Thank you Mr. Chairman, ladies and gentlemen.
I would like to thank the committee for having giving me the opportunity to present the viewpoint of the Chamber of Commerce of Canada on this important topic.
The Chamber of Commerce of Canada represents some 170,000 companies. Its members face numerous challenges every day. Most of them are affected by the appreciation of the Canadian dollar.
In a letter that I sent yesterday to the Prime Minister and to Canada's premiers, I proposed a number of immediate measures that can be taken to strengthen Canada's economy and to help our businesses grow and prosper. Many of our members face unprecedented challenges that grow daily. Fierce competition from emerging economies like China and India, weaker demands south of the border where 77% of Canada's merchandise exports go, and the stunning appreciation in the Canadian dollar since 2002 have created a perfect storm for export-oriented businesses and for companies facing competitors here at home. Canadian manufacturers are on the front line.
Since late 2002, over 330,000 manufacturing jobs have disappeared, more than 80,000 so far this year. The loss in competitiveness is evident in the rapid escalation of unit labour costs, which are the costs of wages and benefits of workers per unit of economic output. Unfortunately, Canada's productivity is rising too slowly to negate the lost competitiveness, and more challenges lie ahead. The Bank of Canada predicts that the Canadian dollar will average 98¢ U.S. through 2009, and Canada's economy will grow by 2.3% in 2008 and 2.5% in 2009. The Department of Finance and the Bank of Canada have stated that the risks to the Canadian economy are tilted to the downside.
Given the challenges that I have just mentioned, it is important to put in place competitive policies that would have a direct impact on our countries's productivity and prosperity and on that of all Canadians.
The Canadian Chamber of Commerce calls for immediate action. The government must put policies in place that encourage flexibility and adaptability, and lay the foundations for a more competitive economy. In our view, the federal government must work with provincial and territorial governments in a number of key areas.
The first area is to lighten the burden of regulation. Overlap, duplication, and fragmentation are time-consuming and costly, and they hamper Canada's ability to compete.
Second, we need to cut interprovincial trade barriers. Internal barriers keep firms from growing large enough to compete effectively in foreign markets, cause investors to look elsewhere, artificially raise prices, and increase the cost of doing business.
Third, as a nation we need to better utilize skilled immigrants through better recognition of foreign credentials, and improve labour market access and integration. Employers across the country are facing major labour shortages. Many foreign-trained professionals and tradespeople cannot put their skills to work. Employers also report long delays in the processing of people whom they've identified for specific jobs.
Fourth, we need to keep the Canada-U.S. border open for legitimate travellers and business. Border delays and complications harm productivity and jeopardize jobs. Additionally, rapidly escalating border compliance costs are wasting hundreds of millions of dollars each year, putting domestic producers at a serious disadvantage relative to their offshore competitors.
Finally, we need to ensure a competitive tax environment. The 2007 budget and the recent economic statement contained a number of positive developments to help business people compete, but more needs to be done. Significant economic benefits can be realized by eliminating provincial capital taxes, by harmonizing provincial sales taxes with the federal GST, and by making permanent the accelerated capital cost allowance for investment by manufacturers and processors in machinery and equipment.
Mr. Chairman, the Canadian Chamber of Commerce believes these measures provide an important first step toward a more competitive Canada. They should be implemented now as a means of helping Canadian businesses respond to urgent and growing pressures. To delay would risk the jobs of Canadian workers and the prosperity of communities across our country.
Mr. Chairman, I thank the members of the committee for their hospitality. I'd be delighted to answer questions and to respond to any concerns that they would want to raise.