Finance Committee on Oct. 3rd, 2011

[Jack Harris, NDP, St. John's East, NL]

I can get a question out in 30 seconds.

Jessica McCormick, we've seen the changes in Newfoundland's tuition fees. That brought more students here, but tell me, has there been any work done on what that has done in regard to who gets access to post-secondary education?

[Jessica McCormick]

What we've seen in Newfoundland and Labrador is that successive provincial governments have been taking various measures to increase access. As you've said, it goes from reducing tuition fees and freezing tuition fees to reintroducing a grants program.

As for what we've seen, not only have student debt increased and enrollment gone up, but students from lower-income households are able to now access post-secondary education. It's not just limited to students in university. It's students who are studying skilled trades, and those are the workers of tomorrow, the ones who will be filling the labour shortage that we expect in the near future.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Hoback, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

I apologize for my tardiness this morning. I got in at 4:30 last night. Air Canada has that late flight out of Toronto, so I feel for a lot of you Newfoundlanders who are trying to get to and from western Canada if you're taking that flight. That's a long haul going from Fort McMurray though Toronto to get here at four in the morning.

But I definitely wanted to be here, because Newfoundland is like Saskatchewan. We're almost like twin provinces, one on one side of the country and one on the other side, and we're both emerging from have-not status to have status. We've both seen our economies grow in a lot of ways.

In Saskatchewan, when you talk about a recession, they kind of look at you cross-eyed and say, “Well, can you get me another 10 plumbers?” There's a tremendous shortage of skilled labour in Saskatchewan right now. With the announcements in the potash sector, we're seeing even more of a shortage of skilled labour, so I think your mobility plan has some merit and some good ideas.

I also want to pass along greetings from our Minister of Intergovernmental Affairs, Peter Penashue. He of course is busy in Ottawa, so he can't be here. I'm surprised that there are no Liberals here considering the number of Liberals who are represented in Newfoundland, but maybe it's the weather or some other interests they have. I'm not sure.

Actually, where I want to go today here a bit is to talk about some of the things that we've done right and how they're going to impact Newfoundland. There's one that I just can't believe we're not talking about and that is Muskrat Falls and the impact that's going to have on Newfoundland. I know that August 19 must have been a really happy day here in Newfoundland when Minister Oliver came out and Mr. Penashue and Mr. MacKay talked about the loan guarantees for Muskrat Falls.

I think I'll talk to you, Jo Mark Zurel, about the impact of the Muskrat Falls and Lower Churchill development on Newfoundland. Can you give us an oversight of just how great that will be?

[Jo Mark Zurel]

Yes, certainly. It will be tremendous for Newfoundland and Labrador from the perspective that it's going to create substantial work in a remote part of our province. It's going to employ a lot of people.

But beyond that, both for our province and for the rest of Canada, it will allow us to have stably priced power that's green. It will take something like the equivalent of three million cars off the roads of Canada. There's a lot to be done yet before the project is complete, but the loan guarantee absolutely is a great example of how Canada can participate.

The point I'd like to make, though, is that this is only about a quarter to a third of the total Lower Churchill Falls project. The Gull Island project is over 2,000 megawatts of power, and that one needs a route through Quebec to be viable.

Right now we have interprovincial rivalries that have for decades prevented this from getting done, so there's a role for Ottawa in making that happen as well, because it will benefit all of Canada with good, clean, efficient power that is badly needed in the maritime provinces and central Canada, and that potentially could access markets in the United States if it were allowed to proceed. This is a perfect example of an infrastructure project where private industry and regional governments can partner with Ottawa to do things that are going to generate long-term wealth and a long-term strengthening of our country in the building of this country.

[Randy Hoback, Conservative, Prince Albert, SK]

Yes, I think you're right. It's the perfect example of what can happen when all levels of government work together in a cooperative manner instead of a controversial manner.

Chair, I was just wondering about something Mr. Giguère talked about. He talked about the P3s that were involved in scandals and that. I'm not aware of those companies.

I was wondering if he could table the names of those companies that were involved in those scandals, because I think that's very important. If there are scandals going on in P3s, we should be examining what they are and who they are and making sure they don't repeat themselves. I know that there have been quite a few examples out west; I know that Brian talked about a bridge in B.C. that came in under budget and a ring road around Edmonton that came in under budget just because that was done through P3s.

Mr. Giguère, if you could table those names, I think that would be very important and helpful to the committee.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

I will be very pleased to tell you about all the scandals in this regard.

[The Chair, Conservative, James Rajotte]

You have one minute, Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

I'm going to go to Genome Canada. I'm very familiar with Genome Prairie in Saskatoon, and it's amazing what they've done in plant breeding. That alone has taken the conventional breeding system from 10 years to four years, just because of the technology and the markers they've found in the genome.

One thing they're talking about is good multi-year funding. Would that be a request that Genome Canada would have, something that's predictable and bankable, not over one year, but over four or five years, so they could actually see a project through that four-year or five-year timetable?

[Pierre Meulien]

Thanks for that question.

This multi-year funding business is becoming critical. The reason, really, is all about strategy. We cannot be strategic with year-to-year funding.

