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Business Council calls on federal government to address Canada’s competitiveness challenges

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Date: December 14, 2017

Related Issues Macroeconomic and Fiscal

Business Council calls on federal government to address Canada’s competitiveness challenges

OTTAWA, December 14, 2017 – In his 2018 Budget, Finance Minister Bill Morneau should table a comprehensive plan to accelerate economic growth and strengthen Canada’s ability to attract investment, the Business Council of Canada says.


In its annual pre-budget letter to the Finance Minister, the Council says Canada’s economy is performing well at the moment, but the positive trends in employment, consumer confidence and household consumption are unlikely to persist.


“Over the next two years, higher borrowing costs and excessive debt levels are expected to constrain consumer spending,” writes The Honourable John Manley, the Council’s President and Chief Executive Officer. “Business capital investment, after showing encouraging growth over the past year, is forecast to decline, in part because of uncertainty over the future of NAFTA and fears that trade disruptions will damage regional value chains.”


The letter cites the recent final report of the federal Advisory Council on Economic Growth, which warned that Canada’s economy will likely expand by just 1.5 per cent annually over the next 50 years. That slow pace “would have a profound impact on the prosperity of Canadian families and the outlook for them and their children,” the report said.


In the face of these challenges, the government should implement a detailed strategy to strengthen growth and competitiveness, including:


A holistic understanding of the business environment – In a recent poll of 61 of Canada’s largest companies, 64 per cent said the business investment environment had worsened over the past five years, while only 20 per cent said it had improved. Moreover, a clear majority said investment conditions in Canada are worse than in the other countries in which their company invests. “We strongly hope that you and your provincial counterparts will heed the serious message these findings convey,” Mr. Manley says.


Tax reform and simplification – While governments boast of Canada’s “low and competitive business tax rates,” the reality is that Canadian firms pay rates higher than those borne by most of their OECD competitors. Meanwhile, recent increases in top marginal personal tax rates and changes to tax-planning rules for private corporations have hurt Canada’s ability to attract talent and entrepreneurs. The Council supports the recommendation of the Advisory Council on Economic Growth for an independent panel of tax experts to review Canada’s tax system.


A world-class regulatory environment – Only 13 per cent of the companies that took part in the Business Council’s survey on investment conditions expressed a positive view of the country’s current regulatory environment. The Council calls on the federal government to commit to creating a “world-class, efficient and responsive regulatory system that attracts investment and incents innovation”.


Support for resource-based exports – Canada is rich in energy and natural resources, but needs modern and efficient transportation infrastructure to get those products to market. The federal government should deliver on its promise to reform regulatory approval processes for major private-sector infrastructure projects, ensuring they are transparent, predictable, fact-based and capable of rendering decisions in a timely manner.


An ambitious trade strategy – Canada must play a leadership role in supporting an open global trading system at a time when protectionist forces threaten to reverse decades of progress. The government should move quickly to conclude and implement the Comprehensive and Progressive Trans-Pacific Partnership, a step that would strengthen Canada’s prospects in the Asia-Pacific region. It should also redouble efforts to forge a closer economic partnership with China, continue efforts to facilitate trade with India, and launch formal talks with the Association of Southeast Asian Nations.


Founded in 1976, the Business Council of Canada is a non-profit, non-partisan organization composed of the chief executives and entrepreneurs of 150 leading Canadian companies, from every region and sector of the economy. Member companies collectively employ 1.5 million Canadians, have annual revenues in excess of $1.1 trillion and are responsible for most of Canada’s private-sector exports, investment and training.


Through supply chain partnerships, service contracts and mentoring programs, Business Council members support many hundreds of thousands of small businesses and entrepreneurs in communities of all sizes across Canada.

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