It’s a budget that’s sweeping in scope, covering Old Age Security, national defense, the government’s Scientific Research and Experimental Development program and the penny. Canadian Business spoke to members of Canada’s business community about whether the federal budget will be good for business and the economy.
Iain Black, president and CEO, Vancouver Board of Trade
This budget reflects the type of long-term thinking that needs to be shown in a global context of the need for more free trade, particularly with Asia, South America and Europe. We congratulate the government for accelerating its balanced budget target rate back to 2015. Similarly, after a period of stimulus spending that increased spending and debt, the government is moving its spending back to traditional levels. The combination of spending control and economic growth is going to restore some of those key financial measurements back to where they were pre-recession, and at that point give them a very strong footing to compete. A commitment of any government to balance the budget is the best method to ensuring government stay within their means and stay sustainable over the long term.
Catherine Swift, chair, president and CEO of Canadian Federation of Independent Business
It is a pretty good budget for business. They’re basically keeping on their schedule for deficit reduction and eventual elimination. They made a good opening gambit, I’d say, on public sector pensions and MP pensions. A lot of detail has yet to be delivered but they have said they will be eventually asking public servants to contribute 50% to their premiums, up from about 35%, while the taxpayer kicks in 65%, which is pretty imbalanced. So they’re going to move to 50-50 and gradually require federal public servants to work until age 65. We think they could have implemented it in a much more compact timeline. They’re asking the rest of Canadians to delay receiving OAS until 67, but they should put the federal employee changes on the same timeline as the OAS change, just as a fairness measure. They did manage to reduce the deficit and I’m not surprised as they always leave themselves a bit of a cushion. They’re saying right now they’ll get rid of the deficit on their original timeline of 2014-2015, but I suspect it’ll happen a year earlier. It’ll be an election year, right?
Glen Hodgson, senior vice-president and chief economist, Conference Board of Canada
It’s good that the government is still shooting to balance the budget by 2015 and gives itself room to do it at least a year earlier. It uses pretty modest growth assumptions. The numbers in the budget, something like 2.1% growth this year and 2.4% next year, are below our numbers. And that’s a good thing. They’ve built in a $3-billion reserve, lowered their revenue expectations by about $3 billion and then there’s room on the upside which is good for business because it means there is a serious plan to get back to balance. And that means no more surprise tax increases down the road.
There’s a bit more moving money around, focusing on innovation, which is clearly in the interest of business, but our view here is that innovation must be lead by business not by government. Adding another $1 billion to supporting innovation is good, but what we really need is to build an innovative culture within businesses. Government can’t fix the innovation file; the ball has been passed to business.
Craig Alexander, senior vice-president and chief economist, TD Financial Group
It’s quite a favourable budget for business. I do think this is very much the government handing the baton to the private sector in terms of economic growth. During the recession, the government needed to provide support to the economy, provided stimulus to mitigate how deep the recession hit, and also helped the economy get into recovery. But now that the economy is growing, the government has to turn its attention to fighting the deficit and that means the private sector will have to pick up that baton and provide the growth to the economy. The government is looking for exports and business investment to be the two strongest drivers of economic growth. In a fiscally constrained world, they’re providing incentives for businesses to invest, hire and promote trade. While this was a fiscally austere budget, it was also pro-business and pro-growth, and I think it struck a pretty good balance between growth and austerity. But the point is the growth has to come from the private sector.
Mark Noonan, partner, Deloitte & Touche
Overall, our view is that it’s more of a stay-the-course budget rather than a revolution budget. There are some good things in there for business, particularly for innovation and technology with the $400 million to a venture capital initiative and $100 million to BDC for their VC initiative. One of the critical shortages in Canada right now is venture capital money for our technology companies, so these are very positive areas of improvement. One thing that could’ve been a bit better for business would’ve been an angel tax credit. British Columbia has one and we hoped one would be put in place on a federal level, helping angel investors of early stage companies to get a credit for that investment, but it wasn’t mentioned in the budget.
Jeff Beer is a staff writer with Canadian Business.