Ontario budget offers manufacturing sector relief

The McGuinty government unveiled its latest budget this week, and offered some help for the province’s ailing manufacturing sector.

The budget eliminated the capital tax retroactive to January 2007 on equipment for the manufacturing industry, and extended the Accelerated Capital Cost Allowance (ACCA) to 2012.

“As with the federal budget, the extension of accelerated depreciation provision for manufacturing and processing equipment is the right approach but the three-year time frame is too short for many companies” said Ian Howcroft, vice president of the Ontario division for Canadian Manufacturers and Exporters (CME).

The province will also provide a 10-year income tax exemption for companies that are commercializing research from Ontario’s universities, colleges and research facilities.

“This [tax exemption] is the perfect compliment to what we believe is the future of our industry, which is making innovations around new products and new materials,” said Canadian Plastics Industry Association’s Serge Lavoie. “A ten-year time frame is a good time frame to work with it’s plenty of time for people to begin commercializing innovations in Ontario.”

Lavoie expressed some disappointment over the $1.5 billion Skills to Jobs Action Plan, noting that it will largely be spent on new education facilities.

“Clearly it’s well-intended but it’s not as focused on manufacturing as we’d have liked,” said Lavoie. “We’ve had liked to see more stuff aimed at employer-sponsored training programs.”

Additionally, the government will provide millions of dollars for workplace training, but it will primarily be focused at the automotive sector.

The budget included several programs aimed at supporting manufacturing upgrades. For example, the Ontario Manufacturing Council will receive an additional $500,000 to support their research work.

In addition to budgetary measures, the Ontario government addressed the sector’s concerns about overlapping provincial-federal legislation. The province promised a “cap and trade” system that will remove one regulation every time a new one is added.

The move was commended by the CME, but CPIA’s Lavoie said the delivery of previous similar promises have been spotty.

“We were probably most underwhelmed by the promise to modernize regulation,” he said. “Governments routinely promise to streamline regulation, but we believe that there needs to be a really concerted effort.”

The provincial budget devoted an additional $1 billion in infrastructure spending, to be delivered through municipalities.