Canada has many advantages: a dynamic and growing population, abundant natural resources, a world-class education system, and universal health care. For all Canadians to participate in and benefit from our advantageous position, we need to build a strong and resilient economic foundation.

Recently, Canada has been confronted by economic volatility compounded by the challenges of growth. As our suburbs grow into cities and our cities become denser, the challenges have become even more complex. We have an urgent need to generate high-quality jobs to unlock the potential of our workers, to build major projects to accommodate the needs of today and the continued growth of tomorrow, to build more homes for Canadians, all while protecting them from the evolving threats to physical and financial security.

Canada must embrace a plan that will unlock our growing potential and establish a strong and resilient economic foundation. As a mid-sized, developed country that is on pace to surpass the population of many of its peers within our lifetime, we must ensure we are effectively positioned to take advantage of our potential. To get us back on track, we have developed that plan, a blueprint for Canadians’ prosperity and a thriving economy.

To seize the opportunity, we must act with urgency and purpose. Canada must take a comprehensive, coordinated approach to addressing these challenges with forward-looking, practical and effective public policies. Governments and the private sector must work together to make certain that the most effective policies are in place to create high-paying jobs for workers and growth that supports all Canadians.

Banks in Canada will continue to work with Canadians and governments across the country to build on our current foundation and position Canada for future success. A cornerstone component for that strong foundation of the future, is a sound, competitive banking system that both enables and protects Canadians' financial future. With all of Canada’s natural and inherited assets and the benefit of one of the most accessible and stable banking sectors in the world, we see the opportunity to build that future.

Here’s how we can do it together:

The Blueprint

Setting the Foundation for Economic Growth

When businesses small and large succeed, jobs and wealth are created for Canadian workers. We need to create the conditions that will celebrate and reward that success. The government needs to make fostering entrepreneurship, small business and economic growth a priority and align its policy framework accordingly.

To release Canadians economic potential, the government needs to:

1. Enable job creation and economic opportunity by removing barriers to accessing credit to start and grow small businesses:

Unlock additional credit sources for small businesses (SME). Canadian banks are the largest supplier of credit to Canadian small and medium-sized businesses, with authorized credit of nearly $300 billion, and loan approval rates of 91%. While impressive, more can be done to enable smaller banks that have previously been largely absent in the SME finance market to serve SME clients.

Recommended Solutions: Review the prudential regulatory treatment of small business loans to ensure that they are not unnecessarily constricting credit.

2. Enable small businesses to participate in major government contracts, growing their business, creating jobs and driving economic opportunity:

Facilitate small business participation in government sub-contracting. For example, with Canada’s population growth there is a well-documented need for significant infrastructure investment. To support these major projects and ensure we leverage Canadian knowledge and innovation, we need to make sure small businesses, and their workers can participate in this work. Current prudential requirements can make it more costly for small businesses to access capital, making it more difficult for them to play a role in the contracting supply chain.

Recommended Solutions: Remove red tape so small businesses can access loans to create jobs and help build the infrastructure Canada needs.

3. Set and meet an ambitious target for making Canada tax competitive for businesses and workers:

Prior governments set the ambitious target of ensuring Canada had the lowest corporate income tax rate in the G7. That provided a strong signal to industry and investors that Canada was open for business and determined to attract international investment. That commitment slowly eroded, as did our competitive position. At the same time, Canadians collective tax burden has been rising. With a change in government in the United States we must ensure that the collective tax burden on Canadians is competitive with other jurisdictions, not only to retain the talented workforce we have here, but also to unlock the capital and entrepreneurial spirit of Canadians.

Recommended Solutions: Recommit to a clear and bold target for making Canada tax competitive so that Canadians can rally around and attract investors and retain the talent we already have – both in Canada and globally

4. Secure Canadians’ financial future by creating a tax system that encourages personal investment, business growth and productivity growth:

Review the Canadian tax system from the ground up and realign it to encourage investment, new business formation and growth, and job creation. Canada is long overdue for a full-scale review. The Canadian tax system has become overly complex, cumbersome and sometimes, a disincentive to investment. An effective tax system encourages investment both domestically and internationally, helping to create jobs and grow businesses. When Canadians invest in their retirement or their family’s future, a more efficient tax system will help them meet their goals.

