Archived - Chapter 3:
A Made-In-Canada Plan: Affordable Energy, Good Jobs, and a Growing Clean Economy

Canada's electrical system includes a mix of private, public, and Indigenous-owned assets. The government believes a clear and predictable incentive that is available to this range of asset owners is needed to accelerate our progress toward a net-zero grid.

By extending support to a broad base of clean electricity technologies and proponents, we can accelerate the investments needed to expand the capacity of our clean electricity grid and ensure it delivers more sustainable, more secure, and more affordable electricity across Canada.

• To support and accelerate clean electricity investment in Canada, Budget 2023 proposes to introduce a 15 per cent refundable tax credit for eligible investments in:

  • Non-emitting electricity generation systems: wind, concentrated solar, solar photovoltaic, hydro (including large-scale), wave, tidal, nuclear (including large-scale and small modular reactors);
  • Abated natural gas-fired electricity generation (which would be subject to an emissions intensity threshold compatible with a net-zero grid by 2035);
  • Stationary electricity storage systems that do not use fossil fuels in operation, such as batteries, pumped hydroelectric storage, and compressed air storage; and,
  • Equipment for the transmission of electricity between provinces and territories.

Both new projects and the refurbishment of existing facilities will be eligible.

Taxable and non-taxable entities such as Crown corporations and publicly owned utilities, corporations owned by Indigenous communities, and pension funds, would be eligible for the Clean Electricity Investment Tax Credit.

The Clean Electricity Investment Tax Credit could be claimed in addition to the Atlantic Investment Tax Credit, but generally not with any other investment tax credit.

The Clean Electricity Investment Tax Credit would be available as of the day of Budget 2024 for projects that did not begin construction before the day of Budget 2023. The Clean Electricity Investment Tax Credit would not be available after 2034.

Labour requirements, including ensuring that wages paid are at the prevailing level, and that apprenticeship training opportunities are being created, will need to be met to receive the full 15-per-cent tax credit. If labour requirements are not met, the credit rate will be reduced by ten percentage points. These labour requirements will come into effect on October 1, 2023. The government will consult with labour unions and other stakeholders to refine these labour requirements in the months to come.

In order to access the tax credit in each province and territory, other requirements will include a commitment by a competent authority that the federal funding will be used to lower electricity bills, and a commitment to achieve a net-zero electricity sector by 2035.

The Department of Finance will engage with provinces, territories, and other relevant parties to develop the design and implementation details of the Clean Electricity Investment Tax Credit. The government will also conduct targeted consultations on the possibility to introduce reciprocal treatment in light of some of the eligibility conditions associated with certain tax credits under the U.S. Inflation Reduction Act.

With respect to intra-provincial transmission, the government will consult on the best means, whether through the tax system or in other ways, of supporting and accelerating investments in projects that could be considered critical to meeting the 2035 net zero objective.

Budget 2023 clean electricity measures would be able to support projects across the North that support the transition away from diesel and in meeting emissions goals, including the Atlin Hydro Expansion Project, the Taltston Hydro Expansion Project, and the Kivalliq Hydro-Fibre Link.

The Clean Electricity Investment Tax Credit is expected to cost $6.3 billion over four years starting in 2024-25, and an additional $19.4 billion from 2028-29 to 2034-35.

The Clean Technology Investment Tax Credit announced in the 2022 Fall Economic Statement will complement the Clean Electricity Investment Tax Credit by providing support to decarbonize industry.  

The expansion and transformation of Canada's electricity system will require major investments and enhanced partnerships between governments and the private sector.

As of March 23, 2023, the Canada Infrastructure Bank has made investment commitments of $8.6 billion in 37 projects, in support of its mandate. Budget 2022 announced a deepened role for the Canada Infrastructure Bank to invest in private sector-led infrastructure projects that accelerate Canada's efforts to reach net-zero. The Canada Infrastructure Bank is an active partner in supporting these efforts, including by making investments in renewable energy, energy storage, and transmission projects.

Building on this, Budget 2023 will position the Canada Infrastructure Bank to play a leading role in electrifying Canada's economy, supporting lower energy bills for Canadians and businesses, and ensuring that cleaner, affordable electricity is available from coast-to-coast-to-coast.

• Budget 2023 announces that the Canada Infrastructure Bank will invest at least $10 billion through its Clean Power priority area, and at least $10 billion through its Green Infrastructure priority area. This will allow the Canada Infrastructure Bank to invest at least $20 billion to support the building of major clean electricity and clean growth infrastructure projects. These investments will be sourced from existing resources.

These investments will position the Canada Infrastructure Bank as the government's primary financing tool for supporting clean electricity generation, transmission, and storage projects, including for major projects such as the Atlantic Loop.

With Budget 2023 announcing new measures to support the building of a more sustainable, secure, and affordable electricity grid, other targeted federal programs will continue to play important roles in advancing individual projects and building a stronger Canadian electricity industry.

