Finance Committee on Oct. 17th, 2006

[John Williamson]

I would choose income tax measures, but I thought the GST reduction was important because it was a promise made to Canadians, and promises made on the campaign trail should be respected.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Okay, fine.

You were talking about showing preferential treatment. We had somebody in here this morning talking about the R and D credit, that a lot of small business corporations take advantage of the research and development credit. It's not refundable for large corporations. How do you feel about that? Is that a way we'll keep investment here?

[John Williamson]

Every year the Government of Canada, through those tax credits, provides support in the range of $1.5 billion. I prefer that kind of support to a direct subsidy or cash handout.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Would you prefer that being spread out among everybody, or do you like that program?

[John Williamson]

I think if a tax credit is offered to business it should be offered across the board. I recognize the government might want to focus, for example, on the aerospace industry. Again, my preference would be to do it through the tax code, as opposed to writing a cheque.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

That clears up things. Thank you.

Mr. Johnston, you talked about commercialization. I think it's a challenge and I still don't really understand what the solution is going to be. I'm not sure if you're aware, but I happened to be reading up on the expert panel on commercialization, and they had a few recommendations. It's also creating another bureaucracy or another group. Is that going to solve anything? Is that going to help commercialization?

[Paul Johnston]

My answer to that would be no. I think the call for yet another bureaucracy to commercialize something doesn't work.

We think the way to commercialize new technologies that are emerging either out of government labs or universities is to ensure it's done in a competitive market-driven way, not through any kind of a “pick winners” but in a market-driven competitive way whereby companies, universities, and government labs actually work together. You'd perhaps need some money for that, and we think yes, but more than that you need the mechanisms that come from completely different cultures. You have to have the mechanisms to help those people.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

That's the question: what are those mechanisms?

If you're going to get into research and you're able to raise money for research, why wouldn't you be able to raise money to commercialize? That's the end point. That would be the easiest part, I would think, to go out and get money, the commercialization part.

[Paul Johnston]

Again, we're back to the valley of death concept. The difficulty is that you need the fourth pillar organization in the middle to help the company take the technology across the valley before the venture capitalists, before the banks, before even angel investors, who then see the revenue stream, and are in a position where they can actually put their money on the table.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Pacetti.

We conclude with Mr. Turner.

[Garth Turner, Conservative, Halton, ON]

Thank you.

Mr. Williamson, what constitutes a special interest group?

[John Williamson]

Any organization that is doing advocacy organization pushing a political agenda--and by that I don't mean partisan, but a political agenda. We're an advocacy organization at the Canadian Taxpayers Federation. We don't accept nor do we seek government funding, and for good reason. At the end of the day, governments aren't our source of money, so we can keep operating whether it's a Conservative, Liberal, or NDP government.

You've got groups across this country, for example, that are provided handouts or funding from Human Resources Canada to go out and lobby for a national day care program. If these groups want to do that, that's fine, but they should do so with the support of their members, if they have any. The court challenges program is a perfect example. I believe everyone has the right to go before the court and challenge federal legislation. I don't believe people should go before the courts backed by the federal government with tax dollars to argue their special interest case.

[Garth Turner, Conservative, Halton, ON]

This committee is now in the process of hearing from 260 or 270 different organizations over the course of this exercise. I guess you'd have to define a lot of those groups, by your definition, as special interest groups. Do you have any particular advice for us?

[The Chair, Conservative, Brian Pallister]

For your information, actually we'll hear from over 450 groups.

[Garth Turner, Conservative, Halton, ON]

That's even more depressing.

[John Williamson]

I suppose my advice is to establish a blue ribbon panel to have members go through the public accounts and separate those groups that actually deliver social programs from those that actually just deliver a political message. Those that deliver a political message should be de-funded.

[Garth Turner, Conservative, Halton, ON]

Finally, Mr. Williamson, do you think the Canadian taxpayer should be footing the bill to send an orchestra to Beijing?

[John Williamson]

Generally, no, I don't. I'm not familiar with that story, but generally, no.

[Garth Turner, Conservative, Halton, ON]

That brings me to Katherine Carleton.

You held out the example of Tafelmusik as being an example of an enterprise that got government seed funding and then grew into a commercial success. Obviously, everyone knows Tafelmusik and they are a great success, but by the same token you are now using Tafelmusik as an example of an organization that has ground to a halt. They can't travel because their government funding has been cut. That's hardly a good example of an organization that grew out of seed to be successful commercially, is it?

[Katherine Carleton]

As I was listening to my colleague Mr. Johnston speak about the valley of death, it occurred to me that we are very different kinds of organizations speaking about very different kinds of activities and different potential for so-called commercial success among us. Some require seed money in order to find their appropriate commercial home. Sad to say, the economy of symphony orchestras is such that 50% of the revenue generally comes from ticket sales; another 20% to 30% comes from philanthropy, either corporate or individual; and the remainder comes from government. That has been the Canadian funding model for many years.

[Garth Turner, Conservative, Halton, ON]

Right. I understand that. But I didn't understand how on one hand you could say this is an example of an organization that grows commercially from seed and then five minutes later you're telling Judy that these guys are in terrible straits because their government funding has been withdrawn. Which way is it?

[Katherine Carleton]

I can answer that one, and happily. In terms of their core functions here in Canada, they're able to do very well with the government investment that they have consistently had over the years. However, for activities such as international touring--

[Garth Turner, Conservative, Halton, ON]

Then it's not seed money. It's program funding. That's what I'm getting at. You said it was seed money, and it grew commercially.

[Katherine Carleton]

No, I didn't say it was seed money.

[Garth Turner, Conservative, Halton, ON]

Then you misspoke.