Finance Committee on Oct. 3rd, 2018

[The Chair, Liberal, Wayne Easter]

We're done, but we're not quite done. I do have to ask CSN a question.

You talked about the black hole, and I know there are a number of regions, including Atlantic Canada, that face that problem under the employment insurance system: they really get no money for a period of time. Has the five-week pilot project that was introduced helped? It might not cover all regions in Quebec. I don't know, so one question is on that.

Second, you mentioned the steel and aluminum industry and the fund there from the federal government. Is that money getting down to the ground?

Whether it's infrastructure or anything else, you can establish money in a fund, but one of the problems the federal government always seems to have is getting the money to where it's supposed to be. Is that money getting out to the people in the steel and aluminum industries who are injured because of the tit-for-tat tariff war between us and the United States?

[François Bélanger]

With regard to employment insurance, the additional five weeks is a really interesting step forward. We are aware that all this will have an impact on some of our workers in the Gaspé and on the North Shore. I am thinking, for example, of the workers in the shrimp industry. We had the opportunity to talk to them about it.

However, the advertised criteria may have a limiting factor. To access the additional five weeks, the person must have made at least three regular EI claims in the past five years, and benefits must have been granted on the basis of a type of seasonal unemployment for at least two of these claims. We find that access to government support is a lot to ask of young workers in this industry. To be eligible for these additional five weeks, a person must have three unemployment experiences in the last five years, including two seasonal experiences. This will really help older workers in the industry, but younger workers may be left behind.

For the moment, that's what we can see with this program. Of course, this has been announced recently.

As for your second question, you wanted to know if financial assistance for steel was down to the ground. I don't know anything about that. I don't know what the situation is with aluminum either. From what we've seen in the newspapers, there doesn't seem to be much demand for this money at the moment, but I don't know any more.

[The Chair, Liberal, Wayne Easter]

I know everybody has lots more questions, including myself, but we do have to end it there. Thank you very much for your presentations, as well as the submissions that have been previously forwarded. We really appreciate it.

With that, we will suspend for 15 minutes and start with the second panel.

[The Chair, Liberal, Wayne Easter]

Let's come to order. A funny thing about this committee is that we always seem to run out of time at the other end, so we'd better get started.

While we're waiting for a couple more members to come in, I want to welcome the witnesses. As you know, these are pre-budget consultations for the budget of 2019. For those who made submissions prior to the middle of August, we have those submissions on iPads. Members will be referring to those once in a while.

Just to give you an idea of where our MPs are from and who they represent, I'll go around the table and ask members to introduce themselves and their ridings.

I'm Wayne Easter. I'm a member of the government party. I'm from the riding of Malpeque, Prince Edward Island.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Good morning, everyone.

I'm Pat Kelly, and I am the MP for the riding of Calgary Rocky Ridge.

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

Good morning.

My name is Peter Julian, and I am an NDP MP. I represent the riding of New Westminster—Burnaby in British Columbia.

[Peter Fragiskatos]

Good morning, everyone.

I am Peter Fragiskatos. I am the MP for London North Centre. I am pleased to be here this morning. Your presentations are very important to me and to the Government of Canada.

I really look forward to it, so thank you very much.

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

Good morning.

My name is Francesco Sorbara. I am the MP for the riding of Vaughan—Woodbridge, which is near Toronto. I am very proud to be here, in Quebec City, today.

[Leona Alleslev]

I'm Leona Alleslev. I am the MP for Aurora—Oak Ridges—Richmond Hill, which is just north of Toronto.

[The Chair, Liberal, Wayne Easter]

With that, we will start.

First, from ADISQ, Ms. Drouin is Vice-President of Public Affairs.

The floor is yours. If you could try to keep it relatively close to five minutes, that would be great. Thanks.

[Solange Drouin, Vice-President of Public Affairs and Executive Director, Association québécoise de l'industrie du disque, du spectacle et de la vidéo (ADISQ)]

Thank you.

