Finance Committee on Nov. 2nd, 2010

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

Like education?

[Perrin Beatty]

There are areas where we can make investments that are economic generators. There are other areas where clearly we are not receiving that return for the investment. When we talk about the issue of the deficit, though—

[The Chair, Conservative, James Rajotte]

Thank you.

[Perrin Beatty]

—and economic growth, the single best way to promote economic growth is to seek private sector growth. The single worst way to deal with the deficit is to push us back into recession, to have business pulling back from its investment plans, pulling back from hiring commitments that have been made, pulling back from buying new technology.

[The Chair, Conservative, James Rajotte]

Thank you.

I'm going to take the final round and try to follow up in an equally friendly fashion.

[Voices]

Oh, oh!

[The Chair, Conservative, James Rajotte]

I want to follow up on Monsieur Carrier's questions.

Mr. Kobly, you and I know each other well, but I want you to pay very close attention to his questions, because if this committee is going to recommend what you're recommending, I think the Alberta chamber, the Edmonton chamber, and the national chamber do have to answer the question about what the short-term fiscal cost is, and you can provide that later on if you want. But there is a short-term fiscal cost. I think we have to be upfront about that.

Your argument is that over the long term it's a deferral in taxation, so you make that up over time. I accept that argument, but you have to show the upfront fiscal cost, what it takes in terms of deferral time, and then I think you have to make an argument as to economic benefit. I think it's a very good idea that you have provided a letter from the Building Trades of Alberta. Obviously that has a greater impact on my colleagues than perhaps the Alberta chamber might on its own. So I think it's a very good partnership there. But you can address it now or you can certainly provide it, but I think those questions do need to be answered to this committee.

[Ken Kobly]

Thank you, Mr. Chair.

Due to the short notice we had that we were going to appear here, we were trying to get that information ready for the committee, and we will continue to pursue that, to get you the actual costs of what this deferral is. Again, it's a timing difference.

It also works in, just to reinforce the point, that the federal government is collecting personal and corporate taxes for five years before there's any potential of having to shell out money for the accelerated capital cost allowance.

We will undertake to get that information to you.

[The Chair, Conservative, James Rajotte]

Okay. I appreciate that. We begin our deliberations on the recommendations after the November break, which is in about a week and a half. So if we could get that as as soon as possible, we would appreciate that.

I want to follow up with the chartered accountants. I appreciate your presentation. There's a lot of good recommendations in here. I certainly concur with my colleague, Mr. Wallace, on any recommendations you have on simplifying the system. But I did want to have you comment on capital cost allowance rates, because there are many industry groups and others that look at it as a form of spurring economic development. In fact, even some economists we had before the committee said this may be in fact the best change you can make to the tax system that would spur economic growth. But you talk in terms of actually corresponding to the true economic life of the asset.

Those who have opposed changing CCA rates in the past have said it has to correspond to the economic life of an asset. But those folks like, Jay Myers from the Canadian Manufacturers & Exporters, say that in fact the rates as they're applied today by the government do not adequately correspond to the economic life of an asset. I wonder if you could perhaps comment further on the recommendation you have in your brief.

[Bruce Flexman]

Our recommendation is aimed at ensuring that capital cost allowance or tax appreciation is competitive, and as a technology changes, as the useful life of an asset changes, if the rates don't keep up, then you're putting business at a competitive disadvantage. Usually what happens is that things change such that lives may shorten, and CCA rates should reflect that. So it was a general recommendation, not looking to incent one industry versus another, but ensuring that this is regularly reviewed and is made current with respect to current technology.

[The Chair, Conservative, James Rajotte]

Okay. I'd like to follow that up. I have more questions, but unfortunately our time is up here for this panel.

I thank you all for your presentations and responding to our questions. If there's anything further you would like the committee to consider, please submit it to the clerk and all the members will get it. Thank you all.

Colleagues, we will suspend for two minutes and bring the next panel forward.

[The Chair, Conservative, James Rajotte]

We will continue with our second panel, continuing our pre-budget consultations for 2010-11.

We want to welcome all of our witnesses here to this panel. We have six organizations presenting for our final panel. This is actually our final panel with witnesses, so you're in the enviable position of having the most influence prior to our deliberations.

We have six organizations.

First, we have the representatives of the town of Lebel-sur-Quévillon. Welcome.

