Submitted by Okanagan-Shuswap MP Colin Mayes
When Suncor Inc. was developing the Athabaska Oil Sands in the 1980s, it faced many challenges that made it a marginal business proposition. At that time, the federal government provided an accelerated capital cost allowance (ACCA) that allowed companies investing in the oil sands to write off their capital investment in infrastructure sooner, which allowed them to retain earnings to re-invest in their development. This was not a subsidy or tax break but rather a temporary accounting practice that would defer taxes until after the company was profitable. Our government discontinued this incentive last year.
During the 2008 economic downturn, Canada’s manufacturing sector was challenged by a strong Canadian dollar and slow markets. Our government extended the accelerated capital cost allowance to Canada’s manufacturing sector to help them revitalize through investing in new equipment, making them more efficient and more competitive in the global market. This was a great success as 40 per cent of the manufacturing sector benefited from this support that has allowed it to expand and create high-value employment opportunities for Canadians.
Proponents of new liquid natural gas (LNG) development in British Columbia asked for the accelerated capital cost allowance to be applied to their capital investment in the plants that take natural gas off the pipeline and cool and compress it to liquid for transportation to offshore markets. The price of natural gas has dropped substantially and our government has responded by extending the ACCA to Canada’s LNG sector to help its growth in Canada in the same manner that the sector has been supported and developed in the U.S. and Australia.
This type of support for investors in our economy is wise and supports job creation. One LNG proponent has stated that during the construction of their pipeline and plant they will employ 4,500 Canadians and, once it is operational, it will provide billions of dollars in taxes to all three levels of government.
Our government knows that providing an investment climate that attracts investment in our economy will create jobs, growth and prosperity for all Canadians which is why we continue to work with the Province of British Columbia to grow an LNG sector that is safe, sustainable and prosperous.