Canadian Chamber Budget 2021 analysis: many positives for business resilience and recovery, but managing fiscal uncertainty will be critical

(OTTAWA) – April 19, 2021 – Canada’s largest business association says today’s budget had many positives for businesses as they look to adapt and exit the pandemic, but our longer-term economic health will depend on the government managing debt and deficits.

“For all of the subsidy and stimulus spending Canada has seen and will continue to see, the only path to real, sustainable growth starts with helping this country’s business owners create more opportunities for more Canadians. Businesses are the ones that drive the economy, start and grow organisations that hire Canadians and build projects. The Budget’s focus on growth and jobs is an important step towards our economic recovery, but our growth drivers will need to shift from public spending to private investment to help get our finances under control. The plan to reduce deficits over the coming years is important, but it will depend on meeting our growth targets,” said Perrin Beatty, President and CEO, Canadian Chamber of Commerce.

“Canada’s fiscal situation needed serious consideration as we begin to shift away from subsidies to economic growth. With so much pent-up demand on the horizon, avoiding structural deficits and fuelling private sector growth were the core building blocks businesses were looking for in this budget. To ensure the hardest-hit sectors and small businesses survive until they can become self-sustaining again, the extension of support programs like CEWS and CERS will help. However, the government must ensure that support is not removed too early and that its level does not decrease too quickly. The Budget announcements on longer-term competitiveness issues like interprovincial trade barriers, productivity, and reducing the regulatory burden in Canada are an important step forward and should be prioritized” added Beatty.

The Budget delivered on a number of the Chamber’s specific policy proposals outlined in its Roadmap to Recovery, Pre-Budget Submission and policy resolutions, including:

• Extension of business supports like CEWS and CERS for the hardest-hit sectors and small businesses
• Creation of the Canada Recovery Hiring Program to help the hardest hit businesses hire staff when they are ready for recovery
• Reskilling and upskilling to get Canadians back to work, as well as producing better data on labour market demand in individual communities and building talent pipelines based on employer needs
• National leadership on reducing interprovincial trade barriers by collecting data, identifying barriers, and allocating federal transfers to provinces and territories to address these issues
• Recapitalization of the National Trade Corridors fund to support trade-enabling infrastructure
• Support for SME technology adoption through capital expenditures and financing to improve Canadian productivity

However, there are also several improvements that can be made to today’s announcements to better support Canadian businesses, including:

• Replacing fiscal guardrails and a medium-term debt-to-GDP target with a fiscal anchor to encourage long-term fiscal sustainability.
• Focusing on supporting working mothers now with support for childcare through tax credits, instead of waiting to create a national program
• Working through the OECD on a multilateral approach to a digital services tax, instead of creating a one-off Canadian model that may not align with our trading partners

“Our members, businesses from Main Street to C-Suite and everything in between, wanted a clear plan to help them lead Canada’s economic revival. They are ready to kick-start our shared recovery, but they need the government to do its part and create an encouraging business environment. Today’s Budget provided necessary supports for many Canadian businesses, but more needs to be done on the economic fundamentals to ensure longer-term growth,” added Beatty.

For more information about the Canadian Chamber’s Pre-Budget Submission, please visit here.