Finance Committee on Nov. 21st, 2013

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

That's fantastic, Mr. Chair. Thank you very much.

I don't run out of things to talk about when it comes to jobs. Jobs are very important.

I want to get back to the oil industry, in particular. I go back and forth between Fort McMurray just about every weekend. There are three direct flights a day from Toronto. They are coming from St. John's. They are coming from Cape Breton. I was surprised not to hear Rodger talk about his time playing hockey in Fort McMurray, and all the jobs there, and all his relatives and constituents who go up there now, because I know that all Canadians are certainly benefiting from this.

I want to talk about the other options we have to grow our economy through federal regulations and through what the finance committee can recommend, especially regarding the pipeline constraint for oil, because that's very important. I know what's going on with LNG. Right now we get about $3.00 to $3.20 for liquid natural gas. In Asia they're getting $12 to $14, but because we have no pipeline going to the west coast and no LNG facility, we can't take advantage of that. We're getting stifled there by about 300% to 400%, and we're doing the same thing with our oil.

It seems bizarre that because we don't have pipeline capacity, the oil sands companies and oil companies generally are spending $11 per barrel to ship oil on rail, which is 10 times more expensive than pipeline capacity, at least 10 times more, and to put it bluntly, who pays for that? Consumers do.

Let's talk about how we can we keep the economy growing, how we can keep employees going, and how we can create a better distribution network.

[Alex Ferguson]

To start with, at a very high level, one of the things we were encouraged to see is the growing cohesiveness, at least in the western provinces, but all the provinces with the federal government, on key elements. We would hope that some of that growing cohesiveness would expand into the market access discussions. I mention the Canada job grant as one where we seem to have all the provinces aligned on a position.

It would be helpful for us to get a similar type of alignment on the aspirational goal for Canada for gaining that market access across the provinces. We have some struggles in certain jurisdictions, not all. We have some really great support, for example, in the Atlantic provinces. I would suggest that it's maybe a little bit less so on the western side. If you get down to more granularity, one of the things the federal government could help us with is the requirement for a world-class spill response and prevention program. We already have that on the east coast. It would be nice to develop the same kind of knowledge and awareness and acceptance on both coasts.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

My understanding is, as a country, we are doing that. We've brought in some of the toughest laws ever in relation to navigation and marine safety. When I was on the transport committee, I remember hearing from experts who identified Canada as one of the safest jurisdictions in the world for marine transport.

Is that not correct?

[Alex Ferguson]

Yes.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I also want to talk about SARA. I started my master of laws in environmental law. I was going to be an environmental lawyer. That's all I was interested in. I want to talk about SARA because I think there has been a miscalculation on the balance relating to the Species at Risk Act.

Could you tell us about that?

[Alex Ferguson]

Certainly.

We've been spending a lot of time on the Species at Risk Act, trying to get it more functional. Our view is that it is a pretty significant constraint not only on the land base but also on Canada's reputation.

Concerning the performance on SARA, with over 500 species currently listed, none has been fully recovered or protected under that legislation. We see an opportunity to increase the performance on that and at the same time create more of a reputational opportunity for us for those market access considerations.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

In fact, if I can be fair, my kids are raised in Fort McMurray, and people who work in the oil sands industry, their kids are raised in Fort McMurray or Calgary, for instance. Nobody wants to see animals gone. Nobody wants to see their children not breathe proper air, etc.

The reality is that the people on the ground in Alberta, and particularly in Fort McMurray, are more concerned about SARA, the animals, and plant life than anywhere else in the country, in my opinion.

Would that be a fair assumption based on what you've heard?

[Alex Ferguson]

I wouldn't restrict it to being unique around the Fort McMurray area. Certainly, other parts of the country have the same ethic and desire concerning those species.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Of course, the people who live in it are very concerned about it as well.

[Alex Ferguson]

Very much, very much; so we believe it's a good opportunity to increase performance on SARA.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Exactly, and rebalance the performance so that we do both of what we need to do.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Jean.

Mr. Caron, the floor is yours.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much.

I am going to ask Mr. Lavoie, Ms. Kozhaya and Ms. Labrecque all the same question.

As you know, Bill C-4, which we will begin studying next week, contains a government measure to eliminate the tax credit for labour-sponsored venture capital funds. The measure is especially relevant for Quebec, since 90% of the tax credit goes to Quebec funds.

Where do your respective organizations stand on the subject? In your view, how important are labour-sponsored venture capital funds to Quebec's economy? What do you recommend as far as this measure is concerned?

[Martin Lavoie]

I'll go first.

We haven't received a lot of complaints from our members about the measure. I know that some manufacturers do benefit from such funds. Keep in mind that ours isn't the sector that benefits most from venture capital. It's more the IT and telecom sectors that benefit in that respect. We haven't taken an official stand. We understand the measure is tied to the tax credit for RRSP contributions.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Unless I'm mistaken, Manufacturiers et exportateurs du Québec issued a press release condemning the government's decision.

[Martin Lavoie]

No doubt, Quebec has more members who benefit from the tax credit.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you.

Ms. Kozhaya, where do you stand on the matter?

[Norma Kozhaya]

We made a statement indicating that the tax credit for the Fonds de solidarité had helped create jobs in Quebec; that sums up our statement. In the past, we have advocated revisiting the way the tax system treats all venture capital funds.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Your organization, in particular, also recognizes the importance of investment in private venture capital funds. Contrary to popular belief, labour-sponsored funds aren't invested solely in unionized organizations or companies. The money is also invested in private venture capital funds.

[Norma Kozhaya]

Absolutely. The funds invest in a variety of sectors and not just in unionized workers' funds.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Ms. Labrecque, what is your view on the subject?

[Julie Labrecque]

Ours is similar to that of the Quebec Employers Council. We, too, want those tax credits preserved because they give companies and investors better funding. Companies benefit from those investments, and we want those tax credits to continue. The measure helps investors because it enables them to build equity for retirement. They can also invest that equity in other types of companies, not to mention in the local and regional economies. Private venture capital funds should also be preserved.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much.

Your position is actually in line with those of the Fédération des chambres de commerce du Québec and the Board of Trade of Metropolitan Montreal. Quebec's business community is a major proponent of maintaining the tax credit. The province's business sector recognizes the importance of the credit, especially in an area as vulnerable as venture capital, where it's incredibly tough to access the funding required to help businesses.

[Julie Labrecque]

Absolutely.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I would like all three of you to comment on what I say next.

I'm not sure whether you know or not, but in late October, Quebec's two main labour funds, Fondaction and Fonds de solidarité FTQ, brought a proposal to the finance minister; it called for the continuation of the tax credit and addressed the federal government's concerns, including cutting the cost of the tax credit by reducing it by a third. That would mean a cap on how many new shares the two labour funds could issue.

Under the proposal, the two main funds would invest $550 million in private funds in Quebec, with the option of investing anywhere in Canada, not just in Quebec. A total of $400 million would be directly invested in private funds outside Quebec, including $120 million in the federal government's venture capital action plan. And just over $1 billion would be invested directly in companies, in addition to the funds' investments in the venture capital action plan.

That was what the two labour funds put forward in a proposal totalling $2 billion over 10 years, in exchange for the tax credit, which would end up costing somewhere between $80 million and $90 million a year. The federal government rejected the proposal, sticking to its decision, whereby it will spend $400 million in one fell swoop and that will be the end of it. What do you think of that proposal? How should the federal government have responded?

Ms. Kozhaya, you can start us off.