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Edmonton Chamber of Commerce Budget Policy – February 2022

Background

The impacts of the global pandemic continue to affect businesses although 2021 has brought recovery. Businesses are dealing with uncertainty and volatility, changing regulations and supply chain disruptions. Some sectors, such as hospitality, tourism and the arts continue to face major barriers to their normal operations.

The Edmonton Chamber of Commerce federal election pillars, outlined in From Challenge to Change, a joint publication with the Calgary Chamber of Commerce, included:

• Economic Recovery and Diversification
• Talent, Skills and Jobs
• Environment and Climate
• Finance and Taxation, and Trade and Market Access.

The recommendations are guided by principles including certainty and stability for businesses and those they serve and employ, facilitating inclusive growth and expanding our economy by bringing more equity-seeking groups to the table, and encouraging collaboration between all orders of government.

 

Economic Recovery and Diversification

Governments have now ended the most intensive support programs and have generally shifted to more targeted recovery programs. We support these targeted programs and continue to call for a scaled model as programs come to an end to ensure businesses don’t hit a brick wall of financial hardship as their support programs end.

There is a positive momentum for the technology sector in Canada with a level of investment in the last few years that has not been seen before. More needs to be done to support the ability of early-stage companies to scale up and retain Intellectual Property in Canada.

As support programs end, businesses are concerned about their capacity to catch up on a mountain of bills with fewer customers coming through the door. We urge governments to ensure that there are flexible debt repayment schedules for businesses who accessed debt-supported response programs, such as the CEBA and BCAP, to ensure employers aren’t forced to shut their doors due to government debt repayment.

While the COVID-19 pandemic is the first such health crisis to emerge in our province since the 1918 influenza pandemic, we cannot guarantee that a century will pass before the next pandemic. Federal, provincial and municipal governments should conduct a holistic review of the response to the pandemic considering the overall effectiveness of programs and policy decisions on outcomes.

As the hardships caused by this pandemic have been felt more acutely by certain segments of the population, this independent review should include an analysis of the impacts on various social identities, including but not limited to socio-economic status, race, ethnicity, gender identity or expression, sexual orientation or expression, indigenous status, location and/or age.

 

Talent, Skills and Jobs

At a time when employment rates are still high due to the pandemic, employers are facing significant difficulties finding skilled workers. In Alberta, the situation has an added layer of complexity because of the job losses in the oil and gas sector. The Government of Canada should work with provinces to support a skills transferability approach to minimize the time workers are unemployed and reduce underemployment. This would include upskilling, reskilling, work-integrated learning and micro-credentials. The federal government should also work with provinces to improve the recognition of foreign credentials across the country.  This priority should be addressed urgently because Canada risks losing workforce talent in a highly competitive international market that has shifted dramatically following the changes brought in by the pandemic.

 

Secure our Fiscal Future

Canada’s tax system has not seen a fulsome review since the Royal Commission on Taxation, which delivered recommendations to government in 1966. The COVID-19 pandemic has significantly reduced government revenues through most taxation streams, and we do not yet know to what degree these trends will revert or remain. This creates the ideal opportunity to launch a new Royal Commission on Taxation, ending over six decades of piecemeal reforms to our tax system. Reforming our tax system with a focus on competitiveness and attracting job-creating investment would help to ensure Canada is well-placed to succeed in the post-pandemic world.

The increase in debt and deficit as a result of the response to the COVID-19 pandemic present a challenge for government budgets for years to come. As soon as it is reasonable given the circumstances, the government should communicate a long-term plan to eliminate the deficit and reduce the debt to protect Canada’s long-term fiscal health. The Government of Canada should publish these plans including concrete fiscal anchors and enduring performance measures.

The Government of Canada is working with other countries on a multilateral agreement on international tax reform. In the meantime, the government will table legislation for a 3 per cent digital services tax which will come into effect January 1, 2024 in the absence of a multilateral agreement. This is an important measure to ensure companies do not have an unfair advantage compared to Canadian firms through tax avoidance. The Government of Canada should continue to work with other countries on international tax reform and update anti-avoidance rules.

 

Support Market Access and Trade

Improving Canada’s system of trade corridors is key to enhancing mobility for Canadian goods and improving the resiliency of the Canadian supply chain. Dedicated funding to advance the development of utility corridors would support Canada’s long-term economic development and strategic trade interests—a proactive and integrated transportation and utility corridor (TUC) strategy to link all of Canada’s regions will be fundamentally important to help our country plan for future growth. An integrated TUC network would allow a dedicated right-of-way for future major national projects, including rail, roadways, transmission infrastructure and pipelines. This development should include the proposed 7,000 kilometre Northern Corridor developed by the University of Calgary School of Public Policy and the Centre for Interuniversity Research and Analysis of Organizations (CIRANO).