We have the Business Tax Reform Coalition, the Canadian Lung Association, the Canadian Gas Association, the Canadian Feminist Alliance for International Action, and the Chemistry Industry Association of Canada.

You will have five minutes to make your presentation.

We will start with the people from the town of Lebel-sur-Quévillon.

[Gérald Lemoyne, Mayor, Ville de Lebel-sur-Quévillon]

Good morning. My name is Gérald Lemoyne and I am the mayor of the town of Lebel-sur-Quévillon, a one-industry forestry town that has been hit by the forestry crisis. This morning, I will tell you what it means, in real life, to live through a crisis like the one that has hit us.

First, I will give you some background. Lebel-sur-Quévillon is what is called an isolated single-industry town: our nearest neighbours are over 100 km away. It is a town that was created with the construction of a pulp and paper plant in 1966. The road was built, the town was built, the plant was built, and the town has lived with the ups and downs of the forest industry all these years. There is also a sawmill nearby that was built in 1975. In the late 1960s, another sawmill, that belonged to another company and is now owned by AbitibiBowater, was opened about 15 km away. The workers live in our town, in Lebel-sur-Quévillon. So it is a community with close ties to the forest industry. Until 2005, it was a town where wages and household incomes were among the highest in Canada.

In 2005 we learned, from the media, that Domtar had just announced that it was shutting down its plants, the sawmill and the pulp and paper plant. It was done in a single blow, with no prior announcement, with no other discussion. It meant the loss of 700 jobs in an isolated community. This all happened almost five years ago, at the end of November. When this kind of thing happens, it is a disaster. It is an economic disaster, but it is first and foremost a human disaster.

Imagine that you are a worker thinking about retiring, who believes your children are going to be able to work in the same place as you. This kind of thing happens and not only have you lost your job, but your house is automatically devalued. So this is all going around you.

The local economy, which depends on forestry, has also suffered a heavy blow, and there are problems associated with all that too. In a community like ours, when these things happen, we are concerned about the social problems that may result.

That was the background. Because I have only five minutes, I will try to be brief.

This morning, we are here to tell you what the federal government should be doing. We are the ones who are suffering the consequences of these closings, and we certainly do not think that what the federal government is doing is sufficient. There are priorities that have to be set, including assistance for individuals, the people of Lebel-sur-Quévillon.

Let me tell you about my own case. I am a plant worker; I am not a mayor who earns an honourable living from being mayor. I paid into employment insurance for 40 years, but when I lost my job, I was not entitled to a single day of employment insurance. Assistance for individuals is certainly a priority in cases like these, along with assistance to the community, assistance in recovery and diversification, and although this aspect is often ignored, support. The senior governments should support us in finding solutions. There is also financial support for our projects. There are ways to avoid disasters happening, ways of preventing them. In the pulp and paper industry and the forest industry, for example, there are research and development, reducing the costs of fibre and other costs, and integrating lumber, paper and energy. There has to be encouragement for integrating these activities.

When we talk about integrating activities, we aren't necessarily talking about merging two plants into one; that's not what we're talking about at all. We're talking about converting plants for the production of products that may have a better future and promoting wood construction. That is also an important aspect. In Quebec, in Canada, we have forests, a forest industry that was one of the jewels of our economy, and one way to get the industry going again is certainly to promote wood construction.

That is all for now.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We will now hear from the people from the Business Tax Reform Coalition.

[Roger Larson, President, Canadian Fertilizer Institute, Business Tax Reform Coalition]

Thank you, Mr. Rajotte and members of Parliament. My name is Roger Larson. I work for the Canadian Fertilizer Institute.

I'm here today to speak on behalf of the Business Tax Reform Coalition, which includes nine associations: our own, the Chemistry Industry Association of Canada, the Canadian Plastics Industry Association, the Canadian Steel Producers Association, the Canadian Association of Petroleum Producers, the Forest Products Association of Canada, the Rubber Association of Canada, the Mining Association of Canada, and the Canadian Petroleum Products Institute.

Collectively we represent manufacturers that have production of over $320 billion, exports of over $210 billion, and direct employment of 1.4 million people. The significance of the coalition is that we have a consensus on the most important issues for our sectors.

We thank the committee for the opportunity to make our recommendations.

