Paru dans The Gazette, le 14 février 2008, p. B-5
Hardly anyone noticed in Montreal when a task force commissioned by the Quebec government recommended last week an overhaul of a tax subsidy program to the so-called "resource regions." Businesspeople cheered in the Beauce, while others howled from the Gaspé to Abitibi.
For years, businesses in seven resource regions have been able to claim tax credits on the basis of their payroll size. The goal was, of course, to encourage job creation in areas where poverty and unemployment is higher and where many people leave for the big cities to find work. But like many well-intentioned government interventions, it had perverse effects.
A manufacturing firm in the prosperous and industrialized area of Ste. Marie de Beauce would thus not be able to benefit from the program. But move only a few kilometres east into the Lower St. Lawrence region, and the same type of firm would get a 30-per-cent to 40-per-cent credit on salaries paid to its employees. With dramatically lower labour costs, the second firm would of course be able to offer better prices for its products and undercut its competitors in the non-privileged region.
It's no wonder that people in the Beauce got together to fight against what they perceived as a particularly unfair program - to the point where former Beauce-Sud MNA and Bourassa government minister Robert Dutil even founded a new political party solely devoted to solving this problem.
Such subsidies programs rarely face opposition. Governments are under constant pressure from small and concentrated group of beneficiaries for whom it is worth spending money on lobbying to maintain those programs. But those who pay for them, the millions of taxpayers dispersed across society, often do not even know of their existence and couldn't care less. So no one will object to them.
But in this case, the program created a very vocal group of opponents. And that's why Finance Minister Monique Jérôme-Forget asked HEC Montreal economist Robert Gagné and two other academics to review it two years before it was due to expire.
The task force made some sensible recommendations that would remove the worst distortions caused by the program. It proposes to maintain tax assistance to businesses in the resource regions until 2015, but on a different basis, replacing tax credits calculated on the basis of the number of jobs with an investment tax credit.
Between 1998 and 2005, productivity growth in the manufacturing sector has averaged 3.5 per cent in urban areas, and only 0.2 per cent in the resource regions. What is needed to bring prosperity to these regions is more investments and not artificial job creation, especially as we enter a period of increasing scarcity of manpower in an aging society. Firms would only get a tax break if they took measures to improve their productivity.
Also, the task force notes that the primary cause of the outlying regions' economic problems is their remoteness from the major urban centres. It proposes to define assistance on this more objective basis instead. The investment tax credits would be made available to small and medium manufacturing firms at a rate of 40 per cent in the most remote zone and at a rate of 20 per cent in the intermediate zone.
Although this is a step in the right direction, there would still remain a number of dividing lines on the map, either side of which two manufacturers of any widget would benefit from different levels of tax subsidies. All such subsidies distort market outcomes, because they treat economic actors differently and create incentives for them to do things they otherwise would not.
If the goal is to promote investment, there is a much simpler way: scrap the capital tax now. This tax, which raises close to $900-million a year, is levied on capital invested by firms. It is one of the taxes most harmful to economic growth. The federal government abolished it last year, and it is slated to disappear in three years in Quebec.
Meanwhile, the government spends over $2.4-billion a year in fiscal aid and direct subsidies to businesses through various programs. A true market-driven approach would be to abolish the capital tax and scale down the various subsidy programs by a corresponding amount. This would reduce opportunities for politicians to take credit for their largesse to specific industries or regions, but it would help all businesses, whatever they do and wherever they are located.
jeudi 14 février 2008
samedi 19 janvier 2008
Une voie pour sortir de la crise
(Paru dans Les Affaires, le 19 janvier 2008, p. 34)
Le gouvernement Harper a annoncé la semaine dernière un Fonds pour le développement communautaire d’un milliard de dollars. La description du Fonds ne mentionne par une seule fois les mots «forêt» et «manufacturier». Normal: le gouvernement veut éviter de fournir des munitions au lobby américain du bois, lequel cherche des preuves que le Canada ou les provinces subventionnent indirectement leur industries. Le Fonds vise plutôt à faciliter la transition des travailleurs dans les collectivités mono-industrielles frappées par les déboires des secteurs forestier et manufacturier vers d’autres types d’emplois, plutôt que le maintien à tout prix des usines et des entreprises en difficulté.
