Evidence of meeting #114 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.

On the agenda

MPs speaking

Also speaking

Shane Bishop  As an Individual
Jeremy Zhao  As an Individual
John Forgeron  As an Individual
Saqib Qureshi  As an Individual
Adam Legge  President and Chief Executive Officer, Calgary Chamber of Commerce
John Bayko  Vice-President, Communications, Canadian Association of Oilwell Drilling Contractors
Ben Brunnen  Vice-President, Oil Sands, Fiscal and Economic Policy, Canadian Association of Petroleum Producers
Martin Roy  Executive Director, Festivals and Major Events Canada
Ricardo Acuna  Chair, Oxfam Canada
Naheed Nenshi  Mayor, City of Calgary
Chris Bloomer  President and Chief Executive Officer, Canadian Energy Pipeline Association
Michael Holden  Chief Economist, Canadian Manufacturers & Exporters
David Kaiser  Member, Board of Directors, Hotel Association of Canada
Casey Vander Ploeg  Vice-President, National Cattle Feeders' Association
Ray Orb  President, Saskatchewan Association of Rural Municipalities
Alex Zahavich  Vice-President of Corporate Development and Applied Research, Education, Southern Alberta Institute of Technology
Ubaka Ogbogu  Assistant Professor, Faculties of Law and Pharmacy and Pharmaceutical Sciences, University of Alberta, Stem Cell Network
Kenneth Goodall  As an Individual
Gillian Eloh  As an Individual
Mary Keizer  As an Individual

10:05 a.m.

Vice-President, Oil Sands, Fiscal and Economic Policy, Canadian Association of Petroleum Producers

Ben Brunnen

The rapid amortization of capital is one of the biggest levers available to the federal government to encourage large-scale investment particularly for natural resource industries. It was widely used and has been in place since the oil sands were established in the 1990s, with the rationale being that enabling companies to overcome the risk of investment would require significant upfront capital and long lead times prior to payout.

The accelerated capital cost allowance does not necessarily change the taxes collected by the government. All it does is change the timing of payment. The government has used this tool in a number of different places, such as the mining sector and the oil sands sector, but it's currently in place for the manufacturing sector, and a recent addition was included in 2015, as I mentioned, for clean energy.

In oil sands, the opportunity for it right now is in encouraging environmental investment and innovation. That's the next phase. It has the potential to be transformational for the sector. This type of research could apply to the entire basin.

10:10 a.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

I'm sorry, but I do want to move on. There was a recommendation on page 7 on the CDE rate provision, which I'll try to talk to you about offline, because I just don't have the time available right now.

I'll turn now to the mayor.

Mayor, thank you for joining us this morning and for taking time out of your very busy schedule. I can only imagine how hectic things are these days on top of running a—

10:10 a.m.

Mayor, City of Calgary

Naheed Nenshi

I still have to be the mayor.

10:10 a.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Absolutely, of course, and we appreciate that.

I reviewed your letter and what you said about the national housing strategy, and obviously that's forthcoming from our side. I want to say I think we've done a heck of a job partnering with municipalities, whether working through FCM or working directly with the cities. I think the partnership that's taking place now, the alignment among all three levels of government, is something that all Canadians should be proud of. It's something that I'm very proud of.

In my riding, we're going to be opening a new subway in a couple of weeks thanks to a lot of work done by the provincial government and my prior government to get that subway up.

10:10 a.m.

Mayor, City of Calgary

Naheed Nenshi

Is it already opening?

10:10 a.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

October 28 is the open house for the public, and December 17 will be the opening of the subway coming up to Vaughan.

10:10 a.m.

Mayor, City of Calgary

Naheed Nenshi

That's great.

10:10 a.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

We're going to turn an area where new inhabitants were into an area where 40,000 people will live within the next decade.

10:10 a.m.

Mayor, City of Calgary

Naheed Nenshi

My cousin bought three condos in Vaughan Transit City.

10:10 a.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

There you go.

10:10 a.m.

Liberal

The Chair Liberal Wayne Easter

You guys are going to run out of time.

10:10 a.m.

Mayor, City of Calgary

Naheed Nenshi

You had a point.

