Finance Committee on Oct. 8th, 2009

[The Chair, Conservative, James Rajotte]

I call the 49th meeting of the Standing Committee on Finance to order. We are continuing our 2009 pre-budget consultations.

We just returned last night from Quebec City. We're very glad to be back here in Ottawa to have with us this morning, for the first panel, eight organizations. I will not read the names of all eight at the outset, but we'll start with the Canadian Wind Energy Association.

Each organization will have five minutes for an opening statement. Then we will go to questions from members from all political parties.

We will start with the Canadian Wind Energy Association.

[Jean-François Nolet, Québec and Atlantic Canada Policy Manager, Canadian Wind Energy Association]

Bonjour. I'll do my presentation in French, but I'll be more than happy to answer questions in both languages.

My name is Jean-François Nolet. I am the Quebec and Atlantic Canada Policy Manager with the Canadian Wind Energy Association. I am here to speak on behalf of Robert Hornung, President of CanWEA. I would like to thank the committee and its honourable members for the opportunity to speak on behalf of the wind energy industry in these important consultations.

The federal government has played a critical role in stimulating the development of the wind energy industry in Canada, most recently through the ecoENERGY for Renewable Power program. This enormously successful program was designed to stimulate the deployment of 4,000 MW of renewable energy in Canada by March 31, 2011 and will meet its objectives and fully allocate all of its funding by fall 2009, 1.5 years ahead of schedule. Unfortunately, the federal government has not yet made a commitment to expand or extend the program, or to establish any alternative support mechanism for wind energy deployment. In other words, federal government support for new renewable power projects in Canada will end in this fall.

An end to federal support for wind energy deployment in fall 2009 has serious implications for Canada's wind energy industry during this time of economic crisis. It will lead to delays and cancellations for many of the 2,000 MW of "shovel ready" wind energy projects that are contracted to be built in Canada by the end of 2011. It will also reduce Canada's ability to compete for investment with the United States, which has taken aggressive actions in 2009 to stimulate investment in renewable power, and will cause investment dollars to leave Canada for the U.S.

CanWEA is asking the federal government to take action in a fall economic statement (and certainly no later than a 2010 federal budget) to support the deployment of an additional 8,000 MW of new renewable power capacity in Canada by March 31, 2014. This would result in $22 billion of private sector investment (a minimum of $7 billion of it invested in Canada, 8,000 new Canadian jobs, and $24 million in annual lease payments to rural landowners across Canada.

The federal government could deliver this support through either of two policy options. The first to expand and extend the existing ecoENERGY for Renewable Power Program. Between now and 2014, the total cost to the federal government would be $600 million, $150 million a year, and would leverage the full $7 billion of private sector investment in Canada in that period. Beyond 2014, the federal government would make annual expenditures of $230 million for 10 years.

The second option is to replace the ecoENERGY for Renewable Power Program with a capital grant program that would provide equivalent economic value. The total cost to the federal government of this approach would be $1.8 billion between now and 2014, $450 million a year, and would leverage the full $7 billion of private sector investment in Canada in that period. There would, however, be no additional costs to the federal government beyond the year 2014.

It is important that any actions taken by the federal government, like the options proposed above, are broadly applicable across the full diversity of the wind energy industry in Canada, including: large traditional Canadian energy companies, wind energy project developers from outside of Canada, small renewable energy companies, and organizations as diverse as community groups, First Nations, and municipal governments.

In this regard, one important additional measure the federal government could take to complement an expansion of the ecoENERGY program or a new capital grants program would be to broaden the applicability of Class 43.2 of the Income Tax Act. At this time, the design of this tax measure ensures that most wind energy developers in Canada (e.g., foreign companies, smaller Canadian companies) cannot make immediate use of this incentive to support their wind energy investments.

In summary, an end to federal support for wind energy deployment in fall 2009 will lead to delays and cancellations of "shovel ready" wind energy projects and will reduce Canada's ability to compete for new investment. The federal government must take action now to support the deployment of an additional 8,000 MW of new renewable power capacity in Canada by March 31, 2014 through either of the two options I described earlier.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll go next to Imagine Canada, please.

[Marcel Lauzière, President and Chief Executive Officer, Imagine Canada]

Good morning, Mr. Chairman.

