Finance Committee on Oct. 28th, 2009

[Ray Pekrul]

If they were married or were living with a pensioner, they would be eligible for those benefits directly; otherwise they are not, according to this provision.

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

Thank you.

[The Chair, Conservative, James Rajotte]

Merci, monsieur Roy.

We'll go to Ms. Block, please.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much, Mr. Chair.

In an effort to honour your request for us to finish up early, I will limit my questions to one, and that will be for the Canadian Wireless Telecommunications Association. As someone who lived in rural Saskatchewan for 20 years and was the chair of a rural health district, who as a mayor also successfully lobbied for high-speed Internet in our small community, I am very happy to hear about increased broadband availability.

In your recommendation you suggest raising, from 30% to 100%, the capital cost allowance for capital expenditures--and I know that you stated the fiscal cost would depend on where that rate lands in terms of what we might do. Can you tell us what the current cost is to the federal government for this program at 30%?

[Jim Patrick, Vice-President, Government Affairs, Canadian Wireless Telecommunications Association]

We have public figures from the CRTC indicating that the capital expenses from both wire and wire-line companies that would fall under this class of assets--I think it's class 46 in the income tax regulations--were $12 billion last year. So that's the total capital expenses for telephone companies. We've estimated, in consultations with our members, that half of that is directed toward broadband, so you're left with a figure of about $6 billion. Apply the 19% corporate tax rate and you get about $1.5 billion as the reduction in taxable revenues from the telcos.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Ms. Block.

I want to thank all of you for being with us today. I apologize about the shortened time, but we have votes at 5:30. If you have anything more to submit to the committee, please do so through the clerk.

Colleagues, we will suspend for a few minutes while we will bring the next panel to the table.

Thank you.

[The Chair, Conservative, James Rajotte]

Colleagues, please find your seats.

I want to apologize. We have votes at 5:30, so the bells will start ringing at 5:15. I'm told there are two private members' bills and there's a government bill, so the votes will take at least 45 minutes, I understand. Unfortunately this will interrupt the presentations.

We have seven groups here, and I'm going to ask colleagues to stay until about 5:21. If each group can shorten their presentation to three minutes we can get all the presentations in. Then we'll go to the votes and ask questions when we come back. If witnesses have somewhere to go we can't expect you to stay, but at least we'll try to get every group on the record before the committee.

I apologize for this, but when votes happen the whips call all members back.

We will start with Mrs. Grant from the Canadian Society for Medical Laboratory Science.

[Moira Grant, Director of Research, Canadian Society for Medical Laboratory Science]

Good afternoon, and thank you, Mr. Chair.

My name is Moira Grant, and I am the director of research with the Canadian Society for Medical Laboratory Science, or CSMLS. I appreciate the opportunity to be here today in the context of your 2009 pre-budget consultations.

CSMLS is the national certifying body for medical laboratory technologists and medical laboratory assistants, and the national professional society for Canada's medical laboratory professionals. I would like to highlight for you the vital role that medical laboratory professionals play in the maintenance of Canadians' health. Whether it is a blood test, a throat swab, or a biopsy, tests performed by medical laboratory professionals provide crucial information about an individual's health. In fact, up to 85% of physicians' decisions are based on medical laboratory test results. Medical laboratory professionals are also on the front line of our public health system, protecting you and your family from emerging infectious diseases such as H1N1.

Some of you may also be surprised to learn that as a group our profession is the third largest health care profession in Canada. A lack of understanding of the key role medical laboratory professionals play in providing Canadians with quality health care leads to a lack of the focus and investment that could resolve critical health human resource challenges related to our profession.

Presently, Canada is facing a nationwide shortage of medical laboratory technologists or MLTs. In 2001, CSMLS issued a report predicting that over half of Canada's medical laboratory technologists would be eligible to retire by the year 2015. Since 2001, provincial and federal governments have taken steps to address shortages of MLTs. Existing education programs for medical laboratory technologists have been expanded and new programs opened.

