CME submitted its 2021 pre-budget recommendations the House of Commons Standing Committee on Finance in August 2020.
The long-term erosion of our industrial and economic competitiveness directly impacts the ability of manufacturers to respond to the current crisis or any future crises. Indeed, if Canada is to be better prepared for the next crisis, actions must be taken that enable the manufacturing sector to survive in the short term and prosper over the long run. To achieve this, the federal government must work with our sector to implement this submission’s recommendations, which are summarized here:
Recommendation 1: That the government leverage strategic opportunities in health care and in other areas of Canada’s competitive advantages. Specifically: (i) Implement a strategy that encourages the development of natural resources, builds up supply chains for manufacturing inputs, and supports upgrading where practical; (ii) Create the Health Advanced Research Procurement Agency (HARPA) to drive innovation and new production in pharmaceuticals and medial devices.
Recommendation 2: That the government support business investment and productivity growth in manufacturing. Specifically: (i) Re-finance existing investment support programs and streamline and speed their application processes to provide business certainty; (ii) Relaunch investment support grant programs for smaller firms; (iii) Fund productivity training in manufacturing, including those that encourage lean process, and energy efficiency improvements.
Recommendation 3: That the government reform the Scientific Research and Experimental Development (SR&ED) program. Specifically: (i) Modernize the definitions of eligible costs and R&D, (ii) Increase the base rate from 20% to 25 % and introduce complementary measures, such as a Patent Box tax incentive (iii) Expand efforts to reduce red tape for companies making SR&ED claims.
Recommendation 4: That the government capitalize on increased demand for local manufactured products and the urgent need for more resilient supply chains. Specifically: (i) Introduce a “Made in Canada” goods promotion strategy; (ii) Conduct a supply chain mapping of Canada’s manufacturing sector.
Recommendation 5: That the government provide supports to help transition unemployed Canadians and youth into new jobs and help address labour and skills shortages in manufacturing. Specifically: (i) Create an Employer Training Tax Credit; (ii) Fund programs that encourage more youth to choose a career in manufacturing; (iii) Increase the number of economic immigrants admitted to Canada each year and update Canada’s immigration point system to better align with employer needs.
Recommendation 6: That the government support initiatives to keep workers safe by implementing a program to offset the mounting costs to businesses of purchasing personal protective equipment (PPE) and training on new protocols.
Recommendation 7: That the government’s climate policies minimize negative economic impacts and emissions leakages. Specifically: (i) Fully recycle all revenues from climate change policies into the manufacturing sector; (ii) Introduce a green tax credit to support GHG-reducing investments; (iii) Establish procurement policies that consider the inherent carbon benefits of Canadian manufactured goods in domestic infrastructure projects; (iv) Introduce an export tax credit for businesses that export to countries without carbon pricing systems comparable to our own.
Recommendation 8: That the government undertake a full review of Canada’s tax and regulatory competitiveness. Specifically: (i) Reduce the reliance on taxes that are the most economically harmful; (ii) Modernize, simplify, and harmonize Canada’s regulatory system.