The Sault Ste. Marie Chamber of Commerce (SSMCOC) calls Tuesday’s federal budget a serving of good and not-so-good, and suggests the need for a dose of caution. It also hopes that with the significant amount of dollars ear-marked for infrastructure that Ontario, and specifically Northern Ontario, is not left out in the cold.
“Obviously, we called on the Federal Government to invest in infrastructure prior to the budget as did our provincial counterpart, the Ontario Chamber of Commerce,” says Rory Ring, Executive Director of the Sault Ste. Marie Chamber of Commerce. “What we need to do now is to communicate the strong need for some of that funding to make its way to Ontario and specifically to the North. With significant amounts of infrastructure dollars earmarked for public transit and green infrastructure, the risk exists that the bulk of available dollars will make their way into projects which solely benefit major urban centers.”
He suggests that this might be the perfect time for the Sault to take full advantage of its claim to being the alternative energy capital of North America. “If the federal government is really serious about the greening of infrastructure than we have an opportunity be a leader, to lend our expertise, to be a centre of excellence and possibly a hub for research and training.”
Given Sault Ste. Marie’s geographic location on the Canada / United States border and a market of several million potential tourists with a day’s drive, the SSMCOC welcomes the announcement of an additional $50 million investment in Destination Canada over the next two years to improve the marketing of Canada as a tourist destination.
According to Monica Dale, President of the SSMCOC, one disappointment with the budget is the apparent loss of the further reduction in the small business tax rate. She notes that “the previous budget, under the Conservatives, had legislated that the small business tax rate would fall by 0.5% per year from 11% to 9% in 2019. The rate is currently at 10.5%, and the government has deferred the decreases that were coming in future years. There was no date or estimate given for the duration of the deferral. This means that small businesses across the country will pay over $1 billion more than expected.”
In its own budget analysis, the Canadian Chamber of Commerce (CCC) notes that budget deficit will reach $29 billion this year and next, before gradually declining to $14 billion in 2020. At 1.5% of GDP, Canada’s deficit compares favourably to Europe (3.3%) or the U.S. (3.9%), but is a significant deterioration from the $3.4 billion back in November.
The CCC notes that the arguments for increased spending do resonate: borrowing costs are cheap in this low interest rate environment, and austerity in the midst of economic weakness can be self-defeating, but adds that if the need for caution were to suddenly be withdraw, we run the risk of going down the path of too much spending as we have before. The CCC points out that if the government can achieve its deficit targets, then the overall debt-to-GDP ratio will fall from 2017-2020 simply because the economy will be growing faster than the debt… But this will take tremendous discipline.