Finance Committee on Oct. 20th, 2010

[The Chair, Conservative, James Rajotte]

I call to order the 36th meeting of the Standing Committee on Finance. We are continuing our discussions with regard to the pre-budget consultations for the 2011 budget. We have for the first hour this afternoon six organizations. I want to thank you all for coming here to present to us today.

First of all, we have Genome Prairie. Then we have the Cement Association of Canada, Campus Stores Canada, the Association of International Automobile Manufacturers of Canada, the Assembly of First Nations, and the Canadian Federation of Students. You will each have five minutes maximum for an opening statement, and then we'll proceed to questions from members.

We'll start with Genome Prairie.

[Dr. Wilfred Keller, President and Chief Executive Officer, Genome Prairie]

Thank you very much, and thank you for giving us the opportunity to present.

My name is Wilf Keller. I serve as president and CEO of Genome Prairie. I'm accompanied by Patrick Pitka, our chief financial officer. I'd also like to point out that Dale Patterson, the vice-president for government and external relations at Genome Canada, is here in the audience today. I'll make a few opening remarks, and then Pat will cover off the recommendations.

Genome Prairie is one of six independent incorporated centres of work under the agreement with Genome Canada, our federal parental entity. I would point out at this point that this is about biosciences and the strategic position of biosciences and the outcome of bioscience research, particularly genomics research, a critical driver in the biosciences that's going to have a highly significant impact going into the future in the case of health, agrifood, forestry, fisheries, environment, and so forth. We see this as a strategic area.

Genome Prairie covers the provinces of Manitoba and Saskatchewan, as far as our regional activities are concerned. We have three major roles.

Firstly, we organize and manage genomics projects funded by Genome Canada, and we try to build the best case for doing this research in Manitoba and Saskatchewan, the prairie region. To date, we have managed over the last decade more than $180 million of these large-scale projects, covering crops—for example, canola, a $14 billion industry primarily driven through genetic research, and we intend to build on that—human health, animal health, and the environment.

Secondly, we want to build a strong regional base by working with the provinces and the regional centres, Western Economic Diversification, and regional producers, groups, and industries, and we want to be sure that regional priorities are met through the work that we promote.

Thirdly, we're very interested in outreach, through mentoring students to be top candidates, for example, in the Sanofi-Aventis BioTalent Challenge. One of our regional students was a national winner last year.

I specifically want to address the whole issue of innovation. There's a lot of discussion about this. There's a major R and D review that's been commissioned recently. The national coalition for innovation has put out a report. We think it's critical that the work that we do and the knowledge that we generate becomes translated into real results, into commercial activity. We have formulated our recommendations around the whole issue of helping the industries, the entrepreneurs, and the companies in our area to be competitive, to take advantage of the new ideas that are out there, and to in fact be innovative.

I'm going to pass this over to Mr. Pitka to provide those recommendations that we see as critical for our organization.

[The Chair, Conservative, James Rajotte]

You have two minutes.

[Patrick Pitka, Chief Financial Officer, Genome Prairie]

Over the past 10 years, Canada has become a recognized player in genomics research, thanks to the support of the federal government, Genome Canada, and the regions.

We must continue to encourage funding of research at a national level and work harder to commercialize our research innovation to provide products and services of social and economic value.

To assist with this, it is recommended that additional funding be allocated to Western Economic Diversification to fund and co-fund large research projects, commercialization of projects, and to encourage product development and leveraging with industry partners.

It is recognized that encouraging research organizations to work with industry at an early stage is key to leveraging funds and expediting product development. It is also important to encourage not-for-profit organizations to work more closely with industry partners nearer to the commercialization stage. Therefore, we recommend that the scientific research and experimental development or SR and ED credits be extended to not-for-profit research organizations, and that the credits be refundable. If refundable SR and ED credits were made available to not-for-profit research organizations, the bench-to-shelf phase of industrial innovation would be significantly strengthened. In addition, we also recommend increased funding for the industrial research assistance program, IRAP, to support innovative Canadian start-up companies.

