Finance Committee on Nov. 17th, 2014

[Dr. Lindsay Tedds]

A number of different mechanisms could have been used instead. One of the calls has been to eliminate all tariffs and excise taxes on sports equipment, and while you've certainly made some movement in that area, a lot of tariffs remain. By eliminating these tariffs you're reducing the price, you're influencing the price elasticity of the demand right at the point of decision. But a better way rather than delaying the benefit to the household by 15 months is to get them that benefit right away, which again is why I refer to the CCTB as being a better mechanism. It is targeted to households that are struggling to overcome these economic barriers that inhibit their children's participation in sport.

[Mark Adler, Conservative, York Centre, ON]

I hear you, but I would counter that in last year's budget we did lower the most favoured nation tariffs. We have lowered the GST from 7% to 6% to 5%. We've lowered taxes 160 different times. Now the average family of four saves about $3,400 in taxes each year, and we have a very aggressive free trade strategy. We've negotiated 43 different free trade agreements. This all works to bring down prices. We've done pretty much what you've said we should do, and we've also done the fitness tax credit, which puts more money into people's pockets. Could you just comment on what we have done.

[Dr. Lindsay Tedds]

Again the stated goal of the fitness tax credit is to increase enrolment of children in sport. It has not done that.

[Mark Adler, Conservative, York Centre, ON]

How do you know that?

[Dr. Lindsay Tedds]

We have studies—and they're all referred to in my briefing note that you can review—four of which have shown that it has influenced a minority of households. The majority, more than 85% of them, are getting the tax credit for behaviour that would have occurred otherwise. So it's not being effective at meeting its goal.

[Mark Adler, Conservative, York Centre, ON]

I hear you, but I have met a number of people in my riding who have taken advantage of enrolling their kids in sporting activities. I represent a riding that is middle class and lower middle class and the majority are from lower class families who are not wealthy people, yet because of the fitness tax credit have enrolled their kids in sporting activities.

I understand that you have four different studies. I'm just wondering if you could submit those in a follow-up to the committee so we can take a look at them more closely.

The fitness tax credit has provided relief to 850,000 different families across the country. I hear what you're saying on a lot of different fronts. I'm not disagreeing with you entirely, but to say it affected and gave a positive outcome to 850,000 different families across the country, I would say that's pretty positive. Wouldn't you agree?

[Dr. Lindsay Tedds]

It's not meeting the goals that you stated when you set out this children's fitness tax credit. I have indicated there are better ways to do it; instead you are simply rewarding behaviour that already occurs. You're not increasing enrolment in sport. Instead you're taxing families on their household income, and then redistributing it to certain families after the fact, most of which are high-income households.

[Mark Adler, Conservative, York Centre, ON]

Thank you very much, Professor.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Adler.

We'll go to Mr. Van Kesteren for the last round, please.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Chair, and thank you all for coming.

Mr. Adler was going on the same vein I wanted to go on. I wanted to possibly, maybe not justify what our government is doing, but to see the benefit. I hear what you're saying, but I also think of policies that we put in place, not necessarily this government or this particular country, but I'm thinking of the United States with the electric cars, for instance. That isn't really showing a whole lot of promise either. Yet most people would agree that this is not a bad policy. We need to encourage people.

I don't want to dwell on this too long, but I think Mr. Adler was saying we've got a lot of kids who aren't getting any exercise, and this is a program where we're going to encourage parents. Maybe we're not getting the results we want, but it's still a move in the right direction. I don't know if you want to comment on that, but maybe we can just wrap up on that point.

I certainly appreciate the work you're doing and some of the other things you brought forward.

I want to ask the rest of the panel. I'm listening to the conversation here, and we all agree that we have to tax. There are services we provide as a government that are expected, and we add some to make government that much better. I can see two roadblocks to some of the suggestions you're making. One of them is that we have people in place whom we hire, people in the bureaucracies, whose jobs are to maintain that flow. We can give away everything, and we can change everything around, but it's imperative that we have a certain amount—what is it now, $240 billion a year?—that we have to collect.

Possibly to you, Mr. Ball, and Mr. Carman as well, is that maybe an area of frustration, that you're running up against bureaucracies? They're really doing their jobs, but are they making it that much more difficult to change some of the status quos, some of the things we've come to expect in some of the areas of revenue we've tapped into?

