Budget 2019: What’s in it for Canadian manufacturers
Some of the key measures with pros and cons from key industry associations.
The Trudeau government’s 2019 pre-election budget is big on spending and some measures will help Canadian manufacturers.
There are provisions for skills and training, innovation, regulatory reform and business measures, among others.
The Canada Training Credit is for people 25 to 65 and is applied to tuition, training costs and related fees. The credit is $250 a year that goes into a national account and accumulates to a maximum of $5,000 over a lifetime. There’s also an Employment Insurance training support benefit. It provides up to four weeks paid leave every four years (55% of average weekly earnings) to help cover living expenses when it’s necessary to leave work for additional training.
There are innovation measures of interest. Several programs are related to the forestry sector involving up to $251 million over three years, starting in 2020-21. There’s also $100 million over four years going to the Strategic Innovation Fund starting in 2019-20, which will promote innovation through collaboration between academia, not-for-profits and the private sector.
An additional funding of $38 million will be provided over five years for Futurpreneur Canada, aimed at young entrepreneurs.
And $100 million over three years aims to develop a diversified strategy to stimulate economic growth in Western Canada, provide incentives for innovation and attract investment.
Shawn Casemore, president of the Excellence in Manufacturing Consortium (EMC), a non-profit that helps manufacturers become more competitive, is pleased to see the government is investing in human capital. “More specifically we welcome the significant investment that is being made in work-integrated learning, preparing students for the workforce – which is much needed in the Canadian manufacturing sector.”
Canadian Manufacturers & Exporters (CME) is encouraged to see a commitment to increasing funding for skills training. “One quarter of a billion dollars and creating 40,000 new work integrated learning spots is certainly welcome and will help address chronic labour challenges,” said Dennis Darby, CME’s president and CEO. “However, manufacturers continue to be concerned about the overall competitiveness of the industry as no significant changes to business taxes or other measures to help business investment were announced.”
He said there’s still a lot to do to ensure the business environment helps manufacturers invest and grow in Canada, and compete globally.
The national association is encouraged the government is upholding the Accelerated Capital Cost Allowance and export supports, and it’s pleased to see investment in more reliable internet service to rural areas, elimination of the income threshold for accessing the enhanced credit under SR&ED, and continued support for regulatory reform. “But these measures will not be sufficient to stimulate the level of investment that is required in the industry and the Canadian economy more generally,” he said in a statement.
A TD Economics budget report noted little in the budget to address international competitiveness issues. “There was again no mention of a longer-term tax system review (both corporate and personal) to address how the economic reality has changed since the Carter Commission’s report more than 40 years ago,” said chief economist Beata Caranci and senior economist Brian DePratto in their report.
The Canadian Federation of Independent Business (CFIB) said the new Canada Training Benefit and the EI Training Support Benefit raise concerns about the role of employers – both in ensuring the training is relevant to the world of work and in administering the time away from the workplace.
CFIB acknowledged the small business premium rebate for businesses that pays $20,000 or less per year in EI premiums. Starting in 2020, a rebate will aim to reduce premiums, but details are pending.
The business association that represents small enterprises has been pushing for a reduction in red tape, and there is some progress in the budget. It notes investment in improving government services to help businesses comply with and understand their tax requirements; a permanent dedicated line for tax service providers permanent; and improvements to the Immigration Refugees Citizenship Canada phone line, with an emphasis on wait times for business inquiries.
But the CFIB noted some missed opportunities:
- Measures to offset the costs of the Canada Pension Plan increases nationally and the new federal carbon tax affecting small businesses in several provinces.
- Exempting previous passive investments from the small business tax changes to maintain access to the small business tax rate.
- Recognizing the vital formal and informal roles spouses play to ensure the success of a family business by implementing a full spousal exemption from the new rules on income splitting.
- Ensure businesses feel the true impacts of red tape reduction by expanding the one-for-one rule to included policies, guidelines and legislation.
- Keeping today’s debts from becoming tomorrow’s taxes by creating a plan to balance the budget within the next three to five years.
The CFIB intends to keep these issues top of mind as the government moves into election mode.