Presented to the Select Standing Committee on Finance and Government Services http://www.bccpa.ca/budgetsubmission

1. Budget Recommendations 2016/17
Presentedto the Select Standing Committee on Finance and Government Services
By the Chartered Professional Accountants of BritishColumbia

2. 1. The challenges of recruiting and retaining skilled labour;
2. The impact of high housing costs;
3. Red tape reduction;
4. Improving financial literacy; and
5. Enhancing productivity in BC.
Basedon our members’ input and our economic analysis, this year CPABC’s
recommendationsfocus on five policy issues to build a stronger BC economy:
Graphicdesignedby Blair Robertson at Blindfolio Design

3. Labour Skills Mismatch
Key Facts:
• It’s estimated that between 2012 and 2022, there will be one million job openings in BC and over
three-quarters of these positions will require post-secondary credentials. The BC government is
expecting labour demand to outstrip supply by 42,250 workers during the same time period.
• Labour skills gaps and mismatches cost the provincial economy up to $6 billion in foregone GDP and
$785 million in tax revenues every year.
• In 2014, total employment in BC rose by 12,800jobs to 2.28million, while the size of the labour force
only grew by 100 workers to approximately 2.43 million.
Graphicdesignedby Blair Robertson at Blindfolio Design

4. Labour Skills Mismatch
CPABC recommendations:
#1. Expand currentinitiativesthat promote education and skillstraining,such as the Canada-BC Job
Grant program.
#2. Promote existing programs, such as Citizenship and Immigration Canada’s “Express Entry” program,
andencourage inter-provincialmigration.
Graphicdesignedby Blair Robertson at Blindfolio Design
“We’redesperate forcertainskills andwe can’tget themin; eventhenewforeignworkers’ express program is notenough.
I’mlosing opportunityand I’m losing my competitiveedge becauseIhave towait six monthsto hireanemployeewiththe
rightskills.”
Meryle Corbett, FCPA, FCMA, CFO, KF Aerospace (Kelowna, BC)

5. High Housing Costs
Key Facts:
• In July 2015, BC’s averagehousing price hit $608,294,an 11% increase since July 2014. By
comparison, the national averageincreased by 8.9% to reach $437,600during the same period.
• Across BC, averagehousing prices vary;BC’s MLS average price is forecast to be between
$573,700and $627,500 in 2015.
• High housing costs are an issue across the province. 78%of respondents
in the CPABC Business Outlook Survey cited this as a major
or moderate challenge to business success in BC.
Graphicdesignedby Blair Robertson at Blindfolio Design

6. High Housing Costs
CPABC recommendations:
#1. Collectdata to monitor the flowof foreign investmentin housing.
#2. Look to other jurisdictions, such as Hong Kong and Australia,to assess policies currently in
placeto try and address this issue.
Graphicdesignedby Blair Robertson at Blindfolio Design
“Iam muchless attachedto Vancouver,becausesettlingdown is impossible. An
academic salary cannotallow someone anymore to buy a familyhome, especially if you
don’thavetimeto commutefar.”
Yves Tiberghien,director at UBC’s Institute of Asian Research
Fromaninterviewwith the Globe and Mail

7. Red Tape Reduction
Key Facts:
• Small businesses made up 98% of BC’s 390,300businesses in 2014, and they employ an
estimated 1,010,800people.
• Accordingto the CPABC Business Outlook Survey, 61% of CPA respondents identified
government red tape as a challenge for business success in BC.
• The Mobile Business License allows businesses to operate in multiple municipalities with only
one license, reducing red tape. Currently there are ten Mobile Business License Agreements in
four of BC’s eight BC development regions.
Graphicdesignedby Blair Robertson at Blindfolio Design

8. Red Tape Reduction
CPABC recommendations:
#1. Encourage municipalitiesto create mobile business licensesin all eight development regions,
andlicenses should be consolidated in regions where multiple licenses exist.
#2. Work with the Small Business Roundtable and the BC Chamber of Commerce to create and
facilitatean open platform to encourage cross-industry discussions.
Graphicdesignedby Blair Robertson at Blindfolio Design
“We’vebeen following theconceptof cooperative competitioninthetech
sectorforever.The interestingtrendIsee, is this conceptof usingnot-for-
profitbodies alongside for-profitbodies, so havingVIATEC, a not-for-
profitsociety,alongside its for-profitmembers, helpingpull leadership
togetherand raising thelevel ofsynergy.”
MiaMaki, FCPA, FCMA, Principal, Quimper Consulting (Victoria, BC)

