Finance Committee on Oct. 25th, 2010

[Avrim Lazar]

There's no doubt that Europe is far more ambitious than Canada is in creating incentives and infrastructure for green energy, as are, for that matter, China and certainly the U.S. So if you have a forest mill, a lumber mill or a pulp and paper mill in the U.S., in Europe, or in many other places in the world, the incentives structure for transformation to green energy is considerably more generous than it is in Canada.

I have to acknowledge that the government did come up with the $1 billion green transformation program, and though it was less than what we could have gotten in the U.S., it was more intelligently designed, so we actually got more bang for the buck. But overall, if there's one thing that would benefit Canada's forest industry, it's incentives for transformation to green energy.

Take, for example, the situation in Quebec, where there is huge dependence on fossil fuels. That's a tremendous cost factor. Switching to biofuels would reduce the cost, increase the jobs, and increase the green performance. It is similar out west, and that's why the re-profiling of that $500 million, which is currently limited to next-generation biofuels, into a more general bio-energy could, at no cost to the government and just with smarter use of existing money, make a very large difference.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you.

I have a question for Monsieur Patry with regard to the importance of innovation and science research. When comparing the Canadian government's stimulus package with other countries' stimulus packages around the world in terms of investment in science, Canada is at the bottom, compared to any other industrialized country and in fact compared to emerging economies like China. We simply have not invested in science.

What does that lack of investment represent in terms of the potential loss of the jobs of tomorrow? You've demonstrated that scientific investment through CFI has created significant opportunities and jobs. Are you concerned with the comparative lack of investment in science in the Canadian stimulus package and what that will mean in terms of our lack of competitiveness in key sectors tomorrow?

[Gilles Patry]

Thank you very much for the question. We've been fortunate in recent years. As you know, the Canada Foundation for Innovation has been in place for a little over 10 years, so Canada is very new at the business of funding the types of science and technology investments that we're talking about. However, I must say that the $5.3 billion that has been received over the last 10 years has gone a long way.

You're making reference, obviously, to the stimulus part of the science and technology investments. Universities and colleges have benefited from the knowledge infrastructure program funding, and we have benefited in recent years. All of this was before the 2008 crisis, but we've benefited from a number of additional projects and investments such as the centres of excellence for commercialization and research program and the business-led NCEs. It's obvious that we need, and I tried to make this case in my presentation, a continued investment in research funding, both at the institutional level--operating grants for granting councils are terribly important--and on the infrastructure side. They're critical. Also, if you look at the 12-year existence of the Canada Foundation for Innovation, with $5.3 billion, you can estimate about $400 million or $500 million a year of investments that have been made, but you have to also understand that this has been leveraged significantly, and that's an important aspect.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you.

Ms. Hughes Anthony, it's great to see you again. I've enjoyed working with you over the years, both in your chamber work and with the banking association. It's nice to see you here today.

You say in your presentation that the federal government “set out a plan to eliminate its deficit by 2015”. The Parliamentary Budget Officer has called that plan weak--

[Nancy Hughes Anthony]

Excuse me, I didn't say that, Mr. Brison. I only spoke about the tax reduction plan.

[Scott Brison, Liberal, Kings—Hants, NS]

Oh, I'm sorry; that was from page 2 of your presentation, the top paragraph.

I bring that to your attention for a couple of reasons. One is that this government has missed every deficit target it has set. So when you present here that in “its own 2010 Budget, the federal government set out a plan to eliminate its deficit”, I would urge you to look at not only the government's numbers but also the Parliamentary Budget Officer's projections.

I'm referring to page 2, the top paragraph.

[Nancy Hughes Anthony]

Yes, I see that.

I'm sorry, Mr. Brison, I thought you were referring to my spoken remarks.

[Scott Brison, Liberal, Kings—Hants, NS]

No, no.

[The Chair, Conservative, James Rajotte]

Do you have a brief question, Mr. Brison?

[Scott Brison, Liberal, Kings—Hants, NS]

The reason I raise that point is that, with our deficit levels in Canada, I believe it's critically important that we get out of deficit.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Brison. You have zero seconds left.

[Scott Brison, Liberal, Kings—Hants, NS]

If I may, Mr. Chair--

[The Chair, Conservative, James Rajotte]

Ms. Hughes Anthony has time for just a brief response.

[Scott Brison, Liberal, Kings—Hants, NS]

I'd appreciate your feedback, Ms. Hughes Anthony, on whether it's more important to actually get Canada out of deficit--

[The Chair, Conservative, James Rajotte]

Mr. Brison, I'm sorry, your time is up. We're over time here.

Ms. Hughes Anthony, can you give a brief response on that topic?

[Nancy Hughes Anthony]

Certainly.

I'd like to mention, Mr. Brison, that this submission was done in August 2010. A lot of things have changed since that particular time.

The point about Canadian banks and their involvement in any kind of stimulus is really to keep banks open, to keep banks lending. That has been the point, and that continues to be the point, as far as the financial system is concerned.

[The Chair, Conservative, James Rajotte]

Thank you very much.

