Finance Committee on Sept. 20th, 2017

[Daniel-Robert Gooch]

I really don't know the extent that they've been looking at airports other than what we—

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I'll do some more homework then; I appreciate that.

I just want to talk with Mr. Beauregard. In regard to what you're saying, we invest—and I mean “we” collectively: government, Parliament, whoever approves and directs—a lot of money into your industry and it all seems to focus on the front end, which is innovation, new creation, and whatnot. But you're saying the final little bit, where we have certification of those planes and different assets, is not being done in a timely basis. Is that what you're saying?

[Mark Beauregard]

That's correct. The reality is that any aeronautical product—parts, service, maintenance services—must be approved by Transport Canada or else you simply can't use it on a civil aircraft in Canada and, most importantly, you can't export that product or service. Eighty percent of our industry is exported, so if you don't have timely certification or approvals by Transport Canada civil aviation, you can't do anything with those millions of dollars that are invested. You can't do anything with it. You have to have it approved. More importantly, the point is that Transport Canada's approvals and certifications must be recognized globally; must be recognized by our trading partners—the United States, Europe—so at the agency, Transport Canada civil aviation staff levels must be appropriate to get other agencies, like the FAA and European agencies, to recognize the Transport Canada certifications and approvals.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Just on that topic, I had a question as well. I was going to bring it up at the end.

We have to look, at committee, as to what is possible and doable. What's the impact on competitiveness and productivity, of not being able to get timely certification? That's what our hearing is, productivity and competitiveness. What do you see as, specifically, the impact there and how does it—

[Mark Beauregard]

I can speak, perhaps anecdotally, about some of the issues. If you do not get your Transport Canada certification in a timely manner, you obviously, then, cannot export the product in a timely manner, so you have a time value of money effect immediately there. With regard to some of the international agreements—I call them airworthiness or maintenance bilaterals—if we do not improve those and seek out other international partners, our services and products are either simply not imported into those other countries, or they take a long time to get approved. I cite an example. Transport Canada has been trying to negotiate, since 2012, a maintenance bilateral with Japan. It is still not done yet despite the Prime Minister, prior prime minister, and prior ministers of transport trying to do this; it still isn't done. This has an immediate impact on a number of our members being able to send repaired products to Japan.

[The Chair, Liberal, Wayne Easter]

Thank you very much for that.

Mr. Picard is the last questioner for this panel.

[Michel Picard, Liberal, Montarville, QC]

Thank you.

Mr. Gooch, I am delighted that you mentioned the great cooperation between airports and customs to solve the problem of line-ups. However, I would like to give you the opportunity to explain the problem more fully and to provide possible solutions. There is actually a recognition that the problem does not just involve airports and customs, but airlines as well.

There is also the fact that time windows are too small, especially during summer vacations. You get the greatest number of aircraft in the shortest amount of time because the time windows are not available. So that creates a huge bottleneck. It comes as no surprise that more people are coming into the airports. You are limited both by extra aircraft and by insufficient kiosks to receive all those people at customs.

Are airlines also part of your discussions to find a solution that will reduce the number of aircraft arriving at the same time?

[Daniel-Robert Gooch]

Thank you for the question. I will answer it in English.

Certainly, CBSA has been very successful in the last few years in working with airports. Airports have made a lot of the technological investments in things like kiosks that allow more travellers to be processed without having to see officers.

In the airline industry, we can't tell airlines when to land. It just doesn't work that way. The scheduling of aircraft flights is very complex. Canada is an important part of an international network with a hub-and-spoke system. Our business is to encourage growth. It's good to grow air services. New destinations are connecting Canadian travellers and businesses, and we want to encourage more of that.

At the moment, things are going a lot better than they were, in part because of the innovation that we've seen. Particularly in Montreal and Vancouver, I understand that things are going very well. Toronto is having a challenge.

It's a matter of getting those travellers through screening. Technology and innovation are a big part of it. We need to continue investing there, but when you have the tremendous growth that we've had, are continuing to have, and will continue to have, you can't forget the bodies on the ground. The border control officers do a very important job, and we need to ensure that resources for that side of the business are reinforced as well.

