Finance Committee on Sept. 15th, 2009

[The Chair, Conservative, James Rajotte]

Colleagues, I want to welcome all of you back to the finance committee. I hope you all had a good summer back in your constituencies.

Today we are starting, pursuant to Standing Order 83.1, our pre-budget consultations. This is the first pre-budget consultation of the finance committee in the fall. We have, colleagues, about 400 witnesses who will be appearing before the committee over the next couple of months, both here in Ottawa and across the country. We certainly look forward to these discussions.

We have six groups with us here today. Each will have a five-minute opening statement before the committee. Then we'll have questions from members.

I'll go down the list, and we'll have the groups speak in the order that I outline.

First we have Pembina Institute. Second we have Care of the Child Coalitions. Third we have the First Nations Tax Commission. Fourth we have the Canadian Gas Association. Fifth we have the Green Budget Coalition. Finally we have BMO Capital Markets; we have, I think appearing as an individual, Mr. Johnson.

Starting with the Pembina Institute, you have five minutes for an opening statement.

[Timothy Weis, Director, Renewable Energy and Efficiency, Pembina Institute]

Great. Thank you for having me here and for kicking off this process.

My name is Tim Weis. I'm the director of renewable energy and energy efficiency policy at the Pembina Institute. We're a national sustainable energy think tank. We work on issues from conventional energy to the development of sustainable energy all across the country.

I'm a professional engineer. I've been working in renewable energy for the past 10 years. I've really seen, in those 10 years, renewable energy go from a marginal technology, sort of on the fringes, to really a mainstream technology, not only around the world but in Canada. In fact, right now Canada already generates close to 1% of its electricity from wind power.

As I outlined in my submission, 2008, last year, was the first year that more money was invested in renewable power than coal or natural gas globally. Renewable power actually is the largest-growing sector of electricity on the planet. When I started getting involved in renewable power about 10 years ago, about a hundred people were at the Canadian Wind Energy Association conference. This year, in Toronto, they are expecting somewhere between 2,000 to 3,000 people. The American Wind Energy Association had about 20,000 to 25,000 people attend their last conference. So this is an enormous industry. It's growing very rapidly and has a huge number of people involved in it.

It's not surprising that there are so many people involved in the United States. The United States has become the largest developer of wind power on the planet. Just last year it overtook Germany. This is important for Canada. This is a huge market that's happening right south of the border. They're our largest trading partner. Watching the investment that's going on in the United States, the way that Canada positions itself to take part in that growth will be very important.

To date, the federal government has been instrumental in growing the renewable energy industry in Canada through a production incentive called ecoENERGY for Renewable Power. This program was first implemented in 2002, and 90% of the wind power in Canada has been installed receiving this support.

In spite of its success, ecoENERGY for Renewable Power is expected to run out of money this year, within a few months, over a year from when it was originally expected to. This jeopardizes a huge amount of investment in Canada and many projects that are already on the books. Not only does it jeopardize projects that are already being developed; it also slows down future projects. It takes two, three, sometimes five years to plan one of these projects. If you don't have market stability or know whether the market is going to be available in the future, it really slows down future development and future decisions.

The list that I circulated this morning is a list of all the projects that are currently subscribed to or registered for ecoENERGY for Renewable Power. All the projects in yellow are the projects that are unlikely to be funded by this program. There are about 7,000 or 8,000 megawatts of projects already on the books right now that are in jeopardy of not being funded. It's important to take advantage of this opportunity.

I have a couple of other points that I want to quickly make.

It's going to be important to unlock the geothermal potential in Canada. Environment Canada mapped the wind resources across the country. That was really instrumental in helping to develop the wind energy resource. Geothermal is one of those technologies that are on the cusp of being developed. We don't really understand what the resource is in Canada. It would only be a few million dollars to get a detailed map of the geothermal potential for the country.

Those are the three things that we've put in our submission this year, but I'd like to stress that there are many things that can be done to support renewable power across the country. Particularly if you look at the amount of investments and the diversity of investments that are going on in the United States, it really is an important time and a strategic time for the government to act on renewable power.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation, Mr. Weis.

