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While some industry stakeholders agree on the utility of federal clean energy tax credits, there’s a large divergence on one key element.

The federal government announced a suite of incentives for the clean energy sector including tax credits in its 2023 budget but while Progressive Contractors Association of Canada president Paul de Jong said his organization supports the credits, a wage rate requirement gives him pause.

A component called the labour conditions clause requires a proponent to tie wage rates of a skilled workforce to a prevailing rate in order to get 10 per cent of the tax credit of the overall package, de Jong said.

“The government is inserting its hand into what is normally a free and competitive marketplace, where contractors are bidding against each other, unions, or even non-union are seeking the support of workers in terms of bargaining on their behalf, and that’s actually worked quite well in Canada,” he said.

Canadian Labour Congress president Bea Bruske said labour supports the wage conditions as they will protect workers as Canada’s energy economy shifts into a carbon-free future.

“We very strongly believe the clean energy tax credit is a very important part of Canada’s transition to a low-carbon economy. There needs to be some strings attached so that it creates the right kind of jobs in communities that the workers are going to be relying on as we transition,” Bruske said.

“(The credit) does require for the payment of prevailing wages, so that can of course be the bucket of benefits, so to speak, not just wages but benefits and everything that can be considered for an employee, but also making sure there has to be a certain amount of hours provided by registered apprentices as well as equity deserving groups,” she said. “We think those things are key to providing the kind of opportunities for workers across the country to move into these jobs and retain these jobs.”

De Jong said while he fully supports workers being paid commensurate to their value, his concerns lie with government becoming involved in the process.

“If the government institutes a ‘one wage rules them all’ approach, you begin to send a signal to investors that there is no ability to be flexible, to be innovative and that the pricing level may be too high for them to greenlight their investment,” de Jong said.

He also cited the huge U.S. stimulus in the Inflation Reduction Act placing significant funding into the clean energy infrastructure sector and said, “it’s not inappropriate for the Canadian government to respond in some proportionate manner.”

“Our concern is not with the tax credit itself, but the manner of its application,” he added.

Bruske said realistically while Canada is competing with the surge in infrastructure work in the United States, “we need to also concern ourselves with the kinds of positions and jobs we want to create in Canada.

“I don’t think paying prevailing wages or meeting those requirements is that arduous that it’s going to scare investments away. There are many opportunities right across this country and we’re looking forward to working with companies and employers that want to actually create the jobs that we need.”

For more on this topic listen to The Construction Record Podcast here.

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