Canadian private companies had $626 billion C in cash holdings in the first quarter of 2014, according to Statistics Canada reports.
Meanwhile, Canada continues to fall behind other OECD countries in business investment. The C. D. Howe Institute, an independent think-tank of economic and social policy, confirms a steady decline in per-worker investment over the last five years in Canada.
New investment is necessary to add building and equipment for new jobs and to provide tools to make existing workers more productive.
Canadian business investment will average $13,200 per worker in 2014, compared to $14,800 in the OECD, and $18,500 in the U.S. according to the C. D. Howe.
In an interview with CBC on Wednesday, Bank of Canada Governor, Stephen Poloz described the Canadian economy as “a long way from normal”. And he said a lack of business confidence and investment was contributing to the problem.
Benjamin Dachis, one of the authors of the report, said however, that business taxes, the taxes on investment itself, are too high. He says punitive taxes have a discouraging effect.
According to the report, former economic engines of Canada, the provinces of Ontario and Quebec, are faring among the worst in the country with per-worker investment plunging to $5,700 in Quebec and $7,000 in Ontario. This is the lowest in 10 years.
Dachis says reducing taxes and encouraging foreign investment in telecom companies and airlines, would help reverse the trend.
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