We are pleased at the progress that has been made, but at the same time we recognize that there is still much to be done. We are calling on the federal government to take leadership in implementing the action plan proposed in 2005 in the Framework for Collaborative Pan-Canadian Health Human Resources Planning. CSMLS is urging investments in four key areas, which are mentioned in the action plan.

First, we call for investments in clinical education. We are currently in the situation where clinical sites, primarily hospital labs, are refusing to accept students because of staffing shortages. It has become a vicious cycle. They can't take students because they're too busy due to staffing shortages, and they're short of staff because there aren't enough new graduates. To help resolve this, funds should be targeted for dedicated clinical preceptors to support on-site clinical education. We are recommending the immediate establishment of 140 clinical preceptor positions across Canada at an estimated cost of $10 million.

Second, we call for investments in bridging programs for internationally educated medical laboratory technologists. We have clear evidence that internationally educated MLTs who complete a bridging program are more likely to pass the national certification examination. By providing targeted, long-term, and sustainable funding for these programs, governments can help qualified professionals enter the Canadian workforce in a more timely fashion.

Third, we call for investments in initiatives promoting the quality of work and life. We believe the best way to recruit and retain health care professionals is to create healthy, supportive workplaces. Of particular concern to us is the lack of full-time employment opportunities for new graduates in medical laboratory science.

Fourth, we call for investments in recruitment into the medical laboratory profession. We recommend the establishment of a national scholarship fund to support students entering medical laboratory science programs.

I understand that health and education are primarily areas of provincial jurisdiction. But as we've seen recently with H1N1, illness and disease don't respect borders or boundaries. We firmly believe that the federal government has a responsibility to protect the health and well-being of its citizens. Making investments in health human resources today will help ensure that Canadians continue to have access to high-quality medical laboratory testing in the future.

Thank you for your time and attention.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll now go to the Canadian Foundation for Climate and Atmospheric Sciences.

[Dr. Marlon Lewis, Member of the Board of Trustees, Canadian Foundation for Climate and Atmospheric Sciences]

Mr. Chairman and honourable members, thank you very much for the opportunity to present to you on behalf of the Canadian Foundation for Climate and Atmospheric Sciences. My name is Marlon Lewis. I'm vice-chairman of the board of trustees of the foundation, a professor at Dalhousie University, and CEO of Satlantic Incorporated, an optical instrument manufacturing company in Halifax, Nova Scotia.

Canada’s economic rebound hinges on its ability to innovate and to rapidly adapt to changing global conditions. The creation of knowledge through fundamental and applied research underpins innovation and lies at the heart of Canada’s recovery program. According to the World Economic Forum, increased emphasis on science and innovation is crucial to achieving sustained economic recovery. This brief, sirs, describes needs and stimulus measures in a key area for the Canadian economy, which is climate.

The Canadian Foundation for Climate and Atmospheric Sciences provides focused support for excellent university-based research. The foundation is Canada's primary funding body for university-based research in climate, atmospheric, and oceanographic sciences, investing an average of $10 million to $14 million per year into the research community. It is an autonomous, non-profit agency established in 2000, with federal endowments totalling $110 million. The mandate of the foundation continues through 2012, although all available funds have now been committed. We seek support for the foundation in meeting what we believe are challenges unprecedented in human history.

Climate change is a driving force in today's economy. On one hand, it is potentially enormously disruptive across the economic landscape. On the other hand, there is a real potential for the generation of new economic activity and the creation of new jobs. I think we heard a little bit of that in the previous session.

With an estimated value exceeding $100 billion per year, weather-dependent industries such as agriculture, forestry, fishing, natural resources, and tourism dominate Canada's economy. Businesses and governments require improved certainty with respect to future conditions to take relevant policy, regulatory, and investment decisions in these and other sectors. Examples include port and pipeline construction, energy markets, and carbon emission controls. This requires a vigorous research establishment, yet paradoxically, federal funding for university-based work on climate, weather, and oceanographic sciences, Arctic conditions, and air quality is in decline. This is compromising Canada's long-term economic recovery and future development.

