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Association Calls Calls 2008 Canadian Budget Inadequate to Support Forest Industry
Ottawa, Ontario, Canada, 26 February 2008 -- The Forest Products Association of Canada (FPAC) believes the federal government’s 2008 budget is an inadequate response to the challenges facing the industry, said Avrim Lazar, FPAC’s president and CEO.

“The forest products industry is facing the worst economic conditions it has seen in many decades, and while government cannot solve this problem it is not doing its part,” Lazar said. “Industry has been aggressively improving productivity and efficiency while government seems to be unwilling to take proportional action to improve hosting conditions and attract investment to Canadian mills.”

FPAC has been calling for the government to take aggressive action to improve the business climate. The extension of the accelerated capital cost allowance (CCA) announced in the budget is a step in that direction. However, by only extending the accelerated CCA by one year, and then phasing it out, this measure falls short. The forest products industry recommended a five year extension, to reflect the time it takes to put in place new investments. Moreover, the government did not accept industry recommendations to improve its R&D tax credit scheme to make sure companies, whether profitable or not, can access the tax credits when times are bad.

FPAC believes the Canadaian government’s complacency is surprising given the unprecedented climb in the Canadian dollar, which has gone up 60% since 2002; the collapse in the U.S. housing market; and continuing weakening of U.S. economic fundamentals. “The industry is acting aggressively to confront these challenges by restructuring its operations, reducing costs, and improving its productivity,” Lazar said. “While the rest of the world moves at warp speed, the federal government is taking baby steps.”

“The forest products industry has strong future growth potential,” Lazar added. “Global markets are growing and there will be increased competition for land and resources. The question is how to make sure that the Canadian industry is well positioned for the future. This requires aggressive action now.”

One bright spot in the budget was the CAD 10 million allocated to the forest products sector to market its goods abroad. The budget recognized that Canada is a world leader in the manufacturing of high-quality, environmentally sustainable forest products, which will be in high demand as the middle classes in Asia grow and consumers insist on planet-friendly products.

The forestry industry represents 3% of Canada’s GDP, directly employs more than 300,000 Canadians and is the economic backbone of rural Canada. FPAC is the voice of Canada’s wood, pulp, and paper producers nationally and internationally in government, trade, and environmental affairs. Canada’s forest industry is an CAD 80 billion dollar a year industry that represents 3% of Canada’s GDP. The industry is one of Canada’s largest employers, operating in more than 300 Canadian communities and providing nearly 900,000 direct and indirect jobs across the country.

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