Canada budget may have more help for manufacturers - minister

OTTAWA, March 18 Mon Mar 18, 2013 1:57pm EDT

OTTAWA, March 18 (Reuters) - A Canadian government measure allowing hard-hit manufacturers to write off investments more quickly has been a success, Industry Minister Christian Paradis said on Monday, but he could not guarantee the upcoming federal budget would extend the measure.

Ottawa first introduced the accelerated capital cost allowance in 2007 to help manufacturers hit by the strong Canadian dollar.

"Of course, as industry minister I think this is a measure that is very, very interesting," Paradis told Reuters in an interview when asked if the extension would be granted in the federal budget to be unveiled on Thursday.

"It added a lot of leverage in the past and I heard a lot of good comments in the multiple round tables in the last months, for sure," he said.

The measure allows businesses to write off investments in manufacturing and processing machinery and equipment over a shorter time frame than in the past, in order to generate more cash flow.

The benefit is due to expire at the end of this year and the Canadian Manufacturers and Exporters industry group is asking for a five-year extension.

Paradis was cautious not to promise anything though, acknowledging that Finance Minister Jim Flaherty is under a lot of pressure to restrain spending in the budget.

"This is a measure that has a cost. It has benefits for sure. How the finance minister will juggle with this, I don't know ... We have to deal with the fiscal constraints that we have," he said.

Paradis said he was "very happy" to see the manufacturing sector growing and noted that he was hearing fewer complaints recently about the strength of the Canadian dollar, which hurts exporters.

"We used to hear that more in the past than now, to be blunt," he said.

"Wherever I go, we all agree that it's unlikely that the Canadian dollar will go down as it used to be so if people are relying on this to increase their competitiveness, it's not the way to do it," he said. "We should not rely on this."

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