Finance Committee on Oct. 24th, 2012

[Doug Strong, President, Precision Drilling Corporation, Canadian Association of Oilwell Drilling Contractors]

I think within the oil field service sector, the macro situation corrects itself over time. The cycle itself—the great equalizer is depletion. Wells do deplete. It is a self-correcting model and cycle. I think, as Mark mentioned, the big thing for us is around people and employment, and really preparing the workforce to be highly educated and trained, and where it's a viable career option, not a cyclical style of business.

I think the biggest impact we can have on the upstream side would be to focus on the people side of it. It's traditionally a young person's industry and opportunity. I think there are tremendous alliances with a lot of the issues that we discussed today.

[The Chair, Conservative, James Rajotte]

I appreciate that. I did want to just touch on a couple more issues in my time remaining.

I take both of your associations' comments very seriously on the national regulator. With the change in the position of the provincial government of Alberta on this, I think there could be an opening.

I did want to follow up, Ms. Amsden, on your responses to the questions with respect to conversion, moving the conversion from RRSP to RRIF, from 71 to 73, removal of the minimum annual withdrawal limit from RRIF, and the elimination of the RRSP/RRIF income from the GIS clawback.

Can you just make your arguments here for those recommendations you made to the committee?

[Barbara Amsden]

I think the real reason for that is that we have an aging population. We have people who are living longer. Once you get to a certain age, the likelihood that you're going to continue until you get much older is much higher. Therefore, we need to allow people to take the money out more slowly than they have in the past.

It's been since, I think, 1991. There was a change from 67 to 71 a number of years ago, but in terms of how much you must take out once you're in a RRIF situation, it hasn't really changed for quite some time, at least since 1991.

[The Chair, Conservative, James Rajotte]

Do you have any costing to share with us for any of these proposals, either today or...?

[Barbara Amsden]

No. We tried to do some, and we'll go back into it. It's definitely not going to be costless, but it has to be something that's looked into over time. In fact, the government, in 2008, when there was that crash, allowed a 25% redeposit into the RRIFs of some individuals. If you have to start taking it out when it is a bad time in the market, you are doubly hit.

[The Chair, Conservative, James Rajotte]

Thank you. I appreciate that very much. I'm very strict on others' times, so I'll be strict on my own. We appreciate you being here and responding to our questions. If there's anything further you'd like us to consider, please do submit it to the clerk.

Just before I suspend, colleagues, you've been distributed two motions for two respective budgets, one for our pre-budget consultations and one for our study on Bill C-377. Are there any questions related to these budgets?

Can I ask someone to move, first of all, the pre-budget consultation motion?

It is moved by Mr. Hoback.

(Motion agreed to)

Can I ask someone to move the motion on Bill C-377.

It is moved by Mr. Jean.

(Motion agreed to)

Thank you. I appreciate that very much.

We will suspend for a couple of minutes. Keep your visiting to about a five-minute break and then we'll bring the next panel forward. Thank you.

[The Chair, Conservative, James Rajotte]

I'll call this meeting back to order.

I welcome our new panel to the table and the two guests we have from Calgary by video conference.

We have five organizations presenting during this panel session: we have the Canadian Association of Social Workers; the Canadian Renewable Fuels Association; the Greater Kitchener Waterloo Chamber of Commerce; from Calgary, by video conference, we have the Calgary Chamber of Commerce; and we have the Small Explorers and Producers Association of Canada.

Thank you all for joining us here today.

You each have five minutes for your opening statement, and then we'll have questions from members.

We'll start with Mr. Phelps, please.

[Fred Phelps, Executive Director, Canadian Association of Social Workers]

Thank you very much. Good evening.

I'd first like to thank the Standing Committee on Finance for the privilege today of presenting the views of the membership of the Canadian Association of Social Workers, which will hopefully serve to inform the direction and decisions of Budget 2013.

The Canadian Association of Social Workers exists to promote the profession of social work in Canada and to advance issues of social justice.

As highlighted in our pre-budget submission to the Standing Committee on Finance, CASW is committed to reducing the growing income inequality gap in Canada, and social workers are seriously concerned that legislation and policies recently adopted by the Government of Canada may run contrary to this objective.

To this end, CASW strongly recommends a reversal of the gradual increase of the eligibility to old age security from 65 to 75 and an investment of an additional $400 million on top of the $300 million per year committed in Budget 2011 in support of seniors solely reliant on old age security and the guaranteed income supplement living with deserved dignity and respect.

