No, it's definitely not made out of pulp. But the butter, of course, comes from Canadian dairy herds. So if it doesn't make you healthy, it should make you patriotic.
Ladies and gentlemen, there are many things that most people already know about the forest industry. Most people know how important it is to Canada. It supports 300,000 jobs directly, and 600,000 additional jobs indirectly. That's more than the automotive sector and more than the oil and gas sector. We are Canada's largest industrial employer.
Most people know that many of those jobs are in rural areas, where finding employment is difficult, and most people know that they're high-tech jobs, paying more than 50% above Canada's average wage. So they're good jobs. Many people also know that we're Canada's largest industrial employer of aboriginals. So these are good jobs in places where it's hard to find jobs, and they help groups who really need jobs.
Most people also know that we're in trouble: that with the softwood export tax and quotas, the structural decline in newsprint and paper demand, the mountain pine beetle, and, most importantly, with the unprecedented rise in the Canadian dollar, we are facing a very severe time of restructuring, with many job losses, mill closures, and very hard times for many communities in Canada.
But most people don't know there is a very bright future for Canada's forest products industry. Most people don't know that global demand for paper is growing by an amount equal to all of Canada's production every year, that as people all over Asia and South America leave their lives in subsistence farming and join the middle class, their demand for paper and wood is growing year after year, and that the North American demand for lumber will rebound. And most people don't know that our competitors have no way of ensuring they will get this increased demand, that this growing global market will be captured.
Russia would like to take this market, but they have problems with infrastructure, gangsterism, and illegal logging. Europe would like to take this growing market, but they have huge problems with an increasing cost structure, as the costs of energy and fibre in Europe have skyrocketed, and they are struggling to keep themselves competitive. Brazil would like to take this market, but they have problems with land use, from landless peasants trying to use the land that's now being used for forests, and also problems with illegal logging and economic stability.
I could go around the world and note that many people would like this market. None of them own it. And Canada is uniquely situated to be able to prosper in this global marketplace of expanding demand, because we have three things the world can't replace: we have the land to grow fibre, and the water and the energy; we have a tradition of know-how and entrepreneurship, which has made us the most successful forest products exporting nation in the world; and we have an environmental record that is second to none in the world.
As the world becomes more and more conscious of a changing climate and threats to the environment and deforestation, the fact that Canada's forest industry has no deforestation, and the fact that we've done Kyoto seven times over in our mills and are committed to carbon neutrality, without purchased offsets, by 2015, and the fact that all FPAC members' operations are certified by a third party for sustainability, which only 10% of the world's forests can match, will stand us very well into tomorrow's marketplace, where natural resources will be scarce and the most prized quality will be environmental credentials.
So, yes, we're going through a hard time, but global markets are increasing, demand is there, and our competitors have their own problems, and we're going to have unique market advantages that others will not have.
Over the last little while, our competitiveness has been increasing very rapidly. The wood industry in the interior of B.C. is the most productive in the world. We've improved our productivity more than the rest of Canadian manufacturing and more than the U.S., year after year. In newsprint, the number of mills at a top quartile for global cost-competitiveness has tripled in the last few years. We are structuring ourselves for success. We are preparing for success.
In the meantime, as you are all too painfully aware and many witnesses will remind you, we are going through a very difficult transformation. My main message to you is the answer to the question: What is your role? What can government do? What can the federal government do? What is the responsibility of parliamentarians during this difficult, painful transformation?
We would like to suggest the federal government can do three things. The first comes from medical ethics and the principle of “at minimum, do no harm”. From that we are suggesting let the restructuring happen, let mergers happen, and let the industry structure itself for success.
One of the reasons we're having so many closures in a short period of time is that governments--primarily at the provincial level, but there's been some federal activity there too--have inhibited restructuring. Restructuring is terrible and painful, but it's necessary to have sustainable jobs.
Even with all the layoffs, there are still 300,000 jobs inside the industry and 600,000 dependent upon the industry in Canada. Keeping those jobs requires that we are allowed to structure ourselves to respond to the demands of the marketplace. Don't interfere; let it happen. There will be some big companies, there will be some small companies, but it's for the marketplace to decide, not governments.
Our second suggestion for the role of government is to create a business climate that draws investment into Canada and makes people want to invest in Canada. Every single day somewhere in the world someone is making an investment decision. Shall I put my forest industry money into a Canadian mill? Should I put it into Georgia? Should I put it into Uruguay? Should I put it into Indonesia?
Each time one of those decisions is made, either we create Canadian employment or we lose Canadian employment. What the government can do to maximize the number of decisions for Canadian mills is extend the CCA to five years, the window for the two-year writeoff. Doing it one year at a time or two years at a time doesn't help. The planning cycle is five years. If we get two years, two years, and then two years, we never get a five-year planning cycle. We need a five-year secure window so people will make the investments.
Make the SR and ED, the research tax credits, refundable. The very moment industry is in trouble is when we want to be able to innovate our way out of trouble, and that means refundability of the SR and ED.
Join with us in partnership for public goods, research, and market development. All over the world, the U.S. government and the European governments all partner with industry for research, technology, transformation, and development of new markets. That's an area where the government can also help.
Let restructuring happen, improve the tax systems so people will want to invest more, and then partner with us on public goods, research, and market development.
I have one last request. These are very political times, with people making all sorts of political gestures around the minority government, but the people losing their jobs and the people who could keep their jobs are depending upon you to rise above all the partisanship, at least to the extent you can, and come up with an all-party report. We don't need positioning; we need help.
Thank you.