Industry associations respond to federal budget

Industry associations are reacting to the 2022 federal budget, which was released on April 7.

The Ottawa-based Chemistry Industry Association of Canada (CIAC) said that it was “pleased to see several measures” that it says will assist in attracting investments for the net-zero and circular economy transformation of Canada’s chemistry and plastics sector. “[We] welcomed the Carbon Capture Utilization and Storage (CCUS) Investment Tax Credit, with a minimum 37.5 per cent inclusion rate for transport infrastructure, 50 per cent inclusion rate on CCUS equipment, and 60 per cent for direct air capture,” CIAC said in a news release. “Budget 2022 proposes up to $1 billion over six years to Innovation, Science and Economic Development Canada for the Strategic Innovation Fund. This will provide targeted support towards critical minerals projects, with prioritization given to manufacturing, processing, and recycling applications.”

Other highlights that CIAC drew attention to include:

• A funding increase of $450 million to help build more resilient and efficient supply chains through the National Trade Corridors Fund.
• $750 million over six years to re-capitalize the existing Global Innovation Clusters program.
• Consultations to review the Scientific Research and Experimental Development (SR&ED) program.
• Investment to increase plastic circularity by developing and implementing regulatory measures, and conducting scientific research to inform policymaking.
• Broadening the role of the Canada Infrastructure Bank to invest in private sector-led infrastructure projects that will accelerate Canada’s transition to a low-carbon economy.

And the Canadian Manufacturers & Exporters (CME) association also weighed in, saying that they welcome initiatives announced in Budget 2022 to stimulate innovation and investment and to ensure more efficient and resilient supply chains. However, they mentioned that the labour market measures announced on Apr. 7 were not sufficient, given the magnitude of the labour shortage confronting Canada’s manufacturing sector.

“The manufacturing sector faces two major challenges today that are hindering its ability to produce and sell products: supply chain disruptions and labour shortages,” said CME president and CEO Dennis Darby. “[The] budget offers important and helpful measures to stimulate innovation and implement and promote long term economic growth and ease supply chain issues, but it fails to address labour shortages. This is a miss.”

“Overall, Canada lags well behind other OECD countries in non-residential business investment, and this is leading to a deterioration in our international competitiveness,” Darby continued. “To ensure Canada’s future prosperity, we need to reverse these trends. But to do this, Canada needs to have the right levers in place to stimulate investment.”

CME also called the government’s plan to cut taxes on small businesses a positive move. It will reportedly ease the current phase-out rules related to the small business tax rate, with access to the lower rate fully phased out when taxable capital reaches $50 million, rather than at $15 million.

Also noteworthy, CME said, is the establishment of a Canada Growth Fund aimed at attracting private sector investment in new and traditional sectors, including manufacturing, as well as to support the restructuring of critical supply chains.

Unfortunately, CME said, the government’s budget did not offer any substantial measures to address ongoing and acute labours shortage in manufacturing, even though the sector is currently facing a record-high 81,000 job vacancies.

CME welcomed the changes to the Temporary Foreign Worker Program announced earlier this week, but more solutions were expected by the sector. While the budget recalls investments made to support the processing of immigration applications, processing times remain too long, according to industry groups.

“CME will continue to work with the federal government on our mutual goal of creating a more competitive, greener, innovative, inclusive, and resilient manufacturing sector,” Darby said. “Budget 2022 is a step in the right direction, but more work still needs to be done.”

Also, the Canadian Federation of Independent Business (CFIB) said that it was “disappointed” that the federal budget doesn’t include measures to help small businesses’ post-pandemic recovery. “The federal budget ends all COVID support programs, including the Canada Recovery Hiring Program, which was meant to help small firms rebuild their workforce in the post-COVID recovery phase,” CFIB said in a statement. “The budget was a missed opportunity to help small firms now facing massive cost increases on virtually every line of their own budgets, including payroll and carbon taxes. It also doesn’t help the two thirds of businesses (67%) that were forced to take on COVID-related debt, at an average of $158,000 per business.”

On the plus side, the CFIB said it was “encouraged” by several other budget initiatives, including a potential new vehicle to create Employee Ownership Trusts; a $4,000 deduction for tradespeople for temporary relocation expenses; a cannabis strategy table to help grow the industry; and a new banking complaints handling system, which CFIB hopes could include small business and payments related complaints.