Evidence of meeting #89 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was changes.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Robert Turnbull  Special Counsel, Financial System, Bank of Canada
Martin Lavoie  Director of Policy, Manufacturing Competitiveness and Innovation, Canadian Manufacturers and Exporters
Carole Presseault  Vice-President, Government and Regulatory Affairs, Certified General Accountants Association of Canada
Chris Aylward  National Executive Vice-President, Public Service Alliance of Canada
Ken Cudmore  President, TSGI-Chartered Accountants
James Infantino  Pensions and Disability Insurance Officer, Public Service Alliance of Canada
Corinne Pohlmann  Vice-President, National Affairs, Canadian Federation of Independent Business
Angella MacEwen  Senior Economist, Social and Economic Policy, Canadian Labour Congress
Gregory Thomas  Federal and Ontario Director, Canadian Taxpayers Federation
Albert De Luca  Partner, National Leader, Global Research and Development, Government Incentives, Deloitte & Touche

3:30 p.m.

Conservative

The Chair Conservative James Rajotte

I call this meeting to order. This is the 89th meeting of the Standing Committee on Finance. Orders of the day are pursuant to the order of reference of Tuesday, October 30, 2012, continuing our study of Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures.

Colleagues, we have two panels with us this afternoon. In our first panel, the first organization we have is the Bank of Canada. The second organization is Canadian Manufacturers and Exporters. We have the Certified General Accountants Association of Canada, the Public Service Alliance of Canada, and we have TSGI-Chartered Accountants.

Welcome to all of you. Thank you for being with us this afternoon. You each have five minutes for your opening statement.

We'll start with Mr. Turnbull and we'll work our way down the row. Then we'll have questions from members after that.

3:30 p.m.

Robert Turnbull Special Counsel, Financial System, Bank of Canada

I guess I'd better hurry. Thank you very much, Mr. Chairman, and honourable members of the committee. The Bank of Canada is very pleased to appear before the committee today. What we've been asked to talk about to assist the committee are the amendments in part 4, division 3 of Bill C-45. These are the amendments to a piece of legislation that I'm sure keeps you up late at night called the Payment Clearing and Settlement Act .

What I'd like to do is deliver a fairly brief opening statement. It is a fairly technical topic. I tried to be as clear as I could. Then I'd be pleased to try to answer your questions about these particular amendments.

I will begin in French.

At the 2009 G20 Summit in Pittsburgh, the leaders agreed that standardized over-the-counter derivatives contracts should be cleared through central counterparty clearing systems, by the end of 2012.

A central counterparty is a financial market infrastructure that stands between buyers and sellers in financial transactions, ensuring that obligations will be met on all contracts cleared through the CCP.

By managing and mitigating counterparty credit risk, central counterparties have the potential to reduce systemic risk, both globally and in Canada. They reduce the potential for financial shocks to be transmitted through the financial system and enable markets to remain continuously open, even in times of stress.

About a month ago, Canadian authorities reconfirmed their G20 commitment to central clearing and indicated that Canadian participants in the derivatives market can respect this commitment by clearing derivatives contracts through the global, cross-border clearing systems that are currently being developed in the United Kingdom and the United States.

Regardless of whether derivatives are cleared through a central counterparty in Canada or abroad, Canadian laws will be applied to determine the rights and obligations of Canadian participants and their customers. It is therefore important for financial stability in Canada that the transfers of assets among central counterparties, Canadian participants and their customers for the clearing and settlement of derivatives transactions be protected from possible legal challenges in the event that a Canadian participant were to become insolvent.

The main statute in Canada for protecting clearing and settlement systems from legal challenges in the event of the failure of a participant is the act that we're dealing with here, the Payment Clearing and Settlement Act, or as we call it, the PCSA. The PCSA gives the Bank of Canada responsibility for the regulatory oversight of clearing systems that could pose systemic risk. The PCSA also provides a number of important legal protections for these systems. In particular, it ensures that the rights of a clearing house to be paid, to settle transactions and to deal with collateral deposited by participants will not be stayed or unwound under the insolvency statutes if a participant defaults.

The purpose of these protections is to ensure that a clearing house will be able to exercise its legal rights to settle the system within a reasonable timeframe following a default and that it will have sufficient rights in the assets deposited by participants to ensure that the clearing house itself is not brought down by a failure of one or more participants, thereby propagating systemic risk.

