BC Business
roundtable
B.C.’s economy is booming, and it’s not just the big guys that are reaping the rewards. Ninety-eight out of every 100 employers in B.C. are classified as small businesses.
To be sure, there have been signs of improvement. The provincial government has reduced its share of corporate and personal income taxes, and it claims success in its goal of reducing red tape. But that’s little relief to typical small-business owners; they’ll tell you they still carry an unfair burden in property taxes and can recite horror stories of battling red tape as they negotiate a patchwork of multiple municipal fiefdoms.
And now you can add one further complication to their plight: a shortage of workers. Across the province, businesses report having to turn away opportunities because they simply can’t find enough employees to do the work.
BCBusiness convened a panel of experts to examine the extent of these and other issues that are top of mind for small-business owners.
Rick Fijal is the owner of FastSigns in Surrey and a director with the Surrey Board of Trade. As a small-business owner, he offers candid observation direct from the trenches.
Laura Jones is VP of Western Canada with the Canadian Federation of Independent Business, a national research and lobby organization that works with small businesses.
Rick Thorpe is the MLA for Okanagan-Westside, minister of small business and revenue and minister responsible for regulatory reform.
BCBusiness: Rick, you’ve got first-hand experience of the challenges faced by small business today. What would you say are the biggest ones?
RICK FIJAL: Provincially, probably the paramount one is the skills and labour shortage, certainly with immigrants and their ability to be accepted into their field of expertise.
Taxes are another big concern, although it’s been pleasant to see some positive movement in that regard. But still, I fail to understand how government spending generally continues to grow beyond the rate of inflation and the growth of the population. It’s just absolute insanity to me. Anybody who ran a business that way would be out of business.
I’m also pleased to see the province’s initiative about reducing regulation, but I still find the regulation absolutely unbelievable. For example, we’re doing a job in West Van, so I have to go out and spend $135 for a business licence to do one job in West Vancouver, which drives me absolutely insane. There is a separate little fiefdom in every municipality that chooses to write their own little regulations, to be interpreted a different way in every single municipality.
BCBusiness: You’ve covered the spectrum. Let’s start by tackling staffing and helping attract immigrants. Laura, what do you see as the problem there, and what is the solution?
LAURA JONES: We’ve got seven out of 10 of our small-business members identifying labour shortages as a problem, compared to only four out of 10 just a few years ago. I don’t think there are any silver-bullet solutions, but when we ask small-business owners what they would like governments to do, two things come up consistently. First of all, what business owners need is more time and more money to cope. Time, because they’re spending more time recruiting and more time training under-qualified staff in some cases. And they’re spending more money to increase wages, salaries, benefits for staff.
BCBusiness: Minister Thorpe, what can the provincial government do to make it easier for people to work here?
RICK THORPE: I think Laura hit the nail on the head: if there was a magic bullet, somebody would have already administered it, so we know there isn’t one. We know that there are going to be a million new jobs – new people required – in the next decade, and we know that we can’t grow them at home. My colleague Colin Hansen has been working with the federal government, and that’s why we’re able to announce a new program, on a pilot basis, focusing on 13 sectors – construction is one of them, hospitality tourism is another one – that’s going to be designed to bring in temporary workers.
We’re headed in the right direction. I do think we have to speed it up, and that requires the private sector working together with the provincial government, working together with the federal government to get results.
FIJAL: It seems to me that the trade barriers, traditionally, are largely driven by profes-sional associations; it’s the teachers’ federation that says no, we won’t allow you in because that’s going to jeopardize the seniority or the opportunities for the existing membership. Or it might be massage therapists. How does that get fixed? Does the government have a role in that?
THORPE: Yes, we do, because there’s a variety of pieces of legislation that impact that. That’s one of the great things about TILMA, the trade agreement we signed with Alberta. We know we live in a global economy, we know we’re competing against the world; wouldn’t you think inside our country we could complement each other instead of working against each other?
