Finance Committee on Sept. 25th, 2018

[Pierre Poilievre, Conservative, Carleton, ON]

The Honourable Sergio Marchi was talking about the pancakes of regulation. Which specific regulation could the federal government remove, or have removed, to allow for additional electrification?

[Sergio Marchi]

If governments were to actually look at all those layers of pancakes, then—

[Pierre Poilievre, Conservative, Carleton, ON]

You have looked at all those layers of pancakes. We're looking more for answers, rather than more questions. What exactly would you deregulate? Which regulations would you remove? What steps, exactly, are you asking us to take?

[Sergio Marchi]

We haven't done that piece of homework yet.

I think we have to get to first base first, because governments refuse to even talk about coordinating.

[Pierre Poilievre, Conservative, Carleton, ON]

My next question, then, is for the Fisheries Council. You mentioned some of the regulations that are accumulating on your sector. Which ones would you eliminate?

[Paul Lansbergen]

First, we have to recognize that DFO, with the new Fisheries Act, is going to have a tremendous burden on itself to write a lot of the new regulations under the new act. It will require resources within the department to hold the consultations that are required for that. It will require the support of the centre of government with justice lawyers to draft the regulations.

We'd like to see some specific regulations addressed while they're working on that, and to give a specific example: export certificates. Our companies have to request an export certificate. It takes five days to get the certificate. CFIA does not inspect in order to provide the export certificate, so it's just a delay. Our facilities are already approved through CFIA, through a HACCP program, and other measures, so that's just slowing things down. For an export-oriented economy that should be something that should be easily fixed.

With respect to LED lighting on fishing gear, other countries use this new technology to either repel unwanted species, to avoid bycatch, or to attract the target species. We're not allowed to do that. Some marking of gear, or even retrieval of lost gear, is not allowed under certain circumstances. That situation seems to be a little perverse.

Little things like that are preventing us from innovating and becoming more competitive. Those are just some simple ones.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

Mr. Julian.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much, Mr. Chairman. I will try to ask three sets of questions. Thanks for your statements.

I'm going to start with you, Mr. West.

The Phoenix debacle has hit hard. I've had many public servants come to me who either haven't been paid, or are being forced to pay money they never received. We've heard of public servants who have lost their homes.

How important is it for this government to fix what has been an incredible debacle and disrespect shown to our public servants? Is it important to have a public inquiry, so that we can get to the bottom of why this decision was made in the first place?

[Howie West]

It's exceptionally important to have it fixed. One of the things we've asked for in our submission is more financing. In the last federal budget, the government only allotted $35 million, $12 million, $8 million, and $8 million in the next four fiscal years. The Treasury Board report on the first Auditor General's report, and the Senate committee's report both suggest that it's going to take up to five years to fix Phoenix.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

I'm sorry, it's going to take how long?

[Howie West]

It is up to five years to fix Phoenix, so more funding will be required.

Additionally, if the government is going to be looking at a new system that goes peripherally to Phoenix—and the new system can't be in place until Phoenix is fixed—the government is going to have to hire more staff to work on that new system to advise, to let them know if it's working or not and to do the testing.

In terms of a public inquiry, what we're asking for in a public inquiry is why no senior bureaucrat said “no”. It's not so much who caused Phoenix within the bureaucracy, or who were the players. We know who those players were. We were talking with the government from 2011, and we're still talking to the government. At no time did any of those senior bureaucrats say, “no”.

In our first meetings in 2011, we asked for the business case for this new system that was being put in place, and we were refused. I received the business case about a year ago. Had we received that business case at that time and were able to talk about it publicly, it would have been very clear that the kind of robust analysis that was necessary to have a pay system that actually paid people was not being considered.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much.

I'm going to move on to Ms. MacEwen.

