Further to CL 11509 on the federal budget, we have provided below some additional detail and analysis on key themes, provisions and investments that may be of interest from an international shipping perspective. It is worth noting that not all of the measures set forth in the budget have dollar figures attached to them, as the budget document also serves as a means of announcing future government plans and initiatives with respect to which funding details are not yet available.
Overall Theme / Guiding Principles
One of the main themes of the budget is that Canada will contend with two intertwined global economic shifts over the coming years. The first is the accelerating global race to build net-zero economies and the industries of tomorrow. The second is a realignment of global trade patterns, as democracies shift their critical supply chains away from authoritarian regimes and toward democracies (“friendshoring”). The budget presents both of these shifts as significant economic opportunities for Canada that will requires substantial investment in order to move forward.
Planning: Budget 2023 proposes a number of initiatives to strengthen Canada’s transportation systems and supply chain infrastructure, including a commitment to developing a long-term roadmap for better planning and coordinating infrastructure investments that will be required to support Canada’s trade growth in the future. This plan will be developed in collaboration with industry, provinces, territories and Indigenous Peoples. The budget also proposes an investment of $11.4 million over three years to update federal guidelines for consulting Indigenous peoples on infrastructure development projects and accommodating impacts on their rights.
Approval Process: Given the importance of ensuring timely completion of major infrastructure projects, the budget commits the government to outlining a concrete plan by the end of 2023 to improve the efficiency of the current impact assessment and permitting process, including by clarifying timelines, mitigating inefficiencies and improving engagement and partnerships. The lack of timeliness and predictability in this process has been identified as a priority by a wide range of stakeholders, and the need to address this issue was one of the key recommendations in our submission to the National Supply Chain Task Force.
Replacement Workers: Budget 2023 proposes amendments to the Canada Labour Code, before the end of 2023, that would prohibit the use of replacement workers during a strike or lockout, and improve the process for reviewing activities that must be maintained to ensure continued pubic health and safety during a work stoppage. Labour Canada initiated stakeholder consultations on this issue in late 2022, and the Federation has submitted preliminary comments questioning whether the proposed ban would extend to the use of management to carry out certain operations during a work stoppage, and highlighting the impacts that any future labour instability would have on Canada’s reputation as a reliable trading partner. We will continue to engage in the consultative process on this issue throughout 2023.
Forced Labour: Budget 2023 announces the government’s intention to introduce legislation by 2024 to eradicate forced labour from Canadian supply chains, with a view to ensuring that importers address their supply chain vulnerabilities and engage in production that promotes Canadian values. This would follow the expected passage of Bill S-211 (currently at third reading in the House of Commons), which prohibits the importation of goods manufactured or produced by forced or child labour, and introduces a public reporting regime requiring private sector entities to report on the measures taken to prevent and reduce the risk of forced labour or child labour being used by them or their supply chains.
Net-Zero: The push towards a net-zero economy is a major theme of Budget 2023, and key priorites identified by the government include greater investment in electricity production and distribution, clean manufacturing, critical minerals, emissions reductions and increased use and production of battery electric vehicles. The government will use a variety of investment and tax incentive tools to aim for net-zero emissions by 2050.
Green Shipping Corridors: The budget allocates $165 million over seven years for Transport Canada to establish a Green Shipping Corridor program to reduce the impact of marine shipping on surrounding communities and ecosystems. The program will help spur the launch of the next generation of clean ships, invest in shore power technology, and prioritize low-emission and low-noise vessels at ports. This would build on a number of initiatives that have already been undertaken by the federal government and various Canada Port Authorities, while also supporting the goals of the Clydebank Declaration for Green Shipping Corridors signed by Canada at COP 26.
Other Measures: Budget 2023 allocates $151.9 million over three years to protect whales, including the North Atlantic Right Whale, the St. Lawrence Estuary Beluga, and the Southern Resident Killer Whale, all of which are vital to Canada’s marine ecosystems. Funding is also provided for protecting species at risk, establishing a plan to protect freshwater against climate change and pollution, and enabling the government to continue developing and implementing marine spatial plans to help guide activities affecting Canada’s marine waters.
As noted in CL 11509, Budget 2023 contains a suite of measures aimed at increasing the efficiency and resilience of the supply chain, including funding for the creation of a Transportation Supply Chain Office ($27.2 million), the development of data to help reduce congestion and inform future infrastructure funding ($25 million), and new authority for the Minister of Transport to compel data sharing by shippers who use federally regulated transportation services. Although we had expected the budget to include an announcement on Canada’s National Supply Chain Strategy (and on further action with respect to the recommendations of the National Supply Chain Task Force), this has been deferred until the coming months.
Liner Shipping Review
As previously noted, Budget 2023 announces the government’s intention to launch a review of the Shipping Conferences Exemption Act, which will likely build on the work that Transport Canada already undertook on this issue in 2022 (and with respect to which we submitted detailed comments on the importance of maintaining the ability of shipping lines to enter into cooperative operational and capacity-sharing agreements). The Federation will be closely following the progress of the current review and will be reaching out Transport Canada to better understand the scope of the review process and related timelines. We will also be keeping a close eye on related developments elsewhere in the world, including in the U.S., where a bipartisan bill seeking to repeal carrier’s anti-trust immunity (the Ocean Shipping Antitrust Enforcement Act) was introduced in the House of Representatives last week.
We will continue to keep members inforrmed of our work on all the above, and will also be reaching out for members’ input / expertise as required on specific issues. In the meantime, please don’t hesitate to contact the undersigned with any questions, concerns or comments.