When it comes to doing business, Canada may not be as friendly as it once was.
Thirty or forty years ago, whenever my company opened a new manufacturing facility or R&D centre in southern Ontario, municipalities would bend over backwards to help us — offering everything from widening the road to installing new traffic lights. In the U.S., job-hungry local and state governments would go even further, promising major tax incentives and free land if we chose to locate there.
But the business-friendly environment that existed in Canada years ago has largely vanished. Instead, businesses looking to open a store or factory get slapped with piles of paperwork and never-ending fees. I’ve been trying to get a business operation up and running for over a year now in the region north of Toronto where my family lives.
Even though the project has received the green light to proceed, I’m constantly amazed at how often there are holdups, as well as requests to fill out forms and fork over added charges. Businesses get doubly hit: first in the pocketbook, with all of the extra costs and fees, and then again as a result of costly delays that keep products and services from coming to market.
I’m committed to seeing the operation through to completion, but would you blame a business that decided it wasn’t worth the time, money and hassle and located elsewhere?
More than 13,000 people left Canada for good in the first quarter of this year, up 42 per cent from the same quarter the previous year. Some of those Canadians who left took their small businesses with them. Several years ago, one of Canada’s largest companies — Encana — moved its head office to Denver from Calgary. But a lot of times, no one hears about the businesses that close up shop or quietly leave for greener pastures, often leaving behind employees without a paycheque.
Businesses everywhere are signalling that they are no longer willing to continue operating in jurisdictions that are overly bureaucratic, inflexible and punitive in terms of taxation and regulation. Politicians have let the bureaucrats run rampant, but governments have also added to the high costs and uncertainties that business must deal with.
In California, there’s been an exodus of companies fleeing the highly taxed, overly regulated state. Tesla, Hewlett-Packard and Oracle all left for Texas, where there is no personal or corporate state income tax and fewer restrictions and regulations. More significantly, many of the companies that fled the Golden State were high-tech start-ups.
Meanwhile, in New York City, companies such as Goldman Sachs and Blackstone, the giant real estate investment group, are packing up and seeking a more business friendly climate in Florida.
What all of these companies have in common is a desire to operate in a more pro-business environment — one with lower taxes, less punitive regulations, and a lot of room to grow and expand. Businesses bring jobs, and jobs help swell government coffers.
It’s no coincidence that the poorly managed cities and states businesses are leaving behind are also running deficits, while the states these businesses are moving to boast massive budget surpluses. Florida this year posted its biggest surplus ever.
Canadian businesses that were already weighed down with regulations and restrictions were dealt another blow the past two years by the pandemic and government’s ham-fisted response. The pandemic resulted in a large number of business closures and bankruptcies. Perhaps the biggest detriment many businesses faced was the climate of uncertainty. The on-again, off-again lockdowns and mandates dried up revenue and made employee retention nearly impossible. In hindsight, our response to the pandemic was overdone.
So how do we fix the problem? We can create a more business-friendly climate by cutting taxes, getting rid of nickel-and-dime surcharges and levies imposed on development, and streamlining and simplifying regulations. But governments can also do more to encourage businesses to open up shop, start a business and hire employees.