Thank you, Chair and members of the committee.
I'm pleased to appear before you today on behalf of Canadian Manufacturers and Exporters, and I appreciate the opportunity to comment on Bill C-31.
Canadian manufacturers are operating in an extremely challenging environment. U.S. tariffs have disproportionately targeted manufactured goods, while repeated changes to those measures and continued threats of further tariffs have created persistent uncertainty for businesses. However, the sector's difficulties did not begin with the trade disruption. Long-standing gaps in investment, productivity growth and technology adoption had already eroded Canada's manufacturing competitiveness.
Clearly, Canada cannot control decisions made by our trading partners, but we can control whether Canada is a competitive place to invest, build and make goods. With that in mind, I want to focus my remarks on three areas. These are business investment, defence industrial capacity and regulatory competitiveness.
First, the CME strongly supports measures that improve the investment climate. Bill C-31 provides temporary immediate expensing for eligible manufacturing and processing buildings as part of the productivity superdeduction announced in budget 2025. The CME welcomes this measure.
More recently, the government announced the productivity mega deduction. Although it's outside the scope of this study, it makes immediate expensing permanent for a much broader range of capital assets, including manufacturing and machining equipment. This addresses a major and long-standing priority of the CME and gives businesses greater certainty when making major investment decisions, but Canada's long-standing weakness in business investment means there is still more work to do. Like others in the business community, we believe a comprehensive tax review would be worthwhile to ensure that Canada remains competitive in encouraging investment, securing major projects and attracting and retaining top talent.
Second, Bill C-31's defence provisions represent an important opportunity to strengthen Canada's industrial base. The bill would establish the Defence Investment Agency under its own legislation and provide new authorities related to defence production, procurement and investment. The CME supports using increased defence spending to strengthen Canadian industrial capacity. To succeed, manufacturers need predictable, long-term demand signals, accessible procurement processes and meaningful opportunities for firms of all sizes, including SMEs, to participate in defence supply chains. The goal should be to ensure that increased defence spending builds the domestic capacity needed to sustain critical defence and security capabilities while supporting stronger firms, deeper supply chains and more production in Canada.
Third, regulatory competitiveness remains critical. Manufacturers consistently tell us that unnecessary regulatory complexity, duplication and delays make Canada a more difficult place to invest. We've been encouraged by recent federal action. While Bill C-31 contains targeted amendments to the Red Tape Reduction Act, I also want to make note of Bill C-39. Although, again, it's outside the scope of this study, it addresses several competitiveness issues manufacturers have raised, including faster project approvals and more reliable transportation infrastructure.
These are important steps, and there's an opportunity to build on this progress. The CME has recommended embedding economic growth and competitiveness more directly into federal regulatory decision-making, broadening the one-for-one rule and strengthening the quality and independent review of regulatory cost-benefit analysis. Importantly, regulatory reform is also one of the most cost-effective ways to strengthen Canada's competitiveness.
Chair and members, Canada is at an important economic moment. For manufacturing, the stakes are particularly high. Bill C-31 contains several measures that can help strengthen investment and industrial capacity. Combined with other recent federal initiatives, they represent important progress.
The priority now is twofold: Continue building on this progress through additional policy actions and reforms, and implement effectively the measures already in place. These will be key to turning policy into more investment, more production and more well-paying jobs in Canada.
Thank you. I look forward to your questions.