Finance Committee on Oct. 29th, 2014

[Patrick Gill]

Yes, certainly.

[Mark Adler, Conservative, York Centre, ON]

—with the Building Canada fund helping to refinance infrastructure and rebuilding infrastructure, and by making the gas tax permanent and tying it to the cost of living. We've been pretty aggressive and pretty favourable in terms of helping municipalities out on that front, have we not?

[Patrick Gill]

Absolutely, the government has made some historical levels of infrastructure investments. We're very delighted that the fund has been renewed for another decade. As those decisions are made on new investments, look towards transportation infrastructure.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you very much, Mr. Adler.

I'm going to take the last round we have here today.

I think in my limited time I'll direct my questions to Ms. Annesley and Mr. Egan.

On the labour issue, coming from my riding I agree 100% with what you said, that it is certainly the number one economic challenge facing my province and my region. I do, though, want to focus on the capital cost allowance issue. As both of you probably know, the accelerated CCA was put in place for the manufacturing sector through the March 2007 budget largely, I think, as a result of the industry committee report, which came out in February of that year. The 2007 budget put it in place for manufacturing and processing, and actually started the phase-out of it for oil sands facilities, which I think concluded in 2012.

It's important to note, though, because some people do consider it a subsidy, that it is the rate at which you can write off an asset over time. We call it accelerated CCA for the manufacturing sector because it's considered differently from the way Finance would normally consider it or the way Finance or CRA would value an asset.

As the two of you are arguing here, in terms of a competitiveness basis, we're not on a cost-competitive basis with countries like the United States and Australia. I think that point needs to be made over and over again, because what you're looking for is some kind of fairness or equity with respect to countries that obviously we're directly competing with.

In the CAPP presentation, to start, you talked about class 47 and class 43. I have just one specific question on that. You say it takes 27 years to substantially depreciate a class 47 asset—that's the current situation for Canada where you are, Ms. Annesley—whereas in the U.S. or Australia it takes 13 years. You want to move it into a class that would take seven years. Am I understanding that correctly? If so, the obvious question is whether you would be satisfied with the move to the 13-year depreciation?

[Janet Annesley]

In our view, I think we have to look at the entire economic rent that's being paid by the industry, in terms of the royalties and upstream and the treatment at the provincial level, some of which we just saw in the announcement last week.

In terms of finance, we need to compare apples to apples along that entire value chain to actually understand our competitive position vis-à-vis the United States and Australia. We would look to cooperate as needed with the Department of Finance to provide whatever access to information that would assist with that kind of calculation.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Egan, you might want to address your specific recommendation. Also, in general, essentially what you're looking for is almost a broad scale in Canada. Here are the CCA rates that apply to whatever you're doing, whether it's manufacturing, LNG facilities, whatever it may be, and here's U.S. and Australia, countries with which we directly compete for these types of global investments.

That is exactly what you're looking for, is it not?

[Timothy Egan]

That's exactly right.

In the first instance, it's fairness, as my colleague indicated, with other fuel manufacturing sectors within the country. But ultimately, then, it's a competitive issue. I mean, what is happening on the back of affordable natural gas in the United States? Industry, to a significant degree, is creating a kind of an industrial renaissance. Why aren't we capitalizing on a similar situation in Canada where we also have an affordable product? I think it's because of a variety of policies or legislative provisions that are not the same. We need to make them the same in order to ensure we have that level competitive playing field that you're referencing.

[The Chair, Conservative, James Rajotte]

Okay. I appreciate that very much.

I'm going to have to cut it there, unfortunately.

Colleagues, we do have a motion to deal with as well, so our second panel will be shorted because of votes.

On behalf of the entire committee, I want to thank all of you for coming in this afternoon for an excellent policy discussion. If you have anything further, please submit it to the clerk and we'll ensure that members get it.

We'll switch over to the second panel.

Colleagues, could I ask you to stay in your seats for one minute? You do have a motion in front of you, dealing with the pre-budget report. We are hoping to have this adopted.

There is only one change.

It is “2014” in the French version.

It's “2014”; it's not supposed to be “2041”.