Thank you very much for your statement, Ms. MacEwen. I actually think this should be very much part of our report as a finance committee. You're talking about a new paradigm in terms of productivity. One of the figures that has been cited here is that our universal public health care system has a $3,000 competitive advantage per employee per year for Canadian businesses vis-à-vis their American competitors. You've talked about a whole range of other investments that would make a difference for Canadian businesses and would make a difference for productivity in Canada.

Can you comment on the importance of not following the Trump economics model where we simply cut—with no obligation, no direction and no strategy—taxes for the corporate sector rather than make these kinds of investments that actually improve the competitiveness of Canadian businesses and also help the quality of life of Canadians?

[Angella MacEwen]

Absolutely. I think if you talk to business leaders, they'll often say that their biggest advantage is their workers. You saw Amazon investing in Vancouver because of the access to high-quality graduates from university there. What we see is that when you have this Trump strategy of cutting regulations willy-nilly, cutting taxes, putting our entire global trade system into jeopardy with trade wars with China and tariffs of 25% on steel, that creates uncertainty. That doesn't create a certain, stable, sustainable environment.

Businesses often want predictability. They want to know. This is what we heard from the panel today. They also want a government that's willing to work with them when stuff doesn't make sense: “Why can't I mark where I lost my fishing gear?” We're not saying, “Don't engage with business in that,” but we are saying that when you deregulate the way that Trump does and when you cut taxes the way that Trump does, you often create more problems than you're solving. You're not getting down to that core thing that we need, which is investment in public services, investment in people. That creates well-being because the reason that we want growth in the first place is for us to all have a higher standard of living and better quality of life.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much.

Finally, Mr. Marchi—you don't seem to age at all, which is a bit disconcerting to the rest of us—could you comment on two things?

The first is with regard to the zero-emissions vehicle strategy. I have an electric vehicle manufacturer in my district, Electra Meccanica, that has not been able to get one cent of government support to build a new manufacturing facility. Could you comment on the importance of that strategy?

Also, you didn't mention in your presentation smart grid technology, which certainly works in northern Europe to deliver electrical power through different types of feedstock. Is that an important part of what this committee should be considering?

[Sergio Marchi]

Thank you very much. I wish your statement on aging were true—you're a diplomat.

First of all, with regard to the zero-emissions vehicle strategy, we're awaiting the task force report. We participated in the deliberations, so we're hoping that it is going to give us a good, practical, realistic plan with realistic targets. We know that a lot of European car competitors are already making very ambitious plans for zero-emissions vehicles. I think we have to keep up with the Joneses, so we look forward to that task force report coming out any day now, as we understand it.

In terms of smart grids, that's very much a part of our considerations going forward. In fact, under our first recommendation in terms of the oversubscribed NRCan funding programs, one of them was the $100-million smart grid program. We think that was a success because the monies were available and the private sector made use of it. I think it has worked well as one of the four programs that we think should be recapitalized.

One thing is certain. The future of the electricity sector will certainly not look like the one today. Smart grids and renewable energy, and how we integrate renewable energy with our current utilities, are obviously going to be things that will be very significant in continuing to bring down emissions and, at the same time, continuing to produce the reliable power that Canadians have come to expect.

[The Chair, Liberal, Wayne Easter]

Thank you all.

On that last question, Sergio, where is the best smart grid in the world—Germany?

[Sergio Marchi]

Germany is certainly one of them, but there is also some very interesting work being done by New Brunswick Power in partnership with Siemens on smart grid technology. It's not like Canada is just looking elsewhere. We're also beginning to renew and innovate the way we must.

[The Chair, Liberal, Wayne Easter]

Thank you.

Now we'll hear from Mr. Sorbara.

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

Thank you, Mr. Chair and welcome, everybody. Good morning.

I'll go first of all to the honourable former minister, Mr. Marchi. You commented on competitiveness and what I would call both regulatory layering and regulatory uncertainty, which tend to both slow down and defer decision-making by companies and private investors. They are things I've often thought about and been very cognizant of.

