Finance Committee on Nov. 22nd, 2007

[The Chair, Conservative, Rob Merrifield]

I'd like to call the meeting to order. I want to thank the witnesses for coming at this time.

We have a couple of changes in the first panel. We will fill it out to have a full five, so that we have five here. We'll be hearing from the Conference Board of Canada, Key Porter Books, the Forest Products Association of Canada, the Tourism Industry Association of Canada, and the Town of Hearst in the first panel.

We have our witnesses before us. We have our members here waiting to hear your testimony. We appreciate your coming in and testifying in the pre-budget consultation process.

We'll start with Paul Darby. The floor is yours.

[Paul Darby, Deputy Chief Economist, Conference Board of Canada]

Thank you very much, Mr. Chair.

Good afternoon, everyone. Thank you very much for inviting the Conference Board of Canada to present today. The topic I'm going to be focusing on is the impact of the rise in the Canadian dollar on the Canadian tourism industry.

Just for background information, this is obviously a very important industry for Canada. The balance of payments, just on our export side, is expected to reach about $21 billion by 2011. Obviously, it's an important contributor to economic activity in Canada.

However, it's pretty clear that the imports of travel services are rising more rapidly than the exports of travel services, and that's at least in part because of the increase in the Canadian dollar.

There are other issues as well, such as the western hemisphere travel initiative, which will eventually require Americans, as you know, to hold a passport if they want to get back into the United States. This is going to have an impact, we feel, on the future of U.S. travel to Canada.

Americans are certainly the most important part of the Canadian travel market, in terms of foreigners visiting Canada. U.S. visitors accounted for 76% of all trips by foreigners who stayed more than one night throughout 2006. Last year—a full year of data—for American travellers to Canada, 76% of trips were for at least one night.

Our forecasts, however, suggest that spending by Americans visiting Canada for non-business purposes—so we're really in a tourism context here—will decline by about $1.9 billion per year between 2005 and 2008. By the time you get to 2008, you'd be about $1.5 billion lower in terms of that activity than in 2005. That's in nominal terms, so in real terms it would be even more substantial. This is obviously serious.

It's very hard to replace those American visitors to Canada with visitors from other countries, simply because of the sheer size of the U.S. market.

Obviously, attracting foreigners to visit Canada, particularly Americans, is going to be very difficult, but we have even a greater issue with respect to Canadians leaving to travel abroad, what we call travel imports. We are looking at about a 25% increase in Canadians travelling abroad—in terms of their spending, now—between 2007 and 2012.

If you do the math, the result is that if you look at the external trade deficit on travel, it should go from about $6.7 billion in 2006 to about $9.5 billion by 2012. Over that five- or six-year period, we're looking at a 41% deterioration in that travel balance, a deterioration of almost $3 billion a year. These are important numbers.

In the time left, let me mention that in terms of the sensitivity analysis we do, normally we would argue that a 10% increase in the Canadian dollar versus the U.S. dollar should result in about a 15% to 16% reduction in overnight travel from Americans; it's quite elastic, in fact. But our feeling more recently is that the sensitivity will probably be down now to about the 0.8% to 0.9% range. In other words, a 10% increase in the Canadian dollar should lower U.S. overnight travel by about 9%.

The reason for that is that generally the U.S. doesn't have the same kind of appeal as it would have had in the past. We've seen a lot of retailing giants now show up in Canada, so we're not seeing quite the same sensitivity. But we're assuming, with the recent increase in the dollar, which was about 18% over the last nine months, that Canadian overnight travel to the United States should be up by about 16% as a result of it.

The other side of the coin, U.S. visitors to Canada, is not nearly as sensitive as in the past, but basically we feel there's roughly a 0.5% to 0.6% elasticity. So again, that 18% increase in the value of the dollar over the last nine months should lower overnight travel from the United States by about 6%.

So we're looking at about a 16% increase in Canadians going to the States and about a 6% decline in Americans coming to Canada, and both are going in the wrong direction, if you like, in terms of our balance of payments.

