Finance Committee on Oct. 6th, 2017

[Naheed Nenshi]

With all due respect, Mr. Kelly, I will tell you that we have been talking to people in your riding a lot, and they understand what we're doing. I appreciate your ability to try to make this political in the middle of a mayoral election, but I will say—

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

Your Worship, I—

[Naheed Nenshi]

Let me finish, Mr. Kelly, if you don't mind.

[The Chair, Liberal, Wayne Easter]

Let's get onto the next question.

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

You mentioned getting to phase two and getting additional funding. I agree with you. We represent the same constituents, and the same constituents want wastewater treatment. They want public transportation. They want infrastructure. I want the city to succeed in getting infrastructure funds from the government. The issue, though, is that we need to be able to credibly go to government, be able to make a proposal, get funding, get what was asked for, and have confidence that it will get built.

What are we down to, Mr. Chair?

[The Chair, Liberal, Wayne Easter]

If we could get you two off the Calgary discussion, we'll give you another four minutes.

[Naheed Nenshi]

This is Calgary, Mr. Chair.

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

I was going to say that all the witnesses are from Calgary, but perhaps I will leave it at that and move to Mr. Bayko.

All of us in this city very upset with the news that we heard yesterday. You mentioned in your opening remarks the way that this has come about, and the despair that many have over whether we will be able to construct large nation-building projects in Canada. These are not Calgary issues. This is certainly beyond Calgary when we talk about infrastructure, when we talk about national infrastructure, when we talk about pipelines.

We were in Yellowknife yesterday and heard from residents of the Northwest Territories who need resource development. They know that for their path to prosperity and to have jobs and employment, especially and in particular for indigenous communities in the north, we need to get behind projects and understand that these projects are good for all Canadians.

I'd like you to carry on with where you had left off in your opening remarks about that, if you have anything else to add.

[John Bayko]

Well, we would agree with you completely. It's our argument that we feel that the majority of Canadians support pipeline infrastructure. One confusing thing to us, I guess, about this recent announcement is that the NEB's press release talked about receiving 820 letters that led it to open up the application process to upstream and downstream GHG emissions. Our response was that we came to Ottawa with almost 35,000 signatures of people supporting pipeline access, so we're wondering where the priority is in terms of building these projects with the support of Canadians or holding them up because of a vocal minority, in our opinion.

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

Could I ask a really focused question? What then, obviously, are the effects of moving the goalposts in the middle of project proposals?

[John Bayko]

Well, we've seen it. TransCanada has just pulled out, and that's a massive blow for our members because investment has already taken a hit. What's interesting is the commodity price. People in oil and gas are familiar with the fluctuations in commodity price, but they're looking at longer-term projects. If they see that four or five years down the road they still may not have market access for products, they're not going to invest dollars in that jurisdiction. They're going to take them elsewhere. We've seen it happen. We've seen it happen in many instances in the news recently. Major international players are pulling their investments out of Alberta and out of Canada. It's bad for drilling and well servicing because there's no money to drill holes. It's that simple.

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

One last question will go to Mr. Legge.

I'd be remiss in this committee if I didn't give you the opportunity to comment on what your members have told you about the proposal for the changes to the taxation of Canadian-controlled private corporations.

[Adam Legge]

Our members are vociferously opposed to the proposed tax changes. We have had extensive consultation. We had a round table with Minister Hehr. I would support the comment made by Mr. Forgeron in the public address just before the witnesses' statements.

It's a rather blunt instrument for, perhaps, a targeted problem. Our concern is that it would remove the incentive for hard-working Canadians to take risks, to build companies, to create jobs. It feels like a solution looking for a problem that doesn't really exist.

We submitted a letter to Minister Morneau, by the consultation deadline, in which we encouraged them to reconsider this proposal, at the very least to extend the consultation in a more meaningful approach. It was a very short consultation period. It was a very difficult one to coordinate through the summer months.

We feel that, at a time when we need to be encouraging entrepreneurship and innovation, it creates a risk of completely derailing that. When you look at the broad-reaching effects, it affects the ability of families to take risks, to build businesses. It has very unintended consequences with respect to some of the industries we see affected, particularly farmers, one of the hardest-working groups of Canadian citizens.

In summary, I'm definitely opposed to it in its current structure. I would hope to see some more consultation with the business community going forward.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

Mr. Dusseault.

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

Thank you, Mr. Chairman.

Thank you all for being here today.

I am very interested in the security costs you mentioned, which are no doubt increasing steadily. You do not have to have white hair like our chairman to realize that security measures at major events have increased quickly in recent years. In the case of festivals like the ones we have in Sherbrooke, within a just few years, security measures have multiplied, and they continue to increase. Have you estimated the average increase in the cost of those measures for festivals? What do the security measures cost?

Similarly, turning to Mayor Nenshi, who I thank for being here, I would like to ask whether there is a major impact on police forces when large events are held. We know that security officers often work there and that they work for certain companies, such as Garda. I know there is also a police presence at such events, such as the Calgary Stampede.

How much does it cost for festivals and for municipalities, which also have to provide security?

[Martin Roy]

First, thank you for your question. I am familiar with the Festival du Lac des Nations, among others.

For most members of FAME, and REMI in Quebec, security costs have literally exploded in the past decade. In the past, volunteers were often tasked with security. It was as simple as that. Now we are required by law to use security agencies, which are in turn paid according to a government decree. As a result, costs have literally exploded.

I would say on the whole that costs are at least five times higher than what they were five or seven years ago, based on my experience and the discussions I have had with event organizers. I am thinking for example of an event for which the security used to cost close to $20,000, but now costs $100,000. So it has increased fivefold.

