Finance Committee on May 22nd, 2013

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you.

[Dean Beyea, Director, International Trade Policy Division, Department of Finance]

Just to clarify, these iPods and MP3 players have been eligible to come in under this exemption. They're technically classified in an area where there is a tariff now, and they're subject to a duty-free exemption.

Nothing that's changed in the GPT will change that. They'll be able to continue to come in under the 9948 exemption.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

It's like that, despite the fact that many countries have been excluded from the preferential tariff. Is that right?

I don't know if you understood my question well.

[Dean Beyea]

I'm sorry. Could you repeat the question?

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Yes, of course. It's like that, despite the fact that many countries have been excluded from the preferential tariff, that is to say more than 70 countries, is that right?

[Dean Beyea]

Right. We've excluded 72 countries from the tariff, but regardless of whether these goods were coming from those countries or not, they were coming in duty free under this exemption for tariff item 9948 and they'll continue to be eligible to do that.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

However—

[The Chair, Conservative, James Rajotte]

You have one minute left.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

I will come back to a question that I already asked and for which I did not get an answer.

To be eligible for this exemption, information needs to be collected, and that is done through the retailers. Should we not be worried about the confidentiality of information gathered on consumers?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Information gathered and remitted to CRA is kept confidential by CRA.

CRA collects a great deal of data, of course, that Canadians value as private, as their own personal information, that we, as a Parliament, have decided they should provide to CRA so that we have a reasonable tax base in our country and a reasonable revenue.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

I am done.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Côté.

Mr. Van Kesteren, you have time for a brief round, please.

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

Thank you, Minister, for being here.

I want to talk to you about the gas tax, and the reason I want to talk to you about that.... You've been to Chatham—Kent—Essex and you know how flat Chatham—Kent—Essex is. You also know, I'm sure, how many bridges we have as a result of that. As a matter of fact, it's somewhat of a crisis.

I have to tell you that I had the opportunity to talk to city officials just the past week, and they are excited about the gas tax. They're excited that, first of all, in 2009 we doubled it, and then we made it permanent.

But there is something else that's taken place in this budget. I wonder if you could talk about the indexing of the gas tax and how that will affect municipalities like mine.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

As you said, I expect them to be happy, if not ecstatic. This is something the Federation of Canadian Municipalities and various individual mayors and councillors across the country, including some at regional government levels, were very keen on having. There had been no indexation to the gas tax fund transfer to the municipalities, and now it will be there.

As you said, we did make the gas tax fund permanent. Indexation is annual at 2%. Every time the fund reaches the next $100 million threshold, it will be adjusted in that way. It will help them plan, but more importantly, on the infrastructure side, this is important for municipalities because it gives them certainty in planning.

We now have a 10-year program in place for when the current program ends, and they can plan their infrastructure over that period of time. They can enter into public-private partnerships using P3 Canada and their own provincial infrastructure agencies. These are tremendous opportunities for bridges, roads, and all sorts of public infrastructure that will help us grow the Canadian economy and create jobs.

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

Really quickly, there is another item of interest in my riding. There has been some controversy over the clearing of land. Of course, that falls under the jurisdiction of private ownership; however, there is a small measure that you've also introduced in this budget, and that's the Nature Conservancy.... There is $20 million that's been allocated to that organization.

Can you tell us how that may possibly benefit, again, the farmers in my riding who are trustees of this land?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

It helps them because the Nature Conservancy can work with them to make sure the appropriate trusts are arranged. It's not just in southwestern Ontario, of course. It's all across the country and it's in suburban ridings, too, in the greater Toronto area, where there are wetlands, and in other areas where the Nature Conservancy has acted successfully in cooperation with homeowners and farm owners, and so on, even including Whitby, Ontario, which I represent.

I have great confidence in their ability to work out solutions that are in the public interest with respect to environmentally sensitive properties.

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

Thank you.

[The Chair, Conservative, James Rajotte]

Mr. Van Kesteren, I apologize for cutting you off. We will have to head to the vote.

Minister, I want to thank you very much for being with us here today and for responding to our questions.

Colleagues, and for the panellists who were to present, I will suspend the meeting and we will come back immediately after the vote.

Thank you.

[The Chair, Conservative, James Rajotte]

Colleagues, could I have you take your seats, please?

