November 1, 2000

Liberal platform offers little to small biz

The Liberal party election platform made public earlier today has something in it for just about everyone, except for the country's small businesses which are ignored for the most part, and when mentioned are treated as an afterthought.

Like those produced for 1993 and 1997 elections, the platform is in the form of "red book." Judging from its size, the latest version can be better described as a "red pamphlet," leading some reporters to ask Prime Minister Jean Chrétien if he was running out of ideas.

Titled "Opportunity for All," the platform is largely a rehash of previously made commitments drawn from Paul Martin's mini-budget, the federal-provincial deal to pump new money into health care, and unfulfilled promises left over from the last election campaign.

New, are details of $5.9 billion in increased social spending over four years in areas such as education, the environment, youth and crime prevention. Government spending on research and development will also be doubled. Although the total cost of the R&D boost was not specified, it will likely be an additional $1 billion a year by 2004-2005.

Chrétien justified his early election call, as a request for a mandate to deal with surpluses, which are projected at close to $60 billion over the next six years. He reiterated his promise to devote about half of the money to new spending initiatives and the balance to debt reduction and tax cuts. That would bring the total cost of new Liberal spending to about $30 billion.

Canada's small businesses are barely mentioned, and when asked to point out measures targeting them, senior Liberal officials signaled programs with only tangential benefits.

For example the promise that a new Liberal government would make high speed broadband access available to all communities across Canada by 2004, will be useful to some businesses. But this is only a spin-off benefit, of what is essentially a regional subsidy transfer program.

Similarly a commitment to put Internet-savvy youth together with small businesses to sharpen their e-business capabilities might help some small businesses. But the program is more in the nature of social policy targeting Canada's youngsters rather than something that benefits small businesses in any real way.

Another commitment is to increase capital available to rural businesses through the Business Development Bank of Canada. Once again, this benefit is only spin-off of what is essentially a regional subsidy program.

The commitment to expand the role of the BDC should be noted however, because it signals a continuing role for an institution that has played a role in helping many Canadian small businesses get access to loans and venture capital.

Another commitment that could benefit some small businesses is the promise to cut the top corporate tax rate, applicable on net income in excess of $200,000 a year, from 28 per cent to 21 per cent over the next four years. However the vast majority of small businesses earn less than $200,000 a year and for these businesses, tax rates were left untouched.

One program that could help small business directly, by helping them open up trade markets abroad, is a scheme to boost the number of foreign trade commissioners. But the plan, which would cost $10 million next year, and $20 million a year in subsequent years, is one that would also contribute to bloating the federal bureaucracy.

As is often the case with the Liberal Party, their platform is an attempt to steer a middle course in public policy, so that the needs of all interest groups are balanced one against another.

However by forgetting to consider the needs of SMEs, who are largely responsible for generating the wealth they so generously plan to distribute, the Liberals risk killing the goose that laid the golden egg.

To grow, prosper and help build Canada's economy, the country's small businesses don't need their hard earned tax dollars funneled through a big Ottawa bureaucracy to be redistributed by bureaucrats to other, less-efficient small businesses.

Small business owners want government off their backs. They want a simplified tax code that they can understand, not an encyclopedia of interpretation bulletins and subordinate clauses. They want to spend their time doing their jobs, not filling out government forms.

And above all they want a tax structure that rewards incentive and puts them on a level playing field with companies in competitor nations. This document offers few such measures.

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