Thank you, Mr. Chairman. As you mentioned, I represent the Canadian Fertilizer Institute, which is my employer. The Business Tax Reform Coalition, on behalf of which I am speaking today, includes the Canadian Chemical Producers' Association, the Canadian Plastics Industry Association, the Canadian Steel Producers Association, le Conseil du patronat du Québec, the Forest Products Association of Canada, the Information Technology Association of Canada, the Propane Gas Association of Canada, the Railway Association of Canada, the Rubber Association of Canada, the Mining Association of Canada, and the Canadian Petroleum Products Institute.
These industries represent over $266 billion of manufacturing production and over $206 billion of exports, as well as the direct employment of 1.6 million Canadians.
As industry associations, we are pleased to come before the finance committee to advocate a number of fiscal measures that we believe will help improve our broad competitiveness and our ability to employ Canadians into the 21st century to sustain our standard of living.
I'd first like to recognize--and I think applaud--something that we picked up on the website this morning. That was the first report of the Standing Committee on Finance. It endorses the tax measures and fiscal measures proposed by the industry committee last year.
Our priority was to talk to you today about a couple of those fiscal measures. Given the continued economic challenges faced by Canadian manufacturing and exporting sectors, we believe the committee's focus on taxation to ensure productivity and prosperity is very timely.
When we spoke to you last year, the industry committee was just starting their study on the manufacturing sector, and it identified three key challenges: the high Canadian dollar, sustained higher energy prices relative to the rest of the world, and intense competition from emerging economies in China and India.
As you know, these challenges persist, and not a day goes by without the mention of the deepening crisis in the manufacturing sector. While these factors are largely external, they challenge industry and government to focus internally on measures to adjust to these forces and allow Canadians to compete in the global marketplace.
Capital is mobile, and the production chains are global. Canada needs to compete for new investment to improve productivity and environmental performance.
When we submitted our brief this August, we identified two key priorities: extend by at least a further five years the new accelerated capital cost allowance for machinery and equipment, and, as a longer-term priority, schedule the federal corporate tax rate down to 15% to open up a clearer Canadian advantage.
The Government of Canada has already acted on the second item, so much has been done.
Federally, corporate taxation is becoming more competitive, and there is greater harmonization with provinces as they match or respond to the federal initiatives on capital tax and income taxes.
The federal government has delivered in the economic statement that was just released to the public. Looking back on the last budget, the federal leadership on capital tax limitation promoted the Ontario and Quebec governments to respond similarly.
The accelerated capital cost allowance measure is extremely important as it dramatically improves cashflow at the front end of a project. We commend the industry committee and the government for taking such a positive step last year to implement it on an interim two-year basis. It demonstrates that the importance of the manufacturing sector is recognized.
However, the point we need to make today is that the current timeframe is too limited to be of use. My colleague Fiona Cook with the Chemical Producers' Association has an example about the significance of the investment timeline to Canadian industry. She would be pleased to come and talk to the committee about it today, if questions permit. She is sitting behind me.
To be effective, this measure needs to be extended so that it aligns with the timeframe of large-scale projects, which can take up to five years from regulatory approval to actually putting machinery in place. I'm not just talking about mega-projects like the oil sands. I'm talking about plans that would take place in my industry and other manufacturing industries. The fact that many investments being contemplated today fall outside the current two-year timeframe means that many in the Canadian industry cannot take advantage of this.
In conclusion, the coalition firmly believes that an accelerated CCA, with a reasonable timeframe, will encourage new investment in the best available technologies, thereby improving productivity, global competitiveness, and environmental performance.
Federal leadership here will deliver additional benefits, as the provinces are likely to match any federal changes.
Thank you.