Finance Committee on Nov. 5th, 2009

[The Chair (Mr. James Rajotte (Edmonton—Leduc, CPC)), Liberal, John McCallum]

Order, please.

I declare the meeting under way. This is meeting number 63 of the Standing Committee on Finance.

This is our last day of open pre-budget consultations. We've had a long session. We've tried to hear from up to 400 witnesses, so it's been a long process, involving nine cities across Canada. But it's also been an interesting and productive set of hearings, both here in Ottawa and across the country. So we thank you for being here on our last day of open hearings.

We have two panels today: 9 to 10:30, and 10:30 till noon. We have the following organizations for the first panel: the Forest Products Association of Canada, the Canadian Petroleum Products Institute, the Brain Injury Association of Canada, the Natural Sciences and Engineering Research Council of Canada, the Social Sciences and Humanities Research Council of Canada, the Canadian Institutes of Health Research, the Canadian Land Trust Alliance, and the Association of Atlantic Universities.

Welcome to all of you.

We'll start with Mr. Lazar of the Forest Products Association.

[Avrim Lazar, President and Chief Executive Officer, Forest Products Association of Canada]

Thank you. Good morning, everybody.

It's an interesting time to have this committee hearing. We've gone through what has been the most difficult recession in two generations, and now we're sitting at the brink, asking ourselves whether we're coming out of it or facing another bubble. The response of government to our present situation will have a large influence on the answer to that question.

Over the last couple of years, throughout the industrialized world—in the U.S., Europe, Canada—we have seen massive intervention by governments in their economies, the most that has taken place in 30, 40 years. The strategic intelligence of those interventions may well dictate the outcomes for industry.

The two principal feedstocks of an economy are money and energy, and governments are now heavily involved in the supply of money and the supply of energy.

We've made a submission, but I want to take some time to put it in context.

We applaud the government for investing so much to restart the economy. But if the economy doesn't rebound, it's going to be clear that unless we get private sector investment, the whole thing is going to start to fizzle. The question now is not how the government can spend more billions of dollars in stimulus. The real question is how the government can create an incentive structure for private sector stimulus money, that is, private sector investment, to keep the recovery going.

In our submission, we have several ideas about this. They're not new ideas, but they're ideas whose time has clearly come: extending the accelerated write-off for capital investments so that we bring capital investments into Canadian industry; and offering refundable SR and ED credits so that people invest in innovation. These are measures that bring in private sector investment instead of depending on further government stimulus.

There is another thing governments could do as the economy moves perilously closer to the brink. Governments could identify regulations that are imposing unnecessary costs on industry. For example, the monopoly status of the railways imposes a hardship on many of our mills. Adjusting that status would make industry more viable and keep jobs in Canada, without costing the government a penny.

Next, if you look across the border, if you look to Europe, if you look to any industrialized economy, the question of energy policy is becoming a major determinant in competitiveness. Europe and the United States are investing massively, billions upon billions of dollars, in the development of clean energy, energy from biomass, renewable energy, and the reduction of dependence on fossil fuels.

With the world facing the threat of climate change, the countries that make this investment smartest and fastest will have a huge economic advantage in the future. We're hoping to see in the budget not just muscular spending for the transformation to green energy, but also a policy framework that would put Canada ahead of the curve in the move from fossil fuels to green energy. This is the way to be ready for tomorrow's economy.

Thank you.

[The Chair, Liberal, John McCallum]

Thank you, Mr. Lazar.

We'll now go to Mr. Boag, please.

[Peter Boag, President, Canadian Petroleum Products Institute]

Good morning.

My name is Peter Boag, and I am president of the Canadian Petroleum Products Institute. With me this morning is my colleague, Tony Macerollo, our vice-president of policy and communications.

We certainly appreciate the opportunity to appear before you today and to highlight key elements of the written brief we submitted to the committee in August, and of course to answer any questions you may have.

