THE BLOG

Budget 2014 Struck a Blow to Small Business

04/17/2014 06:21 EDT | Updated 06/17/2014 05:59 EDT

Small and medium-sized enterprises (SMEs) are the engine of Canada's economy, accounting for almost 78% of all private sector jobs created over the last decade, now employing over 7.7 million Canadians, or 69.7% of the total private sector labour force.

While the growth of SMEs represents the best opportunity for job creation in Canada, between 2006 and 2010, Canada actually lost more than 1,500 medium-sized businesses. During this period, mid-sized businesses were 10 times as likely to shrink or shut down as they were to grow.

These figures are worrisome and indicate that the government needs to rethink its role in creating the conditions necessary for SMEs to expand, and ultimately create the kind of stable, middle-class job opportunities which these firms have traditionally provided our economy.

Yet, while the Conservatives like to talk a big game, Canada's SMEs have received very little attention from the Harper government. Instead, when it comes to making policy, the Conservatives have made their priorities clear: they're on the side of Bay Street -- not Main Street.

Never was this more apparent than Budget 2014's termination of the Hiring Credit for Small Business (HCSB), a hiring incentive of $1,000 that was adopted by the government in response to the NDP's practical proposal for a $4,500 job creation tax credit during the 2011 election campaign.

The HCSB impacted around 560,000 businesses across the country with access limited to firms with total Employment Insurance premiums below $15,000. While the credit was beneficial to all SMEs, it was particularly important for those SMEs seeking to expand their operations and hire new workers. These are the companies that we rely on to grow our economy.

At an estimated annual cost of $225 million, it was also a fiscally prudent means of addressing the subpar unemployment numbers which the Canadian economy has been suffering through during the ongoing economic downturn. In contrast to this cost-effective tool to stimulate job growth, The Parliamentary Budget Officer (PBO) has estimated that the cost of a one-percentage-point reduction in the general corporate income tax rate was roughly $1.85-billion in 2013. However at nearly eight times the cost, the Conservatives' across the board, no strings attached, tax cuts have not had nearly the same impact in stimulating job growth.

While other government programs targeted at SMEs often mire business in time-consuming and highly technical paperwork, one of the reasons the HCSB was so well-received was that it was administratively simple and broadly accessible. Given ongoing concerns over red tape and the administrative paper burden which disproportionately affects the smallest of Canada's businesses, the elimination of a streamlined incentive like the HCSB just doesn't make sense.

Given its success, New Democrats believe the HCSB should be reintroduced and could be expanded to help facilitate the important role that smaller businesses play in creating jobs and hiring Canadian workers.

As we build toward 2015, we will continue to emphasize policies that create winning conditions for Canada's real job creators, small- and medium-sized enterprises. And unlike the Conservatives and the Liberals, New Democrats will prioritize targeted incentives for hardworking business owners on Main Street.