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Archived - Supporting Industries and Communities

Highlights

• Solid progress continues to be made on Community Adjustment Fund projects across the country. About $460 million in funding has been committed in 2009–10. To date, 728 individual projects have begun.
• The Federal Economic Development Agency for Southern Ontario has already committed over 60 per cent of the $206 million in funding allocated for 2009–10.
• A $1-billion Pulp and Paper Green Transformation Program was created to improve energy efficiency and environmental performance in the forestry sector. This is in addition to the $170 million over two years provided for market diversification and innovation in the forestry sector as part of the Economic Action Plan.
• To date, the Government has provided about $44 million to 56 major Canadian events and festivals across Canada.
• The shipbuilding initiative is progressing well. Three vessel life extensions are underway at Canadian shipyards and contracts for repair and refit work on 25 vessels have been issued. Five small boats have been built and delivered to the Canadian Coast Guard base in Victoria, British Columbia.
• Progress has been achieved on the agricultural Economic Action Plan measures as the Government makes funding available to the sector. In addition, the federal-provincial cost-shared Business Risk Management programs continue to provide significant financial support to the agricultural sector during the economic downturn, with $2 billion flowing to the benefit of producers to date for the 2008 and 2009 program years.

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.

Table 2.11
Supporting Industries and Communities

	2008–09	2009–10	2010–11	Total
	(millions of dollars)
Support for Industries
Forestry		70	100	170
Agriculture		85	140	225
Mineral exploration		70	-15	55
Small businesses		170	195	365
Tourism		70	70	140
Shipbuilding		19	30	49
Culture		177	158	335
Tax and tariff relief
Accelerated capital cost allowance for computers		340	355	695
Tariff relief on machinery and equipment	12	76	81	169
Subtotal—Support for Industries	12	1,077	1,114	2,203
Support for Communities
Helping all regions prosper		774	746	1,520
Strengthening partnerships with Aboriginal Canadians		115	183	297
Subtotal—Support for Communities		888	929	1,817
Total—Supporting Industries and Communities	12	1,965	2,043	4,020
Stimulus value		2,106	2,178	4,284
Federal support to auto sector		9,718		9,718
Ontario component of auto sector support		4,859		4,859
Total stimulus value		16,683	2,178	18,861
Notes: Totals may not add due to rounding. This table represents the fiscal cost of measures taken in the Economic Action Plan. For some measures, a fiscal cost accrues in 2008–09. The stimulus value reflects projected cash expenditures. The budgetary impact may differ because some of these expenditures relate to construction and renovation costs of federal assets (for which only depreciation is recorded on a budgetary basis) and loans to third parties (where there is a budgetary impact only in the event that there is a risk of loss).

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 through initiatives such as the $1-billion Community Adjustment Fund. This Fund is 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 (FedDev Ontario) was announced by the Prime Minister on August 13, 2009 in Kitchener-Waterloo, Ontario. The Canadian Northern Economic Development Agency (CanNor) 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 FedDev 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's 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.

Since the launch of CanNor, the agency has prioritized the delivery of programs, including the territorial components of the Community Adjustment Fund and Recreational Infrastructure Canada, as well as the Strategic Investments in Northern Economic Development program and a number of Aboriginal economic development programs. Other priorities include establishing the Iqaluit headquarters of the agency, hiring and training additional staff and setting up operations for the Northern Projects Management Office in Yellowknife, Northwest Territories, to coordinate the work of federal regulatory departments and agencies on resource projects in the territories.

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 by Canada and Ontario, $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 by Canada and Ontario 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 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 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.

These actions have helped to save jobs in hard-hit communities. Based on Statistics Canada's input-output model of the Canadian economy, the Department of Finance Canada estimates that 52,000 jobs (all the assembly jobs and about three-quarters of the indirect jobs that are tied to automobile assembly) are being protected by government action to support the automotive industry.

The Government has also provided support to Canada's automotive parts manufacturing industry. On September 21, 2009, the Government announced a contribution $54.8 million for Linamar Corp. for the development of green and fuel-efficient automotive powertrains. The repayable contribution will lever up to $365 million in investment 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.

Forestry: The global economic downturn and the collapse in the U.S. housing market have created challenges for the forestry sector. Under the Economic Action Plan, Natural Resources Canada is making $70 million available in 2009–10 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.

Since the release of the Economic 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. These actions are in addition to the substantial financial support provided to the forestry sector by Export Development Canada (see box below).

Tourism: The Government has provided support to marquee events across Canada, such as Prince Edward Island's Old Home Week, the Royal Agricultural Winter Fair in Toronto, the 2009 and 2010 Grey Cup Championship Games and Festivals in Calgary and Edmonton respectively, the Gatineau Hot Air Balloon Festival, and the Vancouver International Film Festival, in order to attract visitors and create jobs in the tourism sector. To date, the Government has committed $44.4 million to 56 major Canadian events and festivals.

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. Canada's Economic Action Plan provides Parks Canada with $150 million over two years to upgrade facilities, including visitor centres and campgrounds, as well as roads at National Parks and National Historic Sites throughout the country. Over 120 projects valued at $70 million have begun this year. These include recently completed road improvement activities in Banff National Park, and a two-year, $14-million project to restore the Cabot Trail in Cape Breton Highlands National Park. 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. $48 million for 2009–10 and 2010–11 is committed for 80 cultural infrastructure projects in all regions. Funding committed for 2009–10 totals $25 million.

