Good morning. Thank you, Mr. Chair and members of the committee, for providing the Association of Equipment Manufacturers the opportunity to address you this morning.
The Association of Equipment Manufacturers—AEM—represents companies that manufacture equipment and provide services for the agricultural, construction, forestry, mining and utilities sectors. I tried to count the number of different member companies' equipment pieces represented at the door this morning, but there were quite a few pieces of equipment.
Members include highly successful Canadian companies, such as MacDon and Buhler of Winnipeg, Skyjack and Sellick Equipment of Ontario, Liftking of Vaughan-Woodbridge, DY Concrete Pumps of Calgary Shepard, and Rayco-Wylie of Louis-Hébert. Global companies such as Caterpillar and John Deere are also members. AEM members directly employ some 64,000 Canadians and contribute about $34 billion annually to the economy. They continue to grow and employ more Canadians, such as with Sellick Equipment's new manufacturing facility that opened in Essex County about 10 months ago.
Allow me to touch on three things this morning: the importance of international trade to AEM members, tax measures affecting farm families and small business owners who invest in new equipment, and access to rural broadband.
AEM members operate and export globally, whether they're a small Canadian niche player or a global company. Therefore, international trade and continued regulatory alignment between Canada and the United States is a priority for AEM members.
AEM is a strong supporter of NAFTA and is advocating for a modernized agreement in both the United States and Canada. AEM members continue to spearhead efforts to discourage tariffs that will harm not only manufacturers but their customers: Canadian farmers and small business owners, as well as large business owners. It is of vital importance that construction and farm equipment work seamlessly across the Canadian-American border and that our domestic manufacturers are able to freely export products to other markets.
I'll turn to the need to modernize Canada's tax codes.
The tax treatment for those investing in new farm and construction equipment should be modernized so that it is better aligned with United States tax depreciation rates. Recent changes to U.S. tax treatment of depreciation on capital investment in construction, mining, forestry, and agricultural equipment places Canadian farm families and small business owners at a competitive disadvantage. I understand others will be speaking to this.
We urge the federal government to increase capital cost allowance rates to allow equipment buyers to more rapidly depreciate their investments in new capital equipment. Faster replacement of old equipment increases productivity and profitability, while at the same time providing significant environmental benefits with cleaner, more fuel-efficient engine technologies, and it also improves operator safety, given the new standards. AEM is aligned with others in the agricultural sector, such as the Canadian Federation of Agriculture, in calling for the Canadian government to introduce 100% first-year deductibility for investments in farm equipment.
Another challenge facing manufacturers is access and use of the scientific research and experimental development tax incentive program. This federal tax incentive is designed to encourage Canadian businesses to conduct research and development in Canada. While supportive of the policy goal, few AEM members use the program because the submission process is overly difficult and cumbersome. The cost-effectiveness of the program has been diminished because of the administrative burden placed on applicants. Our recommendation is that the Canada Revenue Agency should be encouraged to root out the problems that discourage companies from using this program.
I'll turn now to rural broadband.
Canada’s agricultural competitiveness depends on increased and enhanced broadband services to rural communities. For Canadian innovation in farming to take root, Canadian farm families need access to broadband in rural and remote parts of the country.
Today rural broadband deployment across the country does not meet the need of the high data transmission requirements of precision agriculture and other data-rich services deployed by farmers. Just this month, CBC News reported on Ontario farmers facing steep economic and financial difficulty because of poor access to broadband services.
In April of this year, the Standing Committee on Industry, Science and Technology published a report on this subject and called for Innovation, Science and Economic Development Canada to develop a comprehensive rural broadband strategy in collaboration with key stakeholders.
AEM supports these recommendations and joins other agricultural associations, such as the Ontario Federation of Agriculture, in calling for increased funding for broadband Internet expansion in rural and remote areas.
Now as we enter the next phase of farming, which is often referred to as “Farming 3.0”, precision agriculture, big data and artificial intelligence will be critical and revolutionary. Recently, AEM commissioned a study analyzing the future trends of agriculture over the next 10 to 25 years. Technologies such as satellite image analysis, in-field monitoring, real-time soil testing, plant-by-plant analysis, robots and predictive analytics will be at the core of Farming 3.0. As Canadian farmers become more digitally advanced, data will be at the centre of the farm as these tools become more commonplace. In this context, the government should continue to support technological development and innovation, and rural broadband is a key tool for Canadian farm families to be globally competitive.
In closing, thank you for considering AEM's submission and recommendations, and we look forward to your questions.