Evidence of meeting #37 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was amendment.
A video is available from Parliament.
3:35 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
It's clause 7, I think, the volunteer firefighter tax credit.
3:40 p.m.
Conservative
3:40 p.m.
NDP
Murray Rankin NDP Victoria, BC
We certainly support this. We're glad to see the government adopting the idea of a volunteer firefighter tax credit. It was something the New Democrats had in their 2011 platform. It's long overdue for our brave volunteer firefighters.
We wholeheartedly support this long-overdue measure.
3:40 p.m.
Conservative
3:40 p.m.
An hon. member
Could we have a recorded vote, please, Chair?
3:40 p.m.
Conservative
The Chair Conservative James Rajotte
We'll have a recorded vote on clause 7.
(Clause 7 agreed to: yeas 9; nays 0)
3:40 p.m.
Conservative
The Chair Conservative James Rajotte
What is the next clause that members wish to discuss? Can I group any more to together?
3:40 p.m.
Conservative
3:40 p.m.
Conservative
The Chair Conservative James Rajotte
Can we proceed to a vote on clause 23?
Can I group any more together?
3:40 p.m.
Conservative
The Chair Conservative James Rajotte
Okay.
(Clause 23 agreed to)
Colleagues, I hear the bells. We have 30-minute bells. There will be a vote at about 4:10 p.m. Can I ask for unanimous consent to go until about five minutes to four?
3:40 p.m.
Some hon. members
Agreed.
3:40 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you.
We will go to discussion on clause 24.
(On clause 24)
3:40 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Mr. Chair, this is one of those clauses.... I can only hope this is the unintended consequences version of a budget implementation act. There has been no logical economic argument offered by the government to get rid of labour-sponsored funds and the tax credit associated with them. We asked officials; we asked witnesses. The government preferred no witnesses that were able to come forward.
This was particularly advantageous to small and medium-sized businesses in Quebec. The transition out of this fund and this opportunity for venture capital makes zero sense at all, particularly with the fragile economy that my Conservative colleagues continue to talk about.
We heard from witnesses that labour-sponsored venture capital corporations and the tax credit associated with those programs were incredibly helpful and advantageous. No compromise solution has been offered up by the government; there is no other fill-in program that would offer venture capital a way into this particular market. The venture capital market, as my friend Mr. Adler would know, in Canada is at a great disadvantage to that of the U.S., for instance.
For the Conservative government to say that a venture capital program that was working, as this one was, as we heard effectively from every witness we heard from.... We didn't hear anybody saying it wasn't worth government expenditures or was a waste of time. We heard none of my Conservative colleagues speak against it either, that I can recall. It makes zero economic sense. Of course the official opposition, the New Democrats, will be voting against this clause.
Again, I find it somewhat surprising. From the testimony we heard, which was overwhelmingly compelling, this was a program that was effective, that brought venture capital money to the table, was sponsored jointly with labour, which again made sense, was a long-running program, very effective for Canadian small and medium-sized businesses, in particular.... So much for prosperity from my Conservative friends across the way.
That's what I wanted to say on the LSVCC tax credit phase-out.
3:40 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Thank you.
The committee members know how vocal I was about our position on this issue. Last year, a number of witnesses appeared before us, representing either labour-sponsored funds or private equity funds. The venture capital industry has clearly demonstrated that the contribution of labour-sponsored funds was essential to the administration of venture capital in Canada. Witnesses indicated that eliminating tax credit for labour-sponsored venture capital funds would jeopardize Canada's health in terms of venture capital, and that the effects of that elimination were being felt in Ontario.
Although Quebec is one of the main protagonists in that area, we also had a witness from Nova Scotia. It would be beneficial for that and other provinces to draw inspiration from the Quebec model in order to develop their venture capital system and improve their health in terms of venture capital. Why? Canada ranks near the bottom of the OECD countries, while Quebec is among the leaders in this area, with only the United States and Israel ahead of it.
The Conservative government decided to end this tax credit without conducting any impact studies on the level of Canadian venture capital. The officials in charge of that sector confirmed this fact. By proposing such an amendment, the government is continuing along the same path.
I appeal to the government—which will probably once again vote to phase out this credit—to reconsider its position and analyze the consequences of this action, especially if the Canadian economy and venture capital matter to it.
As my colleague said, that is why we will vote against this provision.
3:45 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Mr. Chair, I don't know where my honourable colleagues were when the witnesses were here, but there were numerous witnesses who said that this particular program is no longer effective, that it's not working. In fact, it has already been eliminated by some of the provinces involved as well. I don't think Mr. Cullen was even on the committee at the time we had the witnesses, so I understand why he wouldn't have heard that.
The government recognizes the importance of venture capital, which is why we have established and implemented the venture capital action plan, for this very reason: it is more effective and more efficient at getting capital to where it is needed to promote jobs and a healthy economy.
May 27th, 2014 / 3:45 p.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
Further to Mr. Saxton's comments, I was present, actually, during the testimony, and we did hear from several expert witnesses and members of the Canadian venture capital and private equity community who expressed the view that the VCAP, venture capital access program, is not up and running, and that, in the interim, to eliminate the labour-sponsored venture capital tax provisions is irresponsible and threatens an already precarious venture capital industry in Canada. It has a disproportionate impact in Quebec and parts of Atlantic Canada, but it affects the whole country. It's a very important part of our innovation economy. Certainly, these changes ought not occur until the VCAP is fully operable.
Further to that, I recently attended the National Venture Capital Association annual meeting here in Ottawa and spoke to members of that organization. Many of them felt that in fact the VCAP is not fully operable yet.
As such, we don't support these changes.
3:45 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I would like to respond to Mr. Saxton's comment.
I was sitting on this committee last year and I heard the testimony. Only one witness—the person from the University of Calgary—agreed with Mr. Saxton and said that the program was not working. All the other witnesses had the opposite opinion, be it Canada's Venture Capital and Private Equity Association, the Board of Trade of Metropolitan Montreal or the Fédération des Chambres de commerce du Québec—the federation of Quebec chambers of commerce. Many companies and even government witnesses representing the information technology industry felt the same way.
They were told that the labour-sponsored venture capital funds were voluntarily proposing to invest in the government's venture capital action plan in order to double or triple the amounts invested by the government, in exchange for the government's commitment not to reduce the tax credit. The government could have benefited from over $2 billion injected into that fund, compared with the $350 million annual cost of the program it was planning to abolish. The government said no to that proposal.
I think that the events that occurred and the testimony heard in this committee over the course of last year and this year certainly reflect the willingness of the Canadian venture capital industry to maintain the tax credit. That is also the desire of business people and company representatives, especially in Quebec, where the industry is very strong. Even entrepreneurs from outside Quebec agree when they learn about the potential contribution of labour-sponsored funds to the Canadian economy and to the government's plan for improving venture capital.
I think the opposition's arguments do not hold up. Once again, I invite my government friends to reconsider their position in order to ensure the health of Canada's venture capital industry.
3:50 p.m.
Conservative
3:50 p.m.
Conservative
Mark Adler Conservative York Centre, ON
Chair, I wasn't going to say anything on this until Mr. Cullen mentioned my name. I feel obligated to respond.
As far as the LSVCCs go, the empirical evidence is somewhat clear that these funds are underperforming and that they lag in both U.S. and Canadian indexes, so it's wrong to say uniformly that the evidence we heard today or have heard in the past was that all of the funds are performing well and that they should be retained. It wasn't a scientific sampling of what we heard. The empirical evidence is clear, that they are underperforming not only here but also in the U.S. So there is a reason for their being changed in the way they are.
I thought I would clarify that for Mr. Cullen.