Merci, monsieur Caron, for your good eyes.

That would be a very long pre-budget consultation. I think we want to conclude it before then.

Do I have a mover for this motion?

Mr. Keddy.

(Motion agreed to)

Thank you.

Colleagues, we will suspend for two to five minutes and we will come back for the second panel.

[The Chair, Conservative, James Rajotte]

If I can ask colleagues, and our guests, to find their seats, please.

We're back to meeting 53 of the Standing Committee on Finance dealing with pre-budget consultations.

Colleagues, we have votes at 6 p.m., so those are going to cause a shortening of this meeting. I'll ask at the time for unanimous consent to sit until about 5:50 p.m. if that's okay.

We want to thank our witnesses for coming. We have here in our second panel, first of all, Canada's Building Trades Unions. We have the senior advisor, Mr. Christopher Smillie. Welcome back.

We also have Frédéric Julien from the Canadian Arts Coalition. Welcome.

From Futurpreneur Canada, we have the CEO, Ms. Julia Deans, welcome. From Monster Canada, we have the manager, Mr. Scott Byrne, welcome.

From Solidarité rurale du Québec, we have Christian Thivierge. Welcome.

You will each have five minutes for your opening statement and then we will go to members' questions. We'll start with Mr. Smillie, please.

[Christopher Smillie, Senior Advisor, Government Relations and Public Affairs, Canada's Building Trades Unions]

Thank you very much, Mr. Chair.

Canada's Building Trades Unions represent close to 500,000 members in Canada and more than three million in the U.S. We represent people who go to work every day on job sites large and small in the energy sector, and commercial and residential sectors. We're the largest private trainer on the continent and we invest more than a quarter billion dollars a year in Canada in training infrastructure. So we know jobs. We're paid by our members to find jobs every week. If we don't find them a job, we're not doing our job.

Jobs are essentially a private sector responsibility, right? My submission today is that the federal government can easily assist with mobility measures in the Canadian labour market that would assist people who wouldn't otherwise go to where the work is and get them when the employers need them. This can be done through tax credits or a restructure of the employment insurance benefits system and do it all rather cheaply compared to other government spending. My submission is that a mobility assistance measure would ease the strained temporary foreign worker program by transitioning Canadians to labour markets where their talents are required. Even if it's a short duration it helps the economy and the country. A mobility measure would encourage people to get off employment insurance and start working again: a noble cause on both fronts.

All construction work is temporary. All construction work is transitory. Skilled tradespeople are dispatched wherever the work may be. The lucky ones get travel assistance from either the construction employer or the large client. You heard from Janet from CAPP. Sometimes her members pay to fly back and forth to their job sites. The existing permanent relocation tax credit available through the Income Tax Act doesn't make sense or apply to temporary workers who work in transitory industries. No one is moving their family and home for a temporary six-week job on a large apartment building being built in Saskatoon or Hamilton when your kids, wife, and home are in Welland, Barrie, Tuktoyaktuk, or elsewhere.

Canada needs a change in incentive policy for in-demand occupations when relocating for temporary work. lt doesn't matter to industry, it doesn't matter to Janet, or it doesn't matter to me if it's a tax credit or an El grant: industry is united. Parliament had a chance to do something late last fall with Bill C-201. However, the bill was handily defeated because of partisanship. Mobility and getting a job is a non-partisan issue to Canadians. The Government of Canada introducing a mobility assistance policy for in-demand workers is not a partisan act. The government helping people temporarily relocate for work is not a partisan exercise. The government's expense getting them there today means tax revenues tomorrow from the worker, the capital asset, and the company doing the work.

The pilot I suggest in my written submission to the committee starts small; $4 million in forgone tax revenue. lt returns $12 million in income tax paid by individuals alone. Pick a few occupations most in need and choose a few major projects to determine eligibility in the pilot. Federal budgets are about wise spending choices and this modest pilot certainly falls into the frugal category when you look at the breadth of public program spending in Canada. For example Public Works indicates the various departments in Ottawa spent about the same amount on public polling in 2013 as this request would be.

