Thank you for the opportunity to present today. Basically, I will talk today a bit about the erosion of the manufacturing base. The handout--which was circulated, I believe--contains a lot of statistics about the industry itself, which I won't go through. But certainly, during the Q and A, I'd be happy to answer questions on that and focus in on the recommendations.
Historically, the Canadian plastics industry has grown at about twice the rate of general manufacturing. Over the past few years it has weathered the storms of change in the economy, the literal storms caused by the hurricanes in the past couple of years, and we're not really here today to ask for a handout to assist the industry, but for the establishment of a business climate to ensure that the plastics industry continues to prosper.
The question you may ask yourself is, well, why now, if it has done so well in the past? The answer is that the industry is currently facing, to continue with the storm analogy, a perfect storm of challenges: the high Canadian dollar; competition from low-cost jurisdictions; skilled labour shortages; weakening U.S. demand; soaring energy and commodity costs. Practical and immediate steps are needed from the federal government, and there are things that can be done very easily and very cost effectively.
The first main recommendation we would propose is the establishment of a vision for manufacturing within Canada. The Canadian government must take a lead to show that manufacturing continues to be an important part of the Canadian economy. This is very important for the plastics industry because it is, according to StatsCan, the largest manufacturing employer in Canada, with nearly 95,000 employees across the country.
The vision must include a commitment to developing industries that can provide value-added production to our natural resources. Again, for the plastics industry, as you know, plastics is based on a resin produced primarily from natural gas. Canada is a large producer of natural gas. Why not process some of that natural gas within Canada and develop the resins so that we have a security of energy supply and a feedstock supply for the industry? We can do all of this and still meet our NAFTA requirements.
The other recommendation we would make is with regard to the capital cost allowance for a two-year writeoff for investments in new manufacturing capital expenditures. This will help kick-start an innovation and productivity boom in Canada. And frankly, with the high Canadian dollar, it allows companies to take advantage of that situation with their purchases of capital equipment from the U.S.
We would also like to see improvements in the SR and ED tax credits. As you've heard from previous speakers as well, we would like to see more companies take advantage of them. Specifically, make the credits refundable, exclude them from the calculation of the tax base, provide an allowance for international collaborative research and development, and extend the tax credit to cover costs for patenting, prototyping, product testing, and other types of pre-commercial commercialization activity.
We would urge the government to maintain the commitment to reduce the federal corporate tax rate to 19% by 2010, but to also further reduce the rate by two percentage points by 2012. As well, we would like the government to look at a competitive regulatory regime to allow our companies to become much more efficient in their dealings with the federal government.
Lastly, we'd like to see the government continue to improve access to skilled labour through the funding of the Canadian Plastics Sector Council. CPIA is a partner with CPSC, and we have been working with them to take the message to students in high schools and in universities. As you can imagine, plastics isn't always the first industry of choice, but it's a very important one, and once we show students what's involved and the high technology that's involved within the industry, there seems to be a lot of excitement about it. We want to continue that and ensure that we have a future labour force within Canada.
In conclusion, we'd like to see the focus on a positive business climate in Canada, where value-added manufacturing can flourish and continue to contribute to the Canadian prosperity.
I'd be happy to take questions at the end of our session.