You're wrong, Prime Minister

Business outraged at suggestion Canada is not losing top talent

Outraged business leaders, economists and high-tech officials have denounced Prime Minister Jean Chretien for his remarks that the business community has orchestrated the so-called Canadian brain drain to get tax cuts.

"I don't think that's the situation at all," said Ian McLaren, newly appointed president and chief executive officer of Kanata-based telecommunications software developer, Crosskeys Systems Corp., which employs about 300 people.

"Companies are saying, 'Give the people that work for us an even playing field,' " said Mr. McLaren, who cited the high tax rates that high-tech workers face with their salaries and when cashing stock options.

"It's unfortunate that politicians take this stance and sometimes they may not be as close to reality as those that are in the industry," he explained. "There is no question that it's a continual battle to maintain technical staff in Canada. It's a fact."

The remarks that sparked the outrage came when Mr. Chretien told the Citizen there are fewer Canadians moving to the United States than there were 20 years ago.

Mr. McLaren said that it's "kind of irrelevant what was happening in '79. Today, we're in a very fast, high-paced technology industry and we live and die by our ability to attract and keep good quality technical staff, and this is an issue."

It is Canada's tax system that "is driving people south of the border," agreed Terry Kell, president of Kanatek Technologies Inc. of Kanata, a computer systems integrator specializing in data management and Internet solutions that employs about 80 people.

"Fundamentally, the tax system is creating a society of non-achievers. If you work hard and smart you should get something, and the system is supporting people that don't share the same work ethics. There's too many vehicles for people to do nothing and get something, and there's less tolerance for that in the U.S. and more for it here and somebody has to foot the bill."

Among those footing the bill are high-tech companies developing cutting-edge products and providing business opportunities that end up being "de-motivated," he said.

Though Kanatek is moving into a new 30,000-square-foot facility in November, Mr. Kell said he has thought of relocating his business many times.

Kanatek has offices in Dallas and Amsterdam.

"The mentality is not there to support people that are looking to get ahead," Mr. Kell said. "We are going to expand our international presence. I like living here, but I don't approve of supporting other people that aren't willing to put something back into the system."

Nesbitt Burns economist Sherry Cooper, who levelled a broadside of her own against high taxes at an Ottawa Board of Trade luncheon, was perplexed by the prime minister's denial of a brain drain.

"I'm not a politician. I don't want to get going to get into a pissing contest with Jean Chretien," she said. "This brain-drain thing is like the unemployment rate thing. Everyone wants to deny reality when everyone knows it's true. We all have children who are moving to the 'States. We all have relatives who are moving to the 'States. We all know kids who have graduated from our most important university programs who are leaving.

"There isn't a business in the country that doesn't feel the pinch. And for him to deny that it is so ... to me it's, it's ... I don't know, maybe he believes that there's no such thing, but I find it hard to imagine."

Ms. Cooper questioned why Nortel Networks would threaten to leave Canada. "Why would they do that? What possible reason would they have if there is no validity in this?

"It's almost as though Mr. Chretien, when he told us last year that the fall in the Canadian dollar was a good thing É I mean, if you have to spin everything to be something that somehow is a positive development for Canada, then heaven help. Can't we recognize what's wrong and then fix it? But to deny that there's anything wrong or that things couldn't improve, is just crazy. Even politically it's crazy."

The Information Technology Association of Canada (ITAC), which represents 1,300 companies was among those firing back at Mr. Chretien.

"I'm surprised and disappointed," said president and CEO Gaylen Duncan. "It's clear that what we, the industry, have been saying to the government, has not been heard.

"I don't understand how a man who demands 24-hour results on how his party is polling during an election can sit there and say 'I will rely on three-year-old StatsCan data and talk about the economy.' I am just astounded."

And the suggestion that big business was fabricating stories of a brain drain as a means to an end to get a tax cut, brought a livid response. "That's nonsense. A tax cut is important, but the fact is we're crippled. And we're not talking about corporate taxes, we're talking about lower taxes for working Canadians."

Mr. Duncan took aim at Finance Minister Paul Martin and tax surcharges he imposed to help reduce the federal deficit. The surcharges are still in place. "Mr. Martin has crowed about three years of surplus, so he should take off that extra tax he put on only for the deficit.

"This is not a business class issue. This is an issue for Canadian families. We don't want to create a generation of highly skilled emigrants, because those emigrants are our children. We want our children to find work here that rewards the investment and the sacrifices they have made to acquire this high-value knowledge."

John Kelly, chairman of the Ottawa-based Canadian Advanced Technology Alliance, said it was "unfortunate" the issue of tax cuts has been "so intermingled" with the brain drain.

"To suggest that the brain drain was created as an issue relative to taxes is a bit of stretch," said Mr. Kelly, president and chief executive of Ottawa-based JetForm Corp. "To intermingle the two is too black and white. It's much more grey than that."

Losing high-tech talent to the U.S. "is a much broader problem than the tax structure of our country," he said, explaining that exciting career challenges and better compensation are strong magnets in their own right.

"There's no doubt we are losing at the graduate level a number of skilled people who go to the U. S. because they receive overall better opportunity," said Mr. Kelly.

Even though some high-tech workers return to Canada from the U.S. based on lifestyle choices, the brain drain continues, said Peter Leach, president and chief executive of Communications and Information Technology Ontario, which is funded by the Ontario government.

The prime minister's suggestion that Canadian business "is asking for a U.S.-styled economy" is "not true," said Mr. Leach. "I think he's out to lunch there."

Mr. Leach said today's business climate fails to foster opportunities and abilities for entrepreneurs to generate wealth. "We are losing people. That's fact. And the reasons they're going is because the net pay in their pocket is better in the 'States than it is here."

Ottawa Board of Trade president Gail Logan took exception with Mr. Chretien singling out the so-called business class "as separate and apart from the rest of the community."

"I don't think that that's appropriate," she said. "In fact, it's business that creates jobs, not government."

Ms. Logan suggested the prime minister should heed the remarks of Sherry Cooper, who said that "Canadians' after-tax, per-capita income is one-half the level of the United States" and "even below low-income states like Arkansas, West Virginia and Mississippi."