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

Highlights

• $7 billion in GST/HST relief for municipalities of all sizes over the next 10 years.

• Acceleration of the $1-billion Municipal Rural Infrastructure Fund, with spending over the next 5 years instead of 10.

• A stronger voice for municipalities in the federal decisions that affect them.

• New funding of $15 million a year in support of enhanced language training to reduce labour market barriers faced by immigrants.

• Doubling to $50 million support for the Urban Aboriginal Strategy.

• Investment of $125 million over five years for the Aboriginal Human Resources Development Strategy.

• New funding of $4 billion over 10 years to clean up federal contaminated sites and sites for which the Government has partial responsibility.

• New funding of $200 million to support the development and commercialization of new environmental technologies.

• More effective tax rules for registered charities and support for the Voluntary Sector Initiative.

• Increased support for the community-based and non-profit sector.

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.

• In many parts of Canada, municipal infrastructure (roads, water, sewers) was put in place decades ago and now needs to be replaced or rehabilitated.

• Our transportation infrastructure (roads, public transit systems) is not keeping up with demand, which raises serious congestion problems, particularly in and around Canada’s major urban areas.

• Water infrastructure is also under strain. In many small and coastal communities, for example, water and sewage treatment needs to be improved. In older communities, water leakage and combined sewer overflows are serious problems, while high-growth areas are struggling with a demand for water services that is outstripping capacity.

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.

• For many Aboriginal Canadians, access to education, training and employment is an important reason for choosing to live in urban centres. Yet too many Aboriginal Canadians remain on the margins of the local economy and community.

• Most recent immigrants go to big cities and increasingly need settlement services and language training to help them integrate into work and society.

• In the downtown cores and poorer neighbourhoods of many cities, urban poverty problems have led to increased demands for affordable housing.

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

• The March 2000 Vancouver Agreement brought together the Government of Canada, the Government of British Columbia and the City of Vancouver to address long-standing economic and social problems in Vancouver’s Downtown Eastside.

• Winnipeg’s Urban Development Agreement with the Government of Canada, the Government of Manitoba and the City of Winnipeg will harness collaborative action to promote revitalization and economic development.

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:

• In Manitoba, municipalities receive a share of provincial personal and corporate income tax revenue.

• In Calgary and Edmonton, the province of Alberta provides an annual capital grant to fund road and transit costs, based on fuel consumption in each city.

• In Vancouver, Victoria and Montréal, provincial authorities have put in place regionally determined gas taxes to fund transportation agencies.

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

• Many municipalities have introduced measures to reduce water demand and, in turn, the capital and operating costs of water and wastewater systems. For instance, New Glasgow in Nova Scotia reduced its water demand by more than 30 per cent when it introduced a water metering program combined with better maintenance.

• Some municipalities make use of private financing and expertise to provide public infrastructure and related facilities.

• Some are returning to debt markets to help finance their long-term infrastructure needs. Borrowing to finance infrastructure development may very well be appropriate, particularly when the investment benefits future generations, increases the tax base or generates a dedicated revenue stream for the municipality.

• Municipalities are hearing from experts that full accrual accounting for capital assets would provide better information about the state of their infrastructure stock and encourage better planning for its replacement.

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:

• Ensure Canada’s municipalities have reliable and predictable long-term funding, by drawing on close cooperation among federal, provincial-territorial and municipal governments.

• Provide more effective program support for pressing infrastructure and social priorities in communities.

• Help communities acquire the best tools to pursue local solutions for local problems.

• Give municipalities a greater voice in shaping federal policies and programs that affect them.

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:

• Confirms the Government’s intention to propose legislative amendments to give effect to a full rebate of GST paid by municipalities.

• Accelerates federal spending through the Municipal Rural Infrastructure Fund.

• Commits extensive funds to the cleanup of federal contaminated sites.

• Offers greater support for programs affecting community priorities such as immigrant language training and greater coordination of programs for urban Aboriginal people.

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:

• Incorporated municipal bodies such as cities, towns, villages and metropolitan authorities.

• Local authorities such as transit commissions and public libraries that perform municipal functions and that are determined by the Minister of National Revenue to be a municipality.

• Entities designated by the Minister of National Revenue in respect of their delivery of municipal services, such as non-profit social housing corporations that provide residential accommodation on a rent-geared-to-income basis.

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

• The higher rebate represents an additional source of growing, reliable, long-term funding for all municipalities.

• The increased rebate benefits municipalities of all sizes across Canada, both large and small.

• It provides a significant contribution for the funding of critical infrastructure priorities such as roads, modern transit and clean water.

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:

• Budget 2001 announced $2 billion for the Canada Strategic Infrastructure Fund and $600 million for the Border Infrastructure Fund, both of which are now making key investments across Canada.

• Budget 2003 provided a further $2 billion to the Canada Strategic Infrastructure Fund in order to fund additional investments in large-scale projects.

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.

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. 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.

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. 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.

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."

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:

• Responds to the recommendations of the Joint Regulatory Table (JRT)—a key component of the Voluntary Sector Initiative (VSI) that was launched in 2000 by the Government.

• Improves disbursement quota rules that apply to the gifts that registered charities receive.

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:

• A new compliance regime.

• A more accessible appeals regime.

• Improved transparency and more accessible information.

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.

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.

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.

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.

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:

• Support a competitive process resulting in government investments in up to four regional patient capital funds.

• Increase lending to social economy enterprises.

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:

• Cleaning up contaminated sites.

• Promoting environmental technologies.

• Developing indicators that will help ensure that environmental considerations are fully integrated into decision making.

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.

Cleaning Up Contaminated Sites

Budget 2004 includes funding to support cleaning up:

• Federal contaminated sites—i.e. sites for which the Government of Canada has sole responsibility.

• Shared liability contaminated sites—i.e. sites for which the Government of Canada is only partly responsible.

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.

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.

• More than 60 per cent of these expenditures are expected to occur in the North, contributing to an improved environment, economic development and employment opportunities for Aboriginal communities and Northerners.

• More than 40 per cent of the sites affected by this announcement are in or near urban areas.

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.

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.

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:

• Serve as a focal point for dialogue on governance and self-government.

• Help First Nations communities to strengthen capacity, enhance governance structures and day-to-day operations and move toward greater self-government.

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

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