I’m a strong believer that there should be a free movement of goods and people within Canada. People are going to say, well, their standards are a little bit lower than ours and we’ve got to be careful because we want to look after the safety and well-being of our own residents. I actually don’t know anybody that’s professional, anybody who’s been elected, who doesn’t want to protect their constituents and have adequate safety. That should not be what the argument is built on.
JONES: We certainly need to do a much better job with immigration. If we look at the skills that the people are bringing in and the skills that the business owners say they need, there’s almost a complete mismatch. Eliminating a lot of the red tape – like the advertising across the country that’s required before bringing someone into B.C. – is part of the solution. But the red tape can be very serious; it’s not just any one thing you can point to; it’s the total mountain that’s the problem for business.
Let’s go back to the single business licence for a moment. I recently talked to a plumber who works in the Lower Mainland, and he deals with 12 municipalities; that’s 12 business licences he has to get. I asked him, “Do you have to turn down jobs sometimes where you don’t have a business licence?” He said, “All the time, because it’s not worth my while to go and get a business licence, let’s say in North Van, if that’s a one-off job.”
Well, whose interest does that serve? It’s not just bad for business; we all suffer. Has anyone tried to get a plumber lately?
BCBusiness: What is the solution? How do we integrate business licensing?
THORPE: There is a great force out there called the status quo. The same people who were against free trade, the same people who are against inter-provincial trade and inter-provincial mobility, are the same people who are against a single business licence. I’m not going to push rope up a hill forever; I’m going to go where people actually want to move forward. So I went to the Okanagan-Similkameen, and I met with all the mayors and the administrators and said, “I would like you to think about being a pilot project for a mobile business licence for the Okanagan-Similkameen.” They have agreed to it and they have formed a committee; they’re working on it. I understand I’m going to get a proposal in the next few weeks and they’re moving forward.
JONES: It’s already been shown to be incredibly successful in Victoria, where the Capital Regional District has a business licence. Business owners there love it. When it was introduced, there were some concerns that revenue would fall, but when it was introduced revenues actually increased overall.
THORPE: So what we need is Rick to go back to Surrey and mobilize the Surrey chamber of commerce and work with the mayor in Surrey, because the mayor has indicated to me that she is interested in having a single licence for mobile businesses.
BCBusiness: Sounds good. Rick, does that give you optimism? Do you think this is going to be solved sometime soon?
FIJAL: I don’t think this is going to happen anytime soon because in each municipality every little bureaucrat whose life depends on his particular role the way it is now is going to fight this tooth and nail. Businesses do not vote, so unfortunately there is no strong direct voice saying, “Listen, you change this or I’m going to vote you out.” So it’s just going to muddle along as it does, and if you can start to turn the rudder a few degrees, well, maybe 10 miles down the road the ship will start to turn. But you know, when you’re in business, you got to make things happen now; you can’t wait forever.
JONES: Another thing that’s really outrageous about what a lot of municipalities do to their small businesses, partly because they don’t have the votes that residents have, is that they charge business owners many times what they charge the residents for services. So, for example, if you look at Vancouver, business owners pay more than five times what equivalently valued residential properties pay. Business owners are not using five times the services; in fact, there are a lot of studies that suggest that business owners use fewer services than residents. And yet they’re paying that much more.
Property taxes are profit-insensitive taxes; you pay them whether you make money or not. So they are really tough on business owners. But a lot of the mayors that I talked to don’t even seem to be particularly aware of this issue, let alone getting to the stage where they’re ready to do something about it. In some municipalities, like Vancouver, we’re getting to that stage where businesses are closing and choosing to relocate or choosing to do something else because of the tax burden.
BCBusiness: Again, what’s the solution?
JONES: Well, historically our association has focused its attention on the provincial and federal levels, but now our members have started to tell us that it’s municipal governments that are really getting under their skin. We’re going to be tracking these property-tax gaps over time. We’re going to be doing the same thing on spending; we’ve got a spending report planned and that’s part of the solution.
