Consultation on Labour Conditions for Clean Tech and Clean Hydrogen Investment Tax Credits

Current status: Closed

In the 2022 Fall Economic Statement, it was announced that the Department of Finance would consult with stakeholders on how best to attach labour conditions to the proposed tax credits for clean technologies and clean hydrogen.  These labour conditions include paying prevailing wages based on local labour market conditions, and ensuring that apprenticeship training opportunities are being created.

This engagement process gave all interested members of the public the opportunity to provide input on this topic.  The consultation ran from December 1, 2022 to January 6, 2023.  Thank you to everyone who participated.

Key questions for consideration

This consultation sought feedback on the design of these labour conditions.

The discussion questions that served as the basis for this consultation are outlined below.

1. Are there modifications to the prevailing wage and apprenticeship rules introduced in the Inflation Reduction Act in the United States that should be considered in the Canadian context? If yes, how should they differ and why?
1. For example, in the United States, in broad terms the prevailing wage is determined in relation to an average wage paid to workers in a particular occupation employed on similar projects in the same area. What approaches could be used to determine the prevailing wage in Canada for the purpose of the proposed tax credits? What data and methodologies should be used in determining the prevailing wage in Canada for the proposed tax credits?  How might the geographic area be defined when determining the prevailing wage?
2. For example, in the United States, businesses must ensure that 10-15 per cent of total labour hours are performed by registered apprentices. What metric could apply in Canada to determine the appropriate contribution of apprentices to a project? Are there any other kinds of apprenticeship conditions that should be considered besides, or instead of, percentage of hours worked?
2. What effects could requirements for paying prevailing wages and creating apprenticeship opportunities have on clean technology and clean hydrogen investment projects?
3. What effects could conditions for paying prevailing wages and creating apprenticeship opportunities have on workers?
4. Are there certain occupations that the prevailing wage or apprenticeship conditions should (or should not) apply to (such as, in the case of apprentices, the 54 designated Red Seal trades)?
5. Has your organization encountered prevailing wage or apprenticeship conditions in other contexts, for example with respect to government contracts or programs, federally, provincially, locally or in other jurisdictions? If yes, what is your experience with these rules and are there any specific issues that should be noted when developing the labour conditions?
6. Employers would need to be able to demonstrate compliance with the labour conditions. What considerations should be taken into account in this respect when designing the conditions?
7. In certain situations, an employer could subcontract work to be performed. Are there specific limitations in applying labour conditions to a subcontractor?
8. Are there any circumstances for which exemption from the conditions should be considered, such as for certain types of investments or for certain locations? What reasons would justify these exemptions?
9. Should there be a threshold of investment required (or other metrics such as number of workers) for the labour conditions to apply? If so, what would be an appropriate threshold?

What's next?

Input received through this consultation will be considered alongside the analysis departmental officials are conducting to help inform decisions on the design of the labour conditions for clean technology and clean hydrogen investment tax credits. Details will be announced in due course.

While this formal consultation has now concluded, Canadians are welcome to share their ideas and comments with the Department of Finance at any time, by emailing labourconditions-conditionsdetravail@fin.gc.ca.

Related links

• Investment Tax Credit for Clean Technologies (2022 Fall Economic Statement)
• Investment Tax Credit for Clean Hydrogen (2022 Fall Economic Statement)
• Department of Finance launches consultations on clean hydrogen and labour conditions for clean investment tax credits
• Consultation on the Clean Hydrogen Investment Tax Credit