I'll speak in French, but surely you have translation. You also have an English version of our presentation, if you want to refer to it.

Good morning.

Thank you for this invitation to appear before the committee today.

My name is Solange Drouin, and I am the Vice-President of Public Affairs and the General Manager of ADISQ.

I am speaking today on behalf of about 250 independent entrepreneurs, who produce sound recordings, live performances or videos, who act as talent managers, and who are responsible for the production of 95% of French-speaking musical content in the country.

The independent industrial structure that characterizes francophone music production in Canada was created 40 years ago and is unique in the world. In Canada, francophone artists almost always turn to local entrepreneurs, small and medium-sized businesses, to assist them in the production and commercialization of their works.

Everywhere else in the world, music production is dominated by three multinational corporations known as the “majors”: Sony Music, Warner Music Group and Universal Music Group. During the 1980s, those three majors chose to get out of our market, thus allowing French-speaking Canadian artists and entrepreneurs to create together a dynamic ecosystem, a true star system of which the local public has grown fond: a situation that should make the Canadian public proud, as well as our leaders. For 40 years, our artists, supported by these small companies, have been shining here and around the world.

Nevertheless, these majors are still very much present in our market: they are our competitors. Is it really necessary to add that they benefit from enormous resources compared to ours? It's obvious.

Even if the whole musical world has been in turmoil for more than 15 years, independent companies are much more vulnerable to the transformation of the competitive music market. While we were operating in a historically unequal market, we must now deal with a market that has become unbalanced and unfair. This specificity must be taken into account in the current process.

First of all, let me make one important point: we are aware that, since coming into power in 2015, the government has made significant investments in culture. However, independent companies in the music sector, whose very first market is the important domestic market, have been forgotten. Yet there is an urgent need for action. The unfair and unbalanced market to which I have just referred threatens not only their competitiveness, but also their ability to provide the Canadian public with sustainable access to diverse, high-quality and professionally created national contents.

The facts are known and widely acknowledged: revenues stemming from album sales—both physical and digital—have been falling sharply in Quebec since 2005. Those resulting from streaming, paid by a handful of foreign companies that dominate the market, are almost non-existent. Internet service providers do not contribute to the support of the music industry, while their attractiveness is mostly based on the consumption of cultural contents. All this while the investments required to hope to make a sound recording profitable have increased since, going forward, investments must be made in two universes.

Moreover, while our industry was weathering all those storms, in 2012, the government then in power introduced amendments to the Copyright Act that have since taken tens of millions of dollars away from our industry.

Finally, federal public financing for production and commercialization in the music sector has remained stagnant since 2002-2003. Still, its leverage is necessary. Did you know that 84% of the revenues of companies on whose behalf I am speaking today are autonomous revenues?

Music is THE cultural sector that stands out because of the risk-taking of entrepreneurs. But let's be careful: in 2014, the profit margins of these companies averaged 7.4%. Public support is minimal compared to other cultural sectors, but its importance is crucial.

Over the past year, essential processes have finally been launched. We can think about the revision of three important laws in our sector, regarding copyright, broadcasting and telecommunications. This is good news. But we know that such processes will take time, a lot of time: a luxury we no longer can afford.

In order for music companies to remain in business, in the meantime, substantial and urgent funding must be provided.

The Canada Music Fund is being modernized. In order to maximize the impact of this modernization, we ask you to grant an additional annual emergency fund of $10 million, starting in fiscal year 2019-20, and to renew such fund until the many measures necessary for the return to a balanced, fair and viable market for music companies have been completed. This was done in the audiovisual sector last year by the Liberal government. Music faces challenges that are similar in every respect to those in the audiovisual sector, but has been facing them longer.

Cultural diversity is a principle that is dear to Canada. Content creators—artists and producers—are its cornerstones. We thank the Liberal government for maintaining the cultural exemption in the USMCA. We found out on Monday, and we were very happy about it.