[Michel Picard, Liberal, Montarville, QC]

The increase in the use of technology at airports to provide primary inspection kiosks before you go through customs is a wise investment, but it is held back by the fact that few people know that it exists. Whether passengers use the automatic machines or not, they still have to go to a customs officer. But with that new technology, they could make their declarations and go through customs much more quickly.

My question comes in two parts.

How are airports going about familiarizing travellers with the technology and directing them to the kiosks where the technology is in place? I feel that it could greatly reduce the number of people at the booths.

Baggage pick-up can also pose a problem for a lot of people and is only rarely talked about. If I show a NEXUS card when I go through customs, things are done really quickly, but I then have to pick up my baggage. That's the last step and it delays everyone.

Realistically, a certain minimum time is needed to unload baggage. Baggage pick-up is part of the overall experience when you get to an airport. But criticism is often just about going through customs, and not about this final stage you have to get through before you can leave the airport.

[Daniel-Robert Gooch]

Certainly, a lot of the technology that we have and the kiosks that are in place are new, so some of the familiarity with how to use the systems will come with time. There is an educational component to this. I would say it's an ongoing effort with CBSA. You're seeing kiosks being put further downstream or upstream, in terms of being closer to the gate and further away from the customs hall. That's helping.

We have a tremendously valuable forum with Transport Canada called the air consultative committee, where CBSA, Citizenship and Immigration, and Transport Canada work together. All of these agencies have a role in the process. It's amazingly complex how the responsibilities for this traffic flow really kind of align.

A lot of that work is happening, and the educational work is happening. The way the technology itself works is improving. For the primary inspection kiosks that are in place, there are some issues with the transaction times, so we're working with CBSA on how to make that move a little bit better. That's a work in progress.

Can you remind me of the second part of your question?

[Michel Picard, Liberal, Montarville, QC]

It was about getting my luggage on time at the belt.

[Daniel-Robert Gooch]

Well, airports have been investing significant amounts of money into new baggage systems, in part because the needs in terms of screening of baggage are increasing. That certainly improves the delivery times.

The wait to leave the customs hall is not really related to that. Travellers often will have their baggage and are waiting to leave through the customs hall. That gets back to working with our partners on processes.

If you go to other parts of the world, there's a red door and green door system. If you go through the green door, that means you have nothing to declare. Just by that action you're making a declaration that you have nothing to declare. We don't yet have that in Canada. It's part of the road map for the future, but these are the types of files on which we are all working together.

[The Chair, Liberal, Wayne Easter]

Thank you, and I thank all the panellists for their presentations and the questions and answers.

That concludes the first panel of pre-budget consultations. I hate to tell you, but there are a lot more panels to go.

We'll suspend for five minutes. I know the agenda says 5:30, but all the witnesses have been invited for 5, so we will start in five minutes' time with the second panel.

The meeting is suspended.

[The Chair, Liberal, Wayne Easter]

We'll reconvene.

For the purposes of the record, pursuant to Standing Order 83(1), the committee will further discuss pre-budget consultations in advance of the 2018 budget.

We have a number of witnesses. We want to try and hold presentations to about five minutes, if we could, then we'll go to questions.

We'll start with the Assembly of First Nations, Mr. Wilson.

Go ahead, Mr. Wilson, and welcome.

[Daniel Wilson, Special Advisor, Research and Policy Coordination, Assembly of First Nations]

Thank you, Mr. Chair. I thank the committee for the opportunity to appear here today. I'd also thank the Algonquin Nation for allowing us to meet here on their unceded territory.

My message for you today is that investing in first nations, Canada's youngest and fastest growing demographic, makes economic sense for Canada. Many studies have demonstrated how closing the gap in socio-economic outcomes for first nations people would benefit Canada's economy. Most recently, a 2016 report from the National Aboriginal Economic Development Board has estimated that benefit at $27.7 billion per year, or 1.5% of GDP.

