:
Thank you very much, Chair, and let me thank you and members of the Standing Committee on Industry, Science and Technology for the invitation to speak today.
[Translation]
Before I begin, I’d like to introduce my deputy minister, Richard Dicerni, my senior associate deputy minister, Paul Boothe, and our chief financial officer, Kevin Lindsey.
[English]
I don't need to tell any of you that we meet today at a crossroads. Since last fall, the global economic situation has obviously deteriorated faster than anyone predicted. The global economy has further weakened since Canadians voted in the election last October, and further still since Parliament met last month.
As the crisis emerged it was evident that business needed support to see this period through. In the last few months I've met personally with business leaders and workers across the country. These discussions highlighted the fact that Canadians are looking to us to respond with forceful, creative measures that will bring Canada out of this crisis and will build a base for continued growth in the future.
About a month ago the Prime Minister met with first ministers to consult with them on how to meet these expectations. They agreed to accelerate infrastructure investments, strengthen financial market regulation, improve competitiveness, and ensure labour market preparedness and flexibility so we can respond quickly when the economy recovers.
Fortunately, while we face great challenges, we are standing on a very solid foundation, the best in the G-8. In the past four budgets, the government has worked to support a competitive marketplace and to create an investment climate that enables Canada to successfully compete against the world on the basis of its innovative products, services, and technologies.
[Translation]
And because of our government’s track record of prudent fiscal and economic management, we are much better able to address the current downturn than most of our competitors.
Since 2006, we have dramatically reduced corporate, personal and sales taxes – making Canada more competitive internationally and ensuring that Canadians have more money to spend.
[English]
We’ve taken steps to regulate smarter and to reduce the paperwork burden on small and medium-sized enterprises. Enhancements to Canada's scientific research and experimental development tax incentive program are encouraging innovation across all sectors. We invested almost $4 billion in the tax credit in 2007 alone.
In recent weeks we have partnered with Ontario to provide conditional financial support to Canada's auto industry. This assistance will help restructure and renew this vital sector of our economy and ensure that we maintain our share of North American production.
Our budget decisions flow from Advantage Canada, the long-term plan for the Canadian economy that we introduced in 2006. This strategy has led us to pay down a significant amount of our national debt, reduce taxes for all Canadians, build a more competitive business environment, invest in worker training and education, and launch the largest infrastructure rebuilding initiative since World War II.
Now Budget 2009 builds on this solid base. It recognizes that in these challenging economic times, we must work harder than ever to seize economic opportunities and to run with them, to create jobs, to develop new products and to find new markets. Our economic action plan includes measures to stabilize the Canadian economy, create jobs, and support sustainable growth that will further Canada's competitiveness.
My department, Industry Canada, is active in overseeing and implementing initiatives in support of these goals. Some of the top-of-mind issues that we have been dealing with, and will continue to deal with, include science and technology, manufacturing, and support for small business. Certainly we are attempting to create a climate that encourages business innovation and productivity, and this type of climate is what will allow us to innovate, to move up the global value chain, and to compete with our international competitors.
Let me touch briefly on some of these issues. First is science and technology. I don’t have to tell you that S and T innovation is at the heart of Canada's value proposition as a player in the international marketplace. So it comes as no surprise that Canada's S and T strategy was launched by the Prime Minister in 2007, and that the Government of Canada has invested more than $7 billion in helping stimulate economic activity through large-scale investments in S and T over the past four budgets. Of this amount, Budget 2009 accounts for $5.1 billion in S and T investments.
[Translation]
This includes new investments in our universities and colleges to help Canadian researchers make transformative discoveries that contribute to our future well-being and create short-term economic activity and jobs.
[English]
The $2 billion national university and college infrastructure program announced in Budget 2009 will leverage matching funds from other partners. A further $750 million investment in the Canada Foundation for Innovation will support high-end research, equipment, labs, and facilities.
Budget 2009 also provides for updating federal labs; extends our information and communications infrastructure through broadband coverage to unserved communities; and, through $500 million for the Canada Health Infoway, encourages greater use of electronic health records and supports knowledge-based jobs across the country.
From the pacemaker to insulin, Canadian researchers have made discoveries that have changed the lives of people around the world. To ensure this continues, the government has substantially increased funding for Canada's federal granting councils, our most direct means of support for academic research. We have increased the funding to the Canadian Institutes of Health Research, the Natural Sciences and Engineering Research Council, and the Social Sciences and Humanities Research Council by some $40 million a year in Budget 2006, $85 million a year in Budget 2007, and $80 million a year in Budget 2008. Our support for the overhead cost of research has grown by $70 million per year over this time, and these increases are cumulative, ongoing, and permanent.
In addition to the granting councils, some of our best applied science comes from the Canadian Space Agency. I was just in St. Hubert yesterday to celebrate the CSA receiving $110 million over three years in Budget 2009 to develop terrestrial prototypes for space robotic vehicles. From the Canadarm to Dextre, Canadians are proud of our contributions to the international space community, and we want to protect our heritage of leadership in robotics and continue to play a leadership role as we move to the next phases of this technology. We want to remain at the forefront of space robotics with projects such as the Mars Lander and the Lunar Rover. Rovers are electrical vehicles designed to move across the surface of the planet. They could be advanced robots that move automatically, or simpler vehicles controlled from earth or driven by an astronaut. Imagine the pride of Canadians just a few years from now when the vehicle that carries astronauts across the surface of the moon could be Canadian technology. I'm looking forward to that day.
