Thank you very much, Mr. Chairman.
I will try to keep my remarks very brief. I will start by thanking the committee for calling us, noting that I know this time of year becomes very gruelling for members when you have an assembly line of witnesses. Please be assured that the opportunity to come before you to talk about the priorities for the upcoming budget, and indeed for the country, is very much appreciated.
Canada' s economy, as everyone here will know, is a case of bad news and good news. We are all familiar with some of the bad news elements: the uncertainty in Europe, the slowdown in China, and continuing problems with U.S. recovery. Those problems are starting to impact hiring and investment decisions among the members of the chamber. This morning's forecast from the Bank of Canada affirms a very modest growth forecast in the near term, and that's the bad news.
In a larger context, it's clear to us that Canada is very strongly positioned as a desirable investment location and an increasingly effective international trader. A succession of governments have taken the boring doctrinaire decisions that every economics textbook recommends, and to some extent they are working.
I will mention two critical areas where we think Canada is making the right moves. Eliminating the deficit is the single most important thing the government can do now to strengthen our economy and create jobs and protect what Canadians have created. It's debt that is creating so much uncertainty in the United States, and in Japan and Europe. Canada, free of deficits, will be a standout among nations.
To enhance economic growth and our job creation, we also have to diversify our international trade portfolio. Canada trades as a lifeblood issue; two-thirds of our GDP is trade-related. Our traditional trade agreements are out of date, and the government can be commended for aggressive pursuit of new deals in the Trans-Pacific Partnership, in Japan, in India and, of course, in Europe.
Emerging market economies remain the engines of global growth, despite some recent slowdown. We need to seize the immense opportunities available in market economies that are emerging in our time.
One area we are not doing so well in is innovation. This is a key issue for a Canadian economy that does not want to compete on cost. We don't want the low wages and deficient social programs and the careless environmental standards that are sometimes associated with cost-competitive emerging economies, so we have to compete with our brains, yet when it comes to the capacity for innovation, the World Economic Forum ranks us 25th, and we rank near the bottom of OECD nations in getting innovative products and services to the market.
To foster innovation, the government must focus on implementing a new, reinvigorated national strategy, with the spotlight on research, commercialization, training, and retraining. The budget 2012 decision to cut a quarter of the SR and ED tax credit was, in our opinion, a step in the wrong direction. With so many of our trade rivals in so much trouble, there's an opportunity now for Canada to steal a march on the rest of the world. Cutting supports for research and innovation is a counterproductive move.
Generally I would say, Mr. Chairman, that the single most pressing issue for members of the Chamber of Commerce this last year and in the year going forward was Canada's labour and skills shortages. It's a very complex issue. We'll be working on it, and Canada needs a myriad of tools to address it.
We commend the government for action on immigration and for worker mobility in reform of the EI program. Changes to the unemployment insurance program are painful, for certain, but it's a step in the right direction.
I will end my remarks here and welcome questions. I commend the committee for your deliberations.