Finance Committee on Oct. 24th, 2012

[Ben Brunnen]

The reality is what I'm calling for right now: we're looking at expanding trade agreements as a means to enhance productivity. We see that as beneficial for a number of reasons, but in the budget submission we made to you, there's actually a citation from StatsCan when they presented to a standing Senate committee. They basically found that businesses that export have increased their productivity as they entered export markets, have grown much more rapidly after doing so, and have introduced new technologies more quickly.

Basically what we see in this regard, from a productivity perspective, is that accessing new markets creates access to new ideas, new technologies, new business sectors, those types of things, and at the end of the day creates more competition.

I think competition drives productivity very effectively. One of our challenges from a productivity perspective traditionally, not in recent years, has been that low Canadian dollar. There was a little bit of complacency, from a productivity perspective, that we could just rely on our currency position. That's changed a little bit. I think you'll see a bit more of an enhancement in productivity as a result of necessity in that regard.

Deregulation, ICT investment, and competition in that sector will enhance that as well, but opening up new markets, I think, is the fundamental key to doing that, because then we're able to bring in some competition, understand issues a little bit more, and innovate, if you will.

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

Thank you, Mr. Brunnen.

I would like to hear Mr. Sinclair as well. Can you address the corporate tax aspect of my question?

[Art Sinclair]

Generally, with respect to the agenda of the current government with respect to corporate tax cuts, I believe that Minister Flaherty brought in a package in the fall economic statement of 2007 that has extended over a number of years. On behalf of our members, I think our approach is to stay the course. We're probably at a fairly competitive level.

I would also say that the Province of Ontario, and I'll give them credit, has made some significant corporate tax cuts as well. I think in the province of Ontario we're in a pretty competitive position.

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

Why didn't it have an impact on the investment rate, per se? That was the reason it was brought forth.

[The Chair, Conservative, James Rajotte]

We'll have to come back to this. It is a big issue, so we will come back to it in future rounds, I'm sure.

We'll go to Mr. Jean, please.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Chair, and thank you to Mr. Caron for allowing Mr. Brunnen to recite the Conservative trade policy and the successes of it.

I noticed in your brief that you also talked about pursuing reciprocal arrangements on our bilateral trade agreements. Are you referring specifically to the reciprocal enforcement legislation found in the U.S., for instance, in their wine export-import laws between states?

[Ben Brunnen]

Actually, I'm not referring to that, because I'm not familiar with it. I'm referring basically to the concept of ensuring, when we engage in these types of arrangements, that there's equal access, or comparable access, to Canadian companies with these proposed foreign investors. I think that's a critical component in establishing that long-term, mutually beneficial relationship that is in Canada's best interest.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I agree, and that is exactly what the U.S. does in relation to a lot of their trade laws with other states, just because of the protectionism of the sixties and seventies.

I was more interested in your final comments regarding the Nexen deal, in particular. I was wondering if the chamber sees a difference between a corporation that invests in the oil sands, for instance, or in conventional oil in Canada, that is a market economy investment or is owned by foreigners—that is, foreigners or Americans investing in particular oil sands companies—and companies owned by states that maybe are questionable with respect to their human rights records and the rule of law.

[Ben Brunnen]

Where we sit on this piece is that I think there has to be some differentiation, depending on the country and the relationship we have. If it's a state-owned entity, the government needs to understand what the interest is they need to protect against and then establish and legislate some good parameters around that.

I know there are some guidelines in the act right now that talk about what would be ideal from a partner perspective. But it would be really good to see some parameters around what it means when a state-owned company wants to make those investment decisions. I think they can be relatively straightforward. If we legislate that, we can manage those scenarios.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

In fact, wouldn't this bring a lot more clarity and predictability to corporations generally that want to invest, and also to shareholders, with stability in the overall market? Isn't that fair to say?

[Ben Brunnen]

It would be a huge confidence piece, and certainly business is looking for predictability, stability, consistency, and principle in decision-making. For example, if it had been ExxonMobil that had moved forward with the proposal, there would not be as many eyes batting as a result of that piece, right?

An interesting thing in the Alberta energy sector is that in the U.S. they talk about foreign oil, but they think Canada is not foreign oil. In Canada, we talk about foreign investment. We don't necessarily view the U.S. as foreign investment in the oil patch. It's that relationship through the free trade act.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

That is my point, because in fact, probably somewhere in the neighbourhood of 65% to 70% of the oil in the oil sands is controlled by foreign owners, and much of that is, of course, non-state owned. It's shareholders in the United States—my cousins, my uncles, family members, and others who are down in the United States. Isn't it fair to say that they own the majority of the shares, in essence? But they're publicly traded, so of course they have the ability to buy them.

