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.
12:35 p.m.
NDP
12:35 p.m.
Conservative
The Chair Conservative James Rajotte
Could we have order in the room, please?
Thank you.
Go ahead, Ms. Nash.
12:35 p.m.
NDP
Peggy Nash NDP Parkdale—High Park, ON
Thank you, Mr. Chair.
On this side we're very concerned about this motion. It stems from our concern about Bill C-4 as a whole. This motion, of course, deals with the omnibus budget implementation act, which is, yet again, another attempt by this government to throw several legislative changes into one large bill. Many of the provisions in this bill, which have nothing to do with the budget, are meant to limit time for debate, limit discussion, limit any changes, limit input, and to then pass this through as quickly as possible. Frankly, it's a bad way to make legislation. It's disrespectful to the democratic process.
I do want to say that I agree with Mr. Saxton that there are elements of Bill C-4 that should be debated in other committees, and we can discuss which committees. There are three that are proposed: justice and human rights; human resources, skills and social development and the status of persons with disabilities; and citizenship and immigration.
Yes, there are provisions that should be discussed and debated at these committees, but what is being proposed is that there would be a very, very limited time for review at these committees, and these committees won't have had the opportunity to vote on any amendments or to adopt or reject any parts of this proposed law, because ultimately the bill would all come back to the finance committee. We won't have had the benefit of any of the testimony that had been before the other committees. The power to vote on any amendments and to finally vote on the bill is taken away from the committees that have the expertise and that ought to be looking at these sections of the bill. It's a terrible process. It's a bad way to make legislation.
We want to register our protest. We do not think these omnibus bills should make massive changes by throwing the government's almost entire legislative agenda into one large bill. This omnibus budget bill, C-4, would change over 70 pieces of legislation. Some of it is tax legislation and should quite rightly be before the finance committee. But changes to how Supreme Court judges are appointed? Really? Changes to health and safety protection for workers at banks or airlines? Really? We're dealing with that at the finance committee? It makes absolutely no sense.
We want to register our protest against this format. Our message to the government, once again, is to break up these bills. Send the pieces that affect different committees to the appropriate committees, not only for one or two days of witnesses, but for a thorough review, a normal legislative process. Let those committees discuss, debate, propose amendments, and vote on separate pieces of legislation.
Our message is that we should be breaking up these bills, not cramming all these changes into one omnibus budget bill. We think this is a bad way to make legislation.
Mr. Chair, we will be voting against this motion.
12:40 p.m.
Conservative
12:40 p.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
Thank you, Mr. Chair.
Similarly, we will be voting against this motion. I will be voting against this motion on behalf of the Liberal Party.
The power to vote on these measures is essential. To not be able to not only study at the individual committees but to actually vote at the individual committees I think is a mistake.
It's notable that in this budget implementation act, Bill C-4, we are correcting errors made in previous budget implementation acts. Errors are more likely to happen when Parliament is denied the opportunity to fulfill our responsibilities in terms of the type of due diligence that is required in the scrutinization of legislation. We have seen errors in previous budget implementation acts resulting from this kind of kitchen-sink, omnibus-bill approach, whether it is changing the Supreme Court Act or overhauling the management and labour relations within the public service, as well as all the technical tax changes the Auditor General has recommended be in separate legislation, not as part of the budget implementation act.
The government has determined that this is the course they're going to pursue. Ultimately, we'll register our concern and our objection to this and our opposition to it. I don't think it yields optimal public policy results when we take this kind of approach. It denies the ability for individual members of Parliament from all parties, not just the opposition parties...government members ought to be similarly concerned that they are being denied the opportunity to do their jobs, to fulfill their responsibilities as members of Parliament, and to scrutinize legislation to the best of their abilities.
12:40 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Brison.
I will then call a vote on this motion.
(Motion agreed to)
Colleagues, I am advised that I have to suspend for 45 seconds to allow the teleconference to come in, so I will suspend very briefly here.
12:45 p.m.
Conservative
The Chair Conservative James Rajotte
I call this meeting back to order. This is meeting number three of the Standing Committee on Finance. We are continuing our consultations for pre-budget 2013.
We are pleased to have another panel with us here for the second part of this meeting. First of all, as an individual, we have professor and researcher, Monsieur Luc Godbout.
Welcome.
