Finance Committee on March 5th, 2008

[An hon. member]

You'd never do that.

[Ted Menzies, Conservative, Macleod, AB]

I wasn't interrupting when my colleagues were speaking, so I would ask them to....

My point is that the role of the finance minister--now that we've started down that road--is to encourage investment in all of Canada. When he sees a weak point, then it's his job to encourage them--and that's all the finance minister is doing--to get on board with where the rest of the provinces are headed, and that's in lowering corporate taxes to make a stronger argument for you in encouraging investment.

That being said, Avrim, you piqued my interest when you were talking about other uses for wood. Quickly, if you could elaborate on that, where are we at on pine beetle? What are we going to do with all this wood? The forest industry is strapped for cash right now. We realize that. We have a huge forest fire potential coming upon us this year and in the next few years.

Can you please update us on where we are on that?

[Avrim Lazar]

The pine beetle epidemic is proceeding apace. They've been slowed down a little bit by weather. We don't know where they're going to go or how far, because the specialists in this area have been wrong almost every time. The numbers have exploded to such an extent that what is a very small-probability event of a pine beetle's jumping species or moving geographically becomes almost a certainty when you go from millions to billions.

A lot of that wood is good for pulp; a lot is good for bioenergy. There are programs afoot to do that. The difficulty is that as governments create incentives to use it that way, that also creates distortions in the marketplace that aren't always healthy. For a lot of that wood, the economics of transporting it to an energy plant don't make sense, but sometimes you need to just get it out of there.

So there is nothing simple on this, and it's not the sort of thing that's easily amenable to a federal program. Is it hurting us? Yes, it is. Are we trying to cope? Yes, we are. Will it hurt specific towns badly? Yes, it will.

If there's any lesson in it, it's that investments in research on the impacts of climate change on Canadian forests is well worthwhile, and we should increase our money for adaptation research.

The other lesson in it is the sort of research that's done by our innovation institute. Right now they're working quite hard on new ways to use the beetle wood. That kind of investment would be useful too.

Just to go on the record, we're against the beetle.

[Some hon. members]

Oh, oh!

[Ted Menzies, Conservative, Macleod, AB]

Volkswagen might be upset.

HasBill C-8, on shippers' rights, impacted you positively?

[Avrim Lazar]

I just want to say that's one of the best things that have happened in a long time. We've been suffering because of the unfettered power of the railways. This creates fairness. It means that with final offer arbitration, the reasonable gets to win as opposed to the powerful. I have to compliment the government for introducing it. I have to compliment the opposition parties for supporting it and passing it. I thought that was an example of government working the way it should. We watched the debate in committee. It wasn't partisan; it was constructive.

Again, we really want to salute you and say thank you for doing it.

[Ted Menzies, Conservative, Macleod, AB]

Do I have time for one quick question?

[The Chair, Conservative, Rob Merrifield]

You have 30 seconds.

[Ted Menzies, Conservative, Macleod, AB]

I want to ask something on softwood lumber and the WTO ruling. Is it fifty-fifty?

[Avrim Lazar]

Arbitrators will do what they will. We're not particularly unhappy with it. We would have liked to win all of it.

We have noticed in the current market that hanging onto this agreement for a few years is going to be important. Not everyone was happy with the terms of the agreement, but right now it's the only agreement we have. If we lose it, we're in big trouble.

[Ted Menzies, Conservative, Macleod, AB]

We'd better keep the government we have, then.

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Monsieur Crête.

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

Thank you, Mr. Chairman.

I would like a brief response from the witnesses.

Would you be prepared to support a report calling on the federal government to enhance its action plan as quickly as possible to support the manufacturing and forestry sectors, which would involve the use of part of the $10 billion surplus for this current fiscal year, in light of the measures you proposed today? Would you agree, in whole or in part, with that?

[Avrim Lazar]

If that included the measures we put forward, we would agree.

[Pierre Laliberté]

Absolutely.

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

It is not because this is a self-evident truth. I want the committee to realize that you feel that the government has not done enough and that if there are no additional measures taken, we will be dealing with significant problems down the line.

[Avrim Lazar]

Yes, and if

these additional measures are taken immediately, they would be welcome.

If it comes in the next fiscal update, a little later, we'll still give them a hug and a kiss.

I don't want to get you guys too excited now.

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

What would you say is the current proportion of jobs which are not within the manufacturing sector but depend upon it? Pay and accounting services have been greatly centralized and are no longer accounted for under the manufacturing or forestry services, yet they are support services. Would that represent a large number of jobs that we should also bear in mind?

[Avrim Lazar]

In our case, it amounts to 600,000 jobs.

That's 600,000 jobs in the service sector. I can't give you an exact number, but that's the order of magnitude. We have 300,000 direct. The 600,000 indirect is almost all service sector. Every time a forestry guy loses his job, two service sector people lose their jobs.

[Dr. Jayson Myers]

It's the same for manufacturing.

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

Thank you very much for your contribution and your relentlessness.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Mr. Pacetti.

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

Jayson, you brought up something that perhaps we could recommend. I brought it up during the pre-budget consultation— the commercialization, bringing the R and D to market. It's a challenge. In both Quebec and Ontario, some good inventions or innovative products come out and then they just seem to fall off the face of the earth.

During the pre-budget consultations, we had some presentations from the universities. One was Brock University; another was Queen's. They have some money, but they're not comfortable working with industry. I think this is the first time industry has brought it up. I think your association is the first one. There's money for the R and D, but there doesn't seem to be any money for bringing products to market. Nobody has given us a great idea on how to do that.

Some of the venture capitalists are looking for the “valley of death” type of scenario.

I will ask Jason to respond first. And then, I would like to hear your comments, Mr. Laliberté.

[Dr. Jayson Myers]

I think it's extremely important. In my mind, research is transforming money into knowledge. Innovation is taking knowledge and creating something of greater value. The issue is, what solution does business need that they can apply the knowledge to? How can we build more collaborative relationships between the research going on in universities and colleges, which is extremely important, and the industrial application?

We've seen a lot of direct grants to universities, which have sometimes actually diluted some of the collaborative grants, particularly at the provincial level. Through some sort of collaborative research system, researchers in universities and colleges should be able to bring their ideas to industry, rather than trying to take it to market themselves.

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

In my understanding, the universities are not necessarily comfortable with doing it, but they have no choice because industry is not willing to subsidize. Are we looking at setting up a separate fund? Because it's not part of R and D, it's the next cycle.