TORONTO, Nov. 6, 2013 /CNW/ - After several years of relatively robust
performance, Canada is lagging its peers in business investment growth,
according to a new report by the C.D. Howe institute. In "Equipping
Canadian Workers: Business Investment Loses a Step against Competitors
Abroad," authors Benjamin Dachis and William B.P. Robson find 2013
growth in new private-sector plant and equipment spending per worker in
Canada seems likely to lag investment abroad, with strength in the more
natural-resource-oriented provinces offset by weakness in Central
Canada and the Maritimes.
"Business investment is a fundamental driver of economic growth and
rising incomes," said William Robson, "Canada has improved its
standing, but the more serious setbacks in other countries after the
financial crisis flattered our relative performance. We need supportive
national policies, and improvements in the provinces that are lagging,
to give Canadian workers the tools they need to compete against the
best in the world."
After decades of investing far less per worker than counterparts abroad,
Canadian businesses improved their standing after 2009, according to
the authors. By 2012, they had surpassed the OECD average and closed
the gap with the United States. In 2013, however, Canada's per-worker
tally will likely fall to 96 cents per dollar invested in the United
States and slip to 107 cents per dollar invested across the OECD from a
2012 peak of 108 cents.
"Changes in tax and regulatory policies can help move lagging provinces
and Canada as a whole back to a leading position," said Benjamin
Saskatchewan and British Columbia experienced robust investment over the
past five years, but recent figures show investment slipping in both
this year. Growth also appears to be flagging in Alberta, where 2013
investment is forecast to be about the same as in 2012. Newfoundland
and Labrador stands out for continued investment strength, with a
projected large per-worker increase in 2013.
Among less commodity-driven provinces, Manitoba looks set to do well in
2013. Unfortunately, the story in Central Canada is one of continued
underperformance. Ontario workers continue to get only 62 cents for
every dollar US workers receive. Levels in Quebec are better, but
appear to be slipping after an uptick in 2011 and 2012.
The Maritime Provinces in general are not doing well. Nova Scotia seems
likely to improve, but from a very weak performance in 2011 and 2012.
New Brunswick has shown a declining trend for many years, and the
average worker in Prince Edward Island, once again, appears likely to
get only about 50 cents of new investment for every dollar the average
US worker gets.
The authors highlight the impact of taxes on new business investment,
noting that British Columbia's replacement of its Harmonized Sales Tax
this year with a less investment-friendly retail sales tax may help
explain its 9 percent drop in investment per worker in 2013. They also
emphasize that business property taxes in many provinces are likely
major inhibitors of investment in structures.
For the report go to: http://www.cdhowe.org/equipping-canadian-workers-business-investment-loses-a-step-against-competitors-abroad/23390
SOURCE: C.D. Howe Institute
For further information:
Benjamin Dachis, Senior Policy Analyst, or William B.P. Robson, President and CEO, C.D. Howe Institute, 416-865-1904; email: firstname.lastname@example.org