Are Canadians the business world's biggest slackers?

Last Wednesday, the Rotman School of Business hosted the Canadian Business Magazine's Outlook 2007 conference. What were the topics discussed? How to become a high performance business by Accenture Managing Director, Bill Morris; Finding opportunity when the business game you are in changes by John Shackelton, CEO of Open Text; Predictions for Canada's economy in 2007 which brought together economists and a business writer; and, Canada's prosperity gap by Dean Roger Martin.

While all four presentations offered insight into Canadian business, it was Dean Roger Martin's presentation on Canada's prosperity gap that I found most compelling. As many of Gagglescape's readers know, Martin is a leading authority on the value added benefits design thinking brings to business. His research suggests that design is the next big business paradigm. Martin uses his insight into the global business environment along with some strict quantitative analysis to help us understand Ontario's prosperity gap.

What is the prosperity gap? Simply put, it is the difference in GDP per Capita between a group of 16 otherwise comparable jurisdictions. Ontario is 12.4% below the median in this group. Why care? Well, that difference means that we have about $8,000 less per year in disposable income that could go to paying off mortgages or funding an offspring's education, for example. That hurts.

What are the causes of this gap? Some have to do with our business leader's propensity for taking time off. Well-to-do Canadians, it seems, take significantly more time off than do their U.S. counterparts. Taxes also play a part in the disparity. According to Martin - and he pulled no punches - Ontario could not go out of its way to devise a more business unfriendly, non-competitive taxation system. "Taxing businesses at high rates is just counterproductive," says Martin.

What are some of the key steps Ontario's policy makers can take to improve our competitiveness?

1. Increase investment in machinery and equipment, particularly information and communications technology.

2. Increase capital cost allowances to match economic depreciation.

3. Eliminate the capital tax in Ontario.

4. Convert provincial sales tax to value added tax.

5. Improve the quality of venture capital

While there are more steps Martin recommends (see them here), I'd like to take one moment to look at the last point. In his talk Martin emphasized that we have to look at the economic environment using dispassionate analytic tools. Many, he said (and include me in this group) say that Canadian VCs are underperforming. According to Martin, that is not true. Canadian VCs are investing proportionately to their U.S. counterparts. My experience in the Toronto market does not validate Martin's view and it may be that his analysis is based on the entire Canadian sector which would equalize outliers like Toronto.

So, are we the business world's biggest slackers? Based on our delight in taking time off, yes. However, other indicators suggest that given a globally competitive taxation system as well as some fine-tuning of our regulatory infrastructure, we can compete with the best the world can offer.