Finance Committee on Oct. 18th, 2017

[Tom Kmiec, Conservative, Calgary Shepard, AB]

That's what I wanted to know, whether you would serve on it.

Ms. Guimont, you mentioned that it is important for Canada to move towards electric vehicles in order to reduce greenhouse gas emissions.

I would like to ask about the supply of the elements needed to build the batteries for those vehicles. I have some concerns about that issue. I would like to go through the world's biggest producers of these various elements. For example, for batteries, we need cobalt and 65% of cobalt mines are located in the Congo. China produces 65% of the graphite we also need. Lithium is produced in Chile, Argentina and Bolivia, but two of those three countries are not known as places where business can be conducted normally. Indonesia produces 50% of the nickel. Nickel is actually the only element Canada can produce because we have a number of nickel mines.

How will Canada be able to supply itself with all the elements needed while developing Canadian industries?

I am also concerned about re-charging those batteries. Normally, the lowest level of use in each province's electricity grid is during the night. But that is going to change. For example, if each house has an electric vehicle, everyone will charge it at night.

Are our communities ready for that nighttime use of electricity?

[Chantal Guimont]

Let me start by answering your first question, which is very broad and deals with the world's ability to produce all the components. That is certainly an issue. However, it will work itself out with time. With more and more vehicles, technological evolution will also come into play with the batteries. I feel that it will be a consideration that will be planned for as a result.

You are right to say that, aside from lithium and Canada's nickel mines, the components come from outside the country. However, the world market will evolve and we need to pay attention to it. The Canadian strategy will encompass all the components and will certainly have implications for Canada.

Your second question was about the capacity of electricity distribution grids to meet the demand. That is certainly a concern. All electric companies are members of Electric Mobility Canada. The conclusion is that we have the capacity to charge millions of vehicles. However, we must bear local considerations in mind when it comes to the transformation. But that too can be planned for. Electric companies welcome the need to respond to additional loads and are capable of building that into their planning.

You are right about re-charging at night, which is a big advantage. Take the market in Ontario, as an example. The Ontario government is ready to implement pricing conditions for electricity, even at no cost, to encourage nighttime charging. So pricing in terms of the time of consumption is in our favour and, overall, the availability of electricity in the grid is not an issue. It will have to be well managed, but it is not an issue. There are also a number of possibilities with chargers that can control the charge. So smart devices are available to spread things out over time in order to optimize the costs and the impact on the grid. The evolution of modern technologies allows that to be done. It is about smart management in real time.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Boulerice.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you very much, Mr. Chair.

My thanks to all the witnesses for joining us today. Your presentations were very interesting. I would like to be able to ask everyone questions, but unfortunately, I do not even have 15 minutes in order to do so.

Ms. Couturier and Ms. Voyer, thank you very much for your presentation. I would like to emphasize that taxing sugary drinks is also a recommendation of the World Health Organization. I think it is important to point out the international consensus on this.

Mr. Bouchard, thank you for your presentation. I also thank you for sounding the alarm that Canada is lagging behind in research. I think we all have to be aware of that situation and we must come up with some action about it. Not only are we in danger of lagging behind other countries and being less competitive, we are also in danger of seeing our young minds going to work in other countries because they are no longer able to do so here. Thank you very much; I say well done to ACFAS for all the work it has been doing for years.

Ms. Guimont, I am going to continue along the same lines as the questions you have been asked previously.

In Quebec, we spend about $15 billion on petroleum per year, though the province is a major producer of electricity, clean energy that belongs to us and that makes us all a profit. It is absurd to continue along the same lines, not only because it goes against the objectives of the Paris accord, but also because it is making us poor.

Your movement interests me a great deal. We produce electricity in Quebec and they produce automobiles in Ontario. You talked about a number of things: federal government communications, incentives for consumers, and accessibility. In the foreseeable future, is there any hope that we can successfully produce an electric car here at home?

[Chantal Guimont]

It's a very good question that everyone is asking.