We have provided the committee with copies of the AFN's pre-budget submission for 2018 which shows how to help make that gap closure happen. The numbers you see are large and, perhaps, surprising at first, but so are the gaps that we need to close. If eliminating those gaps is an economic benefit and the human cost of maintaining them is clearly unacceptable, then one must react with surprise, not at the numbers in our submission but, rather, at the fact that this gap has yet to be addressed.

Each of the items in our submission is important. The gap in child welfare funding, for example, has been the subject of three orders from the Canadian Human Rights Commission, and I'd be happy to address questions about any of those. However, I want to focus my remaining time on the section that we called “Investing in First Nation Governments”.

Canada tells us that the 2% cap on annual increases to first nation budgets has been lifted, and we are very pleased to hear that. But the areas identified under that heading—band support funding, minor capital, operations and maintenance, and administration of income assistance—have yet to see an annual increase of more than 2% since 1997.

The cumulative loss against inflation and population growth in those areas over 20 years is equal to the $9 billion identified in our submission for 2018-19.

This is what it will take to redress the damage done, to build capacity in first nations governments as the Indigenous and Northern Affairs Committee of the House reported in its default prevention and management study in June of this past summer. Perhaps most importantly, this capacity is needed for effective administration of the programs and services that will help close the socio-economic gap between first nations citizens and other Canadians to give effective use to the significant investments that we have seen in budgets 2016 and 2017.

The AFN is working with the Government of Canada on options for a new fiscal relationship between Canada and first nations governments. At the core of that work is the need to treat first nations governments as governments, so that they can deliver results for their people, so that they can close the socio-economic gap that exists between first nations citizens and the rest of Canada.

In order to support this, we must build the administrative and financial management capacity in first nations governments that has been negatively affected by the underfunding of the past 20 years. Eliminating the socio-economic gap will provide a net economic benefit to Canada and it will save lives.

Overcoming 20 years of neglect will cost $9 billion, and we urge you to recommend that investment.

Wela'lin.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Wilson. I neglected to mention at the beginning that I thank all your organizations for the submissions you've submitted in early August. I know it's a fairly pressure-cooker task to get it done that fast when we're not holding hearings until fall, but thank you. We needed to go through that process in order to get it translated and other things.

From the Appraisal Institute of Canada, we have Mr. McLean, the president-elect, and Mr. Lancastle, the chief executive officer. Go ahead, please.

[Keith Lancastle, Chief Executive Officer, Appraisal Institute of Canada]

Good afternoon, Mr. Chairman and honourable members, ladies and gentlemen. Thank you very much for the opportunity to again appear before this committee. We are very pleased to present our members' concerns and perspectives and recommendations to the Standing Committee on Finance in the context of the 2018 pre-budget consultation process.

The Appraisal Institute of Canada has more than 5,400 members who provide unbiased opinions of value on residential, commercial, and all other types of real property. Our members are university educated and prepare their work in accordance with our “Canadian Uniform Standards of Professional Appraisal Practice”. As a self-regulatory body, we have a strong focus on consumer protection. We maintain a robust disciplinary process and offer a mandatory professional liability insurance program to help protect consumers.

To begin with, we would like to respond to the committee's question of what federal measures should be taken to help Canadians be more productive. There are three measures, in fact, in our mind.

The first is the application of OSFI B-20 guidelines to all mortgage-lending institutions.

The second is mandating stronger valuation fundamentals for real estate-based investments offered to retail investors.

The third is enhancing financial literacy amongst Canadians.

Regarding the application of B-20 guidelines to all mortgage-lending institutions, we know that the majority of Canadian mortgage lending is still being done through federally regulated lenders, but the market share of non-federally regulated lenders continues to grow. Recent data from the Department of Finance showed that the market share of unregulated lenders grew from 6.6% in 2007 to 12.5% in 2015. We believe this trend will continue.

