Is Canada Ready to Play in the Big Leagues in Attracting Investment?

Transcription

1 Investing in the Chemical Industry: Is Canada Ready to Play in the Big Leagues in Attracting Investment? Presentation to: Public Policy Forum By: Richard Paton, President

2 The Chemical Industry Globally: Who We Are A $2.4 trillion (Cdn.)global sector Typically found in large clusters, e.g. Germany, Rotterdam Canada s share is just over 1% of global industry

3 The Chemical Industry in North America: A $700 billion industry Who We Are Investing $40 to $50 billion annually in new plants and processes Concentrated in US Gulf Coast, Mexican East Coast and in Canada, in Alberta, Sarnia and Montreal East

4 The Chemical Industry in Canada: A Keystone of the Economy Chemistry Discovery and Innovation Better Products Social and Economic Benefits Improved Quality of Life

5 The Industrial Chemical Industry in Canada: A $16 Billion industry Who We Are 30% more productive than US based chemical industry Excellent supply of knowledge workers An attractive employer: average salaries now about $60,000 But, Canada currently winning only 5% of new investments

6 The Chemical Industry in Canada: What Does Canada Offer? Good feedstock supply at very competitive costs Competitive energy costs Productivity Operating Costs excellent Flexible trained workforce Fiscal and Economic Environment Links to Other Sectors Critical/Good( Clustering) Existing Facilities Well-Managed with room to grow For more info:

7 The Chemical Industry in Canada: Our Vision Increase our share of North American investments to 10% of annual spending on new projects, or about $4 to 5 billion annually Be at the top of the list when considering North American investments Be known as one of the most responsible places to invest, consistent with our leadership in Responsible Care

8 The Chemical Industry in Canada: Key Factors Influencing Investment Decisions Energy and feedstock supply and costs Location and transportation Corporate taxation Plant construction costs Plant permitting regulations

9 The Chemical Industry in Canada: Taxes Energy Transportation Regulatory regime Issues

10 The Chemical Industry in Canada: Issues Taxes Some good changes, but more needed that applies directly to manufacturing industry Like other sectors, we need either a reduction in corporate taxes or the elimination of capital taxes Provincial reductions will create our advantage-broader federal reductions would magnify them

11 FIRST REDUCTIONS SCENARIO - CORPORATE TAX COMPETITIVENESS MODEL - RESULTS SUMMARY 100% 90% Comparison to Louisiana effective tax ratio 80% Effective Tax Ratio* 70% 60% 50% 40% 30% 20% 10% 0% AB BC ON QC LA TX * present value of taxes divided by present Sum of: Health, Payroll and Sales Taxes value of net cash flow before taxes Property Taxes Capital Taxes Income Taxes

12 MATURITY SCENARIO - CORPORATE TAX COMPETITIVENESS MODEL: RESULTS SUMMARY 100% 90% Comparison to Louisiana effective tax ratio 80% Effective Tax Ratio* 70% 60% 50% 40% 30% 20% 10% 0% AB BC ON QC LA TX * present value of taxes divided by present Sum of: Health, Payroll and Sales Taxes value of net cash flow before taxes Property Taxes Capital Taxes Income Taxes

13 The Chemical Industry in Canada: Issues Energy Recent NEB decisions have led to greater flow of gas and liquids to US Increased demand and limited drilling have have raised questions about future growth potential East coast gas provides new petrochemical opportunities

14 The Chemical Industry in Canada: Issues Transportation Rail competition issues under Canada Transportation Act need to be addressed Shipping Conferences Exemptions Act needs to be passed Port of Vancouver: need mechanisms to avoid labour shut downs, confidence that they are not needed

15 The Chemical Industry in Canada: Issues Regulatory New substance notification- currently getting worse, not better Plant permitting systems and harmonization- need to improve coordination with provinces Supply of building trades

16 The Chemical Industry in North America: What Canada Must Do Governments and departments must work as a team to reduce irritants Need to appreciate the importance of US market and linkages to US parent companies to new investment Act on important legislation as well as minor irritants to minimize barriers to growth and trade Communicate importance of investment

17 The Chemical Industry in North America: What Industry Can Do Provide specific examples of investment opportunities Work in partnership with government to solve issues and remove barriers Communicate messages from government to industry members

18 The Chemical Industry in North America: To Play in the Big Leagues... If Canada is really serious about winning new investment, then the federal government should be making investment a priority- beginning with the Speech from the Throne Industry Canada should have the lead in identifying the legislative, regulatory and policy impediments to being the investment country of choice, but all departments need to be involved The Federal Government needs to look at key areas like energy and move into an active role Canada needs to make our US trade relationship its #1 priority