Finance Committee on Sept. 25th, 2006

[The Chair, Conservative, Brian Pallister]

I call the meeting to order and invite our witnesses today to take the stand, so to speak.

The finance committee continues its hearings, as mandated by the House of Commons, on an annual basis, to consider and make reports on proposals regarding the budgetary policies of the government. This year the theme of our consultations is “Canada's place in a competitive world”.

We appreciate our witnesses being here today. We appreciate the briefs you have submitted to us already.

We'll now invite your testimony before the committee. It will be followed by questions. I think you've been notified of the format. You have only five minutes, which we don't apologize for, and it is true that your remarks will be limited to that. I will endeavour to interrupt you as little as possible. We'll leave maximum time for questions thereafter.

Thank you all for being here.

We'll begin with the National Anti-Poverty Organization. Debbie Frost is president. You have five minutes.

[Debbie Frost, President, National Anti-Poverty Organization]

First, I'd like to thank you for the opportunity to participate in this consultation.

I'm the president of the National Anti-Poverty Organization, and I'm here from Saskatoon.

The National Anti-Poverty Organization is a non-profit, non-partisan organization that represents the interests of low-income people in Canada.

We would like to applaud the government for recognizing that if Canada is to have a meaningful place in the world of the future, then its citizens must prosper. I cannot emphasize enough that it is critical that this government work to ensure that all citizens prosper.

There are not two distinct groups of people living in poverty, welfare families and working families, but instead people who move from one group to the other. As well, many families listed on the welfare roles also receive some of their income from work.

We are going to emphasize a number of key points today, as we know that many of our national and local partners will also be providing important input into your deliberations.

People who rely on welfare in Canada are not just falling behind, they're also falling into despair and hopelessness. The cuts to and reforms of the welfare systems in Canada have created unprecedented suffering and have reduced mobility for both recipients and low-wage workers, persons with disabilities, and single mothers who fall into the welfare trap that they have little hope of escaping from.

For many low-wage workers in Canada, simply suffering from a serious bout of the flu is enough for them to lose their jobs, fall behind on the rent, lose their housing, become homeless, and end up on the welfare system. That is going to work against them returning to the workforce by providing an income that does not allow them to obtain and maintain secure housing, have enough food to eat without lining up at the food bank or soup kitchens, or provide the absolute necessities for their children to participate in school.

For many people, obtaining the basic necessities becomes a consuming daily struggle. Increasingly, people who fall onto welfare are staying longer and are unable to bounce back into the workforce. Canada has always been proud of and enjoyed a high level of mobility out of poverty. With the changes to the EI system, the increases in precarious employment, and the reduction in the real benefits that welfare systems provide, we have reduced mobility and have created a welfare trap.

We take exception with this government's belief that citizens need appropriate incentives to work and save. Speaking for people living in poverty, including those who fall into welfare, we know that the number one goal that is close to all recipients is to obtain a secure job that will allow them to obtain the basic necessities for themselves and their families. We believe that citizens need supports to go to work.

At NAPO we have just started to work on what we are calling “unclaimed benefits”. We are very concerned that most disadvantaged citizens are not receiving the government benefits they are entitled to. We don't feel this is fair.

We are hoping that your government will support our work in two key ways. First, we believe the government needs to provide financial contributions toward groups such as ours to provide tools and workshops for front-line workers. Secondly, we would like government officials from the various departments to work with us in simplifying the process of applying for and obtaining benefits.

Finally, we are happy that the government is interested in citizens saving for the future. This is an area the federal government could support, with funding for financial literacy programming and regulations against predatory lending, as well as ensuring that the banks are providing access to services without excess fees.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much for your presentation.

We'll continue with the Canadian Renewable Fuels Association, and Mr. Teneycke. Welcome, sir. You have five minutes.

[Kory Teneycke, Executive Director, Canadian Renewable Fuels Association]

Thank you very much.

Let me make this very quick.

Members of the committee, thank you for the opportunity to appear as part of your pre-budget consultations. I'm here today to make a case for reducing the tax burden of the ethanol and biodiesel industry to a level that is competitive with that of other countries, most notably the United States. In addition to creating new economic opportunities by fostering the growth of the renewal fuels industry, these tax cuts would provide substantial benefits to primary agricultural producers and reduce greenhouse gas emissions in the transportation sector.