3:35 p.m.

Conservative

The Chair Conservative James Rajotte

You have one minute remaining in your opening statement, Mr. Turnbull.

3:35 p.m.

Special Counsel, Financial System, Bank of Canada

Robert Turnbull

Okay.

The PCSA was enacted in 1996 primarily to address systems that settle payment obligations. While it's been updated since that time to provide for the clearing of securities and derivatives, many of the legal protections in the act are worded in a way that they simply do not apply to the clearing of derivatives contracts. For example, the protections for enforceability of settlement rules in section 8 of the act are limited to clearing house rules that provide for the calculation, netting or settlement of payment obligations. It's doubtful whether these necessary protections extend to the clearing of derivatives contracts and the transfers of collateral and other assets that support derivatives clearing systems.

To sum up within the time that I have, the purpose of these amendments is simply to fix up the wording of the PCSA so that the legal protections that it provides clearly apply to the type of clearing that goes on in these now all-important central counterparty systems for clearing derivatives.

I'll add one final point. This has a competitive aspect as well, because currently Canadian banks that were very active in the derivatives markets are restricted from participating in some of these offshore CCPs because of the concerns of those CCPs and their regulators about potential gaps in Canadian law.

Thank you.

3:35 p.m.

Conservative

The Chair Conservative James Rajotte

Okay, thank you very much for your presentation.

We'll now hear from the Canadian Manufacturers and Exporters.

3:35 p.m.

Martin Lavoie Director of Policy, Manufacturing Competitiveness and Innovation, Canadian Manufacturers and Exporters

Thank you very much, Mr. Chair, and members of the committee. Thank you for inviting us to appear today on Bill C-45.

CME represents about 10,000 manufacturers and exporters across the country who account for 80% of Canada's manufacturing production and over 90% of all exports of goods and services. Innovation and productivity are obviously two increasingly important drivers of manufacturing growth in industrialized countries, and Canada is not an exception.

In the last 10 years, Canadian manufacturers have had to cope with increased competition from developing markets combined with a very rapid appreciation of the Canadian dollar. The only sustainable strategy in the long term is a stronger focus on innovation and productivity. From that perspective, I'll focus my remarks today on the proposed changes to the scientific research and experimental development tax credit, the SR and ED, which is, for our members, the most important issue in this legislation.

The Canadian manufacturing sector, despite representing now about 14% of Canada's GDP, accounts for 55% of all business R and D expenditures in Canada. It is by far the most R and D intensive industry in the country. Roughly half of SR and ED users are actually manufacturers.

Last week, CME published a special report on the economic impact of the proposed changes to SR and ED on business innovation in Canada. The first conclusion is that proposed measures will result in a net diminishment of R and D performed in Canada. We estimate that all proposed measures by the government will reduce R and D tax incentives in Canada by $750 million a year starting in 2016-17. To give you an idea of the size this amount represents, it's 5% of all business R and D expenditures in Canada last year. In our sector, according to our latest management issue survey, 69% of manufacturers will reduce R and D spending while another 20% will start looking at other jurisdictions to conduct R and D activities as a result of these changes. We estimate that the full impact of these changes on actual business R and D expenditures in Canada will be approximately $1.5 billion every year.

Our report also compared the generosity of the R and D tax credits for large companies in different countries. The international competitiveness of our R and D tax credit will fall from number 13 to number 17 in the OECD as a result of the 5% proposed reduction in the tax credit.

The budget also proposes to completely eliminate capital expenditure from the tax base. Again, no other sectors of our economy will be impacted as much as the manufacturing sector, which tends to have more capital intensive R and D activities. While on average in the overall economy only about 5% of all R and D expenditures are related to capital, in our sector it is more than 30%.

Our report compared the fiscal treatment of capital expenditures related to R and D in other countries. The vast majority of countries studied provide either a tax credit or a rapid depreciation rate, such as the U.K., for example, for capital expenditures related to R and D. Again, our international attractiveness as a destination for R and D will decrease.

Another change in the budget was the reduction of the proxy used for claiming overhead costs under the SR and ED program. By proposing to reduce the proxy from 65% to 55%, the government estimates that the proxy is too generous, and that reducing it would best reflect the actual overhead costs of companies. We have not seen any evidence or analysis provided by the Department of Finance that suggests this is really the case. We rather believe that the use of the proxy has to do with the simplification of the claim process, as suggested by the Jenkins panel in their report. Therefore, the government should proceed with a full analysis before making a change that will make more companies turn to the traditional method of claiming overhead instead of using the proxy. We think this will increase compliance costs for companies, and it will also add a burden on CRA's auditors. That was also a key recommendation of the Jenkins report.