This measure could also help Canadians get the training they need in a different market where there is work and an employer willing to tap into the Canada job grant. Use the mobility measure to get to where the training is for the job you're about to start. The job grant is dependent on an employer willing to hire you. Markets with hot employment markets will require more people to be trained. There is a natural link here. The Canada job grant, despite the noise, is the single most important change to the training landscape in two decades.

[The Chair, Conservative, James Rajotte]

One minute.

[Christopher Smillie]

So what's next? It's up to you, up to the finance committee, and up to the Minister of Finance to help a critical industry and help in-demand workers.

ln previous reports your committee has recommended such measures, and we seek your support again. lt doesn't matter to industry if it is a tax credit or a change to employment insurance. What matters to us is having an available workforce wherever and whenever needed for Canada's economy. What matters to us is project completion and labour force certainty for the marketplace.

Quickly, Canada's skilled trades workers are inherently less likely to travel for work than workers from the United States. Funnily enough, the IRS allows deductions for travel to obtain temporary work against income. Here is an opportunity to make Canada's workforce more productive and reduce taxes for everyday Canadians.

I remain available for your questions.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now go to the Canadian Arts Coalition.

[Frédéric Julien, Project Manager, Canadian Arts Presenting Association, Member, Canadian Arts Coalition]

Thank you, Mr. Chair, for the opportunity to appear before this committee today.

Before providing you with more information on the recommendations from the coalition's brief, I'd like to share with you some information from research reports that came out recently and that addressed the topic for today's pre-budget hearing.

First, Statistics Canada released the culture satellite account earlier in December, and this provided great detailed information on the GDP of the culture industries and also the employment. From this report we learned that culture industries represent 4% of our workforce and 700,000 workers.

A few weeks ago, we had the statistical profile of artists and cultural workers in Canada. From this report, also using Statistics Canada data, we learned that there are 137,000 professional artists in Canada and that most of these artists are self-employed workers.

I will be referring to these figures later on in my presentation, but I'd like to stress that between 1990 and 2010 employment among artists and cultural workers grew at a much faster rate than the overall labour force. For the labour force we had a growth rate of 31%, for cultural workers 45%, and for artists 59%.

The Canadian Arts Coalition is proposing effective ways to support and maintain an increased number of jobs related to the cultural sector. The first is to increase the parliamentary appropriation to the Canada Council for the Arts. The second is to establish a pilot program at the Department of Foreign Affairs, Trade and Development, and the third is to investigate revenue models to support a comprehensive Canadian cultural digital strategy. These recommendations were identified as priorities by 42 member associations of the coalition during consultations that we held in April and May 2014.

Here are some notes addressing each of our specific recommendations.

The first one is to increase the Canada Council for the Arts parliamentary appropriation by $35 million in 2015, with a long-term goal of reaching $300 million. Between 1990 and 2010, the breadth and diversity of artistic practices and experiences by Canadians increased tremendously. The number of artists, as I said, grew at twice the rate of the labour force, and the number of organizations supported by the Canada Council increased by 65%. During the same period and taking into account inflation, the parliamentary appropriation to the Canada Council increased by 17%. We're now at a per capita parliamentary appropriation that is actually lower than what it was in 1990.

In order to bridge that gap and to continue to provide Canadians with affordable access to diverse cultural experiences, the parliamentary appropriation to the Canada Council needs to be increased. The coalition's modest immediate request for a first increase of $35 million in 2015 is considerate of the current economic uncertainty, but our long-term goal remains a budget of $300 million.

Our second recommendation is to increase Canada's presence on the world stage for 2017 by establishing a $25-million pilot program over three years at the Department of Foreign Affairs, Trade and Development for Canada's 150th birthday. This pilot program would be directed through three areas: cultural promotion in the embassies, trade and business development, and international circulation of Canadian artists and their works.

The vitality of the arts and culture industry, like any other industry, depends on its capacity to expand its markets beyond the boundaries of our country. Targeted investment intended at building international markets will also result in diversified revenue streams for Canadian arts organizations and also jobs here at home.

