Finance Committee on Oct. 22nd, 2009

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

Okay. Thank you.

Mr. Dewar, just quickly, we've had some other people from either marine or shipbuilding, but my understanding is that there's not much of a shipbuilding industry here in Canada. There is for some of the navy vessels, but nothing for commercial.

Am I missing something here?

[John Dewar]

No, commercial shipbuilding takes place. I think the successful ones are probably on the east coast, from Prince Edward Island. They've got a successful export for tugs, specialized purpose vessels. Offshore modules are also built and refitted and refurbished in Halifax. Irving Shipbuilding does those.

There is a demand, apparently a legitimate demand, for replacement of a large number of the vessels in the navy and the coast guard. It's been a long time since they were successfully able to get a marine project out, although they recently awarded a contract for coast guard vessels after the third try. If we have some time to comment on the cost of doing that bidding, and how that would be useful to companies, we can talk about that.

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

We saw that presentation, but in terms of commercial are there companies out there that are able to do it, or would it mean—

[John Dewar]

Yes.

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

—a whole revamping of an industry?

[John Dewar]

If we look at the shipyard in St. Catharines, which belongs to us, it has survived on doing these forebody conversions, where you replace up to 80% of the steelwork in the hull, preserving the mechanical and control system sections of the ship. Because these ships have a lifetime in fresh water, they can go quite a long time without being replaced. So that work has been done--although, right now, within the last two years, the cost of construction has fallen so low in Asia, particularly in China, and their costs have been brought down because they had huge capacity, they're willing to sell now that the demand for ocean-going ships has also fallen.

So we can't compete against a price of one-third. As I say, it's not a reflection of the productivity of being able to do it, in absolute terms—

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

So it's a question of being competitive.

[John Dewar]

—but it's a price of economics.

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

Thank you.

Thank you, Mr. Chairman.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Pacetti.

We'll now go to Monsieur Laforest.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chairman.

Good morning to all the witnesses.

I have a first question for Fraser Young.

I find the project you refer to a little complex. It may be feasible, but abolishing the GST for a new vehicle, for a used vehicle, an exchange with a person who has a lower income for a used vehicle... Ultimately, the condition is that a vehicle over 15 years of age is retired.

Who will manage that kind of program? Don't you think the administration of that program will increase bureaucracy, which, eventually, could completely cancel out the savings achieved? I find it complex, but you've studied the model enough for it to be feasible. I'd like to hear what you have to say on that, please.

[Fraser Young]

Thank you for your question, Mr. Laforest.

There will always be some difficulty, and we've seen as evidence in the American example that they were crushed with 700,000 transactions that all had to be verified and confirmed, and also that the government was forced to issue cheques and funds directly to the car companies, which meant 20,000 registrations and 700,000 disbursements.

By using the GST specifically, you simplify it to a line transaction on the contract, where there's no GST appearing on the bill to the customer.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

But according to your model, who will be responsible for finding a buyer for my used vehicle? Is it the dealer that sells new cars?

[Fraser Young]

There's a complete system underneath what I'm presenting here that I don't present or profess to everyone. I'm off to Washington next week to do the after-clunkers program for America. Hopefully Canada will benefit.

The idea there is that actually the car would remain. If there was a decent seven-, eight- or nine-year-old car brought to a dealership, it would remain at the dealership until somebody who was lesser-privileged who had a qualifying vehicle, 10 or 15 years old, regardless, or with high mileage or low fuel economy.... That car would be taken in and the other person would come back to the dealer with a voucher of verification.

That system is already in place with the Clean Air Foundation, Car Heaven, and the Canadian government. So the verification process could be accomplished.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

That answers my questions in part. I have a lot more to ask, but we don't have much time.

I'd like to ask Ms. Gulliver a question.

You discussed some promising tax measures that Quebec was offering producers and creators. Ultimately, you're making a similar suggestion to the federal government. In your opinion, the Revenue Agency should adopt similar measures at the federal level.

Have you made a request to the Government of Ontario or to each of the provincial governments?

[Tanya Gulliver]

We reference the Quebec government as an ideal example of what's already happening.

As we are making budget submissions to each of the provinces in their annual budget cycle, these are issues we raise, and we again use the example of Quebec there.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

All right. Thank you.

Now I'm going to turn to Ms. Wolfson, from the University of Toronto.

In one of your recommendations, you talk about doubling the number of discovery grants. You cited a figure of $120,000 over three years. You say this is a new program.

What is the difference between a discovery grant and a research grant?

[Judith Wolfson]

Thank you very much for the question.

The post-doctoral fellowships that we're talking about are really not different from a discovery grant, per se. What we're talking about is having the capacity for post-doctoral students, particularly focused at the international markets.

We don't have the capacity now to attract international students who will come, and the research will of course lead to discovery and in a wide variety of fields. That's why my response was that it be through the granting councils, which already direct research through peer-reviewed bases to a broad range of research. It's not particularly targeted to specific commercial innovation.

I used the example of the BlackBerry that we're all using here. These innovations come from discovery but not necessarily from a predetermined concept.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you.

Thank you, Mr. Chairman.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Laforest.

We'll go to Mike Wallace, who considers himself a contemporary dance artist.

[Voices]

Oh, oh!

[The Chair, Conservative, James Rajotte]

Ms. Gulliver, I'm glad you clarified what a professional is versus an amateur.

[Mike Wallace, Conservative, Burlington, ON]

I knew that was coming. I'm a contemporary dancer because of these guys. That's all I have to say.

I'm going to start with my friends from Upper Lakes Marine and Industrial.

First of all, with the combined ACCA and the SFF, what difference do you think that will make to your actual business? What bump do think that will drive?

[John Dewar]

Let's start with that one-third price that you pay in China for the same ship, because you have to build the equation.

[Mike Wallace, Conservative, Burlington, ON]

You have to remind people here that if they buy a ship overseas, the second-highest tariff penalty in Canada is for a ship, and that's 25%.