Mr. Speaker, I move that the first report of the Standing Committee on Finance, presented on Thursday, November 29, 2007, be concurred in.
It is with great pleasure that I rise today to ask that the House concur in this first report of the Standing Committee on Finance, as it relates directly to the decision that has just been made. The government had decided to establish a trust whose implementation would have been dependent on the passage of the budget. Following representations arising from a consensus in Quebec and led by the Bloc Québécois, the government agreed to no longer tie to the passage of the budget the motion for the establishment of the trust in question. That is a good move, and we are pleased about it.
However, much remains to be done to provide the forestry and manufacturing sectors with adequate support. That is what prompted, in November, the Bloc Québécois to have a motion passed at the Standing Committee on Finance. This motion was included in the committee's first report, which reads as follows:
—the Standing Committee on Finance recommends that the government promptly introduce the tax measures in the unanimous report of February 2007 entitled Manufacturing: Moving Forward — Rising to the Challenge, and that the adoption of this motion be reported to the House at the earliest opportunity.
Now that we have succeeded in getting the government to make funding available for the trust as soon as possible—legislation was passed—the government has to agree to make the money available from this year's surplus. While $1 billion will go to the trust, another $10 billion will go to paying off the debt, even though Canada's debt-to-GDP ratio is currently the best among G-8 countries. The problem is that Canada is not doing enough to deal with the crises in the forestry and manufacturing sectors. That is the context in which the report of the Standing Committee on Finance was produced.
Remember that there was no opposition to this report. When the report calling for the implementation of the tax measures in the Standing Committee on Industry, Science and Technology’s report on manufacturing was adopted, the Conservative members of the committee were not opposed. The vote was unanimous, without any opposition. All the other parties supported the Bloc motion because there obviously really was a crisis in manufacturing as a result of the increase in the value of the dollar and competition with the rest of the planet due to globalization. Something concrete had to be done.
Why does this matter so much? Manufacturing is a crucial sector in Quebec. It accounts for 536,000 jobs and $22 billion in wages and salaries. It provided 17% of all jobs in 2005 and nearly 21% of earned income, nearly three times as much as in Alberta. In addition, 90% of Quebec’s international exports come from manufacturing. Manufacturing shipments make up 59% of GDP. Even more important, ultimately, are the thousands of jobs that depend on it. The crisis in manufacturing is therefore extremely serious.
Some 78,000 manufacturing jobs have been lost in Quebec just since the Conservatives came to power. Since April 2005, 21,000 jobs have been lost in the forest industry alone, including allied industries and services such as transportation and forest equipment. That is half the Canadian total.
But now they are planning to spread the assistance all across Canada, with every province benefiting. This clearly does not reflect the reality. The fact of the matter is that Quebec and Ontario are most affected by the crisis in manufacturing and forestry, and the allocations should take this fact into account.
Today we are asking Parliament to approve the report of the Standing Committee on Finance, which asks the government to implement the tax measures in the report on manufacturing. The tax recommendations can be implemented very quickly. We saw it today. Two weeks ago, the government was saying that we would definitely have to wait until the budget, everything would be decided in the budget, and we would have to vote in favour of it if we wanted these measures brought forward.
The government knew, though, that it could introduce a bill and have it voted on, just as the government did last fall at the time of its economic statement. There was a consensus a little while ago and they changed their budget approach to the $1 billion. Now we are asking the government to continue in the same vein, heed the unanimous recommendations of the Standing Committee on Industry, Science and Technology, and of the Standing Committee on Finance and proceed with the tax recommendations in the report.
Here is the first recommendation:
That the Government of Canada modify its capital cost allowance for machinery and equipment used in manufacturing and processing and equipment associated with information, energy and environmental technologies to a two-year write-off (i.e., 50% using the straight-line depreciation method) for a period of five years. This measure would be renewable for further five-year periods upon due diligence review by a parliamentary committee.
In the last budget, the Conservative government took a tentative step in the right direction and granted this tax advantage for two years. Representatives of businesses in the manufacturing sector, particularly the pharmaceutical sector, told us that a two-year time frame was not enough to convince their parent companies to invest in Quebec and Canada, even though that is what we would like to see.
We hope that the Standing Committee on Finance's first recommendation, which was unopposed in committee, will be heeded here and that the House will adopt the report at the end of this debate, which was initiated by the Bloc. Everyone hopes that the government will extend that period to five years, as recommended by the committee. Support for this is unanimous. The Canadian Manufacturers and Exporters, including the organization's Quebec wing, the federation of chambers of commerce and everyone else wants accelerated capital cost allowance to be extended for five years.
