Budget 2018 Supports Innovation & Gender Equity, But is Silent on Attracting Job-Enabling Investment
February 27, 2018 (Vancouver, B.C.) - The Business Council of British Columbia recognizes the government’s commitment to a stable debt-to-GDP ratio as outlined in today’s federal budget, along with its focus on innovation and expanding the talent pool through greater gender equality and economic reconciliation. The Council supports these broad priorities. However, the Council is concerned about projections showing an endless string of operating deficits and is alarmed at the lack of attention given to Canada’s waning competitiveness and the need to turn around the country’s disappointing business investment performance.
Although Canada’s economy grew briskly in 2017, economic activity is expected to downshift in 2018 and the following years. Moreover, there are signs that the fundamentals for medium-term prosperity are at risk. “The government is not doing enough to address the fact that Canada has become too costly, too complex and too slow-moving to take advantage of new global opportunities - or to facilitate the investments needed to boost productivity and real wages. The hard reality is that Canada is losing competitive ground globally across an array of traded goods industries, notably energy, other resource sectors, and many segments of manufacturing,” observed Greg D’Avignon, the Business Council’s President and CEO. “We find this picture very troubling.”
“In order for every Canadian to have a real and fair chance at success, we must ensure our economy remains competitive – ultimately, this is the only way to attract the job creating investments needed to improve prosperity,” said Jock Finlayson, Executive Vice President and Chief Policy Officer of the Business Council of British Columbia. “The federal government must be alive to the risk that firms across Canada are looking at the sweeping tax reforms and other policy changes recently adopted in the United States. These developments have sharply eroded any competitive advantage Canada may have previously enjoyed, and they signal that we may soon see a redeployment of business capital to invest in productive assets south of the border. There is little in today’s budget that points to a Canadian strategy to deal with this significant challenge.”
Tax burdens not only influence the decisions made by businesses, but also by talented people and entrepreneurs. “Past hikes in personal income tax rates in Canada (including at the provincial level) are making it harder for Canadian organizations to recruit and retain the highly skilled individuals who ultimately drive much of our economic success,” Mr. Finlayson noted. “Budget 2018 has almost nothing to say about this aspect of building a competitive and thriving economy.”
The Business Council applauds the federal government’s commitment to increased gender equity and reconciliation with Indigenous People. “We welcome the focus on these goals, as well as the government’s decision to provide greater flexibility in parental leave provisions and increased income-tested investments in child care through the Canada Child Benefit,” stated Mr. D’Avignon.
The Business Council also credits the government for its ongoing efforts to maintain and expand trade, which is essential to Canada’s prosperity. “The government’s approach to the NAFTA re-negotiations is sound and broadly supported by the business community, as is the plan to ensure Canada is part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Canada-European Union Comprehensive Economic and Trade Agreement,” Mr. Finlayson stated.
Additional measures to invest in research and innovation, particularly the British Columbia-led Digital Technology Supercluster, but also the Industrial Research and Assistance Program (IRAP), the national research granting councils, and additional Canada Research Chairs, are also welcome. “We believe these federal government commitments will benefit BC and help to develop a more productive and innovative Canadian economy,” Mr. Finlayson added.
About the Business Council of British Columbia
Now in its 52nd year as the premier business organization in British Columbia, the Business Council of B.C. is a non-partisan organization made up of 250 leading companies, post-secondary institutions and industry associations from across B.C.'s diverse economy. The Council produces exceptional public policy research and advocacy in support of creating a competitive economy for the benefit of all British Columbians.
Cheryl Maitland Muir
cheryl.muir [at] bcbc.com