Finance Committee on Oct. 5th, 2011

[Paul Davidson]

We've been very pleased with the steady investment in research over the life of this government, and the government that preceded it. It is absolutely fundamental to our competitive advantage. I think in each of the last six budgets, there's been an increase in research and development spending.

That research is developing results for individuals and communities. There are challenges ahead, but let me first speak about the fundamental difference it's made. It has created a globally ready and globally engaged university community that has the capacity now to engage at the highest levels around the world and attract researchers from around the world.

On the talent side, the creation of the Vaniers, the Bantings, and the Canada Excellence Research Chairs has attracted talent. It's front-page news in the U.K. now when European researchers come to Canada.

The challenge now is to sustain those investments. I'll make the analogy that the international research community is a lot like the international financial community: they respond to signals, they respond to rumour, they respond to speculation.

So having a steady increase, a continued investment, in research, in infrastructure, and people, will be critically important.

[Shelly Glover, Conservative, Saint Boniface, MB]

Excellent. Thank you.

I would like to ask Mr. Gauthier a question.

Our government, the Government of Quebec and your agency announced a project here, in Montreal, involving investments from PPP Canada. I think this project, which focuses on trains, will improve the situation.

Could you take a moment to explain how PPP Canada is helping to reduce costs and increase efficiency.

[Joël Gauthier]

Thanks for your question.

We were, I think, the first project awarded money by P3 Canada, and we're very pleased about that. In fact, we're going to open the bid this Friday to start the construction.

I'm not sure whether P3 Canada is very well known in the community. For us, we've discovered it, but I think it was created in 2008 or 2009. I think the contribution of the federal government is a maximum of 25%.

The way it's structured is that you have to build a business case. You have to examine the way in which you will execute the construction, and by doing that you're examining the whole spectrum of PPP. It shows you that you can create value. You can mitigate your risk. You won't have cost overruns or surprises in terms of how you realize your project.

So we did the exercise with P3 Canada, and we were very pleased with the way it went. In fact, we filed for round three. It's under review at the moment, and we hope we can be successful in round three.

We've very pleased with the way the government has structured P3 Canada. We encourage you provide other money for P3 or to create other funds that could be dedicated to specific things, such as public transit.

[Shelly Glover, Conservative, Saint Boniface, MB]

So to those who oppose that fund—because in a platform during the election, others said they would eliminate it—it sounds like you would absolutely support the fund. Again, it reduces costs, and is effective and efficient, is it?

[Joël Gauthier]

Absolutely.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Glover.

We'll go to Mr. Marston, please.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Thank you, Mr. Chair.

Just very quickly, Mr. Saul, we support your call for ending the subsidies. I'm not really going to ask you a question.

Mr. Tunney, you'll be pleased to know that I'm not drawing a Bell Canada pension. I took a buyout, so you're safe.

[Voices]

Oh, oh!

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Now, Ms. Gibeau, we've been saying that the government should be flexible. They're moving to balance their budget. We're saying flex it out, go out a year or so, because we need to do some investing in Canada. Here, the Conference Board of Canada has talked about social infrastructure. They talked about engaging more Canadians in the job market, particularly women and aboriginals. For women, for instance, a child care program could be started. But I want to take it a little further.

In the last election campaign, the NDP talked about the lack of long-term care beds and basic home care, that we would have two social transfers to guarantee that.

To my mind, when I heard your remarks about protecting the Canada health and social transfer, I thought of the huge load on that transfer coming from poverty—which is 21%—and also from people being housed in hospitals who should instead be in home care.

I'm just wondering what your response is to that.

[Élisabeth Gibeau]

Thank you for the question.

You're talking about encouraging women to return to the labour market. I'd also like to say that I'm pleased to see that there are more women among the members present than among the guests here today, of which I am the sole woman.

As for the transfer, or long-term accommodations, it's an issue that is increasingly present currently, in Quebec particularly. Any funding that could be used in this area is welcome. Yes, it's a priority for us as well.

But there are a lot of other areas that deserve attention, especially from the federal government. For example, a lot could be done about medications. In Canada, we pay 30% more for drugs than the average of OECD countries, mainly because of policies that were put in place by the federal government through the Patented Medicine Prices Review Board.

We think that's a big issue. There are several billions of dollars to be recovered there that can eventually be transferred to the provinces through the Canada Social Transfer.

So there is money to be recovered, and there are a lot of issues to be dealt with, particularly long-term care and the housing needed for that care. There are solutions.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Davidson, you were talking about foreign students and the high tuition they pay. One of the really strong concerns we have in the NDP is regarding student debt and how it's accelerating. When I got out of high school, you could buy a house for $15,000. Their debt would buy four houses in my generation. So we're really concerned about that.

One of the things I've spoken about repeatedly here is that, as a school board trustee in Hamilton, I remember that we had a 28% dropout rate. We need to try to find a way to get those people into the system, but many of them see that wall of student debt as hopeless.

Is there any way the federal government could be involved in assisting in some fashion with this debt load?

[Paul Davidson]

It's going to be important that every qualified student have the opportunity to attend university in this country. It's one of the things that makes this such a strong country.

