March 31, 2023, Ottawa, ONTARIO: On Tuesday March 28, Deputy Prime Minister and Minister of Finance Chrystia Freeland released Budget 2023: A Made-in-Canada Plan: Strong Middle Class, Affordable Economy, Healthy Future. While lauding Canada’s economic recovery from the COVID-19 pandemic and near-record low unemployment numbers, the budget projects a deficit of $40.1 billion, nearly $10 billion higher than announced in last Fall’s mini budget. This is driven by lower revenues due to a worsening economy and new spending on initiatives like a national dental care program and investments in clean energy technologies.

This confirms that government has clearly grown more pessimistic about Canada’s economic outlook with real growth expected to be flat in 2023. To deal with the mounting deficit projection, Minister Freeland announced plans to slash over $15 billion in spending over the next five years through “targeted reductions,” such as curbing “professional services” like over-reliance on management consulting firms and a reduction in travel expenses for Federal departments.

The Opposition criticized the Budget for continued spending which would lead to higher taxes and exacerbate inflationary pressures for Canadians. The Conservatives also attacked the Liberals’ inaction on the housing crisis and its lack of commitment to a balanced budget and more economic growth to signal to Canada’s trading partners that it is still a good place to invest.

A large chunk of the spending announced is targeted at technologies to reduce carbon emissions and facilitate Canada’s transition to a net-zero economy. These include commitment to investment tax credits for clean hydrogen, clean technology, and carbon capture, storage, and utilization. The Clean Hydrogen Investment Tax Credit will cover between 15 and 40 per cent of eligible project costs; and higher rebates will go to projects that produce the cleanest hydrogen. The hydrogen credit is worth about $5.6 billion over five years. The budget also provides $6.3 billion over five years to fund the Investment Tax Credit for Clean Energy, which will offer a credit of 15 per cent for investments in non-emitting electricity, natural gas fired electricity generation and energy storage. Lastly, the Investment Tax Credit for Carbon Capture, Utilization and Storage will cost about $520 million over five years and is available to businesses that invest in storing carbon dioxide or use it in other industrial processes.

Canada’s coatings industry continues to be burdened by an exceedingly high number of regulations and the cost of doing business in Canada continues to grow, something that was not adequately addressed in this Budget. Real economic growth has been stagnant for years and direct foreign investment continues to be minimal and while investments in clean energy are a positive, there is still lack of a coordinated strategy to generate sustainable economic growth over the long term.

“The coatings industry continues to be focused on innovation, investment in R&D, more sustainably sourced products and a commitment to moving toward net-zero in the coming years,” commented Gary LeRoux, CPCA’s President and CEO.

CPCA will continue working with all levels of government to ensure that our members remain compliant with Canada’s world-leading regulatory standards, while advocating for more measures that stimulate growth and investment in the economy with more and better jobs for all.