In the last budget, the federal government decided to lower business tax rates, which was good for businesses that are making a profit. However, the measure did nothing at all to make things better for those that are not making a profit. The government says that it does not have the means to implement such a measure, yet all it had to do was keep the tax rates where they were. At any rate, given the current surplus, there should be no problem bringing in a measure like this.
The second recommendation of the Standing Committee on Industry, Science and Technology, which is supported by the Standing Committee on Finance, would affect taxation. It reads as follows:
That the Government of Canada raise the capital cost allowance rate for rolling stock, locomotives and inter-modal equipment to 30% using the declining-balance depreciation method.
Clearly, this recommendation is inspired by the same logic as the first one. In addition, it has important environmental aspects. Rail is a very clean and environmentally friendly mode of transportation. It reduces greenhouse gas emissions and is a more economical and sustainable way to transport goods and people. It is easy to understand why the Standing Committee on Finance sees this as an opportunity to kill two birds with one stone.
I was on the Standing Committee on Industry, Science and Technology when it unanimously adopted the 22 recommendations. I became the finance critic and had these tax recommendations adopted by the Standing Committee on Finance because the unanimous report of the House called for what Quebeckers and Canadians want: economic action by this government, an economic policy to replace the current laissez-faire approach. That is why the committee would like to see this recommendation implemented.
The third tax recommendation by the Standing Committee on Industry, Science and Technology, supported by the Standing Committee on Finance, reads as follows:
That the Government of Canada improve the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program to make it more accessible and relevant to Canadian businesses. The government should consider making the following changes:
1. make the investment tax credits fully refundable;
Businesses, which are promoting research and development today and are competing for contracts, must have refundable tax credits so that they can make the necessary investments in research and development. If they do not make a profit, they are unable to fund their research and development. We have to put an end to this vicious circle and ensure that Canada can move forward by supporting our businesses. That would help them land contracts. I am not talking about subsidies; I am talking about creating a fiscal framework that would enable companies to compete and take their place on the market.
The government should also consider the following changes:
2. exclude investment tax credits from the calculation of the tax base;
3. provide an allowance for international collaborative research and development;
In the current wave of globalization, this last change would facilitate partnerships with interested companies in the U.S., Europe and all the other countries in the world. It would also restore Quebec and Canada to their former positions as leaders in research and development. Currently, R&D is lagging somewhat here.
The government should also consider the following change:
4. expand the investment tax credits to cover the costs of patenting, prototyping, product testing, and other pre-commercialization activities.
It became clear that our businesses needed a boost, an advantage, in order to spark their interest in research and development. It was with this in mind that the measure was included in the report prepared by the Standing Committee on Finance.
All of these measures came from the recommendations made by the Standing Committee on Industry, Natural Resources, Science and Technology. Before the budget, the Bloc Québécois estimated the needs in the area of $4.5 billion. I would remind the House that this year, if no action is taken, a few minutes ago, a billion dollars was allocated to the trust. That money will be available immediately, thanks to the efforts of the Bloc Québécois to be the voice of the consensus in Quebec on this.
There is still $10 billion left, which will be paid against the debt, even though it is not needed at this time. Canada's debt-to-GDP ratio is one of the best of all G-7 countries. What is less positive is that we are not helping our businesses enough to be competitive. From that perspective, one would think that, with the $10 billion surplus, the federal government could, in order to restore its reputation as a fair government, help seniors with the guaranteed income supplement in the amount of $3 billion. We would like $4.5 billion to be allocated for immediate economic renewal measures. A payment of $1 billion was just passed, for communities affected by the forestry crisis. Additional money is also needed to help our businesses. We just saw some measures put forward for this year's budget. This could mean some $1.5 billion and $500 million for Technology Partnerships Canada. That program already exists and has helped businesses create new products.
We have a fantastic example in Rivière-du-Loup. Premier Tech is a company that has benefited from assistance measures. It has partnered with the federal government on two occasions and the amounts received definitely led to the creation of hundreds of jobs. This program was abolished by the Conservatives. They established a new program that helps only the aviation industry. This sector needs assistance and we see that it works. However, the fund should be reactivated to help other sectors that are creating new products. We believe that an amount in the order of $500 million could be allocated for this year.
Therefore $1.5 billion is required for equipment upgrades, $500 million for Technology Partnerships Canada and $1.5 billion for assistance to workers affected by this crisis. We feel that these amounts are reasonable and are options the government should choose in the coming days and weeks.