When they no longer manage to make a living from their art, cultural diversity is directly threatened. This is the case today. Two years ago, our sector felt it was at a tipping point. We are dangerously approaching a point of no return. You have the power to turn us away.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Solange.

Next we have the Canadian Community Economic Development Network, represented by Mr. Toye and Mr. Gibson. Welcome.

[Michael Toye, Executive Director, Canadian Community Economic Development Network]

Thank you, Mr. Chair, and my thanks to the finance committee members for the opportunity to present today.

The Canadian Community Economic Development Network is a national association of community organizations, cooperatives, credit unions, foundations, municipalities and citizens that use economic tools to improve the social and environmental conditions of Canadian communities.

We have members in every region of Canada, including urban, rural, northern and indigenous communities. Mr. Kelly may be familiar with Momentum in Calgary. Cooperative development organizations, with which Mr. Fergus is very familiar in the Outaouais region, as well as the Corporation de développement économique et communautaire not far from here, in Quebec City, are also among our members.

Our members are community leaders moving towards an equitable, inclusive and sustainable economy that better serves people and communities facing barriers to prosperity.

An economy that fosters greater citizen engagement to create opportunities for all serves everyone better. We now have a moment when the government could dramatically scale up the impacts of these local leaders across the country through community-led social innovation and social finance.

In 2017, the Government of Canada established the Steering Group on the Co-creation of a Social Innovation and Social Finance Strategy. Following a year-long consultation process with Canadians, the government released the steering group's recommendations last August, which are presented in the booklet that the clerk distributed earlier.

Social innovation and social finance represent a growing collective awareness that the old silos separating private, public and community sectors are increasingly obsolete. Private companies, charities, non-profits, governments and individual citizens are breaking out of their historically defined roles, merging profit and purpose to break new ground, all for our greater good. We are at a tipping point, hovering at the edge of a paradigm shift that could dramatically improve the way we approach Canada's toughest challenges.

Governments around the world are harnessing this energy and investing in social innovation and social finance. We encourage the Government of Canada to join them and implement the recommendations of the co-creation steering group to enable dynamic local creativity and cross-sector partnerships that will unleash an army of problem solvers.

I'll pass the floor to my colleague Ryan Gibson, CCEDNet's past board president and Libro professor in regional economic development at the University of Guelph. He will give a few examples.

[Ryan Gibson, Past President, Canadian Community Economic Development Network]

Thanks, Mike.

I'd like to bring in two illustrations that highlight recommendations that we submitted for your consideration.

The first is Abbey Gardens, the social enterprise based in Haliburton, Ontario, that started in 2007. Its focus is around sustainable food production, training and education for the community and the region.

One of the challenges they face is that they have a hybrid business model that balances economic development and competitiveness with a social mandate. As such, they find themselves—much like many other social enterprises across the country—challenged by the current suite of small and medium enterprise business support programs that are offered by the federal government that may not recognize hybrid business models or may have challenges around the mandate to access that funding.

Abbey Gardens in Haliburton has been able to work with the community futures program as well as the eastern Ontario development program, but there still exist challenges for these hybrid organizations to access government funds to help them increase their competitiveness and serve their communities.

The second one I'd like to bring your attention to is the BC Rural Centre, a member of CCEDNet.

The BC Rural Centre has existed since the dissolution of the rural secretariat at the federal level to bring stakeholders together in British Columbia that are interested in rural and northern communities. These stakeholders are a community of practice that come together to share knowledge around how social innovation and social finance can be implemented in rural and northern contexts, which is fundamentally different from our urban contexts. These communities of practice bring together community members, stakeholders and indigenous leaders who are often in communities that have great distances between them. This is an incredibly important role that the federal government can take as part of supporting the social innovation and social finance strategy.

These two illustrations really highlight the need for investment in modernization of some of the small and medium business enterprise support programs offered by the federal government, and the need for supporting communities of practice and these knowledge networks to really support our rural and northern communities, and our urban communities as well.

