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ADVANCING B.C.'S ECONOMIC POTENTIAL: Taking Advantage of Opportunity

The Hon. Herb Dhaliwal, PC, MP
Minister of Natural Resources Canada, Senior B.C. Minister, Government of Canada

Friday, March 28, 2003

NOTES FOR REMARKS

BY

THE HONOURABLE HERB DHALIWAL
MINISTER OF NATURAL RESOURCES CANADA
AND
REGIONAL MINISTER FOR BRITISH COLUMBIA

*****CHECK AGAINST DELIVERY*****

Taking Advantage of Opportunity: Advancing BC’s Economic Potential

Good morning. Thank you Paul (Paul McElligott, TimberWest) for your kind words. I am delighted to be here as the Member of Parliament for Vancouver South-Burnaby and the Minister of Natural Resources Canada.

Most importantly, as Regional Minister for British Columbia, I want to update you on my progress since taking on the role just over a year ago. In my speech to The Board of Trade, I designated several priorities and commitments that were crucial to British Columbia reaching its economic potential. I am here today to proudly report that we have since made significant strides forward for our province.

Last year, I stated emphatically, and I quote, "My number one priority is ensuring that our unique perspective and concerns are recognized in Ottawa. You have my word on it." (end quote) I think I speak for everyone in this room when I say we all have that same goal.

I did not take that pledge lightly, and I believe that the results for British Columbia one year later speak for themselves.

But before I go into that… I want to take this opportunity to address a matter that for me is of great importance. Last week… I made a statement outside the House of Commons which some commentators have taken out of context. They wrongly claim that I am in someway anti-American. I take these attacks very seriously. And… I want to clearly state to them… to you, and indeed all Canadians that these accusations could not be further from the truth.

As I stated, I am personally disappointed that the President and Administration of the United States have decided that future action will be taken outside the United Nations process. I do not wish, however, for my comments to be misconstrued to suggest personal disrespect toward President Bush or his administration. I agree with Deputy Prime Minister John Manley when he stated last week, with regard to the United States, "They are dealing with issues that are difficult for them, as well as the world, and I think we can disagree very respectfully."

As I mentioned, part of my new approach as B.C.’s Regional Minister has been premised on working together with both the provincial and municipal governments, First Nations leaders and the business community to collaboratively designate key priorities and cooperatively work towards securing new opportunities.

In my role as the Regional Minister for British Columbia, I am also fully aware of the essential nature of aggressive lobbying directed towards my federal Liberal colleagues. I am extremely pleased to report that my commitment to further opening up these lines of communication have produced some spectacular results.

The Government of Canada has demonstrated its keen interest in supporting economic development in communities all across the province — not just in Vancouver. In the last year, we have announced funding for a new cruise ship facility in Prince Rupert, improvement to Kicking Horse Pass, investments to bring high-speed Internet to communities that currently go without, support for aboriginal business development, measures to support communities affected by the softwood lumber dispute, and major federal research grants for the University of Northern British Columbia and Okanagan University College.

The total funding for the Olympic bid, the new Trade and Convention Centre, the Strategic Highway Infrastructure Program, the Border Infrastructure Program, the Canada-B.C. Infrastructure Program and resources to mitigate the Pine Beetle epidemic, the Government of Canada has committed over $1 Billion to B.C. this year.

These funding commitments represent a ringing endorsement of the success that our caucus is achieving in fighting for the interests of British Columbia back in Ottawa.

Premier Campbell and his Ministers have been traveling to Ottawa on a regular basis to meet with the Prime Minister, Cabinet Ministers and senior government officials.

To Prime Minster Jean Chretien, my Cabinet and caucus colleagues, thank you for listening and investing in the rebuilding of British Columbia’s economic future.

However, I would like to put my federal colleagues on notice that we are not done yet.

British Columbia will be coming to you again with requests to support our efforts at rebuilding the province’s infrastructure and pursuing new economic opportunities as we work our way back to the status of a "have" province in Canada.

We have had very encouraging signs over the past year:

• Real GDP in B.C. increased by 2 per cent in 2002, which was far ahead of projections.
• Employment in B.C. has increased by over 81,000 jobs.
• B.C. housing starts were up over 25 per cent.
• Container traffic at the Port of Vancouver increased 27 per cent.
• For the first six months of last year, B.C. attracted 38 per cent of all investor immigrants to Canada.

