Evidence of meeting #79 for Environment and Sustainable Development in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was grant.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Govindadeva Bernier  Financial Analyst, Office of the Parliamentary Budget Officer
Jean-Denis Fréchette  Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Mark Mahabir  Director of Policy and General Counsel, Office of the Parliamentary Budget Officer
Leonard Farber  Senior Advisor, Norton Rose Fulbright Canada, As an Individual

9 a.m.

Liberal

The Chair Liberal Deb Schulte

Go ahead, Mr. Sopuck.

9 a.m.

Conservative

Robert Sopuck Conservative Dauphin—Swan River—Neepawa, MB

Thank you, Chair.

We had the Department of Finance officials here last time. Basically, what happens when the officials come here—and I'm not saying it's you, necessarily—is that these kinds of initiatives usually get nickel-and-dimed to death. There's this little niggling problem, this and that. Because it doesn't quite fit with existing programs, the bureaucracy, by and large, takes either a very neutral or dim view. I see little enthusiasm for this initiative.

The problem is that heritage conservation is woefully inadequate in this country, and we must have some method. Largely, when it comes to the analysis, it's always, “Well, maybe not.” It's kind of frustrating for those of us who are politicians when we see heritage conservation getting short shrift right across the country.

Your analysis was basically only half an analysis. It wasn't in your terms of reference to look at the economic impact of these kinds of things. Apart from that reference to Michigan, did you do any analysis of the economic impact of this kind of expenditure?

9 a.m.

Parliamentary Budget Officer, Office of the Parliamentary Budget Officer

Jean-Denis Fréchette

No, we did not. There's a difference between the departments and PBO. As you know, under our new legislative mandate, we do all these costings. It's a lot of work, and we have to sometimes take a longer time frame.

For your question, we didn't look at the economic impact for the reasons mentioned before. With the kind of information we had, this was really a fishing expedition. We developed our model based on what we thought was the best information and the evidence we had available.

Doing the economic impact would be a different story and a different project, and also a longer-term project to do.

9 a.m.

Conservative

Robert Sopuck Conservative Dauphin—Swan River—Neepawa, MB

Again, as politicians our emphasis is on the sustainability of our communities, and a program like this, which is very small in terms of the entire federal budget, will have outsized economic impacts.

For example, I have a report from the State of Connecticut. Their tax credits in one year amount to $32 million, and that spurred $159 million worth of private investment.

Again, it's arguable that some of that private investment would have happened without the tax credit. Nevertheless, $32 million was spent and $159 million came out: 560 jobs, $28 million in wages, and taxes of $11 million. It seems to me that the State of Connecticut in this particular example got their money's worth.

Based on the numbers I gave, would you say that's a fair assessment of mine that they got their money's worth for that expenditure?

9 a.m.

Liberal

The Chair Liberal Deb Schulte

I'm not sure that—

9 a.m.

Parliamentary Budget Officer, Office of the Parliamentary Budget Officer

Jean-Denis Fréchette

It's a difficult answer, Madam Chair.

9 a.m.

Conservative

Robert Sopuck Conservative Dauphin—Swan River—Neepawa, MB

We're paid to ask difficult questions.

9 a.m.

Parliamentary Budget Officer, Office of the Parliamentary Budget Officer

Jean-Denis Fréchette

I believe your numbers. It's a fair question. Difficult questions are also fair questions.

Certainly, some states that have made these kinds of arrangements are probably right. I'm not disputing that. In this case, if you look at the take-up rate, it's pretty small. All the members here have stories in your ridings, I'm sure, where you know people who own buildings like that. They don't go for a 20% credit, just because it's maybe too low for the kind of investment and the return they will have.

Yes, the economic impact of $62 million in total, if we include the CCA, can be rather small. It's maybe not small in a riding sense, but in total in Canada, it may be very small.

9:05 a.m.

Conservative

Robert Sopuck Conservative Dauphin—Swan River—Neepawa, MB

I appreciate the reference to labour as well. The studies we came across verify your comment about the high labour component in these restoration projects.

I'm going to read from a Manitoba study that happened to be in my constituency: “Restoration projects are also a boon to the labour force, being more labour intensive than new construction. Typically, labour represents 60-75% of project costs in a conservation project.”

Again, one of the risks that workers in all fields are facing is mechanization, automation, and so on. I think it would be prudent public policy, where possible, to encourage participation in the labour force. There's a training component here. Many of these restoration projects, especially in my area, are close to aboriginal communities, so there's another added benefit to this kind of expenditure.

Could you make a comment on that?

9:05 a.m.

Mark Mahabir Director of Policy and General Counsel, Office of the Parliamentary Budget Officer

We didn't really do any analysis on the secondary economic benefits of labour force participation or of increasing labour force participation.

