Economic growth is led by the private sector. It takes investment in their workforce, infrastructure, and innovation.
The 2022 federal budget has a lot to offer, but time will tell if there’s enough emphasis on enabling the private sector to lead our economic recovery.
It’s encouraging to see our government prioritize investments in housing, reducing emissions, strengthening public health, and building a stronger workforce. Overall, our economic outlook is improving. Employment is up. Our GDP has come in higher than projected.
Where the criticism comes in is the lack of vision in the federal budget.
“Fiscal responsibility will become increasingly important amid inflation and rising interest rates,” states Rocco Rossi, President and CEO of the Ontario Chamber of Commerce, in press release. “While Budget 2022 contains several growth-enabling investments, it lacks an overarching plan and vision for economic growth that will encourage private sector investment and reduce the debt-to-GDP ratio without the need for spending cuts or tax increases in the future. Now more than ever, it is critical for Canada to leverage private capital and reduce regulatory barriers that inhibit growth.”
The budget contains some significant positive investments. The federal government is tackling current housing issues. There are incentives to stimulate housing construction and a new Tax-Free Home Savings Account to help first-time buyers save up for a home.
We’re encouraged to see the government continue to prioritize investments in the VIA High Frequency Rail project, which includes Peterborough in a new dedicated passenger rail line between Toronto and Quebec City. The budget spells out further investment in planning and design steps.
There’s a big emphasis on net-zero emissions — and rightly so. Canada has made some big promises on the world stage to do our part to fight climate change. It’s encouraging to see the government work with the private sector, including investments in carbon capture technology, electric vehicles, and tax credits toward net zero technologies. The government is also investing heavily in assisting the agriculture sector invest in low emissions technology.
Small and medium-sized businesses will see access to the small business tax rate gradually phased out once they reach $50 million of capital, up from $15 million. The government is also working on developing a plan for Employee Ownership Trusts, a tool that can help reward employees and increase retention.
Large banks and insurance companies are going to see a tax increase, prompting some concerns from the business community that these costs will get passed on to their customers.
The government is investing in a stronger workforce through new funding for training, tax credits to encourage seniors to continue longer in the workforce, and funding to support integration for persons with disabilities.
Our workforce is heavily dependant on outside help. The budget includes investments in the Temporary Foreign Worker program as well as assistance for immigration, including expanding the program to recognize foreign credentials.
The budget comes up a bit short in a few critical areas. While there is money set aside for cybersecurity, it’s through the national defense sector. Chambers of commerce across the country have been advocating for more investment in cyber security for the private sector, especially as it impacts our supply chain. There’s a general lack of focus and investment in the supply chain, which is driving up costs and creating challenges for businesses and consumers.
Also missing is debt relief for hardest hit business that used government support programs.
If nothing else, the 2022 budget is big on optimism. The federal government is making some much needed investments in some business sectors that should lead us in the direction of recovery and growth. More can be done, and for that we’ll continue to advocate for a strong private sector to lead our economic growth.