Imagine Canada is a national umbrella organization that speaks in concert with more than 1,300 charities and non-profits working in every community across the country and around the globe.

Our members provide social and community services through organizations such as local boys and girls clubs, United Ways, YMCAs, and YWCAs, as well as health charities such as the Heart and Stroke Foundation and the Kidney Foundation. They also greatly contribute to our quality of life through sports and recreation and arts and culture, as well as through educational, environmental, philanthropic, and religious pursuits.

What is less well known, however, is that charities and non-profits contribute significantly to Canada's economy: more than one million jobs, more than twelve million volunteers in rural and northern and urban communities, and a 6.8% contribution to Canada's GDP.

In our written presentation and our testimony today, we suggest three ways in which parliamentarians can help charitable and non-profit organizations to help Canadians and other people around the world.

Our first recommendation is an enhanced charitable tax credit that would provide an incentive for Canadians to increase their charitable donations over previous years. It would provide what we call a stretch tax credit of 39% on new donations, 10 percentage points higher than the current level of tax credit on donations above $200, up to a maximum of $10,000.

The measure would be based on an individual taxpayer's best previous year of giving, using 2008 as the baseline. To continue benefiting from the credit in subsequent years, taxpayers would need to continue to increase their levels of giving, thereby encouraging more Canadians to give and to give more. The stretch tax credit is particularly appealing in that it would benefit charities of every size and in every region, urban and rural. It would provide an incentive particularly for working families and middle-class Canadians to give more than they have in the past and encourage those Canadians who have not given in the past to begin to donate. This would help broaden the base of donors in Canada, and it would help those Canadians who want to give through their income rather than through assets, and this is the majority of Canadians.

It is worth noting that the 2007 survey on giving, volunteering, and participating found that more than half of all donors indicated they would increase their charitable giving if there were more incentives to do so.

Our second recommendation is the elimination of the disbursement quota regime governing charitable organizations. It entails no costs, but would have significant benefit for charities across the country. The disbursement quota regime is the minimum amount of income and accumulated capital that a registered charity is required to spend each year. Imagine Canada is proposing the elimination of the current disbursement quota regime, first, because it imposes a complex and costly administrative burden on charities; second, because it's really not equitable or enforceable in its current form; and third, because it is particularly difficult for small and rural charities.

Imagine Canada and its members are prepared to work with government to develop a new regulatory approach that would be both effective in advancing accountability and transparency and also be practical for charities to implement.

Our third recommendation is unfortunately not new, and no cost is attached to it.

In December 2006, a blue-ribbon panel appointed by the Government of Canada made extensive recommendations to improve the administration of grants and contributions programs, including expediting timelines for funding decisions. While some departments are beginning to implement some of those recommendations, progress has to be made much more quickly. Imagine Canada is therefore asking the government once again to accelerate reforms to ensure predictable, sustainable and full cost funding.

This request is not about meeting the needs of organizations themselves but rather about meeting the needs of communities and Canadians they serve, at a time when demand for their services is growing.

Charities and non-profits working in partnership with the federal government cannot afford to submit applications for funding in the spring with little or no sense of when the decisions will be taken, only to be informed the following February or March that their applications are successful and that they now have 30 days to spend and account for the money that was originally intended to support several months of operations.

This is only one of many stories our members can tell about the challenges of applying for and accounting for federal grants and contribution programs.

Billions of dollars are paid every year through this mechanism. The immediate implementation of the blue-ribbon panel's recommendations is, we believe, one way of ensuring that charitable and non-profit organizations have effective access to existing funding to better serve Canadians.

Once again, Mr. Chairman, thank you.

Thanks as well to committee members. I will be pleased to answer their questions.

[The Chair, Conservative, James Rajotte]

Okay, merci beaucoup.

The next presenter will be the Society of Management Accountants of Canada, please.

[Richard Monk, Past Chair, Certified Management Accountants of Canada]

Good morning, Mr. Chairman, distinguished committee members, and fellow presenters. I am pleased to be with you today to represent Certified Management Accountants of Canada. CMA Canada has delivered a consistent message to this committee over the past six years: Canada's productivity performance must be improved. Productivity growth is paramount to improving Canadians' standard of living. If we're going to ensure that we have the necessary resources available to invest in areas that improve our quality of life, Canada's productivity performance must be improved.

