On December 16, 2024, the Department of Finance Canada delivered the annual Fall Economic Statement (FES). This statement provides Parliament and Canadians with an update on the country’s finances, including projections, policy updates and emerging economic trends. It highlights key economic uncertainties such as inflation, interest rates, and economic growth, while comparing forecasts from various institutions.
Notably, the 2024 FES emphasizes measures targeting investment, growth, and fiscal stability. For the Co-operative and Mutual sector, a significant advocacy win is the extension of the Canada Carbon Rebate for Small Businesses to eligible co-operatives and credit unions for the 2024-25 and subsequent fuel charge years. This will apply to provinces that do not have their carbon-pricing plan, namely Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, as well as Newfoundland and Labrador. If co-operatives and credit unions have employees in one or more of the designated provinces, they may qualify for some carbon rebate amounts. This success is the result of collaborative advocacy efforts led by Co-operatives and Mutuals Canada (CMC), the Canadian Credit Union Association (CCUA) and Federated Co-operatives Limited (FCL), which involved many other sector stakeholders.
Key Political and Economic Context
The 2024 FES was released during a period of heightened political uncertainty:
- Finance Minister Chrystia Freeland’s resignation: Her unexpected departure has sparked calls from opposition parties for the Prime Minister’s resignation, raising concerns about a potential leadership crisis in the Liberal Party. Minister Dominic LeBlanc was named Finance Minister.
- Resignation of Sean Fraser, Minister of Housing: His announcement of his imminent departure creates some uncertainties surrounding federal housing strategies, and add a hole left by resigning Cabinet members. Sean Fraser is supportive of co-operative housing and spoke at the 2024 CMC Congress in Halifax.
- Trade uncertainty with the United States: The United States President-elect Donald Trump’s proposal to impose a 25% tariff on all Canadian imports looms large, posing risks to Canada’s economic stability. The Government also made commitments to improve intra-provincial, by eliminating domestic trade barriers and making it easier for businesses to operate and grow across provinces and territories.
- Deficit concerns: The federal deficit has surpassed projections from 2023, breaking the government’s self-imposed fiscal rules. The 2023-24 deficit is now projected to be $21.8 billion over the promised $40.1 billion target. This will increase the cost of servicing the debt.
Despite these challenges, the Government of Canada remains committed to achieving a declining debt-to-GDP ratio over time.
Government Four Economic Pillars
The 270-page document outlines the government’s economic strategy, broken down into “four key pillars”:
- Generational investments to enhance workforce participation while reducing everyday costs, such as childcare and dental care, to support Canadian families.
- Securing Canada’s AI advantage by boosting support for scientific research and experimental development.
- Addressing geopolitical risks by strengthening Canada’s supply chain resilience and defending Canada’s economic interests.
- Investing in the industrial transition by extending economic investment tax credits to support business growth and sustainability.
Key Measures & Programs
Many of the items announced in the FES will be further detailed in the weeks and months ahead. CMC will continue to monitor these items to ensure that we advocate for the benefits of the co-operative sector. Below, you will find measures that are most likely to impact co-operatives, mutuals, our Members, and our partners.
Supporting Non-Profit and Co-operative Housing Residents
The Federal Community Housing Initiative receives critical support in the 2024 FES to sustain affordable housing:
- $362.7 million over five years (starting in 2028-29) to extend funding for community housing projects.
- $50 million over two years (starting in 2025-26) for pre-development work to assist affordable housing providers.
These measures are essential in maintaining and expanding co-operative housing across Canada, helping to keep rent affordable and ensure long-term housing sustainability.
Worker Co-operatives & Employee Ownership Trusts (EOTs)
Building on the tax framework announced in previous Budgets, the FES confirms the government’s intention to proceed with previously announced tax measures that were modified following consultations and deliberations since their release. Notably, this includes the harmonization of incentives to sellers whose employees choose to organize as worker co-operatives, instead of using an Employee-Ownership Trust. This is a longstanding file that CMC has been involved with in support of the Canadian Worker Co-op Federation. This incentive also sets the stage for further awareness of the business conversion to co-operatives, which enables the safeguarding of jobs and economic drivers within communities.
