Finance Committee on Sept. 25th, 2017

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

How would that compare with the U.S. at the moment, Dennis?

[Dennis Prouse]

A little slower. We were doing well. The U.S. times have sped up, and they're now committed to moving faster.

The other area to consider, Mr. Chair, is the emerging areas of CRISPR and Cas9. How are those going to be regulated in the United States, and how are they going to be regulated in Canada? Innovation is moving at an incredibly fast pace, and how Canada reacts to that is going to be critical.

[The Chair, Liberal, Wayne Easter]

Thank you. I'll have some questions in that area a little later.

Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I was going to continue with CropLife, because that's very interesting. It's nice to see that companies are involved in innovation, and you don't need a super-cluster to do it. The companies are already doing it.

You mentioned the non-tariff trade barriers. The Canada West Foundation produced a report very recently on TPP, saying that even without the United States, it's a net benefit to Canada, and that Canada would gain from it. Among the top three were agricultural and agribusiness products. Do you think we should go ahead? Should the government be doing more to actually proceed with TPP 11, minus the United States? That's my first question to you.

The second question is, can you give us some examples of these non-tariff trade barriers that your industry is facing?

[Dennis Prouse]

Certainly. There's a very easy answer to the first one: yes. We're strong supporters of TPP 11. Canada tends to do very well in multilateral trade agreements, particularly when it comes to science-based regulatory standards.

As for non-tariff trade barriers, China is an excellent example of a place where it's very difficult for Canadian companies to get new seeds approved. The process is opaque, to put it politely. When the standards aren't clear and the process isn't clear, and when a new seed doesn't get approved in China, it means a Canadian farmer can't grow it because he or she does not now have a market in China.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Is some of that fear also related to IP protection in the case of the People's Republic of China?

[Dennis Prouse]

IP protection would be a somewhat separate area. This is more the regulatory system. This is more the predictability of putting a new trait forward in China and having it approved. I reference China simply because of the immense potential that's there and the fact that I believe 40% of Canadian canola exports currently go to China. They're working through that regulatory process, and they're not tariff barriers—these are non-tariff trade barriers. It's a huge issue.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Mr. Bourque, CP has a yard in my riding. It's Ogden. When the stockyards were built, it was on the edge of the city, and now Calgary has built itself all around the shunting yard. Until very recently, right next to my constituency office, the shunting was blocking the traffic every single day along the main arteries. I notice a lot of businesses have moved into the area because of the spur lines. There are a lot of spur lines that go out, and that makes it really easy for them to move products.

Can you explain a bit more how this would work under the Income Tax Act, which we're proposing here? Are you talking about laying new track, or are you talking about maintaining current track, or are you talking about making it parallel lines in order to maximize how much product can be moved over it? Can you give some more explanation on that?

[Michael Bourque]

We're proposing a couple of things.

First, on the capital cost allowance, if we could accelerate that the way we've seen in other industries, companies would respond by investing in new track. Where you would really see a huge benefit is with short-line operators, because currently many of them have a lighter rail. If they were able to install heavier rail, literally heavier track, then they would immediately get a capacity increase, because often they have to only partially fill the containers they're carrying because they don't have the track infrastructure to carry the weight.

By incenting an investment in track you would immediately see a capacity increase, which would then be translated to additional productivity across the network. The second proposal that we have, which would benefit customers—which is maybe more appropriate for the example you gave—is where the government redirects carbon revenues into a program that would be accessible to rail customers. A rail customer that is not currently rail-served would be able to apply for funding to bring that infrastructure to their plant, for example. Then the government would get reduced greenhouse gas emissions, which would be used as credits toward the investment. They would only get that credit if they continued to use rail over truck on an ongoing basis.

That kind of program exists in Quebec. It has been very successful; it has reduced greenhouse gases, and it has led to the increase in customers that are rail-served. An example would be the forest product industry. Currently, only 50% of forest products, sawmills and the like, are rail-served. The Forest Products Association has a goal on behalf of their members to reduce greenhouse gases using rail. That's a great example of a customer that would directly benefit from that kind of program.

[The Chair, Liberal, Wayne Easter]

We will have to move on to Mr. Boulerice.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Chair.

My thanks also to our guests for taking the time to come to share their points of view with us.

