Finance Committee on Dec. 7th, 2007

[Peter Clarke]

Not in its completeness yet. We are working on some of the areas where some insurance may lead to that, but in the interim there's nothing that's available off the shelf that would truly compensate our industry for the birds and for the loss of production. It is something we are working towards, but it isn't completely available yet.

[The Chair, Conservative, Rob Merrifield]

So there's no private insurance for that.

I have just one more quick question and we'll close this off.

With regard to Mr. Paton, you have suggested that we go from 28% to 17% on a tax reduction for corporations. You realize, of course, this committee just passed a piece of legislation that would move that from 15% in 2012. You never mentioned that at all. I was just wondering if that was going to bother you to go an extra 2% lower.

[Richard Paton]

No, Chair, unfortunately, our submission was sent in August, before your great decisions later on.

[The Chair, Conservative, Rob Merrifield]

I thought that wouldn't upset you too much.

I hesitate to allow Mr. Mulcair--

[Some hon. members]

Oh, oh!

[The Chair, Conservative, Rob Merrifield]

In fact, I don't think I'm going to because he is the one who started this by slapping us on the ignorant stuff.

With that, I want to thank the--

[A voice]

I would ask you to send a copy of the remarks to the Wheat Board.

[The Chair, Conservative, Rob Merrifield]

Okay.

Thank you very much for coming to testify before this committee. We'll take this into due consideration as we prepare our report to be tabled before Parliament.

Thank you. We will recess as we change panels.

[The Chair, Conservative, Rob Merrifield]

We have enough people sitting at the table to start, so we will call this portion of the meeting to order.

This is actually our last panel session before our pre-budget hearings are over. So if you see members around the table smiling inappropriately, it's just because of that. It's been a very long week. We started, I believe, in Victoria and went right to Halifax and then back to Montreal. So it's been very aggressive. And we hit Calgary in between.

We will start. We have a full panel of seven before us. We will start with the Association of Canadian Airport Duty Free Operators. We have André Bergeron, the executive director.

The floor is yours.

[André Bergeron, Executive Director, Association of Canadian Airport Duty Free Operators]

Thank you, monsieur le président.

ACADFO stands for the Association of Canadian Airport Duty Free Operators. We represent the providers of duty free retail services to international travellers at Canadian airports. We're also working in concert with airport authorities to introduce arrivals duty free in Canada.

Our industry is highly regulated. We are legislated through an act of Parliament and are regulated by the duty free shop program under CBSA.

Our members provide retail services to international travellers. We represent sales of $174 million, a source of employment for 1,000 Canadians, a source of promotion for Canadian-made products, an integral part of the tourist experience, and a significant part of the Canadian airport revenue stream, representing approximately $60 million paid yearly.

Our customers are Canadian and foreign travellers. More than half our customers are visitors to Canada. The profile of an international traveller has changed substantially over time. It's no longer true to say that only the very affluent are travelling internationally. In fact, it's very much a middle-income-earner business, and in most markets it even includes some lower-income earners.

Our competitors are airport duty free shops located in foreign countries. These are retail organizations that do not benefit the Canadian government or its people through employment, investment, or tax revenues. Nor do they provide fees to Canadian airport authorities on duty free sales.

Our industry has encountered many difficult, externally driven challenges: 9/11 and its after-effects; export taxes on selected products; SARS; the war in Iraq; the rising Canadian dollar; and, one of our most difficult challenges, the ban on liquids, aerosols, and gels. This ban has dramatically affected two of our most important sales channels. In August of 2006, when the ban on LAG was implemented, overall sales decreased by 35.6%. During the course of the year, losses carried on at approximately 15%. Sixteen months later we have not recaptured this loss.

Lastly, the widespread expansion of arrival duty free across all continents has resulted in a significant change in the duty free market. Canadian rules related to duty free sales have not kept pace with these changes. One measure that would greatly contribute to our competitiveness would be the introduction of arrival duty free at Canadian international airports. Arrival duty free enables international travellers arriving or returning to Canada to purchase duty free goods other than strictly at departure time. These purchases would still be subject to the same overall personal exemption limit set by the Canadian government.

