Evidence of meeting #59 for Finance in the 40th Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cement.
A recording is available from Parliament.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
Do you not have a more specific example of a municipality spending moneys allocated to emergency procedures for water systems, for example? That is what you were saying.
First Vice-President, Canadian Association of Fire Chiefs
No, I have no knowledge of moneys that were inappropriately allocated. They would have to satisfy those very stringent criteria; otherwise the moneys would not be allocated.
Conservative
Ted Menzies Conservative Macleod, AB
Thank you, Mr. Chair.
Thank you to our witnesses. We do appreciate each and every presentation. There is never enough time to ask enough questions, so I'll try to focus my comments very succinctly. In the interests of time, could we ask for answers that are succinct as well?
Mr. Boucher, I have to make a comment about your reference. I know you represent the overall cement industry. You commented about there not being enough shovels in the ground. I appreciate that it would be great to have more, but the impression you left this committee with was that there were hardly any in the ground. I would beg to differ with that. In fact, we had one of your members at a committee presentation in Toronto, who was quite pleased with the amount of work their large company was getting all across the country.
I'll use my riding as an example. Cement trucks run 12 months of the year. We have winter, but cement trucks are still pouring all winter long. Just to get it on the record, I think we need to be clear that this is a two-year project; we have a lot of construction under way, and I don't want this committee to think otherwise. We think it's been pretty successful.
If I can, Mr. Mains, what's the holdup with FCC and floor planning?
Consultant, Public Policy, Association of Equipment Manufacturers
That's a good question. It was brought to the attention of the committee by the Canada West Equipment Dealers Association when the committee was in Calgary, I think, or Saskatoon. I'm not sure which city it was.
We understand there's an agreement in principle that this is a good thing to do, because it is a profitable venture for FCC, after all. We understand that the talent that's needed is there, but one thing we understand to be the case is that their computer systems are not yet designed or in place to allow this type of tracking of inventory. That is the holdup, as I understand it.
I'm not sure how much more attention is needed from the Minister of Finance and the Minister of Agriculture, but I'm sure that if this committee were to recommend that FCC move forward quickly on this, it would be helpful to those equipment dealers seeking to finance the equipment on their lots.
Conservative
Ted Menzies Conservative Macleod, AB
We had pretty good sales of agricultural equipment this year. I'll talk to William about this, but farmers had a pretty good year last year, grain farmers being the exception. A lot of equipment was sold.
Wasn't there adequate floor planning? In my drives across the prairies, I saw lots of equipment sitting on the lots. Some of it, unfortunately, was still sitting there in the drought areas. Has anybody come back into the floorplan business in that void?
Consultant, Public Policy, Association of Equipment Manufacturers
No. After Textron left that business, nobody has come back in. Bear in mind that a lot of equipment would be financed by the majors, like CNH and the John Deere Capital Corporation. So the majors would be financing their dealers, but the short-line manufacturers, such as MacDon Industries out of Winnipeg and Morris Industries out of Saskatchewan, are having to go back to their financial institutions to extend their lines of credit in collaboration with their dealers to try to get this equipment financed. So the problem is far from being fixed. This is a segment that certainly needs attention.
Conservative
Ted Menzies Conservative Macleod, AB
The accelerated capital cost allowance always sounds so good. I remember back when we had a 100% capital cost write-off, it inflated the equipment market incredibly; it just totally skewed the agricultural equipment market. Are we headed that way by putting the accelerated capital cost allowance too high?
Consultant, Public Policy, Association of Equipment Manufacturers
I don't think so. What we're looking at, simply—and this would also be for construction equipment and other utility, mining, and forestry equipment as well—is putting our equipment depreciation rates here in Canada in line with the new five-year rule in the United States for similar types of equipment.
I might add that given that the cost of capital to the government is close to zero, the cost to the treasury is getting close to zero as well, because what we're talking about is not lost tax revenue, but deferred tax revenue. With the time value of money getting close to zero for the Government of Canada, this is not a big ask.
Conservative
Ted Menzies Conservative Macleod, AB
Okay, thank you.
My final question will have to be very brief. It's to Mr. Van Tassel, a good friend of mine from his farm in northern Quebec—and to Leo as well.