Bioscience and genomics research can offer solutions by helping the global food shortage. By developing new crops and seed varieties, we can work toward more productive and nutritious crops to feed the world more effectively in climate conditions that are changing. From developing canola with higher oil content, to researching ways to make flax a more effective vehicle for omega delivery, genomics has a huge role to play.

Is that it?

[The Chair, Conservative, James Rajotte]

hank you very much for your opening statement.

We'll now go to the Cement Association of Canada.

[Michael McSweeney, President and Chief Executive Officer, Cement Association of Canada]

Good afternoon, Mr. Chair and members of the committee.

My name is Michael McSweeney and I am the president of the Cement Association of Canada.

You'll know most of the names of the cement companies around Canada. They're Cal Portland, Ciment Quebec, Essroc Italcementi, Federal White, Holcim Canada, Lafarge , Lehigh Hanson, and St. Marys Cement. As most of you will know, cement is the fine grey powder that, when mixed with crushed stone, sand, and water, makes concrete. Cement is the glue that holds that concrete together.

We want cement in Canada to be seen as a strategic commodity and a critical component to our nation's infrastructure. Cement really does underpin the construction industry across Canada as it is the key ingredient in concrete. Even though the economy has been slowly recovering, like most others, our industry has been significantly impacted by the global economic recession, with reduced demand for cement and concrete across Canada and the United States, which is our primary export market. For the first time in decades our industry has experienced layoffs, prolonged shutdowns, both of which affect all Canadians and the ability to complete infrastructure projects.

Our time is short here today, so without a doubt the two issues I want to talk about are the economy and the environment. With respect to measures to support the recovering economy, we do applaud the government and all members of Parliament for introducing stimulus measures that are renewing Canadian infrastructure. We recognize the challenges created in implementing the stimulus package and accelerating investments and we believe there is a need to encourage government at all levels to maintain the pace of infrastructure investment and help ease the infrastructure deficit, which we all know is huge across this country.

When it comes to the issue of infrastructure spending in Canada, we feel that the debate has largely been focused on how fast the money gets spent or the deadline for the money being spent, but we urge parliamentarians to play more of a role in how well taxpayer dollars are spent.

Our primary message is this. Whether using federal government money or partnering with provinces and municipalities, we're asking you to focus on the concept of total cost of ownership. The motto should never be, “The lowest cost wins”; the motto should be, “Build it once, build it right, build it to last”. In this way, we will be ensuring that new projects contribute to achieving Canada's sustainable development objectives.

In order to be doing this, the government needs to be promoting issues like enhanced energy efficiency, project life-cycle costing, and reducing GHGs. And if I might, I will make a plug for one of our industry solutions, Portland limestone cement, which has been approved by the CSA and is about to be referenced in the National Building Code. We believe the federal government should mandate the use of this new and equivalent cement as a substitute for general use cement. In so doing, the federal government can reduce its carbon footprint by up to 10%.

On top of this economic crisis, our country and indeed the cement manufacturing sector are facing a patchwork of environmental regimes, ranging from carbon taxes in two provinces to potential cap-and-trade programs that are under development in three other provinces across Canada, and hopefully a federal regime on the horizon soon.

I focus a great deal of my emphasis today on the environment and the economy because they are inextricably linked and have a major impact on the cement industry's competitiveness. This is something this committee should be concerned with. As an industry that's energy intensive and trade exposed, it's important that governments design policies that help manufacturers like the cement industry maintain and advance our competitive strategy while at the same time enabling us to reduce greenhouse gas emissions.

In designing regulations, the government should align Canada's climate change efforts with those of the United States on such issues as price signals, alignment, mid- and long-term climate objectives, and avoiding disruption of cross-border trade and border adjustments.

