Finance Committee on Oct. 15th, 2012

[Denis St-Pierre]

It may be that the term “loophole” is what threw me off here. Loophole is something that relates to tax evasion, which is not legal to begin with. It's not something that you make people comply with. It's something that you enforce and stop, so that's what I was referring to: enforcing against illegal activities such as opening accounts in foreign countries and not reporting the income. This is something that I had not heard about, enforcing against those types of planning.

I am not talking about specific measures to curtail tax minimization strategies, which may appear unfair. I must admit that the government has done some work on that in the last few years.

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

Okay, and then also there was work overseas with TEAs and a number of initiatives.

[Denis St-Pierre]

Yes, that was not what I was referring to. I was talking about tax evasion and not reporting income that should be reported.

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

Thank you.

I'd like to go to Mr. Unrau, and certainly I represent cattle country. Kamloops—Thompson—Cariboo is the riding I represent. Certainly I acknowledge we had very difficult times and we had smiles on our faces for too short a period. Hopefully the challenges will be overcome again very shortly.

In terms of increasing, you talked about marketing. I know locally we've done some significant marketing, but could you talk a little about the work in terms of the free trade agreements? Is that making a big difference in terms of your industry? Is it a good focus to continue with?

[Martin Unrau]

Yes, it is, and the focus has to be on working with domestic products, domestic marketing, and also with working with products globally and international trade. I think it's important to note that an animal, when it is processed, is pieced out. You sell the pieces. You don't sell the whole animal.

For example, you may be able to sell a tongue into Japan that's worth about $2 in Canada. It may be worth $26 in Japan. Those are the reasons international trade is so important to us as a beef industry in Canada. Every cattle producer benefits from these types of trade negotiations and deals that we finally make with countries around the globe.

The more trade we can get for our beef, the better off the grassroots producers in Canada will be. As we piece out these animals, we benefit from global trade.

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

Thank you.

I appreciate your comments about research, and I also, again, know there are some dollars that perhaps....

I think many people would like to see more invested in research in their particular areas, but one thing I wondered about is whether we manage to work together with our partners as well as we should, such as the universities.

Do you see any opportunities that we're missing in terms of leveraging and working together with the research dollars? Do we need to do anything that will make it easier for you to create those partnerships? Are there any gaps?

[Martin Unrau]

I think we're on the road to creating some benefits around that.

Before the clusters came into being, universities would build small silos and work within them, so at times research would be done on a certain issue, and it would be repeated without anybody knowing about it. Of course, one of the other issues we had was the tech transfer of the research.

Some of this research was repeated. In the last few years, of course, with the science cluster coming into play, research between universities and research centres has been more transparent and more open for others to see. Therefore, we're improving and working on that. It definitely is a positive, yes.

The only difficulty we have is that it seems we don't get the full five-year funding. We end up with three years of funding, so there's always a bit of a gap before the next program begins. When you're doing long-term research, it's very difficult to continue with research if you have a gap between the programs.

[The Vice-Chair, NDP, Peggy Nash]

Thank you, Ms. McLeod. Thank you, Mr. Unrau.

Ms. Sgro is next.

[Judy Sgro, Liberal, York West, ON]

Thank you very much.

Mr. Unrau, in some of your comments you raised concerns about the outbreak of E. coli and cuts to research in and around the whole beef industry. According to the report that you put out six months ago, it was a concern then.

Given the current outbreak and what you're dealing with now, would you like to comment on just where you think the government needs to go with the research, based on what has happened?

[Martin Unrau]

Might I ask our general manager of research to join me in answering some of these questions?

[Andrea Brocklebank, Research Manager, Canadian Cattlemen's Association]

As I understand the question, it's with regard to whether our position has changed with research.

Actually, no, it hasn't. Research is only part of the equation when we have something like the current food safety incidents. What we asked for was long-term continued investments. Food safety is one of our core areas and one of our top priorities as an industry.

We need continuity in investments. These things don't go away; they evolve. Bacteria change, so there needs to be ongoing examination and investment. We also we need to have what I would call a fire station capacity when an issue arises. In order to attract research capacity in food safety and agriculture, researchers need to see continuity of funding. It's a competitive world. If they have a good research program going and after three years there is uncertainty and a two-year gap, they'll leave and go somewhere else.

I can't speak to whether it would have helped this issue, because research is a long-term thing. It is important to address the issues and to have the people available to help us in the long term.

[Judy Sgro, Liberal, York West, ON]

Last weekend, every time I sat down at various events, my first thought was to wonder where the beef had come from. Interestingly enough, around the table a huge number of people weren't eating the beef. Now the beef may have had nothing to do with Alberta, but how are we going to turn this around? After the BSE, it was a huge challenge to restore people's confidence in the beef industry, which is a critical industry for Canada.