C’est là une bonne approche, qui contraste avec celle adoptée avant Noël par le ministre québécois des Ressources naturelles et de la Faune. Dans son projet de loi 39, Claude Béchard a réduit de 18 à 9 mois le délai à compter duquel il peut attribuer à un autre promoteur le territoire de coupe qui est associé à une usine de transformation du bois ayant fermé. Cette mesure s’inscrit dans la continuité de la politique gouvernementale qui veut que le bois prélevé sur un territoire donné soit transformé dans une usine située sur ce territoire ou à proximité de celui-ci. M. Béchard espère que si un exploitant n’a pas réussi à rentabiliser ses activités sur un territoire, un autre y parviendra.
Or, la consolidation nécessaire de l’industrie forestière, déjà en cours, signifie que certaines usines doivent malheureusement fermer. C’est à ce prix que l’industrie pourra survivre au Québec.
Le bât blesse surtout lorsqu’une fermeture survient dans une ville ou un village qui a été bâti expressément pour exploiter la forêt. La ville perd alors sa raison d’être sur le plan économique. Est-ce qu’une localité mono-industrielle détient une sorte de droit à la pérennité, exerçable aux frais des contribuables ou aux dépens du reste de l’industrie? Je ne crois pas : l’Histoire offre maints exemples où une communauté naît en raison d’une nouvelle activité économique puis disparaît lorsque celle-ci n’est plus rentable.
L’occupation du territoire a été élevée au rang d’une valeur absolue au Québec, à tort selon moi. Plusieurs politiques gouvernementales y concourent, comme l’obligation de transformer localement le bois prélevé.
Mais l’occupation du territoire est d’abord concept géostratégique visant à décourager une invasion étrangère. Qui donc menace d’envahir les régions forestières du Québec?
Plutôt que d’essayer de maintenir en vie toutes les localités mono-industrielles axées sur la forêt, notre régime forestier pourrait viser à maximiser la valeur des forêts publiques. Comment? En rompant le lien traditionnel entre une terre et une usine, ce qui permettrait de créer un véritable marché du bois à l’échelle du Québec. Dans ce modèle, une partie des forêts publiques pourrait faire l’objet d’un nouveau type de contrat, sans lien avec une usine en particulier. Le titulaire, de contrat serait autorisé à vendre le bois en contrepartie d’un loyer annuel et du respect de conditions visant le développement durable des ressources.
En raison des fermetures d’usines, un important marché pourrait être créé, accessible à toute usine au Québec en mesure d’en payer la valeur marchande. Les usines les plus rentables seraient les plus susceptibles de mettre la main sur cet approvisionnement.
Le gouvernement Harper a annoncé la semaine dernière un Fonds pour le développement communautaire d’un milliard de dollars. La description du Fonds ne mentionne par une seule fois les mots «forêt» et «manufacturier». Normal: le gouvernement veut éviter de fournir des munitions au lobby américain du bois, lequel cherche des preuves que le Canada ou les provinces subventionnent indirectement leur industries. Le Fonds vise plutôt à faciliter la transition des travailleurs dans les collectivités mono-industrielles frappées par les déboires des secteurs forestier et manufacturier vers d’autres types d’emplois, plutôt que le maintien à tout prix des usines et des entreprises en difficulté.
C’est là une bonne approche, qui contraste avec celle adoptée avant Noël par le ministre québécois des Ressources naturelles et de la Faune. Dans son projet de loi 39, Claude Béchard a réduit de 18 à 9 mois le délai à compter duquel il peut attribuer à un autre promoteur le territoire de coupe qui est associé à une usine de transformation du bois ayant fermé. Cette mesure s’inscrit dans la continuité de la politique gouvernementale qui veut que le bois prélevé sur un territoire donné soit transformé dans une usine située sur ce territoire ou à proximité de celui-ci. M. Béchard espère que si un exploitant n’a pas réussi à rentabiliser ses activités sur un territoire, un autre y parviendra.
