Finance Committee on Feb. 23rd, 2009

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

We have chosen to listen to and follow the recommendations of the expert panel on international taxation, chaired by Peter Godsoe, which recommended that, in this time of economic crisis, this rule was hampering Canadian businesses investing abroad. We took their advice.

[Thomas Mulcair, NDP, Outremont, QC]

In closing, Mr. Chairman, in both cases I'd like to ask this question. I was the Minister of the Environment for several years in Quebec and I never got one single case of this. I often heard this sort of anecdote that environmental rules were holding up big projects and I heard this type of comparison of this small thing to this big thing. That's never been the case.

There is not a single case that he can point to. If he could, he would have given us one. I'd like to give him the opportunity again. Can he give us a single case of an infrastructure project that was held up or blocked for the reasons he evokes, a single case of a Canadian company that was at a competitive disadvantage through the fact that we're not allowing them to use tax havens the way he's going to be allowing here? Is there a single case?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

There are a lot of examples of the duplication of environmental assessments between the Government of Canada and the provinces and territories. I'm surprised you're not familiar with that.

[Thomas Mulcair, NDP, Outremont, QC]

There isn't one and you know it.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Mulcair.

We'll go now to Mr. Kramp. You have seven minutes.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you, Chair.

Welcome, Minister.

I'm sure I could probably provide the opposition member with several hundred examples simply from my own riding, from the municipalities that I talk to. I'd certainly be willing to sit down and give him direct anecdotal evidence of such, and I know most members around this table are probably experiencing something similar.

However, Minister, there isn't anybody who doesn't recognize that we're in a global economic malaise and that it's certainly going to require a concentrated global response and, quite frankly, an unprecedented level of cooperation, both internationally and domestically. As you have mentioned, Canada has been participating in the various regulatory bodies, and certainly you personally, as our finance minister, have been, whether it's the G7 or the G20. Through budget 2009 and this bill, you've intimated that we have met and will meet our international stimulus commitment. We've actually exceeded, I understand, the suggested stimulus levels of the IMF.

What I think most people recognize, and what I'm more familiar with, of course, as a member in this country, is that we need a coordinated approach domestically--I work with my provincial colleagues on a routine daily basis--so we must have the provinces join in as part of the solution. In regard to your discussions with our provincial counterparts, how confident are you that they are willing to step up to the plate and help provide a coordinated stimulus effort?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Thank you for the question, and as well, may I compliment you on that lovely tie you're wearing?

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

It wouldn't be green, would it?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Save it for March 17, which isn't that far away.

I mean this sincerely. I'm quite encouraged by the acknowledgement by the provinces and the territories, not only by the ministers of finance but by the leaders when they met in January in Ottawa with the Prime Minister, of the seriousness of the challenge we're facing. We need the provinces and territories to work with us on the infrastructure front because that's where the leverage comes from. So in this budget, for example, the leverage is about 1.5%; with the provinces it's 1.9% in the next fiscal year, and then in 2010, 1.1% federal, and then a total of 1.4%. That gives us, in cooperation with the provinces, 3.2% of GDP by way of stimulus over the course of the next two years. This is well above our commitment at the G20 level, and we want to keep our commitments because we want to show leadership again in the G20. Stimulus in one country, because we're all trading countries, produces more stimulus and complements the stimulus in another country.

So I'm very encouraged by the cooperative and collaborative view that the provinces and territories have taken. We are talking to each other about budget processes. As you know, the Province of British Columbia went ahead with its budget last week. The British Columbia budget contains substantial infrastructure stimulus. There are more budgets to come before too long. It's important for all Canadians that we work together.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you.

Minister, I've seen a number of companies, even in my riding—companies like Procter & Gamble, Kellogg's—that in past budgets, and certainly in Bill C-10 now, have been eagerly anticipating and will use the accelerated capital cost writeoff that has been presented in the budget and is certainly intended to be of more assistance. But in supporting the whole global recovery and encouraging our trade and the open markets, we see that Bill C-10 really does eliminate now a significant number of tariffs on machinery and equipment. Quite frankly, how will this measure help facilitate the opening of global markets while certainly helping the stimulus in our economy in general?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Well, we're getting rid of some tariffs on machinery and processing equipment. This will help create jobs. It helps make productivity gains more achievable for Canadian businesses that import a lot of machinery and equipment, whether it's from Europe or from the United States.

