Government can do more by doing less, by unleashing the private sector
Federal government schemes and programs to ameliorate the devastation wrought by the ill-considered shutdown of the Canadian economy for nearly three months have focused on compensating individuals and businesses for being unemployed or shutting down.
Little thought, thus far, has been given to how to relaunch the economy for a sustained recovery from COVID-19.
The usual handouts will still, apparently, be available for months to come. Those who love government propose much more of this eco-focused largesse.
It need not be this way. Government can do more by doing less, by unleashing the private sector.
Aside from tweaking the CERB (Canadian Emergency Relief Benefit) program so it phases out as the recipients become employed again, there are other ways to make work, and hiring, attractive again for all parties: staff, employers and the government.
First, allow companies to sell the rights to their pre-tax losses to other, presumably profitable companies. This gets money into the hands of the companies that need it most, quickly, without the government directly losing anything.
Second, suspend Employment Insurance (EI) and government pension plan contributions for employees and employers for six months. This would cost money but make hiring, and working, more attractive for both parties.
And by putting people back to work and enabling businesses to operate more effectively with higher complements of staff, it would generate more revenue and profits. That income could be taxed later, directly or indirectly via spending at other businesses from the newly-liquid workers.
Third, suspend the GST for six months. This will accelerate consumer and business spending.
Fourth, lower income taxes on individuals and businesses. The Alberta government has made a good start but to effect a radical change, a larger cut should be made.
Fifth, radically reform corporate income tax. Make it a flat 10 per cent of operating income (earnings before interest and taxes) or 10 per cent of free cash flow (operating cash flow – net income not including non-cash charges or changes – minus capital expenditures).
This will boost capital investment, which results in other business spending for all the things the new equipment requires: installation; connection and integration to or with other equipment or facilities; other supplies, instruments and equipment to complement the new equipment; hiring and training new employees to work on and with the new equipment; fuelling, monitoring and maintaining the new equipment; programming, software and technicians required to optimize the equipment.
Sixth, streamline all environmental and related studies and consultation standards and requirements that are mandatory for large-scale industrial, infrastructure and extractive industry projects.
Seventh, clarify and resolve all outstanding First Nations land use claims and rights, including any and all outstanding ones from abuse and neglect by government institutions over the past sorry centuries.
Eighth, remove all barriers to production, transport, sale, consumption, liquefaction and export of natural gas. It’s clean and abundant, and can displace dirtier coal and oil.
This is a start. Some of these ideas may not pan out but they’re worth debating. Certainly they’re cheaper and far more productive – and, ultimately, more remunerative – than paying people and businesses to do nothing.
By Ian Madsen
Ian Madsen is a senior policy analyst with the Frontier Centre for Public Policy.
TROY MEDIA
