Finance Committee on Nov. 3rd, 2011

[Alexander Wood]

Thank you.

I'll just note that I saw Ms. Glover sticking out her finger, and I thought my presentation was so interesting, she wanted to jump right in with a question.

The point I was at, I guess, was to talk about the kinds of recommendations we would make for budget 2012. The first of those recommendations is that the budget should introduce into the discussion of Canada's economic context the framework of national capital. The idea here is to be able to report on how various forms of capital in our society—human, financial, built, or natural—contribute to our prosperity. As it's used in Norway, for example, the framework helps the government explain how the drawing down of its non-renewable natural capital, specifically oil, contributes to the building up of other forms of capital in Norwegian society and so lays the foundation for future prosperity. It's our belief that if the government were to use that kind of framework to communicate just how various forms of capital are being built up in Canadian society, it would greatly assist in the discussion of how Canada is doing in terms of its progress towards a green economy.

Our second recommendation is that the budget should contain a specific and structured focus on the green economy. The idea would be to provide a Government of Canada definition of what the green economy is, and how budget measures directly contribute to it with a clear statement of policy outcomes and objectives. The concrete first step would be to start reporting—again, probably in the discussion of Canada's economic situation—on Canada's greenhouse gas emissions or on other concrete indicators that right now StatsCan is in the business of tracking and reporting.

Our third and final recommendation would be for the budget to provide a greater discussion and explanation of instrument choice. Again, the point is not that the choices being made are the wrong ones; only that the absence of transparency that we note in the budget 2011 document on these kinds of choices makes them difficult to assess from an economic and environmental impact perspective. Our view is that greater transparency would increase overall confidence and buy-in for the budget measures.

That's my presentation. Thank you very much. I look forward to some questions and discussion.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll begin members' questions with Mr. Julian, for five minutes.

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

Thank you very much, to all of the witnesses, for coming here today.

I've got a lot of questions and a short time, so I'll get right to it.

You've all raised the issue of investments, and that's extremely important because there was some indication the government was pushing towards an austerity budget. Very clearly, what each of you has been saying corresponds to what we're hearing across the country with the economic slowdown we're experiencing. This is not the time for austerity. Now is the time for investments. So we thank you for this input.

I'd like to start with Mr. Toews and Monsieur Bosc, because in both of your industries we discussed the issue of falling exports—I did in my previous gig as a trade critic. We have a failed export strategy. We have a record deficit on the current account and balance of payments because of the fact that our exports have been falling everywhere. I wanted to just compare the investments you get from the Government of Canada for product promotion abroad for exports, either in the wine industry or the beef industry, compared to your major competitors. So could you give us first the amount you get to support export promotion, product marketing, and compare that to, for example, the European Union and the amount its producers get, or the American or Australian cattle associations and the money they get?

[Paul Bosc]

Comparing our level of export activity and support to the European Union is a real David and Goliath comparison. Wine is the number one agricultural export of the EU. It's a billion-dollar export business to Canada alone. The European wine industry—

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

I'm sorry to have to move this along, but I have other questions. What's the amount you get in export promotion support?

[Paul Bosc]

Maybe $100,000 a year.

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

Yes, and what is the amount the European Union provides?

[Paul Bosc]

In export support? I imagine it's in the billions of euros. It's got to be.

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

We heard at the trade committee it was about 125 million euros, so that would be a factor of a thousand greater level of support. Thank you for that.

The Cattlemen's Association, can you give us an estimate of both?

[Travis Toews]

We work cooperatively—industry and government—on market development funding, and at this point we are working under the legacy funding, which was a federal fund, $80 million for 10 years. It's leveraged with producer check-off funding, at this point. That market development funding is very quickly sunsetting, so we're looking for a replenishment.

Our U.S. counterparts receive significantly more. They have, I believe, close to a total $80-million budget annually; however, that's a combination of industry and government funding as well, and their industry is about eight or nine times the size of ours.

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

Thank you. That's helpful to know, that the factors are so much larger with our chief competitors.

Mr. McSweeney, you've spoken very eloquently about the importance of investment in infrastructure. We are strong supporters of that within the NDP caucus. I just wanted to see, with your recommendation, what you think the budgetary amount should be to support infrastructure for the upcoming federal budget?

[Michael McSweeney]

I couldn't put an exact figure on it, but if you just look at the Champlain Bridge in Montreal, for example, that's a billion dollars. I thought about coming prepared with my David Letterman top 10 list, and I'd be happy to provide you with that. But if you just look around the country—at the billion-dollar tunnel here in Ottawa for transit; the light rail, subway systems in Toronto; the province of Quebec is into infrastructure for about $33 billion a year; Ontario is about $30 billion a year—we think the federal government should be doing its share as well.

[The Chair, Conservative, James Rajotte]

Thank you.

I'm going to have to move on to the next member. I'm sorry, Mr. Julian.

We'll go to Ms. McLeod, please.

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

Thank you, Mr. Chair.

I first would just like to quickly pick up in terms of some questions for the Cattlemen's Association. Certainly I was delighted that in partnership with the Province of British Columbia, I think the federal government put $3 million in last year, and the provincial government put $2 million in marketing and moving forward. Certainly within Kamloops–Thompson–Cariboo, the ranching industry is incredibly important. I do know that there are glimmers of hope now after many very difficult years.

