Panel data provided by Madison's Canadian Lumber Reporter.

Business Issues and The Next Federal Election

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As an impending Federal election appears to be in the works, it’s time to look at some of the issues affecting Canadian businesses. Each of these issues needs to be discussed by each political party and a solution implemented. So, while some of these issues are not new, they are largely created by the changes in technology and the globalization of the Canadian economy.

One issue which has been on the business agenda for a number of previous elections is regarding the lowering of corporate tax rates in Canada. In order to be competitive with the US and other countries, we need to have an income tax structure which allows Canadian businesses to be competitive. At present, our corporate tax rates weigh Canadian businesses down, making them uncompetitive in the Global marketplace. This is especially true when we are competing against our neighbor to the South.

Another problem Canadian businesses encounter is the need to become more efficient in order to compete. Unfortunately, part of this efficiency gap is created because of the size of our country and the distances over which we travel and transport goods and services. The dilemma is that business can’t start to alleviate this problem without the assistance and leadership of the Federal Government.
A major hurdle which hinders business in Canada in general, and more specifically Prince George, is the need for the developing, constructing and upgrading of infrastructure. While this certainly includes infrastructure such as highways, ports, and airports, it also includes other components such as high speed fiber and wireless towers. All of these components are essential for an efficient and competitive business environment in Canada. Prince George is a prime example of a Canadian community which will grow and prosper from investment in infrastructure, such as the Port of Prince Rupert, wireless internet and cell service along the transportation corridors, and a Ring Road system around our City. The efficient and safe movement of goods, materials and information is essential to creating an efficient economy.
On the heels of federal infrastructure spending is the capital spending Canadian businesses make each year. Unfortunately, our current tax structure does little in the way of providing business with an incentive to invest in high tech and innovative assets, such as high tech machinery or communication equipment. Currently, the useful life of this type of asset is very short, usually three years or less. However, Canadian tax laws do not allow businesses to write off of these assets in accordance with their useful life. This means that most businesses are reluctant to invest their capital in these types of assets. Tax changes must be made in order to allow quicker write offs of capital investments.

Another method the Federal government could use to help Canadian businesses become more efficient would be to provide more incentives for Research & Development, including making more funding available for qualifying projects. The development of new products is one of the most important ingredients used by business to increase productivity and efficiency. However, due to the large start up costs and uncertainly associated with R & D, businesses are reluctant to undertake any new product development with out some form of risk reduction. R & D funding helps provide businesses with the risk reduction they need.
The other issue involving R & D which needs to be addressed by the federal government is the amount of “red tape” which is required in order for a business to qualify for, and receive, R & D funding or tax credits. This process needs to be streamlined to reduce the bureaucratic process which tends to inhibit R & D in Canada. Just making the process easier and less onerous will help to encourage R & D throughout Canadian businesses.

Post secondary education and skills development need to be encouraged in order for Canadian business to assemble the most educated and skilled workforce in the global economy. Without access to a skilled workforce, Canadian business will be left behind. At present, we are seeing a shortage of skilled labor such as machinists, computer technicians and welders which negatively impacts the productivity of the Canadian economy.

Finally, the Federal Government needs to encourage collaboration between Universities and Canadian businesses in order to facilitate the development and production of new and innovative products and services. At present, universities undertake an immense amount of research, much of which could be developed into marketable products or services. At present, there is disconnect in this area, and most products never make it to the market place. Encouraging collaboration between universities and business will enhance this process and provide new products and services, ensuring Canada is one of the most efficient economies in the global marketplace.

By implementing these recommendations, the Federal Government will encourage an increase in the productivity of Canadian business, which will lead to a healthier Canadian economy. 

-Myron Gordon owns TMSG Management Services Group, which provides management and financial services to growing businesses. 


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