Debates of Feb. 5th, 2008

Finance

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

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.

[Louis Plamondon, Bloc, Bas-Richelieu—Nicolet—Bécancour, QC]

Mr. Speaker, I would like to make two short remarks.

I would like to invite my colleague, whose remarks were both eloquent and relevant, to comment on two things. I believe that the suggestions put forward on behalf of the Bloc Québécois by the party critic are achievable and constitute an appropriate response to the expectations of various stakeholders in the manufacturing and forestry sectors.

In his speech, my colleague mentioned this morning's passage of the billion dollars to be distributed on a per capita basis, that is divided among all of the provinces. My colleague expressed surprise, and with good reason. For example, he said that 75% of the manufacturing and forestry industries at issue are in Quebec and Ontario. In Quebec alone, 40,000 jobs have been affected. Yet the government will give the same amount of money, $130 million, to Alberta, where no plants have shut down and where there is little, if any, forestry.

Given his wealth of experience, I am sure that my colleague can provide a historical overview. For example, when the mad cow crisis happened, did Newfoundland and Labrador get any money? No, money was given to the province that was affected by the mad cow problem. When extreme drought was decimating agriculture—I am thinking of the grasshopper problem a few years back—the government distributed $1 billion according to the needs of each province. Quebec received about $40 million and western Canada got about $950 million because the problem was worst there. Should the same formula not apply in the case of this $1 billion aid package?

My second question is a short one. Is my colleague surprised to see that all of the Conservative members from Quebec have kept quiet on this issue? They have not said a word about this, nor have they risen in the House, asked questions, made one-minute statements or speeches, or spoken up in public to protect Quebec's interests in this matter.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I want to thank my colleague from Bas-Richelieu—Nicolet—Bécancour for his remarks.

Regarding the allocation of the billion dollars that we just voted for, that will be decided when we determine how the funds in the trust will be allocated. We will have to fight again because it simply does not make any sense and is totally out of keeping with the economic reality.

I gave some examples to illustrate the seriousness of the crisis in manufacturing. Some 78,000 jobs have been lost in Quebec since the Conservatives came to power, 21,000 of them just in forestry. These figures do not include the period since the summer of 2007. In the meantime, jobs continue to be lost. Quebec and Ontario are the heart of the manufacturing industry.

A fund was created in the case of mad cow disease. The people affected by the crisis could take advantage of the fund, and that is how it should have been.

That is why it is important this morning to adopt the report that was submitted on tax measures for these industries. The tax measures will benefit the existing industries, especially the refundable tax credit.

Companies in Quebec that are currently fighting hard to offer innovative products and keep their market share unfortunately cannot decide to invest in research and development because they are not generating the profits needed to take advantage of the tax deduction. Oil companies, on the other hand, are raking in huge profits and get tax credits as well, which have the effect of reducing their taxes payable. Even if manufacturers do invest in research and development, they are not making any profits and do not benefit, therefore, from the tax credit in the same way, because it is not refundable.

In my view, there is an injustice here. There is an obvious emergency and the money should be made available as quickly as possible. We managed to get the Conservatives finally to move on this issue, thanks to the consensus in Quebec, as conveyed to the House by the Bloc Québécois. I agree with my colleague that a lot of Conservative members must have been very surprised this morning. Ever since Christmas they have been defending the Prime Minister’s claim that we would have to wait for the budget and nothing else could be done. He could not remember that they had done it differently with the economic statement last October.

Now the Conservative members have just been astounded by something else, and I want to conclude on this point. The Minister of the Economic Development Agency of Canada for the Regions of Quebec said yesterday that it was all thanks to the Bloc Québécois. We hear the Conservative members from Quebec say over and over that the Bloc is not good for anything. Yesterday, the Minister of the Economic Development Agency of Canada for the Regions of Quebec said that it was the Bloc that forced them to move.

We are here to defend the interests of Quebec, and we proved it this morning. However, the battle is not over. There is more to do. We will win because we have Quebec behind us.

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, I would like to start by congratulating my colleague on his speech about the motion adopted on November 28, 2007. He gave an excellent presentation on how the report of the Standing Committee on Finance can benefit the Quebec economy and the manufacturing industry. For example, it is increasingly clear that our industries need to be more productive in the future and will need to upgrade their equipment.

