Finance Committee on April 24th, 2007

[The Chair, Conservative, Brian Pallister]

The next speaker will be Mr. Crête.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

With regard to the capital cost allowance for the tar sands, could you give us the figures of your estimate—for 2008-2009, for example—of the cost of that tax expenditure, the accelerated capital cost allowance for the tar sands?

[Mark Carney]

The question is the current existing cost of having the accelerated capital cost allowance.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I'd like to have the figures for the latest years, but also your projection for 2008-2009.

[Mark Carney]

We can come back if we're materially wrong. I think it is on the order of $300 million to $400 million. That is the current cost, if you will, of that acceleration, which, as I'm sure you're aware, is being gradually phased out, as the government phases in an accelerated cost allowance for green technology, including for carbon sequestration and storage.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

2008-2009 could be the one with the biggest investment phase. Are the figures you're giving me for this year? Could those for 2008-2009 be higher?

[Mark Carney]

The figures are for the future.

To be precise, with respect to what is invested today, you only start to take the deduction when the plant is up and running. That's when the depreciation actually happens, which is one reason why the phase-out period goes to 2015, because people have made investment decisions today--they put the plan in place--and then they start to depreciate in the course...through to 2015.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

So that's a tax expenditure.

Let's move on to another subject, deductions in respect of interest on loans for investing outside Canada. We know that the Conservatives have come back to the initial position on Technology Partnerships Canada. On that subject, the minister told us that it would be possible to check.

Have you assessed the possibility of drawing a distinction between loans for investments that enable Canadian companies to carry out contracts and loans that are used only to grow the business?

I'm just going to cite an example. One business in my riding has a $30 million contract in London. It may have to buy a small SME there in order to be able to operate. The tax deduction is justified because it enables it to take its place in a globalization context. However, there may be significant excesses.

Do you evaluate that to try to find a way to eliminate the negative aspect and retain the positive aspect?

[Mark Carney]

I'm afraid I didn't understand the question, whether it was referring to the interest deductibility measure that we've been discussing, or another--

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Yes, we've discussed the deduction of interest with the Liberals and the Conservatives. There may be a negative effect on fairness, but there's also the question of the impact on the global market of which we are now a part.

Are you currently evaluating the possibility of introducing guidelines that make it possible to retain the positive aspect and eliminate the negative aspect? Have you evaluated the actual situation?

[Mark Carney]

The department is charged with constantly assessing the competitiveness of the Canadian tax system, including for investing abroad and investing in Canada. So in the broad sense, yes, but if there's a specific situation in your constituency, we'd be happy to meet with the individuals and....

[The Chair, Conservative, Brian Pallister]

Thank you, sir.

We continue now with Mr. Wallace. Welcome to the committee, Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chair.

I apologize for missing your presentation today. I was defending my private member's bill in another committee at the same time. We won't say how that went.

You may have answered all these questions I have for you, but I appreciate the answers. I do appreciate the books. I am one who goes through them and has a look at them.

Let's start with finance. I just want to be clear, so I understand, that we're looking at about a 2% increase over the next couple of years, each year. Is that an accurate statement?

[Mark Carney]

In terms of the overall--

[Mike Wallace, Conservative, Burlington, ON]

Financial resources, spending.

[Mark Carney]

Right. The overall votes for finance, which would include all the statutory elements, show a 2.9% increase, yes.

[Mike Wallace, Conservative, Burlington, ON]

So 2.9%. From what I'm looking at, from 2007-08 to 2008-09 it goes up by about two points. It's on page 4 of this book.

I find it interesting that your actual FTEs go down in the same timeframe. They stay steady the next year. What's the reason for their going down?

[Mark Carney]

Thank you for the question.

The principal driver is the move of the Canada savings bond program into the Bank of Canada and the administration of the Canada--

[Mike Wallace, Conservative, Burlington, ON]

So you lose those people.

[Mark Carney]

Yes.

[Mike Wallace, Conservative, Burlington, ON]

And the funding follows them, I'm assuming.

[Mark Carney]

The funding follows, and there are some efficiencies, yes.

[Mike Wallace, Conservative, Burlington, ON]

Okay. I appreciate that.

I don't want a long dissertation on this, but I understand you are responsible for domestic coinage.

[Mark Carney]

Yes.

[Mike Wallace, Conservative, Burlington, ON]

Have you ever thought about getting rid of the penny? Is that your bailiwick? Any recommendations from your department on that issue?