The federal government’s recent fall economic statement did not go far enough to address issues of growth and competitiveness for businesses both small and large, several associations say.
In a news release, the Canadian Federation of Independent Business (CFIB) said it is “deeply disappointed” the statement did not include any measures to help small businesses, notably by further extending the Canada Emergency Business Account (CEBA) repayment deadline.
CFIB has been calling on the government to extend the forgivable deadline from Jan. 18, 2024, to Dec. 31, 2024.
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“Sadly, Ottawa ignored the pleas of thousands of small business owners across Canada and didn’t address the crippling pandemic debt that’s weighing on small firms. Over two-thirds of small businesses still carry pandemic debt, at an average of $126,000,” said CFIB president Dan Kelly.
According to CFIB, two-thirds of small businesses do not have the money to repay their CEBA loan and half of those have no capacity to borrow in order to secure the forgivable portion. If a business cannot repay the loan in full by Jan. 18, its CEBA debt increases by as much as 50 per cent, creating the potential for a quarter-million business failures, the association said.
“The government ignored the pleas of panicked small business owners facing the CEBA deadline, yet it has been able to find billions for subsidies to fund multinational vehicle battery plants,” Kelly said.
CFIB also pointed to four tax hikes going ahead over the next several months.
“With the upcoming hikes in employment insurance and CPP on Jan. 1 and the federal carbon tax and liquor tax on April 1, the government is increasing the affordability challenge for Canadians and small businesses,” Kelly said.
CFIB did welcome progress on competition law, interprovincial labour mobility, and employee ownership trusts.
Restaurants Canada also expressed disappointment in the economic statement, saying in a statement that the government has “missed an opportunity to implement sector-specific support for the restaurant industry, which was the hardest hit by the pandemic.”
Restaurants Canada has been advocating for measures to support bottom-line growth in the industry, including: revisiting the CEBA repayment plan by extending the interest-free period by 12 months; allowing for restaurant meals to be a deductible business expense; maintaining the cap on the alcohol excise tax escalator at two per cent; and, implementing a pilot for a dedicated immigration stream for the hospitality industry.
According to Restaurants Canada, while growth in the foodservice industry is forecasted to reach $110 billion in 2023, “this growth has not translated into bottom-line growth for most foodservice businesses, with 51 per cent operating at a loss or barely breaking even, compared to just 12 per cent pre-pandemic.”
The Canadian Chamber of Commerce said that “the government heard the business community on issues such as addressing our housing needs and the importance of ensuring workers can work in any community where and when their skills are needed most.”
However, the chamber said in a statement that it would like to see carbon capture, utilization and storage (CCUS) projects moving ahead.
“Business urgently needs to be able to work with government to invest jointly in these projects so we can fuel green economic growth, achieve our net-zero ambitions, and catalyze the private-sector investment that will help pay for the services and social programs Canadians need.”
The chamber also expressed concerns about the speed with which the government is making changes to the Competition Act.
“If enacted, these changes to the Competition Act would apply to all Canadian businesses and could have significant unintended consequences, including reduced investment and the punishing of pro-competitive business conduct,” the chamber said.
“Next year’s budget must address a number of key measures that weren’t included in the fall economic statement or the 2023 budget, including long-overdue measures to modernize the tax and regulatory system, investments in trade-enabling infrastructure that will strengthen supply chains, and initiatives to foster an innovative economy, maintain our leadership in artificial intelligence, ensure widespread adoption of cybersecurity, and advance digital health,” said Matthew Holmes, senior vice-president of policy and government relations with the chamber.
The Retail Council of Canada pointed to the fact that many of the measures outlined in the statement were previously announced, such as enhancements to the Competition Act and the creation of a Grocery Task Force.
“Unfortunately, other issues important to the retail industry were not addressed in the (statement),” the council said. “While that is disappointing, the government had communicated the limited scope of this specific update well in advance.”
The Business Council of Canada said that the economic statement “missed an opportunity to accelerate private-sector investment and encourage economic growth.”
Finance Minister Chrystia Freeland presented the federal government’s fall economic statement on Tuesday, pledging new limits on government spending as the economy slows and inflation remains high.
The update adds $20.8 billion in new spending over five years since the spring budget, with new measures designed to boost the housing supply, including rental units and affordable housing.
Much of the new spending is tied to policies and programs the federal government announced prior to the fall economic statement, including billions of dollars for electric-vehicle battery plants.