Social workers do recognize that the Government of Canada has taken some very useful initiatives in recent budgets and economic plans to increase employment and job creation through apprenticeship tax credits, foreign credential recognition, and targeted initiatives for older workers.

In terms of challenges being faced and addressing these challenges, CASW commends the Government of Canada on the delivery of “Changing Directions, Changing Lives: The Mental Health Strategy for Canada”, and now seeks the commitment of the Government of Canada to see its recommendations realized into action in order to increase productivity in Canada.

With national leadership and provincial partnerships, it is possible to implement a coordinated national strategy for mental illness and mental health in Canada. Consequently, CASW fully supports the solutions grounded in the recommendations of the government's own national mental health strategy for Canada, including increasing the proportion of health spending that is devoted to mental health from 7% to 9% over 10 years; increasing the proportion of social spending that is devoted to mental health by two percentage points from current levels; setting up an innovation fund to assist provinces and territories in developing a sustainable mental health infrastructure across Canada; and, finally, ensuring that the five key principles of the Canada Health Act be applied fully and formally to mental health services, as they are critical to achieving equity between mental health and general health services.

Social workers firmly believe that the Government of Canada also has a critical role to play when it comes to funding health and health care, as well as developing accountability and equity in the delivery of social services beyond the announced 6% annual increase to the Canada health transfer and the 3% annual increase in the Canada social transfer through to 2016-17.

As the fifth largest provider of health care in the country, the Government of Canada has the opportunity and, some would say, the obligation to both lead by example in areas of direct federal responsibility and to coordinate shared accountability through the Canada health transfer and the Canada social transfer.

CASW recently released a comprehensive report on the Canada social transfer aimed at bringing attention to the lack of accountability inherent in its receipt and delivery. The “Canada Social Transfer Project - Accountability Matters” report outlines recommendations on renewing accountability for the billions transferred annually from the federal to provincial governments in support of social services, child care, and post-secondary education.

The Canada social transfer is inarguably a largely unconditional transfer that has no accountability measures for ensuring the level of adequacy with respect to social programs across Canada. Given that recent budgets and their consequent implementation bills have been used as a mechanism to realize changes in broad areas of legislation, policy, and regulations, CASW recommends that the accountability crisis inherent in the current model of financing social programs through the Canada social transfer be addressed in this next budget.

Thanks for your time in listening to the perspective of social workers. I look forward to responding to any questions the committee may have.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now hear from Mr. Thurlow, please.

[W. Scott Thurlow, President, Canadian Renewable Fuels Association]

Thank you very much, Mr. Chair, and good evening.

On behalf of the Canadian Renewable Fuels Association, I want to thank you for the opportunity to speak to you here today.

CRFA member and supporting organizations provide Canadians with renewable, clean-burning ethanol and biodiesel fuels that help fight climate change and combat pollution, like smog. At the same time, our members provide the platform to develop the next generation of biofuels. With the committee's questions in mind, I would like to move directly to our recommendations.

Given the current climate of fiscal restraint, the CRFA understands that it has become increasingly vital to ensure existing economic programs continue to be efficient and are achieving their desired goals for economic growth and job creation. Over the past decade, government programs and grants supporting renewable fuels production have created some 14,000 full-time jobs and billions of dollars in economic activity.

The ecoEnergy for biofuels program, which has been a central element of this government's renewable fuels strategy, is one that I would like to highlight. Encouragingly, this program has been shown to be highly effective at generating industrial expansion and job creation in Canada's ethanol industry. However, in terms of renewable diesel, there is more work to be done. To this end, we believe modest changes to the program are necessary to ensure that the objective of building out 600 million litres of biodiesel production can be met.

Specifically, the CRFA recommends that the government reopen the ecoEnergy for biofuels program for renewable diesel fund to new project applications, and require existing program projects that were not substantially completed by September 30—the cut-off date—to reapply. As detailed in our submission, we would also like to see attached conditions to new applications to demonstrate their viability.

I want to be clear that our recommendations are in no way intended to detract from the tremendous help the government's ecoEnergy program has been in creating a vibrant and competitive biofuels production industry in Canada. However, the unfortunate reality is that the contribution agreement period for biodiesel has lapsed and only one new biodiesel plant has been constructed as a result of the program.

