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Archived - Chapter 4 - Moving Forward on the Priorities of Canadians -
The Importance of Communities

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Highlights

Introduction

Canada’s communities are the social and economic foundation of the country. In 1871, 20 per cent of Canadians were living in urban areas and 80 per cent in rural areas. Today, the situation is reversed with 80 per cent now living in urban areas.

Whether large metropolitan areas, cities or rural hamlets, the communities Canadians choose to live in have a significant bearing on their quality of life and the social and economic opportunities open to them.

Canada’s cities have become the engine of the economy for the 21st century, the hubs where companies, highly skilled workers, universities and new ideas come together to generate investment and jobs. Dynamic cities are key to Canada’s economic advantage and high standard of living.

Canada’s communities also drive the country’s social advantage: an inclusive and diverse society that allows everyone to develop and fulfill their potential. Safe neighbourhoods, quality education, accessible health care, affordable housing and green spaces are all essential to Canadians’ quality of life.

Finally, Canada’s communities hold an important key to sustainable development for future generations of Canadians, given the communities’ responsibilities in areas such as clean water, clean air, waste disposal and public transit.

Starting in the 1990s, the federal government launched a series of infrastructure programs in close cooperation with provincial and municipal governments. Through these programs, the Government has committed $12 billion to infrastructure—representing a potential total investment of $30 billion after taking into account contributions from provinces and municipalities.

Beyond infrastructure, the federal contribution to municipalities has taken the form of social programs such as employment insurance, immigration, affordable housing, homelessness and cultural programs. Various economic development programs have played a major role in supporting the needs of municipalities in all regions.

The social, economic and environmental challenges facing our municipalities are tightly interwoven and seldom confined to one jurisdiction. As such, they require an integrated response, not only from federal, provincial-territorial and municipal governments, but from other sectors of society as well. These include the private sector, the voluntary sector and social economy enterprises, which promote the economic and social development of communities. Government action must therefore be complemented by greater support for non-governmental organizations that contribute so much to the well-being of our communities.

Challenges Faced by Communities

Infrastructure

Leaders of Canada’s cities and smaller communities have pointed to the financial challenges they face in trying to maintain and improve the economic and social strength of their municipalities. They consistently identify infrastructure as their most pressing priority.

Social Programs

The challenges municipalities face extend beyond the provision of physical infrastructure. Social programs and services that help Canadians participate in their communities, find employment and reap the opportunities around them are also under strain.

These difficult challenges are best addressed by collaborative efforts among governments. For example:

Financing

Municipalities are facing increasing pressure to maintain and renew their infrastructure and ensure that necessary social programs are available to residents. There is a general understanding that there are limits on the extent to which the property tax base—the single most important source of revenue for municipalities—can finance these spending pressures.

Some municipalities, in partnership with their provincial governments, have secured new arrangements to diversify their revenue bases. For example:

Beyond revenue diversification, municipalities are also looking to innovative new solutions to address their challenges. For example:

In addition, provincial governments have supported innovative ways of addressing municipal financial challenges by establishing municipal financing authorities. These institutions pool municipal borrowings and improve municipalities’ ability to borrow in capital markets at low rates.

A New Deal for Communities: First Steps

In recognition of these challenges, the Government of Canada has made a historic commitment to forge a New Deal for Canada’s communities. The New Deal will be a sustained, long-term effort to improve the living standards and quality of life of Canadians in cities and communities of all sizes.

The New Deal for communities is intended to:

The New Deal will be based on a more effective partnership among federal, provincial-territorial and municipal governments, and the private and non-profit sectors. Given how community problems are tightly woven together without regard for jurisdictional boundaries, it is clear that no government or sector holds all the tools and levers required to achieve real and lasting results.

Budget 2004 takes important first steps in building this New Deal. Specifically, the budget:

The Government is committed to providing a stronger voice to municipalities on the full range of federal policies and programs that are important to them. The Prime Minister has appointed a Parliamentary Secretary to lead efforts to secure the New Deal for communities.

The Government has also created the External Advisory Committee on Cities and Communities to ensure that the concerns of municipalities are heard and addressed on an ongoing basis. Finally, the federal Minister of Finance has committed to annual, pre-budget consultations with municipal representatives. The first of these consultations took place on February 19, 2004, under the aegis of the Federation of Canadian Municipalities.

GST/HST Relief for Municipalities

As announced in the February 2, 2004, Speech from the Throne, the Government proposes to increase the rebate in respect of the goods and services tax (GST) and the federal portion of the harmonized sales tax (HST) for municipalities to 100 per cent from 57.14 per cent.

