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c-suite survey

Survey of corporate leaders say Ottawa should focus on increasing productivity, GDP growth and boosting full-time employment.MARK BLINCH/Reuters

Canadian executives want Ottawa to use any surplus funds in the next budget to cut the national debt and help grow the economy, which they are worried is exhibiting increasing signs of weakness.

The latest C-Suite survey of corporate executives shows that business executives' top choices for increased federal government spending are infrastructure projects, and paying down the debt. Those are high budget priorities for about 60 per cent of the business leaders polled. Tax cuts – both personal and corporate – fall further down the list.

More broadly, the executives say Finance Minister Joe Oliver should focus his efforts on increasing productivity, generating higher GDP growth and boosting full-time employment, when he brings down his budget in a few months time.

Jeremy Freedman, chief executive officer at Toronto wealth management firm Gluskin Sheff + Associates Inc., said it is crucial that the government begins to pay down debt, now that it has some money to spare. "Given how much of the budget goes towards interest service … we will be in big trouble when [interest] rates go up," he said. "I worry that if rates go from where they are to more normalized levels, the amount of federal revenues that will have to go to servicing debt will leave them crippled in dealing with the things we need."

At the same time, Mr. Freedman noted, infrastructure spending should be a high priority because it is so crucial to the future of the economy. "As we look all around us we see crumbling infrastructure. The fact is our cities can't operate, people can't be efficient, and we can't actually compete globally [without] a competitive infrastructure." Thoughtful spending on these kinds of projects also creates jobs, he notes.

Government efforts to boost jobs and growth may be increasingly important in the coming months, if the executives' views on the economy are accurate. After 18 months of relative optimism about the Canadian economy – where only about 10 per cent of respondents expected the economy to decline in the following year – there is a sharp note of pessimism arriving on the scene. In this survey, those expecting an economic decline in the next 12 months jumped to 23 per cent.

One of the executives' top choices for surplus spending – although a distant third after debt payment and infrastructure – is a boost to tax incentives for research and development.

Guy Nelson, chief executive officer of Empire Industries Ltd., an engineering firm based in Winnipeg, said science and innovation are crucial to the economy, and governments must take a role in supporting them. To make sure industry stays innovative, "you really have to have a government that is investing in long-term science, along with the private sector if possible, but also in the research institutes and universities."

Even R&D projects that don't have specific industrial applications eventually generate "spin-off technologies and jobs and wealth," Mr. Nelson said. "The government knows that our record is lagging in that area, compared to other countries."

About one-third of executives felt that tax cuts – both corporate and personal – should also be a high budget priority. That's about the same proportion that supported one of the Conservative government's key promises – implementing income splitting for couples with children. Other social supports, such as spending on affordable housing or funding for day-care programs, were top a priority for just over one in ten of those polled.

Deborah Stein, chief financial officer at energy company AltaGas Ltd. in Calgary, said it makes sense that corporate executives would focus more on overall debt levels and long-term investments in infrastructure, things that "drive the economy from a macro point of view."

If there is a strong economy and full employment, social supports are less crucial, Ms. Stein said. "If you have strong balance sheet as a country, and strong infrastructure projects … a lot of the other things will take care of themselves in terms of creating jobs and driving a population that does not need, as much, to rely on social programs."

Still, she noted, Ottawa should consider a wide range of spending for the surplus, and not just focus on one area. "It does not need to be mutually exclusive," she said. "There are certain sectors of the population that do need programs beefed up, and do need help. As a society we have to watch out for each other and I would not begrudge the dollars that would be spent – in an efficient way – in helping those that need help."

Willy Kruh, global chair of consumer markets at KPMG, said he was gratified that executives appear to be concerned about "what's good for the economy and what's good for Canada, versus what is good for them as executives making a lot of money." Their priorities are things that will increase productivity and employment, not personal tax cuts, he said. "It was very much about moving the country forward."

Mr. Freedman, of Gluskin Sheff, said any extra federal money should be distributed widely. "To the extent that we have surpluses, there should be a certain amount [alloted] to debt paydown, a certain amount to infrastructure, and there is a certain amount that should go to current social issues that need to be dealt with, so that peoples' lot in life is improved," he said. "There is an array of things that are all deserving. It should be prioritized, then spread out appropriately."

Cheap oil a boon for many

The recent plunge in oil prices, and their impact on the Canadian dollar and the stock market, underline this country's reliance on energy. But a large proportion of executives, including a majority in the resource sector, say Canada's economy is too dependent on high oil prices.

"Low energy prices will certainly put a damper on things in Western Canada," said Deborah Stein, chief financial officer at AltaGas Ltd., although she thinks demand will eventually be stimulated and prices will come back into equilibrium over the long term. "It'll be tough, but we will get through it."

On the other side of the coin, Guy Nelson, chief executive officer of engineering firm Empire Industries Ltd., says those low prices will help many businesses. "The consumer will have more money in their pocket so that is good for the overall economy."

Jeremy Freedman, CEO of Gluskin Sheff + Associates Inc., agrees that the cut in prices is a boon for many. "It is a huge cut for anybody in terms of their input costs, at the pumps and so on." Canada needs to expand its non-resource sector, particularly in manufacturing, he said. "We need to be committed to making some stuff here that we can make better than anyone else in the world."


The quarterly C-Suite Survey was conducted for Report on Business and Business News Network by Gandalf Group, and sponsored by KPMG. The survey interviewed 153 executives between Nov. 17 and Dec. 8, 2014. Want to know more about what Canada's business leaders think? Watch for coverage Monday on BNN and view the whole survey – plus the C-Suite archives – at

Each quarter a $2,000 charitable contribution is made on behalf of a survey participant. For the October survey, a donation was made on behalf of Suzanne Blanchet, senior vice-president of corporate development at Cascades Inc., to the Multiple Sclerosis Society of Canada.