The Canadian Chamber of Commerce unveiled its Top 10 Barriers to Competitiveness for 2013. The Canadian Chamber undertook this initiative last year to draw attention to the barriers that are holding back Canada’s progress and to urge all levels of government to act more swiftly to improve our country’s ability to compete globally.
Canadian Chamber President and CEO Perrin Beatty declared the initial year of the initiative a success. “As we take stock of the first year of the Top 10, we made progress on several of the items we targeted,” he stated. “For example, our members recorded a major victory when our appeal for change to the regulatory processes around natural resource projects was overwhelmingly accepted by the government. For a country so dependent on the success of natural resource projects, implementing a more efficient process is a huge contributor to competitiveness,” said Beatty.
The Canadian Chamber’s number one issue last year, as identified by the membership, was Canada’s skills shortage. “We held consultations across Canada that enabled us to gain a better grasp on this critical issue. We were very satisfied to hear the Prime Minister also identify the skills shortage as the major challenge facing our country,” added Mr. Beatty. The Canadian Chamber intends to maintain its focus on skills in 2013.
Addressing the Top 10 Barriers to Competitiveness will go a long way towards restoring Canada’s competitiveness. The Canadian Chamber is calling on its own membership, on governments, on educators, on labour organizations, and others to tackle and overcome these barriers. Tolerating them is simply not an option. Effectively addressing these 10 barriers will sharpen Canada’s competitive edge and allow us to prosper in the global economy.
“We have a choice. Either we act urgently to improve our competitiveness or we will pay a high price in lost jobs and prosperity. Working together, we’ve started to address these problems over the past year. The challenge for 2013 is to build on this progress and start closing the gap between Canadian businesses and our international competitors.”
2013 Top 10 Barriers to Competitiveness:
Governments and businesses across regions and sectors will need to work cooperatively and aggressively to address this ubiquitous issue, particularly in four key areas: upskilling, immigration policies, education-employment alignment and Aboriginal education and
“Labour market studies show that mining will need to hire 10,000 workers every year for the next 10 years,” stated Pierre Gratton, President and CEO, Mining Association of Canada. “The Canadian Chamber of Commerce is right to identify skills shortages as the top issue facing the country and we all need to work together—industry, governments, educational institutions, First Nations and other partners—to ensure Canada’s economy does not falter because we fail to fill the jobs our economy has to offer.”
Barriers to world markets for Canadian energy products
The overseas market will be of critical economic importance to Canada in the 21st century. Federal, territorial and provincial governments must act now to support the development of the infrastructure and relationships needed to realize the full potential of Canada’s energy endowment, or risk missing out on a historic opportunity.
“The oil and gas industry is a lynchpin of the Canadian economy, driving investment and job creation across the West and in Atlantic Canada—and sourcing of equipment and services in Central Canada. With so much at stake, this is no time to be standing on the sidelines. By working together, we can get full value for the energy resources we’ve been blessed with—not simply for the energy industry, but for all Canadians. And, just as important, that we do that in an environmentally sustainable way. The energy community has come to realize that economic benefits alone are no longer enough to ensure public support for resource development. We’re listening carefully and taking positive action to genuinely engage with communities, and to prove out the safety and environmental aspects of our projects. As an industry, we know that our response to our stakeholders’ evolving expectations will be critical to developing our energy resources and building much-needed infrastructure to access new markets.” Al Monaco, President and CEO, Enbridge.
“Canada’s competitiveness is pivoting from an almost sole reliance on the United States market to one with much more global diversity,” said David Collyer, President and CEO, Canadian Association of Petroleum Producers. “A key enabler for Canada’s market diversity is the necessary infrastructure to access those global markets.”
Inadequate workforce productivity
Improved trends in business investment in productivity-enhancing technologies and equipment are encouraging but still leave Canada underperforming relative to its competitors. To improve its productivity, Canada must leverage advanced technologies and efficient infrastructure, support efforts to raise literacy and numeracy levels among workers and ensure its EI program is not a disincentive to work.
“One of the few ways that Canada can maintain its competitiveness on global markets is to increase the supply of advanced literacy and numeracy skills. This will necessarily involve upgrading the skills of large numbers of adults,” said Scott Murray, President, DataAngel Policy Research. “Higher levels of investment in these skills would also reduce public expenditures on key income support programs, including Employment Insurance, Social Assistance and Workers Compensation. Policy-makers need to find ways to induce higher levels of private sector investment in skills upgrading.”
Inadequate public infrastructure planning
Government commitments to infrastructure have been intermittent and the criteria changeable, making private sector investment difficult and expensive. Mobilizing private investment to finance public goals is essential for infrastructure development.
“Canada needs a long-term infrastructure plan with predictable funding so that Canadians can safely and efficiently get to work, move the goods they produce and provide the services their clients need without being impeded by congestion or the results of infrastructure neglect,” says Engineers Canada’s Chief Executive Officer Kim Allen, FEC, P.Eng. “Governments, the private sector and other stakeholders must work together to address deficiencies in the core infrastructure that keeps Canadians healthy and safe, and have a vision for the future of public infrastructure in Canada.”
“Infrastructure is a critical investment in our economic, social and environmental quality of life. Communities and economies are built upon infrastructure. Without it, there are no communities and no prosperity.” John Gamble, President, Association of Consulting Engineering Companies.
