2021 federal budget: What’s in it for manufacturers
A look at some of the highlights for Canada's manufacturers.
The federal budget has now been released, with $101.4 billion in new spending and a projected deficit of $354.2 billion for 2020 and dropping to $154.7 billion in the current 2021-22 fiscal year.
The focus of the budget is on pandemic recovery and resiliency with spending in three key areas: raising the federal minimum wage, $30 billion towards a national childcare plan, and $17.6 billion towards cleantech investments. It also includes a 50 per cent 10-year reduction on corporate and small business income tax rates for companies manufacturing zero-emissions technologies, such as solar panels and electric buses.
But there is plenty of interest for Canada’s manufacturing sector, although the Canadian Manufacturers & Exporters association found much to criticize.
Here are some of the important points for Canadian manufacturers, both in plastics and other sectors.
The budget plans to extend the period for the Canada Emergency Wage Subsidy (CEWS) – created to help companies offset the cost of employing workers while revenue is in decline during COVID-19 – to the cost of $10.1 billion. Currently, CEWS is set to expire in June 2021. The budget proposes the period run through September 25, 2021, with the subsidy rate gradually decreasing as of July 4. The government also proposes CEWS be extended through November 20, 2021 should public health situations not improve at the pace expected.
Beginning in 2021-22, the budget proposes to provide $960 million over three years to Employment and Social Development Canada for a new Sectoral Workforce Solutions Program. Working primarily with sector associations and employers, funding would help design and deliver training that is relevant to the needs of businesses, especially small and medium-sized businesses, and to their employees. This funding would also help businesses recruit and retain a diverse and inclusive workforce.
The budget proposes to provide $470 million over three years, beginning in 2021-22, to Employment and Social Development Canada to establish a new Apprenticeship Service. The Apprenticeship Service would help 55,000 first-year apprentices in construction and manufacturing Red Seal trades connect with opportunities at small and medium-sized employers. Employers would be eligible to receive up to $5,000 for all first-year apprenticeship opportunities to pay for upfront costs such as salaries and training. In addition, to boost diversity in the construction and manufacturing Red Seal trades, this incentive will be doubled to $10,000 for employers who hire those underrepresented, including women, racialized Canadians, and persons with disabilities.
The budget proposes to provide $46.9 million over two years, starting in 2021-22, to support additional research partnerships between colleges, CEGEPs, polytechnics, and businesses through the Natural Sciences and Engineering Research Council’s College and Community Innovation Program. It also proposes to provide $500 million over five years, starting in 2021-22, and $100 million per year ongoing, to expand the Industrial Research Assistance Program to support up to 2,500 additional innovative small and medium-sized firms.
Women in manufacturing
The budget proposes to provide up to $146.9 million over four years, starting in 2021-22, to strengthen the Women Entrepreneurship Strategy. Women entrepreneurs would have greater access to financing, mentorship, and training. Funding would also further support the Women Entrepreneurship Ecosystem Fund and the Women Entrepreneurship Knowledge Hub.
In addition to the money allocated to the Net Zero Accelerator, the federal budget aims to grow the clean technology manufacturing sector by reducing general corporate and small business income tax rates for manufacturers of zero-emissions technology such as wind turbines, geothermal energy systems, electric vehicles, batteries for electric vehicles, and others, by 50 per cent as of Jan. 1, 2022 for a period of 10 years.
Research and development
The budget proposes $5.7 million over two years to connect businesses with the National Research Council’s Industrial Research Assistance Program (IRAP)’s Interactive Visits initiative, which allows companies to use and access equipment, facilities and expertise at Technology Access Centres that are connected to Canada’s college system. Businesses owned by individuals in underrepresented groups will have more access. The budget also includes a proposed total of $500 million over five years to expand IRAP to help 2,500 additional SMEs.
Financing for small businesses
Proposed amendments to the existing Canada Small Business Financing Act would allow for $560 million in annual financing funding. Among the changes are increasing maximum loan amounts from $350,000 to $500,000 and upping the loan coverage period from 10 to 15 years for equipment and leasehold improvements, as well as changing the eligibility for loans to include intellectual property and start-up assets.
To access the 2021 federal budget, click on this link.