Finance Committee on Nov. 20th, 2007

[Andrew Jackson]

I'd be in agreement with my colleagues here from business. The reason a manufacturing sector is important is that it is a relatively high productivity sector and that it has the capacity to generate ever higher productivity.

By far the majority of research and development expenditure in Canada is within the manufacturing sector. If we're going to be a major player in the global economy of the future, we simply can't abandon manufacturing, the business of making things.

A lot of important service industries make a huge contribution. A lot of those are tied, in turn, to manufacturing. It's not a matter of fetishizing blue collar, metal-bashing jobs. I think what we have to realize is that the manufacturing sector is changing. But with a dollar at parity, it's going to kill our potential across a huge swath of industries—important industries of the future, not least auto and aerospace, which have been absolutely key building blocks for our future.

It's not a matter of preserving the status quo, I think. It's that we have to change the manufacturing sector. We have moved up the value chain and have become much more innovative. But we're not going to get the investments and innovation and training and so on that we need if the dollar is killing off any prospect of profit from new investment, as Mr. Martin said, and I absolutely agree with him.

[Dr. Roger Martin]

Mr. Chairman, may I also chip in on this?

I think it is really important to understand what's happening to manufacturing globally in advanced economies. Benchmarking ourselves against what manufacturing jobs we used to have I just don't think is useful.

Whether exchange rates are low or high, in Canada and the U.S. manufacturing is just becoming a smaller part of the economy.

I would agree with Andrew about the point of not fetishizing one kind of job or another. We have to ask what all the high-paying jobs are in industries, and, whether they're service or manufacturing, understand the linkage between the two and have a broader view of it than just saying we're losing manufacturing jobs and that is bad.

Part of it is that it's becoming more productive and becoming smaller in total employment as it becomes more productive. The same thing exactly as happened in agriculture.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Menzies, you have four minutes.

[Ted Menzies, Conservative, Macleod, AB]

Thank you very much, Mr. Chair.

Thank you to our presenters.

It's funny that Mr. Martin would, in his last comment, mention agriculture. I think there are some interesting connections that we can draw, because the way agriculture has managed to survive and prosper, I would suggest, is by becoming competitive.

I'm very concerned when I hear Mr. Jackson comment about the loss of 82,000 jobs. As a matter of fact, this year alone Canada overall has gained 345,000 new jobs, 655,000 new jobs since this Conservative government has taken office, and 80% of those are high-value jobs. So your suggestion about 82,000 job losses—not to trivialize that, of course, but there are new jobs.

To Mr. Martin's comment, the new way of doing business in Canada...people are changing their job profiles, and that's a positive thing.

A little clarification for Mr. McCallum: it was the Liberal government that started the free trade negotiation with Korea—

[An hon. member]

No.

[Ted Menzies, Conservative, Macleod, AB]

—if I recall correctly, and I think I'm accurate on that. For him to suggest that the deal is done, unless he's privy to some information I'm not, the deal is not completed. The minister has said it will not be finished until we make sure we're protecting Canadian companies.

I have one quick question, and I want to address this question to all of you. I need a very quick answer because we have bells and we have to go. Should the Canadian government interfere with the Bank of Canada to influence the value of the Canadian dollar?

A quick answer, yes or no, to all of you, please.

[Richard Hardacre]

No.

[Ted Menzies, Conservative, Macleod, AB]

Thank you.

Mr. Jackson.

[Andrew Jackson]

[Inaudible—Editor]...the Prime Minister for saying the dollar is too high.

[The Chair, Conservative, Rob Merrifield]

Yes or no?

[Ted Menzies, Conservative, Macleod, AB]

We'll take that as a “no comment”.

[Andrew Jackson]

Well, there's such a thing as moral suasion.

[Ted Menzies, Conservative, Macleod, AB]

“No comment”--thank you.

[Mark Nantais]

No, but it needs to look at these other supports that I've mentioned as it relates to the auto industry.

[Ted Menzies, Conservative, Macleod, AB]

Thank you.

[Jean Laneville]

The Bank of Canada has a great deal of credibility throughout the world. We should not jeopardize this by making such a change to its mandate. So my answer is no.

[Ted Menzies, Conservative, Macleod, AB]

Thank you.

Mr. Martin.

[Dr. Roger Martin]

I would concur. There is no immediate crisis that I can imagine that would make it worthwhile for the Canadian government to jeopardize the independence of the Bank of Canada. The damage, long term, would be much greater than any benefit you could get in the short term.

[Ted Menzies, Conservative, Macleod, AB]

Thank you, gentlemen.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Mulcair, very quickly.

[Thomas Mulcair, NDP, Outremont, QC]

Thank you, Mr. Chairman.

Perhaps Mr. Jackson could share with us his views about non-monetary incentives that could help us deal with the current crisis. Could he elaborate on his ideas about non-monetary incentives that could be helpful to us?

[Andrew Jackson]

I don't know about non-monetary incentives. I think part of what is needed to create a strong manufacturing sector, a strong cultural sector, is in fact supports from government for new investment. I guess where I'd take issue with Mr. McCallum and his Conservative colleagues is whether a general cut in the corporate tax rate is the answer. Most of the benefit of that would go to the financial sector and the resource sector, which are extremely profitable. I think we need much more targeted measures, like the measures to support our auto industry.

[Thomas Mulcair, NDP, Outremont, QC]

I was pleasantly surprised to hear Mr. Laneville refer to Holland and Norway in his remarks. Am I interpreting you and your group correctly to say that tax reductions would be a bad idea if they do not benefit sectors such as forestry and manufacturing, where there have been no profits and therefore there cannot be any reduction? Like Mr. Jackson, do you think that what we need are measures targeting those industries experiencing the greatest difficulty, in light of the current crisis?

[Jean Laneville]

Yes, exactly. A number of industries in the manufacturing sector are not making any profits and are actually posting losses. Reducing the tax rate is of no help to them. We have to target the industries that are having trouble, show some originality and find ways to support them.

[Thomas Mulcair, NDP, Outremont, QC]

Thank you, Mr. Chairman.