We also believe that the tourism sector will also profit significantly from this increased activity in 2017. An Ontario report told us that almost two-thirds of Ontario's overseas tourists engaged in arts or cultural activities, and that 44% of North American tourists with Ontario travel experience said that arts and culture was their main reason for travelling. These tourists spend a lot of money, actually twice as much as the average typical tourist.

[The Chair, Conservative, James Rajotte]

You have one minute.

[Frédéric Julien]

The last of our recommendations is to investigate the revenue models to support Canadian cultural digital strategy that would enable creation, dissemination, and engagement of cultural content online.

We are concerned about the decrease in the use of traditional broadcasting and the reliance on cultural content through Internet service providers. The problem is that the regulations for Canadian content and for the contributions for the creation of Canadian content come from those traditional broadcasters. On the other hand, we have Netflix and other Internet-based providers that are not subject to any Canadian content regulations and contributions. We'd like to see this reviewed by a House of Commons committee so we can investigate new revenue models and have a more competitive and reliant industry.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you for your presentation.

We'll go to Ms. Deans, please.

[Julia Deans, Chief Executive Officer, Futurpreneur Canada]

Thank you.

My name is Julia Deans, and I'm the CEO of Futurpreneur Canada, and we're the only national, not-for-profit organization that's helping young Canadian entrepreneurs launch businesses across Canada.

Thank you for the opportunity to appear here today.

On a personal note, I, like you, spent last Wednesday in this building and I am very grateful that you got back to the nation's business as you did.

Some of you might have noticed that since I was last before you, we have a new and improved name. We changed our name to Futurpreneur Canada in May because young people, young entrepreneurs, told us they really couldn't identify with the name Canadian Youth Business Foundation. We wanted a name that spoke better to what we do, and also that worked in both languages. We received really positive feedback about it, and I hope you like the name as well.

At Futurpreneur Canada, we help 18- to 39-year-old entrepreneurs with no security and no track record, people considered too high-risk and too time-consuming by traditional lenders to give money to. We were founded by bank philanthropy in 1996, and since then we've invested in 6,740 young Canadians. Last year alone we helped to launch over 800 new businesses, which was almost 40% more than the previous year. These businesses have created 26,000 jobs and $191 million in tax revenue.

We offer four things that young entrepreneurs need most to launch. The first is to help them develop a strong business plan. About 10% of the people who come to us have one; the rest need a lot of support. We then provide them with loan financing of up to $45,000, which is from us and the BDC. Our loans are based on character, not collateral, and also the strength of their business plan. Then we equip them with mentors and we have almost 3,000 volunteer mentors across Canada. We also provide mentors to young people who don't need money, but do need mentoring through our MoMENTum program. Then we give them business resources, counselling, and networks to help them as they navigate those really tricky first years of business.

This combination gives young people the confidence, competence, capital, and connections they need for success. You probably know that the normal five-year success rate for a Canadian start-up is about 50%. Ours ranges from between 50% and 60%, and these are young people without collateral, and up to 80% to 90% repay their loans. So even if they're not in business, they've sold, they've closed it down, whatever, they still have the economic wherewithal to pay back a loan. We think that these great numbers are due to the strength of our mentoring program and our comprehensive business resources.

Futurpreneur Canada has a proven track record of advancing economic growth by supporting emerging entrepreneurs in their growing businesses. We also help build Canada's economy by helping our clients develop the entrepreneurial skills they're going to need whatever they do in their lives. We have seven regional offices—Quebec, Ontario, Manitoba, Saskatchewan, Alberta, B.C., and the Atlantic—and we have reps in some of our really busy centres like Ottawa and Quebec.

We work with young entrepreneurs and about 250 community partners in 1,400 communities, and we have other strong partnerships, including with the federal government, which has been a key and long-standing partner investing in our Futurpreneurs. We used this support to get complementary support from other governments and also the corporate sector.

In 2012, the federal government committed $18 million over two years to help us help young entrepreneurs launch new businesses, and that runs to March 31, 2014. We see now that young people are more interested than ever in starting their own businesses. Millennials are twice as likely as others to start their own business, and we're indeed seeing a rise in demand for our offerings. We see a great opportunity to seize on this momentum and provide more aspiring young entrepreneurs with the investment and programs they need.