In conclusion, there are three ways of looking at the impact of these proposed changes on business R and D. In terms of actual dollars, as I said, changes would reduce business expenditures in R and D to an estimated $1.5 billion a year once all the measures are implemented. In terms of taxation of large companies, the negative impact of the 5% reduction in SR and ED exceeds by far all the benefits that resulted with the corporate income tax, CIT, cuts that have taken place at the federal level since 2008, if you look only at the large manufacturers.

In terms of international competitiveness and our capacity to attract foreign investment from large R and D performers, our ranking would decrease from number 13 to number 17. Even more importantly, all the major developing countries such as India, China, Turkey, and Brazil will now offer more advantageous R and D tax credits, according to our report.

We are making three main recommendations that will mitigate the negative impact of these proposed changes.

The first one is to provide more direct support to large companies by way of a partially refundable tax credit that would be targeted at projects related to enhance productivity. The second one is to allow companies to more rapidly depreciate the cost of machinery and equipment used for R and D purposes. The third one is to conduct a more detailed analysis of overhead costs and the use of the proxy before implementing the 10% reduction.

Thank you very much for your time. I'm available to respond to questions.

3:40 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you very much for your presentation.

We'll now hear from the Certified General Accountants Association of Canada, please.

3:40 p.m.

Carole Presseault Vice-President, Government and Regulatory Affairs, Certified General Accountants Association of Canada

Mr. Chair, members of the committee, my name is Carole Presseault. I am the Vice-President of Government and Regulatory Affairs of the Certified General Accountants Association of Canada, an organization that represents over 75,000 CGAs across Canada. We are happy you invited us to participate in your study on Bill C-45.

This is a very large bill. Much of its content is of considerable interest to our members. However, my comments today will focus on two main aspects—the Agreement on Internal Trade, which is covered in division 14, and the tax system.

Our comments today will concern two specific measures related to the Agreement on Internal Trade contained in division 14 and measures regarding the tax system. The measures included in division 14 implement financial penalties and enforcement provisions to support the decisions of panels that are formed to adjudicate disputes between parties to the Agreement on Internal Trade.

I've skipped a page, I'm sorry. I'm going to come back.

These measures implement changes to the Agreement on Internal Trade, which were agreed to by federal, provincial and territorial governments over the past few years. Let me remind you that the purpose of the Agreement on Internal Trade is to reduce, and where possible, eliminate unnecessary barriers to interprovincial trade and labour mobility.

It's not a perfect agreement and the Committee on Internal Trade was formed to ensure the agreement continues to meet its objectives and to improve the agreement that was signed more than 12 years ago. Implementing the measures in division 14 is a demonstration of the federal government's commitment to comply with the obligation under the agreement.

The measures contained in the bill before us implement financial penalties and enforcement provisions to support decisions of panels that were formed to adjudicate disputes between parties. These measures address a serious flaw. Prior to this, there was little incentive for governments to comply with panel rulings, as we discovered through our own experiences.

By the way, it's also worth noting that until the measures in division 14 are enacted, the Canadian government has lost its right to access the AIT's dispute resolution provisions. We support the measures contained in the bill, but we know there's so much the Committee on Internal Trade can do to further improve the agreement, particularly to improve the efficiency and accessibility of the dispute resolution process.

The process is a long and costly one, and citizens cannot access the process independently of government. Also needed are improvements to the AIT governance that would enable more stakeholder engagement and improved transparency. However, we are encouraged that ministers have agreed to develop a chapter on technical barriers to trade. This is a problematic issue in the approach to trade both interprovincially and internationally, and success in this area would help advance two of the government's priority issues in increasing international trade and reducing red tape.

The timing couldn't be better to address these issues. In December, the federal government will become chair of the Committee on Internal Trade and will have the opportunity to drive the agenda. We encourage the government to seize this opportunity to make the agreement a truly effective tool for strengthening the economic union.

