Budget: Big on Spending, Short on Growth, Ill-prepared for any economic challenges: Chamber
Sault Ste. Marie, ON – Tuesday’s federal budget offers a handful of incentives for Canadian businesses, but does little to prepare or protect Canada’s economy, its businesses or Canadian jobs as we start to witness real external challenges and influencers on the horizon.
This is the assessment of the Sault Ste. Marie Chamber of Commerce (SSMCOC).
SSMCOC Chief Executive Officer, Rory Ring notes that “while it’s disappointing that the budget left the corporate tax rate unchanged, the budget did include a cut to the small business rate of 10.5% to 10% starting this year and another cut to 9% in 2019 as well spending on several fronts to help women entrepreneurs and support women in the workforce. We were also pleased to see some additional funding for FedNor.”
The government plans to make $1.4 billion available over three years in new financing for women entrepreneurs through the Business Development Bank as well as $250 million over three years through Export Development Canada for financing and insurance for women-owned and women-led businesses.
Budget 2018 proposes to provide an additional $511 million over five years on a cash basis, starting in 2018-19, to Canada’s regional development agencies to support the Innovation and Skills Plan across all regions of the country. Of the $511 million, $28 million would be allocated to the Federal Economic Development Initiative for Northern Ontario (FedNor), of which $6 million will be for nationally coordinated, regionally tailored, support for women entrepreneurs.
The budget announced some new spending measures in technology and innovation including $100 million over five years to develop the next generation of rural broadband, which is an issue that the Sault Ste. Marie Chamber has been advocating for in recent years.
The Sault Ste. Marie Chamber of Commerce is pleased to see a new apprenticeship grant for women and a pre-apprenticeship program that will encourage under-represented groups to explore careers in skilled trades along with $2 billion over five years to create a new Aboriginal skills and employment training program.
SSMCOC president, Don Mitchell notes that one of the top challenges cited by Chamber member businesses is finding candidates with the proper qualifications for available jobs. “There is a serious ‘skills mismatch’ that has been a pervasive and growing challenge for businesses, not just in Sault Ste. Marie, but across Ontario and the country. According to Skills Canada, 40% of new jobs created in the next decade will be in the skilled trades, but only 26% of young people aged 13 to 24 are considering a career in these areas. This is a discussion that we have to have at all levels and we need to include young Canadians.”
After a strong and vocal response from Canada’s small businesses, the government has revisited small business tax reform. Tuesday’s budget unveiled new rules for small business passive income that are simpler than previously proposed and which will mitigate negative impacts on savings and investment for most small business owners. They will, however, still increase taxes for a small percentage of Canadian Controlled Private Corporations with passive investment income over $50,000.
“For most small businesses, this budget was intended to offer a few olive branches following last summer’s blistering attack by the Finance Minister,” says Ring. “But the fact remains that we need to have a serious discussion in this country about corporate and small business tax reform, especially in light of what is happening right now with our largest trading partner.”
The Chamber is concerned that little was discussed in yesterday’s budget to quell concerns about several economic challenges that seem to be on the horizon including growing U.S. protectionism, uncertainty over the outcome of NAFTA negotiations, global influencers which could force higher-than-expected interest rates, high household debt and the risk of a housing market correction.
Ring suggests that the government’s economic and fiscal assumptions are highly optimistic. “Given the risks that lie ahead, it would be an economic miracle if Canada is able to maintain a 6% unemployment rate over the next five years, particularly if the economy slows to an average annual growth rate of only 2% as forecast.”
Both the Sault Ste. Marie and Canadian Chambers of Commerce are disappointed in the lack of a concrete and responsible plan to balance the budget, and the unrealistic economic expectations laid out in the budget.
“By adding a further $27 billion to the national debt in 2018, the government appears to believe that we can spend our way to prosperity. If Ottawa continues to run up the debt when times are good, we can only speculate on what our national finances will look like next time there is a downturn,” says Hon. Perrin Beatty, President and CEO of the Canadian Chamber of Commerce.
“Canadian business asked the government to focus on fundamentals like the growing competitiveness gap, the need to attract more private sector investment and presenting a realistic plan to balance the government’s books. Although the budget sets out many positive measures, including support for women entrepreneurs, a clearer path to Indigenous self-determination and improved skills development, it doesn’t address the most basic issues facing our economy,” says Beatty. “The cost of running a business in Canada is rising rapidly. Without a strong private sector, there’s no way to pay for all this spending, except by sending the bill to our kids.”
About the Sault Ste. Marie Chamber of Commerce
The Sault Ste. Marie Chamber of Commerce represents the interests of 700 plus business and agencies in Sault Ste. Marie and has been serving the needs of this community since 1889. The Sault Ste. Marie Chamber of Commerce will lead the way as the voice of business, advancing economic prosperity for its membership and the business community. Learn more about the SSMCOC at www.ssmcoc.com