Speaking Points
The Honourable Christian Paradis, PC, MP Minister of Industry
Montréal, Quebec September 12, 2011
Check against delivery
Good afternoon.
Thank you very much, Mr. Timmons and Mr. Myers, for that very kind introduction. I also want to thank the Canadian Manufacturers & Exporters (CME) and the U.S. National Association of Manufacturers for the opportunity to speak to you today.
My congratulations to both industry associations for putting on this important event.
As Canada's Minister of Industry, these are the types of functions that I look forward to the most. This is where business leaders from our two great countries, representing different industries, roll up their sleeves to find solutions to common issues.
I would like to preface my remarks by saying that all of us in this room were affected in various ways by the tragic events of September 11, 10 years ago yesterday. But out of these terrible and heinous attacks came a resolve on the part of both our nations to confront those who would menace our democratic governments, our integrated economies and our way of life. And the bond between our countries is the stronger for it.
Ladies and gentlemen, we continue to face important challenges in North America. The recent recession and its lingering effects have put our manufacturing sectors to the test. But I am confident that, through common will, joint action and harnessing our capacities for invention and innovation, we will more than meet these challenges.
To be sure, the world is a very different place than it was in 2008. We have experienced a global synchronized recession—one that affected both of our economies. And one from which we continue to feel the effects.
Today, the global economy remains fragile.
Our countries face considerable structural challenges ahead. And manufacturing in Canada and the U.S. has borne more than its fair share of the pain.
So the question is now: where do we go from here?
The answer, I would argue, lies in leveraging our business know-how and leadership in research and development (R&D) to become even more competitive and, especially for manufacturers, to commercialize that innovation.
Indeed, innovation lies at the heart of our economic future. It drives greater productivity and greater competitiveness—something that we need to strengthen here in Canada.
Governments can encourage it by offering incentives and investing strategically. Ultimately, however, it will be companies like yours here today that must meaningfully commit and carry innovations into the marketplace.
It's crucial not only for your companies' future but also for the future of the North American economy—regardless on what side of the border you are on.
A lot has been made of how integrated our two economies have become and how our manufacturers are building and designing products together for the global market—and for good reason.
The relationship between Canada and the United States is long-standing and based on a unique friendship among countries. We are not just your run-of-the-mill trading partners.
As President Ronald Reagan said in 1985, here in Quebec: "We're more than friends and neighbours and allies; we are kin, who together have built the most productive relationship between any two countries in the world today."
We need only look back on the 20 years of NAFTA to see that the close relationship between our two economies is a benefit for us both. Indeed, this is our North American advantage. And some of the hallmarks of this relationship are worth repeating:
- Over 8 million jobs in the United States depend directly on trade with Canada—and many more certainly benefit indirectly;
- Canada is the largest market and trading partner for 34 states; and
- Between 1993 and 2008, Canadian and U.S. manufacturing output rose by 62 percent in both Canada and the U.S.
To recognize this, however, is not to deny today's realities.
Our countries continue to battle the effects of a global recession. Both governments acted quickly and decisively in response to the global recession.
Here in Canada, our government acted swiftly by introducing Canada's Economic Action Plan—to help stimulate the economy and create jobs.
We eliminated tariffs on all manufacturing imports and on machinery and equipment—encouraging businesses to open up their balance sheets and spend money on machinery and equipment. And there is evidence of this, some very positive evidence, in the figures released last week.
We expanded the availability of the accelerated capital cost allowances for clean energy. And we introduced a work-sharing program to help businesses and their employees cope with slowing demand, by allowing them to still work together while avoiding the gut-wrenching decision as to whether layoffs were necessary.
And to help create new jobs, we established the $4-billion Infrastructure Stimulus Fund to provide funding to provincial, territorial and municipal construction-ready infrastructure rehabilitation projects.
Ladies and gentlemen, our plan was the appropriate response for those difficult times. The global situation is obviously very volatile.
Which is why, moving forward, our government will remain focused on creating the right conditions for businesses and individuals to succeed.
We will remain focused on long-term, sustainable economic and job growth by staying the course with the Next Phase of Canada's Economic Action Plan.
As you know, growth in Canada paused in the second quarter, due in large part to external factors—the Japanese earthquake and tsunami had a considerable effect on our manufacturing supply chains.
All the same, Canada's domestic economic data remains largely positive. Almost 600,000 more Canadians are working today than when the recession ended in July 2009. We are the only G7 country to have regained more than all of the output and jobs lost during the downturn.
The road ahead will involve moving away from new stimulus and toward focusing on measured and prudent action, where necessary, in key areas such as trade, taxes, regulation, R&D investment and innovation.