We'll go now to Ms. Smith, please.

[Beverley Smith, Member, Care of the Child Coalitions]

Thank you.

You asked what programs government should set up and what tax measures should be in place.

Your instinct to pay down national debt likely involves cutting spending and getting more people to pay tax, yet those things don't always work together. If you want more people earning, you'll have to fund more programs. If you cut taxes, you can fund fewer programs since people have money to meet their own needs.

Urging a woman who's home with a young child or sick parent to get paid work presents a dilemma. Who will tend the baby or grandma? So government is asked to provide daycare for the young, sick, handicapped and elderly so this woman can earn.

It turns out that funding a substitute is costly. The bill for day care in Quebec stunned its planners. The bill for Sweden's day care got so high that the voters defeated the government. With the greying population, elder care will increase that bill.

We now see that women at home were already doing something essential. Funding only programs so women can leave the home is not even feasible for rural parents or handicapped kids. And it is not what all women want.

“When mama ain't happy, ain't nobody happy.” Stress and depression have skyrocketed. Some women want a paid career, while others want to be the caregiver at home. Some want to blend. Some men want the choices. People differ.

Your dilemma becomes twofold: how to pay down the debt and how to recognize caregiving.

I have a suggestion. Instead of only funding mom-substitutes, fund care itself. Fund it based on who needs care. If funding flows with the one who needs care, women will decide care style.

Fund the frail elderly or handicapped directly so that they pick the caregiver; then they retain dignity and thrive in the culture they value. For young children, give a universal birth bonus and give universal maternity benefits, with funding to age 18. Expensive, you say? Yes, but not as expensive as universal day care, which would cost $20 billion per year.

Direct funding would remove child poverty, reduce marital tension, empower women, and nurture free choice. No government can set up a program to match all needs.

Others nations have had the same insight. The United Kingdom and several U.S. states fund the elderly directly. Australia, Russia, and Singapore now have a universal birth bonus. The people of Japan just replaced their government because they wanted more funding for children.

With a greying population, our tax base is eroding. We need fresh blood. Immigration is not going to provide enough earners. We need babies. Setting up daycare did not increase the birth rate in Quebec. Only changing maternity benefits did that.

It turns out that people value not just earning but also spending time with each other. They can't forever earn. Some are too young, some too frail, and those who can't take care of themselves need care. A healthy society recognizes the nurturer as part of the economy.

Those who operate programs will say they deserve all the money, claiming expertise, saying they are an essential service so people can earn. But they are not the only experts. Childcare and eldercare are hardly the same as medical care or schooling. What care programs in schools offer is akin to what restaurants offer — one way to meet a need. You can eat at home, order in or dine out.

Care of a baby involves diaper changes and teaching to sit. It's a skill nearly all households at some point develop. It's not the same as medical care; you don't do brain surgery at home. Teaching a child about photosynthesis is a skill not all citizens have. Formal education and health treatment are universal rights; day care is not. For care of others, we need to fund people, not programs. When you take care of your own child, you regulate the care. When you trust grandma care or neighbour care, you inspect their values--like eating at a friend's and trusting the cooking.

When you trust a stranger to care for your aunt or child, that's different. Then we do not need government standards, inspections as for restaurants. But government does not run restaurants and need not run daycares.

I'm a schoolteacher for K to 12. I see kids and their dreams and hopes. We have to unleash the same creativity on their parents.

Canadians already know what their child or elderly grandma needs. Let them set that up or purchase it. Small and large-scale daycares may thrive alongside neighbourhood day homes, and parents may work from home.

This is a revolution I'm asking for in the definition of work, productivity, and labour force activity. Do not fund programs, but fund people. At a children's hospital, there's a saying I like: to change the outcome, change the income.

[The Chair, Conservative, James Rajotte]

Thank you very much, Ms. Smith.

We'll go now to Mr. Jules' presentation, please.

[Manny Jules, Chief Commissioner, First Nations Tax Commission]

Let me be a free man, free to travel, free to stop, free to work, free to trade where I choose, free to choose my own teachers, free to follow the religion of my fathers, free to talk, think and act for myself....

