Finance Committee on Oct. 26th, 2010

[Robert Carrier, Bloc, Alfred-Pellan, QC]

I will use my remaining minute to ask a question of Mr. Monk.

I was pleasantly surprised by your presentation, because you talked about human capital. You are a certified management accountant. I think it's a good thing that you are focusing on human capital. I would like to take the opportunity, given the fact that you are here and that you are open-minded, to ask you about the Guaranteed Income Supplement. Indeed, you often are called upon to deal with income tax returns. As it now stands, people have to apply for the GIS. So could the government automatically send people these forms if they are eligible?

[The Chair, Conservative, James Rajotte]

Just a very brief response, Mr. Monk, please.

[Richard Monk]

Our submission didn't really address that issue. We were talking more about productivity--

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Perhaps you have an opinion on that issue.

[Richard Monk]

No.

[The Chair, Conservative, James Rajotte]

Merci, monsieur Carrier.

Mrs. Block, please.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much, Mr. Chair.

Good morning to all our witnesses.

I certainly appreciate the diversity that's represented on these panels, so I don't mind that we have folks from many different industries being represented today.

My first question is for the Association of Equipment Manufacturers.

I'm looking at the cover letter you sent with your submission. You state that you would urge the federal government to modernize CCA rates to allow equipment buyers to more rapidly depreciate their investments in new capital equipment and specifically to increase the depreciation rate for CCA class 10 from 30% to 40%. You also mention the significant environmental benefits in doing that.

What is the economic benefit of increased depreciation rates for investments in machinery?

[Howard Mains]

Thank you for that, Mrs. Block.

The first thing about new investment or investment in new technologies is that typically the new technologies that are being deployed, whether they're being deployed in a mine or a foundry or whatever the industry might be, use a cleaner technology. In the case of construction and agriculture, that equipment, the tractors and the bulldozers, has what are described as tier 4 engines, EPA tier 4 engines. Those are new technologies that are coming into effect in the model year 2011 and have a much lower emissions standard.

With regard to the economic benefit, though, and what more rapid CCA rate claims allow, it increases the cashflow. According to the report tabled with the committee from the Canadian Manufacturers and Exporters, for every 1% increase in cashflow to a company that's making investments in new technologies, there's about a 65% increase in the investment of that new technology.

More cashflow through faster writeoff of investments results in even greater investment in new technologies, and that all leads into the productivity cycle that a number of the people around this table spoke about this morning.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you.

My second question is for the Canadian Hydrogen and Fuel Cell Association.

We know that the Government of Canada works together to lead in the development of hydrogen and fuel cell technology in Canada. My question is in regard to your policy request number 4, the hydrogen and fuel cell commercialization road map. Can you tell me more about this road map and the government's role in updating it?

[John Tak]

Yes. There was an earlier road map done. Industry Canada and NRCan lead together in developing these technology road maps.

We've come quite a ways in terms of developing the technology. We're starting now to sell it, so it's the right time now to look at that road map and see what we did right from the first road map, and what we did wrong, and how we need to adjust that.

For example, we're moving along, but there was the billion-dollar clean energy fund that came out in January of last year, and the hydrogen fuel cell sector received zero from that fund. So we're trying to figure out if we need to take a bit of a different approach here in the areas we commercialize in.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

So you would be saying that the government's role is to provide the funding to continue to develop the road map?

[John Tak]

Those road maps are funded by Industry Canada or NRCan. It's a series of road maps they do for other sectors. It's a kind of methodology they have that they use to advance technologies.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Can you perhaps comment on why the hydrogen sector wasn't part of that billion-dollar clean energy fund?

[John Tak]

I've touched on this question of innovation and where it comes from, and sometimes it's tied to economic development rather than innovation. Look at carbon capture and sequestration. It's a necessary technology, but it's going to a sector that makes a lot of profit, and it's tied to a very traditional sector. biomass. I think $1.4 billion went to ethanol. Is that economic development or innovation?

I think there's a real need to look at what is innovation and what is economic development. We will create 14,500 jobs by 2020, but we're not creating them today. It's a really interesting challenge. Perhaps we didn't meet that economic stimulus goal in the short term for that investment.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mrs. Block.

Mr. Pacetti, please.

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

Thank you, Mr. Chair.

Thank you to the witnesses for appearing.

I think it was clear after you guys presented, and then it becomes more difficult in terms of trying to come up with some solutions, because of the varied backgrounds and different briefs we get.

I would like to begin with you, Ms. Hébert. In the second point, you talk about sustainable development in a cutting-edge sector, but perhaps I will begin with your recommendation of $25 million.

[Lorraine Hébert]

Are you talking about broadcasting?

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

I'm talking about promoting our programs abroad. You talk about $25 million. I already put this question to other groups who had made a similar request. Who do you think should manage this program?

[Lorraine Hébert]

That's a good question. After thinking about it, I think that the Canada Council for the Arts is probably in the best position to manage these measures, because of its knowledge of what's happening on the ground.

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

That was not clear because some people told us that it would be better for the Department of Foreign Affairs and International Trade to manage these programs. The groups did not want the Canada Council for the Arts to do so because the $25 million might be subsumed in the $300 million fund. Perhaps that's why. In my view, the Canada Council for the Arts would be doing the same thing.

[Lorraine Hébert]

It would do a good job, but that should not prevent the Department of Foreign Affairs and International Trade from doing its part in the area of cultural diplomacy, by restoring the budgets in our embassies and the officials whose job it was to work the cultural networks.

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

I thought that is what you would say. Which brings me to my second point. You indicated that the Department of Canadian Heritage, with its Tomorrow Starts Today program, and the Canada Council for the Arts, already overlap in certain areas.

Would new problems be created if a third department or a third organization was involved in distributing the funding?

[Lorraine Hébert]

They do not do the same thing on the ground. The Department of Canadian Heritage has programs which complement those of the Canada Council for the Arts. When the offices for culture still existed, the two institutions did very different things, but their work complemented each other.

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

There was no overlap.