However, my colleague did not really address the fact that making tax benefits more accessible to the manufacturing industry helps build a more sustainable economy in Quebec. Why? Because in Quebec, in certain sectors of economic activity—particularly the manufacturing sector—there are businesses with old technology. So they need more accessible tax benefits, such as refundable tax credits for research and development, and capital cost allowance with a two-year write-off, for a period of five years. For example, I was thinking about recommendation No. 2 from the report of the Standing Committee on Finance, which recommended a 30% capital cost allowance rate for rail rolling stock and locomotives.

Does the member admit that not only will this report help make the manufacturing industry more productive, but that it will also help change industrial processes, making our economy greener and more sustainable?

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I fully agree with what my colleague from Rosemont—La Petite-Patrie is saying. A year ago, I was industry critic. The Standing Committee on Industry, Natural Resources, Science and Technology made the recommendations that the Standing Committee on Finance is now proposing to the House. This was all done in a context of sustainable development.

There is no finer example than public transit in terms of capital cost allowance. If there is investment in cleaner transportation, jobs will be created. For example, the Bombardier plant in La Pocatière manufactures railway cars, locomotives and that type of vehicle. What is more, they are helping the environment. We are incorporating the idea of sustainable development and making great strides.

The current government has always made a distinction between economic development and the environment, but we now need an approach focused on sustainable development, as my colleague was saying. We have to make sure that any economic decisions are made with a view to sustainable development. In future, there can no longer be reckless development that does not take into account the impact on the environment.

The measures being proposed today would help achieve balance. The federal government has helped the oil sands industry and the oil industry very generously over the past few decades with all sorts of tax credits. Now it has an opportunity to help us have a cleaner manufacturing industry.

This industry has already made a significant effort in Quebec compared to the other provinces. We can report on the progress it has made. Nonetheless, this type of credit would allow stakeholders to go even further and, ultimately, we would have cleaner industries. This will allow development instead of the current laissez-faire approach that is resulting in job losses. Products will always need to be manufactured somewhere, but we cannot continue the current practice of offshoring. In some countries, of course, jobs are a matter of day-to-day survival and that is harder to reconcile with environmental issues. Nonetheless, if there is one thing we can do for this planet, it is to ensure that development is accompanied by acceptable environmental sustainability. The little things we do today can have a very positive impact in the future. Companies may get tax credits to improve their productivity and will thereby contribute to sustainable development for Quebec and Canada.

[Rick Dykstra, Conservative, St. Catharines, ON]

Mr. Speaker, I also thank the hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup for providing me with the opportunity to talk about what this government is doing to help the manufacturing sector. I also want to say that the finance committee is trying to work through these issues with all parties. I certainly appreciate the member's efforts in that regard.

I want to mention a few facts about our economy because, quite frankly, our economic fundamentals are exceptional. We are experiencing the second longest period of economic growth in the history of our country. Core inflation has remained within our set range of 1% to 3%. Our unemployment rate is the lowest in more than 30 years and there are more Canadians participating in the workforce than ever in the history of Canada.

We are reducing debt and we are on the best financial footing of any country in the G-7. We are the only country of the G-7 with ongoing budget surpluses, plus a falling debt burden.

Nevertheless, we must remain prepared for the challenges that confront us, including a significant rise in the Canadian dollar and its impact on the manufacturing sector, increased competition from emerging economic giants, such as China and India, and a shortage of skilled workers and an aging population.

As the world changes, Canadians need to work together to make Canada even more prosperous and strong, which is why our government developed Advantage Canada, a strategic, long term economic plan designed to improve our country's economic prosperity both today and in the future. This plan sets Canada on a path toward achieving five key advantages that will strengthen our nation and show a modern, ambitious and dynamic Canada to the rest of the world.

First, the plan will create a tax advantage for Canada by reducing taxes for all Canadians and establishing the lowest tax rate on new business investment in the G-7.

Second, a fiscal advantage will eliminate Canada's total government net debt in less than a generation and will create a strong foundation on which to build sustainable prosperity.

Canada's entrepreneurial edge will reduce unnecessary regulation and red tape and lower taxes to unblock business investment. By building a more competitive business environment, consumers will receive goods at lower prices and Canadian businesses will be better equipped for global success.

The Advantage Canada plan will also create a knowledge advantage by developing the best educated, most skilled and most flexible workforce in the world.

The fifth part of the plan focuses on an infrastructure advantage in order to create modern, world-class infrastructure to ensure the seamless flow of people, goods and services across our roads and bridges, through our ports, our gateways and via our very important public transit systems. Each component of the Advantage Canada plan will benefit the manufacturing sector.

