2020 Federal Pre-Budget Submission

CME participated to the Standing Committee of Finance’s 2020/2021 pre-budget consultations. Given the Committee’s focus on climate change and the transition to a low-carbon economy, it is important to state up front that CME believes that all Canadians, including the industrial sector, have a responsibility to do what they can to address this issue.

CME believes that future action on reducing GHG emissions needs to reflect the following core statements:

• An uncompetitive business environment will drive investment out of Canada, hurting the economy, damaging our ability to generate innovative climate solutions, and resulting in higher global GHG emissions because of carbon leakage;
• Because of our relatively clean emissions profile, policies that result in more manufacturing activity in Canada and displace imports from high-polluting countries will contribute to a net reduction in global GHG emissions; and
• All carbon pricing revenues collected from manufacturers need to be recycled back into the sector to help spark investments in reducing its environmental footprint and in generating technology solutions to the climate challenge.

Most importantly, Canada cannot make a meaningful contribution to fighting climate change without the support of a thriving economy, including the energy sector itself. The wealth generated from strong economic growth is an essential resource to spark the investment and innovation needed to address this challenge.

LIST OF RECOMMENDATIONS

RECOMMENDATION 1
The federal government should re-invest all carbon pricing revenues collected from manufacturers directly back into the sector to support emissions-reducing investments and the development of climate solutions.

RECOMMENDATION 2
The federal and provincial governments should work together to introduce a shared 20 per cent investment tax credit on the purchase of new machinery, equipment and technologies, including software. The federal component would be achieved by extending the 10 per cent Atlantic Investment Tax Credit across the country. Provinces should be encouraged to match that credit.

RECOMMENDATION 3
The federal government should introduce an outcomes-based business tax credit tied directly to companies’ success at reducing their greenhouse gas emissions. This tax credit should be made retroactive back to 2015 to reward companies that reduced emissions in the absence of such an incentive.

RECOMMENDATION 4
In partnership with the business community, the Government of Canada should develop, generate and disseminate environmental performance benchmarks that accurately compare emissions from Canadian manufacturers with those from other countries.

RECOMMENDATION 5
The Government of Canada should establish procurement policies and enabling tools that recognize and take in consideration the inherent carbon benefits of Canadian manufactured goods in domestic infrastructure projects.

RECOMMENDATION 6
The federal government should introduce an export tax credit for businesses that export to countries without carbon pricing systems comparable to our own.

RECOMMENDATION 7
To expand Canada’s ability to develop emissions-reducing technologies, the federal government should:

• Make the Scientific Research and Experimental Development (SR&ED) program significantly easier to access, and have it better support the development of new or improved products and processes;
• Create an electronic business-to-business match-making service to connect Canadian innovators to purchasers; and
• Introduce a patent-box system that would lower corporate taxes on sales of new products developed from patented innovations.

RECOMMENDATION 8
The federal government should create a $1-billion fund that specifically targets investment projects to reduce GHG emissions in Canada’s highest-emitting industries.

RECOMMENDATION 9
The federal government should support the creation and delivery of a nation-wide environmental SMART program that would:

• Be geared to high-emitting companies, regardless of size;
• Offset the cost of technology assessment and diagnostic services; and
• Provide support for investment in reducing GHG emissions and improving energy efficiency.