Finance Committee on Sept. 21st, 2006

[The Chair, Conservative, Brian Pallister]

Unfortunately, your time is up.

[Pierre Paquette, Bloc, Joliette, QC]

Poor Mr. Peacock!

[The Chair, Conservative, Brian Pallister]

You're not the only one, I assure you, who has billions of dollars of expensive ideas in this room. It is a common problem.

[John Keating]

[Inaudible--Editor]...just a small piece of it.

[The Chair, Conservative, Brian Pallister]

We'll continue with Mr. Dykstra, for seven minutes, sir.

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you, Mr. Chair.

I want to continue the discussion or the questioning with Mr. Keating.

When I first saw your name on the agenda, I wondered how space and finance would relate to each other. You've intrigued me in drawing the security, the sovereignty, the environmental, and the economic issues together. I guess what tweaked my interest was when you talked about the investment the Canadian government has made over the last number of years—probably, I guess, over the last twenty, I think you said, or thirty—and the benefits and the rewards that have been reaped from it. I wonder if you could indicate the number and scope of the folks who are in the field. How many people work in the industry in Canada?

[John Keating]

There are about 7,000 people working in this industry in Canada. Clearly they are highly skilled, with high-paid jobs. We have in Canada the highest rate of export in space industry on a global basis: about 50% of everything we do is exported. The great majority of those people are highly skilled. In my particular case, 60% of the thousand people who work in my organization have some form of post-secondary technology education.

[Rick Dykstra, Conservative, St. Catharines, ON]

Where would we have stood twenty years ago in terms of those kinds of numbers?

[John Keating]

I don't know the specific numbers, but the industry has developed over those twenty years. I'm representing industry, obviously, but to me what's more important is the fact that there are valuable and important things for Canadians to do. We're interested in Arctic sovereignty. How do we watch for that? We're interested in coastal surveillance. How do we do that? We're interested in protecting the environment. How do we do that?

Space provides very efficient ways to do that, and that's the thrust of our presentation: consider the efficiency and the value brought there. As a byproduct of that, we create a great industry that's world-leading and we have great export success.

[Rick Dykstra, Conservative, St. Catharines, ON]

If you had to pick a couple of areas that we would focus on as a government in terms of space.... We just had a Canadian land this morning from a trip out to space again, so it's obvious that we are international, that we are well known for our ability to compete at the cutting edge. But if you had to pick some areas that this budget or the next budget could include, where would you focus? You talk about the round tables and getting to where we need to be. Where should we start in terms of getting there?

[John Keating]

There are lots of choices. What would I pick? There's a range of things. I think we ought to have an emergency communications network. If you look at what happened in New Orleans, communications right now is a disaster for those people. We don't have one in Canada. We could use a satellite-based communications network.

We should have maritime surveillance. We should know what's happening off our coasts in terms of pollution, in terms of drug interdiction or illegal fishing. We should be able to monitor that and have the capacity to do that. Satellites could keep an eye on natural disasters, on flooding, on forest fires, on pine beetle infestations. We should be helping our agriculture become more efficient.

So there's a range of things. If we want better relationships with the U.S., clearly some programs that support joint cooperation or exploration might be useful. And certainly from a government perspective, they ought to be thinking seriously about their reputation in terms of the environment. They may not agree with the specifics of the Kyoto accord, but I think they need to send a signal to the world that Canada does care about global environmental climate change.

We can do something. We can build satellites that monitor that. We've in fact built a satellite that looks at greenhouse gases and ozone depletion. Why don't we invest in that? It's a great thing for Canada, it's a great thing for the world, and it builds great-paying jobs and export success.

[Rick Dykstra, Conservative, St. Catharines, ON]

I have one other question that I want to ask Mr. Peacock, so I'll try to be quick here.

Mr. Keating, earlier Mr. McKay referred to R and D and to how business related to that, and I wondered about your industry's percentage of investment into research and development.

[John Keating]

The number we report is that about 8% of our revenue is spent on research and development, but in truth, as I said earlier, the vast majority of the employees are working in research and development; we just get other people to pay for it. The Americans, French, Germans, Chinese, and Indians pay us to develop technology in Canada.

[Rick Dykstra, Conservative, St. Catharines, ON]

I see.

