Finance Committee on Oct. 31st, 2011

[Peter Julian, NDP, Burnaby—New Westminster, BC]

So we went from $10 million a year to $7 million a year for 2011, so there was a substantial cut in those investments.

Anecdotally, you've raised a number of issues around the hail storm in Calgary and the costs of it, the 2011 floods in Manitoba, and of course the forest fires we've seen across British Columbia. Do you have a sense, globally, of the impact of climate change? I realize it's difficult to pinpoint, but roughly what do you think the cost of the continuing impacts of climate change--which are growing--has been to Canadians and to the Canadian economy?

[John Mills]

Thank you very much for the question.

I don't have the detailed numbers of that, although I think recently the national round table came out and indicated that for the year 2020, weather and weather-related events will cost the Canadian economy about $2 billion.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

That's on an annual basis?

[John Mills]

That's on an annual basis.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

So that will be a cost of $2 billion to the Canadian economy, and we've seen the government actually cutting back on investments aimed at getting a handle on the impacts of climate change. That's an important point.

You also raised the issue of the continuing uncertainty surrounding PEARL, the Polar Environment Atmospheric Research Laboratory up on Ellesmere Island, which provides fundamental and very important Arctic research. I think that's an important point to stress.

Can you tell us, then, if we don't look to that investment of $50 million a year, given the global costs that the Canadian economy and Canadians will experience, what the cost will be of not making those investments and of continuing this process of cutting back and slashing funding for research into climate change?

[John Mills]

Thank you very much for the question.

I honestly don't have those numbers, the exact costs. But the escalating costs of inaction, as I indicated earlier, run from $2 billion in 2020, up to $40 billion in 2080. So that will be the cost of inaction. To say we are not doing anything is not correct. There are investments going on. The foundation believes that investment, however, is not sufficient to enable the Canadian economy to react properly.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you very much.

I'd like to move on to Ms. Price.

Your brief was very good as well. Thank you very much.

You're talking about a global investment—again, this is something that is very important for job creation—of what looks like $50 million annually: $30 million to larger festivals and $20 million for emerging and regional festivals. You also talked about the cutbacks that have taken place in federal support for festivals and events over the last few years.

Can you give us a sense of what the impacts have been? I'm talking about the final paragraph of page 3, where you talked about Industry Canada's marquee tourism events program, which ended in 2010, the program that formerly provided federal support for festival events. What has been the impact of those programs not being there, and what is the impact, in terms of jobs, of providing these investments of $50 million as per your recommendation?

[Janice Price]

Thank you.

We are very grateful for MTEP, the marquee tourism events program, because it did help to educate us about the power we can have as a singular sector. And it was a tremendous driver in getting us together and forming the former Canadian Festivals Coalition, now FAME, Festivals and Major Events, so we can speak with one voice about the very positive impact. We very much respected and appreciated the opportunity to work for two years with Industry Canada on what was rolled out as a stimulus program. We always knew it was a term-limited two-year program. We understood that, and respected that it had a sunset on it.

But our learnings from that and the aggregated research you've seen here have allowed us to very confidently state, as we did in meetings with parliamentarians from all parties last week in Ottawa, that we as a sector would guarantee in a new program a return on investment at a minimum of $5 of additional annual tax revenue for every dollar of the $50 million that is invested. Sadly, we heard, particularly from our colleagues in Stratford last week at those meetings in Ottawa, that they have had a significant decrease in tourist visits as a result of not having the extra marketing and programming clout they had from MTEP to help attract those visitors.

[The Vice-Chair, NDP, Hoang Mai]

Thank you very much.

Mr. Adler.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Mr. Chair.

Thank you, witnesses, for appearing here today.

I'd like to focus my questions on the Investment Funds Institute of Canada.

Ms. Pearl-Weinberg, we all know that Canada holds the dubious distinction of being the only country without a common or national securities regulator, and our government has been working very hard with the provinces to institute one. Given all the market turmoil that's occurring in the world, the economic uncertainty that is occurring in other countries--and I know this is something your organization has a strong interest in--could you comment on how a national securities regulator would better protect investors, enhance enforcement of regulation, and attract new international investment?

[Debbie Pearl-Weinberg]

Unfortunately, I'm going to have to get back to you on that. That would be another group within IFIC. We do have a group that can address that, and I will get something back to you in writing on that.

[Mark Adler, Conservative, York Centre, ON]

Okay. Thank you.

In that case, I'll move on to Mr. Dunn.

Our government has been very active in lowering taxes to individuals and lowering corporate taxes. As a result, we're seeing that corporate tax revenues are up for the government. We saw this morning that StatsCan said our economy grew by 0.3% in the month of August, and that Canada, as you had indicated, is considered by Forbes magazine to be the best place to be doing business in the world. We see in today's Financial Post that Canada has been named a hot spot for entrepreneurs.