[Bruce Ball]

I'm not quite sure how to answer that. I guess—

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I'm not picking on them. I'm talking about the reality of the situation.

[Bruce Ball]

I think a lot of our members or clients of our members see red tape. That's something that goes along with this. I see the government making positive moves in reducing red tape and that sort of thing. We've had a lot of good discussions with the Canada Revenue Agency in making things work better with them too. So I think it's a positive environment, but it is difficult. The government is big. Dealing with a large organization, no matter what it is, can be difficult in trying to figure out the answers.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

We try to stimulate, and that's a correct thing for government to do, if we see an area.... I think, Mr. Hennessy, you correctly pointed out that there's value in a policy that enhances an industry. I think of Mr. Kennah, and this is very interesting. But on the same token, we're constantly criticized for possibly favouring one industry over another and saying they have this tax break, so somehow this is a good example you brought forward of where this makes sense. It's that balance that we try to adhere to, on the one hand to make sure the revenues come in and then on the other hand to stimulate the economy, but not necessarily choose winners and losers. It is a balancing act. Am I correct in saying that? Is that a reasonable observation?

Mr. Carman, you can jump in if you want to.

[James Carman]

If I may go to your first question just for a minute. I do think it's been improving over the last several years. Certainly, the work the government has done through the Red Tape Reduction Commission has been very helpful.

Also, in our industry, we've built very good relationships with Finance and the CRA. We now have a CRA financial services liaison group that comes together twice a year to talk about these kinds of problems and deal with them.

As you pointed out, there is a tension, and there are different rules by different players in the industry, but communicating and getting ahead of issues really makes a big difference.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I don't have any further questions, Chair.

I thank you for your contributions.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Van Kesteren.

On behalf of the entire committee, I want to thank all of you for being here this afternoon to discuss the budget implementation bill.

Professor Tedds from Victoria, thank you so much for being with us by video conference as well. If you have anything further for the committee to consider, please submit that to the clerk. She will ensure that all members receive it.

Colleagues, we'll suspend for about five minutes and we'll start with the second panel at 5 p.m.

Thank you.

[The Chair, Conservative, James Rajotte]

I call this meeting back to order. This is meeting number 57 of the Standing Committee on Finance and we're dealing with Bill C-43, a second act to implement certain provisions of the budget.

We have with us another five individuals who are attesting from five organizations. From the Canadian Airports Council, we have the president, Mr. Daniel-Robert Gooch. From the Canadian Network of Northern Research Operators, we have Professor James Drummond, who is from Dalhousie University. From the Canadian Polar Commission, we have the executive director, Mr. David Scott. From the International Arctic Science Committee, we have a professor from the University of Alberta, Mr. David Hik. From Romero House, we have Ms. Jenn McIntyre, director.

Welcome to the committee.

You will each have five minutes, maximum, for your opening statement. Then we'll have questions from members.

We will start with the Canadian Airports Council, please.

[Daniel-Robert Gooch, President, Canadian Airports Council]

Mr. Chair, ladies and gentlemen members of the committee, thank you for the opportunity to speak to you about the proposed amendments to the Aeronautics Act contained in Bill C-43, which is before you today.

My name is Daniel-Robert Gooch, and I am the President of the Canadian Airports Council. The 45 members of the council include all non-government airports that are part of the National Airports System.

There is good reason for rigorous consultation on initiatives and legislation. It helps the Government of Canada avoid unintended consequences. Airports have a concern that this relatively small bit of legislative text is broadly enough written that it could have an unintended negative impact on our nation's airports.

We understood that there would be a legislative move to provide the Minister of Transport with new regulatory authority to intervene in matters around the development and operation of new, small, private aerodromes. There are valid reasons for the minister to have new regulatory powers in this area, most notably to ensure the continued safety and security of Canada's skies. However, this language goes beyond the domain of private aerodromes and should be tightened, we contend. In light of all the possible implications of it, this kind of legislative exercise should be handled cautiously.

The House of Commons Standing Committee on Transport, Infrastructure and Communities, we would suggest, is the more appropriate venue for this. It is designed to consider legislation of this nature so that its implications can be properly considered and the language amended as needed to better align with the stated objectives.

We do not believe that the Government of Canada wants to turn back the clock on the national airports policy or revert back to taking control of our nation's airports and the significant financial responsibility associated with their development and operation; however, the expanded powers being considered in Bill C-43, if implemented, could be interpreted as a move in this direction.

