Thank you very much, Mr. Chairman, and my thanks to the committee for this opportunity to speak to you.
I think the CME has covered most of the general issues, particularly the focus on manufacturing. So I'll just focus on the ACCA and its importance to our particular industry. This is the two-year extension of the accelerated capital cost allowance for manufacturing machinery and equipment.
This amendment is welcomed by our member companies as a strong signal that this government recognizes it can play a vital role in stimulating investment and growth in the chemistry industry and other industries, and more broadly in the manufacturing sector in Canada. The extension of the ACCA is a key factor that contributes to improving our global competitiveness, and it has strengthened the business case to win new investments in Canada.
In fact, this committee and the Government of Canada have undertaken a number of positive initiatives over the last few years, including corporate tax reductions, capital tax, harmonization of tax with the provinces, and the GST. All of these are complemented by the ACCA change, which is focused on large capital investments.
Chemistry companies credit the ACCA as being a key factor in their decision to invest approximately $3 billion over the last four years. This has resulted in revitalizing the chemistry industry, creating jobs and prosperity in key regions of the country.
For example, in Sarnia, Ontario, two CIAC members, NOVA Chemicals and BioAmber, have made recent investments of $250 million and $120 million respectively. If any of you have been to Sarnia in the last few years, you'll know there hasn't been much investment there for about 20 years. This is the beginning, we hope, of a new trend.
In other regions of Ontario, the ACCA has enabled companies such as Sitech, BASF, and DuPont to expand and improve their facilities.
In Alberta, Williams Energy, Dow, Shell, and Methanex have made investments estimated at $500 million.
NOVA Chemicals will be hosting a groundbreaking ceremony on June 7 for a $1-billion polyethylene facility, which is expected to be up and running in the fall of 2015. They will benefit significantly from the ACCA, and it has made a difference in that investment.
All these investments are a strong testament that clearly demonstrates that the ACCA supports growth and investment and creates jobs and prosperity.
It is also stimulative, and in our view it attracts investment that would not normally go to Canada. Why is that the case? Given the shifts in the global economy and the discovery of shale gas, or the use or development of shale gas, our major competitor now for the petrochemical industry is the United States. They have a very different tax structure from what we have. They have what's called a 60% declining-balance tax structure, where they can, on a permanent basis, write off these major investments over about three years. Without the ACCA, we'd be competing against that kind of investment. They also have a partnership structure that looks a lot like the income tax trusts that the government eliminated—it allows people to actually make the investments without any corporate tax because they flow through the investments to individuals.
I'm not advocating, and our industry doesn't advocate, these kinds of measures in Canada, but we believe that the ACCA does, to a certain extent, level the playing field, at least for the next two years while it's being extended.
However, I would caution that in the long term, for longer-term investments, we are still dealing with this competitive situation vis-à-vis the United States, so we'll continue to work with the government on making sure that we have a competitive tax regime that will attract these major investments to Canada.
In conclusion, we'd like to note that we certainly support this budget and the ACCA measures. In fact, we're part of a coalition of 40 companies and associations that all supported it. I'd also like to mention that it was the number one recommendation of the manufacturing committee that Mr. Rajotte chaired several years ago.
Thank you.