Canada’s business leaders aren’t enamoured with the new federal Liberal government’s approach to business, although they are attracted by its “sunny ways.”
The latest quarterly C-Suite Survey shows that almost 60 per cent of corporate executives feel the election of a new government led by Prime Minister Justin Trudeau is negative for business. Eleven per cent think it will be strongly negative.
There is also significant skepticism about the Liberals’ plans to run deficits for a few years to boost infrastructure spending. While half of those who responded to the survey support the plan, which would see the budget balanced after three years, half oppose it.
Still, many executives are enthusiastic about the Liberals’ more open and transparent approach to governing compared with the previous Conservative regime.
The ambivalent feelings about the new government are to be expected from a business community leery of change, especially at a time when the economy is weak, said Mark Sylvia, chief executive officer of Empire Life Insurance Co.
“The new government is coming in at a time when people are feeling that economies are shaky around the world,” he said.
“If we’re talking about a 100-yard dash, they are starting 10 or 15 yards behind,” because of the weak Canadian economy.
At the same time, he said, many of the MPs and cabinet ministers “are neophytes,” and even though Finance Minister Bill Morneau “is a capable guy, he has never been finance minister before.”
Over all, Mr. Sylvia said, “there is uncertainty in the economy and then you bring in a government that has a very different viewpoint and not a lot of experience. That adds up to some negativism.”
Concerns about the new government are most acute in Western Canada, where two-thirds of executives surveyed said the Liberals will be negative for the economy.
That reflects worries in the oil and gas sector about the global competitiveness of the industry and its access to markets, said David Smith, CEO of Keyera Corp., a natural gas processor and transporter based in Calgary. “The climate change agenda would seem to result in higher costs for the industry, as we try to address the costs of carbon emissions. The industry’s concern is that that will make us less competitive with other jurisdictions around the world that aren’t inclined to be so aggressive.”
The concern goes beyond the West, Mr. Smith added, because “the costs that are likely to result from a more aggressive approach on reducing greenhouse gas emissions are going to affect all industries across the country.”
Worries about deficit spending are also most acute in Western Canada, where a small majority of executives, 55 per cent, said they oppose the deficit spending plan.
“I’d support deficit spending in the near term – meaning in the next year or two – to begin to replace aging infrastructure and stimulate the national economy,” said John Barkhouse, CEO of Calgary-based resource-industry waste processor Newalta Corp. “However, I don’t subscribe to long-term deficit budget planning. Ultimately, like any solvent company, you need to run a county to be cash-flow positive.”
He noted that at some point the deficit will have to be dealt with, “and that usually translates into increases in taxes. … There is no free lunch for anyone.”
The C-Suite Survey shows that executives have a different list of top priorities than those expressed in the early days of the new Liberal government. The business leaders put trade issues right at the top – hoping for policies that would boost trade with the United States and Asia. Many would also like to see an accelerated process to review new pipelines, and a ratification of the Trans-Pacific Partnership agreement.
Mr. Barkhouse said he is is a strong advocate of increased efforts on trade, and he supports free-trade agreements that in the past have “opened doors and created opportunities.” That’s particularly important because of our relatively small population, and at a time when the Canadian economy is under duress, he said.
Willy Kruh, global chair of consumer markets at KPMG, said Ottawa may not have specific trade issues at the top of its agenda, but the new government has made it clear that maintaining global relationships is important, and that will eventually translate into action on trade.
Canadian executives now recognize that “Canada cannot be insular when the world is getting smaller and trade is so important,” Mr. Kruh said.
When asked what they would like to see from the new Liberal government that is different from the Conservatives, executives said they are looking for more openness and transparency, and closer co-operation with provincial governments.
“Discord between the provinces and the federal government is not a good thing for any of us,” Empire Life’s Mr. Sylvia said. “More co-ordinated efforts on issues is a welcome thing.”
At the same time, the “tone” has improved in Ottawa, he said. “I think people sensed that there was a bit of meanness festering [within the previous government].”
Looming over the business community is a relatively weak economy that does not appear to be getting much stronger. Only 45 per cent of the executives surveyed said they expect growth in the economy over the next 12 months – the lowest proportion since late 2008, when the country was deep in recession.Report Typo/Error