A premise of government assistance in the pandemic is that no one should lose a job.
Another premise is that the economy can be built back stronger.
A third is that there is no need to worry about the emerging rivers of deficits and debt or the longstanding sandbars of regulations and taxes that make for treacherous waters in British Columbia’s economy.
Try selling these three premises to the region’s business community. Ain’t buying.
Its rejoinder is a decisive, unambiguous pushback: things are broken, and if the subsidies disappear, things will not be unbroken.
The Greater Vancouver Board of Trade (GVBOT) has been tracking the practices and perspectives of businesses in COVID-19. Its fifth report, released Tuesday, paints a cup-pretty-much-empty portrait. As in: the holiday season was hellish, the year had already been horrible, the near-term might be worse, the long-term is at best uncertain – and at worst, truly not the best.
The report from the Mustel Group canvassed 134 of the board’s members in the first two weeks of January. The most charitable thing they could summon in the survey this early in the year is that the pandemic is accelerating their investments in digital technology. That sounds like learning to swim because someone pushed you into the deep end.
Other business investment coming? Not so fast, they say, we’re trying to dog-paddle. Operating costs are growing, so investment is shrinking.
Nearly two-thirds of the businesses said their revenues were continuing to show decline. Seven in 10 said their crucial holiday revenues were down in 2020. Half said they will continue to experience declines in the next three to six months. Four in 10 will reduce their investments this year.
One-quarter will reduce workforces.
One-fifth will be reducing workers’ hours.
One-sixth will take on debt.
The pandemic has made a blur of life and work and time, so it would not be surprising if we had forgotten that before it struck we were facing something akin to a recession in the months ahead. The subsidies have papered over much of that, but there remains a long-due concern that the province hasn’t been competitive, even if there is relative optimism that B.C. will emerge reasonably, eventually, comparably better than elsewhere in Canada.
But here is where there is ambivalence in the narrative: yes, two-thirds of businesses are worried about the debt from all this spending, but generally they don’t want the tap to be turned off.
The question now becomes what becomes of the business prescriptions for governments.
One day – maybe not today, but one day – governments will have to determine how to pay for what they have spent. Even with cheap money to borrow and a printing press in hand, there is no such thing as a free deficit. The governments themselves, naturally, don’t seem fussed about doubling the size of federal spending or running afoul of the provincial orthodoxy of balancing the books. Sooner or later, though, they’re coming back with a claw.
Problem is, the prescriptions from business actually take revenue away from governments and likely reduce their bureaucracies. The loss of red tape is red ink for governments. Competitive tax regimes for business are corrosive revenue regimes for governments.
The sitting governments in Ottawa and Victoria have ideologically expansionist DNA and the relative sizes of the public and private sector are tilting governments’ way in the pandemic by the day. There is a confidence gap in the economic recovery plans provincially and federally, and the leverage in determining the path ahead is with those spending and not those receiving.
A provincial election didn’t help focus the attention of government on the British Columbia economy. A federal election would do the same for Canada, even if it follows a spring budget with a spending blueprint on big-ticket infrastructure or green economy investments. Both, though, forestall any economic reckoning, because few politicians want to campaign as cutters in this climate or emerge from any election eager to do so.
Thus we appear a long way from any ideas on how, or how much, to furnish revenue to offset the expenses. The markets don’t appear to be wincing as they walk. Inflation is set aside from the vocabulary for the time being.
We are in the holding pattern for vaccinations, assuming the needle will move the needle. We are assuming the new U.S. president straightens away America’s pandemic crisis so our borders can be more porous. We are assuming many Canadians have tucked away some funds in their household confinements and will be spendthrifts soon enough.
Those are the largest guesses any of us can remember and pin so much of our hopes with them.
Kirk LaPointe is publisher and editor-in-chief of Business in Vancouver and vice-president, editorial, of Glacier Media.