It's true that tuition fees have increased. So have the forms of student financial assistance. There are still barriers, I acknowledge, and I want to speak to some specific barriers in a moment.

Again, it's a collective challenge for both the federal government and the provincial governments to set the policy objective to make sure that students can afford the universities they go to. There are a variety of mechanisms to achieve that.

I would like to focus on one particular group I mentioned in the last 15 seconds of my presentation. That group is aboriginal Canadians. There are 400,000 young aboriginal Canadians about to enter the workforce. Are we going to make sure that they have the skills and resources to become full members of this society? Or are we going to let this generation pass? It's particularly critical in western Canada.

There are affordable solutions to improve access to university. They include reaching back into the public schools, reaching back into the high schools. They include really innovative programs, such as at the University of Victoria, the University of Winnipeg, and the University of Saskatchewan, that make sure that once those students come to university, they succeed. What the evidence has shown is that it's not so often the financial barriers, but the other barriers. The Canada Millennium Scholarship Foundation did excellent research on this, and we're using that research to makes universities more accessible every day.

[The Chair, Conservative, James Rajotte]

You have 10 seconds, if you want to make a final comment.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I'll just rest and relax.

[The Chair, Conservative, James Rajotte]

Okay. Thank you, Mr. Marston.

We'll go to Mr. Adler, please.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Mr. Chair, and thank you to all for being here this morning.

My first question is to Mr. Tunney. I see that you read your presentation off an iPad.

[Wayne Tunney]

I did? Brian Jean has one as well.

[A voice]

We all have one.

[Mark Adler, Conservative, York Centre, ON]

Under the current corporate tax regime, Canada is well positioned right now to take advantage of the lion's share of future investment opportunities in the high-tech sector. The Information and Communications Technology Council recently released a study saying that in the next five years, we're going to need to fill another 100,000 jobs in high-tech and IT. In your opinion, how would an increase in corporate taxes alter that projection?

[Wayne Tunney]

Every dollar that is spent paying taxes obviously isn't available for other uses, period. And like every other company, we have policies about what is available for distribution and what is spent elsewhere.

In my experience as a tax partner for 24 years with a big accounting firm, before coming to Bell five years ago, I've not seen such a reduction in tax rates. This reduction is extremely important to a company like Bell. Federally, the corporate tax rate will fall from 22% to 15% next year; and in five years in Ontario, from 14% to 10%. In Quebec, it is now higher than in Ontario, or it will be next year. That influences what happens.

Bell is a domestic Canadian company. Compared to a lot of the companies that I used to advise, it's pretty simple. In that context I was aware of the significance of the Canadian rate vis-à-vis the U.S. rate, or spending the money in Ireland, or doing whatever. A lower tax rate not only helps a domestic company, but it is also significantly more important for multinationals to decide where they're going to make their investments and do their business.

[Mark Adler, Conservative, York Centre, ON]

Mr. Davidson, you spoke about an innovation culture.

Can you just expand on that?

[Paul Davidson]

It builds on the question that Mr. Trudeau asked about on pure and applied research. The first thing to keep in mind is that these processes are non-linear. It's not like a manufacturing process where you start with an idea and proceed directly to a market.

But there is more that we can do within the university community to make sure that every student has a better appreciation for the opportunities in the private sector and to have hands-on research experiences, to have that joy of discovery early in their academic careers, not simply taking the notes they have been taught for many years but having that joy of discovery and seeing the ability to take that discovery to reality.

I'll give a very concrete example from Toronto. At Ryerson University, the Digital Media Zone has been operating for about two years. They've put together a group of very young people, some legal advice, and some academic advice, and created a space in a retail environment, giving them a chance to do their best with digital applications. There is a 19-year-old there who has developed a prosthetic arm that requires no surgical attachment--a 19-year-old. He was flown to L.A. to meet California's largest venture capitalist, who is about to write a blank cheque, essentially. This kid is 19 years old. This is happening at Ryerson University in Toronto; it's happening in a retail space at Yonge and Dundas streets. It is incredibly exciting to see what can be done when we say that we're going to do this as a country.

[The Chair, Conservative, James Rajotte]

You have about 30 seconds.

[Mark Adler, Conservative, York Centre, ON]

Mr. Bonnett, you spoke also about Canada's risk management support system and you indicated that it has served your members quite well over the years.

Are there any changes you would want to make to that?

[Ron Bonnett]

Yes, there are some changes, especially in the livestock sector. They've gone through quite a few years of low returns and the reference margin they base their income on has dropped because of that. There are a number of things that we're working on with Agriculture and Agri-Food Canada to make some recommendations and make those programs respond.

If you take a look at overall government spending on risk management, in the last number of years it's dropped by some 40% to 50%. Part of that is because of the increased income from grains and oilseeds; but part of it is also because, the way the details of the programs are set up, they're not responding to some of these long-term losses.

I think we have to take a look at these risk management programs as an investment. If the funding hadn't been there for the grains and oilseeds sectors through the years they had some real crises, they wouldn't be making the returns they are now, and I think there has to be the recognition that it's a long-term investment. We would encourage you to use any influence you have with Agriculture and Agri-Food Canada to sit down with stakeholders and really take a look at how we can fine-tune those programs to make them more effective.