Finance Committee on Nov. 6th, 2012

[Albert De Luca]

No, no. I'm shaking my head in disagreement indeed.

We are not suggesting that there not be any direct funding in strategic areas, for strategic purposes, and for strategic periods of time.

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

Are you familiar with the MacIntosh report in response to the Jenkins report?

[Albert De Luca]

No.

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

I'm wondering whether you would agree with this. I'm not sure of the page of the report but it is under part V. It refers to the difficult task of picking winners and losers. I quote:

One of the chief difficulties with direct assistance is that we simply cannot have much confidence that government bureaucrats are well positioned to pick companies that are likely to succeed in the commercialization sweepstakes.

Would you agree with that?

[Albert De Luca]

Yes.

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

Would you also agree with this statement on the next page in relation to restricting the SR and ED to small firms:

In 2007 (the last year with complete data) about $1.3 billion in SR&ED credits was paid to CCPCs, while $1.8 billion was paid to “large firms.” The average payment to a large firm was $700,000,136 implying average SR&ED-eligible expenditures of somewhere on the order of $3 million. Restricting SR&ED credits to CCPCs will immediately reduce the SR&ED budget by about 60 percent — which is likely to result in far more substantial savings than implementation of the Jenkins Panel’s recommendations.

Would you agree with that?

[Albert De Luca]

I'm not sure about the 60%, but in general, yes, I would agree with that.

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

Do you think that larger firms should not be eligible for SR and ED credits, and that it should be just smaller firms?

[Albert De Luca]

No. The anchor tenants in Canada are important investors in innovation, and we have to acquire more of those. One of the ways of doing so is through SR and ED incentives.

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

Would you be surprised to find out that the Silicon Valley has pretty much the same number of failures within three to six years as the IT sector in Canada? It's pretty much the same.

[Albert De Luca]

No, I'm not surprised at all. That's common knowledge.

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

Whether the SR and ED is effective or not, in essence it has the same number of failures over time even though the SR and ED credit is obviously available in a different nature in the United States.

[Albert De Luca]

It's a long sentence, but I guess the way I'll answer it is to say that the SR and ED is an incentive for taking risks.

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

Exactly, but whether or not the SR and ED is effective is the question, because the same failures happen in Silicon Valley which doesn't have the same system as we have here, and obviously it's a much more robust industry.

[Albert De Luca]

Apples and oranges.

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

That is my point actually. The same failures. Apples and oranges.

Ms. Pohlmann, I love you guys. I have to be honest. I was a member of the CFIB for many years. Since I've been an MP, every time I get responses from you in my office, I write back to each and every one my constituents who writes to me. I find these to be very helpful. In fact, I find them to be so helpful that I want to spend my last two minutes going through your survey.

I notice that 64% of your members said that the EI hiring credit was very or somewhat effective, so your members like this very much.

[Corinne Pohlmann]

Absolutely, they like this. Yes, you can say that.

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

Looking at the PRPP, over 78% say they don't offer a retirement savings plan to their employees because it's too expensive; it's too complicated and burdensome; it's uncommon to have such benefits in their sector and they don't know where to start; there's no suitable plan for their business; and the financial risk exposure to their business is too great.

Those are all the major reasons. It looks to me as if the most significant answer by far was those things I've indicated.

[The Chair, Conservative, James Rajotte]

You have about 30 seconds.

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

Isn't it fair to say our proposal with PRPP takes care of all of those issues? It really does, doesn't it?

[Corinne Pohlmann]

Yes. We're hopeful it will take care of all of those issues. The question now becomes whether the provinces are going to implement it, and whether financial institutions are going to implement it properly.

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

Yes, but it seems like a good proposal from your members.

[Corinne Pohlmann]

Yes. We think the framework is a good one.

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

The final question is regarding—and I'm not surprised at all—the number of people in small business who do not believe they can retire until 68 or later.

[The Chair, Conservative, James Rajotte]

Thank you.