Finance Committee on Oct. 29th, 2012

[The Vice-Chair, Liberal, Scott Brison]

Thank you, Mr. Jean.

Could the analysts let us know at some point—no rush—who brought in that gas tax idea? I'm just curious.

We'd like to hear from Ms. Glover.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

I'm going to start, first of all, with Green Budget Coalition. I appreciate everything you've said today about the differences we've made in three subsequent budgets with regard to oil and gas. I just want to point out very quickly that this government has never introduced any kind of tax incentive favouring the oil and gas sector. That's correct, is it not, sir?

[Andrew Van Iterson]

I'm not expert enough to comment on that.

[Shelly Glover, Conservative, Saint Boniface, MB]

I can assure you it wasn't this government, but this government has in fact, as you've said, in three budgets now, tried to level the playing field. The Income Tax Act right now does not include any tax preference for oil sands producers. We have, as you said, phased out in the latest budget the Atlantic investment tax credit. We've also phased out the corporate mineral exploration and development tax credit, which you were speaking about. Of course, we did also put through an accelerated capital cost allowance for clean energy.

I just wanted to make sure that Canadians who might be listening do know what you were talking about when you were commending us about three of the budgets that we've used to actually level the playing field.

I do want to ask you about other countries. As we know, we're trying to meet, and now we are meeting, the G-20 commitment we made. I just wonder if you know how other countries like the United States are doing in meeting that commitment compared to Canada.

[Andrew Van Iterson]

I'm honestly not an expert on other countries' subsidies.

I did want to clarify something, which is that in the latest budget your government phased out the corporate mineral exploration tax credit; however, there is a mineral exploration tax credit that remains in place, which we are encouraging your government to phase out or not renew. They are two separate pieces—

[Shelly Glover, Conservative, Saint Boniface, MB]

All right. I will look in to that. I know the ACCA that you were talking about is still there.

Nevertheless, Merit, I want you to have an opportunity to dispute what Mr. Marston said about union workers being more highly skilled and perhaps your companies aren't because you don't have the Red Seal. I don't know if you have the Red Seal trade thing.

[Terrance Oakey]

Absolutely.

[Shelly Glover, Conservative, Saint Boniface, MB]

That was what I understood, and I just want to give you an opportunity to clarify. If I misunderstood, then I apologize, but that seemed to be what was being said.

[Terrance Oakey]

I just want to be clear that I didn't interpret the comments that way, but I will just speak to our member companies. They spend millions of dollars on apprenticeship training, scholarship refunds, and also in most provinces apprenticeship is public.

The one problem, though, that I will highlight around apprentices is the ratio. We've been calling, and our provincial associations have been calling, for a 1:1 ratio between apprenticeship and journeymen. There are members just in the Ottawa area that tomorrow would hire probably five or ten more electricians, but they can't because the provincial government says you need to have three journeymen for one apprentice. This is a position that's been supported by the building trades union. I don't know why they support keeping young people out of the industry when we have such a shortage of workers. If we could get rid of that ratio—and I know that's not a federal area, but if we could get the provinces just to simply have a 1:1 ratio, that would fix a lot of our problems.

[Shelly Glover, Conservative, Saint Boniface, MB]

That's interesting.

To go back to the questions Mr. Hoback was asking, I don't understand why the municipalities insist on having these rules in place to favour union members, and unions being invited in. I learn a lot from Mr. Marston when he talks. He's well educated on all of this. I didn't mean to suggest he said something inappropriate. That's just how I understood it.

I'm trying to understand why municipalities are hesitant in saying we should have an open competition.

[Terrance Oakey]

I don't think they are. I think they're bound by decades-old certifications that may or may not still be relevant. If there was an easy decertification process, perhaps they wouldn't still be bound by those processes.

[Shelly Glover, Conservative, Saint Boniface, MB]

So far in committee I have heard from no witness who has convinced me that there is a positive, plus reason for limiting open contracts. I don't get it.

[Terrance Oakey]

Because there isn't.

[Shelly Glover, Conservative, Saint Boniface, MB]

Unless another witness comes forward to suggest otherwise, I think this ought to be a recommendation, because so far no one has told me why it's better to do it the other way.

May I ask you, Mr. Buy, for a list of those programs that are the 26 weeks or under 60 weeks that would actually address the skills shortages? I'm open to considering your proposal. However, I need to be convinced that they will actually address the skills shortages. Could you provide a list of those programs? That would be evidence that might sway us one way or another. I'm at a loss when you compare Canada student loans to Canada student grants, because a loan is repaid and a grant is not.

