Finance Committee on Dec. 4th, 2007

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you.

I have just a quick question before we go back to Mr. Richardson.

Ms. van Kooy, can you explain the national strategy for charity? Are you looking for all charities to have the same strategy? It was not clear what you were discussing or what your point was.

[Katherine van Kooy]

No, it's not that the charities need to have a consistent strategy. We're encouraging the federal government to take a broader strategic approach to how it deals with charities and not-for-profit organizations across the country. There are initiatives such as the tax relief that was offered that made it much more attractive for individuals to make donations of stocks to charities and to be exempted from capital gains tax. That was great, but the measures were introduced in isolation from each other, and many government departments work closely with charities in terms of delivering government services throughout the country and the decisions that are made on an—

[The Vice-Chair, Liberal, Massimo Pacetti]

For example, in what case...?

[Katherine van Kooy]

A lot of work in the health area is delivered in communities. Services to immigrants are largely delivered through not-for-profit organizations. One of the things we're finding in Alberta is the growing awareness of the human resource challenge and, as Mr. Alvarez mentioned, the federal government's initiative to increase immigration. Many other sectors of the economy are now looking at and identifying the need for community-based services to help integrate and settle new immigrants to our communities, or the work they do in communities, just to make them attractive environments to be able to attract new populations to meet the needs of other sectors. It's for the government itself to take a more holistic view as to how it works with charities and not-for-profit organizations across the country.

[The Vice-Chair, Liberal, Massimo Pacetti]

Was a study not done two or three years ago on something like this?

[Katherine van Kooy]

Work was done a number of years ago—the voluntary sector initiative under the former government. That initiative led to quite a number of substantial gains. Some of the things I mentioned in terms of the data collection are outcomes as a result of the work that was done during that period of time, but the reason I mention those particular surveys and studies and the satellite accounts is that it's our understanding that those data collection initiatives are potentially not going to be continued to be funded anymore, so that would really be moving us backwards.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you.

Mr. Richardson, for five minutes.

[Lee Richardson, Conservative, Calgary Centre, AB]

Thank you.

I wanted to thank the committee for appearing here. I wish you had more time. I wish you had time to see around the city. I'm sorry that it's snowing out there. You might get the notion that the streets really aren't paved with gold, that it's very much of a free enterprise society that we live in here. I know that comes as a very strange thing to some on the committee.

One of the things I think it's important to know is how it all works together somewhat differently from perhaps other parts of the country. I think of Ms. van Kooy's volunteer organizations, the amount of support they get, for example, from our leading industries, the oil industry. I think we probably have the highest per capita of volunteer cooperation and charitable donations of any jurisdiction in Canada.

I look, too, at the numbers of our employees who are employed in the oil industry and spin-off industries, for example. I look at the benefits out of all our organizations as a result of this, like the sports centre, like CODA, like the zoo. And it's simply a different way of looking at things that we like to leave some of this in the hands of the people who create the wealth so that they can decide where they want it spent as well as to funnel it through bureaucracies.

I had a question here, but it's dragged out. I just want to get that on the record. We don't always do things the same way out here, but we manage to have a pretty good quality of life as a result of it.

Who might want to comment further on that sort of thing and how we develop that? There are those of us who sometimes take offence at the shots at our industries here and how we work and the contributions they make to the rest of the country. We don't have an accelerated capital cost allowance any longer, for example.

I would like to ask Mr. Alvarez what the impact of that has been and what he expects it to be. I personally didn't think it was a very good idea to lose it.

[Pierre Alvarez]

I think the bigger problem isn't just the accelerated capital cost allowance, Mr. Richardson. We've just seen wave after wave of dramatic changes federally, provincially, on top of very difficult economic circumstances, particularly relating to the dollar and global growth.

The concern I think, and I'm sure you're hearing it from the business community as well, is that there is just a growing weariness in the capital markets about how many changes you can take, how many shots you can take, before people simply start saying, “We're going to look at doing business anywhere else”.

I really think the biggest single concern that's out there is just this growing fatigue in not just the domestic but in the international investment community. Canada enjoyed a tremendously positive reputation, especially on the oil and gas side, for a long time. I think that's grown pretty thin over the last 12 months.

[Lee Richardson, Conservative, Calgary Centre, AB]

We've heard that, and I'm just going to wrap up by asking you this. A response might be “So what?” If they don't, then what kind of impact does that have, and how long can we sustain it?

[Pierre Alvarez]

There are two ways to look at it. One way is from an activity level. We've seen natural gas drilling drop from 23,000 wells to 15,000 wells. We will probably see somewhere between a 5% and 10% reduction in natural gas production this year—not exploration, production. Those are big numbers.

More importantly, where you've seen it is the value of RRSPs and everything else. Over the last 12 months the performance of the international oil and gas stocks has been on a tear and has grown very, very significantly. In Canada, at best, it's been flat. In many sectors, and Mr. Andrew can talk to you about that later, it's been negative.

