Finance Committee on Oct. 17th, 2017

[Greg Fergus, Liberal, Hull—Aylmer, QC]

The report talked about an ecosystem, correct?

[Denise Amyot]

It talked about an ecosystem, but it said that the people in the community would focus on the recommendations on pure research. However, we submitted a proposal to reiterate the importance of the spectrum from pure research to applied research. Our members focus more on applied research. That being said, it represents 1.7% of all funding for applied research, which is truly very little.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

It's not as little as the amount Ms. Greaves and Ms. Hunter are asking.

[Denise Amyot]

We are asking for $100 million in funding. Right now, this unfortunately means that we are leaving money on the table from business and industry, who are willing to invest in research and development. Canada is always criticized for that. Why do companies not invest enough?

Small and medium-sized businesses are ready to invest. However, there is unfortunately not enough capacity in colleges at the moment. We have to tell them no, because there is no money coming from the federal government. One of the reasons we asked for $100 million is to stop saying no and to stop leaving money on the table. At the end of the day, this means we are saying no to economic development, no to productivity and no to developing students' skills. It is very unfortunate to be in such a predicament. There is also potential. Right now, only 5% of instructors do applied research. Imagine what all the others are doing. Only 3% of students have access to applied research.

The needs and expectations are huge. We look forward to the government's next budget. Unfortunately, not much is happening with social innovation because we only receive $5 million a year and the demand is huge.

The demand is also considerable in health, because we train 80% of the people who work in this field. Unfortunately, the current funding does not allow us to innovate sufficiently.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you very much, Ms. Amyot.

Since I know the chair is fair, as Mr. Grewal said, I would like to ask a quick question.

Ms. Foster, I would like to know something about your members who are where the action is. Mr. Francis, Ms. Walsh McGuire and witnesses from another chamber of commerce talked about how important it is for students that the curriculum includes work experience in NGOs or in the private sector.

Are your members in favour of that? How can you promote this opportunity to ensure that students will acquire the work experience in research?

[Pamela Foster]

Very supportive of applied learning opportunities, workplace opportunities, and also research and science opportunities.... To bring it back, what the Naylor report talked about was lost capacity, both for learners and for future research in science, in both the college and the university sectors, because of the lack of support for funding.

When a scientist or a scholar gets research funding, they hire students to help them with their research, which brings along those. There are, then, important opportunities for work placements. It talks about support at all stages of the career.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

So it's not only because of the experience with professors, but also the experience students will get from working with companies and NGOs outside the university.

Are you and your members in favour of that?

[Pamela Foster]

Yes.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

That's fine. Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Albas.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair.

Thank you to all of our witnesses for being here today.

Obviously, low literacy can lead to underemployment, but also a mismatch between skills and what is necessarily demanded by the market is important, so I'm going to go to Colleges and Institutes Canada to start with.

First of all, BCIT, one of the leading institutes in British Columbia, puts firmly on its web page a link so that students can find out not just about the program they're entering but also about the local labour demand for those jobs. That's something they do independently of anything. In the United States, for example, you have a college scorecard, which demands that any institution that receives federal funding, whether it is a college or otherwise, has to post that kind of information.

Are your members stepping up to communicate to students where the jobs are in their regions and making sure the programming matches those jobs?

[Denise Amyot]

I will start and then I will ask my colleague to answer for, specifically, Nova Scotia. In fact, BCIT is one of our members who publish this on their web page. For colleges and institutes, it's compulsory despite the fact that education is under provincial and territorial jurisdiction. It's compulsory to talk about the job placements with respect to the students who study in your institution. That's why we're so proud to be able to say that 91% of our student graduates find a job within six months, and we are very proud of that. In some cases, of course, it's 100%, and sometimes they choose to pursue studies instead of going to the workplace.