Air transport in Canada is a $35 billion industry that supports 140,000 direct jobs. Airports have an important role in the Canadian economy, and we must tread carefully. Airport authorities plan and implement key development programs costing from millions to hundreds of millions of dollars.

It is the breadth of the language of this legislative initiative that is of primary concern to Canada's airports. As drafted, the bill encompasses all airports in the country and, if approved, would confer broad new regulatory authorities for the minister, including, we would suggest, in areas that are explicitly devolved to local airport authorities under the national airports policy.

As drafted, the bill also would give the Minister of Transport the ability to halt development or expansion of an airport if the minister makes a determination that such a project would not be in the public interest. While there may be some who would suggest the minister should have such a role in airports, this would represent a major policy shift back to the pre-national airports policy era in terms of the role of the federal government in airports. That policy entailed a very deliberate depoliticization of decisions like this.

We are also very concerned that the public interest as outlined in the proposed amendments is vague and subjective. Is it, we would ask, truly the government's intent for the Minister of Transport and her successors to once again be at the heart of decisions about airport development and be an arbiter in matters that were designed to be handled locally? We do not believe so, but we are concerned that the changes proposed by this language could be used that way by future governments and/or interest groups. We want first and foremost to ensure all of the possible implications are properly explored and considered.

Another notable consideration is that a broad review of transportation policy is already under way through the review of the Canada Transportation Act being conducted by David Emerson and his esteemed panel of advisers. This is the more appropriate forum to consider major transportation policy changes.

That is why the Canadian Airports Council is asking the committee today to amend the legislation to take into account small private aerodromes that are important to the department or not to integrate the wording in question until it has been examined in more detail.

Thank you for your time. I would now be pleased to answer any questions you may have.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We will now go to Mr. Drummond.

Mr. Drummond, you have five minutes for your presentation.

[Dr. James Drummond, Professor, Physics, Dalhousie University, Canadian Network of Northern Research Operators]

Thank you for the opportunity to appear before you today.

I am a Canada research chair in the Department of Physics and Atmospheric Science at Dalhousie University, but more relevant to the discussions today, I am the president of the Canadian Network of Northern Research Operators, the CNNRO, which represents the many Arctic research facilities in the Canadian Arctic. I'm also the principal investigator for the Polar Environment Atmospheric Research Laboratory, PEARL, at Eureka, Nunavut, and the president of the international Forum of Arctic Research Operators, FARO, which has 20 countries as members.

The CNNRO is composed of facilities across the Canadian Arctic that support many varied research programs, and some have been operational for many years, even decades. Currently we have 26 regular members and nine associate members. The genesis of the CNNRO was the realization that although each individual facility enabled excellent research, the great needs of the Arctic and the interfaces with large European and American projects required a more collaborative approach.

Although much of the discussion today will centre around CHARS, the very significant amount of research infrastructure already present in the Canadian Arctic should not be forgotten. As a specific example, in a recent proposal to the Canada Foundation for Innovation for operations and maintenance support, a subset of seven of the land-based members of the CNNRO documented a continuing investment in research support of more than $4 million per year from many sources.

The CNNRO is supportive of the CHARS initiative and is very pleased with the increased attention it has brought to Arctic research. When the station becomes operational in 2017, it will provide a welcome and significant increment to the overall research capability in the Canadian Arctic. Even before 2017, member facilities look forward to supporting research funded by CHARS across the Arctic.

In order to maximize the effectiveness of the investment that the Government of Canada is making in CHARS, we would suggest some minor improvements to the proposed legislation.

We are concerned that CHARS not be seen as Canada's only facility for Arctic research. CHARS is an excellent concept, but one site cannot hope to provide the necessary research infrastructure over the immense range of conditions in the Canadian Arctic. To give one specific example, the distance between my PEARL facility and CHARS is comparable with the distance between Ottawa and Charlotte, North Carolina. No one would—I hope—base decisions for Ottawa on data gathered in North Carolina. CHARS must be seen as an important part of a properly resourced network stretching across our country, not as a single stop for research and research dollars.

The new organization formed by the amalgamation of CHARS and the CPC will have research responsibilities that go well beyond the Cambridge Bay facilities and indeed will stretch across the planet to the Antarctic. As such, it is important that its management structure be well designed for its whole role.