Why table this motion today? Because we realized that, by hammering away with solid arguments, we could manage to move the government. We have made it take action on the trust. We will now work on having it allocate a portion of the current year's surplus right now, soon, in the days to come, so that we can move on helping the manufacturing and forestry industries that are currently in the grip of a serious crisis.
Last fall, the Minister of Finance, with his rose-coloured glasses, told us that everything was going well. We laid the figures on the table, we showed him that although jobs were being created in the energy sector, the manufacturing and forestry industries were not doing well. We told him all over again, we laid the arguments on the table, we provided statistics, we obtained strong support throughout Quebec and across Canada and, finally, the government agreed to create a one billion dollar fund, with the rather petty approach of tying it to the budget. We continued to fight for the immediate release of the money.
Last fall, the Bloc Québécois made public some proposals that are also found in the unanimous report of the Standing Committee on Finance we are debating this morning in this House. That is what needs to happen next. This needs to happen. The government needs to accept the proposals of the Standing Committee on Finance, and of the Standing Committee on Industry, Natural Resources, Science and Technology. They are proposals by the Bloc Québécois, which worked out the numbers and put them on the table last fall.
As far as the higher dollar is concerned and the parity we have seen for the past few months, we still have not felt its impact in terms of job creation. The negative impact will be felt in the coming months. We know that the U.S. economy is experiencing a major slowdown, and may be heading into a recession. We have the means to intervene, but the federal government is acting like a homeowner who is obsessing over putting all his money into paying down his mortgage as quickly as possible without spending the bare minimum to maintain his house and improve it.
I gave that example to the representative from the Coalition pour le renouvellement des infrastructures du Québec, the mayor of Laval, who said it is not just a matter of fixing up the back deck; the foundation is in disrepair.
Part of the investment the Bloc would like to see can be done by injecting money into infrastructure in the next budget. The gas tax rebate for municipalities needs to be stepped up. Instead of a slow 1¢ or 2¢ increase until 2010, in the 2008 budget, there needs to be a 5¢ increase. That would put $1 billion back into the economy that could be spent on improving infrastructure.
There is concern among the public and the financial sector. We see it in all the newspapers. They say that companies would like the federal government to be innovative and ensure that new tax cuts are targeted, through refundable tax credits, for example. The Bloc Québécois is speaking on behalf of employers, workers and all those who are having a very difficult time dealing with the current crisis. This is not just a matter of principle.
In Donnacona in Mauricie and in Shawinigan and Cabano, where I went during the prebudget consultations, in the eastern regions of Quebec, people told us that it was urgent that the federal government live up to its responsibilities, that it use a significant portion of this year’s surplus to restart the economy, and that it do so, not in the form of subsidies, but rather a positive tax base.
Of the $10.3 billion surplus remaining after $1 billion is allocated to the trust, they are prepared to allocate $3 billion to the debt. That still leaves $7 billion that can be committed in the days to come. This morning we saw that we are entitled to do it, we can do it, and it is legal. The only thing missing is the political will, and that is what we want. We want the federal government to come around to putting this forward. As it did in the case of the trust, we hope that it will also recognize the merit of the Bloc’s arguments and the arguments presented in this House.
I hope that we will have massive support by all parties in this House for approving the report. There would be nothing better than a report approved unanimously by this House to tell the federal government that these measures have to be put in place as soon as possible, that we have to use our share of the available surplus and that the next budget also has to go in the same direction. These are the two actions that we must continue to put forward.
Before we came to this House, the Bloc Québécois committed itself to using every parliamentary tool to achieve these results. Last week, a major offensive was undertaken in five different committees, and today we are continuing, by using another tool: the fact that the report of the Standing Committee on Finance can be approved. We are returning to the fray in question period now that Parliament has resumed.
The people of Quebec and Canada, and many communities, expected this billion dollars for the trust to be available now. We have won this victory. Those people also expect that a significant portion of the surplus for the current year will be reinvested in the economy so that we can deal with the manufacturing and forestry crises, the slowdown in the American economy and the rise in the value of the dollar. It is our responsibility, as parliamentarians, to move forward on this.
I hope that the Bloc will receive all parties’ support in this House in voting for this motion. We would point out, and I will conclude on this point, that support in the Standing Committee on Finance was unanimous. The Liberals and New Democrats voted for this motion, while the Conservatives abstained. I hope that we will find the same kind of unanimity and that the Conservative Party, which has started to budge in response to our arguments, will move forward. This is important for the economy, for jobs, for families and for communities in Quebec and Canada.