Today's motion asks the government to introduce tax measures to support Canadian manufacturing. Recently, the Minister of Finance was in Quebec City as part of the government's prebudget consultations to hear about the challenges facing the manufacturing sector. The finance committee went to Montreal to listen to manufacturers about the types of steps that we need to take to enhance the manufacturing sector in our provinces, territories and throughout the country.

Although it has been a difficult period for many, manufacturers in Canada have been resilient. In the face of adversity, they have acquired more and better technology and equipment. They have improved productivity, have become more diversified and have broadened their reach in this highly competitive, global marketplace. Manufacturers are responding to this difficult situation and so are we.

The government is lifting the tax burden by lowering taxes of every description, including a historic reduction in business taxes.

Canada's strong economic and fiscal foundation has provided the government an opportunity that few other countries have: to put in place historic, broad based tax reductions that will strengthen our economy from one end of the country to the other.

I am talking about the comprehensive tax reduction action that this government has taken since coming into office. Many of the tax reduction initiatives brought forward by our government are broad based, while others will provide direct strategic tax relief to the manufacturing sector.

The capital cost allowance system determines how much of the capital cost of an asset a firm may deduct each and every year. The rates are generally set so that the deductions for capital costs are spread over the useful life of the asset. This ensures the accurate measurement of income for tax purposes and promotes neutrality with respect to investment decisions. Where a capital cost allowance rate is too low to reflect an asset's useful life, an increase to that rate can reduce the tax burden on investment and increase the efficiency of the tax system.

As part of the government's continuing review of capital cost allowance rates and to further the Canadian tax advantage, budget 2007 contained a number of changes to capital cost allowance rates to better reflect the useful life of assets. For example, budget 2007 increased the capital cost allowance rate for buildings used for manufacturing or processing to 10% from 4%. This change will better reflect the useful life of the buildings in the sector because, as we know, in the manufacturing business buildings tend to need repair and rework based on the fact that they are used sometimes on a 24-hour basis. Those repairs should be reflected, quite frankly, in the ability of the company to make and earn a profit.

This year's budget also increased the capital cost allowance rate for other non-residential buildings to 6% from 4%. Furthermore, the budget increased the capital cost allowance rate for computers, an important asset for the manufacturing sector to 55% from 45%.

In addition to those rate changes, to better reflect the useful life of assets in recognition of the economic challenges facing the manufacturing and processing sector, budget 2007 introduced a new temporary investment incentive for manufacturing and processing businesses.

For investment in eligible machinery and equipment, until the end of the 2008 year, businesses engaging in manufacturing or processing will be eligible to claim an accelerated capital cost allowance at a rate of 50% on a straight line basis. This rate will allow these investments to be written off in a two-year period on average after taking into account the half year rule which treats assets as if they had been purchased in the middle of the year.

Taken together, those measures will provide a much more favourable climate for manufacturing and processing businesses to accelerate or increase their investment in buildings, in machinery and in equipment. What is more, those measures will assist the manufacturing sector in restructuring to meet the challenges they are currently facing.

Ours is not a government that rests on its laurels. Even after the budget of 2007, we knew we had more work to do for individual Canadians, for families and, in particular, for businesses across the country, which is why in the economic and fiscal update we are reducing the general corporate income tax rate to 15% by 2012. This broad based tax reduction will improve the investment environment for every sector of the economy, including the manufacturing sector.

Tax reductions announced by this government, the majority of them broad based, will result in $8.2 billion in tax relief for manufacturers and processors. This includes tax reductions totalling $2.6 billion over this and the next five years in the recent economic statement of October 30, 2007, and $5.6 billion for measures announced in the last two federal budgets and the tax fairness package.

However, It is not only the federal government that can provide tax relief to Canadian businesses. Provinces also have an important role in improving Canada's business tax competitiveness.

To encourage further provincial action, budget 2007 put in place a financial incentive to facilitate the elimination of provincial capital taxes and indicated the government's willingness to work with the provinces to complete the sales tax harmonization initiative. Canadians are already reaping the rewards of the first of these measures.

Since the announcement of the measure to encourage provinces to eliminate their capital taxes as soon as possible, both Quebec and Ontario have acted to qualify for the incentive and Manitoba has also announced its intention to do so.

Canada now has a solid, statutory, corporate rate advantage over our partners in the United States and this advantage will continue to grow year after year through 2012.

In addition, as a result of this government's actions, Canada will meet the Advantage Canada goal of establishing the lowest overall tax rate on new business investment by 2011.