Or, la consolidation nécessaire de l’industrie forestière, déjà en cours, signifie que certaines usines doivent malheureusement fermer. C’est à ce prix que l’industrie pourra survivre au Québec.
Le bât blesse surtout lorsqu’une fermeture survient dans une ville ou un village qui a été bâti expressément pour exploiter la forêt. La ville perd alors sa raison d’être sur le plan économique. Est-ce qu’une localité mono-industrielle détient une sorte de droit à la pérennité, exerçable aux frais des contribuables ou aux dépens du reste de l’industrie? Je ne crois pas : l’Histoire offre maints exemples où une communauté naît en raison d’une nouvelle activité économique puis disparaît lorsque celle-ci n’est plus rentable.
L’occupation du territoire a été élevée au rang d’une valeur absolue au Québec, à tort selon moi. Plusieurs politiques gouvernementales y concourent, comme l’obligation de transformer localement le bois prélevé.
Mais l’occupation du territoire est d’abord concept géostratégique visant à décourager une invasion étrangère. Qui donc menace d’envahir les régions forestières du Québec?
Plutôt que d’essayer de maintenir en vie toutes les localités mono-industrielles axées sur la forêt, notre régime forestier pourrait viser à maximiser la valeur des forêts publiques. Comment? En rompant le lien traditionnel entre une terre et une usine, ce qui permettrait de créer un véritable marché du bois à l’échelle du Québec. Dans ce modèle, une partie des forêts publiques pourrait faire l’objet d’un nouveau type de contrat, sans lien avec une usine en particulier. Le titulaire, de contrat serait autorisé à vendre le bois en contrepartie d’un loyer annuel et du respect de conditions visant le développement durable des ressources.
En raison des fermetures d’usines, un important marché pourrait être créé, accessible à toute usine au Québec en mesure d’en payer la valeur marchande. Les usines les plus rentables seraient les plus susceptibles de mettre la main sur cet approvisionnement.
jeudi 17 janvier 2008
Ailing forestry sector: a way out of the woods
Paru dans The Gazette, le 17 janvier 2008, p. B-5
Prime Minister Stephen Harper announced last week a Community Development Trust with a budget of $1 billion. The backgrounder describing the trust does not mention once the words "forest" or "manufacturing."
Understandably, the government wants to avoid supplying ammunition to the U.S. lumber lobby, always keen on finding "proof" to the effect that Canada or the provinces indirectly subsidize their industry. Rather, the Trust aims at helping laid-off workers in single-industry towns hit by the downturn in the forest products and manufacturing sectors transition toward other types of jobs. That's better than trying to maintain mills, plants and towns alive on taxpayer-funded life-support.
Harper's is the better approach in contrast with the one taken by Quebec's natural resources minister, Claude Béchard. In his Bill 39, passed just before Christmas, Béchard has reduced the length of time following which he can reallocate to another company cutting rights connected to a wood processing plant that has closed. The period has come down from 18 months to nine months (six months plus a three-month grace period).
Béchard's bill is consistent with traditional government policy under which wood taken from a given area of land must be processed at a mill located in or near the same area. Like his predecessors, Béchard must hope that, if a company has been unable to run its operations in a given area at a profit, another company might succeed.
The much-needed consolidation of the forest industry, already under way, means that some mills - the least profitable among them - must unfortunately close. This is the price of survival for the industry in Quebec.
The pain is all the greater when a shutdown occurs in a town or village built expressly to exploit the forest, as with Lebel-sur-Quévillon. This costs the town its economic raison d'être.
Does a single-industry town have a sort of right to survive forever, at taxpayer or industry expense? I don't believe so. History offers numerous examples of communities born due to new economic activities that disappear when these activities no longer pay.
Opponents of this normal phenomenon sometimes point to the need to occupy as much of Quebec's territory as much as possible. Several public policies contribute to this goal, such as the obligation to process wood near where it is cut.
Territorial occupation has been elevated in Quebec to the rank of a sacred cow - wrongly, in my view. We should recall that this is primarily a geostrategic concept aimed at deterring foreign invasion. But who is threatening to overrun Quebec's forest areas? Do First Nations peoples truly pose a threat to our territorial integrity?
