SETTING A COURSE FOR THE FUTURE

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SETTING A COURSE FOR THE FUTURE
Overview Presentation to Toronto City Summit
June 25-26, 2002 by David Pecaut CEO, iFormation
Group
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TORONTO WHO WE ARE
People (15 of Canada) Foreign-born Ethnic
groups New immigrants a year (1/3 of
total) Visible minorities (42 of
Canada) Children under fifteen
4.6 M 42 90 80,000 1.3 M 945,000
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POPULATION IN NORTH AMERICA'S LARGEST CMAs(1)
Millions of People

• Census Metropolitan Area
• Includes corridor to mid-west (GTA to
  Kitchener-Waterloo, across to London and down to
  Detroit/Windsor
• Extends from Oshawa to Niagara
• Source Statistics Canada, U.S. Bureau of
  Economic Analysis, TD Economics

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POPULATION GROWTH IN 1991-2000Toronto Versus
U.S. CMAs(1)
Compound Annual Growth Rate

• Census Metropolitan Area
• Source Statistics Canada, U.S. Bureau of
  Economic Analysis, TD Economics

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COMPONENTS OF POPULATION GROWTH IN THE GREATER
TORONTO AREA 1996-2001
Thousands of Persons
Source Province of Ontario, Statistics Canada,
TD Economics
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TRADED VERSUS NON-TRADED SECTORS
Non-Traded
Traded

• Compete with firms outside the economic region
• Bring in new wealth
• Example auto manufacturing

• Compete with firms within economic region
• Circulate existing wealth
• Example most retailers

• Some businesses have aspects of both
• Example financial services

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MANUFACTURING AND TRADED SERVICES DRIVE GTA
ECONOMY
Portion Traded
Share of GTA Economy
Agriculture Primary Automotive
Manufacturing Chemicals, Metals, Electronics and
Other Manufacturing Printing Publishing Finance
Insurance Other Business Services Food
Beverage Processing Distribution Services Hotels,
Restaurants Recreation Retail
Wholesale Health, Education Welfare Government
Services Real Estate Construction
100 100 100 66 52 51 36 36 10 5 2 lt1
0
1 4 13 2 9 6 3 20 3 9 10 4 16
All Traded 18
Medium Traded 40
Lightly Traded 42
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TORONTO'S KEY TRADED CLUSTERS
Main Drivers
Business Services Financial Services Distributi
on Services Automotive Entertainment/Media Tou
rism IT Biotech Food Beverage
Headquarters locations Financial services
headquarters Stock exchange Hub location 10
assembly plant locations (legacy of Auto
Pact) Cultural policies Attractions Anchor RD
facilities/companies Raw materials legacy
investments
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TORONTO IS ONE OF 5 TOP HQ LOCATIONS IN NORTH
AMERICA
Number of top 600 North American HQs
HQs
Source HQ of top 600 North American corporations
from Fortune 500, Financial Post 500
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TORONTO 2 AUTOMOTIVE CLUSTER
Employees (Thousands)
69
Source Institute for Competitiveness and
Prosperity and DesRosiers Automotive Consultants
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AUTOMOTIVE CLUSTER ANCHORED BY ASSEMBLY PLANTS
Ten assembly plants in region 90 of independent
parts firms headquartered within 1 hour of
Toronto Highly skilled labour in tool and die,
plastics, fabrication
Source ICF Consulting and DesRosiers
Automotive Consultants
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TORONTO 3 FINANCIAL SERVICES CLUSTER
Employees (Thousands)
143
Worcester
Source Institute for Competitiveness and
Prosperity
13
TORONTO 3 FILM / ENTERTAINMENT CLUSTER
Employees (Thousands)
47
New London/CT
New London/CT
Source Institute for Competitiveness and
Prosperity
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TORONTO 4 PHARMA BIOTECH CLUSTER
Employees (Thousands)
10
Source Institute for Competitiveness and
Prosperity
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PRIORITIES FOR ALL INDUSTRIES

• Transportation infrastructure
• Roads/rail
• Transit
• Airport
• Communications infrastructure
• Skilled workforce
• Strong K-12 education
• Good colleges/universities
• Skilled trades
• Reasonable business costs/taxes
• Great quality of life

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TRANSPORTATION INFRASTRUCTURE
Roads/ Rail Transit Airports Communicati
ons
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TORONTO EDUCATION LEVELS ARE INCREASING
City of Toronto Labour Force, 1990-98
()
University Degree
Certificate
High School Graduate
Less Than High School
Source City of Toronto
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TORONTO WORKFORCE COMPARES FAVOURABLY
Employees (Thousands)
University Degree or Community College Diploma
High School Graduate
Less Than High School
Source City of Toronto
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INTERNATIONAL BUSINESS COSTS
Annual Costs (USMM) 100 Person Downtown
Financial Services Firm
USMM
Source TD Economics
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TORONTO CORPORATE TAXES COMPETITIVE
of Pre-Tax Income
State/Provincial/ Prefectural Tax
Federal Tax
Source KPMG Consulting
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TORONTO CITY PROPERTY TAXES HIGH
US Thousands
Receipts Tax
Sales Tax
Capital Tax
Property Tax
Source KPMG Consulting
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COMPARISON OF REVENUE SOURCES City of Toronto
Versus Large U.S. Cities
Toronto
Total 38 Largest U.S. Cities
Other Revenue 7
Property Taxes 18
Other 14
UserCharges 14
Property Taxes 45
User Charges 20
Sales Tax 12
FederalFunding 7
Income OtherTaxes 13
StateFunding 29
Provincial Grants 21
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REQUIREMENTS OF KNOWLEDGE-INTENSIVE CLUSTERS