Given the global challenges faced by the Canadian resource-based manufacturing and exporting sectors, the Business Tax Reform Coalition believes that the Standing Committee on Finance should focus on policy measures that will ensure that the Canadian industry is equipped to take on what will surely be tougher competition in uncertain economic conditions.

We need policies that encourage investment. Manufacturing needs a clear, competitive advantage over competing international jurisdictions if it is to attract the necessary capital to make new investments in greener and more productive technologies and to create jobs for Canadians.

An extension of the accelerated capital cost allowance for no less than five years will send the only signal that matters to investors. It will encourage the necessary turnover in capital stock and the acquisition of the best available technologies for improving productivity and achieving environmental goals, which are key challenges for Canada. And it will stimulate additional investment, with zero long-term impact on Canada's tax revenues.

As well, Canada’s Department of Finance needs solid advice and analysis to support value-added resource upgrading and manufacturing. The most senior independent economic policy advisory position within the federal government, the Clifford Clark visiting economist post at Finance Canada, carries the rank of assistant deputy minister. Understanding that global competition is crucial, we therefore recommend the appointment of a resourced-based manufacturing specialist as the next Clifford Clark visiting economist.

In conclusion, we urge the committee to recommend the extension of the accelerated capital cost allowance for no less than five years to help Canadians compete in the global marketplace for new investments. Developing an investment advantage will deliver on a number of policy objectives, including productivity and environmental performance, and it will encourage the development of value-added product chains so that Canada can secure its role in the global marketplace. This step, along with maintaining the announced corporate tax reductions to 15% in 2012, will support the long-term competitiveness of Canadian resource-based manufacturing and processing industries.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We'll hear from the Canadian Lung Association, please.

[Christopher Wilson, Director of Public Affairs and Advocacy, National Office, Canadian Lung Association]

Hello. I'm Christopher Wilson, the director of public affairs and advocacy for the Canadian Lung Association. With me is Dr. Andrew Halayko, who is the chair of the research committee of our medical arm, the Canadian Thoracic Society.

Today we want to highlight the urgent need to increase federal funding for practical patient-focused research on respiratory illnesses. There are three strong reasons why this should be a national health priority.

First of all, the incidence of respiratory illnesses like asthma and chronic obstructive pulmonary disease, COPD, is rising nationally, even as the burden of other diseases like cancer, breast cancer, and heart disease are falling.

Second, lung diseases are very costly in human and economic terms. They affect over six million Canadians and they know no socio-economic, age, or gender barriers. Asthma is the leading cause of emergency room visits for children, and COPD is the leading cause of repeat hospitalizations among all major illnesses, frequently involving admission to costly intensive care units. Lung cancer has by far the highest mortality rate of any form of cancer.

The annual economic burden of lung disease is conservatively estimated at $15 billion, including the cost of treatment, productivity losses, and premature deaths.

Third, the current investment in respiratory research is nowhere near enough to properly address and lower the heavy economic and health burden of lung disease. Respiratory illness accounts for 10% of the total disease burden in Canada but receives only 4.5% of research funding allocated by CIHR, the Canadian Institutes for Health Research.

In contrast, cardiovascular disease and cancer, with only slightly higher shares of the disease burden—12% each—receive much higher allocations of research funding: 2.5 and 4 times higher, respectively.

The current low level of funding greatly limits the impact of our research and threatens our ability to train and retain the talented clinical researchers Canada needs.

What are we proposing for the federal budget? An increase for 2011-12 of $10 million for respiratory research from the current $36 million to $46 million, to be used exclusively for practical research that will result in improvements in patient care and outcomes. We're also recommending increases over the next five years to bring funding to a level that matches the burden of disease.

I realize that it may sound strange to be advocating for greater investments in research at a time when deficit cutting is the order of the day. However, we are putting our proposal forward as an investment that will pay for itself and help reduce burgeoning health care costs through more effective management of lung disease.

To give you an idea of what patient-oriented research can accomplish, I'd like to call on my colleague to take over.

[Dr. Andrew Halayko, Chair, Research Committee, Canadian Thoracic Society, Canadian Lung Association]

Thank you.

I'd like to start by emphasizing that the research we're talking about is probably very different from what you may imagine.

It's work that translates knowledge from basic research into real and early improvements in patient care, and it keeps people with lung disease out of our hospitals. To illustrate the tangible benefits of patient-oriented research, I'd like to give you an example that relates to the treatment of COPD.

