Thank you, Mr. Chair.
Thank you, Laura.
Thank you for inviting me today to discuss Bill C-60, the Economic Action Plan 2013 Act.
On a general note, our organization and our members were very pleased with the recognition in the budget of manufacturing as an important driver of our economy, when it comes to innovation, research and development, exports, and value-added activity.
The budget partially responds to some of our priorities that were identified in our pre-budget submission. I will focus here on three: the accelerated capital cost allowance, which is a tax incentive for the acquisition of machinery and equipment; labour training and facilitating the hiring of foreign workers; and new direct support for manufacturing, research and development, and innovation.
Let me start with the ACCA. This is by far the most popular measure among our members. The ACCA, which has been in place since 2007, has boosted Canadian manufacturers' investments in machinery and equipment by 45% between 2009 and 2012.
In fact, Canadian manufacturing investments and all capital assets have surpassed the United States, in both 2010 and 2011, for the first time since 2006. There is still a lot to do, but we're happy to see that these tax incentives are working well and are meeting their objectives.
Let me talk a bit about labour training. It shouldn't be a surprise to anybody that we're strong supporters of the Canada job grant that was introduced in the budget. In our last three budget submissions, we have strongly recommended that the government introduce a tax credit to support the training of new hires and to increase the skill levels of existing employees.
The second part of the challenge, of course, that our members face is the hiring of foreign workers to fill labour shortages that are not being addressed by the domestic labour supply. While we're working with the governments to make appropriate improvements to the program, we're concerned with the manner that user fees will be managed for the labour market opinions under Bill C-60. Division 9 of part 3 of the bill states that the fees to be charged for labour market opinions will be exempt from the User Fees Act.
While I haven't received any confirmation from government officials so far with regard to the meaning of this, I presume that this means that the government would not consult stakeholders on the level of the fees charged, they would not be bound to ensure that service standards are tied to the fees, there wouldn't be, necessarily, any impact assessment, no tabling or publication of proposed new fee structures, etc.
CME, as a whole, has generally agreed that it is reasonable to pay user fees, but not under these conditions. The User Fees Act was established specifically—because of the abuse of user fees by government departments and agencies—as a way to increase revenues to cover off cost, rather than finding more efficient ways to deliver services, or working on the street to establish effective user fees. This clause sets a very bad precedent, in our view, and we strongly recommend that the fees charged for labour market opinions not be exempt from the User Fees Act.
Finally, I would like to comment on the new direct support mechanisms for business innovation that were announced in the budget. As you remember, last year the government told the industry that this $660 million cut under the SR and ED program would be reinvested entirely in new direct funding for business R and D. The government has done it. But there are still a lot of questions with respect to equity of access to this funding across industry sectors, and across the nation.
While we support the new funding provided to the automotive, aerospace, and forestry sectors, in particular, as well as the new advanced manufacturing fund for southern Ontario manufacturers, we must realize that going from the broad taxed base approach, like SR and ED, to a direct funding mechanism is going to penalize manufacturers that do not match these geographic and industry criteria.
We're hopeful that the government will eventually ensure that these direct funds for business innovation be accessible across the country, and across various manufacturing sectors. We're very concerned that the significant reductions that we'll see in the SR and ED tax credit until 2017 will have a detrimental impact on business innovation.
I'd like to conclude by recognizing that this budget is a great step toward a better recognition of the importance of manufacturing for our economic growth and for our capacity to innovate. However, a lot of work remains to be done to ensure that government policies do not discriminate against certain sectors, or certain regions of the country.
We're confident, however, that the government shares our concerns, and we'll work together toward achieving these objectives.