In addition to a practical reminder that prudent television streaming subscription choices can help us cope with rising food, fuel, and housing costs, Finance Minister Chrystia Freeland offered some more sweeping — and ambitious — proposals in the 2022 Fall Economic Statement she presented at the beginning of November.
More specifically, this statement referred to the recent passage of the American Inflation Reduction Act, which touted the virtues of economic development that adheres to net-zero climate restrictions, but which nevertheless provides plentiful and meaningful employment. Taking a cue from Canada’s need to compete with that initiative, the federal government introduced the Canada Growth Fund as its own mechanism for attracting private sector investment into major ventures that will lead to just such economic development here, which will be highlighted by undertakings like low-carbon hydrogen production and carbon sequestration.
The $15 billion growth fund was first announced in Budget 2022, more than six months earlier, and the Fall Economic Statement promised it would be launched by the end of 2022. It was one of several items Freeland forecast for “the coming weeks”, including an investment tax credit for clean technologies, which applies to electricity generation and storage systems, and low-carbon heating appliances like heat pumps, as well as a targeted credit for hydrogen manufacturing.
In much the same way, Freeland highlighted the $1 billion Canadian Innovation and Investment Agency, which was also originally announced in April’s budget, only now with “further details to follow in 2023”.
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That timeline did not sit well with the Canadian Council of Innovators (CCI), whose President Benjamin Bergen complained that his organization “had hoped to hear the kind of urgency befitting this moment, and a clear commitment on the part of the government to ensure that they will work with business leaders to ensure that policy and programs are nimble and responsive to the needs of the economy.”
In a public statement, Bergen insisted “innovators cannot wait an entire year for substantive action on commitments announced in the 2022 budget including reforms to streamline the scientific research and experimental development tax credit, which should be a key avenue to fund R&D intensive businesses through difficult times.”
CCI has only recently called out the federal government for overdue revisions to the longstanding Scientific Research and Experimental Development program, highlighted in a brief that calls for the same urgency to be applied to this widely used incentive for investments in innovation. Bergen’s statement suggests the Fall Economic Statement reflects a similar pattern of delaying concrete action at the expense of the same private sector that is supposed to be encouraged by government measures.
In a separate analysis, the Royal Bank of Canada (RBC) noted that proposed investment tax credits were less “tech neutral” than those created by the US government’s Inflation Reduction Act, referring specifically to challenges around nuclear or hydroelectric technologies, as well as the absence of production tax credits in areas such as carbon capture and storage.
RBC also echoed the CCI’s critique on the pace of change, arguing in its own public statement that “the government will need to move quickly to make these available, especially setting parameters for the hydrogen ITC and giving time needed to set up, staff, and source deals for the growth fund. It will also need to ensure that pursuing so many economic opportunities supporting global decarbonization do not distract from the pace of decarbonization needed in existing industries.”
With regard to the Fall Economic Statement’s outline of steps to create employment and training opportunities, Colleges and Institutes Canada (CICan) praised the earmarking of more than $800 million for educational support and job placements aimed at young people.
“Making all Canada Student Loans and Canada Apprentice Loans permanently interest-free will help graduates launch their career in these uncertain times,” the post-secondary education network said in its own statement.
Meanwhile, CICan added that there was no new funding announced for innovation and applied research, which is a priority for institutions that provide facilities and expertise to small and medium size enterprises to create new goods and services.
“Leveraging these resources to boost Canadian innovation is especially important for SMEs, which have been hit particularly hard by the pandemic and will need to innovate to adapt to our new normal.”