Effective February 1, 2004, municipalities across Canada get full relief from the tax paid in providing municipal services and community infrastructure. The increased rebate will provide municipalities of all sizes with an estimated $7 billion in additional revenue over the next 10 years, including $100 million for two months of 2003–04, $580 million in 2004–05 and $605 million in 2005–06.

All municipalities will be eligible for the increased rebate. This includes:

The GST/HST relief measure advances the New Deal’s objectives in three ways:

On March 9, 2004, the Government announced further details on the GST/HST relief measure and its operation, including proposed consequential amendments required to facilitate an orderly transition to the full rebate, to protect the integrity of the tax system and to enhance transparency. Annex 9 sets out a detailed Notice of Ways and Means Motion consistent with earlier announcements.

Gas Tax Sharing

The new financial resources provided to municipalities through GST/HST relief are part of the federal government’s recognition that Canada’s communities need reliable, predictable and long-term revenue sources in order to plan for long-term infrastructure investments.

As the Speech from the Throne stated, the Government will work with provinces to share with municipalities a portion of gas tax revenues, or determine other fiscal mechanisms that achieve the same goals. Over the coming months, the Government will launch these discussions with provincial-territorial governments and will continue to consult with municipalities.

Infrastructure Programs

Budget 2003 announced $1 billion over 10 years to help finance municipal infrastructure projects that are typically smaller in scale under an initiative called the Municipal Rural Infrastructure Fund.

In this budget, the Government will accelerate funding under the Municipal Rural Infrastructure Fund. Specifically, the $1 billion provided in the 2003 budget will now be spent over 5 years instead of the original 10, doubling the amount of funding available to municipalities over the next 5 years under this program.

This measure adds to the considerable infrastructure support already provided over the last 3 years through the following initiatives:

The Government has been progressively committing the funding available under these infrastructure programs. Of the $4.6 billion available under the Canada Strategic Infrastructure Fund and Border Infrastructure Fund, more than $1.5 billion remains available for new commitments.

Finally, recent budgets have made important investments aimed at increasing the supply of affordable rental housing and addressing the homelessness problem. The Government of Canada is working in partnership with provinces, territories, municipalities and community groups to ensure these programs are delivered effectively to those most in need.

Affordable Housing and Homelessness: Recent Federal Investments

The Government of Canada has committed more than $2 billion over the six-year period between 2002–03 and 2007–08, including:

  • $1 billion for the Affordable Housing Initiative, a capital grants program aimed at increasing the number of affordable rental housing units being built.

  • More than $500 million for housing renovation programs, including the Residential Rehabilitation Assistance Program, Home Adaptations for Seniors’ Independence, Emergency Repair Program and Shelter Enhancement Program. These programs support the renovation and renewal of the existing stock of affordable housing and help low-income persons with critical housing repair needs.

  • $665 million for the National Homelessness Initiative, a key element of which is the Supporting Communities Partnership Initiative, which provides capital funding on a cost-sharing basis for local community groups to offer supportive services and facilities for the homeless.

These investments are in addition to $1.9 billion provided annually to support 640,000 households living in existing social housing units.

 

Illustrative Examples of Projects Benefiting From Federal Infrastructure Funding

St. John’s Harbour: The Government is providing a $31-million contribution to clean up St. John’s Harbour in Newfoundland and Labrador. This $93-million project involves the construction of a centralized waste water treatment facility on the south side of St. John’s Harbour, together with infrastructure for sewage collection and disposal of treated effluent. When completed, this project will have a demonstrably positive impact on the health of the local population and the environment.

Highway 30: Through the Canada Strategic Infrastructure Fund, the Government will contribute towards the completion of Highway 30. The province of Quebec and the private sector will also contribute towards the project which, once completed, will offer road traffic the opportunity to bypass the Island of Montréal and provide much-needed congestion relief.

GO Transit: $385 million in federal funding has been announced for GO Transit, which provides transit services in the Greater Toronto Area (GTA). The federal investment will help fund a number of commuter rail improvements, which will allow GO Transit to provide additional and more reliable services to area residents. The resulting reduction in automobile trips within the GTA should lead to important congestion and environmental benefits.

Red River Floodway: $120 million in federal funding from the Canada Strategic Infrastructure Fund is being used to help finance the expansion of the Red River Floodway around Winnipeg. The expansion will significantly bolster the level of flood protection for the City of Winnipeg.

Regina Urban Revitalization Projects: A commitment of up to $14 million from the Government was recently announced for two urban revitalization projects in Regina. The first project involves the deepening of Wascana Lake, enhancing its recreational value. The second project entails the construction of a multi-purpose facility at Regina Exhibition Park, which will host community and sports-related activities.

