In anticipation of the 2018-2019 federal budget, the Chamber presented its recommendations to the Honourable Bill Morneau, Minister of Finance for Canada.
A positive economic climate
The international economy saw positive growth in 2017, with an increase of 3.5%, a peak since the trough of the 2008 recession. This positive global environment was particularly favourable to the Canadian economy, delivering growth of 3.2% this year, the best economic performance of G7 member countries.
But, while the outlook for growth is positive, a number of non-economic risks and factors continue to weigh on the recovery in the medium term. For example, revisiting free trade agreements, particularly NAFTA, and the emergence of protectionist attitudes, are two major risks that could impede growth. This is in addition to the drop in competitiveness of local businesses related to U.S. tax reform.
Given the context, the Chamber calls on the Government of Canada to plan an economic stimulus scenario to respond to any adverse shock, while staying the course in the short term to seize opportunities offered by the favourable economic environment.
Five priority efforts
- Increase the rate of investment in strategic infrastructure. Particular attention must be paid to the city’s municipal, maritime, port and airport infrastructures.
- Protect and improve the competitiveness of the tax system. We need to prevent local business competitiveness from being affected by the American reform and relieve the corporate tax burden. The government also needs to modernize the tax system and ensure it reflects the realities of the digital economy.
- Continue to support innovation. The super cluster competition launched by the government stimulated the emergence of innovative, promising projects for our economy. To keep this momentum going, we need to create a new financing mechanism to support promising projects that were not selected.
- Internationalize local businesses. Given the uncertainty surrounding the renegotiation of NAFTA, we need to adopt measures that help local businesses further internationalize and diversify their markets.
- Establish an explicit, robust plan to balance the budget. Effective control of public finances is essential for the state to be able to handle possible economic shocks or a recession. This is why the Government of Canada must establish a plan to balance the budget, with annual interim targets, and maintain a contingency reserve.
You can consult the brief “Strengthening the Canadian economy to support growth” online here
(in french only).