Evidence of meeting #111 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was innovation.
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
We've heard talk this morning about acknowledging that there may be unintended consequences of these tax proposals. Do any of your members care whether the consequences that will affect their business are intended or not?
Chief Executive Officer, Regina and District Chamber of Commerce
Our members are very concerned about this package of tax changes in total. Again, what we really need to do is take a step back and develop a white paper. I agree with Mr. Easter on this. Let's get the experts in the room.
One of the things I personally found very offensive is that the tax experts weren't invited to the round tables. Why? If we're really trying to get this right.... At one round table I was invited to last week, I brought a tax expert. There was not another tax expert there. I said that he was like a board member kind of thing. He wasn't. Anyway, that's another story.
These tax changes are going to have huge impacts. What's the economic impact? Where's the economic analysis on this?
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
Speaking of tax experts, I'm going to move to those who are on our panel. I heard a tax expert speak at a town hall meeting in Calgary, where one single accountant said that he has given advice to clients. Clients have come to him for advice over questions around moving over $1 billion in assets outside of Canada. That's one practitioner at one firm.
Have you had any experience with people, clients perhaps, wondering whether or not it would be in their interest to move money or business operations outside Canada under these proposed tax changes?
Partner, Thomson Jaspar and Associates
Yes, we have. The short answer is yes. The specific example I can give you is a follow-up to the brain drain to the United States.
Our small business owners are still trying to grasp what's happening here. However, the example I have for you is a meeting that happened in my office with a physician. I have an OB/GYN client who works 80 hours a week and has three small children. The husband stays at home with the children now because you can't get standby child care at three in the morning. One of the issues we're hearing from a lot of female physicians is that their husbands are now stay-at-home dads.
The proposed tax changes with regard to income splitting will affect this family to the tune of $22,000 per year. She has just come out of university and has 13 years of schooling, with $300,000 of student loan debt. Now there's an extra $22,000 a year that's going to be added on top of this.
We had our meeting. We went over the facts. They left that meeting and immediately started to explore the United States. As of last month, in the state of California alone, there were 587 OB/GYN positions available, with $250,000 to $500,000 signing bonuses. Goodbye student loan debt. Physicians in the U.S. are paid more.
In the mid-1990s, prior to professional incorporation, Canada was losing 600 to 700 physicians per year. Professional incorporation came in in 2000. By 2006, that has slowed to 122.
If we fast forward, studies in the United States are showing that by the year 2025, the U.S. is going to have a shortage of 62,000 to 95,000 doctors. There are 83,000 doctors in all of Canada. This is scary stuff in terms of what's going to happen to health care should these proposed rule changes go through.
The brain drain is real. We saw the survey from the New Brunswick doctors I believe, three weeks ago. It said that 65% of them said they're going to move to the United States. It is very real.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
Thank you very much, Mr. Chair.
First, I want to thank all the witnesses who are here today. I appreciated the passion with which they made their respective presentations.
This is my first time joining the Standing Committee on Finance on a Canadian tour. However, this is my third time in Saskatoon. I love this city and the people of Saskatchewan.
I have some questions for Mr. Pitka and Ms. Dorish.
The importance of the agri-food industry and the benefits of the research conducted by that industry cannot be overstated. Not only must we be sure to take our place on global markets, but we must certainly do our part to reduce greenhouse gas emissions, as you said in your presentations. This is important, especially considering the significant changes occurring in your sector.
Could you elaborate on the importance of investment in research and development in your sector for reducing greenhouse gas emissions? Why is it important? We want to ensure that the next budget includes federal government investment in this sector.
Chief Financial Officer, Ag-West Bio Inc.
Yes, research dollars are very important. As I mentioned in my presentation, the sequestration of carbon in the soil through the zero tillage process is a new innovation. You don't see the farmers in Saskatchewan plowing their fields, because the carbon just goes up in the air.
It's a start. There are other things.
I'm not a beef expert, but through proper feeding processes, the carbon expelled by cattle can be reduced by 90%. We need more research on how to do that.
With regard to any money that the government can put into research and development, in the Prairies, as I mentioned, there is a 6:1 payback. We're looking at all of those areas in terms of research.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
In the previous group of witnesses, Mr. Root—come to think of it, his name is rather ironic—talked about the importance of investing in artificial intelligence for the agri-food sector.
Mr. Pitka, do you share that opinion? Do you believe that it is important for the federal government to look to invest in this area in order to advance research in your industry?
Chief Financial Officer, Ag-West Bio Inc.