Committee members won't be surprised to hear us talking again about taxation. We note with interest that part 1 of Bill C-45 implements a number of income tax measures and related measures proposed in the March 2012 budget. Measures that we've had the opportunity to comment on in previous processes include the registered disability savings plan, and as my colleague Mr. Lavoie mentioned, the SR and ED tax credit, and of course, international taxation. Many of these measures stem from the work of advisory panels, for example, the Canadian System of International Taxation, and the SR and ED measures from the Jenkins panel.

This leads me to highlight once again the importance of expert advisory panels in advancing change to public policies. I'm confident that members would agree with us, given the recommendations in last year's pre-budget consultations.

I want to talk about a measure that we did not see in the 2012 budget which continues to be a priority for our members and for taxpayers everywhere. It is the issue of a sunset provision to ensure that tax changes are enacted within a reasonable period of time after being introduced in a budget.

Today, you focus your efforts on improving policy changes announced in budget plan 2012, but we need to remember there are still hundreds of tax measures from previous federal budgets that still have not been enacted. We would encourage the consideration of the application of a sunset clause to ensure the coming forward of these amendments in a reasonable period of time.

I'd like to remind you that the short title of the bill is the jobs and growth act, 2012. We submit that removing barriers to internal trade and mobility and taking steps to simplify Canada's tax system are critical to jobs and growth, and Canada's long-term prosperity.

Thank you. I would be happy to answer any questions.

3:45 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you for your presentation.

We will now hear from the Public Service Alliance of Canada, please.

3:45 p.m.

Chris Aylward National Executive Vice-President, Public Service Alliance of Canada

Mr. Chair and committee members, thank you for allowing me the opportunity to present to you this afternoon.

My name is Chris Aylward. I am the national executive vice-president of the Public Service Alliance of Canada. We represent approximately 170,000 federal public sector workers.

The Public Service Alliance of Canada has major concerns with the latest budget implementation bill, Bill C-45. Many of these legislative changes will have a drastic impact on Canadians and should not be rushed through Parliament without time for careful consideration, scrutiny, and debate.

My first comments are on the proposed changes to the federal public sector pension plans. These unilateral changes include increasing the normal retirement age from 60 to 65 for new hires beginning in 2013. PSAC opposes Bill C-45 because it is an attack on younger generations who make up the majority of new hires in the federal public sector. The increase in the retirement age will generate a two-tier system, creating inequities between young and older workers in the public service, forcing younger workers to retire at an older age. The public service pension plan is sustainable, and there is no reason to penalize young workers. Members of this committee should also be aware that the Canada pension plan and Quebec pension plan payments are integrated with federal public service pensions, and that the average annual pension received by retired federal public sector workers in 2011 was $25,991. PSAC calls on the government to focus on strengthening pensions for all Canadians, instead of weakening pension plans and retirement security for those dedicated to public service.

I also want to touch on a change to the Canada Revenue Agency Act contained in Bill C-45. I speak from a very personal advantage on this. This change will put the agency back under the authority of Treasury Board to oversee CRA's negotiating mandate, as well as certain terms and conditions of employment. This is a serious step backwards. Not only does the change in authority contradict some of the very reasons for creating the agency in the first place, it undermines a decade of hard work by the PSAC and the agency that have been put in place to develop effective labour relations. In fact, during the last two rounds of negotiations, both parties put considerable effort into reaching a settlement with the agency before the current collective agreement had expired. This is a first in the federal public service.

The PSAC has other concerns about Bill C-45 that echo much of the criticism being expressed by environmental, scientific, and aboriginal groups, and individual Canadians. I will not address these other concerns due to time constraints today; however, I will be providing the clerk of the committee with a short summary of our additional concerns for your information.

We believe Canadians are not well served by omnibus bills. Bill C-45 should be broken down into individual pieces of legislation so that parliamentarians and all Canadians have ample opportunity to study and understand the consequences of the proposed changes.

Before I close, I will take a few moments to reiterate our concern about significant changes to programs and services that affect the livelihoods, environment, and safety of Canadians, changes that are being made without transparency, and without hearing from those who depend on the services. Search and rescue and coast guard stations are being shut down, despite the pleas to reconsider coming from coastal communities. Veterans Affairs district offices are being closed across the country, including the one and only office in Prince Edward Island, located in Charlottetown. Case loads are almost doubling, despite the desperate situation faced by our veterans. The Department of Fisheries and Oceans' budget and fisheries habitat staff are being cut, yet the recently issued report of the Cohen Commission of Inquiry into the Decline of Sockeye Salmon in the Fraser River reaffirmed the importance of restoring the Department of Fisheries and Oceans' mandate and resources to protect fish habitat.