The reality is that, despite initiatives to moderate the market, there are still many Canadians who are desperate and determined to enter the housing market. If borrowers are turned away by a federally regulated institution, they will often turn to other lenders to secure funding. Unfortunately, there is limited information on the full scope of who these lenders are or what their mortgage underwriting policies may be. Put another way, there is a growing share of the market that is not necessarily competing on the same basis and for whom the same regulatory oversight may not apply. This scenario, in our opinion, is a potential risk to our financial system.

We do know of non-federally regulated lenders that apply very stringent underwriting approaches, both in terms of borrower qualifications and collateral evaluation. But we are also aware of, and are concerned with, those that do not apply this rigour and extend a mortgage in much higher risk scenarios.

B-20 has established an incredibly sound framework for underwriting that requires not only an assessment of the borrower's capacity and willingness to repay but also a commitment to strong valuation fundamentals. As we have seen in other countries, the absence of this type of balanced and consistent approach can have a significant impact on the consumer and on the real estate market as a whole.

AIC, therefore, recommends the expanded application of B-20 guidelines to any and all organizations providing mortgage financing. We believe this will help level the playing field and will help to further stabilize the market.

Second, AIC is concerned with the recent emergence of a range of real-estate backed investments including syndicated mortgage offerings targeted at retail investors. While these types of investments present themselves as an interesting opportunity for retirees or those nearing retirement, we are concerned that these investors may not truly understand the inherent risk associated with the investment and that the report value of the property securing the investment may be inaccurate. We believe that on-site appraisals carried out by qualified professionals are the most effective way to determine the true market value of a real estate asset securing this or any other type of investment. Investors and regulators should ensure that these investment opportunities are properly vetted and that the necessary due diligence and risk tolerance and collateral valuation has been carried out.

Third, there is a need to enhance financial literacy in the areas of mortgage lending. Although governments proactively educate Canadian consumers on issues relating to financial literacy, there continues to be confusion within the marketplace on the full range of fees associated with mortgage financing and re-financing, as well as the roles of various professionals involved in the transaction. A disclosure of all fees incurred as part of obtaining a loan should be a mandatory requirement for all lending institutions, so that Canadians better understand the financial commitment they are making. This includes both the appraisal management fee and the appraisal fee.

With regard to the committee's second question of what federal measures would help Canadian businesses to be more productive and competitive, for our members the need to access reliable and affordable real estate data is essential to complete their valuations of real property, which so well protect lenders and consumers.

The creation of a framework for federal housing statistics and a national property registry are initiatives that AIC welcomes and supports. While this data will be invaluable to governments as they develop effective housing policies, it will also be of great benefit to the industry.

We therefore recommend that the national property registry be fully accessible to professional appraisers and to all other real estate professionals.

Mr. Chairman, honourable members, we are privileged to have been invited here today to share the perspectives of our members. We would be pleased to respond to any questions or comments you or your colleagues may have.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

Turning to the Canadian Alliance of Student Associations, we have Ms. Gadamsetti.

[Shifrah Gadamsetti, Chair, Board of Directors, Canadian Alliance of Student Associations]

Good evening, Mr. Chair, esteemed committee members, fellow witnesses, and members of the gallery.

My name is Shifrah Gadamsetti and I am the president of the student association at Mount Royal University. I am also the board chair of the Canadian Alliance of Student Associations, CASA.

On behalf of CASA's 22 student members, representing over 250,000 students attending post-secondary schools in Canada, I thank you for the opportunity to present our pre-budget priorities today. We know that a productive and competitive economy depends on a highly educated workforce. This is why students must be kept a priority when considering the future of Canada's economy.

To ensure that students maximize their potential during and beyond their studies, we believe the government must provide support through three main pillars: ensuring that students are able to succeed through their education; encouraging student contributions to research and innovation; and facilitating a smooth transition to the workforce.

