The Fraser Institute

The Fraser Institute

December 02, 2010 06:32 ET

The Fraser Institute: Quebec Offers One of the Least Attractive Investment Climates in Canada; Alberta, Western Canada the Best

MONTREAL, QUEBEC--(Marketwire - Dec. 2, 2010) - Quebec is one of the least attractive provinces for capital investment, ranking seventh in a comparison of provincial investment climates, according to rankings contained in a new report released today by the Fraser Institute, Canada's leading public policy think-tank.

"Quebec maintains Canada's least flexible labour market; it has some of the most burdensome government regulations, and a personal income system that discourages investment and entrepreneurial activity," said Filip Palda, Fraser Institute senior fellow and professor at the École nationale d'administration publique.

"These factors discourage capital investment and handcuff growth of the Quebec economy. The province urgently needs to enact policy changes to attract would-be investors."

Quebec earned an overall score of 4.8 out of 10, placing it seventh out of 10 provinces. Its major weak spots came in labour market regulation (10th place ranking), regulations or "red tape" (eighth), and personal income taxes (seventh). Quebec finished in the middle of the pack on the three remaining indicators, placing fifth on both fiscal prudence and transportation infrastructure, and fourth on corporate income taxes.

Alberta topped the rankings with an overall score of 8.1 out of 10, followed by Saskatchewan (6.4) and British Columbia (5.6). New Brunswick scored 5.3 and ranked fourth while Ontario (5.2) came in fifth. Manitoba was the last province to score at or above 5.0.

With an overall score of 4.8, Quebec's investment climate was stronger than just three provinces: eighth place Newfoundland & Labrador (4.4), ninth place Nova Scotia (4.3), and last place Prince Edward Island (2.7).

"It's highly disconcerting that Canada's second largest province remains relatively unattractive for capital investment," Palda said. "Quebec needs to embrace positive policy changes to bolster investment opportunities. Doing so would be a boon for the entire country."

The Canadian Provincial Investment Climate 2010 Report measures six components identified by Canadian investment managers and academic research as the most important contributors to investment climates: corporate income tax, fiscal prudence, personal income tax, transportation infrastructure, labour market regulation, and overall burden of regulation.

"In order to foster job creation and economic prosperity, it's critical that Quebec looks for better ways to attract investors. Key areas for improvement include minimizing red tape, offering competitive tax rates, ensuring flexible labour markets, and restraining growth in government spending," said Niels Veldhuis, Fraser Institute vice-president of Canadian policy research.

"Failure to embrace these kinds of policies means lower rates of job creation, high levels of unemployment, and slower income growth. It's time for Quebec to get on the fast track to economic success."

La version intégrale de l'étude avec ses tableaux de données détaillées est accessible gratuitement en format PDF à l'adresse www.institutfraser.org (en anglais seulement).

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 80 think tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.

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