Evidence of meeting #3 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was debt.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Peter Effer  Chair, Policy Forum, Financial Executives International Canada
Yan Hamel  Chairman, Board of Directors, Association québécoise de l'industrie touristique
Glen Hodgson  Senior Vice-President and Chief Economist, Conference Board of Canada
Ian Russell  President and Chief Executive Officer, Investment Industry Association of Canada
Ailish Campbell  Vice-President, Policy, International and Fiscal Issues, Canadian Council of Chief Executives
David Black  President, Kitimat Clean Ltd.
Luc Godbout  Professor and Researcher, Fiscality and Public Finances Research Chair, As an Individual
David Macdonald  Senior Economist, Canadian Centre for Policy Alternatives
Carole Presseault  Vice-President, Government and Regulatory Affairs, Certified General Accountants Association of Canada
Richard Monk  Advisor, Past Chair, Certified Management Accountants of Canada, Chartered Professional Accountants of Canada
Kevin Page  Research Chair, Jean-Luc Pépin, Faculty of Social Sciences, University of Ottawa

12:15 p.m.

Conservative

The Chair Conservative James Rajotte

Okay.

12:15 p.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Essex, ON

Can I ask Mr. Effer just to make a quick comment?

12:15 p.m.

Conservative

The Chair Conservative James Rajotte

Very briefly, please.

12:15 p.m.

Chair, Policy Forum, Financial Executives International Canada

Peter Effer

I'll just make a few points.

FEI Canada has suggested this year and last year that there be a national framework on retirement planning, retirement income. It is an issue that's coming down the road. As far as pensions go, many corporations view pension plans as part of the compensation package, and fiscal prudence would just dictate that the government act in the same way, determining whether or not an individual's salary for a particular job is appropriate based on the base salary benefits and pension compensation.

Lastly, the CPP was mentioned....

12:15 p.m.

Conservative

Dave Van Kesteren Conservative Chatham-Kent—Essex, ON

I'm going to get into trouble for that, sir.

12:15 p.m.

Chair, Policy Forum, Financial Executives International Canada

Peter Effer

I'll stop if you like.

12:15 p.m.

Conservative

The Chair Conservative James Rajotte

Colleagues, you're asking very good questions, but I do not like cutting witnesses off, so please leave some time in your time for witnesses.

We'll go to Mr. Rankin now, please.

November 5th, 2013 / 12:15 p.m.

NDP

Murray Rankin NDP Victoria, BC

Thank you, and thank you to all witnesses.

I would like to ask Mr. Hamel a question.

Like Mr. Côté, I represent a city, Victoria, British Columbia. Victoria is a city that depends on the tourism industry. I greatly appreciated your presentation, and I strongly support your idea for a campaign to reconquer the U.S.

You spoke about a $35 million investment that would be matched by the industry. That's what you said. Are you suggesting that the government contribution, the contribution of the CTC, should be conditional on an equal contribution from the industry?

12:15 p.m.

Chairman, Board of Directors, Association québécoise de l'industrie touristique

Yan Hamel

Absolutely. The proof is that the industry wants to unite and invest to reclaim the U.S. market. The industry is very committed to the CTC with respect to this $35 million investment. It's a sine qua non equation: if the government invests $35 million, the industry will invest the same amount.

12:20 p.m.

NDP

Murray Rankin NDP Victoria, BC

My next question is for Ms. Campbell. I don't think you had enough time, as you were going very quickly, to tell us about your ideas about NAFTA reform. You had three ideas, and the first one had to do with a mechanism that I would like you to expand upon, if you could.

12:20 p.m.

Vice-President, Policy, International and Fiscal Issues, Canadian Council of Chief Executives

Ailish Campbell

Certainly. We have the Regulatory Cooperation Council with the United States. We also have the Beyond the Border plan, with some very significant pilots that we'd like to see made permanent to facilitate trade. A number of members of the committee have talked about the importance of infrastructure for expanding trade, and we would agree with that wholeheartedly.

The first bullet was simply to suggest that there may also be trilateral opportunities there, specifically with Mexico on rail, and also a unique opportunity to ship more on the water, which of course bypasses a land mass in between us but requires very significant and properly developed ports on both sides.

12:20 p.m.

NDP

Murray Rankin NDP Victoria, BC

The idea of a NEXUS card for business people was also suggested. Is that a realistic possibility?

12:20 p.m.

Vice-President, Policy, International and Fiscal Issues, Canadian Council of Chief Executives

Ailish Campbell

Absolutely. The NAFTA agreement, if you take a close look it, has not been updated in 20 years. It's based on, one could say, a very bureaucratic process of defining occupations. There are occupations from that list that existed 20 years ago that of course no longer exist, and new occupations that I can't even think of that my children will have the opportunity to apply to.

What I would argue is that this has to be a living and breathing document; it has to keep pace with business and business needs. But more than that, we have to really recognize that in some cases we have significant Canadian operations that are here because they can be serviced. Sometimes that requires “linchpin”, I would call them, employees—specific people with skills, who need to be able to travel across the border to provide service and then return, back to their home. We need to become smarter about facilitating that kind of business traveller.

12:20 p.m.

NDP

Murray Rankin NDP Victoria, BC

Thank you.

How much longer do I have?