Before going any further, allow me to say a few quick words about our industry and our association. The Canadian Renewable Fuels Association represents a full-value chain for both the ethanol and biodiesel industry. Our industry is relatively new in Canada, with only 575 million litres of ethanol production today and 100 million litres of biodiesel production, but the industry is quite mature elsewhere in the world, including the United States, Brazil, and western Europe. All around the globe countries are rapidly expanding their production capacity for renewables as a way of reducing greenhouse gas emissions, expanding markets for agricultural production, and enhancing energy security.

During the last federal election the Conservative Party of Canada committed to a 5% average renewable content in gasoline and diesel fuel by 2010. This commitment was also advanced by two of the federal opposition parties and is consistent with policies of a number of provincial governments. In speaking about this commitment to increase the use of renewable fuels, the government has consistently spoken about the benefits associated with producing these renewable fuels domestically: benefits for agriculture, benefits for rural communities, benefits for the environment, and benefits for consumers.

It is relatively straightforward for the government to meet its commitment to require renewable content. Existing legislation allows for such a regulation to be implemented quite easily. However, to have the production of these fuels take place domestically in a country whose markets are integrated with a major established renewable fuels producer is more challenging.

In order to domestically produce ethanol and biodiesel needed for the 5% requirement, we require competitive tax rates for the production and sale of renewable fuels. Canadian producers cannot compete with producers in neighbouring jurisdictions that pay tax rates that are two to four times lower than those paid in Canada.

In the United States, blender tax credits for ethanol are the equivalent to 15¢ a litre, and for biodiesel they are 30¢ per litre. In addition to these blender tax credits, there are income tax programs for small producers and commodity inputs. These are not short-term initiatives to spark the growth of the U.S. industry. Rather, they are stable long-term tax policies designed to enhance energy security, reduce greenhouse gas emissions, and reduce the need for farm income support payments.

It is important to note that Canada has a number of natural advantages in its ability to produce ethanol and biodiesel. It is one of the world's largest agricultural exporters and has vast untapped pools of agricultural commodities like wheat and canola that are currently shipped abroad for processing. For example, we currently export over 70% of our wheat production for processing abroad. That's over 15 million tonnes, or enough to produce five billion litres of ethanol, twice the amount required for the government's 5% commitment.

My point is simply this. We're not looking to the government to mask some inherent inefficiency in the production of ethanol and biodiesel. We're asking the government to implement a series of tax credits that parallel successful tax policies that have existed in the United States since the 1970s.

I've tabled a series of charts that outline what these tax cuts would look like and what the associated costs are. I'd be happy in the question and answer period to go through some of the benefits as well, because I think it's important that we look not only at the costs but at the benefits as well.

Very briefly, if you look at the number of jobs and economic activity, you're talking in excess of 9,000 jobs and $1.8 billion in annual economic activity, which is really unprecedented and unparalleled in terms of the scope of what it could mean for rural Canada, and it could potentially offset some expenditures in agricultural support payments, as well as in greenhouse gas emission reduction programs.

With that, I'll move on. Thank you.

[The Chair, Conservative, Brian Pallister]

Thanks very much for your presentation, sir.

We'll continue with the Canadian Labour Congress representative, Andrew Jackson, national director. Welcome, Andrew, and please proceed. Five minutes.

[Andrew Jackson, Senior Economist, Canadian Labour Congress]

Thanks, Chair. I'm sorry that President Georgetti couldn't be here.

Because time is short, I'll try to speak very briefly to two or three key points.

The first point we'd like to make is that we would hope that there will be some sort of public process to look at the reductions in expenditures flowing out of program review. As we all know, there was a commitment in the last budget that there would be $1 billion in spending cuts, some of the fiscal room that was being provided by the previous government through expenditure review. Frankly, the rumour mill I hear was talking about very large cuts in all kinds of grants and contribution programs, some to areas that we would see as very important areas of activity by the federal government.

I ask you, if you cast your minds back to when the Mulroney government came into power, there was a major review of government spending that was chaired by Mr. Nielsen. I think it's quite appropriate for a new government to scrutinize areas of government spending, the need for focus, but I think there is a need for public input in the results of that process as it unfolds.

The second point I'd like to make is with respect to the issue of corporate taxation. The CLC at the moment is very seized with the scale of the economic restructuring that's going on in our manufacturing sector in particular. We're seeing thousands of jobs lost every month in manufacturing, and it's quite serious. I think if we were to see a turndown in the resources boom, a slowdown in our economy, those jobs would not be easy to get back.

