Finance Committee on Sept. 26th, 2017

[Laura O'Blenis]

Certainly. Sorry about that. I was actually going a little slower than I normally go. Oh, dear.

Our goal is to improve trade opportunities and build capacity for companies to accelerate their growth potential in both domestic and foreign markets. There is also a need to improve coordination of the innovation ecosystem here in Canada to better align mandates of various organizations and groups, to streamline efficiencies and standardize offerings, to better support companies, and to thus maximize outcomes for Canada. Last but certainly not least is the need for digital and physical infrastructure, whereby the appropriate facilities that offer programs, services, and amenities are provided to support companies and accelerate their growth potential.

From a policy perspective, it is vital that the government be a champion of businesses of all sizes. As home to over 1,400 companies ranging from start-ups to SMEs to large multinationals, these entrepreneurs and business owners are building their companies, and we want them to be fiscally responsible. We want them to incorporate solid profit margins so they can save more of what they earn to weather the various storms that inevitably come in business. Striving for profit and saving earnings is an important part of financial literacy for all companies and their survival and growth in the long term. We also need companies to have profit and to save in order to invest more in research and development activities, which will ultimately make us more competitive globally. For this reason, we are looking forward to the continued consultations for the proposed tax policy to ensure that a fair and equitable formula for all companies is adopted.

In budget 2018, AURP Canada is seeking an investment from the federal government to support three key initiatives—our IP matchmaking program, the expansion of our international soft-landing program, and support and coordination of the innovation ecosystem to better drive outcomes for Canada over the next three years. AURP Canada is also seeking federal support for digital and physical infrastructure, policy development, and access to programming to ensure that the growth and development of our research and technology parks continues and can be accelerated.

With funding envelopes such as the supercluster program, the strategic innovation fund, and Innovation Canada all geared to streamline efficiencies within government and better support companies and linkages with industry, academia, and government, Canada is well positioned to improve private sector R and D expenditures, increase the level of technology that is commercialized, and take advantage of trade and business opportunities around the globe. AURP Canada and its members can assist in each of these areas.

We very much appreciate the opportunity to be here with you this evening. Thank you for your time and attention. We look forward to the discussion.

[The Chair, Liberal, Wayne Easter]

Thank you all for your presentations.

We will go to six-minute rounds for the first four. We'll start with you, Mr. Grewal.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for coming today.

My first question is for Sarah, on the importance of apprenticeship. I have a lot of young kids in my riding, a lot of young, energetic people who want to go into apprenticeships, and they are having a lot of difficulty getting people to supervise their training.

You mentioned linking infrastructure and procurement spending to apprenticeship. Can you expand on that a little?

[Sarah Watts-Rynard]

Sure. Some of the thinking around this is that the government.... First of all, the private sector does hire tradespeople, but it doesn't do a great job of hiring apprentices and doing training, so it becomes the net poacher of talent from really small business, where 77% of all apprentices are being trained in companies with fewer than 100 employees. There is training going on, but fewer than 20% of all employers are doing the work in an effort to develop the entire skilled trades pipeline.

Meanwhile, government is putting huge amounts of money into maintenance and construction contracts through procurement and infrastructure. There is an opportunity here to ensure that maintenance and construction companies that can train are able to train apprentices with the skilled tradespeople who are required on those jobs, if they are given an incentive to do so.

One of the best ways, at least as an on-ramp, would be to consider looking at a points-based system. We know that, when the work was given for West Block rehabilitation, for example, a piece of that contract did include points that were given to contractors who could show that they were going to hire and train apprentices on the job.

I recognize that there is some concern about what kinds of additional requirements that would put on employers, but I think that this is a soft on-ramp. Let's look, first of all, along with price and capacity, at whether we are hiring and training people as we are building bridges, hospitals, and schools across the country.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you so much. I think that's an excellent recommendation.

To the Cancer Society, I just want to get some more details on the per capita funding that you are requesting. You are saying that in the U.S., annual per capita federal investment in tobacco control is $3.39, compared with $1.04 in Canada, and you're saying that it's going to lapse in 2018 if not renewed.

Are there statistics to show that spending more results in reduced usage of tobacco?

[Kelly Masotti, Director, Public Issues, Canadian Cancer Society]

Thanks very much for that question.

