Evidence of meeting #122 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was countries.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Garth Manness  Chief Executive Officer, Credit Union Central of Manitoba
Laura Eggertson  President, Adoption Council of Canada
Martin Lavoie  Director of Policy, Manufacturing Competitiveness and Innovation, Canadian Manufacturers and Exporters
Richard Paton  President and Chief Executive Officer, Chemistry Industry Association of Canada
David Phillips  President and Chief Executive Officer, Credit Union Central of Canada
Karen Proud  Vice-President, Federal Government Relations, Retail Council of Canada
Mike Moffatt  Professor, Richard Ivey School of Business, As an Individual
Rob Cunningham  Senior Policy Analyst, Canadian Cancer Society
Ron Bonnett  President, Canadian Federation of Agriculture
James Laws  Executive Director, Canadian Meat Council
Karen Cohen  Chief Executive Officer, Canadian Psychological Association
Yves Savoie  President and Chief Executive Officer, Multiple Sclerosis Society of Canada

9:30 a.m.

Conservative

The Chair Conservative James Rajotte

Mr. Phillips, a brief response.

9:30 a.m.

President and Chief Executive Officer, Credit Union Central of Canada

David Phillips

—if you don't have a dollar to put into capital, then you can't lever that capital into asset growth. That's why I say it's really a tax on growth. It's a matter of arithmetic: if you can't lever that capital, then you don't have that capacity to grow.

In that small community, we are active in financing the smaller end of the small business category. We're really the only ones in that category. In that local community, the credit union is an employer; it's employing people from the local community. In some cases, perhaps, it's the major employer, at least within the town.

9:30 a.m.

Conservative

The Chair Conservative James Rajotte

Okay.

Thank you, Mr. Brison.

We'll go to Mr. Van Kesteren, please.

9:30 a.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Essex, ON

Thank you everyone for appearing before us this morning.

Ms. Eggertson, I want to talk to you first. You introduced a dimension that we don't often think about when we may discuss adopted children. We think about the problems of parents, but those things you mentioned about not having somebody there at graduation, for example, simply stress the importance that we must try as best we can to make that a reality.

It's probably one of the less controversial parts of the budget. Would you elaborate and tell us what kind of cost a family usually faces when adopting a child? I'm thinking of the mandatory home study and pre-service adoption preparation training.

How do the budget changes to the adoption expense credit help those families with these expenses? Could you elaborate on that?

9:30 a.m.

President, Adoption Council of Canada

Laura Eggertson

Yes, thank you.

The costs really depend on what province you live in. In Ontario, for example, if you were to get a private home study done, it might cost you $1,500 or $2,000, and the same for taking the mandatory pre-service training, which in Ontario is called P.R.I.D.E training.

Because the tax credit is only 15% of the total, up to a maximum, when you claim the tax credit you want to be able to pile all of your expenses together to get the maximum benefit. The changes better allow families to do that. Previously, if you had a home study done two or three years before you actually had a child placed with you, you couldn't claim that expense because it had to be done in the year the adoption was finalized. You couldn't pile up those expenses together, if they were done over several years.

It's a very small change, but we hope it will help with some of those costs and, again, make it a little bit easier for families and encourage some who might be on the fence about whether they can afford it or not.

If you adopt directly through the public system, you can do it without cost, really. When I adopted in Ontario, it really didn't cost me anything because the Children's Aid Society conducted my home study, and I went through training there. But if families are trying to get adoption-ready, which many of them are doing, they get their private home study done first, they go through the training, and then they present themselves. If you're adopting internationally, of course, it can be even more expensive, costing some $20,000 to $40,000.

9:30 a.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Essex, ON

Of course, you spoke a little bit about children who go from home to home, wondering if this is going to be the home. In what ways are the adoption expense tax credit and the changes in the budget helping families who are adopting from the foster care system? Why does ensuring that this credit is available earlier matter to families who are adopting?

9:30 a.m.

President, Adoption Council of Canada

Laura Eggertson

It matters to those families, as I said, who may be trying to get themselves adoption-ready before they even contact a Children's Aid Society or ministry in the different provinces and territories. They're spending the money upfront and they're trying to get themselves ready, before they go in and talk to an agency about children.

It also helps if you are adopting privately. You may be looking for an infant or a young child, and that also entails significant expenses, for example legal fees, if you're trying to do it that way.

It's not going to solve the child welfare issue in this country, but as we say, it's a first step. We really want to work with the federal government on a series of measures, of which this would be the start, to try and make it easier and get more kids out of foster care.

9:30 a.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Essex, ON

Do you have a sense of how many families would be affected by this measure?

9:30 a.m.

President, Adoption Council of Canada

Laura Eggertson

It would be primarily the 2,000 or 3,000 who are adopting privately and through the domestic system right now. So 2,000 or 3,000 in a year could be affected by this.

The people who are adopting internationally are probably already able to claim the maximum expenses, because their expenses are so much higher.

9:30 a.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Essex, ON

Very quickly, I'll just switch over to the Manufacturers and Exporters.

I, too, was on that committee with Mr. Rajotte, and we were very proud of that recommendation, and we were very happy to see that happen as well.

Maybe you can just elaborate. Since that measure was introduced, what effect has that had on manufacturing?

Mr. Paton, maybe you're—

9:30 a.m.

Conservative

The Chair Conservative James Rajotte

Just a brief response.

9:35 a.m.

