The costs of many things have gone up, sometimes dramatically, in the last year or so.
Interest rates, fuel, insurance, and wages are just a few cost increases hitting businesses. Now Employment Insurance Premium rates are planned to increase.
The EI program is designed to be self-sustaining. The Canada Employment Insurance Commission sets annual rates based on a seven-year break-even forecast. Increases in unemployment and temporary support programs introduced during the pandemic have led to a forecasted cumulative deficit of $18.8 billion on Dec. 31, 2024.
Employers pay 1.4 times the employee rate. The Canada Employment Insurance Commission is recommending employers pay $2.32 per $100 of insurable earnings, up from $2.28. Employees would also see a larger portion of their paycheque go to EI.
In response to this, the Canadian Chamber of Commerce has issued a letter to Deputy Prime Minister and Minister of Finance Chrystia Freeland and Minister of Employment, Workforce Development and Official Languages Randy Boissonnault.
RE: Potential 2024 Increase in EI Premiums
I’m writing to express our concern about the potential 2024 increase in EI Premiums. EI is a critical program delivered by the federal government. It supports the livelihoods of Canadians and communities during periods of lost income. Temporary program changes in response to the COVID-19 pandemic created a significant deficit that according to the 2023 Actuarial Report on the Employment Insurance Premium Rate led the EI Operating Account to a projected cumulative deficit of $25.2 billion by the end of 2023.
Employers understand that EI is an important temporary job-loss protection program and want to ensure it is effective in supporting their employees during periods of transition. However, increases to EI premiums are effectively a tax on employers who pay a disproportionate amount into the program. Increases to EI premiums must take into account the economic challenges faced by businesses in Canada today, and into the future.
High interest rates, inflation and increased labour costs are making it difficult for small and medium-sized businesses to keep their heads above water. Due to continued strength of the labour market, Budget 2023 stated that the EI Premium Rate would hold steady at $1.63 per $100 of insurable earnings in 2024-2025. We understand EI premiums are being reviewed, and our view is that any increases would be ill-timed and unsustainable at a period when most businesses are struggling to resume normal business operations. It is not fair for employers and employees to pay off the deficit incurred through temporary program changes through increased premiums. Consequently, EI premium rates should be maintained at current levels.
The Canadian Chamber of Commerce represent businesses of all sizes in all sectors and regions of the country, and we would like to emphasize that any proposed changes to EI must balance the need to support workers while ensuring the program is financially sustainable and promotes a return to the labour force.
Senior Director, Future of Work
Canadian Chamber of Commerce
Spending nearly $30 billion annually, Ontario’s public sector is the largest buyer in our provincial economy.
When you spend that kind of money, how it’s spent has big implications. Getting the most value out of each dollar spent is not just about who can provide each product and service for the least amount of money.
The Ontario Chamber of Commerce recently published a policy brief titled Power of the Purchase Order: Modernizing Public Sector Procurement in Ontario. This brief puts forward the case for smarter spending that will have larger benefits for the people and businesses paying the provincial government’s bills.
Ontario’s public sector is made up of its ministries and agencies and includes institutions like hospitals and school boards. They spend money on everything from pencils to medical technology. This kind of buying power comes with a unique ability to invest in innovation, growing new markets, improving living standards, and economic development. However, it often fails to deliver on these goals.
As stated in the policy brief:
The process tends to lack collaboration, discourage investment, misallocate risk, and prioritize short-term costs over long-term value. Procurement modernization presents a major opportunity to transform health care and other public services, build more resilient supply chains, and create greater social and economic value for Ontarians.
The policy brief makes the case for changes like value-based procurement (VBP), shifting the focus from price to outcomes. Outcomes can include quality, lifecycle costs, sustainability, living standards, and economic development. It emphasizes long-term value over short-term costs.
Power of the Purchase Order lays out the case for both simple and complex purchases. A more expensive laptop can be more cost-effective if it requires less servicing from technicians and lasts longer. The implications are much bigger in complex purchases like pharmaceuticals. Bulk sourcing from a single provider lowers costs. To get these lucrative contracts, manufacturers compete to offer the lowest possible pricing, forcing them to reduce supply to just enough to win the bids. Unfortunately, this has led to shortages of critical medication.