Clearly Canada is doing something right, contrary to what a lot of others are saying, particularly the opposition, which is that we should be raising taxes and spending more. Could you comment on how that approach would not be beneficial to the Canadian economy at present?

[Andrew Dunn]

I'll see what I can do to comment on a few of the things you've mentioned.

For sure it's true that Canada is an open economy. One of the reasons the reduction of corporate tax rates has resulted in some increase in corporate tax revenue is simply by virtue of the fact that we made it more attractive for corporations to carry on business in Canada. A multinational, in choosing where to locate and where to operate, is more attracted to Canada than it has been historically. And that's generally helpful to Canada's growth.

We do believe--and it's one of the points we tried to articulate in our submission--it's important not to look only at the corporate side of the tax system. It is absolutely true that making Canada more attractive for businesses improves employment. But ultimately, what has the highest effect on productivity is having more people come to Canada. So in that circumstance we need to devote the same degree of attention to the personal tax regime that we've devoted to the business tax case.

I would point out that when we reduced corporate tax rates we didn't do it suddenly. We didn't do it overnight. It was done over more than a decade. Simply selecting a point on the horizon and saying that is our target, that we want to move to combine federal and provincial rates of 25%.... In fact that was what was said, the last point on the horizon. Doing something similar on the personal tax side we believe could be very attractive to attract the world's most globally mobile employees, the most globally mobile entrepreneurs, and those who can have the single greatest effect on our productivity in Canada.

[Mark Adler, Conservative, York Centre, ON]

As you know, our government has reduced taxes for the average family by about $3,000. Would you recommend reducing personal tax even more?

[Andrew Dunn]

I think in that circumstance we see a need for lower personal tax rates in total. That doesn't have to be done immediately. One of the effects of signalling, by pointing to a target in the future.... People make decisions based on expectation of future state, not current condition, especially something like moving, changing jurisdictions. So in that circumstance, while we believe the target rate should be lower, we don't believe there is a need to act immediately. In fact, simply articulating that target is a strong indication that will have a positive impact.

[Mark Adler, Conservative, York Centre, ON]

Thank you very much.

So a low-tax plan is the way to go to create jobs and a strong economy.

[Andrew Dunn]

Lower tax in the future will result in more revenue collected.

[The Vice-Chair, NDP, Hoang Mai]

Thank you very much.

Mr. Brison.

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

Thank you, Chair.

Mr. Adler referred to the most recent GDP numbers from August. There was a slight increase, 0.3%, in August. But Statistics Canada also reported that GDP would have dropped had it not been for a 2.8% increase in the energy sector and that in fact wholesale trade, manufacturing, utilities, and tourism all declined. I don't think any political party or government can take credit for putting the oil and gas or the potash under the ground, or off in my part of the country, under the water off Newfoundland—that was Danny Williams.

But we have in Canada the emergence of what people refer to as the Holland example, the Dutch disease. We see a driving of the natural resource sector economy, and the crowding out of some of the traditional value-added jobs in manufacturing in some of the economic heartlands of the country, including parts of Quebec, Ontario, and the Maritimes. That's why I'm very interested in proposals, including SR and ED reform and angel tax credit, aimed at strengthening innovation sectors. While we've put a lot of money into research in Canada, the commercialization area is still lagging. So I like these proposals.

Why isn't there more focus in your package? Larry Scott sent me some of this a while ago, and I think it's a very interesting proposal. But what are some of the measures we could do on immigration besides just the tax side? What are some of the other approaches we could take to attract innovators, students, and researchers to Canada, and to stay in Canada?

[Andrew Dunn]

I presume the question is for me, so thank you for asking it.

There are a number of things that are positive attractions for immigrants to Canada. Part of it is stimulating the various provincial bodies across the country to accept broader ranges of foreign professional accreditation. In other words, when somebody has recognition of professional status in any particular field--be it medicine or law or accounting or whatever it happens to be--encouraging that recognition of foreign status as eligible for practising in Canada is number one.

The second point I would raise on that front is treating immigration as a competitive activity.

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

So would you support--

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Brison; you're about four minutes over time.

I have you at 8 minutes, 30 seconds. Is that not correct?

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

I don't think so, and I have a pretty good sense of this.

[The Chair, Conservative, James Rajotte]

I don't know. I just took the chair. Is that not correct?

Okay, I'll give you another minute.

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

Thanks.

Would you support increasing resources to immigration in Canada, both to the processing of immigration cases but also to promoting Canada, to attract more immigrants?