Finance Committee on Oct. 3rd, 2017

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

Thank you for your response.

I addressed the following topic earlier with a representative from the agriculture sector. Now more than ever the agricultural sector needs to use innovation in order to stay competitive. Having worked in the sector a little bit, I am familiar with the issues related to the production capacity of canola and pulse crops in Saskatchewan, as well as in the Prairies. It is an incredible production. I was wondering what the government could do to speed up innovation in the fields and keep the sector competitive.

Will it take funding for research and innovation, partnerships with universities, or equipment procurement?

What do you think would be the most effective way to help farms remain competitive, but mostly become better than others on a global level?

[Patrick Pitka]

Investment in research and development is critical, including the proposed superclusters, which, if by summer...awarded in the Prairies, could be a major contributor to solving some of those issues.

I know of a group from the three prairie provinces who have put in an application for about $200 million. They have industry support of over a quarter of a billion dollars at this time to support the application. It covers research, robotics, technology, the whole gamut.

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

Now I will turn to the representatives of Polytechnics Canada.

You say that 1.7% of research and development funding goes to polytechnics and colleges and you are asking for that percentage to be doubled.

I would like to know what that 1.7% is based on. Was that figure established by the government? Is that all you manage to get because you have to compete with the universities? Where does 1.7% come from?

Could you be more clear so that we can go ahead and possibly make a recommendation?

[Kevin Rogers, Director, Applied Research and Innovation, Polytechnics Canada]

That 1.7% is a reflection of the total funding provided to the national tri-agencies—CIHR, NSERC, and SSHRC.

Most of what the polytechnics and colleges are competitive for by way of grant funding through those agencies is separated into a pool all on its own that they're allowed to apply to, which is the CCIP pool that was referred to. The entire pool is $53 million, and it is set by the tri-agencies. That is the total for which we can apply.

Of that $53 million, $50 million is actually distributed by NSERC, so you're talking about $50 million out of the $3 billion. That's where those numbers are coming from. When you look at having 110 institutions competing for $50 million, we're talking about, what, $200,000 each. When you get into large research projects, that covers a single project.

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

Is it the three agencies that have assigned that?

[Kevin Rogers]

It's in conjunction with federal direction that they have done so, but yes, at this point, that's the allocation towards the college pool.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Engel, you mentioned an example of doing the audit on the building in Ontario. You don't have a recommendation on audits in your brief, unless it's in the long one—I didn't look. Would you be suggesting that the federal government, over a two- or three-year period, do audits of their buildings? There are economic savings if your examples work out, and also there's a lowering of greenhouse gases.

What would you recommend in that area, and how do you tie in the tax incentives that you mentioned?

[Vince Engel]

The tax incentive, I guess, would tie in when the insulation work is completed and inspected to make sure it was done properly. Then a certain amount of tax credit could be available.

We have talked at the provincial level about trying to implement some system of doing energy audits in provincial buildings. We haven't had many meetings with federal people, to tell you the truth. We've been more concentrating at the provincial level to date. We're just taking this initiative on and are expanding it. I guess it's part of the process for us to get to what you're talking about.

[The Chair, Liberal, Wayne Easter]

Do you have any trouble in that area with an underground economy?

[Vince Engel]

The biggest trouble we see is unqualified people doing the insulation.

There are a couple of problems with what you call the underground economy. First, people who aren't qualified just set to work. They look at how the other guy is doing it and do the same. At the end of the day, the insulation is not as efficient as it should be. That insulation is going to be operating in that building for 30 years, and if it's not operating up to par, the meter is running on the energy that's being lost.

One of the other big problems we see, to tell the truth, is value engineering. It may be a term some of you are familiar with. In the construction industry, when you get to the end of a job and there are only a few tradesmen left on site and the money is getting tight—usually it's the insulators and the painters who are last—where are you going to cut back? You can't cut back on the paint because it's visible. The insulation is hidden behind the walls and in the boiler room, and nobody really sees it.

A good example of this, which you may recall, was the Olympic village fiasco a few years ago. They got to the end of that project, and they ran out of money and said, “Cut the insulation.”

Then you have, concealed in the walls, a hot water pipe and a cold water pipe, and neither is insulated. The cold water is sweating; the hot water is providing the heat, and all of a sudden you have mould. Before they moved the first person into the Olympic village, they created a boon for insulators and drywallers, who went in there, ripped off all that drywall, and did the insulation properly. That made headlines all over the world. That's one example of the undervalued attention that's paid to insulation. We think it's under everybody's radar, and we're trying to raise awareness.

[The Chair, Liberal, Wayne Easter]

Thank you for that.

Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Good morning, everyone, and welcome. Thank you for your presentations.

There have been a lot of good conversations, and I'll get to one or two questions after I finish my little diatribe.

The consultative period did end October 2. I've heard some very substantive remarks from the participants here today, and I thank you for them. I know that in a lot of instances there are some unintended consequences as a result of the proposed consultative paper that was issued. I have met with a number of tax experts and spent half of Labour Day with one of them, so I understand it.

It is a consultative paper, and we are listening. That's what any government's duty is: to listen. I think our government has raised the bar on listening and consulting over the last two years, much higher than the prior government.

In my riding of Vaughan—Woodbridge there are about 13,000 businesses. I've heard from many of them. I understand full well what it takes to run an SME and to be successful, and the sacrifices that are undertaken by business owners to achieve success. That should be celebrated, and we should be proud of that.

Moving to Polytechnics Canada, your recommendation is to double, from $53 million to $106 million, over a number of years. Where would you see that benefit going?

