“Canada risks being swept aside.” That’s the sobering conclusion of the Canadian Chamber of Commerce after assessing the nation’s performance in a changing global economic landscape that is seeing scrappier, hungrier countries such as China and India power ahead – with no signs of letting up. “The standard of living of every Canadian depends on how well we as a people respond to the challenge,” says chamber president and CEO Perrin Beatty. “The need for action is urgent.” Here are the Top 10 reasons why the Chamber of Commerce thinks Canada’s competitiveness is flailing – and what it proposes we can do about it.
1. We lack the skills to pay the bills: “When I talk to members of the business community, no matter where in Canada, skills are an area of particular preoccupation,” says Canadian Chamber of Commerce CEO Perrin Beatty. The skilled workers we’ve got are hitting retirement age en masse – Statistics Canada predicts that, sometime in the next 10 years, seniors will outnumber children for the first time – and the young(ish) bucks, by and large, don’t have the education and skill-sets needed to fill increasingly specialized jobs. “Businesses are saying they’re unable to get the people they need, whether it’s engineers, pipefitters, or even people with basic survival skills – literacy, numeracy, the ability to work in teams – who are willing to show up for work in the morning.” The Chamber of Commerce proposes several measures, including tapping into the fast-growing native work force and thinking about non-traditional ways to keep retirement age boomers in the workplace.
2. Filing taxes makes our brains hurt: The government needs to simplify our tax system so it’s easier and less costly for businesses and consumers to comply, says Canadian Chamber of Commerce CEO Perrin Beatty. (The Chamber of Commerce estimates that Canadian businesses spend at least $13-billion just to comply with their tax obligations.) The chamber would like to see a streamlined tax structure, as well as a comprehensive review of “hundreds of exemptions, deductions, rebates, deferrals and credits in the federal tax system with an eye to eliminating special measures that are unfair or that undermine economic efficiency.”
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3. Our Labour Code needs to be more flexible: There are about 12,000 private-sector employers falling under federal jurisdiction – these include banking, transportation, telecommunications and broadcasting – and together they employ 840,000 people. “Even the whiff of a disruption in their operations can drive customers to competitors within and outside of Canada,” says the Chamber of Commerce’s recent report on global competitiveness. The chamber would like to see the Canada Labour Code become more flexible, to allow these companies to be more competitive on the market while still protecting employee and employer rights. And, while it’s on the topic of reform: Standardizing Employment Insurance requirements and benefits across the country would reduce regional unfairness and reduce the cost barrier for small– and medium-sized businesses.
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4. We’re a nation divided: “We put barriers between provinces that would be illegal between countries in Europe,” says Canadian Chamber of Commerce CEO Perrin Beatty. There are barriers to mobility, he adds, requiring people who work in basic trades to be recertified just to perform the identical job in another province. And, as any Ontario wine lover who nervously smuggled a few bottles of syrah back from the Okanagan will tell you, there are barriers to Canadian-made goods crossing provincial borders. “We’re a relatively small market,” Mr. Beatty says, “and when we try to balkanize that market we simply drive up the cost of doing business in Canada.” He points to the New West Partnership Trade Agreement that co-ordinated hundreds of laws and regulations (and that’s just between British Columbia, Alberta and Saskatchewan), as a welcome step. Cheers to the recently passed Bill-C311, too, which moves to end this country’s Prohibition-era laws about booze crossing provincial borders.
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5. We’re tangled in red tape: A 2011 World Economic Forum report pointed to Canada’s “inefficient government bureaucracy” as the No. 1 reason that we’re No. 12 in global competitiveness. We need regulatory oversight to ensure equity, consistency and safety. We don’t need to get bogged down filling out endless reams of forms in triplicate. (The Chamber of Commerce estimates that Canadian businesses spend as much as $33-billion to comply with the layers of regulations.) The chamber would like to see the federal government implement the suggestions of its eight-month-old Red Tape Reduction Commissions Report.
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6. We play hard-to-get with international suitors: Foreign investors can strengthen Canada’s global competitiveness by bringing know-how and economies of scale – but if those investors want to buy a Canadian enterprise valued at $600-million or more, the Minister of Industry sits them down in the proverbial parlour to discuss their honourable intentions. That not-so-little talk, says the Chamber of Commerce, is rife with unclear terms such as “net benefit” and “strategic asset.” If a foreign investor is shown the door, they’re not told why they struck out – and that frightens off other potential Romeos. The chamber would like to see more transparency in the rejection process – and for the government to implement a three-year-old amendment to the Investment Canada Act, which would raise the foreign acquisition process to $1-billion.
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7. We don’t do enough to stimulate R&D: It takes money to make money – or to at least pursue the big ideas that might eventually lead to making money. The federal Scientific Research and Experimental Development tax incentive program gives small businesses cash infusions (via refundable tax credits) in order to encourage R&D spending during those early lean years that aren’t generating taxable income. That’s good, says the chamber, but it would like to see legislation open up the program so that larger companies can also access the full value of the credits. (Currently, bigger businesses can only use the credits to offset payable federal taxes; this isn’t much help during lag times that don’t produce taxable income.) Canadian Chamber of Commerce CEO Perrin Beatty says Canadian businesses need that nudge to explore new ideas and solutions.
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8.We’re not wired enough: “E-business is an enabler,” Canadian Chamber of Commerce CEO Perrin Beatty says. “It enables you to be more efficient, to reach a much larger audience, to improve productivity internally and to hold costs down. It enables you to use your existing work force in a more productive and efficient manner.” Sounds great. One catch: “Canada tends to be a laggard, unfortunately.” To get up to speed with the Scandinavian countries, the United States and parts of Asia, the chamber wants to see the federal government update its digital economy strategy to include stimulation of next-generation networks, help SMEs more quickly adopt e-business and evaluate IT literacy education. It’s not just about digital tools, either: We need to make sure our physical equipment isn’t a candidate for Antiques Roadshow.
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9. We’re scaredy-cats: Venture capital is crucial for getting unproven start-ups off the ground, but Canada’s VC industry has been going downhill for a decade. Thomson Reuters reports a mere $1.1-billion in venture capital was invested in 354 Canadian start-ups in 2010 – that’s a fraction of Canada’s turn-of-the-millennia investment, and chump change compared with the United States, which saw venture capitalists cough up $23.4-billion for almost 3,500 businesses in 2010. Canadian Chamber of Commerce CEO Perrin Beatty believes a culture shift is needed. He cites a 2011 study by Deloitte that asked more than 900 Canadians and Americans about risk aversion. It turns out that the Canadians who don’t like risk really don’t like it – much more so than their fellow American chickens. “It’s a big problem that requires sustained will to change over a lengthy period of time,” Mr. Beatty adds.
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10. We’re falling apart. Like, really falling apart: It’s not just Canada’s work force that’s getting old and rickety: so is our public infrastructure, much of which dates back to the 1950s – and you can’t be expected to take on the world when you can’t properly flush your toilet at home. This is largely the responsibility of municipal governments, but those aren’t usually revenue-generating machines – which means repairs and revitalization too often get pushed off. Federal initiatives such as the annual $2-billion gas tax contribution help, says the Chamber of Commerce, but it would like to see Canada develop a comprehensive, long-term plan for getting grids and roadways back up to snuff – and to develop, and manage, public-private partnerships that can help foot the bill.