• Strong research institutions
• Universities
• Corporate labs
• Government labs
• Highly skilled workforce
• Advanced education
• Open immigration of knowledge workers
• Venture capital industry
• Angels
• Early stage VCs
• Tax-friendly environment

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LOCATION OF TOP 750 GLOBAL SCIENTISTS
Per Million Population
Total Number

• Harvard
• Stanford
• MIT
• UCB/UCSF
• 13 Caltech

U.S. U.K. Germany France Switzerland Japan Canada
Sweden Italy
1.89 0.8 0.5 0.3 2.5 0.1 0.5 1.0 0.1
529 45 38 8 18 17 15 9 8

• U of T
• 4 UBC
• 3 Waterloo
• 1 McGill
• 1 Ottawa
• 1 Trent

Source ISI
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VENTURE CAPITAL

• VC and start-up environment dramatically better
• Capital gains taxes now lower than U.S.
• Foreign venture capital now tax free
• Stock options taxed like U.S. now
• Cross-border mergers now avoid tax penalties
• Angels encouraged by tax free rollover of capital
  gains in qualified start-ups
• Total VC in Canada has grown to 5 billion
  annually
• Ratio versus U.S. now 111 vs. 201 in 2000
• Key Challenge is to get Canadian pension funds
  committed
• Pension funds contribute 3-10 of VC fund monies
  in Canada versus 40 in U.S.

Source Canadian E-Business Roundtable
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QUALITY OF LIFE (I)
Achievements
Concerns
Safety Environment Income
Levels Affordable Housing
Lowest violent crime rates relative to major U.S.
cities Consistently safe drinking water Income
in Toronto CMA rose faster than in all of Canada
1993-1998 Toronto house prices fell 9 in real
terms 1980-2001
Fear of violence against children/youth 1 public
concern 1,000 premature deaths 5,550 hospital
admissions Linked to poor air quality Growing
concentration of poverty in city core Virtually
no new rental housing built in Toronto since 1995
existing units disappearing
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TORONTO IS MUCH SAFER THAN U.S. CITIES
Violent Crime per 100,000 Population, 1997
Source Places Rated Almanac
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RENTAL HOUSING COMPLETIONSCity of Toronto,
1988-1998
Dwelling Units
Assisted Units
Private Units
Source CMHC Toronto Region Market Report,
1998-1998, City of Toronto, TD Economics
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QUALITY OF LIFE (II)
Achievements
Concerns
Transit Arts/Culture Recreation/Amenities
Health
2nd highest per capital ridership of any system
in Canada/U.S. 3rd largest live music and 2nd
largest live theatre centre in North
America gt400 parks (High Park 2nd largest city
part in the world) 54,000 recreation
programs 3,000 neighbourhood special events 2000
Maclean's survey healthiest Canadians in
Toronto (and Vancouver)
Only major city in North America to fund 80
operating costs from fares Steep decline in
municipal funding for arts Future of
waterfront Land-use planning in green
belts Widening income gap, rise in TB and
physician shortages cause for concern
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TORONTO'S LAST THREE ERAS
III. Free Trade and Restructuring Era

• Manufacturing specialization
• Film/entertainment
• High tech
• Tourism

II. Automotive and HQ Era

• Automotive
• Financial services ascending
• Canadian headquarters

I. Post-War Conversion Era

• Core manufacturing
• Financial services

End of War
Avro Arrow Cancelled
Auto Pact Signed
PQ Elected in Quebec
Free Trade Agreement
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TORONTO 2012 THE ECONOMIC CHALLENGE

• Grow what we have
• Automotive
• Financial services
• Business services
• Canadian headquarters
• Film/Entertainment
• Other manufacturing
• Tourism
• Accelerate knowledge intensive clusters
• IT and software
• Pharma, biotech, and medical
• Education as export service
• Make Toronto the North American HQ of choice for
  European and Asian multinationals
• Establish Toronto as one of the top three centres
  for venture capital in North America

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TORONTO 2012 KEY LEVERS TO GET THERE

• Excellent education K-12
• Outstanding colleges and universities
• U of T as leading global research university
• Great transportation infrastructure
• Roads
• Transit
• Pearson as global hub
• Leverage immigration
• Skilled workforce
• Diaspora networks
• Multilingual capabilities
• Improved quality of life

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WHY TORONTO NEEDS A NEW DEAL

• Competitiveness of GTA at risk
• Real incomes declining income gap widening
• Inadequate fiscal base downloading, inadequate
  federal support to immigrants, over-reliance on
  property taxes/user fees
• Infrastructure old and deteriorating
• Affordable housing crisis rise in homelessness

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PILLARS OF A NEW DEAL FOR TORONTO

• Greater autonomy, updated powers Toronto
  charter
• Short-term federal and provincial investment in
  housing, transit, infrastructure
• Longer-term, new revenue streams for city that
  are stable, transparent, accountable
• More effective and accountable leadership at all
  levels
• Municipal, provincial, and federal
• Private sector