It is also true that we work with cities and the police forces of those cities. They often make their resources available to us. On the sites themselves, however, it is up to the festival or the event to provide appropriate security.

Once again, I must point out that this budget item has literally exploded. We cannot neglect security, of course. It is the top priority, so I think this warrants government intervention.

[Naheed Nenshi]

The horrific events in Las Vegas have us all thinking about security at major events, and it's fair to say that no matter what security you had in place in Las Vegas, that event would not have been prevented.

That said, the cities of Calgary and Edmonton—I can't speak for other provinces—are almost uniquely responsible for the cost of our policing. We receive next to nothing from the provincial government and nothing from the federal government in terms of managing that. Our property tax covers the cost of our policing here.

We are good at security. We have done the G8 here, and we have managed major events like the Calgary Stampede every year, but it would be helpful for us to have a broader conversation in the nation about the cost of policing vis-à-vis terrorism and major events. We managed to sort it out for the Olympics, and if we decide to go forward in 2026, we'll be coming to the federal government to cover the cost of security for that. It's $1 billion. It's an opportunity for us to have a broader conversation in the nation about where security and policing costs should be situated, since the threats we face nowadays are possibly national and international threats.

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

Thank you for your answers.

I would like to return briefly to what the president of Oxfam Canada said about the possibility of including a certain condition in our procurement policy for public contracts, namely, that people who work for those businesses must be paid decent salaries.

Have you estimated the number of businesses that currently do business with the Government of Canada and that do not respect that condition and do not pay their employees $15 per hour, for example? Have you estimated how many such businesses have obtained government contracts?

[Ricardo Acuna]

Thanks for the question.

It's a very difficult process because when we talk about a living wage or a fair minimum wage, it varies from municipality to municipality, really. Here in Alberta, for example, a living wage can vary from $16 to $20, depending on where in the province you are, so we haven't set an exact number on it. A consideration is that this is part of the process that needs to be undergone when we speak about bringing a gender-based analysis into the budgeting process. These are some questions that should be considered by all of the various departments and ministries in the federal government. What exactly do we need to accomplish greater equity? To do that, it would be to set a standard that works across the country.

In terms of a living wage, we haven't broken down those numbers, but again that's the type of analysis that we're hoping can be done if the government truly takes gender-based budgeting seriously and dedicates the resources to it.

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

Thank you.

Mr. Mayor, I would like to quickly come back to the cost of floods.

You talked about significant floods that occurred in 2013. What was that like? To what extent did the federal government invest in repairs and everything related to recovery in the aftermath? Can you present us with an

economic case about why you should invest now to prevent the next event like this?

[Naheed Nenshi]

That is a very softball question.

By the way, “inondation“ is my favourite word in French,

because I cannot pronounce it. Thank you for that.

The cost of the 2013 flood was $6 billion in direct repair. The cost of that flood to the GDP and the economic output in Canada is almost incalculable. It's incredibly important that we spend the money now. When you look, for example, at upstream mitigation on the Elbow River, the Springbank dry dam, it's about a $500-million project to prevent what we know is not a one in 100 flood anymore, but maybe a one in 50, maybe a one in 20. It seems to me to make very good economic case.

The work on the Bow River is even more urgent because while we ended up closing downtown Calgary for a few days in 2013, a cataclysmic flood on the Bow River would cause downtown Calgary to be closed indefinitely, or would cause large companies that are located there to have their insurance companies say, “You have to move out of downtown Calgary”, and that is a very incalculable loss to Canada's GDP, given what proportion of the GDP is represented by those companies headquartered there.

In addition to the incalculable personal, emotional, and social losses, there's a very hard-nosed economic case to be made here. This kind of investment is precisely what we need to do to keep this economic engine of the country moving.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

Mr. Sorbara.

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

Thank you, Chair.

Welcome to everyone. I'm very proud to be here in Calgary, which is a beautiful city.

I'm going to quickly ask a couple of questions here.

To the Calgary Chamber of Commerce, I liked, actually, a couple of your recommendations. One recommendation which stuck out for me was that only 1.4% of Canadian medium-sized companies become big businesses. There's a recommendation to establish investor tax credits. Is there any analysis behind this recommendation that we can look at? Will this tax credit replace existing programs?

[Adam Legge]

Through the Chair, thank you for the question.

The tax credit model is used extensively through the provincial systems. We haven't done a national analysis, but I can tell you that the Government of Alberta recently launched its investor tax credit, and it's fully subscribed. We've seen tremendous results. In fact, the rationale for Alberta introducing that was the great success we've seen across the country in provinces like British Columbia and Newfoundland.

The proposal is that it would be an additional tax credit, but what we've seen in the provincial models is that the tax credit is sufficiently offset by the growth in economic activity, jobs, and investment, so what it would do is create a second layer of opportunity for investment in private companies.

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

Thank you for that and for the recommendations. Some of them would be quite useful.

I'll move to the Canadian Association of Petroleum Producers, or CAPP.

Whether the Trump administration gets any of its tax measures in or not, one of the measures I believe is having the accelerated capital cost allowance take place at time equals zero, so basically in your first year. My understanding is that companies would be able to write off any new capital investment that they do. They wouldn't have to do it on a declining basis or on an accelerated basis over a number of years, but just literally in year one.

On your ACCA recommendation, how important is it to partially level the playing field for oil and gas producers here in Canada versus the ones in the U.S. or even oil and gas explorers in Canada versus the ones in the U.S.? Can you comment on that recommendation, please?