We have lagged behind most other industrialized countries for 25 years. The impact of poor productivity growth on individual Canadians is startling and disturbing. The median real earnings of Canadian workers have not grown in a quarter of a century. This is clearly not a recent phenomenon linked to the economic downturn we've experienced. Canada's productivity performance is a long-term challenge.

As we see promising signs that we are coming out of the global recession that has inevitably caught Canadians in its grip, CMA Canada believes it is wise to take a long-term view of Canada's economic performance. Measures aimed at improving the key drivers of productivity--namely human capital, physical capital, and innovation--are steps that could be taken today to set the course for a prosperous future.

In our written submission to you we focus primarily on innovation, or what we call creativity, because it represents the extraction of value from the other two components of productivity--human and physical capital--through inventiveness.

We recommend three specific measures for your consideration. The first is no surprise, that investing in information and communications technology, or ICT, supports creativity. ICT in the workplace has a significant impact on productivity growth. It helps us do things smarter.

The last several budgets included sound initiatives aimed at this objective. We believe the introduction of an ICT adoption tax credit targeted at small and medium-sized businesses is a logical step towards encouraging investment in technology. Wouldn't it be wonderful if some of these smaller businesses became Canada's next international success stories?

One feature of this tax credit that is of special importance would be to permit expenditures on ICT training to be eligible. I don't think I need to convince you of the critical need for education and training to stimulate creativity.

Our second recommendation is directed at business research and development. The scientific research and experimental development tax credit is a key public policy measure encouraging innovation. Moreover, the SR and ED program is well-known in the business community. It is delivered through the tax system rather than a less predictable government grant, and it has a low cost of program delivery with well-established procedures.

While the program is generally recognized as being generous, Canada continues to underperform in business research and development. Our proposal is to enhance the SR and ED tax credit by extending to claimants of all sizes the refundability provision currently available only to smaller businesses. The objective is to encourage all of our companies to make better use of this program and thereby help drive greater innovation in Canada.

As an alternative, the government could permit larger claimants to apply the tax credit against other federal government levies such as EI premiums.

Mr. Chairman, our third and final recommendation is aimed at combatting the counterfeiting and piracy of intellectual property. To put it bluntly, counterfeiting and piracy of intellectual property places Canadians at risk of harm to their health and personal safety. It discourages creativity and reduces tax revenues. Protecting IP rights also promotes innovation and should therefore be encouraged. It's one of the most important steps to increase the level of financial and human resources aimed at combatting illegal activity. Specifically, greater resources should be provided to the Canadian Border Services Agency, the RCMP, the Department of Justice, and Health Canada. These departments and agencies are in the front of the fight against IP piracy.

In conclusion, CMA Canada believes that Canada's lagging productivity performance requires serious attention. Measures aimed at improving the key drives of productivity--mainly human capital, physical capital, and innovation--are steps that could be taken today to set the course for a prosperous future.

Mr. Chairman, I thank you and your colleagues for your interest and I look forward to responding to any questions you may have.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We will now go to the Association of Canadian Academic Healthcare Organizations, please.

[Dr. Jack Kitts, Member, President and Chief Executive Officer of the Ottawa Hospital, Association of Canadian Academic Healthcare Organizations]

Good morning.

My name is Jack Kitts, and I'm chair of the board of the Association of Canadian Academic Healthcare Organizations, known as ACAHO. I'm also president and CEO of the Ottawa Hospital.

I'm joined by Mr. Glenn Brimacombe, who is the president and CEO of the association.

The association appreciates the opportunity to appear before you to highlight our recommendations, which are designed to more effectively align our potential with our performance, which in turn contributes to the country's overall prosperity.

Let me briefly mention that ACAHO is the national voice of research and teaching hospitals, academic regional health authorities, and their research institutes. There are no other organizations in the health system that provide the unique combination of health services, teaching, and research that our members do. We consider our institutions as important hubs in the system, in addition to being a national resource.

Let me now turn to our three recommendations.

