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OPINION: Cutting business taxes doesn’t solve human resources issues

Tim Carroll

Guest Opinion

Perrin Beatty’s address to the Greater Charlottetown Area Chamber of Commerce on May 14 reported that the shortage of the right human resources is cited as the main factor limiting business plans for growth and expansion. Businesses have access to capital and market opportunities, but are unable to get the qualified people they need to do the job. Note that Beatty, president and CEO of the Canadian Chamber of Commerce, and the surveys do not mention taxes as the problem.

Businesses are not saying that taxes on businesses are so high as to discourage investments. The business community repeats that human resources is their biggest challenge, yet some governments in Canada insist on cutting business taxes as the way to stimulate investment. Tax cuts are a lovely offer but have not made any progress creating qualified employees. In spite of a history of tax cuts at all levels of government in Canada the problem remains. The human resource challenge confronting business in the developed world was predicted at least 20 years ago.

Things like education, training and human resources are the responsibility of provinces. Many believe that the federal government has the power to spend on human resource problems. They don’t. The confusion comes from their involvement in manpower issues through the employment insurance agency. Employment Insurance (EI) is limited in helping solve the problem because it is obligated to meet agency objectives, which are not necessarily the same needs faced by industry. In my experience, the level of cooperation between provinces and the federal government can change from one government in Ottawa to another. P.E.I. and others can adopt the usual ‘wishin’ and ‘hopin’ dance with changing federal governments; or provinces can accept that human resources are their responsibility. The provinces are in the best position to lead and muster all the help is available to find a solution.

Provinces have lots of tools to create the kind of working environment that they think is best. Beatty shared the view that the tax system needs to be updated and made less complex. If attracting talented people is the problem, then instead of a tax cut for business only, maybe that money would produce better results by making sure provincial taxes are part of the solution for everyone.

The Employment Standards Act, which covers all workers not under a union contract, is under provincial control. The act was going out for public review under the previous P.E.I. government. If that continues then it may reveal a lot of new ideas to solve the human resource problem faced by business. Employment standards needs innovation because of changes in the workplace and the evolving needs of employers. It’s controversial because the old and new economy needs often conflict.

Both Ontario and Alberta had proposed progressive improvements to employment standards, but that was shut down quickly with the election of new governments in those provinces. So, the field is wide open for someone to step up and take the lead. Actually, a province taking the lead on solving new problems has a great history in Canada. Saskatchewan’s Tommy Douglas in the face of fierce resistance funded Canada’s first universal health care plan. That idea seems to have caught on. Quebec figured out how to deliver an effective child care program and B.C. led the way in Canada on carbon pricing. Ottawa can help a lot but only with the cooperation of the province. If becoming the best place to work in Canada is too far of a reach, then there are the usual areas like immigration, internet access, education and training where incremental improvements can make a significant difference over time.

There are a lot more alternatives for solving the human resource problem then spending money on a further tax cut to corporations. Maybe tax cuts did work at one time before things changed. In marketing different wants are grouped into consumer groups and given easy to recall names. One group is calledthe SLITS (Still Living In The Seventies). Going back to old approaches like cutting taxes may be appropriate for some issues, but it is clearly doing little to solve the new problems that businesses face in today’s world.

Tim Carroll is an associate professor in the Faculty of Business at UPEI.

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