5 Impacts of the Canada’s 2024 Fall Economic Statement on Small Businesses and Entrepreneurs

The Government of Canada’s 2024 Fall Economic Statement has introduced several significant measures aimed at addressing various economic and social issues. This comprehensive overview delves into the highlights of the statement and their potential impacts on citizens, small businesses, and entrepreneurs. Understanding these changes is crucial for navigating the evolving economic landscape and capitalizing on new opportunities.

1. Housing Measures: Improving Affordability and Supply

The statement includes measures to enhance housing affordability and increase the supply of homes. One of the key initiatives is the removal of the stress test for low-ratio insurable mortgages when switching lenders at renewal.

• Removal of Stress Test: The stress test was originally implemented to ensure that borrowers could afford mortgage payments even if interest rates rose. While it added a layer of security, it also made it challenging for some borrowers to qualify for mortgages. By removing the stress test for low-ratio insurable mortgages when switching lenders at renewal, the government aims to make it easier for homeowners to switch lenders without re-qualifying under the stress test. This could lead to more competitive mortgage rates and improved affordability for homeowners.

Impact on Citizens:

• Homeowners: Existing homeowners stand to benefit from increased flexibility and potentially lower mortgage rates when renewing their mortgages. This measure can reduce the financial burden on households and enhance financial stability.
• Prospective Homebuyers: By making it easier for homeowners to switch lenders, the measure could indirectly benefit prospective homebuyers by increasing competition among lenders and potentially lowering mortgage rates.

Impact on Small Businesses and Entrepreneurs:

• Real Estate Sector: Real estate businesses, including agents and brokers, may experience increased demand as more homeowners explore refinancing options and new homebuyers enter the market.
• Construction and Development: The removal of the stress test may stimulate demand for new homes, benefiting construction and development firms. Entrepreneurs in the construction industry could see increased opportunities for growth and expansion.

2. Deficit and Fiscal Projections: Navigating Financial Challenges

The government reported a higher-than-expected deficit of $61.9 billion for the 2023-24 fiscal year, attributed to unexpected expenses related to Indigenous contingent liabilities and COVID-19 pandemic supports. The deficit is projected to decrease to $48.3 billion for the current fiscal year.

• Fiscal Deficit: The fiscal deficit represents the shortfall between government revenue and expenditure. While a higher-than-expected deficit indicates increased government spending, it also raises concerns about fiscal sustainability and long-term economic stability.
• Indigenous Contingent Liabilities: These liabilities refer to financial commitments related to Indigenous land claims, settlements, and programs. Addressing these liabilities is crucial for promoting reconciliation and supporting Indigenous communities.

Impact on Citizens:

• Public Services: A higher fiscal deficit may lead to concerns about potential cuts to public services and social programs. However, the government’s commitment to addressing Indigenous contingent liabilities and pandemic supports underscores the importance of prioritizing essential services.
• Economic Stability: Citizens may experience mixed sentiments regarding economic stability. While the government’s efforts to reduce the deficit are reassuring, ongoing financial challenges may raise questions about future fiscal policies.

Impact on Small Businesses and Entrepreneurs:

• Government Programs: Small businesses and entrepreneurs may be concerned about potential cuts to government programs and support initiatives aimed at promoting business growth and innovation.
• Economic Confidence: The fiscal projections may impact business confidence and investment decisions. Entrepreneurs must stay informed about fiscal policies and adjust their strategies to navigate economic uncertainties.

3. Accelerated Investment Incentive: Encouraging Business Investment

The government plans to extend the Accelerated Investment Incentive for five years, providing $17.4 billion in tax incentives to encourage business investment and job creation.

• Accelerated Investment Incentive: This incentive allows businesses to write off a larger portion of the cost of new capital investments in the first year. By accelerating the depreciation of assets, businesses can reduce their taxable income and reinvest the savings into growth and expansion.
• Five-Year Extension: Extending the incentive for five years provides businesses with long-term certainty, encouraging them to make significant capital investments in equipment, technology, and infrastructure.

Impact on Citizens:

• Job Creation: Encouraging business investment can lead to job creation and economic growth. Citizens may benefit from increased employment opportunities and improved economic conditions.
• Economic Growth: By promoting business investment, the incentive contributes to overall economic growth, enhancing the quality of life for citizens through improved infrastructure and services.

Impact on Small Businesses and Entrepreneurs:

• Capital Investments: Small businesses and entrepreneurs can take advantage of the incentive to invest in new equipment, technology, and infrastructure. This can enhance productivity, competitiveness, and profitability.
• Expansion Opportunities: The incentive provides a financial boost for businesses looking to expand their operations or enter new markets. Entrepreneurs can leverage the tax savings to fund growth initiatives and drive innovation.

