2024 pre-budget submission to the House of Commons Finance Committee
Introduction
Government decision-makers, both rural and urban, have a responsibility to prioritize the competitive advantage of Canada’s rural communities.
Rural areas are home to a quarter of Canada’s population and encompass key sectors that drive the country’s economic engine: from natural resources like forestry, energy, agriculture, and mining to innovative businesses in tourism, technology, health care, manufacturing, and more.
Rural communities contribute 30 per cent to Canada’s GDP, housing 315,221 small businesses that pay more than their fair share of taxes while generating well-paying jobs and investment opportunities that stimulate economic growth nationwide.
We must recognize the incredible benefits rural Canada brings to our nation, but we must also acknowledge the diverse challenges these communities face.
About the Rural Prosperity Group
Canada has no greater competitive advantage than its natural resources, including agriculture, mining, energy, forestry, and more. Yet, the voices of rural communities that power these sectors are often lost in the national conversation.
The Rural Prosperity Group aims to bridge this gap between rural communities and decision-makers. Together, we aim to deepen ties and foster dialogue with the federal government, businesses, and civil society to ensure rural perspectives inform public policymaking.
Applying a rural lens to all government initiatives
As the government looks to address the challenges faced by Canadian families, public servants and politicians in Ottawa often develop policies without fully understanding the unintended consequences. These policies often disproportionately support urban communities where resources are more accessible and inadvertently penalize rural areas, failing to meet the needs of rural and remote communities.
Where billion-dollar LRT investments in Vancouver, Toronto or Montreal may be available to local governments, the same opportunities must be made available to small communities to invest in regional bus transportation, road construction or access to trade-enabling services. Instead, political initiatives are often focused on vote-rich urban communities.
With the subsidization of costly services in urban communities, it is important for governments to provide targeted measures that make meaningful contributions to families outside of our city centres. Additionally, these programs must not come with cumbersome application processes and criteria that hinder the ability of small communities to effectively apply for funding.
It is further imperative that the government begin developing specific metrics and applying a rural lens or place-based approach to policy. By establishing criteria that appreciate and value the rural way of life, it can adapt policy approaches to ensure flexibility and adaptability that work for both urban and rural families. The government, through its open government initiatives, should ensure that these metrics and statistics are accessible to businesses and Canadians to evaluate.
We would further recommend that a whole of government effort be made to evaluate policies with a lens to improving productivity, connectivity (physical and digital) and equitable access to essential services such as health care and education.
Recommendation 1: That the government should establish and apply a rural lens to be applied to all government policy and budgeting initiatives and must ensure that programming does not inequitably benefit or negatively affect some communities at the expense of others.
Reducing the productivity gap for rural communities by improving access to essential services
Canadians living in rural areas often lack access to essential services that those living in urban areas take for granted. Specifically, these communities often must travel hours to see a family physician, move to urban centres to access training or educational opportunities or have unreliable access to trade-enabling infrastructure.
With large segments of rural Canada working in agriculture and natural resources, these services are fundamental to driving economic growth for their communities, but also for Canada. By underinvesting in essential services for rural Canadians, our national productivity is deeply impacted.
As the Coalition for a Better Future noted in its recent report Fragile Growth, “It’s more than just about fairness. Certainly, we believe rural Canadians have a right to critical services like internet connectivity, transportation, education, and health care. But the development of rural Canada is an economic imperative for all of us. This is especially true today when economic resiliency — from food security to supply chains — is becoming increasingly paramount.”
Lack of access to these core services means hours away from family and work, lost productivity, and a general inequity of opportunities to grow their businesses or incomes. The government should place an increased emphasis on supporting these core community-building services to support rural families.
Further complicating these challenges is connectivity — one of the most important drivers of economic and social development in increasingly digital world. Leaders across the world have recognized the need to develop opportunities to learn and engage with others through reliable broadband connections. Increased connectivity has been a core driver of development for emerging economies around the world - in many cases with the support of Canadian technology - yet domestically, we continue to have large portions of our country that lack access to high-speed broadband. Or just as unfairly, those in rural areas pay the same rates for services as their urban neighbours with a fraction of the service delivered.
Access to high-speed broadband in rural communities in Canada still only covers 62 percent compared to 91.4 percent in urban areas, and it's often sorely unreliable. Infrastructure and transportation systems are few, leaving millions in rural and remote areas without access to the services that urban Canadians take for granted.
It is critical that the government take immediate steps to address the disparity in access to broadband internet. This should include a whole of government review of past legislation and regulatory actions taken to evaluate their effectiveness in ensuring equitable access to high speed internet for all communities.
Recommendation 2: That the government and parliamentarians invest in or use all tools at their disposal to support initiatives that expand access to essential services in rural and remote communities, including access to reliable healthcare services, broadband internet, trade-enabling infrastructure services, and skills development programs.
Improving tax and regulatory fairness for rural communities and businesses
Canadians pay some of the highest taxes in the OECD, yet rural communities are often hit disproportionately hard by these high taxes while receiving less than their fair share of government expenditures. The impact of these taxation levels is a deep productivity and competitiveness gap for businesses in Canada, especially as it relates to our closest trading partners in the United States.
Recent taxation and regulatory changes, including increases to the capital gains inclusion rate, the carbon tax and the treatment of intergenerational farm transfers, among others, have had severe and negative impact on rural families. These are also clear examples of taxation policy that does not fully appreciate the contribution of rural and remote communities in Canada and their contribution to the national economic interests.
Similarly, the federal government has missed the opportunity to grow Canada’s rural and remote communities by supporting small and medium businesses that provide economic opportunity for local families.
With increasing frequency, Canadian towns are seeing major industry players close their businesses due to poorly developed government regulations. The result is a disturbing trend of depressed economic activities and increasing pressure to move to large metropolitan cities.
A Statistics Canada report in 2022 highlighted these challenges, noting that 73.7 per cent of Canadians lived in large urban centres, with large urban centres (with a population of greater than 100,000) accounting for the largest growth (5.2 per cent between 2016-2021), while rural population increased by 0.4 per cent during that same period.
As the government looks to address housing, transit and employment challenges facing Canada, it must appreciate the economic and social benefits of the rural way of life, by investing and supporting taxation and regulatory policies that encourage these communities to grow, rather than punish them because of where they live and work.
Recommendation 3: That the government work to eliminate or amend taxation and regulatory policies that negatively and disproportionately impact families and employers in rural communities.
Conclusion
Rural Canada is essential to creating the safe, healthy and prosperous nation we all desire. Therefore, it is crucial to prioritize rural priorities, goals and needs in decision-making processes.
This effort goes beyond simply bridging gaps with federal policymakers or providing special treatment for rural Canadians. It involves fostering deeper connections with the business community, thought leaders, media, public servants, and academia. Implementing a rural perspective in policy-making ensures that policies do not inadvertently or disproportionately harm rural Canada. Instead, it focuses on making rural areas vibrant and thriving places to live and work, benefiting the entire country. It entails applying a rural filter and analysis to all public policies to ensure rural Canada is not overlooked. It means recognizing, appreciating, and protecting the unique way of life in rural Canada and its communities.