We're wanting to meet this demand and grow the number of businesses we help to launch by 10% each year. We're asking the Government of Canada for a contribution of $37.5 million over five years to support our full start-up program, as well as an additional $2 million to support the expansion of our stand-alone mentoring program. This is a reduced annual contribution—we're going to do more with less—and it's going to allow us to help a lot more of the young entrepreneurs we see potential in across the country. We're currently helping 2% to 3% of that potential market, and we want to double that number. With this support, we'll be able to help 5,600 young people with our full start-up program, and 2,000 more young people with our expanded stand-alone mentoring.

ln addition to helping young Canadians realize their entrepreneurial potential, supporting youth start-ups will respond to some of our other key economic challenges. One is youth unemployment, which I know you're well aware of, and the second is dealing with the impending tsunami of retiring small-business owners. We help young entrepreneurs in all sectors of the Canadian economy from high-tech businesses to skilled trades, and we help almost every kind of business.

I was going to share with you some of the things people say about us, but I'm going to leave you with a package that has those notes so I don't have to say it now. I would just to leave off saying that we're very efficient and effective. We have a fantastic track record, we're recognized as a global leader, and we hope very much to count on your support and to have you take part in our global entrepreneurship week activities at the end of November.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

Mr. Byrne, please.

[Scott Byrne, Manager, Strategy, Monster Government Solutions, Monster Canada]

Mr. Chair, members of the committee, thank you for inviting me here today.

Monster Government Solutions is here to help an important and vital subset of the Canadian public: veterans and Canadian Forces service members who wish to transition to civilian life. Recommendation 32 of the recent Standing Committee on National Defence report, “Caring for Canada’s Ill and Injured Military Personnel“, calls on the government to “develop a comprehensive, algorithmic, military skills translation software tool to facilitate Canadian Forces members to obtain civilian employment upon release”.

We recommend that the government invest in a military skills translator, a tool that interprets an individual’s military skills, experience, and training to find better opportunities that best align with their capabilities. We are not alone in advocating for such an investment. The Automotive Industries Association of Canada's pre-budget submission includes a similar recommendation.

Having developed a military skills translator for use in the United States, Monster can attest to the benefits of such a tool. Over 800,000 U.S. veterans have used our program to successfully transition into the civilian workforce. Monster is committed to helping veterans in this transition. Each year in the U.S. we run a national veteran employment summit, which Canadian MPs have attended, and here in Canada we have worked with and support not-for-profit organizations such as True Patriot Love, Treble Victor, and Canada Company on veterans’ issues.

Canada’s veteran pool of talent is unique and highly skilled, with the potential to provide significant assets to employers. Our goal is to unlock that potential. Our skills translator uses a world-leading algorithm which translates military experience into civilian terminology. Not only does this benefit veterans, but it also enables employers to understand how veterans and their skills can be a welcome addition to their company.

This is especially important when only 13% of employers said that their HR departments knew how to read the resumés of military applicants. Our service matches veterans’ talents to comparable career opportunities and to related industry online job postings. A user can add more information, such as special training and courses taken, which the translator uses to further narrow their results to specific roles within the private sector.

As Monster’s military skills translator is already successful operating in other jurisdictions, the time and cost of reconfiguring the translator to provide an effective and tested product for Canada's veterans is greatly reduced. Once granted access to DND’s military occupation codes and the duties associated with rank, as well as training specifications, Canadian veterans and service members could begin benefiting from an operational military skills translation tool within six months with an upfront cost of $1.7 million.

This would be followed by an operating cost of $400,000 per year, to keep the algorithm and the requirements current. Once operational, the program can be integrated into private companies’ recruitment websites. For example, a version of the U.S. translator is part of the TheHomeDepot.com’s recruiting site. Without the data and the initial government support, this would not be possible.

This is an issue that is very close to my own heart. Both my grandfathers and my uncle are veterans. My mother was a medical corps nurse in the reserves, and my father was awarded the Canadian Centennial Medal in recognition of his service. I believe we have a moral duty to help those who have put their lives on the line to defend our country and our values, and help them transition to civilian life.

