Absolutely. Most of it is hard equipment.
Evidence of meeting #44 for Finance in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was program.
Evidence of meeting #44 for Finance in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was program.
2:20 p.m.
Vice-President, Capital Power Corporation
Absolutely. Most of it is hard equipment.
2:20 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
So it is hard equipment and it wouldn't be considered part of manufacturing, so it wouldn't qualify.
2:20 p.m.
Vice-President, Capital Power Corporation
It wouldn't be eligible for M and P, because you're producing gas. As the rules are currently written, M and P excludes production of gas. With the gasifying component of the facility, if you end up in that category, then you end up in class 1 at 4%. Arguably you can try to squeeze into the M and P, but it becomes a bit of a debate whether you get there or not.
2:20 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Thanks.
My next question is to Mr. Schmeiser, from the equipment dealers association.
What we've been hearing from other equipment dealers, not necessarily in the farming area—we heard yesterday from recreational dealers, for example—but any type of dealer, anybody selling equipment, is that it's not necessarily CCA incentive that they're looking for but help in financing. How's that going?
2:20 p.m.
Vice-President, Canadian Government Affairs, North American Equipment Dealers Association
It's a huge issue for our members. We had a lot of momentum in 2008 that has really kind of hit the brakes because of lack of inventory financing. Captive and non-captive inventory finance companies have either cut back or pulled out of the market altogether.
We've been meeting with FCC. We see them as a reasonable solution to our needs, because their cost of funds is considerably lower than any other finance company that has to go to market for funds. We've made that request to the Standing Committee on Agriculture and Agri-Food and met with the Minister of Agriculture on it. FCC has given us some positive feedback, but they have to build the system to create an inventory finance—
2:20 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
But there are some lines available with the government. They've done it through the BDC, so shouldn't that be your first ask in terms of making sure your financing is there? Wouldn't your customers want to purchase the equipment before they're able to write it off?
2:20 p.m.
Vice-President, Canadian Government Affairs, North American Equipment Dealers Association
I agree with you about BDC. When that announcement was made in the budget, we were very excited; however, we don't fall into any of the parameters right now in the first round of funding. We've been advised that we may qualify for the second round of funding.
2:20 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
There doesn't seem to be a second round. That was it; $12 billion out of $13 billion already accounted for, given to the automobile sector.
2:20 p.m.
Vice-President, Canadian Government Affairs, North American Equipment Dealers Association
Yes. That's why we've looked at FCC as the most likely solution to our situation.
2:20 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
One more minute?
Just a question to the people from the Athabasca region; they were talking about infrastructure money. With the new stimulus money as infrastructure money, you happened to get more money than in previous years?
2:20 p.m.
Councillor and Chairman, Budget and Finance Committee, County of Athabasca
Definitely. The previous experience--
2:20 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
And the money's already been given and the projects have already been started and completed?
2:20 p.m.
Councillor and Chairman, Budget and Finance Committee, County of Athabasca
No, the projects are already designed and ready to go, I think--
2:20 p.m.
Councillor and Chairman, Budget and Finance Committee, County of Athabasca
Not started. Well, one within our boundary has been--
2:20 p.m.
Councillor and Chairman, Budget and Finance Committee, County of Athabasca
But one we did do that we didn't qualify for is we did our own broadband Internet a couple of years ago. We're now serving over 90% of our residents with high speed, and that's in an area where you have trees and hills. We did it through a partnership with a private company.
2:20 p.m.
Councillor and Chairman, Budget and Finance Committee, County of Athabasca
MCSNet.
2:20 p.m.
Conservative
2:20 p.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Thank you, Mr. Chair.
Thank you very much to our guests for taking time out of their schedules to give us some valuable input. The folks up in Fort McMurray and Wood Buffalo area work closely with Brian Jean, the member of Parliament for that area. I know he speaks on many occasions about the need for infrastructure improvement. I know he worked hard to get the highway twinned up there, and as you said, it was definitely from a safety perspective as well as for economics.
On the aspect of housing, I've chatted with him several times about that, because I represent the Okanagan. In B.C. we have some serious issues about affordability of rental housing.
One of the questions I have for Mr. Lutes is in your submission you talk about the need for the federal government to remove the rental housing disincentives from the federal tax policy. Maybe you could elaborate a little more on exactly what those disincentives are from your perspective.
2:20 p.m.
President, Wood Buffalo Housing and Development Corporation
Thank you for the question, Mr. Cannan.
The disincentives are anything that would preclude an investor from making a commitment for a 20-year term in developing rental units. The commitment of the investor is over a long term. The current tax regime makes it more practical for a private investor, private developer, to go in and build condos and get out, get his money and get out. We'd like to see opportunities for more rental product to be developed on the market, so remove barriers or at least make an equal playing field so that if you sell a rental property to reinvest in another rental property you aren't hit immediately with capital gains. You're given a capital gains reprieve or period so that you can roll and reinvest into a new development. That's an example of one of the disincentives currently in place.
2:25 p.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
We've had other submissions, and even from my local community, on the aspect of looking back to the seventies when they had the multi-unit residential buildings, the MURBs. I spoke to Minister Flaherty about that, and there were some real inefficiencies and abuse. But that's the model you're looking at, some sort of incentive to encourage a developer to go down that road--or do you have anything more concrete to put forward?
2:25 p.m.
President, Wood Buffalo Housing and Development Corporation
In a similar vein, I think the intent of that was very good, but they needed to have more monitoring and more constraints put on it, so that it was effective and it wasn't just a loophole for people to save money or reduce taxes. It needs to be for the actual developer rather than just a regular tax shelter for anybody who has a few extra dollars. We just need to control it a little bit more and make it so that we can create more rental development.
