ACOA, KPMG and how they used CBC

A story posted yesterday by CBC Prince Edward Island starts:

An international accounting firm has ranked Charlottetown the second best city in the G7 countries to set up a business.

Later in the story, we read:

Officials at the Atlantic Canada Opportunities Agency, who plan to take the study on the road to trade shows and business conferences, are affirmed that they have been right all along.

“Wow!” you might think: reading that lead, and the rest of the story, you might think, quite reasonably, that Charlottetown is “the second best city in the G7 countries to set up a business.”

And you would be wrong.

Here’s why.

First, the study, “Competitive Alternatives,” (which you can read here) was actually partially sponsored by ACOA (here’s the list of sponsors), so their enthusiasm is to be expected. The CBC story never reveals that ACOA was a sponsor. Of course neither does the ACOA news release.

If you dig through ACOA’s website, though, you come across this, in their Parliamentary Report, 1998-2003, referencing earlier versions of the same KPMG study:

The Agency participated as a sponsor in both the 1999 and 2001 studies in an effort to ensure the inclusion of Atlantic Canadian communities.

So ACOA basically bought its way into the study. That’s important, and the CBC should have picked up on that.

Second, the study only covered the 121 cities in the G7 countries that were willing to pay (or “sponsor”). That’s a very small slice of the G7. For example, in the “New England/Atlantic” area, the study only compares Burlington, Lewiston, St. John’s, Halifax, Moncton, Charlottetown, Hartford, Providence and Boston. It’s quite possible, as a result, that Fredericton, Brantford, Regina, or any of the hundreds of other cities in the G7 they didn’t survey, would rank better than Charlottetown.

Third, the study compares only “the after-tax cost of startup and operation for representative business operations in 12 industries, over a 10-year time horizon.” That might mean that Charlottetown is a cheap place to do business; it certainly doesn’t prove that Charlottetown is the best place to do business: the study didn’t look at environment, lifestyle, health care, labour standards, work force or any of the myriad other measures that might go into making for a successful business. KPMG makes that clear in their study; the CBC glossed over this in their story.

Indeed, given that the study says that labour “represents 56 to 72 percent of location-sensitive costs for manufacturing operations, and 75 to 85 percent for non-manufacturing operations,” what the study really reveals, perhaps, is that Charlottetown employers don’t pay their employees very well. The CBC story might very well have been titled “Study reveals Charlottetown workers second worst paid in G7.” But of course that’s not what the news release said.

Finally, the study itself cautions about interpretation of the results:

While care has been taken in developing these findings, the results are necessarily of a general nature and should not be interpreted as a definitive opinion on the merits of locating any specific facility in one jurisdiction as compared to another.

In light of this proviso, the CBC’s headline, “Set up shop in Charlottetown: report” reflects a misinterpretation of the study.

I expect the CBC to do more than republish KPMG and ACOA’s propaganda: by doing so, the CBC serves only to reinforce the reputation of the study. This is a disservice to we taxpayers who paid for the study, a disservice to potential businesses who rely on the results of the study and, ultimately, a disservice to ACOA, which is freed from the responsibility that deeper media oversight would engender.