We do agree with many people in the business community who have rightly pointed to the importance of incentives for new investment in the manufacturing sector at the moment. Because of the high dollar, the reality is many companies are looking at the stark alternative of also closing down or restructuring through new investment.

However, our preferred instrument would not be another cut to the general corporate income tax rate, but much more targeted measures. I draw to your attention the recent TD economics report, “The Economists' Manifesto for Curing Ailing Canadian Productivity”. It's not that I'd endorse every word in it, but I note that Don Drummond is calling for much more targeted measures, such as an investment tax credit that would go specifically to new companies making major new investments.

The problem with cutting the general corporate tax rate is that a huge amount of the benefit goes to the energy sector and the financial sector, which really don't need it. It's of no use to companies that aren't making a profit. We feel a much more targeted measure to deal with the crisis in the manufacturing sector is needed.

I want to say a few words about the importance of the skills agenda. To be blunt, what we fear at the moment is that the federal government might be inclined to take a very narrow view of its jurisdiction in this area and withdraw from what we would see as some very important areas of programming, everything from support for apprenticeship training to literacy training to settlement programs for new immigrants. Frankly, we thought we were on the right route with the previous government, with the conclusion of labour market partnership agreements with three provinces. It was going to roll out to more. There was a lot of flexibility in there to accommodate provincial priorities.

What parliamentarians really have to bear very much in mind is that Canada has a national labour market. We're seeing skills shortages in specific parts of the country and major adjustment challenges in other parts of the country. There really is a major role for the federal government in terms of training for national skills shortages, in promoting labour mobility across Canada, credential recognition, and recognition and upgrading of the skills of recent immigrants. I would hope that in this budget we don't see a major federal withdrawal from a very important area.

I would point to the importance of the employment insurance program. We're seeing many workers at the moment who have paid into that program all their lives and made very little use of it. The scale of assistance people get from the program in cases of layoffs and plant closures now is very limited. If you want an unemployed forest worker from northern Ontario to make the trek to Alberta, frankly you don't want a program that's going bludgeon them into taking the first available job just to keep an income stream going. You really have to support people through a period of reasonable job search and enable them to move across the country if that's their choice. I hope the committee looks carefully at that as well.

I'll wind up with that.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Jackson.

We'll move along to the presentation from the Juvenile Diabetes Research Foundation of Canada. That would be by Robert Hindle.

Welcome. You have five minutes, sir.

[Robert Hindle, Member of the Board of Directors, Juvenile Diabetes Research Foundation of Canada]

Thank you, Mr. Chair, for the opportunity. I address you today as a member of the boards of both JDRF Canada and JDRF International.

As an organization with a proud history in Canada and a global reputation for excellence in medical research, accountability for research dollars, and strong advocacy for investments in human capital, it is our privilege to appear before you today and take our place in this committee's deliberations on Canada's place in a competitive world.

Type 1 diabetes is different from type 2, otherwise known as adult-onset diabetes. Type 2 can be treated and in most cases prevented with diet, exercise, and sometimes drugs. Juvenile or type 1 diabetes is an autoimmune disease, which means it cannot be prevented, and it is the most severe form of diabetes, striking infants, children, and young adults, leaving them insulin-dependent for life. The constant threat of developing devastating complications is unavoidable.

Type 1 diabetes is an extremely urgent public health issue in Canada. If we fail to deal with this problem now, it will only continue to worsen. Diabetes is one of the most costly chronic diseases, with a price tag of over $13 billion a year in health care costs to Canadian taxpayers. Yet Canada has one of the lowest rates of government support for diabetes research among the largest countries doing such research. If a solution can be found—and we are close to that point—then a significant portion of that cost to all Canadians will be greatly reduced and eventually eliminated.

Canada's future is dependent on ensuring our citizens are healthy. Canadian expertise in diabetes research is world-renowned. Type 1 diabetes research was very recently recognized in the Globe and Mail series of the top 10 things Canadians do best. Since the discovery of insulin more than 80 years ago by Doctors Banting and Best at the University of Toronto, Canadian researchers have continued to make outstanding advances.

The well-publicized major breakthrough in 2000 in islet cell transplantation was engineered by a Canadian team of researchers at the University of Alberta led by Dr. James Shapiro. This procedure is now known throughout the world as the Edmonton Protocol. I might say that I have heard researchers and other people in other countries who do not have a wonderful grasp of English say very clearly the words “Edmonton Protocol”.