The Indian Act in Canada was passed in 1876. The quote I read for you was from Chief Joseph in 1879, 130 years ago.

In 1988 I helped lead the first Indian-led amendment to the Indian Act in its history. Since then there have been other amendments, but the essence of the 1876 legislation remains in place. For example, despite the apology last year, the provision of the act that allowed the minister to take our children from their parents and place them in a residential school still remains. It is a matter of some international shame for Canada that a piece of legislation from the 19th century still continues to apply to us in the 21st century, expressing many attitudes that belong to that century.

In its history, Canada has faced two critical questions. What is the place of Quebec? What is the place of first nations?

As chief commissioner of the First Nations Tax Commission, I am pleased to appear before the Standing Committee on Finance to suggest a solution to this first nations challenge for Canada. I am here to ask the finance committee to support the first nation property ownership act, a project we have been advocating for the last four years to the finance committee.

This legislation would allow interested first nations to opt out, should they choose, from the reserve lands system of the Indian Act. It would transfer title of our lands from the federal government to our governments. It would see the lands of participating first nations removed from the wholly inadequate Indian Lands Registry and transferred to a Torrens land title system, the best registry system in the world. It would allow us, if we want, to issue a fee simple title so that our lands are as valuable as any others in Canada.

For the last year, the world and, to a lesser extent, Canada have been suffering through a credit crisis. It has been hard for citizens to convert their assets into capital. We have seen the damage that a credit crisis does to economies in the space of one year. Almost all governments are now running deficits, and the work of this committee has become more challenging.

If a credit crisis can do this to your economy in one year, think of what a 130-year credit crisis would feel like. That is precisely what we have faced since the 1876 Indian Act. In the words of Hernando de Soto, co-chair with Madeleine Albright of the UN Commission on Legal Empowerment of the Poor, you don't have to travel to Zambia or Peru to see dead capital; all you have to do is visit a reserve in Canada.

First nations people own assets, but not with the same instruments as other Canadians. They're frozen into an Indian Act of the 1870s, so they can't easily trade their valuable resources. Canada can no longer afford low first nation productivity. You're well aware that in the next 15 years the number of seniors will grow by over 60%, while the number of new workers will grow by only 20%. Moreover, one in ten new Canadian workers will be aboriginals. In other words, Canada's future prosperity will increasingly depend on our productivity.

The time for change is now. With the stroke of a pen, the first nations property ownership act will free up 130 years of suppressed entrepreneurial imagination and unleash a wave of first nation productivity. I know first-hand what improvements to property rights on our lands can do. In 1996 it cost $8,000 an acre to purchase an acre of our land at Sun Rivers. Today, because Sun Rivers has secure 99-year property rights, quality infrastructure, and excellent local services, that same acre costs about $540,000.

Secure property rights helped raise these property values by over 67,000% in 13 years. Unfortunately, it took us five years and cost over $2 million to create a functioning market. The first nation property ownership act will allow other interested first nations to do this at a fraction of that time and cost.

The economic benefits of this legislation would be significant. We completed a study of 68 mainly rural first nations in British Columbia and found that this legislation would increase property values by almost $4 billion over the next 15 years. We think we can do this for the rest of our communities.

I am asking all members of the finance committee to support this proposed legislation. Our current system of property rights has failed. We need to have access to a system that the rest of Canada takes for granted. Let me repeat: this proposal is for opt-in legislation, leaving each first nation free to choose as they see fit. We need the freedom to choose.

This legislation will give us a real alternative to the Indian Act. The Nisga'a have already chosen this path. Others will follow if the option is available. We need to have hope. This legislation will free our most important gift, the dreams and imagination of our youth.

For your information, I have provided you with a summary of the proposed first nation property ownership act.

In 1910, my people, the Shuswap, issued a statement to Prime Minister Wilfrid Laurier. In the statement we speak of how we find ourselves without any real home in our own country. We remind parliamentarians that we expect much of you as leaders of this great Canadian nation, and we feel confident that you will see that we receive fair and honourable treatment.

It has been a hundred years since we made our case to Canada, but I believe with your support of the first nation property ownership act, in the words of my ancestors, we will make each other good and great.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Jules.

