RE: Government consults Canadians on Budget 2024 measures
The Calgary Chamber of Commerce is encouraged by the Government of Canada’s continued commitment to engagement with stakeholders on the changes and initiatives announced in Budget 2024. We were pleased to see several important initiatives forwarded in Budget 2024, notably the suite of decarbonization investment tax credits, housing affordability supports by increasing the Housing Accelerator Fund, additional investments to improve the Scientific Research and Experimental Development tax credit program, and measures to improve foreign credential recognition and work-integrated learning programs for skilled trades, home builders and young workers.
However, certain measures outlined in Budget 2024 – coupled with more recently passed legislation – will have adverse impacts on Canada’s business community and will require significant course correction to mitigate unintended consequences. Of particular concern are changes to the capital gains inclusion rate, the decision to reduce funding for the Canada Summer Jobs Grant and amendments to the Competition Act in Bill C-59.
While several areas of Budget 2024 are directionally positive, they require further clarity and consultation including the increased deployment of carbon contracts for difference through the Canada Growth Fund, planned improvements to carbon credit markets between provinces and territories – including for nuclear projects – and additional tax credits, including details on the deployment of the Electric Vehicle Supply Chain tax credit, and the rest of the clean economy suite of tax credits.
Measures to Improve Tax Fairness
- Reverse course on the changes to the capital gains inclusion rate, returning the inclusion rate to one-half. We are concerned that the changes to the Capital Gains inclusion rate are significantly affecting the ability of businesses to access essential capital, risking economic growth, diversification and private sector investment in infrastructure. Canada must remain an attractive location for investment on the global stage. By further increasing the tax burden on capital gains, innovative businesses may relocate to more competitive jurisdictions.
Measures to Boost Economic Growth
- Withdraw the amendments to subsections 74.01 (b.1) and (b.2) in the Competition Act which were introduced in Bill C-59. Noting the significant unintended harms these amendments will have on businesses of all sizes and sectors across the nation, and the potential duplicative or conflicting obligations with work ongoing by the Canadian Sustainability Stands Board to introduce sustainability disclosure standards, these amendments must be revoked.
- Release an updated draft of the Clean Electricity Regulations to Canada Gazette I. Given the severe negative impact the proposed CER would have on the affordability and reliability of electricity. All regulations must be achievable with technologies that are commercially available today and must consider jurisdictional differences in power generation capabilities, such as the natural gas power generation used in Alberta, and market structures that will be impacted differently by national regulations. Additionally, the Government of Canada must prioritize a technology-agnostic approach to emissions reduction, allowing markets to select the most cost-effective technologies to achieve climate targets while not compromising the reliability of our electrical system.
- Withdraw the proposed emissions cap to allow the broad-based commercial carbon pricing and the provincial equivalents to effectively reduce emissions. We encourage the government to engage in further consultation with all sectors of the Canadian economy to understand the social, financial and regulatory impacts of the proposed emissions cap, and clarify how it would interact with existing regulation.
- Restore funding through the Labour Market Transfer Agreement in support of the Canada-Alberta Job Grant Program. Noting the importance of workforce development, and the ongoing labour concerns many businesses are still facing, governments need to collaborate on innovative programs to support workforce development. The Canada-Alberta Job Grant program provided nearly $27 million through 2023-24 for Albertan employers to train new employees, which was crucial to investing in our workforce.
- Further support innovative technologies and supply chains by actioning both the Canadian Critical Minerals Strategy and Canada’s Small Modular Reactor Action Plan. Actioning these two key strategies in a timely manner will increase Canada’s productivity and ensure that innovators can continue to propel Canada’s economy. To maximize our potential in both sectors we must act now, prioritizing development in critical minerals extraction and small modular reactors to meet domestic and international demand.
- Ensure eligible businesses receive funding for decarbonization projects in a timely and efficient manner, including from the previously announced Investment Tax Credits. Additionally, continue to pursue carbon contracts for difference (CCfDs) with interested parties through the Canada Growth Fund (CGF), and consider increasing the size of the CGF to provide greater capacity for CCfDs.
- Include provisions for specific clean technologies to be included in the Clean Technology Investment Tax Credit eligibility. Geothermal energy systems and hydrogen combustion equipment, such as hydrogen-fired turbines, should be considered eligible for the Clean Technology ITC, given the purpose of the Clean Technology ITC is to accelerate investment in clean electricity projects needed for a net-zero grid.
- Action the recently announced Indigenous Loan Guarantee Program and ensure funding is sector-agnostic and extends beyond the natural resource sector, and remains available for project proponents in decarbonization, clean-tech and traditional energy spaces.
- Engage with key stakeholders to modernize the Scientific Research and Experimental Development Tax Credit Program (SR&ED). Consider expanding the scope of activities eligible under the SR&ED program to include R&D, as well as commercialization and IP protection activities. Further to our previous recommendations to Finance Canada, we recommend the government simplify the SR&ED application process to decrease wait times for applicants.
- Provide further support to expand connectivity infrastructure, enhance resiliency and develop greater reliability for existing infrastructure in rural, remote and Indigenous communities. Consider supplementing CRTC funding with programs aimed at improving current infrastructure. Funding considerations should also be taken for new infrastructure in more remote areas.
- Support small businesses by lowering Employment Insurance premium rates for small businesses. Consider additional measures such as reducing granting and funding barriers and bureaucratic burden. Support small businesses in flexible and accessible learning, such as upskilling programs for small businesses.
- Establish the Canadian Innovation Corporation in Calgary, given Calgary’s position as the pre-eminent jurisdiction for innovation in clean tech, ag tech, fintech and others.
Measures to Build More Homes
- Advance housing initiatives by incentivizing the development of market and non-market housing. Focus on expanding skilled labour capacity through credentialing and targeted immigration programs and supply chain reliability for materials to support accelerated housing starts.
- Encourage the development and adoption of innovation in the construction industry. Provide direct support through grants, tax incentives or other programs, for innovative home builders and materials developers to decrease the cost of construction.
- Provide direct financial support for non-market housing. A 2023 report from Scotiabank showed Canada must double our existing stock of social housing. By investing in increased non-market housing units and developing public-private partnerships where feasible, pressure can be alleviated across the housing spectrum.
Should Finance Canada wish to discuss any of the points outlined in this submission, please do not hesitate to contact me directly, or have your staff reach out to our Vice President of Policy and External Affairs, Ruhee Ismail-Teja at RIsmailTeja@calgary-chamber.papercrane.ca.
Sincerely,
Deborah Yedlin
President & CEO
Calgary Chamber of Commerce
ABOUT THE CALGARY CHAMBER OF COMMERCE
The Calgary Chamber of Commerce exists to help businesses reach their potential. As the convenor and catalyst for a vibrant, inclusive and prosperous business community, the Chamber works to build strength and resilience among its members and position Calgary as a magnet for talent, diversification and opportunity. As an independent, non-profit, non-partisan organization founded in 1891, we build on our history to serve and advocate for businesses of all sizes, in all sectors across the city.
