Finance Committee on Oct. 17th, 2006

[Pierre Paquette, Bloc, Joliette, QC]

Thank you very much.

I would like to come back to the Conference of Defence Associations. You are asking for—and my colleague has also raised this—a major investment, which we are not calling into question. Everyone is well aware of the state of Canada's military equipment. I think that this is obvious when we see our helicopters having a hard time taking off and our submarines, which are barely submersible.

That being said, your demand leaves us feeling uneasy, because a lot of money is at stake and we don't feel that the federal government has a very clear vision of the role of Canada's armed forces. During the last Parliament, Liberals published an international policy statement that included a national defence component. The policy was questionable and we did not really have time to debate it, because of the general election.

The Conservatives are sending out signals, but there is not a very clear strategic vision. Let me give you an example. Whereas people believe that Canada is playing an important role in United Nations' missions, Canada currently ranks fifth out of the 95 countries that contribute to UN missions. A lot is being invested today in our forces in Afghanistan, which might explain our ranking, but does not show us where we are headed.

Does your proposal to draw up a detailed plan on our defence capacity also include, because we are talking about details, a debate on the role Canada should consider for its armed forces and National Defence?

[The Chair, Conservative, Brian Pallister]

We will go now with Mr. Del Mastro. Over to you, sir.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Mr. Chair.

To begin with, Mr. Kyle, I just want to point something out to you for clarification. In conjunction with the GST rate reduction, budget 2006 did in fact increase the excise duties so that cigarettes did not in fact get cheaper, which is very important to me.

You've raised a point that I know would be exceptionally contentious in society, which is to combat the contraband cigarette problem that we're all seeing. In fact, I've heard numbers of it being as much as 25% of the market right now. I've been to reserves where the signs are large and digital, and where there are 24/7 drive-throughs offering 200 cigarettes in a bag for $10. This is a huge problem.

It seems to me that an alternative to trying to shut down the operation would be to shut down people going and getting them, or basically to police the exit of vehicles that are holding contraband cigarettes. What do you think of that type of a proposal? Because I do think that what you're suggesting would be difficult.

[Kenneth Kyle]

I don't think we'd have to go that far. You can stop going onto the reserve the things that are being used in the illegal manufacture of cigarettes, like packaging and filters and tobacco. There are a lot of things that could be done before we have to do something that extreme.

[Dean Del Mastro, Conservative, Peterborough, ON]

I don't know if it's extreme to suggest that people who aren't entitled to buy cigarettes without taxes on them are stopped from being able to buy them. I don't know if that's extreme. I think going into Akwesasne and shutting down the production of cigarettes would be extreme.

[Kenneth Kyle]

But there are ways to do it without confrontation. I can send some suggestions--

[Dean Del Mastro, Conservative, Peterborough, ON]

I just wanted your opinion on that and I just want to say that I applaud the work you do. I've lost my father, two uncles, and an aunt to cancer, and I hold hope that organizations like yours will lead to days when people don't have to suffer from what I consider to be a non-discriminatory disease.

[Kenneth Kyle]

Parliament approved in the last budget the funding for the Canadian strategy for cancer control, which is an absolutely breathtaking, innovative strategy that could be a model for many other diseases. So we'll keep our fingers crossed.

[Dean Del Mastro, Conservative, Peterborough, ON]

Yes, I hold out hope for that as well.

Mr. MacDonald, the Government of Canada this summer actually rolled out quite a number of what I consider to be very important procurement announcements for the armed forces. There's certainly some misconception that some of these things that we're buying are, for lack of a better term, fancy and glitzy. These are meat and potatoes investments in the military, aren't they?

[Col Brian MacDonald]

Absolutely. When you're talking about strategic and tactical lift, you're talking about the method of getting supplies to where they are needed.

One might make the point as well that we're not simply looking at it in terms of overseas deployments, but also in terms of the requirement of the Department of National Defence to provide aid and assistance to other government departments in such things as the problem of disasters. The acquisition, for example, of the strategic airlifters gives us an airplane that is able to deploy large quantities of materiel in the Canadian space.