Another major breakthrough was in 2004 when Dr. Derek Van der Kooy, with a collaborative team of researchers located all across Canada from the Atlantic to the Pacific, discovered the existence of a pancreatic precursor cell.

Since its inception, JDRF has funded over $1 billion U.S. in research around the world. Over the past ten years, JDRF International has each year funded our Canadian researchers significantly in excess of the net research funds raised in Canada. This is directly due to the achievements and excellence of Canadian researchers as demonstrated over the past 85 years. Our researchers have shown us that “Made in Canada” cure therapeutics are within reach.

JDRF has for years now been a research organization run on a business model. Our research review, funding, and monitoring processes are widely recognized as being among the best in the world. To accelerate the research agenda, JDRF has adopted a proactive, goal-driven approach to research management. At the core of this approach is our commitment to quicken the pace of translating basic scientific discoveries into clinical applications called cure therapeutics. We identify gaps in research, fill those gaps by creating a pipeline of therapeutic candidates for Phase 1 clinical trials, and aggressively fund those innovative, high-risk/high-reward research projects. JDRF demands accountability, measuring progress in months, not years.

We propose a unique, innovative, and focused research partnership with the Government of Canada. JDRF is asking the government to specifically fund research for type 1 diabetes by dedicating $25 million a year over the next five years. This funding should be directly targeted towards JDRF-identified priorities, which have been carefully designed to produce tangible results over that same five years. This will support Canadian researchers in their quest, and in turn Canada's international competitiveness, for generations to come. To do this, direct investments in our country's human capital are vital, to create synergistic economic returns across the board.

I'd be happy to answer anything at Q and A. Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Hindle.

We'll continue with the Police Association of Ontario, represented by Bruce Miller. Welcome, Mr. Miller. Five minutes, sir.

[Bruce Miller, Administrator, Police Association of Ontario]

Thank you.

My name is Bruce Miller and I am the Chief Administrator of the Police Association of Ontario. I was a police officer for over 20 years before accepting my current responsibilities.

I apologize to the francophone members of the committee, because I will be making my presentation in English.

The Police Association of Ontario, or PAO, is a professional organization representing over 30,000 police and civilian members from every municipal association and the Ontario Provincial Police Association. The PAO has a history of working with government and community partners to ensure safe communities.

Safe communities are key to ensuring Canada's place in a competitive world. Canadians have a right to feel safe in their homes, on their streets, while at play, and in their schools. Safe communities create trust and comfort and attract investment, and can only lead to a stronger Canada.

We strongly agree with the government's position that Canada needs more front-line police officers and that many provincial and municipal police forces are seriously underfunded. We support the statement that it's time to reinvest in front-line law enforcement.

The PAO would urge the government to move forward with their commitment to put at least 2,500 new police officers on the beat in our cities and communities, and that sufficient funds be budgeted for that purpose. While appreciative that there are many demands for funding, we believe that safe communities are a priority for the citizens we serve.

Last November we commissioned a public opinion poll across Ontario from Innovative Research Group; here are some of the results: over half of Ontarians expect that they or a family member will have property stolen as a result of a break-in within the next five years; more Ontario residents than a year and a half ago feel that they or a family member will be physically attacked in the next five years; an overwhelming majority, 80%, say that gun violence is worse than in the past five years.

We've been fortunate in Ontario that two successive governments have recognized the need for additional officers and have acted to put 2,000 new officers on the street. The challenges faced by policing remain, and an additional influx of officers is urgently needed. We also need to ensure that police services are continuously rejuvenated with the front-line police personnel who possess the youth and the physical ability to do their required duties.

To their credit, the Harper government has moved forward with a number of important community safety issues. They are taking very needed steps to ensure an effective justice system. It is interesting to note that our recent Innovative Research Group poll showed that 93% of Ontarians felt that Canadian laws and eligibility for parole should be toughened to make persons convicted of crimes of violence and gun crimes more accountable for their actions. However, the bottom line is that community safety depends on an effective judicial system coupled with adequate levels of professionally trained and resourced police personnel.

We would make the following recommendations:

First, we believe that the upcoming budget is an opportunity to demonstrate the government's commitment to policing and community safety. We would urge you to make the 2,500 new officers a priority.

We would also urge that Ontario be given its share of the funding for new officers based on its population base, and that those officers be distributed to municipal police services and the Ontario Provincial Police.

