Federal Budget 2019

Federal Budget 2019

On Tuesday, March 19, 2019 Finance Minister Bill Morneau presented the government’s 2019-2020 federal budget. Although there were some positive announcements with this Budget, unfortunately, it fails to address the fundamental issues undermining the ability of Canada’s business owners to create more jobs and economic prosperity for all Canadians, based on an analysis by the Canadian Chamber of Commerce and the Cape Breton Regional Chamber of Commerce.

While we are pleased that the Budget did deliver on some initiatives key to the growth of our Island and Atlantic Canada, including investments in Canada-wide highspeed internet and the extension of the Atlantic Immigration Pilot Project in support of regional population growth, it fails to provide concrete measures to address the tax and regulatory burden on businesses. The Budget also did not address a key issue identified by the more than 16,000 members of the chamber network in Atlantic Canada which is to reduce the budget deficit of $19.8 billion

The Cape Breton Regional Chamber of Commerce is the voice of local businesses in the CBRM with the federal government. We are part of a network of over 450 chambers and commerce and boards of trades representing over 200,000 businesses of all sizes in all sectors of the economy across the country. On behalf of this network, the Canadian Chamber of Commerce has outlined several public policy priorities for the government in advance of the 2019 Budget below:

The Budget did deliver on some of the Canadian Chamber’s policy proposals outlined in its Pre-Budget Submission, including:

  • Multiple funding mechanisms to ensure that high-speed internet access is Canada-wide by 2030, with $1.7 billion specifically earmarked for rural, remote and Northern communities.
  • $631.2 million to expand Work-Integrated-Learning (WIL) programs, with a view to create up to 20,000 new WIL opportunities outside of STEM-related fields.
  • $150 million to create new partnerships between government and industry to create up to 20,000 new WIL opportunities.
  • Multiple funding mechanisms to enhance apprentice programs in skilled trades.

 

However, the Budget did not address the key issues identified by businesses across Canada:

  • A commitment to a comprehensive review of the taxation system to make it fair and less cumbersome for businesses.
  • A broad-based commitment to reduce the regulatory burden on businesses.
  • A renewed commitment to eliminating inter-provincial trade barriers and mobility.
  • Support for SMEs to help them find new export opportunities and expand Canada’s ability to diversify its trade.
  • A clear strategy to move the Trans Mountain pipeline forward, given the significant investment made by Canadian taxpayers.

 

Some Budget 2019 proposals require more consideration and details before determining the impact on businesses:

  • The Budget identified funding programs to develop “regulatory roadmaps” to address stakeholder issues and irritants. While these efforts align with our Chamber’s interest in reducing the regulatory burden on Canadian businesses, the Budget proposals, unfortunately, maintain a lacklustre, made-by-government solution to a made-by-government problem.
  • The new Canadian Training Credit and EI Training Support Benefits to support the up-skilling and re-skilling of Canadians align with the Chamber’s recommendations, however, the potential impact on small businesses remains unclear. The Chamber needs more information and wants to see a commitment that business is consulted.
  • The Budget offered little new information regarding the national pharmacare plan. The Chamber supports focusing on the 10% of Canadians that are uninsured or underinsured.
  • The Chamber supports making the Global Talent Stream program permanent. The Chamber would like to see the program include a focus on bringing skilled immigrants to rural communities, where they are often most needed.

 

On behalf of the Minister of Small Business and Export Promotion, please find below a summary of the initiatives of interest to small businesses in the 2019 budget:

  • SR&ED tax incentive
    • The Scientific Research and Experimental Development (SR&ED) Program provides more than $3 billion in tax incentives to over 20,000 claimants annually, making it the single largest federal program that supports business research and development (R&D) in Canada. The program provides a 35-per-cent refundable tax credit to eligible small and medium-sized businesses. To date, access to the 35-per-cent rate was determined by a business’ level of income and capital. To better support growing innovative businesses as they are scaling up, the Government proposes to eliminate the income threshold for accessing the enhanced credit. The government is providing $395 million over five years, and $105 million per year ongoing, to support growing and innovative small and medium-sized businesses as they scale up.
  • Youth Entrepreneurship
    • Budget 2019 provides Futurpreneur Canada with $38 million over five years, starting in 2019–20, to continue its important work of supporting the next generation of entrepreneurs. Futurpreneur Canada will match these investments with funding received from other government and private sector partners. This renewed investment would help support the work of approximately 1,000 young entrepreneurs per year. This funding includes $3 million over five years for Futurpreneur Canada to provide targeted support to Indigenous entrepreneurs.
  • Gender Equality
    • Budget 2019 provides details on the Social Finance Fund, which was announced in the Fall Economic Statement. The Fund will help charitable, non-profit and other social purpose organizations access financing for projects that will have a positive social impact. Notably, a minimum of $100 million will be allocated towards projects that support greater gender equality—leveraging existing philanthropic and private sector funds towards this purpose in order to help them reduce the social and economic barriers faced by diverse groups of Canadians of all genders.
  • Regulations
    • Budget 2019 proposes the necessary funding and legislative revisions so that regulatory departments and agencies can move forward on the Regulatory Roadmaps in the Agri-food and aquaculture, Health and Biosciences, and transportation and infrastructure sectors. The goal is to specifically address stakeholder issues and irritants in these sectors, informed by over 140 responses from businesses and Canadians across the country, as well as recommendations from the Economic Strategy Tables. The Budget also provides funding to continue the government’s work on regulatory cooperation both within Canada and with our trading partners. In addition, Budget 2019 picks up on the Fall Economic Statement, which proposed an annual modernization bill, and the upcoming establishment of an External Advisory Committee on Regulatory Competitiveness.
  • Permanent Global Talent Stream
    • To help Canadian businesses attract the talent they need to compete and succeed in the global marketplace, the Government introduced the Global Talent Stream in 2016. This was introduced to help innovative Canadian firms quickly access the highly skilled global talent they need to scale-up, grow and help create jobs for Canadians. This will now be a permanent program, allowing employers to recruit and employ highly skilled workers into the future.
  • Canada Training Benefit
    • To ensure that businesses can access a skilled workforce, and working Canadians get the skills they need to succeed in a changing world, the government is providing:
      • (1) a training credit that accumulates at a rate of $250 per year to help with the cost of training fees; and
      • (2) an EI Training Support Benefit to provide income support when an individual takes time off work to train, for up to 4 weeks off work. This helps individuals train while receiving a source of income that is not from their employer. Importantly, Budget 2019 proposes to introduce an EI Small Business Premium Rebate. Starting in 2020 any business that pays employer EI premiums equal to or less than $20,000 per year would be eligible for a rebate to offset the upward pressure on EI premiums resulting from the introduction of the new EI Training Support Benefit.
  • Broadband
    • The Government is setting a national target in this Budget, meaning that 95 per cent of Canadian homes and businesses will have access to internet speeds of at least 50/10 Mbps by 2026 and 100 per cent by 2030, no matter where they are located in the country. This will involve a coordinated effort involving partners in the private sector and across all levels of government. To meet this commitment, Budget 2019 is proposing a new, coordinated plan that would deliver $5 billion to $6 billion in new investments in rural broadband over the next 10 years.
  • Tourism
    • Canada’s tourism sector is an important source of jobs and growth, and thousands of small and medium sized businesses are at the core of the sector. To help Canada’s tourism sector innovate and grow, Budget 2019 proposes to provide $58.5 million over two years, to the Regional Development Agencies for the creation of a Canadian Experiences Fund. The Fund would support Canadian businesses and organizations seeking to create, improve or expand tourism-related infrastructure—such as accommodations or local attractions—or new tourism products or experiences. In addition, the Budget provides $5 million to Destination Canada for a tourism marketing campaign. The government also proposes to create a seventh Economic Strategy Table dedicated to tourism.
  • Food Processing Sector
    • Of particular interest to businesses in this sector, such as those that trade with CPTPP countries, Budget 2019 proposes to allocate $100 million over five years, from the Strategic Innovation Fund, to support innovation in the food processing sector.
  • Support for First-Time Home Buyers
    • The Construction and Real Estate sectors are core components of the SME landscape in Canada. To help make homeownership more affordable for first-time home buyers, Budget 2019 introduces the First-Time Home Buyer Incentive. The Canada Mortgage and Housing Corporation (CMHC) First-Time Home Buyer Incentive is a shared equity mortgage that would give eligible first-time home buyers the ability to lower their borrowing costs by sharing the cost of buying a home with CMHC. The Incentive would provide funding of 5 or 10 percent of the home purchase price. The buyer would repay the Incentive, for example at re-sale.
  • Creative Industries
    • To address some of the challenges faced by Canadian musicians in the digital era, Budget 2019 proposes to provide $20 million to the Canada Music Fund, so that the Fund can enhance its support for the production, promotion and distribution of Canadian music. With this investment, the Fund will be able to support more Canadian musicians and music entrepreneurs, and help with the rising costs of marketing and promotion necessary in the music industry today.
  • Indigenous Business Development
    • Budget 2019 provides up to $100 million to create an Indigenous Growth Fund. Managed by the National Aboriginal Capital Corporations Association (NACCA), this Fund would allow all Aboriginal Financial Institutions, including Métis Capital Corporations and others, to support more Indigenous entrepreneurs, and more ambitious projects. Funding for the Indigenous Growth Fund will be provided through the Business Development Bank of Canada and the Social Finance Fund.
    • The Budget also provides $50 million over five years to enhance the funding of the Métis Capital Corporations to support the start-up and expansion of Métis small and medium-sized enterprises.
    • Further, Budget 2019 proposes to invest $78.9 million over five years, with $15.8 million per year ongoing, to support Indigenous entrepreneurs and economic development. This investment, through the Community Opportunity Readiness Program, will help First Nations and Inuit communities build business plans, and provide funding to expand existing Indigenous-led businesses, and launch new Indigenous-led start-ups.
    • To further support Indigenous entrepreneurs, Budget 2019 also proposes to provide $17 million over three years, starting in 2020–21, to expand the Aboriginal Entrepreneurship Program. This program provides a range of services and supports that promote the growth of a strong Indigenous business sector in Canada.

 

Heading into the 2019 Federal Election, the Cape Breton Regional Chamber of Commerce, in partnership with the Atlantic Chamber of Commerce and Canadian Chamber network will continue to engage with Federal representatives to focus on priorities identified by our members to support the growth of our local economy.

Thank you,

Kathleen

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