We've talked about the possibility, for example, of a disaster in the Arctic area, which is an area that we are studying at the moment. Having the capacity to lift large quantities of commodities and to lift equipment such as medium transport helicopters in the belly of one of those airplanes to where there is a requirement in terms of some sort of a disaster is a great enabler for the Canadian Forces and its role.

[Dean Del Mastro, Conservative, Peterborough, ON]

Perhaps it could be lifting the DART team to areas where there's been a tragedy, or even Leopard tanks to Afghanistan. I mean, we just don't have these capabilities.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Del Mastro.

We'll continue with Mr. Pacetti.

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

Thank you, Mr. Chair.

Thank you again to all the presenters. It's always interesting. It's good to have different points of view. It makes it a little bit more interesting for us. Our time is limited, so I have a couple of questions.

Mr. Kyle, I'm going to ask the same question, but with a different focus. You addressed the issue of contraband when it comes to taxes. At what point as we keep increasing taxes will we just stop people from smoking? Is that going to happen? Do we want to reduce smokers, or do we want to increase taxes?

[Kenneth Kyle]

The World Bank has pointed out worldwide that the most effective way to reduce smoking is to make tobacco products less affordable, especially to kids and to poor people. People of higher socio-economic status respond to health information and health campaigns; the way you get poorer people and kids to stop smoking is to make the products less affordable. What's stopping the provinces of Quebec and Ontario and the federal government from raising taxes further is the contraband problem from the illegal manufacturing on reserves.

As I've said, I can--

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

I don't mean to interrupt you, but as I said, time is limited.

If we were able to solve the contraband issue, would you believe that we'd still have a way to go to increase the taxes on tobacco?

[Kenneth Kyle]

Absolutely. Yes. We could raise it $10 a carton.

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

Okay, thank you. Ms. Hitchcock, on your brief, I address the issue with commercialization. Somebody brought up a different method. I read the report from the expert task force, but I still don't see a particular solution to commercialization. In your brief you have partnerships, but is this something that the university wants to get into and promote--commercialization? Is this something universities should be doing?

[Dr. Karen Hitchcock]

One of the strongest points I'd like to leave with you is my concern that universities have been too much left out of the process. If we speak about a gap between fundamental research--the council funding and so forth--and then we speak about industry being the ones doing commercialization, we're losing out with tremendous resources at universities and engineering schools and so forth.

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

I don't disagree, because I think it's lacking, and it could probably be a revenue generator. What seems to be happening is that when it's time to make some money, the universities seem to step away. I might be wrong.

If you're going to go that direction or suggest that type of direction for universities to be involved, will they have the expertise?

[Dr. Karen Hitchcock]

Again, I talk partnerships and coalitions. If you think of this as a continuum from fundamental long-term research through mid-term research--which would be D, the development side--and then you speak about very short-term research, what I would be recommending as a new paradigm is to have funding mechanisms that require the partners to work together.

In the U.S. they have grants that must be applied to by both industry and universities. It's an iterative process. We always think of--

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

I don't mean to interrupt, but again, as I said, the time is limited.

You would suggest that we set up a program through which universities and companies can apply for this money. Does the government get the money back, or who is the beneficiary of all this--the companies?

[Dr. Karen Hitchcock]

The beneficiary is an enhanced economy. The beneficiary is job creation. If you're looking at an end point, I think we'd all say it was job creation, not licensing income. We want the companies to stay in Canada.

Universities have tremendous resources to bring to the table, and faculties in engineering are applied; by definition, they're in development. I could go on.

I'm sorry, I see--

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

No, you can keep talking. I can't, that's all.

[The Chair, Conservative, Brian Pallister]

That was an indication that there's no sense his talking; you can proceed.

[Dr. Karen Hitchcock]

I think right now the gap is reflected by the way we fund and the role we ascribe to universities, as fundamental research only. It's just really not accurate with regard to the wonderfully applied disciplines we have in our professions.