From an environmental perspective, the first budget of the new Martin government was not very different from all the old Martin budgets under the former Liberal government.

For observers of environmental policy in Canada, the 2004 budget speech engendered little excitement. After references to a “focused budget plan” that would “demonstrate unequivocally the principles of financial responsibility and integrity,” a declaration that “the number one priority is health care,” allusions to the importance of “learning” and the “ideas, imagination and innovation” that must “power a 21st century economy,” then ” only then” came the first reference to the “environment,” or rather “environmental technologies.” Indeed, aside from a federal commitment to accelerate the clean-up of contaminated sites in Canada, almost all environment-related funding in this budget is earmarked for science and technology “envelopes,” particularly Sustainable Development Technology Canada. There was little mention made in the budget speech of programs to address particular environmental problems, not even that beast of environmental burden, climate change.

Yet this budget is entirely in keeping with the approach to environmental protection and sustainable development elaborated over a decade’s worth of Liberal budgets and policy pronouncements, and can be understood only in that context. From the Liberal perspective, the solutions to environmental problems, and particularly climate change, are to be sought in scientific and especially technological co-benefits arising out of support for two of the government’s major policy pillars: innovation and sustainable development. As a result of the attempt to maximize the interplay among these three elements of their policy agenda “innovation, sustainable development and climate change” the Liberals are developing a broad-based framework supporting environmental science and technology. In a policy sense, however, this is a rather indirect way of protecting the environment, certainly more indirect than an integrated set of targeted programs. In this respect, Paul Martin’s first budget as prime minister presents no radical departures and no new environmental vision for Canada, but rather a conscious decision to “stay the course.”

In Liberal policy documents over the past decade, the major focus for Liberal economic policy has been “innovation.” In a global, knowledge-based economy, it is argued, government needs to foster innovation by accelerating the commercialization of new products and processes and supporting science and technology. At the same time, the Liberals pledged their commitment to the principles of sustainable development. The programs and goals connected with these two major pillars of the Liberal policy agenda “innovation and sustainable development” have become increasingly intertwined and entrenched over the course of the Liberals’ tenure and, furthermore, have become oriented toward addressing the climate change challenge.

In government discussions and documents, the connection between innovation and sustainable development has continually been made, with science and technology as the key linkage. While the 1994 Building a More Innovative Economy report argued that technology must be harnessed to support environmental goals, the 1996 Science and Technology for a New Century: A Federal Strategy noted that: “Science and technology are key to achieving sustainable development. Protecting and conserving the environment,…will require increased innovation in all sectors of society.” Minding Our Future, the first report on implementation of the science and technology strategy released in late 1997, declared in its introduction that: “A productive national system of innovation can generate the knowledge that society needs to make environmentally sustainable decisions.” The second implementation report, Building Momentum, included sustainable development as a “key science and technology file” and identified global climate change as an emerging policy challenge. The third report, Forging Ahead, contained a description of cooperative science and technology activities currently underway in the area of greenhouse gas reductions.

The year 2001 saw the release of Canada’s Innovation Strategy, and a continued commitment to science, technology and innovation, particularly in the area of the environment, in the Speech from the Throne. The speech declared that, “Canadians…feel a keen sense of responsibility to help the world meet the environmental challenge. And in so doing, to show how this challenge can be turned to advantage through leadership in “green technologies”; through more energy-efficient transportation and housing; and through non-polluting industrial processes. All of which will stimulate innovation, new market opportunities, and cleaner communities. This spirit will animate Canada’s approach to climate change.” The 2002 report on implementation of the federal science and technology strategy, Science and Technology Advice: A Framework to Build On, highlighted the need for targeted application of S&T activities to public policy issues, particularly greenhouse gas reduction: “…the government is moving forward to implement its Climate Change Plan, in which innovation and technology have been identified as key to the long-term solutions to climate change…federal S&T is playing an important role in advancing S&T knowledge to support sustainable decision-making.”

