PRESENTATION TO THE POLICY & FINANCE COMMITTEE ON THE ENHANCING TORONTO’S BUSINESS CLIMATE PROPOSALS
- Thursday, October 20, 2005

The Toronto Industry Network thanks this Committee for the opportunity to depute regarding the very important issue of enhancing the City’s competitiveness. Further, we commend the Mayor for his initiative in bringing forward this debate and City staff for laying out options and recommendations.

Manufacturing Decline
The manufacturing sector continues to decline in our City. Urban Development’s Employment Report tells us that in 2000, manufacturing provided 14.8% of the City’s employment and this has dropped to 13.4% in 2004, a change of 9.5%. The number of manufacturing establishments shows similar trends. From 2001 to 2004, there has been a loss of 600 establishments or 10.2%. Think of the companies that are no longer part of our fabric – Labatt’s, Kodak, Imperial Oil headquarters, Colgate-Palmolive, DRG Packaging and so on.

Statistics are dry, impersonal things. Jobs and people’s futures are not. For a long time, jobs have been fleeing our City, mostly to the 905 regions. Manufacturing jobs require workers who are educated and skilled and can pay more than $70,000 plus benefits annually for experienced workers. TIN members employ about 35,000 full-time employees and this activity generates an additional 85,000 jobs amongst suppliers and direct customers. When a manufacturing job is lost, there is a ripple effect felt.

Why Companies Leave
Why is manufacturing leaving Toronto when this City is supposed to be so competitive against other jurisdictions in terms of labour, amenities, public transit, livability, etc? There are a lot of factors such as: international competition; uncertain and expensive energy supplies; competition from the 905s and places such as Alberta; the high and rising cost of industrial land in Toronto (because of the conversion potential); the uneven playing field with the 905s caused by provincial policies; and, the high cost of City government. Some of these issues that are common with the 905s the City cannot control but others are well within its grasp to change.

Usually, no one factor will compel a company to relocate but it is the layering of factors that force the issue. Reinvestment in an aging plant is one of the main decisions that a company will have to make. How does the Toronto location stack up against the 905s or elsewhere?

Here is a précis of TIN’s response to the Enhancing Toronto’s Business Climate paper:

Tax Ratios
Toronto must bring its tax ratios in line with the provincial average in order to be more attractive to new business investment. The 15-year timeframe represents taking baby steps when we really need to take giant paces to make change. We believe a five-year window is sends a message of commitment and we urge that there be a property tax freeze until the proper ratio is achieved. The City urgently needs more industry to generate additional tax revenue and to share in the expenses. We support the concept of a lower tax rate to apply to new industrial construction.

Cost Cutting
The City has to reduce its costs. The current situation, excluding provincial issues such as the Business Education Tax, is unsustainable. We note that manufacturing has had to undertake significant economies during the past decade, which has made many companies stronger and more competitive.

Business Education Tax
We support the City’s position that the BET be brought into line with the rates levied in the GTA. However, we suggest the City could strengthen its arguments in this regard in dealing with its own costs.

Fees/Permits, Approvals, New Sources of Revenue, Industrial Lands, Business Forum
Fees and permits seem to be taking the place of development charges. There is an opportunity for the City to waive fees for new industrial development. The current approvals process for industry should be fast-tracked so that existing industry can compete more effectively for time-sensitive projects and new plants can be located here expeditiously.

The City should examine new sources of revenue. Industrial lands are becoming too expensive for industry because of non-industrial competition. TIN supports a comprehensive approach to keeping employment lands industrial. Besides a Mayor’s Roundtable on Business, the City really needs to improve internal communications regarding policy development and regulation for business.

Conclusion
The Toronto Industry Network is very pleased to be part of this consultative process. Our comments are made not only in the context of enhancing industry’s position in Toronto but also with a view to making our City great again. We recognize that what we are proposing will be difficult to implement but without a drastic overhaul of its tax structure and operations, Toronto will continue to decline. Does Toronto need to become like New York was 20 years ago or Detroit is today?

With the changes to the City of Toronto Act and other new measures, comes an opportunity for Toronto Council to make a real difference. We believe time is of the essence and that the City must make decisive policy decisions that will support industry. Stretching out what has to happen now over 15 years sends the wrong message to industry.

Industry has a very real stake in making Toronto successful again. It is not only the investment reflected in the manufacturing infrastructure, it is the stake thousands of Torontonians, employed by industry, have in the future of their City.

Toronto Industry Network Per: Paul Scrivener