Thank you, Mr. Chairman, for inviting the Edmonton Chamber of Commerce, the nation's largest local chamber, to provide input at the committee's hearings today.
My name is Robin Bobocel, vice-president for public affairs, and I'm here with Rick Hersack, our chief economist.
We realize the difficult job you, as a committee, have in balancing the many and diverse requests for the federal government to provide financial incentives and support expenditures while at the same time you try to provide fiscal recommendations that will ensure that our economy is not saddled with debilitating debt. We are mindful of that challenge. And we were pleased when the federal government reiterated its commitment to balance the books by winding down fiscal stimulus measures as the economy recovers, by reducing the growth rate of direct program spending, and by undertaking a comprehensive review of government administrative functions and overhead costs in order to identify opportunities for additional savings and improved service delivery. These plans are entirely aligned with our chamber's priorities.
Today we would like to bring to your attention recommendations in a variety of areas, including a call for the deferral of capital gains taxation and the implementation of consolidated joint filing for corporate tax returns. In the interest of time, we have provided written briefs to the clerk on both of these recommendations.
Our intention this morning is to highlight three key priorities related to the upcoming budget and Canada's economic recovery.
First, we offer support for the government's stated budget direction through our own fiscal policy. We will promote a no-cost stimulus to economic growth with accelerated capital cost allowance recommendations. And we will recommend strategic investments to support economic drivers of the economy with policies on northern infrastructure development.
Budget 2010 answered the chamber's call to stay the course on the recovery plan, to lay out a strategy to return to balanced budgets over the medium term without raising taxes, and to focus on making Canada more competitive in the international marketplace. It is our hope that the government continues its efforts to act in a responsible, reasonable, and realistic manner. As such, we have four recommendations for this upcoming budget from our current fiscal policy: continue to work to ensure that the debt-to-GDP ratio falls below 30% by 2015; refrain from hiking taxes or reneging on promised corporate tax-rate reductions to return to balanced budgets by 2015; restrain program spending growth to balance the budget over the next five years; and broaden the scope of spending review beyond direct program expenses.
Similarly, with respect to our position on applying the accelerated capital cost allowance, or ACCA, to all mining and resource processing investments, we recommend that the federal government retain ACCA for oil sands and mining projects in Canada and that it extend ACCA to resource-processing investments, including upgraders and other high-conversion capacity investments and shared processing infrastructure.
ACCA rules specify the rate at which capital assets can be expensed annually. They allow the normal costs of capital to be deducted as fast as income from the project will allow rather than having the deductions deferred over time. As corporations recover their initial investments sooner, ACCA reduces the investment risk associated with the mine or project, thus improving the overall economics of the project.
It is also worth noting that ACCA is not a subsidy. Rather, it is simply a deferral of tax revenues to government that might otherwise not have accrued, because productive investments are less likely to occur in the absence of this accelerated writeoff, especially when these projects face enormous amounts of risk, such as cost of capital, global commodity prices, and uncertainty around mitigating climate change, all in tenuous economic environments. Strong evidence of this risk can be seen in the number of upgrader projects recently cancelled in Alberta.
Finally, we would like to discuss the need for strategic northern infrastructure investments. Recent news attests to the importance of Canada's northern resources as a significant driver of our economy and to the importance of the need for government action to support private development. According to NRCan, investment for mineral exploration in Canada's Northwest Territories is expected to more than double this year to $99 million. Nunavut is forecast to see a 50% increase in exploration budgets, to $280 million.
In our opinion, the Government of Canada, in its budget, must be strategic in converting stimulus dollars to investment in northern infrastructure that leverages private-sector spending and that will result in accelerated long-term growth that drives economic activity throughout the country. In addition to it being a long-term economic investment, northern infrastructure development will also enhance our northern presence and sovereignty.
With this in mind, the Chamber of Commerce would like to recommend that budget 2011 allow for funding required for the completion of an all-weather, north-south trans-Canada highway through the Mackenzie Valley. In addition, we believe that it is vital to move ahead with this project immediately as a means of improving the economics of the Mackenzie gas project by reducing logistical challenges related to construction of the proposed pipeline.
With respect to the Mackenzie gas project, we urge that through budget 2011, the federal government ensure that the Mackenzie gas project is not placed at a competitive disadvantage in relation to other large-scale North American energy projects. This may include mechanisms such as direct investment, tax breaks, loan guarantees, or a combination of all three, including programs to ensure that sufficient workforce development and training opportunities occur to maximize first nations and Inuit involvement.
As part of any future stimulus and clean energy initiatives, the Edmonton chamber would like to recommend that budget 2011 allow for strategic investments in hydro developments in the Northwest Territories. Just as an east-west power grid is a national priority, the federal government should look for ways to fund a north-south grid to facilitate the export of clean northern hydroelectric power to southern markets.