2. Low Overall Cost of Doing Business Annual Operating Costs Low Wage Increases and Low Labor Costs Low Wage Increases and Low Labor Costs (cont’d) Competitive Corporate Taxes Competitive Corporate Taxes (cont’d) Low R&D Costs Low Energy Costs Low Energy Costs (cont’d) Low Construction Costs Low Land Costs Competitive Office Space Cost Table of Contents

3. Low Overall Costs of Doing Business The overall cost of doing business is considerably lower in Canada than in other industrialized nations - about 57% that in the U.S. and 59% that in Germany. * Index based on various business costs including: wages, costs for expatriate staff, air travel and subsistence, corporation taxes, perceived corruption levels, office and industrial rents, and road transport. Data for Japan is not available. Source: The Economist (EIU), January 24, 1998 Business Costs* — 1997 50.0 60.0 70.0 80.0 90.0 100.0 Germany U.S. Britain France Italy Canada Index: Most expensive = 100

4. Annual Operating Costs Source: KPMG 1999 5.25 5.4 5.5 5.6 5.75 7.25 7.3 7.35 7.7 7.8 8.4 8.5 8.6 $0$2$4$6$8$10 London Ottawa Montréal Vancouver Toronto Atlanta Dallas Chicago Boston Jersey City SanFrancisco Los Angeles New York Cost in millions of dollars US Annual Operating Costs Comparison by City The cost of maintaining a service centre in Canada’s major metropolitan areas is significantly less than in the U.S. (Annual operating costs for a 100-person professional services organization based in the following city centres)

5. Canada has the second lowest manufacturing wages in the G-7. Cost of Labor — Manufacturing* 28.28 19.37 18.24 17.97 16.74 16.55 15.47 Germany Japan U.S. France Italy Canada U.K. $U.S. per hour Low Wage Increases and Low Labor Costs *Figures are for 1997. Source: U.S. Bureau of Labor Statistics, 1998.

6. A competitive labor market is keeping wage settlements down. Occupational Wages — Knowledge Workers, 1998 Full-time, full-year wages* ($U.S. PPP**) * Mean earnings are shown for Canada, median earnings for the U.S. Data has been converted to full-year assuming a 50-week work year. ** Purchasing power parity Source: IC calculations based on Statistics Canada and U.S. National Science Foundation Low Wage Increases and Low Labor Costs (cont’d) Richard Peabody, President Harris Farinon Canada Our costs per engineer are roughly half of what they would be in the United States." combination of low salary and wage costs, as well as Canada's and Quebec's superb R&D tax treatment] Engineers, Architects & Surveyors Mathematicians & Computer Scientists Natural Scientists $49,400 $46,900 $41,400 $37,068 $34,710 $33,016

7. Competitive Corporate Taxes Canadian locations compare well in terms of corporate income taxes across North America. Corporate Income Tax Rates* — 1998 G-7 Comparison U.K. Canada Italy U.S. France Japan Germany 2530354045505560 % * Combined federal, provincial (or state), and local income tax rates for large manufacturing and processing firms as of July 1, 1998. Source: KPMG Management Consulting, 1999

8. Competitive Corporate Taxes (cont’d) Furthermore, there is no restriction on the repatriation of profits. * Combined federal, provincial (or state), and local income tax rates for large manufacturing and processing firms as of July 1, 1998. Source: KPMG Management Consulting, 1999 Province - State Comparison Newfoundland P.E.I. Quebec Saskatchewan Washington Ontario Alberta Texas Colorado Nova Scotia British Columbia North Carolina Manitoba New Brunswick California New Jersey Massachusetts Vermont Minnesota Pennsylvania 25303540 %

9. Low R&D Costs Canada provides: -a wide range of research support, technology transfer and market development; -a strong capability in advanced technologies; and -skilled personnel. Canada's R&D tax treatment is very generous — immediate and full write-off for all expenditures in R&D capital equipment, and appreciable tax credits. Because of this, firms can significantly reduce R&D costs through direct investment or sub-contracting in Canada. * Based on large manufacturing firms. Source: Conference Board of Canada (August 1999) Saskatchewan Manitoba Nova Scotia New Brunswick British Columbia Quebec Ontario Newfoundland California Massachusetts Alberta Minnesota North Carolina New York Illinois Oregon Colorado Prince Edward Island Michigan 0.400.450.500.550.60 $ Relative Competitiveness of R&D Tax System* After-tax Cost of $1 R&D Expenditure Ohio

10. Low Energy Costs *Source: KPMG Management Consulting, 1999 Annual Electricity Costs — 1998 G-7 Comparison Index: U.S. = 100 +200 Canada U.S. U.K. France Germany Italy Japan 5075100125150175 Electricity costs for industrial users are significantly lower in Canada than in the U.S. -According to a recent study, the annual electrical costs for an average manufacturer are 24% lower in Canada than in the U.S.* *Source: KPMG Management Consulting, 1999

11. Low Energy Costs (cont’d) Canada has abundant oil, gas, coal and hydro-electric resources. Source: KPMG Management Consulting, 1999 Jack Hartery, President and General Manager Stora Forest Industries Ltd. Energy costs, particularly for fossils (fuels), are moderate here, compared with many parts of the world and particularly Europe where the price of gasoline is literally double that in Canada." Province - State Comparison Index: U.S. = 100 Manitoba British Columbia Saskatchewan Newfoundland Nova Scotia Alberta Quebec New Brunswick P.E.I. Ontario Washington Minnesota Colorado North Carolina Massachusetts Texas Pennsylvania California Vermont New Jersey 0255075100125 150

12. Low Construction Costs Building construction costs in Canada are roughly 15% lower than those in the U.S. even after accounting for additional materials for climatic conditions. Source: KPMG Management Consulting, 1999 Construction Costs — 1998 G-7 Comparison Index: U.S. = 100 +600 Canada France Italy U.S. U.K. Germany Japan 75100125150175200 Province - State Comparison Index: U.S. = 100 125 Saskatchewan New Brunswick Newfoundland Quebec Ontario P.E.I. Texas Nova Scotia Manitoba British Columbia Colorado Alberta Washington California North Carolina Pennsylvania Minnesota Massachusetts Vermont New Jersey 5075100

13. Low Land Costs Land Costs — 1998 G-7 Comparison Index: U.S. = 100 Province - State Comparison Source: KPMG Management Consulting, 1999 +2900 Canada U.S. France Italy U.K. Germany Japan 75100125150175 +600 +300 With the exception of Vancouver Island (British Columbia), land costs in Canada are generally preferable to those in the U.S. — on average, land costs are 6% lower in Canada than in the U.S. Index: U.S. = 100 New Brunswick P.E.I. Vermont Quebec Saskatchewan Pennsylvania Nova Scotia Manitoba Newfoundland North Carolina Alberta Ontario Colorado Texas Minnesota New Jersey British Columbia Washington California Massachusetts 050100150200250

14. Competitive Office Space Cost 160 132 120 112 73 60 41 37 29 25 22 17 050100150200 Hong Kong Tokyo Beijing London Paris Mexico City Boston New York Toronto Vancouver Ottawa Montreal Calgary Cost of Office Space in Selected Cities Note: C$ price of Class A office space in prime downtown location Source: Colliers Macaulay Nicols International Inc., 1996. Canadian Office space is available at highly competitive rates. Overall operating costs are significantly lower than most major international centres.