Evidence of meeting #117 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was quebec.

On the agenda

MPs speaking

Also speaking

Shawn McGuirk  As an Individual
Nathalie Lemay  As an Individual
Bridget Doherty  As an Individual
Nathalie Michaud  As an Individual
Julie Poupart  As an Individual
Daniel Morin  As an Individual
Catherine Ferriter  As an Individual
Pascal Monette  President and Chief Executive Officer, Association pour le développement de la recherche et de l'innovation du Québec
Albert De Luca  President of the Board of Directors, Association de la recherche industrielle du Québec
Cara Piperni  Past President, Canadian Association of Student Financial Aid Administrators
Pierre Patry  Treasurer, Confédération des syndicats nationaux
Gaétan Morin  President and Chief Executive Officer, Fonds de solidarité des travailleurs du Québec
Eric Gagnon  Head, Corporate and Regulatory Affairs, Imperial Tobacco Canada Limited
Mathieu Bédard  Economist, Montreal Economic Institute
François Bélanger  Union Advisor, Confédération des syndicats nationaux
Frédéric Bouchard  President, Association francophone pour le savoir
Céline Huot  Vice-President, Strategy and Public Affairs, Board of Trade of Metropolitan Montreal
Corinne Voyer  Director, Coalition québécoise sur la problématique du poids
Chantal Guimont  President and Chief Executive Officer, Electric Mobility Canada
Sarah McMillan  Executive Vice-President, Project Administration, Federal Fleet Services Inc.
John Schmidt  Vice-President, Commercial, Federal Fleet Services Inc.
Elisabeth Baugh  Chief Executive Officer, Ovarian Cancer Canada
Norma Kozhaya  Vice-President of Research and Chief Economist, Quebec Employers Council
Clara Couturier  Research Analyst, Public Policy, Coalition québécoise sur la problématique du poids
Kristen Kiggen  As an Individual
Nathalie Blais  As an Individual

9:45 a.m.

President and Chief Executive Officer, Fonds de solidarité des travailleurs du Québec

Gaétan Morin

I think that the challenge for many Canadian businesses is innovation. In fact, I was listening to the ADRIQ representatives, with whom we have just concluded a partnership. People often think that the concept of innovation means that you make a discovery or invent something, but that is not the case. Innovation is analyzing the activities of a business and seeing what can be improved on the assembly line or in the management of human resources. That is innovation.

One of the investment focuses we set up through our strategic planning consists in guiding, with ADRIQ and Inno-centre, for example, dozens of businesses who are our partners in this innovation challenge, in all sectors. This does not only concern the life sciences sector, where there is long term research. We have to innovate in daily activities. It's a big challenge, it takes patient capital, and we are there to provide it.

9:50 a.m.

Liberal

The Chair Liberal Wayne Easter

Thank you all.

Mr. Kmiec.

9:50 a.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

Thank you, Mr. Chair.

You must forgive me; I am a member from the west, and sometimes I have trouble expressing myself in French.

My first questions will be for Mr. Gagnon, and then for Mr. Bédard.

Mr. Gagnon, this is not the first time I have heard about a difference in the proposed act regarding cannabis and cigarettes.

My question is about the intellectual property rights your business benefits from, as do as others in the same sector, with specific reference to packaging. I have heard that Health Canada wants Canada to use its own packaging, and that it would be unique in the world. This would facilitate contraband, since traffickers use the same machines to produce the cigarettes and the packaging.

You referred to a sum of $2 billion, but the contraband market would generate eight times what the government says if the fiscal planning system were to be handed over to private companies. Can you tell us more about the packaging issue?

9:50 a.m.

Head, Corporate and Regulatory Affairs, Imperial Tobacco Canada Limited

Eric Gagnon

You have to understand that today, the only way for consumers or law enforcement to compare products is the packaging. Traffickers use old technologies and they cannot copy existing packaging. Health Canada wants to impose two things. It wants to standardize the packages; the market will have to use the same package format, and it cannot mention a brand. For instance, the text will use an Arial 10-point font, and all the brands, for instance du Maurier or Player's, will have to use it.