Recommended Solutions:

a. End double taxation of investments in Canadian companies by reinstating the deduction for received dividends for financial institutions making investments in Canadian companies

b. Revisit the decision to increase the capital gains inclusion rate, which disincentivizes investment and makes it more difficult for growing firms to attract investors

c. Phase out sector-specific taxes such as the Large Financial Institutions Tax that distort investment decisions and hurt the millions of Canadians that save with, or invest in, Canadian banks

d. Avoid retroactive application of taxes which undermines the principles of predictability, certainty, fairness and confidence for domestic and international investors

e. Work with the relevant provinces to remove the application of capital taxes which ultimately penalizes banks for holding capital buffers

Creating Jobs for Canadians

To accommodate a growing Canada, we need higher wages and better jobs for Canadian workers. To make that happen, businesses need to be empowered to grow and create those jobs.

To support job creation, the government needs to:

5. Enable job creation, economic growth, and improved productivity by enabling less costly access to credit:

Place a competitiveness lens on all regulation, including banking regulation. Too often, well-intentioned regulation ultimately does more harm than good because it fails to consider its impact on the competitiveness of Canadian industry or the productivity of the Canadian economy. For example, in banking, where every dollar in capital backstops over $7 in lending, if capital requirements are set too high due to measures such as the domestic stability buffer or the capital floor, they can reduce banks’ ability to lend and increase the price of credit. Moreover, if they are out of step with the rest of the world, they can also make Canadian banks uncompetitive on the world stage. Canada has a unique relationship with its prudential regulation of banks, and we believe that there are strong measures and tools already available that do not require or depend upon heightened capital adequacy requirements to safeguard our already sound, stable banking sector.

Recommended Solutions: Ensure regulators and policymakers consider the competitiveness and productivity impacts of their decisions across all sectors and make their decision-making process transparent.

Ensure Consumers Continue to Benefit from Our Highly Competitive and Secure Financial Services System

To access financial services, Canadians can choose between a world-leading federally regulated banking sector that is secure and highly innovative or other market service providers that likely do not reach a similar standard. As Canada’s financial services marketplace evolves, it must evolve to meet Canadians’ interests. Regulatory requirements must ensure Canadians are afforded consistent consumer protections across service providers and that their personal information is safeguarded.

Despite Canada having one of the safest banking systems in the world (Canada has not had a bank failure in the 21st century, compared to 568 in the United States), Canadians incur the costs of regulations and requirements that exceed international standards. To foster competition, support economic growth, reduce direct and indirect costs to Canadian consumers, the government needs to holistically review regulations, regulatory capital, liquidity and other requirements to determine fitness for purpose of balancing stability versus fostering competition and economic growth. To help Canadians benefit from a competitive, innovative and efficient financial services sector, the government should:

6. Ensure Canadians have access to consistent consumer protection in line with what is provided by Canada’s banks:

Canadians have come to know and trust that when dealing with a federally regulated financial institution, they are protected. When Canadians are dealing with a non-bank payment services provider, however, the reality may be very different. This may be particularly true in the case of large technology providers that may be located outside Canada, which could pose unique threats to Canadians – and to the overall financial system and sovereignty. It will be critically important for all providers of financial services to be brought fully within a consistent regulatory perimeter.

Recommended Solutions: Ensure all existing non-bank PSPs and new entrants are held to the same high standard as federally regulated banks. Same activity, same risk, same regulation.

7. Meet evolving consumer needs in a digital and data driven economy:

As technology continues to advance consumers are asking for more control of their data and how it’s used. As a result, jurisdictions around the world are implementing consumer-driven banking regimes to provide more options to their citizens to direct or control how their financial data is used and shared. Canada has committed to a framework but has yet to implement it.

Recommended Solutions: Implement a made-in-Canada consumer-driven banking framework that protects Canadians and their data while enhancing competition, along with a regulatory environment that does not impede growth and innovation.

8. Empower consumers with greater choice when accessing financial services digitally:

Create a regulatory environment that promotes open competition and innovation. Canadians overwhelmingly prefer digital channels to conduct their banking and to pay for goods and services. That puts digital service providers and digital device suppliers in a position to potentially restrict competition or favour their own proprietary offerings over those of federally regulated financial institutions. This, in turn, may stifle competition, innovation and limit choices for consumers, including individuals and small businesses.

Recommended Solutions: The regulatory environment should ensure that digital service providers and device suppliers do not restrict the choices that Canadians have when making payments and conducting financial transactions.

Keeping Canadians Safe

It’s an unfortunate reality that while growth and innovation create opportunities for entrepreneurs, they also create opportunities for criminals. Since crime flows to the weakest point, Canada needs to become a harder target for fraudsters and scam artists to operate in.