Expansion of the Vancouver Convention and Exhibition Centre: The Government has confirmed its intention to contribute towards the expansion of the Vancouver Convention and Exhibition Centre. This investment will significantly enhance Vancouver’s tourism potential and thus improve the local economy.

National Satellite Initiative: The Government has launched a $155-million National Satellite Initiative. This joint project between Infrastructure Canada, Industry Canada and the Canadian Space Agency is meant to provide high-speed broadband Internet access services via satellite to communities located in the Far and Mid North and in isolated or remote areas of Canada. Expanding broadband access will enable these communities to benefit from essential services, particularly in the areas of health, education and e-government.

 

Municipal Expenditures: A Snapshot

In 2002, municipal spending amounted to $47 billion a year, equivalent to $1,513 per person. Municipal spending accounts for about 10.5 per cent of total government spending in Canada.

  • Municipalities provide services that Canadians depend on, including:
  • Transportation (road construction and maintenance, snow clearing, public transit)
  • Protection (fire and police protection)
  • Environment (water and sewage management, garbage collection)
  • Social services, public health and housing
  • Other services including recreation and culture and regional planning
  • The focus of municipal spending varies significantly across provinces, reflecting differences in priorities and differences in the division of responsibilities between municipal and provincial governments.
2002 Total per capita: $1,513
  • For example, spending for social services, health and housing represents a very small share of municipal expenditures in most provinces, except in Ontario where it represents almost a third of total municipal spending.

Composition of Selected Municipal Expenditure by Province, 2002

 

Municipal Revenues: A Snapshot

  • Municipalities raised approximately $47 billion in revenues in 2002, similar to their expenditures, resulting in balanced budgets, on average.
  • Municipalities raise revenues through:
  • Property and related taxes
  • User fees
  • Transfers from other levels of government
  • Investment income
  • Other own-source revenues, such as selective sales taxes, licenses, permits and fines
  • In all, municipalities raised more than 80 per cent of their revenues from property and consumption taxes and user fees levied at the municipal level.
2002 Total per capita: $1,512
  • As with expenditures, the distribution of municipal sources of revenue also varies across the provinces.
  • Property taxes by far represent the largest source of municipal revenue, ranging from 45 to 70 per cent.
  • Municipal reliance on user fees varies significantly across provinces, ranging from 17 per cent in Newfoundland and Labrador to more than 30 per cent in Alberta.

Composition of Selected Municipal Revenues by Province, 2002

 

Municipal Debt Trends

  • Although municipalities are required to run balanced budgets, they are generally permitted to borrow to finance capital expenditures such as investment in infrastructure. However, despite low interest rates, many municipalities have shown a preference to reduce debt in recent years.
  • In 2000 total net municipal debt stood at just under $10 billion, equivalent to 1 per cent of GDP. This represents a significant reduction from a peak of more than $23 billion in 1993.
  • The reduction in debt varies among provinces and reflects various factors including forgiveness of municipal debt by some provinces, in particular British Columbia.

Municipal Debt Trends / Change in the Local Net Debt Per Capita by Province, 1993-2000

The Cleanup of Contaminated Sites

Cleaning up contaminated sites in or near urban areas is key to community rejuvenation. Cleaning contaminated sites facilitates sustainable land use practices by reducing pressures leading to urban sprawl and helps protect local water sources.

The Government is committed to doing its part to help communities meet their sustainable development objectives. To this end, Budget 2004 sets aside $4 billion over 10 years to clean up contaminated sites. This includes $3.5 billion over 10 years for a major, multi-year cleanup of contamination on federal lands. It is estimated that roughly 40 per cent of these sites are in or near urban areas.

Also included is $500 million for the cleanup of sites for which the Government shares some responsibility such as the Sydney tar ponds. (Additional details on the measures taken in this budget to clean up contaminated sites are found in the section "Environment and Sustainable Development" on page 181).

Programs for Urban Aboriginal People

The Urban Aboriginal Strategy (UAS), which helps communities develop new approaches to local Aboriginal issues, and the Aboriginal Human Resources Development Strategy, which provides access to training and employment, are two examples of federal programs that help to address the priorities of Aboriginal people and communities. As described in the section "The Importance of Learning," the budget extends the UAS from three to four years—through to 2006–07—and doubles its total budget to $50 million from $25 million over the duration of the strategy.

As well, as described in "The Importance of Learning," this budget confirms the five-year renewal of the $1.6-billion Aboriginal Human Resources Development Strategy by providing $125 million over five years (i.e. $25 million each year) to replace funds that were due to end on March 31, 2004.

