Bank of Canada senior deputy governor Carolyn Rogers did the country a service last week when she declared that it was time to “break the glass” on Canada’s productivity problem. The debate needed an anchor, and now it has one. 

Central bankers typically avoid declarative sentences about subjects outside their remits. Drifting outside their lane, which is managing inflation, risks headlines like “Did the Bank of Canada just throw the government under the bus?”—the subject line of Compass Rose managing director Theo Argitis’s latest newsletter—and broadsides like this claim from Jim Balsillie that “The real emergency here is that the Bank of Canada is stuck in the past.”

Independence and credibility are key to effective monetary policy. It’s difficult to maintain an air of authority if you’re in the habit of inviting ridicule. It’s safer to say as little as possible. 

As Argitis argued in his newsletter, there was nothing impolitic about the Bank of Canada sounding an alarm about the country’s diminishing ability to generate the wealth required to support our quality of life. Argentina, another resource-based economy, was once one of the richest countries in the world. Complacency is a killer. 

Canada’s productivity problem has existed for decades, and any partisan or lobbyist who sees the Rogers speech as ammunition to use against our current governments should be prepared to explain why their side didn’t do anything about it when they were last in power, or why industry is so quick to blame government for all the economy’s shortcomings. Canada’s inability to create wealth as effectively as its peers is a collective failure. If Rogers made anyone uncomfortable, it’s because someone who can’t be dismissed for blatant self-interest or simply for membership in another tribe was demanding that we own that failure. 

The issue is now firmly on the agenda. Now what? The Bank of Canada’s typical dodge when confronted with a sensitive subject—Not our job, but good luck to you—is effective because it’s usually true. The more productive an economy, the faster it can grow without stoking inflation, but as Rogers said in her speech, the only thing the central bank can do to help productivity along is to keep inflation low and hope price stability encourages business investment. 

Former finance minister Bill Morneau called his 2023 political memoir Where To from Here: A Path to Canadian Prosperity. Paths require pathfinders. Morneau argued that Canada badly needs an agency modeled on Australia’s Productivity Commission, one that could provide neutral economic and policy assessments to feed regular meetings of federal, provincial and territorial ministers. 

Morneau also sounded an alarm over productivity. “I have spent considerable time on this topic because my years of experience in office convinced me that productivity improvement is the most important issue on our agenda, and we are not focused on it,” he wrote. “The implications of ignoring this aspect of Canada are more than significant—they are critical.” 

Given Morneau’s level of concern, it’s notable that he mostly avoided offering policy ideas and instead focused on process. That’s because there’s disagreement on how to measure productivity, never mind what to do about it. 

Randall Bartlett, an economist at Desjardins, published a note this week that shows Canada’s productivity versus the United States might be even worse than we tend to think. 

Productivity is generally expressed as the value of output per hour worked. But hours worked vary, depending on how they are ascertained. Analysts tend to default to Statistics Canada’s Labour Force Survey (LFS), which relies on monthly interviews with individuals, even though Statistics Canada’s payroll survey is generally seen as the more reliable report. The latter receives less attention only because compiling it takes more time, so it lags the LFS by a couple of months. 

According to Bartlett, the LFS tends to exaggerate total hours worked. When the numbers from the payroll survey are used to calculate productivity, the decline in recent years is steeper than suggested by standard calculations, and the gap with the U.S. is wider.

No matter how you measure productivity, the trend is the same: dire. “A change in policy direction can’t wait for more deliberation,” Bartlett wrote. “Action is urgently needed.”

Alas, there’s no consensus on what that action should be. Balsillie’s rebuke of the Rogers speech was triggered by the way she sketched the problem. Rogers acknowledged there’s no consensus on the issue, but like Bartlett, she said “we can’t afford to wait for complete certainty.” Rogers offered that a scan of the relevant research would turn up a few recurring themes: a failure to maximize the skills of workers, chronically weak business investment, a disproportionate number of smaller companies and a lack of competition. 

Balsillie, the former co-CEO of the company that created the BlackBerry smartphone, has spent much of the past decade pushing for industrial policies that recognize the drivers of wealth in the modern economy are intellectual property and other intangible assets. 

The wide productivity gap between Canada and the U.S., home to so many of the companies that dominate the cutting edge of digital technology, suggests Balsillie might be onto something. But bedrock notions such as the value of competition in a free-market economy won’t be easily dislodged; nor should they be, considering patent-based wealth creation appears to have come with the unintended consequence of extreme income inequality and disruptive political polarization. 

Most appear to agree on one thing: the urgency of the matter. The next step should be creating a neutral place to work on solutions. The Bank of Canada can’t do everything. 

Kevin Carmichael is The Logic’s economics columnist and editor-at-large. He has spent more than two decades covering economics, business and finance for outlets including Bloomberg News, The Globe and Mail and the Financial Post, where he also served as editor-in-chief.