CPPI members operate 16 refineries across Canada, supply some 13,000 retail fuel outlets, and provide nearly 85% of Canadians' petroleum product needs. They deliver highly reliable, high-quality transportation fuel choices to Canadians, with a responsible approach to their environmental footprint. They are proud of their contribution to helping make the Canadian economy competitive.

I don't intend to take you through the details of our members' production and performance figures this morning, but those are certainly included in our brief. What I would like to do is highlight two points: one, our position on subsidies as they pertain to alternative transportation fuels; and two, the risk that all of the efforts and investment—the massive stimulus investment that my colleague, Mr. Lazar, just referred to—could be undone. The impact of those could be undone by the unintended consequences of a poorly designed and fragmented execution of a climate change GHG emissions reduction policy.

On the issue of subsidies, while we recognize that facilitating the development and deployment of alternative fuels, renewable fuels, is a priority for the government, we are concerned about the degree to which a permanent subsidy support system may be emerging for these alternative transportation fuels. Our position on subsidies is clear: we as an organization and our members do not in principle support the use of ongoing subsidies, while acknowledging that there is a place for them, in particular with respect to levelling the playing field with competitors in the United States, for example, and that some situations may indeed require subsidies. And we accept that, as in other sectors of the economy, new plant construction is sometimes backed by one-time government subsidies and/or loan guarantees or other mechanisms.

In specific reference to renewable fuels, we believe that renewable fuel users should have fair access to domestic and foreign sources of renewable fuels, and that both imports and domestic sources from every province should be treated fairly in terms of subsidies. Renewable fuel imports can be a substantial source of supply, and fair treatment will help ensure a reliable supply and strong competition to the benefit of consumers. Subsidies distort markets and can create unlevel playing fields, with detrimental impacts to market dynamics that in the end can mean higher costs to businesses and consumers.

So for these reasons, CPPI urges the finance committee to reaffirm support for the sunsetting of subsidy programs that no longer meet the tests of effectiveness and efficiency in meeting government goals. We would also urge the committee to ensure that adequate resources are allocated to scientific research that will provide a greater level of assurance that the use of renewable fuels is, on a full life-cycle basis, indeed contributing to the achievement of Canada's GHG emissions reduction goals.

With respect to the risks of a poorly designed and fragmented execution of a climate change/GHG emissions reduction policy, Canadian industry competitiveness--the overall health of our economy--will be severely impacted by GHG emissions reduction cost burdens that are not borne by market participants in other jurisdictions. Petroleum refining, like much of Canada's economy, is an energy-intensive, trade-exposed sector, and as such is vulnerable to an asymmetric approach where our competitors don't face the same GHG emissions reduction cost burden. In addition to a strong north-south trade flow in petroleum products, product imports from Europe have a strong influence on the Canadian supply.

We need a sustainable approach to energy and climate change that reduces our carbon footprint while maintaining our economic strength and social well-being. Reduction targets must be in line with other jurisdictions with which we compete, be consistent with realistic and achievable compliance pathways, and be accompanied by a carbon pricing approach offering maximum flexibility and transparency, so that the overall GHG objective can be achieved at the lowest possible cost to society. Of course, inherent in this is national coherence within Canada. A fragmented approach will unnecessarily increase the costs of addressing what is a global problem, with negative consequences to our economy.

Indeed, only this past year the National Round Table on the Environment and the Economy issued a study that suggested that the cost to Canadian society could be reduced by as much as 50% under a unified approach.

Let's be clear: whether the carbon price is $25 a tonne, $50 a tonne, $100 a tonne, or more, significant additional costs will be imposed on Canadians, Canadian businesses, and the economy in general. So CPPI members look to governments to place a high priority on avoiding costly duplication of efforts across jurisdictions.

Thank you. I look forward to your questions.

[The Chair, Liberal, John McCallum]

Thank you.

We'll now hear from the Brain Injury Association of Canada, please.

[Harry Zarins, Executive Director, Brain Injury Association of Canada]

Thank you very much, Mr. Chair and committee members. We've submitted our brief, and I simply want to highlight some of the issues there.