First, we recommend that the federal government invest in innovative health delivery infrastructure. Members of ACAHO have a tripartite mission: first, to provide Canadians with the most complex and specialized health care; second, to conduct research that impacts health and health services in Canada in support of better care and better systems in the future; and third, to train health providers who in turn will practise anywhere in Canada. However, this work is largely taking place in buildings that need to be retrofitted, repaired, and in many cases rebuilt in order to meet current standards of safe, quality care and increasingly to meet environmental standards.

Based on a recent survey of ACAHO members, over 300 shovel-ready infrastructure projects over the next 12 to 36 months have been identified as a priority, at a cost of over $20 billion. Of note, 30% of these projects are new buildings and 70% qualify as repairs, renovations, or expansions.

While Budget 2009 created several infrastructure funds—that is, the infrastructure stimulus fund, the knowledge infrastructure fund, and the green infrastructure fund—members of ACAHO were not included as eligible to receive any of this funding.

Recognizing that the role of ACAHO members extends well beyond local, regional, and provincial borders, the association calls on the federal government to create a one-time strategically targeted national health delivery infrastructure fund. It is proposed that this fund have a time limit of five years and be valued at $1 billion.

From the perspective of ACAHO, health infrastructure investments create short-term jobs that build legacy institutions that fully acknowledge the role and contribution of the federal government for residents at the community level and will allow facilities to meet new safety, efficiency, environmental, and patient care standards. It also instills a deep sense of community pride and promotes social cohesion, and it accelerates the transformation of the health system delivery infrastructure to meet both today's and tomorrow's needs.

The second recommendation is to invest in science and technology that drives new knowledge and innovations. Over the past decade, the federal government has made significant investments in Canada's health research enterprise through a number of instruments for which we are extremely grateful. Importantly, these investments recognize the four key components that underpin the research, innovation, and commercialization spectrum: first, people; second, programs; third, infrastructure; and fourth, indirect costs.

While it is crucial to ensure that there is a proper balance and strategic alignment between these four pillars, ACAHO believes that now is the time to increase support for the direct costs of undertaking world-class health research by increasing base funding to the Canadian Institutes of Health Research, the CIHR.

Again, I must say that ACAHO fully recognizes and applauds the federal government for the significant resources that have been invested in CIHR since 2000. However, the association remains concerned that CIHR must be funded at internationally competitive levels so that we can continue to support research excellence and a number of cutting-edge health research initiatives. In order to remain competitive internationally, we must respond to prevent a brain drain to countries that are ramping up their investments in health research and looking to attract the best and brightest minds.

Finally, we recommend that the federal government align the goods and services tax with the health system. In principle and practice, ACAHO is of the view that good tax policy should reinforce good health care policy by promoting the efficient allocation of resources in the system. As it stands, hospitals are entitled to an 83% rebate on the GST paid for all eligible inputs. Health research, publicly funded long-term care facilities, and home community care services receive a 50% GST rebate.

The range of rebates hinders the overall efficiency of the tax and its administration at the local level, and to simplify this process and to better align with the integrated nature of health governance structures, we support a more cohesive approach to how the GST should be administered in this area.

It's also important to note that the provinces of Alberta and New Brunswick, given the manner in which their health systems are configured, do not effectively pay any GST on their health inputs. Given the unfairness of how the GST impacts upon the rest of the health system across the country, the federal government has a unique opportunity to create a level playing field for all provinces.

This recommendation is fair, reasonable, and above all it avoids a situation whereby the federal government gives with one financial hand and takes with the other. It will also keep federal dollars where they were originally intended: in the country's organizations dedicated to providing Canadians with timely access to a range of quality health services.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We will now turn to Engineers Canada.

[Chantal Guay, Chief Executive Officer, Engineers Canada]

Thank you, Mr. Chair.

Thank you for allowing Engineers Canada to appear once again before the House of Commons Standing Committee on Finance.

My name is Chantal Guay. I am the CEO of Engineers Canada. You may also know us as the Canadian Council of Professional Engineers. Engineers Canada and its constituent members, the provincial and territorial regulators of the practice of engineering within Canada, represent more than 160,000 professional engineers nationwide.

Public safety and the public interest are paramount to our profession. Today we are offering long-term solutions to governments on issues for which the engineering profession can lend its expertise and experience to help create a safer, more sustainable, and prosperous future for Canada within a global community.

I offer the committee three specific and tangible recommendations which the federal government could realistically implement to be part of a viable long-term economic solution for Canada.

