Finance Committee on Oct. 5th, 2011

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you very much.

I'm just wondering, why do you call it tar sands? I understand why it was called tar sands originally. It was used to patch canoes, and it paved Parliament Hill, and it also paved Jasper Avenue. But they get oil out of it, they don't get tar.

So I'm wondering why you have about 10 or 12 references on your site to “tar sands“.

And I'm just going to finish by saying that it doesn't help to say things on your site like, “Why I will be risking arrest today”, or “Climate change is a bigger threat than terrorism”, or to be talking about “tar” instead of oil.

Do those things help you raise money, as an organization?

[Graham Saul]

“Climate change is a bigger threat than terrorism” is on our website? That hasn't come to my attention.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

It is. So is, “Why I will be risking arrest today”.

[Graham Saul]

Certainly when I look at the implications of runaway, catastrophic climate change, and if I take the scientists at their words in terms of the hundreds of millions of lives at stake and the billion livelihoods that are going to be undermined if we don't do our fair share--

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Does it help raise money, was my question.

[Graham Saul]

Raise money? No.

[The Chair, Conservative, James Rajotte]

Thank you. We'll have to end it there.

I want to follow up on a couple of points from the last round.

Mr. Tunney, I did want to get some details on your first recommendation, the accelerated capital cost allowance. You have class 8, class 42, and class 46; and you've got 20%, 12%, and 30% respectively. Am I correct in saying that you want those rates to move from 20%, 12%, and 30% to 50%, that is, you want to move them to a straight line 50% depreciation?

[Wayne Tunney]

Yes.

[The Chair, Conservative, James Rajotte]

For all three classes, then?

[Wayne Tunney]

Yes.

[The Chair, Conservative, James Rajotte]

Have you costed the proposal? I mean, there's obviously an economic benefit if you do this, but Finance Canada will cost it out, and if there's not an alternative cost provided, that's the one the minister would have to rely on.

[Wayne Tunney]

Just as Mr. Jean mentioned an incentive for the oil sands, it is a deferral mechanism. In our view, it will enable us to spend more money in these critical years or 2012 to 2014, rather than extending those same expenditures out over five years.

[The Chair, Conservative, James Rajotte]

And to both you and Mr. Davidson on the SR and ED program, am I correct in understanding that you have provided your recommendations to the review of the SR and ED program, both your recommendation and the one from the AUCC?

[Wayne Tunney]

On that specific item?

[The Chair, Conservative, James Rajotte]

Yes.

[Wayne Tunney]

We did not.

[The Chair, Conservative, James Rajotte]

Okay.

Mr. Davidson, did you?

[Paul Davidson]

Yes, we did make a submission to the R and D review. Again, keep in mind that the purpose of that review is to find out how we can increase private sector investment in research and innovation.

[The Chair, Conservative, James Rajotte]

Okay. I want to come back to Mr. Saul.

You talked about subsidies to industry. I'm actually very sympathetic to reducing subsidies to industry overall, but I think we do have to be consistent as a government. One of the things we did in the 2007 budget, as you mentioned in your conversation with Mr. Jean, was to start phasing out the accelerated capital cost allowance for oil sands projects.

At the same time, we put in place a two-year write-off for the manufacturing sector, which we have extended from 2007 to 2011, and then for another two years in the last budget. The reality is that there are companies or industries within the manufacturing sector.... And if you look at infrastructure, particularly in this city, or in any major city across Canada, if you're constructing cement, you are releasing a lot of greenhouse gases into the atmosphere because of the process emissions.

So is it your organization's recommendation that we not extend the accelerated CCA for the manufacturing sector, that we apply the same standard evenly to all sectors and say there's no accelerated CCA because, by your definition, it is a subsidy and so we should eliminate it for the manufacturing sector as well?

[Graham Saul]

Well, I'd have to see some research on the amount of emissions associated with that and the overall impact, and the various purposes the CCA is being been put to. I would like to think we'd be consistent across sectors, but we've done exhaustive research on the oil, coal, and gas sectors and the relationship between these subsidies and their relative need. We haven't done the same, as of yet, for the provision you're referring to. So I would want to see more exhaustive research before having a definite opinion on that.

[The Chair, Conservative, James Rajotte]

If we take the coal sector out of this, as coal obviously did not have the accelerated CCA, unlike the oil sands, what specific subsidies are you referring to with respect to the coal sector?

[Graham Saul]

Well, once again, I would refer you to the research conducted by the International Institute for Sustainable Development, where that's laid out in some detail.

According to a recommendation of the Green Budget Coalition, the Canadian exploration expense allows companies to deduct 100% of their exploration expenses from their income tax each year. In the coal sector, this includes intangible costs of mine development.

Then, presumably, there is the Canadian development expense, which allows companies to deduct 30% of their development expenses from their income tax each year. In the coal sector, this includes the cost of acquiring a mineral property or a right to explore.

So these issues are dealt with in a substantial amount of detail in the available research that's been done over the past little while.

[The Chair, Conservative, James Rajotte]

I guess with respect to that, the mining sector is very prominent across Canada as well. So you're saying that we should apply that same logic, then, to any mineral exploration development tax credits, or any other industry that has exploration or development tax credits?

[Graham Saul]

We're here, as I explained earlier, principally because we're concerned about the potentially catastrophic implications of runaway climate change. We'd like to see policies put in place that discourage a reliance and ongoing dependence on fossil fuels and that encourage energy efficiency, renewable energy, and energy conservation. We're particularly concerned about the coal sector because of its disproportionate contribution to the problem of climate change.

[The Chair, Conservative, James Rajotte]

All right.

I'd like to continue the discussion, but, unfortunately, my time is up as well. As I impose time constraints on others, I should impose them on myself as the chair.

I want to thank all of you for being with us this morning.

Thank you for your presentations and for answering our questions.

We enjoyed it very much.

If there's anything further you wish the committee to consider, please do submit it to the clerk. We will ensure that all members get it.

Merci.

The meeting is adjourned.