[Don Bureaux]

As part of that, we have a very rigorous evaluation of our programming. Many of our institutions and colleges have a three-year rotating cycle for programs, and if enrolment in job placement isn't high enough, those programs are stopped. In fact, that's the art and science that we have to deal with. I get calls often from parents or individuals who are on a wait-list and they think the solution is to simply open up the funnel at the front end to allow more students into the programs. The problem with that is that you have to match that with employment rates at the other end. It's something we look at constantly.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Today, OSFI, the Office of the Superintendent of Financial Institutions has announced further regulations, adding a stress test to uninsured mortgages or, as they are sometimes called, portfolio mortgages, with which you have a down payment of 20% or more. These coupled with changes to the tax-free savings account and, whether or not the government proceeds with them, the proposed changes to passive investments to me bode a very difficult challenge, because the traditional tools that Canadians have used, whether those be tax-free savings accounts, a home, or a business, to actually be able to build equity, which actually creates social mobility, I think, are really at stake.

I have to ask both chambers specifically about passive investments. The changes that the government has proposed would raise the rate significantly, in effect, in some cases, causing businesses to change their behaviours and prepare for neither the rainy days in which the economy turns down nor those times when the economy is hot, or to capitalize on them effectively and take hold of opportunities that open up. Are you concerned that the government needs to address the area of passive investments in particular?

[Penny Walsh McGuire]

I'll touch on this specifically, having received hundreds and hundreds of submissions from our members. I think what we heard consistently on the proposal around passive income was, as you mentioned, that these dollars, this investment in their business, is being used for rainy days when there's economic downturn in order to make payroll, to keep their employees there, and to support the business, but I think even more importantly, it's there for investment in the business.

We hosted a tax town hall and had a number of witnesses talk about having already proceeded with a capital project or an investment opportunity, and they were holding their breath while they waited to see what this proposal could mean, because they were too far down the path.

I don't know if, Rory, you want to build on that.

[The Chair, Liberal, Wayne Easter]

Glenn, do you have a comment?

[Glenn Davis]

I would only echo the comments. We've heard the exact same thing from our members in outreach, that the passive investment might be the most disturbing of the three proposals.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

In regard to this, it's just one more thing and it seems that OSFI has given a real tin ear even to this committee, because we actually recommended that they not proceed with any further major changes without actually digesting the current changes. So I think this is a difficult thing.

Obviously, in regard to your comments, Ms. McGuire, about the federal government needing to have a return to balance, we can't continue to spend and spend, particularly when we talk in Atlantic Canada about the demographics. We heard today from the Atlantic Institute for Market Studies that there is a disproportionate amount that a family here in Nova Scotia will pay compared with a family in Manitoba. I think it was a 20% difference, and 30% if you go to Saskatchewan.

What does the government need to do to be able to deal with that challenge?

[Rory Francis]

Are you asking about the specific challenge of balancing the budget?

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

It's not just to balance the budget, but also what it will do if they do not do it.

You probably weren't here for it, but AIMS basically said that right now a family here is taxed at a disproportionately much higher level, because the taxation is so much higher. If we continue to see federal spending at that rate, eventually that has to be paid, and again, a family here will be paying disproportionately more for that. What is that to your chamber?

[Rory Francis]

What does it do to families across Atlantic Canada? It's really a matter of people being able to put bread and milk on the table and pay the bills and be in a community where they can have competitive businesses, job opportunities, and so on.

The tax situation is not top of mind for people every day until something such as we've experienced in the last while is facing small businesses, and then everyone pays more attention to taxes. We have a lot of benefits in Canada, but we really do need to make sure that we're going to be balancing those benefits with the costs of doing business.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I have a quick question to follow up on your comments. You talked about the need to invest in infrastructure. Again, it does sound more to me that when you say “strategic infrastructure”, it's certain companies and it's not publicly available to everyone, while Mr. Burke is talking about the need to support infrastructure that is at least used by the smaller communities that are heavily dependent on their access to harbours.

Maybe there is no answer other than that the government has a tough job ahead. I do appreciate both opinions. Again, it's traditional communities versus some of the opportunities of the future. I'm not sure how the government is going to slice that one.

[Rory Francis]

My comment was about infrastructure that is not specific to individual businesses. This is supporting businesses in general, but probably owned and operated in a not-for-profit fashion, or frankly, on the academic side of things. To be clear, it's not a competitive situation. It's creating public infrastructure that can support broad-based economic development.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you for the clarification.

[The Chair, Liberal, Wayne Easter]

Thank you.

We'll turn to Ms. O'Connell, and we might have time for a couple more questions following Ms. O'Connell.