Finance Committee on Sept. 15th, 2009

[The Chair, Conservative, James Rajotte]

There are about 30 seconds left.

[Andrew Van Iterson]

You hit the nail on the head: it's a low priority for us in this budget. There are areas where you can get greater bang for your buck with your money this year.

[Michael Cleland]

I would just add that carbon capture and sequestration matters. It has been supported and it needs continuing support. What hasn't been getting the attention it needs is, as I say, the community side of the energy equation. We think there are things that can be done there at relatively low cost with the right policy package, and that's where we need to put our focus.

[The Chair, Conservative, James Rajotte]

Thank you.

Monsieur Roy, cinq minutes.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chairman.

My comment is addressed to you, Mr. Van Iterson, and concerns your first recommendation. I introduced a motion in the House of Commons in 2006, if memory serves, to create a climate change adaptation fund, and I find your first recommendation restrictive.

I will explain what I mean. Climate change implies large scale adaptation of the economy, especially where agriculture is concerned, as well as fisheries, two sectors that are already very affected by climate change and will continue to be.

There's another element, involving all of the transportation infrastructure, in particular roads and bridges. In my region in particular, we are already seeing the effects of climate change. This means that from now on, we are going to have to take climate change into account when we build roads and bridges, and focus on not building them in potentially flood-prone sectors.

I will give you an example. For about 10 years, because of increased precipitation, the road that links Quebec to Sept-Îles, Port-Cartier, etc., has been been made impassable every year. In fact, every summer, a part of the road is destroyed because there is more abundant rainfall, and for two or three days— and sometimes even longer— people are cut off from the rest of Quebec. And yet Sept-Îles is quite a large centre.

We will also have to focus on adapting all of the range of services offered to the population...

I find your recommendation quite restrictive as compared to what I had proposed. Basically, we want all levels of government to carry out sufficient research and create an adaptation fund for all of the infrastructures and economic sectors that will be particularly affected. Considering effects on ecosystems is good, this is not a bad thing, but I find this too restrictive.

[Andrew Van Iterson]

First of all, Mr. Roy, thank you so much for acknowledging that we do need a transformation of our economy in our country. You're absolutely right. The sad reality is that we have not yet had a government willing to make the major changes that we need to make immediately.

These are important steps forward. The research that we've done has laid the groundwork for these measures. They would be very valuable steps, and the sooner we make them, the better. But I fully agree with you that we need to do further research and make even more sweeping, comprehensive measures, so thank you for that.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

You say that research was done. I have not seen anything, personally. I think that this research must have been done mostly by environmental groups, rather than by government. I don't believe I have seen any investments on the part of the federal government in this, in adaptations for agriculture, fisheries and other economic sectors already affected by climate change.

[Andrew Van Iterson]

This research I'm referring to that has already been done is in terms of the importance of our national parks, national wildlife areas, and marine protected areas and which areas are of particular value.

We actually had some discussion within the coalition about whether we have enough research to say what we need to do or whether we should be doing more research. There was a clear conclusion that we do know enough and that we need to be acting now. Yet at the same time, as you've said, we need to do further research so that our actions in the future are more effective.

This is research that has been done by government in particular, but also by non-governmental organizations and other outside groups.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

For instance, I know that among all of the programs involving infrastructure, the Department of Transport does have one involving the adaptation of infrastructure to climate change. That is somewhat surprising in light of the fact that the current government did not even recognize the reality of climate change. It was signed by the minister who was responsible for those files at the time. I will not name him. He was a Conservative minister. I was quite surprised to read in transport department documents that that department was getting ready to launch a program involving adaptation of infrastructure to climate-induced changes.

I wanted to put a question to Mr. Jules.

In your document, you state that over a 99-year period, one of the first nations was given the right to manage property rights. I want to know whether that right is renewable or whether it is temporary, cancellable.

[Manny Jules]

In this particular case, it's in my own home community of Kamloops. There was a 15-year build-out with a 99-year lease. That's the subject property I was referring to.

[The Chair, Conservative, James Rajotte]

Merci.

We'll go to Mr. Dechert, please.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you, Mr. Chair.

As this is our first meeting of the fall session, I'd like to echo Mr. Mulcair's comments and say that I'm looking forward very much to working very closely and cooperatively with all of my colleagues here on the finance committee, and for many months to come--

[Some hon. members]

Oh, oh!

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

--to continue to support our nation's economic recovery.

Mr. Johnson, I have a couple of questions for you. I'd like to thank you very much for your presentation and your proposals. I think there's great merit there that deserves very serious consideration. I also know that you're a highly recognized and very well respected investment industry professional.

I was reading recently about the fairly strong recovery in public security markets. We're not quite back to where we were at the peak last year, but things are trending in the right direction. Could you comment for us on how that will impact the charitable sector in Canada and, in particular, the 2006 budget measure that you mentioned with respect to the donation of public securities to charities?