Director of Policy, Manufacturing Competitiveness and Innovation, Canadian Manufacturers and Exporters

Martin Lavoie

In terms of numbers, we've seen an increase of 45% in expenditure on machinery and equipment between 2009 and 2012.

We've seen the beginning of an increase in productivity in manufacturing in the last year. I want to be careful, it's not just about this measure, but I think we're starting to see some gains in productivity as well.

9:35 a.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Richard Paton

We've seen $3 billion in the last two years, and we think there is about $10 billion out there of potential investment, all of which is marginal and wouldn't be here without the corporate tax plus the ACCA.

9:35 a.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

Thank you, Mr. Van Kesteren.

Mr. Caron, go ahead.

9:35 a.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Thank you, Mr. Chair.

My questions are for Mr. Lavoie and Mr. Paton.

Let's talk about the accelerated capital cost allowance. We support that measure, given the difficult period the manufacturing sector is going through. That measure has already been applied since 2007 and has been extended every one or two years.

My question may be a bit difficult. When do you think the accelerated capital cost allowance will no longer be needed?

9:35 a.m.

Director of Policy, Manufacturing Competitiveness and Innovation, Canadian Manufacturers and Exporters

Martin Lavoie

You are right. By definition, a temporary measure is temporary.

This year, we expected greater levels of economic growth in the United States. The budget has indicated that the growth may not be as significant as we thought and that we should be careful.

We recognize that this measure was implemented to stimulate the economy. In two years' time, we will see whether the initiative should be extended or not. However, I think there is a longer-term issue to be considered. This is not just a tax incentive to stimulate the economy. Another objective of this incentive is to increase productivity through the purchase of machinery and equipment.

It's also important to look at what the U.S. is doing when it comes to those same pieces of equipment. We need to know whether we are at a disadvantage compared with companies that have the ability to produce on both sides of the border, as there are many such companies. It's somewhat difficult to make that comparison because the United States has a range of machinery in each category. However, when it comes to most of the machinery used in our sector, the depreciation in the U.S. is from five to seven years. According to the method used in Canada—the declining method—the depreciation rate is 30% in the first year, and 30% thereafter. It takes from 9 to 12 years to depreciate about 95% of the value. So the incentive is better in the United States than in Canada for most of the equipment.

Mr. Paton mentioned that, in the U.S., in his sector, the depreciation period was between three and five years. So we are talking about a real incentive. I think that, in the long term, we should perhaps review the various categories and the depreciation rates by category, while always trying to be more competitive with the United States.

9:35 a.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Mr. Paton, what do you think?

May 21st, 2013 / 9:35 a.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Richard Paton

I will answer in English.

This is at the heart of the real problem we have here. Large capital investments take at least five years to go from planning to implementation. So even with the accelerated capital cost allowance, with an extension of two years, some of these investments may occur and not be able to take advantage of the capital cost allowance. We've always argued to make it the length of time that a normal major business investment would occur, from the planning stage to the actual implementation stage.

We're sitting here in the North American environment. Our sister association in the U.S. is now projecting $72 billion of investment in the United States' chemical industry, due to shale gas largely, and about $50 billion in seven other manufacturing sectors that are highly energy dependent.

With that 60% double declining balance forever—it's not for two years, it's not a little extension, but it's there in the tax code.... We know what happens when something is in a tax code. It's pretty permanent—unless it's a co-op.

9:35 a.m.

Voices

Oh, oh!

9:35 a.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Richard Paton

So it's very important to have long-term tax competitiveness for big projects.

9:35 a.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Thank you very much.

I have about 90 seconds left.

I will go to Mr. Lavoie and, if I have time, to Ms. Proud.

My question is about the removal of certain countries from the general preferential tariff treatment. We can have a mature debate on the issue of tariffs. The government often talks about China or the BRIC countries. An argument could be made with regard to that. We are talking about 72 countries and the fact that products made in those countries, including the BRIC countries, are not made here. The argument for consumers is that they will have to pay, since they cannot have access to products manufactured here. There are no competitive advantages for businesses.

What do you have to say about those products? Do you think several of them were submitted?

9:40 a.m.

Director of Policy, Manufacturing Competitiveness and Innovation, Canadian Manufacturers and Exporters

Martin Lavoie

I would begin by saying that an inverse relationship also exists. Some products are no longer made here because tariffs were eliminated in the past. In the 2000s, three textile mills were closed on the same day in Huntingdon. Everyone remembers that. And the next day, the tariffs were eliminated.

That being said, I don't want to consider only the consumer's point of view. Even if a product is no longer being manufactured here, the fact that a tariff is being imposed will incite those countries to negotiate free trade agreements with us because they want to have access to our market. If we give them the preferential tariff before we even sit down to negotiate, what could we put on the table to get what we want from them?

9:40 a.m.

Conservative

The Chair Conservative James Rajotte

Ms. Proud, go ahead very briefly, please. We are over time.

9:40 a.m.

Vice-President, Federal Government Relations, Retail Council of Canada

Karen Proud

I think we need to be very clear as to the purpose of these tariffs. My understanding of the tariffs is that originally they were supposed to protect domestic manufacturing in Canada. If there's no more domestic manufacturing in Canada, we don't need the tariffs anymore.

If they are trade negotiation tools, then we should call them what they are and be clear to Canadians that they are that and they are not to protect domestic manufacturing.

9:40 a.m.

Conservative

The Chair Conservative James Rajotte

Thank you. Merci.

We'll go to Mr. Adler, please.