This debilitating illness, which includes emphysema and chronic bronchitis, starts in mid-life and causes gradual impairment over decades. It makes patients very susceptible to frequent episodes of severe acute illness. My colleague Christopher had to watch his own mother pass away from COPD.

COPD creates a sustained demand on medical services and has a long-term negative impact on economic productivity, and at this time, there's no single treatment for the disease. Fortunately, new research by a team of Canadians has opened the door for advances in COPD care. The team developed a new home-based self-management program. It's an alternative to traditional treatment using in-hospital rehab services.

The program provides education to patients, provides a clinical case manager, and they monitor their own symptoms and make decisions about their own physical activity in rehab exercises. The results of this program are striking: 50% fewer hospitalizations, 45% fewer exacerbations, and 73% fewer unscheduled doctor visits.

It also reduced treatment cost per patient by an impressive 38%. This example shows the fruits of practical research, and this is the type of research we are promoting. We think it will pay for itself.

In closing, we urge the finance committee to support the Canadian Lung Association's proposal for increased investment in respiratory health and research. A timely investment now will reap great dividends in the future.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll now hear from the Canadian Gas Association.

[Timothy Egan, President and Chief Executive Officer, Canadian Gas Association]

Thank you, Mr. Chairman and members of the committee, for the opportunity today.

I am Timothy Egan, president of the Canadian Gas Association. I have with me my colleague, Alicia Milner, president of the Canadian Natural Gas Vehicle Alliance.

One of our asks is in respect to transportation. Should we take any questions, with your acceptance, I'd like to defer questions to Alicia on that point.

I will tell you a little bit about our product, then about who we are, and then very quickly what our asks are.

First, natural gas is, as we call it, the foundation fuel in Canada. Over 30% of our energy needs across the country are met by natural gas. It supports thousands of jobs and about $30 billion in annual export revenue. It's abundant, and increasingly so across the country. It's clean; it's not a primary source of particulate matter. It has a low GHG emission profile, and with a range of efficient uses, it delivers further environmental advantages. It's versatile.

Across the country, over six million Canadian customers are using natural gas. Those six million meters represent well over half of the Canadian public. It's affordable. With abundant supply, robust commodity markets, and efficient, competitively priced technology, it's affordable for Canadians across the country. It's also reliable, with an extensive pipeline infrastructure, and it's safe, as Canada is a world leader in safely producing, transporting, delivering, and using natural gas.

That's the product.

Who are we? The Canadian Gas Association is the principal network of distribution companies across the country that delivers energy services to those 6.2 million customers I referenced. Again, that's over half the Canadian public. We also represent transmission companies, manufacturers, and suppliers.

As I mentioned, natural gas is the foundation fuel. It meets 30% of Canada's energy needs, principally delivered through our distribution systems.

With that, what do we do and why are we here before the committee? First and foremost, our goal is to educate Canadians about natural gas and the energy services we provide to Canadians.

Second, we want to promote initiatives that drive sustainability and efficiency using our product. We are a founder and a committed partner in an initiative called QUEST—quality urban energy systems of tomorrow. That's an initiative involving stakeholders from environmental organizations, community groups, other energy industry representatives, and academia, and it is aimed at developing and improving integrated community energy systems across the country. It makes efforts to recover a lot of the waste energy and improve our overall energy efficiency.

Third, we promote initiatives that drive innovation and efficiency, such as a new initiative we've recently launched called ATI, the advanced technology initiative. That is a cooperative effort by our member companies to pool their resources to look at deployment of new technology opportunities for natural gas across the country.

Fourth, we're promoting the use of natural gas in new applications, such as transportation and power generation where it has not traditionally been used as much as other fuels.

Finally, we want to raise awareness off how natural gas is the foundation fuel for Canada's energy system, not only today but for tomorrow.

We have three asks in our submission before you today.

First, we would like to see an extension and refinement of NRCan's current ecoENERGY efficiency programs. These are initiatives aimed at work on looking at the deployment and application of efficient technologies. These programs have been in place for years, and many of them may be winding down. We believe they should continue.

Second, we believe there is merit in creating a new initiative under ecoENERGY called the ecoENERGY communities program. I mentioned the QUEST initiative. There are numerous efforts under way by our member companies and others across the country to promote integrated community energy systems. Many of those efforts cannot get off the ground now, however, because of a series of barriers to implementation, such as municipal planning rules and regulatory frameworks. There is a need for support to set up a series of showcase projects to look at how those barriers can be overcome.

