COLUMN: On Parliament Hill – Stopping the flow of capital flight

When business closures consistently outpace new business creation, it signals a growing concern for Canada’s economic outlook. According to new research by The Canadian Federation of Independent Business (CFIB), “More businesses in Canada have closed than opened for six consecutive quarters, and more than half (55 percent) of small business owners say they would not recommend starting a business right now”.

CFIB’s director Brianna Solberg also warned that “Canada’s economic foundation is crumbling. Governments need to stop just papering over the cracks and really refocus efforts on policies that improve the small business environment”. Her remarks came in a CFIB newsletter addressing the ongoing entrepreneurial drought across the country.

Further, the Canadian Venture Capital and Private Equity Association (CVCA) reports that only 104 investment deals were made with Canadian companies this year. Compared with last year, total venture capital investment in Canadian companies declined by 11.5 percent. These trends expose a lack of investor confidence in Canada, resulting from the environment created by the Carney Liberals.

At the same time, concerns have been raised about capital flows leaving the country. For very dollar of foreign direct investment coming into Canada, two dollars have left—which has been described as the largest capital exodus in Canadian history. The total cumulative investment loss since the Liberals came to power is $1 trillion with a substantial portion going to the U.S. After 11 years of Liberal government, there is less growth, fewer jobs and less investment in our industries.

While the Liberal government claims Canadians have never had it so good, most Canadians are now seeing through Prime Minister Carney’s rhetoric. The investment the Liberal government claims is the highest in the G7 is primarily American and foreign corporations taking over Canadian businesses through mergers and acquisitions.

Canada needs Canadian entrepreneurs and innovators. Canadian entrepreneurs should not be forced to seek growth capital abroad, benefitting other foreign markets.

One of the Liberal platform promises was to scale back bureaucracy. Since that promise was made, Liberal policies have continued to increase bureaucracy and red tape, making it more difficult for startups to scale domestically and attract investment.

Conservatives have warned that Liberal tax burdens, red tape and regulatory policies are driving investment out of Canada. We argue that reducing government barriers would help unleash Canada’s economic potential and allow markets to function more effectively. From this perspective, reforms are needed to ensure that regulatory frameworks do not hinder development or discourage investment. Conservatives maintain that policy should instead focus on creating an environment where innovators and entrepreneurs can build and grow businesses within Canada.

Tax reduction must be part of that incentive. Conservatives have proposed a “Canada First Reinvestment Tax Cut” to eliminate capital gains tax on reinvestment in Canada, which would encourage billions in investment and stimulate growth.

Ultimately, making Canada more attractive to investors is an essential step in retaining capital and strengthening long-term economic growth. How Canada responds to these trends will not only shape outcomes for the current generation but also have lasting implications for future Canadians.

The question remains whether Mr. Carney will take the necessary steps to address these challenges in the interest of Canada’s long-term prosperity.