Finance Committee on Oct. 20th, 2011

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you for that.

You mentioned Germany. That's exactly what Germany did and they have made their technology cutting edge. They have put their focus on value-added jobs and making things in Germany.

[Avrim Lazar]

Our experience is that the competition is not global; it's international. It's between nations. The U.S., Europe, Brazil, all those nations are investing heavily in the transformation of their industries. If we go ahead on the presumption that it's just between companies, we're simply going to get left behind.

[Peggy Nash, NDP, Parkdale—High Park, ON]

One other aspect to that, as you've mentioned, is skilled jobs. Can you give us a sense of how you would see the balance going forward?

We're going to have a generational change as many skilled workers will retire. How do you see the balance between attracting skilled workers to Canada through immigration and putting a new emphasis on apprenticeships and encouraging young people?

Not everyone needs to go to university. In fact, a trades job is a good solid career going forward, and we should be encouraging creating a capacity for young people to get into skilled trades.

[Avrim Lazar]

We're hugely supportive of any possible government initiative to encourage people to go into skilled trades. We've had experiences where we got grants for exciting things, but we couldn't find welders to build the equipment. There is a huge shortage of skilled trades. Training them, importing them--we don't care how we get them. I think we should use all of them.

I just want to add that there's a huge labour pool of first nations youth who are close to where our forest industry does business. We'd love to see government partner with us in creating the training there, and we have the jobs waiting.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Excellent, and I thank you for that.

I will go to Ms. Corbiere Lavell.

First of all, I want to support NWAC in calling for an inquiry for the missing and murdered women.

Concerning first nations education, are you proposing that the 2% cap on education funding be removed, or are you looking for parity with the proportion of funding that provinces and territories are putting in place?

[Jeannette Corbiere Lavell]

I'm a retired teacher in my community. I taught at the elementary and secondary levels. I know firsthand that the funding we get in our schools on reserves is much less than our counterparts just out of our community. We're asking that it at least be comparable, and the 2% cap did not address that in the last I don't know how many years--10, 15, or 20 years even. I want it comparable.

[The Chair, Conservative, James Rajotte]

You're out of time. I apologize for that.

We'll go now to Ms. McLeod, please, for five minutes.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Mr. Chair.

I think because I'm from a forestry-dependent community I'll have to quickly head down that forestry path for a minute.

Certainly great headlines were made this week in terms of trade with China, trade with India, and some revitalizations. I know this committee last year when we travelled had an opportunity to visit the Domtar Mill and see the green transformation fund and what that did.

You've talked about the $60 million in forest sector transformation. I think sometimes it's good to put actual pieces of the puzzle to what's happening, so can you talk a little bit about where you're going with that?

[Avrim Lazar]

The green transformation fund is about three-quarters spent right now--

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Sorry, I know what the green transformation fund is, but the $60 million in the forest sector transformation.

[Avrim Lazar]

That fund in the past has been used to finance our incursions into China. Of course, China is very nation-to-nation centred. Having government help with that has resulted in a huge increase in our exports to China. I haven't got the last number, but at last count there were 11 towns whose financial existence has been saved by exports to China. So that's been hugely successful.

The other help we've got from that is the money for research and innovation. This three-dimensional pulp comes out of that funding as well. It's also been used to tell the story of what the industry's done environmentally. The reason why that's important is the industry improves environmentally but then doesn't get any credit. There's no incentive. By the government telling the story, it creates a huge incentive and some accountability on the industry.

Those have been very successful programs. The rate of change in the industry has been breathtaking, and it is government's smart spending that can take part of the credit. To stop those programs in their track today would be just plain stupid--that's the only word I can say. Why would we take something that's taking an industry that used to be a sunset industry and turning it into a world-leading, transformative industry and put the brakes on all that change mid-course?

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

My next question, and perhaps both Mr. Lazar and Mr. Passmore might want to answer it.... We heard the comment “make stuff”. On one hand, it is very important, and it's been very valuable in terms of increased markets for our forestry products, but how do we also create that “make stuff” mentality within Canada?

[Avrim Lazar]

We used to just produce lumber, pulp, and paper. That's making stuff, believe me. It's been enough to employ 600,000 Canadians. We're now also making bioenergy, the equivalent to three nuclear reactors. With biochemicals, bioethanol, biodiesel, we are extracting from every single tree far more value than anyone every dreamed possible. As a result, not only are we saving jobs, but we have a zero waste imperative. So it's not just to make stuff; it's to make as much stuff as you possibly can and add as much value as you possibly can from every tree.

We used to think the secret was to go up the value chain and make fine pianos, but that's very labour intensive and Canadians don't want to work for those low wages. Instead of doing that, we're extracting more value from every tree, which allows us to pay the high wages you get in the natural resources sector but still get far more value from the natural resource.