Enhanced Language Training for Immigrants

More than 90 per cent of immigrants arriving in Canada settle in the largest urban centres, with more than 75 per cent settling in the metropolitan areas of Montréal, Toronto and Vancouver. Immigration is very much an urban phenomenon. Many newcomers face barriers preventing them from integrating into the Canadian labour market. The greatest of these barriers is insufficient language ability for the workplace. This budget will invest an additional $15 million annually to expand the enhanced labour market language training pilots announced in Budget 2003. Further details are provided in "The Importance of Learning."

New Deal for Communities—Summary

GST/HST Relief

  • Municipalities will receive $7 billion in GST/HST relief over the next 10 years including $100 million for 2003–04, $580 million in 2004–05 and $605 million in 2005–06.

Gas Tax Sharing

  • The Government of Canada will work with provinces to share with municipalities a portion of gas tax revenues or to determine other fiscal mechanisms that will achieve the same goals.

Acceleration of Infrastructure Funding

  • The $1-billion commitment under the Municipal Rural Infrastructure Fund will be spent over the next 5 years instead of over 10 years, as originally planned.

Cleanup of Contaminated Sites

  • New funding of $3.5 billion over 10 years will be provided to accelerate the ongoing cleanup of federal contaminated sites. An additional $500 million will contribute to the cleanup of sites, such as the Sydney tar ponds, for which the Government shares some responsibility.

Immigrant Language Training

  • New funding of $15 million annually will be allocated to language training programs to support quicker integration of new immigrants into the economy.

Urban Aboriginal People

  • The Urban Aboriginal Strategy will be extended to more communities, and its budget doubled from $25 million to $50 million over the duration of the strategy. Additional funds of $125 million over five years will be provided for the Aboriginal Human Resources Development Strategy to replace funds that are scheduled to end on March 31, 2004.

A Stronger Voice for Municipalities

  • The Prime Minister has appointed a Parliamentary Secretary to lead efforts on the New Deal for communities, as well as a federal External Advisory Committee on Cities and Communities.

The Community-Based and Non-Profit Sector

Canadians depend on community-based non-profit organizations, ranging from adult literacy groups to immigrant support agencies and large philanthropic foundations. The activities of these organizations are as diverse as education, culture, the arts, the delivery of social services, faith, international aid, health and the environment. Although some rely on volunteers while others have paid employees, they are similar in that they work for the greater good of communities of all sizes in every region of Canada. In recognition of their contribution to the well-being of Canadians, Budget 2004 contains a number of initiatives benefiting the voluntary sector and the social economy.

Supporting the Voluntary Sector

Canada’s voluntary sector, including its millions of volunteers, influences virtually all aspects of our society from poverty relief, environment issues, health and faith, to arts and culture, international development, sports and recreation.

Tax Rules for Registered Charities

Canadians must be able to donate to charities with full confidence that their monies will be spent on charitable programs and services. Registered charities, for their part, need to know that the rules are clear and are administered fairly and transparently. They must also have the flexibility to effectively manage the gifts entrusted to them by Canadians.

Budget 2004 proposes significant changes to the tax rules for registered charities that will help advance these goals. Specifically, this budget:

Responding to the Recommendations of the Joint Regulatory Table 

In March 2003, the JRT, in its report Strengthening Canada’s Charitable Sector: Regulatory Reform, made 75 recommendations for improvements to the rules governing charities under the Income Tax Act. This report is the result of extensive consultations between the Government of Canada, the charitable sector and other key stakeholders. The JRT was launched in November 2000 as one of six tables established by the VSI.

Budget 2004 responds to the large majority of the JRT’s recommendations concerning registered charities by proposing:

The Government will invest $12 million a year to implement these reforms. The changes will generally take effect on January 1, 2005. Additional information is provided in Annex 9.

Joint Regulatory Table: Principles for Regulatory Reform

  • The regulatory framework that governs charities should facilitate public trust in the work of charities in Canada.
  • The regulatory framework should uphold the integrity of the provisions in the Income Tax Act that govern charities.
  • The regulatory framework should ensure fair application of the law and transparency in regulatory decision-making processes.
  • The regulatory process should be as simple, non-duplicative and cost-effective as possible.
Improving the Disbursement Quota Rules

This budget takes important steps to improve the rules that determine the portion of charitable donations that registered charities must devote to delivering charitable programs and services, including proposals to support more effective gift management practices by charities. This includes, for instance, a reduced disbursement quota, to 3.5 per cent from 4.5 per cent per year on capital assets held by registered charities. This change will help ensure that capital endowments can provide a stable and sustainable flow of funds for the delivery of charitable programs and services. This and other proposed changes are described in Annex 9.

Highlights of Support Provided to Registered Charities Through the Income Tax Systems

The 80,000 charities registered under the Income Tax Act form a significant part of Canada’s voluntary sector. These charities deliver social services and financial support tailored to meet the diverse needs of individuals and communities. Canadians recognize the value of charitable giving and the important contribution that Canada’s registered charities make towards improving quality of life.