As I said at the outset, I am glad the hon. member's motion provided me with the opportunity to tell the House what action this government has taken to assist our manufacturing sector.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I listened carefully to the speech by my colleague, with whom I have the opportunity to work on the Standing Committee on Finance. Our economy has indeed performed extremely well in the past decade, thanks to the concerted efforts of people across the country.

But times have changed. The United States is on the brink of recession, and Canada's manufacturing and forestry industries are in a major crisis. The government acknowledged as much this morning when it decided to make the $1 billion trust fund available more quickly, before the budget is tabled.

Last year, there were warning signs. The Standing Committee on Industry, Science and Technology produced a unanimous report with 22 recommended measures for the Minister of Finance to include in the budget. But they were not in the budget. We expected to see them in the economic statement in the fall, but only one recommendation was implemented.

Does my colleague not recognize that Canada needs much stronger action now and that our businesses need a tax base that will promote research and development?

When the current government decided to reduce corporate taxes across the board, it was using one of the tools at its disposal. The Standing Committee on Industry, Science and Technology had stated unanimously that this was not the priority, because it would give money to businesses that already made huge profits, but it would not encourage less profitable companies to increase their R&D.

Does my colleague not recognize that refundable tax credits for research and development would give our businesses a tremendous boost? Is this not one of the measures the government absolutely must put in place as soon as possible, using this year's surplus, now that it has $3 billion to pay down the debt and it could spend $2 billion to help businesses in the same way, without hurting—

[The Deputy Speaker, NDP, Bill Blaikie]

The hon. member for St. Catharines.

[Rick Dykstra, Conservative, St. Catharines, ON]

Mr. Speaker, my colleague made note of the industry report, which was debated at great length in the finance committee prior to our coming back here in December. He spoke well of the report. The industry committee was ably chaired by the member for Edmonton—Strathcona who also came to the finance committee to speak to this report when it was being debated.

Although my colleague questions and honours the report itself, he did not want the chair of the industry committee to speak to the issues that he is speaking to today. I never had the chance to ask him why he would not let the chair speak but I will leave that as it may.

One of the most important aspects in that report, which was submitted to the finance minister, was the accelerated capital cost allowance, the two year program that would benefit industries all across this country. In fact, the most important part of that report was implemented in the 2007 budget. Prebudget consultations were held across the country and Canadians and businesses told us that this was a good idea and that it was important to have it in the budget. Hopefully there is the potential to extend that program.

The Minister of Finance listened closely to the comments and has read the submissions that were made at the prebudget consultations to consider further extending the two year manufacturing accelerated capital cost allowance. We will need to wait for the budget but I know he listened very closely.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Mr. Speaker, I am really glad that we have the opportunity this morning to discuss concurrence in the industry committee report, “Manufacturing: Moving Forward--Rising to the Challenge”.

One of the suggestions that the NDP member on that committee made in a supplementary opinion that was attached to the report was to call for specific sectoral manufacturing strategies.

New Democrats have long called for a specific auto strategy. I know the member, being from St. Catharines, will know the importance of having a specific auto strategy, but for years we have not had that kind of specific strategy to deal with the auto industry and we still do not.

We also called for specific strategies for the textile industry, aerospace, shipbuilding, plastics, food processing and chemicals.

I wonder if the member could comment on the need for those specific sectoral strategies, and particularly the need for an auto strategy which we have yet to see in Canada.

[Rick Dykstra, Conservative, St. Catharines, ON]

Mr. Speaker, I thank the member for his appreciation for the hard-working employees of the auto sector. The members of the CAW and members of the community of St. Catharines work extremely hard and are dedicated individuals to that sector. Productivity and quality coming out of the Glendale plant in St. Catharines could not be better. It is one of the best not only in our country but in North America. I appreciate his noting that.

There is certainly from a broad base perspective a focus that we have taken as a government to ensure that all sectors in this country are ably prepared to tackle the issues that they face today and to continue to be competitive. Not only that, but we have to make sure that over the long term they are going to be competitive, that they are going to be able to remain in business, that they are going to stay in communities like St. Catharines, Burlington, Peterborough and Oakville.

I certainly look to the Minister of Industry and his efforts to come forward with a further plan that will see from a strategic perspective investments in some of the areas that we need to make and that we have made. I think of training and re-educating and the role that we need to play to ensure that we remain competitive and continue to work toward a much more competitive environment here in our country.

