Finance Committee on Nov. 14th, 2023

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you.

[The Chair, Liberal, Peter Fonseca]

We'll now go to MP Lawrence.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you.

My questions are for Mr. Ciappara. I want to talk a bit.... Across the aisle, we've had lots of discussion about productivity, costs, etc. One of the things that, of course, productivity requires is capital, and massive amounts of capital, because new equipment is not inexpensive. We need to attract capital from around the world.

When we introduce uncertainty in the tax system, such as retroactive taxation, even if it's with the best of intentions, it's my assertion, sir—and I'm looking for either your agreement or disagreement—that it has a negative impact of rejecting capital or having less capital, which will actually hurt some of the most vulnerable Canadians because those are investments in manufacturing and quality jobs for individuals who are not in the middle class but wish to join it.

Would you share my assertion, or would you challenge it?

[Alex Ciappara]

We would agree with that assertion. I would also add that we disagree with the idea of sector-specific taxes like the ones that were incurred by our industry last year. Yes, we are against retroactive taxation as well as sector-specific taxation.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you for that.

As I alluded to with Ms. Jones, I believe there is an opportunity for Canadian banks to take on additional responsibility with respect to the ecosystem Ms. Jones talked about with respect to innovation. We should take a bigger risk appetite, if I could be so bold, in order to help Canadian ideas go to Canadian businesses.

What would be your response to that?

[Alex Ciappara]

This is part of the tax reform we were recommending in our pre-budget submission. Increasing investment in machinery and equipment innovation is critical. Unfortunately, our tax code was written several decades before intangible assets were part of the lexicon. I think there needs to be a review of the tax code.

In terms of bank participation, banks participate in the venture capital ecosystem. They've contributed to the Canadian business growth fund that was established a few years ago. They're contributing in that way. They're contributing in terms of advice. They are contributors.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you very much for that.

There is one clarification that I might add. It's actually been over 50 years now since there was a significant reform to the tax code. It was a white paper with the introduction in 1970 of the capital gains tax. It's been actually half a century since any significant reform there.

[Alex Ciappara]

You're proving my point.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Exactly.

Ms. Pohlmann, in your survey, you stated that the majority of your members put the first issue of concern as taxation. Philip Cross, who came before our finance committee, said that in addition to all of the technical issues that plague the Canadian economy, like the lack of capital, regulatory reform and overtaxation, there's also a cultural issue. We need to be rewarding those business owners.

When we heard what happened at the onset of the mandate of the Trudeau government, that business owners were in fact tax cheats, what type of dampening effect do you think that had on your business owners? No one works harder than business owners, working 24-7 just trying to stay aboard.

[Corinne Pohlmann]

Certainly business owners want to feel as though they're being supported and recognized for the risks they're taking to open, run and grow a business and employ people. When words, whatever they may be, are said that make them feel that they are not respected for that, it can have a very big dampening effect on their enthusiasm.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

On a more rational side of things, it only makes sense to me that, if we were to reduce the burden on Canadian businesses, nearly every economist from Keynes to Milton Friedman would agree that we would get more prosperity. Would you agree with that?

[Corinne Pohlmann]

Generally speaking, yes, that would be true.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Lawrence.

MP Dzerowicz, go ahead for five minutes.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

Thanks to the panellists for all of their testimonies and their patience today.

I'll continue with you, Mr. McKay.

The presentation I received last year from the former president also talked about congestion and how congestion around the whole city of Toronto area is really a huge disincentive for people and goods being able to move. Is there a role for the federal government to help support that? If you have a recommendation on that in terms of alleviating some of that congestion, I would love to hear it from you. If you do not, I'd love something in writing to us moving forward.

[Reid McKay]

We can certainly send you something by email, but suffice it to say the board definitely sees a role for the federal government in alleviating the congestion problems—everything from just facilitating innovative ways to ensure that goods and people move more quickly through our system to supporting the capital and servicing costs of major highway arteries through the city.

[Julie Dzerowicz, Liberal, Davenport, ON]

I look forward to very specific recommendations from you. I think those would be very helpful.

I'll turn my attention to Mr. Ciappara.

Is the CBA supportive of open banking?

[Alex Ciappara]

We're supportive of responsible innovation. Canadians have a tremendous amount of trust and confidence in their banking system and in their financial system. I think we have struck the balance in this country between providing excellent customer experience and having stability in the financial system. That should continue with whatever reforms are brought to this sector. We understand that the report is sitting with the Minister of Finance and we're willing and able to help the Minister of Finance with whatever the government decides.

[Julie Dzerowicz, Liberal, Davenport, ON]

How is the banking sector transforming its lending and investing activities to line up with Canada's efforts to decarbonize and to actually help invest in green finance or sustainable finance?

[Alex Ciappara]

There are a few things. Recently OSFI, the Office of the Superintendent of Financial Institutions—our regulator—put in place new regulations around the climate transition: guideline B-15. That outlines expectations around boards and the institutions they manage with respect to the climate transition. Those include increased disclosure around carbon footprints—not just theirs but also those of their customers. They're working that out right now. Guideline B-15 was implemented just this year. It's still early days. We as an organization are beginning to speak to several groups to help us understand how they're dealing with this. For instance, last week we spoke with CMHC to understand how they're dealing with transitioning to a greener model when it comes to mortgage financing. We had that conversation, and I think the big thing about that is that they're updating the regulations, and we're in the process of doing that.

In terms of our clients, we're helping them and providing them with financing if they need or want to transition to greener technologies.

[Julie Dzerowicz, Liberal, Davenport, ON]

I'll just stop you there, Mr. Ciappara, because I have only so much time. I think that largely there is a belief—and I don't know if this is true or not—that banks aren't moving fast enough in terms of transitioning their lending and investing to make sure they're really investing more in financing the transition to a more sustainable green economy. We need billions of dollars to be able to do that transition, and I really encourage the banking sector to do that. If there's something we as the federal government can do to help accelerate that, please let us know.

I have another question and again maybe you can spend 30 seconds on this. How are banks supporting the clean energy and technology tax incentives that we announced in 2023? Is there something more we can do to better support banks to actually accelerate that support to the industry?

[Alex Ciappara]

In short, it's ultimately our customers who use those tax credits, and we're informing our customers of the tax credits that are available to them.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Dzerowicz.

Just like we did with our first panel, members, we're going to give an opportunity to each party for one final question of our witnesses or for a comment.

We're starting with MP Chambers.

[Adam Chambers, Conservative, Simcoe North, ON]

I wish I had more time with all of you.

Ms. Jones, you brought up the SDTC. I'm just curious. Does the industry still have confidence in the leadership of SDTC?

You can add any comments you'd like.

[Krista Jones]

In the industry, we did a survey of a lot of the companies in our FINTRAC portfolio on what was going on with SDTC. Everybody is supportive of the intention behind what the investments need to be. Everybody is also supportive of making sure that it's run in a conflict-free way that doesn't get in the way of delivering the benefits that it's intended to do. Everybody wants a rapid resolution and the ability to move forward with that program.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Chambers.

MP Baker, you can have one question or a comment.