Charitable giving by Canadians is encouraged in part by substantial tax assistance. For example, individuals receive a 16-per-cent federal tax credit on the first $200 in donations and 29 per cent on donations over $200. When provincial tax assistance is taken into account, individual taxpayers can receive, on average, about 45 per cent tax assistance on their charitable donations over $200. In 2002, 5.5 million Canadians made financial or in-kind donations worth $5.8 billion; and federal tax assistance provided for charitable donations was more than $1.7 billion.

Amendments to the Income Tax Act in recent years have helped to further encourage charitable giving. For example:

  • Since 1997, persons donating publicly traded securities to public charities have benefited from preferential capital gains tax treatment (capital gains resulting from donations are included in the donor’s income at one-half the normal rate; as a result, only 25 per cent of the capital gains are subject to tax).
  • In 2000, this preferential capital gains tax treatment was extended to donations of ecologically sensitive land.

The Voluntary Sector: Going Forward

Maintaining Effective Tax Rules for Registered Charities

The Government is committed to monitoring the effectiveness of the changes proposed in this budget. To ensure that the charitable sector remains well-supported by Canada’s income tax system, the Government will continue to seek the views of the charitable sector, including through a new Charities Advisory Committee that will be advising the Minister of National Revenue. The Government also looks forward to the report of the Standing Senate Committee on Banking, Trade and Commerce that will be examining issues related to charitable giving this year.

Increased Support for the Voluntary Sector Initiative

To strengthen the capacity of the voluntary sector, the Government launched the $95-million Voluntary Sector Initiative (VSI) in 2000—a joint endeavour with representatives of the voluntary sector.

Budget 2004 provides $6 million over the next two years to advance the VSI by strengthening the sector’s capacity to collaborate and innovate. This will also support a stronger voice for philanthropic and charitable organizations in local, regional and national public policy dialogue.

New Not-For-Profit Corporations Act

There are about 18,000 federally incorporated voluntary and not-for-profit organizations now governed by the Canada Corporations Act, Part II (CCA). The Government is committed to creating a new Not-For-Profit Corporations Act that will reduce the regulatory burden on the not-for-profit sector; improve financial accountability; clarify the roles and responsibilities of directors and officers; and enhance and protect the rights of members.

This legislation will be flexible enough to meet the needs of both small and large organizations while providing the accountability and transparency necessary to maintain the public trust and confidence in the voluntary sector. The new statute will deliver on the Government’s commitment under the VSI, and help to build a solid foundation upon which Canada’s social economy can continue to develop.

A Bank for the Charitable Sector

Interest has been expressed in the concept of a bank targeted at the unique challenges of the charitable sector. Proponents of the concept see it as offering a range of specialized financial services and advice, specifically tailored to the requirements of the charitable sector. It could broaden the range of financial instruments available to the sector, as well as its financial-planning capacity.

The idea of a bank for the charitable sector is an innovative concept worthy of further development. Private and voluntary sector support for this promising initiative has the potential to leverage the capabilities of a sector that comprises thousands of organizations working for the benefit of all Canadians. The Government welcomes the opportunity to help explore fully this promising idea by working closely with its proponents as they pursue the federal regulatory and taxation issues related to the creation of this new bank.

Supporting the Social Economy

Social economy enterprises are run like businesses, producing goods and services for the market economy, but they manage their operations and redirect their surpluses in pursuit of social and community goals. Typically, social economy enterprises grow out of community economic development strategies involving citizens, governments, the voluntary sector, business, learning institutions and other partners.

In recognition of the social economy sector’s growing contribution to Canada’s communities, Budget 2004 increases support for the sector by confirming that it will become eligible for a wide range of programs currently offered to small business. These include programs and agencies that provide financing and contributions to small businesses.

Budget 2004 also provides new funding through pilot programs focused on strengthening existing support in areas that social economy and community economic development organizations have identified as their highest priorities, namely capacity building, financing and research.

Capacity Building

Budget 2004 provides $17 million over the next two years to Industry Canada for a targeted pilot program in support of strategic planning and capacity building of community economic development organizations. Industry Canada and the regional development agencies (RDAs)—Western Economic Diversification Canada, Canada Economic Development for Quebec Regions, and the Atlantic Canada Opportunities Agency—will deliver funding through existing programs that support non-profit organizations.