Arrival duty free expansion has gained significant momentum over the last five years. It is now available in 55 countries, and this list is expanding quickly. Now is the time to take action to assist the development of the Canadian airport duty free industry so that we are not last in line in the international market.

The benefits of arrival duty free are numerous. It promotes and retains expenditures in Canada rather than in foreign countries. We have estimated that after the first 12 months, the program would repatriate $61 million in sales to Canada, would create 400 new jobs with $12.7 million in wages, would add close to $20 million to airport non-aeronautical revenues, and would generate $3.7 million in revenue paid to the federal government through employment and corporate taxes.

It would increase investment in Canada for inventory, working capital, and the construction of new retail outlets. It would increase tourism expenditures, as it has in countries such as Australia, where it has been available since 1984, while not affecting negatively the domestic retail industry, as demonstrated in studies of countries as varied as Australia, New Zealand, Norway, and Hong Kong.

To the traveller it provides great convenience and reduces the risk of confiscation due to the ban on liquids and gels onboard aircraft. For the tourism industry, it will provide opportunities to promote to arriving foreign visitors Canadian themes and events such as the upcoming Vancouver Winter Olympics or Montreal's numerous summer international festivals.

Finally, it provides a level playing field for Canadian airport duty free operators, as we are competing with duty free retailers at foreign airports.

To conclude, in our proposal we say that at a minimum, arrival duty free is revenue neutral to the government, as these purchases would have otherwise occurred in foreign airports. Arguably, arrivals duty free is a net revenue gain in terms of additional income and corporate taxes. It also has wide support, including the Retail Council of Canada, various boards of trade, and local chambers of commerce. In order to be successful, we need a business environment that is dynamic and enables us to compete with our foreign competitors. Enabling international travellers and Canadians to access duty free shops at departure and arrival would provide such an opportunity. Therefore, we ask your committee to recommend to the Minister of Finance that the government implement arrivals duty free in its next budget and effect the necessary changes to existing legislation by adding the words “and to enter Canada”.

Thank you for the opportunity to appear. I would be happy to answer any questions.

[The Chair, Conservative, Rob Merrifield]

Thank you very much for your presentation.

The Canadian Federation of Agriculture is next. We have Ron Bonnett, the second vice-president.

The floor is yours.

[Ron Bonnett, Second Vice-President, Canadian Federation of Agriculture]

Thank you. I would like to thank you for the invitation to make a presentation.

As you just mentioned, my name is Ron Bonnett. I am a beef producer from northern Ontario, and I'm also second vice-president of the organization.

There's no doubt there are a number of issues facing the agricultural industry today. We could come with a huge shopping list of some of those issues that are facing us, whether it be the impact of regulations, the impact of the Canadian dollar, or something about the response of some of the farm programs, but the CFA and its membership have decided to focus on four key issues.

As a bit of background, so that you know, the Canadian Federation of Agriculture actually represents about 200,000 farmers across the country. We also have, as memberships, a number of different commodity organizations.

I believe you have a copy provided to you earlier with some of the details of things that we're putting forward, and you can refer to those at a later date. In order to give an overview, the four issues I guess could be divided into two separate categories. The first one would be dealing with support for the industry and the other two are more designed to help reposition the industry to take advantage of innovation coming forward.

First, on the support side, I don't think it's any secret that the hog industry is basically weathering a perfect storm at this time. With high feed prices and our Canadian dollar, it has basically undermined production, and many farmers are losing up to $50 a hog on hogs shipped out of their barns.

The industry sat down and took a look at what would be needed to get them through this. They realize they're going to need a combination of stabilization, as well as some transition funds to assist some producers who do make the decision to get out of the industry.

I won't get into a lot of the technical terms about the types of programs that are available. There are two that are in existence right now: the AgriInvest program and the AgriStability program. The one request is that there's an ability to draw forward from future-year payments some of the funds that would be available. So that would assist with short-term cashflow. There's also a request that there be some backstop to some short-term loans to assist producers as they move forward. There's also a need to look at some of the payment caps that were put in place on the AgriInvest and the AgriStability program because of the fact that the losses are so deep it may go above the caps that have been put in place.

