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.