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 more than 1,000 Canadian magazines and community newspapers will be facilitated through a $15-million investment.

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.

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 food 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 Government continues to make progress on the four new initiatives announced under the Economic Action Plan to support Canada's farm and agricultural businesses. All authorities are in place and progress was made this fall to make funds available to the sector.

Several major initiatives were launched under the five-year, $500-million AgriFlexibility program, which aims to help the agricultural sector adapt to pressures and improve its competitiveness. The Government continues to receive and evaluate new industry and provincial/territorial proposals, and it has already approved a number of multi-year AgriFlexibility initiatives and projects totalling $140 million.

Two rounds of applications closed this fall for funding under the three-year, $50-million Slaughter Improvement Program, which supports investments in meat slaughter and processing plants to help improve their operations. The Government is now approving projects that will be undertaken this year through to the end of the 2011–12 fiscal year.

The legislative changes that created the new Canadian Agricultural Loans Act had a measurable impact on the amount of credit available to the sector, providing 61 per cent more loans issued compared to the same period last year.

The Government is also on track with its timelines for transferring the delivery of AgriStability to British Columbia and Saskatchewan.

In addition to the Economic Action Plan measures, the Government is providing assistance to help the agricultural sector weather the economic downturn and be more profitable over the long term:

• Significant support to agricultural producers for farm losses due to circumstances beyond their control through existing Business Risk Management programs. Over $2 billion has flowed to the benefit of producers through these federal-provincial cost-shared programs to date for the 2008 and 2009 program years.
• Recognizing the importance of sustaining the long-term competitiveness of the sector, new initiatives under AgriFlexibility are supported by complementary programs launched in 2009. For example, the Canadian Agricultural Adaptation Program is making $163 million available over five years to assist producers to respond to emerging challenges and promote innovation, and the Growing Canadian Agri-Innovations Program will invest $158 million over five years to support industry-led innovation initiatives.
• Investments of $75 million to improve food safety by taking steps to improve Canada's ability to prevent, detect and respond to future food-borne illness outbreaks and act on all 57 recommendations made by Independent Investigator Sheila Weatherill.
• New measures to assist the hog sector, which faced difficult challenges over the past three years, are now in place.
  • Lenders are issuing loans to producers under the Hog Industry Loan Loss Reserve Program, which addresses short-term liquidity needs of viable hog operations through government-guaranteed long-term loans.
  • The first tendering process under the Hog Farm Transition Program was held on November 4th for close to $11 million in funding to assist producers transition out of the hog industry and cease hog production for at least three years. The next tendering process will be held in December.

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 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 fully committed the $100 million in new resources available through the Economic Action Plan in 2009–10. An additional $27.5 million was provided to the Industrial Research Assistance Program by FedDev Ontario to support research and development–intensive small and medium-sized enterprises in southern Ontario.

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, the Northwest Territories 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 boats and to repair and refit 40 existing large vessels. 94 per cent of 2009–10 funding has been committed and work has begun on numerous projects.

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 in 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 $88 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 was 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. The Government is currently reviewing the various submissions it received as part of these consultations and is studying what future steps it will take. In addition, the Government is consulting on a proposal to waive the tariff on certain imported ships to reduce costs for industry and help modernize Canada's shipping infrastructure. These consultations are scheduled to end on December 11, 2009.

Table 2.12
Supporting Industries and Communities

	2009–10 Stimulus Value	Authorities in Place	Stimulus Committed
	(millions of dollars)		(millions of dollars)
Support for Industries
Autos
Support for the auto sector	9,718	Yes	9,718
Forestry
Forestry marketing and innovation	70	Yes	58
Agriculture
Agricultural flexibility program	65	Yes	9
Strengthen slaughterhouse capacity	20	Yes	6
Amendments to Farm Improvement and Marketing Cooperatives Loans Act	–	Yes	–
Mining
Extending the Mineral Exploration Tax Credit	70	Yes	70
Small Business
Reducing taxes for small businesses	45	Yes	45
Industrial Research Assistance Program	100	Yes	100
Canadian Youth Business Foundation	10	Yes	10
Canada Business Networks	15	Yes	15
Tourism
Canadian Tourism Commission	20	Yes	20
Marquee tourism events	50	Yes	44
Parks Canada	70	Yes	70
Shipbuilding
Shipbuilding	90	Yes	85
Culture
Cultural infrastructure	30	Yes	25
Canada Prizes for the Arts and Creativity	25	No	–
National Arts Training Contribution Program	7	Yes	5
Community newspapers and magazines	15	Yes	15
Canadian Television Fund	100	Yes	100
Tax and Tariff Relief
Temporary 100-per-cent capital cost allowance (CCA) rate for computers	340	Yes	340
Temporary accelerated CCA rate for manufacturing or processing machinery and equipment	–	Yes	–
Tariff relief on machinery and equipment	76	Yes	76
Support for Communities
Helping All Regions Prosper
Community Adjustment Fund	500	Yes	461
Federal Economic Development Agency for Southern Ontario	206	Yes	131
Eastern Ontario Development Program	10	Yes	10
Strengthening economic development in the North	10	Yes	8
Strategic Investments in Northern Economic Development	10	Yes	5
Promoting energy development in Canada's North	38	Yes	38
Strengthening Partnerships With Aboriginal Canadians
First Nations and Inuit health programs	108	Yes	108
First Nations child and family services	7	Yes	7
Total	11,824		11,579

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