Matthew Lau: Ontario budget should ignore pleading from business
Following most of the Chamber of Commerce’s recommendations would be bad for Ontarians and their economy
You wouldn’t know it from their fiscal policies, regulatory initiatives, and recent love affair with labour unions, but in Ontario, the governing Progressive Conservatives are supposed to be the political party least hostile to business. That means there is still a good possibility they took into account some business concerns when putting together the provincial budget, to be delivered Thursday. Ahead of the budget, various business and industry associations, including the Canadian Federation of Independent Business and Ontario Chamber of Commerce, made submissions to the government to outline their concerns and recommend policies. To what extent should Ontarians be hoping to see those policies in the government’s budget?
The guiding principle of good policy on matters to do with business and industry is that government should leave business alone. Government control of private business is clearly harmful, but as Henry Hazlitt wrote in his famous 1946 book, Economics in One Lesson, “government ‘encouragement’ to business is sometimes as much to be feared as government hostility.” Government favours and handouts to some businesses necessarily mean increased government oppression and taxation of, if not other businesses, then the general public. Ontarians should therefore support business efforts to beat back government intrusion but oppose business attempts to behave like any other interest group and get goodies from the government.
The CFIB is usually among the most reliable of business associations in pushing back against government overreach, and its budget submission makes an excellent first policy recommendation: “Do not introduce any new costs (tax increases, fees, etc.) on small businesses.” The CFIB also: recommends the government recognize occupational certifications from other provinces to reduce the harms of licensing; urges the government to scale back regulation; and advocates some liberalization of alcohol sales — all good ideas. Unfortunately, although the CFIB submission is mostly solid, it also mixes in several deleterious policy recommendations by asking for fiscal goodies such as subsidies for new technology and tax incentives for training employees.
In contrast to the CFIB’s budget submission, the one from the Chamber of Commerce is really quite bad. Ontarians should hope the government ignores it. Its recommendations to remove interprovincial trade barriers and reduce immigration restrictions to strengthen the labour market are good. On the whole, however, the Chamber submission is stuffed with suggestions to replace private-sector activity with government planning, expand cronyism, and increase the cost of government. Many of its recommendations are backed up by little more than fashionable progressive cant or economically discredited theories.
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A case in point: under its list of recommendations to drive innovation, job creation, and community revitalization, the Chamber of Commerce says the government should “encourage the use of domestically produced steel and natural resources in construction and manufacturing.” In addition to this blatant protectionism, the Chamber also presents government climate-change programs as an opportunity to increase innovation and employment. Thus its report recommends more provincial government spending on: energy efficiency programs and audits; research on clean technology; a zero-emissions vehicle strategy; and collaborating with the federal government to “invest” in climate adaptation, among other things.
There is then the nowadays obligatory equity and diversity section, in which the Chamber says the government should help “equity-seeking groups, including but not limited to racialized, Indigenous, and LGBTQ2S+ entrepreneurs” through “supplier diversity policies.” In other words, in awarding contracts, the government should give preferential treatment to people who because of their race or other irrelevant characteristics purport to be “equity-seeking.” But people who can land government contracts by demonstrating how “equity-seeking” they are in fact are unlikely to be genuinely marginalized and in need of real assistance. Meanwhile, this arrangement would see taxpayers pay inflated costs and deserving businesses lose contracts because, while they might offer the best goods and services at the lower prices, the government finds them insufficiently “equity-seeking.”
Also featured on the Chamber of Commerce’s blueprint for expanded government economic planning: a new task force to inform the private sector about recruiting and retaining workers; governmental guidance to business as to what health benefits they should offer; expanded programs for business technology adoption; incentives for hiring graduates of co-operative education programs; and subsidies for worker training. Following most of the Chamber of Commerce’s recommendations would be as bad for Ontarians and their economy as deliberate government hostility to business. When it comes to the business community’s budget submissions it would probably therefore be best if those writing the Ontario budget simply looked at the CFIB’s first policy recommendation and then stopped reading.
Matthew Lau is a Toronto writer.