Finance Committee on Oct. 25th, 2010

[Paul Szabo, Liberal, Mississauga South, ON]

Okay, but you're asking for the full....

[Mark Jamison]

We'd like to continue as per years gone by.

[Paul Szabo, Liberal, Mississauga South, ON]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Szabo.

Mr. Paillé, you have the floor.

[Daniel Paillé, Bloc, Hochelaga, QC]

Thank you, Mr. Chair.

My question is for the CPQ representatives.

In my view, you have rightly pointed out—and this is not coming from socialists or communists, but from the Employers' Council—that health care transfers should not be linked to inflation, but to the needs of the population. You also indicated that Quebec had harmonized its sales tax, and that it should receive compensation for having done so. You are also being realistic with regard to the deadline for infrastructure work when you say that the deadline should be extended so that work as a whole can be completed. I therefore thank you for having raised those issues.

On page 4 of your brief, under business assistance, you raise a number of points, and at the end, you appear to be saying that the recovery is not even across Canada and that there are sectors that may be experiencing slower economic recovery than others. Is it exaggerated to say that, if business assistance were suspended because some sectors are more vigorous, then that might nip the recovery in the bud in the more vulnerable sectors that you mention on page 4?

[Yves-Thomas Dorval]

First of all, there is a question of principle. When the government implemented an action plan to address the economic situation, it did point out that its measures would be temporary. We believe that temporary programs should remain temporary. Once they have helped achieve the expected results, they should be terminated, and other programs devised. There are sectors or industries with different circumstances.

The forestry sector was not only affected by the recession; it faces a structural problem, particularly in Quebec. Therefore, with regard to the forestry sector, among others, and regardless of the fact that the economic action plan is winding down, we believe that it is important to give it special consideration. Forestry is a key sector because of the number of people it employs in Quebec and the impact it has on Quebec's regions, in particular the Mauricie, which has the highest unemployment rate in the province. The situation varies across Quebec; some regions are more deeply impacted than others. The same must be true in the other provinces.

Clearly, special consideration should be given to certain sectors, including the forest industry. The same goes for the aerospace industry. Rather than an immediate impact, the recession has led to longer-term consequences on manufacturers' order books, and the sector will need time to recover.

Therefore, some sectors are facing greater impacts. The question is not to have an overarching plan for all sectors, but to make sure that those industries that have been hit hardest or that face particular circumstances will be given special consideration in upcoming budgets.

[Daniel Paillé, Bloc, Hochelaga, QC]

That means we should get rid of the one-size-fits-all approach.

As a parliamentarian, I always heed the words of the committee chair, and so I will ask you a question about item 7 in your presentation, which deals with the National Securities Commission.

A few days ago, the committee heard from Ian Russell, who represented the Investment Industry Association of Canada. I mentioned to him that his organization dealt with the International Organization of Securities Commissions, and that regulations and tariffs had been harmonized. I told him that he represented an industry that, for all intents and purposes, functioned very effectively in Canada. He answered the following:

“Our industry, I think, functions well.”

You seem to share Ian Russell's opinion. That is interesting.

There is one point that bothers me. In the middle of page 5, you state the following: “Furthermore, we are very concerned about the negative impacts this move could have on Quebec's financial industry and economy.”

Some think that those who do not want a single regulator are being facetious. But you go even further, and you represent the Quebec Employers' Council, which is not known for its socialist tendencies.

You talk about negative impacts on the financial sector. Could you elaborate on that please?

[Yves-Thomas Dorval]

Thank you.

In fact, I suppose that one of the intents behind that project is to address the concerns of foreign investors who find the Canadian system a bit complex. The Canadian financial sector has an excellent reputation. I do not think we need to wage a campaign to convince anyone about that. Furthermore, it is a fact that Quebec, and particularly Montreal, employs many people in the securities industry. There are many high-level jobs that pay very attractive wages. Those jobs very often depend on the proximity of decision-making centres, particularly in the securities field.

We think that Montreal's financial sector, and particularly as it relates to securities, would be affected. That would be especially true for high-value jobs. I do not think that an economy such as Montreal's can afford such a loss without a very significant value-added component.

[Daniel Paillé, Bloc, Hochelaga, QC]

You therefore consider that the proximity of the decision-making centre is a very important factor. The fact that Montreal has its own such centre is a key point. Replacing that with a virtual Canadian regulator would not work.

[Yves-Thomas Dorval]

Based on what we have heard from many people and organizations in the sector, the project does not represent much added value, given that the system operates effectively.

[Daniel Paillé, Bloc, Hochelaga, QC]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Généreux, you have seven minutes.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chair.

