Finance Committee on Sept. 27th, 2010

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

That's a good answer. Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Paillé, you have five minutes.

[Daniel Paillé, Bloc, Hochelaga, QC]

We will not start a debate on harmonization, even though we might enjoy that. I just wanted to mention to my colleague Pacetti the case of the Levinoff-Colbex slaughterhouse. There was much talk about that case in a document submitted last year by the Bloc Québécois. It would be my pleasure to provide you with a copy.

Ms. Kerner, once again, what you said made a strong impression on me, especially because when I arrived in British Columbia last night, I went to see the people from Insite. They are doing some pretty impressive things.

Ms. Thomas, regarding exploration expenses, you seem to be saying that—and I would like you to confirm or correct my interpretation—because of administrative and legal fees, and probably also carrying charges, you would not be able to issue flow-through shares.

What portion of the shares or of the revenues, if eligible, from the issuing of flow-through shares would not be used for exploration? If you say that it is preventing you from issuing flow-through shares, it must be rather substantial.

[Eira Thomas]

To be clear, what we're speaking about here is the smaller, junior to medium-sized companies. We're not talking about 50% of the total revenue that would be generated from flow-through shares. We're talking about making 10% to 15% allowable for other expenses. Specifically, while I did talk about legal and administrative, the one area we're really focusing on here is consultation. The duty of the crown is to consult with aboriginal communities prior to initiating exploration programs. That has been passed on to the explorers. Particularly for a prospector or an individual travelling to communities and conducting exploration and consultation programs, that is expensive. So what we would really like to see is that some of those costs would be eligible and renunciated under the flow-through regime.

Laureen, would you have anything to add to that?

[Laureen Whyte, Vice-President, Prospectors and Developers Association of Canada]

Through the Canadian Mineral Industry Federation we've actually undertaken to try to do a bit of an analysis across the country to clarify what, as a matter of crown policy, is delegated in fact to prospectors and developers as they are doing their work on the ground. It varies from jurisdiction to jurisdiction, but the part right now that we cannot renunciate is the part that's done through the head office. Typically that's where you engage consultants and get the expertise that you need, which can actually be huge if you take into account the capacity issues you are dealing with on the ground. In other words, if a first nation does not have a staff that's capable of taking on some of the work that needs to be done, you have to fund it. You have to acquire the resources for them to engage with you.

[Daniel Paillé, Bloc, Hochelaga, QC]

My last question is for Ms. Wallace.

You seem to focus a lot on information technology, but the number of external consultants in communications and in finance, for instance, is growing. I don't know if you're trying to emphasize that. At first, you focused on information technologies, but don't you think you should be looking at other aspects as well?

[Loretta Wallace]

Yes, you're absolutely correct. In fact, while I'm here representing the computer consultants association, there are many people in this same situation in engineering, accounting, finance. It's consultants across all industries and all sectors. That's why we believe this is such an important topic.

Also, I didn't fully answer Mr. Hiebert's question, and I also wanted to address that it isn't just the reporting of income. It's the whole business expenses that are being somewhat questioned for these consultants in their situations as well. It's an overall view that we would propose to be revisited.

[Daniel Paillé, Bloc, Hochelaga, QC]

In closing, I would just like to say, to contradict Mr. Pacetti's comment, that since you are our first witnesses, we will not forget about you. However, he is not here to hear this.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Paillé.

Ms. McLeod, for five minutes.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Mr. Chair.

Certainly as a representative of Kamloops--Thompson—Cariboo, where the cattle industry is absolutely critical and where for a number of years what they are recouping in terms of their cattle is less than their actual cost, as I look at your recommendations, I wonder if you could quickly go through them one by one. It sounds like you're just asking to maintain the support where you're at, not asking for additional support. Could you just quickly clarify each one with regard to the federal government, the budget and the support?

[Judith Guichon]

I think that's a pretty fair comment, Cathy. Thank you.

I'd like to direct you to the Growing Forward program particularly. The present Growing Forward recommendation between the federal and provincial governments will expire in 2013, so right now what we're talking about is thinking about maintaining the present and thinking a lot about how the future program will be implemented. But our problem here in B.C. under the present program is we've had difficulty accessing any of the federal funds for our province. Alberta and Saskatchewan last year accessed funds under the program for drought. Unfortunately, in B.C., because agriculture is not as high a priority as mining and forestry and the beetles, we have to match the funds if we're going to access. We have a hard time getting access because we can't convince our province that we desperately need these federal funds.

Kevin, would you like to build on that a little?

[Kevin Boon]

That would be the main thing: accessibility and some of the guidelines put around that for us.

The AgriFlexibility that we did manage to get is greatly appreciated. The part we appreciate most about the Growing Forward program is the ability to fix what is there and put the money on the ground in a way that will create our sustainability in the future. I think that's part of the really good part.