Have there been any additional funds put into the legacy fund, which you were requesting? What is the plan, moving forward, to get the confidence of consumers back?

[Martin Unrau]

I think it's very important to note that we asked for the legacy fund to be extended, and so far that hasn't happened, although we're still working on it and confident that it will be reinstated in some measure.

The other issue has to do with the confidence of consumers. That's something that will be a challenge for us. We think we will be able to move that forward, but it's not a short-term thing. Neither is research into food safety. Thus my and Andrea's comments about the three years needing to go to five years.

It's very important to note that food safety has to be addressed. It is of the utmost importance to the cattle industry: without this attention our industry dies—we know that—so it is a top priority for us to assure consumers in Canada and globally that we have a safe food system, that we have a way of ensuring that our food is safe, and that we can move forward as a leader in exporting food like beef and pork.

[Judy Sgro, Liberal, York West, ON]

What is the plan to deal with the current challenge? After the BSE outbreak, it took a long time to turn things around. What's the plan now to try to move forward on the E. coli?

[The Vice-Chair, NDP, Peggy Nash]

Mr. Unrau, you have 10 seconds.

[Martin Unrau]

We are working on a strategy to assure consumers that our food will be safe. The XL situation was a small situation from a plant that had good practices in the past. Something happened. We don't know exactly what the issues were, but they are being addressed as we speak and as we move forward to ensure that our food is safe.

[The Vice-Chair, NDP, Peggy Nash]

Thank you very much. Thank you, Ms. Sgro.

Mr. Van Kesteren, you have five minutes, please.

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

Thank you, Chair. Thank you, all.

Martin, you said that you had a 14% reduction in water use. How do you do that? Would the cattle drink a little bit less, or...? I don't understand that.

[Martin Unrau]

Go ahead.

[Andrea Brocklebank]

With improvements in animal health, feed efficiency, and all of these things, we can produce in two years what used to take three to four years. That means they are drinking less, producing less manure, and eating less. We have more efficient animals.

That's a mixture of everything from animal health and treatment to the feeds we provide them to management practices. It's all of those factors. We have made substantial improvements in productivity, but we know that with limited resources we need to continue moving down that road.

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

I was up in the northern country in Alberta just before we rose, back in September, and I was astounded by the construction I saw in the pipeline industry.

You have a little bit of a labour problem, I think, with getting skilled workers. Is that pretty much true across your line of expertise?

[Kim McCaig]

In our industry sector, that is absolutely true. In the broader resource sector, it's even a greater concern.

We have, as I said, over 8,000 employees today. That doesn't count all of the contractors and those types of companies that work for us. Those companies are facing the issue even sooner than we are.

The issue comes down to the availability of skilled workers. We have a relatively small workforce, but they are getting ever closer to their retirement age in large numbers. I can quote statistics, but the bottom line, and I think the key thing for Canada when you look at the resource side and the skilled labour side, is that we do have to make significant long- and short-term strategies around how we're going to replace those skilled workers, because it's evident in Canada today.

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

I was glad to see that you were pleased with the government's initiative of the idea of one project, one review. I agree with you; I think it's a step in the right direction.

The only thing I was surprised not to see is a recommendation for getting skilled workers from one part of the country to the next. Have you thought about those things? Do you have a recommendation for the government in terms of tax deferrals or some type of project—

[Kim McCaig]

Again, there are some very specific issues around that idea. I can get back to you with our exact wishes around those.

From an implementation perspective right now, I would say that the key thing is whatever government can do to remove the barriers to people moving around this country in order to gain employment and to incentivize it. In other words, in areas of large unemployment, what can we do to help those people move to areas where there is employment? How do we do it?

We can look at it from not only a fixed perspective—in other words, creating programs that have people we want permanently relocate—but also in terms of the mobility of our workforce, and trying to do that across Canada. I think if we look at the barriers and try to remove them in some aspect, it can really help us, and that goes to the essence of your question.

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

You will get back to us on some of those recommendations.

I read somewhere recently that the extraction industry is directly or indirectly responsible for 20%, I think, of our GDP. Of course, you would represent a large part of that, so it's good to see that you are moving forward.

I understand that we do it really well. We must do it really well; we have the infrastructure in place. Other countries that have the same resources that we have might not be able to transport it the way we can.

Are there any other areas that concern you? Are there any other areas that you see as critical to the nation's economic future in terms of the extraction industry, and getting it to other ports, or as something that the government has done that is critical and will help you along those lines?