Good afternoon to you all. My questions will also be for Mr. Dorval.

On page 3 of its document, the CPQ recommends the following: “The CPQ recommends that the government maintain the corporate tax reduction plan it announced (15% in 2012) in order to ensure that Canadian businesses are fiscally competitive.”

You talk about creating good, quality jobs. Have you surveyed your members as to how many jobs could potentially be created by that measure, once it is completely implemented?

[Yves-Thomas Dorval]

I will turn the microphone over to my colleague Norma Kozhaya, the CPQ's Director of Research and Chief Economist.

[Norma Kozhaya, Director of Research and Chief Economist, Quebec Employers' Council]

Thank you.

It is difficult to put a figure on the number of jobs lost. There are more estimates with regard to the impact of payroll taxes. Concerning corporate taxes, we know that Canada is seriously lagging in terms of productivity and private investment. With regard to that decision, taxation is a key factor. We consider that more competitive tax rates would allow us to attract a greater number of private investors, both domestic and foreign. Therefore, these investments will help improve Canada's productivity and create high-quality jobs.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

You have not so far been able to compile data related to the implementation of that measure up until 2012. I would remind you that we are currently facing criticism with regard to that measure. Some people are telling us not to go ahead with that policy and rather, to invest more in social programs. We are all for doing both things at the same time.

[Yves-Thomas Dorval]

In fact, we have not conducted a complete assessment. That might be something we could do. Nevertheless, our analysis of Canada's economic situation very clearly suggests that we must attract more private investment.

During the recession, governments invested massively to ensure that the Canadian economy would recover quickly—which is the case. However, that relatively good financial outcome is due to public investments. We have to find all the means necessary to foster private investment.

We believe that we must be very bold in 2011 in order to increase private investment in Quebec. That is the only way for us to be competitive and ensure long-term progress.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I have another question, this time dealing with EI premiums.

I would like to hear your comment on the pilot projects that were implemented during the recession, as part of Canada's Economic Action Plan. In particular, what do you think of the pilot projects that we recently extended for eight months? You make no mention of that in your brief.

[Norma Kozhaya]

Are you referring to a pilot project in particular? Is that the one providing the five additional weeks?

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I am referring to the 5 additional weeks and 14 best weeks, for example.

[Norma Kozhaya]

With regard to the five additional weeks, we think that that is a good temporary measure. However, we do not think it should be made permanent. You also have to consider incentives to get people to return to work, because we are headed toward a labour shortage. That is the reason why we need workers.

As for the 14 best weeks, we see that quite favourably, because it more effectively rewards work.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Moving on to innovation. You say that the government should continue to make free trade agreements. I think that you would agree that the Conservative government has taken major steps toward that goal.

Could you elaborate on that a bit further? Your brief only contains one short sentence on the matter. In your view, what are the direct, positive impacts for Canada?

[Yves-Thomas Dorval]

I would like to speak more particularly to the negotiations that are underway with Europe. Needless to say, our market is small compared to Europe.

As you know, Canadian and particularly Quebec exports are targeted to certain U.S. states as well as the Canadian federation. However, there are far greater market niches and opportunities in Europe. Such an agreement would allow us to further diversify our export and commercialization targets.

The agreement that is being discussed is not limited to free trade, it also includes issues related to labour mobility. That is something we intend to come back to regularly and drill into people's awareness. With its aging population, Quebec is in great need of a specialized, high-quality labour force. We have no other option but to open our borders and welcome a greater number of skilled workers. Europe has the people we are looking for.

Some European countries are saying that they do not want any Polish plumbers. We want them.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I would like to announce that Canada and the Ukraine signed an agreement yesterday on labour mobility.

I would like to come back to the issue of the securities regulator. You have just stated that Europe is huge in comparison to Canada. That is not only the case with Europe but also in comparison with the rest of the world. Yesterday, I was watching the television show La semaine verte. I learned that 60% of the world's population lives in Asia.

Would you agree that we need to cooperate? You speak of innovation and the need to strengthen interprovincial ties. Why not have a single voice for the securities industry? There are only some 30 million or 35 million Canadians. Should we not work in closer partnership and speak with a single voice?

[Yves-Thomas Dorval]

First of all, that does not appear to be a priority in the current economic context. I think that Canada has an excellent financial reputation. Decisions were made at an early enough stage. We have weathered the recession better than others. That said, I do not think we can gain much from that.

Canada's existing system is functioning. That is why I said if it isn't broken, don't fix it. Given the priorities, if people in the securities sector have a good working relation with one another and are managing things quite effectively, then it is not necessary to create such an impact on Montreal's sector and its well-paying jobs.