Financing

The financing requirements of social economy enterprises are varied, ranging from credit to patient capital, such as longer-term loans with flexible repayment terms. Budget 2004 provides $100 million in the next five years in support of financing initiatives to:

Access to patient capital is often a critical factor in the ability of social economy enterprises to grow. Part of the funds allocated for social economy financing can be used to create up to four regional patient capital demonstration funds. A competitive process will determine the recipients of the funds. Decisions about the allocation of resources between the Loan Investment Fund Program and the Patient Capital Demonstration funds will be made by Industry Canada and the RDAs following consultations and based on regional needs.

RDAs have supported borrowing by both for-profit and not-for-profit organizations through programs such as Western Economic Diversification Canada’s Loan Investment Fund Program. By providing funds to lenders to offset potential future net losses on select qualified loans, lenders are encouraged to make loans to certain classes of enterprises. Mechanisms for this support include strategic alliances with lenders such as credit unions, commercial banks and the Business Development Bank of Canada. Programs of this type will be developed for social economy enterprises across Canada.

Research

Budget 2004 provides $3 million annually over five years starting in 2005–06 to the Social Sciences and Humanities Research Council, which administers the Community-University Research Alliance (CURA) program. CURA links researchers with communities and not-for-profit organizations to work on social and community economic development issues. The program currently supports 40 projects between researchers and communities across Canada.

New funding in this budget will support community-based research on the social economy through a targeted competition under the CURA program. The results of this research will document and share best practices across the country and help the social economy to reach its potential.

New Horizons for Seniors

This budget recognizes the contribution that is made by seniors and seniors’ groups to their communities. It provides $8 million in 2004–05 and $10 million annually thereafter to fund a New Horizons for Seniors Program. This program will support a wide range of community-based projects in all areas of Canada that enable seniors to participate in social activities, pursue an active life and contribute to their community.

Environment and Sustainable Development

A clean and safe environment is fundamental to a healthy society and sustainable economic growth. Budget 2004 makes significant new investments in support of:

These actions build on efforts made between 1997 and 2003, a period during which the Government added $5.4 billion in spending on environmental and climate change measures. Efforts to improve the environment included expanding the national parks system, establishing new marine protected areas, and improving transborder air quality in collaboration with the United States. To reduce greenhouse gas emissions and address climate change, the Government has invested $3.7 billion since 1997, including $2 billion in the last budget. Of this amount, approximately $1.3 billion has been allocated to technology and emission reduction measures. Energy efficiency and renewable energy initiatives, such as wind power incentives, could be considered for funding out of the remaining $695 million.

Recent Investments in the Environment by the Government of Canada (1997–2003)

1997—$60 million, e.g. Commercial Buildings Incentive Program, Renewable Energy Deployment Initiative

1998—$192 million, e.g. Climate Change Action Fund

1999—$121 million, e.g. toxic substances research, establishment of a UNESCO Biospheric Reserve in Clayoquot Sound

2000—$1.4 billion, e.g. Green Municipal Funds, Species at Risk, Canadian Foundation for Climate and Atmospheric Sciences, Sustainable Development Technology Canada

2001—$579 million, e.g. Wind Power Production Incentive, World Summit on Sustainable Development

2003—$3.0 billion, e.g. climate change technology and emission reduction measures, National Parks, cleanup of federal contaminated sites

TOTAL—$5.4 billion

Cleaning Up Contaminated Sites

Budget 2004 includes funding to support cleaning up:

Cleaning up contaminated sites encourages sustainable economic development in urban areas—for example, by encouraging redevelopment over urban sprawl—and leads to improved local quality of life. It also rejuvenates communities by reducing threats to human and ecosystem health, particularly for Northerners faced with the legacy of abandoned mines.

Federal Contaminated Sites

It is important that those responsible for contaminated sites clean them up and, in this regard, the Government is committed to putting its own house in order. The Government is currently responsible for approximately 3,800 sites that have been contaminated to varying degrees, usually due to past practices that were not in accordance with the environmental standards of today.

This budget provides $3.5 billion over 10 years to accelerate the ongoing cleanup of contaminated sites for which federal departments are responsible. This represents one of the single largest environmental investments ever made in Canada and a remarkable opportunity for economic development in the communities where these sites are located.

To ensure the cleanup of contaminated sites is carried out in a timely, effective and well-coordinated manner, the Government will develop a strategic long-term plan and report on progress to Canadians each year.

Federal Contaminated Sites

The contamination of land owned by the Government is the result of a wide range of past activities such as military operations, scientific research and marine navigation. Examples of federal sites include:

  • Giant Mine, located 5 kilometres outside Yellowknife, is perhaps the most publicized contaminated site in Northern Canada. The site is contaminated with arsenic from past gold mining. The Government became responsible for the cleanup of the site in 1999, when the mine went into receivership. In 2003 the Government spent $10 million to address urgent health and safety issues at the site.

