Representatives of Canada’s auto industry had little to say about the federal budget Finance Minister Bill Morneau unveiled in Ottawa on Tuesday.
Flavio Volpe, the head of the Automotive Parts Manufacturers’ Association, said he expected “zero” automotive-related language or policy in the budget. That’s exactly what he and the sector got.
The 367-page document contains the word “automotive” just once, and it had nothing to do with financial support or even regulation of the industry.
Volpe described Tuesday as “the first day in the campaign to close the competitive tax gap with the U.S. in the 2019 budget.”
“We’ll be focussing on that for the next year,” Volpe said.
That’s because Morneau still faces the challenge of corporate tax cuts in the United States that have prompted fears north of the border that companies will choose to invest stateside instead of in Canada.
Volpe said the Liberals “have been clear they aren’t going tit for tat” with the United States when it comes to corporate tax cuts.
Morneau opted to hold the line on corporate taxes in Canada, choosing to help in other ways such as spending to grow women-led businesses, innovation and diversification of trade.
Unifor President Jerry Dias, whose union represents 23,500 workers in the auto industry, wasn’t surprised by anything in the budget.
“I really wasn’t expecting anything in the budget to be dear to the automotive industry,” he said in an interview with Automotive News Canada. “The federal government made the biggest move in decades when it changed the [financial support] system from taxable, repayable loans to straight grants.”
In 2017, the Liberals ended the Automotive Innovation Fund, which offered repayable loads, and created the Strategic Innovation Fund, a $1.26-billion pool of non-repayable money shared by numerous industries, including automotive, aerospace, defence initiatives and tech sectors.
“That has been received incredibly well. It was a game-changed for us,” Dias said.
David Adams, head of the Global Automakers of Canada, noticed there was nothing about zero-emissions vehicles.
“However, as the government is currently working on a national ZEV strategy, perhaps they are waiting for the strategy before they start allocating funding,” he reasoned.
The Liberals said in their last budget that they will be investing $21.9 billion in green infrastructure, including electric vehicle charging stations and electricity grid interconnections.
Meanwhile, an advisory committee created to help the federal government frame a national policy on zero-emission vehicles held its final meeting in mid-September 2017, no closer to definitively answering the question of what government should do to boost sales. The timetable for the Liberal government to roll out its ZEV policy remains unclear, but Transport Minister Marc Garneau plans to release a national zero-emission vehicle strategy in 2018 to help increase the number of sales. Canada is currently one of only two G7 nations without such a strategy.
Michael Hatch, the chief economist for the Canadian Automobile Dealers Association, called the budget “largely a stay-the-course document without much in the way of large-scale new spending, which is not a bad thing.”
He is looking toward 2019.
“The government is obviously laying the groundwork for some bigger-ticket items in next year's pre-election budget, such as (possibly) a national pharmacare benefit,” he said in an email to Automotive News Canada. “But this year's document is mostly a cautious step towards what the government hopes to be a more splashy 2019 version with some more electoral goodies.”
Mark Nantais of the Canadian Vehicle Manufacturers' Association was not immediately available for comment.