Rather than try to keep every single-industry, forest-based community alive, our forestry system should aim at maximizing the value of our public forests. How?
By breaking the traditional link between land and mill, allowing for creation of a true Quebec-wide market for wood. With this other model, part of the public woodlands could come under a new type of contract, not linked to any specific mill. Holders of such contracts would be authorized to sell wood on a competitive market in exchange for an annual rent and compliance with conditions aimed at sustainable development of wood and wildlife resources.
This new type of contract would lead to development of a forest management industry separate from the woodcutting companies, for which this activity is just a cost to be held down.
This approach would put market forces to work in helping resolve the age-old conflict between wood cutters, hunters, fishermen, campers, vacationers and any other forest users. In attempting to maximize their income, companies holding management contracts would have an interest in meeting economic demand from each user group.
With the closings already announced, a market for millions of cubic metres of wood could be created, accessible to any mill in Quebec able to pay the market price.
The most profitable mills are those that would be most likely to put their hands on this supply.
Prime Minister Stephen Harper announced last week a Community Development Trust with a budget of $1 billion. The backgrounder describing the trust does not mention once the words "forest" or "manufacturing."
Understandably, the government wants to avoid supplying ammunition to the U.S. lumber lobby, always keen on finding "proof" to the effect that Canada or the provinces indirectly subsidize their industry. Rather, the Trust aims at helping laid-off workers in single-industry towns hit by the downturn in the forest products and manufacturing sectors transition toward other types of jobs. That's better than trying to maintain mills, plants and towns alive on taxpayer-funded life-support.
Harper's is the better approach in contrast with the one taken by Quebec's natural resources minister, Claude Béchard. In his Bill 39, passed just before Christmas, Béchard has reduced the length of time following which he can reallocate to another company cutting rights connected to a wood processing plant that has closed. The period has come down from 18 months to nine months (six months plus a three-month grace period).
Béchard's bill is consistent with traditional government policy under which wood taken from a given area of land must be processed at a mill located in or near the same area. Like his predecessors, Béchard must hope that, if a company has been unable to run its operations in a given area at a profit, another company might succeed.
The much-needed consolidation of the forest industry, already under way, means that some mills - the least profitable among them - must unfortunately close. This is the price of survival for the industry in Quebec.
The pain is all the greater when a shutdown occurs in a town or village built expressly to exploit the forest, as with Lebel-sur-Quévillon. This costs the town its economic raison d'être.
Does a single-industry town have a sort of right to survive forever, at taxpayer or industry expense? I don't believe so. History offers numerous examples of communities born due to new economic activities that disappear when these activities no longer pay.
Opponents of this normal phenomenon sometimes point to the need to occupy as much of Quebec's territory as much as possible. Several public policies contribute to this goal, such as the obligation to process wood near where it is cut.
Territorial occupation has been elevated in Quebec to the rank of a sacred cow - wrongly, in my view. We should recall that this is primarily a geostrategic concept aimed at deterring foreign invasion. But who is threatening to overrun Quebec's forest areas? Do First Nations peoples truly pose a threat to our territorial integrity?
Rather than try to keep every single-industry, forest-based community alive, our forestry system should aim at maximizing the value of our public forests. How?
By breaking the traditional link between land and mill, allowing for creation of a true Quebec-wide market for wood. With this other model, part of the public woodlands could come under a new type of contract, not linked to any specific mill. Holders of such contracts would be authorized to sell wood on a competitive market in exchange for an annual rent and compliance with conditions aimed at sustainable development of wood and wildlife resources.
This new type of contract would lead to development of a forest management industry separate from the woodcutting companies, for which this activity is just a cost to be held down.
This approach would put market forces to work in helping resolve the age-old conflict between wood cutters, hunters, fishermen, campers, vacationers and any other forest users. In attempting to maximize their income, companies holding management contracts would have an interest in meeting economic demand from each user group.
With the closings already announced, a market for millions of cubic metres of wood could be created, accessible to any mill in Quebec able to pay the market price.
The most profitable mills are those that would be most likely to put their hands on this supply.
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