  • The Dene Aboriginal population near the shores of Great Bear Lake, Northwest Territories, lives in the midst of the former Port Radium. Significant efforts have been made in recent years to assess how best to address the community’s health and environmental concerns.

  • The Distant Early Warning Line system was installed throughout Canada’s North in the Cold War era to protect North America. Cleanup of both physical debris and chemical contamination on these sites will be accelerated, in accordance with today’s environmental standards.

  • Although it is best known as one of Canada’s ecological treasures, Banff National Park is also home to a number of former landfill and storage areas that have been assessed and will likely require cleanup.

  • The Lachine Canal was once central to the industrial growth of Montréal. Federal, provincial and municipal governments have undertaken restoration measures to transform the Lachine Canal area into a recreation space and a foundation for the revitalization of nearby neighbourhoods. However, areas within the Canal may still require further remediation.

  • Last year, the Government spent over $8 million to address contamination at the former Harvey Barracks near downtown Calgary. Once completed, the cleanup will ensure the land can be redeveloped to meet the needs of a growing city.

  • A contaminant found at the Canadian Forces Base at Valcartier, Quebec, has also been found in the neighbouring community of Shannon. Steps have already been taken to provide safe drinking water for the community but further work is required to deal with the contamination itself.

Shared-Liability Contaminated Sites

Budget 2004 also provides up to $500 million over 10 years to provide support for remediation activities consistent with federal responsibilities and policies on shared-liability contaminated sites.

An immediate priority for the Government will be to conclude discussions with the Government of Nova Scotia and the City and citizens of Sydney to establish an effective approach and a fair division of responsibilities and costs for the cleanup of the Sydney tar ponds.

Environmental Technology

The Government of Canada is committed to ongoing support for the development and commercialization of environmental technologies.

New environmental technologies hold the promise of improving economic efficiency while contributing to a cleaner and healthier environment, for example, through more efficient use of energy. These technologies will be fundamental to meeting our environmental goals, such as reducing greenhouse gas emissions to address climate change.

Reflecting the sale of its Petro-Canada shares, the Government will increase its investments by $1 billion in support of new environmental technologies. Over the two fiscal years covered by this budget, the Government will invest a further $200 million in Sustainable Development Technology Canada (SDTC). A further $800 million will be invested over the subsequent five years in support of environmental technologies, as new opportunities emerge and priorities are identified.

SDTC is an arm’s-length foundation that supports the development and commercialization of new technologies that address climate change and air quality issues. The $200 million provided to SDTC in this budget will increase its total funding level to $550 million. The mandate of SDTC will also be broadened to include support for clean water and soil technologies. This broader mandate will allow SDTC to deliver innovative technology solutions in relation to the full spectrum of sustainable development issues—climate change, clean air, water and soil. It also complements other environmental initiatives announced in this budget, such as the cleanup of federal and shared-liability contaminated sites.

The commitment to invest a further $800 million over five years on environmental technologies will help Canada address new and pre-existing environmental challenges while seizing the opportunity to develop dynamic and growing sectors of our economy. For example, investment in fuel-efficient and alternative fuel vehicles and new lightweight materials can deliver environmental benefits and improve the competitiveness of the Canadian automotive sector. Other potential investments include the further development and demonstration of clean coal and CO2 sequestration, renewable energy, and cellulose ethanol technologies.

Over the coming year, the Government will also examine the range of available federal programs that support environmental technologies in order to ensure cost-effective delivery and to maximize results for Canadians.

Environmental Indicators

Building on the recommendations of the National Round Table on the Environment and the Economy, this budget will invest $15 million over the next two years to develop and report better environmental indicators on clean air, clean water and greenhouse gas emissions.

Other Initiatives in Support of Communities

Northern Strategy for Economic Development

In the Speech from the Throne, the Government committed to develop a Northern Strategy to help ensure that economic development opportunities are developed in partnership with Northern Canadians. The Parliamentary Secretary to the Minister of Indian Affairs and Northern Development with special emphasis on Northern Economic Development and the Minister of Indian Affairs and Northern Development are working to develop this strategy.

This budget will provide $90 million over five years to support a Northern Strategy for economic development. This initiative will have a positive impact on all Northerners, including the approximately 50,000 Aboriginal people in Canada who live in the North.

Northern Oil and Gas Development

Oil and gas development has the potential to provide unprecedented opportunities for Northern Canadians for decades to come. Development of these resources must be realized both in partnership with Northern communities and in a manner that ensures effective environmental stewardship. The Government is committed to these goals and to facilitating a timely regulatory and environmental assessment response to pipeline and oil and gas development in the Northwest Territories.

