Budget 2018: Key takeaways for a stronger, cleaner economy

February 28, 2017

By Katherine Monahan, Will Scott, and Scott McFatridge

The Federal Budget was tabled on February 27, 2018 and includes new funding for nature conservation and clean innovation. Smart Prosperity Institute breaks it down to see how Budget 2018 can help build a stronger, cleaner economy.

Historic funding for nature conservation:

The 2018 federal budget announces a significant investment in nature, with $1.3 billion over five years which will include funding allocated towards: species at risk conservation and implementation activities; enlarging Canada’s national wildlife areas and migratory bird sanctuaries; strengthening federal capacity to manage protected areas and national parks; and creating an integrated network of conservation areas in collaboration with provincial, territorial and Indigenous partners. Of this, $500 million will be used to initiate a $1 billion Nature Fund, in partnership with industry, environmental non-governmental organizations, provincial and territorial governments, and others. An additional $167.4 million over five years has been set out to better protect, preserve and recover endangered whale species in Canada.

This allocation is a step in the right direction if Canada wants to eventually meet its Aichi targets under the United Nations Convention on Biological Diversity to protect at least 17 per cent of terrestrial and inland water areas and 10 per cent of coastal and marine areas. The funding will also make an important contribution to protecting species at risk in Canada. Smart Prosperity Institute’s recent report highlights that 85 per cent of the imperilled species populations that have been tracked from 1977-2013 have either seen no improvement in status or have actually deteriorated.

Significant support towards research to spur innovation ($3.86 billion over 5 years):

The Government has committed towards supporting research for innovation, what we refer to as PUSH policies, including $1.4 billion in new funding for granting councils (NSERC, CIHR, SSHRC). Other initiatives included in this figure are a new Tri-council fund to support inter-disciplinary research ($275 million over 5 years), funding towards Canada Research Chairs ($210 million over 5 years); a $231 million research support fund administered by SSHRC.

The announcement also includes $763 million over 5 years for the Canada Foundation for Innovation to provide researchers with state of the art equipment and facilities; a $140 million over 5 years for a College and Community Innovation Program to encourage collaborative applied research between businesses and colleges and polytechnics; $540 million over 5 years for the National Research Council including a new program based on the successful US Advanced Research  Projects Agency model; and $2.8 billion over 5 years to construct multi-purpose collaborative labs with a net-zero carbon footprint.

Increased financing ($2.57 billion over 5 years) towards the Innovation and Skills plan:

Budget 2018 further bolsters last year’s Innovation and Skills plan with an emphasis on streamlining programs, promoting women entrepreneurs, creating a new IP Strategy, and modernizing regulatory frameworks.

Most notably, the Budget announces the consolidation of 92 innovation programs down to 35. The budget aims to streamline the program suite by amalgamating programs under, and strengthening, four flagship programs: the Industrial Research Assistance Program (IRAP, with an additional $700 million over 5 years), the Strategic Innovation Fund (SIF, with the addition of existing programs and their funding), the Canadian Trade Commissioner Service (with an additional $10 million over 5 years), and the Regional Development Agencies (with an additional $400 million over 5 years).

The Innovation and Skills Plan will also add: a Women Entrepreneurship Strategy (including funding for training, export promotion, and scale-up financing); an Intellectual Property Strategy (with $85.3 million over 5 years and $10 million per year afterwards); $11.5 million over 3 years for regulatory reform; and $3 million per year for innovation program monitoring and evaluation.

Promoting participation from under-represented groups in the skilled trades, and science, technology, engineering and mathematics (STEM):

The transition to a clean economy has important distributional implications that need to be considered since there will be significant shifts in patterns of economic activity (e.g. increased demand for competences in STEM and the skilled trades). Budget 2018’s ambition towards inclusive growth and skills training can help contribute to a just transition and decent work for Canadians. Examples of relevant measures include $19.9 million over five years to create an Apprenticeship Incentive Grant for Women in the skilled trades, and $46 million over five years for a novel Pre-Apprenticeship Program to support participation from underrepresented groups (including Indigenous Peoples and new Canadians) in the skilled trades.

Revamping environmental assessment with impact:

The Government has announced that it will invest about $1 billion over five years to support the proposed new impact assessment system and Canadian Energy Regulator. The new system would replace the current Canadian Environmental Assessment Act and National Energy Board, with promises to increase transparency, include more inclusive consultations (including with Indigenous Peoples), making assessment criteria more comprehensive, and ensure science-based decision making. The money will also help set up the new Canadian Energy Regulator that will replace the National Energy Board.

Moving forward with the implementation of climate change mitigation and adaptation initiatives:

The Government is providing $109 million over five years to help implement, administer and enforce the federal carbon pricing system, including the federal backstop. It will also make available $20 million over five years, for external experts to ensure and advise-on the effectiveness of measures under the Pan-Canadian Framework. Budget 2018 confirms Income tax measures announced in Budget 2016 to expand tax support for electrical vehicle charging stations and electrical energy storage equipment.

With regard to adaptation and resilience, the Government has committed to: Complete the modernization of Canada’s weather forecast and severe weather warning systems ($40.6 million over five years); Revitalize water stations, improve services for long-range water forecasts, expand technical and engineering capacity ($69.5 million over five years); Support the operation of water stations that are cost-shared with provinces and territories ($9.8 million over five years).

Other key takeaways:

The Government will establish a Sustainable Development Goals Unit ($49.4 million over 13 years) including increasing monitoring and reporting activities by Statistics Canada. It will also proposes to provide $41 million over five years to Statistics Canada to help modernise Statistics Canada so that it can respond to current data needs, including those related to environmental analysis.  Budget 2018 also extends the Accelerated Capital Cost Allowance from a 2020 sunset to 2025, for clean energy generation and energy conservation equipment. Finally, the Government has announced it is creating an independent Canadian Ombudsperson for Responsible Enterprise ($6.8 million over six years) that will work to ensure that Canadian firms operating abroad exercise leadership in ethical, social and environmental practices.