Mr. Speaker, I rise to start the second reading debate on the jobs and economic growth act. This ambitious legislation includes key elements of budget 2010 and year two of Canada's economic action plan. The jobs and economic growth act, a key component of that plan, is a testament to the proactive and aggressive actions that our Conservative government has taken; actions to ensure that not only Canada was protected from the worst of the global economic storm but that we will lead the global economic recovery.
As CIBC economist Warren Lovely recently noted:
Simply put, highly rated Canada offers safe harbour.... Few advanced economies boast stronger real GDP growth prospects--a view endorsed by our own economics department, a broad cross section of private sector banks, the Bank of Canada, the IMF and...the OECD. Meanwhile, Canada's near-term growth in nominal GDP should lead the G7...
Our Conservative government, through today's legislation, is working to address the long-term opportunities and challenges that our country will be confronting in the years ahead.
The jobs and economic growth act would accomplish that objective by bringing forward a range of economic measures to contribute to Canada's advantage now and for the future, for example, by: eliminating tariffs on manufacturing inputs and machinery and equipment; eliminating the need for tax reporting under section 116 of the Income Tax Act for many investments; narrowing the definition of taxable Canadian property; implementing important changes to strengthen federally regulated private pension plans; implementing the one time transfer protection payment to provincial governments announced in December 2009; regulating national payment card networks and their operators, if necessary; enabling credit unions to incorporate federally and operate as banks; making it easier for companies to offer telecommunication services to Canadians; stimulating the mining industry by extending the mineral exploration tax credit; creating greater tax fairness between single and two parent families with respect to claiming universal child care benefit amounts; implementing an enhanced stamping regime for tobacco products to deter contraband. There is much more in this document.
The jobs and economic growth act would also help restrain and focus spending. It proposes to freeze allowances and salaries for parliamentarians and reduce what are known as governor in council federal appointments.
Let us briefly look at a few of the aforementioned highlights of this legislation and hear what Canadians are saying about them.
First, we are proposing to completely eliminate tariffs on manufacturing inputs and machinery and equipment. This bold action will position Canada as the first country in the G7 and G20 to be a tariff-free zone for manufacturing. Manufacturers across this country are applauding that.
Canadian manufacturers will be able to produce their quality goods right here in Canada without job-killing tariffs and without a web of productivity-draining red tape. This will give our manufacturers the competitive advantage they need to succeed in the global marketplace.
This important initiative will lower production costs, increase competitiveness and enhance innovation and productivity. More important, it is estimated that our move to make Canada a tariff-free zone for manufacturing will create 12,000 new, good quality jobs in the years ahead.
This legislation builds on key Canadian economic advantages, such as being home to the soundest financial system in the world, and allows us to boast the lowest tax rate in the G7 for new investment.
The jobs and economic growth act would truly make Canada an even more attractive place for new investment and for the new jobs it would create. This would also further assist in diversifying Canada's trade patterns. It would complement our Conservative government's efforts to grow freer trade with places like the European Union and India and implement recent agreements with Colombia, Panama and Jordan.
Since announcing this bold initiative, we have heard a lot of positive feedback. In earlier speeches on budget 2010, I relayed some of the feedback to the House. Today, I would like to draw the attention of the House to even more applause that has been received since that time.
We have heard from business leaders like Linda Hasenfratz, CEO of Linamar Corporation, who praised the tariff reduction. She said, “Anything that we can do to reduce costs in terms of importing manufacturing equipment is going to be of benefit to us. We do buy a lot of equipment. We tend to spend somewhere between $180 million and $200 million a year on manufacturing equipment, so to improve the cost of that is going to be a benefit to us”.
Dani Reiss, CEO of that popular Arctic Canadian coat manufacturer, Canada Goose, also heralded it as “a great move...tariffs only made it more expensive to be a Canadian manufacturer. I think this move by the government will make made in Canada viable for more apparel companies”.