Indeed, our government has a strong record of cutting taxes—$60 billion worth of taxes, to be precise. Most notably, we cut the corporate tax, which will be reduced to 15 percent federally by January 2012. We also eliminated the corporate surtax for all corporations, eliminated the federal capital tax, increased the income limit for the small business tax rate to $500,000 from $300,000, and reduced the small business tax rate from 12 percent to 11 percent.
Our government has also created a Red Tape Reduction Commission to identify and reduce irritants to business.
And as you will hear later today from my colleague, Minister of International Trade Ed Fast, one critical part of the solution is to reduce the impediments to the flow of trade, investment and people between our two countries.
This is work that we have already begun, and something of which we are proud.
Most notably, Prime Minister Harper and President Obama announced in February joint efforts that will help expedite cross border trade and travel—by harmonizing both regulatory and security requirements. Specifically, Prime Minister Harper committed last week to take action to keep our access to the American market as open and as secure as possible. My Senior Associate Deputy Minister, Simon Kennedy, will be making remarks on the Beyond the Border Working Group later in the program.
In addition, the Canadian government has been active in negotiating new trade agreements around the world. These pacts will give Canadian businesses, and our integrated supply chains, access to new markets. In particular, when concluded, our agreements with the European Union and with India will provide significantly expanded markets for new customers.
And to break into these markets, innovative R&D and its commercialization will be absolutely key.
We are not going to compete with emerging economies on wages or in the assembly of low-cost, low-skill goods. Rather, we will compete by increasing productivity, by developing more value-added products and services, and by being the first to tap into new niche markets.
On this matter, I am pleased that my officials have been working with the CME to talk to firms and better understand the advanced strategies being employed in the manufacturing sector. By the sounds of it, many of you are leading the way in Canada in process innovation, making significant investments to improve productivity and competitiveness.
And you're not alone in recognizing the importance of making investments in innovation. This month's edition of Policy Options magazine published a poll result that I found very telling about how Canadians see the future of our economy. The poll suggests that three out of every four Canadians believe that Canada's future prosperity will depend on innovative R&D. And I would add that success will depend on our ability to commercialize that innovation.
The move toward a more innovative economy is something that we have understood and supported since first coming to office. In 2007, Prime Minister Harper launched Canada's Science and Technology (S&T) Strategy. This strategy established our government's plan to foster greater S&T investment and has guided our work since then.
To be sure, one key area of focus is manufacturing, where we have made an effort to link the competitive energy of our entrepreneurs to the creative genius of our scientists.
Budget 2011 alone provided more than $700 million in new S&T funding, building on the more than $6.3 billion in S&T funding provided in the first two years of the Economic Action Plan.
But, as I said at the beginning of my remarks, the private sector has to take a leadership role.
Canada's performance in business R&D, innovation and productivity is well-documented. We lag comparable countries with respect to business R&D. This is a serious matter.
It is for this reason that our government called for a comprehensive review of all federal support for R&D to improve its contribution to innovation and to economic opportunities for business. Last October, we announced the creation of an independent panel of experts to review federal R&D investments. The panel has conducted its own research and developed an informed view through broad consultations with the private sector, academic leaders, provinces and territories, and subject matter experts.
We expect its report in a matter of weeks and look forward to studying the recommendations.
In keeping with S&T for a moment, there is one statistic about innovation and the Canadian economy that I find telling. Canada's information and communications technology (ICT) companies make up about 5 percent of our gross domestic product, but they drive the competitiveness of the other 95 percent.
Put another way, ICTs will be one of the primary drivers of economic growth and innovation throughout the 21st century.
When individuals, companies and entire economies adopt these technologies, a number of important things happen. Their adoption boosts productivity, accelerates innovation and generates new products, processes and business models.
Whether it's a trucking company investing in communications technologies to automate order handling and provide real-time tracking, or a manufacturer that installs sensors to monitor equipment performance that in turn makes safer products, technology is fundamentally changing how we do business.
Digital technologies extend the reach and expand the markets of businesses, and they connect people and ideas in ways we couldn't even have imagined a few short years ago.
It's for that reason that we are developing a strategy on the digital economy that will help lay the foundation for our government's approach for years to come.
Ladies and gentlemen, let me conclude by saying that when our government was returned with a strong mandate, Canadians were telling us that we were leading the country in the right direction.
They told us that our policies, which focused on maintaining stability, combined with targeted investments and legislation in strategic areas of our economy, were the right approach.
We have invested in creating the conditions for future growth, while working on removing the barriers to growth today.
As the North American manufacturing sector continues to adapt to new realities, our government will work closely with you to create the conditions for success.
I look forward to working with you and to getting things done. For Canada and for North America.
Thank you.
