Those are great questions.
Let's start with the dollar. Did we lose opportunities when the dollar was low? The answer is yes, we definitely lost opportunities, but I want to be very clear that the body that was hiding behind the low dollar was government. We didn't become the world's most successful forest product exporting nation by having people who lacked market drive and entrepreneurial skills. But it was very hard to invest in Canadian mills when the Competition Bureau was putting a chill on mergers and the provincial governments were not allowing rationalization. I go back to the three substandard mills being forced to stay open by the province and not being able to invest in a global one.
Could we have been more aggressive when the dollar was low? Yes, but it would've required forcing the government's hand. Even today, with all the layoffs in Quebec, they don't seem to be getting the reality of the marketplace.
Was that good policy when the dollar was 70 cents? Yes, it was great policy. It maximized jobs, and there were social rents for the people from the fibre.
When the dollar is at parity, it's a disastrous policy. It leads to layoffs; it leads to closures, both impermanent and....
Government policy doesn't move that quickly. When the dollar went up, the industry moved like crazy. If you look back at the numbers in that report, the number of mills that are top-quartile productive has tripled since we wrote that report, because we've adjusted to the dollar and moved quickly; government policy has moved much more slowly.
I'm going to go back to the federal government. A tax regime that made sense at 70 cents doesn't make sense when the dollar's gone up. Just as industry has to adjust to the exigencies and demands of a rising dollar, we can't just sit back and whine and say, “Fix it for us”, and we haven't. We've made the adjustments; we've merged, we've rationalized, and we've increased productivity year after year, more than the Americans. We've been running like crazy.
Government also has to adjust. A business regime, a tax regime, a regulatory regime that was acceptable at a 70-cent dollar is disastrous when the dollar is at parity. We certainly deeply respect what your government has done in terms of reducing corporate taxes in general, but it's slow compared to the speed at which the marketplace is moving: the dollar goes up 36% in a couple of years, and taxes inch down over five years. Global marketplace competition increases hugely every year; the tax regime moves very slowly.
The CCA thing and the refundability of SR&ED would help, but overall, while we're moving with a sense of urgency created by necessity, the improvements in business climate are moving much more slowly. We understand that the government gets it; what we need is to get it and act faster and harder, because we're losing a huge opportunity.
The economists in finance say to me that the CCA rapid writeoff is going to cost money we don't have. Each time someone makes an investment in Uruguay, in Carolina, or in Indonesia, we're losing money that we're never going to get back. You won't have to offer an accelerated tax writeoff for that investment, because it's not being made in Canada. When people say the SR&ED credits cost too much money and the cupboard is bare, well, what's it cost when people don't invest in technology in Canada? What's it cost if a mill closes because it can't get access to a tax credit that it would've had three years later?
The relative sense of ease that we hear makes us very uncomfortable, because we're living in the global marketplace, which is a nasty, competitive place, and we don't see the business climate changing as quickly.
Let me go to your second question, which was on forest product innovation. The money you gave is great. It is helping. We have moved our innovation institutes from four separate ones to one integrated one to try to extract more value. Industry's paying the largest share of the cost of that. One of the best ways government can help is to increase its investment in the institute.
One specific idea that I would throw out to you is right now we lack receptor capacity in the mills. The innovation institute comes up with a new technology, but because we're running so hard to stay in business, we actually haven't got the capacity to receive the new ideas. Some form of extension program out from the federal forest products innovation institute into the mills would actually hugely lever the current investments in the technology.
On the optimization of the wood supply, certainly the best way to get optimized wood supply would be to reduce the tenure system politics, so that fibre will be allowed to go to its highest and best value. What we're seeing with some raw logs being shipped and sent as pellets to be burned in Europe is the impact of subsidies for biofuels in Europe. Our approach to renewable fuels in Canada has been much slower than the European approach.
We don't think that it makes sense either economically or for the environment to take trees and burn them for energy, but we do think it makes sense to use the waste byproducts, sawdust and bark, to power our plants. The current ecoENERGY initiative is just about out of money, and refurbishing that, refunding that, would speed the transition of mills from the use of hydrocarbons to the use of renewable fuels. That's a very cost-efficient way of getting an environmental plus and an economic plus.
If I may add to Madame DeBellefeuille, we did reduce our greenhouse gases by 44% from 1990. No other industry has done that, and the recognition of 1990 would certainly be respectful.
Merci.