Building an Economy That Works for All Canadians
Backgrounder
The federal government’s economic plan is ensuring that Canadian workers and businesses lead the way as the global economy moves towards net-zero.
The 2023 Fall Economic Statement introduces a series of new measures to advance the government’s economic plan by continuing to build a stronger economy, fight climate change, and create great careers for Canadians—today and for generations to come.
Building Canada’s Clean Economy
The federal government’s plan to build Canada’s clean economy is already delivering results. Over the past three years alone, more than 90 clean growth projects valued at a total of more than $40 billion, including private investment, are underway or will soon move forward into construction across Canada. These projects are drawing investments into every region of the country and creating great jobs for the middle class.
In recent years, Canada has secured major investments across the electric vehicle and batteries supply chain, from critical minerals to batteries to electric vehicle assembly, which will help our economy grow and create and protect good-paying, middle class jobs.
In 2023 alone, the federal government has secured landmark battery manufacturing facilities—Volkswagen and Stellantis-LGES in Ontario, and Northvolt in Quebec. These projects will employ thousands of Canadians and anchor the future of Canada’s electric vehicle industry, while also creating new opportunities for workers and businesses across Canada’s critical minerals, clean manufacturing, and clean technology industries.
Canada’s economic plan will ensure our economy remains competitive today and into the future, with investments that are competitive with those of our largest trading partners—because Canadian workers and businesses have what it takes to lead the way.
Delivering the Clean Economy Investment Tax Credits
As an important pillar of Canada’s economic plan, the government is focused on implementing, on a priority basis, the clean economy investment tax credits for carbon capture, utilization, and storage; clean technology adoption; clean hydrogen; clean technology manufacturing; and clean electricity.
The following timelines outline the federal government’s path towards delivering all investment tax credits by the end of 2024.
Using Waste Biomass to Generate Electricity and Heat
To create new opportunities for forestry and agriculture to generate affordable electricity and heat from their by-products that would otherwise go to waste, the 2023 Fall Economic Statement proposes to expand eligibility for:
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The 30 per cent Clean Technology Investment Tax Credit to include systems that produce electricity, heat, or both electricity and heat from waste biomass. This expansion of the Clean Technology Investment Tax Credit would be available to businesses investing in eligible property that is acquired and becomes available for use on or after the date of the 2023 Fall Economic Statement.
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The 15 per cent Clean Electricity Investment Tax Credit to include systems that produce electricity or both electricity and heat from waste biomass, which would be available as of the date of Budget 2024 for projects that did not begin construction before March 28, 2023.
Delivering the Canada Growth Fund
To help attract billions of dollars worth of investments in Canadian workers and Canadian businesses, the federal government launched the Canada Growth Fund, a $15 billion arm’s length public investment vehicle led by some of Canada’s leading investment professionals from the Public Sector Pension Investment Board (PSP Investments).
The Canada Growth Fund’s investments in cutting-edge Canadian businesses and technologies, such as its first investment announced last month, will help innovative companies grow in Canada and support good jobs for Canadians.
In summer 2023, the Canada Growth Fund commenced operations, and is deploying a suite of financial tools to de-risk and bolster private investment in low-carbon projects, technologies, businesses, and supply chains.
One of the financial tools the Canada Growth Fund is providing to support clean growth projects is contracts for difference—including contracts on the future price of carbon. Carbon contracts for difference will backstop the future price of carbon and provide predictability to businesses in order to de-risk important emission-reducing projects.
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The 2023 Fall Economic Statement announces that the Canada Growth Fund will be the principal federal entity issuing carbon contracts for difference. The Canada Growth Fund will allocate, on a priority basis, up to $7 billion of its current $15 billion in capital to issue all forms of contracts for difference and offtake agreements.
Advancing the Indigenous Loan Guarantee Program
Everyone in Canada deserves to share in Canada’s economic prosperity, and the clean economy opportunities that lie ahead offer new ways to advance economic reconciliation. The federal government is determined to ensure that Indigenous communities can share in the benefits of major projects in their territories on their own terms.
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Informed by Natural Resources Canada’s ongoing work to develop a National Benefits-Sharing Framework, the 2023 Fall Economic Statement announces that the government will advance the development of an Indigenous Loan Guarantee Program to help facilitate Indigenous equity ownership in major projects in the natural resource sector. Next steps will be announced in Budget 2024.
Pension Fund Investment
Canada’s pension funds provide Canadians with the secure and dignified retirements they deserve and have contributed to after a lifetime of hard work. The federal government believes that continued domestic investments by Canada’s pension funds have the potential to boost Canada’s economy and create good careers for people across the country.
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The 2023 Fall Economic Statement announces that the federal government will work collaboratively with Canadian pension funds to create an environment that encourages and identifies more opportunities for investments in Canada by pension funds and by other responsible investment pools, while helping to deliver secure pensions for Canadians.
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To enable pension funds to more fully participate in Canada’s economic growth, the 2023 Fall Economic Statement also announces that the government will explore removing the “30 per cent rule” from investments in Canada. The 30 per cent rule restricts Canadian pension funds from holding more than 30 per cent of the voting shares of most corporations.
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To improve transparency around pension investments, the government also proposes to require large federally-regulated pension plans to disclose the distribution of their investments, both by jurisdiction and asset-type per jurisdiction, to the Office of the Superintendent of Financial Institutions (OSFI). This information will be made publicly available, and the government will engage with provinces and territories to discuss similar disclosures by Canada’s largest pension plans in a simple and uniform format.
Defending Canadian Business from Unfair Foreign Treatment
Canadian workers and businesses deserve to be treated fairly by Canada’s trading partners. When the Government of Canada opens its markets to goods and services from other countries, Canada expects those countries to also grant Canadian businesses the same access that we provide their companies.
To protect Canadian workers and Canadian businesses—and to develop mutually beneficial and resilient supply chains—Canada is considering reciprocity as a policy feature. Going forward, Canada will consider implementing reciprocity as a key design element for new policies, including certain clean economy investment tax credits, federal procurement, and federally-funded infrastructure projects. Concurrent to this announcement, the government is releasing a policy statement with further details on Canada’s approach to reciprocity.
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