We have our tobacco expert in the room. If you don't mind, I'd like to bring him to the table to answer those specific questions around statistics.

[The Chair, Liberal, Wayne Easter]

Sure.

[Rob Cunningham, Senior Policy Analyst, Canadian Cancer Society]

There is extensive evidence. It's summarized by the best practices of the U.S. office on smoking and health at the Centers for Disease Control. We have long-term experience, particularly in California and Massachusetts, and it works.

Many Canadians would be surprised to know that we no longer have any mass media campaigns from Health Canada discouraging smoking. There's a lot we can do.

[Raj Grewal, Liberal, Brampton East, ON]

So your answer is yes, that statistics do show that more spending leads to less usage of tobacco.

[Rob Cunningham]

You want to spend it on effective initiatives, but those are available. We know what to do, and a comprehensive, multi-faceted strategy is the best way to do it.

[Raj Grewal, Liberal, Brampton East, ON]

This is just an assumption, but I am wondering if, in 2017, with access to the Internet and everybody connected 24-7, the on-package label and those types of controls just aren't as effective anymore, because every child in Canada is exposed to media from around the world.

[Rob Cunningham]

I think the warnings on the package are really important, because people see them every day of every year, 20 times a day, every time they take out their pack. The kids may see the packages of their parents. Many new Canadians may come from parts of the world where awareness of the health effects is much less than in Canada. It's a really cost-effective strategy.

You referred to the Internet. Having social media as part of a campaign to increase awareness and have messaging that would affect kids is a good way to go, as well.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you.

Brian Kingston, I've seen you so many times at this committee that you feel like an old, good friend. Your council represents some of the biggest companies in Canada. You spoke about a risk of capital fleeing the country, as your CEO wrote about in the paper last week. I have a question. I used to be a corporate lawyer with a big firm, and our clients always complained about the tax burden, but that's the job of a business. Every business wants to pay less tax, but businesses make decisions on more than just tax policy.

In terms of all the politics going on down south, Canada is seen right now as a pretty stable environment to invest in, wouldn't you agree?

[Brian Kingston]

Yes. Canada is absolutely a stable investment environment. That's not to be debated, but tax is a major consideration when large companies are thinking about whether or not to invest in Canada.

As I noted in the survey that I highlighted and will be releasing tomorrow, tax is becoming increasingly important for companies when they decide whether or not to invest in Canada. I would not downplay the importance of tax competitiveness. As I noted, Canada's competitiveness is slipping relative to that of our competitors, particularly if the U.S. goes ahead with reform.

[The Chair, Liberal, Wayne Easter]

Thanks to both of you.

Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Thank you, Mr. Chair.

I want to start with the Business Council. Talking about foreign investment, I come from Calgary, Alberta. We are known for energy. We've seen a $50-billion drop in energy investment since 2014, which is a 62% drop in investment. That's not just due to a drop in oil prices. That includes the new methane regulations being brought in by the government, the LMR rules brought in by the provincial government, higher taxes, and the carbon tax that is being imposed. If you look at just energy in Alberta, you'll see that it is equivalent to 75% of all your manufacturing in Ontario, and it's basically an entire aerospace industry in Quebec. Anywhere else, this would be called a national crisis, but because it's in Alberta, no one really seems to be bothered with it.

The biggest impact I see in the communities I represent is in terms of women and STEM, and you have it here in your submission. For a generation, we've been convincing young people and young women to go into STEM, to get an engineering degree, a science degree, or a technical degree. They've joined these workplaces. They're typically the people with the least amount of experience in the workplace. They're the new ones. They've redirected themselves into this field. They're superintelligent and super-smart. They have the go-getter attitude that most Albertans have, but now they're in an industry that the federal government and many provincial governments are obstructing at every single step of the way.

You talk about foreign investment fleeing the country. I've seen it in my community, with 110,000 direct and indirect jobs lost, just gone, especially in communities like mine, suburban Calgary. For the Business Council, when you're talking about STEM and women involved in STEM, what else are you suggesting should be done beyond just this PromoScience program, where the federal government has targeted interventions? I'm seeing these women unemployed in my community. I have example after example. They have five, 10, and 15 years' experience. They're great engineers. They used to lead entire teams. All those people are gone. All the drafters are gone. Everybody is gone.

