Joe Oliver: AI could help with productivity, if we let it

Around the world, economists, technologists, politicians and philosophers are debating AI’s likely transformative yet highly uncertain potential for good and ill. As Canada grapples with challenges from a debilitating trade war and self-inflicted economic weaknesses, decision-makers have a historic opportunity to harness AI in the national interest.

One critical issue is whether AI can rescue Canada from 10 years of productivity stagnation resulting from falling Canadian real investment per worker, which was down a grim 15 per cent between 2014 and 2023 — compared to up 21 per cent in the U.S., 13 per cent in the Euro area and 11 per cent in the OECD.

Also critical is whether Canada’s regulatory, energy and investment policies will allow the country to exploit its early AI research advantage, given our historic weakness in converting innovation into higher productivity and global-scale companies.

Canada was one of the birthplaces of modern AI, with crucial work done by Geoffrey Hinton in Toronto, Yoshua Bengio in Montreal and Richard Sutton in Alberta. Yet the AI giants are overwhelmingly American: Nvidia, Apple, Google, Microsoft, Meta, OpenAI and Anthropic. Canada’s private AI investment gap with the U.S. last year was enormous — US$286 billion versus US$4.3 billion, or 67 times more in an economy that is about 13 times the size of Canada’s.

According to Stanford University, there were 1,953 newly funded American AI companies in 2025 versus 79 Canadian ones.

Statistics Canada cites estimates about how much AI could increase annual Canadian labour-productivity growth over the next decade that range from 0.4 to 1.1 percentage points. It reports that in the second quarter of this year 19.2 per cent of Canadian businesses had used AI to produce goods or services during the previous 12 months, which is roughly comparable to U.S. numbers.

But adoption, capital investment and commercialization have been limited. According to the Bank of Canada, more than two-thirds of business leaders personally use AI during a typical week, yet only eight per cent apply it significantly in their core operations, while another 50 per cent report only low or moderate core use. Really large economic gains could come from enhancing productivity in energy, mining, construction, manufacturing, transportation, agriculture and health care, where AI adoption is currently much lower.

The government identifies Canada’s cold climate and hydro, nuclear and other electricity resources as competitive advantages in AI. But we need vastly more generation, transmission and other infrastructure to meet projected demand for 5.5 GW of AI compute by 2030, which is only a little over three years away. Ottawa says it wants to double the electricity grid by 2050, but it is not at all clear our regulatory and permitting systems can deliver that much new infrastructure in a timely manner.

As a general-purpose technology, AI requires investment in software, computing capacity, machinery, data systems and organizational change to capture its productivity benefits and scale rapidly. Bottom line: Canada must reverse a sad track record of creating promising technology businesses that eventually migrate south or sell out.

This all goes back to the central question. Will the government make the transformative policy changes needed to address our productivity crisis? The prime minister’s rhetoric is supportive, but more needs to be done to: lower corporate taxes; reduce intrusive regulation, not just for the few companies or sectors the government favours but broadly; eliminate interprovincial trade barriers; arrest capital flight and actually attract capital; accelerate energy and mineral development; and support R&D and technology diffusion.

AI provides an immense opportunity to boost our rate of economic growth and increase our prosperity. If other countries are quicker to capitalize on this transformative breakthrough, our relative decline will accelerate. Even as AI raises global GDP, it may widen the gap between the most successful national economies and everyone else. If Canada continues to fall behind other developed economies, that would undermine our security and erode our sovereignty, even if our southern neighbour does become more benign post-Trump — which is not guaranteed.

In short, the stakes could not be higher.

Financial Post

Joe Oliver was minister of natural resources and finance in the Harper government.