We would call attention to the need for comprehensive reporting to you and to the public, not only about activities in Cambridge Bay but also across both poles and the full range of actors, both governmental and non-governmental, across the Arctic. We believe that the more comprehensive the reporting, the more efficient and effective will be the response to the many complex challenges confronting the Arctic. Full reporting will also aid in our interactions with the other Arctic countries and their research programs.

In terms of governance, we would like to emphasize the need to choose board members for the new organization from as wide a constituency as possible and to ensure that board members are and remain effective in their governance role. We note that there is no specific mechanism for choosing and monitoring the performance of board members and ensuring that the representation remains as wide and active as possible. A specific mechanism to deal with this issue would be welcome.

In conclusion, the CNNRO would like to thank you for the opportunity to present our comments today, and we look forward to supporting an exciting program of Arctic research in the future.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Drummond.

We'll now hear from Mr. Scott, please.

[Dr. David J. Scott, Executive Director, Canadian Polar Commission]

Thank you very much, Mr. Chair.

I am very happy and honoured to be here today.

I'd like to focus today on two key points. First, I'll introduce the Canadian Polar Commission and some of our significant current functions. As we move forward, these will be core functionalities for the new proposed organization. Secondly, I would like to emphasize that with this piece of legislation and the new organization it would create, we have a unique opportunity to create an organization that's greater than the sum of its parts. This proposed merger between the commission, the High Arctic research station program, and the station itself that's being constructed at Cambridge Bay gives Canada an opportunity to strengthen its leadership position and move knowledge creation ahead in the north to the benefit of all Canadians. We're trying to leverage and maximize everything we do. The Canadian Network of Northern Research Operators is an element of the northern research infrastructure that's out there, and that's part of the solution that's already in place.

Specific to the Polar Commission, we are Canada's national institution for furthering polar knowledge and awareness. We work in both polar regions. We function as a knowledge broker, linking producers or creators of knowledge with those who need to consume it—specifically, those who need it for making decisions locally, regionally, or nationally. This includes federal government departments, those who are delivering science programming; territorial governments, who increasingly are becoming northern knowledge creators; aboriginal people and organizations in the north who have knowledge and are creating new knowledge; and academics from across Canada and around the world. All are creating and consuming knowledge. One of our functions as the commission is to strengthen and build partnerships among these independent entities and to work with the networks and the infrastructure that exists in order to enhance efficiencies and effectiveness to do more with the existing resources.

In terms of awareness, we have a mandate to communicate polar knowledge publicly to Canadians. We do this through a number of channels, including through social media like Facebook, Twitter, and a regular blog through Canadian Geographic. Every two weeks we post a new important story of interest on their website and in the pages of Canadian Geographic magazine, which reaches 3.5 million Canadians with each issue.

We're a primary point of contact, through our polar knowledge app, for information about knowledge creators and knowledge that's being created in the Arctic. We're constantly reaching out to translate this knowledge to Canadians. We provide analyses; we promote northern perspectives to inform and influence new investments, such as CHARS; and we focus knowledge creation into the highest-priority areas from the perspective of northerners who are most impacted by that knowledge. Our most recent major deliverable is the “State of Northern Knowledge in Canada” report, available

in both official languages on our website. Hard copies are also available.

This report outlines recent progress made in the creation of knowledge since the international polar year period, and outlines remaining gaps that are important specifically to northerners themselves.

The commission recognizes that Canada's polar knowledge creation ecosystem, if you will, is currently thriving. The CNNRO is an excellent example of that. However, there is a need for increased efficiencies through coordination and communication.

Secondly, then, the opportunity of the proposed legislation really is a new opportunity to create a brand new federal organization. This new organization, by combining the CHARS science and technology program and the station being built with the existing capacity of the Canadian Polar Commission, is really a shot in the arm for the creation of new knowledge, but it needs to find its place in the existing knowledge ecosystem and assist in creating the whole that's greater than the sum of its parts.

By increasing awareness of the key knowledge gaps, as we've done in the outline here, we have an opportunity to create collaborative solutions and stimulating partnerships among all of the players within Canada and abroad, and in particular, leverage the huge appetite in the international community for partnership within Canada to perform research in the Canadian north that applies to global issues, such as how the climate is changing. This community is prepared to come to Canada and invest in Canada, and we can work together with them in partnership.

