News

Good news. We have unanimous agreement in the House of Commons and Senate to fast-track a $1-billion community relief package for laid-off forestry and manufacturing workers across Canada.

Unanimity has been rare in this session of Parliament. This aid package shows not only how important the manufacturing sector is for MPs and their constituents across the country, but how urgent it has become for Ottawa to take action in the face of the rapid appreciation of the Canadian dollar and weakening demand in the United States, our major export market.

The future of our economy itself is at stake. The living standards of all Canadians depend on our ability to add value in our businesses and jobs. But we must now do so in a global market amid intense competition for investment, market share, knowledge, technology and skilled workers. Canadians have remarkable assets working in our favour — the richness of our natural resources, a highly educated and highly skilled work force, our knowledge base, a highly productive business sector and our well developed logistics, services, and knowledge infrastructure. Our future prosperity rests on our ability to make the most of those assets and to create greater value from them.

Manufacturing is what converts our country's natural resources, and the knowledge and skills of Canadians, into higher-value products and services tradable around the world. Manufacturing is the largest single business sector in the country. It directly accounts for 15 per cent of the Canadian economy and employs two million Canadians in highly productive, high-paying jobs.

Canadian manufacturers are global competitors. They export more than half of everything they produce. And they are fighting tooth and nail for investment and product mandates. Manufacturers are Canada's innovators. They are the companies that bring new products to market and conduct over 75 per cent of private-sector R&D in the country.

But manufacturers are much more than that. They anchor a supply chain of primary industries, services, technologies and innovation that generates even more value, and more jobs, for the economy.

Manufacturing and processing industries are customers for 45 per cent of our country's agricultural production, one-third of the output generated by our utility sector, 30 per cent of our mining, oil and gas sector, 29 per cent of our professional, technical and engineering services, just under 20 per cent of our transportation, warehousing, distribution and information services, and 14 per cent of the value created by other business and financial services sectors. And these contributions don't take into account the retailers or the public servants whose wages and salaries are paid by the people whose jobs depend on manufacturing.

Every dollar of manufacturing output in Canada generates $3.05 in total economic activity. Clearly, this isn't a question of manufacturing against other sectors of the economy, but how closely integrated businesses are, and how many jobs in all sectors depend on adding value in goods production.

The critical importance of manufacturing is not lost on our MPs. Last year, all parties unanimously supported 22 policy recommendations tabled by the House of Commons industry committee aimed at improving the competitiveness of Canadian manufacturers. The federal government responded positively, and introduced in its last budget a two-year write-off for investments in manufacturing and processing equipment, with eligibility to the end of 2008.

It is now time to implement the industry committee's recommendations in full. In his upcoming budget, Finance Minister Jim Flaherty should extend the window for accelerated depreciation on manufacturing equipment for another five years. He should make scientific research and development tax credits refundable and commit to improving the administration of the system. He should introduce an employers' training tax credit to encourage businesses to invest more in maintaining and upgrading the skills and capabilities of their workers. And, he should increase the capital cost allowance rate for rolling stock, locomotives and intermodal equipment to 30 per cent to help modernize Canadian logistics systems.

These measures would encourage investments in productive assets, innovation, skills development and logistics infrastructure — investments that are critical to adding value in a modern economy. They would be of benefit to all business sectors. Above all, they would help Canada's manufacturers and exporters make the adjustments they need to compete under extraordinary economic circumstances.

Tax measures that encourage investment are much preferred to yet another community rescue package. There should be unanimous agreement on that.

Jayson Myers is president and chief economist of Canadian Manufacturers & Exporters, Canada's leading trade and industry association, and chair of the Canadian Manufacturing Coalition.