Mr. Chair, and members of the committee, thank you very much for the opportunity to appear today. I say that as more than the usual pleasantry because I know that before Christmas there was some doubt as to how long this committee was going to give consideration to this bill. I do, therefore, want to thank very sincerely both current and former members of the committee for recognizing that this is a bill that has some broad strategic implications and deserves a thorough examination.
I think other witnesses have addressed the issue of how a ban on replacement workers affects the bargaining process, and I know you've heard a variety of evidence: does it make strikes longer or shorter, more frequent, less frequent, more violent, less violent?
With your permission, I'm going to take a step back from that debate and look at the impact of the bill on the Canadian economy as a whole. I will start with one basic proposition: that the essential impact of a legal ban on the use of replacement workers is to increase the bargaining power of unions in the affected sectors. I'm not making a statement about the philosophical issue of whether workers deserve more bargaining power or not. I'm simply stating that such legislation does give them more leverage at the bargaining table than they enjoy today. I think it's therefore reasonable to suggest that passing this bill will lead to greater financial gains for affected workers in future negotiations. If that wasn't the case, why would unions want the bill? Whether these gains are larger or smaller, the question then is, who pays the price?
Companies in federally regulated sectors have customers across the country. In some cases they serve households and individuals and in others they provide vital services to business. Some of them obviously do both. In all cases higher costs for labour will be passed on, either to customers in the form of higher prices or to investors through lower returns. To the extent higher costs for labour are passed on to consumers, the issue is whether government should be intervening to help union members in these industries get more money at the expense of all other Canadians.
As a matter of social justice, for instance, should all families pay more for a telephone because government has decided that workers in this particular sector deserve higher pay? Higher costs could also be passed on to business customers. In this case the issue is slightly different; it's whether government should be intervening to give an additional advantage to workers in one group of industries at the expense of workers and investors in another industry. Does it serve the national interest, for instance, if higher costs for railway transportation have to be borne by Canadian manufacturers or retailers?
You may wish to argue that the gains for workers advantaged by this bill would not lead to higher costs but rather would come entirely at the expense of profits, of returns to investors. Academic studies do show the direct link between replacement worker bans and business investment. I note in particular the 2004 study by John Budd and Yijiang Wang of the University of Minnesota that found that strike replacement bans in Canada led directly to reduced business investment. They noticed, I might add, an especially significant drop in investment in the construction sector where banning replacement workers had the same impact as an economic recession.
Such studies aside, it's stating the obvious to say that whatever the rate of return on any potential investment, if that rate of return drops, investors are less likely to dive in and commit their money. You may argue that the impact on rate of return on federally regulated sectors from this bill would be rather small. Well, perhaps it might, but we live in an era in which competition for investment worldwide is fierce.
Canada, I would suggest, is already at a disadvantage, on several fronts. Canada's tax policies impose one of the highest marginal effective rates on new business investment in the industrialized world. New security measures in the United States are making travel within North America more difficult, and that's making Canada a less attractive place for a growing business with international customers to set up shop. The rise in global demand for energy and other resources is good news for western Canada, but the resulting higher prices are hurting manufacturers, which are largely located in Ontario and Quebec. The rise in the value of the Canadian dollar in recent years--largely resource connected--has added to this pressure. And of course suppliers of goods and services alike are facing intense new competition as emerging powers such as China and India transform patterns of trade and investment worldwide. One result is that Canada's manufacturing sector has already lost hundreds of thousands of jobs as companies faced with all of this either go out of business, invest in new technologies that replace labour, or shift production offshore.
So far our economy as a whole has been able to absorb these shocks and keep overall unemployment low, but Canada faces a real challenge here--a challenge to figure out where we want to compete in the world, what kinds of work we want, and what standard of living associated with that work are Canadian workers today and our children going to enjoy in the decades ahead.
What I've pointed out here is that we're already in a situation that gives investors--whether they're Canadian investors or foreign investors doesn't make much difference--some powerful reasons not to invest in this country.
We also are engaged in a very important debate, I have to add, about how to address the issue of climate change. A lot of Canadians consider that very important, and quite rightly so. On this issue, parties on both sides of the House have indicated that the solution, in one way or another, is going to involve new regulations and other measures that could significantly raise the cost of doing business in this country, as well as the cost of living for Canadian families, I might add. Yet here we are contemplating another piece of legislation at this committee whose essential impact will be to make it still more expensive to do business in this country and less attractive to invest.
My point is—and I will close on this, Mr. Chair—that whatever you believe about the merits of giving organized labour a long-cherished weapon at the bargaining table, you cannot consider this bill in isolation. When Canadians next go to the polls, whenever that may be, they will not be casting a ballot on the basis of this issue, and certainly not this issue alone. They will be considering which party to trust with the job of guiding our economy through some complex and daunting global challenges. They'll be asking each of you, in every party, what you have done and what you will do to help our economy to grow, to help communities attract more jobs and good jobs, and to help sustain the public services that those jobs and their incomes pay for through their taxes. Frankly, if you vote for this bill, you will be hurting that cause and not helping it.
Mr. Chair, thank you.