Manufacturers pleased to get $5B boost,
Sector satisfied with measures worth $5 billion over five years to help compete globally
OTTAWA— Canadian manufacturers say the federal budget contains measures worth $5 billion over five years to help them become more globally competitive.
Among the biggest winners is Ontario — Canada’s manufacturing heartland — which is getting nearly $1 billion in additional funding over five years.
Ottawa also agreed to extend for two years a measure that allows business to more quickly write off investments in new machinery and equipment.
“We’re retooling for the 21st century,” federal Finance Minister Jim Flaherty said during a news conference as he outlined a budget that identified skills training, innova- tion and public infrastructure as its top priorities.
“The most important measure is the accelerated capital cost allowance,” Flaherty added. “It’s the most expensive — $1.4 billion over four years in foregone revenue.
“But it’s widely used. More than 25,000 businesses in the manufacturing and processing sector have used it since it was introduced in 2007.”
Canadian manufacturers welcomed the budget, which builds on the Conservative government’s previous efforts to create a business friendly climate. “I think it’s really sending an important signal. This is a budget about rebooting the economy,” said Jayson Myers, president and chief executive officer of Canadian Manufacturers & Exporters.
Myers estimates the budget is worth $5 billion over five years, including the faster write-off for new machinery and equipment, new funds to boost research and product development and a jobs grant aimed at creating a skilled workforce. Many of the measures don’t come into effect until next year and the initial investments are modest, budget documents show.
For the current year, Ottawa’s total investment in helping manufacturers and business amounts to $317 million, according to budget documents. The new Job Grant would make $5,000 in federal funding available per employee, however it’s conditional on the provinces and employers agree to provide matching funding.
In addition to the specific measures aimed at business, all businesses will benefit from federal spending on public infrastructure and strategic procurement, Myers added. Ottawa plans to spend $53.5 billion over five years on public projects, including roads and bridges.
While Canada is in the “enviable position” of having survived the recession of 2008-09 in relatively good shape compared to its industrialized peers, Flaherty said, “the global economy remains fragile.”
Manufacturers have had to grapple a rising Canadian dollar and increased competition from global competitors. To give them a helping hand, Ottawa said it would extend or renew several initiatives including:
Extending the Accelerated Capital Cost Allowance program for two years.
Earmarking $920 million in additional funding over five years for the Federal Economic Development Agency for Southern Ontario, dubbed FedDev Ontario, starting in 2014.
The initiative includes $200 million for a new Advanced Manufacturing Fund in Ontario. A recommitment to the $1 billion already earmarked for aerospace research over five years.