I think it's important to emphasize that these modest adjustments would require no new federal dollars. We believe that the funds committed in previous budgets can be directed to shovel-ready projects that are prepared to move forward in Canada today. Doing so could generate more than 1,350 direct and indirect jobs and could contribute almost 400 million additional litres of new production capacity in the Canadian market by the end of 2014.

Expanding Canada's biofuels industry creates jobs and environmental benefits that all Canadians can profit from. This is why the government must continue to ensure that the right conditions are in place to drive innovation and attract job-creating investment dollars to Canada. We have seen the success of an operating incentive as part of an integrated strategy aimed at stimulating the creation of ethanol plants and believe that the same support for next-generation ethanol projects would provide the security needed to attract private capital investment during the critical commercialization phase.

For this reason, CRFA proposes an operating incentive of 15¢ per litre for next-generation ethanol projects that can be funded directly by using the unused ethanol money remaining as part of the ecoEnergy for biofuel program, which we estimate to be at approximately $50 million. Here we are asking for previously allocated funds for ethanol to be redirected to benefit next-generation ethanol producers.

Another area of vital interest to our industry is Sustainable Development Technology Canada. Our members have relied heavily on programs like the SDTC NextGen Biofuels Fund. While there is no doubt that the global recession has slowed the development of some exciting technologies, there continues to be considerable advancement by the Canadian renewable fuels industry. It is our understanding that over 60% of the $500 million allocated in the NextGen Biofuels Fund is already committed and that many project announcements are imminent.

Moreover, by the end of this year, we understand that the fund will be almost 80% committed. Knowing that the program was originally designed to run until 2015 and pay out beyond 2017, I would posit that we are on the right track. Not everyone shares that view, however. Despite planned investments and commitments from the SDTC board, some stakeholders from other sectors have asked the government and this committee to recommend reprofiling the program fund sector into other areas outside the renewable fuels sector. Regardless of what others may suggest to you, those funds are not idle. The CRFA believes it would be a mistake to reposition these already committed funds at this critical time and that doing so would send a very negative message to innovators, private investors, and Canadian clean-tech entrepreneurs. We recommend that the fund and the qualification for applicants be preserved as is.

I sincerely appreciate this opportunity to speak to you on behalf of the Canadian renewable fuels industry, and I'll be happy to answer any questions you may have.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now hear from Mr. Sinclair, please.

[Art Sinclair, Vice-President, Greater Kitchener Waterloo Chamber of Commerce]

Thank you very much, Chair. Thank you to the committee for allowing us to make our recommendations on the 2013 budget.

I'd also like to acknowledge the efforts of our local MPs: Minister Goodyear, Harold Albrecht, Peter Braid, Steven Woodworth—

[A voice]

They are great guys.

[Art Sinclair]

They are great guys, yes, absolutely.

Every year, for the last number of years, they have also conducted pre-budget hearings back in our community of Waterloo region with all the different interests. Of course, for an organization like ours that isn't based in the immediate Ottawa area or close to a provincial capital, our relationship with the MPs and MPPs is critical. Again, we are very fortunate to have excellent representatives. We thank them for their ongoing support and their participation in the annual budget process. It is a lot of work.

I am going to be brief in my comments. I had prepared speaking notes, but in the interest of ensuring that all the points are made, I am going to condense my presentation somewhat.

The first issue I would like to raise is the accelerated capital cost allowance for manufacturers. Our region—the Waterloo region—is still a home to a number of manufacturing organizations. There are approximately 1,500 manufacturers employing 55,000 people. The manufacturing industry is still a very viable component of the southwestern Ontario economy. It still employs a lot of people, and they pay a lot of municipal, provincial, and federal taxes.

In past submissions to this committee, we have been supporters of the government's accelerated capital cost allowance for manufacturing and processing. It was brought in by Minister Flaherty in 2007 as a one-year measure, and it has been extended a number of times since then. We concur with the Canadian Manufacturers and Exporters, who have proposed that in fact this particular initiative be made a permanent fixture of the tax system. We would support that.

This is a measure that probably provides about $500,000 per year to Canadian manufacturers to invest in new equipment. Academic reports and other analyses that have been conducted on the manufacturing sector keep referring to productivity. This money is used for productivity enhancement to make Canadian manufacturers more competitive, efficient, and more productive. Again, we would support having that particular measure be made permanent.

