Ontarians need to overcome complacency and act now to achieve future prosperity potential



    Task Force on Competitiveness, Productivity and Economic Progress urges
    Ontario Government and all Ontarians to move forward on the 2020
    Prosperity Agenda

    TORONTO, Nov. 19 /CNW/ - As Ontario's Government begins its new mandate,
it has a great opportunity to redouble its efforts at tackling a Prosperity
Agenda to reach Ontario's economic potential by 2020. Ontario is one of the
most prosperous and competitive jurisdictions in the world, especially among
those outside North America. But we're not living up to our full potential,
and Ontarians need to shift their attitude from a collective complacency to a
shared determination to achieve this potential. The Task Force on
Competitiveness, Productivity and Economic Progress in its Sixth Annual
Report, Path to the 2020 Prosperity Agenda, released today at the Canadian
Business Outlook 2008 Conference, proposes the 2020 Prosperity Agenda as a way
of invigorating the debate.
    In new research released today, the Task Force confirmed that Ontario's
economy is one of the world's most successful when compared to similar regions
outside North America. Ontario's Gross Domestic Product (GDP) per capita ranks
third among a peer group of 15 most populous and prosperous international
regions.(*) But against a similar set of North American jurisdictions(xx)
Ontario continues to fall further behind. Two decades ago, Ontario stood close
to the median of the 14 most populous US states and Ontario and Quebec. It now
stands second to last. This gap represents lost prosperity, which negatively
affects Ontarians at all income levels. In its Report last year, the Task
Force set out an Agenda for achieving this potential by 2020. This year, the
Task Force identifies the key first steps to put Ontario on the path to
achieving this Agenda.
    The Task Force, a group of industry and academic leaders, chaired by
Roger Martin, Dean of the Rotman School of Management, was established in 2001
to stimulate businesses, governments, educational institutions, and
individuals to increase the pace of innovation and competitiveness. That will
ensure a continuing increase in our standard of living.
    In Path to the 2020 Prosperity Agenda, the Task Force reports that
Ontario's GDP per capita is now $6,000, or 12 percent, behind the median of
the 16 jurisdictions, up from the 2005 gap of $5,500 in constant dollars
(2006). GDP measures the value created by workers and firms in Ontario from
the human, physical, and natural resources in the province.
    "Closing this gap is not an unrealistic aspiration. As recently as twenty
years ago, we were in the upper half of our peer group," added Martin.
    The Task Force concludes that Ontario's competitiveness is important for
the average Ontario family. Its research shows that, if we met our prosperity
potential, families would gain $8,600 in disposable, after tax income - every
year. It also indicates that families across the income spectrum are affected
by our unfulfilled prosperity potential. As Ontario's prosperity gap widened
through the 1990s, Ontario's high- and middle-income families fell behind
their US counterparts. Traditionally, lower income Ontarians have outperformed
their counterparts - but this advantage is fading as we fall further behind
the US peers in overall prosperity.
    Governments in Ontario would also generate an additional $27 billion in
tax revenue, an amount that could fund important social and capital
investments.
    Lagging productivity continues to be the biggest barrier to closing the
gap. The Task Force points out that productivity growth is more than improved
efficiency. According to Martin, "more important, we need to create more value
that customers want in our products and services. That requires innovation and
upgrading - such as has occurred in the Ontario wine industry with the
development of high value ice wine and its consumer acceptance around the
world."
    "We were hoping that competitiveness and prosperity issues would be more
important in the recent provincial election," said Martin. "But, as the
Government charts its course in its new mandate, we're optimistic that it will
take them up as important areas to address."
    The Task Force is proposing a wide range of initiatives to encourage and
support innovation, but is placing special emphasis this year on tax changes
as the Government prepares its first budget.
    A priority is to build a smarter tax system to raise motivations for
businesses to invest. Canada and Ontario have among the highest tax rates on
business investment in the world. The Federal Government is taking dramatic
action to give Canada an environment more conducive to business investment.
Its recent economic statement puts in place significant reductions in
corporate income tax rates. Ontario needs to follow suit. It also needs to
speed up the demise of the capital tax, currently scheduled to end in 2010.
"In the scheme of things, these are easy changes to make," said Martin. "But
the Province needs to take bold action in addressing a major weakness of our
tax system and replace our provincial sales tax with a value added tax and
then harmonize its collection with the Federal GST. Our research and the
research of others show that this move would stimulate investment and create
jobs better than any other tax reform."
    Tax changes would help lift Ontario's anemic business investment in
productivity- and wage-enhancing machinery, equipment, and software. But we
also need initiatives to welcome more robust business competition and ways to
ensure highly capable managers are leading the pace.
    The Task Force continues to urge Ontarians to increase their investment
in education. Its research in the area of poverty points to the importance of
a high school diploma and other formal skills. At the post secondary level,
the Task Force urges an examination of the balance between research and
student experience in our universities. "We've built a solid research
capability in Ontario's universities," said Martin. "But there's evidence that
the day-to-day experience of students may be suffering from crowded classrooms
and unavailable professors. We need to understand the tradeoff better."
    In summary, Martin said, "We are calling for a shifting of our overall
attitude from collective complacency to a shared determination to close the
prosperity gap. Let's take pride in what Ontarians have accomplished; but
let's acknowledge we could do better and put ourselves on a path to achieving
our prosperity potential."