Since I submitted the brief on August 14, many things have happened in the world of injury prevention and brain injuries. First of all, what we're asking is that the government invest in injury prevention in order to reduce health costs and to move onto other important things, such as research in brain injury, acquired brain injury, and the effects of brain injury to the economy.

Secondly, invest in specialized housing for brain injury survivors. That will reduce the stress on social services in housing and specialized housing for people who've acquired brain injuries.

Last but not least, we're also looking at investing in a data bank so that we have a clear picture of what the issues are with regard to acquired brain injury.

Over the last six to eight years, we've had a variety of reports, the Romanow report, Ending Canada's Invisible Epidemic: A Strategy for Injury Prevention, and the Leitch Report, which was commissioned by the government, recommending a national strategy to reduce the risk of injury among Canadian children.

On August 18, the cost of preventable injuries and the economic burden was tabbed at $19.8 billion. If you look at the investment that we want to put into injury prevention, that would save a considerable amount of dollars.

In terms of injury prevention, we are also looking at a national sports helmet standard certification program and a national education program to support that. Certainly, there is no national standard against which a growing array of provincial regulations for sports helmets can be referenced. This gap in Canada's public health and safety regulatory framework is resulting in an increasing risk to Canadians, as people seek out more recreational leisure opportunities. For example, few Canadians are aware that bicycle helmets have a shelf life of five years. Many Canadians are wearing helmets that are no longer safe, due to age.

In 2005, provincial, territorial, and federal sports ministers set a target to raise the activity levels of Canadians by 10% by the year 2010. As well, the B.C. government set the target to increase physical activity by 20% by 2010. Meanwhile, associated health care costs for the treatment of preventable head injuries continue to increase. Canadian helmet standards are the solution to mitigate this unacceptable risk.

Certainly, the government must also fund a national data bank of brain injury. Presently, there is no national collection of brain injury statistics. As an example, the Lions Gate Hospital, which falls within the Whistler-Blackcomb ski resort catchment, does not record brain injuries.

Data and information management are fundamental to fully understand the scope of brain injuries. Of equal importance is coordination among hospitals and national data collection agencies and large research projects associated with brain injuries and child and youth health.

The government must also look at funding and developing a national strategy for brain injury survivors. A brain injury is a long journey from which one will not fully recover. The scope of this strategy will start with the development of a plan for the housing of brain injury survivors. Presently, children and young adults who suffer brain injuries are usually cared for by parents, often with little or no support. What happens to these children and young adults when those parents grow old or pass away? What follow-up will there be?

As our population ages, this will become more of a challenge, and it may be the beginning, if it isn't already, of another silent epidemic. Employment, homelessness, crime--and many more topics--and acquired brain injury survivors could fall into this national strategy.

Last but not least, the government must take a leadership role through Heritage Canada and Sport Canada to develop a national concussion management program that will educate parents, athletes, coaches, sports leaders, and medical personnel about the short-term and long-term effects of repetitive concussions and how concussions can be prevented through certified equipment, rule changes, and enforcement. The investment now will certainly reduce the health care costs in the future and make Canada a more healthy place.

Basically, among 29 OECD nations, Canada ranks 22nd when it comes to preventable childhood injuries and deaths. Canada ranks 21st in child well-being, including mental health, and Canada ranks 27th in childhood obesity.

Overall, Canada ranks 12th out of 21 wealthy countries in the United Nations' rankings of child well-being. The future of these children and young adults is not bright unless we prepare for the future today, unless we as Canadians develop and implement a strategy to start dealing with those presently affected by acquired brain injury, providing them with the quality of life that is escaping them and that all Canadians deserve.

Thank you very much. I look forward to your questions.

[The Chair, Liberal, John McCallum]

Thank you very much for your presentation.

We'll now go to Madame Fortier, with NSERC.

[Dr. Suzanne Fortier, President, Natural Sciences and Engineering Research Council of Canada]

Thank you.

