An opportunity missed, but hopefully not lost

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Source: GLOBE Foundation

It could be called the ’Everyman’s Budget. Everyone stands to get something from the fiscal measures brought down by Canadianfederal Finance Minister Jim Flaherty. While there were some ’green’ elements among the flurry of spending proposals, there were some notable gaps. At a time when our most important trading partners are moving strongly in the direction of creating more sustainable economies with a strong focus on energy and environmental security, yesterday’s budget seems to have missed the mark. In many respects it represents an opportunity missed, but hopefully not lost.

Economic recovery was the over-riding mantra of the budget, the total cost of which could result in a deficit in excess of $34 billion for 2009 and lesser deficits over the next five years. Homes, highways and harbours topped of the list of capital projects that will start immediately, spurred by federal funding of 50 cents of every dollar.

’Jobs for today’ was the major focus of the budget. As noted by the national Post, 'a shovel in every hand' has replaced 'a chicken in every pot' as the political rallying cry for the federal government’s effort to kick start an ailing economy by spending on bridges, roads, rail lines, research centres, federal buildings, slaughterhouses, aboriginal reserves and hockey arenas.

Even twinning yet another section of the Trans-Canada Highway through Banff National Park was added to the list of ’shovel ready’ infrastructure undertakings.

It was a no surprise budget. Many of its key elements had already been made public in a barrage of good news announcements that preceded Mr. Flaherty’s statement in the House. The focus on short term, job creation projects was also expected, as were measures to deliver fast relief in the form of tax cuts to individuals and corporations.

Spending on education, transportation, health, childcare, farming, the arts, tourism and recreation as well as support for mining, forestry, sustainable energy and agriculture are also needed to stabilize the ailing Canadian economy.

Infrastructure spending will focus on four kinds of projects:

Provincial, territorial and municipal infrastructure, mainly short-term projects aimed at renewing public infrastructure, including road and sewer upgrades, as well as green infrastructure to contribute to cleaner air, land and water.

First Nations infrastructure - spending will go toward the construction and renewal of schools, improved access to safe drinking water, and health care and policing infrastructure in Aboriginal communities.

Knowledge infrastructure - spending will focus on modernizing universities and colleges, building research infrastructure, expanding health information systems, and improving broadband services in rural Canada.

Federal infrastructure- Federal infrastructure spending will focus on upgraded passenger rail services, safer bridges and highways, refurbished harbours for small craft and more efficient border crossings.
The budget also promises $1 billion over a five year period for a Green Infrastructure Fund designed to improve the quality of the environment and to build a more sustainable economy over the longer term. 

While details are yet to be provided, the Fund will support sustainable energy infrastructure such as energy transmission lines to improve air quality and to lower carbon emissions. Funds will be allocated on a cost-shared basis based on merit, with funding decisions made in cooperation with provincial governments.

The budget also notes that clean-energy technologies have the potential to make a significant contribution to reducing emissions from the production and use of energy, and can create new opportunities as Canada makes the transition toward a greener global economy.

To this end, $1 billion over five years will go to support clean energy technologies. This includes $150 million over five years for research, and $850 million over five years for the development and demonstration of promising technologies, including large-scale carbon capture and storage projects. This support is expected to generate a total investment in clean technologies of at least $2.5 billion over the next five years.

So far roughly $375 million has been provided to support the development of carbon capture and storage technologies. This included $250 million promised in Budget 2008 for a full-scale commercial demonstration project in Saskatchewan and research on the potential for carbon storage in Nova Scotia.

Budget 2009 suggests that accelerated capital cost allowances may be used to promote further investment in clean-energy generation technologies, as well as advancing the timing of capital cost deductions for tax purposes.

In truth, much more is required to move Canada forward on the path to a sustainable, low-carbon economy. Clean technology development is the one solid ’good news’ item in these troubled economic times. All indications are that despite a short-term slowdown in cleantech investments due to the global credit crunch, investments in energy efficiency will be one of the biggest sectors to watch in 2009 (See Nine clean technology predictions for 2009).

Budget 2009 could have placed a much greater emphasis on promoting the development and deployment of clean energy technologies as part of the planned spending on municipal infrastructure. As well, as noted in an earlier GLOBE-Net Editorial, if we are going to provide financial support to sustain the auto industry, why not push more for the new generation of more fuel efficient vehicles - even plug-in electric vehicles or hybrids.

A potentially beneficial element in the budget is the proposal to streamline federal approval processes so that more provincial, territorial and municipal projects under the Building Canada program could start in the upcoming construction season.

Changes are planned to the federal regulatory framework by means of legislative, regulatory and administrative actions to drive efficiencies in assessing environmental and other impacts of infrastructure projects, presumably without compromising protection of the environment.

This could involve amendments to the Navigable Waters Protection Act and the Canadian Environmental Assessment Act to allow one environmental assessment process to meet federal and provincial requirements. It is estimated that these changes could shave the time required for federal approvals of major projects by up to 12 months.

It is well known that current infrastructure approval processes are subject to duplication and inefficiencies in administration leading to unnecessary project delays. A caveat is that while process efficiencies are always welcome, there should be no diminishment of the rigour with which environmental impact assessments are carried out.

Overall, it is too soon to gauge the full impact that yesterday’s deficit creating budget might have on the business of the environment and what promise it holds for a greener economy in the future. The Economic Action Plan, which is the essence of the budget, runs to over 300 pages and is replete with proposed spending initiatives. It will take time to digest.

Early reactions from the construction sector have been positive. City officials are pleased with new monies for social housing and transit systems. In other quarters some disappointment has been registered with respect to the level of spending on renewable energy such as solar and wind power, and on plans to support the nuclear industry, a move opposed by some environmental groups.

In the weeks ahead it is hoped that more attention will be given to putting in place measures to stimulate the development and deployment of clean technologies both as part of the planned spending on infrastructure as well as in the advancement of our academic and research establishment. As noted above, this may be an opportunity missed, but it need not be an opportunity lost.

One other thing missing in the budget is an articulated strategy for a stronger more sustainable economy in the future . Such a ’vision’  for Canada’s future  would have given us the ’hope’  similar to that which galvanized citizens in the United States to elect President Barack Obama. 

John D. Wiebe
President and CEO

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