That's just from that increase in the dollar that has taken place over the last nine months. Obviously, there is fallout from the rise in the dollar that took place in the years prior to that.

In the interest of time, Mr. Chair, I'll stop there.

[The Chair, Conservative, Rob Merrifield]

Thank you very much. I appreciate that.

Next is the vice-president of Key Porter Books, Jordan Fenn. The floor is yours for five minutes.

[Jordan Fenn, Vice-President, Key Porter Books]

Good afternoon.

My name is Jordan Fenn. I am the publisher of Key Porter Books, and I am honoured, having received the invitation to be here today, to present the impact of the strong Canadian dollar on the Canadian publishing industry.

Located in Toronto, Key Porter is one of the few remaining wholly owned and operated Canadian publishing houses and enjoys sales that place us in competition with the large multinational branch plants, such as HarperCollins, Penguin, and Random House.

We've been publishing books of importance to Canada and Canadians for close to 30 years and have had the esteemed privilege to work with and represent many talented authors during our history, including former Prime Minister Jean Chrétien as well as current party leaders Jack Layton and Elizabeth May.

The Canadian publishing industry has produced an incredible number of internationally acclaimed writers and has seen the respect for our homegrown authors grow, particularly over the last three decades.

Protecting this unique voice of Canadian culture is important, and ensuring a healthy industry today will provide a strong industry for future generations of writers and their respective audiences.

Our industry has faced many challenges over the years, and though there have been casualties, we have survived. The challenges we face today at the hands of a strong dollar, however, are significant, so much so that they will seriously impact the entire publishing community as well as associated businesses, including our retail partners, printers, distributors, transportation firms, and obviously the writers' union. As a result of the rising dollar, the media, politicians, and consumers have questioned the retail pricing of books and have demanded par pricing.

I do not believe that the issue has been properly communicated to the marketplace. If anything, it has been poorly represented and has created greater frustration and anger within the consumer sector. Instead of our finance minister holding up a copy of a Harry Potter book and challenging the Canadian price, he could have explained the economics of producing books for a population of 300 million versus 30 million.

Why does a book priced at $24.95 U.S. have a Canadian retail price of $32.95? With a par dollar, should these prices not be immediately changed to reflect this?

The development of a book sees work begin an average of 18 months before it hits retail shelves. All costs for titles published today were therefore incurred and budgeted well over a year ago and at the exchange rate at the time. For Canadian publishers, these costs are all in Canadian dollars.

While one would think that Canadian industry would benefit from a rising currency, the strong dollar provides no advantage or benefit to Canadian publishers, as the majority of our publications are acquired from Canadian agents representing Canadian authors, with each contracted in Canadian dollars. Our operating costs and overhead, including salaries, leases, promotional costs, utilities, etc., are all in Canadian dollars, and given that the majority of Canadian publishers support Canadian printers, the costs to print, bind, and deliver the books are also in Canadian dollars.

After scrutinizing and examining all facets of our business in the development of each book, I see nowhere along the line that allows for Canadian publishers to benefit from a strong dollar. Our costs are static, if not increasing, and yet in order to be competitive against the less expensive American publications crossing the border, we are forced to adjust our prices, which is a direct hit against the profitability and therefore the health and sustainability of our industry.

Profits in publishing are already thin. This is a fragile industry, and thus the impact this is having on Canadian publishers has the potential of being devastating, as the financial implications of reduced revenue against static costs produce an obvious outcome.

Books have long had accepted consumer price thresholds. Each format, whether it be a hardcover, a paperback, an oversized illustrated title, or a children's book, has an established price point that is the result of publishers' budgeting and is based on measures that allow the publisher to acquire the title, financially compensate the author, produce the book—including all associated costs, such as editorial, design, production—as well as to provide the retailers with a discount, which affords them the required margin. Additionally, each book has a set amount budgeted to cover overhead, marketing, and publicity and distribution costs.