Mr. Bourque, I would first like to make a comment. I am a fan of trains. I actually took a VIA Rail train this morning to come here from Montreal. I just want to point out that, in a number of municipalities, CP or CN rail lines go through the city, sometimes blocking the residents’ active transportation. Where I live, it is quite a frequent problem. Unfortunately, your members are not always very open to the idea of increasing the number of level crossings, which creates some difficulties.

Mr. Yussuff and Mr. Luff, clearly, the idea of a national daycare plan is music to New Democratic ears. Quebec members find the plan even more interesting, given their experience with early childhood centres for some years, the results of which are positive. They are positive for the children, but also for the parents. It actually enables them to return to the workforce—mothers more than fathers, it must be said. The economist Pierre Fortin has estimated that it has actually allowed 70,000 women to return to the workforce. That increases our collective productivity. It is also very positive for those women in terms of their financial autonomy.

Do you see a federal public daycare plan having the equivalent impact in the rest of the country?

In your opinion, what positive effects could it have on the economy in general?

[Hassan Yussuff]

They're twofold. It would certainly increase women's participation in the economy. The statistics speak for themselves. I think Quebec has one of the highest rates of women participation in the economy. A large part of that has to do with having a child care program to assist women with the needs of their children while they're working. We've seen increased productivity that has come as a result of that and that the economy as a whole has grown because of their contribution.

The provincial government is getting back every penny they put into the program because women are offsetting that by contributing to the tax base by paying income tax. In addition to that, for the children.... Early learning is a fundamental principle, that we all learn through academic studies. That can help children get an early start in regard to their future. More importantly, it can provide an equal space for everybody to have the same...which over time will make our society that much more equal.

Quebec has done this to a large extent without much federal help. I think what the government is attempting to do here can certainly spur other provinces to invest more in the child care network across this country. It would be a tremendous boost to the economy overall going forward. Plus, it would help the kids. We want them to have a good foundation as they grow up to be adults. It would also allow families to be less stressed about what can happen to their kids when they can't find adequate child care.

As a father, I know first-hand that in absence of me and my partner being able to provide for my child to have personal care, I couldn't do what I'm doing because my schedule does not allow me to just send my child to child care and wait at the end of the day for him or her to be picked up.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Mr. Luff, these days, there is a lot of talk about tax reform and fairness. I see that as a noble goal that most representatives in Parliament share. However, at the moment, the government is focussing solely on SMEs and professionals, especially health care professionals. It refuses to see the problems of tax evasion, abusive avoidance, or tax havens. There is a lot of secrecy and uncertainty in that regard.

In your view, how much money could taxpayers recover if they were to seriously tackle the problem of tax evasion and the exodus of our wealth to tax havens, a phenomenon that has been on the rise for years?

[Mike Luff, Senior Economist, Canadian Labour Congress]

I think it's a good point that the government's tax reform package could be more comprehensive. We've put forward a number of proposals in this area, including eliminating the stock option deduction. That would save $670 million a year. Tax income from capital gains and investments, at the same rate as employment income, could save up to $10 billion a year. Thirdly, eliminating the flow-through share deductions could save up to $125 million a year. There's a number of additional steps that could be taken as part of tax reform that would, first, ensure greater fairness in the system, and, second, provide more revenue for the vital public services that Canadians rely on every day.

[The Chair, Liberal, Wayne Easter]

Thank you all.

We'll turn now to Mr. Fergus.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you, Mr. Chair.

Good afternoon, everyone.

My sincere thanks to all those testifying before the Standing Committee on Finance. The committee is very interested in all the ideas and recommendations you have presented.

Dr. Moineau, I certainly heard your message about investing in the sciences and in research, as the Naylor report mentioned. I feel that you are totally right to say that it would bring a lot to Canada in terms of the ability to be more innovative and competitive, and to deliver really meaningful health services in our country.

Mr. Coleridge, I thought your presentation on mentorship and the services that Big Brothers Big Sisters of Canada provide are.... You're not asking for a lot, yet it can deliver a lot. We know that when you give young people exposure to a different way of living, a better way of living, and having somebody who they can confide in, and who they develop a long-term relationship with as a mentor.... I've seen that first-hand and how it works in Gatineau. I have to salute your colleagues in Gatineau.