In my presentation, I talked about the supercluster. Ag-West was involved in putting together a group to make an expression of interest for funding for the supercluster. We've included researchers and institutions from Alberta, Manitoba, and Saskatchewan. It's a $200-million request. Part of it includes emerging technologies, such as artificial intelligence, big data, and robotic applications. That's part of it. Part of it is improving varieties and more value-added processing and commercialization. It covers that whole area.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
Mr. Engel, your association is vital to meeting the challenge of the climate change affecting us all. We must take steps to have certified professionals who can make changes to or renovate our buildings. It is very important especially here in Saskatoon. The last time I was here, in December, it was -35 degrees Celsius. I know firsthand how important it is to have well insulated buildings.
Can you elaborate on your contribution and tell us why it is important for the federal government to keep investing in this area? As you know, our federal government is investing $60 billion in green infrastructure. That includes the changes that will need to be made to renovate our buildings so that they are on the cutting edge of technology.
International Vice-President, Western Canada, International Association of Heat and Frost Insulators and Allied Workers
I'm not sure what the question is, but I'll say a couple of things. The building code is under review right now. We are lobbying to get stricter, with more thicknesses of insulation and more uses of insulation in new builds. For new federal buildings, schools, and hospitals, we've been promoting the upgrading of the insulation code in the specifications.
There also needs to be a review of the code for retrofits in federal buildings. Special attention, we believe, should be paid to insulation, because over the course of a building's lifetime, maintenance happens in the boiler room, for example, and pieces of insulation are removed so work can be done on the equipment. Many times, that insulation is just put to the side, ends up in the garbage, and is never replaced. Over a period of time, these all accumulate.
There have been studies and surveys done, and they show that in many buildings 20% to 30% of the mechanical insulation is not working right because it has been either damaged or removed. I think we need some attention paid to the building codes and to insulation in particular. We need to realize that the cost of energy has increased so much. Insulation is more valued. Traditionally, it's undervalued by a lot.
I hope that answers your question.
October 3rd, 2017 / 12:15 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you all.
This discovery research, Mr. Pitka, on canola was because at that time Agriculture Canada did recovery research and took a shot in the dark. In the 1995 budget—I remember it well; we were the government at that time—we cut back by going to matching dollars. It was because of budgetary issues, but we went to matching dollars.
Am I wrong in thinking that, because we've now gone to matching dollars, the corporate sector is demanding that we get a return on dollars within five or seven years, and therefore, we're not doing the discovery research any more under that proposal that we used to do? Should we emphasize more public research shot in the dark rather than depend on the matching dollars from the corporate sector, who have their profit they're interested in rather than shot-in-the-dark research?
Chief Financial Officer, Ag-West Bio Inc.
Yes, we would support that process because it is tough to come up with matching dollars for these projects, especially from industry, because the IP generally is public as well at that point.
Liberal
The Chair Liberal Wayne Easter
Okay.
Mr. Gorniak, on the doctor issue, what number did you say? What are they paying in the U.S. as a signing bonus?
Partner, Thomson Jaspar and Associates
What we were told from my client who had looked into the matter was that the signing bonuses range from $250,000 to $500,000.
Liberal
The Chair Liberal Wayne Easter
We've asked our doctors and accounting firms in P.E.I., at least, to write the Minister of Health on this issue, not just the Minister of Finance, because this could have implications. I'm not saying it will, but it could have implications on the health system, and in Atlantic Canada we have the lowest paid doctors and the highest taxes. Our situation is even a little more troublesome than yours.
Partner, Thomson Jaspar and Associates
Just to add to that, where the real risk is was already alluded to by Mr. Hopkins. The rural areas are going to suffer the most. When doctors start to leave, it's going to be the rural areas, not just in Saskatchewan but across Canada. Trying to attract and retain those doctors is going to be very difficult. If they are fortunate enough to do that, if the proposed tax changes that don't potentially allow income splitting go through, those spouses, if they go with a young family, are not going to be able to get a job in that community, either because they're too hard to find or they have to provide child care.
Liberal
The Chair Liberal Wayne Easter
With that I want to thank members and the witnesses for their testimony and their presentations.
The committee will be on the road this week and in two weeks' time in eastern Canada, and then from that we'll hopefully propose some recommendations for the minister to consider in budget 2018.
I want to thank each and every one of you for your presentations.
With that, we'll suspend for about five minutes and then have an open-mike session. I know there's one guy back there who was waving his arms. He wanted on earlier to answer a question.
Liberal
The Chair Liberal Wayne Easter
Could we come to order.
Okay. We shall reconvene.
Do we have just the one open mike, Suzie?
Liberal
Liberal
The Chair Liberal Wayne Easter
—whichever you think is the fanciest name.
We'll not stick to one minute, so we'll give you three or four, as you're the only one on.