Mr. Speaker, I do not think I have had the opportunity to congratulate you on your new posting since the last Parliament.
Today I am pleased to join the debate on Canada's competitiveness and place in the world, specifically with regard to the stimulus bill that is being discussed in the United States House of Representatives. Within the stimulus bill, there is a provision that would only allow steel and iron from the United States be used for infrastructure projects as identified within the stimulus bill.
Today we are cautiously encouraged to the news that the United States Senate has voted in favour of softening the buy American provision within this massive stimulus package. Our government has worked extremely hard with our American counterparts and we have made some great headway. We will continue to see this through to a successful conclusion.
Why we are concerned about this issue is simple. It has been identified already in the House. Our government recognizes that in this time of global uncertainty, protectionism is not the answer.
We know from history that protectionist legislation winds up not only hurting the economy in which that protectionist legislation is moved, but it invariably hurts economies that surround it. We are telling our friends in the United States that now is not the time to shut the door. Seven million U.S. jobs are supported by trade with Canada.
The reality is our North American economy is an integrated one and the stimulus package that is being put together will impact and has to benefit not only the Americans but also trading partners. As long as governments do not succumb to the lure of protectionism, the spillover effects of this stimulus package can be overwhelmingly positive. Given the magnitude of the challenges that we all face, no individual country is likely to be able to save itself without help from trading partners.
We are living in a world where economies are tightly interwoven, in a world where global supply chains are intertwined, a world where not only capital and products but ideas that our future travel great distances at an ever increasing velocity.
It is worthwhile to remind ourselves that our closest economic relationship in the world is the one that we share with the United States. Raw materials and finished goods, services, finance and people criss-cross our border daily in volumes that are unmatched anywhere else in the world.
We all know the numbers: $1.7 billion in two-way trade, 45,000 trucks and 300,000 people move across the border each and every day. The United States is one of our largest sources of foreign investment and innovation, and we are its largest and most secure supplier of energy products, as well as being its biggest customers for agricultural exports.
As the U.S. economy flourishes, so does our economy. All this contributes not only to our prosperity, but we believe it gives us a special understanding of our neighbours to the south.
I think we would all agree that there is a strong link between a healthy Canadian industry and our own competitiveness. Obviously competitiveness is a concern to all Canadians, to this Conservative government and to all members of the House.
The government is well aware that a central challenge facing businesses today is to improve competitiveness by increasing the value of product lines and reducing production costs. This is especially the case for the manufacturing sector, which has been adjusting to higher commodity prices, increased international competition and global economic challenges.
The first thing I would note is our global competitiveness has improved significantly in recent years. According to the Global Competitiveness Report 2008-2009, published by the World Economic Forum, Canada's world ranking in global competitiveness moved up from 15th in 2004 to 10th place in 2008.
This report highlights that Canada's improvement is mainly due to our superior transportation and communications infrastructure. It is also due to our highly efficient markets, particularly the labour and financial markets. Our education system also got excellent marks for its quality. This means that Canada's workforce is top quality and is well positioned to adopt the latest technologies for productivity enhancements and to create new high value-added products for the world markets.
As we all know, the economies of the world are facing a deep global recession that will draw upon all of our resourcefulness and best cooperative efforts. Governments around the world have found themselves moving into turbulent financial and economic waters, and certainly Canada is not immune. However, there is a general consensus among economists and experts that the Canadian economy will perform better while many other industrialized OECD countries will struggle over the next two or three years. This is largely due to the core strength of our economy.
The balance sheets of our financial institutions are also in relatively good shape. Canada's financial system is one of the best in the world. It is sound, well regulated and well functioning. Nevertheless, because of globalization and the interdependence of the world financial markets, the Canadian economy is impacted by the adverse consequences of the current crisis.
Looking beyond the current market turmoil, our focus should be on improving our productivity, as it is the fundamental determinant of our quality of life and our competitiveness.
When the G20 leaders met in Washington, D.C. in November 2008, there was a wide range of views regarding both the nature and the seriousness of the current situation. In spite of these differences, the G20 leaders were able to agree to provide timely stimulus to domestic demand while also maintaining long-run fiscal sustainability.
I am proud to say that the Conservative Party of Canada is strongly committed to supporting a productive economy. Our government is committed to creating a competitive environment and putting in place support for business that encourages innovation and entrepreneurship, and rewards investment.
Canada's economic action plan, to which the members opposite have given their support, addresses both the short-term downturn and the financial constraints, while also stimulating productivity in the long term. It will stimulate the economy through investments to build infrastructure, by reducing taxes and freezing employment insurance rates, by stimulating housing construction, by improving access to credit, and by strengthening Canada's financial system, helping Canadians access training programs, and supporting businesses and communities.
