INDU Committee Report

The government must immediately adopt an industrial policy that meets Quebec's needs.

The Bloc Québécois would like to thank the many witnesses who expressed their concerns throughout the Committee’s hearings.

In view of the gravity of the crisis in the manufacturing sector and in the Quebec and Canadian economy as a whole, the Bloc Québécois believes the Committee should have gone much further in its recommendations. The BQ wants to see immediate and realistic solutions being implemented to resolve the many challenges facing Quebec's manufacturing sector. We feel it is necessary to present this supplementary opinion in order to show the government the various avenues that it must explore promptly in order to provide strong support for the manufacturing sector.

The Standing Committee on Industry, Science and Technology has not managed to reach a consensus on the measures to be taken

During the previous study conducted by the Standing Committee on Industry, Science and Technology into industrial sectors, entitled “Manufacturing: Moving Forward — Rising to the Challenge”, the Committee managed to reach a consensus on various facets of Canadian industrial policy. Unfortunately, the Committee was not able to repeat that accomplishment and the measures recommended in this report are much less direct.

The Committee is recommending some measures that are good for Quebec

The Bloc Québécois presented two recovery plans to stimulate the economy. Although most of the measures put forward by the Bloc Québécois were not taken up in the Committee's recommendations, the Committee did in fact support some of the BQ’s proposals.

The Bloc Québécois notes, for instance, that the Committee is recommending that the government introduce a tax credit for young graduates in resource regions. This measure will help more young people return to their regions while providing regional economies with a qualified workforce, which will make it possible for these economies to innovate and diversify.

The Industry Committee also recommended that the government introduce various tax measures to encourage the development of renewable energy. These measures could encourage the production of cellulosic ethanol from forest residues, which would offer new opportunities for the forest industry, as would the Committee’s recommendation that the government establish a policy on lumber use in federal buildings.

The Committee agreed with the Bloc Québécois’s recommendation regarding military procurement. The Committee recommended that the government review its defence procurement policy so that government procurement stimulates the development of Quebec’s aeronautics industry. Such a policy would of course have to bear in mind the relative size of the aeronautics industry in each region of Canada to ensure that Quebec benefits equitably. In addition, by establishing a long-term space strategy, the government would provide a framework for the further development of this industry in Quebec. Finally, expanding the Strategic Aerospace and Defence Initiative would serve to better balance risk-sharing by the government and industry. Such a move would of course have to reflect the $200 million the Conservatives promised in the last election campaign.

The Bloc Québécois has long called for the replacement and enhancement of the Technology Partnerships Canada (TPC) program. The Committee recommended that the government reinstate or replace this program. Other key sectors such as the pharmaceutical, production technologies, environmental technologies and new materials sectors could also benefit.

The Committee acted on the Bloc Québécois’s longstanding request by recommending the government of Canada conduct an internal review of Canada’s antidumping and countervailing policies and practices and their application to ensure that Canadian trade remedy laws and practices remain current and effective. This review should also include comparisons with other World Trade Organization members such as the European Union and the United States.

Finally, together with the Bloc Québécois, the Committee recommended that the government propose proactive measures to eliminate trade irritants. Specifically, the Committee recommended that the government fight initiatives such as the “black liquor” tax credit, which hurts the pulp and paper industry in Quebec greatly, as well “Buy American” legislation, which blocks access to markets in the United States and prevents US municipalities from buying from our companies.

The Committee should have gone further and presented an actual industrial development policy based on measures that the Bloc Québécois proposed in its two recovery plans:

Although the Committee recommended that research and development tax credits be reviewed and that consideration be given to making them partially refundable, the Bloc Québécois would have preferred that the Committee recommend 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 by considering the following changes:

1. make the investment tax credits fully refundable on a quarterly basis;
2. provide an allowance for international collaborative research and development; and
3. expand the investment tax credits to cover the costs of patenting, prototyping, product testing, and other pre-commercialization activities.

With regard to the immediate assistance urgently requested by the forestry sector, the Committee merely recommended that the government expand financing opportunities through Export Development Canada (EDC) and the Business Development Bank of Canada (BDC). The Bloc Québécois regrets that the Committee could not recommend that the government create an actual loan and loan guarantee program for the forestry industry, with a budget similar to that given to the automobile industry, and provide the industry with single-window access to this financing.

