Finance Committee on Oct. 19th, 2017

[Tobi Day-Hamilton, Director, Communications and Strategic Initiatives, University of Waterloo, Institute for Quantum Computing]

Thank you, Mr. Chair, and thank you to the committee for the opportunity to speak to you today about the importance of the investment in fundamental science, in particular quantum science.

Quantum science and technologies are poised to be the economic engine of the 21st century. Today Canada sits among the global leaders in quantum research, in large part due to the investments from the federal government. We have the potential to lead the coming quantum revolution and bring quantum technologies to the world. To maintain our leadership position, strategic, consistent, and sustainable funding for quantum science is needed.

Some of you may be wondering what quantum science is and why it is important. Quantum science involves the behaviour of atoms and molecules. This behaviour is fascinating and completely different from the behaviour of objects around us. Some even call it completely counterintuitive. The ability to harness this quantum behaviour gives us a richer and radically more powerful approach to building new technologies. These quantum technologies will have impact on computing, information security, drug design, cancer detection, natural resources exploration, artificial intelligence, and areas we have yet to discover. Quantum technologies promise profound and transformative opportunities.

Canada was one of the first countries to make significant investments in quantum research, and right now, as I mentioned, we are a world leader. Canada's “Quantum Valley”, in the Waterloo region, is known worldwide as a hub for quantum science and the development of quantum technologies. Our public-private partnership model is one that other nations look to as they ramp up initiatives in quantum research. Our investments in people, infrastructure, and educational programs have attracted researchers and students to Waterloo from around the world. Waterloo is the only place with a full ecosystem, from theory to technology to commercialization, ready to bring quantum technologies to life.

The Institute for Quantum Computing at the University of Waterloo is the driving force behind the quantum innovations to come. IQC's community of over 200 researchers is exploring quantum technologies with game-changing applications, such as those involved in early cancer detection, targeted drug design, and unlocking the mysteries of Parkinson's and Alzheimer's. They are building quantum computers with unprecedented power, which will play a critical role in materials for efficient energy harvesting and transport, machine learning, and other critical scientific challenges. Our researchers are developing quantum technologies that will have transformative societal impact right here in Canada.

Hwever, we're not alone. Global investments in quantum research by both government and industry have grown substantially in recent years. The U.K. has launched an initiative of 450 million pounds. The EU has created a $1-billion flagship in quantum research. Japan, Singapore, and the United States all have bold investments in quantum technologies, and just last week China announced a $10-billion investment to create a laboratory for quantum information science. In addition, companies like Google, IBM, Microsoft, Intel, Alibaba, Lockheed Martin, and others are also heavily investing in quantum science.

Canada currently holds about a 7% share of the worldwide quantum science investment, yet forecasts expect global budgets to increase threefold, potentially leaving Canada with a significantly reduced share relative to other jurisdictions. The race to realize the opportunities of quantum science is tightening, but Canada still has the potential to maintain a leadership position in bringing these technologies to life. To do that, to remain a leader in quantum science, we need to do a few things. We need to continue to attract and retain top talent; we need to continue to make significant research and infrastructure funding available to quantum research and technology development; we need to maintain a focus on the importance of fundamental research as a driver of innovation and economic prosperity; and we need to establish a funding stream for high-risk and high-reward research initiatives.

Strategic, consistent, and sustainable funding will keep Canada in a leadership position in quantum research and its resulting technologies. We can't take our leadership position for granted. We have to go further. We must keep the pace through strategic investments in quantum research and development so that Canadians—all Canadians—can experience the immense economic and social impacts of the quantum revolution.

Thank you again for this opportunity. I invite you to join us in Ottawa in December when we launch “Quantum: The Exhibition” at the science and tech museum.

I'd be happy to answer any questions. Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

We'll turn to Results Canada and Christina Dendys.

[Christina Dendys, Interim Executive Director, RESULTS Canada]

Thank you. It's my privilege to be here today and to be among what is a very diverse set of witnesses.

Results Canada is a national grassroots advocacy organization that is committed to creating the political will to end extreme poverty globally. Extreme poverty is a place where hunger and disease thrive, and where too often children don't live to reach school age, let alone attend school. It's a place where home might be a corrugated tin shack in an urban slum. One in ten, or 767 million, people live there.

At Results we champion cost-effective, proven, tangible, and high-impact solutions and approaches that address the causes and mitigate the impact of poverty. Our volunteers across the country are parents who think that no parent's child should die needlessly from a lack of immunization that costs pennies. They are neighbours who think that nobody around the block or around the world should suffer from a disease that costs dollars to treat. They're everyday citizens from coast to coast. They're your constituents. I'm honoured to be here today to represent their views.