Finally, as you know, tomorrow there is a private member's bill, Bill C-429, that is seeking to require the Department of Public Works and Government Services to favour one construction material over others in the construction, maintenance, or repair of public works. We believe it's neither good nor acceptable public policy for Canadian governments to promote one building material over another building material by excluding alternative, viable, and competing Canadian materials from Canadian construction markets. We strongly believe that all construction materials should operate on a level playing field and in a fair, competitive, and open economic environment.

Thank you very much, Mr. Chairman. I look forward to any questions you might have.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. McSweeney.

We'll now go to Campus Stores Canada.

[Chris Tabor, Manager, Queen's University Bookstore, Campus Stores Canada]

Thank you.

My name is Chris Tabor and I'm the director of the bookstore at Queen's University at Kingston. I'm here today on behalf of Campus Stores Canada, the national trade association of institutionally owned and operated campus stores.

We have almost 100 member stores nationwide and more than 80 vendors and supplier associates. In short, if you know one, or more than one, of the million university or college students in Canada, there's a very good chance you know someone served by Campus Stores Canada.

It's no secret that attending a post-secondary institution is an expensive proposition. Costs for tuition, room and board, and materials are ever increasing, while a student's opportunities to work are extremely limited. There are always new costs on the horizon, such as the prohibitively high proposed new access copyright fee, which will see students shell out millions more to pay for service they already get.

It is important, then, to examine policies and regulations that artificially increase the cost of education, with the aim to reduce fees wherever possible. One such economic impediment is the artificial inflation of book prices because of provisions found in the Copyright Act.

It may interest the committee to know that in the years 2008-09 the U.S. federal government and approximately 23 states considered legislation affecting access to and the affordability of course materials for U.S. students. I am very happy to be here to talk about how with the stroke of a pen a change in a regulation can save Canadian students tens of millions of dollars each year without any cost to the public purse.

The Copyright Act allows publishers to establish import monopolies on books from authors around the world, and in turn it outlines what these import monopolies may charge for the cost of books. Books imported by those other than these exclusive importers are referred to as parallel imports.

Subsection 27(1) of the Copyright Act makes parallel importation of new books an offence, provided that those exclusive distributors adhere to the regulations promulgated under the act. Specifically, book importation regulations stipulate that an importer can charge a bookseller the price of a book in the country of origin, plus the difference in the exchange rate between the two countries, plus an additional 10% or 15%, depending on the country of origin.

Campus Stores Canada considers this to be a private tariff established by public policy. It is a tax paid from the wallets of Canadian students and their families, and it is collected primarily by foreign private interests. It allows publishers/distributors to receive an additional 10% or 15% of pure profit from their products before risking losing a sale to parallel importers. Importantly, this returns no appreciable benefit to the artists or the authors who created the works in question.

These unnecessary costs are not insignificant. The trade in imported books by campus booksellers is worth $262 million annually, representing roughly half of the books sold at these stores. Removing this tariff would save students about $30 million annually, with savings beginning virtually overnight.

The tariff's design is an artifact of publishing, commercial distribution, and policy paradigms that have changed radically since these regulations were promulgated in 1999, most notably through the development of Internet-based commerce.

Unlike booksellers, individual consumers are not bound by these regulations, and they are able to freely and legally purchase books from the lowest-cost provider regardless of geography--and they do. Through Internet retailers, Canadian consumers are often able to buy books more cheaply than Canadian resellers can. It confounds market logic that a Canadian student is able to import individual books more economically than a multinational corporation importing commercial volumes of products. This is a direct result of the tariff's artificial inflation on domestic book prices.

To get the best value on learning materials, students are effectively forced by this tariff to turn to Internet retailers in other countries, an extra step that is as absurd as it is inconvenient.

In previous budgets, the government has introduced measures to reduce the cost of post-secondary learning materials, including a $500 tax credit for the purchase of textbooks. We applaud these efforts. However, moving forward, we believe that a substantially greater reduction in textbook prices can be achieved by amending the book importation regulations to remove the 10% and 15% tariffs. Doing so will see students spend millions of dollars less for textbooks each year, without the need for any expenditure on the part of the government.