So there will be no way of distinguishing one product from another. This will become a blueprint for traffickers who will only have to copy that package. The government says there is no danger because we have a stamp that allows us to tell legal packages apart from those that are not legal. However, illegal packages all have that stamp on them today, and traffickers have access to it. They are not counterfeit stamps, they are the real stamp from Health Canada.

We feel that the plain packaging will not reduce cigarette consumption. A cigarette package already has a message pertaining to health that covers 75% of the package and sets out the risks related to smoking. All that is left is a 25% space at the bottom of the package where the brand is mentioned. Rather than reducing the rate of smoking in Canada, this measure will increase contraband and create a counterfeiting problem in Canada that we do not have currently. That is one of the big issues we have to face.

Australia is one of the countries that introduced plain packaging. However, since 2015, when the Australian government introduced this practice, it has had to continually invest large sums to fight the trafficking that has exploded in that country.

9:50 a.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

Fine.

Mr. Bédard, you are with the Montreal Economic Institute, the MEI. I consulted their website and I see that you have published many articles. I also saw that the Apple site offers an MEI app. I am going to download it.

Last September 27, you published an article in which you said that Canada had to lower the corporate tax rate and adopt proportional income tax, a topic you touched on in your presentation. You also spoke about the tax reform that the Trump administration is trying to get Congress to adopt. Can you give us some details on the risk Canada runs by only focusing on income tax rates, in the context of negotiations on the free trade agreement, NAFTA? Should the reforms being contemplated by the Trump administration not also rank among Canada's priorities?

I have another question about physicians and professionals, with regard to the changes the government is proposing pertaining to private companies owned by doctors.

You may answer the first question, and I will continue with physicians afterwards.

9:50 a.m.

Economist, Montreal Economic Institute

Mathieu Bédard

Thank you for your question.

A lower tax rate in the United States will simply make large mergers easier, similar to when Burger King merged with Tim Hortons in Canada. That was partly thanks to our slightly lower corporate tax rate. If the United States was to drop its rate, transactions like these wouldn't be possible, and doing business with Canada would hold no appeal. Mergers of this type would no longer happen.

The NAFTA negotiations reinforce the need to make the corporate tax rate a higher priority. If businesses set up shop in the U.S. after the proposed tax reforms are passed, they will have even less reason to do business with Canada and find it harder to come back.

9:55 a.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

No one brought this up today, but I'd like to discuss the cancellation of the energy east project. I'm from Calgary, and it had the potential to be a major driver of job creation. It would have meant thousands of jobs for Alberta, Quebec, and regions across the country. I find the mayor of Montreal's remarks absolutely shameful. He celebrated the death of thousands of Canadian jobs that could've been created.

On September 8, the MEI put out a press release on the subject. How would it have affected taxes? According to a survey, 65% of Quebecers would prefer to have Quebec's oil supply come from western Canada than from outside the country. This project had the potential to create thousands of jobs, not just during the construction of the pipeline, but also once it was in operation.

Do you have any comments on that?

9:55 a.m.

Economist, Montreal Economic Institute

Mathieu Bédard

It's really too bad. After all, a pipeline is nothing more than liquid travelling through a pipe. People need to stop fearing pipelines. They rely on sophisticated and, yet, very simple technology. We already have numerous pipes carrying liquid in numerous locations. People need to stop being afraid and believing all the myths.

9:55 a.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

The project was cancelled because of the federal government, which changed the National Energy Board's system. The government kept moving the finish line in terms of the criteria TransCanada had to meet to convince the review committee of the merits of its pipeline project.

How will the cancellation of this project affect other major construction projects in the energy sector, as well as other sectors?

9:55 a.m.