I apologize for the vote interruption. We have another vote tonight as well.

We're pleased to continue our study this afternoon of Bill C-60, An Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures.

We have five witnesses before us.

We now welcome Mario Albert, president and chief executive officer of the Autorité des marchés financiers.

Welcome.

We have the CEO of the Canadian Youth Business Foundation, Julia Deans. Welcome.

We also have with us here Alex Levasseur, president of the Confédération des syndicats nationaux.

Welcome.

From Genome Canada, we have the president and CEO, Mr. Pierre Meulien. Bienvenue.

And from the Nature Conservancy of Canada, we have the president and CEO, Mr. John Lounds. Welcome back to the committee.

You will each have up to five minutes for an opening statement, and then we will have questions from members.

We will start with Mr. Albert.

You have five minutes to give your presentation.

[Mario Albert, President and Chief Executive Officer, Autorité des marchés financiers]

Thank you, Mr. Chair.

I would first like to thank the Standing Committee on Finance for inviting the Autorité des marchés financiers to participate in your study of Bill C-60.

This afternoon, I would like to present our position specifically on section 133 of this bill. This section would indefinitely extend the mandate of the Canadian Securities Transition Office.

This office's mission is to promote establishing a national securities regulator in Canada. The office's activities are to come to an end in July. The Autorité des marchés financiers takes a clear stand on extending the Canadian Securities Transition Office mandate, we believe this extension is inappropriate.

In its December 22, 2011 ruling, the Supreme Court of Canada concluded that regulating securities is a matter of provincial jurisdiction according to the Constitution. Consequently, there are simply no grounds for extending the Canadian Securities Transition Office's mandate in order to create a national securities regulator that would involve the federal's government participation.

Beyond the constitutional issues, it is also important to note that currently the provinces are adequately regulating securities. In fact, we are convinced that creating a national securities regulator would be a step backwards from the current system. Creating a national regulator would inevitably standardize regulations, possibly on the basis of the interests of the sizeable market in Ontario.

However, securities markets in Canada are markedly different from one region to another. In order to be efficient and effective, the regulatory framework must acknowledge the differences. The current system does a very good job of this. It allows for a high level of harmonization while taking into account, when necessary, the specific needs of each region.

On the administrative front, over the last few years the provincial regulators have implemented a securities passport system. The system allows securities issuers looking for financing in a number of provinces to do so by communicating solely with the provincial regulatory authority where their headquarters are located. This system is efficient, effective and fast. It is not a costly collage as the promoters of a national regulator would say.

Overall, the provinces provide quality regulations of securities in Canada. A number of international studies confirm this. For example, the World Bank recently ranked Canada 5 out of 175 countries when it comes to protecting investors. The Organization for Economic Co-operation and Development, the OECD, ranked Canada second for its quality of securities regulation. In this context, one may want know why the federal government is seeking to change a system that works well.

That being said, as the Supreme Court of Canada's decision reminds us, the federal government has a role to play in maintaining the stability of the financial system. This role is significant in the current international financial and economic environment. However, rather than try to interfere with securities and taking the risk of provoking more costly and unproductive legal challenges, I humbly suggest that the federal government focus its efforts on strengthening the cooperation between the different financial regulators while respecting their constitutional responsibilities.

The provincial ministers in charge of securities, with the exception of Ontario, recently asked their regulators if they had suggestions on how to improve the governance and operations of the Canadian securities administrators.

[The Chair, Conservative, James Rajotte]

You have one minute left.

[Mario Albert]

For the Autorité des marchés financiers, this work is important. We believe it is possible to continue to improve this structure, which already works very well and has proven successful.

Moreover, federal and provincial regulators already work together. The Autorité des marchés financiers works regularly with the Bank of Canada, the Office of the Superintendent of Financial Institutions and the Canada Deposit Insurance Corporation to manage files, and with the Royal Canadian Mounted Police on investigations. We also take part in the work done by the group of heads of regulatory agencies. Cooperation among regulators could be increased if this group's mandate were broadened and improved.

The Government of Quebec recognizes that financial stability is important. It has therefore already indicated that it would be open to cooperation with the federal government as long as its jurisdiction was respected.

