Thank you very much, Mr. Chairman and members of the committee.
On behalf of the 4,500 members of the Canadian Trucking Alliance, I'm happy to present to you again this year.
As in previous years, I just wish to remind you that trucking is a significant leading indicator of economic activity in the country. While there is some preliminary indication, or perhaps I'd better characterize that as hope, that the economy has hit bottom, no one in the trucking industry is anticipating any meaningful improvement or growth at this time. The situation remains extremely fragile.
As an essential component of the supply chain and a key facilitator of Canada's trade, the trucking industry has an important role to play in terms of economic renewal. The 2010 budget needs to ensure not only that recovery is real but that Canadian businesses are able to take full advantage of the recovery when it does come.
The trucking industry doesn't expect government to solve all of its problems. Our industry is a creature of the most competitive market there is. Ultimately, our members' ability to manage their businesses will determine whether they survive. However, the Government of Canada and the 2010 budget have a significant role to play in ensuring that the industry is able to take full advantage of the opportunities that do present themselves through economic renewal, is treated fairly compared to other sectors of the economy, and receives value for the tax dollars it generates.
Furthermore, it's important to note that the industry's economic goals are more aligned now with society's environmental and safety goals than at any other time. CTA's primary goal for the 2010 budget is to establish partnerships with government and mechanisms to accelerate the re-equipping of the Canadian truck fleet when recovery does take hold.
Ours is also an industry where our number one business input cost, diesel fuel, has not been harmonized with the GST in terms of its taxation. It is still subject to the archaic and regressive excise tax. Few other industries, certainly none that I can think of beyond the transport sector, are subject to so severe attacks on their primary business input.
CTA has raised this issue with the committee in recent years. The excise tax on diesel fuel serves no policy purpose other than to generate general revenue.
Perhaps our message has started to sink in. During the 2008 federal election, the current government promised to reduce the federal excise tax on diesel by 50% sometime over the following four years. However, while the fundamental tax policy arguments for reduced or eliminated tax are as, if not more, relevant today than they were a year ago, CTA is open to discussing an alternative approach other than reducing the tax at this time. We're prepared to work with government on a program that would earmark revenues generated from the excise tax to programs aimed at accelerating investment in and increasing the market penetration of new smog-free heavy-truck engines and proven currently available GHG technologies.
The 2010 model year heavy-truck engines that roll out later this autumn represent the final step in the joint mandate of USEPA and Environment Canada to eliminate smog-causing air contaminants from heavy-truck engines. This is great news for the environment, but it comes at a cost. First, the new heavy trucks will cost about $10,000 more to purchase than previous models. Second, to become smog-free the new truck engines have had to give up some fuel efficiency. This is not only costly to truckers, but it also impairs our ability to reduce our carbon footprint.
It is imperative that we at least win back the lost fuel efficiency from becoming clean, but of course we also want to do better than that. Energy efficiency technology on trucks is, according to the National Round Table on the Environment and the Economy, the second-largest single GHG reduction opportunity for Canada, after carbon capture and sequestration.
The fuel efficiency technologies that CTA proposes in its enviroTruck initiative are all proven and available. They are approved by the USEPA SmartWay transport program. The California Air Resources Board is going to mandate them in regulation in that state starting in 2010.
A study by a reputable environmental engineering research firm for CTA found that if the entire Canadian fleet of class A trucks were to adopt the full enviroTruck package of energy efficiency technologies, GHG emissions would be reduced by 11.5 million tonnes a year, the equivalent of taking 2.5 million cars off the road.
The problem is that the industry is in no position to buy new equipment, at least not at a rate that would provide much environmental benefit for many years to come. The industry simply doesn't have the capital, and credit remains extremely tight.
There are a couple of federal programs providing some very modest incentives already in existence. Transport Canada's ecoFREIGHT program provides $65 million over four years for qualified purchases. However, these dollars are split amongst all four transportation modes: rail, air, marine, and trucking. Similarly, last week NRCan announced a pilot demonstration program where funds are available for investing in U.S. EPA SmartWay-approved technologies. However, the total amount of funds made available is only $1 million.
CTA would like to see better coordination and consolidation of the various programs. Moreover, we would like to see an appropriate level of funding provided that would leverage greater industry uptake, and a possible source of that funding is, in our view, the revenue generated from the federal excise tax on diesel fuel. A similar approach could also be used for the latest proven safety devices, such as electronic onboard recorders for monitoring hours of service compliance, and electronic stability control. Mandates for both of these are currently under consideration in the U.S. and Canada.