Thank you for this opportunity to meet with you.
The Canadian Manufacturing Coalition represents 50 trade associations representing over 100,000 companies and is represented in all 21 subsectors of manufacturing. Sales in 2014 were $621 billion, and that was a 5% increase from the year before. Exports were $525 billion. That's also a new record. We've had a weak start to 2015 because there's been some short-term weakness in manufacturing.
I'm here today to speak in support of the accelerated capital cost allowance 10-year extension at a 50% declining balance rate as it was introduced in budget 2015. In summary, analysis shows that the competition had a better system. We believe budget 2015 will level that playing field in this area.
I personally represent the Chemistry Industry Association of Canada, so some of the examples that I'm going to be using will come from there.
Let me start by saying that we commissioned an independent study in early 2014 and we shared that with the standing committee during the pre-budget hearings in the fall. The study shows that the measure adopted matches what already exists as a permanent feature in the United States.
The second point I'd like to make is that there is an opportunity to invest in North America. The accelerated capital cost allowance, which is levelling the playing field, puts us back in the game. For over a decade there has been very little investment in North America; a lot of it has been going to developing economies. Shale gas and generally lower energy prices are changing and putting us back in the game.
The third point I want to make is, why 10 years. Why extend it for so long? This takes account of business cycles and planning processes. Investors can look with certainty on this aspect of planning in the future. I have an example, which I've supplied to you, of a timeframe for a large capital-intensive investment. Think of an investor considering a billion-dollar investment and looking at perhaps five years before there is any prospect of income. The ACCA will provide some front-end cash flow. Having a 10-year time horizon, or roughly two business cycles, will also allow everyone to measure if this is resulting in incremental investments. That's the last point I'd like to make.
There are budget pressures, and it's important to demonstrate that a measure is providing incremental net benefits and not costs. Our sector plans to measure incremental investments over the first five years of this ACCA. We want to demonstrate that it should be a permanent feature in the future.
ln summary, we strongly support the federal government adopting a 10-year accelerated capital cast allowance.
I would be pleased to take questions later.