The final thing I should mention on the hog industry, too, is the fact that in some areas of the country they have come through some disease outbreaks in the last couple of years, and that has added another complication: the reference margins they have in existing programs are not as high as they could be, and there needs to be recognition of that.

The second point on support I wanted to make was to take a look at the suite of safety net programs that we have in place for farmers. They have AgriInvest, AgriStability, and two others--AgriRecovery and AgriInsurance. We're proposing another one, and it would be called AgriPlex.

I think there are a number of provinces and a number of commodities that have expressed concern about the fact that this is not a one-size-fits-all program across the country. There needs to be some flexibility so that provinces and producers within those provinces can put programs in place that work. Here in Quebec they have some production insurance programs that have worked really well. That could be money that would help assist in those programs. I know Ontario is developing some programs to work. In New Brunswick they want to make investments in some environmental things. But the concept would be to have a pool of money established to support those types of initiatives.

From a pragmatic point of view, if you look back at the history of agricultural spending over the years, there have been a number of ad hoc payments, and by putting a program like this in, it would provide stability I think to the Department of Finance, so there was money set aside to cover off some of these unanticipated things, and at the same time it would give some stability to the farm community.

Now I would like to move in and talk about positioning. The first thing we want to look at is a “Grown in Canada” program. I think a number of people would have seen the coverage on Marketplace and W-FIVE about the concern consumers have about what it is they're buying. Are they buying Canadian product or not?

We're proposing a two-pronged program. We've already started talks with the retail and processing sector to establish a new category of product called the “Grown in Canada” product. We would still leave the existing “Product of Canada” that covers the processing, but there would be another specific category established with our own governance and supervision to make sure that the product was verified “Product of Canada”. But tied to that there would have to be a marketing program, and that marketing program, we're suggesting, should be about $20 million a year to help consumers in making the decision to move ahead.

The final point I want to make is on making investment. We've come out with a Canadian cooperative investment plan. This would be a tax incentive to encourage producers to invest, and we're suggesting a tax credit of up 125% for co-op investment. These, in a package, I think would assist to help reposition the industry.

Thank you for your attention.

[The Chair, Conservative, Rob Merrifield]

Thank you very much for your presentation.

We'll now move on to the Fédération des femmes du Québec, Michèle Asselin. The floor is yours for five minutes.

[Michèle Asselin, President, Fédération des femmes du Québec]

Good afternoon, Mr. Chair.

Good afternoon, ladies and gentlemen.

For the Fédération des femmes du Québec, the next federal budget should give priority to measures to promote women's equality particularly for women who are victims of double discrimination in Quebec and Canada.

Our first recommendation more concerns our foreign policy. We propose a reduction in military spending and an increase in investments in development assistance programs, particularly programs that will help women and children. CIDA's programs should give priority to poverty reduction. That would be consistent with the commitments Canada has made to eliminate discrimination against women.

Among the measures that should promote fairness for immigrant women, there is one important measure: greater investment in integration programs, in particular for French-language instruction and occupational training programs.

As for the measures for Aboriginal women, we are very concerned by health care in the areas of the isolated communities in northern Quebec and northern Canada. The federal government has responsibilities. It must take the necessary measures to provide care that is comparable to that offered in southern Canada.

I would like to draw your attention to the fact that the shelters for Aboriginal women who are victims of violence on Aboriginal lands in Quebec—there are some 10 of them—receive 45% less funding than the other shelters in Quebec because the Quebec and federal governments pass the buck as a result of jurisdictions. It's quite shameful that Aboriginal women who need shelters where they live do not have the same services as other Quebec women. For us, this is an urgent priority.

Now let's consider the issue of women with a functional limitation. There should be more programs to support their full integration into society. They need services and equipment. However, we must also look at programs and services to protect them from physical, mental, sexual and other forms of abuse.

As regards other fairness measures for all Quebec women, I would like to draw your attention to the importance of reinstituting the Court Challenges Program, which enables women's groups to bring important cases before the courts.

We should also eliminate those provisions of the employment insurance scheme that discriminate against women, particularly the setting of eligibility requirements expressed in hours. These are criteria—the statistics prove it—that discriminate against people who work part time. As women are unfortunately the champions of nonstandard and part-time work, they have much more limited access to the employment insurance program than men. The employment insurance system should also be significantly improved so that unemployed persons can maintain a decent standard of living.

