SASKATCHEWAN CHAMBER OF COMMERCE RESPONSE TO PROVINCIAL BUDGET 2018-19April 11, 2018
In Budget 2018-19, the Government of Saskatchewan announced that the current PST exemption aimed at ENERGY STAR certified appliances, like refrigerators, freezers, dishwashers, clothes washers, heaters, boilers, and heat pumps will expire effective April 11, 2018. The rationale offered by the Government of Saskatchewan was that ENERGY STAR certified appliances are now commonplace in the household appliance market and the PST exemption offered was no longer necessary to encourage the desired consumer behaviour.
Even though the Government of Saskatchewan has chosen to wind down the PST exemption available for ENERGY STAR certified appliances, the Saskatchewan Chamber of Commerce strongly encourages the provincial government to continue looking for new ways to move forward on promoting energy efficiency in the province. The Chamber encourages the Government of Saskatchewan to carefully consider each of the recommendations outlined in the Chamber’s own Energy Efficiency Strategy released in 2017.
While not specifically addressed in Budget 2018-19, the provincial government through its recently proposed Made-in-Saskatchewan Climate Change Strategy has expressed interest in the idea of renovating government-owned buildings to make them more energy efficient above and beyond the energy performance requirements outlined in the 2015 National Building Code.
Given the excess capacity currently experienced in the province’s construction industry, along with the excess capacity experienced in the building trades, this could be a unique opportunity to simultaneously reduce unemployment, realize substantial savings on energy costs in the public sector, and smooth out the ebbs and flows of the business cycle.
One area of concern for the SCC and its members is the provincial government’s decreasing levels of capital investment in Saskatchewan over the next few years.
While the Chamber cautions the government against spending money on new projects just for the sake of maintaining investment levels, it is important for Saskatchewan businesses, particularly those involved with providing construction products and services, to continue finding opportunities to do work in the province.
The SaskBuilds capital investment plan was at its peak in 2016-17 with approximately $1.757 billion being spent on projects in Saskatchewan, but that amount is quickly declining as those large projects wind down, with only $746 million expected to be spent by SaskBuilds in 2020-21. It should be noted that a large portion of that spending is focused on transportation-related projects.
Since there are numerous large projects that have been waiting on the sidelines for numerous years, including the Upper Qu’Appelle Water Supply Project, various large irrigation projects, northern infrastructure and numerous others, the SCC encourages the provincial government to explore new funding partnerships with the Private sector and the Government of Canada to get some of these projects underway. By starting some of these projects soon, they will be help to fill the construction void that is created when current P3 projects in Saskatchewan are completed over the next few years.
Also on the topic of capital investments, the new value-added Agriculture Incentive is another item in the 2018-19 Budget that caught the SCC’s attention.
This incentive will provide a non-refundable corporate income tax credit equal to 15 percent when a company makes a capital investment of at least $10 million relating to new or expanded production capacity in value-added agricultural facilities.
If enough value-added agriculture projects are undertaken as a result of this new incentive, it could help to keep capital investment in Saskatchewan flowing as new projects are identified, approved, and started.
One final item in the 2018-19 Budget that the SCC believes has a lot of potential, is a new tax credit for equity investments made into technology companies that are located in Saskatchewan. This is something that the Chamber, other organizations, and investors have been wanting for years (usually under the name of an Angel Investor Tax Credit), so this credit has the potential to be quite important for the future of Saskatchewan’s technology sector.
Other jurisdictions in Canada have already had similar tax credits for years, so it will be nice to have this new tool with which to attract technology companies to Saskatchewan and/or encourage the creation of new technology companies here.
In coming months, the SCC and other Chambers throughout the province will help to promote both of these new incentives to ensure awareness of them remains high. Overall, Budget 2018/19 was a positive one. It serves the public interest, allows money to flow back into education and still maintains a tight rein on overall spending. These measures, along with a clear commitment to a balanced budget in 2019/20 means the business community should support this Budget.