The second point we would like to advance is... As many of you in Ontario are aware, four years ago, Minister Flaherty announced the southern Ontario development program, which evolved into FedDev Ontario, which has been operational since August 2009. It was originally intended as a five-year program with $1 billion. We're three years, or 60%, through the program. In meeting with a number of stakeholders that are community partners throughout the Waterloo region and in southwestern Ontario...there is a lot of support for this program. It has provided some valuable funding to start up businesses in our community and the Waterloo region, primarily young, growing firms in the IT sector. It has provided a lot of assistance to a lot of stakeholders, such as municipalities and universities throughout southern Ontario. We would like to see this program extended in some form beyond the original five-year mandate.

The third point we would like to bring forward is something that was brought forward in the previous panel by Ms. Walmsley; namely, pooled registered pension plans. We are, as a chamber, also highly supportive of this initiative. As Ms. Walmsley said, to make this program successful, it requires the support of the provincial governments as well as the provincial finance ministers.

We have written to Ontario Finance Minister Dwight Duncan. He indicated that the Province of Ontario is reviewing this measure; however, they would be in further contact with their federal counterparts. Our message to the federal government is that our business community, and the business community across Canada, supports this program. That would be the message that we would like the federal government to take forward in negotiations with the provinces: that there is support amongst the business community for this program.

Certainly, we have a lot of small businesses that are members of the Canadian Chamber of Commerce in our area. They have told us there aren't a lot of options available, particularly viable, cost-effective options, that they can offer to their employees in terms of retirement plans. This addresses a lot of their concerns, so we very much would still like to see the provinces get on side, and particularly the Province of Ontario.

Again, thank you very much for the opportunity to present our recommendations.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Sinclair.

We will now hear from the Calgary Chamber of Commerce, please.

[Ben Brunnen, Director, Policy and Government Affairs and Chief Economist, Calgary Chamber of Commerce]

Hello there. Thank you very much for the opportunity to present today. My name is Ben Brunnen. I'm director of policy and government affairs, and I'm chief economist with the Calgary chamber.

The Calgary chamber represents about 2,200 businesses within the Calgary region, and I'm speaking today on their behalf as we assist you in creating the best environment for Canadians: to live, work, invest, and raise their families.

My remarks today are based on three main themes from our pre-budget submission: principled expenditure management, employment insurance amendments, and enhanced foreign investment rules.

First, from a principled expenditure management perspective, with a favourable debt-to-GDP level and reasonably strong economic growth, Canada is the envy of the developed world. However, the risk of a global recession is higher than it has been since 2008. As such, we cannot be complacent. The chamber urges the federal government to apply prudent fiscal management policies to program expenditures, positioning Canada for stable long-term growth. This approach is beneficial in that it establishes future spending parameters in the context of the current fiscal climate and spending constraints. It also sends a credible signal to the business community that the federal government is committed to returning Canada to balanced budgets.

The chamber suggests that the government adopt a bandwidth approach to spending by targeting expenditure increases within a range delineated by population and inflation growth and real GDP and inflation growth, also known as our smart spending bandwidth, which we presented previously as well. This range is between 2.6% and 3.0% for 2013-14, using a five-year average.

Second, I'd like to talk about amendments to federal employment insurance. With demographic pressures and a strong investment climate, labour shortages are expected to be a long-run concern for the Canadian economy and a top priority for Calgary chamber members. The chamber suggests that the federal government introduce amendments to the EI program so that it is structured as a true insurance program similar to car insurance. The social program aspects should be moved to other programs, but still funded, similar to the Quebec government's parental insurance program. This restructuring of the EI program would facilitate the reduction of EI premiums, thereby reducing real wage costs to employers and increasing the real wages received by employees. This would create a stronger link between amount paid and benefits received.

We also encourage the federal government to adopt variable premium payments for the EI program, based on the program’s 58 established economic regions. Areas of consistently high unemployment, with correspondingly higher benefits paid, would pay relatively higher premiums, and vice versa. This would eliminate the implicit redistributed properties of the EI program that discourage employers and employees from finding solutions to chronic unemployment challenges and would facilitate labour mobility. Our end goal is to improve the labour market and reduce distortions in the job market, ultimately positioning Canada for a more competitive and economically prosperous future.