Tax complexity and structure
Canada’s tax system over-relies on income and profit taxes, the most economically damaging forms of taxation. Canada’s tax system is also overly complex and, as a result, imposes unnecessary and significant compliance and administration costs on businesses and consumers. Canada must create a simple, fair and growth-oriented tax system.
“Years of incremental changes to Canada’s tax system have made it inefficient and overly complex. That, in turn, makes it costly to comply with, costly to administer, and costly to Canada’s economy,” said Anthony Ariganello, President and CEO of the Certified General Accountants Association of Canada (CGA-Canada). “We are long overdue for a major reform of the tax system, one that must be guided by independent, evidence-based advice.”
Poor innovation performance
Canada lacks a definitive innovation strategy that brings coherence to the many government policies and programs affecting private research, academic research and commercialization. A clear approach that leads to action is urgently needed. Poor innovation leaves Canadian business vulnerable to competitors and to changing economic conditions.
“Canada’s governments can be pivotal in ensuring we take the opportunity that is ours by ensuring we maintain an internationally competitive framework of tax and other frameworks to attract, foster and hold onto the best and brightest in this field. Government policy leadership can make the difference between a Canada with competitive mobile technology companies and Canada as the place you just have to be if you are going to be at the forefront of innovation in mobile computing.” Thorsten Heins, CEO, BlackBerry.
“The life science sector in Canada is at a vital decision point where half measures are not an option: we must make an informed, long-term commitment either to be a global player in research and innovation or not,” says John Helou, President of Pfizer Canada Inc. “Rejecting an innovative future will have important consequences on Canada and Canadian patients. We call on governments to put in place the right winning conditions and demonstrate a long-term commitment to the innovation process and thereby show Canada has the courage and conviction to build this promising future.”
Deficient strategies for trade success in new markets
Canada’s competitiveness is constrained by a focus on slow-growing, traditional markets. Canada must reduce its dependency upon its usual trading partners and expand its access to new markets in Asia, Africa and South America. Legal access to these markets is but the first step. Canada needs to construct trade strategies that will turn access into success.
“Sheltering our economy and relying on too few markets has contributed to our lack of a world view. There’s no excuse for this, when in fact Canada is one of the most diverse and successful multicultural societies anywhere, and the world is very receptive to doing more business with us. We need to continue Canada’s push to deepen trade links, and provide the resources and policies to support these and future initiatives at all levels of government.” Rick Waugh, CEO, Scotiabank.
“Amidst tough global competition, the Canadian government needs to make a pivot. It can and should play a catalytic role in helping Canadian business better integrate and innovate in high-growth markets. Part of the challenge is to close the awareness gap on both sides. The other part is to ensure that businesses, especially SMEs, have access to ‘linking’ resources, technologies and capabilities. For this, we need focused political leadership, and to work smarter—not just harder. Recent government investments to expand trade commissioner services in critical markets are a good start and should be built on.” Rana Sarkar, President and CEO, Canada-India Business Council.
Internal barriers to trade
Canada is still far from being a barrier-free internal market. Internal trade barriers cost our economy up to $14 billion each year. Canadian business still has to petition governments for the “right” to sell goods and services in Canada. There needs to be a new agreement that will deliver a single, unimpeded marketplace for internal trade, labour mobility and investment.
“The logic of federalism and the plan of Canada’s founders was to use the power of the federal government to create a barrier-free national economy. This goal has never been more important, as populations change and differing levels of economic growth create a pressing need to allow workers and goods to move and relocate easily and with a minimum of red tape,” said Brian Lee Crowley, Managing Director, the Macdonald-Laurier Institute. “Ottawa has the duty, power and responsibility to remove trade barriers between Canadians.”
Uncompetitive travel and tourism strategies
Through a combination of high transportation costs and steadily reduced marketing efforts, Canada has slipped from seventh place among the world’s tourism destinations to 18th place in just a decade. A huge industry, critical in every region, is struggling with its competitiveness and needs public policies that are forward-looking and supportive.
“There is an opportunity to drive export activity and create jobs by increasing international travel to Canada, but this won’t occur without public policy fixes,” said David Goldstein, President and CEO of the Tourism Industry Association of Canada. “Attracting international visitors requires competitive investment in international marketing and aviation policy freed from excessive taxes, fees and levies.”
Lack of access to capital
A critical element of business competitiveness in any industry is access to capital—be it through venture capital or through foreign direct investment. Canada must support a sustainable private-sector led venture capital market and increase its appeal to foreign investors.
“Canada is home to many creative idea generators and entrepreneurs, money and financing, primarily venture capital is required for the dream to be converted to jobs and economic opportunity,” said Jim Oosterbaan, President and CEO, NGX. “Recent efforts by the federal and provincial levels of government to provide support to venture capital are welcome, but more needs to be done yet for our nation to realize its potential. This is not just about providing money but about implementing policies that provide long term stability for business investment.”
The Canadian Chamber of Commerce is the vital connection between business and the federal government. It helps shape public policy and decision-making to the benefit of businesses, communities and families across Canada with a network of over 420 chambers of commerce and boards of trade, representing 192,000 businesses of all sizes in all sectors of the economy and in all regions.
Consult the Canadian Chamber’s Top 10 Barriers to Competitiveness document.