The Saskatchewan Trade and Export Partnership also calls the tariff-free zone “a big deal”, adding:
Investment in new machinery and the latest technology is one good way to more effectively produce goods and to make them more competitive. Much high-technology equipment must be imported from Europe and Asia, so eliminating tariffs helps make it more affordable for Canadian manufacturers.
Andrew Coyne, the respected public policy commentator and national editor for Macleans magazine cheered it as well. Andrew said that it is “terrific public policy, a shot in the arm for Canada's manufacturers, and a timely example to the rest of the world. It will lower costs, save on paperwork, and improve productivity. It will make Canada the G20's first tariff-free zone, and as such is likely to prove an attractive incentive to locate a plant here”.
I literally could devote my entire speech to passing along the many positive statements we have heard on the tariff-free zone for manufacturing initiatives that is simply a part of budget 2010 and legislated through the jobs and economic growth act. However, I would not have the opportunity to talk about many other great aspects of this bill, so I will move on. Maybe we could talk more about this later during the period for questions and comments.
Let us talk about the major positive pro-growth reform to section 116 of the Income Tax Act. Specifically, the bill helps by eliminating tax reporting for investments such as those by non-resident venture capital funds in a typical Canadian high tech firm. This would enhance the ability of Canadian businesses to attract foreign venture capital, fuelling job creation and economic growth. We have also heard glowing praise for this move from all across Canada.
Dave Bullock, CEO of LiveHive Systems, speaking for the Waterloo region tech cluster that is home to more than 700 technology companies, remarked:
Very simply, amending Section 116 removes one of the biggest barriers to growing successful companies in Canada - access to international investment capital.... This is a change that will give promising Canadian companies the opportunity to get to that next level.
Canada's research-based pharmaceutical companies also cheered the move as “a far-sighted approach...which will have the capacity to boost the flow of venture capital into Canada for biotechnology and biopharmaceutical companies”.
Another key element of the jobs and economic growth act is the important changes to strengthen federally regulated private pension plans. I am proud to say I was personally very involved in the development of these changes. By way of background, in early 2009, our Conservative government announced we would review issues related to pensions under federal jurisdiction, regulated by way of the Pension Benefits Standards Act, 1985.
This represented the first comprehensive review in nearly three decades. We started that process in January 2009 when we released for public comment a major research paper on legislative and regulatory regimes for federally regulated private pension plans. We followed that up with extensive cross-country and online public consultations open to all Canadians. We asked for input on the legislative and regulatory framework for federally regulated private pension plans.
From March until May 2009, I travelled across Canada from Halifax to Vancouver to Whitehorse and many places in between. What is more, despite the challenging timelines and logistical challenges, we never once left anyone at the microphone who wanted to speak. Every single person who wanted to have his or her voice heard on this very important file was offered that opportunity.
Let me take a brief moment to express my thanks to all those people who took the time to participate in that process, either in person or online. Their involvement was central and absolutely necessary for the entire process to be both meaningful and successful. During that consultation I heard very unique, personal and raw stories. This focused my determination to get it right, to ensure that this landmark study of federally regulated private pensions and whatever reforms followed from it got it right. It was just too important.
We carefully reviewed all the submissions throughout the summer and into the early fall of 2009, when we announced a package of significant reforms to federally regulated pensions that, I humbly suggest, did get it right. There is one change I am particularly pleased with and it is included in the jobs and economic growth act. Namely, it is the requirement for plan sponsors who voluntarily wind up a pension plan to fund 100% of their contractual commitments to those plan members.
Travelling around Canada, time and again I heard troubling stories of various plan sponsors who made a decision to stop offering a defined benefit plan to their employees. On too many occasions, this meant that those retirees did not receive 100% of what they had been promised and deserved. The old framework actually allowed that to occur. We thought that was wrong, and that is why we are changing that in this act.