We believe there is a need for more transparency about the scope and impact of all planned cuts to federal services and programs, and a need to listen to Canadians being affected.

Thank you very much. I look forward to your questions.

3:50 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you very much for your presentation.

We will now hear from TSGI-Chartered Accountants, please.

3:50 p.m.

Ken Cudmore President, TSGI-Chartered Accountants

Good afternoon, Mr. Chairman and committee members.

By way of introduction I'd like to make a few comments about my background as it relates to SR and ED and R and D funding.

I have more than 30 years as a chartered accountant, with a computer science degree and an MBA. In the past I was a full-time faculty member at the University of Calgary and taught the most recent SR and ED courses for the Institute of Chartered Accountants of Alberta. For the past 10 years my practice has consisted of about 10 qualified scientists and CAs who focus solely on the SR and ED area, serving multinational corporations as well as small corporations, mostly in western Canada.

I believe I have a unique multidisciplinary outlook on SR and ED. I am from the trenches. I've also worked with the National Research Council's industrial research assistance program, IRAP, and our firm was the company that submitted the first successful shale gas technology claim in Canada. I've served as the inaugural chairman of the joint CRA and industry information technology oversight committee for the SR and ED prairie region. I am an active participant as an angel investor in western Canada, both through direct investments and also through membership in Venture Alberta, which is reputed to be one of the most active venture forums in Canada. This provides me with further insight into the technology start-up community.

To begin, I would like to summarize the overall impact that we anticipate the changes proposed in Bill C-45 will have on SR and ED performers at the ground level.

Our company has gone through a detailed modelling process to simulate the SR and ED impact of the 2012 budget on our clients, who should be considered to be a cross-section of western Canadian companies. We did this because the microeconomic nuances of how policy decisions affect individual organizations are not always visible from a macroeconomic viewpoint. Our conclusion is that Canadian-controlled private corporations, or CCPCs, are likely to experience a 5% to 10% reduction in investment tax credits, whereas non-CCPCs—those are the big ones—can expect more drastic reductions, on the order of 30% to 40%.

The industry consensus communicated to us both by our clients and by contacts is that the reductions in the SR and ED benefits will unquestionably reduce their overall ability and willingness to conduct research in Canada and will reduce jobs. This should be a concern for all Canadians.

I am also particularly concerned about the impact of the proposed changes on the energy industry, which will have effects nationwide. The implications can be extrapolated to numerous industrial sectors in Canada over the long term.

The primary story of oil and gas in Canada is no longer a story of wildcat wells and exploration uncertainties. It is primarily a technology story, that is, of using new technology to unlock unconventional resources that were previously inaccessible. This fundamental shift is highlighted by the fact that in 2010 oil sands production overtook conventional oil as the leading production method in Canada, with 51.9% of production. The technology needed to turn unconventional resources into producible reserves and a contribution to our GDP is extraordinarily sophisticated and extraordinarily expensive, with sourcing requirements that reach beyond Alberta's borders.

Every day we see Canadian energy companies taking enormous risks to develop new technology. The largest spenders in oil and gas research are most commonly in the non-CCPC category, and they will be the hardest hit by the reduction in investment tax credits. In particular, the reduction in the general ITC rate from 20% to 15% and the elimination of capital expenditure deductions will severely impact these organizations.

In our view, the impact these changes will have on the energy industry warrants re-evaluation of the proposed policy changes. We believe that public innovation policy is best delivered in an indirect form that organically results in leveraging industries in which Canada has a natural advantage in developing, commercializing, and exploiting technology.

There are few other industries in Canada that have advantages such as we have in the energy sector. We are world leaders now and we need to stay there to protect Canada's economic future. We need to enhance our competitiveness in this increasingly technological field to build world champions. Reductions to the SR and ED program will dramatically alter the positive path that we are currently on in the energy industry along with many sectors upon which the industry impacts.

Lastly, I would like to comment on the critical issue of how the proposed changes will affect jobs in Canada.

R and D performers in western Canada tell us that they will react to the concerns outlined above by reducing their research efforts in Canada. This has already started to happen. Research capital is highly liquid, and these companies are not afraid to redistribute their funds to other jurisdictions. They also recognize that we are locked in a global war for talented innovators and that they must either initially attract and then keep our innovators in Canada or go to where these individuals are.