So we have not enjoyed, as a country, that uptake in prosperity that a lot of the larger international firms have, and that flows through not just in production, as I said. That's the value of the Alberta heritage fund, it's the value of RRSPs, it's the value of pension funds—all of those have a huge weighting in the oil and gas industry, because we're 25% of the national economy now. We can't take any more hits.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Richardson.

Monsieur St-Cyr.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

I would like to put a question to Mr. Henwood, from the Canadian Sport Centre Calgary.

In your brief, you mention a number of points to examine. Among others, you mention up-to-date tax credit evaluation results from the 2007 Children's Fitness Tax Credit.

Do you have any objective information from studies or research, as well as figures, on the impact that this tax credit has had on young people practising sports, or at the very least, if you do not have that, do you have an idea, something that may be more subjective? What have you seen out there in terms of the use of sports facilities as a result of this Children's Fitness Tax Credit?

[Dale Henwood]

First of all, I would say there's a vast array of research evidence on studies related to the importance of children being active. I could provide you with lots of documents on that. I think there is lots of information there.

In terms of the impact right now of, as an example, the children's tax credit, this is the first year. I believe, based on people I've talked with--people in my community and my neighbours--that it's a very good thing. I believe it's part of a comprehensive policy that we need for sport.

I would also say that right now in the sports sector we get about 88% of our money from non-government sources. I will compliment a lot of the oil and gas companies in this area in particular, because I think they have shown a great support for sport. I think the corporate tax benefits afforded in other G-8 countries are much better than they are in Canada in terms of the benefit back to the corporation.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Going back to this credit, you are saying that currently, there are not necessarily any figures or studies that confirm the impact of this tax credit on the use of facilities, and that it is perhaps too early to know what the real impact is. Is that correct?

[Dale Henwood]

It was just introduced not even a year ago, so I think it's difficult, but from the people I talked to in my community, I can say anecdotally that it's going to be very significant.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Thank you very much.

Ms. van Kooy, in your brief you mentioned alternative funding methods for charities, namely debt financing. That is an interesting idea, because the problem exists throughout Canada, be it in Alberta or in my riding, in Montreal.

You say that certain jurisdictions have programs that encourage funding, debt financing for charitable organizations.

Can you give us some examples of institutions and programs that we could use as models?

[Katherine van Kooy]

A number of things have been looked at. One of the issues experienced by many organizations in need of debt financing is that the commercial banking system is not necessarily attracted to supporting those kinds of organizations.

There have been efforts in Canada to try to establish a bank specifically for financing not-for-profit organizations. It would be a financial institution that would have a better understanding of the needs of these organizations, and a funding supply would be available to it. The challenge has been to get the initial amount of capital you need in order to establish that kind of institution.

It's one of the approaches that has been looked at. It's a matter of looking at different ways, either by making different alternatives available legislatively or by arriving at some vehicle whereby the government perhaps would stimulate it.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

I am going to interrupt you, because I wanted to hear something more concrete.

In your brief, you say:

There are examples in other jurisdictions of approaches adopted by governments to encourage investors and corporations to invest in community development....

I would like to know what those other jurisdictions are, those other governments that we could use to base such measures on.

[Katherine van Kooy]

There are a number of situations in....

I'm going to draw a blank on this. I'm sorry, perhaps I could provide that response to you in writing following this.

[The Vice-Chair, Liberal, Massimo Pacetti]

I think that was my question as well.

Mr. St-Cyr's time is up.

The brief is a good brief, but the problem is we don't have any examples, and a lot of the recommendations are a bit...I hate to use the word “vague”, but you've got to give us what you want to see; you've got to give us some good concrete examples.

[Katherine van Kooy]

I'd certainly be happy to do that. If there's a possibility of following up with you, I will provide that in writing.

[The Vice-Chair, Liberal, Massimo Pacetti]

Right. Just send it through the clerk. That's what we're looking for.

Thank you.

Mr. Dykstra, you have five minutes.

[Rick Dykstra, Conservative, St. Catharines, ON]

A couple of you spoke about the scientific research and experimental development tax credit. We've had a lot of discussion about this as a committee. Obviously, our industry committee came forward with some pretty solid recommendations, and a number of them were put into the 2007 budget.

The finance committee itself actually, for good reason, I think, decided to abstain on that vote of endorsing it from a finance committee perspective based on the fact that moving on the scientific research and experimental development tax credit without making sure you're going to do it properly is a concern for us. If we're going to do it, we want to make sure it's done properly and has the maximum amount of impact. That's why the Minister of Finance actually started the panel on this, to discuss it to make sure that it does comes forward in a positive way.

I noted, Mr. Alvarez, that you did use a couple of words that I think are pretty important, and I'd like you to expand on that; the words are “ transparency” and “clarity”. It would be good to get your thoughts on that, because we are just in the middle of trying to move forward on this, and it would certainly be helpful to get your thoughts.