As well, could you comment on how our government support for the small business sector in Canada with the new and advantageous low small business tax rates might also make the donation of private company shares more advantageous to the not-for-profit sector?

[Donald Johnson]

Thank you.

I think the rebound in the stock market is certainly a plus factor from the charitable donation perspective, but the drop in the stock market has had two major impacts. One is that the number and size of donations of stock have dropped substantially. They should recover to some degree with the rebound in the stock market, but the bigger impact has been the drop in the value of endowment funds. I would say on average they're probably down about 30%, or probably 20% now. The disbursements from those endowment funds are based upon the market value of the assets in the endowment fund, so disbursements have dropped on average 20% to 30%. Some universities have stopped disbursements totally for this year.

So while the rebound in the market will certainly help, there are still some major fund-raising challenges. A lot of people have had to defer their pledges for fulfilling their donations because of the decline in the market. I just think that given the fact that there is a precedent in the United States for exempting gifts of private company shares and gifts of real estate, there's every reason to believe we should be on a competitive playing field with the United States, because these gifts of capital assets are typically the ones that provide major donations to endowment funds and community foundations and so on, as well as universities and hospitals.

With respect to the private companies, I think that also is a major untapped source of potential donations when people start their own businesses. If the owner of the businesses is getting on in years and his children don't want to take over the business, typically they'd sell the business at that point in time. I think if they were exempt from capital gains tax, many of those owners would give serious consideration to donating a portion of their shares to a charity at the time they're selling the business and I think that would stimulate some major incremental gifts.

This is a long-term solution that's going to help our not-for-profit sector secure greater funds, so I think it's very good public policy. I think it's also very good politics. I was delighted to hear Mr. Mulcair confirm his support. Given the fact that we have a minority government, I think it would be great if all parties could communicate their support for this measure, and then it will happen.

[The Chair, Conservative, James Rajotte]

You've got about 45 seconds left.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

I have one further question.

We've seen some good news in recent days about the recovery in the average net worth of the average family, and partially that's due to the recovery of residential real estate prices. Certainly in my city of Mississauga, residential real estate prices are recovering and increasing in recent months. How would that impact the charitable sector if we were to proceed with your proposal to allow the donation of real estate to the charitable sector?

[Donald Johnson]

Actually, in Canada, because the sale of principal residences is exempt from capital gains taxes, this measure would not be relevant to principal residences. It would be for a vacation property; it would be for any commercial property.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

So vacation properties and commercial properties?

[Donald Johnson]

Yes, right. It could be rental residential, commercial, or industrial property. It's basically taxable real estate that's relevant too.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

I have one quick question for the Green Budget Coalition, if I could.

[The Chair, Conservative, James Rajotte]

You're out of time, Mr. Dechert.

We'll go to Ms. Hall Findlay, please.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you very much, and thank you very much, everyone, for being here.

My questions are specifically to Mr. Jules.

I will echo the sentiment that this is very intriguing, and I know you've been pursuing this for some time. I do have a couple of specific questions on how this would work, though.

I'm looking at your table here, and the suggestion is that the title to land would be transferred to the first nation in question; the first nation would then be in the position to grant fee simple ownership to individuals, not clearly necessarily to members of the first nation. As you've provided, it could go to anyone. How would that be determined? How would you determine who you would actually grant title to? Would there be priority to members of the first nation? How would you establish...? I'm curious about this. You would get something, and then would you just leave it open to the market to determine valuation? Would there be preference?

If you could elaborate a little bit on that, I'd appreciate it.

[Manny Jules]

First and foremost, this would have to take place with a vote of the entire community in favour of opting out of the Indian Act. Right now the title is vested in Her Majesty, and therefore the federal government owns Indian reserves. So the land would actually be transferred to the first nation.

My vision is that there would be a subsequent vote allowing individual certificate of possession holders. Right now individuals who own land on reserves would be entitled to have indefeasible title. There would also be subsequent votes or, at the same time, votes as to who would be allowed to own property.

But the market ultimately would bring this to bear. In order for a property to be mortgaged anywhere else in the country, you have to be able to go to the bank and you have to be able to put forward a market case to have value in that land. So if you have a restricted market, as it is right now on Indian reserves, you realize less than one-tenth of its value.

[Martha Hall Findlay, Liberal, Willowdale, ON]

In that sense, if you had a vote after the transfer, would that vote then include the provisions and terms, for example, of priorities as to who might be able to acquire fee simple?

I'm just a little bit uncertain as to what happens then, what the first nation does with the money it would receive from its own members or other non-members of the first nation, if in fact there is a possibility of the whole nature of the reserve somewhat disappearing, as my colleague said. I appreciate your statement that it wouldn't likely disappear, but it does change the nature of the whole....