Time the PM wrote a pre-budget letter to businesses
‘It might be liberating for the Prime Minister and informative for Canadians for him to set some benchmarks for business action,’ writes Ken Polk. / UNSPLASH PHOTO
An annual rite of Ottawa’s pre-budget cycle is for business advocacy organizations to tell the federal government what it must do to spur economic growth.
This week we saw the latest of these annual exercises with the release by the Business Council of Canada (BCC) — an advocacy arm of the largest companies in Canada — of an in-depth consultation it held with members in advance of the 2025 Budget. The consultation’s findings were framed as a clear message to the government, from the commanding heights of the Canadian private sector, of what is required of it in the Nov. 4 budget to meet this highly consequential economic moment.
To its credit, the BCC’s consultations were a departure from recent practice in both depth and scope. And it is certainly true that the November Budget is shaping up to be the most consequential since the Jean Chrétien-Paul Martin deficit-busting budgets of the mid-1990s. So it was smart of the BCC to take an approach that appeared to rise to the national stakes.
The same old, same old
Despite the hard work that went into it, it's a little disappointing that the recommendations are what we've heard before: lower taxes, tighter fiscal discipline, smaller government, and lighter regulation to spark labour productivity growth.
In fairness to the BCC, one of its primary missions is to advocate on behalf of its members for favourable government policy outcomes. So it would be expected for them to try to hold Ottawa’s feet to the budgetary fire in the name of national economic interest.
At this watershed moment, one might have reasonably expected some bold ideas fitted to a time that the BCC says calls for Canadian boldness. But there is nothing like that. Instead, the BCC leaves it to the federal government, not business, to take the lead in bringing about national economic transformation by rethinking how it does fiscal, tax and regulatory policies.
For federal policymakers, this business stance is tiresomely familiar. Year after year, decade after decade, budget after budget, business groups promise that their desired federal policy changes, if enacted, will unchain their members' pent-up entrepreneurial spirit and productivity potential. Decade after decade, the promised results have not materialized.
While it is difficult to underestimate the capacity of the federal government to screw up tax and regulatory policies, it is equally difficult to underestimate the failure of the Canadian private sector to lead.
In a $3 trillion economy where federal spending of all kinds amounts to around 15% of GDP, it is the private sector that has the raw economic power — and should have the incentive — to transform the economy, not the federal government.
You need look no further than the work of the BCC itself for frank admissions about the underperformance of the Canadian private sector when it comes to productivity-improving investment. The Competitiveness Scorecard it commissioned in 2019, for example, said “The lack of business investment in machinery, equipment and intellectual property in Canada is well-documented … Canadian business investment per available worker badly lags that in the United States and other OECD countries. This underperformance in business investment directly contributes to our poor productivity performance.”
It simply cannot be that the root cause for this investment deficit lies solely with the dead hand of the federal government. Rather, we have a corporate culture well documented as being largely risk averse, unimaginative and which has failed, over and over, to put its investment money where its policy mouth is.
Magical thinking from business
In its pre-budget letter to Prime Minister Mark Carney, the BCC concedes that “Our country needs more investment — public and private — to raise productivity and growth, and confront both new and ongoing challenges we face as a nation.” But he then says “A lot can be done, with a stroke of a pen today, to unleash private enterprise and capital that doesn’t cost the government a penny. All that one needs is political courage.” Just a stroke of the pen. This smacks of magical thinking.
Third parties often lecture federal policymakers about the need for courageous political decisions. What this means to any sentient political leader is that the lecturer is ready to work with your successor after voters boot you out.
He then proceeds to call for “five simple commitments, which in sum amount to a repackaging of everything that the BCC asks for pretty much every year. This is an astonishingly business-as-usual approach for what Canadians are being told is not a time for business as usual. Nowhere do we see any bold commitments being made by the BCC membership to meet investment, labour force upskilling or innovation benchmarks. Nor do we see something like a call for the creation of business-government planning fora to establish a coordinated, true productivity partnership.
It leaves one wondering if it's not time for the Prime Minister to write his own pre-budget letter to the BCC, and others, laying out what Canadians need from the private sector to demonstrate that business is serious about living up to its unique and primary role in economic development and productivity improvement.
Indeed, it might be liberating for the Prime Minister and informative for Canadians for him to set some benchmarks for business action, rather than being the passive recipient, year after year, of the same old policy lectures from business. It might be shocking. It certainly would not be business as usual.