In fact we've driven some of the public-private partnerships in the research area, and we cannot build strategic partnerships with the private sector if they don't know we're going to be there in two or three years. This is one of the big things that I want to do in terms of linking the research with the private sector. So I think you're absolutely right that this is key.

Also, as you know very well, the NRC is building a very large wheat program. They will be using our $10 million wheat project as a cornerstone of that, so we're all about enabling others to succeed as well. We're going across those divides very actively.

[The Chair, Conservative, James Rajotte]

Thank you.

I should say, in fairness to Mr. Brison, that he did e-mail me this morning. He took off from Halifax but the plane could not land, so the entire plane went back to Halifax. In fairness to him, I should point out that he certainly did make an effort to be here this morning.

I do want to raise a few points.

First, Ms. McCormick, you talked about the Canada education savings grant and the RESPs. It's true there has not been as much take-up as one would have hoped, but the issue is that there are a lot of people who have invested in these programs.

So very quickly, if we do wrap these up, how would your organization suggest we respect the investments people have already made in these programs?

[Jessica McCormick]

Those investments were welcomed and certainly long overdue.

What we've seen is that the individuals who benefit most from RESPs are from higher-income or wealthier households and are able to save more for their education. What we're saying is that we need to address the problem in a way that takes into account varying socio-economic circumstances.

[The Chair, Conservative, James Rajotte]

They've made their investments, so what are you saying to them? What happens to their investment? Under your program, what would happen to it?

[Jessica McCormick]

I can certainly provide more information. I'm speaking on behalf of the Newfoundland and Labrador component of the federation, so I feel that our national office can certainly provide additional information on that.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

Mr. Blakely, quickly again, you talked about short term and long term. One of the issues that may arise--I don't know if it will--is the department may raise the issue that if you're doing it for short-term moving expenses it may be hard determining if it is in fact for labour, ensuring there is no abuse. I know you probably have an answer to that, so I want to get you on record in terms of ensuring that it is for actual moving expenses for labour needs across the country.

[Robert Blakely]

Certainly. As it sits now, if one is going to access certain programs, you get a certificate from your employer--I think it's a T2000 form--where the employer certifies that you're getting this for short-term work, that it's for this period of time, and that you've had some compensation from the employer in the amount of x dollars. Then you go to your friend the accountant and the accountant puts together your other expenses and comes up with a net amount to fill in on your income tax.

Trying to devise the program is not a problem. I think we have that one covered.

[The Chair, Conservative, James Rajotte]

Okay, I appreciate that.

The issue of business tax reductions is a huge issue, so I want to follow up with Mr. Zurel.

It's often said that this is for the big oil and gas companies and the big banks. But with regard to the corporate tax rate, if your business income is $500,000 or less, you pay the 11% rate. If it's above $500,000, right now you pay 16.5% federal rate and typically a 10% or 11% provincial rate. If your business income is $600,000, you are not a massive enterprise in this country. I think we need to clarify that the larger rate applies, I would argue, to a lot of small and medium-sized and large enterprises. I do want to get your point on that.

As well, I do want to get you to respond to what the Canadian Manufacturers and Exporters said in their January report of this year, that by reducing taxes, being competitive has actually resulted in more business investment, more innovation, and more revenue to the federal government, at least in the short term.

[Jo Mark Zurel]

I totally agree with your comments. The rates, in terms of where the small business tax rate cuts in, are low. So we have thousands of companies across Canada that employ a lot of Canadians and are still paying the high rate of tax, even though they may be only relatively small companies.

We need to be really vigilant to make sure we protect these companies, because ultimately, with no economic drivers in our Canadian economy, there will be no services. In the short term, looking to raise taxes on small and large businesses, to collect all the money and distribute it to people who are less fortunate, makes sense. But what the Canadian business community or the St. John's Board of Trade really argues for is to make sure we are able to deliver these services to support Canadians for the long term.

We don't advocate cutting back on services to people who need a hand up or who need support. But we do advocate making sure we don't kill the geese laying the golden eggs. We do advocate making sure we create an environment where businesses can thrive so that we will have people employed by these businesses, these businesses will be able to pay taxes, and they won't migrate outside the country.

A good example is the manufacturing industry in Ontario and the manufacturing industry in Newfoundland and Labrador. We do struggle. We really battle. Our costs are high. Our country is remote from markets. So in order to compete, we need to be able to ensure that all of our costs are at a reasonable level.

I don't think there's any major problem with regard to tax revenues being consumed and wasted, or low taxes being wasted by companies. In fact, we need to make sure our business community remains healthy to be able to support Canadian services.

[The Chair, Conservative, James Rajotte]

Thank you.

Unfortunately, my own time is up. In fact, our committee's time is up

We want to thank you very much for being with us here this morning and responding to our questions. I know many of our colleagues asked for further information. Please feel free to provide that to the clerk, and we will ensure that all members of the committee get it. Thank you for being with us here this morning. We appreciate it.

Colleagues, we will meet in 15 minutes in the lobby.

The meeting is adjourned.