Finance Committee on Oct. 27th, 2011

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

There is just a little problem. Imagine another person who is not a member of your association, but maybe indicates I'm a member of the association. Does the victim of this guy have any protection?

[Ian Russell]

Well, that's fraud, and you're right, it has happened. But for any bona fide member of our industry, there are protections in--

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

You make the professional protection of your members...but you don't make a professional association for the victim?

[Ian Russell]

No, but what I have said is that there are mechanisms for victims in our industry to seek redress, and as far as I can see from the evidence, it's working pretty satisfactorily. Now I know there has been some significant malfeasance in particular provinces. Those have happened outside the Canadian investment industry.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Thank you very much.

My second question for you is on the pension plan. Do you support the PRPP? My problem is the problem of the financial health of this country.

You don't seem to guarantee a minimum pension for all Canadians with this program. It is a voluntary program; it is not obligatory. It's a partial program, and if you don't make a pension for all Canadians, you create for the future a very important poverty problem.

[Ian Russell]

I see where you're coming from.

First, we have the CPP, which is a mandatory program. It was overhauled 10 years ago. It's very efficient. That's the core of our pension system.

The other aspects of it are voluntary. But at the same time, there are real incentives through the tax system--the RRSPs, the RRIFs, group RRSPs, and the PRPPs. There's a wide range of different programs that can be accessed by individual Canadians to supplement their retirement. So when you stand back and look at the system, I think it's quite effective.

[The Chair, Conservative, James Rajotte]

Thank you. Merci.

We'll go to Mr. Adler.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Chair, and my thanks to all the witnesses for being here today.

Being from Toronto, I'm going to avoid CropLife Canada, Grain Growers of Canada, and the Saskatchewan Association of Rural Municipalities, so you can all take a breather for the next five minutes.

Mr. Russell, it's good to see you again. I'm going to direct my questions to you.

The NDP is correct—credit where credit is due—in that they are in favour of lowering of the small business tax rate by two points. But they also support an increase in corporate tax of 19.5%, which represents a $3.6 billion corporate tax squeeze.

Going through all the different consultations that we have throughout the country and in Ottawa, and listening to the NDP and how they are in favour of increased taxes, it reminds me of that movie, Canadian Bacon, with John Candy, when he stormed the RCMP headquarters to free his friend who had been arrested for crossing the border with firearms. One of the persons in the jail cell, when John Candy asked what he was in for, said, “Well, I'm a corporate executive.”

How would an increase in corporate taxes affect your members?

[Ian Russell]

When I talk about my members, I'm talking about the investment dealers. They're large and small. Many of them are small, almost 200 of them. A rise in corporate taxes at a time when they are under the gun would hurt. Profitability, particularly for small firms, is very weak.

As to the broader question, an increase in the corporate rate for corporate Canada would be a bad move. First, it would amount to a complete reversal in the commitment the government made to bring down taxes to competitive levels. So it would breach the commitment. It would also abrogate this very competitive rate we have, which sends a positive signal to business over and above the actual impact of the rate itself.

Second, the preferred rates, the small corporate rates, are driven by the large rate. So if you bring the large rate down to the 15% level, then you're providing a scaled-down version for small business. This is the wrong time to be looking at imposing a higher tax on any business, but particularly small, struggling businesses.

[Mark Adler, Conservative, York Centre, ON]

In the last budget, the government extended the two-year extension of the accelerated capital cost allowance. Could you discuss how that's been a benefit to your members?

[Ian Russell]

Extending the capital cost allowance brought the effective corporate rate down for large companies. So it has benefited the large companies, the capital-intensive companies that are the backbone of the economy. That's been positive.

But that in and of itself doesn't provide a large benefit to small companies in the biotech area, the general commercial area, or the resource area. They are more reliant on either lower corporate rates, which they have benefited from to some extent, or from what we believe would be some additional incentive in the capital-raising program for those companies that need capital.

[The Chair, Conservative, James Rajotte]

You still have time.

[Mark Adler, Conservative, York Centre, ON]

Do I? Okay, I have a quick question for Dr. Chad.

Universities are all vying to commercialize their research. Do you see the competition between the universities as a positive, or do you think some kind of coordinated effort would be beneficial?

[Dr. Karen Chad]

Absolutely, a coordinated effort would be.... I think it goes to the earlier question about what it is going to take to get us working together. The university really is the place where that whole culture of creativity and idea generation thrives, but a lot of our faculty are not trained to be able to take ideas and translate them into products and services and technologies. I was delighted to see that one of the top recommendations was to have coordination between industry, government, and the universities in that respect.

[Mark Adler, Conservative, York Centre, ON]

I know in the Toronto area the relationship between MaRS and the University of Toronto is a huge problem.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Giguère.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Yes. My question is for all members, on the reduction of the red papers. It's very important because in the past, in the United Kingdom, Mrs. Thatcher cut all inspections, réglementation, and all possibility for inspection. There was no red paper in England after Mrs. Thatcher.

You had the same problem after that, because there was no more inspection of animal feeding practices, no more agricultural inspections at all, and 10 years later the farmers in the United Kingdom were obliged, three separate times, to destroy their whole herds. They had the vache folle two times and la fièvre aphteuse once. Reducing red papers has had a significant cost. I understand rejecting red papers is important. If you start reducing the security of the réglementation, there can be significant problems.

The question is for everybody or anybody.

[Ray Orb]

I guess we're not sure exactly what the question is. What did you want to tell us about?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Why do you make the argument for the reduction of the red papers and at the same time the preservation of the réglementation?

[The Chair, Conservative, James Rajotte]

It's the red tape reduction commission. It's a question about regulation.

[A voice]

Is he talking on the agriculture side, though?

[The Chair, Conservative, James Rajotte]

I think he's talking generally. You could use navigable waters.

[David Marit]

Mr. Chair, I'm just somewhat confused by the question.

If you're talking about the regulatory regime that we're living under with something like navigable waters, what happens with it is that it delays the process, and that's the concern we have with it. We've had projects in this province that were funded through the federal, provincial, and municipal governments that were actually delayed to the point where they didn't get done.

So I think that's what we're looking for. We don't have to change things within the environment regime. We just have to change things within the regulatory regime to streamline the process and save everybody a lot of money.

[The Chair, Conservative, James Rajotte]

Mr. Prouse, would you like to speak?

[Dennis Prouse]

In terms of regulation, Mr. Chair, I'd be happy to speak to the issue of food safety.

Canada has one of the safest food supplies in the world. Never once has a food safety issue come up on biotechnology and genetically modified foods. So in terms of where we should place emphasis, food safety in Canada is excellent, largely because we have a science-based regulatory regime. So Canada is well served in that regard.