Compared with crime, trials, courts and sex, the subject of productivity doesn't sell newspapers. But without better productivity, there won't be as much money to buy newspapers -- or anything else, for that matter.

So it's worth perhaps pondering a sentence or two from Statistics Canada last week: "Productivity growth in Canadian businesses was a flat 0.0 per cent last year." And this one: "Labour productivity has been virtually flat for two consecutive years."

Those are terrifying sentences, economically speaking. Without productivity growth, there's no real economic growth, no real wealth creation, no improvement in the country's overall standard of living. You'd think that would make news.

For years, federal governments have been nattering on about productivity. And, in fairness, Canada made important productivity strides in the 1990s, eclipsing the U.S. powerhouse six out of eight years from 1993 to 2000. Canada needed those years, because the country had slipped further and further behind the Americans in the previous quarter of a century.

Since 2000, however, the old pattern has returned. Canadian productivity has gone in the tank, with no growth for two years, while U.S. productivity improved by 4 per cent each year.

"Experts" blamed the rising Canadian dollar, but that's not the answer -- because our productivity slump started before the currency's rise. Indeed, over time, the higher dollar might make Canadian companies more competitive, since they will import more high-technology machinery and rely less on the magic carpet of the low dollar for growth.

When the Statscan report was published, Industry Minister David Emerson said he'd produce some kind of innovation strategy. Heaven only knows how many of these Ottawa has already produced.

At productivity's heart lie innovation and research and human skills. Without these, a country is sunk. So how is Canada doing? In short, poorly relative to others.

A brilliant report emerged recently that underscored that poor performance and knocked the props from beneath some of the much-vaunted tax breaks offered companies by Ottawa and the provinces to encourage research and development.

The Toronto-based consulting firm Impact Group looked at where and how much industrial research -- a key determinant of productivity -- was done in Canada from 1994 to 2000. Among the sobering findings: Very few Canadian companies do research and development. Over seven years, only 9 per cent of Canadian firms did R&D every year. The remainder did nothing or were "at best occasional performers."

Here's a sentence from Impact to wake everyone up: "We conclude that there has been no generic increase in the number of companies performing research in Canada between 1994 and 2001." This, despite strong economic growth and a host of government incentives.

What did happen, however, was that firms dipped quickly into the research and development business to scoop up available government tax credits -- without increasing their overall commitment to R&D. This was particularly noticeable in Quebec, which led the country in R&D relative to its market size.

The Quebec government showered tax incentives on companies and pushed up provincial R&D numbers. Says the Impact study: "Much of the apparent activity was simply companies taking advantage of available government money." Offer essentially free money, in other words, and companies will come. They just won't stay at the R&D business for very long.

The Impact study doesn't say precisely why, but here's a guess. The hidden issue of Canadian economic structure is foreign ownership. Canada remains too much a branch-plant economy, and branch plants don't do much R&D unless bribed to do so by governments. Similarly, small and medium-sized companies do next to nothing.

According to Industry Canada, there are at least 190 federal and provincial programs trying to spur technology development and commercialization. Says the Impact study: "Yet for all this activity, the number and proportion of companies in most industry sectors consistently performing research in most parts of the country is not growing." Indeed, there is less R&D than before in the West and almost none at all in Atlantic Canada.

What will last month's federal budget do for this problem? Nothing. It followed the polls by mortgaging the fiscal future to health care and equalization, neither of which will improve the country's capacity to innovate.

The budget set the country's future course. Canada will be more equal with less money to equalize.