[The Chair, Liberal, Wayne Easter]

Thank you.

Next is the Chantier de l'économie sociale, with Mr. Martin Frappier and Ms. Laura Cicciarelli.

[Martin Frappier, Communications Director, Chantier de l'économie sociale]

I will make my presentation in French. If there are any questions in English afterwards, Ms. Cicciarelli will be able to answer them.

Thank you for inviting us. It is always good for us to have more opportunities to participate in discussions on different issues, especially when they are financial in nature. For our organizations, money is crucial. This is what allows them to develop.

I will first say a word about the Chantier de l'économie sociale.

The Chantier includes 7,000 social economy enterprises. Our organization is recognized as a privileged interlocutor of the Government of Quebec, under the Social Economy Act. As you know, the social economy in Quebec is at the root of an immense volume of businesses and jobs. We are talking about 7,000 entreprises and 212,000 jobs. This is still significant; it is equivalent to one in twenty jobs. The total revenue of these companies in Quebec is $40 billion.

The social economy ecosystem is very diverse. There are very innovative financial tools that offer venture capital or patient capital solutions, research and support tools. It is a very well organized ecosystem.

We will address two elements in today's presentation. Of course, there are more details in the brief we have submitted.

The first element concerns the recognition of the social economy, then I will talk about the Social Innovation and Social Finance Strategy, which we think is a very important tool that must be provided with significant resources.

In the social economy world, a key element of the discourse of the Prime Minister, as soon as his government was elected, is given great importance. I am referring here to the strategy for inclusive growth.

By inclusive growth, the Chantier de l'économie sociale means the growth and production of inclusive wealth, something that reflects on the greatest number of people. Beyond money, inclusive growth is about participation. We are therefore talking about the growth and development of organizations and companies that allow the participation of the greatest number of people.

In the social economy, it is often said that one of the characteristics of our companies is to promote the empowerment and development of people. From this point of view, it is quite important.

One of the problems we have with program administration is the knowledge of the specific characteristics of social economy enterprises. Many programmes aim to support business development, but, due to a lack of knowledge of the social economy and overly selective criteria, access to these programmes by social economy enterprises is unfortunately limited. This may also be due to the fact that the legal status does not fully meet the criteria.

To remedy this, we recommend that each department that manages programs for businesses have officials who are familiar with the specificities of the social economy, in order to fully understand what it means to deliver programs. The government could create a service that would ensure that officials are familiar with the social economy and coordinate social economy efforts.

The next year will be a pivotal time to put the social economy back on the agenda. The government's intentions were very encouraging at the beginning of its mandate, but they have not been translated into concrete action to date.

The entire Quebec ecosystem is based, among other things, on financial tools that have been structured over the years to provide special support to social economy enterprises. These financial tools come at a strategic moment of recapitalization, particularly the Fiducie du Chantier de l'économie sociale. The Government of Quebec has already made some progress by promising to participate in the recapitalization of the Fiducie. Of course, the Government of Quebec wants the federal government to do its part too. That is what we also want.

As a reminder, I would like to point out that investments in the Fiducie have a leverage effect on investments from different sources, particularly private sources, on a one-to-seven basis.

Each dollar invested by the Chantier de l'économie sociale Trust in a social economy enterprise means a $7 investment from other funding sources.

Of course, the trust invests not only in what I would call traditional enterprises, “classic” enterprises, but also in all sorts of new developing sectors. Recently, for instance, a student housing fund was set up, which was an innovation.

I also want to mention the Social Innovation Strategy and Social Finance Strategy. I will not repeat what our colleagues said about it, but discussions have progressed apace over the past year. We had and still have certain concerns with regard to the strategy; we would like it to meet the recommendations of the steering committee, and to see it bolstered with substantial funds.

