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Budget Expected to Reshape Landscape for Canadian Businesses

The 2017 federal budget was about jobs, innovation and the middle class. The 2018 federal budget was about jobs, innovation and the middle class. In 2019, we can expect more of the same, but with added election-year twists. It is widely expected that Finance Minister Bill Morneau will deliver the final budget of the Liberals’ mandate before the end of February. While details remain scarce, themes have begun to trickle out. The government’s fiscal plan is expected to set the stage for the next election, which will be won or lost on the public’s appetite for an aggressive approach to tackling climate change.

Canada’s business community – whether we are referring to large or small enterprises – is as close to open revolt as at any time since the finance minister unveiled proposed small business tax changes in 2017. At the same time, the dynamics of regional economies and the political divide between eastern and western parts of the country have not been so starkly on display since the 1970s. 
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The prime minister’s focus on pricing pollution has been panned as an attack on businesses and middle-class workers by his political opponents. Even though the plan will rebate 90 percent of funds collected directly to tax payers, there is a strong resentment growing in parts of the country that continue to depend on oil and gas development to grow the economy. It has prompted some provinces, especially those led by conservative premiers, to reject the plan and bring a suit against the federal government. Other provinces where clean, green technology is an engine of economic growth are siding with the federal government in court.

The federal plan will be applied across jurisdictions, but its form and function will likely be a matter of ongoing debate. While that conversation unfolds on the sidelines, politicians are stepping into the ring with bold claims to bring the public around to their way of thinking.

Ontario Premier Doug Ford has expressed concern that the carbon pricing system will lead to a recession. While there is an expected decline in overall GDP, economists are singing a very different tune. The Conference Board of Canada shared its analysis that the carbon tax has the potential to decrease Canada’s GDP by $3 billion per year, but it also contextualized this change as a small fraction of a percent of the overall Canadian economy, which generates $2.1 trillion in activity annually. Provincial leaders in Saskatchewan and New Brunswick have aligned themselves closely with Premier Ford, which has put wind in the sails of the federal Conservatives, who look forward to capitalizing on the development. Regardless of whether the carbon plan makes for a noticeable decline in economic growth overall, it is undeniable that particular industries will be hit harder and the effects will be felt differently from province to province. That is fueling political drama, and in an election year, the stakes couldn’t be higher.

It is anticipated that the federal Liberals will take steps to support business owners, particularly in the sectors that will be harder hit by the carbon plan, with its upcoming budget. Groups that rely heavily on highly skilled workers, especially those with an aging workforce, are anticipating new federal supports to promote trades and make it easier for apprentices to get their ticket. Furthermore, retraining opportunities may be an area of focus to support middle-class families that are struggling as established industries are disrupted and the economy shifts.

As the election approaches, AED will be implementing a targeted government relations strategy to shape political platforms and ensure that member concerns are prioritized at the federal level. For all Canadian members, the April Fly-In day will present an opportunity to make your voice heard on issues of importance in the construction sector, and in your region. We look forward to working with you all to make sure the government gets the message and takes action.

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