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At a time of prolonged and worsening economic uncertainty, small and medium businesses in Canada again find themselves in the eye of the storm. As the owner of a small business, it’s not only the palpable labour shortage, rising inflation or stock market declines making me uneasy; our federal government’s overt lack of focus on economic growth has put businesses in a place of peril.
The Canadian Association of Insolvency and Restructuring Professionals recently announced there were 807 business bankruptcies filed in the first quarter of 2022, on the rise from the same time last year where there were 603. The Canadian Federation of Independent Business has said the average small firm is taking on $160,000 of additional debt.
Thanks to the alphabet soup of subsidies served up during the pandemic, beneficiaries of the CERB or the CEWS were able to stay afloat, but little attention was paid to how to make them resilient in the long-term or help them grow their business through exports. Now, the government can’t just pump more money into the economy and SMEs find themselves left in the lurch with higher costs, a weaker Canadian dollar, more pressure on wages and higher debt payments thanks to rising interest rates.
Our government seems to believe that performative politics equals progress. Former Finance Minister Bill Morneau has publicly acknowledged the mandate of his ministry was to redistribute wealth, saying “there is no real sense of urgency about our lack of competitiveness…it’s like we’re the proverbial frog in the pot, not realizing what happens to us as the heat gradually rises.” This lack of focus on growing SMEs and the slow fiscal response are the reasons businesses find themselves treading water.
Federal data shows that SMEs make up 98% of all businesses in Canada and over two-thirds of the private labour force. In 2020, 43% of Canada’s $471.9 billion exports of goods was attributable to SMEs. Studies done by the Business Development Bank of Canada show that that exporting businesses make more money, grow faster and are more resilient during economic downturns than those selling only locally. Instead of eyeing export markets and supporting SMEs, the government has instead prioritized performative politics.
In 2018 I hosted a symposium for doctors to address the difficulties in managing their practices. Doctors in Ontario incorporated their medical practices to run them as small businesses after encouragement from the Liberal government but, swiftly, the tax incentives for the doctors were removed leaving practices having to collapse or amalgamate with other doctors. Doctors were tired pre-pandemic. Now they are exhausted, and many are cutting hours or closing practices. This was wholly avoidable. Instead of supporting, the Liberal government attempted to have my symposium shut down on the floor of the House of Commons before it was even held.
Since 2019 they have promised to tackle credit card transaction fees for small businesses, a barrier to accessing export markets, however, no action. In the 2022 budget it was repeated yet again, promising further consultations but nothing actionable for the businesses who need these costs lowered now.
Low hanging fruit like this should come first, but significantly more is needed on economic strategy. If the government is lacking imagination, it can look at the efforts of Invest in Canada. It is offering foreign companies major funding, quick processing for out-of-country employees and their families and other incentives to take advantage of Canada’s economy. If we allowed intranational applications, Canadians SMEs could benefit, not just those who don’t pay into our tax system.
Another area for action is cybersecurity. Cybercrime jeopardizes every business and, rather than handouts, the government should invest in protecting business’s hard-earned cash from malicious actors. The government could also encourage our hugely respected pension funds to invest more capital into Canadian SMEs, something they will be more likely to do if the government creates the conditions necessary for them to thrive. Recently the Caisse de depot et placement du Quebec lost most of its $400M cryptocurrency investment. Retrospectively, investing in Canada’s tangibles might seem like a good idea.
The federal government must act now. It has the recommendations and the data in front of it, but for reasons unknown to most of us, it lacks the political imperative. Time to remove the performative politics from the economic recovery and focus on growth.
At a time of prolonged and worsening economic uncertainty, small and medium businesses in Canada again find themselves in the eye of the storm. As the owner of a small business, it’s not only the palpable labour shortage, rising inflation or stock market declines making me uneasy; our federal government’s overt lack of focus on economic growth has put businesses in a place of peril.
The Canadian Association of Insolvency and Restructuring Professionals recently announced there were 807 business bankruptcies filed in the first quarter of 2022, on the rise from the same time last year where there were 603. The Canadian Federation of Independent Business has said the average small firm is taking on $160,000 of additional debt.
Thanks to the alphabet soup of subsidies served up during the pandemic, beneficiaries of the CERB or the CEWS were able to stay afloat, but little attention was paid to how to make them resilient in the long-term or help them grow their business through exports. Now, the government can’t just pump more money into the economy and SMEs find themselves left in the lurch with higher costs, a weaker Canadian dollar, more pressure on wages and higher debt payments thanks to rising interest rates.
Our government seems to believe that performative politics equals progress. Former Finance Minister Bill Morneau has publicly acknowledged the mandate of his ministry was to redistribute wealth, saying “there is no real sense of urgency about our lack of competitiveness…it’s like we’re the proverbial frog in the pot, not realizing what happens to us as the heat gradually rises.” This lack of focus on growing SMEs and the slow fiscal response are the reasons businesses find themselves treading water.
Federal data shows that SMEs make up 98% of all businesses in Canada and over two-thirds of the private labour force. In 2020, 43% of Canada’s $471.9 billion exports of goods was attributable to SMEs. Studies done by the Business Development Bank of Canada show that that exporting businesses make more money, grow faster and are more resilient during economic downturns than those selling only locally. Instead of eyeing export markets and supporting SMEs, the government has instead prioritized performative politics.
In 2018 I hosted a symposium for doctors to address the difficulties in managing their practices. Doctors in Ontario incorporated their medical practices to run them as small businesses after encouragement from the Liberal government but, swiftly, the tax incentives for the doctors were removed leaving practices having to collapse or amalgamate with other doctors. Doctors were tired pre-pandemic. Now they are exhausted, and many are cutting hours or closing practices. This was wholly avoidable. Instead of supporting, the Liberal government attempted to have my symposium shut down on the floor of the House of Commons before it was even held.
Since 2019 they have promised to tackle credit card transaction fees for small businesses, a barrier to accessing export markets, however, no action. In the 2022 budget it was repeated yet again, promising further consultations but nothing actionable for the businesses who need these costs lowered now.
Low hanging fruit like this should come first, but significantly more is needed on economic strategy. If the government is lacking imagination, it can look at the efforts of Invest in Canada. It is offering foreign companies major funding, quick processing for out-of-country employees and their families and other incentives to take advantage of Canada’s economy. If we allowed intranational applications, Canadians SMEs could benefit, not just those who don’t pay into our tax system.
Another area for action is cybersecurity. Cybercrime jeopardizes every business and, rather than handouts, the government should invest in protecting business’s hard-earned cash from malicious actors. The government could also encourage our hugely respected pension funds to invest more capital into Canadian SMEs, something they will be more likely to do if the government creates the conditions necessary for them to thrive. Recently the Caisse de depot et placement du Quebec lost most of its $400M cryptocurrency investment. Retrospectively, investing in Canada’s tangibles might seem like a good idea.
The federal government must act now. It has the recommendations and the data in front of it, but for reasons unknown to most of us, it lacks the political imperative. Time to remove the performative politics from the economic recovery and focus on growth.
