Finance Committee on March 12th, 2015

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Excellent. Thank you.

Turning to Ms. MacEwen for a second, one of the things we're hearing is not so much that $50 oil and 80¢, approximately, are the new normal, but they're much more a return to normal in the sense that the 40-year average on oil is about this price and the loonie may be somewhere closer to its true global value. It has appreciated against other currencies, just not against the U.S. dollar.

One thing that concerns me and part of the impetus for this study was that traditionally, in previous drops in oil, the loonie also fell and manufacturing picked up, so the net impact across the Canadian economy may have been hard in communities like Ms. Blake's before, yet there would be a consequent rise in others. But we're hearing from some in the manufacturing sector that this might not be the case, that there may be something structural happening where those manufacturing jobs are not returning with a robust U.S. economy and a lower Canadian dollar. Is that something your union has occupied itself with?

First of all, am I reading the situation right? Second, is there something structural that's happened in the manufacturing sector, in which we're not seeing the return to work of those value-added jobs, and is there anything we can do about it?

[Angella MacEwen]

I take the Governor of the Bank of Canada, Stephen Poloz, and what they've put out very seriously, where they've said there has been a loss of capacity in the manufacturing sector in Ontario. Since we're coming out of a recession where there hasn't been a buildup in machinery and equipment, because people were cutting back, there has been complete loss of capacity and plants have been shut down.

With the dollar low it is a bad time to be importing machinery and upgrading. Since they were already upgrading at capacity, we're not going to see a lot of upgrading, and it may not make sense for them, unless they're sure that this dollar is going to stick around for a long time. Many manufacturers were burned when the dollar rose, so they may not want to set their business plan on an 80¢ dollar for a long term.

Yes, that's something we're concerned about. Things we talk about are tax treatment of investment in equipment, appreciation and depreciation, that kind of thing, and public sector infrastructure transitioning to that green economy, because the old economy may not come back. We need to transition to a new green economy. We need to look at what kind of future we're going to be building.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

So as was once said, never waste a good crisis.

[Angella MacEwen]

Exactly.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

If there's this feeling of change, of something significant being altered perhaps, then what is the opportunity for the Canadian economy in that moment?

Thank you, Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Cullen.

We'll go to Ms. Bateman please.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Thank you to all of our witnesses. I very much appreciate the discussion that we're having this morning.

It's very interesting because one of the witnesses, Ms. MacEwen, referred twice in her testimony to the devastating recession that we have come through. Our government takes a great deal of pride in having performed better than any G-7 country after that devastating recession—to use her words—and to have created 1.2 million net new jobs in that context. I didn't realize that we were kindred spirits until today.

I want to talk about the productivity issues that some of our witnesses have raised. For example, Ms. Cobden, 235,000 people put bread on the table because of your industry. That's incredible. You did speak about productivity. Could you take a few minutes to expand on that? It's very interesting.

[Catherine Cobden]

I think one of our reactions throughout the decade, which has been a very difficult time, was to focus on retooling our operations to seek better productivity than any of our competitors globally. We have a full report on this which I would be happy to submit to the clerk. I don't want to spew off a bunch of numbers for you, but there is a significant effort that has gone on by industry.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Feel free to spew.

[Catherine Cobden]

In our sawmill sector, for example, we outpace our U.S. counterparts. In the overall Canadian sectors we are the leader; the only leader beyond us could be agriculture. I have my colleague here with me.

We really did have to double down, make some major changes, and continue to move on that productivity track. We've adopted tons of innovation. I could go on about this, but essentially the innovation that's come out of this innovation system I was referring to has helped us improve our productivity. What I love is that we're adopting the innovation that we've jointly invested in.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Wonderful.

It's not just the Forest Products Association of Canada that is experiencing better productivity. We've seen data recently indicating—and I'm quoting from some information we have here—that Canada's productivity levels are above the United States' level.

I'd like to ask Ms. MacEwen if this is a fact and we have Canadian productivity levels above the United States' level. How do you label the current situation a crisis when not only is the Canadian economy diverse—I believe oil and gas is about 7.8% of the economy—but many economists, and certainly many energy experts, and many of the people who have given testimony in the last several days, are saying that now is not the time for panic or overreaction?

[Angella MacEwen]

I don't think anything I've suggested is that it is time for panic or overreaction.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Good.

[Angella MacEwen]

I think there are things we knew and needed to do in October that would still make sense to do now and would help to take the edge off if something were to happen.

I think if there is a crisis, it will be because governments overreact and cut spending.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

You're recommending that there not be an overreaction.

[Angella MacEwen]

Right. I think that the advice I gave before the price of oil...still stands as good practice.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Okay, thank you.

That's very congruent with what our Minister of Finance has done. He doesn't want to overreact—

[Angella MacEwen]

I disagreed with him before, though.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

But there is congruence because he's taking time.... Just as the wonderful mayor from Wood Buffalo has said, the fiscal prudence they're demonstrating is taking time to make sure they can assess it, and that's in fact what we're doing with our federal budget.

I'd like to move to Mr. Watkins.

Sir, could you speak to the productivity issues in your industry? You were commenting about high energy prices. As a proud Manitoban, you really ought to move to Manitoba because our hydro is very affordable.

[Ron Watkins]

One of our members is there, actually.

It's a very good question, and I'd add just a couple of points to what I think every industry has done. They have had to become more productive and more efficient in their operations. Certainly it has been a challenge for us. We're a heavily trade-exposed sector. We're competing not just with the U.S., but with Asian and European countries as well as in our own market, so we have no options but to improve our productivity and compete.

One of the interesting ways that I think our industry has changed over time—I've been with the association now for eight or nine years—is that our employment levels have gone down, but our production levels have not, so that's a productivity increase. One of the things we've actually been able to learn from is the transnational nature of our companies in a sense. They're adapting best practices from their global organizations. I can tell you that some of our practices are being adopted by sister companies in other countries.

We're working hard at it. We've made a lot of improvement. There is always more that needs to be done, and there's also a role for public policy in that domain, as you know. It's very much a key issue for us, always.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Very good.

Thank you so much.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Bateman.

Colleagues, I want to give you an update. There's about 21 minutes until the vote. The clerk has arranged to have a bus for those members who have to go vote.

I am going to stay. I am going to pair with Mr. Cullen. If others want to pair, they can endeavour to do that, but if you do want to vote, there will be a bus provided to take you to the vote.

Before I go to Mr. Brison, may I get approval for the budget for this study?

[Some hon. members]

Agreed.

[The Chair, Conservative, James Rajotte]

That's great. Thank you.

We'll go to Mr. Brison, please.

[Scott Brison, Liberal, Kings—Hants, NS]

This committee has no trouble approving budgets during these volatile times.