Now we'll go to Mr. Cleland, please.

[Michael Cleland, President and Chief Executive Officer, Canadian Gas Association]

Thank you, Mr. Chairman.

I represent the Canadian Gas Association, which is the downstream end of the natural gas industry in Canada--in other words, the part of it that deals directly with customers. However, we also work very closely with our upstream partners along the natural gas value chain, the pipelines and the producers.

There are a couple of things I want to start with, just to underpin the discussion. Canada has an abundant supply of natural gas; North America has an abundant supply of natural gas, looking out many years into the future. And we have a delivery and distribution system that combined with that supply has the potential to underpin an increasingly efficient, environmentally responsible, and reliable energy system if we put the right sorts of investments in place.

Our proposal before you is for three specific ideas, and I'll come back to them in a minute. The way we've framed them is to inform, enable, and integrate, and all of that in aid of creating a stronger, more sustainable energy system in Canada.

Our focus as the downstream end of the system is in what we call the other 50%. About half of the energy we use in the economy...about half of our greenhouse gas emissions come from large industrial sources, oil and gas production and upstream power generation. We're looking at the other side of it, the place where 80% of Canadians live in our communities and where about half of the energy is used and about half of the greenhouse gas emissions are emitted. The trick here is how do we improve the environmental performance of that other 50% while sustaining the quality of the communities that we value as highly as we do. Our emphasis--and I will underscore this several times--is efficiency. Through a direct focus on efficiency of the whole energy system, we can make gains that will be beneficial economically and environmentally that outstrip anything from any other strategy.

How does natural gas fit into this? There are several aspects that I would underscore. One I mentioned earlier: natural gas is in abundant supply looking out many, many years into the future, from a number of domestic as well as other sources, including, potentially, sources offshore and including some renewable sources as we start to tap those in perhaps a somewhat different price environment in the future.

Natural gas is part of the pathway for adopting low carbon alternative energies because it is an ideal partner to make those work.

Natural gas is the most efficient energy choice in a large number of applications. About 40% of the energy we use in the economy is heat--space heat, process heat, domestic heat for hot water. The most efficient way to get heat is through the direct combustion of gaseous fuels, and right now natural gas is the one we have available.

Gas has an important role in the power generation system, complementary to the sorts of things that one of your previous witnesses was talking about; there are a number of roles there.

Finally, natural gas has important roles in the transportation system, particularly in the heavy duty part of the transportation fleet, where there are economically available Canadian-based technologies that can improve air quality and improve greenhouse gas performance, again based on natural gas technology.

We were one of the founding partners in a group called QUEST, which is Quality Urban Energy Systems of Tomorrow. You'll be hearing from them later on, I believe. One of the things that QUEST has done is develop a set of six principles that are the foundation of the program. It starts with efficiency, and again I'll underscore that. It then talks about using energy where it should be used--in other words, high-quality energy like electricity being used in high-quality applications, not being wasted in low-quality applications like space heat. Speaking of heat, about half of the energy that comes into the economy is actually lost as waste. If we can manage more of that heat, we can keep it as a resource. Reducing waste extends then to using local renewable resources. Finally, it is using the grids strategically as a resource to optimize the energy system.

With that in mind, I will quickly go over the three proposals.

One, better inform Canadians about energy efficiency on a full-cycle basis. By that I mean looking at what it means to make an energy choice right up the system, all the way through transportation, transmission, and production, which is something the U.K. and the U.S. are moving towards and it is something that Canada needs to move towards, and we have several specific proposals.

Secondly, better enable alternative energy solutions. We're proposing the use of an investment tax credit in support of that, something that will move quickly and something that will create the kind of incentive that will allow us to bring in a variety of technologies quickly and efficiently.

Finally, promote an integrated energy systems approach, and again, my colleagues from QUEST will talk to you about that in a couple of days. Building on the Clean Energy Fund to promote those sorts of approaches is the big prize in terms of the kinds of changes to our communities that we're looking for in the future.

With that, Mr. Chairman, I'll wrap it up and turn it back to you. Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Cleland.

