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Letter to Prime Minister Harper from Canadian Manufacturing Coalition

November 3, 2008 ( Ottawa, ON )

The Right Honourable Stephen Harper, P.C, M.P
Prime Minister of Canada
Langevin Block
80 Wellington Street
Ottawa, ON K1A 0A2

 

Dear Prime Minister,

 

We are writing on behalf of the millions of Canadians whose jobs depend directly and indirectly on sustaining a competitive manufacturing and value-adding business sector in Canada to ensure that your Government fully understands the critical situation that these companies face.  The industries and employees we represent are the most competitive and innovative in this country.  They create real sustainable wealth for Canadians, and are central to the fortunes of many service industries.  However, today, as a result of the deepening global credit and economic crisis, their future is at risk.

 

You have made it clear that the economy will be the first priority for your Government.  It must be the top priority for Parliamentarians of all parties.  At a time of unprecedented financial volatility, your leadership in setting a clear and certain direction for economic policy in Canada is of paramount importance.

 

We urge you to respond rapidly and strategically to current economic challenges by focusing on three critical objectives.  First, address immediate liquidity problems by ensuring that credit continues to be available to consumers and businesses within Canada.  Without action to address the current liquidity problems, other economic measures and policy initiatives will be academic if companies have closed their doors.

 

The global credit crisis has an immediate negative impact on Canadian industry, with tightened credit leading to a steep downturn in consumer and business spending.  Viable, highly competitive businesses are threatened as inventories rise, investments are postponed, and orders fall off sharply or are cancelled. Customers are looking for stability and are struggling to find the credit they require.  Suppliers and distributors are also under significant financial pressure. 

 

We are confident that sales will rebound as global credit market conditions improve and financial markets stabilize.  But in the meantime Canadian businesses need to raise additional credit to maintain operations and to avoid more widespread lay-offs and closures. 

 

Your Government must act urgently to ensure that financing remains available to otherwise creditworthy companies.  The Minister of Finance and the Bank of Canada have taken important and positive steps to backstop Canadian banks and ensure liquidity in our credit markets.  But, credit is still not available for many of our businesses.

 

We urge your Government to introduce temporary guarantees for loans and lines of credit so that our financial system works for otherwise creditworthy businesses facing the prospect of a sharp downturn in demand.  The Business Development Bank and Export Development Canada should also be more proactive in providing credit and financial support in response to volatile market conditions.

 

Your second objective should be to counter recessionary pressures by making investments that will strengthen Canada’s competitiveness and help offset the imminent economic slowdown. Public investments should be targeted to improve critical transportation, border, communications, and energy infrastructure.  Government support for innovation should focus on projects that Canadian businesses can commercialize. 

 Your Government should encourage businesses to invest in new technologies, innovation, and skills.  These are the wealth-creating assets of a 21^st century economy.  They are the investments that we need to build and sustain more competitive value-adding industries in Canada. Specifically, we call upon your Government to: 

• Extend the two-year depreciation for investments in manufacturing and processing machinery and equipment introduced in Budget 2007 for at least an additional five-year period to allow sufficient time for companies to acquire the technologies and put them in place; 
• Make Scientific Research and Experimental Development Tax Credits refundable and take immediate steps to improve the administration of the SR&ED tax credit system following on the commitment made in Budget 2008; and, 
• Introduce an Employers’ Training Tax Credit. 

As you know, these measures were unanimously supported by the Standing Committees on Industry Science and Technology and Finance in the last Parliament.

 Your third goal should be to implement policy measures that will improve the long-term strength and competitiveness of the Canadian economy. The current economic crisis underlines the importance and the urgency of taking effective action.  It is essential that Canada not act in isolation.  As governments in other countries move to support their own economies and institutions, it is important to ensure that changes to our own policy and regulatory environment do not disadvantage Canadian businesses in highly competitive globally traded sectors. 

We therefore urge your Government to work to build regulatory frameworks that enable innovation and competitiveness, simplify and streamline regulatory compliance, and ensure that new regulations are thoroughly vetted to assess their real impact on our international competitiveness.  We ask that you ensure that the policy objectives of the Cabinet Directive on Streamlining Regulation are achieved.

Your Government must be vigilant to ensure that markets around the world remain open to Canadian exporters.  At the same time, Canada’s existing trade rules must be firmly enforced to prevent market distorting trade practices on the part of offshore producers seeking relief from economic pressures by exporting unfairly into our markets. 

Prime Minister, we share the vision of a stronger, more competitive Canadian economy emerging from the current credit crisis.  Your Government has a leading role to play in creating a framework that enables value-adding industries to restructure, invest in innovation, and seize new business opportunities.

The current financial crisis requires urgent attention. We believe the measures we have outlined are necessary first steps to ensure a stronger economy, good jobs, and a prosperous future for all Canadians. 

Sincerely,

Canadian Manufacturing Coalition