We are deeply concerned that the net effect of the proposed SR and ED changes will be the loss of high-value innovation jobs. This will have significant and long-term negative effects upon our global competitiveness.

Thank you for this opportunity.

3:55 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you very much for your presentation.

We'll begin members' questions with Ms. Nash, for five minutes, please.

3:55 p.m.

NDP

Peggy Nash NDP Parkdale—High Park, ON

Thank you, Chair.

Welcome to all of the witnesses today.

I want to begin with the two presentations on the SR and ED tax credit. I will ask you first of all, Mr. Lavoie, how many companies your organization represents.

4 p.m.

Director of Policy, Manufacturing Competitiveness and Innovation, Canadian Manufacturers and Exporters

Martin Lavoie

It's about 10,000 companies.

4 p.m.

NDP

Peggy Nash NDP Parkdale—High Park, ON

How many of those companies did you say on average would take advantage of the SR and ED tax credit?

4 p.m.

Director of Policy, Manufacturing Competitiveness and Innovation, Canadian Manufacturers and Exporters

Martin Lavoie

What I said is that roughly half of the SR and ED claimants are manufacturing companies. I would expect more than 80% of our members to claim SR and ED credits.

4 p.m.

NDP

Peggy Nash NDP Parkdale—High Park, ON

As the voice of the manufacturing sector, you understand and have conveyed to us the importance of this tax credit. If I understand you correctly, the sector that you represent provides 55% of R and D in Canada.

As I understand it, and correct me if I'm wrong, over the last decade we've lost about one in four manufacturing jobs. Is that correct?

4 p.m.

Director of Policy, Manufacturing Competitiveness and Innovation, Canadian Manufacturers and Exporters

Martin Lavoie

It is roughly that, yes.

4 p.m.

NDP

Peggy Nash NDP Parkdale—High Park, ON

That occurred through a variety of factors. Obviously we had an economic downturn, and there's global competitiveness, technology, a variety of factors.

It seems that most of the businesses I speak with talk about the importance of investing in R and D, the importance of innovation, the importance of being cutting-edge when it comes to new product development.

Would you agree that these are key factors for our economy, and especially for the manufacturing sector?

4 p.m.

Director of Policy, Manufacturing Competitiveness and Innovation, Canadian Manufacturers and Exporters

Martin Lavoie

Yes, that's correct. Innovation and productivity are two very important drivers of business growth in our sector in the next decade, for sure.

4 p.m.

NDP

Peggy Nash NDP Parkdale—High Park, ON

If we look around the world at some of the AAA rated economies, such as the Nordic countries, Germany, Australia, is that the approach they are taking? Are they investing in R and D and innovation? Is that what's leading to their success?

4 p.m.

Director of Policy, Manufacturing Competitiveness and Innovation, Canadian Manufacturers and Exporters

Martin Lavoie

There is a variety of models. I would say that very few countries do not offer tax credits for R and D; the vast majority do. As to the generosity of the tax credit, Canada's is not the most generous tax credit, if you look at large companies.

Keep in mind that SR and ED is in fact two systems. There is one for Canadian-controlled private corporations, which is a refundable 35% tax credit. The other one is a 20% non-refundable credit for what you call large companies or non-CCPCs.

That being said, keep in mind also that non-CCPCs are not necessarily just large multi-nationals. Correct me if I'm wrong, but I think the threshold is $400,000 in taxable income. Many mid-sized companies would fall under the large company definition.

4 p.m.

NDP

Peggy Nash NDP Parkdale—High Park, ON

Okay. I noted that the CEO of your organization, Jayson Myers, said recently that he's concerned that this change is moving us in the wrong direction by increasing taxes on the companies that are investing most in R and D, and that it's going to weaken the ability of companies in Canada to compete for investment and every R and D dollar they spend.

I assume that this, in summary, is the approach your organization is taking.

4 p.m.

Director of Policy, Manufacturing Competitiveness and Innovation, Canadian Manufacturers and Exporters

Martin Lavoie

I guess it's twofold. There are of course some companies that don't have the capacity to move R and D to other jurisdictions. I would say that for those companies the options are limited. Since we're talking about larger companies, many of them actually have this mobility. They will look for the environment in which they get the most advantageous return for their investment.