In closing, I believe that the establishment of this new federal organization will go a long way to achieving collaborations in the creation of relevant and important polar knowledge for the benefit of northerners and all Canadians, while serving as a model for the federal public service of the next generation. By this, I am referring to the clerk's Destination 2020 initiative, whereby we have an opportunity with the proposed organization to create a new public service organization that is engaged with and connected to citizens, functions horizontally across government, makes use of smart new technologies, and mobilizes a diversity of talents.

Thank you once again for the opportunity to provide you with some additional information.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Scott.

Mr. Hik, we'll now go to you, please, for your presentation.

[Dr. David Hik, Professor, University of Alberta, and Member, Executive Committee, International Arctic Science Committee]

Thank you very much. It's a pleasure to meet with the committee this afternoon.

I'm here representing the International Arctic Science Committee. I have spent the last four years as president of IASC and sit on the executive committee. I am a professor at the University of Alberta, and I've also been a member of the Canadian Polar Commission board for the last four years, just so that relationship is clear.

I'd like to first say a few words about the significance of international cooperation in Arctic science, and then, second, emphasize the tremendous opportunity that the merger of CHARS and the Canadian Polar Commission presents for improving all aspects of Arctic research in Canada and our contribution globally.

The national strategies of all eight Arctic countries place a very significant importance on research and science as the basis for sound decision-making in Arctic affairs, and consequently improving the quality and relevance of Arctic research and ensuring that the timely access to this knowledge remains a priority for all Arctic countries.

It's also increasingly obvious that the Arctic is intimately connected to the rest of the planet, and I'll give a few examples in a minute. In a nutshell, Arctic science is global science. Canada is already a leader in this area, and the opportunity to improve our capacity will be increasingly relevant and valuable for the whole planet.

The International Arctic Science Committee is a non-governmental international scientific organization that was created by the eight Arctic states in 1990, to encourage and facilitate cooperation in all aspects of Arctic research, both natural and human sciences. IASC currently has 22 member countries that work to promote this type of scientific cooperation.

IASC provides a forum where scientists and the administrators of national polar programs meet to discuss their common interests and to plan research programs, assessments and other coordination activities that address urgent needs. In Canada, the Canadian Polar Commission is responsible for appointing scientific experts to IASC technical committees. These individuals are drawn from universities, government, and the private sector.

Overall, IASC provides mechanisms and instruments to support science development in the Arctic, and especially projects that are beyond the capability of any single nation. It can provide independent scientific advice about the Arctic region, and oversight to ensure that scientific data and information about the Arctic are safeguarded, freely exchangeable, and accessible to anyone who needs it.

We also have done a lot of work to support the training of the next generation of Arctic scientists, particularly working with northern residents and indigenous peoples in the Arctic. We engage with relevant science organizations around the world. As an observer of the Arctic Council, we can bring additional partners from non-Arctic countries into various Arctic Council activities.

I want to note that many Canadian scientists are playing key leadership roles in a number of Arctic research organizations, including Arctic Council, IASC, and the International Arctic Social Sciences Association. At the present time, Canadians lead the World Meteorological Organization and the International Council for Science. We talk with each other and think about ways that we can, as a country and within Canada, organize ourselves to be as successful as possible within these international contexts.

Now, the International Polar Year really did confirm that the Arctic is experiencing rapid and severe changes and that over the next decades these changes are going to accelerate. They affect not only the regional ecosystems, but also have far-reaching implications for the rest of the planet. We think of these as teleconnections, things that connect different parts of the globe. They're expressed in various ways in terms of contributions to sea level rise from melting ice sheets and glaciers; the loss of sea ice and snow that changes the colour of the planet, the albedo; greenhouse gas emissions from thawing permafrost; black carbon from forest fires ending up on the snow, and other contaminants; and the weakening of the polar vortex and other changes.

The $150 million Canadian IPY program was the largest national investment, and it had a huge positive impact on Canadian science.

What we see now is that CHARS has the opportunity to be the point of contact for Canadians to continue to engage in international activities. Strengthening the CHARS mandate in the new legislation will be particularly important. In particular, we'd like to see CHARS take a whole-of-government and a whole-of-Canada approach. The new organization will bring together a part of our programs, but we see an opportunity for CHARS to have a strengthened mandate to make sure that Canada is well represented in these international fora.