One of the things I want to pick on more directly is related to research. We're very fortunate that we're going to have a Grassland Applied Technology Centre. I appreciate the need for research and the continuation of research, and I know that in Growing Forward 2 we're going to be looking at how that looks, but what really struck me is the lack of coordination with the province. Thompson Rivers University of course has Mr. Church, who I think has incredible qualifications. Are we doing as good a job in leveraging all our partners? Because I think they're all bringing money to the table in different ways. What would the priorities be in Growing Forward 2? Would you see more collaboration with all the partners in the sector? I think we're missing some huge opportunities, and I'm hoping our Grassland Applied Technology Centre really does bring all those partners to the table, including our aboriginal partners.

Can you speak to that issue?

[Travis Toews]

That's an excellent question. I think that a lack of coordination and communication actually spawned the beef science cluster initiative, which really works to pull all the research pieces together, coordinates the activities across the country among universities, certainly with industry, as well as federal and provincial governments. That was the reason for the beef science cluster approach. The Beef Cattle Research Council, a division of CCA, coordinates and administers the industry component of the beef science cluster. Coordination and efficient use of research dollars is essential at a time of very tight fiscal conditions across the country.

I do want to clarify our position here. We recognize we are in a time of belt-tightening across this country. So as we've laid out issues, they've been our priorities, recognizing that down the road there are going to be trade-offs. Among the trade-offs, these are our priorities: research is a key priority for the long term, and the sustainability and competitiveness of our industry. We also appreciate the sound fiscal policy, and recognize that we need to maintain that sound fiscal policy. Our producers have benefited from the resulting positive business climate that has occurred in this country due to that policy.

Thank you.

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

I know opening the borders has been a huge priority whenever the agriculture minister travels anywhere, and I think we're starting to see success.

Mr. Collyer, you've heard from some of the other witnesses, and you made references to subsidies. Could you speak to government subsidies to the industry? Are they or are they not? It seems to be something that needs clarity at this table.

[The Chair, Conservative, James Rajotte]

Keep it brief, please.

[David Collyer]

I could have a very long response, but I'll be brief.

We fundamentally disagree with the characterization that the oil and gas industry is subsidized. I reference the paper by Mr. Mintz, from the University of Calgary. He's done a comprehensive study and looked at the issue. The industry is not subsidized. We think the tax treatment is quite appropriate for the nature of the expenditures we're undertaking in the industry. I would argue that some of the studies that have been done on this subject lack objectivity. They are not sound in their methodology, and they say that there is significant subsidization of the oil and gas industry, which we believe is incorrect.

I will provide to the committee, as background, the paper by Mr. Mintz. I think you'll find it quite enlightening on the question of subsidies.

[The Chair, Conservative, James Rajotte]

Mr. Brison.

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

Thank you, Mr. Chair.

Mr. Bosc, I wanted you to know of our support for the Free My Grapes campaign and the elimination of interprovincial trade barriers on wine. Representing the Annapolis Valley of Nova Scotia, where we've seen significant growth in the wine industry in recent years, and where it's become part of value-added agriculture, this is a real opportunity for us. So we support that.

I have a question for Mr. Roche on CANARIE. We invest significantly in public research in Canada. We support that and believe that if anything, we ought to be augmenting that investment. Why do we still have such a gap between what we invest in public research and our commercial results compared with those of other countries? I'm thinking of Israel as one example. But even in the U.S., there seems to be a healthier environment for commercialization.

[Jim Roche]

That's a question that many people want to know the answer to. It's a little bit outside the scope of CANARIE's activities. However, in the last two years CANARIE has invested in programs to assist in the commercialization of research, with a view to accelerating the movement of research from the labs into industry and also to assist Canadian ICT companies to get their products to market faster. We can do that because through the investments of the Canadian government over the last 18 years we have a tremendous national asset that we can leverage to help accelerate the commercialization of research.

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

Thank you.

To the Cement Association, the Green Budget Coalition, and Sustainable Prosperity, I have a question for you relative to government procurement and the role that it can play in the creation and support of a market.

When I was Minister of Public Works and we were doing government procurement, one of the things that I tried to insist on was life-cycle costing. Whenever we made an investment, I tried to focus on the whole life-cycle. If it was a vehicle, we calculated the energy cost over a period of time. If it was a building, we would consider whether we ought to invest the incremental difference to have a LEED's gold building. The cost up front of an item that will be more efficient over a longer period of time is often significantly higher up front. Would it make a significant difference, in the greening of government procurement and also support of the industries you're speaking of, if we were to change Treasury Board rules to ensure that we consider life-cycle costing, not simply up-front cost, on every government acquisition?

[Michael McSweeney]

The answer is yes, we should be looking at the cradle-to-grave, life-cycle costing. Asphalt pavement, for example, lasts between five and seven years. Concrete pavement lasts between 35 and 50 years. When oil is at $70 a barrel or less, we're not competitive on first cost with asphalt, but whenever oil is greater than $70 a barrel, we are winning first cost every time. So we would implore the government to put life-cycle costing into everything that they do, especially infrastructure. Build it right, build it wise, build it to last.

[The Chair, Conservative, James Rajotte]

You have about 30 seconds.

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

On greening the economy, what would be the impact of that measure?