We'll go now to Mr. Van Iterson.

[Andrew Van Iterson, Program Manager, Green Budget Coalition]

Thank you, Mr. Chairman and honourable committee members.

I'm here today on behalf of the Green Budget Coalition, which is unique in bringing together 20 of Canada's most respected conservation and environmental organizations, representing over 600,000 Canadians, including groups you would know, such as Ducks Unlimited, Nature Canada, Équiterre, the David Suzuki Foundation, and the Pembina Institute.

We have been working cooperatively since 1999 to assist the federal government to develop and implement strategic budgetary and fiscal measures that are critical to long-term environmental sustainability, and our efforts were acknowledged in an annex to the 2005 federal budget.

I want to outline today three prime tax and spending measures, each of which is pivotal for ensuring prosperity and a sustainable future for Canadians and each of which could be advanced substantially in the 2010 budget: first, protecting Canada's biodiversity and ecosystems nationwide in the face of dangerous climate change; second, investing in Canada's freshwater future, beginning with the Great Lakes-St. Lawrence basin; and third, creating clean energy jobs by renewing Canada's commitment to renewable power.

I also want to highlight the ongoing importance of implementing fair fiscal policies to ensure that market prices truly represent the environmental costs and benefits of economic activity.

Canada continues to lose elements of its terrestrial and marine ecosystems due to many types of human activities. Furthermore, Canada has not fully met its commitments under the UN Convention on Biological Diversity on which Canada and all signatories will be reporting in 2010. Preserving our quality of life in the face of dangerous climate change and meeting our international commitments requires an immediate commitment to protecting ecosystems and biodiversity. The Green Budget Coalition recommends funding and implementing a national ecosystems-based adaptation strategy to protect Canada's biodiversity nationwide in terrestrial and marine environments, including national parks, national wildlife areas, ocean management areas, and the greenhouse gas reservoirs of our natural forests and wetlands.

Secondly, fresh water is also central to the health of Canadians and our economy, and federal leadership is crucial in protecting Canada's freshwater resources. The coalition was very pleased that the federal government committed to a new water strategy in the 2007 Speech from the Throne. To deliver this strategy, Canada should begin with priority investments in the Great Lakes-St. Lawrence basin, as outlined in our brief around water quantity and quality. Such investments will ensure a clean, healthy source of drinking water for millions of Canadians and facilitate a healthy, growing economy and business climate for area residents.

As Mr. Weis detailed earlier, 2010 is also an important time for the Government of Canada to renew its support for renewable power to create thousands of clean energy jobs, to enable Canada to meet its target of 90% of Canada's electricity coming from non-emitting sources by 2020, and to create new economic development opportunities. Priorities should be put on renewing and expanding the important ecoENERGY for Renewable Power program and establishing green energy bonds, as well as developing a national geothermal data and classification system.

At the same time, it's critical to put in place other key frameworks that are necessary for the transformation of Canada's economy, to be globally leading and environmentally restorative, one where economic success and environmental health are mutually supportive rather than working against each other. To achieve this, we need to implement comprehensive fiscal changes to ensure that market prices tell the environmental truth by accurately and fairly representing the true value of non-renewable resources and the costs of pollution to the environment and to human health. Business leaders and environmental protection and energy efficiency should benefit from competitive advantages rather than paying additional costs, just as individuals making changes to their day-to-day lives should not have to pay more to make an environmental choice.

In conclusion, I urge you all to recommend to the finance minister and to your respective parties that budget 2010 invest in renewable energy, in ecosystems and biodiversity, and in water and watersheds, and that it support structural changes to make market prices tell the environmental truth. These measures will create long-term benefits for all Canadians.

We will be sending you a package of more detailed recommendations on all these issues in the coming week, and we look forward to meeting with each of you individually to discuss them further.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll finish with Mr. Johnson, please.

[Donald Johnson, Senior Advisor, BMO Capital Markets]

First of all, I'd like to thank the House finance committee for providing me with the opportunity to present our proposals for a tax-effective stimulus for Canada's not-for-profit sector.

