Atlantic Canada’s business community – wrestling with a worker shortage, aging population and high taxes – is cautiously watching how the new Liberal minority will approach the region’s economy.
The four easternmost provinces largely endorsed Prime Minister Justin Trudeau’s bid for a second term, handing the Grits 26 of 32 ridings.
But without a majority of seats in the House of Commons, it’s unclear how negotiations unfolding in Ottawa could impact the Liberals’ economic promises.
On the campaign trail, the Grits pledged to remove the "swipe fee" merchants pay credit card companies, to slash corporate taxes in half for businesses making zero-emission products, and cut the cost of incorporating a new business.
But with the Liberals reliant on the support of other parties to pass legislation, the government could agree to usher in campaign promises put forward by opposition parties as well.
The NDP, for example, promised to end the “unfair tax treatment” of family transfers of small businesses, cap the fees small businesses pay credit card companies, and introduce a universal pharmacare plan that would save small businesses money on benefits.
Jordi Morgan said a key concern with a minority government is the high spending that often accompanies the bargaining and brinkmanship of an informal coalition.
“In many cases, minority governments only work by saying yes to the spending plans of various parties,” said Morgan, vice-president of the Canadian Federation of Independent Business based in Atlantic Canada.
“We’re hoping we don’t end up with highest common denominator spending patterns,” he said, adding: “It’s a little disquieting for people who don’t want to see the government go deeper into debt.”
But other business observers expect the strong Liberal minority will mostly stay the course on economic policy.
“From a political standpoint, I don’t think there’s going to be very much change,” said Aaron Wudrick, federal director of the Canadian Taxpayers Federation.
“It’s a fairly large minority government that looks to be relatively stable, so I don’t think we’re going to see any dramatic lurches from what we’ve seen for the past four years.”
Yet a big change is exactly what the Atlantic Chamber of Commerce is calling for.
Glenn Davis, the organization’s vice-president of policy, said the biggest issue facing the region is the soaring health care costs of a rapidly aging demographic.
He said without a review of how the country’s health transfer is doled out, the Atlantic provinces could be crippled by rising costs.
“With the aging demographic we have in Atlantic Canada, we’re behind the eight ball in terms of being able to fund health care,” Davis said.
He said the per capita funding formula awards provinces with faster growing economies and populations, with the result being the “rich get richer.”
Because the Atlantic provinces tend to have more rural, older populations and historically slower economic growth, it leaves the region at a disadvantage when it comes to the health transfer.
“If we have to raise taxes to be able to afford to pay for social services like health care, that has an impact on everybody – individuals and businesses – and we’re already the highest taxed provinces in the country,” Davis said.
