Kevin O'Leary: Canada Is No Longer Competitive
(Kitco News)- Money votes with its feet, and capital flows out of thecountry show that investors are no longer interested in Canada as a place to dobusiness, according to Shark Tank star and chairman of O’Shares ETFs, KevinO’Leary.
“The thing about money is that it has no politicalaffiliation. It doesn’t care. It looks to the path of least resistance, andthat path is no longer in Canada,” O’Leary told Kitco News on the sidelines ofthe “Three Sharks In A Castle” symposium. “If you’re doing a large project,you’re not doing it in Canada anymore; it’s not the place to invest.”
According to the Shark Tank investor, the Canadian corporatesector has lost its competitive edge since President Donald Trump’s tax cutshave reduced U.S. corporate tax rates to 21%.
However, in a report released by Deloitte, as of February2018, the national corporate tax rate of Canada is 15%, compared to the newAmerican tax rate of 21%, after Congress implemented historic tax reform inJanuary.
Despite Canada’s advantage, O’Leary said that businesses nowsee the U.S. as a more favorable place to invest as a result of these tax cuts,as evidenced by Canadian capital going south of the border.
According to Stats Can, net foreign direct investment (FDI)in Canada fell 37% in 2017 from the previous year. Total net FDI outflows fromCanada jumped 2% in 2017, with the majority of that capital going to the U.S.
Although a recession in Canada is not imminent, over thelong-term, capital flight out of the country would ultimately lead to aslowdown in GDP growth, and lack of job prospects, O’Leary said.
“People graduating from McGill, and Waterloo, and U of T,they’re going to have a hard time finding good jobs here because the capital ispursuing opportunities elsewhere,” he said.
According to statistics released by the Government ofCanada, the average real GDP growth rate since 2016 quarter two is 3.2%, thehighest amongst G7 countries. The U.S. real GDP growth rate stands at 2.4% forthe same period.
O’Leary added that Canada’s coming predicament is a resultof poor policy choices made by the government.
“We need leadership that understands the only thing thatmatters is a buoyant economy first, and all good things flow from that. The socialnet comes from that, all the wonderful things we do in healthcare in Canadacomes from that. We need a growing economy” he said. “I would ask, on abi-partisan basis for the leaders of Canada to wake up and smell the roses,because the money is leaving town.”
By David LinFor Kitco News
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