Mr. Paillé, you have seven minutes.

[Daniel Paillé, Bloc, Hochelaga, QC]

Thank you, Mr. Chairman.

I would have liked to have had enough time to ask the housing cooperatives some questions. Perhaps I will have some time.

My comments will be directed to the president of the Canadian Bankers Association.

You are no doubt aware that the president of the Investment Industry Association of Canada, Mr. Ian Russell, appeared before us last Thursday. I asked him whether or not he did in fact represent the securities commissions for all the provinces and territories, as well as the AMF, and he told me that this was the case. I also asked him whether this group used one single system, namely the passports system, and whether his association, using the system, did business with the International Organization of Securities Commissions. I asked him whether this was the organization that had harmonized all of its regulations and rates. I asked him whether in fact he represented a Canadian sector that ran very smoothly, and he replied as follows:

“Our industry, I think, functions well.”

Earlier, we heard from the president of the Quebec Employers' Council. He said that the added value that could eventually be provided by a single securities commission, in this case a Canadian commission as the federal government sees it, in comparison to the current system, remained to be seen. He said that national and international observers felt that the system worked well. Scarcely an hour ago, he stated that he had serious concerns about the negative ramifications that the federal initiative could have on Quebec's financial and economic sector.

I have in the past been a securities issuer. However we know full well—you know this as well, Madam—that regardless of where the securities are issued, whether it be Rivière-du-Loup, Calgary, Burlington, Edmonton, Vancouver or Saskatoon, we are now dealing with one body in Canada. You said that the system is fragmented. With all due respect, I think that you are a little bit behind the times as far as the facts are concerned. It may have been fragmented 20 years ago, but that is no longer the case now.

What prompts you to state today that the system is fragmented and not operating well, whereas everyone feels that it is in fact running very smoothly?

[Nancy Hughes Anthony]

Yes, Mr. Paillé.

I would respond by saying that not everyone is saying that.

I would say there are lessons learned from the recent international financial crisis that underline even more the importance of us having a single, unified approach to securities regulation in this country.

Certainly there are efficiencies to be gained, and in my view, the passport model, which some might say is okay, does not go far enough. The passport model entrenches infrastructure costs and time factors that in today's environment investors don't really want to afford. You have not only Canadian investors, but you have investors from overseas who come and look at the Canadian system and say, “I can't believe this. It's like driving my car across the country and having to get a licence in every different province. It's crazy.”

So I feel that for a variety of reasons, including in particular, Mr. Paillé, increased enforcement--

[Daniel Paillé, Bloc, Hochelaga, QC]

I apologize for interrupting you like this, but it is my time that is being used.

You know full well, Madam, that what you have said is inaccurate. When you are a Canadian issuer, you can issue securities in your province and have a passport for elsewhere.

Moreover, the International Organization of Securities Commissions held an international convention in Montreal. All of the big players in the international securities industry were in attendance. This was held in Montreal and the only person missing was perhaps the Canadian Minister of Finance. On this note, I would say that the Canadian bankers are exaggerating because they want to take over this business and centralize it in Toronto.

In addition, in your brief, you added that we would be better protected. You stated that “a single Canadian regulator will offer improved investor protection.” However, you know full well that the policing, namely the police who catch the white-collar criminals—come under the Criminal Code and not the securities commissions. If there are any Earl Jones types or others who are walking around, Canadian securities commission or not, these are criminals. These individuals are arrested under the Criminal Code, and this is not the job of the body that issues the security.

You are fully aware of the fact that the current system works very well. Why then do you want to compromise a system that works very well? You risk jeopardizing the system with an organization that would run counter to these things.

[Nancy Hughes Anthony]

Obviously Mr. Paillé, we must disagree on this point, because I do think enforcement can be much improved across the country. I do believe that some of the provisions that are put into the proposed act that is now under consideration will allow enforcement agencies and police officers much greater collaboration and will therefore improve enforcement across the country.

I guess I would also take exception to your....

You said that they were going to centralize it in Toronto. To my knowledge, this has not yet been decided.

I believe every model we have ever seen--and certainly the current model that is being discussed by the transition office--talks about the need to utilize the important expertise that exists in Quebec, in B.C., and in Alberta in terms of the proposed Canadian securities regulator--

[The Chair, Conservative, James Rajotte]

Thank you. Merci.

We'll go to Mr. Wallace, please.

[Mike Wallace, Conservative, Burlington, ON]

I will give my time to Mr. Menzies.

[The Chair, Conservative, James Rajotte]

Mr. Menzies.

[Ted Menzies, Conservative, Macleod, AB]

Thank you, Chair, and thank you, Mr. Wallace. I have to run in a few minutes.

Thank you, Ms. Anthony, for clarifying that, and accept our apologies for someone on this committee suggesting that you were not telling the truth, because you in fact were. We do appreciate that, and thank you for clarifying some of the misinformation out there.

I have some very serious questions for the Western Canadian Wheat Growers and for the Grain Growers of Canada. Please tell me you finished your harvest before you took time to come down here.