Good afternoon. Thank you for this invitation. It was significant enough for us to brave the storm and travel here today. Obviously, this is not the first time we are appearing before you, and there is a feeling of déjà vu. That in itself is not necessarily good news.
To summarize the severity of the problem, during this period of global growth, Canada lost 350,000 jobs in the manufacturing sector, of which 140,000 jobs were lost in Quebec alone: this is of great concern to the FTQ. The situation in Quebec has changed radically. To illustrate the importance of the change in the manufacturing sector, the province of Quebec once recorded a trade surplus of $9 billion, and is now running a deficit of $10 billion. The manufacturing sector provides for 85% of exports leaving Quebec. This is not minor. Often, it is said that we are now in a service-based economy, and that the manufacturing sector, or even the natural resources sector, are part of the old economy. However, as is reflected in annual reports, it can be shown that it is within the manufacturing sector where we are on the winning side of commercial exchange with our economic partners. Therefore, this is a major concern, not only for the people we represent, but for society as a whole.
The appreciation in the value of the Canadian dollar is a major factor, and increases the competitive pressure under which our businesses operate. Some say that this is not so bad because such a situation provides for business incentives and the possibility of upgrading technological equipment in Quebec and throughout Canada. In Quebec, we observed that capital expenditures in the manufacturing sectors for 2007 hit record lows since 1994. In comparison with the peak cycle, this represents a rather considerable decline of 40% since 2001. Generally speaking, the investment we would like to see in equipment is not necessarily being made. This does not mean that this is consistent throughout all sectors, but generally speaking, and in actual fact, investment in capital and equipment is simply not being made.
As we speak, the problem in Canada is that we tend to generalize. People say that unemployment rates are not so bad. Overall figures on investments lead some to believe that things are not so bad. Presumptions are being extended as a result of what is going on in the resource sector, mainly the oil and gas sector, and even the construction sector.
I wanted to provide you with that context and state that we are here again today because the problem remains ongoing. We are now facing a looming recession in the United States which could have a domino effect on other economies, including ours, since the U.S. is our main trading partner. This is not a particularly rosy outlook.
What can we do from a tax perspective? From the outset, I would say that I personally am in full agreement with Mr. Lazar and Mr. Myers. Their comments on capital cost allowances and refundable tax credits are absolutely relevant. The same applies to investments in research and development. We believe all of these must be enhanced. In that regard, the status quo is worrisome.
For several years now, Canadian exports have been increasingly comprised of non-processed products. Yet, up until the early part of this century, value-added products had been consistently increasing throughout the country. I firmly believe that we must take advantage of the lead that resulted from the resource sector boom and allocate a portion of the revenues being generated by this economic activity to help sectors that are under pressure.
The focus is truly on the issues of value-added products and productivity. It would be more appropriate to take a sectoral approach, given the respective histories and dynamics of each sector. I think we all subscribe to this idea.
We wish to emphasize two or three points. Obviously, there is the issue of training. Employers are the first to state that there is a shortage of skilled workers, and if the shortage is not evident yet, it soon will be. We have noted with some concern the proposals to open the doors to temporary workers, whereas there are many workers who are under-utilized, and who worked in now defunct industries. These very people could be trained for other jobs and trades. Yet, the money is not there. It is as simple as that.
Right now, under the provisions of the Employment Insurance Program, the federal government could invest almost one billion additional dollars to be distributed to the provinces for the purposes of training. Let us recall that we have been running a $2 or $3 billion surplus for several years now. This is not a trivial issue. For example, a mine in the area of Level-sur-Quévillon is bringing in 200 workers from Tunisia, and yet there are 300 forestry workers living in the community, who are more or less unemployed. Aberrations such as these are occurring, and make no sense. We need the resources now, not in five years.
For several years now we have been calling for the strengthening of the Employment Insurance Program. The objective is not to encourage people to wait for a handout. The program was originally conceived to help people in difficulty make a new start. One cannot plan for relocation when one is lacking time and necessary resources. This factor must be taken into consideration. Once again, we are disappointed. We've been calling for measures to be taken for years now. New budgetary surpluses being announced each year prove that we have the means to take action.
Obviously, one component of the problem we are confronting is monetary in nature. We have already had the opportunity to speak briefly on the Canadian dollar. The Bank of Canada slashed rates yesterday, which was the right thing to do. I do not know if this issue falls within the jurisdiction of this committee; however, this topic must be discussed.