OTTAWA — Federal officials are pouring cold water over expectations of any blockbuster announcement of new aid for the battered manufacturing and forestry sectors coming out of Friday night's first minister's dinner in Ottawa.
Senior Finance Department officials said Thursday that Canada's manufacturers are being caught in a worldwide squeeze stemming from the increasingly fierce competition from developing economic giants, such as China and India.
The officials, who spoke on background, hinted that Prime Minister Stephen Harper's earlier announcement of $1-billion in aid to help workers and single-industry towns suffering from layoffs would be all that would be forthcoming from Ottawa at the meeting.
''We're not going to have a program that stops shrinkage in the manufacturing sector in Canada when it's shrinking in every other country,'' said one official.
Ontario and Quebec premiers Dalton McGuinty and Jean Charest called the measure inadequate, saying it amounted to only about 10 per cent of what their provinces have pumped into the manufacturing sector in response to the crisis.
''We're not in a situation where we're asking the federal government to do something that we haven't done ourselves,'' said Charest.
Both also complained that the aid would not flow immediately, but be contingent on passage of the federal budget later this spring.
The finance officials released a presentation used last month during a meeting of finance ministers that showed manufacturing had declined as a portion of the economy in all G-7 countries over the past 35 years. In the graph, Canada's manufacturing sector has fared slightly better than those in the United Kingdom and the U.S., but worse than in Germany.
Manufacturers have shed about 300,000 jobs since 2002, but the slump deepened last year after the Canadian dollar began its climb above the U.S. currency, at one point in November reaching as high as $1.10 U.S.
Harper's aid package was aimed at the forestry sector, which has been particularly hurt by the high dollar and the crisis in the U.S. housing sector.
The Forestry Products Association of Canada released new figures Thursday showing that companies shut down operation in 94 mills during 2007, resulting in 12,116 layoffs. The largest job losses were in Quebec (3,683), followed by B.C. (2,807), Ontario (2,560), and the Atlantic provinces (2,328).
Despite the difficulties, ''there is enormous opportunity available to the industry,'' said the group's president Avrim Lazar. ''But the industry needs a business policy climate that will allow it to seize this opportunity.''
The lobby group called on the first minister to develop a plan to help the industry modernize, including extending the capital write-off on new equipment from two to five years, making research and development tax credits refundable, and reaching an agreement on harmonizing sales taxes.
Finance Minister Jim Flaherty has recently said Ottawa is making progress on harmonization with some provinces, which the officials said were Manitoba and Saskatchewan.
And they noted the federal government has already taken major steps to help businesses gain a competitive edge in the world, including the two-year capital tax allowance and corporate tax cuts that will reduce the federal bite to 15 per cent by 2012.
But they added that the government doesn't favour measures that might be inflationary, or impede the ''impending adjustment'' manufacturers need to go through to become competitive.