Our first recommendation is based on the fact that Canada's highway systems and bridges, water systems and sewers are vital to our safety, quality of life and prosperity. Unfortunately, there continue to be increasing signs that our infrastructure has reached the limit of its useful lifespan and requires urgent rehabilitation. In addition, our growing population requires new infrastructure that is efficient and safe. Based on these needs Engineers Canada urges the federal government to carefully consider the value of the National Round Table on Sustainable Infrastructure.

The Round Table is an initiative of the larger infrastructure community which provides long-term best practices in infrastructure planning and national asset management with economic viability. The Round Table further aims to be a "go to" resource on infrastructure that is capable of advising internal and external stakeholders. It also aims to fill the information gap to assist decision-makers in determining sound choices about infrastructure and optimizing their investment strategies.

Our next recommendation relates to climate change. Extreme weather events have become a new reality. Engineers Canada strongly believes that a long-term committed approach by government on climate change is vital. We are very proud of the ongoing collaborative work with the federal government which has led to the Public Infrastructure Engineering Vulnerability Committee in dealing with the impacts of climate change.

The Vulnerability Committee is a shared initiative which has been conducting a comprehensive assessment of Canada's infrastructure assets due to the impacts of extreme weather events threatening our existing infrastructure. Based on the impacts of weather on our environment, we recommend providing sustained funding commitments for existing shared initiatives such as the Public Infrastructure Engineering Vulnerability Committee.

Engineers Canada's final recommendation urges the federal government to invest in research, development and innovation across Canada, in universities, throughout government and industry. Research, development and innovation will ensure economic prosperity and quality of life for our citizens. In instances where innovation intersects with the practice of engineering, engineers are well positioned to provide expertise in the development of controls to ensure public safety. Our first priority is always public protection.

In closing, I would like to express our thanks and appreciation to the committee for allowing Engineers Canada to present our recommendations to you as you prepare your recommendations for the next federal budget. Canada's engineers welcome the opportunity to work with government, to share our expertise, to safeguard public safety and interests, and to help provide long-term solutions.

Thank you for considering our comments. I look forward to answering your questions.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We now go to the Association of Universities and Colleges of Canada.

[Paul Davidson, President, Association of Universities and Colleges of Canada]

Thank you very much.

Mr. Chair and members of the committee, it is a great pleasure to be here.

I'm the new president and CEO of the AUCC. Over the last four months I've had the occasion to visit eight provinces and about 30 campuses around the country. Let me say how grateful we are for the knowledge infrastructure program. It is delivering results in more than 80 communities across the country.

A little less than a year ago my predecessor came to this committee and told you that we needed help, that we needed to be ready for what's coming in the next century, and that we can deliver shovel-ready projects. Those projects are under way now. They are creating jobs now and creating jobs for the future. I invite you to visit our website for ongoing reports on our progress and to look for a progress report in coming weeks.

I also want to make one other economic point, which is that between last August and this August there were 40,000 net new jobs in Canada for those with a university education, while there were 370,000 jobs lost to those who did not have that education. I think we are starting to see in real terms what a knowledge economy is about. Now the question is what we do to leverage our success and accelerate our growth.

Over the years you have heard AUCC talk about the importance of research. But it's not just us. People around the table have spoken about the need for improved research funding. And it's not just outside groups. Advantage Canada, the science and technology strategy, the Council of Canadian Academies, the Competition Policy Review Panel, the Science, Technology and Innovation Council, and the OECD in recent months have all said that now is the time to up our game.

I've been thinking about how to articulate the benefits of research not only to members of Parliament but to everyday citizens, everyday voters, everyday taxpayers. You can see in the press every week new breakthroughs that are improving Canadians' lives, whether it's this morning's headline on cancer research or the Nobel prize that was won earlier this week. These are accomplishments of which all Canadians can be proud.

Let me give you a few examples as well of everyday research that's going on in universities across the country.

You are politicians; you eat a lot of breakfasts and a lot of eggs. The omega-3 egg is the product of research at the University of Guelph, funded federally and provincially, which is creating jobs in that community and improving the health of Canadians.

