Setting the Path for the Year Ahead, and the Next Election to Come

The presentation of a budget is an important part of the Parliamentary cycle, one that demarks the budget year ahead, but also the greater direction that a government wants to go beyond that time frame. It’s a chance for a government to change course or correct it, to send messages and to respond to needs that have arisen as the year has moved along. It also represents a chance for a government to on put a fresh face and try to put the worries of the past year behind them.

Budget 2023 comes in the context of continued global economic turbulence, the war in Ukraine, inflation hitting peoples’ pocketbooks hard, American policy (and money) to spur green economic development, new Healthcare funding for the provinces and more. On top of that is layered the Confidence and Supply Agreement between the Liberal Government and the NDP, which ensures action and funding towards shared policy goals. Even with agreement and the usual leaks ahead this year’s budget, there were still surprises left to find out when Minister Chrystia Freeland rose in the House at 4 pm Eastern.

There were important items for Canadians, businesses, Indigenous governments, stakeholders, and others to be interested in. Even as the government attempts to demonstrate some restraint in their spending, there is still a fair bit of interest to help Canadians and our economy. Here are some of those important measures announced that stood out:

Green Economy:

• Clean tech manufacturing tax credit, worth 30% of capital investment costs in manufacturing equipment, totalling more than $4.5 billion over 5 years.
  
  • The credit will be available to offset the cost of equipment for mining and processing critical minerals.
• Clean Electricity Investment Tax Credit, a 15% refundable tax credit for eligible investments in non-emitting electricity generation systems, abated natural gas-fired electricity generation, stationary electricity storage systems that do not use fossil fuels in operation, and equipment for the transmission of electricity between provinces and territories.
  • This credit will also be made available to public utilities operators and both new projects and the refurbishment of existing facilities will be eligible.
  • Labour requirements, including ensuring that wages paid are at the prevailing level, and that apprenticeship training opportunities are being created, will need to be met to receive the full 15-per-cent tax credit. If labour requirements are not met, the credit rate will be reduced by 10%. Labour requirements will come into effect on October 1, 2023.

• Canada Infrastructure Bank to invest at least $20 billion to support the building of major clean electricity and clean growth infrastructure projects.
• $3.0 billion over 13 years, starting in 2023-24, to Natural Resources Canada to:
  • Recapitalize funding for the Smart Renewables and Electrification Pathways Program to support critical regional priorities and Indigenous-led projects and add transmission projects to the program’s eligibility.
  • Renew the Smart Grid program to continue to support electricity grid innovation.
  • Create new investments in science-based activities to help capitalize on Canada’s offshore wind potential.

• Budget 2023 announces the details of the Clean Hydrogen Investment Tax Credit:
  • Levels of support will vary between 15 and 40 % of eligible project costs, with the projects that produce the cleanest hydrogen receiving the highest levels of support.
  • Will also extend a 15% tax credit to equipment needed to convert hydrogen into ammonia, in order to transport the hydrogen.
  • Similar labour requirements to other announcements included as well.

• $500 million over ten years to the Strategic Innovation Fund to support the development and application of clean technologies in Canada.
  • Strategic Innovation Fund will also direct up to $1.5 billion of its existing resources towards projects in sectors including clean technologies, critical minerals, and industrial transformation.

• Eligibility for the Clean Technology Investment Tax Credit expanded to include geothermal energy systems.
• Modifies the phase-out of the Clean Technology Investment Tax Credit, moving the starting of the phasing out from 2032 to 2034.
• $10.6 million for Natural Resources Canada’s Centre of Excellence on Critical Minerals to provide direct assistance to critical mineral developers in navigating regulatory processes and government support measures.
• Changes to the Investment Tax Credit for Carbon Capture, Utilization, and Storage to widen eligibility and implement labour requirements.

Training and Work Force:

• $813.6 million in 2023-24 to enhance student financial assistance for the school year starting August 1, 2023.
• $625 million in 2023-24 in the Labour Market Transfer Agreements for supports for labour and skills training

• $5.4 million over three years, to Employment and Social Development Canada to ensure that the Work-Sharing Program continues to provide timely support to Canadian workers and businesses.
• $197.7 million to the Student Work Placement Program to continue creating quality work-integrated learning opportunities for students.

• Amends the Canada Labour Code to improve job protections for federally regulated gig workers.

Indigenous Governments:

• $40 million to Crown-Indigenous Relations and Northern Affairs Canada to support Northern regulatory processes.
• $11.4 million over 3 years to Crown-Indigenous Relations and Northern Affairs Canada to engage with Indigenous communities and to update the federal guidelines for federal officials to fulfill the Crown’s duty to consult Indigenous peoples and accommodate impacts on their rights. This will support the implementation of the United Nations Declaration on the Rights of Indigenous Peoples Act.
• $76.3 million to Indigenous Services Canada to continue to support the administrative capacity of First Nations governments and tribal councils delivering critical programs and services.
• $19.4 million over 5 years for the Northern Participant Funding Program to increase the participation of Indigenous Peoples and other Northerners in environmental and regulatory assessments of major projects.
• $5 million in 2023-24 to support the co-development of an Economic Reconciliation Framework with Indigenous partners that will increase economic opportunities for Indigenous Peoples, communities, and businesses.
• Canada Infrastructure Bank will provide loans to Indigenous communities to support them in purchasing equity stakes in infrastructure projects in which the Bank is also investing.

Social Programs:

• $4 billion, over seven years, to implement a co-developed Urban, Rural, and Northern Indigenous Housing Strategy
• A one-time Grocery Rebate, providing $2.5 billion in targeted inflation relief to the Canadians who need it most.
• $13.0 billion over five years, and $4.4 billion ongoing to Health Canada to implement the Canadian Dental Care Plan.

Other Pledges of Note:

• Budget 2023 announced the governments intention to work with regulatory agencies to reduce “junk fees”, which could include higher telecom roaming charges, event and concert fees, excessive baggage fees, and unjustified shipping and freight fees.
• $34.1 million over three years to Agriculture and Agri-Food Canada’s On-Farm Climate Action Fund to support adoption of nitrogen management practices by Eastern Canadian farmers, that will help optimize the use and reduce the need for fertilizer.
• $368.4 million over three years to Natural Resources Canada to renew and update forest sector support, including for research and development, Indigenous and international leadership, and data.
• $123.2 million to boost Francophone immigration in Canada and $117 million to ensure the prosperity of official language minority communities.

With the introduction of this Budget, we will now see the Parliamentary process start, with debate, votes, committee hearings and more taking place over the next weeks and months in both the House of Commons and Senate. This provides stakeholders an opportunity to engage with government on the proposed budget measures or to prepare to take advantage of them once they become law. We at Niipaawi are happy to discuss any of these matters with you and see how we can help you achieve your goals. Please don’t hesitate to contact us, we’re here to help.

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