Our economic action plan will provide over $20 billion in new tax relief over the 2008-09 year and the following five fiscal years. The economic action plan has launched the Canada skills and transition strategy to help Canadians weather the economic storm and provide them with the necessary training to prosper in a changing economy.
This government is also taking significant action to assist key sectors, such as forestry, agriculture, shipbuilding, automotive and aerospace industries.
To alleviate the pressure on financing, we increased the resources, scope and action of Export Development Canada, EDC, and the Business Development Bank of Canada, BDC, to ensure they have the extra financial capacity to provide firms with financial assistance. Last year we approved a $2 billion increase in borrowing authority of Export Development Canada, and an increase of $1.8 billion in the borrowing capacity of the Business Development Bank of Canada. This is enabling them to offer additional credit to their clients. This is in addition to the $350 million in capital committed to each of these financial crown corporations to support about a further $3 billion in increased credit.
The way we mutually manage our border with the United States is important to our competitiveness. Our gateways to the United States are of particular concern to our highly integrated North American car industry. Our government knows that we cannot remain competitive with a border that clogs and slows down the smooth operation of an integrated industry.
Our economic action plan is accelerating and expanding federal investments in infrastructure with almost $12 billion in new infrastructure stimulus funding over the next two years. This is in addition to $33 billion in funding that was provided in budget 2007 to build modern infrastructure to keep these gateways open for business.
With many companies operating on both sides of the border, one-third of our trade is between related firms, it is in the national interests of both Canada and the United States to work together to find constructive solutions to the economic crisis. This is particularly critical in those industries that are especially closely integrated. For example, the auto sector represents 12% of Canada's manufacturing base and employs 130,000 people in Ontario alone. Vehicle production represents one-fifth of the North American total. The majority of this activity is in support of the big three automakers.
Our economic action plan also streamlines the federal approval process so that more provincial, territorial and municipal projects under the building Canada plan can start in the upcoming construction season. These investments will support productivity and competitiveness for years to come.
Advantage Canada provides a detailed policy agenda which builds on Canada's strengths and seeks to improve our long-term competitiveness performance. Through ongoing reductions in corporate taxes, we are on track to establish the lowest rate of tax on new business investment in the G7.
Our Conservative government is making it a priority to regulate smarter and reduce the paperwork burden on small and medium size enterprises. We increased the amount of small business income eligible for a reduced federal tax rate of 11% to $500,000 from its current limit of $400,000.
Our government created the Competition Policy Review Panel to look at Canada's competition and investment policies. It submitted its final report last June. We will proceed with legislation to modernize and improve Canada's competition and investment laws by implementing many of the recommendations of the Competition Policy Review Panel. This will make product and financial markets more effective and efficient to promote investment and innovation and to create jobs for Canadians.
Our government has also adopted a number of measures to support innovation in recent years. Budget 2008 provides reforms to enhance Canada's scientific research and experimental development and creates an automotive innovation fund to support strategic large-scale research and development projects to build innovative, greener and more fuel-efficient vehicles. Recently, the Prime Minister committed to boosting the value of this fund by $200 million so that more investments in state of the art assembly plants and leading-edge technologies can be made.
We are aggressively opening markets abroad for Canadian goods, services and investments through the conclusion of ongoing trade negotiations. The Minister of International Trade is working to fight protectionist sentiments among our trading partners, and we will launch new initiatives, such as an economic partnership with the European Union.
Clearly, this Conservative government has taken many significant steps and has made significant investments to improve Canada's competitiveness.
As the Minister of Finance laid out in Canada's economic action plan, our government will continue to manage spending responsibly. We will ensure that the programs and services are efficient and aligned with the priorities of Canadians. We will take steps to enhance credit availability for Canadian businesses that are affected by the global credit crisis. We will continue to consult with the provinces and territories and Canadians to develop responses to short-term economic issues while continuing to implement our long-term economic plan.
Finally, this Conservative government recognizes that free, open and fair trade can help Canada weather this financial storm. As the Minister of International Trade stated in the House earlier this week, “With the current crisis squarely upon us, it is crucial to resist the temptation to move towards protectionism. History showed during the Great Depression that imposing trade barriers is not the answer”.
The United States has seen its manufacturing base reduced, its deficits swell and the rise of new global competitors. The financial industry crisis and the reversal of the housing market have meant a reduction in confidence and even fear of the future. It is therefore not surprising that the voice of protectionism is heard in difficult times.
As I stated earlier, thanks to the hard work of this Conservative government, the team of my colleagues and our government ministers, we are making great headway. We are encouraged by the softening of the buy American provisions in the United States stimulus package. We are also encouraged by the recent statements by President Obama. The Minister of International Trade will continue to stay in close contact with his American counterparts and to monitor this legislative process very closely.