One of our concerns, and we sincerely hope it will also be one of yours, is that existing ecosystems be respected. There are already, in Quebec and also everywhere in Canada, actors and organizations that work in the social innovation area. The social economy is entirely aligned with the social innovation perspective. It seems important to us that those actors be respected, and that we give them the means to go further and bring their projects to fruition, rather than their having to redouble their efforts.

This is true for support structures, financial support, and research as well. There are organizations in Quebec, for instance, like the Centre de recherche sur les innovations sociales, CRISES, the centre for research on social innovations, that are connected to a university, do research and deserve to be supported. The example is relevant because a few years ago the government supported the Community-University Research Alliance, CARU, which enabled an enormous number of interesting research projects in all of the regions.

Generally speaking, we would also like to see more promotion activities to reach youth through an awareness campaign on social finance, innovation and, more broadly, the social economy. We see potential in the universities and educational establishments in general. Young people are showing growing interest in the social economy and social innovation, and we think that we need to reach that important audience.

I will stop here.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Frappier.

We'll turn now to Mr. Lesage, from Collectif Échec aux paradis fiscaux.

[Samuel-Élie Lesage, Coordinator, Collectif Échec aux paradis fiscaux]

Thank you.

I'll speak in French, but if you have any questions in English, that's no problem.

My name is Samuel-Élie Lesage. I am the coordinator of the Échec aux paradis fiscaux collective, a coalition that includes Quebec unions, community organizations and student associations.We represent the 1.5 million members. As our name indicates, we are working to put an end to the scandal of tax havens, either through citizen education, popular mobilization or co-operation with elected officials.

The use of tax havens by enterprises and individuals is increasing. The data on Canadian DFIs, direct foreign investments in tax havens, are crystal clear. For instance, from 2010 to 2017, Canadian DFIs in the Cayman Islands increased by 179.8% and those in Bermuda during the same period increased by 357.5%. It is likely that these investments are not being made to fund the real economic activities in those countries, but to reduce taxes paid here. We also know that in the main, large businesses and wealthy individuals are the ones who use tax havens. Finally, recent media revelations in Canada regarding tax havens, such as the Paradise Papers, Panama Papers, the KPMG affair, and many others, have undermined the population's confidence in Canadian tax authorities, and also, more broadly, in the tax regime in its entirety.

To re-establish the confidence of the population in the Canadian tax regime, but also to restore fairness among all taxpayers, individuals and corporations, it is essential that the issue of tax havens be tackled seriously. For some years, the Canadian government has responded to the growing indignation by making a few legislative adjustments and by cooperating with OECD countries on base erosion and profit shifting, or BEPS. That is good, but it is nevertheless clearly insufficient. The government has to make significant legislative changes to prevent businesses and wealthy individuals from using tax havens to avoid paying tax, and to put an end to the banking secrecy that protects offshore investments.

In keeping with the theme of these consultations, there are three reasons behind our arguments. First, if public services and social programs are to be funded adequately, taxes must be remitted in full, as they fund a large part of public services. These services make it possible to train and care for competent, highly qualified workers who have considerable spending power, which is of course advantageous for the growth of businesses. Public services also reduce socioeconomic inequality and mean that all citizens can be integrated into social, political and economic life. Increased revenues will allow the state to conduct structuring projects and to maintain and modernize infrastructure. In short, public services that are well funded by tax contributions that are fully paid are conducive to sound economic activity and social justice for all.

Secondly, we have to re-establish trust in the fiscal regime. Fighting against tax havens will contribute to restoring the confidence of the population and small businesses in the Canadian tax regime. That confidence is currently being shaken by the fact that affluent individuals and businesses are taking advantage of unacceptable largesse. The population has understood that funding public services rests increasingly and unfairly on its shoulders. The Canada Revenue Agency feels that it has made important efforts to track tax fraud. Unfortunately, that is not the public's impression of the CRA's efforts. Much more needs to be done to recover the large amounts of unpaid tax, give the CRA the necessary means to enforce compliance with tax laws, and restore public confidence in those institutions.