We also have Mr. David Macdonald, a senior economist from the Canadian Centre for Policy Alternatives; Madame Carole Presseault, the vice-president of the Certified General Accountants Association of Canada; Mr. Richard Monk, an advisor with the Chartered Professional Accountants of Canada, and we welcome Mr. Kevin Page back to the committee in his new role at the University of Ottawa.
We have by teleconference from British Columbia, Kitimat Clean Ltd. —and I hope, Mr. Black, you can hear me.
12:45 p.m.
Conservative
The Chair Conservative James Rajotte
Okay. Each of you will have a maximum of five minutes for an opening statement, and then we'll have questions from members.
We will start with Professor Godbout.
12:45 p.m.
Professor Luc Godbout Professor and Researcher, Fiscality and Public Finances Research Chair, As an Individual
I'm going to start, Mr. Chair?
12:45 p.m.
Conservative
12:45 p.m.
Prof. Luc Godbout
First of all, I would like to thank you for this invitation.
In the most recent throne speech, the government announced its intent to develop a framework for the budgetary process through balanced budget legislation. I am going to address the aspects of such legislation that are in the brief I gave you.
If it is normal for a government to incur a deficit during recession periods so that the system will function properly, it is entirely reasonable that the budgets be balanced during periods of economic growth. In section one of the brief, I look at fiscal rules to promote the healthier public finance. The section provides examples of countries that use such rules. For example, countries like Switzerland suggest that the government's budget be balanced over an entire business cycle. Sweden goes further and proposes an average budgetary surplus over the business cycle. Other countries, like Germany and the United Kingdom, do not authorize deficits unless they are for investment purposes. In other words, a deficit may be incurred only for an investment. Countries like Poland have gone even further by enshrining in their constitution the limit for the total public debt. That may cause some problems.
In the 1980s and 1990s, Canadian provinces also had fiscal rules, some stricter than others. In Quebec, for example, the Balanced Budget Act provides that the government must maintain a balanced budget, but it allows a certain degree of flexibility to permit overruns under certain circumstances. An example would be a decrease in federal transfers.
Section two explains why it is important to return to a balanced budget. I would like to turn your attention to figure 1.
First of all, it is important to understand that the OECD data relates to all public administrations in Canada, including the federal and provincial governments. The figures show that from 1996 to 2008, Canada has had a balanced budget in 11 years out of 12, meaning that the debt-to-GDP ratio declined. In figure 1, it is the ratio in black. In 1996, the debt-to-GDP ratio was 100%, and in 2007, it dropped to 65%.
At that point, I did another simulation. I wondered what would happen in Canada if all public administrations had had deficits of 3% of the GDP during that same period. During the recession in 2008, governments would have already been in a deficit situation of 3%. It isn't some crazy example. That is roughly what France experienced: 12 consecutive years of deficit from 1996 to 2008, at about 3%.
During the economic growth period, the debt would not have really declined, but it would have stayed the same. However, when the recession hit in 2008, the debt level would have increased. In that situation, the debt-to-GDP ratio would be 126% in 2014, while in the current situation, the debt-to-GDP ratio is 85%, or lower than it was in 1996.
I will wrap up with four parameters that should be considered when drafting balanced budget legislation.
First, it is important to aim for an average budget surplus of 1% of the GDP over the business cycle. Some years don't go well and there's a recession, but it's important to aim for a budget surplus over the business cycle. That's the only way to intervene when the economy is failing without increased debt from one recession to another.
Second, the legislation must make a contingency reserve fund mandatory. The federal government manages an annual budget of $300 billion. It seems quite reasonable to establish an annual budget reserve of $5 billion. If the annual reserve fund is not needed, it can go toward the debt.
Of note, in 2008 the federal government's budget no longer had this flexibility; there was no surplus anymore. The projected surplus for 2009 was $1 billion. As a result, when the recession hit, it had reduced contingency reserves.
Third, the Balanced Budget Act must plan how unanticipated surpluses will be allocated. In the 1990s and the early 2000s, federal surpluses were systematically higher than the budgetary surpluses provided for in the budget. In such a case, it would be useful to determine immediately how the surplus should be used. Should it be applied to the debt? A lost idea from the 2006 budget was to consider allocating unplanned surpluses to the Canada pension plan and Quebec pension plan in the name of intergenerational equality.