Finally, we recommend that consultations take place with the federal government, the Province of Ontario, and the policing community to ensure that the goals of the program are realized.

Safe communities will attract business and growth. We need to ensure that Canadian communities continue to be safe and to prosper, and 2,500 new police officers could only add to that sense of prosperity. We would urge the government to move forward on this investment in both community safety and prosperity.

We appreciate the opportunity to participate in this important process and would like to thank all of you for your support and interest in community safety.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thanks very much, Mr. Miller.

Now the presentation of the American Federation of Musicians of the United States and Canada, Paul Sharpe. Welcome, sir. Five minutes is yours.

[Paul Sharpe, Director, Freelance Services Division, American Federation of Musicians of the United States and Canada]

Thank you very much to the chairman and to all members of the committee for allowing me an opportunity to speak to you about self-employed artists making registered pension plan contributions.

My name is Paul Sharpe. I am a 55-year-old musician who has been a member of the AF of M in Canada for 40 years, and have practised as a full-time musician for approximately 38 of those 40 years. Throughout that time, I had no eligibility to enlist in a wonderful fund called AFM-EPW Fund (Canada), a registered pension plan that is of course, by its nature, under federal jurisdiction. I would only be eligible under an employee-employer relationship, and only rarely over my 38 years of performance did I enjoy that situation. That opportunity might have come through working with the CBC or as a studio musician by the session, but most of my gigs were for corporations, weddings, casinos, clubs, parties, etc., all freelance, self-employed work. I therefore feel very qualified to speak on the subject of asking that the Income Tax Act and the regulations thereto be amended to allow self-employed artists to participate, or to participate in RPPs.

Self-employment in Canada in all sectors, but particularly in the cultural sector, is on the rise and continues to be. This is a subject that I really urge you to consider, first, because it's something we can do that we don't believe entails a cost to the government. Secondly, we need to modernize the way this particular sector in Canada is engaged in the market.

What the impact on myself and generations after me would be only became apparent to me when I became employed by the AF of M. Every paycheque that I get now shows that there is a contribution made on my behalf, but up until then, 38 years of working, did not vest me in a pension plan.

This is something that, in my capacity as director of freelance services of 13,000 members of the AF of M in Canada, I would like to see made available. Our members are distributed among 28 local associations throughout Canada in each and every province and territory. They very, very much need to plan better for their retirement. This is something the government can do to assist them to improve their retirement life. Speaking with those freelance musicians across the country as I travel, there is a lot of support for this. We hope you will support it.

Once again, I thank you for the opportunity to address you. We believe this is a no-cost situation to the government, and because this is my second trip before this esteemed committee in two years, we hope we can work together to get the job done this time. Thank you very much.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Sharpe.

Next, from the Provincial Building and Construction Trades Council of Ontario, Brett McKenzie. Welcome.

[Brett McKenzie, Executive Chairman, IBEW Construction Council of Ontario, Provincial Building and Construction Trades Council of Ontario]

Thank you, Mr. Chairman and committee members. I appreciate the opportunity to speak before you today.

To try to be consistent with the pre-budget theme the government has mandated to ensure we have the needed skills in Canada and to make certain that our tax regimes allow us to attract workers, I want to talk a little bit about an amendment to the Income Tax Act for construction workers with regard to travel and room and board. The issue I want to talk about is worker mobility and the deduction for travel and living expenses.

I'm a construction electrician, and the problem I see in the construction industry is unique in Canada. It's one where employment typically requires laid-off workers to travel beyond their metropolitan areas to obtain new or temporary jobs. However, once they go to those areas, they are unable to deduct any reasonable expenses for travel and living that are incurred with those employment opportunities. At the same time, they have to maintain their principal residences. Consequently, construction workers have a double financial burden when it comes to working.

There is some limited tax relief for employees when they're directed by their employers to work at remote or special sites, whereby payments of travel allowances are not included in their income. However, once again, no tax relief is available to the unemployed person who is seeking employment in another region or territory. The denial of such deductions has a negative effect on workers, the EI program, and Canada's economy. Without such tax relief, the worker has two choices. He or she must either incur high travel and living expenses without tax relief, or decline the job and collect EI.

Ladies and gentlemen, construction workers are proud of what they do. They want to work, but they need some incentive. They need some help from the government to do that. The construction industry is cyclical. In one region it will be booming, and in another region it will be quiet.

