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CME appreciates Federal Budget 2022 initiatives to strengthen supply chain


April 8, 2022  by Manufacturing AUTOMATION

The Canadian Manufacturers & Exporters (CME) shared its thoughts on the 2022 Federal Budget. The association appreciates the measures announced in the budget to encourage innovation and investment toward building efficient and resilient supply chains.

However, CME released a statement, noting its disappointment in the lack of sufficient measures to tackle labour shortage in Canadian manufacturing.

“The manufacturing sector faces two major challenges today that are hindering its ability to produce and sell products: supply chain disruptions and labour shortages,” said Dennis Darby, president and CEO of CME. “Today’s budget offers important and helpful measures to stimulate innovation and implement and promote long-term economic growth and ease supply chain issues, but it fails to address labour shortages. This is a miss.”

CME welcomed the several measures announced in the budget designed to improve Canada’s innovation and investment performance, including the creation of a Canadian Innovation and Investment Agency designed to help businesses make the investments needed to innovate and grow. The association noted that the agency’s mandate will need to be clear, agile and align with industry needs if the agency is to deliver on its mandate of improving investment growth in manufacturing.

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“Overall, Canada lags well behind other OECD countries in non-residential business investment, and this is leading to a deterioration in our international competitiveness. To ensure Canada’s future prosperity, we need to reverse these trends. But to do this, Canada needs to have the right levers in place to stimulate investment,” said Darby.

CME said that the government’s plan to cut taxes on small businesses is a positive move. It will ease the current phase-out rules related to the small business tax rate, with access to the lower rate fully phased out when taxable capital reaches $50 million, rather than at $15 million.

CME considers the establishment of a Canada Growth Fund noteworthy. The fund aims to attract private sector investment in new and traditional sectors, including manufacturing, as well as to support the restructuring of critical supply chains.

A 30 percent tax credit for investments in clean technology and a refundable tax credit for Carbon Capture, Utilization, and Storage (CCUS) will support manufacturers as they work to decarbonize their industrial processes. CME added that businesses should have access to the necessary technical support for this.

CME appreciated the federal government’s commitment to undertake a review of the Scientific Research and Experimental Development (SR&ED) program as well as to consider the suitability of adopting a patent box regime. CME added that since manufacturing constitutes a large share of Canada’s R&D expenditures, it is essential to consult the industry on proposed changes to the SRE&ED program.

A recent CME survey revealed that supply chains disruptions have had a significant impact on Canadian manufacturers, resulting in sales losses of more than $10.5 billion. Ninety percent of Canadian manufacturers say they are experiencing supply chain disruptions that are affecting their ability to produce and sell products. CME explained that strong policies are needed to help ease pandemic-strained supply chains and to prevent future disruptions.

“The measures announced in today’s budget are appreciated, but we must be able to deploy them quickly so that our companies see immediate improvement,” says Darby.

Specifically, the new measures announced today, such as the National Corridors Fund to Facilitate the Movement of Goods, the development of industry-led solutions to make supply chains more resilient, and the elimination of red tape to make supply chains more competitive could prove helpful, according to CME.

CME was disappointed that the government’s budget did not offer any substantial measures to address ongoing and acute labour shortages in manufacturing, even though the sector is currently facing a record-high 81,000 job vacancies.

CME welcomed the changes to the Temporary Foreign Worker Program announced earlier this week, but more solutions were expected in today’s budget. While the budget recalls investments made to support the processing of immigration applications, processing times remain too long.

“CME will continue to work with the federal government on our mutual goal of creating a more competitive, greener, innovative, inclusive, and resilient manufacturing sector. Budget 2022 is a step in the right direction, but more work still needs to be done,” concluded Darby.


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