Finance Committee on June 14th, 2007

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chairman.

I appreciate your presenting today. It was very interesting.

I don't have a long question; most of the questions have been asked. One thing you did mention—and I'm not sure you're qualified to comment on it, but I would appreciate it if you are—was Alcan, as an example, and how people seem to be somewhat upset that a foreign takeover is happening, that a foreign buyer is interested, and why we haven't been able to take it to the next level.

With respect to my question, sir, as an economist, do you find there's a reason Canadians aren't more aggressive in investing in Canadian companies? Instead of us complaining when foreign organizations buy our firms, why aren't Canadians coming forward to buy these firms and keeping things Canadian?

[Prof. Walid Hejazi]

I wish we had two hours to speak about this one topic. I think it's a very important question, and it's one I've discussed on many other occasions.

Basically, what is it about Canada that prevents the Canadian managers from taking over those companies? There are many hypotheses—they have not been quantified—but we think they have to do with managerial talent within Canada. For example, if you look at the number of MBAs that graduate in Canada relative to the size of the population, we lag behind that of the United States significantly. That has an effect 10 to 20 years down the road, when you look at the stock of managerial talent.

Secondly, when you think about how thin financial markets are in Canada relative to how thick they are in the United States or Europe, if you look at the amount of bank credit, for example, relative to the size of the economy, Canada lags behind that of other G-7 countries significantly. In terms of raising the capital that's required within Canada, that really limits the ability of Canadians. The whole infrastructure that underlies what would be needed for Canadian entities to rise up to buy these Canadian companies is really lacking.

I could go on, but again, I think this panel of experts should consider that topic as well. That's a very important issue.

[Mike Wallace, Conservative, Burlington, ON]

Thank you.

Thank you, Mr. Chair.

[The Chair, Conservative, Brian Pallister]

Mr. Pacetti, to conclude.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chairman.

Just quickly, when we're talking about Canadian income or income earned in Canada or income revenue, is any of that being taxed in Barbados at the low rate, or is the only income taxed in Barbados foreign income?

[Prof. Walid Hejazi]

I don't know the answer. But my understanding, from discussion with people on the spirit of the law, is that the income being taxed in Barbados is income generated globally, not income that's generated in Canada.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Other than tax shifting of course.

Thank you.

Thank you, Mr. Chairman.

[The Chair, Conservative, Brian Pallister]

Merci beaucoup, monsieur.

Merci, Monsieur Hejazi. We appreciate your patience in getting the technology up and functioning. Thank you for that. We very much appreciate your time today.

[Prof. Walid Hejazi]

I want to say thank you. You were more aggressive this time than last.

[The Chair, Conservative, Brian Pallister]

Of course. Thank you.

We'll suspend for a minute while we get reconnected.

[Proceedings continue in camera]