Pursuit of Productivity, Invocation to Innovation

Remarks by Kevin G. Lynch
Clerk of the Privy Council, Secretary to the Cabinet and Head of the Public Service
to the University of Saskatchewan

May 28, 2009
Saskatoon, Saskatchewan

Pursuit of Productivity, Invocation to Innovation

(University of Saskatchewan Spring 2009 Convocation)

Let me begin by thanking the University of Saskatchewan for this honour, which means a great deal to me, and for this opportunity to speak to you on this very special occasion. 

Special because today is about you.  You, the graduates - are moving on and entering a world of new challenges.  Of course, you enter that world better prepared than most - you have a U. of S. education!  And I certainly don’t need to remind the graduates what makes this university so special.  A rich history.  Proud traditions.  Outstanding academic and athletic achievements.  The diversity of your student body.  World class assets, including the Canadian Light Source Synchrotron.  And a campus that is among the most beautiful in the country. 

From the  Kenderdine Art Gallery to Rugby Chapel to the Diefenbaker Canada Centre, this campus - its places and its people, have been a part of your lives for the past few years and will always remain so.  No matter where you go, or what you do, you will always carry a bit of this university with you.

Just as importantly, you will also carry all that you have learned here.  Not just the content of your courses, but the rigor of their discipline.  At a time when we are inundated with facts, data and information, from television, radio, the internet, cell phones and e-mails, your time here has developed your ability to make sense of it all.  To give meaning to information.  To draw value from it.  And add value to it.  Quite simply, here is where you have learned how to learn. 

And that’s critical.  Especially now.  Especially in today’s world.  Where there is no curriculum.  Everything’s an elective.  And globalization means that you will face fundamentally different challenges from those of your parents’ generation.  

A world where your competition, and your inspiration, is as likely to come from across the globe as from across the country.  Where your markets, partners and opportunities will straddle continents and connect through the internet.

In such a world, innovation is both the price of admission and the measurement of success.  Where you have to run faster just to stay in place.  Which means that our best must be the world’s best.

Many of you will be heading directly into the workforce - and in tough economic times.  But make no mistake, the recession will end.  The global economy will recover.  And opportunity will return.  

Canada is poised to do relatively well coming out of the global recession, because of the policies we have pursued over the last 1-2 decades.   But we can do exceptionally well if we focus on becoming more productive. 

Now, I know that productivity is one of those concepts that only an economist could love!   And this morning - on this of all days - why on earth would I want to talk with you about it?

Because productivity matters - and it will matter to you, to the kinds of opportunities and even the kind of country you will have.  In fact, how you, as the new generation of leaders, meet the productivity challenge will determine, to a great extent, the quality of your lives and the course of your careers and the success of our country.

Why do I say that?  Because just as a more productive farm can feed more people and a more productive factory can win more contracts, a more productive country can adapt better to new circumstances, seize new opportunities and create new jobs.  A more productive economy leads to new products, lower prices - and higher wages.  And higher wages mean people can buy more and improve their standard of living.

Just as critically, a more productive country generates the prosperity that enables us to afford things like health care and higher education - which combine to create a virtuous circle.  Why?  Because healthy and well-educated workers are more productive workers. 

Nor is this limited to just one or two sectors.  The fact is we need to think of more productive, more innovative methods and ideas in every nook and cranny of our economy - from forestry, fishing and farming, to mining, medicine and manufacturing, and to public service.  

So productivity is not just a measure of economic output, it’s a means to an end.  And that end - greater prosperity and well-being - matters not just to economists, or to convocation speakers, but to all of us as Canadians.

Now, as any economist will tell you, there are basically two paths to improve a country’s standard of living.  The first path is to have more people in the workforce, so in total we produce more “stuff”.   The second way is to improve productivity, so that each worker produces more “stuff”.

