Evidence of meeting #17 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was innovation.
A recording is available from Parliament.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
Could you tell me quickly what we could draw from the green climate fund?
Policy Coordinator, Oxfam Canada
The green climate fund was set up last year at the UN climate change conference. It's to become operational by 2020, but they have not yet identified the sources of revenue for it. It's to have at least $100 billion to help poor countries cope with climate change. But there is an interim fund that Canada has pledged to be part of called the fast-start financing, to which Canada contributed $400 million last year.
Conservative
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
Thank you, Mr. Chair.
I would like to start my questions with Mr. Brunnen.
I'm sure you're aware that the tax levels were a significant issue in the last election, and there's still some great dialogue going on, with a suggestion by the opposition that we should be raising taxes.
We certainly recognize that small and medium-sized businesses are important, but really, quite substantially, small businesses might be making $500,000 into that threshold.
Can you talk generally about the impact of a competitive tax rate on the companies and businesses you represent, and how that will be important in the future during these economic times?
Director, Policy and Government Affairs and Chief Economist, Calgary Chamber of Commerce
Absolutely.
Starting with the tax rate, if we take a look at the recent federal budget documents we see the decline in the corporate income tax rate. At the same time we see a corresponding increase in aggregate corporate income tax revenue. That suggests a number of things, but one very clear thing is that when we decrease the tax levels, we increase the size of the pie. It increases the amount of revenue through the sheer size of increased economic activity. But we also empower businesses to create jobs and reinvest in the economy.
For example, when we look at the economic performance we're seeing for Canada vis-à-vis the global economy, of course there are some global challenges that are well beyond our control, but we are in a very favourable position. The national unemployment rate of 7.1% is a little high, but it's one of the better places to be, without a doubt.
So there are some positive benefits that we're seeing as a result of this good economic policy. While it seems counterintuitive politically, it makes good sense in terms of quality of life for Canadians and prosperity.
The other piece I'll point to is the leadership we're starting to see regarding deficit reduction, as well as the debt-to-GDP ratio. Looking at the debt-to-GDP ratio, we're in a very favourable position. It's up at around 34%, but this matters when we look at global economies, particularly in Europe and the United States. Businesses are sitting on their capital at this time waiting for some level of certainty before they start putting that back to work. So it comes down to political uncertainty. But certainly the debt levels are one component that influences investment decisions, if you will.
Setting up that good fiscal framework through competitive taxes, reducing the deficit, and eliminating the debt create a good framework for Canadians.
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
Thank you.
To continue with your other point on the government tackling debt, we've looked at each department--5% to 10%, in terms of what they're doing and where they're going. You talked about this bandwidth approach. Is that a common term, or is it a Calgary term? Could you talk a little bit more about that as an approach to a balanced budget?
Director, Policy and Government Affairs and Chief Economist, Calgary Chamber of Commerce
Sure. We're in the process of trying to get that trademarked as a Calgary national term eventually.
The concept really is that we've been trying to find ways to set good, simple rules for spending parameters around budget management. Oftentimes we hear and see population and inflation as sort of that mantra, but that doesn't necessarily enable governments to accommodate economic growth and the pressures that result.
So we've come up with the concept. We call it the smart spending bandwidth, but it's this bandwidth that suggests limiting or tracking government expenditure increases to between either real GDP and inflation or population growth and inflation. That range will change depending on the cycle, so in low economic times population growth and inflation will be higher. In better economic times GDP and inflation growth will be higher, but it always enables that rationale.
It's a very simple rule to follow. It suggests that if we keep our expenditures within this range, we're spending within our means—real growth in the economy or real growth in the population. That obviously is a suggestion for spending increases.
Of course there are suggestions about whether we're spending optimally at this point in time, and that goes back to some of the initiatives you mentioned—for example, the reductions you had been talking about, Minister Clement's initiative in terms of looking for some savings in that regard. Ideally, we'd find some savings in that regard from an efficiency perspective, but we continue with tracking expenditure increases in a reasonable manner linked to growth.
Conservative
The Chair Conservative James Rajotte
Okay, thank you.
Thank you, Ms. McLeod.
We'll go to Mr. Brison, please.
Liberal
Scott Brison Liberal Kings—Hants, NS
Thank you, Mr. Chair.
Ms. Kenny, was the former Court Challenges Program of Canada important in terms of defending the rights of your communities?
President, Fédération des communautés francophones et acadienne du Canada
Yes, it was very important for our communities. It has actually been replaced with the Language Rights Support Program. The Court Challenges Program of Canada enabled communities whose linguistic rights were violated to take the government, be it federal or provincial, under the provisions of the charter—
Liberal
Scott Brison Liberal Kings—Hants, NS
Should the Conservatives' decision to cancel that program be reversed?
President, Fédération des communautés francophones et acadienne du Canada
There is a program right now. The former program was replaced and even improved. The new Language Rights Support Program provides us with more money and, in addition, it includes a negotiation component. You're asking whether it should be replaced, but I think that it has been replaced already.
President, Fédération des communautés francophones et acadienne du Canada
Absolutely. The resources are hardly enough to cover.... However, I should tell you that they were also insufficient under the former court challenges program.
Liberal
Scott Brison Liberal Kings—Hants, NS
Thank you.
Mr. Fried, I agreed with a lot of what you said today about the importance of foreign development aid.
One of the things I think we also have to recognize is the importance of trade to the developing world and providing opportunities through liberalized trade, through moving forward with the Doha round or what follows the Doha round. That's why I was a little confused when you said you supported a tax on international shipping, because if we're going to enable the developing world to move forward, it's going to be in part through trade. Is not a tax on international shipping counterproductive to that goal of economic engagement of the developing world?
Policy Coordinator, Oxfam Canada
It's a good question, and thank you for asking it.
The international shipping is a very large and growing source of greenhouse gas emissions, and in the climate change negotiations no one has really known how to deal with it, because it doesn't belong to any one country, and it's not one country that can impose reductions on it. We see the need to give the industry incentive to reduce its emissions.
What Oxfam and the World Wildlife Fund together have proposed is a levy on fuel, on shipping fuel. We've asked an independent economic analyst to do a study of implications for world trade of this. It would indeed have an impact of about 0.2% on world trade, which is relatively minor. We propose a compensation mechanism for the poorest countries to be given part of the revenue as compensation so they can make up for that 0.2%.
Liberal
Liberal
Scott Brison Liberal Kings—Hants, NS
It is a support for the movement of technologies to cut emissions.
Policy Coordinator, Oxfam Canada
To cut emissions is the point. And it raises revenue at the same time, which can help the poorest communities deal with the effects of climate change.
Liberal
Scott Brison Liberal Kings—Hants, NS
Or we could put that revenue into helping develop the technologies to cut the emissions from the shipping. That research could be done in Canada through well-funded public research.
Liberal
Scott Brison Liberal Kings—Hants, NS
Mr. Patry, I appreciated your presentation. We recognize the importance of public research at CFI and other research agencies in Canada.
Why are we still stymied in Canada in commercialization? There still seems to be a challenge in moving forward from much of the important publicly funded research to commercializing those technologies to create jobs and opportunities. What's your view on that, and what should we consider as a committee to address it?