The interplay among these elements of the policy agenda “innovation, sustainable development and climate change” also has been reflected in successive Liberal budgets, though more in terms of support for broadbased science and technology support than specific policies or programs.

Martin’s first budget in 1994 announced the creation of the Task Force on Economic Instruments and Disincentives to Sound Environmental Practices, which was to study the barriers to environmentally friendly investment practices. The environment received little attention in the 1995 budget, which merely announced that the income tax treatment of energy efficiency, renewable energy and non-renewable energy investments would continue to be reviewed. The 1996 budget was slightly more ambitious, announcing the creation of Technology Partnerships Canada, a $250 million fund to encourage the development of high technology products and processes, including environmental technologies. In addition, the finance minister’s budget plan declared that: “The development of renewable energy sources will better position Canada in meeting its long-term energy demands and its international commitment to reduce CO2 levels.” Citing the task force’s work, the creation of a new Canadian Renewable Energy and Conservation Expenses (CRCE) category in the tax system was announced, along with other tax incentives to support investment in the preproduction phases of renewable energy projects.

The focus on technological innovation was continued in the 1997 Budget with $20 million per year over three years allocated to promote investments in energy efficiency and renewable energy for commercial buildings. Some of these funds would be spent under the auspices of a new Climate Change Action Fund (CCAF). The 1998 budget also addressed the environment in technology terms: $34 million was allocated to foster innovation by small-and medium-sized businesses and to implement state-of-the-art technologies for preventing pollution as well as using energy, water and natural resources more efficiently.

The 2000 budget, launched in an election year, represented continuity in terms of policy focus but also change in announcing significant funding increases. In the budget speech, Finance Minister Paul Martin declared that “for Canadians of all ages, protecting the environment is not an option “it is something we simply must do. It is a fundamental value” beyond debate, beyond discussion.” The minister announced that the federal government would establish a Sustainable Development Technology Fund, at a cost of $100 million, to help companies develop and bring to market “green” technologies. The budget also announced new funding totalling $210 million for the CCAF and federal energy efficiency and renewable energy programs. In this budget, then, the innovation, sustainable development and climate change agendas thus appeared to be coming together even more explicitly, with environmental technologies as the beneficiary. As the finance minister noted in his budget speech: “The unequivocal fact is that climate change “indeed, the entire environmental spectrum” will provide challenges, but for an innovative economy it presents many more opportunities. Indeed, those nations that demonstrate how to truly integrate environmental and economic concerns will forge new tools and develop new technologies that others will have to adopt. Tremendous rewards await those nations that get there first, for those which do it best.”

Then, in the January 2001 post-election Speech from the Throne, the Liberal government stated that it would spend $4 billion over four years to promote “leading edge” research in areas such as new environmental technologies. In particular, the government announced its intention to support the development of fuel cell and other renewable energy technologies. The May 2001 economic update announced continued investment in innovation, with monies allocated for new environmental technologies and practices to be considered part of the government’s “stimulus package.”

The 2003 budget, although the first Liberal budget to be delivered by someone other than Paul Martin, nevertheless continued to emphasize themes set out in earlier budgets. Climate change was portrayed as “an economic opportunity”: “This country’s capacity in knowledge and innovation will be key to how we meet this challenge. Canada is already one of the world’s leaders in environmental technologies. But we can, and must, expand both our environmental and our economic advantage as we move forward on our Kyoto commitments.” The budget dedicated another $2 billion to help implement the government’s climate change plan “$250 million for Sustainable Development Technology Canada to encourage the development of greenhouse-gas reducing technologies and another $1.7 billion over a five-year period “to support partnership, innovation and targeted measures to promote energy efficiency, renewable energy, sustainable transportation and alternative energy sources.”

