On April 7, Canada’s Minister of Finance and Deputy Primer Minister, Chrystia Freeland released the 2022 Federal Budget: A Plan to Grow our Economy and Make Life More Affordable.
The budgetary balance is expected to remain below that projected in the 2021 Economic and Fiscal Update, with a $113.8 billion expected deficit in 2021-22, improving to a projected deficit of $8.4 billion in 2026-27, or about 0.3 per cent of GDP. The federal debt is expected to decline from 46.5 per cent of GDP in 2021-22 to 41.5 per cent of GDP in 2026-27.
Real GDP grew 6.7 per cent at an annual rate in the last quarter of 2021.
The budget forecasts 3.9 per cent economic growth this year but expects that to slow over the ensuing four years to average 2.9 per cent annual growth in real gross domestic product. Inflation too is expected to fall from 3.9 per cent this year. Unemployment is expected to stay at a low of 5.5 per cent over the forecast horizon.
OSPE has identified areas of most interest to our membership:
The Next Steps Towards High Frequency Rail
- Budget 2022 proposes to provide $396.8 million over two years, starting in 2022-23, to Transport Canada and Infrastructure Canada for planning and design steps in support of high frequency rail between Toronto and Quebec City.
Increasing the Impact of the Canada Infrastructure Bank (CIB)
- To increase the CIB’s impact, Budget 2022 announces a broadened role for the CIB to invest in private sector-led infrastructure projects that will accelerate Canada’s transition to a low-carbon economy. This will allow the CIB to invest in small modular reactors; clean fuel production; hydrogen production, transportation and distribution; and carbon capture, utilization and storage. These new areas fall under the CIB’s existing clean power and green infrastructure investment areas
IMPACT: OSPE commends the government’s continued approach to invest in infrastructure, which includes public transit, Information Technology (IT), and infrastructure that supports trade and transportation. OSPE agrees that funding infrastructure projects is a beneficial, long-term investment. However, given that funding is finite, OSPE believes money must be spent wisely and hard decisions need to be made in terms of which infrastructure projects get approved. OSPE stresses to all levels of government that key decisions on infrastructure should be evidence-based and made in consultation with infrastructure experts, including engineers.
Reducing Emissions on the Road
- To accelerate the manufacturing and adoption of cleaner cars, the federal government will put in place a sales mandate to ensure at least 20 per cent of new light-duty vehicle sales will be zero-emission vehicles (ZEVs) by 2026, at least 60 per cent by 2030 and 100 per cent by 2035. To reduce emissions from medium- and heavy-duty vehicles (MHDVs), the federal government will aim to achieve 35 per cent of total MHDV sales being ZEVs by 2030.
- In addition, the federal government will develop a medium- and heavy-duty ZEV regulation to require 100 per cent MHDV sales to be ZEVs by 2040 for a subset of vehicle types based on feasibility, with interim 2030 regulated sales requirements that would vary for different vehicle categories based on feasibility, and explore interim targets for the mid-2020s.
- Budget 2022 also proposes to provide $1.7 billion over five years, starting in 2022-23, with $0.8 million in remaining amortization, to Transport Canada to extend the Incentives for Zero-Emission Vehicles (iZEV) program until March 2025. Eligibility under the program will also be broadened to support the purchase of more vehicle models, including more vans, trucks, and SUVs, which will help make ZEVs more affordable
Helping Businesses Switch to Medium- and Heavy-Duty Zero-Emission Vehicles
- Businesses across Canada want to upgrade their fleets to be part of the solution to climate change. However, those upgrades can be expensive, and businesses need to be confident that ZEVs can reliably transport their goods to market.
- Budget 2022 proposes to provide $547.5 million over four years, starting in 2022-23, to Transport Canada to launch a new purchase incentive program for medium- and heavy-duty ZEVs.
A New Tax Credit for Investments in Clean Technology
- Budget 2022 announces that the Department of Finance Canada will engage with experts to establish an investment tax credit of up to 30 per cent, focused on net-zero technologies, battery storage solutions, and clean hydrogen.
