Federal Budget 2017- Impact on Grants and Incentives

On Wednesday March 22, 2017, Finance Minister Bill Morneau delivered the federal budget. As the second budget of the Liberals’ term, it reaffirms the federal government’s commitment to infrastructure, skills and innovation. Spending on innovation will secure funding for research and development as well as strategies that will achieve business growth. Overall, the budget will benefit manufacturers and exporters, with several implications to the grant landscape that Fairtax will be following closely.

The budget proposes to establish a new $1.26 billion Strategic Innovation Fund, that will help to consolidate preexisting innovation programs situated across different industries. The creation of this fund will consolidate the Strategic Aerospace and Defense Initiative, Technology Demonstration Program, Automotive Innovation Fund and the Automotive Supplier Innovation Program. It will also expand to include Clean Technology and Agri-Food with $200 million in funding over 3 years, half of which comes from last year’s budget and $100 million in new funding. Clean technology will receive $2.2 billion to fund research and development, and to spark acceleration and growth. $1.4 billion in new financing over 3 years will be assigned to the “Business Development Bank of Canada and Export Development Canada”.

Budget 2017 significantly boosts federal support through the Labour Market Transfer Agreements, with a $2.7 billion commitment over six years. The increased funding for training will allow companies to train staff, in order to increase productivity, ultimately creating better wages.

Here are the budget highlights from a Grants & Incentives perspective:

  1. Employment and Training

  • Labour Market Transfer Agreements will secure $2.7 billion over six years.  
  • Work-integrated learning placements created through Mitacs for Canadian post-secondary students and graduates will create 10,000 placements, up from the current level of around 3,750 placements.
  1. Innovation and Research

  • Establish a new $1.26 billion Strategic Innovation Fund, that will help to consolidate preexisting innovation programs situated across different industries. It will consolidate the Strategic Aerospace and Defense Initiative, Technology Demonstration Program, Automotive Innovation Fund and the Automotive Supplier Innovation Program.
  • Over 5 years, $950 million will go towards funding superclusters in industries such as advanced manufacturing, agri-food, infrastructure, clean technology, clean resources, digital technology, health/bio-sciences and transportation.
  • $400 million will go to the Business Development Bank of Canada on a cash basis over three years, beginning in 2017–18, for a new Venture Capital Catalyst Initiative that will increase late-stage venture capital available to Canadian entrepreneurs.
  • Private sector funding could inject $1.5 Billion into Canada’s capital market.  
  • Renewed funding of $59.6 million in 2017–18, to support the Council’s business innovation initiatives.  
  1. Clean and Going Green

  • Clean Technology and Agri-Food will recieve $200 million in funding over 3 years, half of which came from last year’s budget and $100 million in new funding.
  • Clean technology will receive $2.2 billion to fund research and development.
  • Sustainable Development Technology Canada will invest $400 million over five years, starting in 2017–18, to recapitalize the SD Tech Fund™. Funding will support new clean technologies that promote sustainable development, including climate change, air quality, clean water and clean soil.
  1. Infrastructure

  • $20.1 billion in transportation through bilateral agreements with provinces and territories.
  • $21.9 billion in green infrastructure.
  • $11.2 billion for the New National Housing Strategy in a range of initiatives designed to build, renew and repair Canada’s stock of affordable housing.
  • Northern communities (Indigenous Communities) will gain an additional, $4 billion. This will build and improve housing, water treatment systems, health facilities and other community infrastructure.  
  • The Canada Infrastructure Bank will be responsible for investing at least $35 billion over 11 years, using loans, loan guarantees and equity investments.
  • $10.1 billion over 11 years to modernize Canada’s transportation system, protect our oceans and waterways and address the requirements of existing federally funded transportation assets (VIA Rail Canada Inc., Marine Atlantic Inc. and Eastern Atlantic ferries).
  • $81.2 billion over 11 years, starting in 2017–18 , in support of public transit, green infrastructure, social infrastructure, transportation that supports trade, Canada’s rural and northern communities, and smart cities.
  1. Industries

  2. Agri-Food
  • Creation of a $10.1 billion Trade and Transportation Corridors Initiative that will invest in gateways and ports, to help get agri-food products to market.
  • $70 million over six years, starting in 2017–18, to further support agricultural discovery science and innovation, with a focus on addressing emerging priorities, such as climate change and soil and water conservation.
  • Currently developing agri-food policy framework for next 5 years under Growing Forward 3 Program.

Automotive

  • Automotive Innovation Fund and the Automotive Supplier Innovation Fund will be consolidated as part of the Strategic Innovation Program.

As for existing grants, funding will most likely continue in sectors that support innovation, skills and infrastructure. The overall budget and spending sends a clear signal for job creation and growth with the funds and grants being proposed creating opportunities for businesses to cultivate, develop and expand. This will affect grant strategy moving forward since program changes and increased funding for strategic innovation in Agri-Food, Aerospace and Defense, Clean Technology and the Automotive industry are expected. Fairtax will be monitoring the grant landscape and the impact on funding strategies going forward to best serve its clients’ grant strategy.