Jack Mintz: What’s a federal budget without a plan to attract business? This one
When it comes to supporting private business investment — the most important source of economic growth — Tuesday’s federal budget comes up short, to put it mildly. It’s not until page 288 in the excessively wordy 369-page Budget Plan that one even gets the inkling that something called business investment even enters the thoughts of this government.
And even there, the government isn’t thinking about it all that deeply about it, although it does put on a brave face in saying “recent indicators point to ongoing business investment gains.” The accompanying chart shows that business investment barely eked a positive gain in 2017 after sharp declines since 2014. Maybe 2018 will start seeing some improvement. It’s hard to imagine it getting worse (although, as Philip Cross notes elsewhere in FP Comment today, Statistics Canada’s just-released survey of business intentions suggests it likely will). If by chance investment improves, it won’t be because of this budget. Instead, U.S. growth spurred on by tax reform and deregulation will do far more to increase growth in Canada than anything achieved by the sprinkling of federal tax dollars.
Anything in this budget that might be considered federal support for business investment is really just throwing bits of money here and there at various subsidies like the Industrial Research Assistance Plan, the Strategic Innovation Fund and host of other pet projects, with little policy evidence to show these programs lead to substantial gains in economic incomes and so probably hurt growth more than help it.