2020 is testing the Canadian economy. In Newfoundland and Labrador, the test is far tougher than anywhere else in Canada. The state of emergency and oil prices have amplified the impact of COVID-19 here.
With fewer cases being announced, it is time to begin the discussion of reopening our economy. We know that a reopening must be executed cautiously, as public health and safety is of the highest importance.
But the economic crisis that is occurring demands response and transparency. It is very difficult to tell business owners who have invested their life savings in their business to sit tight and wait while they lose significant amounts of revenue. It is perhaps more difficult for the workers who have lost their jobs and are anxious to get back to work.
Planning is difficult when living in an unpredictable environment. Even as I write this article on a Wednesday to meet a deadline, I know that by the time it is published on Saturday some of the content may be dated.
In fact, I hope and expect a phased plan will be announced by the time this is published. Indeed, this week we advised the provincial government that we would be publicly calling on them to advise as to their plan. We hope such plan is in line with suggestions below. It is in uncertain times, that people need a plan more than ever.
Plans afford people a feeling of certainty, which in turn lends itself to confidence. Confidence means having faith. We could all use a little more faith right now. I believe we can show COVID-19 to the door, and let business back in.
How do we safely and quickly reopen the economy? Moreover, what would government like to see from business? How can business contribute to the plan? Undoubtedly government wants and needs advice from business as a key stakeholder. Considering this, here are some views from the St. John’s Board of Trade to help fuel the discussion.
Reopen the economy in phases: We are not reinventing the wheel here. Many other industrialized economies across the world are ahead of us. There are even other provinces within Canada that have introduced their plans. I am not talking about jumping off a bridge just because someone else is doing it, I am talking about building the model for our bridge to the future. Business needs certainty and a practical plan.
Make Newfoundland and Labrador competitive: Business will need support coming out of this. We need to focus on making our province’s tax regime competitive as well as ensuring that our best revenue generating industries, such as oil and gas, can unleash their full potential. In 2018, the Newfoundland and Labrador Government’s Independent Tax Review Committee determined that we fall in the middle of the pack for tax competitiveness. But since then we have not made significant attempts to improve our tax regime. The Board put forth several recommendations in 2018, such as the elimination of the Health and Post-Secondary Education Tax which would help employers with large payrolls. Changes such as these can help government create a better tax environment for business to come out of COVID-19 and help attract new businesses to our province.
Canada’s role: The Government of Canada will play a major role in how fast our overall economy will recover. To date it has thankfully unveiled many programs, and time will tell how effective they will be. The board has consistently asked the federal government to cast the widest safety net to ensure assistance for as many businesses as possible. We know at this point many businesses are left out in the cold without support. Canada needs to prioritize these businesses. For example, the revenue drop threshold in relation to the commercial rent relief program is high and relies on the landlord to reduce rent. Lowering the threshold and making the landlord whole could be a better option than forcing them to lose revenue and making it optional to participate. Also, the Government of Canada must get back to basics and focus on international trade and supply chains. This will allow businesses to get up and running at a faster rate.
Transparency and clarity: The taxpayers and shopkeepers of the province will need transparency and clarity from the provincial government on what our next steps are and then going forward as we climb those steps. We recognize that our province faces financial hardship, but it costs nothing to communicate and produce a flexible plan. The business community will start feeling more at ease when they receive clear direction on next steps.
As I noted in my previous article, business needs concrete support from all levels of government to ensure our economy can come roaring back from this crisis. The Board will continue to advocate to government, using every resource at our disposal. The road to recovery will not be easy. It can be travelled safely and while following instruction from our health officials. We are facing one of the greatest challenges of our lives. But I have seen the strength and resilience of our business community and our people. I know that if anyone can come out of this, we can.
Let us all focus less on what is unprecedented, and more on what there is precedent for: working hard, each of us taking responsibility while not wasting time on criticism, and making it out the other side. Let’s get back on track and back in the black.
The St. John’s Board of Trade means business.
Andrew Wadden is the 2020 Chair of the St. John’s Board of Trade, and a partner with Wadden Peddigrew Hogan Law.
