Thank you very much, Mr. Chairman.
Good morning, members of the committee. My name is Mark Nantais. I am president of the Canadian Vehicle Manufacturers' Association. We're certainly pleased to be here and certainly welcome your comments on our recommendations for the federal budget 2012.
In 2010 CVMA member companies Chrysler, Ford, and General Motors produced 65% of all vehicles manufactured in Canada and accounted for roughly 50% of all vehicles sold. Currently our member companies produce 22 different light-duty vehicles in six high-volume assembly plants along with a variety of high-volume components, including engines and transmissions, at four additional facilities. Through their sales, assembly, and research activities, as well as their head offices, CVMA companies directly employ 35,000 Canadians and support an additional 50,000 retirees. For every one assembly job, seven other jobs are created in the economy. We know of no other sector that has such a high job multiplier.
Our suggested budget actions are as follows.
Recommendation one: Budget 2012 should re-introduce competitive, flexible automotive investment funds to attract new automotive investments as well as investments that upgrade and retain the existing Canadian automotive footprint. Company decisions are now being made every three years or less, and the next horizon for new investments is already upon us. The existing competitive challenges facing Canadian manufacturers related to a high Canadian dollar, high commodity prices, and high energy costs will all affect the auto industry’s ability to compete for new investments. Given that the automotive innovation fund is scheduled to sunset soon and that Canada must compete globally for automotive production mandates, an automotive investment incentive program that is not just equal to but better than competing jurisdictions around the world remains a necessity. We actually have examples if you wish to get a sense of these types of incentives.
Recommendation two: Budget 2012 should eliminate the green levy excise tax and focus on policies that deliver environmental benefits through measures aimed at getting the oldest and most polluting vehicles off the road and encouraging the use of clean and renewable fuels. The green levy was introduced in the 2007 budget under the vehicle efficiency incentive before the new fuel efficiency standards were to take effect in 2011 in order to achieve revenue neutrality of the auto eco-rebate program, which was actually established in that same budget. Two significant milestones have since occurred. First, the government has eliminated the eco-auto rebate program in 2009, no longer requiring the green levy to achieve revenue neutrality. So what we now have is the introduction of a new additional tax on vehicles that have some of the best fuel economy and segments equipped with the most advanced and comprehensive safety systems. The auto industry has consistently argued against the adoption of the so called “feebate” programs, such as the green levy, given the inability to meet the stated environmental objectives, not to mention suppressing new vehicle sales. This view has been supported by the National Round Table on the Environment and the Economy and Natural Resources Canada.
Second, as mentioned, the government implemented this past September much more stringent vehicle greenhouse gas regulations for the 2011 through 2016 model years, and further expressed its intention to regulate even more stringently for model years 2017 through 2025. This measure will drive significant improvements in new fuel efficiency and reduce greenhouse gas emissions of the fleet, as all vehicle segments will be required to improve performance and reduce emissions. Underscoring the urgency of the elimination is the fact that under the green levy consumers will soon be paying even more tax, even though the vehicle's performance may have improved or remained unchanged. Natural Resources Canada actually intends to adopt new vehicle fuel consumption testing protocols and label values, which will determine how much tax is paid in order to facilitate testing of more advanced technologies and provide fuel consumption values that are actually more meaningful to consumers and world driving conditions. This will have the effect of increasing the public's fuel consumption values and increase the tax.
Recommendation three: Budget 2012 should introduce a consumer incentive for a defined period to encourage the purchase of advanced vehicle technologies with complementary incentives that promote the necessary refuelling and recharging infrastructure to support the introduction of a broad range of alternate renewable fuels and a greater electrification of the vehicle.
In closing, we understand you receive a wide range of policy proposals as part of the budget consultation process and we would suggest full economic studies and corresponding public consultations before implementing major policy shifts. One such example is the unilateral tariff reductions under the guise of harmonization with the United States, of which the impacts on local industries may be uncertain. Given the importance of trade to Canada's economic health, the only time tariff reductions should be considered is in the context in negotiating bilateral or multilateral free trade agreements that result in new market export opportunities for Canadian-produced products.
Unilateral action would undermine Canada's current bilateral negotiations, which are intended to provide market access benefits to both of the involved parties under negotiated and mutually agreed upon terms, conditions, and timelines.
Thanks very much, Mr. Chairman.