Mr. Chair and members of the committee, thank you for giving me the opportunity to appear on behalf of NSERC, the Natural Sciences and Engineering Research Council of Canada. I am president of NSERC.

I am especially happy to be here with my colleagues from the Canadian Institutes of Health Research and the Social Sciences and Humanities Research Council of Canada.

The unprecedented crisis in the global financial system has given the world a strident wake-up call and a new understanding of the interdependence of our economies and future prosperity. Added to the need to improve Canada's record innovation, the crisis has called attention to the urgency of laying the groundwork for a research- and development-driven economic renewal.

As in many developed countries, Canada enjoys a complex, rich, and dynamic system of science and innovation. Our challenge is to fully exploit this system to give Canada a competitive advantage. First and foremost, this starts with an unfettered commitment to important principles. Striving for excellence, working as partners, making the tough choices and being accountable for them are the foundation on which we need to lay the groundwork for Canada's economic recovery.

Second, we all need to understand our place in this system, playing our distinct roles to the best of our abilities and interacting optimally with other parts of the system. Our joint appearance today illustrates our commitment to working as a system, and as the title of our brief indicates, to share in a common vision and a concerted plan to ensure that we can all reap the benefits of the investments that have been made and will continue to be made in S and T.

Finally, we need to turn this wake-up call into a call for action. Now is the time to up our game.

At NSERC, we have heard the call to action and are focusing our efforts on new initiatives that change the way we do things, with a view to being more effective in our unique roles and working in partnership with other key science and technology stakeholders.

The three parts of our brief are as follows. First, allowing people to fully realize their creative potential is paramount to an innovative society and a competitive economy. Two major studies recently confirmed that NSERC's discovery grants program is one of the most effective and productive tools in the world for promoting creativity. It is the envy of researchers the world over. Implementing the recommendations of those studies enhanced the program's competitiveness, making it more dynamic and raising the bar in research and development. By implementing these recommendations, we showed that Canadian researchers are also prepared to pick up the pace.

Since its inception 30 years ago, NSERC has had a strategy for bringing academic researchers and companies together. In today's highly competitive global marketplace, however, this strategy needs to be constantly renewed and kept alive.

Over the last months, NSERC has mobilized an advisory committee of leaders from industry, government, and academia and has held consultations across the country to help us develop a strategy for partnerships and innovation that responds to today's needs and positions NSERC to do its part to lay the groundwork for Canada's economic recovery.

The strategy, which will be launched in the very near future, aims to increase innovation by connecting industry to the world-class academic research network in a more flexible and agile way. We at NSERC are determined to extend the reach and impact of our programs so that a greater number and range of companies and researchers can benefit from them. We have had direct experience with the power and potential of such partnerships.

Let me share with you just one example.

I think I will have to skip the example, because I got the signal that my time is almost up. I'll get to the end, but we'll be happy to send you some examples in the very near future.

We also need to continue developing highly skilled people, in order to meet the demands of Canada's job market. By working with the world's top researchers and attracting the best and brightest of young Ph.D. graduates to Canada, we are giving Canada a competitive edge in the years ahead.

In all our work, NSERC is committed to act as a good steward and wisely use the resources entrusted to us to build a strong and broad base of research capacity and advance the priorities of Canadians.

Over the last decade, Canada has built an excellent and powerful research engine. Whether in sports or R and D, however, excellence alone is not sufficient to be and remain competitive. Agility in seizing strategic, exceptional opportunities is also needed. At NSERC and in our sister agencies, we are taking action to ensure that excellence and agility are a part of all we do so that we can fully contribute to laying the groundwork for a robust, renewed economy driven by R and D.

Merci beaucoup.

[The Chair, Liberal, John McCallum]

Thank you.

We'll have Mr. Gaffield from SSHRC, please.

[Dr. Chad Gaffield, President, Social Sciences and Humanities Research Council of Canada]

Good morning.

Thank you very much for inviting us. I am delighted to be here.

shoulder to shoulder, as I like to say, with my colleagues from NSERC and CIHR.

