Manufacturing is critical to Canada. The country’s 90,000 manufacturers generate over 10 per cent of the country’s GDP and nearly two-thirds of its merchandise exports. The sector’s footprint amounts to nearly 30 per cent of Canada’s economic activity, and Alberta manufacturers provide high-paying jobs for more than 140,000 families.
Output and exports of Canada’s manufactured goods have grown at much slower rates than in other developed countries, and this is largely due to a steady decline in manufacturing investment that started in the early 2000s. With that and the sting of the COVID-19 slowdown in mind, Canadian Manufacturers and Exporters (CME) has submitted eight recommendations to boost manufacturing as part of the government’s budget consultation process.
- Implement a strategy that encourages the development of natural resources, builds up supply chains for manufacturing inputs, and supports upgrading where practical. Create the Health Advanced Research Procurement Agency (HARPA).
- Re-finance existing investment support programs and streamline their processes to provide business certainty and relaunch investment support grant programs for smaller firms. Fund productivity training in manufacturing.
- Reform the Scientific Research and Experimental Development (SR&ED) program. Specifically, modernize the definitions of eligible costs and R&D, increase the base rate from 20 per cent to 25 per cent, and introduce complementary measures such as a Patent Box tax incentive.
- Capitalize on increased demand for local manufactured products and the urgent need for more resilient supply chains.
- Provide supports to help transition unemployed Canadians and youth into new jobs and help address labour and skills shortages in manufacturing. Specifically, create an Employer Training Tax Credit, fund programs encouraging more youth to choose a career in manufacturing and increase the number of economic immigrants admitted to Canada each year.
- 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.
- Ensure climate policies minimize negative economic impacts and emissions leakages. Specifically, fully recycle all revenues from climate change policies into the manufacturing sector; introduce a green tax credit to support GHG-reducing investments and establish procurement policies that consider the inherent carbon benefits of Canadian manufactured goods in domestic infrastructure projects. Introduce an export tax credit for businesses that export to countries without carbon pricing systems comparable to our own.
- Conduct a full review of Canada’s tax and regulatory competitiveness.
We hope the next federal budget signals to Canada and our trading partners that we are serious about nurturing a competitive manufacturing sector.
Canadian Manufacturers & Exporters (CME) is the voice of Canadian manufacturing. CME represents more than 2,500 companies who account for an estimated 82 per cent of manufacturing output and 90 per cent of Canada’s exports.