The Fédération des femmes du Québec and many social movements have one very important concern. That is to give priority to social programs. Let us remember that Canada differs from the United States in its commitment to provide certain services and a basic income to all its citizens. For women who, on average, have incomes below those of women and who continue to be primarily responsible for children, these programs guarantee a certain security, particularly with regard to health, child care services, children's allowances and retirement incomes. However, we emphasize that Canada has previously done better in this regard and could do even more to improve the situation of all citizens.

I have a lot of things to say, so I'm going to say them very quickly.

In social programs, the agreement on child care must be complied with. It's quite embarrassing to think that most women in Canada do not have a child care service. We have one in Quebec. Under that agreement, we must continue to respect Quebec's independence, independence in a number of social programs which have proven themselves in terms of leadership, but as you will understand, we support all Canadian women and demand that they be able to enjoy child care programs as good as those of Quebec. That should be a priority in the next budget.

We should also look at improved “compassionate” care benefits. We must invest more in health; we must invest more in social assistance programs. We also have an entire series of measures to improve the tax system.

I therefore hope that you will ask me questions. I know I am out of time, but I hope to be able to talk with you during the question period. Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Now we'll move to the Juvenile Diabetes Research Foundation. We have Bob Hindle, the director.

Bob, welcome.

[Bob Hindle, Director, Juvenile Diabetes Research Foundation]

Thank you, Mr. Chair and committee members.

On behalf of the Juvenile Diabetes Research Foundation, thank you again for the opportunity to speak with you. You have our written proposal, and this afternoon I will touch on some highlights to bring together the illustration of the vision that this proposal looks to.

By means of introduction, JDRF has long been known as the leading funder of type 1 diabetes research on a not-for-profit, non-government basis. Just to put that into context, the leading government funder of type 1 research in the world continues to be the United States, which over a five-year plan is contributing $150 million a year in a dedicated fund to the National Institutes of Health for type 1 research.

JDRF is currently projecting, this year, $137 million to research, and next year the budget calls for $160 million. So very possibly next year we may change that sentence and leave out the non-government part.

JDRF has contributed a total of over $1 billion already. JDRF, several years ago, changed their research funding style, and we are proposing in this project something unique to the Canadian government. It is not a fund-and-forget request; it is a proposal for a unique and strategic partnership with the Canadian government to create a clinical trial network.

The proposal breaks down into two parts. The project to create a clinical trial network is on a 10-year initial term, and the specific request is, for the first five years, funding of $125 million. As I said, this is not on a fund-and-forget basis about which we'll get back to you in five years, at which point the researchers will tell you what happened.

JDRF's research management policies are founded on a business model. This implies and brings with it expertise that is not available elsewhere in the world. The business model calls for regular evaluations. There is a detailed proposal ready, which will show a tangible and measurable return on investment for this investment. That's the key word: we are looking for an investment in a partnership, not a handout that has no means of evaluation every six and 12 months.

We have had meetings with the Canadian Institutes of Health Research. In March, the CIHR announced the creation of a totally new element called their clinical research initiative. This is following up on Dr. Bernstein's open letter to researchers of January 6 of this year, which spoke of the need for CIHR, and in general for funding of health research in Canada, to move into what is called the transitional research stage.

How do you take basic discoveries and move them through this transitional gap to where venture capitalists and pharma companies find it in their commercial interests to take them the rest of the way towards commercialization?

This addresses existing Canadian strengths. Since 1921, and continuing right up to August 2007, Canada has had a particularly noted worldwide reputation as our researchers have led the world in significant achievements in type 1 diabetes. It also leverages existing Canadian research institutions, our leading hospitals and universities, because that is where the research is being done.

Such an initiative on a longer capital investment basis will allow them to leverage their own resources. Giving the universities and the hospitals a 10-year runway allows them to ramp up their own facilities and their own institutions as another form of leverage of this $125 million.

It also provides regular reporting on the progress of the investment by the only research institution in the world that's capable of doing this. This has already been recognized.