Lastly, the legislation must take into account the state of the economy and provide for situations in which deficits are allowed when things go wrong, as well as outline the repayment terms to re-balance the budget.
Thank you very much.
12:50 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you for your presentation.
Mr. Macdonald, we'll hear from you now.
12:50 p.m.
David Macdonald Senior Economist, Canadian Centre for Policy Alternatives
I'd like to thank the committee today for their invitation on this important and ongoing issue of fiscal sustainability and economic growth.
It is unfortunate that five years after the recession we are here still talking about economic growth and the lack of a full recovery in either GDP growth or the labour market. I think that growth is exacerbated by federal government austerity as well as by provincial government austerity. While government spending was a significant driver of economic growth in the year after the recession, that influence has now waned. The federal and provincial government cutbacks inevitably mean lower growth and less employment, both within the public service and in private sector companies that contract with governments for service.
As well, many of the other drivers of economic growth in the past year have been muted. For instance, the balance of trade since 2009 has turned negative, meaning that we import more than we export, and trade becomes a drag and not a driver of GDP growth in Canada.
Increased resource exports have not made up for a collapse in the manufacturing sector. Every year, we are exporting our national wealth and no longer using international trade to our advantage. Instead, other countries are using us to their advantage.
Business investment has added little to economic growth over the past year. Instead, the cash holdings of corporate Canada continue to grow, and appear to continue to grow, in good times and in bad.
Economic growth over the past year has come almost entirely from consumers, through household consumption, although interestingly this is not through housing construction, which has been the case previously. Given stagnant wages for most households, the increase in consumer spending in the past year has come almost entirely from an increase in household debt. This increase comes as households already have historically high debt levels.
Fiscal sustainability at the federal level is often taken in isolation from the rest of the economy. For instance, federal fiscal sustainability is presently defined as reducing the federal government's debt-to-GDP ratio from its present level of 33% down to 25%. Even at 33%, Canada's federal government has the lowest debt-to-GDP ratio of any federal government in the G-7. There's no pressing economic need to further widen this gap. Moreover, there are much more pressing sustainability issues in the Canadian economy outside of the federal government's relatively small and manageable debt.
As I mentioned earlier, households have been doing the heavy lifting in terms of economic growth since the recession. The federal government is concerned with its small 33% debt-to-GDP ratio while households have a record debt-to-GDP ratio of 95%, up from the 50% levels in the 1990s. If any sector in the Canadian economy is over-leveraged with debt, it is surely the household sector, not the federal or provincial governments. Household incomes have been constrained, among other things, by a labour market that has still not seen a full recovery, either in the unemployment rate or, perhaps more importantly, in the employment rate or the percentage of working-age Canadians who have a job.
While there has been a decline in the unemployment rate, part of this is due to discouraged workers simply giving up looking for a job. Excluding this effect by using the employment rate, there has been much less recovery in the percentage of working-age Canadians that have a job compared to pre-recession levels. Moreover, those that have jobs don't see the sort of regular wage increases they saw in previous decades. In Canada's largest cities of Montreal, Toronto, and Vancouver, the average real income of the bottom 90% is lower today than it was in the 1980s. For lower-income Canadians, programs like the temporary foreign worker program likely further suppress wages. In fact, about 10% of all the jobs created since the recession went to temporary foreign workers.
Stagnant incomes mean that increased consumer spending comes from debt accumulation and not from rising incomes for middle-class households. This should be the target of federal government policy. Real wage increases in the middle, better support for low-income Canadians, and more job creation, particularly for youth, should be the federal government's goals. These broad strokes will hopefully result in an orderly de-leveraging of households, by and large the largest sustainability threat that Canada currently faces.
Thank you.
12:55 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you very much, Mr. Macdonald.
We'll now hear from Madame Presseault, s'il vous plaît.
12:55 p.m.
Carole Presseault Vice-President, Government and Regulatory Affairs, Certified General Accountants Association of Canada
Thank you, Mr. Chair.
Honourable members, thank you for the opportunity to participate in the pre-budget consultations leading up to Budget 2014.
I am pleased to be here today to deliver remarks and recommendations on behalf of the Certified General Accountants Association of Canada. CGA-Canada is currently working with the Chartered Professional Accountants of Canada to integrate operations under the CPA banner. My colleague to my left will go into this unification initiative in a little more detail. We think unification will enhance the influence, relevance and contribution of the Canadian accounting profession, both at home and internationally.
