Federal Budget Helps Canada Compete for People, Ideas and Money, Business Leaders Say

March 19, 2007

The 2007 federal budget delivers a host of measures that will help Canadians compete more successfully in the global economy, says the Canadian Council of Chief Executives (CCCE).

“To ensure growing prosperity for all Canadians over the next decade, our country must compete on three fronts: people, ideas and investment,” said CCCE Chief Executive and President Thomas d’Aquino. “This budget launches important initiatives in all three areas, adding real muscle to the comprehensive competitiveness strategy laid out by the government last autumn.”

The budget includes a series of measures that should be highly effective in enabling Canadian enterprises to expand investment in new technologies and to continue growing in Canadian communities:

• Allowing Canada’s hard-pressed manufacturers to write off their investments in new equipment in just two years offers critical support to help them to survive and grow in an intensely competitive global market, and all businesses will benefit from accelerated capital cost allowance rates in other areas.

• Offering provincial governments a financial incentive to encourage the elimination of capital taxes will speed up the reduction of Canada’s effective marginal tax rate on business investment.

• Focusing significant new public investment on transportation and border infrastructure, notably in the Detroit-Windsor area, will help Canadian companies compete more effectively both within North America and globally.

• Streamlining the federal regulatory process and working with the provinces to develop a common regulator and more principles-based regulation for securities markets will benefit investors, businesses and the economy as a whole.

• Other more specific steps such as the elimination of withholding taxes on interest payments in the Canada-United States tax treaty also will have important benefits.

“Federal measures alone will give Canada the third-lowest marginal tax rate on new business investment among G7 countries,” Mr. d’Aquino said. “If provincial governments do their share by eliminating their capital taxes and harmonizing remaining sales taxes with the GST, Canada would have the lowest rate in the G7 by a significant margin and an important competitive advantage in attracting new investment and jobs.”

The budget’s measures to improve the investment environment are complemented by its focus on enhancing the country’s supply of skilled labour. It expands public support for post-secondary education, creates a tax credit to strengthen incentives for low-income Canadians to work, improves access to training for Aboriginals, encourages older workers to stay in the work force by allowing phased retirement and provides new incentives for businesses to offer more training to employees.

At the same time, the budget takes concrete steps to expand Canada’s supply of skilled labour through immigration. Constructive measures include improvements to the Temporary Foreign Worker Program, greater efforts to help foreign students and skilled foreign workers to become permanent residents, funding for the previously announced foreign credential assessment office and more aggressive international marketing aimed at potential immigrants.

“We also welcome the budget’s commitment to expanded public investment in research and commercialization, and the government’s determination to focus support on areas in which Canada is or has the potential to become a global leader,” said Mr. d’Aquino. “We look forward to working with the government in the year ahead to identify ways to expand private-sector research and development as well, such as improvements to the Scientific Research and Experimental Development tax credit.”

The government also deserves credit for taking action on so many fronts within a framework of sound fiscal management, Mr. d’Aquino said. “By ensuring that public spending grows less rapidly than the economy and by  continuing to run surpluses and pay down the public debt, the government is setting the stage for further tax cuts and growing prosperity in the years ahead for businesses and families alike.”

Founded in 1976, the CCCE is committed to helping make Canada the best place in the world in which to live, to work, to invest and to grow.  Member CEOs of the Council lead companies that collectively administer $3.2 trillion in assets, have annual revenues of more than $750 billion, and are responsible for the vast majority of Canada’s exports, investment, research and development, and training.

In addition to Mr. d’Aquino, the members of the CCCE’s Executive Committee are:  Chair, Gordon M. Nixon, President and Chief Executive Officer, Royal Bank of Canada; Honorary Chair Richard L. George, President and Chief Executive Office of Suncor Energy Inc.; and Vice Chairs Dominic D’Alessandro, Paul Desmarais, Jr., Jacques Lamarre, Hartley T. Richardson and Annette Verschuren, the chief executives respectively of Manulife Financial, Power Corporation of Canada, SNC-Lavalin Group Inc., James Richardson & Sons, Limited and The Home Depot Canada.