We have an agreement in principle with the Canadian Institutes of Health Research. We've held meetings, received the approval of Dr. Bernstein and his successor, the interim CEO, Dr. Chartrand, and the head of the Institute for Diabetes who would be most directly involved, Dr. Bhagirath Singh.

With tangible, measurable ROI being provided by JDRF, the reliability of what we are proposing can be independently verified because JDRF has concluded a similar type of effort in the United States, which resulted in a clinical trial network called the Immune Tolerance Network. The drawback of that particular facility is that it is almost always used to capacity.

JDRF concluded a similar project with the Australian government 18 months ago, which is just getting up and running. With all due respect, even the Australians admit they do not have the background and expertise to grow this very quickly, which narrows us down to existing Canadian research availability, capacity, world-leading achievements, and expertise.

The final element I'd like to highlight is that this network will forever leave a legacy in Canada because it will not be used 24/7 by type 1 research; it will then be available to research institutions for other disease research on an ongoing basis.

Merci.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll now move on to the Canadian Ecumenical Justice Initiatives. We have Jean-Luc Djigo.

The floor is yours.

[Jean-Luc Djigo, Representative, Quebec, KAIROS: Canadian Ecumenical Justice Initiatives]

Thank you.

My name is Jean-Luc Djigo. I am the KAIROS representative in Montreal. It is a great pleasure for me to have this opportunity to briefly present to you, on behalf of KAIROS, the essential points that should be considered for the federal budget.

The following five points reflect the values in which we, as a coalition of churches, believe.

First, make a commitment in the 2008 budget to develop and implement a poverty reduction strategy in consultation with a broad range of citizens, men and women, particularly those living in poverty. That plan should define specific targets and a firm calendar and determine mechanisms for accountability to the Canadian public.

Second, develop a plan to increase the amount of foreign development aid to 0.7% of gross domestic product, GDP, by 2015, and thus rank poverty reduction number one among our foreign aid priorities.

Third, consider the introduction of a carbon tax on fossil fuels with rebates for low-income Canadians and residents of remote communities.

Fourth, implement the recommendations of the Senate report on specific claims, which includes creating, within two years, an independent body for land claim settlement, and adopting new guiding principles that recognize the claims.

Fifth, increase citizen deliberation and common ground building during this fall's consultations by organizing dialogues with various citizens groups across Canada.

We think the budget should contain principles that reflect our values, that is to say fairness, transparency, social responsibility, an adequate and prosperous economic framework for all and ecological sustainability. All these points have been detailed in the documents distributed to you.

In closing, I'll take the opportunity to ask a few questions. Has this consultation heard the voice of people living in poverty, that of Aboriginal people, and that of Canada's children? Have we heard the voice of people from the countries of the south who depend on and are waiting for our support?

These, briefly put, are a few points that KAIROS would like to submit for your consideration.

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much for your presentation.

We'll now move to our last presenter. We have Mr. Pierre Morisette, executive director. I believe you introduced your group, so we'll allow you five minutes.

[Pierre Morrissette, Executive Director, Regroupement économique et social du Sud-Ouest]

Thank you, monsieur le président.

The Lachine Canal celebrated its 180th birthday two years ago. It's a masterpiece of the federal waterway system that opened the route to the Great Lakes and the interior of the continent. The Lachine Canal is an important asset of the Canadian heritage. It was at the centre of the Canadian industrial revolution, and its surroundings and neighbourhoods were at the heart of Canadian industrial activity until the middle of the 20th century.

As it stands now, the Lachine Canal is a disgrace for the federal government. Parks Canada, the manager of the site, has barely the resources to maintain it properly. The furniture is old and deficient. The cycle path needs urgent repairs and probably a complete renovation. Light bulbs are not replaced, etc.

Given the national historical importance of the Lachine Canal, it is very difficult to understand why Parks Canada has so little resources to develop it. The interpretation programs are minimal. There are very few self-interpretation panels, and we are still waiting for the canal house and interpretation centre that were to be created for the reopening of the canal in 2002.

As I mentioned earlier, the Lachine Canal area was at the heart of the Canadian industrial sector for more than a century. The opening of the St. Lawrence Seaway in 1959 marked the beginning of the end for the Montreal SouthWest economic base.