You are politicians; you spend a lot of time travelling this country. Don't you love it when they say they have to go into the de-icing bay one more time? The world-leading research institute on ice and de-icing is based at the Université du Québec à Chicoutimi. Every time you speed through that de-icing facility, you can thank the research that's going on in universities across the country.

At the end of the day, whether you are sleeping in your own bed or a bed in Ottawa or a bed somewhere on the road, you may have trouble sleeping. Sleep apnea is a major concern for thousands of Canadians. Research on that subject was done at the University of Calgary, and it has turned into a business generating $160 million in sales.

You have asked us for examples of real-life research. These are just three that I think you can find reflected in your everyday life.

As I said, we can take great pride in the world-class accomplishments of our researchers. But it's far too easy to be complacent. You may have seen just this week that Thomson Reuters has projected that India will surpass the G-7 in its research output in the next seven years.

So yes, we can take pride in what has been happening, but we need to do more. That's why our request for increased research funding this year is front-end loaded. It's front-end loaded to accelerate the results of the knowledge infrastructure program and position Canada for the 21st century.

Our two other areas are internationalization and improvement of access for aboriginal education.

On the international front, are you aware that in the last ten years international education has become the third-largest source of export earnings for Australia, second only to iron and coal? That's what the knowledge economy is. They have done that through a sustained federal government investment in international student recruitment. Are you aware that there are 2,600 students from India studying in Canada and 26,000 studying in Australia? Think for a moment what that means, as the Prime Minister heads to India.

Think what it means about the future of our economic relationship, our trading relationships, our social relationships, and our position in the world. Australia has pointed a path for how we can move forward on internationalization. Let me ground this again, for members interested in Atlantic Canada as it faces its population struggles. International student recruitment is a magnet for acquiring top talent in Canada.

I want to close by looking at the situation of aboriginal Canadians. I don't need to tell this committee that the aboriginal population is growing at three times the average national rate. University attainment is one-third of the national average.

There are 400,000 aboriginal Canadians who will be entering workforce age within the next 10 years. What are we going to do about it? There are solutions that are available. There's a huge fix that needs to be addressed in terms of the K-to-12 aspect of the education system, but there are measures that can be taken now to improve access to higher education for aboriginal Canadians in skills like engineering, pharmacy, chemistry—the real skills that aboriginal Canadians need to grow our country.

Mr. Chair, I want to conclude by saying that last year was a significant investment in the knowledge infrastructure program. It poises Canada to take us into the 21st century, to ensure that the knowledge economy fuels our growth. All our fiscal projections depend on the knowledge economy. For that I ask for your support for these three areas as they address the economic, demographic, and social challenges this country faces.

Merci.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Davidson.

We'll now go to Ms. Dorner with the Independent Media Arts Alliance, please.

[Jennifer Dorner, National Director, Independent Media Arts Alliance]

Good morning, Chairman and members of the committee.

I would like to start by thanking the Standing Committee on Finance for this opportunity to present on behalf of our members and the diverse communities we represent.

The Independent Media Arts Alliance is a member-driven non-profit national organization working to advance and strengthen the media arts community in Canada. We represent more than 80 independent film, video, audio, and new media production, distribution, and exhibition organizations in all parts of the country. The IMAA serves more than 12,000 independent media artists and cultural workers. And by independent, we mean that the artist initiates and is the driving force behind the work and maintains complete creative control over the work.

I would describe this past year as a bit of a roller-coaster ride for the independent media arts sector. There were many announcements made by the federal government and by Heritage Minister James Moore that have been both beneficial and detrimental to our community. Overall, this has been a very difficult year for us.

The cuts to several programs, including Trade Routes, PromArt, the Canadian Independent Film and Video Fund, the Canada Feature Film Fund, the national training program for the film and video sector, and Canadian Culture Online, have had a severely negative impact on the independent media arts sector. However, we do want to acknowledge the renewal of several Heritage programs that previously fell under the Tomorrow Starts Today initiative, and we also want to note the funding injections that appeared in the 2009 federal stimulus budget.

However, the overall picture reveals that the federal government prioritizes the larger commercial entertainment industry and has neglected to recognize the importance of supporting the independent media arts sector. More needs to be done to ensure long-term stability of the larger sector. The recent restructuring of federal funding programs has created gaps at the foundation of the independent media arts sector. These include training programs, support for emerging media artists, and market development programs.