[Jeff Passmore]

The same thing could be said for the agriculture sector, where at the farm gate you could create a lot more value from agriculture residue, whether it's straw or a forestry product. Once you've got a biomass, which has a high level of cellulose in it, and you can convert that cellulose to sugars, then those sugars can be turned into, or we could turn them into, renewable fuels. You can also turn them into polymers to make plastics. Almost everything you can currently imagine that is made from hydrocarbons, all the consumer products, could instead be made from carbohydrates or from biomass, and there's a huge amount of consumer demand for those green products.

I mentioned in our written submission that the U.S. Department of Agriculture has a biopreferred program now with over 5,000 identified consumer products that either wholly or in part are made from biomass, and over 100 companies--I think the number is up to over 200 companies since I made the written submission--have now applied to the U.S. Department of Agriculture for biopreferred labelling because they want to meet that consumer demand.

[The Chair, Conservative, James Rajotte]

Thank you, and thank you, Ms. McLeod.

We'll go to Mr. Brison, please.

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

Thank you, Mr. Chair, and thank you to each of you.

Mr. Lazar, what are some other countries doing in terms of bioenergy and the bioproduct area that we ought to be doing here? Which countries have established best practice approaches that we could implement to be competitive in the jobs of tomorrow?

[Avrim Lazar]

That's a good question. Basically just about all of our competitors' governments are doing more than the government is doing here. While what our government has done has been hugely useful and well targeted, it's been much less ambitious than in the States, Europe, South America, and even in China. They've been investing much more heavily in the transformation into bioenergy, bioplastics; they are investing more heavily into turning what used to be pulp mills into biorefineries. We're doing that in Canada as well, but we're doing it with less government support than our competitors are getting.

We're quite willing to compete with any other company across the globe. Canadians are just as smart, just as hard working, and just as innovative as any other company. We can't compete with their governments.

The U.S. invests massively. It's not as smart as our investments, which has given us a bit of an advantage, but they're investing more than 10 times as much as Canada.

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

Thank you, Mr. Lazar.

Mr. Swedlove, it's good to see you again in front of our committee.

You mentioned that the PRPP approach provides the advantage of lower costs in terms of managed funds. I agree with that. As a principle, I generally support measures that increase choice and security for investors and that reduce fees.

The Canada Pension Plan has a very low administration cost associated with it. It's geographically and sectorally diversified. It's diversified across asset classes, with everything from private equity and public markets to real estate and infrastructure. In addition to the PRPP proposal, would you be averse to enabling Canadians, on a voluntary basis, to invest in a supplementary Canada Pension Plan? It would seem consistent with your proposal.

[Frank Swedlove]

Thank you, Mr. Brison.

Indeed it would be possible to have a supplementary CPP plan that would be in addition to a PRPP structure. I think there are a number of things, though, that one would want to consider if they wanted to go in that direction.

First of all, the existing CPP structure is not a defined contribution structure, so they would have to create an entire infrastructure in order to provide a defined contribution supplement to the existing system. I think there would also be a bit of confusion among Canadians between the defined benefit CPP plan that exists today and a supplementary CPP system--

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

But with any additional investment product...the PRPP will create some level of confusion initially.

[Frank Swedlove]

I think people would recognize there's a separation between their existing CPP structure and a PRPP, which is a defined contribution system.

Also, I think people should reflect on the fact that if you look at the expected growth numbers of the CPPIB, we will be seeing, by 2040, a CPPIB that will have about $750 billion to invest. It would represent about 20% of the pension business in Canada. That's the existing CPP.

I guess an issue that I would at least put on the table would be if we were to look at having a supplementary CPP, that would increase pretty significantly the assets in the hands of one organization, the CPPIB, in terms of making investment decisions.

[The Chair, Conservative, James Rajotte]

Could you wrap up very briefly?

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

You could also allow, for instance, OMERS, teachers. There could be provisions to do that as well.

Just quickly on--

[The Chair, Conservative, James Rajotte]

I'm sorry, we are out of time, Mr. Brison. I apologize for that, but we do have to move along.

Mr. Van Kesteren, please.

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

Thank you, Chair.

Thank you all for appearing.

Mr. Lazar, in a former committee, I recall, and Mr. Rajotte will recall as well, we did an industry study and had the forest people as witnesses. We recognize that there is boreal forest to cover the whole earth.

You said, I think, that 20% of the...? It's 10%—substantial.

So there are lots of trees, and we're doing some wonderful things. But I remember asking the question, who makes the equipment? I don't know if you were there, but the answer was that Sweden does. I thought, wow, these people were ahead of the curve.

Now, I say that, but it is not a criticism. I just think that for a government this is an excellent project; it's an excellent strategy.

Ms. Robinson, I, for instance, chair a trucking caucus. In this country the other thing we have is roads. We have lots of roads; we do lots of transport. Are there areas that we could target to become world leaders in providing the equipment?

Do you see opportunities there? Is that something you might want to talk about?