It’s very easy to focus on the tough parts of running a business in 2014. But every once in a while, it’s useful (and encouraging) to remember just how much things have changed for the better.
Bill Robson has no shortage of suggestions. The president and CEO of the not-for-profit economic think tank C.D. Howe Institute is the guest of this week’s BusinessCast.
Over the past 25-odd years, he says there have been three significant policy changes that have unquestionably made Canada a better place to do business for entrepreneurs. Here’s what they are:
1. Free trade
Canada’s trade activity with the U.S. is now so robust that it’s easy to forget that free trade between the two nations was once considered a grave threat to business north of the 49th. “Some of the very important framework policies that are now part of the landscape in Canada were at one point topics of hot debate,” Robson says. “For example, free trade with the U.S. is now something we’ve lived with for a long time. We’ve seen some important positive developments in the economy as a result of that agreement, but back in the late 1980s there was a federal election fought over it. Many people were worried.” They needn’t have been, he adds; the consensus among economists is that free trade with the U.S. has been an overwhelmingly positive development.
2. Low inflation
The past several years have conditioned most Canadians to get used to—if not expect—low inflation rates. “People have come to count on it,” explains Robson. “But back in the late 1980s and early 1990s, lots of people thought low inflation wasn’t possible; others thought it wasn’t desirable.” Anyone with a longer memory knows that keeping these numbers low is in the interest of everyone, he adds: “People who remember the late 1970s and early 1980s will remember the difficulty of planning a business where price increases could be double digit in a year, and where interest rates tended to swing wildly.”
3. Reduced business tax rates
Complaining about taxes might seem appropriate, but it’s worth noting that in that regard, Canadian businesses today are much better positioned than they once were. “Another area that’s made quite a difference is the effort we’ve put into business tax rates, particularly the high corporate tax rates we used to see provincially and federally,” says Robson. C.D. Howe’s position has long been that high taxes “are a very expensive way of paying for government programs because of the discouraging effect they have on business investment.” Lower rates have proven to be far more effective for the economy as a whole, he adds.
For more of Robson’s thoughts, check out this week’s BusinessCast, which you can listen to by clicking the button above or download by clicking on the iTunes logo below:
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