The Ontario Chamber of Commerce

Productivity Leader

Fostering a culture of innovation and smart risk-taking in order to become a productivity leader

Ontario’s innovation gap is a major barrier to increasing productivity and prosperity. Firms need to unlock their innovative potential, but do not receive the right support from government to do so.

The business and government sectors must work together to address current challenges and create a business environment that promotes innovation.

The Good News…

• The elimination of capital tax, adoption of the Harmonized Sales Tax (HST), and other efforts are all helping Ontario businesses become more competitive and productive
• Ontario attracted $6.1 billion (USD) worth of foreign direct investment in 2010, second in North America
• Ontario has strong universities and research centres that excel in science and technology

The Challenges…

• 38% of business and civic leaders feel the province is either not that innovative or not innovative at all
• Ontario businesses invest less in productivity-enhancing machinery and software than US businesses
• Canadian businesses under-invest in R&D, spending only one per cent of GDP on R&D, compared to an OECD average of 1.7% and 2% in the U.S.

How do we foster a culture of innovation and smart risk-taking?

1. Clarify Canada’s innovation policy space: provincial and federal governments should streamline their support programs
2. Transition from R&D laggard to leader: businesses need to embrace a risk-taking culture (ex: adopt new technologies and invest in human capital)
3. Increase government support for business R&D: governments need to increase supports that link business to academia — and vice versa
4. Support business investment in R&D: government investment should work for all businesses, regardless of size or sector, and be as flexible as possible
5. Continue progress on tax reform: federal and provincial governments should regularly review the impact of taxation on business and overall competitiveness