Canada's Science, Technology and Innovation Council benchmarked Canada's performance earlier this year against national and international standards and urged Canada to “strengthen and better link all sectors of its science, technology and innovation system if it wishes to maintain its economic independence, competitiveness, productivity and quality of life, and position Canada in the leading group of innovating countries”. The measures and amounts required for this strengthening with respect to climate prediction, we believe, are assessed to be $25 million per year. This amount would increase research activity from the present level by about one-third, and it's what we estimate to be the likely limit for take-up and use of research results for policy and regulatory activities.

The Canadian Foundation for Climate and Atmospheric Sciences therefore recommends that the federal government invest $25 million per year for at least the next 10 years in weather, oceans, and climate research in order to underpin economic recovery, support innovation and policy, enhance intellectual capital, and safeguard Canadians. The funds, we believe, should be administered through an existing agency, such as the Canadian Foundation for Climate and Atmospheric Sciences.

Thank you very much, sir.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Lewis.

We'll go to the British Columbia Treaty Commission, please.

[Sophie Pierre, Chief Commissioner, British Columbia Treaty Commission]

Thank you very much, Mr. Chairman.

Honourable members, thank you very much for having the BC Treaty Commission, my colleagues and me, join you this afternoon.

We're here to discuss the modern B.C. treaty-making that is going on in British Columbia. This was established in 1992. Unlike the rest of Canada, treaties remain unfinished business in British Columbia.

This is the first time the BC Treaty Commission has appeared before the finance committee, and we do that for a very particular reason: we feel there's not a clear understanding and a clear appreciation of the direct economic benefits of treaty-making in British Columbia.

So we're here to emphasize that and to underscore the words that come from the economic action plan. The Prime Minister's commitment to promote greater participation by aboriginal men and women in the Canadian economy and to address the specific challenges and opportunities they face are well reflected in the economic action plan. What we have to offer through the B.C. treaty process speaks directly to that.

A perfect example of this is that on the west coast of British Columbia you were all participants in moving through the Maa-nulth treaty process. It happened within four days, with all-party support. That has already started to show economic benefit for the region. As soon as that was done, the Province of British Columbia transferred what they called early land transfers. They transferred pieces of prime real estate, not the type where you usually find Indian reserves but real estate having prime economic development potential. They transferred that immediately to the Maa-nulth first nations, and they now have real economic opportunity, primarily in the area of tourism.

We're here to ask your support in accelerating the treaty process and accelerating what's going on through the government with the treaty process. We want to build on the impetus that was created by the Maa-nulth Final Agreement and also to underscore the impacts that were mentioned in the 2006 Auditor General's report, where the Auditor General noted:

the federal government expects that the fair and timely resolution of B.C. land claims through negotiated treaties will clarify rights to land and resources in the province.

The Treaty Commission has commissioned PricewaterhouseCoopers to update our economic benefits analysis of doing treaties in British Columbia. The last one was done by Grant Thornton in 2004, five years ago. Since then we've had the Tsawwassen treaty that's implemented now and we have Maa-nulth, which was passed in May of this year in the House.

We're taking the reports of the economic benefits of treaty and we're bringing them into today's dollars. The report will be finished next month. Already the preliminary numbers underscore what the previous report said, which was that there's tremendous economic benefit. If we were to do two treaties a year for the next number of years, rather than one every five or so years, we would be looking at doubling net benefits to $2 billion; but for the wage income, we're talking about $7 billion if we do just two treaties a year rather than one every five years or so.

Just as important, though, for you is the lost opportunity costs we have. The Grant Thornton report of 2004 estimated that we lose $1.5 billion a year because we don't have the treaty settled. And of course, take all those numbers and there's the multiplier effect.

