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Archived - Supporting Industries and Communities

Highlights

• Solid progress continues to be made on Community Adjustment Fund projects across the country. Approximately $350 million in 2009–10 funding has been committed. To date, almost 600 individual projects have begun.
• Fulfilling key Economic Action Plan commitments, the Federal Economic Development Agency for Southern Ontario and the Canadian Northern Economic Development Agency were launched in August by the Prime Minister.
• The Government has worked in cooperation with the Government of Ontario and the Government of the United States to provide unprecedented support to the automotive industry.
• In addition to the $170 million over two years provided in the Economic Action Plan to support the forestry sector, a $1-billion Pulp and Paper Green Transformation Program was announced that will support investments by this sector to improve energy efficiency and environmental performance.
• To date, the Government has provided approximately $40 million to 46 major Canadian events and festivals.
• Funding for shipbuilding initiatives in 2009–10 is fully committed and work has begun on 5 vessel life extensions, 22 vessel refits and the construction of 98 other small boats.
• All agricultural measures announced in the Economic Action Plan are in place:
  • The Canadian Agricultural Loans Act has received Royal Assent and loans are being granted.
  • The AgriFlexibility and Slaughter Improvement Programs have been launched and funding is expected to be committed this fall.
• In addition to these Economic Action Plan measures, the Government recently delivered a comprehensive restructuring plan for pork producers.

Introduction

Canada's Economic Action Plan provides approximately $14 billion to support adjustment and help create and protect jobs in regions, communities and industries of the Canadian economy that have been most affected by the severe downturn. This includes targeted support for traditional industries such as forestry and agriculture, and manufacturing, which play important roles in the economies of many communities. This support will help these industries invest in their long-term success and create new opportunities and jobs for Canadians in all areas of the country.

Canada's economy was built on a base of traditional industries that have provided employment and livelihoods for generations of Canadians. These industries, including agriculture, fishing and forestry, continue to represent important elements of our economy today, especially in rural and remote regions, providing jobs and supporting communities.

Manufacturing plays an equally important role in other parts of the country, employing thousands of Canadians and indirectly supporting many others through distribution, processing and retailing. Today, manufacturing continues to contribute to our economy by producing the goods that Canadians rely on and that enable us to successfully trade with other countries around the world.

Canadians are understandably concerned about the health of traditional industries and manufacturing. The Government has acted decisively to help these sectors bolster their competitiveness, so that they can take advantage of new opportunities and continue to be important contributors to job and wealth creation in Canada.

The Economic Action Plan provides support for jobs in industries most affected by the global recession. The Plan also provides assistance to communities affected by the economic downturn. Through the Economic Action Plan, nearly $12 billion in support is available in 2009–10 to create and sustain jobs in industries and communities affected by the global slowdown.

Support for Communities: The Government is helping vulnerable communities manage through the considerable transition caused by the global recession. The $1-billion Community Adjustment Fund is one such initiative, designed to help communities with fewer than 250,000 people deal with significant job losses and industrial restructuring.

The Government has fulfilled two important commitments made in the Economic Action Plan by creating two regional economic development agencies. The Federal Economic Development Agency for Southern Ontario was announced by the Prime Minister on August 13, 2009 in Kitchener-Waterloo, Ontario. The Canadian Northern Economic Development Agency was launched by the Prime Minister on August 18, 2009 in Iqaluit, Nunavut. The role of both agencies is to open up business opportunities and create jobs, while meeting the specific development needs of their respective regions. These agencies are also the delivery agents for federal Economic Action Plan initiatives including the Community Adjustment Fund and the Recreational Infrastructure Canada program.

Of the $206 million available to the Federal Economic Development Agency for Southern Ontario in 2009, strategic investments have been announced to support job creation in innovative firms in the region. Specifically, $27.5 million has been committed to the National Research Council Industrial Research Assistance Program to support research and development-intensive small and medium-sized enterprises in the region. Also, the Government has announced that it will invest $50 million in the Business Development Bank of Canada so businesses in southern Ontario will have greater access to venture capital.

The Government is also providing extensive support to affected industries, including the following:

Automotive Sector: The automotive industry has faced significant challenges over the past year. The governments of Canada and Ontario, working closely with the government of the United States, have taken significant steps to help the automotive industry overcome these challenges. These include:

• Jointly supporting the restructuring processes of Chrysler and General Motors through loans and debtor-in-possession financing.
  • Of the $3.7 billion committed to Chrysler, $2.9 billion has been disbursed to date. Chrysler emerged from bankruptcy on June 10, 2009. The governments of Canada and Ontario received 2 per cent equity in the restructured firm.
  • All of the $10.8 billion committed to General Motors has been disbursed. General Motors emerged from bankruptcy on July 10, 2009. Canada and Ontario received a combined 11.7 per cent ownership stake in a restructured General Motors, as well as US$403 million of preferred shares.
  • Both Chrysler and General Motors emerged from bankruptcy protection earlier than anticipated.
  • The Government of Canada has appointed a director to each of the boards of the restructured firms.
• Introducing the Canadian Warranty Commitment Program to sustain consumer confidence and help encourage the sale of new vehicles. This program was recently brought to a close as both General Motors and Chrysler have successfully emerged from bankruptcy protection.
• Expanding the accounts receivable insurance provided by Export Development Canada to support manufacturers and suppliers of automotive parts.