Our three recommendations are calling attention to the areas that remain ineffective and would benefit from support, either financially or through alternative measures, in order to ensure growth and stability of the cultural industry.

Our first recommendation focuses on cultural export development and trade promotion programs for artists and organizations. We are asking that the federal government invest an additional $40 million per year into the expansion of the capacity and mandate of the audience and market development programs at the Canada Council for the Arts. The loss of PromArt and Trade Routes was a real setback for the audience and market development of media arts festivals, exhibitions, touring programs, etc. The final report published by the Standing Committee on Canadian Heritage concluded that the cancellation of these programs is, at the very least, debatable.

The IMAA is not asking for these programs to be reinstated. However we feel that the Canada Council for the Arts does an excellent job at supporting artists and organizations in the development of their practices nationally and internationally and in disseminating artworks abroad. However, the audience and market development office at the council is overburdened and cannot meet the demands of the requests and does not have the capacity to fill in the gaps left by the loss of those two programs.

The second recommendation is for an overall increase to the Canada Council for the Arts. We are asking for the overall funding of the Canada Council to reach $300 million over four years. This goal is consistent with the message that has been echoed by numerous arts groups over the past five years. We acknowledge that the federal government recently announced a $25 million increase to the council's annual funding, which brings it up to $181 million per year today. However, this does not go far enough to relieve the pressures faced by the smaller artist-run organizations and independent artists. In addition, the loss of several programs, as previously mentioned, has left hundreds of professional media artists without support to complete their projects, advance their practices, or to sustain their businesses. The loss of these programs has put increased pressures on the Canada Council for the Arts, specifically the media arts section.

Our final recommendation draws attention to the individual artist. According to a study published earlier this year by the Art Gallery of York University, in 2007 the average artist made $25,000 per year from all sources. That includes practise income, secondary employment, and all non-work sources. To compare, Canadian artists make significantly less than the national average, which was $36,000 in that same year. That is quite a big difference.

Artists often obtain income from other sources to subsidize their practices, which cuts down on studio time and hours dedicated to developing their profession. Grants have proven to increase an artist’s gross studio income proportionately, whether it is in sales or in artist fees. However, large grants are not always spent in one fiscal year and are taxed in the year they are received. This is a direct setback to the artist’s career, which would benefit by the full use of the funds received.

The IMAA recommends that the federal government grant professional artists and creators a $30,000 tax exemption on revenue deriving from copyright and residual payment, and complete tax exemption for grants. This would provide a concrete measure to improve the living wages of artists.

That's our final recommendation.

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

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We will now hear from the Conseil canadien de la coopération et de la mutualité, please.

[Brigitte Gagné, Executive Director, Conseil canadien de la coopération et de la mutualité]

Committee members, thank you for welcoming us this morning and for allowing us to present our recommendations for the next federal budget.

First, I do not necessarily want to read what you have received. I am sure you have done your homework. What I would like to be able to do is to give some context for the importance of cooperatives across Canada, provide you with three recommendations and put the emphasis on major investment to establish a cooperative investment system across Canada.

Canada's francophone cooperatives and mutual associations joined forces in 1946 to create an environment conducive to the development of francophone cooperatives and mutual associations from coast to coast. There are 3,500 cooperatives and 44 mutual associations generating more than $23 billion of sales, representing more than 8,860,000 members in Canada with total assets of over $170 billion, creating more than 100,000 jobs across the country. They also represented $779 million in sponsorships, dividends, grants and donations to Canadian communities in the 2008 fiscal year.

If there's one clear observation that can be made of the cooperative system, it is that it is solid. Recent research conducted by the Government of Quebec in 2008 shows that two cooperatives survive beyond their 10^th year, compared to zero in private businesses. In periods of crisis, cooperatives can afford to be more patient than private enterprises.

This morning, our recommendations are designed first to introduce positive action measures in support of the development of francophone cooperatives outside Quebec. As you know, over the past 100 years, cooperatives have enabled these communities to survive financially and to do business in their chosen language on the land where they have chosen to live.

I would also like to recommend the development of a job creation strategy in Canadian communities through a two-part investment in cooperatives.