So in conclusion, what we're seeking from the Standing Committee on Finance is to consider in your report to Parliament the importance of achieving the economic stimulus effect that will result in the province of British Columbia by completing treaties in a very timely manner. We know it can be done.

Thank you very much.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We'll go to the Health Action Lobby, please.

[Karen Cohen, Executive Director, Canadian Psychological Association, Health Action Lobby (HEAL)]

Thank you, Mr. Chairman, and honourable members.

My name is Karen Cohen. I'm the recently appointed co-chair of the Health Action Lobby. I'm also the executive director of the Canadian Psychological Association. I'm joined by Pamela Fralick, who is the past co-chair of the Health Action Lobby and president and CEO of the Canadian Healthcare Association.

The Health Action Lobby, or HEAL, is a coalition of 38 national health and consumer associations and organizations dedicated to protecting and strengthening Canada's health system. It represents more than a half million providers and consumers of health service in Canada. It was established in 1991 with a view to exchanging knowledge, developing consensus, and providing advice to government and others on pan-Canadian health issues.

HEAL is recommending that the federal government establish a five-year national health human resource infrastructure fund valued at $1 billion. It's important to note that the fund is time-limited, issue-specific, and strategically targeted.

In 2007, Canada spent $160 billion on health. It's estimated that between 60¢ and 80¢ of every health care dollar in Canada is spent on health human resource. In other words, of $160 billion, $96 billion to $128 billion was invested in health human resource. This investment underscores the central role of the health professionals within the health care system. The magnitude and the role of the investment demands that we undertake health human resource planning thoughtfully, responsibly, and accountably.

The infrastructure fund is a critical step towards improving the access to health and health service that Canadians need. It's driven by three trends. First, the health needs of Canadians are becoming more complex as a result of chronic disease and living longer with chronic disease, as well as an aging demographic. Second, like the general population, health providers themselves are aging, with several of our health care professions having an average age of over 45 years. They're reaching retirement and they're leaving the profession in numbers greater than they're being replaced. Third, the foregoing trends are not unique in Canada, resulting in intensified global competition to attract and retain experienced and specialized health care professionals.

The fund we're suggesting takes on these trends by targeting these essential and interrelated elements necessary to train and develop additional health care professionals and leaders. These are funding for special initiatives to offset the direct costs of training providers and developing leaders, such as the cost of recruiting and supporting more community-based teachers and mentors--and here, we echo what we've heard today from our colleagues in medical laboratory science; to offset the indirect or infrastructure costs associated with the educational enterprise, i.e. the buildings, housekeeping, maintenance, and information systems that we need to support education and training; as well as an overall data management system that allows us to specify, track, forecast, and cost health human resource requirements in the face of an evolving demand for health service.

The first two elements are required to create additional education and training positions. Practical training depends upon sustained and resourced engagement of community-based teachers, supervisors, and mentors. The third element of HEAL's proposal--precisely, data management--is essential if we are to clearly understand the causes of the boom-bust cycle of our health workforce supply and demand in Canada, demonstrate accountably an effective use of resources, and engage future evidence in foreign practices and decision-making to respond to Canada's evolving health needs.

Understanding the future responsiveness of the health system in terms of providing quality health and health care services in a timely fashion largely depends on the availability of health providers. We are of the view that now is the time for the federal government, in close collaboration and consultation with the provinces and territories and providers themselves, to establish a national health human resource infrastructure fund.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now go to Communitech. We'll do one more presentation. It shortens the time we're here afterwards.

[Mike Wallace, Conservative, Burlington, ON]

Your name is James Rajotte, and my whip's name is what? I can't remember.

[The Chair, Conservative, James Rajotte]

Okay. Well, we'll suspend the committee, and I expect all members back here after the vote.

[Mike Wallace, Conservative, Burlington, ON]

Thank you.

[The Chair, Conservative, James Rajotte]

We'll suspend the committee.

Thank you.

[The Chair, Conservative, James Rajotte]

We'll continue the meeting. I apologize again for the delay. We did have votes in the House.

