Finance Committee on Dec. 7th, 2007

[Jean-Patrick Brady]

That's entirely an existential question. With regard to the first question, which concerned tuition fees, we at FEUQ have always said that tuition fees had to be increased as a result of the lack of funding. Of course, that reasoning is partly valid, when you say that the increase in tuition fees is made necessary by the underfunding that results from the cuts to federal transfers in the 1990s, yes, absolutely.

You know, sometimes everything is so simple for us young people. We are a bit naive. I would simply say to you that it's a question of political will. If one day people realize that postsecondary education is a springboard for both individuals and society in general, it will be very easy for a government to simply send transfers to the provinces. At that point, each of the provinces will do what it has to do, in accordance with its powers. In Quebec, considering the $400 million under-funding of universities, that money will clearly be paid to the universities.

[Thomas Mulcair, NDP, Outremont, QC]

Thank you.

My next question is for Mr. Paton from the Canadian Chemical Producers' Association. In his presentation, Mr. Paton said that

the five-year CCA change--and these are your exact words--was “totally irrelevant” in the event of the type of business you were describing. Could it also be fairly argued that a lot of your clients, a lot of those industries--I guess your companies send a lot of their products to the manufacturing industry in Canada--because of the high dollar and the failure of the government to intervene, paid no taxes in the past year because they hadn't been making any profit? So isn't it fair to say that it is equally totally irrelevant that the tax rate has been reduced? If you're not paying taxes, what benefit is a reduction in your tax rate?

[Richard Paton]

In fact, in the last six or seven years, the industry has done quite well economically--

[Thomas Mulcair, NDP, Outremont, QC]

The chemical industry.

[Richard Paton]

The chemical industry.

[Thomas Mulcair, NDP, Outremont, QC]

But I'm talking about the other manufacturers--

[Richard Paton]

Even for manufacturing, even though they've got struggles, the output has been up. So I can't speak generally for manufacturing, but I'm sure all my companies are paying lots of taxes.

[Thomas Mulcair, NDP, Outremont, QC]

So the ones that are paying lots of taxes, they're the ones benefiting from the tax reductions. Meanwhile--

[Richard Paton]

Nobody's benefiting from this tax reduction, because it is irrelevant. It's outside the planning cycle of any capital project.

[Thomas Mulcair, NDP, Outremont, QC]

For the CCA, but not for the tax.... Not for the rate reduction, of course--

[Richard Paton]

On the general corporate tax rate? Yes, of course, we're paying lots of corporate taxes--billions.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We're going to go to Madame Thi Lac.

[Ève-Mary Thaï Thi Lac, Bloc, Saint-Hyacinthe—Bagot, QC]

Good afternoon. Thanks to all those who are here with us this afternoon. My question is for Mr. Brady.

Mr. Brady, I'm a newly elected member. I represent a riding where a major fight was waged a few years ago to obtain funding so that the Université de Montréal could be fully accredited in veterinary medicine and thus enable students to study veterinary medicine in Quebec in French. My question was in that regard.

I agree with you when you say that tuition fees should not be increased. That's important for students. However, we all know that, if academic infrastructures are not at an acceptable level, they will also be threatened with closure in certain fields.

I would like to hear what you have to say on that subject.

[Jean-Patrick Brady]

Yes, let's talk about infrastructure. When we talk about the issues more directly related to underfunding, there's obviously the question of the quality of new professors, of library resources, but also, more generally, the question of infrastructure, as you mentioned.

The infrastructure question is a broad one. Obviously, it can concern the physical state of buildings, but it can also include, more concretely, resources, laboratories, human resource centres and so on, every situation where there is a lack of actual equipment. We shouldn't wait until the building falls down for students to react. Sometimes we tend not to want to be alarmists and to wait until those kinds of things occur.

Once again, it's very simple. We're talking about underfunding of $400 million in Quebec alone. It's very important that each of the governments, which obviously includes the federal government, does its share so that universities in Quebec become more competitive and avoid heading in the direction you mentioned, which, for example, would mean that veterinary medicine students would be forced to go study elsewhere, where universities receive more funding.

[Ève-Mary Thaï Thi Lac, Bloc, Saint-Hyacinthe—Bagot, QC]

I'm sharing my time with Mr. St-Cyr.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

I'm going to put a question to both Mr. Paton and Mr. Boucher. Your presentations contain two recommendations that the Bloc Québécois supports and which it likes. The first is that the capital cost allowance for property and equipment be accelerated, and the second is that the research and development tax credit be made refundable. That's interesting because it's a form of deferred tax; consequently, the cost to the government over a long period of time is not that great. It will ultimately recover those taxes later.

As these are targeted measures, they make it possible to give businesses more cash where they need it, compared to a general tax cut which would help businesses that are already doing well.

I know that, in an ideal world, you want to get help and not to pay any taxes. But if you had to choose, what would be more beneficial for our economy, targeted measures or general measures?

[Richard Paton]

Unfortunately, I can't make a choice there.

First of all, I think if you follow Mr. Flaherty's proposal of having a 25% tax rate as the average of federal and provincial tax, you will create a huge advantage for investing in Canada that is not there right now. That creates what I would call branding; it brands Canada as a place to invest.

The CCA is quite different, you're absolutely right. It's essentially different cashflow, in terms of tax revenue: it does not reduce taxes, it's not a subsidy, etc. But it will target, as you suggest, and accelerate those capital investments that are so necessary for productivity, environmental improvement, and for the manufacturing industry right now as it's facing the dollar and all kinds of challenges.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Pacetti.

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

Thank you, Mr. Chairman.

Mr. Paton, I understand, and I think we, or at least our party, agrees with extending the CCA. Your industry, and not just your industry but some of the industries that have not, let's say, been successful in terms of productivity in the last few years—especially industries that benefited from the low Canadian dollar—didn't make any investments or reinvest their profits in machinery and equipment. Now, all of a sudden, the CCA comes on board, and now you're asking that it extend.

Shouldn't these investments have been made in the past? Why do we have to extend them for five years? Shouldn't these investments have already been in the planning?

[Richard Paton]

That's a very good question. In fact, I know that Jayson Myers of the Manufacturers and Exporters has a very interesting chart on that. Up to about 2001, companies were making quite active investments, and generally companies that keep making those investments keep their productivity levels up and are able to deal with foreign competition.

Our productivity levels, by the way, are about 62% above those of the United States, so we're not in a low-productivity business.

Since 2001, because of energy costs and because of the dollar—and we see the dollar has gone through a big change in the last little while, but actually it's been going through this change for above five years—the amount of money available for companies to make those capital investments has gone done. We've even seen it in terms of environmental performance.

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

Fair enough.

Mr. Clarke, your proposal for the avian influenza does not have a costing to it. Could you provide us with a cost?

[Peter Clarke]

It would be rather difficult, but I could give you a scenario.

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

Your estimate is better than mine.

I only have two minutes left.

Ms. Bilodeau, I'm going to ask you more or less the same kind of questions.

The act has been around for a number of years, but the grocery distribution business has evolved. We see that people want healthier ready-made products.

Have you met with the Department of Finance? Was there any agreement, openness? I don't think you should turn to the Revenue Agency.

[Monique Bilodeau]

We've started to meet with representatives of the Department of Finance. We've told them that, if we want Canadians to eat better and to reject junk food, it's not by taxing commodities that we'll be able to do that.

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

I agree, but I'd simply like to know whether you've taken steps.