The election may be about the economy, but don’t tell business
New Democratic Party Leader Jagmeet Singh was out of the gate quickly, a good strategic move since his opening salvo will do nothing to separate him from the other parties in the election race.
“No more catering to big corporations or the ultra-rich,” Singh tweeted. “We need to put people first.”
That pitch might have made the NDP special in the past, but not in 2019. There is no constituency that has been catered to less in recent years than businesses that employ more than a few dozen employees. (As always, small businesses have a special place in the heart of every campaigning politician, and don’t let the Canadian Federation of Independent Business tell you otherwise.)
Prime Minister Justin Trudeau appears to make economic policy by reading the briefs sent his way by various corporate lobbies and then doing the opposite of what they recommend. Andrew Scheer, the Conservative leader, presents the wealth of Trudeau and Finance Minister Bill Morneau as a weakness, which must come as a surprise to the even wealthier men and women who run Canada’s most important companies. Elizabeth May and the Green Party probably would dispute the suggestion that they are anti-business, but they couldn’t deny that their base is motivated by some anti-business policies.
You will have read or heard that the election is about the economy. If so, the campaign will be remarkable because it appears destined to take place with little regard for the enterprises that create most of the country’s wealth. That’s disconcerting if you believe, as I do, that Canada’s fundamental economic weakness is its lack of competitiveness. Whoever wins will be obliged to make good on their various promises to help the middle class feel like it’s getting ahead. The companies that employ most of those people will be at the back of the line.
“If you look at Capitalism 2.0 in the future, this idea that a government’s role is creating a just society, but also creating a level playing field in that just society is super important,” Michael McCain, chief executive of Maple Leaf Foods Inc., said on David Herle’s “The Herle Burly” podcast in July. “It’s super, super important. You can’t operate with just one of those things.”
Canada’s political parties appear to want to try.
Every major business lobby has begged Morneau to overhaul the tax code over the past couple of years. David Bensadoun of the Aldo Group Inc., Dax Dasilva of Lightspeed POS Inc., and Eric Boyko of Stingray Group Inc. are among the executives who have told me that Canada’s tax rates are barriers to growth. Those three lead companies that align with the Liberals’ progressive brand: Aldo was the first footwear brand to be certified climate neutral; Dasilva, who is gay, is a champion of diversity in the workplace; and Boyko has planted a flag for Canada in the digital economy. But when they ask for a more competitive tax regime, they might as well be billionaire hedge-fund managers.
“We do think the tax environment for businesses is competitive, so we are in a competitive zone,” Morneau said on the latest episode of the Financial Post’s Down to Business podcast. “We do not think that the way you create advantages for a country is through taxes alone.”
The Conservatives aren’t going out of their way to associate with big business, either.
Scheer might get an extra point for his promise to build a west-east “energy corridor” for pipelines and hydro cables, but his party is disparaging of big business as often as it is complimentary. “We have seen a surge in corporate welfare that is taxpayer funded money for well-lobbied industries and businesses,” Pierre Poilievre, the Conservative finance critic, said on Down to Business on Aug. 28. “We think business should get ahead by having the best product, not the best lobbyist.”
Poilievre declined to make specific tax promises because the party’s platform hadn’t been released, but he emphasized that a Scheer government would leave more money in “people’s pockets to help them get ahead,” and said nothing about easing the burden of big companies and the relatively rich people who tend to run them. He said Conservatives would “obsessively” cut red tape, a pledge that should be easy to keep, since Morneau introduced various measures to do just that in last fall’s economic update.
Canada’s corporate big wigs have to accept some of the blame for their exclusion. For too long, executives have hidden behind their various trade associations, which may have left them with more time to run their companies, but enabled others to turn members of the “one per cent” into cartoon villains. They haven’t helped their cause by regularly begging the government to solve problems such as climate change and skills mismatches, rather than tackling difficult issues on their own. Canada’s lamentable productivity rate is a policy problem, but it also is a function of short-sighted corporate decision-making.
McCain shows how business might get back in the game. The leader of one of Canada’s biggest food processors told Herle the “notion of the primacy of shareholder value is dead.” McCain said companies should treat the communities in which they work with respect, including when they decide they must close a plant. And he said they should join the fight against big societal issues; Maple Leaf is focused on reducing its contribution to climate change and volunteering its expertise to reduce child malnutrition.
It’s too late for this campaign, but if there are more McCains in four years, the corporate establishment might get a hearing in the next one.