• Budget 2023 proposes to provide $3.0 billion over 13 years, starting in 2023-24, to Natural Resources Canada to:

  • Recapitalize funding for the Smart Renewables and Electrification Pathways Program to support critical regional priorities and Indigenous-led projects, and add transmission projects to the program's eligibility;
  • Renew the Smart Grid program to continue to support electricity grid innovation; and,
  • Create new investments in science-based activities to help capitalize on Canada's offshore wind potential, particularly off the coasts of Nova Scotia and Newfoundland and Labrador.

The federal government is committed to advancing the Atlantic Loop—a series of interprovincial transmission lines that will provide clean electricity between Quebec, New Brunswick, and Nova Scotia—and is currently negotiating with provinces and utilities to identify a clear path to deliver the project by 2030.

Supporting Canadian companies in the manufacturing and processing of clean technologies, and in the extraction and processing of critical minerals, will create good middle class jobs for Canadians, ensure our businesses remain competitive in major global industries, and support the supply chains of our allies around the world.

While the Clean Technology Investment Tax Credit, first announced in Budget 2022, will provide support to Canadian companies adopting clean technologies, the Clean Technology Manufacturing Investment Tax Credit will provide support to Canadian companies that are manufacturing or processing clean technologies and their precursors.

• Budget 2023 proposes a refundable tax credit equal to 30 per cent of the cost of investments in new machinery and equipment used to manufacture or process key clean technologies, and extract, process, or recycle key critical minerals, including:

  • Extraction, processing, or recycling of critical minerals essential for clean technology supply chains, specifically: lithium, cobalt, nickel, graphite, copper, and rare earth elements;
  • Manufacturing of renewable or nuclear energy equipment;
  • Processing or recycling of nuclear fuels and heavy water;
  • Manufacturing of grid-scale electrical energy storage equipment;
  • Manufacturing of zero-emission vehicles; and,
  • Manufacturing or processing of certain upstream components and materials for the above activities, such as cathode materials and batteries used in electric vehicles.

The investment tax credit is expected to cost $4.5 billion over five years, starting in 2023-24, and an additional $6.6 billion from 2028-29 to 2034-35. The credit would apply to property that is acquired and becomes available for use on or after January 1, 2024, and would no longer be in effect after 2034, subject to a phase-out starting in 2032.

Here in Canada and around the world, major automakers are pivoting to building electric vehicles at historic speeds. Canada can capitalize on this shift by securing our place in rapidly developing global supply chains for electric vehicle manufacturing, including in battery manufacturing and the critical minerals and high-value midstream components that play an essential role in their production. Together, these segments of the electric vehicle supply chain can create and secure more high-quality jobs for Canadian workers for a generation to come.

Recognizing Canada's potential to be a global leader in battery manufacturing, Volkswagen announced on March 13, 2023, that its subsidiary, PowerCo, will build its first overseas 'gigafactory' in St. Thomas, Ontario.

This massive battery manufacturing facility will represent a significant portion of the North American battery manufacturing sector. It will cement Canada's place in the North American and global battery value chains, and create good middle class jobs for Canadians, both at the facility itself and across Canada's battery and critical minerals sectors.

Projected costs of this agreement have been fully accounted for in Budget 2023. Further details and announcements will follow in the coming weeks after finalization of the agreement by Volkswagen.

There are trillions of dollars in private capital waiting to be spent in building the global clean economy. Canada is extremely well-positioned to attract a competitive share of this capital. And doing so is essential in our work to fight climate change, create middle class jobs now and into the future, and grow the clean economy. 

The Canada Growth Fund is a $15 billion arm's length public investment vehicle that will help attract private capital to build Canada's clean economy by using investment instruments that absorb certain risks in order to encourage private investment in low carbon projects, technologies, businesses, and supply chains.

The 2022 Fall Economic Statement announced that the Canada Growth Fund would be initially launched as a subsidiary of the Canada Development Investment Corporation (CDEV), with a permanent, independent structure to be put in place in the first half of 2023.

The Growth Fund was formally incorporated as a subsidiary of CDEV in December 2022.

As a significant part of the government's plan to decarbonize and build Canada's clean economy, the Canada Growth Fund requires an experienced, professional, independent investment team ready to make important investments in support of Canada's climate and economic goals.

• Budget 2023 announces that the government intends to introduce legislative amendments to enable the Public Sector Pension Investment Board (PSP Investments) to manage the assets of the Canada Growth Fund to deliver on the Growth Fund's mandate of attracting private capital to invest in Canada's clean economy.

Established as a federal Crown corporation, PSP Investments is one of Canada's largest pension investment managers with more than $225 billion in assets under management. It operates at arm's length from the government. The Canada Growth Fund assets managed by PSP Investments will be separate from and managed independently of the pension assets of PSP Investments. PSP Investments will continue to successfully deliver on its pre-existing pension management mandate.

By partnering with PSP Investments, the Canada Growth Fund will be able to move quickly and begin making investments to support the growth of Canada's clean economy. As the government committed in the 2022 Fall Economic Statement, the Canada Growth Fund will begin investing in the first half of 2023.