While such changes are not included in the current copyright bill before the House of Commons, legislative changes are not needed to remove this tariff. Regulations, as you know, can be altered with the stroke of a pen. In an era where fiscal prudence is king, government must be sure to take advantage of opportunities to decrease cost to Canadians without increasing cost to government. This is one of those areas.

I'd like to thank you for your time, and of course I'm happy to answer any questions you may have.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from Mr. Adams, please.

[David Adams, President, Association of International Automobile Manufacturers of Canada]

Thank you, Mr. Chairman.

The Association of International Automobile Manufacturers of Canada is a national trade association that represents the Canadian interests of 14 international automobile manufacturers that manufacture, distribute, and market vehicles in Canada. Our members directly and indirectly employ some 77,000 Canadians, and through the third quarter of 2010, our members’ share of the new light-duty vehicle market stands at 53.3%. Additionally, over 52% of the AIAMC's collective vehicle sales in 2009 were produced in the NAFTA region.

This year began with optimism that the Canadian economy had weathered the global financial crisis better than most nations and was poised for solid economic growth throughout 2010. However, economic optimism in Canada has waned amid ongoing global financial challenges, stubborn unemployment rates, and higher consumer debt levels. The current challenges are reflected in consumer confidence levels as well, which, according to the Conference Board of Canada's consumer confidence index, has dropped from 96.6 in January to 78.1 in September. There is essentially a direct correlation between consumer confidence levels and new vehicle sales.

Through the first quarter of this year, vehicle sales were up 15% on a year-to-date basis, but this growth over last year diminished to 9.1% through the second quarter and receded further to 7.2% through the third quarter. Total sales for 2010 are expected to rebound to somewhere between 1.55 and 1.58 million units.

With respect to the Canadian vehicle manufacturing component of the automotive industry in Canada and our economy in general, given our proximity to the United States and the integration of our economy, the uneven and tepid economic recovery in the U.S. continues to weigh down things here. While vehicle production at the beginning of the year had been anticipated to increase 30% for 2010, even if that is achieved it needs to be remembered that last year Canada produced just 1.5 million vehicles and has not produced fewer vehicles since 1975. Currently, through the third quarter, vehicle production is up 17% in Canada.

With a dollar that has hovered much closer to parity with the U.S. dollar this year than last, we have seen a predictable surge in vehicle importations from the United States. Through the end of the third quarter, figures from the registrar of imported vehicles reveal more vehicles have already been imported into Canada from the U.S. in 2010 than in the whole year of 2009. Against this backdrop, the AIAMC makes the following recommendations to the standing committee.

In the face of a record deficit and a myriad of other demands on public resources, we appreciate that our first recommendation may be better suited to be phased in over a two- to three-year period. The goal of all our recommendations is to address unintended competitive vagaries, to reduce unnecessary cost in the Canadian automotive market, and to encourage Canadians to continue to purchase vehicles from Canadian dealers to support the Canadian automotive industry.

Our first recommendation is to reduce finished vehicle tariffs on imported passenger vehicles from 6.1% to 2.5% on an applied basis, which is consistent with the tariff on imported passenger cars in the United States. This would provide the opportunity for manufacturers to pass on savings of approximately $900 to the consumer and will also assist manufacturers in meeting the pending GHG regulations as North American production facilities cannot be converted to the production of smaller, fuel-efficient vehicles in the short term. Tariff reduction to the level of the U.S. rate is consistent with other regulatory harmonization initiatives being undertaken within the industry on both safety standards and emission standards in recognition of the integrated nature of the industry. This initiative also supports the purchase of vehicles through Canadian dealers. A lower common tariff rate with the United States goes some way to mitigating competitive distortions in the marketplace that arise as a result of bilateral trade deals.

Our second recommendation would be to reallocate a portion of the existing $100 excise tax that has been placed on motor vehicle air conditioners since the 1970s. Currently 99% of cars and trucks sold in Canada are equipped with air conditioners. This was not the case when the tax was imposed in the seventies, and it was viewed as a luxury at that time. Right now air conditioning is essentially viewed as a necessity, and that tax represents a significant tax grab.

