With a slowdown in housing and forecasts for growth now below expectations, Canada’s executives are as anxious as others to see the economy rebound. Despite an increasingly positive view of the U.S. economy – for the first time in years the C-Suite thinks the United States will outperform Canada – concerns about the Canadian economy are becoming more pronounced. Almost half of the C-Suite respondents think that government stimulus is more important than meeting deficit targets.
The concern is best seen in the way c-level executives see their own company’s performance. Typically very optimistic, they have steadily dialled back their projections. Two years ago, 40 per cent expected their company to grow strongly, but now it is down to one-quarter. This is the result of a precipitous drop in the expectations of the resource sector, the driver of Canadian economic activity.
It is apparent from the federal budget delivered last Thursday that Finance Minister Jim Flaherty is hearing these same concerns. Despite falling short on revenue targets, the Conservative government opted for a balanced approach over a more ruthless focus on deficit targets. It renewed a major multiyear infrastructure program that many in key business sectors had been counting on to boost the economy.
While there is clear support for cutting “government” (but not health care or education), most executives agreed that stimulus infrastructure investments have to be part of the response to the economic situation we face. Given current economic expectations, executives may have wanted that stimulus now, rather than commencing in 2014. Executives are clear on what the priority should be for infrastructure funding – transportation. The movement of people and goods – improving roads, public transit in cities, port expansion, faster border crossings, and in Ontario, even high-speed rail – are the investments that the C-Suite thinks would do most to help our economy.
The 2013 federal budget also focused on another key C-Suite priority, skills training.Since 2007, a significant portion of the C-Suite has told us that human resources issues are their top concern. But this is not just an area where fast-growing companies could use help. In this quarter’s survey, the C-Suite identified investment in skills training as the best investment governments could make to boost economic growth. The salience of this issue – as well as infrastructure – has only grown.
David Herle is principal and Alex Swann is vice-president of Gandalf Group.