The Government is supporting all aspects of Canada's automotive industry, including parts manufacturing. The Government recently announced $54.8 million for Linamar Corp., a Canada-based parts maker, to help it develop green and fuel-efficient automotive powertrains. The repayable contribution will help lever up to $365 million in investments by Linamar by 2013. This support is being provided through the Automotive Innovation Fund, established in Budget 2008 with $250 million over five years to support large-scale, strategic research and development in the sector.

Canada's Economic Action Plan:
Working for Canadians

The Jobs Impact of the International Partnership to Support the Automotive Industry

The motor-vehicle industry, including both assembly and parts, is Canada's largest manufacturing industry, accounting for 10 per cent of manufacturing real gross domestic product and about 20 per cent of real merchandise exports in 2008. About 100,000 Canadians were directly employed in the motor-vehicle and parts manufacturing industries at the end of 2008. Of these workers, about 40,000 were employed in automotive assembly.

The automotive industry provides employment in a number of supporting industries. For every 10 direct jobs in auto assembly, there are:

• 5 jobs in the motor-vehicle parts industry.
• 7 jobs in other manufacturing industries, such as primary and fabricated metal products, plastics and rubber products, and machinery.
• 24 jobs in non-manufacturing sectors, such as engineering, accounting and legal services, financial services, wholesale trade, and transportation and warehousing.

General Motors and Chrysler account for close to 45 per cent of vehicles produced in Canada. Moreover, given the extreme interdependency of the auto supply chain, a shock to the supplier base caused by production disruptions at one of Canada's automakers would pose a systemic risk to continued operations of other automakers and suppliers in Canada.

As a result, the governments of Canada and Ontario worked together, in partnership with the Government of the United States, to support the auto sector. Combined support by Canadian governments, provided through loans and other instruments to General Motors and Chrysler, totalled about $14.6 billion.

Currently, General Motors and Chrysler plants directly employ about 14,000 workers. In addition, over 50,000 jobs in other industries are estimated to be tied to production at General Motors and Chrysler. Based on Statistics Canada's input-output model of the Canadian economy, the Department of Finance estimates that 52,000 jobs (all the assembly jobs and about three-quarters of the indirect jobs) are being protected by government action to support the automotive industry, of which 17,000 jobs had already been accounted for in Budget 2009 estimates. As a result of these actions to support the automotive sector and other adjustments to the Plan, it is now expected that the Economic Action Plan will create or maintain 220,000 jobs by the end of 2010, up from the estimate of about 190,000 jobs in Budget 2009.

Forestry: The global economic downturn and the collapse in the U.S. housing market have created challenges for the forestry sector. To date, a total of $70 million has been provided to Natural Resources Canada to support market diversification and innovation initiatives for the forestry sector, including research and demonstration projects on new forest products and initiatives to help forestry companies market innovative products internationally to protect and create jobs. This investment will be supplemented with a further $100 million next year.

In addition, since the release of the Action Plan, the Government has announced the creation of a $1-billion program to support environmental improvements for the pulp and paper industry. The Pulp and Paper Green Transformation Program will allow pulp and paper mills in all regions, particularly focused in British Columbia, Quebec and Ontario, to reduce greenhouse gas emissions while helping them become leaders in the production of renewable energy from biomass. This will position mills located in many communities to improve their competitiveness and create and sustain jobs.

Tourism: The Government has provided support to marquee events across Canada, such as the Charlottetown Festival, Stratford Shakespeare Festival, Calgary Folk Music Festival, Festival d'été de Québec, and Vancouver International Jazz Festival, in order to attract visitors and create jobs in the tourism sector. To date, the Government has committed $40 million to 46 major Canadian events and festivals. Another call for proposals is expected in the fall of 2009.

Our vast national parks represent a unique Canadian advantage and help attract a large number of visitors from abroad each year, generating significant economic activity and bringing our natural heritage closer to Canadians. The Economic Action Plan provides over $150 million over two years to Parks Canada to support upgrades and major capital repairs to national historic sites and visitor facilities in national parks. Parks Canada has fully committed the $70 million made available in 2009–10 to projects across the country. These important investments are helping to create economic stimulus and jobs now while ensuring that our parks continue to provide Canadians with peerless opportunities for enjoyment and learning.

Culture: The arts and cultural industries are also important economic engines, by providing employment and opportunities for Canadians. The Economic Action Plan invests over $335 million over two years in additional funding for several programs dedicated to culture and the arts, in recognition of the importance of artistic institutions and endeavours and the role they play in Canadians' lives. In 2009–10, $177 million in funds is available for arts and cultural industries.

In 2009–10, support is available for infrastructure-related costs for professionally run cultural and heritage institutions such as local theatres, libraries and small museums. Some $22 million for 2009–10 is committed for 53 cultural infrastructure projects in all regions.