I'm very pleased to present to you today alongside my colleagues from CPA Canada. You will note that this is the first time that the accounting profession, comprising the three legacy bodies of CGA, CMA, and CA, has joined forces to deliver a coordinated message on the making of the federal budget. We really wanted to make your life easier, didn't we?
My comments will be brief and will be focused on two specific issues, taxation and internal trade, both of which are important to Canada's fiscal sustainability and economic growth. We support, as part of our co-branded brief with CPA Canada, the recommendations regarding standard business reporting and the patent box.
Let me talk about tax simplification. As a committee, you've acknowledged that the tax system needs to be simplified by recommending in your last two pre-budget reports that an expert panel or a royal commission be established to undertake a comprehensive review of the income tax.
Tax reform is like the weather. Everyone talks about it, but we can't do very much about it, or nothing very much is done about it. But in this case, we think a lot could be done.
We know that Canadians want a simpler, fairer, and more efficient tax system. We've asked them. These are some of the data that we have in a recent survey: 62% say that having a simple tax system is important; 81% of people surveyed ranked having a fair system a top priority; and 68% of Canadians favour eliminating some special tax credits to have their overall personal income tax lowered.
Canadians want tax reform, and we need to start the process. What a better place to start building consensus, we think, than here in Parliament and in this committee. We submit today that the Commons finance committee ought to consider setting the stage by undertaking a study that could examine how tax reform could be moved forward.
We know the benefits of tax simplification: lower compliance costs, higher compliance rates, less admin costs for the government, and a strong tax system with a more secure tax base and predictable revenue. The cost of a complex tax system? It's a barrier to jobs, growth, and long-term prosperity.
One last comment I want to make on tax is that we were very pleased with the passage of Bill C-48, the Technical Tax Amendments Act, 2012, because it helped clear a backlog of unlegislated tax measures that had accumulated over 12 years. But we know that more work can be done in this respect. Going forward, we need to prevent legislative backlogs from developing. We very strongly feel that a process needs to be established to deal with these technical tax amendments in a timely manner, such as incorporating them in legislation on an annual basis, and parliamentarians have the ability to improve the process.
Last, but not least, permit me to say a few words about internal trade.
CGA-Canada is pleased a comprehensive economic trade agreement with the European Union has been signed in principle. But we caution that, here at home, unfinished business remains. The federal government must work with its provincial and territorial partners to eliminate internal trade barriers to ensure that Canadian companies have the same access to local markets as our European competitors.
This means removing unnecessary and duplicative regulations that overlap from one jurisdiction to another, inhibiting trade. And it means establishing an effective dispute resolution mechanism that is more accessible to Canadians.
Governments must make progress on this issue. Persistent internal trade barriers and the ongoing perception of a fragmented economic union continue to hurt consumers, discourage investment and damage Canada's reputation as a place to do business.
The next meeting of the Committee on Internal Trade, which is comprised of the federal/provincial/territorial ministers, is fast approaching. CGA-Canada urges all governments to use this opportunity to work together to strengthen Canada's economic union.
Mr. Chairman, I thank you for your time. I would be pleased to respond, of course, to any questions the committee may have.
1 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you very much for your presentation.
We'll now hear from Mr. Monk, please.
November 5th, 2013 / 1 p.m.
Richard Monk Advisor, Past Chair, Certified Management Accountants of Canada, Chartered Professional Accountants of Canada
Mr. Chairman, committee members, and fellow witnesses, I am pleased to be with you this afternoon representing the Chartered Professional Accountants of Canada. Thank you for inviting us.
As this is the first time CPA Canada is appearing before the committee, I would like to provide a background of our organization. CPA Canada is a national organization established to support and represent the new chartered professional accountant, or CPA, designation. It was created by the Canadian Institute of Chartered Accountants and the Society of Management Accountants of Canada to provide services to all CPA, CA, CMA, and CGA accounting bodies that have unified or are committed to unification.
The unified body will have approximately 170,000 members. As part of the unification effort, CPA Canada and the Certified General Accountants Association of Canada are working toward integrating their operations, including the development this year of a co-branded 2013 pre-budget submission, and I'm pleased to be presenting alongside our colleague from the Certified General Accountants Association here today.