What else is there that the government could be doing for energy, but specifically for women in energy? A lot of them are exactly there in STEM-related professions and occupations.

[Brian Kingston]

I think the number one thing the government can do is to create more regulatory certainty for that industry to bring that investment back. We witnessed that declining capital investment that occurred in Alberta. It was shocking when the price of oil—and resource prices more broadly—dropped.

When we survey our members, the number one issue they see impeding investment in Canada is the regulatory environment, and most of that is coming from the energy and oil and gas sector. I think that if you could clarify the regulatory environment regarding large projects, such as pipeline approvals and so on, you could attract some of that investment back. If you want to make a huge impact in a short of time, that's it. More investment creates more jobs.

While we support some of the programs that the government has adopted, I think the bigger point is the point you've made, which is that there simply is not the investment in that industry that we had prior to the downturn. That would be my number one recommendation.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Maybe we'll continue with some of the other recommendations you have, such as enabling seniors to work longer. You want the OAS to be moved back up to 67. Do you have any data produced by your organization, Statistics Canada, or anyone else showing that since the return to 65—the previous government raised it from 65 to 67 and now it's gone into reverse—there's been a reduction in labour market participation?

I ask that because, again, in Calgary, Alberta, there are a lot of older engineers with a lot of experience who chose to retire early. There was the recession that kicked in, and then there was the prolonging of the recession because of bad provincial and federal policies, which have left more people unemployed longer. Also, when they got close to retirement age, they decided that they didn't want to work full time anymore, or part time. They do want to work on a contract basis whenever it suits their needs, but if they're working, they might have some of their benefits clawed back, such as the OAS in the way that interacts. Do you have any data showing a reduction in labour market participation?

[Brian Kingston]

Given how recent that change was, the increase under the previous government and now the decrease, we don't have any up-to-date data on whether it is influencing decisions on people right now to stay or leave the workforce.

However, when you look at OECD countries, the trend is to allow and to encourage people to work longer and to not force retirement at 65, simply because we're all living longer. It doesn't mean that someone can't retire, but why would you force them to leave the workforce at 65? We don't see any sound policy rationale for that.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I have 15 seconds. I'll take it, of course.

The chair has vastly improved. Thank you.

[The Vice-Chair, Conservative, Pierre Poilievre]

Sorry, you actually have one minute.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Perfect. I knew there was a benefit, Mr. Chair.

Mr. Wudrick, obviously the small business tax proposal that the Liberals dropped during the summer is the number one issue I am hearing about. I have a folder that I carry with me all the time with the latest emails from constituents.

What is your organization hearing from members? Have you produced any new data in aggregate, showing that this many small business owners or types of companies have said they will do x, y, or z, whether it's laying off employees, restructuring their corporations? Do you also have any data indicating how much more in professional fees it will cost certain companies? I've seen some estimates going around, but there's nothing really in aggregate that provides a decent average to work off of.

[Aaron Wudrick]

We don't have a lot of aggregate data. I certainly have more emails than I care to remember. I think I've been personally copied on at least 300 or 400 submissions to the finance minister. That's certainly on a scale that we haven't seen before.

Aside from the dollars-and-cents issue, I think it's important to stress—and I hope the government is aware of this—that a lot of the folks feel personally vilified. They feel that the government has made them out to be doing something inappropriate. I recognize that some folks in government say that wasn't the intention, but that is certainly the way it came across. I think the government needs to take great pains to say you are not targeting these people and you will do everything in your power to make sure they are not hit, and then back off.

The level of uncertainty out there is like we've never seen. Again, this affects people from all walks of life, in all types of industries. I've never seen anything like it in my time at CTF.

[The Vice-Chair, Conservative, Pierre Poilievre]

That would be time.

Mr. Dusseault, you have the floor.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair, and thanks to all the witnesses for being here today.

I will begin with the Canadian Cancer Society and talk about the tobacco control strategy, which is supposed to be renewed in 2018.

You mentioned the economic impact of tobacco use in Canada. I would like to hear more about the social costs of tobacco use. To what extent might the investments you are requesting have an impact on our economy and businesses, which could save money?