Support for Business Investment in Air-Source Heat Pumps
- Budget 2022 proposes to expand the accelerated tax deductions for business investments in clean energy equipment to include air-source heat pumps. To support job creation and growth in clean technology manufacturing in Canada, the government proposes to extend the 50 per cent reduction of the general corporate and small business income tax rates for zero emission technology manufacturers to include manufacturers of air-source heat pumps.
Building Capacity to Support Green Procurement
IMPACT: We are currently in a Climate Crisis, so OSPE is pleased to see that this Budget focuses on the need for a green economy that is sustainable for future generations. Restoring our economy in the wake of the COVID-19 pandemic should keep in mind our existing environmental and climate change concerns. As Ontario historically has been a leader in automotive manufacturing, OSPE is also pleased that the government is recognizing the importance of investing in electric vehicles (EVs). OSPE has been advocating for the incorporation of a EV sales mandate and is pleased to see that this Budget reflects our ask. OSPE is also encouraged by the incorporation of policies and incentives for further investment by the private sector in clean and green technologies.
Propelling Clean Tech Projects
- Budget 2022 proposes to provide $150 million over five years, starting 2022-23, to Natural Resources Canada to develop the Canada Green Buildings Strategy. The strategy will include initiatives to further drive building code reform; to accelerate the adoption and implementation of performance-based national building codes; to promote the use of lower carbon construction materials; and to increase the climate resilience of existing buildings.
- Budget 2022 proposes to provide $200 million over five years, starting in 2022-23, to Natural Resources Canada to create the Deep Retrofit Accelerator Initiative, which will provide support for retrofit audits and project management for large projects to accelerate the pace of deep retrofits in Canada, including a focus on low-income affordable housing.
Greener Construction in Housing and Buildings
- Budget 2022 proposes to provide $183.2 million over seven years, starting in 2022-23, with $8.5 million in remaining amortization, and $7.1 million ongoing to the National Research Council to conduct research and development on innovative construction materials and to revitalize national housing and building standards to encourage low-carbon construction solutions.
- Budget 2022 proposes to provide $250 million over four years, starting in 2022-23, to Natural Resources Canada to support pre-development activities of clean electricity projects of national significance, such as inter-provincial electricity transmission projects and small modular reactors.
- Budget 2022 proposes to provide $2.4 million in 2022-23 to Natural Resources Canada to establish a Pan-Canadian Grid Council, which would provide external advice in support of national and regional electricity planning.
IMPACT: The Building sector is a huge contributor of greenhouse gas emissions. These measures are welcomed as they will help millions of current and future homeowners reduce their home’s carbon footprint.
- Budget 2022 proposes to provide up to $3.8 billion in support over eight years, on a cash basis, starting in 2022-23, to implement Canada’s first Critical Minerals Strategy.
- Budget 2022 proposes to provide up to $144.4 million over five years, starting in 2022-23, to Natural Resources Canada and the National Research Council to support research, development, and the deployment of technologies and materials to support critical mineral value chains.
- Up to $1.5 billion over seven years, starting in 2023-24, for infrastructure investments that would support the development of the critical minerals supply chains, with a focus on priority deposits;
- $79.2 million over five years on a cash basis, starting in 2022-23, for Natural Resources Canada to provide public access to integrated data sets to inform critical mineral exploration and development;
- The introduction of a new 30 per cent Critical Mineral Exploration Tax Credit for specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors.
IMPACT: These investments will contribute to the development of a domestic zero-emissions vehicle value chain, including batteries, permanent magnets, and other electric vehicle components. This is essential for Canada’s path towards net-zero. OSPE agrees that these investments will help secure Canada’s place in important supply chains with our allies. Engineers understand that the global shift to a knowledge-based, low-carbon economy is increasing demand for raw materials. Mining is one of the economic backbones of the Ontario economy and is especially important to northern Ontario. The materials and products delivered help Ontarians stay safe, meet basic needs, and sustain northern communities. This industry produces around $10 billion in revenues for Ontario per year and employs over 75,000 Ontarians. Mining is also the largest private sector employer of Indigenous Ontarians.