Moreover Environment Canada has initiated consultations on an extended producer responsibility regime for managing end-of-life ozone-depleting substances, which would duplicate the existence of provincial and territorial regulations to address this same issue. While proper quantification of mobile air conditioners' contribution to the problem and the appropriate cost-benefit analysis of additional regulation for the auto sector have yet to be undertaken, it’s unreasonable for an additional levy to be placed on mobile air conditioners when the current excise tax generates approximately $150 million annually.

Should this initiative by Environment Canada to supplement provincial regulations for vehicle-related air conditioning systems move forward, we recommend that it be funded through the revenues currently collected and not by adding a costly new and duplicative regulatory regime.

Our third recommendation would be to eliminate the green levy excise tax that has been applied on vehicles that was introduced in the 2007 federal budget.

While the members of the AMC are strong proponents of fuel-efficient vehicles, on a matter of principle it's incongruent that the government would retain one component of the vehicle efficiency initiative while cancelling the incentive component of the initiative that encourages consumers to make more fuel-efficient vehicle choices.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Adams.

Now we'll hear from the Assembly of First Nations.

[Richard Jock, Chief Executive Officer, Assembly of First Nations]

Thank you, Mr. Chair.

Our submission is called “Transforming the Relationship—Sustainable Fiscal Transfers for First Nations”.

First nations citizens have not enjoyed the same level of service as is provided to Canadians by municipal, provincial, and federal governments. The machinery of fiscal governance, therefore, needs to be transformed in order to be reflective of the core Canadian values of equity and opportunity.

Furthermore, a commitment to accountability requires stable, predictable, and fair funding practices between Canada and first nations. Current funding relationships disadvantage first nations and really undermine their ability to plan, predict, and effectively oversee critical service areas. First nations funding enjoys no statutory guarantee and is subject to policy change and annual reallocation.

Therefore, a new funding framework for allocating resources needs to be adopted that will enable first nations to exercise full jurisdiction over priority areas—most notably, in our example, education. First nations systems—and I would emphasize the word “systems”—are needed to effectively deliver services and to fulfill responsibilities.

A key piece of any reforms will be to generate standards to which funding must be matched. A new funding relationship must also reflect the spirit and intent of treaties and must also be a mechanism to ensure parity with provincial funding rates, reflecting the real cost of delivering services. We would submit that the way to implement this is by providing incentives by which communities and systems would leverage additional resources against service standards.

These measures would constitute a reorientation to accountable and sustainable funding for first nations governments, who would then in turn have all the tools to deliver effective services and in turn would be fully accountable to their citizens.

In the example of education and in terms of dealing with the issue of equity in education funding, the federal government provides education funding for students at $2,000 less per student on average than for other Canadian students. Moreover, education for first nations is the only education funding in the country that is not statutorily based but again is subject to policy change and internal reallocations.

In the 2010 Speech from the Throne, the federal government committed to working hand in hand with first nations to reform and strengthen education and to support student success and provide greater hope and opportunity. This we certainly look forward to with a great deal of hope and anticipation. However, to strengthen first nations education, first nations education systems, including second- and third-level supports, are essential, and these could be at the sub-regional and regional levels or at the treaty level. These are essential characteristics of what would be a modern first nations education approach.

The development of new education systems must include a new funding relationship based on legislation that will enable greater planning and stability and will maximize performance and outcomes. It's important to note, though, that first nations education systems will require stable and adequately resourced infrastructures, which include things that we take for granted, such as libraries and gymnasiums, technology, special education programming, and access to high-quality staffing. We would say that first nations developed language instruction is a key part of this system.

In summary, AFN has made approximately ten years of pre-budget submissions. For this one, we would highlight the following priority areas.

The first is first nations education. For the development of a first nations education system in concert with the federal government to close the gap in funding, we estimate—although pending some joint work with Indian and Northern Affairs and with provincial jurisdictions—annual investments of $304 million for INAC's elementary and secondary education program and approximately $495 for post-secondary education.

