May 6, 2004.

PRESENTATION TO THE POLICY & FINANCE
COMMITTEE

“THE DEVELOPMENT CHARGES PROPOSAL AND THE NEED TO
KEEP TORONTO COMPETITIVE FOR INDUSTRY”

We thank you for the opportunity to make this presentation regarding Development Charges – a topic of considerable concern to our membership.

BACKGROUND

The Toronto Industry Network represents a wide range of manufacturing companies with more than 27,000 direct employees and 80,000 associated employees in the City of Toronto. Manufacturing is still an important activity in Toronto. The Canadian Labour Congress in a recent study stated that approximately 20% of the City’s labour force works in manufacturing. Through our products and services, we support a much broader employment base in the GTA and the rest of Ontario.

COMPETITIVENESS

While Toronto and the GTA enjoy a competitive geographical advantage because of the region’s close proximity to major North American markets as well as its own critical mass of suppliers and consumers, Toronto’s industries are facing growing competition from not only North American sources but also in places such as the Pacific Rim. Many companies here must compete internally with sister facilities domestically and internationally for product mandates.

Cost containment is an ongoing struggle for most industries. There are the direct costs of production such as labour, energy, materials and plant infrastructure plus the non-production costs such as taxes.

As you know the Province raised corporate taxes by 3% this year and removed the cap on commercial/industrial property taxes. The City will raise taxes it charges industry by 1.5%. Further the city is increasing water rates 6% annually for the next three years. Most of this increase is borne by large industrial water users that will not benefit from the infrastructure improvements paid for by the increases. The City is becoming less competitive for industrial activity.

Layered on these considerations, are the continuing and pressing issues of transportation gridlock which affect just-in-time shipments, the growing shortage of skilled workers, the uncertainty surrounding electricity reliability, availability and price and finally, the choking government over-regulation of industry.

The City must increase its competitiveness to retain existing industry that will face the decision in the next five years to re-invest and to attract new industry to Toronto.

DEVELOPMENT CHARGES

One of the few advantages Toronto has over its GTA neighbours is its lack of Development Charges (DCs). To implement DCs will discourage new plant construction and existing plant expansions. While provincial regulations prohibit the levy of DCs on plant expansions not exceeding 50% of the existing floor area, we are not confident that this provision will remain in place. It is hard to justify the business case for plant construction in an existing, serviced industrial area when DCs become part of the equation.

The amount of revenue the City could generate from applying DCs to industry does not justify the risk of losing industrial development. There are enough pressures for industry in just trying to stay competitive.

We thank you for your attention and urge the Committee to reject the implementation of Development Charges.