Thanks very much, Mr. Chairman.
Good afternoon, honourable members.
I'm very pleased to be here—and thank you for the invitation—representing Fiat Chrysler, Ford, and General Motors. Together these companies are responsible for about 60% of all vehicle production in Canada, and they're among the largest multinational companies in the world, exporting their vehicles to some 100 countries around the globe. Their investments in Canada support the entire value chain, from parts manufacturing to research and development that leads to exciting technology development. Canadian plants are among the most productive in North America, and they are consistently producing award-winning quality vehicles.
Today I want to focus on four recommendations. We've actually presented them in our pre-budget submission, which provides more details.
To begin, number one is productivity, allowing for grants and non-repayable contributions.
The terms of the automotive innovation fund need to close the gap against competing jurisdictions and to ensure that Canada has the most competitive tools available, including the magnitude and form of the AIF, its tax treatment, flexibility, required conditions, and speed of approval for eligible proposals.
Most competing jurisdictions offer non-repayable contributions in many different forms, including cash grants, refundable tax credits, and infrastructure and training credits, with contribution levels that can actually exceed 50% of the total investment spending. There are no additional taxes incurred as a result of the incentives. The conditions are flexible and performance based, and project evaluation and approval is relatively fast. In fact, they're more fitting to a company's investment decision-making cycle. Furthermore, lowering the threshold to $25 million from $75 million would be very helpful in terms of innovation.
Speaking of innovation, we need to expand opportunities for automotive research and development.
The Canadian auto industry is a major investor in research and development of the technologies that actually spur advanced production processes, as well as vehicle safety and environmental performance that meet both the objectives of government as well as the driving experience that is demanded by consumers. The pace and scope of technological change in our industry has never been more profound.
R and D programs that are flexible, responsible, responsive to the needs of industry, and administratively efficient will help to support the innovation agenda by promoting auto research excellence and the opportunity to build on the existing research capacity, which CVMA member companies have right here in Canada.
The most recently announced changes to the scientific research and experimental development program do not address the narrowly defined scope for eligibility, which is an issue for advanced auto manufacturing. The program needs to revert to the original form wherein capital costs are recognized to offer benefit to auto manufacturing, and it should be based on a broader definition of innovation versus the current definition of science.
Increases in the cost of doing business will negatively impact Canadian automotive competitiveness compared with other jurisdictions where operating costs are actually lower. Longer-term certainty and predictability are also key factors when global investment decisions are made. For example, Canada's existing auto manufacturing plants will have the added challenge to compete with jurisdictions that do not operate under a carbon tax or a cap and trade regime. This has the potential to dissuade investors from placing future mandates here.
As part of the announced CPP enhancement, it is important that government recognize that auto manufacturing companies already provide high-quality private pension plans to their workers. If CPP premiums are increased as proposed, this will result in significant increases to auto industry payroll expenses at a time when there are already competitiveness challenges for the industry, versus other competing jurisdictions.
As had been considered in other proposed public pension plan enhancements, the government should provide exemptions to the proposed CPP enhancements or provide CPP cost offsets to companies that already have provided comprehensive private pension plans to their employees.
Last, Mr. Chairman, speaking of border efficiency, commercial goods, and temporary international workers, the CVMA is a strong supporter of the continued commitment to the beyond the border initiative. It encourages the government to address the action plans that have been developed, and to do so expeditiously.
Border crossing infrastructure needs to respond to the volume of commercial shipments, and real-time data must be continuously reviewed to ensure infrastructure is meeting the needs of Canadian business. Appropriate levels of staffing are needed to quickly respond to demand peaks in commercial traffic, keep wait times at a minimum, and ensure that trusted trader lanes are fully operational.
Harmonization with the U.S. northern border policy and infrastructure would also help to ensure there is consistency and efficiency with commercial crossings while maintaining the integrity of a secure border.
On temporary international worker mobility, Canada needs to work towards a target turnaround time of about four hours, for example, to get specialized expertise across the border. Any shutdown in production for an assembly line due to a delay can cause losses of revenue in the realm of $1.5 million per hour. CVMA member companies are global companies with global teams that provide specific expertise. Any delay to get this expertise to Canadian facilities has repercussions on our productivity as well as future investment decisions. As trusted traders, the industry would be interested to explore the potential of a trusted employer pilot that would expedite the permit process. Budget measures that support the development of a more efficient program, including a pilot that our members could participate in, would be a positive step forward.
Mr. Chairman, as I said, our pre-budget submission provides more details, and I'd certainly be pleased to answer any questions the members of the committee may have.
Thank you.