Have you costed out how much it would cost the government in revenues for that?

[The Vice-Chair, Liberal, Scott Brison]

Thank you, Ms. Glover.

[Shelly Glover, Conservative, Saint Boniface, MB]

Can you just answer?

[The Vice-Chair, Liberal, Scott Brison]

Actually, we've gone beyond the time, but we'll have some opportunity to discuss the recommendations later.

[Shelly Glover, Conservative, Saint Boniface, MB]

You can submit it in writing.

[The Vice-Chair, Liberal, Scott Brison]

Yes, thank you very much, Ms. Glover. Time marches on.

We appreciate each of your interventions today. It will help us as we draw together recommendations for the upcoming budget as part of these pre-budget consultations, so thank you very much.

We're going to have a five-minute break.

[The Vice-Chair, Liberal, Scott Brison]

I call the meeting back to order.

Welcome to our witnesses, and welcome back to our members. We're going to resume the 84th meeting of the Standing Committee on Finance.

Welcome back, Mr. Turk. It would have been tragic if the representative of the Association of University Teachers was late for class. You are always punctual, and we're looking forward to hearing from you.

We have today from the Association of Universities and Colleges of Canada, Paul Davidson. We have Mr. Turk from the Canadian Association of University Teachers. From the Canadian Cooperative Association, we have Shawn Murphy. We have Jay Myers from the Canadian Manufacturers and Exporters. And we have Terry Audla from the Inuit Tapiriit Kanatami. Welcome to all of you today.

You have five minutes each, and we're looking forward to hearing from you.

We're going to start with Mr. Davidson.

[Paul Davidson, President, Association of Universities and Colleges of Canada]

Thank you very much, Chairman.

Good afternoon, everyone. I am very pleased to be here today. I would like to congratulate the committee for the advice it provided to the government on the budget.

Last week, 65 university presidents from across Canada came to Parliament Hill to show how universities are putting ideas to work for Canadians. I'm pleased to say there was widespread recognition of the role universities are playing in communities across Canada in conducting leading research, fostering innovation, and ensuring that Canada has the talent we need to succeed in the global knowledge economy. Our members were joined by university champions from the private sector—from student entrepreneurs building “born global” companies to CEOs who have invested in higher education for their workforce to up their company's game in a competitive world.

Universities are centres of ideas and innovation. Whereas a 20th-century Canada could prosper from its natural bounty, today's global knowledge economy demands that we must compete on our brains. Canada's students and their families know this and are making smart choices. Over one million students are pursuing an undergraduate education in 2012.

The 2013 budget gives the federal government the opportunity to make strategic investments that will allow universities to continue to increase Canadian economic prosperity within the global knowledge and innovation economy. The AUCC specifically recommends that the federal government invest in university research, international education and renewing post-secondary education for aboriginals in the 2013 budget.

Specifically, we recommend enhancing support for the federal research granting agencies and the Canada Foundation for Innovation, including the institutional cost of research. Quite simply, these are foundational to everything that universities can do.

We also recommend more graduate student internships and employment experience in a broad range of interdisciplinary sectors. This would enable more companies to take advantage of the highly talented graduates that Canada's universities produce.

As you've heard from several witnesses, the recent Council of Canadian Academies' report highlights the outstanding quality of Canada's university researchers and points to Canada's growing influence on global knowledge. Additional investments are required to sustain and accelerate the pace of research.

Canada also needs a strong national and coordinated approach to international education, one that involves governments working in concert with the education sector. International education should be a pillar of the Government of Canada's foreign policy and economic growth objectives.

Over the course of the summer, you may have seen a recent report from DFAIT that indicated international students contribute close to $8 billion a year to Canada's economy. When I say that, I'm thinking of communities like Nanaimo, Kamloops, Brandon, Sudbury, Chicoutimi, and Moncton, which all benefit from international students. International students actually contribute more to Canada's economy than the export of softwood, wheat, and aluminum. To think of this sector as a lever for Canada is important, especially in new and emerging markets.

Attracting international students to Canada gives us an edge in global commerce and trade. But it's about much more than attracting international students to Canada. We must also ensure that this generation of young Canadians gains study abroad experience to prepare them to meet the needs of the global economy. We think of ourselves as an open global nation, but American students are twice as likely to study abroad as Canadians, and German students are three times as likely to study abroad. We have lots of work to do.