The Province announced the creation of Supply Ontario back in 2020. This Crown agency has a mandate to modernize public procurement for the Province.
The policy brief contains 23 recommendations to create better outcomes for public sector spending and does so with a focus on innovation, attracting investment, and health care procurement:
Procurement in the public sector covers a wide range of goods and services – from office supplies to infrastructure, engineering services, and health care technologies.
For basic commodities, the process is simple. The buyer can easily describe what it is looking for through a request for proposal (RFP) and select a vendor that will best meet its needs. In these cases, it makes sense to prioritize cost-efficiencies and look for economies of scale.
In contrast, procurement of complex goods and services requires a more sophisticated process, one that is more oriented towards long-term value and collaborative problem-solving.
Ontario’s current approach to procurement can inadvertently discourage businesses from even attempting to bid, which leads to less competition and less favourable outcomes. There are several practical steps that can be taken to attract investment in Ontario’s supply chains, and encourage more participation from small, local, diverse, and green businesses. Increased competition for bids leads to a more diversified supply chain and better value.
Innovating Health Care
Health care procurement is not only significant from a budgetary perspective, but also for its impacts on patient and population outcomes. Medical devices, drugs, support services, and innovative solutions are complex purchases that provide long-term value to the health care system, its practitioners, and its users. Driving greater value within Ontario’s health care system requires spending wisely, which may not necessarily require spending more.
It is encouraging to see all levels of government take a renewed look at their procurement process. The City of Peterborough is undergoing a hard look at social procurement with the goal of leveraging existing procurement activities to achieve positive social value objectives that align with the City's strategic goals and plan. Governments are big spenders and it’s critical that we take a good look at how the money is spent to get the best value long term.
We’re stronger together. A common phrase, good naturally passed around to comfort and inspire. Something aimed to motivate the community to join together in times of trouble. But it’s more than an expression. It’s how the community got through the flood in 2006. It’s how we recovered from the May two-four windstorm. It’s how we will get through the pandemic. That way of thinking can get through another crisis, our environmental crisis.
A key to creating a more sustainable environment may be the connections we have to the other businesses in the community. Or at least a place to start.
If you’d like to discover more businesses within Peterborough and the Kawarthas, check out lovelocalmarketplace.ca.
* Todd Haiman Landscape Design – Blog January 25, 2017 in URBAN ROOFTOP AND TERRACE, OUTDOOR SPACE DESIGN
Investing in innovation is key to a thriving economy.
The Chamber of Commerce of Brantford-Brant has a proposed policy resolution that will urge the federal government to expand and improve its investments in innovation. The resolution is a partnership with the Peterborough and the Kawarthas Chamber of Commerce and will be debated at the annual Canadian Chamber of Commerce (CCC) conference in October. If approved by the CCC membership, it becomes part of its advocacy efforts for the next three years.
The federal government created an “Intellectual Property Strategy” to support and protect innovation across Canada. Improvements to the strategy must include an additional focus on federal investment and tax incentives, that will encourage business investment in intellectual property (IP) and innovation to improve productivity, economic growth, and incomes for Canadians.
The “Intellectual Property Strategy” was an investment of $85.3 million over five years to help Canadian businesses, creators, entrepreneurs and innovators understand, protect and access intellectual property (IP) through a comprehensive IP Strategy. This strategy was announced in the 2017 budget with details released in the 2018 budget, and underwent a program review in the spring of 2023, with the results pending to be published.
In the Roadmap to Recovery document, the Canadian Chamber makes the following recommendation as an important step in nurturing recovery: “Adopting an “innovation box” regime that would reduce the corporate tax rate for income derived from patented inventions and other intellectual property connected to new or improved products, services and related innovative processes developed in Canada.”
The Intellectual Property Strategy has goals and recommendations in three areas: IP Awareness, Education and Advice; Strategic IP Tools for Growth; and IP Legislation. Recommendations within these areas lack information about the cost of potential investments.
