Thank you.
Members of the committee, bienvenue à tous. The Business Council of Manitoba and our members would like to thank you for the opportunity to provide input for federal budget 2024. To borrow a quote from our new premier, here are our recommendations to increase the ability of the “economic horse” to pull “the social cart”.
Number one is controlling the levels of government debt and debt-servicing costs while maintaining a globally competitive tax structure. There is an immediate need to control the amount of spending to service the national debt, in order to ensure sufficient spending in critical areas, such as providing health care and social programs and investing strategically for economic growth. The continuation of deficit-financed spending at higher interest rates typically leads to higher taxation. This needs to be avoided at all costs to keep us competitive.
Canada must be globally competitive. Our tax structure and regulatory environment must routinely be benchmarked to other OECD countries with the objective to first improve Canada's position, and then continue to maintain it. This, in addition to growth-supporting investments, will make Canada a more attractive country to invest and do business in, leading to GDP growth and increased funding through taxation for social programming.
The Government of Canada must invest in service delivery efficiencies and technology-based solutions wherever possible. A risk-based approach to program integrity and processing must be taken, and a comprehensive program review of government spending should be undertaken to rationalize existing programs.
Number two is labour market development. Canada is experiencing a general shortage of labour suitable to meet employer needs. In addition, labour productivity rates in Canada have been decreasing over the past several decades compared with other nations. The recent increases in federal immigration levels and provincial nominee program allocations are positive developments.
Now, work must focus on the selection process to better align newcomers with labour market and employer needs. Foreign credential recognition continues to be an issue for newcomers to our country. We recommend the creation of a credential alignment tax credit for new Canadians pursuing Canadian equivalents to their foreign credentials. This will allow people to gain Canadian credentials more quickly and affordably while boosting the labour market and GDP.
Further, we need to continue to address the goals of economic reconciliation and reduce the social costs of underemployed populations. There must be an investment in programs that will increase workforce participation rates, including among female, northern and indigenous citizens. Positive program examples are work-integrated learning provided through employers, tax credits to offset the costs of employer-led training, and strategically aligning university education funding with employer needs.
There is also an immediate need for a joint funding program with provinces to create new day care spaces, and to recruit and train workers in support of the national $10-a-day day care program. Manitoba was one of the first to adopt a $10-a-day program, but it is utterly useless without the spaces and the workers.
Number three is housing. Housing supply across the country is insufficient in comparison to demand. The significant volume of immigration to Canada, the severe effects of inflation in building costs and increases in interest rates that affect mortgage affordability are all contributing factors to this issue. The adjacent issue of lack of affordable housing for the population considered unhoused due to socio-economic factors is also of great concern. There is an immediate need to incentivize the private sector to increase new housing and multi-family project starts. Enhanced incentive programs through CMHC, such as lower-rate financing or developer tax credits, are critical to address the rising construction and interest rate costs, which are currently prohibitive.
To build more housing, we need more skilled labour. A combination of immigration and increased funding to provinces via the labour market development agreements is critical for the construction industry, and educational institutions must invest in additional training and apprenticeship programs.
Number four is infrastructure. Canada's competitive ranking in terms of critical trade infrastructure has dropped significantly over the past decade. The COVID–19 pandemic period further emphasized the necessity of robust supply chains and infrastructure. Canada requires a long-term integrated national trade corridor strategy developed and financed through collaboration among the federal and provincial governments and the private sector. The national trade corridor strategy should include transportation systems, supply chain design and a review of trade opportunities arising from existing and prospective mining and port activities in northern areas.
In addition, the scope and criteria used by the Canada Infrastructure Bank should be revised and expanded to ensure that all funding, including funding allocated in past budgets, can productively be used toward priorities or investments.
On ownership transitions in Canada, 75% of existing business owners in Canada plan to exit their business in the next 10 years. This is a crucial stat. This will create a substantial risk that many of these companies will become foreign-owned branch subsidiaries or directly relocate to other communities.
One recommendation to ensure that companies remain in Canada is to facilitate employee ownership transitions. Despite recent changes to the trust legislation in 2023, the major incentives to facilitate employee-owner transitions were not addressed. Eliminating the capital tax impact on owners would differentiate these owner-employee transitions from other third party transactions and dramatically increase the likelihood of businesses remaining and growing in Canada and dispersing wealth to employees.
On the green economy, Manitoba is a leader in green energy with its usage of hydroelectricity. Therefore, the impact of reducing emissions is much less in Manitoba compared to other provinces, which are dependent on hydrocarbon fuels. The federal government incentive programs for GHG reductions should be adjusted for the relative proportions of hydro power to ensure that provinces like Manitoba are able to participate on a level playing field.
We encourage the federal government to work with the new Manitoba provincial government to ensure that the proceeds of the carbon tax pricing are utilized to provide incentives for investing in green technologies, including the development of hydrogen power and electrification of transportation—