In the American market, these same formats have established pricing based on the power of the American dollar. The exchange rate has determined the Canadian pricing on imported books, though if a title originates domestically, the prices are as mentioned.

As an example of what we're experiencing, if you look at a Canadian fiction title, paperback, average price of $21.95, south of the border, we see these books are approximately $6 or $7 cheaper. While Canadian publishers are not benefiting from the strong dollar, we've been challenged to lower our prices to place our formats in line with American titles of the same genre. Failure to lower our prices will impact our ability to compete with imports, although by lowering these prices we are in fact removing all levels of profitability. Without that, we lose the ability to offer retail incentives, promote our authors effectively, and market the books. Without supporting each publication with a marketing and publicity campaign, Canadian-authored titles will languish on shelves and the impact will seriously lessen the saleability of our books. This will not only affect publishers, but authors and retailers as well.

On the retail side, I understand from various partners that at the front lines of the pricing issue, they are faced daily with irate customers demanding price parity. I've even heard of a customer being removed from a Toronto bookstore by police for throwing books at store employees because of the pricing. What this consumer didn't understand was that even on the books that are imported from American publishers, these prices were set at least 12 months in advance, and that the Canadian company representing the American publications incurs all costs in Canadian dollars, has all staff compensated in Canadian dollars, has overhead expenses in Canadian dollars, bills and collects in Canadian dollars, and budgets based on annual anticipated sales revenue in Canadian dollars. To simply lower retail pricing for such firms is to—

[The Chair, Conservative, Rob Merrifield]

Very quickly now.

[Jordan Fenn]

I'll move on.

Is my time up?

[The Chair, Conservative, Rob Merrifield]

And then a little.

[Jordan Fenn]

Okay, the impact is there. I'll close there. I could go on.

[The Chair, Conservative, Rob Merrifield]

I'm sure you can, and you probably will during questioning, but I think you made your point very clearly.

Actually, the order is a bit out, but that's okay. We have the president and chief executive officer of Forest Products Association of Canada, Avrim Lazar.

The floor is yours for five minutes.

[Avrim Lazar, President and Chief Executive Officer, Forest Products Association of Canada]

Thank you.

I'd like to thank parliamentarians for holding these hearings. I know you hear many witnesses, and it might even get boring sometimes, but I just want you to know that we really care about this stuff and really appreciate it when you actually give us your attention. It matters a lot.

What's at stake in the forest industry is a million jobs, 3% of the gross domestic product, the largest employer of aboriginal Canadians, and 300 towns, which will shut if we have to shut the mills. In these towns, you can't just move to the next industry. In many of these towns there's nothing to do but go up either to Prince Albert or down to Toronto.

What's involved is the economic backbone of a lot of rural Canada and a huge number of jobs.

The good news is that this industry has been Canada's productivity champion for eight out of nine years. Of all of manufacturing, no other industrial sector has improved its productivity as much as the forest sector.

The good news is that we've outdone the U.S. in the wood sector in productivity year after year and have kept pace in pulp and paper.

The good news is that we are the environmental performance champion, having done Kyoto seven times over, but also having committed to carbon neutrality without buying offsets. Canada is the champion in terms of logging without deforestation: we have virtually no deforestation, whereas most of our competitors do.

The good news is that global demand for our products is going up 3% a year, equal to twice the whole production of Quebec every single year. And very few countries are positioned to supply that demand, because they have huge land-use problems, water problems, energy problems, and environmental problems.

So we have a great industry, a great employer, huge demand, and great productivity, and we are being taken down by a 40% increase in our cost structure. All of our input costs are in Canadian dollars and all of our sales are in American dollars. No matter how productive, brilliant, innovative, or entrepreneurial you are, when your cost structure goes up 40%, you're not quite sure where to look.