This reorganization of the waterway system had a catastrophic impact on the SouthWest: a sharp decline of industrial jobs, a sharp decline of population. And all that of course resulted in massive unemployment and poverty, bringing the SouthWest Borough to one of the poorest urban areas in Canada at the beginning of the 1980s.

In 1984, RESO was founded at the initiative of a wide variety of community and economic partners and stakeholders to revitalize the socio-economic base and support its population to integrate the workforce and restore its dignity.

Very quickly, the Lachine Canal was recognized as the backbone of the SouthWest revitalization. After being completely closed to navigation in 1970, the Canal became the symbol of the area's devastation. For most people, the Canal was an open wound that reflected the neglected state of its neighbourhoods and literally became Montreal's garbage can. Restoring and reopening the Canal was thus a major component of the SouthWest renaissance, and hopefully a strategy to bring back businesses and population based on 21st century economic perspectives: the new economy, the cultural industries and tourism.

One of the goals was to ensure jobs and proper living conditions for those who had been left behind. So far, 10 years after the announcement of the public investments to reopen the Canal in 1997, and five years after its reopening in 2002, even though we make a rather positive assessment of the impact of the project on the SouthWest's social and economic situation, we are forced to observe that the goal to improve the fate of the poorest in our neighbourhoods is, at best, partially achieved.

The Canal banks are rapidly developing with luxurious condos and other accommodations for middle and upper class households, which is not a bad thing for the demographic balance of the borough, as long as the poorer households feel that they won't be the victims of a gentrification process that would eventually push them away from their neighbourhood. This is why we think that this ambitious but necessary project must be completed to fulfil all of its expected benefits.

Among things that urgently need to be done, I will address two specific issues: the development of a multifunctional and multiclientele project on the former Canada Post property on the banks of the Canal, a property now owned by Canada Lands Corporation, CLC; the announcement and realization of the second phase of public investments to complete the Canal's renovation and support its touristic and cultural development.

The Canada Post site offers a great opportunity to undertake a development that will be inclusive, sustainable and beneficial for all. The SouthWest community will be involved in defining a master plan for the site and we are very confident that the community's objectives and priorities will be taken into account.

However, we are faced with a major obstacle that could compromise the realization of community projects: the cost of site decontamination. Considering that this site has been the property of the federal government for over one and a half centuries, and in accordance with the polluter-pays principle, we think that the federal government has a responsibility to take care of the decontamination costs and give back a clean piece of land to the community. It appears that the federal government has put aside $4.5 billion for the next 10 years to decontaminate federal properties. For some technical reasons, it seems that CLC doesn't have access to these funds that would really help to make the difference and facilitate a more inclusive and affordable project on this property.

We respectfully ask you to change whatever regulation needs to be changed to make these funds available to the Canada Post site project.

Thank you, Mr. Chair.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll now move to the question and answer period.

We will start with Mr. Pacetti. The floor is yours. I think we'll try for two rounds of four minutes.

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

Thank you, Mr. Chairman.

Welcome to all the witnesses. We appreciate your comments. It's always interesting to have witnesses who represent organizations with various interests. That makes our debates a little more interesting, even though it sometimes makes our lives a little more difficult.

Mr. Morrissette, I know that the canal is located in the SouthWest. I also know that my friend Mr. St-Cyr is concerned about it, even though he represents another political party. I represent a Montreal Island riding. This is something that affects all citizens of Montreal Island and the surrounding areas.

Is your organization subsidized? Does it receive funding?

[Pierre Morrissette]

The Regroupement économique et social du Sud-Ouest is supported by the three levels of government, the federal government, the Government of Quebec and the City of Montreal.

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

Have studies previously been done on the canal and the clean-up of that entire area?

[Pierre Morrissette]

Yes, studies were conducted in the 1980s to determine whether the canal itself should be decontaminated or simply reopened without being decontaminated.

The decision was to stand pat, not to stir up the sediments on the bottom of the canal, but to be watchful so as not to put them back into suspension in the water. That permitted a first phase of investment in order to reopen the canal to navigation in 2002.

Here's the gist of my remarks today: the work isn't finished.