This week, the new Trudeau Government released its first budget.
What we like about the budget: the investment in skills, broadband access, innovation, infrastructure, Aboriginal education and the efforts to stimulate the economy. We are also pleased to see the Mineral Exploration Tax Credit (METC) extended for a year. This is great news for Northern Ontario and will provide some assistance to junior exploration firms currently struggling to raise capital.
Things we didn’t like so much: the small business tax rate. We are disappointed with the government’s decision to push back the small business tax reduction. It was also disappointing that there was no reference to specific investment in the Ring of Fire and increased funding for FedNor.
The budget announced a hefty infrastructure spend – $120 billion over the next decade. The government’s new infrastructure plan will be rolled out in two phases.
Done right, the government’s commitment to building infrastructure can be an important investment in the future. However, every dollar being committed is borrowed money that we can’t afford to waste. The government should focus on the projects that will benefit Canada’s economy the most: trade-enabling infrastructure as well as infrastructure that support our resource and manufacturing sectors. We hope to see more of these concrete measures in the second phase of the infrastructure plan.
The Canadian Pension Plan is still a bit of a question mark. The budget lacks detail on how the Government plans to move forward with the CPP. The budget maintains that the Government of Canada is striving to come to a decision with the provinces and territories on enhancing the CPP by 2016. Under the CPP Act, amendments to the CPP require the agreement of the federal government along with 7 provinces comprising two-thirds of the Canadian population. That won’t be easy. We will be continuing to monitor this file as well as the province’s proposed Ontario Retirement Pension Plan (ORPP) as pension changes could represent significant increases in payroll taxes for employers.
The implementation of an innovation strategy, the investment in research and development in Canada’s universities, the focus on skills and training and the support provided to innovation clusters and incubators will ensure Canadian companies have the tools they need to rapidly grow into global competitors. We urge the government to work with the private sector on this plan to make sure these investments also lead to commercialization.
On a cautionary note, we are wary of the deficit outlined in this budget and the time it will take to return to a balanced budget. Putting money on our collective credit card in the short term can be acceptable, if we have a solid plan on how to pay it back. What we must not do is to spend now and send the bill to our kids. We urge the government to keep its promise to balance the budget during the term of this Parliament.
We will be closely monitoring the government’s economic strategy. With the right choices, Ottawa can help grow business and make Canada more competitive. With the wrong choices, these are deficits that could easily spiral and hobble our economic competitiveness. The business community is ready to work with the government to make sure that, collectively, we take the right path.
What do you think about the budget? Did the budget benefit your sector?
Let me know what you think. Email me at [email protected].
Until next time, all the best.
Debbi