The Budget
Date: 2023_04_18
Chamber: HOUSE OF COMMONS
Mr. Chandra Arya: Canada has made a remarkable recovery from the COVID recession. Canada's economic growth is the best among the G7 countries. About 830,000 more Canadians are employed today than before the pandemic. Inflation has been falling for the last eight months. Our unemployment is at a record low, and in February, we had labour force participation for women aged 25 to 54 at a record high of 85.7%. However, we also face many challenges. As we know, globalization is winding down. We see a sort of Cold War-style era returning to the world now. The unipolar world is no more. It is bifurcating into a bipolar or even a tripolar world. Multilateral agreements that were the basis for global trade are also taking a back seat, with the WTO Appellate Body almost unable to function because of vacancies that are not filled because of issues related to some major countries. What we are seeing now, more than bilateral trade agreements, are free trade agreements among blocs of countries; we are also seeing more friendshoring. In fact, this concept of friendshoring is just starting up. While it is a challenge, this is also an opportunity for us. Protectionism is growing. This is not just from the traditional countries that were practising protectionism, such as developing countries; rather, protectionism is also growing in developed countries, especially countries like the United States. A few years back, in this chamber, I talked about the importance of artificial intelligence and how that technology will not only affect the corporate sector and the economy but also the entire society. We are already seeing the impact of artificial intelligence and technologies like robotics and automation on this society. I will be sharing my time with the member for Richmond Hill . The budget talks about transforming challenges into opportunities. It mentions a need for investment to manage the structural changes, which will not be limited to one sector or one aspect of the economy. Broad-based investment will be required to grow our economy and create good middle-class jobs in the years to come. The scale of required investment is massive, and the private sector alone is unlikely to mobilize the level of capital required in Canada at sufficient speed. However, although we say the private sector alone cannot mobilize, it is expected to invest about $100 trillion in the global clean economy between now and 2050. Many of the investments that need to be made will stretch over decades and involve high upfront costs, and that is where governments come in. Moreover, key sectors and technologies will have significant spillover effects by driving development of related industries. For example, fundamental inputs to clean production and the production of clean technologies, such as electricity; critical minerals; and carbon capture, utilization and storage, will provide foundations for an expanding clean economy. For related sectors, such as hydrogen and clean manufacturing, this will boost their productivity, support their resilience and help generate new middle-class jobs. Private investment decisions may not take full account of these spillovers, and this increases the risk of underinvestment. Without the right policy framework, as stated in the budget 2023 document, Canada could see underinvestment in critical areas and a slow pace of innovation in new clean technology. Together, these factors would result in Canada falling behind the United States and other countries that are moving forward aggressively to build their clean economies, create middle-class jobs and ensure more prosperous futures for their people. Canada must act decisively to ensure that it remains the location of choice for new investment in these sectors, particularly in the face of the U.S.'s recent passage of the Inflation Reduction Act. In addition to this act, we have to take notice of the U.S.'s CHIPS and Science Act, a $280-billion act. It will not only focus $80 billion on the manufacturing of semiconductors in the United States but also invest in around 20 technology centres focusing on advanced technologies, from transition energy and biotechnology to others. This combination of the IRA and the CHIPS and Science Act is called a once-in-a-lifetime, once-in-a-generation policy of the United States. It has fundamentally rewritten the entire industrial policy of the United States. We also have to consider the friendshoring that the U.S. is emphasizing now. That is a challenge for many countries in the world, but it creates opportunities for Canada that we are already seeing in the critical mineral sector. I will talk about this in a minute. Budget 2023 proposes substantial measures as the next steps in the government's plan to "crowd in" new private investment by leveraging public investment and government policy. The goal of this approach is neither to substitute government for the private sector nor to supplement market-based decision-making. Rather, it is to leverage the tools of government to mobilize the private sector. This approach is not about the government picking individual corporate winners in an effort to engineer a preferred vision for the economy in 2050. That approach did not work in the past, and it is even less likely to work in today's environment of rapid technological change. The tax incentives and investment supports proposed in budget 2023 are designed to set a framework for boosting overall investment while leaving the private sector to determine how best to invest based on market signals. Canada has been rich and prosperous because of the natural resources we have and the hard work of several generations of Canadians, including present-day seniors. However, the future is changing with the digital economy and the new technologies that are coming up. We have an opportunity, in these challenging times, to invest and grow. One growth aspect is the critical minerals, which are very important for the clean economy that is being envisaged all around the world. Before touching on that, I just want to mention two fundamental challenges. The first is that many of the investments that will be critical for the realignment of global supply chains and a net-zero future are large-scale, long-term investments. The second challenge, as I have already mentioned, is the U.S.'s IRA, with the related CHIPS and Science Act. In budget 2022, last year, we committed $3.8 billion to Canada's critical mineral strategy. In March of this year, last month, the government launched the critical minerals infrastructure fund, announcing that this new fund will allocate $1.5 billion towards energy and transportation projects needed to unlock priority mineral deposits. In addition to this funding, the federal government is entering into bilateral agreements with various provinces. Recently, we signed an agreement with Ontario, what we call the "Ontario table," where the federal government and the province committed to work together to align resources and timelines and to have a common regulatory approach to promoting the critical minerals required for a clean economy. I also have to mention that although we have critical minerals and announced investments, and although we have already attracted investments in battery manufacturing and electrical vehicles manufacturing, we still have the stumbling block of the long regulatory processes that are required to see a critical mineral mine start and become operational.