In addition, the volatility of the Canadian dollar has made many international companies say, “Let's go some place where the currency is more stable than a mining stock.” The future of our currency is being traded like pork bellies. Speculators are making huge profits or losing huge amounts of money betting on our currency going up and down, and in the meantime our industrial infrastructure is heading south.

Put yourself in the shoes of a Canadian company with mills in Canada and the U.S., let alone those of the American- and the Scandinavian-owned companies. Put yourself in their shoes. You don't know whether your cost structure is going to be at a 98¢ dollar, a $1.02 dollar, a $1.10 dollar. You have no idea where it's going to go. Even if you could make a profit at parity, are you going to take a chance and invest in Canada or are you going to move your money south?

Many economists have been saying that Canada is weathering this storm well and that it's amazing how well things are going. Economists live in the world of numbers that are published. Businessmen live in the world of numbers that are going to come, because they see where the investment is going. And the money is flowing elsewhere because of the instability of the dollar and because of the height of the dollar.

So first, we are saying to the bank: our economy is not a spectator sport; you are not powerless; allowing our dollar to move as if it were a penny stock is a mistake. The bank should send a strong interest rate signal for it to come down and tell speculators that they cannot make a profit on the backs of Canada's infrastructure.

Those economists who say there's nothing that can be done are wrong—the bank can act, can send a signal—and those who say “let the market decide” have been living inside their economic textbooks instead of in the reality of today's economy.

The second thing we are saying is not to the bank but to all parliamentarians. There is a unanimous report, an all-committee report, on the future of Canadian manufacturing. It has 30 excellent recommendations for creating a business climate that would make people want to invest here.

Key among these are the refundability of the research credits—the SR and ED credits—and also the extension of the capital cost allowance to five years. That would make a big difference. It would make people think we believe in our economy.

Let me talk for just one minute on the SR and ED. Right now we get this tax credit if we're making a profit. If we're not, the government says, “Oh, it's nothing to do with you.”

Why would we not want to allow support for innovation for industries going through transformation? Why would we only want to support innovation and those who are already doing well? Why would the government, why would the finance minister, why would Canada want to wash its hands, to abandon innovative efforts in manufacturing in the forest industry and those industries that have to innovate their way out of trouble? Refusing to make the investment credits refundable means you're betting on our going out of business and we'll never get those credits. We need the money now. It's money we spent on investment; it's money we'd get when we get profitable; it should come soon as refundable credits to help manufacturing.

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Now we'll move to the vice-president of public affairs with the Tourism Industry Association of Canada, Christopher Jones, for five minutes.

[Christopher Jones, Vice-President, Public Affairs, Tourism Industry Association of Canada]

Thank you very much, Mr. Chair.

First, let me thank the committee for the opportunity to appear before you to share our views with respect to your investigation of the impact of the rising value of the Canadian dollar in various economic sectors.

First let me thank the committee for the opportunity to appear before you to share our views with respect to your investigation of the impact of the value of the dollar.

Tourism in Canada is a $66.9 billion sector that accounts directly for more than 630,000 full-time jobs and indirectly employs 1.66 million Canadians. Its economic impact is felt in all regions and communities across the country. Moreover, it is a key generator of tax revenue for all three levels of government. In 2006, an estimated $19.4 billion in tax dollars were generated, including $9.1 billion at the federal level.

Without question, Canada's tourism sector is greatly affected by the recent rise in the value of the Canadian dollar vis-à-vis its American counterpart. Earlier this month, TIAC held its annual tourism leadership summit in Victoria, British Columbia. We titled this year's summit “Red, White and Blues—Renewing American Travel to Canada”, and the focus of our program was the significant declines we have observed in visits from our neighbours to the south.

In five years we have seen the number of inbound customers from the U.S. drop by a significant 34%. This figure is particularly worrisome to the sector when you consider that Americans make up 86% of non-resident travel to Canada. Moreover, this decline pre-dates the historic appreciation in the value of the Canadian dollar that we have seen in recent months.

