What Bay Street wants in the budget

Economists, lobbyists and industry experts weigh in on a business-minded federal budget

Sarah Barmak
<p>Financial center, Bay Street, Toronto, Canada</p>

Financial center, Bay Street, Toronto, Canada

(Mark Blinch/Reuters)

In the days leading up to the release of the 2013 federal budget, economic experts and business leaders across the country have voiced their ideas, hopes and recommendations. They represented a wide range of perspectives, asking for reforms to employment insurance, taxes—or little change at all.

“I would hope for a stay-the-course budget,” said Craig Wright, senior vice-president and chief economist for RBC Financial Group. “The economic outlook continues to be challenging and uncertain, suggesting limited appetite for any dramatic change of the fiscal course. I assume the budget will continue to be based on conservative economic assumptions alongside the maintenance of a large allowance for risk. The net effect will be that what is tabled will be the worst-case outlook with the actual outcome continuing to be one of smaller deficits and a quicker return to balance that forecast.”

John Manley, president of the Canadian Council of Chief Executives, said he hoped the government’s efforts to improve the tax system would continue.

“Maintaining focus on Canada’s international competitiveness to ensure the private sector can drive growth and jobs is essential,” he said. “I would also encourage the federal government to continue its work on jobs and skills. Recent EI and immigration reforms are a good start, and further reforms to encourage mobility are needed. We should also be working harder to develop and train workers from disadvantaged groups, including Aboriginal communities, and to attract international students and researchers to Canada.”

Corinne Pohlmann, vice-president of national affairs for the Canadian Federation of Independent Business, had several things on her wish list, including no increases in CPP or QPP premiums and extending the Employment Insurance hiring credit. “This credit has been helpful to offset the increases in EI premiums, which can be a deterrent to hiring among small businesses,” she said. “However, the credit has not been extended beyond 2012 yet; EI premiums will continue to go up for a few more years.”

Pohlmann also hoped for a sign the government would lower taxes on small businesses. “The general corporate rate has come down quite a bit over the last several years, from as much as 28 per cent in 2001 to just 15 per cent today. During that same period, the small business rate has decreased from 12 per cent to (just) 11 per cent.”

The C.D. Howe Institute is looking for a more aggressive approach to fiscal responsibility, which would balance Canada’s books far earlier than even the Conservative government plans to. In its shadow budget, the think tank has proposed setting limits on Ottawa’s operating costs, reducing the numbers of federal staff and trimming subsidies to Crown corporations.

In this way, Canada would return to a surplus by fiscal 2014-15, a year ahead of schedule.

Finally, the oil and gas industry is looking for a few treats from the budget that could help producers through a slow-growth business environment. The Canadian Association of Petroleum Producers is asking the government to ensure non-discriminatory policies in other jurisdictions toward Canada’s oil and gas exports, and to support its initiative to diversify export markets, in particular access to Asia-Pacific markets from Canada’s West Coast.

The energy industry is also looking for a tax break. It wants liquefied natural gas (LNG) facilities to be reclassified as manufacturing and processing assets so they can be included in a more favourable tax class. This will bring the assets in line with the way tax authorities treat LNG processing facilities in the U.S. and Australia.