It would require major investments because electric vehicles aren't currently manufactured in Canada. So a business plan needs to be established but, first and foremost, we have to ensure that our market would support electric vehicles. That's the purpose of our recommendation today. If we want manufacturers to consider moving to Canada, we need to see this market grow significantly. At present, electric vehicles account for less than 1% of automobile sales. If we compare that result with 3% in California and 50% in Norway, there is much more fertile ground, and we need to take the lead required to interest manufacturers. So we're talking about a complete vehicle assembled here.

Many niche markets are experiencing incredible growth. Delivery trucks come to mind, for example, and all the components of an electric vehicle: the batteries, engines—we need only think of TM4, which exports electric motors to China—the software, the artificial intelligence that will be developed with self-driving vehicles, and more and more technologies. There are a lot of possibilities for components that can be added. All these industries are trying to export more because there are no manufacturers here at the moment.

The question is on the table and comes up often. I think the Canadian strategy will look at it from a future perspective. There would be huge benefits in doing so.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

I have questions for the other witnesses as well. Time is passing quickly. Thank you for your answer and your work.

I would now like to address Mr. Schmidt and Ms. McMillan.

I'm quite amazed by the table on page 2 of your document. I am also disappointed to see that Quebec's share of the national shipbuilding industry is less than 1%. In terms of getting our fair share of federal contracts, I appeal to my fellow MPs from Quebec to insist that there is a problem in this regard. We can see that you have the experience, capacity and expertise to fulfill the contracts, as you indicate on your cover page.

I think it would be worthwhile for everyone to have the people in the Quebec City and Lévis area able to build future ships through federal contracts.

In concrete terms, what do you expect from the 2018 federal budget that would open this door?

[John Schmidt]

Thank you for your question.

We have proposed a second ship, a ravitailleur.

We're officially asking the government today to open up the shipbuilding strategy to allow Davie in to build ships, or to build portions of ships, so it's really an adjustment in the strategy. The budget is there. The government has already indicated that they want to build the ships, that they want to replace the ships, but it's all in the implementation of the strategy.

As you know, with any large program, it takes 30 years. The success of any program is in how you manage change. Now that Davie is on the scene, with twice the capacity that was there when the country selected the two existing shipyards, we need to take that into account and have Quebec also contribute, and make the national shipbuilding strategy truly national.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you very much. I fully agree.

Ms. Huot, you covered a lot of things in 10 minutes. You did a good job. Thank you.

One term caught my attention. You spoke about equity in terms of the digital or electronic infrastructure. For the people you represent, what does such equity mean, in concrete terms? Could you tell me more about it?

[Céline Huot]

I talked about equity with regard to digital taxation.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Digital taxation. Right.

[Céline Huot]

Take the example of Netflix or Airbnb. These new models have completely upset the economy. There's also Uber, which has arrived in most cities. It won't stop there. We can continue to pretend that we can manage this on a piecemeal basis, or we can do what other countries have done, in other words, ensure that there is equity between Canadian and foreign companies. Otherwise, there will be inequity.

[The Chair, Liberal, Wayne Easter]

Thank you.

I just want to come back to the shipbuilding for a minute. One of the difficulties here is that the national shipbuilding strategy is already in place. How do you get around the fact that agreements have already been entered into and investments have been made by other shipyards? What's the cost of that if you change that strategy?

Also, for the shipyards that are already building, the Government of Canada—and this is too often typical—changed its funding approach as they started down the road in the system they'd agreed to provide funding for. How do you get around that?

[John Schmidt]

That's a very good question, Wayne.

I was part of Public Works during the initial stages of development of the shipbuilding strategy. What is commonly misunderstood is that they're not guarantees of contracts. By signing the umbrella agreements with the two shipyards, they are essentially first right of refusal. In other words, if you cannot negotiate a fair contract on commercial terms, then you can seek alternatives. What we're saying is that under the current plan for the government—under annex A—which was to give the east coast shipyard the CSC to build an AOPS and the west coast shipyards the Diefenbaker and the JSS, these have already been discussed but no contracts have been awarded, for example, for the JSS other than for a definition phase.

