Editorial: The feds deliver a small budget bonus

The federal budget includes limited good news for us.
Patrick Flannery
April 15, 2019
By
At the time of this writing the federal budget just dropped and it’s generally good news for the rental industry. The headline item was a shared equity mortgage program for first-time home buyers that could see lower-income buyers get as much as 10 per cent of the value on an interest-free basis.
Anything that stimulates housing construction and home ownership trickles down to us. However, first-time homebuyers don’t tend to buy new houses, so the effect on construction may be small. If that 10 per cent is invested on renovations in an older home, however…

Apparently, Ottawa is going to send the money it collects in gas taxes directly back to municipalities without allowing the provinces to get their greasy paws on it first. I think reinvesting gas taxes into infrastructure was part of the original justification for them way back in the ‘70s, but like so many other taxes of this kind it simply morphed into a slush fund to boost provincial balance sheets. If this $2.2 billion turns into actual work on roads and sewers, that’s good business for the local rental store. And I have a feeling municipalities might be slightly more likely to use the money for its intended purpose.

There’s some assistance for skills training for workers, but it’s being delivered through Employment Insurance so it’s unclear how much it will benefit rental stores. The Canadian Federation of Independent Businesses certainly doesn’t like the plan. It says small business owners would have to give employees several weeks off in order for them to receive the assistance, with no guarantee that the training the employee receives would be relevant to their job duties. In any event, the budget says workers can get up to $250 per year to cover training to a lifetime maximum of $5,000. Not much, but better than nothing.

Predictably enough, the CFIB didn’t feel the budget had enough tax relief for small businesses. We can probably all forget about tax relief for the foreseeable future as governments have apparently decided that debts and deficits don’t matter any more. This country hasn’t had a recession for 10 years, yet the feds have run deficits in every budget except one since then. This budget projects a slightly lower deficit but this is in an environment, as Andrew Coyne pointed out in the National Post, where the strong economy is shovelling so much tax revenue in that finance ministers can hardly find places to spend it.

Of course, all the effects in the budget don’t add up to the impacts of larger economic issues such as the value of the dollar and the price of oil. The dollar is right around where it normally is, historically. Oil should be good, but it isn’t because of Trudeau’s ongoing hostility towards the pipeline projects that would allow Alberta to ship it economically.  

I hope you’ve been finding our rental rate information from EquipmentWatch appearing on page 12 of every issue useful. The rates rental stores across the country and in your region can charge should be an important barometer of the overall conditions in our markets. Do tune in to our quarterly podcasts where analyst Adam Raimond gives some additional insight into rate trends and what they might mean for demand for certain equipment. In general, it looks like there hasn’t been a better time to be in the rental industry. Contractors are looking to rent more and more as their analytics convince them they are better off not having to carry their own fleet costs. Large and medium-size organizations seem to be finding plenty of opportunities to grow into all manner of lucrative niches, while still leaving room in most markets for smaller stores to serve homeowner and small contractor needs. And the growth of the big boys does come in handy when and if you decide it’s time to sell.

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