Thank you very much, Chairman and members of the committee. I thank you for the time.
In my brief few moments I'll concentrate on two issues: one is a matter of environmental significance; the other is a matter of tax fairness and competitiveness.
We are on the verge of an era of the smog-free truck in Canada. By law, the 2007 model-year engines reduce the emissions of particulate matter by 90%, a precursor of smog that is linked to respiratory disease. In 2010, by law, the other major precursor of smog, NOx, will be reduced by 95%. I can tell you that it's not too far-fetched to say that the air coming out of the exhaust of the new trucks is cleaner than the air in most of the cities in Canada at the present time.
However, there are some challenges. One, these new engines are much more expensive to purchase, in the order of 7% to 10%, but as importantly--this is an example of the state of the technology--there's a fuel efficiency penalty associated with the new engines. So while we're becoming ultra-clean, at the same time our performance in terms of GHG is being denigrated, and that really is a reflection of the fact that we did not have a broad-based policy going forward when looking at these issues.
We can't, obviously, survive with a reduction in our fuel efficiency, so what has happened in the industry is that they've put off purchasing these new smog-free engines. There was a huge pre-buy in 2006, and we anticipate there'll be another one in 2009, unless something changes.
We can invest in equipment. We must now invest in equipment that's attached to our tractors and to our trailers that will allow us to recoup and enhance our environmental performance. They, too, don't come cheaply.
However, in marrying the two technologies under something we're calling the enviro truck initiative, we can, if only half of the new heavy trucks that are purchased in Canada each year, meet the enviro truck criteria. We would not only see the virtual elimination of smog emissions from heavy trucks in Canada, but we would see fuel efficiency increased on a net basis by 22%, we would save almost 1.5 billion litres of diesel fuel per year from these trucks, and greenhouse gas emissions would be reduced by 4 million tonnes.
This is not a pipe dream. These are real gains that can be made. However, as I indicated, the investment climate present in our industry does not lend itself to it; the cash simply isn't there for us to be able to move in any sort of a concerted way to the new equipment. If this is all about the environment, what we should be seeking to do is to accelerate the penetration of those new vehicles into the marketplace.
We're suggesting that this be done through a program similar to the vehicle efficiency initiative that was introduced in the last budget for light duty fuel-efficient cars, or something similar to the Energy Star program, which has worked extremely well for the appliance sector.
While we're not sure what the cost per tonne is for those other programs, the cost per tonne for our program is somewhere in the order of $55 to $75 per tonne of GHG removed, which we're told is really very attractive compared with some of the other programs I mentioned previously.
The second issue concerns the fact that the government has been talking about the need for the provinces that have yet to harmonize with the GST to take their sales taxes, particularly the sales taxes on business inputs, and harmonize those with the value-added goods and services tax, something with which we agree wholeheartedly.
However, at the same time, the federal government still has some vestiges of its own archaic regressive tax system in the form of excise taxes. I'm particularly speaking of the excise tax on commercial diesel fuel, which was introduced in the mid-1980s for the express purpose of reducing the deficit, or helping out with the government's fiscal imbalance.
While we have an imbalance now, it's the other way, and that tax is not serving any policy purpose other than to generate revenue. We're arguing that if there is an effort to harmonize provincial sales taxes with the GST, this would also be the time to eliminate the regressive excise taxes on commercial diesel fuel and harmonize those as well with the goods and services tax.
Things such as lowering corporate income tax rates and those sorts of things are very helpful, obviously, and certainly in terms of Canada's competitiveness worldwide are helpful. However, in a low-margin industry such as trucking, they are not particularly helpful; we're not generating huge profits.
But to have these sorts of taxes continue to be levied upon our business—and upon the second-largest component of our operating cost—without any concern for profitability is regressive, and we think it's time to make the change.
I thank you for the time. We've submitted our materials previously. I'd be happy to answer any questions you might have.