The National Arts Training Contribution Program is providing nine projects with $5 million in 2009–10 to support the highest-calibre institutions in Canada to train the most talented emerging artists for professional careers.

Continued access by Canadians to 1,084 Canadian magazines and community newspapers will be facilitated through a $15-million investment. The first $5 million was provided in July with the remainder to flow by January.

In 2009–10, as a result of the $100 million in funding for the Canadian Television Fund, projects in partnership with the broadcasting industry will support the production of high-quality, distinctively Canadian television programs.

Another $14.3 million was confirmed for the Canada New Media Fund, which has been fully committed.

Mining: Canada's rich mineral resources represent significant economic opportunities. Promoting the exploration and development of these resources offers important benefits in terms of employment, investment and infrastructure, especially for rural and remote communities. Canada's Economic Action Plan supports mineral exploration activity and jobs across Canada by extending the temporary 15-per-cent Mineral Exploration Tax Credit to flow-through share agreements entered into during the period from April 1, 2009 to March 31, 2010.

The extension of the Mineral Exploration Tax Credit has been in effect since April 1, 2009. The legislation required to implement the extension received Royal Assent on March 12, 2009.

Agriculture: Canada's agricultural industry plays a unique role by providing healthy and nutritious foods for families in Canada and across the world while forming the economic basis for many small and rural communities in all regions of the country. The Economic Action Plan announced:

• A $500-million AgriFlexibility program to support initiatives that help the agricultural sector adapt to pressures and improve its competitiveness, such as those that reduce the farm business's costs of production and its footprint on the environment, support innovative processes and products, and address market challenges.
• $50 million to support investments in meat slaughter and processing plants to help improve their operations.
• Assistance to the agricultural sector in the form of expanded access to credit for farmers under the new Canadian Agricultural Loans Act, in order to allow them to grow their operations and to support the intergenerational transfer of farms.
• A commitment to work with interested provinces and territories toward the devolution of delivery of the AgriStability program to support improved client service.

The Government continues to make progress on the four new measures targeted to Canada's farm businesses outlined in the Economic Action Plan. All measures are in place and it is expected that funding will start to be committed to specific projects this fall.

In addition, the Government has recently demonstrated its ability to respond rapidly to new pressures facing the sector by delivering a comprehensive restructuring plan for pork producers. The plan includes investing $17 million in key marketing initiatives, providing government-backed credit to help viable operations weather the current economic uncertainty, and allocating $75 million to help struggling operations to transition out of the industry.

Small Business: Canada's many innovative small and medium-sized companies are an important economic engine, introducing new goods and services, developing new technologies and creating jobs for highly skilled young graduates.

To help our small businesses innovate, Budget 2009 provided $200 million in new resources over two years to the National Research Council's Industrial Research Assistance Program. The National Research Council has worked with small and medium-sized companies and has fully committed the $100 million in new resources available through the Economic Action Plan in 2009–10.

The Economic Action Plan provided $10 million over two years to the Canadian Youth Business Foundation to help young Canadians start their own business. Funding was provided to the foundation in June to enable it to begin supporting the entrepreneurs of tomorrow throughout Canada.

Shipbuilding: Canada's shipbuilding industry has been a mainstay of our history as a seafaring nation bounded by three oceans. The industry employs Canadians in over 150 establishments in Atlantic Canada, Quebec, Ontario and British Columbia. The shipbuilding sector is instrumental in providing the Canadian Coast Guard with the vessels needed to ensure the safety and security of our coasts and waterways. The Economic Action Plan has provided $175 million to the Canadian Coast Guard to purchase 98 new vessels and to repair and refit 40 existing vessels.

In 2009–10, $90 million is scheduled to be spent and good progress is being achieved. Funding for 2009–10 is now fully committed and work has begun on 5 vessel life extensions, 22 vessel refits and the construction of 98 other small boats. A further 40 contracts are expected to start this fiscal year, ensuring a steady workload for the industry.

Tax and Tariff Relief: In addition to supporting key industries, the Economic Action Plan includes permanent and temporary measures which build on broad-based tax reductions that are lowering the general corporate income tax rate from 22.12 per cent (including the corporate surtax) in 2007 to 15 per cent by 2012. These, in addition to other tax reductions introduced since 2006, will give Canada the lowest overall tax rate on new business investment in the G7 by 2010.

The Economic Action Plan is also helping Canadian firms create jobs, modernize their operations and better compete globally through the elimination of tariffs on a range of machinery and equipment, and through temporary measures to accelerate the capital cost allowance on manufacturing or processing machinery and equipment, and computers. Since the implementation of the Economic Action Plan, businesses have benefited from about $69 million in tariff relief on their imports of machinery and equipment from overseas.

The Government also followed through on its Economic Action Plan commitment to undertake consultations with Canadian businesses to provide additional tariff relief to support the economy. A notice to this effect has been published in the Canada Gazette on September 19, 2009, seeking the views of Canadians on the elimination of tariffs on manufacturing inputs and additional machinery and equipment.

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