Canada has the natural resources and human talent to thrive in the global economy, but output is being held back by red tape and productivity problems.

That was the major takeaway from a panel discussion with three prominent Canadians and BNN Bloomberg’s John Erlichman this week, where the conversation tackled everything from housing affordability and the regulatory regime to the ongoing debate about domestic pension investment.

Former Bank of Canada Governor Stephen Poloz said the length of the decision-making process for major proposals is holding the economy back.

"We lost sight of the things that matter," said Poloz, who is currently a special advisor at law firm Osler. "Time is money. Decisions that take 10 years to make or not make are really stalling us down.”

He says Canada has far more red tape than one would like to see in a truly dynamic economy. “Measurable productivity has been wasted” because of needless regulatory barriers and delays, Poloz said. Making sure that processes happen with “punctuality" is something Poloz says is a priority to make Canada a more successful country.

Costly delays

For his part, former Finance Minister and Deputy Prime Minister John Manley agreed with the notion that regulatory delays are a big part of the productivity problem.

Manley cited the recently completed Trans Mountain Pipeline Expansion as a great example of the problem: it took 12 years to be finished and cost the economy billions of dollars more than it needed to in terms of lost economic output.

Speaking about the energy sector, Manley reiterated the importance of natural resources for the economy. He added, “Canada is good at it (monetizing its natural resources), let’s really make sure we are very good at it.”

Housing crisis

Manulife chief economist Frances Donald singled out the housing crisis, meanwhile, as being the biggest threat to Canada’s economy.

"Canada won’t be able to attract and retain labour if it’s just too expensive to live here," she said. "The (housing) issue has accelerated very dramatically in the past three years."

She added that if Canada is not able to find a way to build affordable, or even just less expensive housing, it will be really hard to tackle other issues such as brain drain or "motivate Canadians to engage in productivity-enhancing endeavours."

Poloz agreed with that assessment, saying "our value proposition to people who want to come here or just stay here is eroding.” 

Pension focus

Poloz was recently tapped by the federal government to examine the issue of whether or not major pension funds should be encouraged or compelled to invest more domestically than they currently do.

Poloz says his top priority consists of “looking for barriers to ensure there is a clear-leveled playfield, ”if these impediments are improved “then that would increase the scope for pensions to invest in Canada.” He added that pension funds already invest a large sum in Canada.

Despite the challenges, all three said there are myriad reasons for optimism about Canada’s economy over the long term.

"Canada might be moving slightly in the wrong direction, but we still have a lot of advantages over global peers,” Donald said. “We have too much red tape but we also have democracy and highly educated population.”

Manley agreed, noting that as Canadians, “we have everything the world wants and needs.”