4. Border Security: Ensuring Safety and Stability

A significant investment of $1.3 billion is proposed to enhance border security, including stricter bail and sentencing laws and measures to take assault-style weapons off the streets.

• Border Security Investment: Enhancing border security involves investing in infrastructure, technology, and personnel to prevent illegal activities and ensure safe and efficient border crossings. The investment aims to protect national security and promote public safety.
• Stricter Laws: The introduction of stricter bail and sentencing laws aims to address public safety concerns and reduce crime rates. Measures to take assault-style weapons off the streets focus on preventing gun violence and enhancing community safety.

Impact on Citizens:

• Public Safety: Citizens may feel safer knowing that the government is taking measures to enhance border security and address crime. Improved safety can contribute to a higher quality of life and a sense of well-being.
• Community Confidence: The government’s commitment to public safety and security can enhance community confidence and trust in law enforcement and regulatory agencies.

Impact on Small Businesses and Entrepreneurs:

• Cross-Border Trade: Improved border security can facilitate cross-border trade by ensuring safe and efficient movement of goods and services. Small businesses engaged in international trade may benefit from reduced risks and streamlined processes.
• Security Costs: Stricter security measures may lead to increased compliance costs for businesses involved in cross-border trade. Entrepreneurs must allocate resources to ensure compliance with new regulations and maintain supply chain integrity.

5. Social Safety Net Investments: Expanding Support and Services

The statement outlines investments to expand Canada’s social safety net, including initiatives to reduce the costs of essentials like child care, dental care, and prescription medications.

• Child Care: Investing in affordable and accessible child care services can support working parents, particularly those in low- and middle-income households. By reducing child care costs, the government aims to enhance workforce participation and economic stability.
• Dental Care: Expanding dental care coverage addresses oral health disparities and ensures that all Canadians have access to essential dental services. Improved oral health can lead to better overall health outcomes and reduce long-term healthcare costs.
• Prescription Medications: Reducing the costs of prescription medications aims to make healthcare more affordable and accessible. By addressing medication affordability, the government seeks to improve health outcomes and reduce financial stress for individuals and families.

Impact on Citizens:

• Enhanced Well-Being: Investments in the social safety net can improve the well-being of citizens by providing essential services and reducing financial burdens. Access to affordable child care, dental care, and medications can lead to better health, economic stability, and quality of life.
• Economic Participation: Expanding social support can enhance economic participation by enabling individuals to enter or re-enter the workforce. Reduced child care costs, for example, can encourage parents to pursue employment or education opportunities.

Impact on Small Businesses and Entrepreneurs:

• Employee Benefits: Small businesses may benefit from reduced healthcare costs for their employees, leading to improved employee satisfaction and retention. Offering comprehensive benefits can enhance the attractiveness of job opportunities and support workforce stability.
• Workforce Participation: Enhanced social support can increase workforce participation, providing businesses with a larger pool of potential employees. Entrepreneurs can leverage this expanded workforce to drive growth and innovation.

6. Economic Growth and Job Creation: Strengthening the Economy

The government highlights a strong economic recovery, with over 330,000 jobs created in the last year and a cumulative increase of 1.4 million jobs since before the pandemic. The unemployment rate is at a historically low level of 5.7%.

• Job Creation: The creation of over 330,000 jobs in the past year reflects the strength of Canada’s economic recovery. Job creation contributes to economic stability and growth, providing individuals with employment opportunities and income security.
• Unemployment Rate: A historically low unemployment rate of 5.7% indicates a strong labor market and high levels of workforce participation. Low unemployment is associated with increased consumer spending, economic confidence, and improved living standards.

Impact on Citizens:

• Employment Opportunities: Citizens benefit from increased employment opportunities and economic stability. Access to jobs and income security enhances quality of life and financial well-being.
• Consumer Confidence: A strong labor market and low unemployment rate boost consumer confidence, leading to increased spending and economic activity. Citizens may feel more optimistic about their financial future and make long-term investments.

Impact on Small Businesses and Entrepreneurs:

• Talent Acquisition: Small businesses and entrepreneurs can tap into a robust labor market to find qualified employees and build strong teams. Access to a skilled workforce is essential for business growth and innovation
• Economic Growth: A strong economy and low unemployment rate create a favorable business environment. Increased consumer spending and economic activity can drive demand for products and services, supporting business expansion and profitability.