Access to capital, innovation, and competitiveness
The 2024 FES introduces several financing programs to support small and medium-sized businesses, co-operatives, and mutuals:
- Scientific Research and Experimental Development (SR&ED) Program:
- Capital expenditures are now eligible for the deduction and investment tax credit components.
- Co-operatives and mutuals engaged in innovation, technology adoption, or research and development (e.g., agricultural co-operatives, clean energy or technological co-operatives) can benefit from increased refundable tax credits.
- Accelerated Investment Incentive:
- Extended to properties acquired on or before January 1, 2025, and available for use before 2030, with the phase-out period adjusted to 2030-33.
- Co-operatives investing in capital-intensive projects (e.g., renewable energy infrastructure, housing development, and agricultural processing) can benefit from accelerated depreciation to reduce upfront tax burdens.
- Green Bond Program:
- The government plans to issue two smaller green bond transactions in the fiscal year 2024-25. The government remains committed to regular green bond issuances.
- Co-operatives and mutuals engaged in environmentally sustainable projects (e.g., renewable energy co-operatives, sustainable agriculture, green housing initiatives) may benefit from increased funding availability.
- Clean Electricity Investment Tax Credit:
- A refundable tax credit equal to 15 per cent for eligible investments in low-emitting electricity generation, storage and electricity transmission.
- Co-operatives owned by municipalities or Indigenous communities can qualify.
- Canada-wide Early Learning and Child Care:
- The Canada-wide early learning and childcare transfer payments are expected to increase from $6.6 billion in 2024-25 to $7.7 billion in 2029-30, benefiting co-operatives involved in childcare services. This supports affordability and capacity-building.
Implementing Consumer-Driven Banking (Open-Banking)
The FES includes measures that will directly impact credit unions, caisses, and mutuals:
- The government proposes to “make amendments the Consumer-Driven Banking Act and the Financial Consumer Agency of Canada Act to introduce the outstanding legislative elements of Canada’s Consumer-Driven Banking Framework. These amendments relate to, among other things, accreditation, national security, data sharing, security safeguards, consent, authentication, liability, complaints, administration and enforcement, and screen scraping”.
- $44.3 million over three years (starting in 2025-26) to implement the Consumer-Driven Banking Framework to develop a public registry of financial institutions participating in the framework, and to launch a consumer awareness campaign.
These measures aim to modernize the financial services sector while ensuring consumer access and trust.
Other relevant updates for the movement
The 2024 FES announced that:
- The government proposes to amend the Farm Credit Canada Act to require regular legislative reviews to ensure alignment with the needs of the agriculture and agri-food sector.
- The Government is planning to further invest in biofuels, renewable energy sources derived sustainably from plants and other organic materials. It is seen as a valuable economic opportunity to create jobs in agriculture and forestry. Since 2022, Canada’s Clean Fuel Regulations have been supporting the production and adoption of biofuels across the country.
- The Business Development Bank of Canada’s (BDC) is building on its history of partnering with regionally focused lenders, and launched on November 21, 2024, a new Community Banking Initiative. CMC has been very involved in related discussions and was present at the launch.
- The government intends to introduce the Small Business Innovation and Procurement Act, to establish a Canadian small and medium-sized business procurement target and a Canadian innovative business procurement target.
Policy Priorities for Co-operatives
The continued use of tax policy to encourage a strong business sector aligns with CMC’s key policy priorities, including:
- Tax-Deferred Co-operative Share Program: advocating for it to become a permanent fiscal measure.
- Access to the small business deduction: ensuring equitable access for all co-operative entrepreneurs.
- Federal co-operative investment plan: promoting co-operative business growth through targeted incentives.
- Fair taxation for indivisible reserves: securing fair taxation policies to protect the financial stability of co-operatives.
Federal-level advocacy is a key pillar of Co-operatives and Mutuals Canada’s activities. CMC will continue to build on these priorities through ongoing federal advocacy.
For questions regarding current advocacy priorities or measures announced in the FES, or if you have issues accessing federal programs due to being a co-operative enterprise, please reach out to Daniel Brunette, Senior Director of External Affairs, at dbrunette@canada.coop or Nancy Wanye, Manager of External Relations, at nwanye@canada.coop.