Mr. Speaker, I will be splitting my time with the hon. member for Markham—Unionville.
It is with pleasure that I rise to speak to this extremely important motion regarding an extremely important issue. The manufacturing and forestry sectors are facing immense challenges today. The rapid ascension of the Canadian dollar or perhaps the depreciation of the U.S. dollar and the rapidity of its decline have contributed to that, but there are also long term competitiveness issues and productivity issues that are extremely important for the entire industrial sector.
I will focus part of my comments on the unique challenges of the maritime lumber industry in my region of the country. Clearly, there are challenges in my region where we have a market flooded with cheap lumber that is coming from British Columbia, which is partly the result of the clear-cutting that is occurring in British Columbia as a result of the mountain pine beetle. What was originally a natural disaster has become an economic disaster for other parts of the country. We have the decline of the U.S. housing market and its impact on Canadian lumber exports, and of course, there is the rising dollar and energy prices. Our production costs are higher and the competitiveness of our product is declining.
Some producers in my riding have said that the price they can get for their finished product in some cases is actually cheaper than what it costs for them to buy logs for their raw material. In fact, the U.S. lumber producers in Maine are now exporting lumber into Atlantic Canada.
Of 92 mills operating in the three maritime provinces of Prince Edward Island, New Brunswick and Nova Scotia, 22 have produced no lumber since January 2007, and 18 more have announced permanent, indefinite or temporary shutdowns. Only 16 mills are operating near capacity and they are mostly smaller producers for local markets. The rest are cutting production. To date, 1,249 employees have been laid off in the maritime lumber industry. This information is updated on an ongoing basis and in fact, there have been more shutdowns since last month. If this trend continues, by December 31, 2008 the industry will be operating at 50% of 2006 production.
It is cold comfort to the industry to have the government say that somehow the U.S. softwood lumber agreement that the government signed in its early days is a panacea to all the challenges faced by the Canadian lumber industry. The lumber agreement with the U.S. administration at that time was more about getting photo ops for the Conservative government than it was about getting real long term results for Canadian lumber interests.
It is really important to recognize the importance of supporting communities affected by the decline in the lumber industry. The first thing that ought to be done is the re-establishment of the economic diversification program for forestry regions. The Liberal government's forestry strategy in 2005 committed $1.5 billion to support the industry, including money for companies to invest in research and development, and a five year national forest community adjustment fund designed to help diversify economies for forestry dependent communities in decline.
Those programs were cut and slashed by the Conservative laissez-faire government that cared more about rigid ideology than in helping Canadian communities. It is the same government that has cut labour market agreements with many Canadian provinces. Those labour market agreements were there to help workers, whether in the forestry sector or in the manufacturing sector, who found themselves in industries in decline and in transition. They were benefiting from those labour market agreements but the government cut them at a critical time.
The challenges faced by the lumber industry in the maritimes are different from other parts of the country because the industry has a different ownership makeup in terms of forest lands and woodlands. It is really important that members of Parliament realize that while some of the conditions in the maritimes are different, the challenges being faced by the maritime lumber industry are severe. The Conservative government is ignoring the maritime lumber industry and has failed to defend its interests just as severely as it has failed to defend the interests of the forestry industry in Quebec and across the country.
On the manufacturing sector side, it is clear that the government's accelerated capital cost allowance, which applies over a two year period, needs to be applied over a five year period. The Canadian Manufacturers & Exporters Association has called for that. It has said that companies do not make long term production enhancement equipment purchase decisions overnight. For an accelerated capital cost allowance to actually make a difference it needs to be over a five year period not over a two year period. We have called on the government repeatedly to implement the accelerated capital cost allowance over a five year period which would help provide a stronger partnership with Canadian manufacturers to help them invest in the productivity enhancement they need.
Furthermore, in terms of research and development and commercialization activities that can help Canadian manufacturers compete and succeed globally in a hyper-competitive environment, the government ought to reform its SR and ED program. This program has helped Canadian companies and manufacturers involved in industries as diverse as biotech to clean tech and manufacturers that are themselves making these kinds of investments.
One change that could be made to broaden and strengthen the impact of the SR and ED program would be to increase the annual R and D expenditure limit, which was established initially in 1985 pre-NAFTA, from its current level of $2 million to $10 million and adjust the taxable capital threshold from $10 million to $50 million. That would make a huge difference for a lot of Canadian manufacturing companies and other firms involved in research and development and commercialization.
Another change would be the removal of the current CCPC restriction on the SR and ED program for refundable credits while maintaining eligibility requirements. This would make a difference in terms of taxable income and taxable capital thresholds.
Infrastructure investment, particularly transportation infrastructure, is critically important. The Liberal government that I was part of had made a significant investment in the Pacific Gateway. The Conservative government has continued with that investment but has actually reduced the level of the investment that our government had initially made. The Pacific Gateway is part of it.
With respect to the Atlantic Gateway, the government recently announced some sort of exchange of letters or memorandums of understanding, but that is not good enough. The government should be moving more quickly to establish and strengthen trade routes along both the eastern seaboard and Atlantic Canada.
The government needs to earmark more resources for Ontario's aging infrastructure, particularly the Windsor-Detroit crossing, and it needs to make this crossing a higher priority. I read an article in today's Toronto Star entitled, “Chrysler CEO pleads case for new Windsor crossing”. All stakeholders need to be engaged in this. We need to see the government take action and commit the resources required.
According to the Canadian-American Business Council, insufficient infrastructure, coupled with onerous paperwork, are creating a competitive disadvantage for businesses on both sides of the border. Today, with the importance of rapid transportation of parts and materials in manufacturing, it is critically important that the Canadian and U.S. borders work efficiently and effectively. The government needs to make those kinds of investments, which would be far more effective investments that we could actually use, than cutting the GST, which does not benefit productivity, does not enhance manufacturing competitiveness and does not help create jobs for Canadian workers.
