This year’s federal budget shows that the conspicuous absence of a productivity agenda in the federal Conservatives’ election platform was due to political positioning rather than a lack of interest in the area.

The Tories have, indeed, done more to lower corporate taxes — a key requirement for higher productivity growth, according to the business community — than the Liberals planned. They also put additional funds, albeit one-time allocations, into education, as well as introducing an apprenticeship job creation tax credit and increasing funding.

Finance Minister Jim Flaherty’s speech specifically addressed the issue, saying that for the Conservatives, increasing productivity means keeping our borders open, reducing regulatory red tape and barriers to interprovincial trade, and investing in education and research and development.

What Flaherty did not mention was the politically sensitive issue of reducing barriers to foreign investment, particularly in financial services and telecommunications. Banking is particularly critical because it is a big sector, in terms of both size and the influence it has over other sectors through its attitude to loan requests. The Bank Act comes up for renewal later this year so the Conservatives may be waiting until then to deal with the issue.

A key question concerning productivity is whether it is a long-term problem embedded in the attitudes of business decision-makers, which change only slowly, or whether there are some short-term measures that can make a difference within a few years.

The introduction of the apprenticeship training tax credit suggests the Tories may be leaning toward the latter view. Economists tend to be skeptical of such incentives, saying that it is in the self-interest of businesses to train more people, so paying them to do so is throwing money away.

Another critical question is whether we need to increase the number of university graduates, particularly at the Masters and PhD levels, or increase the number of community college grads or increase the number of both. Some feel we need more university-educated business decision-makers while others argue that we will face not only a skills shortage as baby boomers retire, but will also get a bigger impact from upping the productivity of low-skill workers than that of the already highly educated.