PSP Investments will provide an independent investment team with extensive experience across the range of investment tools that the Growth Fund will use to deliver on its mandate and attract new private investment to Canada. PSP Investments will also establish an investment decision-making committee, focused exclusively on the Growth Fund, to ensure that investment decisions align with the Growth Fund's objectives, investment principles, and performance criteria.

While the Growth Fund will be independently managed by PSP Investments, it will maintain the market-leading reporting framework for public transparency and accountability that the government committed to in the 2022 Fall Economic Statement.

To ensure that workers are represented in the governance of PSP Investments, the government will consult unions this spring on adding two seats to the PSP Investments Board of Directors for representatives of organized labour, in keeping with the current recruitment rules for filling positions for board members. The government aims to legislate this change in fall 2023.

In the 2022 Fall Economic Statement, the federal government announced a refundable investment tax credit for investments made in clean hydrogen production based on the lifecycle carbon intensity of hydrogen.

This critical investment in a growing source of energy will help create good middle class careers, ensure that Canadian companies can remain globally competitive, and encourage the use of clean energy to reduce pollution.

Since the 2022 Fall Economic Statement, the government has consulted on how best to implement the Clean Hydrogen Investment Tax Credit, and has used the input received to inform its design.

• Budget 2023 announces the details of the Clean Hydrogen Investment Tax Credit with the following key design features: 

  • The levels of support will vary between 15 and 40 per cent of eligible project costs, with the projects that produce the cleanest hydrogen receiving the highest levels of support (Table 3.1).
  • The Clean Hydrogen Investment Tax Credit will also extend a 15 per cent tax credit to equipment needed to convert hydrogen into ammonia, in order to transport the hydrogen. The tax credit will only be available to the extent the ammonia production is associated with the production of clean hydrogen.
  • Labour requirements will need to be met to receive the maximum tax credit rates. If labour requirements are not met, credit rates will be reduced by ten percentage points. These labour requirements will come into effect on October 1, 2023.

The proposed Clean Hydrogen Investment Tax Credit is expected to cost $5.6 billion over five years, beginning in 2023-24. Between 2028-29 and 2034-35, the Clean Hydrogen Investment Tax Credit is expected to cost an additional $12.1 billion.

Additional details can be found in the Budget Supplementary Information, under "Investment Tax Credit for Clean Hydrogen" and "Labour Requirements Related to Certain Investment Tax Credits".

Growing Canada's Biofuels Sector

With global demand for biofuels growing rapidly, the production of biofuels offers economic opportunities for Canada's energy sector, as well as for Canada's agricultural and forestry sectors, which provide essential feedstocks used in these fuels. These include canola, pulping liquor, bio-charcoal, and organic matter in municipal and industrial wastes.

• In the months ahead, the federal government will engage with the biofuels industry to explore opportunities to promote its growth in Canada. This will include an examination of different support mechanisms that could support the sector in meeting the growing demand for low-emissions fuels.

To build more zero-emission technologies in Canada, Budget 2021 reduced corporate income tax rates by half for zero-emission technology manufacturers to drive investment and create new jobs. These rates, of 4.5 per cent for small businesses and 7.5 per cent for other businesses, are currently scheduled to expire beginning in 2032, subject to a phase-out starting in 2029. With new opportunities ahead, extending this support is important to ensure businesses have the runway they need to innovate and produce zero-emission technologies.

• Budget 2023 proposes to extend the availability of these reduced rates by another three years, such that the reduced tax rates would no longer be in effect for taxation years starting after 2034, subject to a phase-out starting in 2032.
• Budget 2023 also proposes to extend eligibility for the reduced rates to include the manufacturing of nuclear energy equipment and the processing and recycling of nuclear fuels and heavy water, effective for taxation years beginning after 2023.

These enhancements of the reduced tax rates are expected to cost $20 million over five years, starting in 2023-24, and an additional $1.3 billion from 2028-29 to 2034-35.

The Strategic Innovation Fund provides funding for large projects across sectors that include emissions reduction, biomanufacturing, and natural resources. Since 2018, the Strategic Innovation Fund has created or maintained more than 105,000 jobs, and used $6.9 billion in contributions to leverage $67 billion in private investment across 107 projects. The federal government wants to ensure that companies and innovators in Canada are well-positioned to capitalize on the exciting opportunities to come as we build Canada's clean economy.

• Budget 2023 proposes to provide $500 million over ten years to the Strategic Innovation Fund to support the development and application of clean technologies in Canada. The Strategic Innovation Fund will also direct up to $1.5 billion of its existing resources towards projects in sectors including clean technologies, critical minerals, and industrial transformation.

The 2022 Fall Economic Statement announced the details of the Clean Technology Investment Tax Credit, which will provide support to Canadian businesses in adopting clean technology at a 30 per cent refundable rate. In Budget 2023, the federal government is expanding the eligibility for the Clean Technology Investment Tax Credit to further support the growth of Canada's burgeoning clean technology sector.

