Radar Hill Blog

Federal Budget Consultations

There are pre-budget consultations going on across the country, before our elected federal politicians gather in Ottawa for the new budget. I have sent the following to my Member of Parliament, Dr. Keith Martin:

For the upcoming budget, a very important issue is to consider small and medium sized businesses (SMBs) differently than large / multinational businesses. SMBs need to be encouraged, and one of the best tools government has for SMBs are tax incentives, or tax reductions.

By their very nature, large businesses are not innovative, and are slow to react to a changing world, to an economic shift. Indeed it is large business that come looking for bailouts and handouts, such as the auto industry, because their own lack of vision leads them to failure. The leverage they have is the number of people they employ, and therefore the threat of laying off hundreds or thousands of people, and the consequences of that.

SMBs are different. Certainly they employ less people so do not have that leverage, but they also innovate more, and can react much quicker to a changing marketplace and a changing world. Indeed, as our economy shifts and our demographics change, it will be the SMBs that will be at the forefront of solutions. Don’t consider this as just in the hi tech field. Some solutions, no doubt, will be low tech.

SMBs are tied to their communities. The owners and entrepreneurs are people who are active in their communities, volunteer their time with boards of trade, charities, social organizations, school groups, etc. One study in BC found that 96% of SMBs do charitable donations of time and money in their communities. SMBs stay in their communities, and not relocate to low wage, low regulation parts of the world.

In hard times, SMBs having to lay off staff is much harder than for large businesses. It could be their neighbours, people they have community connections with, that they are forced to lay off. SMBs want to hire, especially as they develop and launch new products and services that address issues in our changing world.

My company has been negatively affected by the downturn in the real estate industry, because half our clients are real estate agents. We run a very tight ship, a very efficient organization, and are very careful with our expenditures, but we still had to lay off. As a response we are developing new products. But as the owner of an SMB I find it incredibly frustrating that if we face closure because of the economic downturn, we cannot fly to Ottawa to get a bailout. Our clients, all of whom are either SMBs or single person, self employed businesses (SOHO), cannot get bailouts either.

With the amount of tax we send to Ottawa, we could instead use that money to employ another programmer or designer who would live and work and support our community, and pay taxes. Yet the thought that those taxes may end up going to a large, inefficient company that is whining for a handout, makes my blood boil. If we decide to delay paying that tax so we can keep our doors open and our staff paid (so they can pay their own bills and spend money in our community), we would get hit with a severe penalty. Revenue Canada is no friend of SMBs.

You must refuse to bail out inefficient companies. If there are two companies in the same industry, one that is managing, and one that is failing and comes asking for a handout, don’t do it. Let it fail. You need to encourage the efficient company. An efficient company will find it hard to compete against an inefficient company that sucks money out of the government. With the auto industry, and large companies looking for handouts (bailouts), be wary of them taking the money, paying bonuses, continuing that lack of vision and innovation, and then relocating to another country.

For infrastructure, look at projects that appear to be better long term. Rather than widening the highways, which encourages more automobile use, consider high speed rail lines through and between metropolitan areas. Hope to Vancouver, Calgary to Edmonton, Ottawa to Montreal.

Though not a budget item, more an overall philosphy, we should consider the concept of ‘enough’. How much income do people need? Rather than cap salaries and bonuses, there should be a fixed range of earnings between what the highest paid people in a company make, and what the lowest paid people make. For some of the more abusive companies, it is over 400%. To illustrate, a shop floor employee who earns $10/hour or $16,000 in a company in which the CEO earns over a million dollars a year. The range should be set, maybe at 100% or 150%. It doesn’t mean the CEO can’t earn so much. It means the CEO has to find ways to have the lower wage staff earn more, earn a decent, livable wage.

About Shawn

Co-owner and one of the founders of Radar Hill, Shawn is an award-winning public speaker who publishes our newsletters and organizes our monthly workshops. He loves working with business owners, and tries to keep up with marketing trends.
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