The provincial and federal budgets unveiled in April have finally given us a better sense of the financial implications of living with COVID-19. There are a lot of unknowns about how pandemic-economics will resonate in our daily lives, but there are reasons for optimism.
B.C.’s immunization campaign is rolling out faster than anticipated, and, on Vancouver Island, we have done a remarkable job of keeping case numbers low and our communities safe.
To better understand what the federal and provincial budgets mean for businesses, the Greater Victoria Chamber of Commerce hosted an online event with Matthew Hohnsbehn, Liaison Officer at the Canada Revenue Agency, and Kris Wirk, Partner at Dusanj & Wirk Chartered Professional Accountants. Kris is also the Vice Chair of The Chamber’s Board of Directors.
We’ve spoken with Matthew and Kris several times during the course of the pandemic as part of our ongoing Business Restart Series. If you’re a Chamber member, you’re likely familiar with these events. And if you’re not — you should be! I highly recommend checking out this event, or the many others we regularly host. All the information is accessible at victoriachamber.ca.
On May 6, I spoke with Matthew and Kris about Grants and Taxes in 2021, and what tools businesses can access to bounce forward as we recover from the pandemic. We also talked about changes that have happened, and what businesses can expect in the months ahead. The CRA has had to re-invent its operations, reassigning staff and responding to new demands. One way that has happened is expanding call centres to deal with the increased volume of people with questions about new programs.
The CRA has also learned from its experience at the start of the pandemic when it was focused on throwing a safety net under Canadians as fast as possible. At the time, government was lauded for moving quickly to put money into pockets, but hindsight shows it was a little too fast. With a little perspective, the CRA can develop a new playbook for future crises that will allow government to do a little more due diligence without too much administrative burden. For example, verification methods must be quick enough to balance the burden on administration with the need to keep Canadians solvent.
In April’s federal budget, we heard that extensions to relief programs will help employers continue to cover the cost of wages and rent, though these subsidies are scheduled to start decreasing over time. We need to move away from an economy propped up by public money and toward growth led by the private sector. From what we’re seeing at The Chamber, our members have embraced the need to pivot their operations to cater to shifting consumer demands. Even as restrictions are lifted, society has changed and we can’t look back to the way things used to be.
In Greater Victoria, this is most evident in our tourism economy. This is a sector that should be gearing up for its high season, when revenue allows most businesses to rebuild their war chests to survive the leaner shoulder and winter seasons. However, with restrictions to international travel sticking around for the foreseeable future, tourism businesses will need to tap into the Canadian Emergency Wage Subsidy much longer than other sectors.
The construction industry, for example, hasn’t missed a beat during the pandemic and is actually dealing with the same constraints that have affected the economy for a number of years — finding and keeping workers. This is an ongoing advocacy priority for The Chamber. We’re calling on government to incentivize getting people, especially those who lost jobs or are underemployed, into skilled positions that are currently in demand. There is a huge opportunity to remake our economy by investing in workforce training that helps organizations reach their potential.
Here at The Chamber, we like to speak about being on the Recovery Runway. It’s a fitting analogy of where we are, moving forward slowly but surely. We’re like a plane taxiing on the tarmac waiting for the right time to throttle up and take off.
If you’re not there yet, here are a few things you can do to prepare for the flight. First, make sure you’re taking advantage of the shift to digital. We are in an online world, and your business needs to be as well. This includes having an online account with the CRA so you’re not reliant on the telephone or printed mail. You need to do your part. Governments are trying to adjust their administrative practices to the new reality, and relief programs are designed to get more people working. But everyone is still adjusting the flight plan. For businesses to succeed they have to fully plan, and then plot out alternate routes — not just for the summer and the end of government programs, but out to the great blue beyond.
It’s no surprise that, as a result of that planning, this is an especially active time for mergers and acquisitions. With low bank rates and so much uncertainty, we’re seeing a lot of consolidation as industries seek efficiencies and fortify themselves.
Speaking with Kris and Matthew, it’s clear that the world’s financial order is in uncharted territory. How this will affect Canadians remains to be seen, but it will be a long flight to zero debt. The only way we will arrive there is through economic growth in the private sector. As the recovery intensifies, the expectation is we will also see higher taxes for top earners and businesses, as well as capital gains.
To hear more details, I encourage you to watch my conversation with Matthew and Kris. Are you ready for the better days ahead? And is your business prepared to meet the pent-up demand that promises to propel our economy to new heights?
Bruce Williams is CEO of the Greater Victoria Chamber of Commerce.
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