• Budget 2023 proposes to expand eligibility for the Clean Technology Investment Tax Credit to include geothermal energy systems that are eligible for capital cost allowance Classes 43.1 and 43.2. The Clean Technology Investment Tax Credit would be available to businesses investing in such property that is acquired and becomes available for use on or after the day of Budget 2023. Projects that will co-produce oil, gas, or other fossil fuels would not be eligible for the Clean Technology Investment Tax Credit.
• Budget 2023 also proposes to modify the phase-out of the Clean Technology Investment Tax Credit. Rather than starting the phase-out in 2032, the tax credit would now begin to phase out in 2034 and would not be available after that year.

Including geothermal systems in this measure is expected to cost $185 million from 2023-24 to 2027-28.  This will bring the total expected cost of the Clean Technology Investment Tax Credit to about $6.9 billion over the same period.

Getting Major Projects Done

Building Canada's clean economy will require significant and sustained private sector investment in clean electricity, critical minerals, and other major projects. Ensuring the timely completion of these projects is essential—it should not take 12 years to open a critical minerals mine. As part of its clean growth strategy, the government is making it a priority to expedite major project reviews while maintaining strong regulatory standards.

In the past year, the federal government has taken action to fast-track the assessment of mining, energy, and other major projects, and to make Canada's rigorous regulatory process more efficient. This includes:

• $1.3 billion over six years, starting in 2022-23, and $55.4 million ongoing, to the Impact Assessment Agency of Canada, the Canada Energy Regulator, the Canadian Nuclear Safety Commission, and ten other federal departments, to continue to improve the efficiency of assessments for major projects;
• $10.6 million for Natural Resources Canada's Centre of Excellence on Critical Minerals to provide direct assistance to critical mineral developers in navigating regulatory processes and government support measures; and,
• $40 million to Crown-Indigenous Relations and Northern Affairs Canada to support Northern regulatory processes.

The Impact Assessment Agency of Canada and other federal departments are also working together to streamline regulatory assessment processes and ensure timely decisions.

Clean growth projects also require provincial and territorial regulatory approvals, and ensuring regulatory processes are efficient and effective is a shared responsibility. Building on the success of the federal-provincial cooperation agreement signed with British Columbia, the federal government stands ready and willing to work with provinces and territories to deepen federal-provincial cooperation to reach the goal of "one project, one assessment".

Over the course of this year, the government will propose further steps to ensure the effectiveness of Canada's reviews of major projects, which will support the growth of Canada's clean economy while continuing to uphold the highest standards for environmental and other impacts.

• Budget 2023 announces that, by the end of 2023, the government will outline a concrete plan to improve the efficiency of the impact assessment and permitting processes for major projects, which will include clarifying and reducing timelines, mitigating inefficiencies, and improving engagement and partnerships.
• In addition, Budget 2023 proposes to provide $11.4 million over three years, starting in 2023-24, to Crown-Indigenous Relations and Northern Affairs Canada to engage with Indigenous communities and to update the federal guidelines for federal officials to fulfil the Crown's duty to consult Indigenous peoples and accommodate impacts on their rights. This will support the implementation of the United Nations Declaration on the Rights of Indigenous Peoples Act and provide more clarity on how the government will proceed to ensure an effective and efficient whole-of-government approach to consultation and accommodation.

As outlined in Chapter 4, Budget 2023 also announces investments in improving Indigenous economic participation in major projects, as well as increased support for the participation of Indigenous Peoples and other Northerners in environmental and regulatory assessments of major projects in the North.

Carbon capture, utilization, and storage (CCUS) is a suite of technologies that captures carbon dioxide (CO2) emissions to either store the CO2 or to use in other industrial processes, such as permanent mineralization in concrete.

In Budget 2022, the federal government announced design details of the Investment Tax Credit for Carbon Capture, Utilization, and Storage—an important tool for reducing emissions in high-emitting sectors and helping to create good careers. In August 2022, a consultation on draft legislation and additional design features was launched, which provided the Department of Finance with submissions that have informed additional design elements of the investment tax credit.

• Budget 2023 proposes that the Investment Tax Credit for Carbon Capture, Utilization, and Storage:

  • Include dual use heat and/or power equipment and water use equipment, with tax support prorated in proportion to the use of energy or material in the carbon capture, utilization, and storage process, subject to certain conditions;
  • In addition to Saskatchewan and Alberta, be available to projects that would store CO2 using dedicated geological storage in British Columbia;
  • Require projects storing CO2 in concrete to have their concrete storage process validated by a third-party based on an ISO standard prior to claiming the investment tax credit; and,
  • Include a recovery calculation for the investment tax credit in respect of refurbishment property.

The proposed changes are expected to cost about $520 million over five years, beginning in 2023-24.

The government intends to apply labour requirements to the Investment Tax Credit for Carbon Capture, Utilization, and Storage. Details will be announced at a later date. These labour requirements will come into effect on October 1, 2023.

A full package of legislative proposals will be released for consultation in the coming months. Once legislated, the tax credit will be retroactively available to businesses that have incurred eligible CCUS expenses, starting in 2022.