To begin, student success depends on affordable, yet high-quality textbook options that help them get the most out of their education. Unfortunately, the cost of textbooks remains a significant barrier for many, and it is one that isn't always fully covered through financial aid. In response to this issue, provinces like B.C. and Ontario have invested in new technology called “open educational resources”. OERs include freely accessible learning tools such as textbooks, lesson plans, and videos developed by instructors under an open copyright licence. OERs can also be readapted to meet a variety of student needs. Overall, the results have been incredibly positive for students. OERs have saved 40,000 students over $4 million in the last five years. This is why CASA recommends a pilot grant through the tri-agencies to incentivize students and faculty to develop OERs. After all, no student should be prevented from succeeding in their post-secondary education because they cannot afford textbooks.

Succeeding in post-secondary education also means accessing essential mental health accommodations and supports. We know that mental health issues tend to surface during post-secondary education while students are away from family, friends, and a support networks for the first time. Unfortunately, students also struggle against long wait times and significant costs for on- and off-campus support. This includes the cost to obtain a professional assessment often required for academic accommodation. Left unaddressed, mental health problems and illnesses also have an enormous impact on the overall economy.

We recommend that the Canada student loans program provide funding to support the upfront costs of mental health assessments required for academic accommodations. This would ensure that students get the help they need to succeed throughout their education, while building lifelong resiliency.

We would also like to emphasize supporting student research and innovation. Students were encouraged by the significant increases in overall tri-agency research funding in budget 2016. However, the overall proportion of funding dedicated to graduate students remains lower today than it was in 2011. This is why CASA, in partnership with the Student Union of Quebec, asked for new tri-agency funding specifically designated for graduate students. We would also like to see the proportion of graduate research funding return to its 2011 level.

We strongly encourage the use of Canada's Fundamental Science Review, also referred to as the Naylor report , as a blueprint for long-term support of science and research.

The final pillar is aiding effective transition into the workforce. A key strategy for this is to provide students with program-relevant experiential learning opportunities as part of their education. Research has shown that students who do relevant and paid work during their studies are almost twice as likely to get a job upon graduation as those who do not.

While the Canada summer jobs program offers quality work experience, its focus on the summer is too limited. Expanding it to provide year-round part-time jobs better reflects the dynamic experience of a diverse student population. Upon graduation, students want to focus on successfully transitioning into the workforce. However, precarious youth employment and rising interest rates on student loans make this extremely stressful and challenging.

Students with Canada student loans are told that they have a six-month non-repayment period before they have to start repaying their loan after graduation, but they are accumulating interest throughout those six-months. This unfairly burdens new graduates, especially since finding a job often takes at least five months and the average student loan debt is approximately $26,000.

CASA recommends the six-month non-repayment period be made interest-free. This would provide basic relief for new graduates while allowing them to focus on their most important goal—looking for work that will maximize their potential.

In closing, we believe that a highly educated and skilled population can accomplish great things given the right circumstances.

Thank you very much. I look forward to your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

Next, from the Canadian Home Builders' Association, we have Mr. Kevin Lee, CEO. Welcome, Kevin.

[Kevin Lee, Chief Executive Officer, Canadian Home Builders' Association]

Thank you.

With some 21% of skilled workers in residential construction retiring over the next decade, productivity gains need to be an important part of our industry's future. We need to promote young people getting into the skilled trades; we need parity of esteem in Canada for trade paths compared to university paths; and once people are in the trades, we need harmonization of qualifications across Canada to promote labour mobility. All these measures have a federal leadership component.

There are two keys way to look at productivity as it relates to housing. One is how the development of our communities affects the productivity of the entire economy, in all sectors; and the second is how productivity within the housing sector can help its businesses and address housing affordability for Canadians.

An efficient economy relies on the timely provision of quality housing that is affordable, in locations that enable efficient movement of its citizens. The ability of our industry to supply this is largely determined by policies enacted at all three levels of government. We see costs to our economy and to the personal lives of Canadians as they spend hours each day in gridlock as they travel from where they can afford to live to where they have to work.

However, home ownership remains a cornerstone of the middle class. It has led to the financial well-being of the vast majority of Canadians and continues to do so, yet we see more mortgage measures by federal players locking out first-time homebuyers. The problem is that all these measures are demand-side actions, when the big problems and potential solutions are on the supply side.

