Finance Committee on Oct. 7th, 2014

[Mark Adler, Conservative, York Centre, ON]

It would lend itself to hiring more temporary workers, would it not?

[The Chair, Conservative, James Rajotte]

Thank you.

[Mark Adler, Conservative, York Centre, ON]

You didn't let him answer.

[The Chair, Conservative, James Rajotte]

Mr. Myers, would you like to answer that question or do you want me to go to my round?

[Jayson Myers]

It's becoming harder to hire temporary workers these days.

[Voices]

Oh, oh!

[The Chair, Conservative, James Rajotte]

Thank you.

I have a couple of comments and I want to put a question.

First of all, with respect to you, Ms. Atkinson, I appreciate your presentation. I liked your comments on the Canada Health Infoway. I agree fundamentally that the biggest productivity we could make—aside from any public-private debate about health care—and the biggest impact we can make on productivity is ICT adoption. I have to show you this card. As a resident of Alberta, this is my health care card. This was created in about 1970, when I was born. I just cannot believe that we, in supposedly the richest province in Canada, don't have a card that has some kind of relevance to the modern world. I just had to show that.

I appreciate your comments on the venture capital system as well.

There's a second point I want to make, though, and this is a very large question, so I don't know if you or Mr. Myers can respond here or if you want to respond later. If you look at business enterprise expenditure on research and development—we have a chart here from our analysts for 2012, so this is before some of the SR and ED changes—you will see, frankly, that Canadian companies were not doing that well even though the federal corporate tax rate had come down by then. That's something that I think Canadian companies, in fairness, do have to address as to why they have not been investing more in research and development.

Ms. Atkinson, you mentioned your sector, but that's something.... I know that's a big question. You can make a few comments here and then comment later.

My final point and final question are for Mr. Myers. We've been at this since 2007. You, Mr. Van Kesteren, and I were part of that committee back then that recommended the accelerated CCA. I've talked to many people about this. I strongly support it; I supported it being for five years.

The government has been doing it in two-year installments, but perhaps we should look at—and I've talked to Ms. Royer about this—a full comparison between the Canadian and U.S. rates and actually move toward permanent changes in CCA rates to ensure that we are competitive with our biggest trading partner. Or we should do something like that, because when you say “accelerated CCA”, it's almost like you're giving a favour to an industry, and certain economists, as you know, call it a subsidy or whatever. Should we look at permanent changes in terms of CCA rates vis-à-vis our American counterparts?

I have about two and a half minutes.

Mr. Myers, do you want to start with that? Then I'll go to Ms. Atkinson.

[Jayson Myers]

Sure.

Yes, I think that's exactly what we need to do—not only the rate but also the types of assets that are included in U.S. depreciation rules.

[The Chair, Conservative, James Rajotte]

That's a good point.

[Jayson Myers]

I know that with a new project, the American depreciation rules will depreciate the entire project rather than classes of machinery and equipment—for instance, classes of assets—so there are other factors apart from the rate.

But I agree. Indeed, in my mind, what we should be doing here is to try to set up the best tax treatment for capital investment in North America. Clearly the depreciation rules we've had in place since 2007 have really helped us enormously in doing that. We'd be totally supportive of putting the former in place.

[The Chair, Conservative, James Rajotte]

I just have a quick question about straight-line depreciation and declining depreciation. Do you prefer declining over straight-line depreciation?

[Jayson Myers]

Straight-line depreciation would be much better. It's clearer. But on a declining balance basis, I think we'd be looking at a 45% rate to bring it into some level of comparison with the United States. I know it's difficult to move to a straight-line balance, because most of the other depreciation rules are on a declining balance basis.

[The Chair, Conservative, James Rajotte]

Thank you.

Ms. Atkinson, I have about two minutes left. That's your time available.

[Karen Atkinson]

Thank you.

In terms of reasons why private sector R and D hasn't been as high as you'd expect—I think that's what you were looking at—I think there obviously is a myriad of factors. One, I think we're now clearly in an environment where those decisions are now global decisions. Relative to other jurisdictions where companies are making R and D investments, I don't think Canada necessarily fared more poorly compared with other major R and D investment jurisdictions.

I also think that 2012 was still a year when many companies, especially the larger companies with the bigger budgets, were very much still coming out of the recession and still very cautious about their R and D investments. There was obviously a lot of speculation about the changes to the R and D system that were leaving companies a little bit uncertain.

[The Chair, Conservative, James Rajotte]

I appreciate that.

Perhaps we'll share the chart with you, because Canada, at least according to this chart, does not fare well in terms of business investment. Maybe we can share that, and then you can have a further response to the committee.

[Karen Atkinson]

I'd appreciate that. Thank you.

[The Chair, Conservative, James Rajotte]

Thank you so much.

I want to thank our panellists for being with us. Merci beaucoup à tous. Thank you so much for partaking in our pre-budget consultations

The meeting is adjourned.