Mr. Chair, members of the Standing Committee on Finance, I am pleased to be with you today to present the recommendations of the Manufacturiers et Exportateurs du Québec regarding the 2024‑2025 budget.
Canadian Manufacturers and Exporters, which we are part of, submitted its pre-budget submission earlier this year. Today I will focus on the recommendations that are most relevant for Quebec manufacturers given the challenges we have in the province. My presentation will be in French, but I will be happy to answer any questions in English afterwards.
The manufacturing sector represents 13,000 businesses. Our activities generate 12.8% of Quebec's gross domestic product, which, to date, makes us the biggest contributor to Quebec's GDP. We are also major exporters: manufactured goods constitute 86.8% of Quebec exports.
The economic situation across Canada is uncertain and unpredictable. The federal government can count on Quebec and Canadian manufacturers to support the economy, but they must be given the necessary tools to do so. Today I am going to outline some of our recommendations, divided into four major themes.
The first of those themes is labour and access to talent.
There are nearly 22,000 vacant positions in Québec's manufacturing sector. That fact is still the greatest drag on both manufacturers' growth and, it's important to note, on investment. There are 16,000 temporary foreign workers in our sector in Quebec. Quebec manufacturers use the temporary foreign workers program.
To address this situation, we have two recommendations.
First, we need to align the immigration system with the needs of manufacturers. More specifically, we want the government to be able to select more welders, electrical engineers and mechanical engineering technicians so that economic immigration can serve Quebec and Canadian manufacturers.
The second recommendation concerns housing. There is a housing crisis all across Quebec. The major manufacturers will invest in housing, by both purchasing and renovating, in order to house their workers. As you can understand, however, these kinds of investments are harder for small and medium-sized manufacturing businesses to make. We therefore ask that the government accelerate investment and cooperate with the provinces and municipalities so that we can quickly build more housing across Quebec and maintain our manufacturing operations in the regions.
The second major theme is stimulating investment.
Canada ranks second last for non-residential investment among the countries of the Organisation for Economic Co‑operation an Development. We now invest less in this area than we did in 2014, which means that we have experienced negative growth since that year.
Many significant investment projects are unfortunately being delayed or cancelled in the current economic context. We recommend several measures in our brief to address this situation. I will briefly present four of them to you. First of all, the government should introduce a 10% investment tax credit, as is being done in Quebec and the Atlantic provinces. Second, it should extend the accelerated investment incentive. If we want to stimulate investment now, in a context of uncertainty, we need to encourage businesses to do so. Third, the government should also extend and recapitalize the strategic innovation fund and commit at least $2.5 billion a year to it. Fourth and last, it should enhance and reform the scientific research and experimental development tax incentives program. That's particularly important for Quebec's aerospace industry.
Exports are the third theme of our recommendations.
We need to increase exports. However, it's often difficult for businesses to enter international markets. They must be a known quantity and have had contracts here in Canada. Which is why we recommend that the federal government review its procurement policies and eliminate the lowest bidder rule to enable our businesses, which are competitive, to access public contracts. These are businesses that produce here in Canada in compliance with environmental and occupational health and safety standards. They must be given a chance to bid for and access public contracts.
We must also provide better support for small and medium-sized manufacturing businesses. Only 1,000 of the 13,000 manufacturing businesses in Quebec have more than 100 employees. However, the 12,000 businesses with fewer than 100 employees need export assistance. They need to be provided with better support and more programs to mitigate the risks associated with their initial forays into international markets.
The fourth and final major theme is the fight against climate change.
The big challenge in the next few years will be to decarbonize activities. Quebec and Canadian manufacturers want to contribute to the federal government's carbon-neutrality objectives and to be part of the solution. However, they need more support and predictability, as well as key measures, in view of the investments that will be required.
More than a year ago, the U.S. government announced a range of tax measures under its Inflation Reduction Act. Here in Canada, we are still awaiting the measures the federal government announced to materialize. For a year now, businesses operating on both sides of the border haven't even had to wonder on which side of the border to invest their money to decarbonize their operations: they know it's better to do it on the American side. Consequently, the government must expedite implementation of the five tax credits previously announced and ensure that those programs are predictable and more broadly based to stimulate investment in Quebec and Canada.
Thank you very much. I will be pleased to answer your questions.