INDU Committee Report

INTRODUCTION

The New Democratic Party wishes to submit a dissenting opinion concerning the appended recommendations to the report to the Standing Committee on Industry, Science and Technology from the Subcommittee on the Canadian Industrial Sectors (SSIS).

The New Democrats would like to thank the many witnesses who appeared before the subcommittee who shared their time and their passion and interest in the survival and future success of Canada’s varied industrial sectors. It is with this very same passion and interest that members of the New Democratic Party participated in these committee meetings, and the core of why this dissenting opinion is being submitted.

While the committee made significant progress in identifying and understanding the various crises in industrial sectors across Canada in its report; the recommendations appended to it fall short. The motivation behind the creation of this subcommittee was to address the urgent crisis faced by certain industrial sectors in Canada. For this reason, it is disappointing that none of the recommendations put forth by the New Democratic Party members received consensus; as their inclusion would have had measurable positive impacts on communities across the country. I will now explore these recommendations within the industries they sought to help.

Minerals and Metals

 Canada is one of the largest mining nations in the world. The mining sector is a key contributor to Canada’s GDP, totally $42 billion in 2007 alone. The industry employs over 360,000 Canadians across the country. Despite the industry’s impressive numbers, mining and miners have fallen on harsh times with this economic recession. With the volatility of the nickel market, attention has focused on the impressive technologies and expertise developed at the Centre for Mining Excellence and Innovation (CEMI) in order to better position the country through this economic recession. The New Democrats put forward the following two motions:

1.    Create, in addition to the Centre for Excellence in Mining Innovation (CEMI) in Sudbury, three new centres of excellence, one in British Columbia, one in Saskatchewan and one in Quebec.

Throughout the committee’s study of the sector, witnesses continually raised the fragmented nature of the industry as a stumbling block towards more value added and more modern processing facilities. Through the creation of three new Mining Excellence Centres; strategies can be streamlined, and one of the structural challenges facing the mining sector could be alleviated.

2.    Commit the necessary funding for the Centre for Excellence in Mining Innovation (CEMI) in Sudbury, and the previously mentioned centres of excellence.

CEMI has sought $9.5 million over 5 years from FedNor — a request which was denied last year by the Conservative government. This funding rejection from the Industry Ministry is contrary to the positive recommendations from the mining industry, and FedNor staff.

Forestry

Canada’s forestry industry generates $29.3 billion in GDP and provides over 250,000 jobs in communities across the country. The industry produces primarily wood products (i.e., lumber) while in other parts of the country forestry output is divided between softwood lumber and pulp and paper production. The vast majority of the industry is located in rural and remote areas. Over 300 communities in Canada are dependent on the forestry sector, whereby dependence is defined as having at least 50% of wages earned in the community coming from forestry jobs.

Despite the dependence several Canadian communities have on the forestry sector, the Canadian government has been slow to take any action to prevent devastating job losses. Unfortunately none of the recommendations put forward by the New Democrats reached consensus. The recommendations put forward by the New Democrats would have addressed a key crisis area.

3.    That the government of Canada negotiate an end to the U.S. “Black Liquor” subsidy for the Pulp and Paper sector, or match, or exceed those provisions for companies operating in Canada prior to the summer parliamentary break.

The Conservative government has been alarmingly passive about the harmful subsidy for the U.S. pulp and paper sector. Under a 2005 devised renewable energy initiatives, U.S. pulp and paper mills are eligible for substantial tax credits for burning “black liquor” along with diesel fuel in their boilers. U.S. pulp and paper companies are eligible for a 50¢ per gallon excise tax credit on the use of concentrated pulping liquors, the residual waste that is created from the pulping process. Estimates put the value of that credit at $125 to $150 per tonne for unbleached mills, and $175 to $225 per tonne for bleached mills.

To put it in context, in November of 2008, the largest American pulp and paper received over $70 million dollars for using black liquor as a renewable fuel source.

In the committee’s report, it highlights the fact that a number of industry representatives and organizations identified a role for the government in levelling the playing field for Canadian pulp and paper supplies by resolving and/or responding to this tax subsidy provided by the U.S. government for its own pulp and paper industry.

The time for the government to act is now — waiting any longer will result in tens of thousands of additional job losses. A commitment to examine the issue is not enough for the thousands of forestry workers who will lose their jobs as a result of the government’s slow uptake on this issue.

These credits put Canada at a serious disadvantage. I believe if it’s unaddressed, this may be catastrophic to our pulp mills on the Canadian side of the border. ... if a bleached hardwood market kraft mill can actually realize a benefit of $175 per tonne, it will put the cost structure of our Canadian mills at a huge disadvantage.

Mark Arsenault, New Brunswick Forest Products Association, 5: 9:30

Canadian pulp mills are at risk since they cannot compete without a similar subsidy. Canada can either provide the same subsidy to its own pulp mills, or coordinate an end to the subsidy in the U.S.

4.    Immediately offer forestry specific loan guarantees to large and small forestry companies such as AbitibiBowater and its suppliers who are unable to collect during bankruptcy protection.

If this recommendation had obtained consensus among committee members, it would save 12,000 jobs at AbitibiBowater.

5.    Establish a forestry sector specific Adjustment Fund to build and maintain sector specific projects and job training programs.

This recommendation would ensure that the forestry sector would not need to jockey with the other industries for crucial funding programs.

Conclusion:

Once again, thank you to all the witnesses and committee members who worked on this committee.