As Govindadeva said, about half of the costs would be labour costs in a regular renovation, and for a historic renovation the labour costs are higher. That's really all the analysis we did in the report.

9:05 a.m.

Liberal

The Chair Liberal Deb Schulte

You have one minute.

9:05 a.m.

Conservative

Robert Sopuck Conservative Dauphin—Swan River—Neepawa, MB

In terms of the entire federal budget, which is in the neighbourhood of $300 billion—is that what our federal budget is?—quite honestly, $55 million to $60 million is a small amount of money compared to the actual federal budget.

Would you agree with that?

9:05 a.m.

Parliamentary Budget Officer, Office of the Parliamentary Budget Officer

Jean-Denis Fréchette

I think I mentioned that, in the context of the total federal budget.

9:05 a.m.

Conservative

Robert Sopuck Conservative Dauphin—Swan River—Neepawa, MB

Again, as politicians, when we look at the benefit of heritage conservation in terms of enhancing communities, gentrifying communities, and creating economic development and labour force participation, I've come to the conclusion that this will be money well spent, and I certainly hope this bill will pass.

Thank you, Madam Chair.

9:05 a.m.

Liberal

The Chair Liberal Deb Schulte

Thank you.

Mr. Stetski is next.

9:05 a.m.

NDP

Wayne Stetski NDP Kootenay—Columbia, BC

Thank you for being with us today.

In the report, you list a number of issues with the Register of Historic Places, and I think Parks Canada has identified that the list is incomplete as well. How important is it that the register be updated and verified for moving forward with this legislation?

9:05 a.m.

Financial Analyst, Office of the Parliamentary Budget Officer

Govindadeva Bernier

Obviously if the aim of the legislation is to provide the credit only for properties that are listed on the register, definitely the register has to be updated for everybody who owns property that's already designated as heritage, whether under provincial or municipal jurisdiction.

Definitely the register needs to be updated, but there are some openings in the way the bill is worded such that even if the property is not already on the register, if it has received provincial or municipal designation, it could be considered eligible for the credit. It's not necessarily a problem going forward in the short term, but obviously at some point the register will probably have to be made more up to date.

9:05 a.m.

NDP

Wayne Stetski NDP Kootenay—Columbia, BC

Your report focused only on those that were registered to date. Did you get any sense of the scale of how many might be eligible under municipal or provincial jurisdiction but aren't on the register?

9:05 a.m.

Financial Analyst, Office of the Parliamentary Budget Officer

Govindadeva Bernier

Actually, we tried to add those to the total number of properties, because as we mentioned, as of April 2017, there were 13,000 unique listings on the register, out of which approximately 6,000 or 7,000 were privately owned. For our total number of eligible properties, if we include owner-occupied residences, we arrive at a number that's close to 40,000. In order to get a better sense of the real cost of the credit, we tried to include most of the properties that were recognized under provincial or municipal legislation but weren't yet listed on the register. Obviously, as soon as the credit would be implemented, there would be a great incentive for these people to get their properties listed on the register.

Technically, what the website of the Canadian register says is that their purpose is to list every designated property, whether municipal, provincial, or federal, so we tried to include as many properties as possible, based on discussions we had with Parks Canada. They gave us a pretty good estimate of the total stock of historic properties.

9:10 a.m.

NDP

Wayne Stetski NDP Kootenay—Columbia, BC

Thank you.

On page 9 of the report and in the chart you presented in your paper today, you note that “these results assume that the taxpayers claiming the credit have enough tax liability to use all the credit in the current year.”

Can you expand on that a little? Does it mean that the tax credit would be more available for wealthier businesses and individuals, but potentially unavailable or not able to be used by, say, seniors at a lower income bracket?

9:10 a.m.

Director of Policy and General Counsel, Office of the Parliamentary Budget Officer

Mark Mahabir

Basically, the way the bill is worded, it allows a taxpayer to claim the full amount in the year that they make the expense, if they have taxable income to cover the full amount. As well, they can roll over that amount for the future 10 years, so the taxpayer can also claim the credit in a future tax year. Those people with lower incomes could claim the credit in a future year if they don't have adequate income in the year they make the expense.

9:10 a.m.

NDP

Wayne Stetski NDP Kootenay—Columbia, BC

Thank you.

9:10 a.m.

Liberal

The Chair Liberal Deb Schulte

You have time remaining. Are you done?

9:10 a.m.

NDP

Wayne Stetski NDP Kootenay—Columbia, BC

Yes.

9:10 a.m.

Liberal

The Chair Liberal Deb Schulte

Mr. Bossio is next.