Evidence of meeting #60 for Finance in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was students.
A recording is available from Parliament.
4:10 p.m.
Liberal
John McCallum Liberal Markham—Unionville, ON
Okay, thank you very much.
Dr. Padmos, you have two recommendations. The first costs $10 million a year. It's a Conservative promise to create more residency spots. So this is something they have not yet done. Is that right?
4:10 p.m.
Chief Executive Officer, Royal College of Physicians and Surgeons of Canada
That's correct. Residencies are funded by provincial departments and ministries of health ordinarily. There are 2,500 new residents taken into the system each year in Canada. This represents a very small additional commitment by the federal authorities.
4:15 p.m.
Liberal
John McCallum Liberal Markham—Unionville, ON
Well, to go from small to big, your recommendation number two talks about 3% of GDP for research. My back-of-the-envelope calculation says that's about $45 billion per year. Where does this number come from, and approximately what do we spend now?
4:15 p.m.
Chief Executive Officer, Royal College of Physicians and Surgeons of Canada
Just under 2% of GDP is spent on all forms of health research—bio, psycho, social—at the present time. The U.S. targets 3% and generally achieves it.
4:15 p.m.
Liberal
4:15 p.m.
Chief Executive Officer, Royal College of Physicians and Surgeons of Canada
4:15 p.m.
Liberal
John McCallum Liberal Markham—Unionville, ON
Okay, thank you very much.
For the students, I certainly agree with your idea of getting rid of most of the tax credits—certainly the ones for textbooks are pretty useless—and instead increasing basic grants to students. I agree with you on that. However, if you're talking about giving more money to provincial governments for post-secondary education, I'm not sure I wouldn't think it might be better to put that same money directly into the pockets of students. You're never quite sure what will happen once another level of government gets its hands on the money. I'm suggesting it might be better to put it in the students' pockets. You're students. Do you disagree with me on that or do you agree?
4:15 p.m.
Campaign Coordinator, Canadian Federation of Students (Newfoundland and Labrador)
I wouldn't say that we totally disagree. I think that there needs to be a balanced approach. We need more money in student financial assistance, but we also need core funding for the provinces to put into post-secondary education. But again, I would stress that we're not looking for a blank cheque to go to the provinces for just anything. That's where this post-secondary education act comes into play. We would like moneys that are accountable and can clearly be defined as going into post-secondary education.
4:15 p.m.
Liberal
John McCallum Liberal Markham—Unionville, ON
Thank you very much.
I have another question for Hilary Pearson. We've heard from Don Johnson on his charitable giving proposal, which amounts to letting individuals give land without having to pay the capital gain on that. We've also heard the one that you are proposing about the stretch tax credit. By the fact that you've presented one and not the other, am I to infer that you prefer the stretch tax credit to the Don Johnson proposal?
4:15 p.m.
President , Philanthropic Foundations Canada
We're very conscious of the fact that you can't recommend everything and that there have to be priorities. Given the impact of the recession and the urgency of promoting more giving by Canadians, we think that the stretch tax credit would have a greater impact for the average Canadian and for the small donor, yes.
4:15 p.m.
Liberal
John McCallum Liberal Markham—Unionville, ON
One could do both, but one might not have enough money to do both.
Thank you very much.
4:15 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you very much, Mr. McCallum.
We'll now go to Mr. Laforest.
4:15 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
Thank you, Mr. Chairman.
Good afternoon and welcome to all the witnesses.
My first question is for Mr. Collyer, from the Canadian Association of Petroleum Producers.
In your first recommendation to the federal government, you in a way asked that a new tax program be created to allow larger investments, to support oil companies' research and development. You say this: "For a 30-month period, the federal government will give development and completion expenditures the same tax treatment as that afforded exploration wells."
In the context of that request, you talk, among other things, about a program that was implemented in 1974, the accelerated capital cost allowance tax provision. However, you make no reference to environmental issues, which are considered by Quebec and Canadian society as an important issue that concerns you directly as representative of the oil companies.
You're asking the federal government for financial support, but you make no reference to the fact that you must increasingly protect the environment, particularly in the area of oil sands exploration. In 1974, the prevailing tax provision recognized the high costs and long pre-production investment periods, the high risk of volatile oil prices, financing risks and the future flow of government revenues. There was very little talk of environmental protection at that time. On the other hand, it's a major issue now, a fact of which you are not unaware.
Why do you not even talk about it in the context of this request?
November 2nd, 2009 / 4:20 p.m.