At the outset, I want to underscore the crucial role that strong management of government finances plays in achieving a sustained economic recovery and enhancing economic growth. CPA Canada applauds the government for its continued commitment to balancing the budget, now estimated to happen in 2015, largely through expenditure controls.
Mr. Chairman, we made three recommendations in our written submission that would encourage economic growth, promote job creation, and help improve Canada's productivity record.
First, we call upon the federal government to undertake a comprehensive review of Canada's tax system to reduce complexities and inefficiencies. Tax simplification recommended by this committee in recent years would increase productivity, improve Canada's competitiveness, and eliminate a barrier to jobs, growth, and long-term prosperity. We recommend a two-staged approach. The federal government should undertake a comprehensive review of Canada's tax system and appoint an independent expert panel to provide advice on short- and long-term options to streamline and modernize Canada's tax system.
In addition, consider creating an independent tax simplification office to provide advice on reducing its complexity. The U.K. office of tax simplification could serve as a model. Taxpayers would benefit from lower compliance costs, businesses would face less red tape and have more time to devote to productive endeavours, and government would have lower administrative costs and more predictable revenues.
Second, we recommend that standard business reporting, specifically XBRL, be adopted for use by businesses for all government filings. This would cut the red tape and compliance costs of businesses of all sizes. Standard business reporting would enhance the government's data collection, which could be shared among departments and agencies. We were pleased that XBRL was included in this committee's recommendations in 2012.
Indeed, adopting standard business reporting would benefit business, taxpayers, and the federal government. Of note, the Canadian Federation of Independent Business identified compliance cost as a significant issue to Canadian business. We ask that the committee repeat its recommendation and issue a report and that a cross-departmental study and cost study be undertaken, with results forming the basis for developing an implementation plan.
Third, capitalizing on the creativity of Canadians by transforming their knowledge into products and services in the global marketplace—what we call commercializing innovation—can improve Canada's productivity record. Several countries encourage the commercialization of innovation by a tax incentive known as a patent box. A patent box reduces the tax rate on income derived from the exploitation of research and development and the ownership of intellectual property rights flowing from R and D. The objective is to encourage R and D activity and the commercialization and adoption of intellectual property developed from R and D by domestic firms.
Canadian businesses would benefit by paying a lower rate of tax on profits earned from commercializing their innovations. A ripple effect of high-value employment opportunities would emerge as companies increased their research, development, and exploitation of innovation in Canada. We recommend, therefore, that the federal government implement a patent box regime to incent Canadian companies to develop and commercialize their innovation in Canada.
In closing, CPA Canada continues its commitment to financial literacy, to foreign credential assessment initiatives, and to helping internationally trained accounting professionals, and we remain committed to working with you to promote economic growth, job creation, and increased productivity.
Mr. Chairman, thank you very much.
1:05 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you very much for your presentation, Mr. Monk.
We'll now hear from Mr. Page, please.
1:05 p.m.
Kevin Page Research Chair, Jean-Luc Pépin, Faculty of Social Sciences, University of Ottawa
Thank you, Chair, Vice-Chairs, and members of the House of Commons Standing Committee on Finance. It is an honour to be with you today.
I would like to make some brief remarks with respect to long-term fiscal sustainability, balanced budget legislation, and productivity trends.
On fiscal sustainability, Canada's fiscal sustainability situation is likely better than many other countries. As Warren Buffett says, “Doing good does not excuse us from doing better.” According to the Parliamentary Budget Office, the federal fiscal structure is sustainable, meaning we have a fiscal structure that will stabilize debt relative to the size of our economy in the face of demographic change. Similarly, the Canada Pension Plan and the Quebec Pension Plan are sustainable, meaning we have a pension structure in place that will stabilize the relationship between net assets and expenditures over time.
We do have a fiscal sustainability issue, a positive fiscal gap, at the provincial and territorial levels of government. The size of the gap at the provincial level was exacerbated by the federal policy change to the escalator for the Canada health transfer.
You may wish to recommend in your pre-budget consultations report that the Government of Canada prepare annual sustainability reports, like other OECD countries, and that the analysis be done to reflect all levels of government.
Health care is a major pressure on fiscal sustainability in Canada. Do we want a one-taxpayer approach to fiscal management? Do we want a national approach to health care cost management? If we do, the committee may wish to recommend a national dialogue on health care policy and finance involving all stakeholders. You may wish to consider options to reform federal transfers to provinces.