The reasons for the decline in the number of Americans visiting Canada are not strictly tied to the dollar. The overall declining economy in the United States and the significant rise of gasoline prices have created a disincentive for the rubber-tire visitor to come to Canada. Gas prices are encouraging more Americans to fly rather than drive to their holiday destinations, and the relatively high cost of flying to Canada creates a price disadvantage compared to U.S. domestic destinations, Mexico, the Caribbean, and some European ones.

Significant issues exist at our border crossings for Americans as well, with lengthy wait times and confusion over the documents needed to be able to return to the United States. These factors have combined to alter what were longstanding leisure travel patterns for residents of both the U.S. northern border states and Canadian provinces.

These are all contributing factors that would have impacted Canada's tourism industry independent of the dollar's rise. But what we know from having observed the travel patterns over the past 25 years is that the number of inbound visits traditionally tracks very closely—as my colleague Paul indicated--the value of the American dollar. As the value of the U.S. dollar rose throughout the 1990s, the number of person trips to Canada rose to more than 45 million. But over the past four years, as the greenback slid in comparison to the Canadian dollar, the number of person visits has dropped to the lowest levels in 30 years.

The higher value of the Canadian dollar will also encourage Canadians to travel and spend their tourism dollars abroad, further magnifying our tourism deficit. We measure this deficit by looking at the amount that Canadians spend abroad versus the amount that foreigners spend when they're travelling in Canada. Since 2002 this deficit has risen exponentially, from $1.7 billion in 2002 to $7.2 billion currently. We can only assume by what we have observed this summer and fall that this number will rise. Numbers released this week by Statistics Canada demonstrate that in September, with a 95¢ dollar, overnight car travel to the United States rose to its highest level since 1993.

I know there are members of the committee from the Niagara region, and my guess is that tomorrow morning there will be a significant exodus of your constituents across the Rainbow Bridge looking for black Friday bargains. This doesn't only mean that local retailers will take a financial hit at a crucial time of the year; it also means that those families will spend money on food, lodging, and other attractions that they might have otherwise spent here in Canada. At the same time, we are being told by Niagara Falls tourism that they've seen a 16% drop this year in the number of people making day trips from the States. We're hearing similar stories from other border towns, such as Windsor and Victoria.

What steps can we take to ensure that tourism can regain its footing? First of all, let me emphasize that because of the foreign currency earnings that tourism generates, it has always been considered an export industry. It is affected by the rise in the dollar in the same way that forestry and manufacturing are. As such, we would urge you to remember tourism if you get around to recommending any sort of adjustment or mitigation policy to help defray the impact of the rising dollar.

We can also ensure that we invest sufficiently in the physical infrastructure at Canada's crossing facilities, including increased investment in the development of new biometric-based forms of ID, such as an enhanced driver's licence.

To help manage the flow of people across our borders, we should get the Canada Border Services Agency to actively monitor and evaluate peak border times with the intent of reducing processing delays experienced by visitors.

We should also invest in our border crossings so that wait times at the border can be actively monitored and evaluated with the intent of reducing delays experienced by visitors and of helping to manage the flow of people across our shared borders.

We also need to assess how we can make Canada a more economical destination by air. The tourism sector, the Canadian economy, and Canadian citizens will benefit from further open skies negotiations, which would increase competition and result in more flights to and destinations in Canada.

My final point is that marketing assistance for the Canadian Tourism Commission would be extremely helpful.

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Now we will go to our final presenter.

We have the mayor of the town of Hearst, Mr. Roger Sigouin. You have five minutes, please.

[Roger Sigouin, Mayor, Town of Hearst]

Thank you for the opportunity to address this committee.

The high Canadian dollar has added more fuel to the crisis situation of the forest industry in northern Ontario and is causing uncertainty and fear in all small communities across the north.