The rationale for policies to promote temporary inter-regional movement of labour.... In the absence of this movement there are two perverse consequences. First, labour shortages will emerge in some regions concurrent with unemployment in others. Second, unemployment causes apprentices who have not completed their training to leave the trade, thereby wasting the training investments and eroding future skill bases needed in that region. This results in workers being less productive, which is in nobody's best interest.

Ironically, if these construction workers became self-employed or independent contractors, they would be allowed to deduct many of their expenses for travelling abroad to work. It should be kept in mind that under the Income Tax Act, transport workers already enjoy tax deductions for meals and lodging. Performing artists are also entitled to a maximum of $1,000 in deductions for expenses. Therefore, as I see it, tax fairness demands that the inequity be remedied.

What I want to talk about today is that we have a solution to the problem: amend the Income Tax Act to allow construction workers to deduct costs incurred in taking temporary jobs away from home. However, those should be subject to and limited by the same requirements that apply to the special worksite exemption in the Income Tax Act. We're asking for relief, but we're also stating that there should be a mechanism in place to make sure everybody plays by the same rules.

In a nutshell, in the end, one of the key things we have to look at is the net cost-benefit. Is this going to cost the government or the citizens of Canada any money? No, it's not. Using the numbers we looked at, allowing the deduction for worker expenses, the estimated net benefit to the public purse would be approximately $95 million.

What I'm bringing forward here today would actually add money to the government's purse. This takes into consideration the expenditure for allowing the mobile worker deductions, which are approximately $71 million, less the benefits to the public purse from EI savings--because people will no longer be collecting EI--of $81 million, and adding the additional income tax generated, which would be approximately $85 million. However, the estimated net benefit does not take into consideration any additional EI contributions.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, sir, and thank you all for your presentations.

We'll begin the first round with Mr. McKay. Seven minutes, Mr. McKay.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you, Chair, and thank you, each one of you, for your excellent presentations.

I have a series of relatively small questions and maybe I'll just go around the table in the order of presentation.

The first is to the Canadian Petroleum Products Institute with respect to biofuel requirements. Is the Globe and Mail article correct that effectively says that when you add ethanol to gasoline you would get less mileage for that litre of ethanol?

[Kory Teneycke]

Yes, depending on what rate you blend it at. Ethanol has a lower energy value than petroleum. That's not to be mistaken for energy balance, which is how much energy you get out of it versus how much it takes to produce it; that's positive, at about twice as much energy out. But there's a lower BTU value, so at higher concentration blends--the article was correct in referencing 85% ethanol--you would see about a 25% reduction in gas mileage associated with that.

[John McKay, Liberal, Scarborough—Guildwood, ON]

So is the optimum blend around 15%?

[Kory Teneycke]

It's 10%, and at 10% you don't have any change. It's not that 10% is 2.5% because 85% is 25%; it doesn't work like that. Because of the higher octane level of ethanol, at 113, it boosts the octane level of the rest of the gasoline. That offsets the energy loss when you're looking at 10% blends, and 10% blends are what we use in our gas today. One-third of the fuel in the United States is 10% ethanol blend.

Literally billions of kilometres driven, with lots of testing and no energy loss or mileage loss at that rate--

[John McKay, Liberal, Scarborough—Guildwood, ON]

I apologize for interrupting, but I have only seven minutes here.

[Kory Teneycke]

All right.

[John McKay, Liberal, Scarborough—Guildwood, ON]

My second question, again directed to you, is with respect to your tax credits. What I understand about the current system is that you can't find enough ethanol. You can't get enough product in order to meet even the 5% mandated requirement. So why would the government be suggesting a series of tax credits, etc., for an industry that has a huge demand?

[Kory Teneycke]

You'll notice that those plants aren't being built in Canada. There are about two plants a month being built in the United States right now, with countless plants in Brazil and other countries. Despite the past government's ethanol expansion program, which found 14 projects that were eligible to receive federal money, we've had only two of those plants built. Another two are under construction.

So it looks like the vast majority of that money won't end up going towards projects, because they're not being built. The reason for this is that we're not competitive in terms of our tax treatment of this industry in Canada. You'll see those plants continue to be built in jurisdictions where it's most profitable to do so.

[John McKay, Liberal, Scarborough—Guildwood, ON]

That's what I wanted to get to, the point that they're not competitive with that tax treatment.

[Kory Teneycke]

That's right.