Early in this study, the committee heard from the veterans ombudsman, who said:

[…] today as a nation we are not capitalizing enough on the effort in time and expense that Canada has put into developing the skill sets of these men and women. When they finish their service, for the most part we thank them and then they drop off our radar screen.

Investing in a military skills translator is a tangible way for the government to harness that training experience while directly and immediately benefiting forces personnel, employers, veterans, and their families.

I thank you, and I look forward to your questions.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

Mr. Thivierge, you now have the floor for five minutes.

[Christian Thivierge, Corporate Secretary, Solidarité rurale du Québec]

Ladies and gentleman, I would first like to thank you for your invitation to Solidarité rurale du Québec to present our position on ways to maximize the number and types of jobs for Canadians.

I would first like to point out that Solidarité rurale du Québec is first and foremost a coalition of Quebec organizations that has been promoting and advocating for the revitalization and development of rural areas and their communities and villages for the past 23 years. In 1997, the Government of Quebec recognized the unique characteristics of rural life and made Solidarité du Québec a rural advisory body for all of Quebec.

Solidarité rurale du Québec has always maintained that the social and economic development of rural and remote regions and communities requires a vision and understanding that takes into account all aspects of rural life. In our opinion, this is the first thing the federal government must have in mind if it wants to implement conditions to increase their prosperity.

In other words, community size, population density, the type of natural resources to be found, remoteness from major centres and accessibility to services and infrastructure create very different realities from one rural area or community to another. The government's decisions must take these factors into account to maximize the number and types of jobs for Canadians.

How? By providing a modulatory clause in development and employment assistance programs, whether it be programs to provide training or support for innovation in business. The rules could be flexible and allow small or remote communities to qualify for assistance, venture capital or expertise.

The government must also put conditions in place to allow people in rural and remote areas to develop employment, on their own, that meets their local realities. These essential conditions include making high-speed Internet available. We recognize that efforts have been undertaken, but there are still too many underserved areas. All businesses and self-employed workers outside of urban centres should be entitled to a connection allowing them to be competitive, at a reasonable cost, which is not currently the case.

In addition, it is important to develop programs and tools allowing rural and remote residents to innovate by developing value-added products locally. A diverse economy is the basis of prosperity and the creation of diverse jobs.

We also believe that the government must protect those agricultural products that will be subject to the new open market rules with Europe. The very act of protecting agriculture and the agri-food processing industry protects Canadian jobs. Cheese makers in Quebec in particular come to mind.

Finally, the government must give rural communities the tools they need to foster their development. In this case, we could talk about forest biomass, which is something that can support rural communities. The government alone cannot solve employment challenges in rural communities and must, from now on, learn to support, mobilize and trust.

Communities must have levers to influence their development and mobilize their resources rather than waiting for a multinational to announce hundreds of jobs or foreign investments. We therefore recommend that the Government of Canada adopt, as part of a possible federal rural policy, a measure similar to the rural pact in Quebec's national policy on rurality.

I should point out that, in 2010, the OECD called this policy the most advanced in the world. The rural pact is a decentralized financial support measure. It is essentially an agreement between the government and each regional county municipality to strengthen and support rural development in these areas. The measure can support local and regional initiatives based on the will of the community. The rural pact, along with its budget envelope, is a real driver for job creation in rural areas. Such a pact would allow rural people across Canada to take control of their prosperity.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for that presentation.

We'll begin five-minute rounds with member questions.

Mr. Rankin.

[Murray Rankin, NDP, Victoria, BC]

Thank you, Mr. Chair, and thank you to all of our witnesses for their excellent presentations. There was so much in five minutes.

I want to begin with Mr. Smillie.

You really made a very powerful presentation, asking almost agnostically whether....It didn't matter whether your idea was a mobility tax credit or an EI travel voucher, you were indifferent. It sounded like a very sensible idea. I'm sure you've spoken about it to government officials and others.

What response are you getting to such an obviously sensible idea?

[Christopher Smillie]

We get that it sounds like a good idea, and it sounds like it could assist, but then we keep waiting.