The Task Force on Competitiveness, Productivity and Economic Progress says Ontario's economy can no longer afford for companies to hold onto "larger cash balances" instead of investing the money to trigger more productivity.
"Companies need to step up their efforts to grow the economy, and counterbalance risk by producing higher returns," urged the 74-page report released on Thursday, titled A Push for Growth: The Time is Now.
"Given the higher level of cash balances, this is the time to turn this situation around and for companies to innovate and invest in productivity-enhancing projects."
The task force was created in 2001 by the Ontario government to monitor economic progress compared to the other provinces and the United States.
In 2000, Ontario ranked 15th in GDP per capita among its North American peer jurisdictions. In 2011, it came in at 14th.
Bank of Canada governor Mark Carney raised the issue of large cash reserves on Canadian companies' balance sheets in the summer and suggested that it be spent, or returned to shareholders through dividends, given Canada's economic stability.
The task force adds that now is a good time to stimulate growth due to a "sound banking system, a strong housing market and a robust dollar."
If businesses continue to sit on its cash reserves, then growth in the province will "languish for the next eight to 10 years," projects the report.
"Ontario has made some good progress over the past decade," said task force chairman Roger L. Martin, who is also dean of the Rotman School of Management at the University of Toronto.
"However, good is not good enough anymore."