We want to run our business in Ontario. The government is making that incredibly difficult
Hydro costs and crushing taxes almost pushed us to pick up and move
I've long been proud to call Ontario my home, but unfortunately, it's an increasingly challenging place to do business.
I'm the managing director of a bio-tech company that manufactures a proprietary antimicrobial copper alloy that kills dangerous bacteria and hospital-acquired infections such as MSRA and C. difficile. We are well capitalized and growing quite quickly, looking to build a new facility. Ontario should be the easy choice.
But it isn't an easy decision. At all. The Ontario government makes it incredibly difficult to do business here. The news that Procter & Gamble is shuttering its Brockville, Ont. plant — laying off 500 workers — is just the latest evidence of that.
The first problem, of course, is the cost of energy. The rising cost of residential power has been discussed to death elsewhere; Ontario's Liberal government recently announced a 17 per cent cut to bills to try to undo some of the damage (too little, too late for those business that have already shuttered) though according to a report from the financial accountability officer, the province will actually spend $45 billion on the scheme to save $24 billion.
Then there's the issue of tax competitiveness. As a bio-tech company, our workers are highly educated, mobile and always in demand. Crushing provincial income taxes make retaining our talent an incredible challenge. It keeps me up at night. Ontario businesses must fight the tech brain-drain to other markets such as Silicon Valley and Israel already. We need a government that helps Ontario companies retain talent, not one that makes it more difficult by virtue of an ever-increasing tax liability.
- Procter & Gamble to close Brockville, Ont., plant
- Liberal hydro plan to cost $45B but will only save electricity ratepayers $24B
The list goes on. The high cost of real estate in the Greater Toronto Area — both for our employees to live and for our facility to exist — is a major disincentive to invest here, and one that is exacerbated by land transfer fees on both residences and commercial properties (Ontario hiked commercial land transfer fees by a third late last year).
And then there's the politics. In recent years, the Wynne government has been eager to "invest" in all kinds of businesses that really didn't need any additional help beyond a level playing field and fairly applied rules. Handouts from governments looking to shore up their support are great if you're receiving the cheque. But if you don't win the government largess lottery, you can find yourself competing against not simply another group of savvy entrepreneurs, but savvy entrepreneurs backed by a provincial government that now has skin in the game.
Paying off the debt
The Liberals have been in power since 2003. The saying "power corrupts, and absolute power corrupts absolutely" comes to mind. The countless "mishaps," which led to billions of dollars lost, seem so surreal to private business owners, and it is so discouraging to try to thrive in a province where leadership has no concept of the value of a dollar.
In keeping with that theme, the Liberals have also run up Ontario's debt — more than doubling it in their time in office — leaving the province as the most indebted sub-sovereign borrower in the world. Someone's going to have to pay for that debt eventually, and Ontario's business leaders have a sneaking suspicion it'll be them.
Sticking with Ontario
After months of considering Ontario locations for our facility, we began looking at other options, including parts of the American Rust Belt desperate to attract businesses. Taxes are low, power cheap, and the incentives — including sometimes literally cash incentives — were hard to ignore.
But we've chosen to stick it out in Ontario. After considering what I've written above, you might think we are either crazy or stupid — perhaps both. But there's a method to our madness. Some of the reason is purely sentimental. My partners and I want to raise our families in Ontario, and we want to help provide high-quality, well-paying jobs in our province. There's also the issue of uncertainty right now in the United States — the hard work by states is being offset by concerns about the future of NAFTA and the free flow of capital and labour.
It would be easy to pick up stake and simply plunk down our facility in the most convenient low-cost jurisdiction — indeed, we've spent many hours asking ourselves if our fiduciary duty demands exactly that. But there is often benefit in adversity. Ontario businesses continue to thrive. We exist in a climate where the cards are stacked against us, and we manage to compete globally, and very successfully at that.
As such, Ontario businesses are robust, and their managers know how to thrive when they're in the trenches. In an increasingly interconnected global economy, there is no longer a steady-state where we can anticipate rational outcomes. Businesses are constantly forced to innovate and re-imagine their role in the marketplace, so why not invest in a province where businesses are forced to be twice as smart?
We do so in spite of the government, not thanks to it. Our best allies are other, larger companies that have chosen to stick it out here, helped along by some smart politics at the municipal level. Companies such as Shopify, Hubba and Breather are thriving here. We don't have their scale, but we benefit from their example.
So we are doubling down on Ontario. It's going to be hard, but worth it, we think. It would just be nice if we could count on our provincial government to pave the way for new businesses, instead of putting down obstacles.