Concerning first nations infrastructure, due to deferrals and based upon the 2% cap we feel, and information shows, that additional investments of about one billion dollars are required to address housing and water systems backlogs, including $200 million, which has been noted by the Parliamentary Budget Officer, for new schools and capital maintenance.

An additional $376 million is needed to address some of the shortfalls in the non-insured health benefits program, and an additional $125 million over three years is required to have the Aboriginal Healing Foundation continue until the end of the Truth and Reconciliation Commission.

Lastly, I would note the emerging need for emergency capacity for emergencies and natural disasters.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We'll finish with the Canadian Federation of Students, please.

[David Molenhuis, Chairperson, Canadian Federation of Students]

I thank the committee for the opportunity to make the voice of students in Canada heard here today.

The Canadian Federation of Students represents more than half a million students from colleges and universities across Canada and is Canada's largest and oldest national students' union.

I come before this committee with a simple request: make post-secondary education a right in Canada. Everyone in Canada, regardless of socio-economic circumstances, should be able to access a college or university education. Our economy now demands that workers have a diploma or degree in hand in order to effectively compete in the labour market. The fact is that 70% of new jobs require some form of post-secondary education. However, skyrocketing tuition fees, in addition to putting post-secondary education out of reach for many Canadians, have saddled those who have attended our institutions with collectively over $15 billion in federal student debt.

Inadequate post-secondary education funding has also resulted in tuition fee increases of over 230% since 1992. Those who receive government assistance or private bank loans face average debt loads of $28,000, with many debts over twice that figure. The result is an increasingly cost-prohibitive and elitist system, with a greater number of Canadians left behind each year.

A lack of federal leadership to address increasing tuition fees results in significant lost opportunity costs to our country. For every Canadian shut out of post-secondary education, the costs of health care, employment insurance, social assistance, and public safety increase, while the tax base is reduced at the same time. The OECD estimates that the economic return on investing in post-secondary education is $1.63 for every dollar the federal government spends. Simply put, our government cannot afford to continue to underfund our post-secondary education system.

The Canadian student movement has made four recommendations to move towards making a post-secondary education a right for everyone.

The first recommendation is to adequately fund the system and create a dedicated post-secondary education transfer to the provinces through a federal framework. We need to achieve greater collaboration and avoid the abuse of federal transfers such as was shown in the actions of the British Columbia government in 2008, when funding was increased by $110 million while at the same time $50 million was cut to the university sector.

The 2007 federal budget announced the largest increase to core transfer payments for post-secondary education in 15 years. But when accounting for inflation and population growth, we're still roughly one billion dollars behind where we were in 1992.

As well, the current government program of funding education-related tax credits is a poor instrument to improve access or reduce student debt. They are not available when students are required to pay tuition fees or living expenses; however, the federal government still spends over $1.4 billion on this program each year alone. When tax credits are combined with savings schemes, the amount spent on these untargeted programs comes out at over $2.5 billion.

A better use of this money would be to shift all funding from back-ended tax credits and savings schemes to the front end in the form of needs-based grants. Moving this to the front end in the form of grants would increase the value and number of Canada's student grants and would be a completely cost-neutral measure to the federal government. This would all but eliminate the need for students to borrow from the Canada student loans program until roughly 2025.

Although federal and provincial governments spend billions of dollars each year on universities and colleges, adequate information to fully analyze the impact of that spending is not collected. The education indicators report by the OECD this year again noted that Canada could not provide data for 57 of 96 indicators used to compare each country's post-secondary education systems. Further, the future of a vital post-secondary education data collection mechanism, the youth in transition survey, is uncertain. We're recommending that the federal government adequately fund Statistics Canada with an additional $10 million to collect data on post-secondary education's impact on the economy and save the youth in transition survey.