    
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                     Path to the 2020 Prosperity Agenda

    Attitudes: Accept the challenge; overcome complacency
      -  Government, business, labour, and community leaders need to turn up
         the volume on the importance of prosperity and productivity and
         prosperity

    Investment: Focus on people and technology
      -  Invest in focused and innovative ways to fight poverty
      -  Raise awareness among all Ontarians of the benefits of education
      -  Continue investments in post secondary education
      -  Assess the tradeoff between research and the student experience in
         our universities
      -  Step up business investments in information and communication
         technology

    Motivations: Pursue smarter taxation
      -  Convert the provincial sales tax to a value added tax harmonized
         with the GST
      -  Remove the capital tax immediately
      -  Reduce corporate income tax rates
      -  Continue attacking high marginal tax rates for lower income
         Ontarians

    Structures: Place a premium on creativity and innovation
      -  Focus venture capital efforts on quality, not quantity
      -  Continue to expand innovation policy to include building management
         capabilities
      -  Pursue the reduction of barriers to investment and trade

    -------------------------------------------------------------------------
    

    The complete report can be downloaded directly from:
    http://www.competeprosper.ca/index.php/work/annual_reports/annual_report_
6/

    About the Task Force

    The creation of the Task Force on Competitiveness, Productivity and
Economic Progress was announced in Ontario's April 2001 Speech from the
Throne. Roger L. Martin, Dean of the Joseph L. Rotman School of Management at
the University of Toronto, is the Chairman. The mandate of the Task Force is
to measure and monitor Ontario's competitiveness, productivity, and economic
progress compared to other provinces and US states, and to report to the
public on a regular basis. Members of the Task Force were announced on October
17, 2001. See www.CompeteProsper.ca for further information.

    About the Institute for Competitiveness & Prosperity

    The Institute is an independent not-for-profit organization established
in 2001 to serve as the research arm of Ontario's Task Force on
Competitiveness, Productivity, and Economic Progress. The Institute and the
Task Force are supported through the Ministry of Economic Development and
Trade.

    
    (*) Ontario's 14 international peer jurisdictions outside North America

    - Baden-Wurttemberg       - Kanto (Japan)           - Randstad
      (Germany)                                           (Netherlands)
    - Bayern (Germany)        - Kinki (Japan)           - Rhône-Alpes
                                                          (France)
    - Cataluna, (Spain)       - Lombardia (Italy)       - South East (UK)
    - Comunidad de Madrid     - New South Wales         - Viaamse-Gewest
      (Spain)                   (Australia)               (Belgium)
    - Hessen (Germany)        - Nordrhein-Westfalen
                                (Germany)

    (xx) Ontario's 15 peer North American jurisdictions
         (14 US states and Quebec)

    - California              - Massachusetts           - Ohio
    - Florida                 - Michigan                - Pennsylvania
    - Georgia                 - New Jersey              - Quebec
    - Illinois                - New York                - Texas
    - Indiana                 - North Carolina          - Virginia
    





For further information:

For further information: James Milway, Executive Director of the
Institute for Competitiveness & Prosperity at (416) 920-1921 ext. 222

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INSTITUTE FOR COMPETITIVENESS AND PROSPERITY

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