Together our agencies have prepared a brief that emphasizes the value and impact of the research excellence we foster for Canadians. Together we are working closely with universities and partners from all sectors of society, sharing a common vision and working with a concerted plan to help Canada today and build a strong future for the new era of the 21st century.

Today we are pleased to propose ways that both leverage previous federal government investments in research and research training and increase our capacity to seize the new opportunities of the 21st century. We believe such investments are a key part of Canada's economic recovery, specifically at the Social Sciences and Humanities Research Council.

As we redesign how we fund research, we see great potential to increase Canada's research excellence in three significant ways: through enhanced operational research funding, coupled with strengthened funding for indirect costs; through support for partnerships that connect the campus and the larger community to focus on priorities for Canada; and through additional investment in post-doctoral fellows to attract and retain top talent at a time of limited hiring of new professors as universities face serious financial challenges.

The recent financial crisis made it very clear to Canada that it could not rely on the same assumptions that had allowed it to excel in certain areas and succeed in others in the past. In fact, the 21st century brings with it a whole new set of complications. What influence do the new geopolitical forces have on our economy, our communities and our place in the world? How can we adapt to climate change? How can we remain commercially competitive on the world stage?

Succeeding in a complex global environment and economy and improving productivity cannot be done through technology alone. The most striking conclusion of recent studies on innovation is that increases in productivity now stem largely from improvements to business strategies, social policies, regulatory frameworks, and the strategic use of information and communications technology in an evolving digital economy.

Since the 1980s, the dominant model of innovation has evolved from the assumption of a linear transfer from campus to business of technologies and products to a multidimensional model that includes researchers, entrepreneurs, community organizations, and many others, especially the consumers and users of both goods and services.

Juste pour reprendre un petit peu, the new 21st century model of innovation places people at centre stage and thus emphasizes the key contributions of research and research training in the social sciences and humanities. A recent study based on Statistics Canada data states that SSHRC research influences close to $390 billion of economic activity and accounts for 76% of total employment and 69% of Canada's economic output.

In this new context, students, scholars, and research partners in the social sciences and humanities play an increasingly important role in building Canada's competitive advantage. Our research contributions address the most pressing economic, cultural, and social issues in the headlines today, as well as those that may appear tomorrow. Our focus on advancing knowledge and understanding about people, their ideas, and behaviour helps us understand and give meaning and value to technologies and discoveries in the natural and health sciences. Not surprisingly, students in the social sciences and humanities now represent more than 60% of all university students in Canada.

Take, for example, Open Text, a Canadian IT company recently ranked by Fortune magazine as one of the world's fastest growing companies. Its IT chief strategy officer, Tom Jenkins, estimates that graduates in the social sciences and humanities represent two-thirds of the labour force at Open Text. Why? Because such companies must focus on global engagement in a customer-driven marketplace to be successful. They recruit graduates from the social sciences and humanities for their creativity, global knowledge, and ability to manage and drive change. Such companies rely on our research in design, marketing, and other fields that complement their efforts in technological development.

In other words, Mr. Chairman, the social sciences and humanities are helping to build a strong culture of collaboration and a robust culture of innovation among the funding agencies, across the research community, and across the private, public, and not-for-profit sectors domestically and internationally to bolster economic recovery and promote a prosperous future for Canada in the 21st-century world.

In closing, I would like to thank you, Mr. Chair, as well as the committee members, for your efforts to address the needs of Canadians. I also want to say that you have the support of the federal research-funding agencies as you endeavour to restore economic growth and ensure Canada's prosperous place in the world.

[The Chair, Liberal, John McCallum]

Merci beaucoup.

Suivant we will have CIHR. Ms. Fitzgerald, please.

[Christine Fitzgerald, Executive Vice-President, Canadian Institutes of Health Research]

Thank you, Mr. Chair, and honourable members of the committee.