For many years, Canada was able to raise living standards almost as much from the growing size of its workforce and the value of its natural resources as from its productivity growth.  Generation after generation, more and more people entered the job market - sometimes beyond the economy’s capacity to absorb them, creating unemployment.  Just ask any parent who is here today about the 1970's and ‘80's and they’ll tell you what unemployment levels were like.

But today we face a very different reality - a shortage of skilled labour.  And as the baby boomers retire, in record numbers, there will be fewer and fewer workers left.  To produce. To create.  To manufacture.  Which means that we won’t be able to drive economic expansion, or grow living standards, through an increasing labour force alone.

Instead, we’ll have to rely on the second path - being more productive, more innovative.  Not just to pick up the slack left by retiring workers, but to help pay for the growing demand for health care and other social services from those same retirees.

It’s a double-edged sword - the very people who are withdrawing from the workforce will also begin to draw more on public services.  Which means that those who are left will need to - you guessed it - be more productive.  More innovative.  More creative.

The good news is that if we can boost our productivity, we can offset the rising demands from an aging population through strong economic growth.  Making the costs imposed by an aging population much more manageable. 

So how are we doing on the productivity front?  The truth is, not good enough.  Especially when compared to our larger trading partners.  In fact, our productivity growth has been slowing, not rising, over the last half century.

I hope you’ll forgive me if I illustrate that performance with a few statistics.   Today, Canada’s average business sector productivity is less than 80% of comparable U.S. levels.

In particular we’re falling behind in things like innovation and adopting information and communications technologies (ICT) - key enablers of productivity, the vital tools of competitive improvement.  In fact, in 2007 Canadian businesses were investing in R&D and ICT at rates that were roughly half those of their American counterparts.

We also need to do better at translating Canadian research into Canadian products and services.   Too many ideas developed in Saskatoon or Regina are turned into products by people in Boston or Raleigh.  Depriving our economy of the benefits of innovation. 

This university understands that problem.  Your association with Innovation Place Research Park is helping to connect research with real life applications.  We need to take this example, and others, and multiply them across the country.

The drive to enhance productivity is one which must engage all of us - as private citizens and as public policy makers.  A decade ago, the federal government changed its approach to research – stressing excellence and opportunity, not entitlement.

There has been new funding for university infrastructure, for the Granting Councils and for the indirect costs of research.  And dynamic new engines of research were created, such as the Canada Research Chairs, the Canada Global Excellence Chairs, Genome Canada, the Vanier Scholarships and the Canada Graduate Scholarships. 

And the Canada Foundation for Innovation (CFI).  The CFI was established as an independent corporation, at arm’s length from government.  Its members drawn from the research community and the private sector.  Bringing a rigour and discipline to research funding that was previously unknown - and long overdue. 
 
This province - and this University - have been major beneficiaries of research funding, including funding for the Synchrotron, based on the excellence of your research, the strength of your ideas and the quality of your faculty and students.  This University – and your exceptional President, Peter McKinnon, have been strong supporters of this excellence-based approach to research funding.

Which brings us back to where we began - to the graduates and to the importance of an education system second to none.  In a world driven by ideas, ingenuity and imagination, educated workers are our greatest natural resource and the only sure way to create a sustained Canadian advantage. 

Canada has a truly unique opportunity to seize the future.  As Canada’s relative performance in the current global financial crisis and recession so amply demonstrates, the Canadian approach has served us well.  But we need to do better.  Be more productive.  Be more innovative.

Which means that, more than ever, we need people like you - bright, well-educated, highly motivated.  People driven to be the best, capable of competing against the best.  A generation of graduates who understand and embrace today’s flatter world and the power of technology.

Today, your final day at U. of S., you leave rightfully proud and well prepared - to provide the kind of innovative thinking our future requires and to offer the kind of insights your education enables.
 
Ahead of you lie unimaginable opportunities and undreamt of possibilities.  It has been an honour sharing this important day with you.  Our country, the world, needs your energy, your enthusiasm and your ideas.  I wish each of you, every success.

Thank you.