We have three more organizations to present and then we have members' questions.

We'll go next to Communitech, please.

[Iain Klugman, Chief Executive Officer and President, Communitech]

Thank you very much.

Good evening.

Mr. Chair and members of the committee, thank you very much for your time today.

My name is Iain Klugman. I am the CEO of Communitech, the technology organization in the Waterloo region. This is my colleague Avonwy Peters.

We work at the forefront of Canada's technology industry, with more than 550 technology companies. We work with companies at all stages of growth, from more than 200 active start-ups with fewer than five employees, through to Canada's largest software company, Open Text Corporation, and Canada's largest technology company, Research In Motion, which employs 10,000 Canadians.

This vantage point gives us insight into what business needs to be successful and into the challenges faced by Canadian entrepreneurs. We're here today because we think government can make a significant difference to our economic success with modest but targeted investments and strategic cost-effective policy changes.

There are two recommendations I want to highlight for you today. One is increased support for the NRC IRAP program and the second recommendation is for the reform of section 116 of the Canadian tax code to address a root cause of Canada's capital crisis.

The industrial research program of the National Research Council has been a significant factor in building and growing successful tech companies in Canada for more than 60 years. IRAP support makes an immediate difference to companies by providing funding for staffing and projects at a critical stage in the development of SMEs, and the program is highly effective. Analysis shows IRAP investments are leveraged by a factor of 11:1. It's non-sectoral, and it's a competitive process that supports companies with the greatest potential.

Tech companies from across the country resoundingly agree on the value of IRAP and we applaud the Government of Canada for increasing the program's budget earlier this year. But even the increased budget dollars were spent in the first half of the year, demonstrating demand.

This is a good program and a strong instrument for government to support companies in an immediate way. IRAP needs continued increased support to ensure that we grow the next generation of tech companies for Canada. I have testimonials that have been distributed to you from four technology companies that give you a sampling of how IRAP has made a difference in their evolution.

I'd like to share just one of them with you as an example, and this comes from Ted Hastings, the CEO of Moxy Media. Moxy Media is Canada's largest Internet company, headquartered in Guelph, Ontario, with offices in Santa Monica, San Francisco, and Fort Lauderdale. He says that they face regular pressures to invest in their U.S. offices. But in 2009, support from IRAP allowed them to staff up a project in Guelph that was originally scheduled to be executed in California. According to Hastings, “This is a program that directly impacts our ability to create jobs in Canada instead of south of the border.”

I won't read the others, but I invite you to take a glance at them.

The second major area is capital crisis. And I'd like to raise this with you this afternoon, as it impacts technology companies. Quite simply, the system is broken, and because it's broken, we are raising a generation of companies that cannot succeed in Canada.

Lack of capital is a barrier to companies at each stage of growth, but there are things government can do that will have immediate positive impact and have minimal or no cost implications, which is always good. Government can help companies raise capital through specific instruments meant to address gaps at particular points in the funding ecosystem. It can offer a tax credit for angel investors to encourage more capital for companies needing $500,000 to $2 million. It can match existing investment instruments like Ontario's emerging technologies fund.

Most importantly, it can reform section 116 of the tax code to make Canadian companies more attractive to U.S. investors. We invest heavily in research and innovation in this country and then we lament that our investments don't translate into commercial success. Why? Once our start-up companies reach a certain size, they have difficulty raising U.S. capital because of section 116 getting in the way, so they're forced to sell their businesses. That means we never create a strong crop of mid-sized businesses in Canada, which means our Canadian VCs aren't successful because they don't yield the returns they potentially could. In fact, we undercapitalize our technology companies through this barrier...one-third of comparable companies in the United States.

In the end, our start-ups never grow into large global powerhouses because they don't have access to capital, and this problem is cyclical. The root cause analysis is that Canada's tax system puts up barriers to investment by U.S. and other foreign investors--namely, through section 116 of our tax code.