When the federal government provides support for businesses to grow, their workers must also see the benefit. For the first time in Canadian history, the 2022 Fall Economic Statement announced that labour requirements would be attached to investment tax credits.

These tax credits, for investments in clean technology and clean hydrogen equipment, have requirements that include paying prevailing wages and ensuring that apprenticeship opportunities are being created.

Following consultations with unions and other stakeholders, Budget 2023 is announcing additional details on the labour requirements for the Clean Technology and Clean Hydrogen Investment Tax Credits.

• To be eligible for the highest tax credit rates, businesses must pay a total compensation package that equates to the prevailing wage. The definition of prevailing wage would be based on union compensation, including benefits and pension contributions from the most recent, widely applicable multi-employer collective bargaining agreement, or corresponding project labour agreements, in the jurisdiction within which relevant labour is employed.
• Additionally, at least ten per cent of the tradesperson hours worked must be performed by registered apprentices in the Red Seal trades.

The government also intends to apply labour requirements related to the prevailing wage and hours worked by registered apprentices to the Investment Tax Credit for Carbon Capture, Utilization, and Storage, and the Investment Tax Credit for Clean Electricity. Further details will be provided at a later date.

In all cases, the requirements would apply to labour that is performed on or after October 1, 2023.

Ensuring Fairness for Canadian Workers with Federal Reciprocal Procurement

The federal government is committed to having procurement policies that treat Canadian workers and businesses fairly—and this should include ensuring the government buys goods and services from countries that also grant Canadian businesses a similar level of access to their government procurement markets. In doing so, we will ensure that federal procurement dollars benefit Canadian workers and businesses, and support the development of mutually-beneficial, reciprocal, and resilient supply chains.

• To deliver these benefits, Budget 2023 announces the government will undertake targeted engagement with provinces and territories, industry stakeholders, and workers and unions on concrete reciprocal procurement measures, so they can be implemented in the near term. The proposed measures will include placing conditions on foreign suppliers' participation in federally-funded infrastructure projects, applying strict reciprocity to federal procurement, and creating a preference program for Canadian small businesses.

The federal government will also engage with provinces and territories to explore extending this reciprocal treatment to all sub-national procurement opportunities.

Beyond government procurement policies, in light of some of the restrictive eligibility conditions associated with new measures within the U.S. Inflation Reduction Act, the government will initiate targeted consultations on the possibility to introduce new reciprocal treatment for the measures in the government's plan to build a clean economy.

Our economy depends on skilled tradespeople. From electricians, to painters, to plumbers, supporting Canada's skilled tradespeople is essential to attracting more Canadians to the trades, and ensuring that Canada has the skilled workforce required to build Canada's clean economy and double the number of new homes that will be built in Canada by 2032.

• To help tradespeople invest in the equipment they need, Budget 2023 proposes to double the maximum employment deduction for tradespeople's tool expenses from $500 to $1,000.

This change would take effect for the 2023 taxation year and would reduce federal revenues by $11 million over six years, starting in 2022-23.

Employee Ownership Trusts enable employees to share in the success of their work. They support participation in business decisions and allow workers to receive their share of profits. With more than 75 per cent of small business owners planning to retire in the next decade, Employee Ownership Trusts can also give business owners an alternative succession option. Budget 2022 announced the government's commitment to create these trusts while consulting with stakeholders to address remaining barriers.

• Budget 2023 proposes to introduce tax changes to facilitate the creation of Employee Ownership Trusts. Selling the business to employees would become a more attractive proposition for owners looking to exit, and employee-owned businesses would be able to re-invest more of their profits in growth.

The government welcomes stakeholder feedback on how best to enhance employee rights and participation in the governance of Employee Ownership Trusts.

These changes would take effect for the 2024 tax year, and would reduce federal revenues by $20 million over five years, starting in 2023-24.

Every year, the federal government invests nearly $3 billion in Canada's Labour Market Development Agreements and Workforce Development Agreements with provinces and territories. This funds a range of supports, including skills training, on-site work experience, career counselling, and job search assistance that helps one million Canadians each year to upgrade their skills or find new jobs.

• Budget 2023 proposes to invest an additional $625 million in 2023-24 in the Labour Market Transfer Agreements to ensure Canadians continue to have access to the supports they need to get their next job.

Many seasonal workers—including in fishing and tourism sectors—rely on Employment Insurance for the support they need between work seasons. To address gaps in Employment Insurance support between seasons, the government introduced temporary rules in 2018 to provide up to five additional weeks—for a maximum of 45 weeks—for eligible seasonal workers in 13 economic regions. This support is set to expire in October 2023.

• Budget 2023 proposes to extend this support for seasonal workers until October 2024. The cost of this measure is estimated at $147 million over three years, starting in 2023-24.

When workers are engaged in a typical employer-employee relationship, but are misclassified as something other than employees, they miss out on the same labour rights, protections, and entitlements as traditional employees. For those in the gig economy, such as those who rely on an app or digital platform for their source of work, this can have a real impact on the stability and security of their livelihoods. As a first step in addressing this, in 2021, the federal government made illegal the intentional misclassification of employees in the federally regulated private sector.