[Ben Brunnen]

Yes, in terms of the ownership profile of the energy sector in the last 10 years and foreign investment in the Alberta sector, 30%—

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I only have one minute left, so make it quick, please.

[Ben Brunnen]

—would equally be the U.S. and China.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I was interested in more of this, and I will talk to you at a different time.

In the EI suggestions you have in your brief, you're suggesting that we need to make it a fair, actual insurance program and reduce barriers to mobility as well, to encourage people to relocate. That's fair to say, is it not?

[Ben Brunnen]

Yes. Essentially what we're calling for is to bring it back to a true insurance-style program. There are a number of other components to it right now that distort, that are not necessarily linked to somebody losing his job. They're valuable programs and we'd like to see them funded separately. If we did that, and then structured it similar to an insurance program.... The reality is, if you live a high-risk lifestyle.... For example, I get a different insurance premium for a different neighbourhood in Calgary because I'm more likely to make a claim on hail damage.

If we were to structure it like that, you'd be encouraging the thriving and sustainable businesses in the regions of chronically high unemployment to prosper, without being brought down, if you will, by those that are struggling. This is going to help remove distortions in the labour market, which is one of the biggest challenges, from both a competitiveness perspective and an economic prosperity perspective.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Jean.

Mr. McGuinty.

[David McGuinty, Liberal, Ottawa South, ON]

Thanks, Mr. Chair.

Mr. Thurlow, I'd like to go back to some of the testimony you presented earlier. There is no national energy strategy for the country. We have other strategies being pursued by the government. The Conservative members like to say, for example, that this is some kind of national energy program, while they pursue other important industrial strategies across the country. This is about an energy strategy for the country—where we are, where we're going, what it looks like. It's not the mischaracterization of some plan to fetter the free market.

You are heading up an association. It's an important one, a growing one around the world—

[W. Scott Thurlow]

No pun intended.

[David McGuinty, Liberal, Ottawa South, ON]

—in renewable fuels. Do you know what role the renewable fuel sector in Canada is supposed to play, what contribution it's supposed to make with this overall reduction of 17% of greenhouse gases in the next 13 years?

[W. Scott Thurlow]

Actually, I can answer that question. Part of the renewable fuels strategy introduced by this government was to set a goal of a four-megatonne reduction, in concert with its Copenhagen Accord obligations. I can tell this committee with a great deal of confidence—and this was reported as recently as last week—that the transportation sector strategy that this government adopted is working. It is partly integrating with the United States fuel economy standards and partly integrating renewable fuels into the energy mix being used by consumers at the pump. Ethanol and biodiesel have significantly improved the climate change footprint, for lack of a better description, when compared with traditional oil and gas products, and the government's renewable fuels strategy has gone a long way to move that forward.

[David McGuinty, Liberal, Ottawa South, ON]

You said that the government lapsed a lot of money in the ecoEnergy program. If I recall, the federal renewable fuels standard is going to require 600 million litres of production. Where are we getting that production now?

[W. Scott Thurlow]

Right now we're not producing 600 million litres. We're importing some of that biodiesel or renewable diesel from offshore. Unfortunately, canola producers in Manitoba and Saskatchewan are exporting their canola into the United States, where it's being upgraded and sent back into Canada.

We'd like to see some opening up of the ecoEnergy money, the money that lapsed just three weeks ago, on September 30. We'd like to see that program reopen so that shovel-ready projects can get under way. We want to get them up and operating before the end of 2014. That way, our domestic canola producers, our domestic seed producers, can have their products value-added right here in this country.

[David McGuinty, Liberal, Ottawa South, ON]

I want to go back to something you said about NextGen Biofuels Fund. You looked at the SDTC and its commitments, and the amount of money in that fund is already being committed. In my own riding of Ottawa South, Iogen Corporation, which is located there, recently decided to commercialize their technology in Brazil. They walked away from a massive opportunity in Ottawa and particularly in Manitoba.

What advice do you have for this committee for preventing this from happening again? This is a huge loss of jobs, a huge loss of investment in new tech. We're not talking about food for fuel, as it is often cast. We're talking about creating next-generation enzymes to produce fuel from poplar trees, from straw.

How do we prevent this kind of loss from happening again?