understanding of the structure of the canadian economy, i can say that while the income trust structure may be very appropriate where firms need only to manage existing assets efficiently, it is definitely not appropriate in cases where innovation and new investment are key. to the extent that the system was favouring the use of the income trust structure in these cases, the incentives for innovation and investment were reduced, and the potential for future productivity growth was reduced. finally, members of the committee should realize that the different risk - return characteristics of income trusts may not enhance market completeness if they arise from differences in tax treatment. clearly, there has been a very significant tax incentive to use the income trust form of organization in cases where this would not have been the appropriate form of organization from a business efficiency point of view. by giving incentives that led to the inappropriate use of the income trust form of organization, the tax system was actually creating inefficiencies in capital markets, inefficiencies that, over time, would lead to lower levels of investment, output and productivity. while we at the bank have not done any research on how the rules of the tax system could be designed so that they do not give inappropriate incentives that would bias the choice of firms to operate either as an income trust or as a corporation, the changes proposed by the government last october would appear to substantially level the playing field. for the income trust sector to deliver efficiency benefits through the enhancement of market completeness, it's important that the tax system provide a level playing field.

lawrence schembri : getting down to business - investment and the economic outlook remarks by mr lawrence schembri, deputy governor of the bank of canada, to the greater vancouver board of trade, vancouver, british columbia, 21 march 2017. * * * i would like to thank russell barnett for his help in preparing this speech. introduction thank you for the invitation to speak here today. my colleagues and i routinely consult the business community, and i welcome the opportunity to share our economic outlook with you and listen to your views. this consultation process is an important ingredient in our policy making. to achieve our monetary policy goal of low, stable and predictable inflation at the 2 per cent target rate, our economy should operate at, or close to, its productive capacity. however, most advanced economies, including ours, have been running well below full capacity since the great recession of 2008 – 09 owing to a persistent deficiency in demand. after years of serial disappointment, recent data suggest that the recovery in the global economy appears to be gaining traction. notably, growth in the us economy is expected to remain solid, supported by robust fundamentals, including a strong labour market with gradually rising wages. for the canadian economy, estimates of the growth of gross domestic product ( gdp ) from statistics canada for the fourth quarter of 2016 came in somewhat stronger than we had anticipated in our january monetary policy report ( mpr ). while the headline number is welcome news, a more detailed analysis suggests continued scope for caution. exports continue to face ongoing competitiveness challenges. and despite recent gains in employment, subdued growth in wages and hours worked continues to reflect persistent economic slack in canada, in contrast to the united states. in particular, one component of gdp that remains concerning is business investment. while investment in the energy sector now appears to be stabilizing after a painful adjustment to the decline in oil and other commodity prices that began in 2014, overall business investment in the economy remains weak. statistics canada also reported that non - residential business investment spending contracted by more than 15 per cent in the fourth quarter of 2016 and by almost 8 per cent for the year as a whole. the current elevated level of geopolitical uncertainty, and the related prevailing uncertainties around the economic outlook, are likely contributing importantly to this continued underperformance in business investment. therefore, it is still too early to assume that the worst is behind us. so business investment is the topic i want to focus on today. it is, i am sure, top