The Forest Products Association of Canada believes the federal Government’s Budget 2008 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 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.

The 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 $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 over 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 $80-billion dollar a year industry that represents 3% of Canada’s GDP. The industry is one of Canada’s largest employers, operating in over 300 Canadian communities and providing nearly 900,000 direct and indirect jobs across the country.

– 30 –

For more information, contact:

Paul Vieira
Director of Communications
Forest Products Association of Canada
(613) 563-1441 ext: 323
pvieira@fpac.ca

Laura Ballance
Curve Communications
604-684 3170
laura@curvecommunications.com

Jeremy Dunn
Curve Communications
604-684 3170
jeremy@curvecommunications.com