On the first issue of tax, the one I would concentrate on is the SR and ED income tax credit program. Clearly, there are opportunities to approve that to facilitate and stimulate Canadian investment in innovation, which impacts our competitiveness. Right now, refundable credits are exclusive to Canadian-controlled private corporations, CCPCs; it's non-refundable to companies over a certain threshold and those that are not Canadian controlled.
In an industry where you're investing potentially five to six years ahead of any inbound cashflow, a tax credit that's based ultimately only on profit is not nearly as useful or as helpful as a refundable credit based on your investment. In addition, there are thresholds and ceilings on refundability with respect to capital as opposed to operating investments.
So we would certainly like to see some changes and improvements to the SR and ED system to make it more accessible to all firms, not just CCPCs, in terms of the refundability issue, though that doesn't, as I said, replace the need for some form of direct investment, when we look at how other countries do it and the competitive disadvantage we are at.
With respect to regulatory barriers, sure, Canadian aerospace companies face all of those same regulatory issues that any business operating in Canada does, and the more we can remove unnecessary regulation and reduce red tape, the better. That's always positive.
With respect to specific regulatory barriers in the aerospace industry, there really aren't that many. We enjoy a very good, productive relationship with Transport Canada as the regulator of civil aviation safety and the certification authority in Canada. There's always room for improvement, but we do have a very productive relationship with Transport Canada.
The main issue for us as an industry that ultimately sells most of its products into global markets, where they're required to be certified, is to ensure that Transport Canada continues to develop very productive relationships and reciprocal acceptances of certification in countries like the U.S. and in Europe, in particular through the Federal Aviation Administration and the European Aviation Safety Agency.
Going back to that issue of technology controls, I think you heard quite a bit of that today because it is one that really impacts our industry. But it's not exclusive to defence technology, because what happens is much dual-use technology.... This is an industry in which you don't have one technology necessarily exclusive to defence and then another exclusive to commercial. The technologies move back and forth between commercial and defence. It's more a matter of application rather than basic technology. So for much of the advanced technology--not only products, but also processes like advanced machining know-how--once it gets into a U.S. military system, even though it may have been developed as a commercial technology it now gets captured as a dual-use technology under the controls of both the export administration rules, under the Department of Commerce, and under ITAR, under the Department of State.
There's a tremendous impact not only for aerospace but for all advanced manufacturing industries in Canada that ultimately are going to be constrained by those technology controls in their ability to work in the U.S., to access U.S. markets, and be competitive in global markets.
So it is a key issue for us.