The Chemistry Industry Association of Canada (CIAC) was invited to participate in an Alberta government pre-budget consultation on Wednesday, January 17, 2018, hosted by Joe Ceci, President of the Treasury Board and Minister of Finance, and Marg McCauig-Boyd, Minister of Energy.
This session was part of a broader consultation effort and included representatives from oil and gas (upstream, pipelines, and service companies), electricity producers, labour, and the chemical manufacturing sector.
Minister Ceci provided context to this year’s budget challenges highlighting the historic dependence on resource revenue to fund government spending. While there are signs of growth in the province’s economy, tax revenue to government is lagging due to lower commodity prices and the corresponding impact on royalties and corporate income taxes. The Minister indicated a shift in the coming provincial budget to one of government spending restraint, reduced expenditures while maintaining a focus on core programming, and starting on a path to get back to balance between government spending and revenue.
CIAC focussed its comments on two issues of importance to the chemistry sector in Alberta. First, in addition to reducing government expenditures, the government needs to focus on growing new incremental investment in the value-add chemical manufacturing sector. We have missed the current wave of new investment from our sector in the U.S., and through its response to the pending recommendations from the Energy Diversification Advisory Committee (EDAC), we would like to see a longer-term plan for improving the competitiveness of new investments in Alberta.
We need to shift from a singular focus on maximizing resource revenue (market access) to one that includes maximizing the impact of Alberta’s oil and gas resources through increased chemical manufacturing in the province. We compete with other jurisdictions for new investment and all levels of government in Canada – municipal, provincial, and federal – need to work together to improve investment competitiveness in Alberta.
Second, Alberta needs to work with the federal government to understand the impacts of U.S. corporate tax changes relative to maintaining the competitiveness and historical advantage in the combined federal and provincial corporate income taxes. More specifically, we drew attention to the U.S. tax measure for a 100 per cent Accelerated Capital Cost Allowance (ACCA) for five years. The U.S. approach to ACCA is better and broader than what is currently in place in Canada and Alberta. We reinforced our earlier advocacy to Alberta Treasury Board and Finance to work with the federal government to introduce a 100 per cent ACCA for a minimum of one full business cycle of seven years to specifically apply to upgrading resources into manufactured products.
Overall, the Ministers heard from a broad cross-section of Alberta’s energy industry and a dominant theme of discussion focused on improving business competitiveness in the province through both fiscal and non-fiscal measures.
For more information, please review our submission to the federal budget process: Driving Canadian Growth in the Global Chemistry Sector