To demonstrate the Government’s commitment to responsible energy development in the North, Budget 2004 provides $75 million over three years to increase federal and regional environmental assessment capacity and streamline the regulatory process. This announcement will also ensure resources are available to conduct scientific research on current and longer-term environmental challenges associated with development in the Mackenzie Valley, Mackenzie Delta and the Beaufort Sea.

Supporting Northern Communities

Territorial Formula Financing

  • $150-million increase in Territorial Formula Financing (TFF) over five years to support territorial investments in their priorities. This will bring projected TFF payments to more than $10 billion over the next five years.

Health Support for the Territories

  • Health transition funding, provided after the 2003 First Ministers’ Accord on Health Care Renewal, will be made ongoing in 2006–07, providing $60 million over three years to bolster health care services in the North.

Northern Economic Development

  • $90 million over five years to support a Northern Strategy aimed at ensuring economic development opportunities are developed in partnership with Northern Canadians.

Northern Oil and Gas Development

  • $75 million over three years to ensure that the Government of Canada and regional authorities can respond in a timely, responsible and effective manner to the tremendous opportunity of pipeline and oil and gas development in the North.

Contaminated Sites

  • $3.5 billion towards the cleanup of federal contaminated sites, over 60 per cent of which is expected to occur in the North—contributing to an improved environment, economic development and employment opportunities.

Seabed Mapping

  • $51 million over 10 years to conduct seabed mapping of the Arctic continental shelf. The data collected will lead to a formal submission under the United Nations Convention on the Law of the Sea and help secure Canada’s sovereignty in the High Arctic.

Economic Development in Atlantic Canada

Atlantic Canada has made considerable economic progress in recent years. The region’s economy is diversifying into new, knowledge-based industries, and there is greater value-added activity in the natural resources sector. Pan-Atlantic initiatives that build on these foundations, such as the Atlantic Investment Partnership, are accelerating these developments. Over the coming year the Government will be working with Atlantic Canadians to find ways to ensure that these economic gains are consolidated and expanded. This work will be guided by recent reports, such as The Rising Tide: Continuing Commitment to Atlantic Canada, which provides a number of proposals that could further strengthen the region’s economic prospects.

Independent Centre for First Nations Government

The Speech from the Throne highlighted the importance of building strong First Nations governments. Both the Government of Canada and the Aboriginal leadership agree that this can best be achieved by emphasizing the various elements of sound and effective governance, notably partnership, dialogue, capacity building, transparency and accountability.

As announced in December 2003 and reaffirmed in the Speech from the Throne, the Government of Canada will work with First Nations to establish an Independent Centre for First Nations Government. This budget proposes to provide $5.5 million over the next two years and up to $5 million a year thereafter to establish and operate this Centre. This amount would be in addition to funds that may be allocated by the Minister of Indian Affairs and Northern Development for this initiative.

The precise design of the Centre will be developed in 2004–05. A First Nations-led Advisory Council will make recommendations regarding the design and mandate of the Centre over the next six months. It is expected that the Centre will:

Canada’s Relationship With the Métis Community

In September 2003, the Supreme Court of Canada ruled in the Powley case that the members of the Métis community in and around Sault Ste. Marie have an Aboriginal right to hunt for food under subsection 35(1) of the Constitution Act, 1982.

This budget proposes to set aside $20.5 million over the next year to enable the Government of Canada to work with Métis leadership as well as provinces and territories to properly address Métis Aboriginal harvesting issues and work towards assessing the implications and possible approaches to implementation of the Powley decision.

Table 4.8
The Importance of Communities


 

2003–04

2004–05

2005–06


 

(millions of dollars)

New Deal for communities: first steps

     

GST/HST relief for municipalities1

100

580

605

Infrastructure programs

 

25

50

Total

100

605

655

The community-based and non-profit sector

     

Tax rules for registered charities

 

12

12

Voluntary Sector Initative

 

3

3

Total

 

15

15

Supporting the social economy

     

Capacity building

 

7

10

Financing

 

20

20

Community-University Research Alliance

 

0

3

New horizons

 

8

10

Total

 

35

43

Environment and sustainable development

     

Cleanup of contaminated sites2

 

(400)

(400)

Environmental technology

 

200

 

Environmental indicators

 

5

10

Total

 

205

10

Other initiatives in support of communities

     

Northern strategy for economic development

 

10

20

Northern oil and gas development

 

20

30

Independent Centre for First Nations Government

 

2

3

Canada’s relationship with the Métis community

20.5

Total

 

52.5

53

Total

100

912.5

776


1 Tax initiative.

2 The estimated cost related to the management and remediation of environmentally contaminated sites has been accrued as a liability in the Government’s financial statements. As a result, the actual costs of the remediation will not affect the budgetary expenses, although they will impact on non-budgetary transactions and financial source/requirements.

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