Economic development in rural communities needs more investment from both the federal government and private sector

As a consultant, I get the pleasure to speak with business owners in communities across Canada for their input to municipally-led development projects.  I hear about the local business environment and innovative business owners and entrepreneurs who can make their location a suitable place for business.  However, a common complaint that I hear from some business owners is that banks do not invest in rural Ontario, which limits their ability to expand their business. Industry Canada’s Community Futures Development Corporations does provide financing to businesses in rural Ontario, but some business owners and entrepreneurs argue that not nearly enough funding is available to support business expansions.

There have been recent comments by Canada’s Finance Minister Jim Flaherty that businesses are sitting on dead money and not contributing to business investment and economic growth.  We have reached the end of federal economic stimulus funding and Finance Minister Flaherty argues that the government has done its job in creating an economic environment that supports business investment and job growth.  To the federal government’s credit, some of the economic and fiscal policies have included lowering corporate tax rates and accelerating the depreciation allowances for machinery and equipment, which makes for an attractive economic environment.  However, there is no mention of opening up the purse strings and making more funding available through the CFDCs, which would support business investment and job growth in rural Ontario and rural communities across Canada.  In a recent article published by TD Economics, Craig Alexander, Senior Vice President & Chief Economist argues that businesses are in fact investing in new and expanding structures and equipment and hiring more employees.  He notes that business investment remains only 2.3% below the pre-recession peak and that the private sector has created close to 80% of the net new positions since mid 2009.  The article is encouraging for the economy as a whole and indicates that the private sector is doing its part to support business investment and economic growth in Canada.  However, I’d be interested in seeing investment directed to Canada’s urban areas compared to rural areas to see if in fact the private sector is supporting rural areas and determining if the anecdotal evidence is true.