Bank towers in Toronto's financial districtMark Blinch
Highlights from the 22nd quarterly C-Suite Survey: The Economy and Expectations for the 2011 Federal Budget.
Source: Gandalf Group
ECONOMY
Optimism about the Canadian economy remains very strong, and executives are now almost as positive about the potential for the U.S. economy in the coming months. That hasn't stopped executives from worrying about possible stumbles south of the border, along with energy prices, personal debt levels, and the lingering government deficits.
Q: What are your expectations for the Canadian economy over the next 12 months?
March 2011:
Strong growth: 3%
Moderate growth: 93%
Moderate decline: 4%
December, 2010 (last quarter):
Strong growth: 3%
Moderate growth: 89%
Moderate decline: 8%
Q: What are your expectations for the U.S. economy over the next 12 months?
March 2011:
Strong growth: 3%
Moderate growth: 78%
Moderate decline: 16%
Strong decline: 1%
Don't know: 2%
December, 2010 (last quarter):
Strong growth: 1%
Moderate growth: 60%
Moderate decline: 37%
Strong decline: 1%
Q. Are you very or somewhat concerned about these issues?
U.S. economy: 85%
Rising energy prices: 73%
Levels of personal debt: 73%
Government deficits: 65%
Rising interest rates: 64%
High Canadian dollar: 59%
Rising inflation: 53%
Labour shortages: 45%
BUDGETARY MEASURES
A year ago, almost 60 per cent of executives thought a tax hike would be necessary to eliminate the deficit, but that number has shrunk sharply as the economy improves. A vast majority want to keep the next scheduled corporate tax cut, set to come into effect next year, and most think that move will be revenue neutral for the government.
Q. Do you agree that to eliminate the deficit, some form of tax increase will be necessary?
March 2011:
Strongly agree: 6%
Somewhat agree: 25%
Somewhat disagree: 41%
Strongly disagree: 28%
March 2010 (one year ago):
Strongly agree: 18%
Somewhat agree: 40%
Somewhat disagree: 25%
Strongly disagree: 15%
Don't know: 3%
Q. Do you feel strongly that scheduled corporate tax rate reductions should go ahead?
March 2011:
Yes, strongly: 50%
Yes, moderately: 33%
No, moderately: 11%
No, strongly: 6%
Q. Do you agree:
The economy will be in growth mode for the next four years: 83%
Corporate tax cuts will be revenue neutral for the government: 75%
Canada is in a structural deficit: 51%
There shouldn't be any new tax cuts: 45%
RETIREMENT, BORDER SECURITY, TAXES
Executives' opinions are divided on the value of boosting contributions and payouts from the Canada Pension Plan and the Quebec Pension Plan, but a large majority supports sharing intelligence and information with the United States in order to boost border security. While they like the corporate tax cuts, many don't have specific plans for using the proceeds.
Q. Would you support increasing premiums paid to the CPP/QPP to pay for higher benefits?
March 2011:
Strongly support: 16%
Somewhat support: 36%
Somewhat oppose: 25%
Strongly oppose: 21%
Don't know: 1%
Q. Would you support sharing more intelligence and immigration information with the U.S. to enhance security?
March 2011:
Strongly support: 58%
Somewhat support: 28%
Somewhat oppose: 6%
Strongly oppose: 7%
Don't know: 1%
Q. What will you do differently as a result of the corporate tax cut?
No change: 31%
Re-invest in business: 26%
Don't know: 11%
Other: 11%
Grow business: 10%
Research and development: 6%
Hire more people: 6%
Q. What are your high federal budget priorities:
Investing in education and training: 58%
Investing in research and development: 52%
Investing in transport and infrastructure: 42%
Attacking the deficit more aggressively: 39%
Investing in renewable energy: 33%
Reducing personal income taxes: 33%
Assisting manufacturing sector: 28%
Improving retirement security: 15%
Methodology
The quarterly C-Suite survey was conducted for Report on Business and Business News Network by the Gandalf Group and sponsored by KPMG.
The survey interviewed 152 executives between Feb. 10 and Feb. 24, 2011. Respondents represent ROB 1,000 companies from across Canada in the manufacturing, service and resource sectors. The margin of error is 7.3 per cent, 19 times out of 20.
Each quarter, a $1,000 charitable contribution is made on behalf of a survey participant. For the December survey, a donation will be made on behalf of Howard Crone, executive vice-president and chief operating officer of Cequence Energy Ltd., to a charity of his choice.