The Government of Canada is continuing to make strides that will directly affect the business climate in British Columbia. More specifically, this includes our commitment to eliminate the capital tax by 2008, a reduction in the resource income taxation rate over the next five years from 28 per cent to 21 per cent, and an increase in the Film and Video Production Services Tax Credit from 11  per cent to 16 per cebt, a measure of particular benefit to B.C.’s billion-dollar film industry. The budget also supports small business and entrepreneurs for a number of tax changes, including a 50 per cent increase in the small business deduction limit to $300,000 from $200,000 over four years.

And yet in spite of these positive developments, there is no denying the significant economic difficulties that British Columbia continues to encounter.

Last year, I stated that "Challenges are opportunities to redefine ourselves…"

A perfect example of this maxim is the softwood lumber industry, which represents a key area of opportunity for British Columbia.

B.C.’s softwood lumber companies are among the most technologically advanced and efficient in the world.

In fact, at the Global Forest Industry Conference held this past week in Vancouver, it was reported that global softwood sales are depressed except in British Columbia.

The findings of the conference determined that British Columbia sawmills earned in excess of $150 million in profits this past year, which represents a huge improvement from the previous fiscal year that saw break-even financial figures.

Because B.C.’s companies have invested so heavily in upgrading their operations with the latest technologies and improving their levels of productivity — global companies simply cannot compete.

Herein lies the real reason why the United States has imposed unfair and unwarranted duties of 27 per cent on our softwood exports.

The Government of Canada is unwavering in its commitment to achieving a fair and long-lasting solution to the softwood lumber dispute as quickly as possible.

I want to assure you that we will continue to pursue all available options for a resolution, including diplomacy, negotiation and litigation at the World Trade Organization as well as through the terms of the North American Free Trade Agreement.

As many of you know, intense discussions between the Government of Canada and the U.S. Department of Commerce have been ongoing since the beginning of the year. We are seeking a proposal for forest policy reforms that would lead to the elimination of the countervailing duty.

On March 26, B.C. announced substantive forest policy reforms aimed at revitalizing the forest industry. The reforms are also expected to be helpful in the ongoing negotiations with the United States.

We all want a long-term, policy-based solution to the dispute that will provide unfettered access to the U.S. market for Canadian lumber.

With an estimated value of $10 billion, the U.S. will continue to be our number-one export destination for wood products. But the U.S. does not need to be our only significant export market. The WTO recently applauded Canada’s trade regime as one of the most open in the world but warned that Canada must diversify its trade beyond the United States.

The softwood lumber dispute has underlined the importance of developing new markets for our forest products.

Over the past year, the Government of Canada has announced more than $350 million to support workers, industry, research and market expansion in the softwood lumber industry.

We’re working together with the industry to develop new global markets through the Canada Wood Export Program, which represents an investment of $35 million from the Government of Canada. Industry groups and the B.C. and Quebec governments have followed this program by pledging to match our initial investment into this important new program.

In addition, the Government of Canada has also allotted $29.7 million to help expand and develop Canada’s overseas markets. We have specifically begun to target both India and China in terms of the economic expansion initiatives for our lumber products.

Last November I took a group of Canadian companies to India in order to begin to take advantage of the huge market potential of a population of over a billion people.

The federal government is also realizing great progress with our $5.3 million initiative to support industry’s efforts to develop the wood products market in China. As well, Natural Resources Canada is working directly with the Chinese government to revise its building codes to allow wood-frame construction.

You don’t have to be an economist to predict the benefits to Canadian wood producers if we are successful in expanding our market share in these and other countries.

In addition to our efforts to support expansion into new markets, the Government of Canada is also supporting the wood products industry to ease the difficult transitions resulting from the dispute over duties.

Today, I am happy to report that B.C. communities will receive more than half of the Softwood Lumber Community Economic Adjustment Initiative, established by the federal government to help communities most impacted by the duties to diversify their economies.

We are not stopping there. In the coming weeks and months, my caucus colleagues and I will announce additional federal investments in every corner of the province. These investments will be diverse and substantial for communities across British Columbia.

In the northeast we will be funding new community, recreation, and tourism facilities located in Taylor and Dawson Creek. In the Kootenays, we will contribute to the expansion of the Cranbrook Regional Airport. In the Caribou, we will be involved with improvements to Prince George’s Exhibition Park. And, in Penticton and Whistler, funding will be provided towards the expansion of convention facilities.