10:10 a.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

The question relates to PTIF two. What would you like to see come out of there, out of the bilateral agreements? Also, with regard to the national housing strategy, can you rhyme off your top three asks?

10:10 a.m.

Mayor, City of Calgary

Naheed Nenshi

Let me go backwards. When we looked at the national housing strategy, we worked well with Minister Duclos. I should have said upfront that this government's commitment of $12 billion to affordable housing over 10 years is truly historic. It's the first time that mayors in big cities got exactly what they wanted. Now, it's a matter of figuring out the way we should be working with the provinces.

This really represents our top three requests. The first is clarity around timing of those flows, so we can do some long-term planning. The second is the development of a thoughtful way to work with or through the provincial governments to ensure that municipalities and non-profits that operate in cities actually have access to that funding. The third is the development of some guidelines regarding the allocation of that funding, and preferably local control, so that it can be used toward new builds versus rehabilitation of existing stock. Those are the three big things we want with respect to housing.

As for PTIF two, Calgary and Ottawa are in a different place with this, given the electoral commitments of this government, and the money devoted to the green line. We're very pleased with our relationship with Minister Sohi, and the work that has been done on the green line. As I was intimating to Member Kelly earlier, the federal government has fully participated at the table on all our discussions around the green line and its design, which has been great.

When it comes to PTIF two, we really do have to look at what happens in the long term. We've been asking for a while for permanent, stable, long-term financing, because for the cities in Canada that rely on rail-based transit, those projects, even the construction of those projects, long outlive the mandate of any government. The idea is to obtain long-term, predictable financing, so that we can borrow money if needed, and understand how to move forward on that.

The other thing we've talked about a lot has to do with debt vehicles. With regard to the green line, right now the city is carrying all of the debt. It may well be that the provincial and federal governments will cover the carrying costs of the city's financing, but the city still carries the debt. It's time for us to have a broader conversation at the federal level regarding financial mechanisms, and how we should manage the debt on big projects, especially rail-based transit projects. Using the Canada infrastructure bank might be a good starting point.

10:15 a.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, both.

Mr. Kelly, for six minutes.

10:15 a.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Thank you. I may as well continue where I left off with Mr. Legge.

At the end of your earlier intervention, you mentioned unintended consequences, and we've heard this quite a few times both at this committee and in statements by the minister. Do your members care whether or not a consequence is intended, if it's going to hurt their businesses?

10:15 a.m.

President and Chief Executive Officer, Calgary Chamber of Commerce

Adam Legge

The reality is that all of our members who fall under this private corporation model have told us that unintended consequences are real, and they would impact business. They would impact our members' ability to sell within the family, and create intergenerational entrepreneurship. They would affect our members' ability to allow a spouse to stay home and take care of children, so that energy could be focused on the business schedule, which could affect the families themselves.

Finally, these unintended consequences would affect the fundamental viability of many of these businesses, whether they're in the agriculture sector, manufacturing sector, oil and gas sector, or retail sector.

10:15 a.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Have members expressed stories similar to the stories we heard from Mr. Forgeron during the open-mike session, such as the cancelling of projects and the relocation of businesses? Are these the things your members have told you about?

10:15 a.m.

President and Chief Executive Officer, Calgary Chamber of Commerce

Adam Legge

Yes. Our members have told us that it would essentially terminate any of their expansion plans. They would then be looking at encouraging their children to not take over the family business, but to pursue different kinds of employment instead. This spans the entire industrial sector, from retail to manufacturing, oil and gas, professional services, agriculture, and so on.

10:15 a.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

I'll move to you, Mr. Brunnen, and give you an opportunity to carry on from your part of the presentation earlier.

One of the themes of this committee is the competitiveness of the Canadian economy, and we discuss this in our pre-budget consultations. Can you talk about the role that regulation plays when it comes to competitiveness?

10:15 a.m.

Vice-President, Oil Sands, Fiscal and Economic Policy, Canadian Association of Petroleum Producers

Ben Brunnen

Thank you, Mr. Kelly.

