KPMG study says Canada leads the way among G7 nations
Paul Luke
Province
Housing affordability is ‘challenging’ in Vancouver, but B.C.’s metropolis rates well in other areas. Photograph by : Les Bazso file photo – The Province
Vancouver remains Canada‘s costliest city in which to do business, a new study shows.
And if that dubious honour isn’t enough, the declining U.S. dollar has eaten into the city’s previous cost advantage in the Pacific Northwest, according to the KPMG study released yesterday.
The study, which is done every two years, measured 27 business costs in 136 cities across 10 countries.
Vancouver‘s overall cost advantage over Seattle has been whittled down to “a minor 1.3-point lead,” KPMG said.
Housing affordability is challenging in B.C. but the province’s cities rate well on other factors, the study found.
“Although the high Canadian dollar does present challenges, British Columbia enjoys a strong economy with low unemployment, a highly educated workforce including foreign-born professionals and strong GDP growth,” said Elio Luongo, KPMG’s Vancouver managing partner.
Chilliwack is Canada‘s third-most-expensive city in which to do business and Calgary placed second.
Canada maintained its ranking as the world’s second most cost-competitive country to do business in as tax cuts offset some of the impact of the rising loonie, the study found.
Canada ranked only behind Mexico, which was included in KPMG’s Competitive Alternatives study for the first time this year.
The cost of doing business in Mexico is about 20.5-per-cent cheaper than in the United States, which is used as the benchmark indicator for the study.
Of the G7 group of countries, Canada now leads the way, followed closely by the U.S.
The study found the weaker U.S. dollar had helped the U.S. move up four places to rank third, followed by Australia, which previously ranked first. While Canada retained its second spot, the figures showed its cost-competitive edge had narrowed to less than one per cent with these two countries.
France was in fifth spot, followed by the United Kingdom, the Netherlands and Italy. Japan and Germany were at the end of the list as the least cost-competitive places for business.
“With the Canadian dollar at par, Canada is challenged to maintain the competitive edge it once held,” said Mark MacDonald, global director, competitive alternatives at KPMG.
“Canada has to present a clear value proposition to businesses in other areas. One example of this is the federal government’s recent cuts to corporate income tax rates, which are among the lowest for a wide range of operations among countries surveyed.”
Glenn Mair, a co-author in the study from MMK Consulting, said Canada also ranks highly in terms of non-cost factors, such as education. “Canada consistently ranks well when we consider environmental regulation, education attainment, housing affordability, labour force, and energy availability — all of which are important business-location considerations,” Mair said.
The survey found that among major Canadian cities, Montreal and Halifax had the greatest cost advantage relative to comparable U.S. cities.
It found business costs had risen the fastest in British Columbia and Alberta over the past two years, reflecting the western economic boom. Vancouver was still the country’s most expensive city, followed by Calgary and Chilliwack, then Toronto.
The study measured 27 significant cost components that are most likely to vary by location, including labour, taxes, real estate, and utilities, as they are applied to 17 business operations, over a 10-year planning horizon.
© The Vancouver Province 2008