• Budget 2023 proposes to amend the Canada Labour Code to improve job protections for federally regulated gig workers by strengthening prohibitions against employee misclassification. This will help ensure all federally regulated workers receive the protections and employer contributions to which they are entitled, including Employment Insurance and the Canada Pension Plan.

When businesses struggle, it can be difficult for them to keep staff on payroll. The Work-Sharing Program helps avoid layoffs during temporary decreases in business activity by providing income support through the Employment Insurance program to eligible employees who work a reduced week while their employer recovers. This means that employees can keep their jobs and continue earning income, while their employer retains skilled workers without having to hire someone new when business picks up.

• Budget 2023 proposes to provide $5.4 million over three years, starting in 2023‑24, to Employment and Social Development Canada to ensure that the Work-Sharing Program continues to provide timely support to Canadian workers and businesses.

Work-integrated learning programs such as co-ops and internships play a critical role in helping students transition from post-secondary institutions to the workforce. The federal government recognizes the need to continue supporting students to develop work-ready skills, particularly in the context of an increasingly complex and evolving labour market.  

• Budget 2023 proposes to provide $197.7 million in 2024-25 to the Student Work Placement Program to continue creating quality work-integrated learning opportunities for students through partnerships between employers and post-secondary education institutions.

These measures will ensure that students can gain the necessary skills, education, and real-life work experience to transition successfully into the workforce.

The ability to form a union, bargain collectively, and strike is essential to a healthy democracy. These important rights can be undermined when an employer brings in replacement workers to temporarily do the work of unionized workers during a strike or lockout.

• Budget 2023 proposes to table amendments to the Canada Labour Code, before the end of 2023, that would prohibit the use of replacement workers during a strike or lockout, and improve the process to review activities that must be maintained to ensure the health and safety of the public during a work stoppage.

Canada's trade corridors keep our economy moving. From ports, to airports, to railways and highways, they are the backbone of the supply chains that bring goods to our communities and enable our businesses to export their products around the world.

Since 2017, the federal government has announced more than $2.7 billion for projects to increase Canada's trade corridor capacity under the National Trade Corridors Fund. To date, this has meant support for more than 120 transportation supply chain projects across the country, including bridges, roads, airports, railways, and ports.

Recent events, including the pandemic and flooding in British Columbia, which cut off the supply of goods to and from the west coast, have demonstrated the economic challenges for Canadians and businesses that come with supply chain disruptions.

• To further strengthen Canada's transportation systems and supply chain infrastructure, Budget 2023 proposes to:

  • Provide $27.2 million over five years, starting in 2023-24, to Transport Canada to establish a Transportation Supply Chain Office to work with industry and other orders of government to respond to disruptions and better coordinate action to increase the capacity, efficiency, and reliability of Canada's transportation supply chain infrastructure;
  • Collaborate with industry, provinces, territories, and Indigenous Peoples to develop a long-term roadmap for Canada's transportation infrastructure to better plan and coordinate investments required to support future trade growth;
  • Provide $25 million over five years, starting in 2023-24, to Transport Canada to work with Statistics Canada to develop transportation supply chain data that will help reduce congestion, make our supply chains more efficient, and inform future infrastructure planning. This measure will be advanced using existing Transport Canada resources; 
  • Introduce amendments to the Canada Transportation Act to provide the Minister of Transport with the authority to compel data sharing by shippers accessing federally regulated transportation services;
  • Introduce amendments to the Canada Transportation Act for a temporary extension, on a pilot basis, of the interswitching limit in the prairie provinces to strengthen rail competition; and,
  • Launch a review of the Shipping Conferences Exemption Act to improve marine shipping competition.

These measures are a down payment on Canada's National Supply Chain Strategy, which will be released in the coming months and will be informed by the recommendations of the National Supply Chain Task Force report.

Delivering Canada's Infrastructure Funding

Through the Investing in Canada Infrastructure Program (ICIP), the federal government is providing more than $33 billion in funding for public infrastructure across the country—projects that municipalities rely on to make our communities stronger. Under this program, provinces and territories prioritize and submit projects to Infrastructure Canada for review.

To date, the program has approved $24.2 billion for 5,400 projects. These projects have improved access to safe drinking water by building or rehabilitating over 1,000 water and wastewater systems, strengthened communities with 800 projects to improve cultural and recreational spaces, and enhanced public transit systems by acquiring over 4,200 public transit vehicles like buses, subway cars and light rail transit trains.

ICIP is supporting several transformational infrastructure projects, such as the extension of Montreal Metro's Blue Line, the St. John's 2025 Canada Summer Games Track and Field Facility, the Winnipeg North End Sewage Treatment Plant Upgrades, the Eastern Ontario Regional Network Cellular Gap Project, and the Port Saint John West Side Terminals Modernization Project.