There is room to make adjustments in those programs, or to realign them. For example, if we were to build a second ravitailleur Resolve class vessel, that would allow Seaspan to start building the icebreakers, which are very urgently needed. Under the current plan, Seaspan will not, in reality, be building those until close to 2030. That'll make the Louis S. St-Laurent 70 years old. We can't continue to sell vessels that are single-hulled vessels in the Arctic, and at the same time make and implement the Arctic protection plan and insist that all commercial vessels be double-hulled.

The problem is that the Coast Guard and navy fleets are rusting out faster than they can be replaced, and the program needs to be adjusted to allow additional capacity to bring forward all of our capabilities but also to replace those vessels, and all within the terms of the current agreement.

There would still be plenty of work for Irving and plenty of work for Seaspan, but now you're adding capacity to allow Quebec to participate and to fill those gaps, because what we proposed, the Asterix, which we're delivering to the navy next month, is actually considered an interim solution, and it's a lease, so that's how we've gotten around the issue with the NSS. The government is leasing that vessel with the option to buy, but there's no reason why the government cannot implement the other needs by including Davie, simply by amending the NSS.

[The Chair, Liberal, Wayne Easter]

Yes, and I know there have been substantial changes to Davie since the original negotiation. I understand that.

Mr. Grewal.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair.

My first question is for the Board of Trade of Metropolitan Montreal.

You commented in your testimony about the importance of international workers and highly skilled workers from abroad. You'll be pleased to know that we've announced a new program that allows certain highly skilled workers to come here within two weeks.

Do you have any data on how many employers in Montreal are taking advantage of such programs?

[Céline Huot]

I do not have the exact data, but I would be pleased to ask the members. I know that it's mainly the gaming and animation sectors that need these talents, and they have sometimes two issues.

[Raj Grewal, Liberal, Brampton East, ON]

Yes, I know. That program is imperfect and there's been feedback from a lot of high-tech firms that are now actually starting to recruit a lot of top-notch engineers from across the globe because of what's happening down south and their closing their borders and our having an opportunity to recruit high-level talent to come to this country.

You also spoke about a real emphasis on productivity. Can you elaborate on that a little bit more?

[Céline Huot]

On the productivity of companies or individuals?

[Raj Grewal, Liberal, Brampton East, ON]

Individuals are productive and companies are productive.

[Céline Huot]

But you want me to add—

[Raj Grewal, Liberal, Brampton East, ON]

On companies, yes.

[Céline Huot]

Companies, okay, for the productivity.

It's something that we have to reinforce, and for that the taxes are something very important to let them invest and to let them go in their project. We know that companies have lots of money to invest, but sometimes they just keep it because of the situation in the United States, so we have to encourage them to invest faster and really invest in technology. That is linked to talent. If they do not have the talent to implement the technology, if they do not have the talent to manage the change, because sometimes it's very transformational change for the organization, they would keep that money. This is something that we really have to focus on.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Mr. Bouchard wants to comment.

[Frédéric Bouchard]

I just wanted to add an example, which is there was a meeting last week in Montreal between the gaming industry, the Quebec government and universities to talk about similar issues and the kind of incentives to bring in more talent. Talent came up earlier.

We must not forget that the reasons universities were funded throughout Canada in the 20th century was to train talent, so there's a recruitment of talent on the global stage, but we must make sure that we train the talent, as well, and that is done..... I'm piggybacking so I won't use too much time, but we must understand that research environments are training environments. When we talk about top-notch engineers or top-notch programmers, or top-notch doctors or whatever, most of them can only be trained in research environments. That's how they become top-notch for economic development, for societal change, for cultural contributions. They're tied, and one must not forget if we're really concerned about economic development that talent is a big issue and we must make sure that we have the right environments to train talent. And we know what they're called: they're called universities and research environments.