Thank you very much for the opportunity to speak today, and thanks to Paul for reminding me that I'm not young anymore. It was the glasses that did it to me.
Alberta-Pacific Forest Industries, Al-Pac, is the last greenfield pulp mill built in Canada. We directly and indirectly employ over 1,000 people and spend over $220 million annually in Alberta, of which over $150 million is spent in the local region. We're a critical employer to at least four communities in northeast Alberta.
We began operations in 1993, and since then we have witnessed remarkable change in our business. The pulp and paper industry has shifted to Latin America and Asia where mills two to four times our size are being built every two to four years. The use of genetically modified tree species, lower labour and regulatory costs, and better access to Asian markets have made new investments in Canada almost impossible.
The dramatic switch to electronic media has resulted in shrinking markets for traditional printing and writing papers, except here. Thanks for the use of the paper.
Canada does have the largest amount of third-party certified forests in the world, and Al-Pac manages the largest single-certified land base in the world. That's a big deal since most of that is done overtop the oil sands of northeastern Alberta. We have an industry that has made investments in bioenergy, biofuels, biochemicals, and biocomposite products. We realize this is just the beginning of the transformation of Canada's third-largest manufacturing sector.
We're not going away. We have many opportunities to transform our business and build upon some of the best environmental credentials in the world.
At Al-Pac we have a new owner, Hokuetsu Kishu Paper out of Japan, which is looking at making global investments in the pulp and paper business. We'd like to help them to invest more of their money in Canada.
Here are some facts about the Canadian forest industry. We employ about 288,000 people directly and indirectly, and over 12,000 in Alberta. Approximately 70% of aboriginal communities are located within the forest regions of Canada, and approximately 9,000 aboriginal people are employed within the forest sector.
There are over 231 forest-dependent communities in Canada. There are about 12 forest-dependent communities in Alberta. Over 50 communities identify forestry as a primary industry. The forest industry remains one of the key industries in Canada for stability and growth within our rural and aboriginal communities.
Today I'd like to highlight three areas that we would like for consideration not just in this year's budget, but also in recognizing that investments in transformation take time. Like this industry where we have 100-year planning horizons, we encourage the government to think in longer timeframes.
With respect to carbon, government needs to establish a framework to ensure that carbon prices are comparable across Canada and do not adversely affect our competitiveness in jurisdictions where this type of policy is lacking.
Government needs to establish compliance mechanisms, such as offset mechanisms that are consistent and available across Canada. The offsets mechanism should include forest sinks, as well as carbon displacement projects such as biofuels and bioenergy.
We also need government to promote biofuels and lower carbon emitting fossil fuels for the transportation sector by increasing the minimum fuel-blending levels to 10% for gasoline and 5% for diesel, with minimum requirements for advanced biofuels.
Finally, government should adopt a carbon first principle for infrastructure spending and procurement.
With respect to innovation, the government should invest $100 million over four years in the Natural Sciences and Engineering Research Council of Canada, NSERC, for R and D in the forest industry, and $200 million over four years as core funding for FPInnovations at the national level to support provincial research organizations like Alberta Innovates Technology Futures. This funding should be done in parallel with provincial funding. While FPInnovations' current funding does not expire until 2018, early renewal is critical for FPInnovations' organizational planning and as a signal to the provinces as they prepare their budgets.
For broader deployment of clean technology, invest $250 million. Many of the technologies can be replicated across the industry, and there are still risks involved with which government can help.
Invest $200 million over four years in the investments in forest industry transformation program, or IFIT. All of the current budget allotment within this program has been allocated, and there are no further calls for proposals for this obviously successful program. IFIT is set to expire in 2018, and a signal of long-term support is required.
Invest $40 million over four years for the business cluster, starting in 2017-18.
Quickly, on SR and ED, scientific research and experimental development, reinstate the ability to claim capital as part of the SR and ED eligible cost structure. Increase the rate for SR and ED programs to something higher than the current 15% of eligible costs for large, non-Canadian-controlled private corporations. Increase the certitude of obtaining SR and ED credits by adjudicating the claims in the spirit that the program was intended when it was developed in 1986. It is an incentive-based program and not a compliance-based program.
The forest industry in Canada is transforming. It's based on a foundation of world-leading environmental practices, innovative thinking, and recognition for the need to change. We're the backbone of so many rural communities, and we desire to work with aboriginal communities who are our neighbours and partners. We support the decarbonization of the economy, and we believe we are part of the path to get there. How this path unfolds will be strongly influenced by the actions the government takes, not only in the next budget but in clearly outlining a long-term strategy aligned with where we as an industry know we need to go.
Thank you.