To help build more infrastructure sooner, Budget 2022 signalled the government's intent to accelerate the deadline for provinces to commit their remaining funding to March 31, 2023, with any uncommitted funds after this date to be reallocated to other priorities. The government is working closely with the provinces to support them in allocating their remaining funding and expects that all remaining funding will be committed by the deadline.

Whether it is building public transit, supporting the resilience of communities, or funding community infrastructure, the government knows our partners rely on a long-term approach to infrastructure. Following the success of ICIP, the government is actively reviewing Canada's continued infrastructure needs as it charts a course for future federal infrastructure programming. The government will provide an update on this work later this year, including the next steps on permanent public transit funding.

Supporting Resilient Infrastructure Through Innovation

The Smart Cities Challenge was launched in 2017 to encourage cities to adopt new and innovative approaches to improve the quality of life for their residents. The first round of the Challenge resulted in $75 million in prizes across four winning applicants: Montreal, Quebec; Guelph, Ontario; communities of Nunavut; and Bridgewater, Nova Scotia.

New and innovative solutions are required to help communities reduce the risks and impacts posed by weather-related events and disasters triggered by climate change. To help address this issue, the government will be launching a new round of the Smart Cities Challenge later this year, which will focus on using connected technologies, data, and innovative approaches to improve climate resiliency.

VIA Rail trains help to connect communities across Canada, including rural, remote, and Indigenous communities where other transportation options may be limited or unavailable, such as those between Winnipeg and Churchill, Prince Rupert and Jasper, or Montreal and Senneterre. However, many of VIA Rail's trains require significant investments to ensure they can provide the service that Canadians deserve.

• Budget 2023 proposes to provide $210.0 million over five years, starting in 2023-24, with $117.4 million in remaining amortization, to VIA Rail to conduct maintenance on its trains on routes outside the Québec City–Windsor Corridor and to maintain levels of service across its network.

This funding is in addition to the $42.8 million over four years, starting in 2023-24, with $169.4 million in remaining amortization, provided in Budget 2022 to construct, maintain, and upgrade stations and maintenance centres in the Québec City–Windsor Corridor.

To carry out its critical activities, such as search and rescue and icebreaking operations, the Canadian Coast Guard operates 117 vessels and 22 helicopters. As the Coast Guard plans to expand its fleet of ships in the coming decades, new investments in people and infrastructure are needed today to prepare for these new vessels.

• Budget 2023 proposes to provide $119.6 million over five years, starting in 2023–24, with $102.1 million in remaining amortization and $17.4 million ongoing, to Fisheries and Oceans Canada to reinforce the integrity of its helicopter fleet and ensure the Canadian Coast Guard has the necessary infrastructure and support to hire and train the staff to operate its future marine vessel fleet. Of this amount, $27.8 million over five years and $4.3 million ongoing would be sourced from existing departmental resources.

The federal government provides financial support for interprovincial ferry routes between Saint John, New Brunswick and Digby, Nova Scotia; Wood Islands, Prince Edward Island and Caribou, Nova Scotia; and Îles-de-la-Madeleine, Quebec and Souris, Prince Edward Island. These ferry services are essential transportation links for communities, businesses, and tourism, and contribute an estimated $141 million annually to the regional economy.

• Budget 2023 proposes to provide $29.9 million over two years, starting in 2023-24, to Transport Canada for the Ferry Services Contribution Program to support the continued safe and reliable operation of ferry services in Eastern Canada. This will include the chartering of a second vessel for the Wood Islands-Caribou route.

For nearly 20 years, converting the Bonaventure Expressway into an urban boulevard has been part of the vision for the redevelopment and revitalization of Montreal's shoreline. The federal portion of the expressway will soon require replacement, which provides an opportunity to modernize the roadway in line with this vision and restore public access to the area.

• Budget 2023 proposes to provide $47.8 million over nine years, starting in 2023-24, with $225.5 million in remaining amortization, to the Jacques Cartier and Champlain Bridges Incorporated for the redevelopment of the federal portion of the Bonaventure Expressway into an urban boulevard.
• Budget 2023 also proposes to provide $576.1 million over five years, starting in 2023-24, with $192.3 million in remaining amortization, to the Jacques Cartier and Champlain Bridges Incorporated to operate, maintain, and repair its infrastructure in the Greater Montreal Area.

Delivering the Lac-Mégantic Rail Bypass Project

Canadians will always remember the 47 victims of the tragic train derailment in Lac-Mégantic, Quebec in July 2013. The completion of the Lac-Mégantic rail bypass project remains a priority for the federal government as the community continues to recover from this tragedy.

The government continues to take important steps to move the project forward, including working in close partnership with the Government of Quebec to make the project a reality. In December 2022, the Prime Minister and the Premier of Quebec committed to fund the project in the same ratios as initially announced in 2018.

Review of the Scientific Research and Experimental Development Tax Incentive Program

The Scientific Research and Experimental Development (SR&ED) tax incentive program continues to be a cornerstone of Canada's innovation strategy by supporting research and development with the goal of encouraging Canadian businesses of all sizes to invest in innovation that drives economic growth.