Other key reforms to federally regulated pensions in the jobs and economic growth act consist of the following: authorizing an employer to use a letter of credit if certain conditions are met, to satisfy solvency funding obligations in respect to a pension plan that has not been terminated in whole; establishing a distressed pension plan workout scheme, under which the employer and representatives of the members and retirees may negotiate changes to the plan's funding requirements, subject to the approval of the Minister of Finance; and permitting the superintendent of financial institutions to replace an actuary if the superintendent is of the opinion that it is in the best interests of members or retirees. Much more was added into that as well.
I am happy to report that the reforms we announced were very well received by public interest groups and many commentators. Let me take a moment to share what I heard with the House. First, the National Association of Federal Retirees was “pleased to hear that the Government of Canada is taking action to strengthen the pension framework and enhance benefit security...”.
Dan Braniff, founder of the Common Front for Retirement Security, in a letter to the Minister of Finance wrote, “On behalf of the Common Front for Retirement Security, I wish to congratulate you.... This is an important milestone for creating greater security for many pensioners and plan members.... We also wish to show our appreciation for the excellent work of [the member for Macleod] who travelled across Canada and obviously listened to the voices of pensioners.... Thank you for taking this very important step for better retirement security at this very critical time”.
Raymond Bertrand, president of Bell Pensioners' Group, in a letter to my office, added, “I am writing to you on behalf of the Bell Pensioners' Group to express our appreciation for the manner in which you have consulted with Canadians, and in particular pensioners, who are most affected by amendments.... You made sure the voice of pensioners was heard in the round table consultation process which you so ably led. You clearly identified that one of your main priorities was to protect the pension promise. On behalf of all our members, please accept our thanks for your willingness to move forward the very difficult policy agenda of pension reform”.
Ian Lee, of Carleton University Sprott School of Business, called the reforms “far-reaching because they do address some of the demands that were being made by pension advocates.... What it's going to do is create a framework that is going to allow for greater scrutiny...[and] change the rules whereby companies can contribute more money...in aggregate I think it's going to ensure that our pensions are on a better footing, a more solid foundation”.
As well, the Canadian Labour Congress admitted:
These changes result from the consultations the government has held over the past year and some of them look good....
One more positive element of the jobs and economic growth act that I would like to take a moment to highlight today is the provisions to enable credit unions to incorporate federally. In this legislation, we are proposing to create a federal legislative framework for credit unions. This is to promote the continued growth and competitiveness of the financial sector. Allowing credit unions to grow and be competitive on a national scale will broaden choices for consumers and attract new members. It will also improve services to existing members across provincial borders.
Again, we have heard a lot of great feedback on this particular provision.
Credit Union Atlantic has hailed this move as “an important step forward for the credit union system...this provides a framework for a more competitive banking system in Canada and will enable further growth of the credit union alternative”.
The Case for Progress Committee, a coalition of several credit unions across this country, called it a “historic milestone”:
This new legislation benefits all Canadians by increasing their choices in selecting a financial institution. It will strengthen the stability and the competitiveness of the entire financial services industry in Canada.
In my short time today, I have only scratched the surface of what is clearly a very ambitious piece of legislation.
The jobs and economic growth act contains much more good news in this legislation that I am sure the opposition will welcome, items like the important financial support for excellent organizations such as the Canadian Youth Business Foundation, Genome Canada, Pathways to Education and the Rick Hansen Foundation.
Canada is certainly showing strong, hopeful signs of economic recovery. I do want to caution the House, though. The signs are still not strong enough to warrant a switch of focus away from the economy.
The economic action plan and its related components, like the jobs and economic growth act, is making an important positive contribution across Canada.
As The Toronto Star recently noted:
The Northern Tiger is back....
Canada's attractive record in job creation, GDP growth and comparative fiscal strength is well known....
You could call it “Canada's moment,” a chapter in history that finds the Canadian economy outperforming expectations while major foreign economies are still in distress.
Let us all work together, across the aisle and party lines, to keep up the momentum.
Let us support this legislation and build Canada's economic advantage today and for tomorrow.