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2021 Federal Budget: Planning for a Post-COVID, Post-Carbon Future

Canada’s 2021 federal governmental budget was released on Monday, April 19th showcasing the country’s upcoming spending on projects, economy boosting initiatives and expectations in combating COVID-19. Released by Finance Minister Chrystia Freeland, a significant portion of the budget offers new spending ventures to support the agricultural sector while promoting “green growth”.

Billions of dollars are slated to restimulate the economy to “bounce back” from the damages that the COVID-19 pandemic has caused with a significant portion aimed to transition farmers to a lower-carbon economy. The budget is set out to plan a “net-zero” economy while adhering to a more environmentally conscious approach, with expectations to meet net-zero emissions by 2050.

 

According to Freeland’s budget documents, “Budget 2021 announces the government’s intention to return a portion of the proceeds from the price on pollution directly to farmers in backstop jurisdictions (currently Alberta, Saskatchewan, Manitoba, and Ontario), beginning in 2021-22.” Acknowledging that a large percentage of farmers use natural gas and propane in their work, the document says it estimates “farmers would receive $100 million in the first year.” Freeland notes that “returns in future years will be based on proceeds from the price on pollution collected in the prior fiscal year and are expected to increase as the price on pollution rises,” and that more details will be released later this year.

“The resource and manufacturing sectors that are Canada’s traditional economic pillars – energy, mining, agriculture, forestry, steel, aluminum, automobiles, aerospace – will be the foundation of our new, sustainable economy.”

Farmer support and Climate-focused solutions

To improve the budget’s “green growth” plan, the budget includes extending the funding for the Agricultural Clean Technology Program. The 2018 program is expanding from its initial $25 million to an allocated $165.5 million investment. Also included in the budget is $50 million prioritizing the purchase of more efficient grain dryers for farmers across the country.

Additional funding is also slated to be administered during the 2021-2022 fiscal year to the Agricultural Climate Solutions program. Over the next two years $200 million will be added to assist projects specifically “accelerating emission reductions by improving nitrogen management, increasing adoption of cover cropping and normalizing rotational grazing,” according to the budget.

The Nature Smart Climate Solutions Fund, “targeting the protection of existing wetlands and trees on farms, including through a reverse auction pilot program,” will be allocated $60 million over the next two years. The Agricultural Clean Technology Program is also allocated $10 million over the same timespan.

Freeland’s notes within the budget frames farmers as “major players in Canada’s fight against climate change.”

“The agricultural sector has the potential to scale up climate solutions, many of which are already underway across the country.”

Meaningful Back-and-forth

Budget 2021 is also announcing a system of consultations for future regulations on pricing carbon pollution, and carbon border adjustments. The process is expected to be announced within upcoming weeks, Freeland assures.

“This consultation process will begin in the summer with targeted discussions, including with provinces and territories, importers, and exporters – especially those who deal in emissions-intensive goods. The broader public will be engaged this fall,” the budget says.

“Net-Zero emissions” and trading standards

A significant aspect in the budget’s “net-zero” economy is the overall reduction of Canada’s greenhouse gases. Canada’s Clean Fuel Standard is expected to reduce these gases by more than 20 megatonnes in 2030 to ultimately to net-zero emissions by 2050. Over the next seven years, the government proposes to spend $67.2 million to implement and administer this endeavour.

The document says, “this standard creates new economic opportunities for Canada’s biofuel producers, including farmers and foresters, who are part of the diverse supply chain for low-carbon fuels. Making this investment now will secure Canada’s future competitiveness in the global transition to a low-carbon economy.”

The government is also making use of the unique position Canada has with the other G7 countries, having trade agreements with every other G7 country, and with two-thirds of the world’s economy. As such, Ottawa is primed to play a key role in the world’s recovery after COVID-19. Budget 2021 is proposing $292.5 million to be spent over the next seven years as compensation to assist processors of all supply managed agricultural sectors, to adapt to the CETA and CPTPP trade deals.

Foreign Worker support

According to the budget, Canada’s approximately 4,000 employers within the food production and processing sectors rely on temporary foreign workers filling up to 60 000 jobs. With the concurrent isolation requirements under the Quarantine Act, the budget proposes methods to ensure these workers’ safety and financial stability.

Budget 2021 confirms the extension of the Mandatory Isolation Support for Temporary Foreign Workers Program into 2021-2022, to assist in costs associated with COVID-19 and mandatory isolations. $57.6 million will be provided and support of up to $1,500 per worker would be provided until June 15 of 2021. After that date, employers will then be able to receive $750 per worker until the gradual dissolution of the program on Aug 31.

The government says, “if workers are required to quarantine at a government-approved facility, due to a lack of suitable facilities at their employers’ facilities, employers can receive up to $2, 000 per worker for costs associated with mandatory isolation requirements.”

Over 15 years of wine

Ottawa is also striving to boost the Canadian wine agri-food sector by implementing a new program intended to support wineries. A $101 million budget, starting in 2022 – 2023, to be distributed over two years will be intended to allow these wineries adapt to the new economic challenges.

Developing a post COVID-19 economy

A significant number of proposed projects involve revitalizing the economy and development of new initiatives for new or small businesses, alongside the worrying $354 billion dollar deficit. Including a proposal to increase the minimum wage to $15 an hour, the budget is also planning to extend rent subsidy until fall, and a pledge to enact a $10 a day childcare pledge for all Canadians by 2025 with an initial $2 billion allocated to be used for child care within the next 12 to 18 months.

Budget 2021 also proposes an infusion of $3.9 billion, over three years starting in 2021-22, to make Employment Insurance more accessible for Canadians over the upcoming year. Consultations examining systemic gaps exposed by COVID-19 will focus on self-employed and gig workers, as well those enduring difficulties in seasonal industries or different life events. For the fiscal 2021-22 year, the government plans to spend $5 million over two years to Employment and Social Development Canada to achieve this goal.

The budget also proposes to assist small businesses through extensions of the Regional Relief and Recovery Fund, and the Indigenous Business Initiative application deadline until June 30 of this year. $80 million is also proposed to provide, on a cash basis, for the Community Futures Network of Canada, and other regional development agencies.

Ultimately, the Canadian 2021 Budget is an ambitious document proposing an extensive amount of spending to the benefit of a large portion of the country. Ideally the goal is to infuse much needed funds to economic initiatives while also making gradual changes to the environment. Additionally, a significant portion of the budget is set aside to improve the overall living conditions for everyone affected by the pandemic; there is much in the budget to look forward to in the upcoming months. The significant deficit leaving 2021 is cause for worry, and it remains to be seen if projections to reduce that to $154.7 billion by 2022 will be realized, but the government remains optimistic.

 

 

 

Written by Michael To

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