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Modest plans for economic growth supported by significant increases in spending
Council urges government to keep an eye towards Canada’s long term fiscal health
Vancouver, BC – March 22, 2016 – The Business Council of British Columbia welcomes today’s federal budget, which provides a modest boost to a sluggish Canadian economy and signals a renewed focus on stimulating innovation and infrastructure investments.
With the government’s decision to run deficits over the foreseeable future leading to a significant increase in debt, fostering an environment for sustained economic growth is essential to ensure the debt is kept manageable relative to the size of the economy. The Business Council believes the government should aim to keep the debt/GDP ratio on a downward track over the course of the updated fiscal plan outlined in Budget 2016.
“While the deficit projections tabled by Finance Minister Morneau are significantly larger than we were expecting six months ago, both the global and the Canadian economies are battling headwinds that are weighing on growth,” said Greg D’Avignon, President and CEO of the Business Council. “A return to deficits is understandable given the macroeconomic circumstances, although the delay in returning to balance is somewhat troubling.”
As the government enters deeper into debt, it is important that expenditures are focused on laying the foundation for a more productive and competitive Canadian economy. While today’s budget provides some insight into how the government intends to support innovation and the movement of Canadian products and services to international markets, there is more to be done in these areas.
“The Council welcomes the government’s commitment to an increase in infrastructure funding over the coming years,” said Jock Finlayson, Executive Vice President and Chief Policy Officer at the Business Council. “As the details of the multi-year infrastructure program are worked out, we recommend that a high priority be given to infrastructure that enables Canadian trade and strengthens the pillars of a knowledge-driven economy.”
The Business Council also urges the government not to overlook the role of the private sector in building infrastructure to drive future economic growth.
“By some estimates, there is as much as $60 billion in planned or proposed energy-related investment in Canada, encompassing everything from oil and gas pipelines to LNG facilities to clean energy projects,” said Finlayson. “Realizing even a portion of this substantial private sector investment opportunity would help the government achieve its economic and job growth objectives, while allowing Canadian energy resources to access and command higher prices in global markets.”
Budget 2016 includes a number of measures that should be positive for the BC economy:
- $2 billion over three years to modernize and improve infrastructure and other research and training facilities at Canadian post-secondary institutions.
- $32 million over two years for the BC-based Centre for Drug Research and Development, which will facilitate the commercialization of more locally-developed innovative health products and technologies.
- $87 million over two years to support research in forestry, mining, earth sciences, mapping, and energy technologies.
- $1 billion over four years to accelerate clean technology development, with a focus on research, development and demonstration, to accelerate the commercialization of promising technologies. BC has a strong clean tech industry and stands to benefit from Ottawa’s growing interest in this area.
In addition, the government’s decision to allocate $11.9 billion over five years to infrastructure projects is positive news from a BC perspective. A portion of this will flow to improve and expand public transit in the lower mainland. Other near-term infrastructure priorities include water and wastewater projects and social housing. The above measures are included in “phase one” of the government’s planned two-phase infrastructure program that will eventually see $120 billion invested over ten years.
“Overall, the Business Council finds the budget to be appropriate for today’s challenging economic times,” stated D’Avignon. “However, we recommend a stronger focus on eliminating the operating deficit by the end of the government’s mandate.”
The Council looks forward to contributing to the work of the recently announced Advisory Council on Economic Growth.
Visit www.BCBC.com in the coming days for the Business Council’s full analysis of Budget 2016.
About the Business Council of British Columbia
The Business Council of British Columbia, now in its 50th year as the premier business organization in British Columbia, is a non-partisan organization made up of 250 leading companies, post-secondary institutions and organizations from across BC’s diverse economy which support hundreds of thousands of jobs across the province. The Council provides timely and exceptional public-policy research and advice on issues to enhance BC’s competitiveness and prosperity.
Cheryl Maitland Muir
cheryl.muir [at] bcbc.com