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Canada's Economic Action Plan
Support for Manufacturing and Other Key Industries
June 2009
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Many Canadian communities, businesses and workers have been seriously affected by the economic slowdown. That is why our Government brought forward Canada's Economic Action Plan. It is a clear blueprint to stimulate the economy, protect Canadian jobs and support those hit hardest. It is delivering $62 billion in stimulus, among the largest of the Group of Seven (G7) economies.
The Government is delivering on Canada's Economic Action Plan today, when it is needed the most. It will provide a boost to output and employment. It is an investment in our future.
The Plan:
- Reduces taxes permanently.
- Helps the unemployed through enhanced
Employment Insurance and training programs. - Avoids layoffs by enhancing the Employment
Insurance work-sharing program. - Creates jobs through a massive injection
of infrastructure spending. - Helps create the economy of tomorrow by improving infrastructure
at colleges and universities and supporting research and technology. - Supports industries and communities most affected
by the global downturn. - Improves access to and the affordability of financing for Canadian
households and businesses.
The manufacturing industry has been especially hard-hit during this global economic crisis. The entire sector is undergoing significant restructuring, which is having an impact on businesses, employees and their communities. That's why Canada's Economic Action Plan introduced significant measures to help businesses become more competitive and support economic development in communities—actions that are already making an impact.
Support for Key Industries
To help mitigate the short-term effects of the current global economic crisis, the Economic Action Plan commits nearly $4.3 billion in economic stimulus to support key industries and communities and help position them for long-term, sustainable economic success.
Support for Manufacturers and Processors
Our Government is helping Canada's manufacturers and processors cope during a challenging economic environment. In order for them to emerge even better equipped to compete globally once the economy recovers, Canada's Economic Action Plan has put a number of important measures in place.
These industries are already benefiting from the following measures, ensuring they will continue to produce the goods Canadians rely on, while successfully exporting around the world:
- To help manufacturing and processing industries restructure and retool for long-term success, the Economic Action Plan extends the temporary 50-per-cent straight-line accelerated capital cost allowance (CCA) rate to manufacturing or processing machinery and equipment acquired in 2010 and 2011. This temporary measure was first introduced in Budget 2007 and extended in Budget 2008, which means that manufacturers and processors are benefiting from it now.
- To help businesses adopt new technology at a faster pace, the Government introduced a temporary two-year 100-per-cent CCA rate for computers acquired after January 27, 2009 and before February 1, 2011.
- The permanent elimination of tariffs on a wide range of machinery and equipment is now lowering the costs of importing specialized equipment from overseas to modernize operations. The Government continues to consult with Canadian businesses on providing even more tariff relief.
In total, the Government has introduced more than $60 billion in tax relief for Canadian businesses over 2008–09 and the following five fiscal years.
Support for Small and Medium-Sized Businesses
Canada's Economic Action Plan continues to assist Canada's small and medium-sized businesses in efforts to produce new goods and services, develop ground-breaking technologies and employ highly skilled young graduates.
Actions taken to support small and medium-sized businesses include:
- An increase in the amount of small business income eligible for the reduced federal income tax rate of 11 per cent to $500,000 from $400,000. This increase has been in effect since January 1, 2009.
- $200 million in new resources over two years to support innovative small and medium-sized businesses through the National Research Council's Industrial Research Assistance Program. Funding in 2009–10 is expected to be largely committed to business projects by the end of June.
The tax relief introduced in Canada's Economic Action Plan builds on broad-based corporate income tax reductions that will reduce the general corporate income tax rate from 22.12 per cent (including the corporate surtax) in 2007 to 15 per cent by 2012. The schedule of rate reductions will allow Canada to have the lowest statutory corporate income tax rate in the Group of Seven (G7) by 2012, and the lowest overall tax rate on new business investment (marginal effective tax rate or METR) in the G7 by 2010. In 2012, Canada will have a METR that is lower than the average METR for Organisation for Economic Co-operation and Development (OECD) countries.