In Budget 2022, the federal government announced its intention to review the SR&ED program to ensure it is providing adequate support and improving the development, retention, and commercialization of intellectual property, including the consideration of adopting a patent box regime. The Department of Finance will continue to engage with stakeholders on the next steps in the coming months.

Canada's colleges, CEGEPs, and polytechnic institutes use their facilities, equipment, and expertise to solve applied research problems every day. Students at these institutions are developing the skills they need to start good careers when they leave school, and by partnering with these institutions, businesses can access the talent and the tools they need to innovate and grow.

• To help more Canadian businesses access the expertise and research and development facilities they need, Budget 2023 proposes to provide $108.6 million over three years, starting in 2023-24, to expand the College and Community Innovation Program, administered by the Natural Sciences and Engineering Research Council.

For decades, Canada's participation in the International Space Station has helped to fuel important scientific advances, and showcased Canada's ability to create leading-edge space technologies, such as Canadarm2. Canadian space technologies have inspired advances in other fields, such as the NeuroArm, the world's first robot capable of operating inside an MRI, making previously impossible surgeries possible.

• Budget 2023 proposes to provide $1.1 billion over 14 years, starting in 2023-24, on a cash basis, to the Canadian Space Agency to continue Canada's participation in the International Space Station until 2030.

Looking forward, humanity is returning to the moon. Canada intends to join these efforts by contributing a robotic lunar utility vehicle to perform key activities in support of human lunar exploration. Canadian participation in the NASA-led Lunar Gateway station—a space station that will orbit the moon—also presents new opportunities for innovative advances in science and technology. Canada is providing Canadarm3 to the Lunar Gateway, and a Canadian astronaut will join Artemis II, the first crewed mission to the moon since 1972. In Budget 2023, the government is providing further support to assist these missions.

• Budget 2023 proposes to provide $1.2 billion over 13 years, starting in 2024-25, to the Canadian Space Agency to develop and contribute a lunar utility vehicle to assist astronauts on the moon.
• Budget 2023 proposes to provide $150 million over five years, starting in 2023-24, to the Canadian Space Agency for the next phase of the Lunar Exploration Accelerator Program to support the Canada's world-class space industry and help accelerate the development of new technologies.
• Budget 2023 also proposes to provide $76.5 million over eight years, starting in 2023-24, on a cash basis, to the Canadian Space Agency in support of Canadian science on the Lunar Gateway station.

The forestry sector plays an important role in Canada's natural resource economy, and is a source of good careers in many rural communities across Canada, including Indigenous communities. As global demand for sustainable forest products grows, continued support for Canada's forestry sector will help it innovate, grow, and support good middle class jobs for Canadians.

• Budget 2023 proposes to provide $368.4 million over three years, starting in 2023-24, with $3.1 million in remaining amortization, to Natural Resources Canada to renew and update forest sector support, including for research and development, Indigenous and international leadership, and data. Of this amount, $30.1 million would be sourced from existing departmental resources.

The dairy sector is facing a growing surplus of solids non-fat (SNF), a by-product of dairy processing. Limited processing capacity for SNF results in lost opportunities for dairy processors and farmers.

• Budget 2023 proposes to provide $333 million over ten years, starting in 2023-24, for Agriculture and Agri-Food Canada to support investments in research and development of new products based on SNF, market development for these products, and processing capacity for SNF-based products more broadly.

Russia's illegal invasion of Ukraine has resulted in higher prices for nitrogen fertilizers, which has had a notable impact on Eastern Canadian farmers who rely heavily on imported fertilizer.

• Budget 2023 proposes to provide $34.1 million over three years, starting in 2023-24, to Agriculture and Agri-Food Canada's On-Farm Climate Action Fund to support adoption of nitrogen management practices by Eastern Canadian farmers, that will help optimize the use and reduce the need for fertilizer.

Farm production costs have increased in Canada and around the world, including as a result Russia's illegal invasion of Ukraine and global supply chain disruptions. It is important that Canada's agricultural producers have access to the cash flow they need to cover these costs until they sell their products.

• Budget 2023 proposes to provide $13 million in 2023-24 to Agriculture and Agri-Food Canada to increase the interest-free limit for loans under the Advance Payments Program from $250,000 to $350,000 for the 2023 program year.

Additionally, the government will consult with provincial and territorial counterparts to explore ways to extend help to small agricultural producers who demonstrate urgent financial need.

Foot-and-Mouth Disease (FMD) is a highly transmissible illness that can affect cattle, pigs, and other cloven-hoofed animals. Recent outbreaks in Asia and Africa have increased the risk of global spread, and a FMD outbreak in Canada would cut off exports for all livestock sectors, with major economic implications. However, the impact of a potential outbreak would be significantly reduced with the early vaccination of livestock. 

• Budget 2023 proposes to provide $57.5 million over five years, starting in 2023-24, with $5.6 million ongoing, to the Canadian Food Inspection Agency to establish a FMD vaccine bank for Canada, and to develop FMD response plans. The government will seek a cost-sharing arrangement with provinces and territories.