Thank you very much, Mr. Chair.
Thank you to all the members for having us here today. As mentioned by the chair, my name is Stephen Laskowski. I'm president of the Canadian Trucking Alliance. I am joined by my colleague Jonathan Blackham.
By way of background, the Canadian Trucking Alliance is a federation of the nation's provincial trucking associations. We have approximately 4,500 members, a cross-section across the country of different commodities. We employ a membership of around 150,000, and we move about 70% of the nation's freight.
As noted, the committee is looking for topics that are related to economic growth and ensuring Canada's competitiveness. While there are a host of issues in CTA's documents—and we had to shrink them even more due to your word count requirements, which kept our wordiness down a bit—I'm going to keep our opening remarks to three main topics. There are others in our submissions. We're happy to take questions, but we'll deal with the top three we're going to highlight: what we refer to as Driver Inc., which is an underground economy issue; Canada's competitiveness compared to that of the United States; and the truck driver shortage in Canada.
I'll start with what is known as Driver Inc. A number of drivers and carriers are entering into agreements whereby drivers incorporate themselves and then sell their services to the carrier. It is important to note that these drivers are not traditional independent contractors, known as owner-operators in our industry, as they do not own, lease or operate a vehicle. These drivers drive the carrier's vehicles and are virtually indistinguishable from a normal employee. In this scheme, no source deductions are made, and often drivers will be claiming small-business deductions they are not entitled to. In fact many, we believe, are just not paying taxes, period.
It is difficult to pinpoint the exact percentage of misclassified drivers or those who are not paying taxes. We believe that we are probably looking at an underground economy of close to $1 billion. At even a fraction of the driver population—and we're looking at probably 20%—that $1 billion continues to grow.
We need action. If this practice continues unchecked, CTA expects the entire industry will move to this model, given the competitive savings and the driver shortage. Quite frankly, people are using this as an incentive to get people to come to work for them in a tight labour market. It's costing the real trucking industry—those who are compliant—people, and it's costing the taxpayers of Canada $1 billion in an underground economy. It's time for action.
On Canada's competitiveness compared to U.S. competitors, at the U.S. border this year there will be around 11 million two-way truck movements. Those trucks will carry $400 billion in Canada-U.S. trade. In the past, around 68% of these movements were related to Canadian registered trucks. However, we must always remember that the Canadian trucking industry competes internationally. What do we mean by that? There are U.S. trucks up here and they compete for our members' business, those 150,000 people.
Competition with large U.S. fleets with natural advantages related to economies of scale is an everyday reality for Canadian fleets. A large fleet in Canada is 1,500 trucks. In the United States that's probably not even mid-sized. You're looking at fleets of over 10,000 to 15,000 trucks.
One area Canada could improve on is capital cost allowance rates. U.S. capital cost allowance rates are far more advantageous, allowing U.S. carriers to write down trucks in half the time. While this advantage has existed for well over a decade now, the tax advantage for U.S. trucking companies over their Canadian counterparts has hit new levels with the corporate tax reductions introduced by President Trump. In the past, we have been told that, due to the competitive advantage we had on corporate tax rates, this was, in essence, a wash. It no longer is, with what Mr. Trump has done.
Canada must address this growing tax inequity between Canadian and U.S. fleets. As a possible step, the government could provide an accelerated CCA rate for carbon-reducing trucking equipment, as identified by Environment and Climate Change Canada's phase 1 and phase 2 heavy truck regulations, which were introduced this year, the details of which could be worked out between government and industry.
The last issue is driver shortage. As a result of growing industry demand and a stagnant supply of drivers, the truck driver supply and demand gap is estimated to reach 34,000 people by 2024. Today, it is estimated the industry is short between 10,000 and 15,000 drivers. On the ground, this is evidence of the struggles carriers are facing to find qualified drivers to fulfill current contractual obligations. Many fleets have unseated trucks, which means that those trucks could be on the road but, because there are no qualified drivers, they sit by the side of the fence. What this means to the economy is that eventually freight is going to sit at their doors and not make it to customers, and the growing threat of NAFTA will be increased by not fulfilling north-south trade.
Not only does our industry have one of the oldest and most rapidly aging workforces, but it simultaneously struggles to attract new drivers. That's something our industry needs to deal with, but there's also a role for government.
We are already starting to see customers and shippers affected. It won't be long until customers, the general public, will start to be affected. In fact, I am somewhat happy to say that customers are calling the Canadian Trucking Alliance asking, “What are we going to do about truck driver shortage?” I have to tell you, I've been in this business for 20 years and I've never had those calls before.
As for the silver bullet for driver shortage, there really isn't one. There's some responsibility on the part of our membership, and we're doing that. I'd be happy to take some questions on how we're addressing it, but, as with everything, there's a role for government as well.
The industry has recently completed a report on the temporary foreign worker program. CTA would like to see those recommendations acted upon, including the creation of an expedited program for trucking. Currently, if we wanted to bring over immigrants from across the world—and there are many qualified truck drivers who would love to be Canadians—we simply can't do it. It's much more difficult for our industry, compared to others. We also want to attract Canadians who are here in Canada looking for a job. We're going to have 34,000 vacancies soon, so there's opportunity.
What would we like to see the government do? CTA would like to see funds made available for training in the trucking industry, as in other sectors. Currently, we do not have the same sort of access to funds that other sectors do, particularly the skilled trades. Unfortunately, our government has referred to truck drivers as unskilled. That holds us back, not only with training, but with immigration, and we'd like to work with the government on resolving that.
We'd be happy to take questions when the appropriate time comes. Thank you.