Finance Committee on Nov. 1st, 2010

[The Chair, Conservative, James Rajotte]

Thank you Mr. Carrier.

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

—in the different regions.

[The Chair, Conservative, James Rajotte]

Thank you.

I'm going to take the next government round. I wanted to follow up on some of the questions that were asked earlier, particular with respect to CAPP.

I'll ask for clarification at the beginning. Mr. Cullen asked about oil and natural gas. Am I correct in understanding that your first proposal is for natural gas alone?

[David Collyer]

Yes, it's specific to natural gas. It does not include any consideration of oil, either as oil sands or otherwise.

[The Chair, Conservative, James Rajotte]

I want to follow up on the question about Canadian competitiveness vis-à-vis the United States, because it seems to me some people are asking about it. They're saying that with the price of gas where it is, we should allow the shale gas development to take place in the United States rather than in Canada.

What is your response to that question?

[David Collyer]

My response, Mr. Chair, is that we're well served to have a natural gas price in North America that works for both consumers and producers. Given the job creation, economic benefits, and so on that flow from production of natural gas in Canada, it's important that we maintain a healthy and competitive industry here. With specific respect to our proposal, we believe that from a tax standpoint it effectively puts the Canadian industry on a level playing field with our competitors in the United States.

[The Chair, Conservative, James Rajotte]

Perhaps I'll get Encana to comment on this. One of the things I did this summer was to go into northeastern B.C. and see a site. I know what fracking is now, because I've seen it first-hand, but I'd like you to comment. My understanding of your argument is that you're promoting it because it is in fact a lower-carbon fuel. Am I correct?

[Eric Marsh]

That is correct. The environmental benefits are not the only reason we're working on it. The transportation sector produces between 40% and 50% of the emissions, and natural gas can help move that. We don't have the technology today to run an 18-wheeler or large trucks on batteries or do something better than that, and we think it's a great opportunity for natural gas.

As a comment on the competitiveness of it, I think you have to recognize that among all these different pieces--whether royalties, taxes, or whatever--the Canadian Mcf figure of gas that gets produced has to be competitive with the Mcf produced that day in the U.S.

The U.S. advantage is that it's closer to the burner tip, as we say; there's more of a market there. In North America we produce about 75 Bcf--billion cubic feet--per day. About 14 Bcf per day comes out of Canada, so our biggest market is really to sell into the United States. It's been an exporting revenue source for years in Canada, and I think it's important that we stay very competitive and analyze that.

[The Chair, Conservative, James Rajotte]

I have about two minutes left. Unfortunately, I don't have more time.

I want to come back to the issue of the accelerated capital cost allowance, because when I chaired the industry committee, we recommended it for the manufacturing sector, and at that time many economists came out and criticized it and said it was a subsidy.

Our argument as a committee was that it's a tax deferral and results in a lot more economic benefits coming to the government over time. It's being proposed for telecommunications, for natural resources, for the equipment manufacturers...for a lot of people. The manufacturing coalition has come back.

I wanted to give you the opportunity to address the question of whether it is a subsidy, because you know that's how the finance department is initially going to react. They're going to say it's a subsidy, a fiscal cost to the government, and have concerns on that side, especially with the fiscal situation we're facing.

I have about a minute for whoever wants to address it.

Go ahead, Mr. Lord.

[Bernard Lord]

I'd be happy to address that.

In fact, we don't view it as a subsidy at all; it is a short-term incentive. The tax that would be collected by the government will be collected anyway; it's just that the amortization is done faster, and it provides an incentive to build out faster. It's easier to get capital. That's certainly the case for the wireless sector, and I would say it's the case for other sectors as well.

The other thing is that we have to be careful. What I've noticed--and I don't want to speak for anybody else--is that there are some industries around this table that create wealth and prosperity for the country. We can't fall into the short-sightedness of imposing more taxes on those that produce wealth and prosperity in order to subsidize those that always fail. That's the danger. In fact, by providing a capital cost allowance, you're actually providing the incentive for those that create prosperity to do it faster. Then you'll be able to tax them more if you want to, which we don't think is a solution.

Let's support those that succeed rather than subsidize those that end up failing or those that just need more effort.

[The Chair, Conservative, James Rajotte]

Mr. Collyer or Mr. Marsh, we have about 15 seconds if you want to add a brief comment.

[David Collyer]

I think Mr. Lord said it very well. We would share that view completely.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

I have Mr. Brison again, please.

