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How Budget 2010 Affects Engineers

Good news:
$19 billion in Stimulus Spending Remains until March 31, 2011

Bad news:
Stimulus Spending Will End on March 31, 2011

The Honourable James Flaherty, Minister of Finance

The Government of Canada released its Federal Budget 2010: Leading the Way on Jobs and Growth today at 4:00PM EST.  As suspected, there were few surprises. The government remains committed to deliver the remaining stimulus money before March 31, 2011.

The government intends to balance the budget by 2015. Expenditures are expected to decrease significantly as the stimulus spending winds down and departmental budgets experience a freeze, meanwhile, it is presumed that revenues will increase as the economy recovers.

In addition to the current stimulus package, there is some limited new infrastructure investments. The industry may also have opportunities under some environmental initiatives announced in the budget. The budget is expected to be positive for the manufacturing and resource sectors, potentially resulting in additional work for the consulting engineering sector. There are also more opportunities to access research assistance.

Infrastructure spending post March 31, 2011 will likely be comparable to pre-stimulus levels.

New Infrastructure Money:

• Additional $175 million over two years to help renew the Marine Atlantic Fleet and Shore Facilities.
• Transport Canada will receive $10 million over three years to support legal, financial and technical work on the Windsor/Detroit Border Crossing.
• Jacques-Cartier and Champlain Bridges Incorporated will receive $55.5 million over two years to carry out capital expenditures to maintain the safety of its bridges in the Montreal area.
• $179 million First Nations Water and Wastewater Action Plan has been extended for two more years.

Environmental Measures:

• Clean energy generation will continue to receive tax relief through the Capital Cost Allowance (CCA) program. The budget expands the eligibility for this program.
• The Government will establish the Next Generation Renewable Power Initiative allocating $100 million over 4 years to promote clean energy technologies in the forestry sector.
• The Government will take steps to further improve the regulatory review process for large energy projects.  Responsibility for conducting environmental assessments for energy projects will be delegated from the Canadian Environment Assessment Agency to the National Energy Board and the Canadian Nuclear Safety Commission.
• Great Lakes Action Plan: Budget provides as additional $8 million per year to Environment Canada to continue to implement its action plan to protect the great lakes.

Taxation:

• This year, Canada will have the lowest overall tax rate on new business investment in the G7.
• By 2012, Canada will have the lowest statutory corporate income tax rate in the G7.
• Canada will become a tariff-free zone for industrial manufacturers which will provide $300 million annual savings on import duties.
• Temporary 15% Mineral Exploration Tax Credit will be extended for an additional year to March 31, 2011 providing the Mineral Exploration Sector $65 million over two years in tax relief.

Financial Restraint:

• Increases to Defence spending will be $525 million less than previously planned for 2012/2013; and $1 billion less than planned beginning in 2013/14. The current budget is $18 billion.
• Government Departmental Spending: In 2011/2012 and 2012/2013 will be frozen at 2010/2011 levels (excluding stimulus funds). The government expects that crown corporations and other agencies will follow suit.
• Strategic Reviews to Identify Opportunities for Savings: Government departments are in the process of undertaking strategic reviews to identify 5% of the lowest priority and lowest performing programs. A comprehensive review of government administrative functions and overhead costs will be taken to identify further opportunities for savings and improved service delivery.
• Government will also continue its corporate assets management review.

Reducing Red Tape:

• Government intends to create a Red Tape Reduction Commission with both parliamentarians and private sector representatives. The goal is to review federal regulations where reform is most needed to reduce the compliance burden and provide specific recommendations.
• Government will establish an advisory committee of small business and entrepreneurship to provide advice on improving business access to federal programs and information.

Other new money:

• $18 million over 5 years to INAC to commence the pre-construction design phase of the Canadian High Arctic Research Station.
• $13 million for NSERC to foster closer collaboration between NSERC and private sector partners.
• $15 million per year for the College and Community Innovation Program, which enables applied research collaborations between colleges and local firms.
• $135 million over the next two years for National Research Council’s Regional Innovation Clusters Program – designed to bring academia, government and business together.
• $40 million over two years to support up to 20 demonstration projects for a newly launched Small and Medium Sized Enterprise Innovation Commercialization Program – a two year pilot initiative.
• INAC will receive $11 million over two years to accelerate the review of resources projects in the North.

Foreign Aid:

• Although Canada will provide a further $800 million in foreign aid on top of its current commitments, this aid will continue to be distributed through outside agencies such as the IMF and will continue to be untied to Canadian firms.

This is a preliminary review of the Federal Budget by ACEC staff. We refer you to the budget links below for additional information and details on the budget. ACEC and its staff will continue to monitor the Federal Budget and its implications for the industry of consulting engineering.