FIJAL: And it may be telling people things they don’t really want to know: you’re either going to have to spend less money or pay more taxes.
JONES: Well, no politician likes bad press, so when you can make these things more public and make it clear that business owners are concerned, that’s when you get action. If you look at what happened with the City of Vancouver last year, where they did put a freeze on business taxes, that was in response to an incredible amount of pressure from business owners who were showing up at city council meetings to raise their concerns. That’s, I think, where you get action.
FIJAL: Unfortunately, some small businesses don’t normally have the time. When you’re working nine to 10 hours a day, you don’t have time to go sit at a council meeting. You don’t have time to lobby your member of parliament. You’re busy trying to satisfy your customers and to earn an income. Meanwhile, some retired, self-serving interest group that has nothing to do can sit there and make this lobby. So unfortunately, the small-business sector really doesn’t get represented, unless you hit a raw nerve like a parking tax, and suddenly everybody is up in arms.
THORPE: I think people forget that there’s only one taxpayer. All the money, whether it’s going to the federal, provincial, municipal or regional government, is all coming out of Fred and Mary’s pockets, and they do not have an endless supply. So I actually think the answer is responsible spending at all levels of government, and all of us have actually helped create the high level of expectations that people have. To me, it’s just mind-boggling what people expect their governments to pay for.
JONES: I want to highlight an area that I don’t think the government gets nearly enough credit for: British Columbia has been a leader on regulatory reform. B.C. is the first government in the country to say, if we really want to get a handle on the elephant, we’re going to have to get serious about measuring it. So they set a target to reduce red tape by one-third in three years. We’ve recently had the federal government commit to a 20-per-cent paper-burden reduction in one year. That whole model is based on B.C.’s experience and B.C.’s success. I believe the program expires next year.
THORPE: Actually, we’ve just extended that now to 2012.
BCBusiness: Rick, these are all wonderful initiatives on the overall planning stage. Have you seen any of this trickle down to the street level? On the regulations front, do you find yourself filling out any fewer forms than you were, say, five or 10 years ago?
FIJAL: I think provincially it’s gotten better, but municipalities have more than picked up their share. Now in my business, in signs, Surrey wants to adjudicate what colour they’re going to be. Instead of the safety or the size, now it’s, “Sorry, we don’t like that corporate logo; it doesn’t matter that it’s at 198 stores across the country, but we don’t like it.”
THORPE: So are they telling people what colour to paint their houses too?
FIJAL: Well, that’s coming soon, I’m sure. You look at things like that and you wonder who is served by this, other than the person whose job it is to run around and chase their tails and make life difficult for everyone.
BCBusiness: We’ve talked about a lot of impediments to business, the staff shortages, the taxes. Maybe we can talk a little bit about why it is that B.C. has such a robust small-business sector and what we’re doing right.
JONES: Certainly over the past four years, B.C. businesses have been among the most optimistic in the country. We’ve been running first and second place with Alberta for most of that four-year period, which has been an incredible turnaround from where we were at the beginning of the decade. That’s very good news, and I think a lot of it has to do with the innovative spirit here. Even when it comes to labour shortages, we asked our members recently, have you done anything different to attract or retain staff in the last few years? Over 50 per cent said yes, and they describe some really creative and innovative practices, whether it’s offering an $8,000 set of tools to an apprentice who stays with you for four years or allowing someone to bring their pet dog to work.
THORPE: I think you’re correct: we have so much to celebrate in B.C. I was up in Quesnel recently; what you generally hear about Quesnel and that area is the mountain pine beetle, but I can tell you that I didn’t hear that in Quesnel. All that I heard was a positive spirit: mining is coming back; the comunity is diversifying; the Rocky Mountaineer train is coming through, surpassing our expectations. We’ve got great entrepreneurial spirit, we’ve got a great place to do business, and those are the keys to success.
What do you think? Use the comment form below to leave us your feedback.