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, I was somewhat surprised to hear my Bloc Québécois colleague tell us that, during deliberations of the Standing Committee on Finance, the Conservatives abstained from voting on this motion and the report. This only shows that the Conservatives and the governing party want to keep the manufacturing industry in the stone age relative to the modern economy. Opportunities abound, however, for example in this report and this recommendation, to promote what I call intelligent transportation, a more sustainable intermodal transportation. The government and the Conservative MPs refuse to support this type of measure.

This is completely unacceptable, especially since we know that the federal government has decreased investments in the rail system over the past few years, even though that system represents the future of transportation. Cleaner methods of transportation, such as marine, for example, must be used and links must be created, particularly with the regions in Quebec and northern Quebec.

Does the hon. member see that, by refusing to support this kind of report, the government is holding the manufacturing industry back and not allowing it to change its industrial processes? Not only is this hindering the productivity of businesses, but at the same time, it goes against a rule that ought to be generally accepted, that is, to support decisions that encourage sustainable development.

[Rick Dykstra, Conservative, St. Catharines, ON]

Mr. Speaker, I can think of no better sustainable decision than the 2007 budget. Whether we talk about the infrastructure investments in it, whether we talk about equalization, whether we talk about specific investment in Quebec, the 2007 budget did all of those things.

The member spoke about going back to the stone age. I certainly do not advocate it, but if he is a fan of the Flintstones, I will not criticize or go there. I do not have the time to do it. However, I will say that the important word in the stone age is “stone”. Across this country we had seen a lack of investment in infrastructure over the past number of years.

In the 2006 budget there was an investment of over $16 billion in infrastructure. In the 2007 budget there was an investment of $17 billion in infrastructure, not including the $1 billion in the 2006 budget for universities, specifically for infrastructure. There is over $33 billion to partner with the municipalities, to partner with the provinces to rebuild an infrastructure system.

As the member mentioned the word, a lot will be made out of stone. If he believes that is not an important component of this country and the infrastructure that we certainly rely on, I would argue that sadly, the member is mistaken.

I would suggest that the hon. member be careful about the words he uses, because I can assure him there are communities, companies and people across this country who are waiting for bridges, for investments in roads, for sewer and water--

[The Deputy Speaker, NDP, Bill Blaikie]

Order. I do not want the Chair to be accused of having a heart of stone, but that part of the debate has come to an end. Resuming debate, the hon. member for Markham—Unionville.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I will be splitting my time with the member for Kings—Hants.

Here we are, 364 days after the industry committee tabled its report in the House with 22 separate recommendations, all put forward by the manufacturing sector itself, and what action have we seen from the government? Actually, we have seen it implement one-half of one of the 22 recommendations.

Industries told committee members that the government should modify the capital cost allowance to allow for a direct two year writeoff of machinery and equipment and that this should be made available to them for five years. The members of the committee, understanding the planning horizon that many of these industries need to make large capital acquisitions, recommended this sensible approach to the government.

The finance minister, though, thought he knew better than industry. He felt that his years as a lawyer and a politician had taught him more about the needs of manufacturers than manufacturers themselves. As a result, he only provided this benefit for two years instead of the five that the manufacturers had requested. Let us look at the results of this brilliant insight by the Minister of Finance.

In January 2007, the Conference Board of Canada's business confidence survey indicated that 56% of business leaders thought it was a good time to undertake investment expenditures. Just last week, that is, a year after the fruits of the labour of the finance minister should have become evident, it released its winter 2008 business confidence survey and only 46% of business leaders felt the way they had last year. On top of that, business confidence has hit a nine year low in this country. That is lower than it was in the aftermath of 9/11 and lower than it was at the time of the SARS difficulties, hardly a vote of confidence in the economic policies of the Minister of Finance.

That brings us to today. As I mentioned, it is one year less a day since my colleagues in the industry committee tabled this fine report. For 364 days now, the government has let the report sit on a shelf collecting dust while it runs around the country telling Canadians that everything is just fine. However, a quick look at Statistics Canada's monthly employment surveys will tell a very different story from the rosy picture the government is trying to paint.

Since this report was tabled, 135,000 manufacturing jobs have simply vanished, gone up in smoke. That is a big number and it is important because each one of those 135,000 jobs represents a Canadian who is a breadwinner for his or her family, people who have to make mortgage payments, buy groceries and make sure their kids get to hockey practice.

