Thank you very much, Mr. Chairman and members of the committee, for your hospitality in inviting us to be here with you today.
As many of you know, the Canadian Chamber of Commerce is the largest and most influential advocate for business in Canada. We have members of all sizes and from all sectors of the economy in all regions of the country. We're very pleased to have the opportunity to participate in the committee's hearings.
I thank the Committee for this opportunity to share the viewpoint of the Canadian Chamber of Commerce on this important issue.
Mr. Chairman, on November 20 I wrote to the Prime Minister and to each of the provincial premiers. In those letters the Canadian Chamber of Commerce proposed a number of immediate measures that could be taken to strengthen Canada's economy and to help our businesses grow and prosper. I've brought with me copies of those letters, in English and in French, for members of the committee if they'd like to take a look at our recommendations in greater detail.
I can tell you, however, that many of our members face unprecedented challenges that grow daily. Fierce competition from emerging economies like China and India, weaker demands south of the border, where 77% of Canada's merchandise exports go, and the stunning appreciation in the Canadian dollar since 2002 have created the perfect storm for export-oriented businesses and companies facing competitors here at home.
Canadian manufacturers are on the front line. Since late 2002, over 330,000 manufacturing jobs have disappeared; more than 80,000 have disappeared so far this year. The loss in competitiveness in Canada is evident in the rapid escalation of unit labour costs, which are the costs of wages and benefits of workers per unit of economic output.
Unfortunately, Canada's productivity is rising too slowly to negate the lost competitiveness. More challenges lie ahead of us. The Bank of Canada predicts that the Canadian dollar will average 98 cents U.S. through 2009 and that Canada's economy will grow by 2.3% in 2008 and 2.5% in 2009. The Department of Finance and the Bank of Canada have stated that the risks to the Canadian economy are tilted to the downside.
In view of the challenges I just mentioned, it is important to implement competitive policies which will have a direct impact on the productivity and wealth of our nation and that of all Canadians.
The Canadian chamber calls for immediate action. Governments must put in place policies that encourage flexibility and adaptability and lay the foundations for a more competitive economy.
Mr. Chairman, I'll touch very briefly in my opening statement on a number of these issues today and the recommendations that we make, but I'd be very pleased to go into any of them in greater detail with the committee.
In our view, the federal government must work with provincial and territorial governments to first lighten the burden of regulation. Overlap, duplication, and fragmentation are time-consuming and costly and they hamper Canada's ability to compete.
Second, we need to knock down the interprovincial barriers to trade. Internal barriers keep firms from growing large enough to compete effectively in foreign markets. They cause investors to look elsewhere. They artificially raise prices and they increase the cost of doing business.
Third, we need to better utilize skilled immigrants through the recognition of foreign credentials and improved labour market access and integration. Employers across the country are facing major labour shortages. Many foreign-trained professionals and tradespeople can't put their skills to work.
Employers also report long delays in the processing of people whom they've identified for specific jobs. We need to and we can take immediate action in Canada to accelerate the placement of these people, particularly skilled workers from abroad who've been identified for posts here in Canada. The goal there, Mr. Chairman, is to ensure that all businesses in all sectors, faced with the challenges, including the dramatically escalating dollar, are better positioned to compete.
Fourth, we need to keep the Canada-U.S. border open for legitimate travellers and business. Border delays and complications harm productivity and jeopardize jobs. Additionally, rapidly escalating border compliance costs are wasting hundreds of millions of dollars each year, putting domestic producers at a serious disadvantage relative to their offshore competitors.
Fifth, we need to ensure a competitive tax environment. Budget 2007 and the recent economic statement contained a number of positive developments to help business compete. But more needs to be done. Significant economic benefits can be realized by eliminating provincial capital taxes, by harmonizing provincial retail sales taxes with the federal GST, and by making permanent the accelerated capital cost allowance for investment by manufacturers and processors in machinery and equipment.
Mr. Chairman, the Canadian Chamber of Commerce believes that these measures provide an important first step toward a more competitive Canada. They should be implemented now as a means of helping Canadian businesses respond to urgent and growing pressures. To delay would risk the jobs of Canadian workers and the prosperity of communities across our country.
Mr. Chairman, your specific reference today is to look at the impact of the rising Canadian dollar upon the competitiveness of Canadian industry, and we believe, from the perspective of the Canadian Chamber of Commerce, that there are serious challenges that Canadian business faces, both from the rise of the dollar itself and also from a range of other changes that are taking place in the global economy. By putting in place today the measures I have outlined, we could help to ensure that all Canadian businesses can compete more effectively in the global marketplace.
Mr. Chairman, I thank the committee for its attention. I'd be very pleased to answer any questions you may have during the question period.