We recommend amending the definition of “taxable Canadian property” to exclude shares of private corporations except those whose value is derived from real estate or timber property. This would significantly streamline the process for foreign investors and it would make Canadian companies an attractive investment rather than the daunting and complex administrative exercise that they face today.

Adopting the recommendations of Canada's technology and venture capital communities to reform section 116 will reduce a significant compliance burden. It will have an immediate positive and direct impact on Canada's ability to grow a technology industry that produces more companies, more jobs, and more wealth for Canadians, with no additional cost and no tax leakage.

Ladies and gentlemen, thank you for your time this evening. I look forward to your questions.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now go to Make Poverty History.

[Dennis Howlett, National Coordinator, Make Poverty History]

Thank you very much for this opportunity to bring our concerns before you.

Make Poverty History is a very broad coalition, involving over 1,000 organizations and over 250,000 individual Canadians who have signed on in support of our demands for more and better aid, trade justice, debt cancellation, and an end to child poverty in Canada.

Today I want to speak to you about the tremendous opportunity Canada has as host in 2010 of the G8 and G20. It's an opportunity for Canada to provide bold leadership to help deal with the pressing challenges of global poverty and climate change. In order to do this, to have the international stature, leadership, and respect needed to provide that kind of leadership, a key thing Canada could do is adopt a timetable to achieve the 0.7% of GNI aid target.

With the global economic crisis, the food crisis, and the impacts of climate change, after a number of years of real progress in reducing global poverty, we are now in danger of going backwards. It requires a renewed effort if we are to move forward again and achieve the millennium development goals by the year 2015, which is the target date.

Canadians like to think of themselves as a compassionate and generous people. But we are only 16th out of 22 donor countries, and well below the average country effort of 0.47%. The Netherlands, a country with less than half the population of Canada, gives almost twice as much in aid, in dollar terms. Five countries, including Sweden, Norway, Luxembourg, the Netherlands, and Denmark, have reached or exceeded the 0.7% aid target. And another 11 countries, including the U.K., France, and Germany, have timetables for doing so before the year 2015.

Canadians may have reservations about simply increasing Canada's development assistance when there are concerns about the quality of that aid. And those concerns are not without justification. Indeed, I understand the Auditor General will be releasing a report about Canada's aid program next month.

Although progress has been made in recent years in improving the aid effectiveness, including untying aid, the Canadian aid program still has a ways to go before it will become as effective as it can be. But new legislation, the Official Development Assistance Accountability Act, which became law in 2008, will greatly boost efforts to improve the quality of Canadian aid. This is John McKay's private member's bill, which we worked on with him to get passed.

With the passage of this legislation, we have made a big step forward on the “better” part of our more and better aid goal of the Make Poverty History campaign. So Make Poverty History is redoubling efforts now to achieve the “more” part of our demand with the launch of its Let's Get to the 0.7% campaign.

As host of the G8 and G20 in 2010, Canada will be expected to come forward with some kind of legacy initiative. Canadian civil society groups are recommending some bold initiatives on child and maternal health and on food security, which are badly needed as we have made the least progress on the millennium development goals in the child and maternal health area. And on food security, after actually going down to about 800 million people in hunger, we have now gone back up to over a billion. So we desperately need some bold action.

Such bold initiatives cannot be accomplished simply by shifting funds within the existing aid budget. It will require additional aid dollars, which can only be available by committing to a timetable to achieve the 0.7% aid target within 10 years. We estimate this would require about an annual 15% increase in the aid budget.

Just this weekend I met with a very well-connected person from the United States who informed me that the Obama administration is expected to announce in January a $63 billion commitment to a global health initiative. That should give you some sense of scale. Unless Canada is prepared to take a bold initiative at the G8 or G20, we could end up looking bad in comparison with some other countries. The EU chairmanship is shifting to Spain, and the European Union is proposing a major new initiative to achieve their millennium development goals.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Howlett.

We'll now go to the Professional Institute of the Public Service of Canada.