Charting a sound fiscal future for our economy
When it comes to business, N.L.’S provincial budget misses the mark
The Government of Newfoundland and Labrador’s Budget 2021 had a few noteworthy items for businesses across the province, but the overall future of the economy will require a serious plan that was absent in both the budget and in the recently released Greene report from the Premier’s Economic Recovery Team.
Newfoundland and Labrador was already facing several issues before the COVID-19 pandemic and now must be willing to work collaboratively with business to create a climate that is attractive for business investment and growth.
Newfoundland and Labrador’s finances are very fragile, and while a tax break for businesses that have fought hard to make it through this pandemic may not be feasible, a reduction in the regulatory burden could have been a top priority for government in this budget. Ensuring that we get regulation right is often the most cost-efficient, practical way that a government can impact an economy and the climate for business. Having a practical and open approach to regulation can significantly support economic growth, while an unnecessarily burdensome regulatory environment can stifle growth and discourage business investment.
Other governments across Atlantic Canada have developed different approaches to dealing with the regulatory burden but each of their governments have put a priority on reducing the burden on businesses and that is something that the Government of Newfoundland and Labrador is falling behind on.
Immigration and having access to a qualified workforce is another key item that the province must treat with urgency. Canada has set a target and is on track to welcome more than 400,000 newcomers this year, and 1.2 million over the next three years. Newfoundland and Labrador is aiming to welcome 5,100 newcomers by 2026. That is a long way down the road, and more of a priority should be placed on welcoming newcomers to our province. Accessibility to workers will be essential to pandemic recovery and economic growth for Newfoundland and Labrador. And while it is important to recruit those with in-demand skills, it is also important to recognize that employers require workers of all skillsets.
Budget 2021 does make a few key sectoral investments, such as the much-needed support for the tourism and hospitality sector. There was also a significant investment in cellular and broadband connectivity across the province that will benefit rural communities as the world becomes increasingly digitized.
For the Government of Newfoundland and Labrador, the issues of structural deficits remain, and the can is largely being kicked down the road, much as it was previously. Newfoundland and Labrador currently generates the highest provincial revenue per capita in the country but also has the highest expenditures per capita in the country. We can no longer ignore this very real problem and we must come to terms with the fact that we have a spending problem that drastically needs to be reduced. To its credit, the government is finally talking about expenditure reductions, but it must show the willpower to follow through and begin taking the hard steps forward.
When creating a budget document or economic plan, government does not have to re-invent the wheel for economic recovery or growth. Fundamental free market principles that encourage minimal government bureaucracy and competitive taxation will almost always put business in a good position to succeed and foster a positive environment to attract new business.
Newfoundland and Labrador has one of the highest per capita tax burdens in the country. Once the province is able to rein in deficit spending and get the debt to a manageable level, there could be an opportunity to reduce that burden which will position the province to have a competitive private sector for growth and new investment. Until then, it would be prudent for the government to reduce the regulatory burden and increase access to workers in order to maximize the potential of the business community in our current climate.
Brandon Ellis is the senior manager of policy for the Atlantic Chamber of Commerce, a nationally accredited organization representing the network of 94 chambers, 29 corporate partners and more than 16,000 businesses in Atlantic Canada. He lives in St. John’s.