Thirdly, guaranteeing tax equity is a prerequisite for healthy competition. The fight against tax havens is thus equally necessary to restore fiscal equity among all businesses. That fairness is currently absent because the Canadian businesses that do not use tax havens have unfair competition from the ones that do. To that, I would add that the issue of unfairness in the digital sector and e-trade no longer needs to be proven. The Canadian government's lack of action in this sector is, unfortunately, deplorable.

What to do? What potential solutions must we examine? Last February, the Collectif submitted various suggestions to the CRA. They are in fact included in the document we have given you. We are pleased today to have the opportunity to do the same at these pre-budget consultations.

To wage a more active battle against the use of tax havens, Canada can and must, among other things, create a public registry of the true, ultimate beneficial owners of companies; consider new forms of income tax to counter the erosion of tax bases, for instance, like the U.K. Google Tax; prevent the tax free repatriation of profits generated by a company in Canada when it is no longer subject to tax or is very lightly taxed in the foreign state; review or abolish the tax treaties and tax information exchange agreements, TIEAs, with well-known tax havens, such as Barbados; and significantly increase the resources allocated to the CRA for the monitoring of abusive tax optimization strategies. Those are only a few examples, and that is not an exhaustive list.

In short, the tax laisser-faire which prevails in Canada is hindering the growth of enterprises that comply with tax rules, to the advantage of the large actors who have the means to abuse those laws. It undermines the confidence of citizens in the tax regime and undermines the state's ability to provide quality, accessible public services. All of these elements are, however, necessary if we are to have an economic growth system.

The fiscal status quo is no longer acceptable. We are simply asking the Canadian government to ensure that its tax laws are equitable, and are complied with by everyone.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you. I'm just trying to find your brief. My technology's great, but only when it works.

Next we have Ms. Chan, with Merck Canada Incorporated.

[Jennifer Chan, Vice-President, Policy and External Affairs, Merck Canada Inc.]

Mr. Chairman, vice-chair and committee members,

thank you for giving me this opportunity to address you on behalf of Merck Canada, one of the major innovative biopharmaceutical companies in Canada.

Merck Canada and the pharmaceutical industry are currently in the midst of an exciting and demanding time.

It is very exciting because of the remarkable progress that is being made in science and technology. That progress allows us to develop new medications and revolutionary vaccines to meet the outstanding challenges in the health care area.

This period is also demanding because we have to take part in putting in place the required policies to ensure that the new treatments are made available to the patients who need them.

I'd like to submit four recommendations to you regarding these opportunities and challenges.

Our first recommendation is that the federal government increase the Canada health transfer by at least 5.2% annually to allow provinces and territories to meet increasing health needs resulting from the aging of our population and the corresponding rising incidence of cancer, including providing timely access to cancer immunotherapies.

Our population is aging and will face more chronic diseases and cancer, among other health challenges. By 2030 the number of cancers diagnosed is projected to be almost 80% greater than the number diagnosed in 2005. At the same time, more new treatments, such as immunotherapies, will continue to become available, contributing further to the decline in cancer death rates that we are already starting to see.

Our health systems in Canada need to be prepared to meet these growing challenges. The Conference Board of Canada estimates that over the next decade, an additional $93 billion in health care spending will be needed, and the health care inflation rate will be 5.2% annually. Accordingly, we recommend the government ensure that the Canada health transfer be increased by at least this rate in the coming years to ensure provinces can meet the growing health demands, including providing timely access to these cancer immunotherapies.

Our second recommendation is that the federal government commit $100 million annually for a public vaccine funding mechanism.