Launching a New Housing Accelerator Fund
- Budget 2022 proposes to provide $4 billion over five years, starting in 2022-23, to the Canada Mortgage and Housing Corporation to launch a new Housing Accelerator Fund. The fund will be designed to be flexible to the needs and realities of cities and communities, and could include support such as an annual per-door incentive for municipalities, or upfront funding for investments in municipal housing planning and delivery processes that will speed up housing development. Its focus will be on increasing supply, but government supports will be targeted to ensure a balanced supply that includes a needed increase to the supply of affordable housing. This new fund will target the creation of 100,000 net new housing units over the next five years.
Direct Support for those in Housing Need
- Budget 2022 proposes to provide $475 million in 2022-23 to provide a one-time $500 payment to those facing housing affordability challenges.
A Tax-Free First Home Savings Account
- Budget 2022 proposes to introduce the Tax-Free First Home Savings Account that would give prospective first-time home buyers the ability to save up to $40,000. Like an RRSP, contributions would be tax-deductible, and withdrawals to purchase a first home—including investment income— would be non-taxable, like a TFSA.
A Ban on Foreign Investment in Canadian Housing
- Budget 2022 announces the government’s intention to propose restrictions that would prohibit foreign commercial enterprises and people who are not Canadian citizens or permanent residents from acquiring nonrecreational, residential property in Canada for a period of two years.
- Budget 2022 proposes to provide funding of $5.3 billion over five years, starting in 2022-23, and $1.7 billion ongoing, to Health Canada to provide dental care for Canadians. This will start with under 12-year-olds in 2022, and then expand to under 18-year-olds, seniors, and persons living with a disability in 2023, with full implementation by 2025. The program would be restricted to families with an income of less than $90,000 annually, with no co-pays for those under $70,000 annually in income.
Boosting Canada’s Innovation Ecosystem and Promoting Innovation Investments
- Creating the Canada Growth Fund, working for three main goals: reduce emissions and contribute to achieving Canada’s climate goals, diversity our economy and bolster exports and to support the restructuring of critical supply chains
- The Budget 2022 proposes an investment of $15 billion over five years and on a concessionary basis. The overall goal is to attract three dollars of private capital with every dollar invested. More details to be announced with the fiscal update
- Creating a Canadian Innovation and Investment Agency to work with new and established Canadian industries and businesses to provide them with the tools needed to innovate, grow, create jobs and overall be competitive in the global economy
- The Budget 2022 proposes an investment of $1 billion over five years to support initial operations of this new agency.
Deepening the Canadian Research Leadership Pool
- In the year 2000, Canada launched the Canada Research Chairs Program (CRCP). Budget 2022 proposes hiring an influx of leading researchers to build on this program.
- Budget 2022 proposes an investment of $38.3 million over 4 years starting next fiscal year and $12.7 million ongoing for the federal granting councils to add new and internationally recruited research chairs in STEM.
IMPACT: OSPE is pleased the Government of Canada is investing in the research talent pool and elevating Canadian innovation. The investments will open the door for future engineers to contribute to our economic growth and to innovate solutions to global challenges that will position Canada as a strong leader on the world stage. Ontario is home to some of the most talented engineers in Canada and OSPE is pleased the Government of Canada is providing them the opportunity to contribute to the nation’s economic prosperity.
Supporting Medium Sized businesses with a Favourable Tax Rate
- In Budget 2021, small businesses with a capital limit of $15 million were given a reduced tax rate. Budget 2022 proposes expanding the tax rate to include medium sized businesses, raising the limit from $15 million to $50 million
IMPACT: COVID-19 brought devastating times for local business owners and entrepreneurs. The favourable tax rate introduced at the height of the pandemic provided a benefit but as the pandemic continues, businesses are still struggling. Raising the capital limit to allow more medium sized businesses to join will benefit more Canadian businesses and entrepreneurs.