Back in November, the Liberal members of the finance committee secured a series of meetings to hear from representatives of sectors like tourism, forestry, retail and manufacturing. These meetings actually led the member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup to table the motion that we are debating today.

During the course of those meetings, Jim Stanford, chief economist of the Canadian Auto Workers, told the committee that unless the government began to get engaged, the manufacturing sector could easily lose 300,000 more jobs in the next two to four years, but the government has shown no sign whatsoever that it will engage on this subject of such importance to all Canadians.

I believe this neglect of the manufacturing sector and this neglect of the unanimous industry report by the government illustrates the two fundamental differences between Conservatives and Liberals when it comes to economic policy. Let me list those two differences.

First, Liberals are the party of fiscal prudence and Conservatives are not. Second, Liberals believe in an active but prudent approach to economic policies and Conservatives believe in a combination of laissez-faire and “I don't care”. Let me go through each of those two positions.

In terms of fiscal prudence, any objective observer of history, north and south of the border, will have noticed that Conservatives and republicans are the parties that run big fat deficits. Look at Ronald Reagan in the 1980s. Look at George W. Bush today. Look at Brian Mulroney, who left, in 1993, a $42 billion deficit for the Liberals to clean up. Look at the former premier of Ontario, Ernie Eves, along with his three colleagues who are currently members of this cabinet, who ran an election in the year 2003 on a balanced budget they said. Except when Dalton McGuinty got in, he called in the auditors and, lo and behold, there was a big, ugly, fat $5.8 billion Conservative deficit for Dalton McGuinty to clean up. These are historical facts. I might add that Bill Clinton, a democrat, ran uninterrupted surpluses.

So, the general moral of the story is that Conservatives and republicans ran big, huge deficits, and leave that mess for succeeding Liberal and democratic governments to clean up.

My second point is that Liberals are fiscally prudent. Conservatives are not. Liberals believe in an active but fiscally prudent government. We would not sit by wearing our laissez-faire spectacles or our “I don't care” attitude and simply watch as hundreds of thousands of manufacturing jobs go down the drain. We would take an active approach. The proof of that is that our leader, Stéphane Dion, has recently announced two--

[Some hon. members]

Oh, oh!

[The Deputy Speaker, NDP, Bill Blaikie]

Order, please. The member has been here a long time. He knows he should not be referring to people by their name.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Speaker. My apologies for that slip.

The Leader of the Opposition has recently enunciated two parts of the Liberal platform which speak to this active but fiscally prudent attitude toward economic policy.

First, he would create a $1 billion fund to invest in the manufacturing sector in such a way as to leverage further investment and jobs. This is in addition to the $1 billion for communities that was just passed in the House earlier today. This is an active policy of investing in industry along the lines of the industry committee recommendations and something that this government, and particularly this finance minister, has steadfastly refused to have anything to do with.

In addition, there was a report in the Globe and Mail this morning about industry pushing for R and D tax credits to be refundable. Our leader was ahead of the curve on this one. In that same speech, he said that a Liberal government would allow partially refundable R and D tax credits so that firms making investments in R and D, which are critical to the future of our economy, would get some credit for those whether or not they were making a profit.

Those are just two examples of what I mean by an active approach to government, particularly when the economy is weak, particularly when sectors like manufacturing have been hammered by the combination of a high dollar, high energy cost and a weakening U.S. economy. We on the Liberal side will come forward with active measures to support those sectors and to support Canadians whose jobs are at risk.

In contrast, the finance minister actually used the words “shell game” when asked whether his funds would provide any support to Canadian manufacturing. It is clear he has ideological blinkers. It is clear that he is in a world of extreme laissez-faire, “I don't care”.

In conclusion, the big contrast between the Liberal Party and the Conservative Party is, on the one hand, we are the party of fiscal prudence and, on the other hand, we believe in a strong, active but fiscally prudent approach to the economy, so that those sectors which are bleeding jobs will have some help and some partnership from a government that actually cares about its citizens and their jobs.

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Speaker, I would just like to sum up my hon. member's statements into a few words. If I could sum it up for the viewers at home, I would say the Liberal Party has never seen a tax it did not like; it has never seen a tax it would not hike; it brings in spending programs; and it likes to really handcuff the hands of business.

However, what I would like to speak to is what the finance committee actually did hear from some experts like Don Drummond, the TD Bank chief economist. Don Drummond said he thought the federal government had made tremendous strides on the corporate income tax side, to its credit. We are heading to a very competitive structure. We are there for business. I am not exactly sure what the member is speaking about.