Vaccines are important disease prevention tools. In 2007 the federal government invested $300 million to support human papillomavirus—otherwise known as HPV—immunization programs for over 1.7 million girls across Canada, to prevent cervical and other cancers. As evidence emerged on the health benefits to males, the programs were then extended to both genders. As a result, we have prevented a significant number of future HPV-related diseases and the costs that are associated with them. New funding would help provinces and territories continue to implement HPV immunization in older age groups and other immunization programs and would help to support communication and education activities to increase vaccine knowledge and acceptance. This would help the federal government meet its global commitment to achieve 90% of HPV immunization uptake by the year 2030, and ensure that Canadians are healthier and that our workforce is more competitive.

Our third recommendation is that the federal government reconsider the proposed amendments to the patent and medicines regulations, which will have very detrimental effects on the future prosperity of Canada and on the health of Canadians. The proposed amendments, which will change the way in which the federal regulator—the Patented Medicine Prices Review Board—assesses patented drugs, will have serious negative consequences on Canada's economic competitiveness in medical and biopharmaceutical research and patient access to innovative medicines. Among the consequences will be a significant reduction in research investments and health innovation partnerships, and the loss of high-quality jobs in the pharmaceutical and related sectors. Canada will lose its current tier one status as an early market for access to new medicines and as a prime destination for global clinical trials. That's denying Canadians an important means to access new treatments.

These proposed changes are untested and unprecedented in any jurisdiction, and run counter to Canada's innovation and skills strategy. Merck Canada strongly recommends the government reconsider these amendments, which would be detrimental to Canada's prosperity. We recommend that the government work together with the pharmaceutical associations towards better solutions to improve patient outcomes and protect the economic foundations of the life sciences industry.

Our final recommendation, recommendation number 4, is that the federal government develop a national pharmacare program that provides Canadians with universal, timely and high-quality access to medicines that maintain public and private drug insurance coverage. Merck Canada agrees with the need to address gaps in access to medicines, and if done right, a national pharmacare program would contribute to the sustainability of our health systems and increase Canada's economic productivity and competitiveness.

Any such program must be adequately funded so that Canadians have access to the medicines they need in a timely manner. It should also permit Canadians who have private drug coverage to maintain it, and this would allow governments to focus resources on addressing the coverage gap and ensuring timely access to new medicines.

On behalf of Merck Canada, we hope that the government will take these four recommendations into account.

I thank you for your attention. I am at your disposal for questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Chan.

We'll turn then to Mr. Vaillancourt, President, Quebec Association for the Taxation of Financial Transactions and Citizens' Action.

[Claude Vaillancourt, President, Quebec Association for the Taxation of Financial Transactions and Citizen's Action]

Good morning. I'd like to thank the committee for inviting me.

The Quebec Association for the Taxation of Financial Transactions and Citizen's Action, ATTAC, is an international organization that focuses on financial issues, but from a citizen's perspective. The Quebec chapter of ATTAC has existed for 18 years. The term ''economic growth'' has become fraught with meaning and consequences. Today we can no longer blindly forge ahead with growth the way we used to a few years ago. Now more than ever, we realize that natural resources can be depleted, and that we are consuming much more than our planet can sustain. We are saddling future generations with a colossal ecological debt. Ecosystems have gone awry because nature is being overexploited. Economic growth as we know it encourages an excessive production of consumer goods and causes enormous waste.

Climate change and the loss of biodiversity caused in large part by an economy based on unlimited growth and the consumption of fossil fuels are already causing their share of catastrophes. Among other things, this will within a few years trigger massive population movements, thus creating a surge of climate change refugees. Consequently, we can no longer keep heading in that direction as though nothing were happening. It is no longer possible to continue to defend a productivist economy under which blind economic growth and job creation, no matter which jobs, justify dangerous decisions, damaging to the environment and all populations.