Albertans in remote, rural, and First Nations communities require reliable telecommunications infrastructure to access education, employment opportunities, community and public services, and goods and services. Attracting and retaining businesses and workers in those communities through broadband-enabled personal, social, cultural, educational, and employment connections is a priority. Firms in remote communities require broadband to access customers and suppliers, to benefit from artificial intelligence and other cloud-enabled services, to retain employees and to access skills training.

Red tape reduction provides a cost-effective alternative to traditional economic stimulus measures. Rather than costing government in the long run, red tape reduction measures can actually reduce government expenditures by eliminating unnecessary or redundant regulatory standards and simplifying the process for obtaining government approvals. The pandemic brought much temporary red tape reduction, including simplified processes for various types of approvals, and these temporary improvements should be made permanent wherever possible.

 

Invest in a Low-Carbon Economy

Climate change is the issue of our time. By being innovative we have the opportunity to position Alberta for the economy of the future and a global leader in solving climate change. Each order of government must be committed to meaningful, thoughtful policy solutions to solve climate change. Canada can be a leader in natural resource development AND solve climate change simultaneously. When doing both, however, we need tangible outcomes and conviction. It is important that national regulations and solutions take significant regional differences into account to avoid unintended consequences of applying the same standards to all regions. For example, Edmonton’s climate is dramatically different compared to other major urban centres in Canada and buildings may require different retrofit and building code standards. Policy solutions should also be made in the broad context of competitiveness to avoid carbon leakage.

Alberta’s energy sector has been an important economic driver for Canada for decades—and will continue to be critical to Canada’s economic growth for years to come. We extract and refine energy safely, reliably, and in an ethical manner. The oil and gas sector yields benefits across the country through economic spinoffs including indirect jobs, taxation, and support for other industries. It has been critical to financing strong public services and providing meaningful employment for generations. Alberta has become a leader—and has the talent and geography to continue this leadership—on renewable and hydrogen energy as well. Attracting international investment in both renewable technologies like small nuclear reactors, and the clean technology being utilized by the oil and gas sector, will be critical for the sector to continue supporting Canadian prosperity and charting a low-emissions path forward. To this end, we call on all orders of government to publicly support the energy sector in its entirety—including petrochemicals and renewables as part of an equal energy mix—promote this mix among Canadians and in international markets around the world.

 

Recommendations

Edmonton Chamber of Commerce recommendations to the Government of Canada:

Economic Recovery and Diversification

1. As governments wind down COVID-19 economic support programs, shift to models that are focused, flexible, scalable, and do not provide disincentives to return to work or to hire.
2. Provide flexibility on debt repayments to support businesses onceCOVID-19 support programs end.
3. Conduct and publish results of a review of the collective response by all levels of government to COVID-19 to aid in future emergency response efforts for both governments and businesses.
4. Support early-stage companies to scale up to retain Intellectual Property in Canada.
5. Support our economic recovery through inclusive economic growth, promoting a business environment of inclusion and expanding economic opportunity for marginalized and under-represented groups.

Talent, Skills and Jobs

1. Work with provinces to support a skills transferability approach including upskilling, reskilling, work-integrated learning and micro-credentials. The federal government should also work with provinces to improve the recognition of foreign credentials across the country.

 

Secure our Fiscal Future

1. Establish a Royal Commission to conduct a comprehensive review of the Canadian tax system in consultation with industry stakeholders and sub-national governments and deliver a report in a timely manner.
2. Continue to focus on long-term fiscal planning and key fiscal guardrails, particularly as we transition away from COVID-19 support programs.
3. Continue to work with other countries on international tax reform and update anti-avoidance rules.

 

Support Market Access and Trade

1. In consultation with businesses and utility companies, develop trade corridors, including the proposed Northern Infrastructure Corridor, and invest in trade-enabling infrastructure.
2. Acknowledging recent investments, work with industry on a plan to develop and implement a strategy to enable 100% of businesses, homes, ranches, and farms in Alberta to have access to broadband internet by 2025.
3. Continue to review regulations with a goal to reducing regulatory burdens on businesses wherever feasible.

 

Invest in a Low-Carbon Economy

1. Reinvest carbon tax funds directly into innovation to leverage, support and advance innovation in the private sector.
   • Include enhanced oil recovery as part of the Investment Tax Credit for Carbon Capture, Utilization and Storage to support lower emissions in the sector.
2. Publicly support Alberta’s continued position as an energy leader that will play a key role in the transition towards the low-carbon economy of the future.
3. Incorporate regional factors into federal programs designed to reduce greenhouse gas emissions and ensure all programs and policies are examined through a lens of competitiveness for business and economic health for the region.