The most important message I want to bring today is that Canada does not stand alone in the world. In our interconnected globe, ensuring that our international aid envelope is increased is not only about being charitable or about making good on global commitments but also in Canada's strategic interest, and not to give away the ending, that is my single recommendation today: ensure that the next federal budget, unlike the last, commits to increasing Canada's international assistance envelope.

As members of the finance committee, you know that how we allocate our resources paints a picture of who we are as a people—what we stand for in the world, what we hold as values—and right now, when it comes to foreign aid, that picture is more Dorian Gray than it is Group of Seven.

There are three key reasons that this matters and why I hope you will include this recommendation in your report to the House.

First, it matters because our credibility is at stake globally and here at home. Canada used to be a leader when it came to foreign aid. In fact, we literally set the bar. This week 47 years ago, a commission led by Lester Pearson set the target that called for rich countries to commit 0.7% of GNI to international assistance. That was 70¢ for every $100 we earned. Today Canada's support for international assistance hovers around 26¢ for every $100 we earn. Despite leading the G7 in growth, that puts us at the bottom of the list compared with international allies and far below the global target. It's also a new low historically for Canada. If we stay on this track, this government will have the worst record on aid than any government in decades, Conservative or Liberal.

It's time to right this situation. It's time to make good on a recommendation that came out of this very committee last year, when you called on the Government of Canada to increase its investments in ODA to reach 0.35% of gross domestic product within three years.

Second, it matters because the world is increasingly interconnected. What happens over there matters over here. In my earlier days working in development, I used to say that our neighbour's house is on fire and we can stand by and watch it burn or we can work together to put out the flame, but now that house is a duplex. We live on the other side of the wall. If we watch it burn, we do so at our own peril. In our increasingly global economy and community, in an instant external events or trends could impact our own economic interests, national priorities, policies, and directions.

Consider these facts. Today, with rampant migration and displacement, there are more refugees in the world than in any other time in recorded history. Diseases like Ebola, which shook the world a few years ago, or tuberculosis, which has been with us for centuries, are airborne infectious diseases that do not respect geopolitical borders. Right now, as we sit in this room, alarm bells are sounding on what the UN is calling the largest humanitarian crisis since the creation of the United Nations. A catastrophic famine has 20 million people starving, or at risk of starving, in Yemen, Somalia, South Sudan, and Nigeria. These challenges have global impacts, and they demand global solutions, interventions, and investment. The duplex is on fire. Doing our part to quell the fire is in our own strategic interest.

Third and finally, it matters because there is tremendous potential and opportunity to tap, and Canada is well positioned to be a leader in unlocking and benefiting from that potential. Aid works, and aid coupled with smart development policy has seen tremendous wins. Child deaths have been cut in half and the number of people living in extreme poverty is lower than ever before, but hard-won gains require smart, sustained support. Today's generation of young people is the largest in history. Globally, half the world's population is under 30. Nine out of ten people aged 10 to 24 live in low-income countries. This massive wave of youth could be alarming—or it could be viewed as an opportunity to support a generation of young people who are equipped to transform the world. There are many things we could be doing, with support for education being at the top of the list.

With 263 million children out of school globally, investing in education, gender empowerment, and other critical inventions will be critical to quelling the alarm in favour of opportunity.

In the coming months, Canada has two opportunities to shine in this space. In February, the Global Partnership for Education will be hosting a replenishment in Senegal. Canada can and should be leading in contributions. Beyond that, when Canada hosts the G7 next year, we could lead on a development initiative that prioritizes actions to support girls' education and training within fragile contexts.

Educating girls is a best buy in development. Every dollar invested in an additional year of education sees a return of $10 in future earnings and health benefits. Together, these investments could really make a big difference, but they won't if we are just cutting off a bigger piece of an increasingly shrinking pie.

In conclusion, aid matters, and Canada's leadership matters beyond our borders now more than ever. Please consider recommending that aid, especially impactful and effective aid, is prioritized in your recommendations, as you did last year. The eyes of the world will be on Canada in 2018. Let's live up to the leadership, compassion, and vision that this opportunity affords.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Christina.

Now we'll turn to the last panellist, Mr. Marchand, with the Windsor-Essex Regional Chamber of Commerce.

[Matthew Marchand, President and Chief Executive Officer, Windsor-Essex Regional Chamber of Commerce]

Thanks, Mr. Easter. It's good seeing you again. I'm a big fan of P.E.I. Actually, I've been to Summerside and Charlottetown. You come from a very nice part of the country. I hope to get back out there before long, and maybe I'll see you.

Good morning. Thanks for inviting the Windsor-Essex Regional Chamber. We've been representing this region for over 141 years, so we have a our fingers on the pulse on the community.