I know for example that BCIT would fall under the umbrella of polytechnics. I am originally from British Columbia and I have family there, so I'm very familiar with BCIT and the trades.

Could you talk about where the benefit would go from that recommendation and how it would assist in closing what I would call a labour supply issue in terms of the skilled trades? The skilled trades are anything from being a mechanical engineer to a bricklayer. Could you just tackle that in 30 seconds, please?

[Dennis Johnson]

Thank you.

The need is already there, so the $106 million would just help to address the current need.

We have a number of programs. There is a already a shortfall in the $53-million range this year. There is $13 million in documented unmet needs for this year. That's not going out looking for additional work; that's just what's in front of us.

The additional investment would just help to meet the existing needs, primarily from small and medium-sized enterprises, but it would also allow us to expand those activities.

When Polytechnics does applied research, often there is a real direct benefit to the students that you may or may not see in the university basic research. A lot of our applied research projects are direct learning experiences, so in many cases it definitely benefits the skilled trades, and often they're involved in projects.

[Kevin Rogers]

If I could add to that, in terms of the benefits, one of the things you find is we're the ones with the boots on the ground when it comes to businesses and developments. At this point we're working with everything from the tech start-ups coming out of the local incubator through international auto manufacturers, so the diversity of the projects is huge, and adding the funds would simply allow us to expand the potential. It has been growing steadily, which is why there's such a large shortfall already, and there is no sign that's going to abate.

The potential is there throughout this country for the polytechs and colleges when it comes to research.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I have one quick comment. Mr. Hopkins or someone brought in the idea of post-mortem versus inter vivos estate planning. I am aware of the issues that have arisen with the consultative paper with regard to some of the sections that potentially may be impacted from the paper. Those concerns have been brought forward, so please rest assured.

For the International Association of Heat and Frost Insulator and Allied Workers, a couple of friends of mine own what are called chillers. You put them in buildings and they make the buildings more energy efficient for heating and cooling. They have commented to me about the lack of labour—

[Vince Engel]

—a manpower shortage—

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

—or proper individual training. Our government put $85 million into apprenticeships in our last budget. Have any of those funds flowed down to you folks, or is that being directed toward other areas? If not, then we should talk.

[Vince Engel]

I think it's in the works. My colleague can answer better whether any of the money has actually made it to the local training centres, but I know there is a program that the Liberals brought in. We're providing some input from industry on what we think we need to enhance our training and to bring more people into the workforce and get more people trained up faster.

I don't know if you want to add anything to that, Chuck.

[Chuck Rudder, Business Manager, International Association of Heat and Frost Insulators and Allied Workers]

We have an application pending with the union for the structured training fund. On direct funding to us, we haven't really received any. Our funding comes from the provincial government in Saskatchewan for our training of frost insulators.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I want to talk to Ag-West Bio Inc. You commented on how Saskatchewan and the Prairies have become a powerhouse in lentil production and canola.

I'm going to be very general. How can we continue that?

[Patrick Pitka]

We need to continue research to improve yields and transportation. Right now we're exporting lentils to over 120 different countries in the world, so we need to keep the process going. As I said, transportation and research are issues, as well as more processing locally.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, everyone.

[The Chair, Liberal, Wayne Easter]

Mr. Kelly.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Thank you, Mr. Chair.

I've heard you this morning, as well as my colleague Mr. Sorbara, talk about how the consultation period on the tax changes has come and gone; it ended yesterday. The fact that the majority of our panellists this morning have devoted most of their presentations to this topic, I think speaks to the inadequacy of that 75-day period. I'm going to continue on this theme because it's so extremely important to so many Canadians.

John Forgeron is a constituent of mine who, at age 34, quit a high-paying and secure job, mortgaged his home to the max, borrowed hundreds of thousands of dollars from friends and relatives, basically risked the financial stability of his family and, indeed, had the potential to test family connections by borrowing lots of money from these family members, and went into business. Ultimately, he was quite successful in his business.

He feels insulted and attacked by the very language employed in the tax change proposals. In one of the round tables I held in my constituency, he said that he is exploring setting up in Ontario near the U.S. border in order to better support and grow his U.S. business. He is now looking at Denver, Ohio, or Pennsylvania. The return does not justify putting capital at risk in Canada with the proposed tax changes.

I would like Mr. Hopkins, first, to comment on capital flight.

[John Hopkins]

I think the former minister in the Chrétien government has already spoken to that, and there is already capital that is looking to leave this country. There is all kinds of instability out there right now. I was actually on a radio show and started getting text messages from a guy who wanted to know if he should invest his $250,000 in a business now, or not. In the middle of the show, I'm telling him to talk to his accountant first, because these changes are going to impact him.

This is a very real thing. It's not only that, but it has the potential for the largest brain drain in Canadian history. I don't understand why we would insult the professionals from coast to coast to coast. I don't get that whatsoever. There are opportunities for people to leave this country. Are they leaving today? No. But there is a lot of opportunity for them to move elsewhere, particularly doctors.

In Saskatchewan, what I can tell you is Regina and Saskatoon will be relatively okay, but are towns such as Bienfait, Yorkton, and Prince Albert going to be okay? I don't know. These are the kinds of things we're really concerned about, as well as the ability for businesses to say that some of what Trump—I'm not a big fan of his; let me just put that on the table—is talking about in terms of tax changes and the impact of those, are really starting to resonate with some business people to think if they're going to get hammered here, why wouldn't they set up somewhere else?