As agriculture minister Lyle Vanclief settled in for dinner, a gab session and an evening of lobbying at Singapore’s Club Chinois, he had a job to do.
He had been told by his bureaucratic advisers for this Asian business promotion trip that this well-heeled crowd of business people were prime candidates to invest some of their loot in Canadian food manufacturing and production firms.
But first, they had to be convinced Canada knows how to treat its foreign investors well.
Like many Canadians, these Singapore tycoons – “there are a few billionaires in the group,” his briefing notes said – were worried about Canada’s tax policies.
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In background instructions for the minister, obtained through access to information rules by Ottawa researcher Ken Rubin, Vanclief was urged to meet the issue squarely.
“The High Commission has noted that taxation issues may be a popular question during the dinner,” the minister was told.
Vanclief began by singing the praises of Canada. It has a strong and growing economy, natural resources, skilled workers and access to the lucrative United States market through the North American free trade deal.
But what about taxes?
He leaned on Ottawa’s favorite consulting firm, KPMG, for the answer.
Its researchers had studied the relative cost of doing business in Canada, the U.S. and five European countries and guess what? “Canada is the lowest-cost country overall as well as the lowest cost country in the food processing sector.”
In the agri-food sector, Canadian costs are 3.8 percent lower than in the U.S., he said. The implication was that these savings will go right to the bottom line if those cheaper goods are sold into the American market.
Lest there remained skeptics in the audience who had listened too often to the high-tax horror stories peddled by Canada’s business lobby, Vanclief got down to specifics.
Canada has the lowest electricity and telecommunications costs. “As well, Canada’s labor, income tax rates and research and development tax incentives are all highly competitive.”
Then, as the clinching points, Vanclief noted that unlike some other countries, Canada does not impose restrictions on “the reparation of profits.” Make it here and you can invest it or spend it anywhere.
And among the G7 most-industrialized countries, Canada has the most generous business subsidies in the research and development field.
It may seem ironic that a Canadian politician from the farm in Belleville, Ont., had to spend an evening rubbing elbows and promising incentives to a roomful of billionaires and multi-millionaires.
But that’s how the game is played in an era when global businesses ride high, capital is mobile, governments are desperate for investment and national rules are irritants to be bargained.
It is difficult to remember that little more than a political generation ago, the national debate was about how to restrict and screen foreign investment to make sure it was in the national interest.
These days, politicians and governments believe the answer is self-evident and they are prepared to show the color of their money to prove it.