President, Canadian Association of Petroleum Producers
Let me just make a couple of observations in response to your question. The first is just to clarify the proposal that we've made. On the scientific research and experimental development program, it is to broaden the eligibility. So we're not asking for the introduction of a new program; it's simply to broaden the scope of expenditures on technological innovation that would be eligible for that program. And some, and I think in fairness a large part, of those expenditures would be directed to environmental issues. So it is a way to stimulate an incremental investment. It is not the introduction of a new program.
With respect to oil sands, let me just make a couple of observations. I would first say that oil sands is a key part of the Canadian economy. It does create a significant value across the country. It creates significant employment across the country, and we think that tax measures that can help to stimulate investment in oil sands would be a positive measure. I would also say, on environmental performance, the industry clearly understands that it needs to improve its environmental performance, and in no way in our representations to the committee do we suggest that is not the case. We're simply saying that there is an opportunity for the government, through tax measures, to encourage incremental investment in technology, which we think is a key lever for environmental performance, for cost reduction and improving recovery. So environmental performance is absolutely a key part of what underpins our proposal.
4:20 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
You say this is one of your concerns, but can you tell us there has indeed been an improvement in greenhouse gas reduction compared to the very start, when you began producing oil from the oil sands? Can you tell us what percentage improvement there has been? Do you have any figures on that subject?
4:20 p.m.
President, Canadian Association of Petroleum Producers
Perhaps I can refer specifically to greenhouse gas performance. This is Environment Canada data. Since 1990, we have improved the greenhouse gas intensity of the oilsands production by 33%. So there has been a very significant improvement in the overall greenhouse gas performance of our industry.
I would also point you to some recent work that's been done by a couple of different independent bodies that have compared the greenhouse gas emissions full life cycle from oil sands to that of other crudes used in the United States. What they show is that oil sands greenhouse gas performance falls within the band of production from almost all other sources that the U.S. has for crude oil that it consumes in the United States. So if you look at full life cycle, our position is that oil sands falls within the range of supplies that are available to the U.S. market.
4:20 p.m.
Bloc
4:20 p.m.
President, Canadian Association of Petroleum Producers
And as I referred to in my earlier response, 33% improvement in greenhouse gas intensity is significant.
4:20 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
Thank you.
I'd like to ask Mr. Maduri, from Barrett Xplore, a question.
Your project is to hook up the vast majority of rural regions in Quebec and Canada. Do you have any specific objectives? What are the limits for a small municipality in northern Ontario or Quebec? Do you think that, one day, even with federal government assistance, you'll really be able to hook up a municipality of 300 inhabitants that is completely remote, 500 km from anything?
4:20 p.m.
Conservative
4:20 p.m.
Chief Executive Officer, Barrett Xplore Inc.
I think the key message is that we use two technologies.
One of the key technologies to reach these communities, the small remote communities, is satellite. In essence, with the capability we have today, we can reach any community anywhere in Canada. The key objective that we have as a company is to bring more capacity on satellite, with the goal of being able to reach more Canadians. So we have the footprint, we have the coverage. The next goal is to get more capacity to deliver to all rural Canadians, and also to be able to bring the prices down to make it affordable to all rural Canadians.
4:25 p.m.
Conservative
4:25 p.m.
Conservative
Ted Menzies Conservative Macleod, AB
Thank you, Mr. Chair.
Thank you to all of our witnesses appearing here today.
I will echo Mr. McCallum's comment that we wish we could ask all of you questions. We have heard some very compelling arguments from all of you--not enough on how to save money, but I guess that's our problem, not yours.
Mr. Collyer, you've already had a fair bit of air time today, but I do want to expand a little bit, and I think the story doesn't get told often enough of how large a contribution to this country's economy your folks, the Canadian Association of Petroleum Producers, actually represent. Just to expand on that, perhaps you could just quickly explain a bit of your proposal about treating development and completion expenditures with the same tax treatment as exploration.
The concern I take out of this is what happens if we stay with the low gas prices and then our expertise, our knowledge, our educated individuals who know how to do this--a very specialized industry--leave the country? If you could, please expand on that.
4:25 p.m.
President, Canadian Association of Petroleum Producers
I'd be happy to.
First of all, in terms of the economic contribution, there are just a couple of statistics that might be helpful. Indirect and direct employment from the oil and gas sector across the country is about half a million people, so there's a very significant contribution to jobs across Canada. The companies that comprise our industry are about 25% of the value of the TSX--again just another metric that would give you a sense of the economic contribution we make.
In terms of the tax treatment we're suggesting, what we're asking is that rather than a 30% declining balance--which is the normal tax treatment for development expenditures--for a time-constrained period those expenditures are allowed full deductibility. So it effectively changes the phasing of tax deductions for those particular expenditures.
Maybe I'll just ask Mr. Herring to say a few words in response to your question about employment and how our proposal would impact employment in the industry.