OTTAWA — Canadian governments should demonstrate the promise of AI to help address the productivity crisis by adopting the technology in their own operations, a new report recommends.

The report, from the Public Policy Forum think tank, says AI could be a major productivity driver in services sectors, which employ most of the workforce, just as mechanical automation has done for industries that make and handle goods. 

It calls for Canadian governments to develop programs and policies to encourage the technology’s use in key economic areas like the management of power grids, supply chains or health-care systems. “Canada is probably going to have to focus,” said Peter Nicholson, the report’s author. “There’s no reason why we have to do everything.”

Canadian banks already rank well on an index of financial institutions’ use of AI, but businesses here have long been slow to adopt new technologies and spent less than firms in other countries on R&D. 

The report, which will be published Wednesday, calls for governments to act as model AI users, demonstrating how the technology can safely improve the delivery of services to convince a Canadian public that’s notably skeptical of the technology. “AI needs more positive cases to be made for it,” said Nicholson, a former corporate executive who has advised policymakers at home and abroad.

Government departments can also act as early customers for startups developing AI products. But the report warns that their normal way of buying the cheapest option won’t work here. “It will cost more, it will have more risk, it will take more time,” Nicholson said. Policymakers should treat AI the way they once did defence, accepting the extra expense to support growth.

Nicholson said he intentionally focused on AI applications that already exist today rather than future magic solutions. In the near-term, generative tools could help increase workers’ output by more quickly summarizing information; producing software code; translating between languages; and helping robots to better navigate the world. 

Bank of Canada governor Tiff Macklem recently warned that while AI has the potential to be economically transformational, its effects on productivity will take “many years.” For individual firms, there’s no evidence that adopting the technology improves output in the short term, according to a study published Monday by The Dais, a Toronto-based think tank.

Nicholson’s report does not put dates or dollar figures on the AI impact, but argues Canada should embrace it nonetheless—especially since governments and large companies in other places are sure to.