9. Financial Literacy
Key Facts
• Over the past five years, BC’s consumer debt-per-capitaincreased by 47.7% to reach $58,621,
the highest level in Canada. The national averagewas $49,624.
• One way to address the issue of rising consumer debt is ensuring that the public has adequate
financial education to make informed decisions on how to manage their finances.
• In 2011, the BC Securities Commission conducted a youth financial literacy survey with 3,000
Canadianhigh school graduates. Nearly three-quarters of respondents indicated they expect
to own a home within the next ten years; in reality, only 42% of those between ages 25 and
29 are homeowners.
Graphicdesignedby Blair Robertson at Blindfolio Design

10. Financial Literacy
CPABC recommendation:
#1. Encourage private,public, and government partnerships to bring real life experience into the
classroom, including working with the profession to bring financial experts into schools.
Graphicdesignedby Blair Robertson at Blindfolio Design
Accordingto CPA Canada, professional accountantsin seniorcorporatepositions are
concernedwiththecurrentlevel ofpersonal debt among Canadians. 59%of thosesurveyed
areworriedthatthehighlevel of debt is hurtingtheeconomy, whileanother50% agreed that
thecurrentlevel ofdebt is a threattofuturedemand forproductsor services.
CPA Canada Business Monitor (Q4 2014)

11. Business Productivity
Key Facts
• Investment in machinery and equipment is a key driver of productivity, and the removal of
input tax credits adds a 7% cost to doing business in BC when compared to jurisdictions like
Albertaand Ontario.
• The decline in the value of the Canadian dollar further reduces businesses’ spending power, as
most new equipment and technology is purchased in the US and in US dollars.
• The Business Council of BC states that BC’s Marginal Effective Tax Rate went from
17.8% in 2012 to 27.5% in 2013, when the PST was reinstated. This is compared to
the national averageof 18.6%.
Graphicdesignedby Blair Robertson at Blindfolio Design

12. Business Productivity
CPABC recommendation:
#1. Review the PST and implementinputtax credits for business capital investment in order to
maintain our province’s competitiveness and drive productivity.
Graphicdesignedby Blair Robertson at Blindfolio Design
53%of CPA respondentsindicatethatthereturntothePST/GST taxregimehas posed a
“major” and“moderate” challengeto theirbusiness, another32% indicateitas a minor
challenge.
CPABCBusiness Outlook Survey, 2015

13. Recommendations from CPABC
Economic Roundtable Participants
#1.BC’s propertytax on businesses has traditionally been much higher than residential property tax. This is costing
businesses,particularly small businesses.While propertytaxes are under municipal jurisdiction, the BC
governmentshould call on municipalities to review theirproperty tax policies and work towards setting a cap
onthe propertytax gap betweenbusinessesand residents across the province.
#2.Technology touches all of BC’s industries and there is a huge opportunity to leverage technology to become more
productive across the province. It is drivinggrowth in industries such as agriculture, life sciences, and health
sciences. The BC government should more actively promote the Eligible Business Corporation program and other
BC initiatives thatwould support growth of the technologysector.
#3.The exchange rate of the Canadian Dollar is a major economic determinant in the Thompson-Okanagan. At the
moment, the low Canadian exchange rateis fueling growth in tourism and trade.However, it is also increasing
inputcosts for those businesses who buy machinery and technology, or raw materials from the US. The BC
governmentshould reinstate business inputtaxcredits to minimize theadditional taxburden on businesses at
all times.

14. About CPABC
• The Chartered Professional Accountants of British Columbia (CPABC) was established when the
CharteredProfessional Accountants Act came into force on June 24, 2015.
• CPABC is one of the largest professional organizationsin the province,representing over 32,000
members and almost 6,500 legacy and CPA students and candidates.
• CPABC is the amalgamationof the Institute of Chartered Accountants of BC, the Certified General
Association of BC, and the Certified Management Society of BC.
• CPAs are on the front linesof businessin thisprovince,and they see firsthand what issues are
affecting investment and the economy.