These are only a few examples of ways and means the Government of Canada will continue to make strategic public investments in B.C.’s future.

Another encouraging area for growth that I am extremely excited about is British Columbia’s tourism sector, which has consistently provided substantial increases in visitors to our province every year. Tourism in this province already has huge economic benefits, and must be looked at as a means towards truly expanding the diversification of our economy.

Last year I identified both Vancouver’s 2010 Olympic Bid and the creation of a first-class convention and trade facility as two of my top tasks as B.C.’s Regional Minister. Once again I am pleased to report that the federal government has delivered on these priorities.

In December, the Prime Minister announced $230 million towards the construction of a brand new expansion to the Trade and Convention Centre in Vancouver. The recent commitment by the provincial government to also contribute funding to this project will ensure a huge boost to British Columbia’s international economic presence.

And of course there is Vancouver and Whistler’s bid for the 2010 Winter Olympics. The Government of Canada wholeheartedly supports the Olympic bid. Prime Minister Chretien has committed $310 million to games-related infrastructure. This figure climbs to over $400 when government related services are included.

The Olympics will leave behind a legacy of investments in our tourism infrastructure, several transportation infrastructure projects and world-class sports facilities. More importantly, however, is the potential of the games to revitalize the spirit of British Columbia, which will help transform two cities, a region and a province.

The Olympics, however, are not the only area of potential that could be on the horizon for British Columbia.

We have all seen the economic benefits that are resulting from natural gas finds in northeastern B.C. And there may be additional opportunities for further development, pursued in an environmentally sustainable fashion.

Today, I am extremely pleased to announce that the Government of Canada is proceeding with a consultation plan that will provide a solid understanding of all the views of the B.C. public and all the possible impacts of oil and gas activities on coastal communities, on First Nations and on environmentally sensitive areas.

The people of British Columbia have told us very clearly that they want a say in any decision-making on this important matter. They want to know that if we lift the moratoria, any emerging industry would be environmentally sustainable, socially responsible and economically feasible.

Let me assure the public of British Columbia that no decisions will be made by the Government of Canada without first carefully considering the environmental and social impacts on coastal, rural and First Nations communities.

This public review will contain two phases. First, we will commence with science workshops, which will allow science experts from representing governments, First Nations communities, industry, universities and advocacy groups to identify gaps, which need to be filled. These consultations will be facilitated by an independent expert.

Secondly, the Government of Canada will engage in public hearings and First Nations consultations.

The Government of Canada will be naming an independent three-member panel to provide all interested parties with the opportunity to make presentations. This panel will conduct information-scoping meetings at the community level, informing the public about the scope of the review, advising the avenues available to get involved, and provide all interested parties with necessary background information.

The panel will fully engage British Columbians with extensive public hearings, giving all interested stakeholders the opportunity to involve themselves in this important process.

While First Nations will be encouraged to participate in all aspects of the review, a separate set of First Nations consultations will additionally be conducted by the Government of Canada. Taking place simultaneous to the public hearings, these consultations will be community based, and will ensure that issues of unique interest to First Nations are fully explored.

The study area for review will be limited to the Queen Charlotte Basin, with exclusions for known sensitive areas such as the Gwaii National Marine Conservation Area and shoreline areas. Additional exclusion zones will also be identified by federal departments and other stakeholders through the scientific workshops, the public hearings, and the First Nations consultations.

Let me be clear: This process is not a decision on whether or not to lift the moratoria, but rather a means to fully explore the issues and views of British Columbians.

Our approach will be comprehensive and it will be balanced. It will be co-operative so that, together, we can make an informed decision that reflects the informed views of all concerned.

I also want to make very clear today that this consultation phase will be done thoroughly and as efficiently as possible. The Government of Canada plans on moving forward with this consultation plan immediately, and with the objective that all the information needed to make an informed and balanced decision will be available by early in the New Year.

The Government is also proposing to improve the taxation of resource income in the mining and oil and gas sectors.

As I mentioned earlier, the Government of Canada will be phasing in a reduction from 28 per cent to 21 per cent of the federal statutory corporate income tax rate on income from resource activities.

