Home Month and Year June 2021 Feds Come Up Short in Budget 2021

Feds Come Up Short in Budget 2021

David McLean

The past year has taught Canadians a valuable lesson – manufacturing matters. As manufacturers have demonstrated on countless occasions during the pandemic, manufacturing is not only vital to our economic success, but essential to helping our country face our toughest challenges. From the production of PPE to the manufacture of vaccines and medicines, a strong and healthy Canadian manufacturing industry is in Canada’s best interests.

That’s why we expected a little more to support local manufacturing in the most recent federal budget.

First off, we commend the federal government for recognizing the importance of the manufacturing sector and addressing many challenges faced by Canadian manufacturers. Recapitalizing investment supports like the Strategic Innovation Fund, enhancing accelerated capital write-offs, extending the wage subsidy, helping companies transition to net-zero, investing in skills training and childcare, are all very positive initiatives that will help industry recover from the pandemic.

However, the government missed an opportunity to address fundamental issues plaguing the long-term health and growth of the manufacturing sector. Longstanding requests from Canadian Manufacturers & Exporters to significantly drive technology investment and scale-up and commercialization through a comprehensive, targeted manufacturing strategy were largely missing.

As we inch closer to the end of the worst of the pandemic, governments around the world are investing massively in the manufacturing sector. The federal government missed an opportunity to have a more comprehensive approach which would have helped to make our manufacturers more competitive. A lot of the measures announced were positive and will help, but there is not enough in there to move the needle and drive long-term growth.

Canada is lagging far behind when it comes to productivity. It’s important to note that the growth of business capital investment in Canada over the past five years was 8.8 per cent, compared to 30.4 per cent in the United Kingdom and 28.1 per cent in the United States. This means the gap is widening, and this long-term erosion of our industrial competitiveness directly affects manufacturers’ ability to respond to the current crisis or future ones. We must turn the ship around.

The lack of a comprehensive manufacturing strategy as recommended by the Government’s own Industry Strategy Council in today’s budget is placing our sector in a difficult situation. This is not the plan that will launch our industry forward or see us win the global race.

We’re going to continue to work with the federal government to get the right policy mix needed for long-term growth and more resilient Canadian supply chains. Manufacturers need more help to de-risk incentivized digitization, automation and technology adoption in order to drive productivity growth. We also need to look at “patent box” regimes that reward commercialization and production of Canadian-made advanced technologies, thereby eliminating a key competitive disadvantage between us and a growing number of international peers.

There’s much to do to help Canada increase value-added exports, but the pandemic has clearly shown us the upside. A genuine manufacturing strategy that is simple and focused would be a good start.

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.