If the member wants to speak of deficits and governments that ran deficits, surely to goodness he remembers Mr. Trudeau who originally put this country into debt in the first place. Then of course I heard him saying that he would like to run as a democrat in the United States. I suppose he will also be sponsoring private health care. I would love to hear what he has to say.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, the member does not have his facts straight. Let me just take the case of spending and taxes.

[An hon. member]

You had a chance and you never did it in 13 years.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, on corporate tax cuts our party recommended those before the Conservatives did. That is one area in which we do agree. But on personal income tax cuts, we had a $100 billion tax cut for personal taxes in budget 2000.

All that the current government did on broad based personal income tax was that when it got into power it increased the lowest personal tax rate from 15% to 15.5% and then in the next year it brought it from 15.5% to 15%. It had a rise and a fall and somehow we ended up in the same place and it claims to have cut taxes.

Finally, on spending, as Andrew Coyne and other Conservatives have pointed out, this is the biggest spending minister in Canadian history. The spending under this government has gone up faster than under the Liberals and it hardly looks like a Conservative government in that respect.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I listened carefully to my hon. colleague's remarks. There were reports in the papers this morning about a problem arising from the fact that, regarding the investment tax credits, which Canada claims to be the most generous in the world—the reality is that the people from Telus said so in a brief to the minister—the Canada Revenue Agency ensures that there are very narrow opportunities and, as a result, the desired effects are not being achieved with these types of measures.

Over the past decade, Canada has put $94 billion into its surplus. Instead of paying off the mortgage early, is it not time that funds be allocated promptly, in terms of investment, to give our manufacturing and forest industries a chance to move forward? Is it not time that the government follow up on the recommendation that investment tax credits be made refundable as soon as possible to send a positive signal at a time when the economy is slowing down, which is unfortunately hurting everybody?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, the hon. member and I are more or less in agreement on that point. He said he would like the credits to be made refundable, and I just said that the Leader of the Opposition recently announced in a speech that we too were in favour of these credits being refundable. We did not suggest that they should be 100% refundable, because ours is also the party of fiscal prudence. We would have to see how much money we have, but the credits would be at least partially refundable. That is what the leader of our party said he would do.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, it is with pleasure that I rise today to speak on this motion at a critically important time for Canada in the global economy.

We live in a time of unprecedented rapidity of change, a hyper-competitive global economy where a country or a company is either moving forward or is falling behind. We cannot sit still.

The week before last, I was at the world economic forum in Davos, Switzerland, surrounded by political and business leaders from around the world, people who represented some of the fastest growing economies and companies in the world. The focus at Davos was on issues like science, research and development, the importance of science to competitiveness, and the issue of climate change and the greening of the global economy.

In fact, European Business magazine's issue that particular week was “Profit from a changing climate”, which said that greening one's economy can in fact create jobs, opportunity and prosperity, and that we are heading toward a global carbon-constrained economy. In that kind of environment, as a price is put on carbon by multilateral government organizations and individual governments, we will see that environmental laggers will become economic laggers.

The focus was on competitiveness in a cleaner, greener environment. Here in Canada we have a government that has not focused on competitiveness, has not focused on environmental stewardship, and in fact has focused only on short term politics as opposed to building competitiveness. Its tax measures have been more focused on buying votes than on building a richer, fairer or greener Canada.

It was also announced at the world economic forum, in its most recent study, that Canada has slipped in terms of our global competitiveness this year to number 13 in the world.

This is a time when countries like Ireland, the Netherlands, Sweden, Finland, Australia and New Zealand have reformed their tax systems to be more competitive, to attract capital, to grow their economies, and to build higher wage jobs and greater prosperity for their citizens.

In Canada, we have not had significant tax reform in fact since 1971 with the Carter commission under the Chrétien government and the government of the member for LaSalle—Émard. We saw the biggest personal tax cut in Canadian history, but we really need overall tax competitiveness.

Instead, this government has chosen to cut consumption taxes with the GST. It was repeated by economists around the world that in fact it makes more sense, instead of cutting the GST and that $14 billion per year that it takes out of revenue, to cut personal income taxes, for instance, focusing on low and middle income Canadians.

With $14 billion a year, we could raise the basic personal exemption, the threshold at which Canadians start to pay taxes, to about $20,000. That would take millions of low income Canadians off the tax rolls altogether. It would be fairer. It would also provide tax relief to all Canadians at every income level, particularly favouring low and middle income Canadians. It would build a more competitive tax system because economists are united around the world that if we are going to cut taxes for competitiveness, to create jobs and prosperity and for better fairness and equity, it is better to cut income taxes than consumption taxes.

