In his 2018 budget, Finance Minister Bill Morneau has missed an opportunity to shore up Canada’s eroding competitiveness and improve the country’s ability to attract jobs and new investment, the Business Council of Canada says.
“The budget’s title is ‘Equality + Growth’, but on the growth side the government’s agenda is disappointingly thin,” said The Honourable John Manley, the Business Council’s President and Chief Executive Officer. “Nowhere in the budget’s 367 pages is there even a passing acknowledgement of the fact that Canada faces an intense fight internationally for investment, jobs and talent.”
Over the past two months, business groups and a wide range of economic commentators have urged the government to respond to recent U.S. corporate tax reforms, which for the first time in many years have given the United States a significant competitive edge over Canada.
Yet today’s budget includes only a single brief mention of U.S. tax cuts, buried deep in an annex on the domestic and global economic outlook. It says that “over the coming months” Finance Canada will study the U.S. reforms to assess “any potential impacts on Canada”.
“I don’t think anyone expected the Minister to rewrite the tax code overnight,” Mr. Manley said. “But this budget all but ignores Canada’s serious tax competitiveness challenges, sending an unfortunate signal to entrepreneurs and companies that are looking to invest and grow.”
At the same time, the Business Council welcomed a number of specific policy measures in Budget 2018, including:
- A new Women Entrepreneurship Strategy to help women-owned businesses grow, find new customers and access export opportunities;
- A detailed plan to increase female labour force participation, reduce the gender wage gap, recognize companies that promote women to senior positions, and encourage women and other under-represented groups to consider careers in the skilled trades;
- Measures to close the gap between the quality of life of Indigenous and non-Indigenous people, including greater support to keep First Nations children safe and supported within their communities;
- A promise to conduct “targeted reviews” of regulatory requirements and practices that impede innovation and growth in emerging industries;
- $155 million in funding over five years to create a new Canadian Centre for Cyber Security that will help protect Canadians and their sensitive personal information;
- The planned introduction of a deferred prosecution regime to strengthen the government’s approach to corporate wrongdoing and encourage companies to come forward when they discover cases of abuse;
- Funding of more than $3 billion over five years to support Canadian scientists and researchers, including $1.3 billion for laboratories, equipment and other infrastructure;
- A pledge to streamline and simplify the government’s current suite of 92 programs and agencies in support of business innovation.
As in the past two years, Mr. Manley expressed disappointment in the government’s failure to set out a clear path to balance its budget over the medium term. Between 2017 and 2023, the government expects to add nearly $100 billion to the federal debt, bringing it to almost three-quarters of a trillion dollars. Over the same period, the debt-to-GDP ratio is forecast to decline slightly, from 31 per cent to 28.4 per cent.
November 1, 2023
Founded in 1976, the Business Council of Canada is a non-profit, non-partisan association composed of the chief executives and entrepreneurs of Canada’s leading private sector enterprises. The Council’s 150 member companies employ 1.7 million Canadians, contribute the largest share of Canadian federal corporate taxes, and are responsible for most of Canada’s exports, corporate philanthropy, and private-sector investments in research and development.
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.