The Autorité des marchés financiers is completely open to working in this direction. We believe that this approach is much more productive than extending the mandate of the Canadian Securities Transition Office.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

Next we'll hear from Ms. Deans, please.

[Julia Deans, Chief Executive Officer, Canadian Youth Business Foundation]

Thank you, Mr. Chair and committee members.

My name is Julia Deans, and I'm the CEO of the Canadian Youth Business Foundation.

We're a national not-for-profit organization. We were established in 1996 to help young Canadian entrepreneurs launch successful businesses. We have a successful track record of advancing economic growth by supporting young entrepreneurs as they build businesses, and also in developing the entrepreneurial skills that will help them in whatever career path they pick.

In brief, we help Canadians ages 18 to 39 develop a strong business plan; only 10% of them have one when they come to us. We then provide them with loan financing, mentors, business resources, and networks, to help them navigate the initial years of their start-up. We have seven offices coast to coast, and we work with over 200 community partners in more than 1,400 communities across Canada.

As the minister said, to date we've invested in 5,600 Canadian entrepreneurs and engaged 4,000 volunteer mentors to help them. These businesses have created 22,100 jobs and $155 million in tax revenue. The federal government has been a key partner, and this budget will help more young entrepreneurs start more businesses.

I joined CYBF four months ago because I see it as a terrific model for building jobs and futures for young Canadians, with potential for much greater impact. We currently help probably 2% to 3% of the potential youth entrepreneur market, and our goal is to double that in the next five years.

In addition to helping young Canadians realize their entrepreneurial potential and building our economy, supporting youth start-ups responds to other economic challenges. One of these is youth unemployment, which currently sits at around 15%. That is twice the national unemployment average. Youth entrepreneurs create jobs for themselves and they also hire others. Harry Chemko, a young Vancouver-based entrepreneur, started his IT business with a $15,000 loan from CYBF. He now has about 350 staff serving billion-dollar corporate clients worldwide, and he recently handled all of the merchandise for the Winter Olympics.

Another huge challenge is the expected retirement of 66% of our small business owners by 2016, according to the CFIB. This is particularly a problem for rural communities, many of which face the loss of businesses that are key to their vitality. It also drives up costs for everybody else. For example, a Nova Scotia government official told me that the shortage of HVAC businesses outside of Halifax means that every construction project requires Halifax-based technicians to travel and stay in hotels.

Youth entrepreneurs are well poised to succeed retiring business owners, but they need help to get launched. As you can suspect, the single biggest obstacle for new entrepreneurs is accessing sufficient start-up capital. This is really hard for young people in particular. They don't have assets to pledge as security for loans or the networks to tap into for funding.

Unlike banks, CYBF does not require collateral. We look at the young entrepreneur's character and at their business plan. The entrepreneur can receive a loan of up to $15,000 from us. It's repayable over five years at rates slightly less than commercial bank rates, and interest only is payable in the first year. Based on our strong track record and the high repayment rate from our entrepreneurs, the Business Development Bank of Canada will extend a further $30,000 loan, and then mainstream banks will take notice.

You can imagine that most entrepreneurs focus mainly on getting the money, but good planning, management, and advice are what mitigate their failure in the first few years. CYBF entrepreneurs call our full suite of pre-launch coaching, our two-year mentoring program, access to entrepreneurs and residents, networking events, and other supports the quadruple bypass surgery they didn't know they needed. This is what leads them to have higher success rates than the national average for start-ups.

In addition to our core major start-up program, we have several programs that are aimed at helping particular groups of entrepreneurs, including newcomers, transitioning Canadian Forces members, high-potential growth entrepreneurs in the innovation space, and those preparing for export. We also offer a stand-alone six-month mentoring program for young entrepreneurs who don't need financing.

Based on our track record, CYBF and Canada have been recognized as global leaders in advancing youth entrepreneurship. We represent Canada on a number of international alliances, including one that parallels the G-20. We are really proud to have been a trusted partner of the Government of Canada for the past 12 years, and we've successfully leveraged federal investments to attract additional funds from provincial governments and also from the corporate sector.

We truly appreciate the government's belief in us and the decision to invest $18 million over the next two years to help more young entrepreneurs launch and succeed in Canada.

I very much appreciate the opportunity to speak with you about CYBF in person today. Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

Mr. Levasseur, you have the floor.