Top 10 barriers to competitiveness for 2013: Canadian Chamber report

Skills shortage, barriers to energy markets and workforce productivity top list.

Comments Off February 12, 2013
by Design Engineering Staff

The Canadian Chamber of Commerce unveiled its Top 10 Barriers to Competitiveness, impediments the chamber feels are stymieing Canada’s progress internationally.

Combat Skills Shortage: As it was 2012, Canada’s skills shortage topped the list again this year. According to the Canadian Chamber, governments and businesses need to focus their efforts in upskilling the under-employed, immigration policies, education-employment alignment and Aboriginal education and workforce development.

Diversify Energy Markets: At number 2, the chamber report says Canada is overly dependent on the U.S. oil market. Instead, it recommends that Canada develop foreign markets, particularly in Southeast Asia, to take advantage of higher world crude prices compared to depressed North American crude prices.

Boost Productivity: While improvements have been made, the chamber says Canadian businesses are still weak in terms of utilizing advanced technologies. According to the Bank of Canada, Canadian workers have only about half as much machinery, equipment and information technology to work with as their American counterparts. In addition, the chamber says Canada should support efforts to raise literacy and numeracy levels among workers as only 47 percent of Canadian workers in mature industries possess the Level 3 literacy skills needed to adopt new technologies and adapt to new work responsibilities.

Improve Public Infrastructure Planning: At number 4 on the list, the report says Canada has not maintained its investment in infrastructure, leading to approximately 30 per cent of municipal infrastructure to be rated as “at risk”. To remain competitive, the report advocates that Canada develop a long-term infrastructure investment strategy that, “includes workable funding models and increased private sector involvement.”

Simplify Tax Structure: According to the chamber’s report, Canada’s tax system is overly complex and is over-reliant on income and profit taxes. It advocates a comprehensive review of the tax system to simplify its structure and make it “fair and growth-oriented.”

Improve Innovation Performance: The chamber says Canada lacks a definitive innovation strategy and laments the 25 percent cut in the SR&ED tax credit program last year. Instead, the report says Canada needs stronger IP laws, copyright protections and an R&D incentive program that isn’t biased toward Canadian-owned SMBs.

Diversify Markets: Canada must reduce its dependency upon its usual trading partners and expand its access to new markets in Asia, Africa and South America, the report argues.

“Sheltering our economy and relying on too few markets has contributed to our lack of a world view,” says Rick Waugh, CEO of Scotiabank. “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.”

Remove Internal Trade Barriers: In addition to international markets, the report says Canada still suffers from internal trade barriers, which are estimated to cost the economy up to $14 billion annually. Instead, the report advocates a single, unimpeded marketplace for internal trade, labour mobility and investment.

Increase International Tourism: Through a combination of high transportation costs and reduced marketing efforts, Canada has slipped from seventh place among the world’s tourism destinations to 18th place in just a decade, the report states. To combat the problem, the chamber advocates lowering air travel costs, rebating the value-added tax and boosting tourism marketing.

Improve Access to Capital: While Canada has large, stable institutional inventors, the report laments the dearth of venture capital in Canada. According to Thomson Reuters, 444 ventures received only $1.5 billion in 2011, compared to $5.9 billion invested in 1,007 start-ups in 2000 at the height of the dotcom boom/bust. To remedy the situation, the report advocates establishing a tax credit for angel investment.

The full report, “Top 10 Barriers to Competitiveness,” is available on the Canadian Chamber web site (PDF link).
www.chamber.ca