In 2019-2020, $30M was slated to establish a pilot program called the “Patent Collective”. The collective will work with Canadian entrepreneurs to pool patents, so that small and medium sized firms will have better access to critical IP they need to grow in early stages without fear of infringing on a patent. The budget refers to this program as providing these businesses with the "freedom to operate". Program entry was limited to the first year, and applications closed after one year.
This strategy is still in its infancy and Canada remains 16th in innovation overall in the Global IP Rankings in 2023. The Index consists of five key sets of indicators to map the national intellectual property environment for the 28 surveyed countries by the US Chamber of Commerce.
Canada's support to business in this space lags behind the offerings of other countries that are ranked above Canada on this list. One of those differences is a “patent box” tax approach. A number of countries (the U.K., Belgium, Luxembourg, France, Spain, Hungary, Ireland, Switzerland and China) have adopted this approach which sharply reduces the normal corporate tax rate on income derived from the exploitation of patents. The Netherlands widened the policy to an “innovation box” to encompass a broader class of intellectual property.
The various “patent box” programs have been implemented provincially in Canada, but not yet adapted at the federal level. British Columbia has had a tax policy in place since 2006, Quebec included patent box policy in its 2016 budget, and has recently updated it to maintain a 2% reduction in the corporate income rate for R&D activities carried out in whole or in part in the province, and Saskatchewan announced patent box tax policy in its 2017 budget, and recently updated it to include a 10-15-year eligibility window.
The reference to “box” comes from having to tick a box on the tax form that indicates this type of revenue is being claimed. The types of profits that qualify for the lower tax rate, and how acquired intellectual property is treated, differ significantly among countries and provinces.
Additionally, the “patent box” rate varies considerably among nations and provinces. Finally, some countries put caps on the total tax relief companies can receive from patent boxes. In the case of Saskatchewan, the provincial government has installed time limits on the number of years of tax relief that can be attached to a patent.
In the 2021 Federal Budget, the government committed to study a national patent box program; however, this study has not yet started. The Parliamentary Budget Officer found that a Patent Box program to reduce the corporate tax rate by half to 7.5% for large corporations and 4.5% for small business, applied to profits generated from R&D developed and patented in Canada, would cost $242 Million over five years. This investment in a national incentive will improve international competitiveness, support business investment in research and help bridge the commercialization gap between concept, patent, and delivery to market, by supporting new economic activity and tax revenue to offset the immediate expenditures of the proposal. The government could also apply the savings that will be realized from streamlining the SR&ED tax incentive program to offset all the immediate revenue cost of this proposal, and complement the existing SR&ED Investment Tax Credit program— firms would have an incentive to base their R&D activities in Canada and to commercialize them in Canada.
The federal “Innovation Strategy” also has a goal to double the number of high-growth firms in Canada from 14,000 to 28,000 by 2025. High-growth firms are the most likely to innovate, sell globally and invest in people creating more and better paying jobs. A secondary goal is to achieve growth in intellectual property applications and have these companies base their R&D and commercialize their innovation in Canada.
A federal “My First Patent Program” could help achieve this. Quebec funds such a program with the following parameters: Quebec SMEs with 250 or fewer employees that are able to demonstrate research and development efforts completed or in part can apply for a non- repayable contribution of up to 50% of eligible expenses, to a maximum of $25,000 for patent application projects, industrial design registration or integrated circuit topography.
This policy resolution was renewed at the 2017 and 2020 national conventions, and it continues to propose key solutions to help Canadian businesses develop and protect IP.
That the Government of Canada:
1. Complete the study on a national “patent box” strategy to encourage business investment in innovation in Canada by 2025, to be implemented for 2026.
2. Consult with senior business leaders and technologists to define what intellectual property would qualify, e.g., patents, copyright, industrial design, and for what duration.
3. Ensure that any such regime adopted in Canada delivers the clarity and simplicity that encourages participation in innovation from both SMEs and large companies.
4. Develop a federal program modelled after the “My First Patent Program” using the Quebec model as a template to encourage more investment by SMEs across the country.
5. Review the Patent Collective Program and update funding to meet the needs of new potential innovators.
The Peterborough and the Kawarthas Chamber of Commerce acts as a catalyst to enhance business growth, opportunity, innovation, partnerships and a diverse business community.