It's important to include new words in our vocabulary, difficult words like “negative growth” or “de-globalization”, that do not please everyone, but are necessary. Thus, Canada's competitiveness—we would prefer to say Canada's leadership—should not translate into a race to growth that can only be deadly in the long term; rather, it should highlight our way of approaching the transition, economically and environmentally, and we should become a model to follow in this great shift. As opposed to what those who want to caricature such a perspective say, we do not at all want to go back to the days when we used candles for lighting. A true ecological transition based on other principles than productivist growth can create jobs, provide a better quality of life and ensure a better future.

The Government of Canada must be the motor of important, necessary changes. To do that, it must support if not subsidize any measure conducive to energy savings, in sectors like public transit, housing, building insulation, and geothermics; take measures to reduce waste; counter urban sprawl, and densify urban populations; support renewable energy rather than fossil fuels; and stop any and all subsidies to the fossil fuel industry, and the construction of pipelines. However, we must support hydroelectricity, wind power and solar energy; take measures to electrify transportation; and develop an economy based on short supply chains. To do so, among other things, we must: encourage local economies in calls for tender, and make that a priority in free trade agreements; encourage, through subsidies if necessary, local and ecologically responsible organic farming, rather than agricultural industry based on exports, huge water consumption, pesticides and oil, which are toxic to the environment; maintain supply management and make it more accessible to the new generation, if not extend it to other sectors, since it is, among other things, very effective to control overproduction.

It's important to achieve these changes quickly. To accuse those who defend this necessary and urgent societal project of being unrealistic dreamers is a very poor strategy which may well prove risky over the long term. We are aware that many Canadian policies are going in the opposite direction. The Government of Canada continues to subsidize oil and gas companies; it purchased the Trans Mountain Pipeline, designed to transport highly polluting tar sands oil; it supports a static perspective on free trade based on the same principles since the 1980s, as though nothing had changed since; from one trade agreement to another, it has created large gaps in supply management; and it negotiates agreements that promote long circuits and the unlimited movement of goods, which causes huge fuel consumption.

We should no longer purchase, for instance, poor quality stone from Pennsylvania to restore the Quebec Citadel, which is very close, but rather opt for stone that is locally produced in Sillery, and is of much better quality. This type of situation, which occurs too often, is due to a thoughtless opening of markets. We have to pay attention to what our scientists are telling us. The temperature of the earth has already increased by one degree.

If growth and the plundering of resources continues at today's rate, the earth's temperature will have risen by 3.2 degrees by the end of the century, and that will have terrible consequences.

The Canadian economy must adopt new paradigms and make it a priority to cleave to everything the Canadian government negotiated in the Paris Agreement on climate change. Canada should even be among the most ambitious of the signatories and undertake a true ecological transition as quickly as possible.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Vaillancourt.

We will start with seven-minute rounds, and we'll stick to seven-minute rounds.

Mr. Sorbara will begin.

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

Thank you, Chair.

I want to welcome all of you.

I'll begin with Ms. Chan from Merck Canada.

Last year I attended a groundbreaking in the heart of Toronto. I represent the riding of Vaughan, which borders Toronto. The French company Sanofi made an announcement on a medicines investment in their facility in Toronto.

I also heard comments on the patented medicines regime. Can you provide some clarity on your comments there as well, please? We do want to ensure that Canada, not New Jersey, receives its fair share of investment from medicines.

[Jennifer Chan]

Thank you for the question, Mr. Sorbara.

In terms of the patented medicines regulations, what we are really looking for is an opportunity to ensure that in health and innovation policies a whole-of-government approach is taken towards addressing the affordability challenges in terms of the pricing of pharmaceuticals in Canada, while at the same time ensuring that we work with the government to improve access and continue to support the innovation economy. Again, it's about taking a balanced approach in bringing health and innovation policies together.

Currently, the challenge, and the huge concern, is that the proposed changes on the affordability side are measures that are completely unprecedented and untested. Essentially, as an industry, we believe there are better solutions that can be implemented effectively and in a timely manner to help to address the affordability challenge that Health Canada and the Minister of Health are trying to solve without devastating the health research ecosystem and our ability to continue to attract investments into Canada.