On page five of your submission, you talk about an appropriate response to what the United States did earlier this year. I want to look at it holistically. If you were a company, two years ago you had no incentive to repatriate your capital back to the United States. Now you have a very big incentive to repatriate capital and retained earnings back to the United States. Once you do, you can invest it and get a full writeoff in year one, and so forth. We need to think about that.

Out of the measures you've put down here to promote Canada's economic competitiveness, where would you rank accelerated capital cost allowance and changes to that measure, versus the other ones you've listed?

[Sergio Marchi]

First of all, I'm glad you're thinking about the whole issue of competitiveness and the relationship with the regulatory regime. As I said in my earlier statement, we're very pleased at the CEA that the Minister of Finance has chosen competitiveness and growing the economy as a theme. It's time, because business has been fairly united for the last couple of years in beating that drum. We're looking forward to seeing what kinds of tools the government will be using from its financial tool box.

The capital cost allowance is probably close to the top, certainly in terms of what our members are urging with regard to advocacy with government. That would be a very high priority for us. It was in previous years and that continues to be the case.

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

Of course. Thank you.

I would note that Sergio and Tim need to have a conversation. Section 2 of Tim's submission, which I read last night, says, “At the same time, there is a growing realization, that large scale electrification of end use demand is neither cost effective nor technically feasible.” Maybe you guys need to square on that one.

However, I want to speak to the Canadian Gas Association this morning. We know from the western Canada sedimentary basin, and from other resource fields that we have in Canada, that we have a natural advantage in gas. Out of your recommendations here, where can we get the most bang for our buck in terms of incentivizing further natural gas exploration and the appropriate distribution model for both rural and urban?

[Timothy Egan]

We have, as you noted, a supply picture that's incredibly positive. It just gets more and more positive all the time. The Government of Canada talks about several hundred years of supply. The product is as affordable as it has ever been. I was in Nova Scotia last week, and I had a bill in my hand from 1915. Natural gas is almost one-fourth the commodity cost it was in 1915. You're right. The supply picture is extraordinary.

The single best thing we can do to continue to help on the supply side is to look at the regulatory framework and the regulatory pancaking. I can list a series of provisions that are very onerous for our industry: the clean fuel standard, the methane regulation, the carbon backstop, the energy efficiency standards, the proposal for offset purposes, and Bill C-69. Each of these represents a cost to the end-user and to the producer, so we need to look at how we can lighten that cost. On the distribution side, we need to send a signal that isn't as negative as the signal has been about the prospects of using natural gas.

We're all for electricity. Many of our members are joint. We have a great deal of co-operation, and at the same time, we compete. It's healthy competition. Obviously the electricity industry is going to advance an electrification strategy.

The chairman asked about a smart grid. I'd say we don't need a single smart grid. We need a smart energy delivery system. That can be an electric grid. It can be a natural gas distribution system. It can be one of a variety of choices, and we shouldn't be picking a favourite. We should be giving choice.

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

Thank you.

I have one last question, and it's for CUPE and the public service workers.

Our government right now is consulting on revising the Canada Labour Code. We've also, as a government, removed what I would characterize as two anti-union pieces of legislation from our counterparts, Bill C-525 and Bill C-377. We dealt with that earlier in the mandate.

How important is that to your members, whether they're private sector or public sector union workers—those are hard-working middle-class Canadians—have a level playing field and are able to go to work with the protections and benefits that they deserve?

[Angella MacEwen]

Absolutely. Bill C-377 and Bill C-525 were awful pieces of legislation that targeted unions. We're very glad that most of that has been undone, particularly in terms of privacy for our members, with Bill C-377.

The Canada Labour Code review is a good opportunity. There's a lot that can be done in terms of recognizing the reality of precarious work that CUPE members in particular are struck by, like contract flipping, like a $15 minimum wage at the federal level, and making it easier to unionize precarious workers so that they can have the support of a union when they need it.