[Locked In]

Vancouver ranked fifth among major cities for business competitiveness: report


By Gordon Hamilton, Vancouver SunMarch 31, 2010

Vancouver’s competitive advantage over the major cities of the United States has jumped significantly in the last two years, according to a report by international consultants KPMG.

Vancouver ranks fifth among 41 major international cities in terms of business competitiveness in the report Competitive Alternatives. Two years ago, Vancouver ranked No. 21. The KPMG report examines business competitiveness in 10 industrialized countries. Montreal ranks third and Toronto ranks sixth.

Vancouver’s nearest competitor, Seattle, ranks No. 29.

Of the 10 nations examined in the report, Canada ranked second only to Mexico. The Netherlands was No. 3 and the U. S. No. 8.

Glenn Mair, director of MMK Consulting in Vancouver, a co-author of the report, said in an interview that relatively lower labour, energy and tax costs in Canada were a large driver of the country’s competitive business environment.

Canada’s stronger dollar is not having that big an impact on business costs, Mair said, because of significantly lower costs for labour taxes and energy.

“Over the long term trend, what we see is labour costs in Canada have grown moderately relative to some other countries, particularly the U.S. in boom years. Energy costs in Canada continue to be reasonable or have actually improved compared to some other countries.

“And over the last 10 years, the tax environment in Canada has changed quite significantly with a whole variety of corporate income tax, capital tax and sales tax changes at the federal level and among many of the provinces.

“That has really re-shaped Canada’s tax environment from being a moderate to high tax country 10 years ago to actually being, relatively, one of the lower tax countries among the G7 countries today,” Mair said.

Much of Vancouver’s advantage stems from the overall Canadian advantage, but provincial corporate income tax cuts and the upcoming HST have helped improve the city’s business climate, Mair said.

Those benefits apply to smaller cities in the province, such as Prince George, he said, which as lower business costs than similarly-sized Western U.S. cities. The study also compared 71 other cities with smaller populations.

The study is forward-looking, he said. It measures the costs of establishing a new business in each place over a 10-year time horizon, which accounts for the HST advantage showing up in the report. The business benefit of the HST, which comes into effect in July, is that it is a refundable value-added tax. Mair said all other nations in the survey have refundable value-added tax for businesses, except the U.S. which has non-refundable value added taxes.

The Canadian business advantage boosted Montreal, which was No. 2, and Toronto, which was No. 6.

The survey was among cities with a population over two million in the 10 nations surveyed.

The study uses the four largest U.S. cities, New York, Los Angeles, Chicago and Dallas-Fort Worth to form a baseline of business costs against which business costs in other countries and cities are compared. Those average costs in those four cities are given a value of 100. Vancouver’s rating was 94.9.

Monterrey, Mexico, has the biggest costs advantage, with a score of 81.5. Tokyo, Japan, has the worst competitive advantage at 108.9.

The survey examines 26 cost components like labour, taxes, real estate and utilities.

KPMG managing partner Elio Luongo, said in a news release that Vancouver is positioned to grow because of Olympic Games exposure and growth in Asia. Having a competitive edge over other major other cities is an added advantage, he said.

ghamilton@vancouversun.com

© Copyright (c) The Vancouver Sun

Source: Vancouver Sun