Third, we're looking for supportive measures to encourage natural gas for long-haul and return-to-base transportation fleets, very targeted supports for transportation in high-emitting sectors of the transportation sector.

With that, Mr. Chairman, I'll wrap up my comments. Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We'll now hear from the Canadian Feminist Alliance for International Action.

[Kate McInturff, Executive Director, Canadian Feminist Alliance for International Action]

Thank you for the invitation to appear before the committee today.

My name is Kate McInturff, and I'm the executive director of FAFIA. We're an alliance of organizations from across Canada committed to ensuring the well-being of women in Canada.

I have three things to say to you today: don't spend more, spend better; when you spend on women, you spend better; and follow the money.

So don't spend more, spend better. Canadian taxpayers want and need a budget that meets their needs now and ensures a better future. A budget that fails to meet the needs of more than one-half of the Canadian population is economically unsustainable and demonstrates a failure to carry out the duties of government to meet the basic needs of its population.

I'm not here today to make a request for an extraordinary reallocation of resources to a special interest group. Women are not a special interest. They're not a small collectivity with particular concerns. They're one-half of the Canadian population and they have precisely the same interests as the other half of the Canadian population—a secure, prosperous, sustainable, and caring future for all Canadians.

I'm not here to ask you to allocate sufficient resources in the next fiscal year to allow women to attain their basic human rights across Canada, although I would love to see that happen. I'm here today to ask that when you spend on economic stimulus, you spend in a way that reaches more than a quarter of women in Canada; that when you deliver relief and support through tax policy, you do it in a way that reaches more than a quarter of the women in Canada; and that when you cut spending, you do it in a way that disadvantages fewer women.

If you can increase women's capacity to have an economic life that is secure and sustainable, everyone wins, because when you spend on women, you spend better. Globally, the increase in female employment in the developed world has contributed more to GDP growth than the rise of the economies of China and India combined. In the private enterprise sector, major corporations, such as, for example, PricewaterhouseCoopers, have recognized that increasing gender equality increases their productivity and their competitiveness. Yet with all of the spending on physical and defence infrastructure, there has been no corresponding spending on social infrastructure, spending that would reach more than 20% of women employed in the construction industry, for example; spending that would reach teachers, nurses, and service providers.

I'll give you an example. Spending on child care and early childhood education not only has an immediate benefit for those employed in that sector—and those are predominantly women—but it has multiple economic benefits.

First, it eliminates the single, most significant impediment to women's participation in the formal economy, women who we've already invested in through training and education.

Two, it has been demonstrated to significantly increase the educational achievements of all children, and of low-income children in particular, who have access to that early childhood education, increasing the likelihood that they will complete high school, college, and university, all of which will make for a more competitive workforce in the future.

Third, research demonstrates that, at a minimum, for every dollar invested into early childhood education for all children, two dollars is returned to the public purse. And for every dollar spent on low-income children in early childhood education, eight dollars is returned. This is just one example of how spending on women has a positive impact on economic growth and increases the well-being of all Canadians.

Finally, how do you know you're spending on women and how do you know you're spending better? Follow the money. Implement the recommendations of the 2009 report of the Auditor General on gender-based analysis. The implementation of the report's recommendations as they pertain to the budget process and all other fiscal and economic policy will provide an evident space for more effective spending, spending that provides results for women as well as men.

Thank you.

[Prof. Kathleen A. Lahey, Professor, Faculty of Law, Queen's University, Canadian Feminist Alliance for International Action]

Chair, could I just add some comments very briefly?

[The Chair, Conservative, James Rajotte]

Sure. You have one minute, please.

[Prof. Kathleen Lahey]

The first point I would like to make is this. Why do we feel this is an urgent situation? Because women in Canada have not yet recovered from the 1991 recession. Women's share of total incomes earned in Canada rose to an historic high of 36% of the total in 1997. It has remained exactly at 36% ever since then. That is an important benchmark, because the other brief point that I'll make is that if you do apply gender-based analysis, you will not just ask whether the corporate income tax cuts money could be spent better elsewhere; you will also ask, what are women getting from that? Statistical analysis demonstrates that women are getting between zero and, at most, 32% or 33% of the benefits of that, because of the demographics of the corporate structure in Canada.

Thank you.