The government's fiscal stimulus plan has provided crucial funding for Canada's economy during this global economic and financial crisis. While a few not-for-profit organizations have benefited directly from the fiscal stimulus plan, Canadian hospitals, universities, social service agencies, and arts and cultural organizations are facing fundraising challenges. The collapse of the stock market and the decline in the value of endowment funds and their disbursements have reduced funding for professors, doctors, researchers, students, artists, as well as individuals in need of assistance.

Given the estimated $56 billion fiscal deficit for this year, it is unrealistic to expect the federal government to increase direct funding for health care, education, social services, and arts and culture, but we must find a way to provide a tax-effective stimulus for Canada's not-for-profit sector.

After conducting extensive research on alternatives for stimulating and increasing private sector funding for charities, we have concluded that two amendments to the Income Tax Act would result in significant increases in private sector donations on the basis that it is more tax-effective than direct government funding. These measures capitalize on the great success of the government's decision to eliminate the capital gains tax on gifts of listed securities, which began with the 1997 budget and was completed in the 2006 budget.

We strongly recommend that the government expand the capital gains tax exemption to include gifts of private company shares and gifts of taxable real estate. To address any concern about the potential for valuation abuse, we propose that the charity would not issue a tax receipt to the donor until the charity had received the cash proceeds from the sale of these gifts. If the purchaser of these assets from the charity was not at arm's length from the donor, an independent third party valuation would be required for the private company shares or the real estate.

Removal of this barrier to charitable giving would unlock significant amounts of private wealth for public good. The total value of all private companies in Canada is greater than the actual total amount of the value of public companies, currently estimated at $1.4 trillion. Also, real estate represents a significant portion of the personal net worth of most Canadians.

If the donation of real estate to a charity is to be retained by the charity to fulfill its mission, an independent third party appraisal would be required to provide an appropriate value for the tax receipt.

Gifts of private company shares and gifts of real estate are already exempt from capital gains taxes in the United States. An implementation of these two measures would level the fundraising playing field for Canada's charities, which are competing with the United States for the best and the brightest talent.

Our proposals would enable the donor to sell the private company shares or the real estate and gift all or a portion of the cash proceeds to a charity within 30 days of the closing of the sale, under an existing provision in the Canada Income Tax Act. This made in Canada provision would be more effective and less costly for the recipient charity than the current U.S. system, which requires that the charity actually takes ownership of the asset. These amendments would provide the same tax treatment to donors of private company shares and real estate as currently applies to donors who give publicly listed shares to a charity. In principle, all three asset classes should have the same tax treatment when they are donated to a registered charity.

That raises the issue of what would be the cost to the government of these measures. The tax revenue cost depends on the amount of the increase in charitable gifts of private company shares and taxable real estate, plus the adjusted cost base of the donated property. Based upon the e-brief published today by the C.D. Howe Institute, gifts of taxable real estate are estimated to increase by $100 million to $200 million per annum. The forgone tax for the federal and provincial governments combined would be between $60 million and $115 million per annum.

For private company shares, the e-brief estimates new donations of $200 million to $500 million per annum, with the forgone tax estimated at between $130 million and $325 million. Two-thirds of this tax revenue cost is borne by the federal government and one-third by the provinces. It should be kept in mind that the cost of a charitable donation tax credit is roughly 45% of the gift, whether the gift be in the form of a capital asset or in the form of cash.

All four political parties supported the 2006 budget measure that eliminated the capital gains tax on gifts of listed securities. There is every reason to believe that all four parties would support these measures as well. Furthermore, six former prime ministers have communicated to me that they support each of these two proposals in principle.

While amendments to the Income Tax Act are normally implemented as part of the budget, the government does have the option of including these measures in the fall economic statement. If there is no election this fall, we urge the government to include these amendments in the fall economic statement; however, if there is an election this fall, we urge the next government to include these measures in its first budget, which presumably would be tabled in the spring of 2010.

Thank you. I would be happy to answer any questions.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Johnson.

We'll go to questions from members, starting with Mr. McKay. You have seven minutes.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you, Mr. Chair, and thank you, witnesses.

I want to start first with Mr. Weis and then Mr. Van Iterson.