Helping Small and Medium-sized Businesses Move into the Digital Age
- Since 2018, the Government of Canada launched three major programs that supported Canadian businesses to file for patents, recognized businesses that owned patents are economically more powerful. This year, the Government of Canada wants to invest in building a World Class Intellectual Property Regime
- Budget 2022 proposed an investment of $96.6 million over 5 years starting this fiscal year and $22.9 million ongoing, with details of
- $47.8 million over five years, starting in 2023-24, and $20.1 million ongoing to Innovation, Science and Economic Development Canada to launch a new national lab-to-market platform to help graduate students and researchers take their work to market;
- $35 million over five years, starting in 2022-23, to Global Affairs Canada for the CanExport program to help Canadian businesses secure their intellectual property in foreign markets;
- $10.6 million over five years, starting in 2022-23, and $2 million ongoing to Innovation, Science and Economic Development Canada to launch a survey to assess the government’s previous investments in science and research, and how knowledge created at post-secondary institutions generates commercial outcomes;
- $2.4 million over five years, starting in 2022-23, and $0.6 million ongoing to Innovation, Science and Economic Development Canada to expand use of ExploreIP, Canada’s intellectual property marketplace, so that more public sector intellectual property is put to use helping Canadian businesses; and,
- $0.8 million over five years, starting in 2022-23, and $0.2 million ongoing to Innovation, Science and Economic Development Canada to expand the Intellectual Property Legal Clinics Program, which will make it easier to access basic intellectual property services.
- Budget 2022 proposed an investment of $96.6 million over 5 years starting this fiscal year and $22.9 million ongoing, with details of
IMPACT: Research shows that economies thrive with more patents under their belt. With the additional investments proposed in this budget, OSPE commends the Government’s commitment to the country’s innovative talent and support of our innovators, including Ontario’s engineers who are the anchors of the innovative ecosystem. With the continuation of the national programs, Ontario has the opportunity to expand their intellectual property portfolio, capitalizing on their local talent and, in turn, secure the status of Canada’s hub for innovation.
Preparing Canada’s Aerospace Sector for Recovery
- OSPE was disappointed there was no investment in the Canadian Aerospace field. The Aerospace sector is fundamental in the growth of the economy and must be a focus of all governments.
In 2021, the budget announced an investment of 30B over five years to bring affordable childcare to Canada. Early this year, all 13 provinces and territories have signed the agreement.
- In response to requests from provinces and territories, and to support the implementation of the Canada-wide early learning and child care system, Budget 2022 proposes to provide $625 million over four years, beginning in 2023-24, to Employment and Social Development Canada for an Early Learning and Child Care Infrastructure Fund
IMPACT: OSPE is excited about the endless opportunities Ontario’s working parents, specifically working mothers, have now that affordable childcare is on the horizon. Investing in access to affordable and quality childcare is an important factor in determining the participation, attachment, and retention of professionals in the labour market, including engineers. This has been a policy OSPE has long advocated for, and we are thrilled the Federal government has fulfilled their promise to bring affordable childcare to the country.
Funding for Black Researchers
- Provide 40.9M over 5 years and 9.7M ongoing to the federal granting councils to support targeted scholarships and fellowships for promising Black student researchers
- Invest an additions 11B over 6 years to continue to support Indigenous families
- Budget 2022 provides $340.8 million over ten years, starting in 2021-22, to support Wabaseemoong Independent Nations’ exercise of jurisdiction.
- Budget 2022 also proposes to provide $87.3 million over three years, starting in 2022-23, to enable Indigenous communities to continue to work with the federal government and the provinces and territories to support the implementation of Indigenous child welfare laws.
- Budget 2022 proposes to provide $398 million over two years, starting in 2022-23, to Indigenous Services Canada to support community infrastructure on reserve, of which at least $247 million will be directed toward water and wastewater infrastructure.
- Budget 2022 proposes to provide Indigenous Services Canada with $173.2 million over ten years, starting in 2022-23, to support the transfer of water and wastewater services in 17 communities to the Atlantic First Nations Water Authority.
- Budget 2022 proposes to provide $100 million over five years, starting in 2022-23, to support the implementation of the forthcoming Federal LGBTQ2 Action Plan, which will support a fairer and more equal Canada for LGBTQ2 Canadians.
Supporting Black Canadian Communities
- Budget 2022 proposes to provide $50 million over two years, starting in 2022-23, to Employment and Social Development Canada for the Supporting Black Canadian Communities Initiative, to continue empowering Black-led and Black-serving community organizations and the work they do to promote inclusiveness.
IMPACT: OSPE is an active advocate for diversity and inclusion in the engineering space. Canada prides itself on their diversity and it is important that the Government invests in the wellbeing of marginalized communities. We are pleased with the Government taking steps to not only protect but elevate the goals of marginalized individuals.