Lastly, in 1996 funding increases to the provinces for the post-secondary student support program for aboriginal students were capped at 2% per annum, regardless of the increased costs to post-secondary education and the demographic growth of the aboriginal population. The number of students funded by the PSSSP fell from 27,000 in 1995 to just about 22,000 in 2006, and it's estimated that over 19,000 students have been denied funding since the cap was introduced in 1996. By lifting the cap on the PSSSP and clearing the backlog of students previously denied funding, the federal government would move closer to fulfilling its treaty obligations to first nations and Inuit peoples.

Again, I thank you for the opportunity to make this presentation, and l look forward to any questions the committee members might have.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

Colleagues, I'll just remind you the first round is seven minutes per party, so if you do wish to have two members of your party ask questions, I suggest you share your time.

We'll start with Mr. Szabo.

[Paul Szabo, Liberal, Mississauga South, ON]

Thank you.

For Genome Prairie, I was very interested in recommendation 2, and I'd like you to elaborate just very briefly on the not-for-profit funding and how significant that change might be.

[Patrick Pitka]

The credit that currently is available is 35% and whatever is provided by the federal government. Most provinces also support this same concept. It's at a lower rate—about 15% to 20%—so it would be quite significant.

[Paul Szabo, Liberal, Mississauga South, ON]

We're going to get some amplification of the value for the dollars available. There may not be many more dollars, but it's going to be able to engage research that presently does not have sufficient funding to do it. Is that the idea?

[Patrick Pitka]

That's the idea, yes, and work more closely with industry at the same time.

[Paul Szabo, Liberal, Mississauga South, ON]

Fair enough.

Mr. McSweeney of the Cement Association, welcome, sir.

The association of professional consulting engineers told us last week that Canada had an infrastructure deficit of about $125 billion. I think there's a fair bit of cement that might be used in that.

I'm wondering whether or not you have seen the same kinds of studies, and whether or not the Cement Association has taken any initiatives to collaborate with how we address that, simply because the consequence of not dealing with that infrastructure deficit is going to translate into a reduction of real GDP of a significant magnitude, which is going to be totally contrary to everyone's interests. Have you done anything, as an association, to get engaged on the infrastructure deficit?

[Michael McSweeney]

Thank you very much, Mr. Szabo.

I certainly appreciate where you're coming from, since you have a cement plant in your—

[Paul Szabo, Liberal, Mississauga South, ON]

St. Lawrence, yes.

[Michael McSweeney]

Yes, Holcim Canada is located in your constituency.

We're aware of those numbers. And we're also aware of the tremendous pressure on governments with deficits right now to spend more and more money on infrastructure. But we are aware, in the provinces of Quebec, Ontario, and British Columbia, that there is an unprecedented amount of spending on infrastructure and renewing infrastructure.

Of course we can always say more, more, more, but I think you have to ensure that the growth doesn't outpace that of the funds that are available. So we encourage governments to look at infrastructure at every opportunity and encourage growth in all sectors of building materials, whether it's steel, glass, wood, or concrete. But we understand where provinces and the federal government and municipalities are coming from in these economic times, when they're really challenged for resources and pitting hard dollars over soft dollars for soft services.

[Paul Szabo, Liberal, Mississauga South, ON]

Okay.

In terms of another opportunity, you probably are aware that the Parliamentary Budget Officer has expressed concern that a significant percentage of the projects approved under the stimulus fund may not be completed by the deadline date, which means probably a loss of some potential business for you. Are you aware of that? Are you concerned? Have you relayed your position to the government about how important it will be to follow through on those projects that have been approved and started but may not be completed for reasons beyond their control?

[Michael McSweeney]

What we found was that in year one of the stimulus package, most of the money went to architects and engineers and environmental assessments. We only started to see the benefits of the economic stimulus package at the beginning of this year. We had forecast a growth of 9% in cement for 2010, and we're only going to see about 4% to 6% increase in sales in cement.

In letters and speeches that we're making, we are encouraged to hear that the government may be looking at extending the deadline past the March 31, 2011, date that was set two years ago.