With respect to the incentive for investing in wind power, after the last budget I got a rather irate telephone call from a friend of mine, who was incensed that the last budget had reduced the subsidy to such an extent that it no longer made smaller projects viable. Essentially it was reconfigured to one large player, and after that, everyone else was pretty well on their own.

I'm interested in your comments on the amount of the subsidy. You're both very concerned about the stabilization of that subsidy, so that projects going forward will know for sure what the subsidy might be so that they can determine their viability going forward.

Mr. Weis.

[Timothy Weis]

I'm not sure what particular program your friend was referring to that favoured larger projects over smaller projects. The ecoENERGY for Renewable Power program remained the same before and after the last budget. It simply wasn't renewed or expanded, and it is about to run out of money this coming year. I think that's why people were really concerned that it was in last year's budget, so that it didn't run out of money this fiscal year. But it does speak to the important point of stability, in terms of whether or not funding is going to be available going forward. That's a problem for large or small projects across the country. I think that's why we're urging that this program be renewed this year, or earlier--in an economic update would be even better--to create that market stability again.

The big question is, if you're going to be making investments in renewable power, it takes at least two, three, four, or five years from when you're thinking about developing that project to when the rubber actually hits the road. You need to have that long-term outlook. That has been the real concern. When the program wasn't expanded or renewed in the last budget, it really left the industry, large and small, in limbo going forward.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Trying to compare apples to apples, what is the comparable U.S. subsidy and what is the comparable term of the program in the U.S.?

[Timothy Weis]

There have been so many investments made in the United States under the most recent stimulus package that I wouldn't want to discount, or not acknowledge, all of the efforts and all of the investments made in renewable power in the States. At the same time, there is one particular subsidy that's similar, and that's the production tax credit in the United States. PTC, as it's often referred to, is about twice the level of the incentive here. It's an incentive of about 2¢ per kilowatt hour. The Canadian incentive is 1¢ per kilowatt hour.

That program has been going on a year-to-year basis, which is one of the reasons why, in spite of the fact that the United States is the largest market for wind energy in the world, this was really the first year they actually developed any manufacturing. The manufacturing all happened in Europe previously because they had the long-term, stable policies.

The most recent stimulus package in the United States reinstalled the production tax credit for a three-year term, so that would be comparable; what we're asking for is a five-year term in Canada. So the program would be significantly less money in Canada--about one-half, at 1¢ per kilowatt hour--but it would be over a five-year term. That would be a bit of an advantage in Canada to have it a little more long-term, certainly.

[John McKay, Liberal, Scarborough—Guildwood, ON]

So you prefer the stability. The subsidy is one thing, the stability is another.

[Timothy Weis]

Yes, but they're both really important.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Yes.

Mr. Van Iterson, do you have anything to add to that?

[Andrew Van Iterson]

Mr. Weis is really the expert within the Green Budget Coalition, so I'll leave it at what he said.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Okay.

My second question is to Mr. Cleland. It has to do with natural gas and its usefulness for fleets.

One of the proposals, again coming out of the United States, is that large trucking fleets be converted and that, since their route is pretty well a fixed route, stations be set up along the way. Is that a viable solution for Canada? Is that an intelligent use of natural gas?

[Michael Cleland]

Potentially, yes. I think you may hear more about that from my colleagues with the Canadian Natural Gas Vehicle Alliance later in your hearings.

The most obvious place for using natural gas is in what you call the return-to-base fleets. These are urban fleets--buses, waste haulage, all that kind of thing--where you can have your refuelling on-site at your garage and that sort of thing. You don't have problems of range.

There is potential for longer-haul, but that requires refuelling infrastructure. Therefore, you would have to put it on high-density, long-haul corridors. Windsor-Quebec City is an obvious one. In all likelihood, it involves using liquefied natural gas technology, but pretty much the same engines. Again, they're Canadian-built engines that use either compressed or liquefied natural gas.

You have to look into the economics of that. I can't speak to it in detail, but it has very real prospects.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Yes. The person who I heard make--

[The Chair, Conservative, James Rajotte]

You have 45 seconds.