I'd like to thank the committee for taking this study on. We think it's very important. Thank you for inviting the Canadian Labour Congress.
I'm here on behalf of 3.3 million members of the Canadian Labour Congress. We bring together workers from virtually all sectors of the Canadian economy, in all occupations, and in all parts of Canada. I'm going to be speaking from that perspective.
It has long been the position of the CLC that Canada has had an overreliance on unprocessed and semi-processed resource exports, which has had a negative impact on productivity. We heard Jim Stanford earlier talking about the need for making linkages between stuff that we pull out of the ground and stuff that we sell.
As a result of globalization and unfavourable trade deals, a high dollar, and a devastating recession, manufacturing in Ontario especially has experienced devastating losses over the past decade.
Coming out of the recession, business investments in manufacturing and other areas have been very slow to rebound. The October 2014 monetary policy report of the Bank of Canada suggested that this was because of a semi-permament loss of capacity in several manufacturing export sectors and that we should not expect to see business investment and hiring pick up until it was clear that the Canadian economy was on more solid footing.
That was before the price of oil collapsed. In the context of what normally happens to manufacturing if the price of oil collapses, the dollar lowers, and that's better for export sectors, but this indicates that we don't necessarily have the capacity for those export and manufacturing sectors to pick up the slack and carry the economy forward. Given that context, it's the opinion of the Canadian Labour Congress that the lower price of oil will be a net negative for the Canadian economy as the lower dollar will be insufficient to spur new business investment.
We've also pointed out several times that corporate tax cuts have failed to spur new business investment. If we look at the GDP data released for the fourth quarter of 2014, it's clear that there were areas of weakness showing in the economy even before the full impact of oil prices was felt. These include continued dependence on consumer spending to drive economic growth. In that quarter it grew 2% on an annualized basis. In that quarter we saw decreases in machinery and equipment investments, the export of goods falling to 0.5% on an annualized basis, and growth hinging on a buildup of inventories.
One impact of the falling price of oil we could expect to see is cuts to investments by private sector companies and public sector bodies such as the Province of Alberta and other hard-hit oil provinces. We see a shrinking potential output, which will lead to increased unemployment.
To compensate for this lack of investment in the Canadian economy and to respond to the additional negative impact that the falling price of oil will have on the Canadian economy, the Canadian Labour Congress calls for a major public investment program to create good jobs, to promote our environmental goals, to stimulate new private sector investment, and to boost overall productivity.
In October 2014, the International Monetary Fund suggested that the time was right for Canada to make some much-needed infrastructure investments. I previously testified before the committee about these investments. Clearly identified infrastructure needs could be financed through borrowing without increasing our debt-to-GDP ratios since the types of public infrastructure investment we're calling for increase growth both in the short term and in the long term.
Encouraging value-added production investment in key sectors along with green job and green skills initiatives will enhance innovation and labour productivity. These initiatives will also require active government strategies on trade, sectoral development, and domestic procurement strategies. Having a sectoral development policy that seeks to promote more investment, production, employment, and exports, especially in a diversity of sectors in the economy, is key to attaining a more desirable sectoral mix and a greater share of output and employment.
Thank you.