Let me touch briefly on manufacturing. If S and T innovation is at the heart of our economic growth, our manufacturing just might be the backbone. In fact, Canada's manufacturing sector directly contributes to about 15% of our GDP and employs close to 1.9 million Canadians—mostly in full-time jobs. Recently, I don't have to tell this committee, it has faced some challenges, challenges in the automotive and forestry industries in particular, but not exclusively in those industries.
To help lay a foundation for companies today and in the long term, the government is taking action on a range of critical measures to improve access to credit and to enable further investments in productivity-enhancing machinery and equipment.
Other key infrastructure investments include tax relief measures; investments in science, technology, and skills; and targeted industrial support initiatives that will also help to strengthen manufacturers' competitiveness across the country. These include enhanced resources and scope for the Business Development Bank of Canada and Export Development Canada, as well as new credit facilities to help free up the credit market; a two-year extension on the 50% temporary accelerated capital cost allowance, and measures to provide relief for the purchase of computers and imported machinery and equipment; and assistance for targeted sectors, such as the automotive, forestry, shipbuilding and tourism sectors.
I'd be remiss if I didn't quickly update you on our progress with respect to the auto industry.
[Translation]
As you know, two of the Detroit Three were teetering on the edge of bankruptcy late last year. As President Bush warned and President Obama has reiterated, the situation had the potential to pull down the entire U.S. economy, and therefore needed to be addressed quickly with immediate liquidity.
[English]
Recognizing what was at stake, the Government of Canada moved quickly, with the Ontario government, to follow a U.S. $17.4-billion loan package with a package of our own, offered to Canadian subsidiaries of GM and Chrysler. The Canadian offer represents a proportional amount of the U.S. support package and is consistent with Canada's share of the Detroit three's North American production.
We held up our part of the bargain and were ready to provide these loans in December, but GM and Chrysler asked us to defer our negotiations while they worked with the U.S. Treasury. We are committed to ensuring that an orderly restructuring of this industry take place on a North American basis, preserving Canada's share. That means we need to stand ready with liquidity support, and if needed, longer-term loans.
I assure you that we will continue to encourage all stakeholders, automakers, unions, but also parts makers, bondholders, and other governments to come to the table with the objective of ensuring a healthy industry going forward.
On the small-business side of things, the credit crunch has posed a significant problem. I can tell you that the department has faith in small and medium-sized businesses and is already investing in the BDC to provide at least an additional $1.5 billion in financing to help businesses sustain operations and grow. We are injecting hundreds of millions of dollars into the BDC to increase its lending activities, and this will be complemented by significant funds to top up lines of credit from financial institutions for small and medium-sized businesses. This injection of funds will allow the BDC to make financing available to thousands of small and medium-sized enterprises in Canada, in all sectors, from manufacturing to science and technology, to construction, to tourism, to forestry, and to commercial fishing.
In addition, Budget 2009 includes the following spending measures to help small businesses and to grow and create new jobs: $200 million over two years to the industrial research assistance program, IRAP, to enable it to temporarily expand its initiatives for small and medium-sized enterprises; $30 million over two years for the Canada business network, which delivers single-window access to reliable, up-to-date, and relevant information to businesses; $10 million to the Canadian Youth Business Foundation to support and mentor young Canadians who are creating new businesses; and increasing the amount of small business income eligible for the reduced federal tax rate of 11% to $500,000 from the current limit of $400,000, as of January 1.
I'd like to thank you for your time this afternoon. Let me reiterate that I think Budget 2009 sets us on the right course. My department is working diligently to shoulder its part of the load. We will ensure that due diligence is completed and that our actions are accountable to the Canadian taxpayer. With innovation as our guide, I'm confident that we will be able to navigate through this economic storm.
I'm interested in answering your questions, so I will stop here, and I'm certainly willing to participate in the discussion.
Thank you, Chair.
:
Thank you for the questions.
Indeed, I guess our strategy is “if it ain't broke, don't fix it”. Both FedNor and the EODP have been working well. Obviously, the EODP has been around for a shorter period of time, but as the honourable member knows, FedNor has been around for decades, delivering economic development programs for the north.
When I became minister responsible for FedNor in 2006, I was very pleased to announce that this program, for the first time in its existence, would have a base budget that it could guarantee, that it could rely on for five years running. That amount is $38.4 million, but indeed, there have been some add-ons to that budget over the years, for molecular medicine research, for instance, and a northern Ontario medical school.
Indeed, in this budget, there is an extra $13 million for this year and an extra $13 million for next year, which would bring the NODP budget, the northern Ontario development budget, to $52.77 million, which is the highest it's been under any government. That money is going to northern Ontario in 2009-10 and 2010-11 via the community adjustment fund. From our perspective, that program is working well and should continue to receive our support.
The terms and conditions of SODA, the Southern Ontario Development Agency, have not been finalized yet. There will be announcements in due course.