BUDGET 2021: Short-term help, long-term investment, record deficits

Budget 2021 Analysis

Federal Budget 2021 reaffirms the Liberal government’s current approach to addressing the pandemic and economic recovery with significant investments that signal continued economic intervention. It is a response to the ongoing COVID-19 crisis as well as a path forward for economic recovery, and one of the largest increases to the national deficit since the Great Depression. Through the addition of billions in spending, it has a focus on the “care economy” and those who have been hardest hit by the pandemic-induced recession. Notable investments include spending for national childcare, climate action, green recovery, long-term care, youth employment, skills development, business supports, housing and Indigenous communities. 
To ensure the continuity of businesses, Budget 2021 extends several relief programs for both employers and individuals. These include the extension of the Canada Emergency Wage Subsidy, Canada Emergency Rent Subsidy, Lockdown Support and Canada Recovery Benefit. With the rapid launch and successful rollout of these programs, the government is looking to continued support of business through the end of the pandemic. 

To address economic recovery, the government has “one million jobs by the end of the year,” a signature feature of their strategy. While the budget does not lay out a direct path to creating these jobs, many of the investments signal a desire to engage the private sector and get Canadians back to work. The spending allocated to the development of skills, training and trades, and youth employment could be utilized by member firms. Additionally, investments in large-scale infrastructure projects such as the Permanent Public Transit Fund and the Broadband Fund present strong opportunities for our industry to play a continued role in nation-building projects. 

While climate action is a primary theme throughout, Budget 2021 also demonstrates the government’s understanding that the natural resources sector has a strong role to play in transitioning Canada to a low carbon economy. Significant investments to expand the natural resources sector include critical mineral processing and refining, carbon capture technology, and water and irrigation infrastructure. ACEC-Canada will continue to advocate for our members who work in this sector and share our industry expertise in developing sustainable, core infrastructure in partnership with the federal government.

Infrastructure was not a centrepiece of this budget, however, there are many investments to spur national infrastructure development across Canada. They include funding to support the first National Infrastructure Assessment, a one-time investment to address infrastructure priorities in municipalities and First Nations communities through the federal Gas Tax Fund, and a doubling of the federal government’s regular funding for municipalities and First Nations communities in 2020-21 through the Gas Tax Fund to be renamed the Canada Community-Building Fund. The federal government also proposes recapitalizing the National Trade Corridors Fund over the next four years to develop transport-related projects. These projects lend hope to the possibility of a national right-of-way to enhance both domestic and international trade. 

ACEC-Canada looks forward to continuing to work with government to shape the initiatives announced in Budget 2021, while also advocating that the government balance infrastructure spending appropriately between transformational projects and core infrastructure for the economic recovery ahead. 

Budget 2021 Overview

Minister of Finance Chrystia Freeland tabled the government’s first budget in over two years. This long-awaited budget is one of the most important in recent history as many sectors of the economy continue to be impacted of COVID-19. Budget 2021, which could double as a re-election pitch for the Liberals, provides the government’s roadmap to Canada’s economic recovery post-crisis and a plan to build a stronger and greener economy. Themes recurring throughout the budget include support for the hardest-hit sectors, investments in green energy, and support for those who have been disproportionately impacted by COVID-19.
What Budget 2021 Means for our Industry
Selected highlights of the 2021 Federal Budget relevant to the ACEC-Canada membership:
Permanent Public Transit Fund
$14.9 billion over eight years, starting in 2021-22, for public transit projects across Canada. Including new permanent funding of $3 billion per year for communities across Canada, beginning in 2026-27.
o New subway lines
o Light-rail transit, streetcars and electric buses
o Active transportation infrastructure
o Improved rural transit
 Canada Community-Building Fund
One-time investment of $2.2 billion to address infrastructure priorities in municipalities and First Nations communities through the federal Gas Tax Fund
Doubling the federal government’s regular funding for municipalities and First Nations communities in 2020-21 through the Gas Tax Fund to be renamed the Canada Community-Building Fund
National Infrastructure Assessment
$22.6 million over four years, starting in 2021-22, to Infrastructure Canada to conduct Canada’s first ever National Infrastructure Assessment. The assessment would help identify needs and priorities for Canada’s built environment
 National Trade Corridors
$1.9 billion over four years, starting in 2021-22, to recapitalize the National Trade Corridors Fund. This funding could attract approximately $2.7 billion from private and other public sector partners, resulting in total investments of $4.6 billion
15 % would be dedicated to building and improving transportation networks in Canada’s North
Broadband Fund
$1 billion over six years, starting in 2021-22, to the Universal Broadband Fund to support a more rapid rollout of broadband projects in collaboration with provinces and territories and other partners
Mining and Minerals
$9.6 million over three years, starting in 2021-22, to create a Critical Battery Minerals Centre of Excellence at Natural Resources Canada. The centre would coordinate federal policy and programs on critical minerals, and work with provincial, territorial, and other partners. The centre would also help implement the Canada-U.S. Joint Action Plan
$36.8 million over three years, starting in 2021-22, with $10.9 million in remaining amortization, to Natural Resources Canada, for federal research and development to advance critical battery mineral processing and refining expertise