The Investment Tax Credit for Exploration, which helps junior mining and exploration firms raise new equity financing, will also be extended for another year and we will be looking at a new tax credit for qualifying mineral exploration expenditures.

With regard to R&D and commercialization, the recent budget announced an additional $25 million per year to expand the Industrial Research Assistance Program, which assists SMEs in developing and using innovative technologies.

These initiatives are all measures taken by the Government of Canada to ensure that British Columbia’s traditional industries continue to drive our province’s economy. The exciting prospects for me as the B.C. Regional Minister, however, are in the new and promising possibilities that lie ahead for British Columbia. I now want to take the opportunity to speak to you about the need to invest in B.C.’s new industries. To begin with, let’s consider the opportunities associated with the Kyoto Agreement.

The recent federal budget allocated $2 billion over the next five years to combat climate change. This is good news for B.C. Why? Because we are already leading the country in research and development of new technologies aimed at reducing greenhouse gas emissions.

Dozens of existing B.C. companies are on the leading edge of creating new technologies that will be part of our post-Kyoto world. As a result, B.C. companies, universities and researchers are well-positioned to benefit from the federal government’s $2 billion dollar investment. And I can tell you that my colleague David Anderson and I are committed to ensuring that B.C. continues to lead the nation in the years ahead.

One of those leading edge B.C. companies is Westport Industries. I am very pleased to announce today that the Government of Canada is contributing an $18.9 million investment towards an initiative which incorporates Westport Innovations’ High Pressure Injection Technology. This project will provide critical monies towards R&D to adapt diesel engines to operate on natural gas for mobile applications. This initiative is expected to create and maintain 600 jobs over the duration of the project.

A couple of weeks ago I attended a very interesting presentation by some of British Columbia’s leading technology industry associations. These groups came to me to champion the development of an integrated strategy for the development of the B.C. technology industry designed to achieve the province’s vision of becoming a preferred global destination for technology enterprise.

B.C.’s emerging technology sector is growing faster than any other industrial sector. Between 1996 and 2001, the contribution of the emerging technology industry to the province’s GDP increased 48 per cent to $3.3 billion. Over the coming years, this contribution to the provincial economy is expected to accelerate dramatically.

I am working with industry here and my political colleagues in Victoria and Ottawa to support a strategic planning approach to B.C.’s future economic growth. This can happen through the active support of world-leading technology clusters such as:

• Information and Communications Technologies
• New Media/Wireless
• Alternative Energy, and
• Life Sciences.

We as a government are committed to being a part of this growth by ensuring adequate funding for new and emerging research and development within British Columbia.

Over the past year, Industry Canada has awarded over $65 million dollars to B.C. technology companies.

To date, B.C. universities have received $216 million through the Canadian Foundation for Innovation, which was established to attract top talent from around the world into an exciting and dynamic environment of research and innovation. In fact, the University of British Columbia has been the largest funding recipient from the Foundation in the entire country.

$110.5 million has also been set aside for research and development within the softwood lumber industry to further upgrade technology and productivity. As I already pointed out, our softwood companies are some of the most scientifically advanced and efficient in the world, and this fund will only help to ensure that this level of innovation is sustained.

In conjunction with business and our educational facilities, the Government of Canada will continue to pursue our goal of making Canada rank among the top five countries in the world in terms of research and development (R&D) performance by 2010.

Conclusion

Everyone in this room shares the same goal: Advancing British Columbia’s economic potential to once again become a leading economy in Canada.

As you know, my background is in business. Like all of you, I understand that challenges can indeed become opportunities.

In 1996, the federal government recognized British Columbia as unique in Canada and officially designated the British Columbia Economic Region. The mechanisms of government have not yet caught up with this recognition. I am working hard to bridge this gap in order to ensure that B.C. is treated appropriately in reference to this recognition.

For me, this past year as B.C.’s Regional Minister has been productive in delivering tangible results for this province. I have only begun, however, and I know am certainly not satisfied yet. I will continue to make British Columbia my number-one priority, whether I am here at home, elsewhere in the country, or traveling internationally.

W.A.C. Bennett used to say: It’s only 3,000 miles from B.C. to Ottawa, but it seems like 3 million miles from Ottawa to B.C.

I have worked and will continue to work to bridge the distance between our two capitals and to further encourage the partnerships that are now successfully delivering real economic benefits for Canadians living in British Columbia.

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