Given the Liberals’ consistency of focus in terms of innovation and sustainable development, with science and technology as the linkage among the two, and the immediacy of the Kyoto target, presumably requiring that particular types of technologies would be tied into a targeted emission reduction approach, there was a sense that the ground had been prepared and that more specific meat needed to be placed on the bones of the framework already in place. Yet, climate change and the Kyoto target seem to have melted into the background, perhaps as part of a political strategy oriented toward shoring up Liberal support in the West. Moreover, despite a widespread consensus that urban efforts to reduce pollutants are critical in terms of achieving national environmental goals, the much-discussed “New Deal” for municipalities “which would put in place predictable long-term funding, increase support for infrastructure, allocate a share of the gas tax as a way of providing extra funding for public transit, and provide a greater voice for municipalities in shaping federal policies” failed to materialize.

Certainly, the enhanced funding for remediation of contaminated sites “$3.5 billion over 10 years to aid in the clean-up of the 3,800 contaminated sites for which the federal government is currently responsible and $500 million for “shared liability” contaminated sites” is being welcomed by the environmental and many local communities. This commitment builds on more modest funding provided for remediation in earlier budgets and is at least partly a response to sustained criticism on the part of the environmental commissioner. Billed as “a remarkable opportunity for economic development,” the contaminated sites funding may also represent something of a legacy issue for David Anderson, who more than likely yearns for a policy “success” to balance the lack of enthusiasm that accompanied Kyoto and the Species At Risk Act.

Perhaps the only truly new, targeted environmental measure in the budget is a pledge to develop better environmental indicators for clean air, clean water and greenhouse gas emissions. This measure is a modest response “to the tune of $15 million over the next two fiscal years” to a recommendation in the 2004 Greening of the Budget Submission by the National Round Table on the Environment and Economy which called for a small set of “natural and human capital indicators” to be published annually and incorporated into each federal budget statement.

In the main, however, the 2004 budget delivers more of the same “a commitment to innovation and environmental technologies via increased funds for science and technology envelopes. In now familiar phrasing, the budget plan explains that “[n]ew environmental technologies hold the promise of improving economic efficiency while contributing to a cleaner and healthier environment…These technologies will be fundamental to meeting our environmental goals, such as reducing greenhouse gas emissions to address climate change.” The government is planning to sell its shares in Petro-Canada and earmark $1 billion of the proceeds to support “new environmental technologies.” However, only $200 million of this total will be invested over fiscal years 2004-2005 and 2005-2006, with the remainder to be invested over the subsequent five years “as new opportunities emerge and priorities are identified.”

“Potential” targets for new technology investments include, according to the budget documentation, renewables, ethanol and fuel-efficient and alternative fuel vehicles, with the latter likely to emerge out of discussions on the new “National Strategic Framework for the Canadian Auto Sector,” also foreseen in the budget. The initial $200 million will be funnelled through Sustainable Development Technology Canada, whose mandate is to be broadened beyond a primary focus on climate change to encompass clean water and soil technologies. Interestingly, the New Democratic Party’s recently released “green platform” outlines an alternative, more detailed plan for putting proceeds from the sale of Petro-Canada shares to use. According to the NDP plan, all proceeds could be used “to create a new Crown corporation for renewable energy with innovation centres in solar, tidal, wind and geothermal energy across Canada, located close to fossil fuel centres.”

Those with longer political memories will remember that Paul Martin was once opposition environment critic and the party’s sustainable development advocate. Many environmental observers (including this author) had high hopes for the new Liberal government back in 1993, in part because Paul Martin would assume a key role in the new administration. Such hopes faded quickly, how-ever, as environmental initiatives in the Liberals’ first mandate were, in the words of Juillet and Toner, “sideswiped” by the Liberals’ fascination with fiscal issues. Having morphed into Deficit Slayer, Finance Minister Paul Martin was determined to put the nation’s finances in order, and environmental budgets fell prey to program review.

There are some (again, including this author) who wondered whether, once installed in the Prime Minister’s Office, Paul Martin might show some of those early environmental inclinations. Yet, the contents of Budget 2004 suggest that Martin appears content merely to secure the moorings of the modest foundation that he himself helped to put in place, rather than erect any ambitious program structures.


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