The Grands Frères et Grandes Soeurs de l'Outaouais are doing exceptional work for the youth of the country, especially, as you mentioned, for newcomers, which is really important.

Ms. Deschamps and Ms. Corbeil, you have done a lot to popularize science. I offer you my thanks, as I did with Mr. Coleridge. You are providing an example for young people, especially young women, so that they can work in a scientific field. That is really important. We could certainly invest more in that area.

Mr. Yussuff and Mr. Luff, I greatly appreciate your taking the time to recognize the tax benefits inherent in our system. It is important for us to discuss the matter, so that we can fully explore the issue of tax fairness.

Mr. Prouse, I don't know what you did in a previous life to be associated with our chair, but thank you for your presence. Certainly, we do appreciate what CropLife can do. Again, it's similar to the faculties of medicine in Canada or similar to the association of science centres. Again, it's an opportunity for us to invest in research and development especially in the agriculture and agrifood sector. It's very important. As my colleague Mr. Kmiec said, it was very helpful.

Finally, to you, Mr. Bourque, from the Railway Association of Canada. I appreciate your recommendation on the accelerated capital cost allowance, which can lead to investments in railway construction and help to reduce greenhouse gases.

I also appreciate your support for VIA Rail’s high-frequency passenger rail service.

Can we discuss that, Mr. Bourque? You said that producers, manufacturers, want to invest in railways. Can you tell us more about that, not only about what is being done in the Quebec forestry industry, but also elsewhere in Canada? Can it also apply to co-operatives and farmers in western Canada?

[Michael Bourque]

Thank you very much.

Certainly, yes, there are probably more short-line railways in Saskatchewan, for example, than anywhere else in the country. All of the short-lines, you might know, belonged at one time to the class I carriers— just about all of them. They were spun off when those were allowed to commercialize. The reason that the larger railways left those lines was because there wasn't a lot of traffic. Over the years there wasn't a lot of investment that went into those lines. By definition they are, for the most part, less built up, older, and have received less investment. Short-line railways in this country typically invest about 12% of their revenues in their track and equipment on an annual basis and the class I carriers have been able to invest closer to 20% over the last 10 years. Even through the big recession in 2008, they were still investing at that rate.

There's no question that from coast to coast there are short-line railways that would benefit from these kinds of measures. Consequently, rail customers would benefit because of the access to class I infrastructure. Of course, there's a societal benefit which is why I emphasize the public policy discussion here. There are reduced greenhouse gases, reduced emissions of all kinds, and reduced wear and tear on our highways; and rail is safer than trucking.

[The Chair, Liberal, Wayne Easter]

Thank you. We will have to end it there.

It might be useful for some committee members to explain what a short-line is.

Michael, basically, they're feeder lines into the main-line railways not owned by big rail and sometimes owned by farm groups. Does that cover it?

[Michael Bourque]

Some of them are owned by communities, for example, in Barrie, Ontario. Most of them are small to medium-sized entrepreneurs providing all kinds of services, parking cars, and doing all kinds of things to make a living.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Shields.

[Martin Shields, Conservative, Bow River, AB]

Thank you, Mr. Chair.

I totally agree on the short-lines. If any money went anywhere for infrastructure to me it would be short-line. Those other big guys can figure out to get money for investment. We need the short-line guys in our country. That's where the money should go for infrastructure first, in my opinion.

Moving to science, you finally got to answer a question I was going to poke at. The fields I've been in, health and education...doing non-smoking programs with high school kids is way too late. Going back to education. You talked about grade 4 to 7. Can you identify for me any programs that you're aware of in grades 4 to 7 that you would look at or support?

[Stephanie Deschenes]

Certainly.

There are lot of small programs across Canada. Several science centres have programs targeted specifically at girls in that range. The programs are great but they lack that consistency across Canada, particularly in the smaller and rural communities. I think the challenge is to target them so they see themselves as potential scientists before they get to the age where it's not cool anymore to play with bugs or that kind of thing.

[Martin Shields, Conservative, Bow River, AB]

In all those places you mentioned, who is there with those grade 4 to 7 kids?

[Stephanie Deschenes]

It really depends and that's part of the problem.