We also need to position Canada as an international leader in higher education, not only as a recruiter but as a partner in education and research. International research collaboration amongst universities, governments, and industry builds the strong people-to-people ties needed to attract the best and brightest talent and to expand our trade and investment ties around the world.

To support international higher education, Canada should implement the recommendations of the Chakma report. In brief, these are funding international research collaboration at scale, investing in initiatives to support study abroad opportunities for Canadian students to gain global skills, and investing in initiatives to enhance marketing and branding efforts to attract international students to Canada and leverage existing investments.

Our final recommendation is to invest in post-secondary education for aboriginal people. If I can, let me be blunt for a moment. I have come before this committee four years in a row now, saying that this is an urgent national priority. We welcome and support the government's efforts and the crown-first nations gathering, and the particular focus on the K to 12 system, but we have to do more. Canada needs to go further and we need to go faster.

Universities have also made strides in attracting and retaining aboriginal students over those four years. We have proven projects that can be scaled up to increase aboriginal participation and graduation rates. Action and investment are needed now.

AUCC recommends advancing aboriginal post-secondary education measures that can be delivered by a third party with a proven track record in aboriginal matters in conjunction with private sector partners. The partnership of aboriginal leadership, universities, and the private sector will help close the higher education gap between aboriginals and others in Canada.

Thank you, ladies and gentlemen. Canada will benefit from these investments.

[The Vice-Chair, Liberal, Scott Brison]

Thank you, Mr. Davidson.

Welcome back, Mr. Turk.

[James L. Turk, Executive Director, Canadian Association of University Teachers]

Thank you, Mr. Chair. There's nothing like having five minutes to concentrate the mind.

I begin by observing what I'm sure everyone in this room agrees with, and that is the importance of post-secondary education and training, not only for the future of our economy, but also for the future of our society. We're not only training people who are going to be making economic contributions, but we're also educating people who are going to be family members, community members, and citizens.

Something everyone would agree with, I assume, is the vital role the federal government plays in post-secondary education and training, both in the transfers to the provinces for post-secondary education and training and in funding research.

We congratulate the government for sticking to its commitment of having a 3% escalator in its transfer for post-secondary education on a continuing basis. But we would note that with the rising costs—that is, with inflation and with the increasing enrolment—that 3% escalator is not keeping up with the costs that provinces, universities, and colleges are facing.

With respect to the spending on research—and this is where I'd like to focus my remarks—again, the government deserves credit, because it has been spending more on research than its predecessor, but we would suggest that it's been investing that money badly. I don't know who the government's advisers are and how it should be spending research money, but I'd strongly urge you to get new advisers. It's time to get a new crew to give you advice.

Let me give you a few examples. The government allocated close to $200 million for 19 Canada excellence research chairs. Each gets $10 million over a period of time, as well as more money provided by their own institutions, and there are another 10 in the works. This is a huge amount of money concentrated in a very small number of people. We'd suggest that this is not the best way to advance science. It's the same mentality as some sports teams who think that by spending the bulk of their capital on a few high-priced stars, they will build a sports franchise. It doesn't work.

For example, instead of $10 million per, some very vital research centres have had to close, for example, the Polar Environment Atmospheric Research Laboratory, which is closing because it can't get $1.5 million a year. That money supported the work of 60 scientists doing a vast range of high Arctic research. Given how expensive it is to do research in the high Arctic—it does cost money—what's being lost is not only the work of those 60 scientists, but also the $8 million or so in equipment that the government has financed for that centre.

There is the Experimental Lakes Area, the best in the world in freshwater study. It's been compared to closing the world's most powerful astronomy telescope, or closing Los Alamos. The cost is $2 million a year.

There is also the Kluane Lake Research Station, a legendary research centre more than 50 years old, uniquely positioned to study the largest non-polar icefield in the world and the effects thereon in global warming. That costs a million dollars a year, and yet we have $10 million per person for each of the Canada excellence research chairs.

The Minister of Industry.... I can make available to committee—and hopefully you've seen it—a letter signed by more than 48 of the top scientists in the country deploring the kinds of cuts that NSERC had to make that resulted in these closures. The NSERC website is very clear that it's having to make these closures because of the government's cut to its funding.

