Canadian Legislative Issues
Budget 2016: Its Impact on Fleet Managers
Last month’s federal budget outlined the fiscal and economic blueprint the new government intends to follow early in its mandate. It was heavy with platform commitments that the Liberals ran and won on. Having made so many promises, it was impossible to keep them all in the government’s first fiscal plan. That said, there has been a marked shift towards rhetoric and policies aimed at "greening" the economy, meeting climate change targets, and transitioning to a low carbon economy. Though details remain scant, this new approach at the federal level towards an activist climate change approach will have policy consequences for fleet managers, and will present challenges as well as opportunities.
The relevant section of the Budget is worth quoting at some length:
Budget 2016 proposes to provide $2 billion over two years, starting in 2017–18, to establish the Low Carbon Economy Fund. The Fund will support provincial and territorial actions that materially reduce greenhouse gas emissions and are incremental to current plans, and achieve significant reductions within the period of Canada's nationally determined target. Resources will be allocated towards those projects that yield the greatest absolute greenhouse gas reductions for the lowest cost per tonne.
Two billion dollars is not an insignificant investment, though it is worth noting that it will not begin to flow until fiscal 2017-2018, which indicates the government intends to develop how this money will ultimately be spent over the next year or more. Consistent with its desire to increase transparency and consultation, that time period should be spent speaking to provinces and other stakeholders about how best to allocate the money in this fund. This presents an opportunity for NAFA and its members, and the timing is good given NAFA’s own transition in its government relations (GR) structure. NAFA’s newly-formed legislative and GR committee now has an opportunity to engage with concrete policy proposals that would benefit fleets and help the government reduce emissions in a cost-effective manner.
Canada’s new car market is coming off a third consecutive year at almost 1.9 million units sold last year. This number is well known. Less well known is the fact that only a little over 1.5 million of those sales went to consumers. The rest – well in excess of 300,000 new cars – were fleet sales, which themselves grew very strongly last year to set another new record in the Canadian market. Policies aimed at incenting fleet buyers to "go green" represent a massive opportunity to reduce emissions at a reasonable cost to the federal government, given the establishment of this new $2 billion fund.
