April 8, 2022
Regina, SK – The Government of Canada’s 2022-23 Budget, which was released yesterday, contains several important items for Saskatchewan businesses. This year’s budget did not introduce any COVID-19 support programs; coupling this with the strengthening of Canada’s economy has dropped the deficit from past projections, with the 2022-23 deficit estimated at $52.8 billion. While a balanced budget is still out of sight, the deficit is projected to decline each year, reaching $8.4 billion by 2026-27.
One of the Saskatchewan Chamber’s largest efforts with the federal government over the past year has been advocating for the return of the carbon tax proceeds to Saskatchewan small and medium-sized businesses through the Climate Action Incentive Fund (CAIF).
“The Saskatchewan Chamber was pleased the budget again recognized the federal government’s obligation to return the carbon tax promised to small and medium-sized businesses, and we are optimistic that after several years, businesses will actually start to see this money this year,” noted Saskatchewan Chamber of Commerce Acting CEO Elissa LaLiberte. “However, we are disappointed. We had specifically requested that CAIF funding eligibility go beyond support to emission-intensive, trade-exposed (EITE) small and medium-sized enterprises. While we fully support the EITE sector being prioritized, we believe it would be best to offer broader supports, with more streams and more businesses having an opportunity to get involved. This would help Saskatchewan fully and promptly utilize the CAIF dollars and introduce greater environmental benefits.”
On the environmental file, the membership of the Saskatchewan Chamber is particularly pleased that the 2022-23 Budget dedicates some federal resources to continuing the opportunity to develop small modular reactors (SMRs).
“The Chamber has been critical of the federal government’s decision to specifically exclude nuclear power in the Green Bond Framework,” continued LaLiberte. “Saskatchewan will not achieve net-zero and meet our growing energy demand without an increasingly diverse mix of generation, including nuclear SMRs. While there is always a hope for more, we are pleased that Budget 2022-23 recognized the potential of SMRs and allocated funds to continue to support their advancement. (1)
The federal government’s ambitious climate change agenda continues to represent significant budget costs. The Saskatchewan Chamber supports the refundable investment tax credit for businesses that incur eligible carbon capture, utilization and storage (CCUS) expenses but, again, believes the federal government fell short of making a program that would work for Saskatchewan.
“By making enhanced oil recovery an ineligible use of the CO2, the federal government is cutting off opportunities for Saskatchewan and sustainable energy production. Even with the escalating carbon tax, investing in CCUS is difficult and adding enhanced oil recovery would help the math make sense while putting more environmentally conscious oil and gas into the market,” elaborated LaLiberte. (2)
Beyond the environment and carbon tax areas, there were other positive elements for Saskatchewan business in the budget. The Saskatchewan Chamber is pleased the federal government is recognizing the labour struggles facing businesses and anticipates that the $4,000 deduction for tradespeople for temporary relocation expenses will hopefully help attract people to the opportunities in Saskatchewan. The Critical Mineral Exploration Tax Credit will also help build Saskatchewan’s budding rare earth mining sector.
Finally, the Saskatchewan Chamber was pleased to see a continuation and strengthening of the investment in the universal broadband fund to enhance internet connectivity in the country – something Saskatchewan’s rural communities have noted they urgently need.
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The Saskatchewan Chamber of Commerce is the Voice of Saskatchewan Business and represents the interests of over 10,000 individual businesses, industry associations, and local chambers across the province through its chamber network. For more information on Chamber activities and advocacy efforts, visit saskchamber.com or @SaskChamber on Facebook, Twitter, Instagram, and LinkedIn.
Contact:
Elissa LaLiberte
Acting CEO
Saskatchewan Chamber of Commerce
306-781-3128
elaliberte@saskchamber.com
Laurèn Neumann
Director of Marketing & Communications
Saskatchewan Chamber of Commerce
306-781-3126
lneumann@saskchamber.com
(1) Budget 2022 proposes to provide $120.6 million over five years, starting in 2022-23, and $0.5 million ongoing, as follows:
· $69.9 million for Natural Resources Canada to undertake research to minimize waste generated from these reactors; support the creation of a fuel supply chain; strengthen international nuclear cooperation agreements; and enhance domestic safety and security policies and practices; and,
· $50.7 million, and $0.5 million ongoing, for the Canadian Nuclear Safety Commission to build the capacity to regulate small modular reactors and work with international partners on global regulatory harmonization
(2) Budget 2022 proposes a refundable investment tax credit for businesses that incur eligible CCUS expenses, starting in 2022. The investment tax credit would be available to CCUS projects to the extent that they
permanently store captured CO2 through an eligible use. Eligible CO2 uses include dedicated geological storage and storage of CO2 in concrete but does not include enhanced oil recovery.
From 2022 through 2030, the investment tax credit rates would be set at:
• 60 per cent for investment in equipment to capture CO2 in direct air capture projects;
• 50 per cent for investment in equipment to capture CO2 in all other CCUS projects; and
• 37.5 per cent for investment in equipment for transportation, storage and use.
To encourage the industry to move quickly to lower emissions, these rates will be reduced by 50 per cent for the period from 2031 through 2040.