One of the things that needs to be addressed by 2013, though, is the business risk management programs. Built the way they are, what happens as we go forward in multiple years of downturn is that the margins that are created make it so that they don't function well either. They don't give the money at a period of time when that rancher's or farmer's agriculture is down and out, because the margins decrease, making it less available, so they are basically working on poverty to build on poverty.

One of the other recommendations that Judy ran out of time a little bit on, too, is very important. It's CFIA. The CFIA is our Canadian Food Inspection Agency and it's a huge part of producing cattle and food in British Columbia and Canada. One of the problems we foresee with it is that basically there are three agencies in one. You have health inspection on your cattle, you have food inspection after it's processed, and then CFIA is also very involved in trade. So what happens is that their cup runneth over with extra work to do.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

So perhaps to summarize, then, it's some rejigging but also making sure that support continues. That seems to be the bottom line.

[Kevin Boon]

Exactly, and with CFIA, we'd say a major revamp of the organization fundamentally.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Because I have the opportunity to be vice-chair of the committee for status of women, I actually wanted to pick up on some of the comments that were made earlier.

[The Chair, Conservative, James Rajotte]

You have one minute.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Certainly I'm very proud of the work we're doing, and I'm very proud that we've increased funding to that particular organization to the highest level it's ever been at and have really.... I appreciate that advocacy has a role, but also to really have on-the-ground programs that are supporting women in these communities.... So again, I've been very proud of a lot of the work we've done.

I guess where I want to focus in here--and I certainly appreciate your comments--is that certainly over the last year in my riding and ridings throughout the country, it's not just Status of Women Canada providing programs, but through HRSDC we have partnered in so many different areas. So when I hear the words “national strategy”, what I know is that I see that the communities have answers. So when we're providing to the homeless partnering strategy just the support for those groups in our communities to--

[The Chair, Conservative, James Rajotte]

Ms. McLeod, we're over time, so just put the question and we'll--

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Anyway, I just want you to briefly talk about the community base and the government really just providing a hand up for groups that are really doing the important work, because I think that's probably the best use of dollars we have.

[Hilla Kerner]

I'm proud to say that our rape crisis centre has no government money, provincial or municipal, in what we offer to women, because the community is willing to support us in a variety of ways. Also, my specific collective has been fortunate to rely a lot on volunteer commitments, both of some of our paid staff.... We all give way beyond the time that we are paid for and we have a major force of volunteers who sustain the work of the organization.

So it's true: the community has a big role. But there are some things that not only the government can pay for; I think there are some things that the government should pay for. The fact that there is no funding for national coordination of all the rape crisis centres in Canada is a problem. It undermines, segregates, and individualizes the work that each rape crisis centre does instead of having them build on and benefit from each other's work.

So I do think that it has been important and I have a lot of respect for the many services that Status of Women Canada rightfully funds. I think it has a huge importance, but it cannot come in and replace advocacy, which means changing the world and making it a better place for women.

[The Chair, Conservative, James Rajotte]

Thank you.

We have about five minutes left. The next round is a Liberal round. Mr. Pacetti doesn't have any further questions. The round after that is a Conservative round, but because I did cut off the answer to Mr. Davies' question and it was a very good question, Mr. Gratton, did you want to finish your answer to his question?

[Pierre Gratton]

Sure. I guess I took the bait and focused on HST.

To come back to what was buried in his question, there are a couple of key points worth mentioning. First of all, concerning the flow-through credit program, it's the small exploration companies that can take advantage of that, not big business. Those that don't have operating capital--so we're talking about companies with a handful of employees--can take advantage of that. That's one point worth mentioning.

As for deep drilling, it's a very high-risk and very expensive undertaking, and the tax credit would incent the kind of activity that companies might otherwise not both bother with because it's so expensive and so high-risk. Yet the return--having an existing mine site last another 25 years because of a new discovery--is not just to the company but to all Canadians. It means a lot more activity in the region. Jobs continue. Revenues to government continue. So that's the rationale for both of those.

[The Chair, Conservative, James Rajotte]

Do you want to address that?

[Eira Thomas]

I just wanted to make one additional comment that in general a tax credit is not a tax break. It's a tax incentive for investors. It's a tax credit for investors in the junior sector, and that is an important distinction, because these companies are undertaking a very high-risk activity in remote regions. It is very expensive and it has a long time horizon.

Interestingly, Canada's mineral reserves have been on a 25-year decline, so it is a really important way of addressing that and ensuring that we can continue to be dominant in the world in our mineral exploration and development.

[Don Davies, NDP, Vancouver Kingsway, BC]

Can I have a quick follow-up question to clarify?