The most significant challenge facing cooperatives is access to capital. The purpose of these two tools is therefore essentially to capitalize cooperatives, first, by establishing a cooperative development fund that would provide cooperatives with access to non-traditional loans in the form of patient capital provided at preferred rates and, second, by providing cooperative members, producers and workers with access to credit through the creation of a Cooperative Investment Plan, commonly called a CIP.

I would like to remind you that, in 2004, this committee made the following recommendation to the Government of Quebec in its December 2004 report:

[...] it is important that all Canadian businesses—including co-operatives—operate on a level playing field and within a tax regime that enables them to meet their needs in order that they and the Canadian economy can grow and prosper.

The committee recommended that the federal government immediately take the following action: create a Cooperative Investment Plan that would encourage agricultural cooperative members and employees to invest in their agricultural cooperatives.

This morning I am pleased to be here with Mr. Jacques Lucas, from the Coopérative fédérée, who initiated the Cooperative Investment Plan in Québec. I'm going to hand over to him so he can tell you about it.

[Jacques Lucas, Lead Director of Financial Services, La COOP Fédéréé, Conseil canadien de la coopération et de la mutualité]

Thank you, Ms. Gagné.

Mr. Chairman, thank you for affording the COOP fédérée and the other Quebec cooperatives the opportunity to describe the experience of the Cooperative Investment Plan.

As Ms. Gagné said, the plan is an investment by members and employees. Any capital investment indicates that the financial lever it affords can generate three or four additional dollars of funding that the cooperatives can secure to ensure their development.

Statistics-wise, in the document you have before you, you will see $393 million, which was invested purely until 2006. The statistics were missing for 2007 and 2008. It should now be up to $450 million. That being said, if you multiply that by three, the leverage factor, it's $1.2 billion that was invested in all of the cooperatives that were eligible for the plan.

Let me recall also--and this is very important--that 75% of these investments were done in regions, in agricultural communities, the forestry sector, and of course in the manufacturing sector.

The cost of this plan, as estimated by the study that was recently submitted to you, is anything between $17 million and $20 million, or loss of taxation revenue. On the other hand, this plan would generate $120 million, at least, in investments all across the country, which of course creates more activity for the co-ops. It helps them buy equipment, diversify their activities, expand their activities, create more profits, and engage more employees.

That is the bottom line of the program. It has been evaluated by the Quebec authorities also. It is a winner all over the place, and that's why it has been kept for at least 24 years.

We can answer all of your questions. There are certain admissible cooperatives that we can speak to if need be. Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

[Brigitte Gagné]

Lastly, Mr. Rajotte, I would like to tell you that we have provided a full set of research documents that have been prepared on the CIP in Quebec.

[The Chair, Conservative, James Rajotte]

Merci.

Thank you all for your presentations this morning. We will start the questions from members with Mr. McCallum, for seven minutes.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Chair, and thank you all for being with us this morning.

Mr. Davidson, as one who has been an academic twice as many years as I have been a politician, I fully agree with the thrust of what you said, particularly the importance of front-end loading research funding, especially given that the government has cut funding for research councils. And I totally agree with you that Australia is eating our lunch with respect to foreign students. That's extremely important for the future and we should get our act together.

I also agree that if you're asking for money you have to be polite to the government, but I don't think you should be so keen to please the government as to say wrong things. I'll give you one example. You say, and I quote, “Canada is leading the G-8 in economic recovery.” That's not a forecast. Forecasters cheat. They may be right; they may be wrong. You say that Canada is leading the G-8 in economic recovery, but if you look at the facts, the latest quarter for which we have information is the second quarter of this year, and Canada was dead last among G-7 countries in growth. Three countries—Japan, France, and Germany—grew. Four countries shrank.

[Ted Menzies, Conservative, Macleod, AB]

A point of order, Mr. Chair. What relevance does this have to our witnesses? This is partisan rhetoric that these people don't need to hear.

Ask the gentleman a question and quit the partisan crap.

[John McCallum, Liberal, Markham—Unionville, ON]

I'm coming to the point--

[The Chair, Conservative, James Rajotte]

Order. One at a time, please.

Mr. Menzies, finish your point of order.

[Ted Menzies, Conservative, Macleod, AB]

My point of order is that these people came here to provide us with information and a request. They didn't come here to hear a political speech from John McCallum.

Thank you.