It’s time to come together: 2021 federal election insights

The election results are in: the Liberal party of Canada will be leading the country with a minority government as we move out of the pandemic and towards economic recovery. But it’s been a trying year and a half, and Canadians are exhausted. Across the country, we’re seeing people dealing with personal challenges, mental health issues and job resignations on an almost unprecedented scale.

Now is the time to come together and collaborate as we move towards recovery. And this election has given us the opportunity to reflect on how we’ll do that.

We’ve analyzed the Liberal party platform and identified a few of the key impacts for Canadian businesses. There’s still some uncertainty about which elements of the Liberal platform will ultimately pass into law and the extent to which the Liberal minority government will need to collaborate with other parties to enact meaningful change. But there are already some significant directional trends around what the new government is looking to do.

Beyond the election itself, we’re also currently experiencing the effects of major global shifts, including climate change, fractured geopolitics, social tension and the pandemic. It’s not just governments that will need to collaborate amidst this uncertainty. Here at PwC Canada, we feel there’s never been a more important time for all of us to build trust with each other: corporate Canada, the government and individuals. If we want to solve some of the important challenges facing our country, we all have a role to play.

What are some of the opportunities for Canadian businesses?

Reforms to the Scientific Research and Experimental Development (SR&ED) Program

As part of their election platform, the Liberal party promised to introduce new investment tax credits to incentivize innovation and green technologies. One of these measures is to improve the SR&ED program by reducing administrative red tape, better aligning eligible expenses with current innovation and making the program more generous for certain companies.

While in the past, many companies might not have filed SR&ED claims because of the associated administrative and audit burdens, the hope is that these changes will empower Canadian companies that are innovating to get credit for the important work they’re doing. Research and development (R&D) is the lifeblood of our economy and will be crucial to pandemic recovery.

COVID-19 supports for small businesses

The Liberal party also included a variety of measures aimed more specifically at facilitating economic recovery by supporting small businesses. One of these is the Canada Digital Adoption Program, which will provide, among other supports, grants of up to $2,400 to small businesses for new technology expenses. Another is the Canada Small Business Financing Program, which will provide, in addition to other supports, an increase in maximum loan amounts from $350,000 to $500,000.

As we all know, many small businesses have been hit hard by the pandemic, so this support will be an important step in economic recovery. While it remains to be seen how effective these programs will be, they’re a clear signal on the part of the Liberal party of the continued importance of small businesses to the Canadian economy.

Increased tax for banks and insurance companies

So how does the Liberal party plan to pay for these and other measures? As part of their platform, they plan to increase the federal corporate income tax rate by three percentage points for banks and insurance companies that earn more than $1 billion per year. They also plan to introduce a temporary Canada Recovery Dividend that would be paid by certain banks and insurance companies to the government.

It’s understandable that governments are looking for new revenue sources after taking on so much debt. But an inadvertent side effect of looking to banks and insurance companies to generate revenue will be that Canadians with ownership stakes in those organizations, even if it’s only through their pension funds, will bear part of the cost. So also will the investors and customers of these sectors, as the cost of the increased taxes will likely be passed along at least in part to the broader community. Whether this is the best way to raise funds to help pay for economic recovery is uncertain, but this emphasizes the fact that we’re all in this together—and we need to focus on collaborating as we move towards a post-pandemic reality.

Bringing it all together

We’re all trying to navigate this global pandemic. As a country, we’ve dedicated a lot of money towards supporting Canadians, and we’ve all seen firsthand what we can achieve when we work together.

As we move into the next phase, proactivity and collaboration will continue to be key. Over the coming years, citizens, businesses and government will need to come together to rebuild our country and fight for the issues that matter.