I'll get right to the key points. Before getting too far, though, I want to thank the government for following through on its commitment to lower the small business tax rate from 10.5% to 9%. We also want to thank our local MPs Tracey Ramsey, Brian Masse, and Cheryl Hardcastle for standing with small business. I also want to thank you, Mr. Easter, for your work in that regard.

Chambers across Canada take the government at its word that meaningful consultation with us will follow. We will be vigilant on this ongoing small business tax issue and offer ideas and solutions. The one thing we need is a full economic assessment of what these changes mean in terms of investment, jobs, and tax revenue. We also believe this raises an opportunity for a full review of the tax system.

The Prime Minister said on Monday that the problem isn't individuals, but the system. We agree. The tax system is too complex, and we need to simplify it. We need to make our tax structure more competitive. The U.S. government right now is embarking on the most massive tax reform package of our lifetime. Its goal is to improve the competitiveness of the American economy. We urgently need a policy response; hence our call for a comprehensive tax review here in Canada.

The big issues that affect our economy locally are jobs without people and people without jobs. This is one of the top concerns of business here and across Canada. Right now, Canada is leaving tens of billions of dollars of economic opportunity on the table in lost wages as companies are unable to bid on work and find workers. More than half of Windsor-Essex and Ontario businesses cannot find qualified staff. The local impact here is about $600 million a year.

Skills Canada reports that 40% of the jobs in the next 10 years will be in the skilled trade sector, yet only a quarter of our young people are considering a career in skilled trades. The problem is only getting worse.

Here are some quick ideas to drive jobs and productivity: encourage the provincial government to address the skills gap by changing the apprentice ratios, encourage young people to take on skilled trades as a career, and use the power of government to drive changes in attitudes. In addition, we would suggest tax incentives to get more people in the trades and reward them for graduating. We need to be aggressive if we want to be successful.

Another top issue is the skyrocketing cost of doing business in Canada. For example, our competitor states in the U.S. Midwest, such as Ohio, have one-third the electricity costs, no carbon taxes despite using 50% coal, lower regulations, no border or political risk, and a much lower wage structure. We need cost offsets to be competitive and to maintain jobs and investment here in Canada.

The U.S. is pursuing an America-first, jobs-first agenda. We need a policy response, and we recommend that a manufacturing strategy including auto and steel, two big pieces of the Canadian economy, be developed and executed.

The Windsor—Essex chamber can assist in that regard. We have resolutions, and the Canadian chambers are supporting us. Included in a manufacturing strategy would be the goal of a level playing field. It's unfair to expect Canadian entrepreneurs and workers to compete with one set of rules for labour, environmental, and safety standards while other countries we compete with for investment and jobs have far lower standards along with much lower costs. Some of our competitors aren't even companies at all; they're essentially government departments.

For our agricultural community, PACA, the Perishable Agricultural Commodities Act, is the key issue. We are waiting for the agriculture minister and the industry minister to follow through on their election commitments to provide the agricultural sector, which is largely made up of small businesses, with an alternative to PACA.

Work visas for Canadians working in the U.S. are another key issue. Just so the committee understands, right now, every day, we have 6,000 people in the Windsor-Essex region commuting to Michigan for employment, predominantly in health care and automotive-related industries. We need certainty that the work visa issues will be addressed in the current NAFTA discussions.

Last but not least is innovation. While it's exciting that many communities across Canada and the U.S. are trying to land tech companies, Windsor—Essex would also like to create and build more of them here. How do we do that? Our ideas include investing in 5G network technology, looking at funding models to support training and retraining due to technology advancement, and supporting community-led accelerators and innovation centres.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Marchand.

We will now turn to questions, starting with Mr. Grewal.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair, and thank you to our witnesses today.

I want to apologize. I'm going to duck out after my questioning round because I have to get back for Diwali functions in the beautiful riding of Brampton East.

My first question is for Satinder. You spoke about credit card fees. We have some of the highest credit card fees in the world. How do we compare to our neighbours down south?

[Satinder Chera]

I think we're probably comparable in many ways. I noted just yesterday that down in the U.S., the Supreme Court has now accepted a case, and they are looking at American Express and the fees they charge merchants. I think certainly the challenges down there are pretty comparable.

I would say that in Canada there were positive efforts made by the previous government in bringing in a code of conduct for the credit card industry. Unfortunately, what we have found with that code of conduct is that some of the commitments that were made, particularly around transparency and openness about those rates, haven't come to pass. I think this is one of the reasons Minister Morneau is reviewing the file, which is certainly encouraging. My hope is that this committee will add to that momentum. Hopefully, we can get some hard caps in place in the next budget.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you.

You spoke about the marketing to kids in terms of Bill S-228, which is going to the Senate, I believe, at this point. You were saying that it would have a negative effect on your members in terms of how it almost feels as though the bill is designed to make things much more difficult for small convenience stores. Can you comment further on that?