Here are some alternative solutions. Firstly, the issue of supply needs to be properly documented with statistics, measures, and indicators. To truly understand what is driving up housing prices, we need to have deep-dive data and analysis on the supply side in all urban centres. For example, at current trends, Canada would be 300,000 family-oriented units short over the next decade, and prices for those family-oriented houses that do exist will continue to escalate.

We need to encourage the missing middle: medium-density, low-rise, mixed-income housing in walkable communities with ready access to transit. The government needs to track the type of housing and communities being approved, so that the statistics can be used to change trends.

The federal government also needs to tie its infrastructure investment to transit-oriented development plans, to ensure proper density around transit nodes to promote affordability and maximize ridership. It needs metrics to track these indicators.

To support mobility in lower-income families, a portable housing benefit is required, tied to people rather than social housing units, so people can easily move as new job opportunities arise, rather than being tied to a housing unit they can't leave due to long waiting lists.

The federal government needs to launch or support a “Yes In My Backyard” campaign to counter Nimbyism that so often delays or derails mixed-income projects in or near existing neighbourhoods.

Government regulation and red tape delays need to be addressed. Bringing projects online has gotten much slower over the years, increasing costs and hampering productivity. A return to federal statistical tracking of the indicators related to this in urban centres can lead to improvement.

Regarding codes, Canada already has excellent codes and standards that result in excellent housing. However, there are currently many social, health, and environmental aspects that groups are seeking to incorporate into the codes. Continual improvement is, of course, always desirable; however, this must also be done in ways that are affordable.

While the national code process does support cost-impact analysis to a degree, it is time for a true federal priority to pursue a simple goal: let's build better houses for the same price or less. If there is a need to address a given issue with a code, it needs to be done in a way that doesn't increase costs. If there isn't such a means, then R and D and innovation is needed to find a solution before regulating it.

Given today's affordability challenge, this is a position that should be taken by the federal government at large and with respect to the national building code. It should be supported by federal R and D dollars, leveraged with those of the private sector.

That leads to the federal investment in housing R and D, which has been woefully lagging in recent years, especially compared to investments in other industries that are much smaller components of the economy and employ far fewer than the over one million jobs created by residential construction. This type of federal investment is particularly important in housing because the industry is principally made up of small businesses. Also, most innovation in construction is non-proprietary, so public sector investment in R and D is very appropriate as a federal role.

Of course, speaking of small businesses and productivity, you must address the current proposed corporate tax changes. The residential construction industry is made up of mostly small, family-run businesses. In the industry, 83% of companies have nine employees or fewer. The proposed changes will make it harder for families that devote so much of their collective energy and resources to a small business to succeed, the same entrepreneurs who seek increased productivity inherently every day.

The tax change directly proposes a disincentive to entrepreneurs to take on the risk-reward challenge that starting and owning a business entails. They will likely drive more work into the underground economy, resulting in less, not more, tax revenue, and unfortunately undermining hard work by our association in collaboration with the Canada Revenue Agency to fight the underground economy. We need and surely can find a better approach.

I'll conclude by reinforcing that innovation and productivity certainly matter in residential construction. We have a uniquely Canadian history of industry-government collaboration in this area, and we need to build on this for a successful future.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much. I was wondering if you were ever going to mention the underground economy, but you did get to it.

From the Chemistry Industry Association of Canada, we have Bob Masterson, president and CEO, and David Podruzny, vice-president, business and economics.

Welcome.

[Bob Masterson, President and Chief Executive Officer, Chemistry Industry Association of Canada]

Thank you, Chairman Easter.

This evening we'd like to speak to this committee about the significant opportunities for investment and economic growth within Canada's chemistry sector, along with our thoughts on what budget 2018 can do to help ensure this opportunity is realized in the coming months and years.