My name is Christine Fitzgerald, and I'm the executive vice-president of the Canadian Institutes of Health Research. You just heard from Mr. Zarins from the Brain Injury Association, and just using an example right off the bat, it was CIHR that funded research that resulted in changes in regulation for hockey helmets in the province of Ontario.

It's a privilege for me to join my colleagues from NSERC and SSHRC to speak about the importance of investing in research. I'm here today to provide the view from health research. I will address three questions. Let me start with the first question.

Why does health research matter for Canada? Canada's future success depends on the health and well-being of its citizens. Canadians care about their health and that of their children, families, and communities. Everybody in this room today probably knows someone who has to deal every day with the devastation of living with cancer, diabetes, Alzheimer's, depression, and cardiovascular disease. Canadians also understand the value of health research and how it contributes to the future quality and sustainability of our health care system.

The Canadian Institutes of Health Research receive the lion's share of public funding destined for health research and training in the country. Our annual budget is $986 million, in other words, $27 for every Canadian. CIHR uses that money to support more than 13,000 established researchers and trainees.

Of every dollar we spend, 94% goes directly to health research conducted in cities like Saskatoon, Edmonton, Calgary, Montreal, Toronto, and Hamilton. This research benefits not only our health and health care system, but also contributes to the future economic prosperity of our country. The equation is simple: knowledge drives innovation; innovation drives productivity; productivity drives economic growth.

Since 2000, CIHR has leveraged close to $800 million in additional funding and has contributed to over 150 spinoff companies. Spinoff companies and leveraged funding are not the full measure of success. Studies have consistently shown a significant economic return on investment from health research, with the most recent study by RAND Europe showing a return of close to 40%.

And to those who think we aren't investing enough or too much, I quote a famous philanthropist who once said: “If you think research is expensive, try disease.”

My second question is, why must we build on our strengths? Health research is one of the four top clusters of internationally competitive science and technology strengths for Canada, as confirmed by the Council of Canadian Academies. The others are the natural resource sector, information and communications technologies, and environmental sciences. Within health research, the council recognizes Canada's exceptional strengths in neurosciences, regenerative medicine, aging, cancer, and clinical research. For example, 70% of the world's top cancer stem cell researchers are in Canada and California. That's why we entered into a collaborative research agreement with California in 2008.

Dr. Alain Beaudet, CIHR's president, is in India this week meeting with six of the world's foremost health research funders, who have formed a landmark alliance against chronic diseases like heart disease and strokes, cancer, and type 2 diabetes. Unless we step up our efforts, 388 million people worldwide will die of one of these diseases within the next decade.

Let me end with my last question. Why is doing well just not good enough? It's not easy to get a CIHR grant; it's very competitive. Only one in five health researchers is successful. Yet while the domestic competition becomes stiffer for Canadians, the global competition for talent is intensifying. Countries such as Sweden, the U.S., Australia, and the U.K. have stepped up their investments in health research. Why? It's simple. Because the social and economic benefits are significant.

In recent budgets, the Government of Canada has invested in research infrastructure in universities, colleges, and teaching hospitals. The government has also invested in highly qualified personnel through programs like the CRC and the Vanier scholarships. Over the last decade, the proportion of federal funding for people in infrastructure has increased, but the proportion for operational costs is actually going down. CIHR, NSERC, and SSHRC fund the operational costs of doing research.

[The Chair, Liberal, John McCallum]

Ms. Fitzgerald, could you wrap up briefly, please?

[Christine Fitzgerald]

Mr. Chair, last week Canada hosted 60 former Gairdner prize winners in health research from around the world, 22 of whom went on to win Nobel prizes. These giants of health research met with hundreds of high school students across the country. It was the largest gathering of international health research talent in Canadian history. Four of these Nobel laureates came to Ottawa and were recognized in the House, which you may remember. We asked these giants for advice on what Canada needed to do over the next five years to bring home a Nobel Prize.

[The Chair, Liberal, John McCallum]

Ms. Fitzgerald, we're way over time here. Could you wrap up very briefly?

[Christine Fitzgerald]

Their advice was simple: don't stop, keep going.

