A snapshot into the political landscape and how it impacts dealers
Where once it was an “us versus them” mentality when it came to the auto business and government as it related to policies and regulations, in more recent times, there’s been more of an emphasis on “entente cordiale.” But despite considerable strides in creating regulations that are fair to both parties, there remain challenges on the road ahead.
For dealers, it might well appear that there’s more government red tape to deal with. Whether it concerns consumer rights, taxes, environmental regulations, building codes, there seems to be increasing pressure on retail businesses both large and small to adapt to these changes.
In many cases, the increasing number of bills being put through Parliament can often have a negative impact on our industry, despite being seemingly well intentioned by those that often propose them.
Working together the key
The ability of auto dealers and the government to work together is critical to achieving effective solutions. That’s where organizations like national and regional dealer associations come in, giving their members a voice in political circles, as well as being able to educate government on specific matters and concerns relating to the industry.
In Ottawa, the Canadian Automobile Dealers Association has a full time advocacy group dedicated to working with the federal government, while protecting the interests of its members. Where it was once a combative mentality, today the emphasis has shifted to much more cooperation between the two sides, which Michael Hatch, CADA’s Chief Economist in Ottawa says “is very much a good thing.”
According to Hatch there are a number of topics in particular over the last couple of years that have caused concern for dealers, perhaps chief among them being regulatory and red tape issues.
“At present, this is probably one of the biggest concerns of our members,” says Hatch. “CADA has submitted proposals to the Harper government’s Red Tape Reduction Commission, specifically focused on a few areas of tax policy and administration where we feel things could be better.”
These areas include:
• establishing fairness in accessing the small business deduction for dealers;
• improving the methods by which the Canada Revenue Agency conducts audits;
• improving the coordination by which audits are conducted, both on a federal and provincial level;
• greater leniency in assessing fines for marginal delays on tax payments; and
• simplifying rules on taxable benefits, such as company-owned vehicles.
“These are topics which have been ongoing concerns for a number of years,” says Hatch and both parties are working together to try and achieve an effective result.
Economic policies that help
While red tape might still be a thorn in the side for many dealers, there are other areas where working with government has yielded substantial benefits.
“As an organization, we at CADA have been very happy between the level of cooperation between the current government and ourselves. The economic policies of the Harper government have helped bring Canada through this most recent recession in better financial shape than many developed countries, which has resulted in the added effect of creating a greater influence in global economic matters.”
So, does a stronger economy overall means stronger prospects for dealers? According to Hatch that’s very much the case, even though some of the programs resulting in it might have been controversial.
“The economic assistance package provided to the auto industry by both the federal and Ontario provincial governments drew a lot of flak from the public. Politically, it was a very difficult program to put through, however, in hindsight it proved to be the correct course of action. The recovery of General Motors and Chrysler is testament to the fact that it was the right thing to do.”
However it wasn’t just financial aid to the automakers themselves, where the Harper government was able to avoid severe economic crisis. Access to secured credit was another. “The Canadian Secured Credit Facility was very important in back-stopping seized automotive credit markets throughout the worst of the economic crisis in 2008-09. Without it the current economic climate would no doubt be much worse.”
Another area where dealers and government have worked to achieve a satisfactory result, concerns the Harmonized Sales Tax. Now in force in the Atlantic provinces, Ontario and British Columbia, it’s another aspect of legislation that’s drawn a lot of criticism from the public, though as far as businesses go, certainly in the Atlantic provinces, which have had it the longest, the long-term benefits have ultimately outweighed the short term pains.
“It’s made life a lot simpler,” says Hatch. “Because of the input tax credits businesses such as car dealers can claim when paying the HST, it actually lowers costs to business. We’ve seen this result in lower prices passed on to consumers, particularly in the Atlantic Provinces. The HST is also a great job creator over the longer term, so CADA is fully supportive of it. It’s a shame that the B.C. government has recently been taking steps to remove the HST.”
Yet despite such examples of where cooperation between both dealers and government has proved to yield more favorable economic conditions, there remain many challenges. One of the biggest concerns environmental regulations, a current political hot topic.
Whether it relates to upcoming vehicle emissions and fuel mileage programs, or environmental building standards or hazardous waste disposal, there’s a real need to simplify regulations as much as possible, as well as minimize the cost such programs can add both to the bottom line and the price of goods and services available to consumers.
On the emissions standards front, the need for what Hatch and Huw Williams (CADA’s CADA’s director of public affairs in Ottawa), call the same set of “continentally-integrated regulations,” to which both OE manufacturers and dealers must abide is key. They say the new and upcoming emissions and fuel economy regulations will be tough, but are confident their OEM partners can meet the challenge. Having as many as 60 or more different sets of provincial and state regulations to abide by and follow would be virtually impossible to administer.
On the subject of regulations relating to dealer fixed operations and facilities, these issues tend to be provincial in nature rather than federal. “Our provincial [dealer] associations are always ready to open the lines of communication with their respective governments as they come up, such as the disposal of hazardous waste in Manitoba and Ontario,” remarks Hatch.
However he states that “whatever the regulation, it’s vital that it be designed in a reasonable manner with business concerns’ taken into account. Governments need to be made aware of the consequences resulting from the laws and policies they enact.”