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

Mr. Chair, I have a notice of motion that I'd like to present for Wednesday. I'll read it into the record.

[The Chair, Conservative, James Rajotte]

Mr. Brison, this is the last final round. You're going to read your notice of motion for debate on Wednesday.

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

Yes.

[The Chair, Conservative, James Rajotte]

At this point, should I just thank the witnesses, then?

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

Yes.

[The Chair, Conservative, James Rajotte]

This is a bit of parliamentary procedure. We have a notice of motion.

I want to thank the witnesses for being with us here today and for their responses to our questions. If there's anything further you'd like the committee to consider, please do so through the clerk. We'll ensure that all members get it.

Thank you.

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

Mr. Chair, the motion is:

That the Committee requests that the Parliamentary Budget Officer provide it with a general analysis, within 21 calendar days, of the Department of Finance’s response to the motions moved by Scott Brison, MP and passed by the committee on October 6, 2010. That analysis, shall include, but not be limited to the following items:

The Department of Finance’s assertion that the majority of the Government of Canada’s justice legislation can be implemented without any incremental fiscal costs to the Government and that to the extent that there are new costs associated with the legislation, that these have already been incorporated into the Government’s fiscal projections;

The figures provided by the Department of Finance on the estimated costs to the federal treasury of the Government of Canada’s planned reduction of corporate tax rates from January 1, 2011 onwards;

The Department of Finance’s estimates on the costs of the F-35 aircraft.

The committee also orders that the Government of Canada provide the committee with electronic copies of the following:

Five-year projections of total corporate profits before taxes and effective corporate tax rates from 2010-11 to 2014-15;

All documents that outline acquisition costs, lifecycle costs, and operational requirements associated with the F-35 program and prior programs, the CF-18. Such documents include but are not limited to the Selected Acquisition Report and the report of the US Department of Defence’s Joint Estimating Team both relating to the F-35.

The committee also orders that the Government of Canada provide the committee with electronic copies of the following motions as they relate to each justice bill listed in Mr. Brison's motion of October 6 as well as the following bills: S-2, An Act to amend the Criminal Code and other Acts; S-6, An Act to amend the Criminal Code and another Act; S-7, An Act to deter terrorism and to amend the State Immunity Act; S-9, An Act to amend the Criminal Code (auto theft and trafficking in property obtained by crime); and S-10, An Act to amend the Controlled Drugs and Substances Act and to make related and consequential amendments to other Acts:

the incremental cost estimates broken down by Capital, Operations & Maintenance and Other categories

the baseline departmental funding requirements including the impacts of the bills and Acts, broken down by Capital, Operations and Maintenance and Other categories;

the total departmental Annual Reference Level, including all quasi-statutory and nonquasi-statutory items, including Capital, Operations and Maintenance and Other categories, including the incremental cost estimates;

detailed cost accounting, analysis and projections, including assumptions, for each of the bills and Acts, conducted in accordance with the Treasury Board Guide to Costing.

That the committee orders that all information requested in this motion from the Government of Canada be provided to the committee within 7 calendar days;

That the Committee authorizes the Clerk to distribute to the Parliamentary Budget Officer all documents provided by the Government of Canada to the Committee in response to this motion;

That the Committee shall report to the House the analysis provided by the Parliamentary Budget Officer to the Committee in response to this motion.

Finally, Mr. Chair, I apologize that we do not have the motion in both languages. I have talked to my colleagues from the Bloc, and tomorrow morning the motion will be circulated in both languages. We appreciate your patience with that today.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Brison.

Yes, obviously, we do ask for notices of motion in both official languages, but my understanding from the clerk is that a member can get the floor and read it into the record, which satisfies the requirements. But I would encourage all members to have motions in both languages.

Monsieur Paillé.

[Daniel Paillé, Bloc, Hochelaga, QC]

I have a technical question. I want to know whether the fact that it was moved in English only makes it out of order. It is a long motion. We cannot debate it, but I ask the question in terms of procedure.

[The Chair, Conservative, James Rajotte]

It's in order because it's a notice of motion and he's not introducing the motion. It's a notice of motion because he wants to debate it on Wednesday.

Maybe Mr. Brison can indicate when on Wednesday he wants to debate it. We have a two-hour meeting and it may be a lengthy debate on this motion.

Do you want to debate it at the beginning?

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

Thank you very much for your patience. I am sorry about today, but tomorrow morning, the clerk will circulate the motion in both official languages.

[Mike Wallace, Conservative, Burlington, ON]

Are you answering his question?