Economist, Montreal Economic Institute

Mathieu Bédard

It raises all kinds of questions around investment in infrastructure projects. Investment in infrastructure is important in the long term. In Canada, we tend to think only in terms of the initial investment and, for the most part, in terms of the federal investment, but there are private companies that are willing to take on major infrastructure development projects. The energy east pipeline was one such project.

As far as infrastructure goes, I think it's time to move beyond the thinking that those investments should always come from government. We should further open the door to private investments, which would raise productivity—our theme today—and cost taxpayers less than the infrastructure projects we have currently.

9:55 a.m.

Liberal

The Chair Liberal Wayne Easter

I believe Mr. Patry wanted in on this as well.

Go ahead, Pierre.

October 18th, 2017 / 9:55 a.m.

Treasurer, Confédération des syndicats nationaux

Pierre Patry

I'd like to respond to a few of the comments.

First of all, I completely agree with what Mr. Fergus said about corporate taxes. At the beginning of the 21st century, the federal corporate tax rate was 29%. Today, it sits at 15%, and we are still bemoaning the lack of investment. We were told that reducing the corporate tax rate would lead to investment, but that didn't happen. Even when the late Mr. Flaherty was finance minister, he said that companies were not investing enough. That's my first point.

Second of all, on the matter of the energy east pipeline, the statistics we looked at showed that barely any jobs would have been created in Quebec. We would've had a few during the construction phase, but not many, and once the pipeline had been built, almost no jobs would've been created in Quebec.

What's more, the pipeline, which would have crossed multiple bodies of water, posed enormous risks. The project wasn't rejected because the federal government wasn't willing to promote infrastructure, quite the contrary. We talked about it in our presentation. In its first budget, the federal government signalled its intentions in a certain number of areas. In its second budget, it reiterated its desire for more infrastructure projects.

The pipeline, however, was not a sound investment for the future. Of course, we will continue to use oil and need an oil supply in the short term. What we really need to do, however, is put a lot more effort into developing alternative fuel sources, in order to reduce greenhouse gases. Canada signed on to the Paris accord in 2015, so we need to work a lot harder on achieving those goals, rather than developing pipelines to transport oil.

10 a.m.

Liberal

The Chair Liberal Wayne Easter

We'll have to cut it there.

Mr. Boulerice.

Mr. De Luca, we'll let you in, in the next round.

10 a.m.

NDP

Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC

Thank you, Mr. Chair.

Before I get to my questions, I'd like to say something. It's perhaps a detail, but not one I can overlook.

Mr. Bédard, we don't necessarily agree on the idea that an oil pipeline is merely liquid moving through a pipe. The Montreal Economic Institute provided an English-only presentation, even though we are in Quebec. I can't believe it. I want you to know for the next time that we have interpreters who provide simultaneous translation. Therefore, we can conduct our discussions in both official languages.

Mr. Patry, turning back to you, I'd like to talk about tax havens. In the House, the NDP put forward a motion that was supported by our friends in the Liberal Party. We are still waiting to see what measures the government is going to take.

You are absolutely right about the fact that Quebec and Canada are losing huge amounts of tax revenue because of tax havens. I believe that, thanks to the agreement with Barbados, which came into force in 1980, some $83 billion is invested there. There is more Canadian foreign direct investment in tax havens than in the BRIC countries, in other words, Brazil, Russia, India, and China. That's pretty staggering.

You put Canada's tax revenue losses at $6 billion, but some say the figure is even higher. Statistics Canada, for instance, estimates the losses in tax revenues to be somewhere between $5 billion and $8 billion a year.

You also talked about the Canada health transfer, saying that the increase cap was too low. The new government is more or less sticking to the same rules, in other words, increasing the transfer by about 3% a year, even though health care cost forecasts show that an annual increase of 5% to 6% is needed. As a result, the strain on our public health care system will grow even further over the next few years.

Numerous researchers, including Alain Deneault, Marwah Rizqy, Brigitte Alepin and Alain Dumas in Trois-Rivières, have shown that the government could raise revenues by going after the outflow of capital into tax havens.

