Export diversification strategy also welcomed.
OTTAWA—Farm and other business groups welcomed new equipment depreciation rules and a diversified export strategy Finance Minister Bill Morneau announced in his fall economic update.
The Canadian Federation of Agriculture (CFA), Grain Growers of Canada (GGC), the Canadian Agri-Food Trade Alliance (CAFTA) and the Canadian Produce Marketing Association (CPMA) were among the groups welcoming the minister’s promises. Parliament will have to pass legislation to bring them into effect and the groups promised to watch those steps carefully.
Morneau said there would be tax changes to enable businesses to write off the full cost of some types of machinery and equipment in the year of purchase and a $1.1 billion fund to help Canadian exporters find new international markets by expanding the Canadian Trade Commissioner Service. It will also support additional infrastructure to boost port capacity and $800 million will be added to the federal strategic innovation fund during the next five years.
CFA President Ron Bonnett said, “This fiscal update shows that the federal government is taking the right steps to increase the competitiveness and efficiency of Canada’s agricultural sector. This support is pivotal to achieve the target of increasing agricultural exports to $75 billion by 2025 which was set out in the 2017 federal budget.”
Accelerated capital cost allowances will allow Canadian farmers more freedom to invest in their operations, he said. The 100 per cent deductibility on clean energy equipment will provide a direct incentive for further investment in climate change mitigation.
GGC President Jeff Nielsen said the government “continues to recognize the important role agriculture plays in the growth of our economy, noting that agriculture contributes 6 per cent to Canada’s GDP and committing to increase agricultural exports by 50 per cent between now and 2025.
The depreciation, export diversification and regulatory reform measures announced by Morneau “will help grain farmers succeed at home and around the world by encouraging exports, investment and innovation…and will deliver real results for Canada’s hard working grain farmers.”
CAFTA President Brian Innes commended Morneau’s pledge “to make Canada the world’s most globally connected economy. Increased support will help exporters take advantage of new trade agreements and access new markets.
“The new Export Diversification Strategy will provide much-needed additional support for Canada’s agrifood exporters to identify and take advantage of the new market opportunities provided by the new trade agreements.”
CPMA President Ron Lemaire said the measures announced by Morneau “will bolster the fresh fruit and vegetable industry and increase the industry’s competitiveness in the global marketplace.”
They are “a thoughtful response to many of the competitiveness challenges the fresh produce industry faces,” he said. Regulatory reform and international trade diversification are especially helpful. “We look forward to continuing our work with the government on increasing our industry’s competitiveness.”
CPMA is pleased with the export diversification strategy, additional funding for agrifood market access issues, the creation of an Expert Advisory Committee on Regulatory Competitiveness and the new depreciation incentives.
Perrin Beatty, President and CEO of the Canadian Chamber of Commerce said while the statement contains a number of important measures to address Canada’s competitiveness gap with other countries, but more urgently needs to be done.
“In advance of today’s update we have been calling for targeted tax cuts to stimulate investment, concrete measures to reduce the regulatory burden, and accelerated investments in the National Trade Corridors Fund,” he said. It hopes the promise of regulatory reform lives up the billing.
Missing from the statement was a full review of the tax system and a clear, realistic strategy for balancing the federal spending and revenue, he said.
Goldy Hyder, President and CEO of the Business Council of Canada, said the measures in the economic statement “will partially offset the negative impact on Canada’s economy of recent U.S. tax changes, while creating incentives for Canadian companies to make new job-creating investments.
“However, we all need to recognize that Canada’s competitiveness challenges go much deeper than any single tax measure. We will continue to urge the government to adopt a comprehensive strategy to foster business confidence, attract investment and enable the creation of new, high-value jobs.”
The update also outlined a series of regulatory modernizations, with competitiveness being added as a permanent part of regulatory mandates. The economic strategy table report outlined many regulatory bottlenecks and CFA is relieved to see the government promising to take immediate actions on items such as food labelling, barriers to interprovincial trade, the introduction of general aquaculture regulations and others.
“It is very heartening to see the government is listening to farmers and, more importantly, acting on what they hear. These initiatives are an excellent step towards harnessing the potential of Canadian agriculture,” said Bonnett said.