[Satinder Chera]

The bill itself has passed in the Senate now, I believe, and is waiting for first reading in the House of Commons. If you take Bill S-228, along with Health Canada's review of marketing to kids—we're putting those two together since the government is reviewing both in parallel—I guess our concern is with the unknowns.

As we read the legislation, it's not clear to us that at the end of the day retailers would not be held accountable for any contraventions of the act. Certainly, from the perspective of our members, one of the concerns is.... For example, we talk about limiting advertising for anyone under 17 years of age. One of the practical concerns is that if you have an employee who is 17 years of age, will they now be prevented from handling certain products in their stores? Also—

[Raj Grewal, Liberal, Brampton East, ON]

Maybe you know the answer to this question. If you're 18 years old, are you allowed to work in a gas station?

[Satinder Chera]

I'm talking about convenience stores like—

[Raj Grewal, Liberal, Brampton East, ON]

Convenience stores and gas stations go hand in hand. Even in a convenience store, you would be handling tobacco, right?

[Satinder Chera]

Well, they wouldn't be handling tobacco.

[Raj Grewal, Liberal, Brampton East, ON]

You wouldn't be able to sell it if you were an 18-year-old?

[Satinder Chera]

No.

[Raj Grewal, Liberal, Brampton East, ON]

That's good to know. That was just a personal question.

[Satinder Chera]

I think the concern is more around some of these other products—for example, chocolate or chips. It's more of a question mark: would that be prohibited under the legislation? I think that's where our concerns lie.

[Raj Grewal, Liberal, Brampton East, ON]

What's the number one thing that the government could do in the budget to make the lives of convenience store owners easier?

[Satinder Chera]

I think the credit card fees are the top recommendation for us. There is certainly that, along with going after this contraband market, which I think is critical. I think everybody would agree that—

[Raj Grewal, Liberal, Brampton East, ON]

Yes. We heard about that yesterday from Imperial Tobacco Limited. They came and testified on especially the situation in the province of Ontario. You included that chart as well.

[Satinder Chera]

Yes. We will be putting out numbers in the next month, Mr. Grewal, around the dollar impact that it's having on retailers, and certainly we will share those numbers with the committee.

[Raj Grewal, Liberal, Brampton East, ON]

That sounds good.

My next question is for the Windsor-Essex Regional Chamber of Commerce. Thank you for being here.

You spoke about the costs of doing business in Canada being a concern. One of the biggest frustrations I have as a member of Parliament is the levels of government and the way that some of our processes work. If you have an idea federally and you want to build something in your riding, you first have to get your city on board. Once you get the city on board, you have to get the region on board. Once you get the region on board, then you have to get the province on board. By the time you get through this whole thing, you may not even be re-elected, so the idea will fall by the wayside.

On your comments on how we could make it easier from a common sense perspective to get entrepreneurs, an easy example is always the builders and their permits to get building.

[Matthew Marchand]

That's a great question, and thanks for asking it. I could spend all afternoon responding to it, but I'll just take about two minutes.

There are a couple of things. In automotive investment, for example, we've lost arguably tens of billions of dollars in investment in the auto sector to the southern United States and Mexico. The cost of doing business is one of the reasons, along with the permitting time in the different levels of government. It could take three or four years for something to go through here in Canada. Down in the southern United States and Mexico, it can go much more quickly.

It's an attitude adjustment that has to happen. We have to compete for business. We have to say to people “Hey, do you want to spend money and employ people here in Canada, here in Ontario? We're going to make it fast for you. Here's what we're going to do. We're going to fast-track this, we're going to have concierge service, and we're going to get this department involved and that department involved.” For example, in Mexico it's one-stop shopping. We've been arguing for that here in Canada.

When a large company wants to invest here in Canada, instead of shuffling them off to different departments—I know that's the way things are done in Ottawa, since I've been through it a number of times—we have to have the attitude of how to make it happen in the quickest amount of time to get it done. We could be more competitive. If we cut our time in lending investment from where it is now to where it should be in line with the southern United States, Mexico, and even the Midwest, we'd be in a far better place.

The top of the list is a concierge service. Second is a change of attitude in the administration so that private sector investment is to be heralded and welcomed and should be done as quickly as possible. It shouldn't be, “Here's what the problems are, and here's what our department's answers are.” We should give civil servants targets in terms of how quickly they're driving the permit process through. We should be coordinating with the federal and provincial offices to get things done, and they should be held accountable for targets, jobs created, and speed of permitting. That goes to the local level, too. We've talked about that here at the Windsor-Essex chamber with our local folks here.

[The Chair, Liberal, Wayne Easter]

Thank you for that. We'll have to end it there. We are converting to six-minute rounds now.

Mr. Albas, you have more time than I thought.