Thank you, Mr. Chair.
First of all, I want to say it's a real pleasure to be here to talk about something that I care about, namely research and development and in particular research and development in our private companies.
I have been speaking to a number of companies in my riding of Kingston and the Islands, small and medium-sized enterprises, that rely very much on it, and they've told me that their companies have benefited enormously from the scientific research and experimental development tax credit. They always take the credit and plow it right back into their business, and they create jobs in my riding, Mr. Chair. They do that. There are other companies across the country that are creating jobs.
I want to say that the difference between a tax credit for research and development and simply an overall tax cut on corporations is that you can imagine just cutting taxes on corporations and increasing the amount of cash that they have in their balances, but the company doesn't need to take any risk. They could simply take that extra cash and pay a dividend.
On the other hand, a tax credit that incentivizes the taking of risk by investing in research and development encourages companies to take risks, to do the research and development that can make Canadian workers more productive and give them a leg up on the competition from other parts of the world over the coming decades.
I want to start out with that overall idea for why it's important to have these tax cuts.
First of all, I want to say that we agree with the NDP amendments. They are very similar to the amendments that we have proposed. I'm concerned about the decrease to the credit for third party expenditures from 100% of the expenditure to 80% of the expenditure. The reason for doing so is that we don't want to give a tax credit for the profit margin of the third party, but some of the third parties could be, for example, universities or other not-for-profit organizations, and in those cases it would be inappropriate to make that change. I believe we're going to be discussing that more a little later in the evening.
The exclusion of capital expenditures penalizes certain sectors. In particular, for example, in my riding there's a company that works in factory automation. You can just imagine that there's a lot of capital expenditure involved in that.
It's not the same case for another company in my riding, for example, that takes advantage of the SR and ED tax credit. It's a software company. They do software for customers around the world. They may not care so much about capital expenditures, but my local company that works in factory automation may care a lot.
The other sector that really cares a lot about capital expenditures and that would be hurt by exclusion of capital expenditures from eligibility for the scientific research and experimental development tax credit is the sector that includes oil and gas technology companies.
The interesting thing about oil and gas technology companies is that we extract a lot of oil from, say, the oil sands in Alberta, but we have this problem of not having enough pipeline capacity to get the oil to market. However, we are also world leaders not only in the amount of oil and gas we have in the ground but in oil and gas technology.