OTTAWA, NOVEMBER 22, 2023 – The federal government’s Fall Economic Statement addresses some of the uncertainty Canadian manufacturers have around the implementation of investment tax credits designed to increase the country’s competitiveness, but manufacturers want the government to move even more quickly to enact the measures.
Finance Minister Chrystia Freeland delivered her economic statement in the House of Commons Tuesday. It provides a timeline for implementation of the five investment tax credits (ITCs) aimed at helping manufacturers transition to the clean economy and respond to the U.S. Inflation Reduction Act (IRA). According to the economic statement, the tax credits will be delivered by the end of 2024.
Manufacturers have been pushing the federal government to provide certainty around the timing of these measures, fearing they are falling behind the U.S. in the wake of President Joe Biden’s massive investment in clean tech through the IRA. The establishment of the IRA, which promises to support the manufacturing industry with at least US$369 billion over 10 years, is already attracting massive investment to the United States.
Since its inception, the IRA has generated more than US$110 billion in private investment and created 170,000 jobs. This is in addition to other measures, such as “Buy America”, which has also helped bolster the American economy.
Meanwhile, the Canadian response, which includes the proposed ITCs and separate agreements containing IRA-equivalent benefits with battery producers and automakers, has been slow, and manufacturers want the ITC implementation accelerated to enable them to play on an equal footing and continue to be competitive.
“Although this is a step in the right direction, as it provides a little more certainty for our manufacturers, we are still behind. The race to develop a clean economy is picking up speed, and we need a robust response. We encourage all parties to work with the Canadian government to implement these initiatives as quickly as possible,” said Dennis Darby, President and CEO of CME.
Housing a Key Focus
The Fall Economic Statement also includes a number of measures aimed at boosting the supply of housing, an issue of growing concern to manufacturers. As highlighted in CME’s recent report, Manufacturing Canada’s Future, companies across the country are struggling to find workers, and a shortage of housing was cited as a key factor. As such, CME recognizes the measures announced today, including enhancing and expanding the Apartment Construction Loan Program and the Affordable Housing Fund to build more homes, faster.
“Manufacturing remains a cornerstone of Canada’s economy, directly generating close to 10 per cent of Canada’s real gross domestic product (GDP), making up one-quarter of its business research and development spending, and accounting for 60 per cent of the country’s merchandise exports. However, sustaining growth in the sector growth requires a strong partnership between industry and government, and CME looks forward to working with them to achieve all of our mutual goals” concluded Darby.
About Canadian Manufacturers & Exporters
Since 1871, Canadian Manufacturers & Exporters has been helping manufacturers grow at home and, compete around the world. Our focus is to ensure manufacturers are recognized as engines for growth in the economy, with Canada acknowledged as both a global leader and innovator in advanced manufacturing and a global leader in exporting. CME is a member-driven association that directly represents more than 2,500 leading companies who account for an estimated 82 per cent of manufacturing output and 90 per cent of Canada’s exports.