Our industry is a vital component of the Canadian economy. We're the third-largest manufacturing sector, with over $53 billion of annual shipments. Nearly 73% of that is exported, and that makes us the second-largest manufacturing exporter. Like many people, I'm sure most of you don't give much thought to the role of chemistry in your lives, but if you look around this room, 95% of everything we touch every day is impacted by the business of chemistry. It's everywhere.

Our industry is also very highly skilled. We employ more than 86,000 Canadians, and 38% of those are university graduates. That places us with the second-highest percentage of university graduates, the first being the IT sector. More importantly, perhaps, for this committee, our sector has a tremendous track record in providing economic and wage growth across the entire business cycle. In its recent report, the House of Commons Standing Committee on Industry, Science and Technology acknowledged this and identified chemistry as one of the strongest performing manufacturers in employment growth since 2010. Globally, the chemistry industry is very large and very fast-growing, with annual growth rates well in excess of global GDP in each of the last 10 years. Moreover, with growing populations in Asia, demands for middle-class lifestyles, and demands worldwide for more sustainable outcomes, the chemistry industry is poised to triple its volume of shipments in the next 20 years.

Much of that production growth has taken place in Asia, but in the United States, chemistry is also the fastest-growing manufacturing sector. In the last five years, there have been over 300 global-scale investments in the chemistry business in the United States, totalling over $250 billion U.S. The National Association of Manufacturers says that's the single, largest, fastest-growing sector of the manufacturing economy and is responsible for over half of the investment.

Our concern is that we share many of the same benefits that the American chemistry industry does, and if you look at our historical track record over the last 40 years, we should have expected to see 10% of that investment. We should have seen 25 to 30 projects worth $25 billion to $30 billion of new investment. Unfortunately, however, we've lagged well behind our historical share. We've seen more like 1%, or $2.5 billion to $3 billion of investment. In our view, this should be a concern to this committee.

Though we have missed out on the past wave of investments, the global growth I've talked about is continuing, and we do think that Canada is better poised to capture part of the next wave. The reason I say that is that the governments of Ontario and Alberta have prioritized investment growth in the chemistry sector. There are currently three major projects, accounting for nearly $12 billion, under active consideration in those jurisdictions, and those are only the projects that are publicly announced.

Over much of the last year, we have urged the federal government to heed the investment opportunity in our sector and take note of those provinces' determination to capture this new investment. We continue to stress the importance of ensuring that Ottawa's economic priority sectors align with those of the important provinces of Ontario and Alberta—and British Columbia and Quebec—so that all our oars are pulling in tandem in the same direction.

Budget 2017 did provide some important signals that the government was listening. We were pleased to see the launch of the strategic innovation fund and its broadening to include high-growth, advanced manufacturing sectors, including chemistry. While welcome, the strategic innovation fund alone will not be sufficient to attract sustained investment growth as seen south of the border. To that end, we've submitted to this committee our recommendations, i.e., the four factors we believe are necessary to help secure investments, both those awaiting final decision and also future opportunities under consideration. These recommendations relate specifically to the second objective of your study. I'll mention them briefly, and then we'll look forward to your questions to elaborate further.

First, we do believe the strategic innovation fund is important. We're asking for increased investment by the Government of Canada to ensure that this fund is capable of matching funding from the provinces' own strategic funding initiatives.

Second, we're requesting that the 10-year extension of the accelerated capital cost allowance currently in place be made permanent for manufacturing and processing, and moreover, that it be broadened to include additional eligible activities, at least to match what's available to our sector south of the border.

Third, in part to attract that additional foreign investment that Minister Morneau and his Barton advisory council have called for, we are recommending that a 100% accelerated capital cost allowance be introduced for a minimum of one full business cycle of seven years, to specifically apply to resource and manufacturing upgrading.

Last, we recommend implementing a special manufacturing and processing tax rate in the form of a two-point M and P reduction.

I'll stop there. Thank you very much for your interest. We look forward to elaborating on and providing some justification for our recommendations.

[The Chair, Liberal, Wayne Easter]

Thank you.

We welcome Charlotte Bell, president and CEO of the Tourism Industry Association of Canada.

Welcome. The floor is yours.