Through the Canadian system, we seek to advance effective outcomes that focus on regulatory systems. Essentially a good regulatory system needs to provide the confidence and assurance to the Canadian public that the social and environmental outcomes are met satisfactorily, also that there's confidence for investors. That's currently one of the biggest weaknesses in the Canadian system, whether it's the review of CEAA, the Canadian Environmental Assessment Act, or the NEB, or the species at risk requirements for boreal caribou under the SARA. Those three major pieces of federal legislation currently being contemplated are threatening the investor confidence of the sector.

We need to see something that reduces the regulatory risk long term. The financial terms are also challenging, as I have indicated today, but for examples of where the regulatory risk causes concern, look no further than the LNG sector or the announcement yesterday. How can we find a way to bring that balance back into the Canadian regulatory system to give investors the confidence to put up the capital that is going to be required for multiple years and multiple billions? This is one small part of what I've brought to the table today.

Some commitment from the federal government to affirm and recognize the role of oil and natural gas in Canada's future energy mix would be a very helpful signal. Some concerted effort to work with industry, perhaps develop a whole-of-government approach to advance and improve competitiveness while achieving government objectives would be a very important measure as well.

10:20 a.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Signalling is an important aspect of investor confidence. This is the problem I hear about from many people, both constituents and business people in town, that mixed messages coming from the federal government on small or large projects are extremely harmful to investment. It's not just the law that's tabled in the House; it's also the messages that are sent outside.

Would you agree that we need to send a much stronger signal to the broader global investment community that Canada is open for business and that projects can be built in Canada?

10:20 a.m.

Vice-President, Oil Sands, Fiscal and Economic Policy, Canadian Association of Petroleum Producers

Ben Brunnen

I would definitely agree on the importance of signalling. Our members compete to raise money globally for opportunities. They definitely have projects where they like to invest and create the jobs and the wealth in Alberta and across the nation.

Lately, the confidence has not necessarily been very strong for the industry and the signals from the federal government have not been supportive, generally speaking. There hasn't really been anything too substantively supportive of late. We've seen that in the investment numbers, whether it's the discussion of the Canadianization of the oil sands.... I know some would appreciate that. Essentially, the message in that space is anyone with access to capital and optionality is investing in another jurisdiction.

Long-cycle oil and gas development is being prioritized. LNG and offshore in other jurisdictions are being advanced. They're not necessarily being advanced here. Some message from the Canadian government that indicates some level of support and the role for Canadian energy in the energy mix would be very welcome.

I have one final point on that. We have a very good regulatory and environmental framework. We have a carbon price coming forward. If the world isn't using Canadian energy, it's going to be using it from another source and their carbon footprint and their environmental impacts will likely be worse.

Thank you.

10:20 a.m.

Liberal

The Chair Liberal Wayne Easter

Before I go to Mr. McLeod, on that point, regulation and the environment and what we're doing, I think you said earlier, Mr. Brunnen, that is also an important point for investment. How do we do a better job of getting the word out on what we are actually doing?

I co-chair the Canada-U.S. Inter-Parliamentary Group. I'm in the U.S a lot, and I will admit it's crazy times down there these days. In any event, that message is not getting through, that our greenhouse gases and reductions are just as good as they are in California, etc.

Even if you look at energy east, the things that are said on the side that's opposed are not very close to the truth sometimes.

10:20 a.m.

Vice-President, Oil Sands, Fiscal and Economic Policy, Canadian Association of Petroleum Producers

Ben Brunnen

That's a good question, Mr. Chair.

There's a role for governments—and our industry is working toward it—to help inform and educate. That's where I was going with defining the vision for Canada's oil and gas globally. We need to add a bit more context regarding what future energy demand looks like, confirm that there will be a role for oil and gas globally and help people understand that, and also raise awareness of the strength of the Canadian system: our climate pricing is actually better than California's, for the energy sector in particular, given what's being developed right now in Alberta. Those are the types of messages we would like to see conveyed in the public space from the government's perspective. We understand the importance of the balance, but we also understand the importance of economic prosperity, and we can achieve that.

The other piece I would encourage is in relation to the substantive regulatory consultations that are currently under way. There are a lot of them, and they are foundational to long-term access to the resource base. In the absence of some clarity and confirmation that there will be some confidence from industry about what that process looks like and is expected to look like over a long period of time before they can get a return on their capital, they're going to be jittery, as we're seeing right now.

Those are my comments.