How could going after tax havens give our health care system a boost?

10 a.m.

Treasurer, Confédération des syndicats nationaux

Pierre Patry

I'll speak to that first, and Mr. Bélanger may want to round out my answer.

Indeed, estimating the losses of tax revenues for the various levels of government is extremely tough. Tax havens are, by definition, opaque jurisdictions. That's the first thing I would say. For our part, we've always tended to use the most conservative figures, so as not to magnify the problem, while making sure our estimates are credible.

However, when we compare a minimum annual loss in tax revenues of $6 billion and the health transfer cuts imposed on the provinces through the new agreement, that $6 billion would represent a shortfall, proportionally speaking, in Quebec, of just over a billion dollars, around $1.2 billion.

The provinces adopted austerity policies, not just because of the shortfall, but also because of the cuts to health and education transfers that began in the mid-1990s. If we were able to go after that revenue being withheld from us, to some extent, unlawfully, our quality of life would go up.

Incidentally, the CSN has done studies on quality of life. Investments in public services and social programs rank among the leading factors, but in order to make those investments, you need to have the money and you need to go after it where it is.

10 a.m.

NDP

Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC

Thank you.

Since I have only six minutes, I'm going to try to ask other witnesses questions. Sorry, Mr. Bélanger.

Mr. Morin, I have a question for you stemming from the fact that previous governments probably did not have as detailed an understanding of the crucial role that the Fonds de solidarité FTQ and Fondaction CSN play. They are unique organizations with few, if any, counterparts in the rest of Canada. Therefore, I want to make sure that everyone here understands just how vital these funds are to job creation and retention and to Quebec's economic fabric and development. They play an absolutely essential role and represent a major success story. I want to make that clear.

No matter where we go, job training is on everyone's mind. In fact, we touched on that earlier. Finding skilled employees seems to be a challenge all over the country and in every region of Quebec. You referred to your role as the provider of patient capital. That's very important, although you don't necessarily have to go over it again. You also talked about the fund's role vis-à-vis employability. I'd like you to elaborate on that, because it's a challenge we are hearing about all over the country.

10:05 a.m.

President and Chief Executive Officer, Fonds de solidarité des travailleurs du Québec

Gaétan Morin

Indeed, the economy is changing significantly, and the types of jobs we see will continue to change tremendously over the next decade. Artificial intelligence and automation are often cited as ways to enhance productivity. I think that we, as a society, need to make sure that people can continue to participate fully and work in that society.

Just recently, for example, we took the initiative of joining forces with the Literacy Foundation, establishing an agreement. Nearly 40% of Quebecers experience some difficulty reading or writing, such as reading the instructions for a prescription drug. In an increasingly automated world, there is no denying the fact that people will eventually be talking to machines, and that means that they will have to be able to converse and read, in terms of essential workplace skills. We therefore decided to conduct a study to assess the impact of literacy issues in the workplace. There's nothing like measuring something to know its impact.

A few years ago, we measured the impact of entrepreneurial succession issues, including the lack of succession. Now, we have decided to measure how those challenges faced by Quebeckers impact GDP. Next, we will look at what we can do to fix the situation and help those workers transition to the new economy as well.

10:05 a.m.

NDP

Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC

Thank you very much.

I have just a few seconds left, and I'd like to ask Ms. Piperni a question.

I'm keenly aware of the student debt problem. It's something I'm concerned about. We are trying to build a knowledge economy, and we want people who are educated, and yet, we have students leaving university with tremendous amounts of debt. You talked about creating more on-campus jobs to help students earn some income. I think that's a good idea.

Does that, on its own, solve the problem? Do tuition fees merit some focus as well?

10:05 a.m.