We seem to have a crisis in agriculture every year. You know that it's going to happen. We've been struggling with how to deal with this, whether it's business risk management, CAIS, or whatever the program is. Has anything come of the meeting last summer with the first agriculture ministers leading you to think we have a better fix coming for the crisis that we know will come next year?
Vice-President, Ontario-Quebec Grain Farmers’ Coalition
Not that I know of. There was supposed to be a consultation on how to have a better program for business risk management, but we didn't hear if it was finalized yet.
Conservative
Thomas Mulcair NDP Outremont, QC
Thank you, chair.
I would also like to welcome those making presentations today and thank them for their contributions to our discussions as we prepare for the next budget.
I will first address Mr. Boucher of the Cement Association of Canada. I will read part of your recommendation no. 3, because I am not sure that I have fully understood it. You begin by stating:
In designing GHG regulations, the government should align Canada’s trade and climate change efforts with the U.S. on such issues as price signals (timing and size); alignment on mid and long term climate objectives and avoiding disruption of cross-border trade and border adjustments due to perceived differences in approach to GHG mitigation.
I have been working on this issue for a very long time but I am not sure I understand what you mean.
President and Chief Executive Officer, Cement Association of Canada
I will try to explain. In the cement sector, we favour a sectoral approach. Many discussions have taken place, and others are underway, in Europe as well as in Canada, at the provincial level. Because of the Western Climate Initiative, there are many discussions at the federal level in the United States. Therefore, we favour a sectoral approach.
As I mentioned, 15 million tonnes of cement are produced in Canada annually. Approximately 5 million tonnes are shipped to the United States. Hence, it is an integrated market. We are promoting the harmonization of regulations—federal, provincial and American—to foster trade and eliminate tariff barriers and taxes at the border in order to permit the free movement of goods.
NDP
Thomas Mulcair NDP Outremont, QC
Could you be a little more specific in your explanation so that we can all understand. You just said that you do not want specific taxes. You want a sectoral approach. You do not want greenhouse gas emission costs to be internationalized for your products, but you do for other products.
What barrier at the border are you concerned about?
President and Chief Executive Officer, Cement Association of Canada
We are concerned about carbon leakage, namely that if cement companies in Canada and the U.S. do not have a level playing field... I will give you an example. British Columbia has a provincial carbon tax, which has led to significant increases in cement imports from Asia, China in particular and Korea.
NDP
Thomas Mulcair NDP Outremont, QC
I believe that we must internalize the carbon cost in British Columbia. Thus, it has become more cost-effective to import from these other countries. Is that right?
President and Chief Executive Officer, Cement Association of Canada
Exactly.
For example, global cement production totals 2.5 billion tonnes—
President and Chief Executive Officer, Cement Association of Canada
Yes, but it is an important player because it is a strategic commodity.
Having said that, the price issue is fundamental because a large amount of cement is produced. One tonne of cement manufactured in China can compete with one tonne produced in Alberta, for example, or Quebec.
Quebec also imports cement. Therefore, we have a major sectoral approach in the important debate on climate change that has been going on for many years. We have studied and are very familiar with all aspects of the issue, from the cap and trade system to carbon taxes.
We are clearly telling the government that all these regulations must be harmonized in order to prevent carbon leakage, that is, to prevent the relocation of industries. It is much easier now to invest in a cement factory in China. It can be built much more quickly and for less. It can be cost-effective.
NDP
Thomas Mulcair NDP Outremont, QC
To clarify your remarks, the Canadian cement industry is taking a stance that is somewhat similar to that taken by the French government. When a country does not comply with the Kyoto Protocol, it can be punished by applying tariff to prevent its goods from entering the country because the overall environmental costs have not been internalized.
Therefore, you would like Canada, which does not comply with the Kyoto Protocol, to be punished through its exports. Is that what your industry is saying?
President and Chief Executive Officer, Cement Association of Canada
No, not at all. We are saying that the cement industry operates globally.
President and Chief Executive Officer, Cement Association of Canada
Yes, but 40 million tonnes of aluminum are produced compared to 2.5 billion tonnes of cement. It is a matter of scale.
What we are saying is that in order for all industries to be competitive, it must be cost-effective for Canadians to purchase their cement and it has to be produced here.