12:20 p.m.

Conservative

The Chair Conservative James Rajotte

You have two minutes.

12:20 p.m.

NDP

Murray Rankin NDP Victoria, BC

All right. Good.

Mr. Hodgson, I'd like to ask you a question about one of the aspects of the education and skills report card that my colleague Ms. Nash referred to in her questions. You noted that there were some key areas of weakness. We got an A on one aspect, but where does Canada rank in the areas of workplace skills training, lifelong education, and the highest levels of skill attainment?

12:20 p.m.

Senior Vice-President and Chief Economist, Conference Board of Canada

Glen Hodgson

We are in the top two—after Finland—when it comes to K to 12 education, so let's set that aside. We're not great when we get into post-secondary—graduate degrees, PhDs. We're actually a fairly weak performer compared with the market leaders.

In fact, I'll announce here that we're having in Toronto today a summit on post-secondary education and skills and are about to launch a new research centre at the Conference Board on that topic. Perhaps we can come back at some future date to talk more about the research, but we're going to examine in real detail the handovers between colleges, universities, employers, apprenticeships, and how to build the most skilled nation possible.

12:20 p.m.

NDP

Murray Rankin NDP Victoria, BC

We would welcome that. As you well know, most of that jurisdiction is provincial, including skills development and post-secondary, so it's difficult for me to know precisely how the federal government could get its hands around your idea.

How could the federal government...? Is it just a matter of spending? Is it research and development, in which we've been perennially weak?

You talk about PhDs and so forth—that sector—being weaker compared with others. What precisely would you recommend the federal government do?

12:20 p.m.

Senior Vice-President and Chief Economist, Conference Board of Canada

Glen Hodgson

We're not at the point of making recommendations yet. I won't announce it, but we've talked to senior levels of the federal government about joining the centre and being part of the research agenda, so that they can inform themselves about the role going forward.

But clearly, knitting together a balkanized provincial education system and actually having pass-over points and a sharing of best practice would be a huge step ahead.

12:20 p.m.

NDP

Murray Rankin NDP Victoria, BC

I agree. Thank you very much.

12:20 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

Thank you, Mr. Rankin.

Mr. Keddy, please.

12:20 p.m.

Conservative

Gerald Keddy Conservative South Shore—St. Margaret's, NS

Thank you, Mr. Chairman.

Welcome to our witnesses. I'll try to keep my questions short and allow the witnesses time to answer.

Mr. Russell, you've made a number of recommendations, one on the impact of a lower capital gains rate for small businesses, one on CPP and EI taxation of employer and employee contributions, specifically in RRSPs, and the other on a small business financing incentive program. All of them, I think, are worthy initiatives and deserve some discussion and have merit.

The challenge, of course, is that in this economic climate and at a time of fiscal restraint, it is difficult to look at all of them. If you could pick one of those three points, which one do you think would be the most responsible and reasonable to implement at this time?

12:25 p.m.

President and Chief Executive Officer, Investment Industry Association of Canada

Ian Russell

Thank you, Mr. Keddy; it's a pleasure to respond to your question.

You're quite right, I think, that when you're looking at the decision you would make, you have to take into account the cost-effectiveness of the measure, which is the cost of it to the treasury. The other part of it would be how effective it is.

If I had to pick one, I think I'd pick the enterprise investment scheme. We've looked very closely at this. This is a U.K. incentive vehicle for small, emerging businesses—start-ups and emerging companies—that has been highly successful in the U.K. It has been in place for 20 years. It has had scrutiny by Her Majesty's Treasury. It has done a very successful job and has been very popular, so it works.

It would be very cost-effective. We estimate that it might cost $200 million to $250 million in tax expenditure to put in place, which would be from a 30% deduction from income tax for the purchases of those shares. Also, the capital gains earned on the shares would be tax-free.

The most important thing about its effectiveness is that the market decides. This is not something like a venture capital labour-sponsored fund or any other kind of managed fund. These are decisions that individual investors would make on the merits of the investment.

I think something like that would be a huge shot in the arm, both for small businesses looking for capital and for the marketplace itself. So that's what I would recommend.

12:25 p.m.

Conservative

Gerald Keddy Conservative South Shore—St. Margaret's, NS

Thank you for that.

My next question goes to Mr. Hodgson and Ms. Campbell.

There's a fair amount of discussion—and I think it relates to both of your interjections—on infrastructure and also on foreign direct investment. I'm reaching out here to link the two of those together, and I want to link those back to the CETA with the European Union. I think we have here an example of where you can blend all three to make it an advantage for Canada, quite simply, and I'll be a little closer to home by making it an advantage for Nova Scotia and the east coast.

We have a very enviable position now for Canada: 800 million consumers between the European Union and the United States and Mexico—more than 800 million consumers. We have an east coast port that's a post-Panamax port, which has lots of space in it still and some room to expand, but it will be challenged on room to expand. And we have a rail route to central Canada that's 32 hours closer to the central United States than the port in New York, and that rail route is running at 50% capacity. So if you were going to invest anywhere in the country in the short term, I think it's automatic that you'd look at eastern Canada and the advantages that are there to take advantage of the CETA.

12:25 p.m.

Conservative

The Chair Conservative James Rajotte

A brief response to that, please.