One of the interesting dichotomies I'm sensing, but I don't think is probably the case, is in terms of your presentation, Mr. Barr, on our responsibilities from a world perspective, and Mr. Peacock's presentation on an internal Canadian perspective. I see a divergence between where we need to go with the fundraising that needs to be done here in this country for those who need it and our responsibilities internationally throughout the world. I sense that we're going to see a fight, especially with the numbers we talk about in terms of reaching 0.7%, or at least a divergence of direction.

I wonder if you could both comment on whether that is going to be the case, or on how you intend to work together.

[Gerry Barr]

Oh, I don't think there's any serious divergence at all. We're all part of the voluntary sector and we're all part of civil society, trying to address a whole range of needs and social justice issues around the world and in Canada as well. We're very much on the same stage. There is a different application, that's for sure. There is a challenge in front of Canada about how effectively it's able to respond globally.

Domestic philanthropy way out-scales international development assistance. The whole flow of international development assistance globally is about $70 billion annually. That's not very much for a planet, for literally billions of people who are struggling to get out of poverty.

So I don't think we've hit the ceiling yet. We'll have to go an awfully long way before we do.

[Rob Peacock]

When you put it in context with Mr. Barr's comments, with the $100 billion in revenues coming into Canada, it is a small disproportion. I think the saying “charity begins at home” is very much still honoured by most people who give for the common good.

[The Chair, Conservative, Brian Pallister]

We'll continue with Madam Wasylycia-Leis. Seven minutes, Madam.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you, Mr. Chairperson.

Thank you to all of you for your presentations.

I want to start with Gerry Barr. First of all, thank you for coming year after year after year to try to ensure that Canada lives up to its international obligations. We're still a long way from doing that.

I want to focus on a very disturbing story that I heard on CBC Ottawa this morning suggesting that Canada must funnel its foreign aid through international agencies like the World Bank or the United Nations Development Programme, and that we do not know where the money is going, how it's being used, and what effect it has. The article went on to say that we're apparently putting $300 million through CIDA to Afghanistan, but we don't have a clue about where it's going. And of course there are all kinds of stories suggesting that some of the warlords are getting a bigger share than the people who actually need it.

I want to ask you what the situation is and what we can do about it. Would it not be the case that Canada has the right to demand some sort of accounting if it puts money into international development?

[Gerry Barr]

I would begin quickly with the back end of your comment and say, absolutely, it has the right, and it must do it.

I think this morning's story focused particularly on freedom of information requests and the potential that there would be a block to the response to those requests because other countries were involved in the same pooled funding that is being used.

I would make the point--I'm sure Mr. McKay would want me to make the point--that if his bill goes through, it will virtually guarantee a detailed, coherent, and synthetic report of all of Canada's annual aid activity based on the criteria that are set out in the bill. Parliamentary oversight would be enormously enhanced, and you would have the answers to these questions as a result of the oversight processes that are envisioned in the bill.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

I would just add, though, that taking into account the governments'--both Liberal and Conservative--poor track record for actually acting on bills passed by Parliament, I think we would want to demand that the Government of Canada--with or without legislation--have some accounting about money it now puts in, especially in terms of Afghanistan, where we are being led to believe that our role is significant and meaningful, yet around which there are serious questions.

[Gerry Barr]

Yes, absolutely. I couldn't agree more, and particularly in circumstances in conflict zones, where one needs to be super careful about the application of resources.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you.

[Gerry Barr]

By the way, the information is certainly available; it's only a question of whether it will be made public.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

I want to go to Mr. Larson and follow up on John McKay's questioning. You'll notice that he's gone through quite a metamorphosis from when he was in government. It's good to see what a few months in opposition will do.

I want to ask his question the way I've asked it many times before at this committee, which is this: don't you think we should get some cost-benefit analysis before we give another break to the corporate sector? I want to draw your attention to the fact that corporate income tax, as a share of overall government revenue, has dropped considerably over the last five years from 15% to 11%, and the money we get from personal income tax has gone from about 45% to 65%. I think it's pretty hard to justify another break for corporations at a time when, as John said, we haven't seen the benefits from giving those kinds of corporate tax breaks. Over the last little while, we've seen profits go up astronomically, and by all accounts corporations in Canada have set record-level profits, business organizations included. They have dropped their investment in Canada and they have received huge tax cuts from the government.

I don't disagree that there are some areas we might want to look at carefully in terms of research and development and protection of certain Canadian industries--maybe aerospace or astronomy--but should we do this blanket kind of thing when we don't have any evidence that it actually helps our economy and leads to greater competitiveness?

[Roger Larson]

The answer to your last question is yes, we should give blanket tax incentives--