Finance Committee on Nov. 7th, 2017

[Alison Thompson]

I would. Geothermal heat has really come into being, or been recognized, as renewable. It has always been renewable; it was just never codified into law as being renewable. Now that we accept that it is, what's been holding back projects is that particular designation that gave access to the CRCE and the ACCA. However, I just want to underscore further that it's not game-changing yet, because it's not complete.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

When you use the acronym, you're referencing the accelerated capital cost depreciation?

[Alison Thompson]

Yes, it's the ACCA.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I just want to put that on the record.

Is there anything you'd like to add to that?

[Alison Thompson]

I'd love to shout from the rooftops and the rafters that it's game-changing, but we want parity and we believe that the other renewables have sprinted ahead of us. Geothermal is constantly being called into question, but what's wrong with geothermal is not the resource and not the technology and not the talent; it's that we don't have access to the same types of mechanisms that are available for the other renewables, or for oil and gas and mining, for example.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I think when you say “access” you mean access to capital.

[Alison Thompson]

I mean access to capital by being eligible for the CRCE, for test turbines and transmission expenses.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you. I look forward to seeing further development in that sector.

Mr. Robinson, what was the rating that S&P provided the AIIB? Do you have that handy?

[Michael Robinson]

Yes, I do. It is AAA/A-1+.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I formerly worked in the bond-rating industry for five years and then covered it from the sell-side bond desk at a major bank, and I can say that's actually the highest rating that any sort of entity would be able to achieve—in this case what would be called a sovereign entity. It's great to see that for the AIIB, and it's great to see that there's an oversubscription, as we would call it, of entities wanting to apply to the AIIB. It's great to see that Canada is at the doorstep there, and a great participant.

Now, if I understand your angle—and please correct me if I'm wrong—it is to ensure that the appropriate measures are taken to prevent corruption taking place within the AIIB. The World Bank functions, and it has done some great things, but maybe some of the stories are not great. Is that along the tangent of your comments?

[Michael Robinson]

Exactly. We're very encouraged that what was announced in March of this year showed that they seemed to be going in that direction. When they were started in January 2015 through the signing of the original agreement, it wasn't clear. There is nothing at all in the agreement about prevention of corruption, and there's nothing in the voting powers or anything like that. Some of us have been a bit concerned that they should catch up.

As a partial answer to one of your colleagues' earlier questions, some of us have felt that the World Bank and the Japanese didn't want to join, and the U.S. didn't want to join because the World Bank and others were a little concerned that the level of corruption control wouldn't be there. I don't know whether that's the case. The World Bank is in a difficult spot because being dominated by the U.S., as one can see, they'd be seen as a competitor.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Am I done?

Thank you for the comments. Excuse me for not getting to everyone on the panel this afternoon.

[The Chair, Liberal, Wayne Easter]

Mr. Albas and Ms. O'Connell will split the time.

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

Thank you, Mr. Chair.

Mr. Bradley, in your remarks you mentioned your support and the co-operatives' support for the measure that's in the bill. Again, you're pointing out that the solution is to have established and continued use of the small business tax rate for the people in your co-operative.

You mentioned that some lobbying was done to ensure that that happened. Could you explain just what the issue was, and what the source of the problem was that this now, in your opinion, fixes?

[James Bradley]

The particular budget item that was proposed would have denied the small business deduction to an incorporated farm whose incorporated entity was a member-owner of another incorporated company that is their own co-operative. Their shareholding in their own co-operative would mean they were deemed to be not dealing at arm's length, and that non-arm's-length transaction would mean they would have to be denied access to small business deductions.

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

If they own a farm but then they join a co-operative so they can participate with you, they would be able to receive that first up to $500,000, at this lower rate. Is that correct?

[James Bradley]

Yes.

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

You lobbied for that. Did you go to the Minister of Agriculture or did you go to the Minister of Finance?

[James Bradley]

We started with the Minister of Agriculture and worked through finance as well.

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

Thank you very much.

I just want to switch gears a bit. Mr. Cross, the shares that we're purchasing are deficit-financed. We heard from the officials last night that there's little to no chance of any kind of cost recovery, because we're buying into something. Eventually, Canadian taxpayers will have to pay that back, plus the interest. That would be a safe thing to assume, would it not?

[Philip Cross]

I'm not sure I follow the premise. Pay it back with interest? Are you talking about the contribution to the equity of AIIB??

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

Well we're deficit financing to pay for it. The last time I checked, the government doesn't have a surplus to be able to buy the shares.

[Philip Cross]

Okay, I see where the interest comes from in this, yes.

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

Since we do have some old lawyers and some not-so-old lawyers in the room, have either of you ever utilized work-in-progress, or what's sometimes referred to as bill-based accounting? Have you, or any of your colleagues in law, used these?

[Michael Robinson]

I can't balance my bank book, and certainly I couldn't answer that question properly. The firm that I'm with, and I'm just counsel there now, has hundreds of lawyers, but hires experts—real accountants—to do that sort of thing.