Opinion: B.C.’s small businesses losing confidence in provincial economy

Credit: Courtesy of Government of British Columbia

B.C. Premier John Horgan

As the government releases its budget, it has an opportunity to show strong support for the business community

Premier John Horgan insists that B.C.’s economy is booming and that his government’s policies are helping make our economy more resilient and able to provide a brighter future for British Columbians. Despite his conviction, B.C.’s small and medium businesses are signalling that the future isn’t as bright as we would all like it to be.

For the past several years, the Coalition of BC Businesses has been following business trends presented by the BC Chamber of Commerce in the annual Collective Perspective survey. This year’s findings paint a concerning picture of how new taxes and increased costs embedded in last year’s provincial budget have impacted the engines of B.C.’s economy. The survey showed that the province’s small and medium-sized businesses feel left behind by current government policies, and that it’s more difficult and expensive to do business in B.C. today than it was last year.

According the survey of nearly 900 businesses from across the province:

• 49 percent of respondents state their confidence in B.C.’s economy has declined,
• 79 percent believe that the cost of doing business in B.C. has increased, and
• 54 percent don’t feel that government is supportive of business.

B.C.’s almost 400,000 small businesses are the backbone of our communities. They account for 98 percent of all business in the province, employ more than a million people, account for one-third of the province’s gross domestic products and create nearly two-thirds of all net new jobs every year. Simply put, their success is B.C.’s success.

Yet the Chamber’s survey makes it clear that many are starting to struggle. Although B.C.’s business community has led the country in growth and competitiveness for the past several years, that progress and prosperity is now at risk as the cumulative impact of rising costs, new taxes and burdensome red tape are hampering their growth and productivity.

The path to prosperity
The B.C. government needs to know that the province’s businesses are facing a litany of daunting challenges: a growing labour shortage, high cost of living, increased competition for top-end talent across North America, new payroll taxes, minimum wage increases, soaring property costs and too many layers of bureaucratic red tape. The end result is that businesses are losing confidence in B.C.’s economy as a place to grow and invest. That means small and medium-sized businesses are losing their appetite to take risks and are hesitating to scale up operations or hire new staff. B.C. cannot afford policies that make doing business more difficult, especially when other jurisdictions are eager and competing for investment.

With the upcoming budget, Premier Horgan and Finance Minister Carole James have an opportunity to demonstrate strong support for B.C.’s small businesses and help foster an environment where they can invest, grow and employ more British Columbians. Fortunately, government already has the road map it needs to support a thriving small business community in B.C.

In 2018, the provincial government commissioned a Small Business Task Force to identify smart policies that could be implemented quite quickly and would help increase business confidence. The task force interviewed more than 1,300 small business owners and entrepreneurs from every region the province to learn about their challenges. Its report contains several business-friendly recommendations to reduce costs of doing business and to strengthen economic growth and competitiveness. The Coalition believes government should announce its intention to implement the Task Force’s recommendations, especially:

• Review the Employer Health Tax to reduce its impact on small businesses through measures like increasing the exemption rate for the smallest employers, removing the 2019 double-dipping overlap for proactive employers and exempting the tax on employees under the age of 19;
• Lessen the impact of minimum wage increases on small businesses by linking minimum wage to the Consumer Price Index to accommodate inflation, as also recommended by the Fair Wages Commission
• Exclude work vehicles and standard pickup trucks from the Luxury Vehicle Tax
• Work with WorkSafeBC to provide businesses with rebates to reduce the $6.4-billion (142-percent) surplus from 2017
• Announce a commitment to continue engaging with B.C.’s small business community to analyze the unintended impacts of changes to legislation, regulation and policy prior to them being implemented

These are only the tip of the iceberg of what the Small Business Task Force recommends, but all of the recommendations would have an immediate impact on business confidence in B.C. The government would be well advised to implement these policies into its 2019 budget—it would go a long way to showing B.C. businesses that government is paying attention to their needs.

At the end of the day, government must remember that to keep the economy booming, it needs to keep businesses working. If B.C .is to succeed, we need balanced, smart policies and strategic investments in 2019 that will help grow the economy and boost confidence that B.C. is still a great place to do business.

Jeff Guignard is chair of the Coalition of BC Businesses, an alliance of business and trade associations that collectively represent more than 100,000 small and medium-sized businesses in B.C. We’re here to support businesses as we embrace the changing world of work.