April 7, 2022 (Vancouver, B.C.) - The Government of Canada’s Budget 2022 is tabled at a time of great global uncertainty and volatile energy and commodity markets, while at home, our economy and labour market are overheating, and Canadian households face surging inflation and eroding affordability. Today’s budget walks a fine line between increased spending of more than $50 billion over the coming years, which could exacerbate inflationary pressures, with an eye towards reducing the deficit and kick-starting business investment and growth.
“The Business Council recognizes the Government has important commitments to meet with respect to spending on housing, health care, climate change, and defense. However, Canada continues to lag behind all other OECD countries with respect to per-capita economic growth – which makes it harder to expand the economic pie, increase government revenues and improve the prosperity of Canadian households,” said Greg D’Avignon, President and CEO, Business Council of British Columbia. “It is imperative that the Government turn its focus to enhancing the country’s investment environment, boosting productive private sector investment, scaling our businesses, and attracting innovators who contribute to our collective prosperity.”
Business non-residential investment has been weak in Canada for several years, running at only 50-60% of the U.S. level on a per worker basis and also lagging well behind other high-performing OECD economies. While the Budget refrains from broad tax increases and offers a few measures that should help to boost investment -- including a graduated corporate tax rate for small and medium sized businesses, investment in development of critical minerals, and a new innovation agency – improving the business environment should be the federal government’s number one goal.
It is encouraging that the federal deficit came in lower than projected in 2021-22 and will shrink further in 2022-23. Some of this reflects the positive effects of economic growth, rising commodity prices, and higher inflation on the revenues flowing into the Government’s coffers. Looking ahead, we believe the Government should plan on returning to a balanced operating budget by the end of its term.
The Business Council welcomes the Government’s pledges to help meet Canada’s climate goals, including by establishing the new Clean Growth Fund and adopting a modest incentive for carbon capture and storage. However, an honest conversation about how to accelerate the development of needed electricity generation and related infrastructure in order to meet Canada’s GHG emissions reduction targets is necessary and overdue.
The regulatory burden on business and industry in Canada has increased steadily in recent decades, including at the federal level. While many advanced economy jurisdictions are looking to streamline and reduce regulatory costs and complexity, Canada appears to be going in the opposite direction. This trend, if it persists, promises to increase costs for businesses and hamper new investment in most of our leading export and infrastructure industries.
In this regard, we are disappointed that Budget 2022 puts a low priority on moving to ‘smart regulation’ policies that are fit for purpose in a 21st century economy that is heavily exposed to global competition.
While the Government deserves credit for ensuring that Canada is linked to international markets through up-to-date trade and investment agreements, being part of such agreements won’t deliver the hoped-for economic benefits if the hosting conditions for capital and business growth in Canada are not among the best in the world.
“Given the importance of exports to our overall economic prosperity as a nation, Canada must take bolder action to attract investment into the country’s export sectors. While the Government recognizes this need, Budget 2022 makes only modest advances in that direction,” said Ken Peacock, Senior Vice President and Chief Economist, Business Council of British Columbia.
About the Business Council of British Columbia
Now in its 56th year as the premier business organization in British Columbia, the Business Council of B.C. is a non-partisan organization made up of over 200 leading companies, post-secondary institutions and industry associations from across B.C.'s diversified economy. The Council produces exceptional public policy research and advocacy in support of creating a competitive, productive economy for the benefit of all British Columbians.
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Media Contact:
Cheryl Maitland Muir
Business Council of British Columbia
604-812-5965
cheryl.muir@bcbc.com