Finally, I'd like to talk about enhanced foreign investment rules. Expanding trade agreements and encouraging foreign investment in Canada is critical to our long-term prosperity. A recent focus on foreign interest in the Canadian energy sector has once again called into question Canadian government policy regarding foreign investment and acquisition of Canadian resources by foreign investors. In the last decade, approximately half of all merger and acquisition activity in Alberta's oil sands involved foreign companies, and that's a value of $30 billion.

Foreign investment is particularly critical for the oil sands because of the capital-intensive nature of the industry. Without it, there could be as much as 40% less oil sands investment in our province. With Alberta recognized as having among the largest proven oil reserves in the world, foreign interest in the oil sands is increasingly coming from emerging economies, particularly in Asia, whose growth trajectory suggests a long-term insatiable demand for energy.

However, Canada needs to update the Investment Canada Act to be able to respond and embrace foreign investment in our country. The recent decision to postpone the $6 billion Petronas takeover of Progress Energy has raised concerns around the clarity of the net benefit test and the interest regarding state-owned companies and Canadian natural resource assets. Looking ahead, the proposed $15 billion acquisition of Nexen by state-owned CNOOC is likely only the beginning of a long line of potential foreign takeovers of Canadian energy assets.

The Calgary chamber is asking the federal government to undertake a comprehensive, stand-alone review of the 1985 Investment Canada Act. We recommend that it be separate from the Budget Implementation Act and provide a broad and fulsome public debate. Specifically, we'd like to see the government clarify the net benefit test, as outlined in section 20 of the act, to streamline the wording, prioritize and focus the essence of the test, and establish parameters therein. We also recommend including parameters around reciprocity and the net benefit test, increasing substantially the threshold at which the federal government is legislated to undertake a review, improving the transparency of decisions so that third parties considering deals can assess their chances at meeting requirements, and setting specific criteria for state-owned companies to meet net benefit requirements in order to protect the Canadian economy from potential foreign government interference.

The current challenge for investors and Canadian companies is that nobody knows exactly how the rules will be applied in their particular case or how they should interpret the act and what they can do better in the future.

Thank you very much for inviting the Calgary chamber to present to the House of Commons finance committee. I look forward to responding to any questions you might have.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now hear from Mr. Leach, please.

[Gary Leach, Executive Director, Small Explorers and Producers Association of Canada]

Thank you very much, Mr. Rajotte.

Thank you to the members of the committee for inviting our association to speak with you.

My name is Gary Leach. I am executive director of the Small Explorers and Producers Association of Canada. On January 1, by the way, we'll simplify our name to simply the Explorers and Producers Association of Canada.

We brand ourselves as the home of Canada's oil and gas entrepreneurs. Our membership is 300 companies. These are oil and gas companies that started here in Canada, they're headquartered in Canada, and they invest here in Canada.

These member companies of our association contribute to the Canadian economy each year in new investment some $6 billion to $8 billion invested in new oil and gas and oil sands production facilities. This sum, by the way, is equivalent to the entire value of all the building permits issued each year in the greater Toronto area. So while you can see all the condos and office towers and industrial buildings going up in the Toronto area, you don't see the same visual image from our investment in the country because ours goes underground rather than up. I hope it gives you some idea of how much our association members are investing in this country each year, contributing to the economy and sustaining tens of thousands of well-paying jobs, primarily in rural areas of Canada.

In fact, a strong Canadian natural gas resource sector has been one of the main pillars of our nation's relatively strong performance compared to other G-7 economies. The oil and gas industry alone is the largest, by far, private sector investor in the nation and has become Canada's largest export industry by value.

As you may know, the upstream sector generates annual top-line sales of $100 billion per year and reinvests each year more than half that amount. There is no other industry in the country that remotely approaches the level of investment in Canada of the oil and gas industry.

We think it's time to let the private sector drive the nation's economic growth while Ottawa focuses on reducing its deficit spending and withdrawing stimulus that it has introduced to the economy in the last few years.

We think the federal government has done the right thing to reduce corporate tax rates because we think this will draw more investment by the private sector—helped along by those provinces that choose to align their tax regime with the federal one—and this investment will lead to more jobs and higher wages for Canadians. However, the wealth that can be generated for Canadians from coast to coast by our oil and gas industry, whether you measure that in well-paid jobs or taxes or royalties paid to government, is seriously impaired by our lack of access to markets outside North America. This reduces the value of Canada's energy exports by tens of billions of dollars per year. We only get to sell a barrel of oil one time, and if we don't get the best price for that barrel when it's sold, the opportunity is lost forever.

