But the $525-billion stash is out of his reach. It’s in private hands. Since the financial meltdown of 2008-2009, Big Business has socked away most of its earnings. According to the Gandalf Group, which tracks corporate cash reserves, the accumulation has now surpassed half a trillion dollars.
To put that amount in perspective, it would almost wipe out Canada’s $602-billion debt. It would cover the nation’s public health bill for the next 3 1/2 years. It would provide enough impetus to propel the economy out of its sputtering recovery.
“There’s a lot of capital sitting out there that needs to get engaged,” Flaherty told reporters heading into a closed-door meeting with the country’s most influential business leaders last week. “We need private action.”
If he delivered that message, it would signal a shift in his government’s relations with business.
Until now, Flaherty has met a select group of bankers, chief executives and market-friendly economists at a private conclave every summer. What would typically happen is that they would rattle off their shopping lists — further tax cuts, more free trade deals, more foreign workers, more strictures on unions — and he would listen, incorporating some of their requests into his fiscal plan.
The finance minister now wants a two-way dialogue. He thinks he should deliver advice, not just receive it.
The public will have to guess whether he followed through on his intention at the Wakefield Inn and Spa last Thursday. Neither Flaherty nor his hand-picked interlocutors are likely to tell Canadians what happened at the meeting.
One thing is clear, however. Moral suasion won’t be enough to pry open corporate fists. The Conservatives have tried repeatedly to get Corporate Canada to act in the national interest. Their words have had no perceptible impact:
• Business leaders ignored pleas from Flaherty and his colleagues to invest in innovation. Despite tax incentives and credible evidence that everyone would benefit, Canada continues to have one of the lowest levels of industrial research and development in the western world.
• They turned a deaf ear to Flaherty’s exhortations to take advantage of record low interest rates and Canada’s strong dollar to upgrade their plants and invest in state-of-the-art equipment while Europe and the United States are mired in debt.
• They shrugged off Ottawa’s entreaties to hire and train Canadian job-seekers, insisting they needed a greater influx of foreign workers to address labour shortages.
In short, they have contributed little to the health of the Canadian economy, especially since the recession.
They could afford to thumb their noses at the government as long as there were no consequences. Flaherty made it easy. Regardless of their behaviour, he gave them tax cuts, praised them for generating economic growth, followed their recommendations and watched passively as they squirreled away billions.
If he wants a different outcome, he’ll have to take a different approach.
He could tax cash reserves when they exceed a corporation’s foreseeable needs. That would make it more expensive to hoard money than put it to productive use.
He could make corporate tax cuts conditional on creating jobs or investing in new products and processes.
At a minimum, he could make this a public issue. Most Canadians have no idea how much money corporations are hoarding. They don’t understand why they can’t find work, why the forecasts remain bleak or what’s blocking economic growth.
A half-trillion-dollar buildup of inert cash can slow things to a crawl.
Original Article
Source: the star
Author: Carol Goar
No comments:
Post a Comment