[Some hon. members]

Oh, oh!

[Christine Fitzgerald]

Canada needs to continue building on expanding its clusters of research excellence.

Now I reach my very last sentence!

Canada needs to increase its recruitment and training of the best talent and to support it at levels that are internationally competitive.

Thank you.

[The Chair, Liberal, John McCallum]

Thank you very much.

We'll now go to the Canadian Land Trust Alliance, please.

[Dave Walker, Executive Director, Canadian Land Trust Alliance]

My name is Dave Walker. I'm the executive director of the Canadian Land Trust Alliance.

First I'd like to thank the members of the committee for this opportunity to present.

The Canadian Land Trust Alliance represents 47 land trusts across Canada. These are charitable organizations that can be found in every community across Canada. Their main objective is to acquire property by donation or purchase. Most of these lands are ecological lands. We also have land trusts like the Bruce Trail working to acquire recreational trails. We also have farm land trusts, and we have built heritage land trusts.

Together we have 305,000 members and supporters. We have 26,000 volunteers working for us who are supported by over 800 staff among our members. Collectively, we have preserved over 3.6 million acres of land for the benefit of Canada and its residents.

One of the major programs we work under is the ecological gifts program, a program set up and administered by Environment Canada. The purpose of this program is to enable citizens and private landowners in Canada to donate their properties to help Canada achieve its goals in biodiversity and species-at-risk habitat.

Currently the program allows our donors to carry their tax credits forward for five years. We're finding that many of our donors are rural landowners who don't have the income to use their total tax credit in the five years. So we would respectfully ask the government to consider extending this to 10 years. There will be no additional cost to the government from this. As a matter of fact, there could be a cost saving because in the current situation we have landowners dividing up their land donations or land parcels and donating them every six years so they can re-trigger their tax credits.

I would like to add that in the U.S. right now they are about to make permanent their conservation tax law, which will extend the tax credit to 15 years. They have the majority of members of both the Senate and the House co-sponsoring that bill.

The second item that would be of great help concerns a group of land trusts in Canada that is working with U.S. supporters of land trusts and has formed the American Friends of Canadian Land Trusts. While we are currently able to accept donations of cash from American residents in support of the Canadian land trusts movement, many of our key ecological properties across Canada are owned by U.S. residents. They have owned these lands for several generations. A number of them have agreed to donate the properties, but we need to have the American Friends of Canadian Land Trusts added to section 3504 of the income tax regulations, thereby giving them prescribed donee status. That would allow these landowners to elect to have their land valued at closer to their cost base, which would eliminate the money owing on the capital gains tax. Right now, Canadian residents, through the ecological gifts program, do not pay capital gains on their donations of ecological lands. Unfortunately, our U.S. friends do pay that tax when they want to donate their land back to Canada. So that change would be a help.

Third, we do support Imagine Canada's recommendation to eliminate the disbursement quota governing charities under the Income Tax Act. We agree with Imagine Canada's reason and have one additional reason. When land trusts take these lands, they are promising their community and the ecological gifts program that they will manage these lands in perpetuity. We have to build what we call stewardship funds so that we have the money to manage these lands in perpetuity, but with the disbursement quota in place, that is sometimes hard to do.

Thank you for your time.

[The Chair, Liberal, John McCallum]

Thank you very much, Mr. Walker.

Our final presenter is Mr. Halpin.

[Peter Halpin, Executive Director, Association of Atlantic Universities]

Good morning, Mr. Chair and committee members.

My name is Peter Halpin. I'm the executive director of the Association of Atlantic Universities, based in Halifax, Nova Scotia.

The AAU is an advocacy organization that represents the interests of universities across our region, thereby ensuring public visibility of the important role they play in preparing future leaders of our communities in path-breaking research and innovation, and contributing to the economic prosperity of life in Atlantic Canada.

The AAU's pre-budget submission to this committee is entitled “Solutions for Atlantic Canada's Future”.

