Manufacturing industry says there’s opportunities, but room for improvement in new federal budget – CBC

Federal Budget Analysis: Implications for Sustainable Industrial and Economic Development

Overview of Budgetary Allocations and Alignment with SDG 9

The recent federal budget outlines significant investments in defence and infrastructure, presenting opportunities to advance Canada’s commitment to Sustainable Development Goal 9: Industry, Innovation, and Infrastructure. These allocations are designed to build resilient infrastructure and promote inclusive and sustainable industrialization. Key funding packages include:

• An $81 billion funding package for the Canadian Armed Forces.
• A $51 billion national infrastructure program.
• $6.6 billion over five years for the defence industry, including the creation of a Defence Investment Agency.

Further supporting SDG 9, the budget introduces measures to foster innovation, such as a “productivity super-deduction” allowing businesses to write off capital investments in the first year, alongside tax incentives for research and development.

Industry Perspectives on Economic Growth and Decent Work (SDG 8)

Industry leaders have responded to the budget with a focus on its potential to foster Decent Work and Economic Growth (SDG 8), while highlighting areas requiring further detail and commitment for sustainable impact.

1. Canadian Tooling and Machining Association: President Louis Jahn noted opportunities for economic diversification by pivoting towards the energy and defence sectors. This shift supports the creation of resilient and diversified industrial bases, a key component of SDG 8.
2. Automotive Parts Manufacturers’ Association: President Flavio Volpe cautioned that the scale of defence contracts is limited compared to the automotive sector. This suggests that while diversification contributes to economic resilience, its impact on sustained, large-scale employment under SDG 8 may be constrained.
3. Molded Precision Components: Owner David Yeaman identified the accelerated depreciation of capital equipment as a positive measure. This policy is expected to stimulate reinvestment in new, more efficient equipment, thereby enhancing productivity and supporting the goal of sustainable economic growth.

Promoting Sustainable Procurement and Local Economies (SDG 12 & SDG 11)

A critical component of the budget’s potential impact on sustainable development lies in its procurement strategies and support for local economies.

• Sustainable Public Procurement (SDG 12): The call from industry representatives for mandated Canadian procurement requirements within defence spending aligns directly with SDG 12 (Responsible Consumption and Production). A “buy-Canadian” program promotes sustainable public procurement practices that support local industries and shorten supply chains.
• Resilient and Sustainable Communities (SDG 11): The Sarnia-Lambton Chamber of Commerce views the infrastructure investments as having great potential to strengthen the region’s role as a gateway to global markets. This investment supports SDG 11 (Sustainable Cities and Communities) by enhancing trade infrastructure, which is vital for the economic resilience and sustainability of border communities.

Challenges and Opportunities for Transformative Change

Despite positive elements, stakeholders have identified challenges to achieving transformative progress towards the Sustainable Development Goals.

• Need for Bold Policy: Goldy Hyder of the Business Council of Canada stated that while extending existing tax measures is helpful, it is not transformational. A bolder approach is needed to attract the capital required for large-scale investment in sustainable innovation and infrastructure (SDG 9).
• Regulatory Barriers: Hyder also highlighted that regulatory challenges remain a significant impediment to investment in Canada, hindering progress towards robust and inclusive economic growth (SDG 8).
• Direct Fiscal Support: David Yeaman suggested that a direct reduction in corporate taxes would be more effective in encouraging reinvestment. This would provide companies with the capital needed to upgrade to greener technologies and more sustainable production methods, advancing both SDG 9 and SDG 12.

SDGs Addressed in the Article

• SDG 9: Industry, Innovation and Infrastructure

  The article heavily focuses on government investment in infrastructure and support for the domestic manufacturing industry. The budget allocates significant funds for a national infrastructure program and for the defence industry, including a “buy-Canadian” procurement policy. It also discusses tax incentives for capital investment and research and development, all of which are central to building resilient infrastructure, promoting sustainable industrialization, and fostering innovation.

• SDG 8: Decent Work and Economic Growth

  The article discusses measures aimed at stimulating economic activity and improving business productivity. The introduction of tax incentives like the “productivity super-deduction” and accelerated depreciation for capital equipment is intended to encourage investment, which is a key driver of economic growth. The concerns raised by industry representatives about the need for more “transformational” policies to attract capital also relate directly to fostering sustained economic growth.

Specific SDG Targets Identified

SDG 9: Industry, Innovation and Infrastructure

• Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all.

  The article explicitly mentions the budget includes a “$51-billion infrastructure program.” The Sarnia-Lambton Chamber of Commerce’s optimism about strengthening its role as a “gateway to the U.S. and global markets” through infrastructure and trade highlights the importance of this investment for economic development and connectivity.

• Target 9.2: Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries.

  The budget’s focus on supporting manufacturers through defence spending and procurement policies directly addresses this target. The article notes an “$81-billion funding package for the Canadian Armed Forces, including a buy-Canadian procurement program,” and “$6.6 billion over five years for the defence industry.” The call from industry representatives for “Canadian procurement requirements” underscores the goal of using government spending to bolster domestic industry.

• Target 9.5: Enhance scientific research, upgrade the technological capabilities of industrial sectors in all countries, in particular developing countries, including, by 2030, encouraging innovation and substantially increasing the number of research and development workers per 1 million people and public and private research and development spending.

  The article states that the budget includes “tax incentives for research and development.” This measure is a direct policy tool to encourage private sector R&D spending and foster innovation within the manufacturing industry.

SDG 8: Decent Work and Economic Growth

• Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors.

  The budget introduces measures to “help businesses write down capital investments,” such as the “productivity super-deduction” and “accelerated depreciation of capital equipment.” As one business owner noted, this will help with “reinvestments in new equipment which is needed right now.” These policies are designed to spur investment in modern technology, thereby boosting economic productivity.

Indicators for Measuring Progress

• Indicators for SDG 9

  • Government investment in infrastructure: The article explicitly provides a financial figure that can be used as an indicator: the “$51-billion infrastructure program.” Progress can be measured by the allocation and disbursement of these funds.
  • Government investment in domestic industry: The article mentions specific funding packages that serve as indicators: the “$81-billion funding package for the Canadian Armed Forces” and “$6.6 billion over five years for the defence industry.”
  • Policies supporting domestic procurement: The implementation of the “buy-Canadian procurement program” is a key policy indicator. Its effectiveness could be measured by the proportion of government contracts awarded to domestic firms.
  • Incentives for R&D and innovation: The provision of “tax incentives for research and development” is a direct indicator. The uptake of these incentives and the resulting private sector R&D expenditure would be metrics for progress.

• Indicators for SDG 8

  • Incentives for capital investment: The article identifies specific policy measures that act as indicators, such as the “productivity super-deduction” and “accelerated depreciation of capital equipment.” The value of capital investments written off under these programs would be a quantifiable measure of their impact.

Summary Table of SDGs, Targets, and Indicators

Source: cbc.ca