PRICE IS RIGHT FOR DOING BUSINESS
A recent study conducted by the international consulting firm KPMG, compared the cost factors that companies look at when deciding to locate and operate in a given area. Costs are compared from start-up through the first 10 years of operation. The final report, entitled The Competitive Alternative: A Comparison of Business Costs in Canada, concluded that Canada has lower business costs than the United States and five leading European countries.
The study rigorously measured 42 cities in Canada, France, Germany, Italy, Sweden, the United Kingdom and the United States on the same factors across eight industrial sectors - a comparison beyond the capacity of many small to medium size firms. The report helps executives considering a new operation in North America or Europe to identify locations that merit further consideration. While a final investment decision must also include non-cost factors such as workforce availability, quality of life, education, and medical care, business costs are still among the main factors in an investment decision.
The results clearly show that, on the basis of cost, Canada is the number one location for investors compared to the U.S. and Europe. This is important news for investors looking for a low-cost, competitive location. It is also important to all Canadians, because every $1 billion in new investment in Canada is estimated to create 45 000 jobs over five years.
Low start-up costs, low communications rates, low interest rates and the lowest overall tax burden of the seven nations gives Canada a 5.4 per cent cost advantage over the United States. Canada's cost advantage ranged from 1.8 per cent, over second-place Sweden, to 11,8 per cent over seventh place Germany.
Other key findings regarding Canada include:
- Canadian cities top the list of the most cost-competitive centres from which to serve the NAFTA market;
- Compared to the United States, business costs in Canada are about $1 million a year lower for an average firm of about 100 employees on revenues of $10 million. Canada's cost advantage over some other countries studied was even greater.
- Canada's effective corporate income tax rate - including federal, regional and local taxes - is among the lowest of the seven countries studied.
- Canada's research and development incentives gives Canada a powerful competitive advantage in knowledge-intensive industries.
As you can see, the KPMG study reinforces the many positive forecasts made by international organizations about Canada. Just last month, for example, the International Monetary Fund predicted that Canada would lead the industrial world in economic growth this year and next.
Canadians must now aggressively develop a global brand name for quality and low cost. We have a powerful message to send about Canada's attractiveness as the most cost-competitive base from which to serve the NAFTA (North American Free Trade Agreement) market. I hope that all Canadian political and business leaders will take this message across Canada and abroad. If you which to obtain further information, abstracts of the study can be obtained from KPMG's web site at www.kpmg.ca. For complete volumes, contact the publisher, Prospectus Inc. in Ottawa at (613) 231- 2727 or 1-800-575-1146.
by the Hon Lucienne Robillard - député
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