Environment Committee on Oct. 17th, 2017

[John Aldag, Liberal, Cloverdale—Langley City, BC]

We wouldn't have a national inventory of designated places and condition reports?

[Genevieve Charrois]

No, not on the register.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

You've had a chance to have a look at Bill C-323. In your comments you note that there are shortcomings in its design.

I have a very simple question. Can we fix the shortcomings in our clause-by-clause consideration through amendment or do we need to scrap it and start over?

[Joëlle Montminy]

Some shortcomings could be addressed, but there might be other things that are more significant to fix.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

Okay.

I would like to move to Finance.

It seems that Finance is implicated in the discussions on why we haven't been able to move forward on heritage conservation in Canada over the last 15 or 20 years. I would like your thoughts on some things.

In your testimony you talk about the socially beneficial behaviours. You say “it endeavours to achieve this at the expense of another desirable goal-—raising revenue”. We've heard through our previous study that we've been doing and again today this idea of the tax credit actually returning more than is being forgone to the government. The numbers are anywhere from a dollar forgone in revenue through the tax credit to a $1.25 indirect tax credit and also generating up to 5:1 in economic activity.

I'm curious as to how you do the math whereby you say that we're forgoing revenue? Help me understand Finance's perspective on this.

[Pierre LeBlanc]

Yes.

Our perspective is that those studies attribute all the economic activity to the credit. In other words, they assume that in the absence of the credit there would have been no rehabilitation of those historic properties. We don't consider that realistic. It would be tantamount to saying that there's no rehabilitation of historic properties in Canada today because we don't have a credit.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

Okay.

I'll just move on.

Do you actually know, making that kind of a statement, it's really.... I accept the premise that it may be overstating. Do you actually monitor how much investment is going into the heritage sector at this point, or is it just an assumption that's being made that it's an overstatement?

[Pierre LeBlanc]

It's certainly an assertion. But it's my understanding that there is rehabilitation of historic properties going on today in Canada in the absence of a credit. It seems to me that the proper baseline isn't zero.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

Okay. That's a fair assertion although we've heard that more than 20% of our heritage is being destroyed, lost forever, and that we have continued deterioration of heritage properties. Maybe the number is somewhere between one and.... The assumption needs to be looked at.

I want to get to the second piece.

You talked about the national cost-sharing program and the funding that's there. As we've heard, the base funding is $1 million, and this applies only to certain national historic sites that are out there, which is a very small percentage of heritage properties within the country.

We're at $10 million for two years. Then we revert to $1 million. Is $1 million a year a fair amount of money for the federal government to be investing in support of heritage in Canada?

[Pierre LeBlanc]

No. I think what I can tell you is that it's a fair question and I can bring it back to colleagues at Finance who deal specifically with the funding of programs like this, because we're not on the program side; we're on the tax side. I will do that.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

If Finance has any information, it would be useful because that is the program that we keep pointing to as being the one way that the government supports heritage outside of the ownership within the federal ownership. I maintain that we can do better than $1 million per year and I would like to see us do significantly better than $1 million per year.

You talked about the subsidy of private homeowners through taxes as an example and that this may benefit particularly the wealthy. I know in my time working within the heritage conservation field, Parks Canada used to offer—I don't know if they still do—a fantastic conservation workshop aimed specifically at windows in heritage buildings. I think that sometimes we make the assumption that a house may have leaky windows and you can simply go to Home Depot and spend some money and, without spending anything more than that, it equates to a subsidy.

The fact is that many of these heritage buildings are very intricate and ornate, even elements that are important to the character, so there are associated costs. In many cases the trades that are involved are very much the middle-class Canadians that our government is working so hard to support. The fact is we want to see these trades survive and thrive and maybe do proper heritage conservation. In the restoration of windows, there is a cost beyond going out, as I say, to a local supplier with a contemporary window form. Is there something wrong with that? What am I missing that—

[Pierre LeBlanc]

I think that's a very fair statement in considering the distributional effects. To the extent that there's a positive economic benefit one wants to consider, I think you make a very good point on how that's distributed, so amongst owners, but also workers and potentially consumers.

Also, you spoke of the positive spillover, almost the non-economic benefits and how those might be distributed among the population. Those are very important points to take into account. I agree that's an important point.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

Thank you.

[The Chair, Liberal, Deb Schulte]

I'm sorry, John, you're out of time.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

Thank you. I had one more good one.

[The Chair, Liberal, Deb Schulte]

You'll have to maybe pass along the mike and just have time to do one more.

Mr. Sopuck.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

I'm going to ask a very quick question and pass the majority of my time to Mr. Godin.

Mr. LeBlanc, suffice it to say that the tax policy branch will do their job in terms of bills like this is to consider their potential implications with the tax system, as your brief points out. Is that correct?

[Pierre LeBlanc]

Sure. We try to, as a system as a whole.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

Yes. So community economic development is not in your mandate, I mean a direct part of your mandate. Is that correct?

[Pierre LeBlanc]

When we analyze tax measures, we try to take a holistic view that takes all positive benefits and costs into account.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

That certainly did not come out in your testimony, and as members of Parliament from all political parties, that is our concern. The proponent of this particular bill made a very cogent and intelligent argument on behalf of the quantifiable benefits of bills like this, especially in the United States. I found that completely missing in your testimony.

I'll now pass it on to Mr. Godin.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Thank you, dear colleague.

I listened to your comments this morning and I must say it is unfortunate that you are not open to finding solutions. We all know there is a problem with the preservation of historic monuments in Canada. Through Bill C-323, my colleague is seeking to make certain provisions for preservation.

We understand that a bill is never perfect and that it will evolve. Our witnesses, particularly from the Department of Finance, raise some big question marks and seem to be closed, which I find disappointing.

You are here as managers, while we are parliamentarians and MPs. Since we wear different hats, I can understand that you have some reservations.

Mr. LeBlanc, I have some questions for you.

You stated in your presentation that one of the benefits of direct funding programs as compared to tax incentives is that they can give the government greater flexibility. They are not mutually exclusive, however. Why are you closed and why do you say that the proposed tax credit is not acceptable and is not the solution? I think it is a possible solution. We know it is not perfect, but that does not mean it should be ruled out.

[Pierre LeBlanc]

Thank you for the question.

What I said is that, when we compare tax measures and direct spending measures, there are always pros and cons for each. When we consider a tax measure, we assess what the benefits are, particularly as regards flexibility. In this case, individuals and companies can decide. That is what I said.

I also said that there are some drawbacks. As to managing expenses, which is an important objective of our society, it is more difficult to determine how much we can spend if that is through a tax credit. If...

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

I will stop you there. I am satisfied with your answer and would like to ask some more questions quickly.

In your presentation, you stated that the “Federal Rehabilitation Tax Credit has been effective“. You also said: “ [...] a number of the studies that we have reviewed appear to assume that none of the rehabilitation work would have taken place absent the tax credit, which we believe is overstated.”

What is the basis for that statement?

[Pierre LeBlanc]

I do not have the exact figures, but I can tell you that there are heritage properties in Canada that are undergoing restoration. So there is some activity in this area. As other MPs have noted, there are some problems with demolitions. That said, the activity level is not nil.