Wednesday
Nov182015

Federal mandate letters reveal government's stance on business

There was great interest last week when Prime Minister Trudeau released the mandate letters outlining the responsibilities and commitments of his new cabinet.  

In truth, the business community can be connected to every ministry of government, however, there are a few including Small Business, Employment, Workforce Development and Labour and Finance that have direct impact.

In the mandate letter to Finance Minister Bill Morneau, Prime Minister Trudeau asks him to “meet with your provincial and territorial colleagues at your earliest opportunity to begin a process to enhance the Canada Pension Plan to provide more income security to Canadians when they retire.” 

“There is some comfort, in that, there doesn’t seem to be a rush to action on CPP as was felt there might be when the Liberals were elected,” says Hendrik Brakel, Senior Director Economy, Finance and Tax Policy, Canadian Chamber. “However, the Canadian Chamber is watching with concern any possible increases to payroll taxes such as CPP as employer contributions act as a tax that makes it more expensive to hire staff, which can depress employment.” 

At the Canadian Chamber of Commerce (CCC) Annual General Meeting in Ottawa last month just prior to the election, the Peterborough and Kingston Chambers of Commerce put forward a policy resolution on reforming the Canada Pension Plan to allow employees the option of contributing more to the plan.  

The CPP discussions could also have an impact on the implementation of the proposed Ontario Retirement Pension Plan (ORPP).  The next opportunity to learn more about the plan will be in December when an economic analysis by the Conference Board of Canada is released.

Meanwhile, the Minister of Employment, Workforce Development and Labour MaryAnn Mihychuk is tasked with, “improving our Employment Insurance (EI) system so that it is better aligned with the realities of today’s labour market and serves workers and employers”.  Included in the seven specific tasks identified are reducing EI premiums and ensuring EI contributions are only used to fund EI programs. 

While that statement seems to be promising, the concern is that workforce training is still considered part of EI programs. That is an issue Brakel also speaks to: “the other major payroll tax, employment insurance, has been pulling in far more money than it was paying out for many years and so it was set to decline from 1.88% to 1.47% in 2017. The Liberals have promised to tax an extra $500 million of revenues from keeping the EI rate at 1.65% in order to pay for additional training. The Canadian Chamber has for a long time been vehemently opposed to using EI premiums for purposes other than funding the insurance it provides.”

The Minister of Small Business and Tourism Bardish Chagger has been asked to work with the Minister of Finance as the small business tax rate reduction is implemented.  This is a previous government promise that the Liberals are keeping.  The small business tax rate will be reduced from 11 percent to 9 percent over the next few years.  Also in the Small Business mandate is a request to work with the Minister of International Trade to ensure that a new international trade strategy is supportive of small and medium-sized enterprises (SMEs), so that they are able to take advantage of government financing and export-oriented supports.  

Brakel also identified an interesting point in the Finance Minister’s letter: the creation of a Canadian Infrastructure Bank to provide low-cost financing (including loan guarantees) for new municipal infrastructure projects in our priority investment areas.  “The federal government has a very high credit rating, making this type of financing available will help municipalities,” says Brakel. “The Chamber is very much aware of the need for economic infrastructure and this will support municipalities with their infrastructure needs.”

Further to the commitment of the Chamber Network nationally, heading into the CCC AGM, Chambers across Ontario signed onto a resolution emphasizing the need for infrastructure to be a focus of government. One of the five recommendations is to provide stable, predictable and equitable financing in all projects, including advance notice of available funds, criteria and application processes to ensure the projects needed have access to the funds available in a timely manner.  The resolution was passed by delegates at the AGM.  

By and large, the mandate letters fall very much in line with the campaign promises of the Liberal party.  As the government continues to unfold its mandate and release its throne speech in the first week of December, the Peterborough Chamber will be watching and commenting as necessary to ensure the legislative framework helps strengthen business. 

Comment through the "Peterborough Chamber" group of LinkedIn.

 

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