We therefore support the goal of streamlining the project review process in Canada, particularly for major pipeline infrastructure projects. Canadians are quite capable of conducting project reviews with thorough consideration of environmental, social, and economic impacts in a reasonable timeframe. We don't need 10 years to conduct a review of a project like the Mackenzie Valley gas pipeline—which didn't survive the review process. Ten years doesn't add anything to the knowledge base that couldn't have been learned in two or three years in a properly managed process. Businesses investing in Canada are entitled to a government review process that's efficient, effective, and has a decision point within a reasonable period of time.

We also endorse continuing steps by Ottawa to reduce the burden of too much regulation and red tape imposed by government on small business. I'm sure many of you know that trying to understand and comply with overly complex regulation is far more costly per employee for a small business than large ones. A recent survey suggested thousands of small business owners in Canada said they would not have started their business if they had realized how much time was spent dealing with governments instead of keeping their customers happy.

For small and mid-sized oil and gas companies, a serious additional challenge is raising enough capital to fund their growth plans. This has particularly been the case since the financial market crisis of 2009, and it has been made worse by weak natural gas prices and the heavy discount that I referred to a few minutes ago that Canadian oil sells for in the North American market.

The amount of equity financing raised for Canada's oil and gas industry is down 44% this year to the mid-point of the year, compared to the first half of 2011, dropping to just over $4 billion from a $7 billion record raised in the first half of last year.

The amount of money borrowed for oil and gas investment has increased 25% over that same time period. However, of the $4.1 billion in equity financing raised in Canada so far this year, about $104 million—so a little over 2%—was from the issuance of flow-through shares.

[The Chair, Conservative, James Rajotte]

Mr. Leach, if I could get you to just wrap up very briefly, then we could go to members' questions.

I know you'll get a lot of questions on this, but we are running very short on time here.

[Gary Leach]

All right.

I spoke about flow-through shares. The finance department has recognized flow-through shares as an important financing mechanism for small oil and gas companies.

We have two recommendations: increase the annual Canadian development expense conversion limit to $4 million from $1 million; and increase the taxable capital test to access the conversion to $50 million.

Thank you, Mr. Chairman. Those are my remarks.

I'm of course happy to answer questions.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now begin members' questions.

Mr. Caron, you have five minutes.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much.

Thank you very much, all of you, for your presentations.

I'll concentrate my questions on you, Mr. Brunnen—and maybe Mr. Sinclair, but you especially, as an economist. I'm an economist myself, and I'm really interested in macroeconomics. There are many issues I would like to tackle. I'll try to do that within the five minutes allocated.

In terms of productivity, we've been seeking to try to increase Canadian productivity for a long time. I still remember the free trade debates. We were told that the gap between Canadian and U.S. productivity could be reduced, or “will” be reduced, thanks to the agreement. Yet the gap never really got any slimmer between both countries.

The issue of Canadian productivity has been a problem since forever, I think. We've looked at many ways, including investment in research and development and so on, to try to improve on productivity, but nothing seems to work.

My first question—then I'll have a second question, before I give you a chance to answer—is why can't we seem to find a real solution on the issue of productivity, regardless of the prescription that is being either given or implemented by government?

The second point relates to taxation. The question is that, in especially the corporate sector, taxation has been reduced significantly since 2000, and even since 2006, since we've had this current government. At the time, I think the rate was 22%. Now it's 15%. The main argument for it is that if we are reducing tax rates, then that money will actually be reinvested and there will be economic growth in general.

It makes sense, except that in reality.... We've all heard about “dead money”. Even Mark Carney, the Governor of the Bank of Canada, has mentioned it. We also have a problem where, if we're looking at the real investment rate in this country since 2000 and since 2006, it's been pretty flat. So we don't necessarily see that money going into investments in real terms.

I just want to know why you think that is, and if you think that prescription has actually fulfilled all the potential its promoters actually put forward.

[The Chair, Conservative, James Rajotte]

Do you want to start, Mr. Brunnen?

[Ben Brunnen]

Sure.

Definitely I think we can get rid of the first section there. If we need clarity on the second part of your question, perhaps we can get into that.

In terms of productivity, where we're talking about strengthening productivity, you....

I mean, basically you've solved it in five minutes, right?

[Voices]

Oh, oh!