To stop crime and reduce scams, the government needs to:

9. Protect Canadians finances and personal information: • Working collaboratively to share information, business and government can protect Canadians from being targeted by scammers. Around the world, consumers are being victimized by fraudsters who use digital communications, social media platforms, and digital finance tools to scam unsuspecting consumers out of their hard-earned money. With annual losses estimated to be in the range of $11 billion, scams are not petty crime. Moreover, it is believed that much of those funds are funneled to organized crime. Canada’s governments and private sector must collaborate to reduce fraud and scams.

Recommended Solutions: Support the efforts of the cross sector, public private anti-scam alliance where financial institutions, technology platforms, telecommunications companies, governments and law enforcement are jointly working to find solutions to protect Canadians from scams.

10. Make life safer for Canadians, reducing violent crime and related social issues:

Continue to improve Canada’s anti-money laundering (AML) regime by focusing on priority risks, high-value reporting, prosecutions, and statistics that enable evidence-based policies. Its foundational legislation should focus on risks, rather than encouraging high-volume, low-value reporting. Changes to the reporting framework may be required to help drive this evolution.

Recommended Solutions: Evolve Canada’s AML regime into a risk-based framework that is fit for the purpose of combatting money laundering and terrorist financing.

Creating the Foundation for More and Affordable Housing

Canada needs more housing. The demand for housing has been growing faster than the supply, and it shows in housing prices and availability. That needs to change. The ultimate solution is more supply, which will require cooperation among all levels of government, but there are measures that the federal government can take on its own to help reduce housing costs and simplify the home ownership process.

To facilitate more and affordable housing, the government needs to:

11. Make Housing more available and affordable for all Canadians:

Reduce premiums on construction of multi-unit properties and improve mortgage funding and securitization for multi-unit properties. Price multi-unit premiums with a break-even objective rather than pricing them – as has been done historically – with the objective of generating surplus government revenues. Furthermore, consider having more favourable terms and conditions for qualification for mortgage loan insurance. The government should select by geographic region depending on housing needs as well as set an affordable housing target per building on the surface area, as opposed to the number of affordable housing units.

Recommended Solutions: Reduce premiums on construction of multi-unit properties and improve mortgage funding and securitization for multi-unit properties.

Consider making conventional multi-unit residential loans (i.e. less than 80 per cent loan-to-value) eligible for portfolio insurance – subject to portfolio insurance pricing.

Recommended Solutions: Remove one of the two payment requirements to securitize such mortgages (i.e., the timely payment guarantee under the NHA MBS and CMBs), particularly for multi-unit properties.

Faster Approvals for Major Projects

Endowed with a variety of natural resources, Canada could attract much more international and domestic investment that would unleash economic potential that will provide more good paying jobs for Canadian workers and growth for Canada as a whole. However currently, Canada unfortunately has a reputation that major projects cannot get built or take too long, deterring investment.

To reposition Canada as a preferred investment destination, the government should:

12. Create quality jobs for workers, higher wages and more economic growth from coast to coast to coast:

Give investors greater certainty about timelines for government approvals, licenses and permissions. Uncertain timelines discourage investment, and the regulatory environment plays a significant role in determining those timelines.

Attracting capital is essential to the economic success and prosperity of all Canadians and the more certainty government can provide to businesses looking to invest in Canada, the better chance there is to get those projects built and built quickly.

Recommended Solutions: Prioritize streamlining approval processes and reducing red tape on major projects to make Canada a more attractive place to invest and do business.

13. Create quality jobs, higher wages and more economic activity that will lead to higher productivity and a higher quality of life for Canadians:

Unlock private capital through more effective use of public private partnerships. Canada has fallen behind on critical infrastructure and more needs to be done to move projects forward. Private capital is a vital source of funding for large scale infrastructure projects, and more can and should be done to leverage it to keep Canada moving forward in a timely way. Effective infrastructure reduces congestion, facilitates housing for Canadians, and increases Canadians productivity and quality of life.

Recommended Solutions: Prioritize public private partnerships to accelerate large scale infrastructure projects and create great jobs for Canadian workers.

Implementing This Blueprint Will Provide Canadians with a More Prosperous, Safer Future

As we emerge from the current economic and socially challenging post-pandemic time, Canada has the potential to continue as a world leader. We have natural assets, a diverse and dynamic economy, a democratic foundation, and the people to make it happen. With all our current opportunities come challenges. We can meet and overcome these challenges with smart policies that create jobs, spur growth, unlock credit, protect consumers, build homes and reduce crime. We believe our blueprint will provide Canadians with a more prosperous, safer future.