In addition, the Economic Action Plan took steps to ensure businesses will continue to have access to the financing needed to thrive. Through the Business Credit Availability Program (BCAP), Export Development Canada (EDC) and the Business Development Bank of Canada will provide at least $5 billion in direct lending and other support to viable businesses whose access to financing would otherwise be restricted. As of mid-May, business lines were in place and BCAP was fully open for business.
On March 18, EDC committed up to US$40 million to participate in a US$180-million renewal of a syndicated facility for New Flyer Industries. Winnipeg-based New Flyer manufactures heavy-duty transit buses, including drive systems powered by clean diesel and energy-efficient gasoline-electric and diesel-electric hybrid vehicles. The syndicate of lenders included the Bank of Nova Scotia and the Bank of Montreal.
In May, EDC provided Clearwater, a leader in the global seafood market, with short term financing of up to $10 million. The new financing will provide additional capacity to Clearwater's senior debt facilities and flexibility for Clearwater's working capital needs, and will ensure short term liquidity is maintained.
On April 22, EDC established a new credit facility with the Toronto-Dominion Bank and Wescast Industries, where EDC provided $30 million in financing for Wescast, to be used for working capital requirements and general corporate purposes. Based in Brantford, Ontario, Wescast is a supplier of cast iron exhaust manifolds for original equipment manufacturers and Tier-1 customers for the car and light truck markets in North America, Europe and Asia.
The Government has provided $23 million to date to support the following events:
- Toronto International Film Festival
- Festival International de Jazz de Montréal
- Stratford Shakespeare Festival, Stratford, Ontario
- Montréal's Just For Laughs Festival
- Festival d'été de Québec, Québec City
- Shaw Festival, Niagara-on-the-Lake, Ontario
- Calgary Stampede
- Toronto's Luminato festival
- Charlottetown Festival
- Festival Grand Rire de Québec
- Vancouver International Jazz Festival
- Edmonton International Fringe Theatre Festival
Support for Tourism
The tourism industry is an important economic engine in communities across Canada, drawing visitors and economic activity that creates jobs. The Economic Action Plan included new funding of $100 million over two years to support marquee tourism events across Canada to help them attract a greater number of visitors and to increase the profile of Canada's tourism sector at home and abroad.
Support for Industries and Communities
To help Canada's communities respond to the global economic crisis by promoting development and diversification, Canada's Economic Action Plan invests more than $2 billion over five years. By working closely with affected communities, as well as provinces and territories, the Government is taking steps to address short-term economic disruptions and help support long-term prosperity.
- Canada's Economic Action Plan created the two-year $1-billion Community Adjustment Fund to help lessen short-term job-loss impacts in smaller communities. Examples of projects to be supported include silviculture activities to help the forestry sector in Quebec and measures to assist lobster fishing in Atlantic Canada.
- To support economic development in Southern Ontario, where many communities are adjusting to the restructuring of the manufacturing sector, Canada's Economic Action Plan provides more than $1 billion over five years for a new Southern Ontario development agency. The agency is being established and funding is expected to begin flowing this summer.
Other Key Measures in Canada's
Economic Action Plan
The measures contained in Canada's Economic Action Plan are designed to work together to achieve a better and stronger Canada.
Along with the actions designed specifically for business, Canadian entrepreneurs will also benefit through:
- An expansion of work-sharing that is providing support in record numbers to thousands of businesses and employees.
- The freezing of Employment Insurance premium rates for 2009 and 2010.
- The temporary Home Renovation Tax Credit and housing investments that are providing substantial economic stimulus for construction and related industries.
- $12 billion in new infrastructure funding with significant employment impacts in the construction and manufacturing sectors, and which generates considerable spinoff activity in the rest of the economy.
- $5.1 billion in science and technology initiatives that will help build the highly skilled workforce needed for Canada to compete and win in the global, knowledge-based economy.
For more information on Canada's Economic Action Plan, visit
www.actionplan.gc.ca
or call
1 800 O-Canada (1-800-622-6232)
1-800-926-9105 (TTY)