The entire economy of northern Ontario and the very fabric of our lives are in jeopardy. Although I represent the town of Hearst, this presentation could easily be made by Longlac, Smooth Rock Falls, Wawa, White River, Atikokan, Nippigan—northern Ontario communities that have permanently lost their single industries—or by Kapuskasing, Opasatika, Cochrane, Dryden, Kenora, Timmins, Kirkland Lake—who are currently struggling with significant cutbacks and massive layoffs in the forestry sector.

My municipality is 500 kilometres from Thunder Bay, Sudbury and Sault Ste Marie, 600 kilometres from North Bay and 955 kilometres from Ottawa and Toronto. Much of northern Ontario above the 50 ^th parallel is populated by First Nations, who live in isolated communities that generally are only accessible by air, although one, Moosonee, can be reached by rail.

Hearst has a population of 5,620 people, but my community serves a much larger geographical area of 10,000 people. Northern Ontario is boreal forest, and it holds most of Ontario's natural resource wealth. With only 7% of Ontario's population, we are exporters because we have to be.

Over the years, local operations have consolidated or closed. Hearst has lost four major mills, and two of the three newer operations now belong to North American conglomerates. The industry has always faced the challenges of surviving to the "boom and bust" cycles that are typical of our northern natural-resource-based economy.

This is no longer the case. The global market situation has made the crisis that we are facing today much more serious. This unprecedented challenge cannot be met without government intervention. The forest industry is our livelihood, and the driving force behind our local economy.

In the immediate Hearst area, three manufacturers—Columbia Forest Products, Tembec Industries Inc. and Lecours Lumber—employed 765 people directly in 2006, and another 171 indirectly in secondary support and service industries. In my community of 5,620 people, the forestry sector accounts is clearly the major employer and accounts for at least 43% of the labour force.

In Hearst, Tri-Cept (Hearst) Inc. permanently closed its planing mill with a loss of 40 jobs in 2006. Columbia Forest Products closed their particle board plant in Hearst at the beginning of this month, with a loss of 83 jobs. On November 9, 2007, 1200 layoffs were announced by Buchanan Forest Products across all their operations in both northeastern and northwestern Ontario, Bowater in Dryden and NorBoard in Cochrane.

Countless families are affected, not because they work in the industry, but because they supply goods and services to the forest industry and to its employees. Older workers in the mill in Hearst are poorly educated. They have not even finished high school and are now facing layoffs with no education.

Real estate values, both residential and commercial, are collapsing because the large plants are closing. This is what we are facing. Our young people are moving away. They are leaving town in order to be able to find a full-time job.

Northern Ontario industries, and, with them, our northern Ontario communities, are facing our most serious challenges. My neighbour here I think addressed the role now played by the issue of the dollar.

Electricity costs are very high in local mills and they have increased by 10-12% in recent years. Fuel costs have soared, but the increase cannot be passed on to the consumer because the market will not bear added costs.

As for transportation, the national rail infrastructure in northern Ontario is in poor condition, though it is vital to move our products to market. The Ontario Northland Railway closed its spur line to Lecours Limber, but the provincial government intervened to save the railway, and the jobs on the First Nations reserves.

Remote First Nations in the far north have no access to our northern communities. Some members of First Nations have no education and no access to services that can provide it so that they can play a full role in our society. The government should ensure that they have access. The far north has resources and the government should open it up so that the resources can save the north as a whole. The resources are there, and the First Nations want to work. Let us get to work together.

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll now move to the question part of our meeting, and we'll start with Mr. McCallum from the Liberal Party for seven minutes.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you.

First, I would like to thank all the witnesses for coming, and especially Mr. Sigouin, because he had to travel for six hours to get here.

I'd like to begin with the subject of self-inflicted wounds, starting with Mr. Jones on tourism. I don't think the government can do anything about the value of the dollar. I think maybe the bank is just.... It's debatable. But in terms of fiscal measures, would you think the cancellation of the GST rebate for visitors was important?

Would you think it would be highly beneficial or only slightly beneficial if Canada got approved destination status from China? I know from visiting Australia, there were thousands of Chinese tourists, because Australia has that status. Would that be significant for the tourist industry?

