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budget 2011

Rob Moore, Minister of State, Small Business and Tourism, second from left, Ted Menzies, Minister of State, Finance, and Ryerson University President Sheldon Levy try out a 3D demonstration after an announcement January 25, 2011 to officially designate 2011 Year of the Entrepreneur.Moe Doiron/The Globe and Mail

While the federal budget has few goodies for big business, it does include a number of items for small businesses, giving greater credence to Ottawa's designation of 2011 as the Year of the Entrepreneur.

Many of the moves are temporary and relatively low-cost for Ottawa, but Canada's biggest lobby group for the small business community said that they're significant enough to have an impact.

The Canadian Federation of Independent Business was not expecting any major tax reductions, but it had lobbied hard for a new hiring credit, more help for manufacturers and measures to cut red tape. It made gains on all three issues.

"[The measures]are not massive amounts of money, but I think they are hitting the right notes," said CFIB president Catherine Swift.

Still, entrepreneurs worry the budget - and those gains - may not survive as written, given that all three opposition parties have suggested they won't support it.

Under the new measures, roughly 525,000 small businesses will be eligible for a new temporary hiring credit that promises to reduce their collective 2011 payroll costs by about $165-million.

The credit, of up to $1,000, is applied against a small employer's increase in 2011 EI premiums over 2010. It is available to employers whose total EI premiums were $10,000 or less in 2010.

In addition, Ottawa will spend $10-million on a brief extension of a work-sharing program, and $80-million on a three-year pilot project to support collaborative projects between colleges and small and medium-sized businesses that hasten the adoption of information and communication technologies.

The measures are small in comparison with others announced in the budget, however. For example, Ottawa will spend $420-million to extend, by one year, two temporary employment insurance projects to help laid-off workers.

A relatively big win for manufacturers, meanwhile, is the Conservatives' decision to extend a measure, originally introduced in 2007, that reduces the cost of investments in new machinery and equipment. It's the only item, in fact, that the Canadian Manufacturers & Exporters association was hoping to see in the budget.

The so-called accelerated capital cost allowance, which speeds up the rate at which manufacturers can write off capital investments in machinery and equipment, will remain in place for two more years - until 2014. The Finance Department estimates the two-year extension will cost some $620-million over four years - peaking at $275-million in fiscal 2014-15.

Cathy Pin, vice-president of commercial banking at Bank of Montreal, said the extension will make it easier for manufacturers to absorb the costs of such big outlays.

The CFIB, meanwhile, is also cheering measures that promise to reduce red tape and make the Canada Revenue Agency more accountable. Those include a new requirement for the CRA to provide written interpretation on tax inquiries when requested to do so online.

In January, the federal government designated 2011 the "Year of the Entrepreneur" but did not unveil any new initiatives to assist with innovation or job creation.

That became a sore spot with some entrepreneurs because Ottawa had also suggested it was the responsibility of small and medium-sized businesses to drive the economic recovery.

Jennifer Lambert Jones, artistic director of Toronto-based Joy of Dance Centre & Teachers College, was among those skeptics. Now, she says the budget's measures, particularly those around red tape, are baby steps in the right direction.

"All of it is pretty conservative," Ms. Jones said. "There is nothing that is going to knock my socks off, that's for sure."

Her big worry now is that posturing by opposition parties, especially the NDP, means the fate of this budget remains in doubt and a federal election could be on the horizon.

For Garth Whyte, president and chief executive officer of the Canadian Restaurant and Foodservices Association, the more immediate concern was that the budget failed to recognize that entrepreneurs work in the restaurant industry too.

The organization wanted assistance for B.C.-based eateries grappling with a "drop in business" resulting from the introduction of the harmonized sales tax on July 1, and better compensation for Toronto restaurant owners who sustained losses during last year's G-20 summit. Those two events cost the industry $800-million, Mr. Whyte said.

"I think as far as a general help for the economy and businesses in general, it gets a passing grade," Mr. Whyte said of the budget. "But we're giving it a failing grade for acknowledging and supporting our sector - which is the fourth-largest sector in Canada, employing over a million people."