Vanguard Magazine

Shipyard $250m Wider economy $190m R&D / Technology $60 – $130m Defense Sector Investments $40 – $50m Supply chain $220m Supply chain $140m Induced C$1.96bn Non-Defense Sector Investments $40 – $50m Shipyard $510m Wider economy $350m T a x E c o n o m i c a n d T a x E co n o m i c O P r o j e c t O n P r o j ec t benefits per $ billion of spend B u i l d i n Ca n a d a Shipyard $0m Wider economy $0m R&D / Technology $170 – $250m Shipyard $0m Supply chain $25m Supply chain $20m Defense Sector Investments $190 - $720m Wider economy $10m Non-Defence Sector Investments $150 – $410m Ta x E c o n o m i c a n d T a x Ec o n o m i c O P r o j e c t O n P r o j e c t benefits per $ billion of spend B u i l d i n E u r o p e More Certain Less Certain Key: Positive Impact Upper end estimate Lower end estimate Shipyard $250m Wider economy $190m R&D / Technology $60 – $130m Defense Sector Investments $40 – $50m Supply chain $220m Supply chain $140m Induced C$1.96bn Non-Defense Sector Investments $40 – $50m Shipyard $510m Wider economy $350m T a x E c o n o m i c a n d T a x E c o n o m i c O P r o j e c t O n P r o j ec t benefits per $ billion of spend B u i l d i n Ca n a d a Shipyard $0m Wider economy $0m R&D / Technology $170 – $250m Shipyard $0m Supply chain $25m Supply chain $20m Defense Sector Investments $190 - $720m Wider economy $10m Non-Defence Sector Investments $150 – $410m Ta x E c o n o m i c a n d T a x Ec o n o m i c O P r o j e c t O n P r o j e c t benefits per $ billion of spend B u i l d i n E u r o p e More Certain Less Certain Key: Positive Impact Upper end estimate Lower end estimate www.vanguardcanada.com AUGUST/SEPTEMBER 2017 21 SHIPBUILDING S Sin título-1 1 04/07/2017 9:56:21 Shipyard $0m Wider economy $0m R&D / Technology $170 – $250m Shipyard $0m Supply chain $25m Supply chain $20m Defense Sector Investments $190 - $720m Wider economy $10m Non-Defence Sector Investments $150 – $410m Ta x E c o n o m i c a n d T a x Ec o n o m i c O P r o j e c t O n P r o j e c t benefits per $ billion of spend B u i l d i n E u r o p e More Certain Less Certain Key: Positive Impact Upper end estimate Lower end estimate Figure 1: Benefits for the Canadian economy for every CAD $1 billion spent in the "Build in Canada" scenario and technology transfer. In addition, there is little evidence to support the scale of such benefits, so we have applied a range to reflect this uncertainty. Comparing the costs and revenues to government In addition to the benefits to Canada, it is important to understand the impact on the public finances in terms of costs and revenues. A "reference ship" was used to enable a like-for-like cost comparison between the two scenarios. The reference ship is based on a modern frigate design, with capa- bilities and specifications which broadly match Canada's requirements. Areas such as ship design costs and relative inexperience in building modern frigates drive the initial cost in Canada higher than in Europe, but a combination of lower wage rates and the investment in the modern shipyard in Halifax with comparable performance to shipyards pro- ducing modern frigates effectively negate the cost difference. Taking into consid- eration the costs associated with meeting the offset obligation and the financing of the cost difference between the scenarios, benefits, such as the jobs and associated economic and tax benefits at the shipyard and in the supply chain. In contrast, the majority of the "Build in Europe" ben- efits flow from spending in Canada to meet the offset obligations – referred to here as off-project benefits. These benefits are less certain, as they are dependent on success of the investments, particularly in areas such as research and development

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