The AAU's vision for Atlantic Canada is closely aligned with the core principles of Advantage Canada, which state that:

We can and must do more to turn ideas into innovations that provide solutions to environmental, health and other important social challenges, and to improve our economic competitiveness.

Since 1997, successive governments have made substantial investment in Atlantic Canada. Perhaps most significant has been the Atlantic Innovation Fund, the AIF. Launched in 2001, the AIF is highly complementary to the core principles of Advantage Canada: investing for sustainable growth; and strategically supporting the three pillars of the national science and technology strategy—the entrepreneurial, knowledge, and people advantages.

Much has been achieved in Atlantic Canada since the creation of the AIF. It provides a very strong foundation that can be built upon to further improve Atlantic Canada's productivity and prosperity.

The AAU recommends that the federal government invest $350 million over five years in support of a university-led initiative called “Solutions for Atlantic Canada's Future”. That proposed program is designed to successfully advance the core principles of Advantage Canada in Atlantic Canada. It will further improve regional partnerships, productivity, and prosperity.

The AAU's recommendation is comprised of six integrated program components that will ultimately advance Advantage Canada.

Our universities have responsibility to improve our region and the lives of the people who live there. That is precisely why our universities are embarking on this bold new strategy to create a brighter, more prosperous future for Atlantic Canada. Our approach is driven by the strength of ideas found in our universities and our ability to transform those ideas into economic and social value, which will determine Atlantic Canada's future prosperity. Our initiative, “Solutions for Atlantic Canada's Future”, aligns with the goals and priorities of the region's governments, business sectors, and communities. Our universities and their partners will play a powerful role in creating an innovative, successful economy and improved quality of life.

Times does not allow me to review all aspects of “Solutions for Atlantic Canada's Future”; however, I would like to draw your attention to the important role our universities play in Atlantic Canada as talent magnets.

By attracting thousands of new students, academics, and research scholars to the region, our universities play a vital role in Atlantic Canada's population strategy. This academic year, our universities have enrolled over 7,000 international students from over 165 countries worldwide. That is an astonishing 16.5% increase over the previous year. We also know that more than 30% of those international students will apply for permanent resident status in Canada, either during their studies or immediately following graduation. That is why many in our region agree that our universities are probably the single most effective immigration policy instrument for the region.

All of the details of our proposal are in the submission, and I hope you may have the opportunity to review them.

We are working right now on developing a process management and performance measures model for each of those proposed programs, and we would like to share that with the committee in the near future.

Again, thank you for providing me with the opportunity to present our submission to you this morning. I look forward to any questions you may have.

Thank you.

[The Chair, Liberal, John McCallum]

Thank you very much, Mr. Halpin. We appreciate your presentation.

We'll go to questions from members. We're starting with Mr. McKay, please.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you, Chair.

And thank you, witnesses, for the very good presentations by each and every one of you. I'm not going to get to each and every one of you, so I will try to narrow it to three people.

We always have a good presentation by you, Mr. Lazar. You've been many times to this committee and you are always thoughtful and provocative.

I take your overall point that government stimulus is in some respects propping up the Canadian economy at this particular point, although the Parliamentary Budget Officer is trying to figure out exactly what it's doing. That can only run on for so long and then it has to be private stimulus, if you will; the market has to take over.

I buy that basic point. Once that point occurs, which I would say has to be already occurring, we have to get to the game now. In other words, as Wayne Gretzky famously said, it's not where the puck is, it's where the puck is going to be, which I think is the point of your presentation.

Your first point is that the Bank of Canada take action to mitigate the volatility and rise of the Canadian dollar. The Bank of Canada has precious little money to play with. How do you propose doing that?

[Avrim Lazar]

What we've been saying to Mr. Carney is, use what you've got. In the past the attitude and the policy framework have been extremely conservative. The banks should think only about controlling inflation.

We certainly support the concept that the two dollars should be allowed to float to reflect the relative performance of the two economies. That being said, there's a range within which that would happen, and we're well outside of that range when speculation drives up the dollar. So we haven't--