A second area is in terms of the funding of the three granting councils: the Social Sciences and Humanities Research Council, NSERC, and CIHR. Over the last six years, since this government has come to power, in terms of real dollars—that is, after inflation—the funding for all three granting councils has fallen: SSHRC by 12.9%, NSERC by 3.1%, and CIHR by 6%, and indirect costs have fallen by 2.5%.

In terms of who gets funded with granting council money, if you look at NSERC, where we look at the balance between targeted research—that is, research directed by third parties—and basic research, the amount in real dollars that is being spent on basic research has fallen by about $80 million since 2006-07, while that being spent on targeted research has increased by an equivalent amount.

We also see the destruction of our knowledge base, the dismembering of Library and Archives Canada, the serious cuts to Statistics Canada that are crippling a lot of social science research, and the cuts to Parks Canada, which looks after 167 historic sites as well as countless archaeological artifacts.

In short, you're spending a lot of money. You could spend it better. We encourage you to put in an initial $500 million from the three funding agencies, have the funding agencies be more at arm's length, and introduce the Canada Post-Secondary Education Act, as we recommended in our submission to you. And we join with AUCC in encouraging much more substantial funding for aboriginal education.

Thank you, Mr. Chair.

[The Vice-Chair, Liberal, Scott Brison]

Thank you very much, Mr. Turk.

Now we'll hear from Mr. Murphy.

[Shawn Murphy, Manager, Government Relations, Canadian Co-operative Association]

Thank you, Mr. Chair.

I wish to begin by thanking you and the committee members for inviting the Canadian Co-operative Association to appear before the finance committee as you undertake your pre-budget consultations.

As you are undoubtedly aware, the Canadian co-operative sector has received a lot of attention over the past months. In May, the House of Commons debated a motion to establish a special committee to look into the co-op sector.

To our surprise, the committee was formed in June and they held numerous hearings over the summer. In September, the special committee tabled their report in the House. The report and the recommendations from the special committee have been very well received by the co-operative sector, and we see this as an opportunity to develop and grow our partnership with the federal government.

The special committee report made eight recommendations; however, CCA believes that there are three that stand out.

The first recommendation was that the government study the possibility of consolidating the responsibilities for cooperatives under a suitable department such as Industry Canada. We are not looking for another study, but rather we would like to see co-ops housed in Industry Canada. Currently co-ops are housed under Agriculture and Agri-Food Canada—not a natural fit.

So why should we go to Industry Canada? Cooperatives are businesses—businesses in your riding. They employ Canadians, they pay taxes, and they create jobs. Cooperatives can be found everywhere, including your riding, small villages, big cities, and every region of Canada. They exist in virtually every sector of the economy, from retail and financial services to agriculture, housing, and health care.

Cooperatives are more durable than other types of businesses. Research has shown that new co-ops are more likely to remain in business than other new enterprises and are more resilient in economic downturns.

Finally, cooperatives are rooted in their communities and in your ridings. The jobs and wealth they create remain in the communities in which they are located.

These are a few reasons why we believe the co-op sector can help Industry Canada deliver on its efforts to create jobs, stimulate growth, and invest in the future.

The Special Committee on Co-operatives also recommended that the government explore the feasibility and cost of allowing Canadians flexibility to invest RRSP funds in cooperatives. The current RRSP rules do not encourage investment in the cooperative sector. The so-called 10% rule prevents members of certain cooperatives from using their RRSPs as investment vehicles to recapitalize their co-ops. Therefore, in the spirt of the committee's recommendations on RRSP contributions, I would suggest that you revoke the RRSP measures enacted in the 2011 federal budget.

The third recommendation revolves around capitalization of cooperatives. Co-ops are businesses. However, because of their unique business model, co-ops often find it difficult to raise capital.

The special committee recognized this and suggested that potential solutions could be found. One solution could be a national investment fund. The fund would be a national pool of financing available to support the growth and development of existing and new individual co-operatives.

Our sector is already moving forward with the development of a national investment fund. This would be a great opportunity for a partnership between co-ops and the federal government.

Finally, if you remember nothing else from my submission, I want you to remember our three recommendations that would create jobs, stimulate growth, and invest in the future: first, the co-op sector belongs within Industry Canada; second, we suggest that you revoke the RRSP measures enacted in the 2011 federal budget; and third, the development of a national investment fund.

Thank you, Mr. Chair.