The government has taken a different approach. It is the government and has the right to do that. I just believe that there are fairer and more competitive approaches to tax reform.

Furthermore, beyond that, there has been some discussion this morning on competitiveness and manufacturing. I serve on the industry committee and the recommendations presented by the industry committee a year ago could make a huge difference. As my colleague from Markham has said, the government has chosen to only respect and follow one-half of one recommendation.

Today in The Globe and Mail, there is an article entitled “Business pushes for new tax relief, Finance Minister under pressure to offer new subsidies but slowing economy eroding federal coffers”.

Why is the government seeing the federal coffers decline? It is not only the slowing of the economy. It is the fact that we have the biggest spending government in Canadian history. It is a government that has not only chosen to increase spending like a drunken sailor. At the same time it is cutting a consumption tax instead of focusing on business taxes, personal income taxes and competitiveness.

Furthermore, the article says that companies pitch Ottawa on scientific innovation. Our leader has presented making the SR and ED program refundable, such that all companies can benefit, through the tax system, from sound investments in research, development and commercialization, because science matters.

When we speak of science, it is important that at the very top decision making levels of government, governments in today's economy understand the importance of science. I was particularly dismayed when the Prime Minister not only fired the national science adviser to the Prime Minister, but completely eliminated the position. There is only one other jurisdiction in the world this year that has demoted and reduced the role of the national science adviser, and that is the Bush administration.

The national science adviser provided to the Prime Minister the kind of sound advice, whether it was on climate change, or stem cell research, or reproductive technology, or the green economy or on innovative new areas such as cleantech. I believe cleantech will be the fastest growing area of the global economy. We are seeing venture capital firms, such as Kleiner Perkins and others, which were behind the Internet revolution, now investing massively in this area. This is an area where Canada could excel.

David Rubenstein from the Carlyle Group, speaking at a venture capital conference in Quebec City a few months ago, and who was also at the Davos conference two weeks ago, said to me personally, “Canada has the potential to be a global leader in clean energy and cleantech”.

To that end and further, in today's Report on Business is an article “Energy players in carbon capture drive”. Currently a group of energy leaders and businesses in Alberta is focused and prepared to make massive investments in a CO₂ sequestration project. It says that the federal and provincial government plans to back its development are still at a preliminary stage.

Business is ready to act. Business is looking for sound signals and strong investment alongside of business to leverage on government and business investment to make the kinds of investments that can not only reduce Canada's carbon footprint, but can also make Canada a leader in clean energy. This is another area on which the government has not focused. We know its interest in climate change is perfunctory at best. We also understand the government has no real interest in long term competitiveness. It is more focused on short term, vote buying schemes.

It is critically important for Canadians, whether they are in the manufacturing sector, the forestry sector or agriculture, to see a government with a plan. Our Liberal leader recently spoke in Hamilton to launch a Liberal industrial strategy around manufacturing, including the $1 billion advanced manufacturing prosperity fund, the AMP program. Our leader spoke of partnering and leveraging with private sector capital to create the kinds of high wage jobs that could make Canada more competitive, to stand shoulder to shoulder with Canada's manufacturing sector, not to abandon them with the laissez-faire “I don't care approach” of the Conservative government, but to stand with them and to help their businesses become more competitive. We need to reform our SR and ED program to ensure Canadian businesses have the capacity and the incentive to investment in cutting edge research and development that can create the kinds of discoveries which lead to greater competitiveness.

Furthermore, the previous Liberal government made a significant investment in the forestry sector, a $1.5 billion focused forestry fund that the Conservative government eliminated in one of its first acts as a government. The $1.5 billion, which was introduced two years ago by a Liberal government, focused on helping forestry communities diversify and succeed. The government replaced it with a less generous $1 billion program, less focused. The Conservative program was focused on all industries, not only the forestry industry.

The government is offering too little, too late, without vision, without focus and without an absolute plan to help bring Canada forward.

The Liberal Party and the Liberal leader are offering Canadians a plan to build a richer, fairer, greener Canada to be more competitive to create the kind of sustainable wealth that Canadians deserve and also to ensure that Canada plays its role as a responsible environmental citizen of the world. This is the kind of plan Canadians deserve and this is the kind of responsibility parliamentarians have to present those kinds of plans, to debate them and to earn their support among Canadians.