It also shows leadership. We have a protectionism issue now around the world. There's a great temptation for politicians to act in a protectionist way because it's quickly popular in the short term—regrettable, ill-advised, but quickly popular--to say only buy goods in one's own country, for example. We've had that discussion, obviously, with our American neighbours, given the stimulus package that's been brought forth in the United States, making clear that our international agreements will be honoured and making sure that everyone is sensitive to the inadvisability of protectionist measures. We had these discussions at some length at the G7 finance ministers' meeting in Rome a little over a week ago as well.

Canada, as with our banking system, with this measure on reducing tariffs again shows leadership. We show that not only do we believe in open markets and that we are against protectionism, but we are in fact taking steps to reduce tariffs now and to eliminate tariffs at a time when some countries are inclined toward protectionist measures.

[The Chair, Conservative, James Rajotte]

You have 30 seconds.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Well, there's one story that I believe is an unbelievable success story. My daughter happens to be in the financial investment business, and I've been talking to a number of our local financial advisors, and everybody is telling me that the tax-free savings account has been an absolute boon. What kind of feedback are you getting across the country?

[An hon. member]

Oh, come on.

[An hon. member]

Good question.

[The Chair, Conservative, James Rajotte]

Order.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Thank you, Chair, for bringing order to these proceedings.

The feedback has been superlative.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Minister.

We'll go now to Mr. McKay.

Mr. McKay, you have five minutes.

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

Thank you, Chair, and thank you, Mr. Minister.

One of the reasons or pretty well the only reason the government enjoys provisional support of the official opposition is that we agree that Canada needs fiscal stimulus, monetary stimulus, and your budget provides about $6 billion in fiscal stimulus. The parliamentary budget officer said at these hearings a couple of weeks ago that the lapse rate of the Government of Canada in terms of last year's fiscal infrastructure projects was about 50%. In other words, about 50% of the money went out the door, and 50% simply got rolled back into the program.

It's not very encouraging, Minister, so what assurances can you provide this committee that in fact the speed, which is the basis of your argument to pass this budget, will in fact happen this time when it didn't happen last year?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

We are in an economic crisis, and so is the world. We have made commitments to our colleagues in the G20 that we will do this. Canada keeps its commitments. We are taking every measure possible within the Government of Canada to expedite delivery of the various forms of stimuli. That includes moving forward with more expedited processes within government itself, within Treasury Board, within the machinery of government items. That includes seeking that this bill be expedited, of course, because of the spending that's in this bill and creating a new vote so that we can get more money out the door in advance of supplementary estimates.

It will bore a lot of Canadians if we get into talking about estimates, and I won't get into it, but you've been here a number of years and you know that the estimates process can take a lot of time. So we're trying to move forward, I hope, in an intelligent way to be both responsive in terms of getting the money out the door to the benefit of Canadians and responsible. The President of the Treasury Board and I have met with the Auditor General, and we talked today about meeting with the parliamentary budget officer as well, to make sure they're fully informed about what we're trying to accomplish here for Canadians--not to act in an irresponsible manner, of course, but that extraordinary times require extraordinary measures for the benefit of our country.

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

How will we measure your success, though, sitting here at this time next year? Will be it be 50%, 60%, or 100%? Can you give Canadians assurance? You've actually put in your budget a use-it-or-lose-it provision. So what will be the measure of success for this government?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

The measure of success will be to have properly executed the economic action plan that is in the budget, and that is a widespread plan. As you know, it has many aspects and it is not without its challenges, but in our view, it's what the country needs.

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

Secondly, anecdotally and factually, you hear a great deal about restrictions in credit and people having a great deal of difficulty. In fact, in this morning's paper there's a story about NOVA trying to find $200 million and basically being thrown to vulture funds because it can't get extensions to its lines of credit.

The government has done some things to facilitate extensions of credit. Are there plans for the Government of Canada to actually bypass chartered banks and get directly into, in certain selective instances, extensions of credit?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

That possibility is being created by giving domestic financing authority to EDC, for example, and they will operate in higher dollar amounts than BDC. I expect the banks in Canada to work with the Government of Canada to ensure adequate access to credit. I expect the banks to work in cooperation with EDC and BDC and the other crown financial corporations, just as CMHC has been assisting with providing the service of acquiring insured residential mortgages over the past number of months.

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

Thank you.