Indigenous First Nations, Inuit, and Métis Communities
$40.4 million over three years, starting in 2021-22, to support feasibility and planning of hydroelectricity and grid interconnection projects in the North
$36 million over three years, starting in 2021-22, through the Strategic Partnerships Initiative, to build capacity for local, economically-sustainable clean energy projects in First Nations, Inuit, and Métis communities and support economic development opportunities
$4.3 billion over four years, starting in 2021-22, for the Indigenous Community Infrastructure Fund, a distinctions-based fund to support immediate demands, as prioritized by Indigenous partners, with shovel ready infrastructure projects in First Nations, including with modern treaty and self-governing First Nations, Inuit, and Métis Nation communities
$1.7 billion over five years, starting in 2021-22, with $388.9 million ongoing, to cover the operations and maintenance costs of community infrastructure in First Nations communities on reserve
Carbon Capture
$319 million over seven years, starting in 2021-22, with $1.5 million in remaining amortization, to Natural Resources Canada to support research, development, and demonstrations that would improve the commercial viability of carbon capture, utilization, and storage technologies
Protecting Nature
$17.4 million over two years, starting in 2021-2022, to create a Water Agency to work with the provinces, territories, Indigenous peoples, and key stakeholders on a mandate, including identifying opportunities to build and support more resilient water and irrigation infrastructure
$87.4 million over five years starting in 2021-22, and $18.6 million ongoing to modernize federal procurement and create opportunities for specific communities by diversifying the federal supplier base. Public Services and Procurement Canada would:
o Implement a program focused on procuring from Black-owned businesses
o Continue work to meet Canada’s target of 5 per cent of federal contracts being awarded to businesses managed and led by Indigenous peoples
o Improve data capture, analytics, and reporting
o Incorporate accessibility considerations
o Pursue reciprocal procurement policies to ensure that goods and services are
only procured from countries that grant Canadian businesses a similar level
of market access
 Green Bonds
The publication of a green bond framework with an issuance target of $5 billion, subject to market conditions. These green bonds could fund green infrastructure, clean tech innovations, nature conservation, and other efforts to address climate change and protect our environment
Canada Community Revitalization Fund
$500 million over two years, starting in 2021-22, to the regional development agencies for community infrastructure
Business Assistance
Extend the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS) until September, while also implementing a new program to temporarily subsidize new hiring, providing $1,100 per month for every new employee. It is estimated that the extension of the wage subsidy will cost $10.1 billion in 2021-22
Any publicly listed corporation receiving the wage subsidy and found to be paying its top executives more in 2021 than in 2019 will need to repay the equivalent in wage subsidy amounts received for any qualifying period starting after June 5, 2021 and until the end of the wage subsidy program
$3.0 billion over five years, starting in 2021-22, and $966.9 million per year ongoing to enhance sickness benefits from 15 to 26 weeks
Establish a federal minimum wage of $15 per hour, rising with inflation, with provisions to ensure that where provincial or territorial minimum wages are higher, that wage will prevail
Allow immediate expensing of up to $1.5 million of eligible investments by Canadian-controlled private corporations made on or after Budget Day and before 2024
Improve the Canada Small Business Financing Program through amendments to the Canada Small Business Financing Act and its regulations. These proposed amendments are projected to increase annual financing by $560 million, supporting approximately 2,900 additional
small businesses. They include:
o Expanding loan class eligibility to include lending against intellectual
property and start-up assets and expenses
o Increasing the maximum loan amount from $350,000 to $500,000 and
extending the loan coverage period from 10 to 15 years for equipment
and leasehold improvements
o Expanding borrower eligibility to include non-profit and charitable
social enterprises
o Introducing a new line of credit product to help with liquidity and cover
short-term working capital needs