[Christopher Jones]

Thank you for the question, Mr. McCallum.

Clearly, the industry was concerned last year with the cancellation of the visitor rebate program. We were heartened to see the replacement of two-thirds of it, which dealt with the group tour market and the meetings market in the form of a foreign convention and tour incentive program. That program has been in place now since April of 2007.

We have indicated to Minister Ablonczy, who's responsible for this sector, that we will be happy to review it with her at the year mark in April of 2008 and see if any features of it could be tweaked to enhance its function as an incentive scheme.

The loss of the individual program was a concern. We indicated that at the time. Many other countries that have value-added taxes rebate the VAT to the visitors to their country, but that's life.

On the ADS we would like to obtain that designation. We are concerned that the United States is close to obtaining that designation fairly soon, and that is a market...although the Chinese market is growing substantially without ADS because of visiting friends and relatives and business travel. So it is growing significantly, although we would like to be able to tap into the tour market eventually, which is what the Australians are doing at the moment.

[John McCallum, Liberal, Markham—Unionville, ON]

Would it not be fair to say that if the U.S. gets it before us, that would be very bad for Canada? If the Chinese could only come to Canada within North America, then we'd have a bit of a monopoly there, at least for a little while. If we're competing one on one with the U.S., would that not be a big disadvantage, or if the U.S. gets it before us, that's even worse?

[Christopher Jones]

It would be a considerable concern, but we are doing what we can at the moment. We are gearing up to market the Olympics in 2010, and the government has recently made a significant and much appreciated investment in that marketing effort.

So, yes, over the longer run, we would like to tap into that market, particularly if the U.S. market stays in the doldrums. But we're confident that our foreign affairs department is going to push that file forward.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you.

I would like to turn now to our two forestry speakers.

I think both of you are aware of the plan the Liberal government had. It was just before the election and it was $1.5 billion—$600 million if you exclude the loan guarantees. It involved supporting workers in communities at $150 million, the transformative technology program at $215 million, forest innovation and value-added products at $90 million, etc.

I don't want to sound too partisan, so I won't ask whether the government was wise to scrap it. Let me put it in a more positive way. Would such a program be a good thing today if it were to be reintroduced? Would these components, such as community assistance and transformative technology, be useful for your industry?

Perhaps each of you could comment.

[Avrim Lazar]

Certainly we've been very clear about what would be useful today: refundability of the SR&ED credits; extension of the two-year window for accelerated capital costs to five years; more money for research in research innovation; and all-party support for Bill C-8, which puts competition into the rail act would be very useful. Anything that can be done to improve the accessibility of technology would be very useful, and of course the communities need support in their transition.

The best thing you can do for communities is to create a business climate where people want to invest in Canada. The refundability of SR and ED, the capital cost allowance, and the money for R and D would help the most.

I want to be very clear, though, and this is something where I think there has been misunderstanding: we don't want subsidies. We don't want you to come in and save a mill that's uneconomic. What we want to do is make this a place where mills are economic.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you.

[Roger Sigouin]

I think it was a great way to help the industries, but for my own municipality, and even other municipalities, I'm going to go a bit further. We face energy costs that are going higher and higher, and I don't know how much control we have over that.

We are looking for a green technology in Hearst, and we need support for that. I think the federal and provincial governments should be involved in the economic development. The Town of Hearst put in $250,000 for economic development. When your town is in trouble, I think the government should say that if you put in $250,000, we're going to put in $100,000 to support you in getting champions from outside of your country to invest in your community. There's a lack of money, and we need some help.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you very much.

I'll take it from both of you that that's a yes, except there are other things you would want as well, such as SR and ED, accelerated capital cost allowance, energy costs, and many other things—

[Avrim Lazar]

Most of which come out of the all-party recommendations on manufacturing. All parliamentarians who've looked at this on the industry committee have agreed, and now I want to see action on it. It should be—