Finance Committee on May 21st, 2013

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

Thank you very much.

Mr. Moffatt, the government has said that tariff reductions on hockey helmets and baby clothes will “benefit Canadian families and retailers”. These are worth about $80 million, whereas the increase is $330 million.

So if the government says that tariff reductions on helmets and baby clothes will benefit Canadian families and retailers, is it safe to say, applying their own logic to their disproportionate increases, that these increases will actually hurt “Canadian families and retailers”, to use their own words?

[Prof. Mike Moffatt]

Yes, based on the government's logic, absolutely this will harm Canadian retailers and consumers.

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

It applies specifically to hockey helmets. Are you aware whether it applies to ski helmets?

[Prof. Mike Moffatt]

We're Canada, so everybody focuses on hockey, but the tariff changes that were made apply to sporting equipment and sporting helmets across the board.

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

The tax code has grown significantly in recent years. Is there also a risk that we're making the tax code a lot more complicated, with these one-offs based on politics rather than economics?

[Prof. Mike Moffatt]

Absolutely, the fact that we're sitting here having this discussion about what kinds of helmets this does and does not apply to, other than just having a line item that says “helmets”, indicates that this is making the tariff code more complicated.

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

We had the retailers here earlier. They said the cross-border shopping was going up. Do you believe that the risk of this represents a threat to Canadian jobs in the retail sector?

[Prof. Mike Moffatt]

Yes, absolutely. We're already seeing a great deal of cross-border shopping. Anybody who has gone to Sarnia, Ontario or to Windsor, Ontario sees first-hand the stream of cars going across the border.

We say that on average the tariffs are increasing by 3%, but the increases could be anywhere from 0.5% to 18%, depending on the goods. It makes far more sense to buy many of those goods in the United States and bring them back over, rather than purchase them in Canada, and that is going to harm retail jobs.

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

Ms. Cohen, your association, the Canadian Psychological Association, expressed concerns several weeks ago about this bill and its application to certain services. You met recently with the CRA, yet your questions don't seem to have been answered. What clarity did you get from that meeting?

[Dr. Karen Cohen]

We had the opportunity to meet with the CRA just last week, and they provided some clarity, but the concerns we've outlined today reflect the continued concerns coming out of that meeting. It's really what it means to have solely a health care purpose and what it means to have an insurance purpose. I think there's still a lack of clarity on this question.

We're certainly willing to work with government, moving forward, really to ensure that Canadians are not taxed for necessary assessments. That issue, just to underscore the important point, is related to how health care services are funded in this country; you can't take the insurance part out of it.

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

Thank you very much.

Mr. Bonnett, you raised the issue of agricultural research and the layoffs within the federal government research area. How important is decentralized agricultural research to Canadian agriculture?

[Ron Bonnett]

Part of the problem is that we haven't had a really clear discussion yet on what should be core funding for government and what should be project funding. Some of the announcements that have been made have increased the amount of money available for research and project funding, but then there have been cutbacks of the A-base funding. It goes back to my comment that decisions are being made, but there is not a long-term strategy in place for how you balance the core A-base funding and the project funding. Both are necessary.

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

Has there been a reduction of personnel in the regional agricultural research centres? I'm told that as scientists retire, they're not being replaced in such places as our agricultural research station in Kentville, Nova Scotia, as an example. That represents a dimunition of the resources.

Is this something that is happening across the country?

[Ron Bonnett]

That's a concern that has been brought by our members from B.C. right through to the east coast: the fact that retiring scientists haven't been replaced. This gets back to the core discussion: what is the role of government research, and what type of mix of scientists do we need? I don't think those questions have been answered.

[The Chair, Conservative, James Rajotte]

Thank you. Thank you, Mr. Brison.

Mr. Van Kesteren, please.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I thank everyone for appearing before us.

Mr. Bonnett, I'm going to talk to you. It's good to see you again.

You've expressed your pleasure and, I think, support of the GPT program. I wonder if you could tell us about Canadian companies that have been trying to export to some of these emerging economies that were graduating from the GPT program. They often run into brick walls. For example, I think in India, in some cases, we're facing up to 100% tariffs. Can you speak on these trade barriers that Canadian companies face and the impact your members?

[Ron Bonnett]

I think there are a number of trade barriers that do impact companies trading abroad; it is not only the tariffs. One of the things we're finding with a lot of the trade discussions now is that it's a matter of a combination of tariffs and non-tariff barriers. I think this is why it's important to have comprehensive trade agreements that broach a large number of items. It could be everything from environmental barriers to scientific barriers to regulatory barriers, but it's a combination of things creating obstacles for Canadian companies doing business.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I want to zero down on countries like Brazil, Argentina, China, and Russia. How can removing those countries help farmers and agriculture producers sell their commodities?

[Ron Bonnett]

You mention a country like Brazil, which sort of pulls a cloak around itself as being a developing country and as needing all kinds of special support. But anybody who has been to Brazil recognizes that it has an advanced economy, with advanced agriculture. Actually, it gives them a very competitive advantage against Canadian producers. I think we have to make sure that when we're allowing benefits to developing countries, they truly are developing countries and not ones that are trying to wear this mask and use it to gain a competitive advantage for themselves.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I'm glad you mentioned that about Brazil. Canada is in competition with these countries.

[Ron Bonnett]

Very much so.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Can you touch on some areas where we're in competition.

[Ron Bonnett]

Well, it doesn't matter whether you're talking soybeans, beef, grain products or any other product, Brazil has become a leader in worldwide trade. If they get that advantage, it actually hurts Canadian producers, because some of these commodities trade with very small margins.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

You agree then that with these countries you mentioned, it's not reciprocal. Can you give us some examples of where farmers are losing out, in what specific areas it is really starting to hurt? Is it hurting Canadian farmers?

[Ron Bonnett]

Soybeans would be one that comes to mind fairly quickly. The corn trade, again, would be one where there's a big impact. With Brazil at the present time, it's predominantly the crop sector, but I think in the meat sector there's more work being done in Brazil on beef production and pork production as well. A lot of it is because they have this preferential treatment.