In these times of economic crisis, the Bloc Québécois would have preferred that the Committee recommend that the government offer refundable tax credits to businesses that finance employee training. In that way, employees could remain employed while taking provincially recognized training. This move would have given participating businesses the necessary liquidity, improved workforce productivity and helped targeted workers from becoming unemployed.

To encourage investment, the Committee could also have recommended that the government immediately introduce a temporary refundable tax credit equal to 20% of investment in production equipment so that manufacturers could increase their productivity. Furthermore, the government could have set up a credit facility to help fund these investments. Unfortunately, the Committee chose not to explore this avenue.

To promote the development of Quebec’s private woodlots, the Committee could have recommended that the government create a registered sylviculture savings plan so that forest owners could shelter their savings from tax for future investment in forestry development. However, the Committee did not endorse this recommendation.

Because Canada’s trade policy is inextricably linked to its industrial policy, the Committee should have recommended that the Government of Canada, through the Department of Foreign Affairs and International Trade, complete and disclose to the public, in a timely manner, all important impact analyses of all free trade agreements signed by the government or ratified by the House on specifically vulnerable industries and on employment in these same industries.

The Committee could also have developed specific measures for industrial sectors facing special challenges, for example:

• For traditional industries rocked by the explosion in Chinese imports, such as textile, apparel, furniture and consumer goods manufacturers, introduce a series of measures to support rapid adaptation and modernization, paired with an aggressive use of safeguards to give them the few years they need to make this shift.
• For the aerospace industry, increase government support to equal that of our competitors, which requires significant investment in researching and developing new products, ad hoc programs to allow aerospace SMEs to carve a niche in the supplier market and considerably better financing for sales contracts. In the main, this means investment, not subsidies.
• This same approach, albeit with sometimes different measures, applies to all cutting-edge industries in Quebec.

Lastly, the Committee could have taken advantage of this report to present, on the initiative of the Bloc Québécois, a plan to help the fisheries industry. Unfortunately, the recommendations do not address this issue.

Beyond support to industrial sectors, the crisis also affects people and communities:

Even though the various measures put forward by the Bloc Québécois contribute to the prosperity and development of Quebec industries, the fact remains that the current crisis will result in job losses in all sectors of the economy.  Moreover, some businesses in transition that were already in dire straits will have to close. Therefore, supporting the workers and communities affected by the crisis is imperative.

This is why the Bloc Québécois recommends that the government restore a regional economic diversification and support program for the regions that have been hit by the forestry crisis, a program similar to the one cut by the Conservatives in the fall of 2006.  

To support older workers affected by the crisis, the Bloc Québécois recommends the immediate implementation of a support program for older workers.

Lastly, the Bloc Québécois continues to call for a complete reform of employment insurance, including:

• Adopting a new approach that assumes that claimants are acting in good faith;
• Eliminating the two-week waiting period;
• Creating a 360-hour eligibility threshold for all claimants;
• Increasing benefits from 55% to 60% of earnings;
• Increasing insurable earnings to $42,500;
• Using the 12 best weeks;
• Implementing a support program for older workers;
• Expanding the right of a claimant to receive benefits while taking training.

For a real industrial development policy that takes Quebec's interests into account:

Once again, the Committee’s work has shown the extent to which Quebec's interests differ from Canada's. While the implementation of stringent regulations on greenhouse gas emissions, through a carbon exchange, based on Kyoto targets and as presented by the Bloc Québécois, would be advantageous for industries in Quebec, the Committee recommended that the government take an environmental approach that is tailor-made for the oil industry in western Canada. The Committee did not recommend that the government offer substantial loan guarantees to Quebec's forest industry, even though the government is giving assistance totalling more than $10 billion to Ontario's automobile industry.

In short, the federal framework will never allow Quebec to adopt an industrial policy that suits its needs. In fact, whether we are talking about policies that are custom-made for the western oil industry, that are detrimental to Quebec's environmental activities; the federal government's attempts to reroute funding from Quebec to Ontario, through the establishment of a single securities commission; the amendments to the equalization formula, which will take billions of dollars away from Quebec; the federal government's military procurement policies that are trying to compete with rather than stimulate development in Quebec's aeronautics industry; or the enormous assistance package given to Ontario's auto industry while Quebec's forestry sector receives nothing but crumbs - Canada's industrial development policy will never correspond to Quebec's needs. The only way that Quebec will have what it requires in order to reach its full potential is for Quebec to achieve sovereignty.