On balanced budget legislation, the federal government is largely on track to balance its budget in 2015. The current growth is sluggish due to a number of factors, including fiscal austerity, as Mr. Macdonald mentioned.
The committee may wish to recommend that the federal government provide five-year spending plans by department and agency outlining areas of spending reduction and changes to service levels. Spending restraint plans that generate fiscal and service-level risk create spending pressures into the future.
Balanced budget legislation, as highlighted in the Speech from the Throne, could provide a strong fiscal signal that the government is managing within a fiscal target.
The experience in developed countries, as Professor Godbout has noted, particularly in the European Union, highlights the additional demand for analysis to mitigate the negative impacts of counter-cyclical fiscal policy. This includes the calculation of output gaps, cyclically adjusted budget balances, the need for corrective enforcement type mechanisms, and stronger roles for independent fiscal institutions like PBO on assessment of achieving targets.
The committee may wish to undertake analysis of varying experiences with fiscal rules, targets, and balanced budget legislation and make suggestions on the necessary analytical requirements so that any balanced budget legislation is based on best practices, as highlighted by Professor Godbout.
On economic growth and productivity, Canada's productivity growth since 2000 has lagged that of the U.S. and is below OECD averages. Aging demographics will reduce our labour input, and the continuation of modest productivity growth suggests that Canada's potential long-term growth rate will decline significantly over the next few decades, from about the 2.5% range to the 1.5% range.
The causes for Canada's weak productivity growth and impacts of a declining potential growth rate warrants significant analysis and debate. This committee may wish to consider undertaking or commissioning a research project involving experts and stakeholders from different domains and reporting back after an appropriate period of time to strengthen debate and decision-making for the 2015 budget. On productivity, this research planning could examine all the principal drivers of productivity growth where analysis has suggested we have fallen behind or could do much better. Innovation, investment, human capital, and micro-economics frame our policies.
Thank you.
1:05 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you very much, Mr. Page.
We'll now go to Mr. Black for your five-minute presentation, please.
1:05 p.m.
President, Kitimat Clean Ltd.
Good afternoon, Chairman.
Thank you for this opportunity. If you have seen my face, you know it's better suited to a teleconference than a video conference, so in a way I'm doing you a favour here, but I apologize if there's no video conference in this small town we're in.
My presentation is not so much about policy advice; it's directly, though, about increasing jobs and taxes for Canada.
May I ask, Chairman, if you and the panel have had a chance to glance at the pages I provided? If not, I will—
1:10 p.m.
Conservative
1:10 p.m.
President, Kitimat Clean Ltd.
All right. Then I won't review the size or the basic elements of it. Instead I'll just talk a little about the progress to date and leave time for questions.
We have made significant progress in all areas of the project. Almost all issues are resolved. We've chosen the refinery site and British Columbia has reserved the crown land for us. All levels of government in British Columbia and the Canadian government indicate support for the endeavour. We've had consultations with 25 first nations chiefs thus far. We believe we will reach agreements with most, if not all. There don't seem to be any big roadblocks. The public is supportive locally, and, most importantly, all polls indicate that the public is solidly behind us throughout the province. Two-thirds of the public are behind a pipeline across B.C. if there is a refinery. Two-thirds are against the idea of a pipeline across B.C. without a refinery, just putting our raw resources onto tankers and endangering the coastline with the diluted bitumen.
A strategy for financing the project has been developed. We've signed a memo of understanding with ICBC, the Industrial and Commercial Bank of China, which is the largest bank in the world. We're working to sign another with the China Development Bank, which is their mandated bank to invest outside China. China wants to take all the refined fuel, so the off-take agreement is in the process of being drawn up.
We have agreed on the technology for the refinery. It is new technology, never used before in a heavy oil refinery. It will maximize the product yields and provide for far better environmental impacts than any other refinery in the world—half of the greenhouse gas. We expect to submit our environmental application this fall. This will take two and a half years, probably, and during that time we'll be putting contracts in place in all the foregoing matters. We will also be completing a major feasibility study, which is a prerequisite to financing the project, during that timeframe.
Thank you.
1:10 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Black, for your presentation.
We will begin members' questions with five-minute rounds again with Ms. Nash, please.