Past President, Canadian Association of Student Financial Aid Administrators

Cara Piperni

The rise in tuition is certainly a concern. Our organization is concerned about access over affordability so that students with low financial capacity can have equal access to post-secondary education. I think it's both. We certainly want to see more non-repayable aid going to needy students, but we also see that those needy students don't have the same types of access when there is a parent with a degree. Networking and job opportunities can be derived when mom and dad pay for a degree. The student can participate in a multitude of extracurricular activities to be able to create that relevant experience and set them up for the job market. The most vulnerable low-income students need both: they need the aid to cover their cost of attendance and they need the richness in experience to be able to create that foundation for employability.

10:05 a.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, all.

Mr. De Luca, you wanted in earlier, so we'll let you in now. Earlier in your presentation you talked about collaboration on research and you said “like Quebec did”. Can you give us a little further information on what Quebec did?

10:05 a.m.

President of the Board of Directors, Association de la recherche industrielle du Québec

Albert De Luca

I'll do this part in English if I may, Mr. Boulerice, since the question was asked in English.

Collaboration in general between enterprises is very important because it creates cross-pollination and so on. Innovation is an area where risk sharing, acquiring knowledge, and so on become some of the benefits.

Many years ago Quebec introduced a collaborative research program. I think the French name is Programme bilatéral de recherche collaborative Québec. “Précompétitive”—that's what you should look for, precompetitive research. It allows companies from Quebec that collaborate with companies either from Quebec or from outside of Quebec, anywhere in the world, not just in the rest of Canada, if they take the risk of collaborating, to be entitled to a more generous credit for their research expenditures. The standard SR and ED is increased to reflect the additional risk taken. We've made recommendations recently to the Quebec government to model that slightly differently to incent large companies to work with small companies. We ask large companies to take more risk by working with smaller companies. It's always a little more complicated, a little more risky, a little more everything. For that reason, we will incent them by giving them a similar incentive to what the small business would receive. As you know, small businesses are entitled to higher credits. In this case, we would tell the larger business that it was entitled to an equivalent credit to reflect the risk it would be taking. That's the general notion of it.

10:10 a.m.

Liberal

The Chair Liberal Wayne Easter

Thank you.

We'll now to turn to Ms. O'Connell.

10:10 a.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

Thank you, Mr. Chair.

Mr. Morin and Mr. Tremblay, in your brief—and it was touched on here during the questioning—you talk about literacy. At first I thought it was financial literacy that you wanted to improve, but based on some of the questions, maybe it was overall literacy you wanted to improve in terms of dealing with the new economy or changing economy. Could you elaborate? It is one or the other or both? What would you like us to consider for the upcoming budget?

10:10 a.m.

President and Chief Executive Officer, Fonds de solidarité des travailleurs du Québec

Gaétan Morin

Financial literacy is very important to us. In fact, it's part of our mission, which is twofold. We invest in businesses and we educate Quebeckers on the importance of having adequate savings.

Unfortunately, Canadians and Quebecers are among the worst savers in the world, so we focus a lot on young people. You haven't had a chance to see them, but many of our ads, for example, target young people, to get them thinking about opening up an RRSP by the age of 30 or 35.

Beyond financial literacy, training is a major consideration. Every time we invest in a company, we provide what we call economic training. A Fonds de solidarité FTQ employee with teaching experience meets with employees of the companies we invest in to demystify certain concepts, such as profit. Showing a business the importance of making a profit is key, because that is what enables the business to reinvest and ensure its longevity.

At the end of the two-day training course, employees realize how important profit is, and that triggers another movement. With this newfound awareness, they then suggest ideas to the company president or entrepreneur with a view to improving gross margins or profitability.

We close the loop, so to speak, by making sure employees also understand the importance of saving. It extends well beyond the idea of profitability. We teach the employees of our partner companies about the economic environment, export challenges, and the changing economy. It's really about educating the employees.

In the past 25 to 30 years, the number of strike days in Quebec has dropped significantly. I'm not saying all the credit goes to the Fonds de solidarité FTQ, but initiatives such as ours help make workers aware of the importance of saving.

10:15 a.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

Thank you.