If Canada takes certain steps, including increasing the competitiveness of its tax and regulatory systems, scaling high-growth companies and ensuring access to skilled labour, it could unlock an \u201cinvestment super cycle,\u201d a Wednesday report from TD Economics said. <\/p>\n
The cautiously optimistic analysis comes as the country finds itself in a prolonged trade<\/a> war with the U.S., which has escalated just before Prime Minister Mark Carney\u2019s Canada Investment Summit, set to attract the world\u2019s largest money managers to Toronto on Sept. 14 and 15. Yet the report outlines \u201cthe art of the possible in Canadian investment\u201d if government policy falls into place, TD Bank Group deputy chief economist Derek Burleton said in an interview. <\/p>\n The report estimates that more than $1-trillion could be spent on approved or on-the-table projects over the next 10 years and beyond. \u201cWe know there\u2019s no silver bullet,\u201d Mr. Burleton said, but the combination of Canada\u2019s richness in natural resources, global structural changes such as the push for defence dollars and government risk-taking creates a \u201challmark of a super cycle.\u201d <\/p>\n Of that $1-trillion in long-term spending on more than 300 publicly announced projects, energy was the largest sector, accounting for 34 per cent. This factors in proposals for Alberta\u2019s Peace River nuclear power project<\/a> and the West Coast oil pipeline<\/a>, neither of which has been approved yet.<\/p>\n Defence was the second-largest sector at 27 per cent of total potential spending, which included plans to modernize the North American Aerospace Defence Command (NORAD). After 2035, the report\u2019s modelling put defence as the sector with the greatest investment potential. <\/p>\n Trade war casts shadow over Carney\u2019s investment summit<\/a><\/p>\n Assuming governments can successfully clear the hurdles necessary to execute the projects they are backing themselves, Mr. Burleton said, international investor confidence could follow and yield a \u201cflywheel effect.\u201d <\/p>\n \u201cIf governments can create that private ecosystem over time, then not only can we take advantage of the projects that are currently being bandied about, but we can see other projects step forward.\u201d <\/p>\n In a \u201chigh investment scenario\u201d projection, TD identified the potential for more than $1.5-trillion in spending to materialize in the long term. <\/p>\n On the conditions needed to unleash these dollars, the report critiqued Canada\u2019s corporate and personal tax systems as barriers to growth. As Canada competes for top entrepreneurial talent, the analysis pointed out that its personal tax rates are higher and apply at lower income thresholds compared with other G7 countries. <\/p>\n On the corporate side, the report argued Canada\u2019s tax credit phase-outs and Canadian-controlled private corporation rules incentivize small businesses to stay small or engage in excessive tax planning, rather than growing.<\/p>\n