(Whitehorse, Yukon) Overall, the Yukon Chamber of Commerce is supportive of the 2022-2023 budget tabled in the Legislative Assembly on March 3, however Yukon businesses will be looking for more details on energy costs, COVID-19 relief, affordable housing and labour market challenges in the weeks, months and years ahead.
The Yukon Chamber of Commerce wants to start by acknowledging that the Government of Yukon’s COVID relief programs that led the country in terms of timing, relevance, scope, term and ease of access. This immediate action taken by the government and the leadership provided by Premier Silver, Minister Pillai and other Cabinet Ministers is not only appreciated, it provided a critical lifeline for many Yukon businesses and their employees.
This was the core message in our response to the budget address delivered by Premier Sandy Silver last Thursday.
The Premier's speech opened the first session of the 35th Yukon Legislative Assembly and outlined the government's vision to spend $1.97 billion in 2022-2023, including $1.42 billion in operations and maintenance expenditures and a record $546.5 million in capital expenditures, with a surplus of $39.5 million.
While the Chamber is generally pleased by the budget, a letter to the Premier on March 4 expresses our support for the budget, but raises concern over the continued growth in Yukon's debt and includes key observations and considerations from the perspective of Yukon's business community, acknowledging that multiple sectors have not fully recovered from an unprecedented global crisis and that many Yukon businesses are now experiencing labour shortages, supply chain issues and rising costs that contribute to uncertainty.
Here are some highlights from this year's response to the budget:
There were no real surprises in the budget and predictability is important to businesses, however...
The long-term debt of the government continues to rise, which is troubling, however capital spending on infrastructure is the key driver of this debt and these capital projects are critically important to Yukon’s economy and businesses as they emerge from the COVID pandemic.
The government needs to be careful that their capital spending plans do not pressure prices for Private Sector projects which is always a delicate balance. Careful, and even somewhat slow growth with targeted objectives should guide Government of Yukon capital spending.
In the longer term, it will be important to look at reducing the Yukon’s debt. Yukon is fortunate that the government does a good job of managing cash flow and coupled with low interest rates the cost of servicing Yukon’s debt has been manageable, but as signalled by the first interest rate increase in years this past week and forecasts by the Bank of Canada that we can expect interest rates to rise, makes it important to reduce Yukon’s debt.
The budget contains several initiatives that we are pleased to see in place:
Easing of COVID restrictions is critical to the Yukon economy and all businesses across the Yukon. It is important that the Yukon catches up to other jurisdictions in respect to easing restrictions that have resulted in brutal impacts some sectors of the economy.
Businesses do not want hand-outs they want to return to performance and self reliance. Government spending aimed at the normal objectives of assisting to build the economy on a level playing field are most welcome.
COVID supports for business health care and a $10 million COVID contingency to carry on this governments support programs for business that have not only led the country, but more importantly have provided a life line for many Yukon businesses whose doors would have closed without that support remain in the budget as well. The Chamber hopes we are at a point when the contingency will not be needed, but it is prudent to have it in the budget and sectors like tourism will need incremental relief programs.
Budgets for Economic Development and Tourism have been maintained which will be critically important to support recovery from COVID. The Chamber would like to have seen a boost in spending on tourism and small business recovery initiatives, given all these sectors has had to weather, but it is a delicate balance when a competing objective is to hold the line on government spending. Smart, strategic spending of the Tourism budget will be key.
A critical shortage of affordable housing has been handcuffing our economy and we are pleased to see a continued investment in housing development and maximizing access and leveraging federal housing programs in support of housing initiatives.
The enhanced investment in Our Clean Future initiatives is important and supported –increasing energy costs are crippling many businesses– the Yukon Chamber and member businesses are standing ready to partner with government and the utilities to take action on energy costs now.
In addition to the budget announcements, working to address a number of challenges and proposals will result in meaningful support of a healthy and sustainable Yukon
The Government of Yukon needs to be careful not to celebrate overall GDP growth in Yukon as the largest driver of GDP is government spending, and if we adjust for mining’s contribution, the balance of Yukon’s economic sectors are in a fragile state. Mining’s contribution to the economy is critically important and it has a significant impact on GDP, but often the benefits associated with GDP growth, do not trickle down to the general Yukon economy to the same extent as contributions from other sectors. Government needs to keep an eye on the health of all sectors as we seek to recover from the impacts of COVID lockdowns. In the case of tourism, the industry is not expecting recover to pre-COVID revenues until 2024-2025.
The proposal for paid sick leave funded by employers would have crippling impacts on small business – a number of small businesses with fewer than 10 employees have told us that it is not just the sick leave costs that are of concern, but the need to carry the cost to replace the employee who is off sick as they need everybody that works for them. The Chamber has been clear that this is absolutely the wrong time to be considering this program, and any move to implement a paid sick leave program would be most unwelcome.
Businesses are seeing more and more migration to government – SMEs cannot compete with government wages and benefits – many businesses are now supporting a proposal to extend health benefits to private sector employees to be paid by government to enable them to retain their employees. Businesses are looking for a clear signal from all governments that they understand that government employment growth is a move in the wrong direction as businesses seek to recover from COVID impacts.
The Chamber applauds the move by the Government in closing Queens Printer and having these services provided by a capable and competitive private sector that results in local jobs, and reduced the cost of these services to government.
The wholesale pricing policies for liquor and cannabis are dated and not competitive with other jurisdictions – updating and modernizing these policies would create new jobs and provide Yukoners with better selection and more competitive prices.
Increased energy and transportation costs are impacting all Yukoners, and are headed towards a crisis in Yukon communities outside of Whitehorse, where essential services like grocery stores will be closing their doors or be obliged to raise their prices to a level which would see more of their local customers driving to Whitehorse to shop.
Our rural SME members are expressing growing concern about the issues we have raised in response to the Budget, as the impacts are magnified for businesses outside of Whitehorse. There needs to be special attention applied to the plight of businesses in rural Yukon.
Increase investment in vocational training and education – with a particular emphasis on Indigenous youth and entrepreneurship – seizing an opportunity to expand Yukon’s skilled work force from within existing Yukon residents.
The Yukon Chamber of Commerce looks forward to working in partnership with the government to advance these initiatives. Premier Silver, Cabinet Ministers and their department management teams have been meeting regularly with our Board of Directors and Sector Committees exploring opportunities and innovative solutions to the challenges that Yukon businesses have been facing and tackling which have become more acute due to the COVID pandemic over the past two years.
The Yukon Government has demonstrated time and again over the past year that they want to work together with business to build a more sustainable and competitive private sector. We can not overstate how much this level of engagement and taking action is appreciated. We are looking forward to working with them in the coming year as the voice of businesses in the Yukon.
Incorporated in 1985, the Yukon Chamber of Commerce is the collective voice of Yukon's business community, working to create a climate conducive to a strong private-sector economy by providing leadership and representation on issues and projects affecting business. The Chamber works with over 750 Yukon businesses, through direct or Community Chamber membership, as well as the six Community Chambers of Dawson City, Silver Trail, St. Elias, Watson Lake, Campbell Region, and Whitehorse.
For Information or Comment Contact: Denny Kobayashi
Executive Director (867) 333-4257