We have one last point.
Evidence of meeting #172 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was research.
A recording is available from Parliament.
Evidence of meeting #172 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was research.
A recording is available from Parliament.
9:05 a.m.
Director General, Association pour la recherche au collégial
We have one last point.
9:05 a.m.
Retired Manager, Association pour la recherche au collégial
Our fourth recommendation urges the government to further encourage private, public and non-profit organizations that want to support research and innovation. As we know, most of the businesses, over 95%, that make up the industrial fabric of Quebec and Canada are micro-businesses or small and medium-sized businesses. They do not have the means or the resources to better equip themselves with technology or to be globally competitive.
We suggest that these small businesses that lack such means call upon the services of Canadian colleges, with whom they already have close ties, for help with research and technology transfer, among other things. In order to encourage businesses in that regard, we propose that they be given access to a more generous and worthwhile tax credit program that will enable them to improve their technology and perhaps also compensate for the labour shortage we are currently experiencing.
Non-profit organizations working in the social arena will not derive any benefit from a tax credit since they generally do not pay taxes. In their case, a direct subsidy would be preferable. All of these organizations that use the research done by colleges in the social innovation sector could do more to help social services resolve large-scale societal issues that are costing the government a lot of money and having an impact on public finances and the deficit.
9:10 a.m.
Liberal
The Chair Liberal Wayne Easter
Thanks, both of you.
We will now turn to the Confédération des syndicats nationaux, with Mr. Patry, treasurer, and Mr. Bélanger, adviser.
The floor is yours. Welcome, and thank you.
9:10 a.m.
Pierre Patry Treasurer, Confédération des syndicats nationaux
Thank you, Mr. Chair.
Hello ladies and gentlemen and members of the Standing Committee on Finance.
First and foremost, I would like to acknowledge Mr. Fergus and remind him that the CSN stands in solidarity with those affected by the tornadoes in the Outaouais area. We have already said it, but I wanted to reiterate that.
I am the treasurer of the Confédération des syndicats nationaux, which is a labour organization made up of nearly 1,500 unions representing some 300,000 workers, primarily in the province of Quebec. Since we already sent you our brief on August 1, I will simply give an overview of the eight recommendations that we made in it.
The first two recommendations have to do with taxation. I would like to remind you that the CSN welcomed the government's tax reforms aimed at making personal income tax more progressive. The CSN also agrees with the tightening of tax rules governing Canadian small businesses, even though the government did not go as far as we would have liked.
First, we believe that the government must do more in that regard, and we recommend that it introduce measures to protect the tax base by enhancing Canada's taxation measures. These measures include revising the capital gains inclusion rate because, as they say, a dollar is a dollar; tightening stock option deductions; reducing tax breaks for oil and gas companies, and I will come back to the issue of climate change later; and replacing research and development tax credits with direct government assistance, which we believe would be a more effective policy and provide better support in that area.
Second, the Government of Canada participates in G20 and OECD initiatives to combat tax havens, which is good, but not enough. The CSN participates in Échec aux paradis fiscaux, an organization that I believe you will be hearing from this morning in your second group of witnesses. That organization is of the opinion that the government needs to put some order in its own house. The CSN shares that opinion and is calling on the government to amend the regulations governing tax information exchange agreements and tax treaties in order to make it impossible for companies to transfer dividends back to Canada from tax havens completely tax free. We know that the various levels of government are losing a lot of money that way and we think that the federal government should take action in that regard.
I would now like to talk about employment insurance issues. The CSN believes that a great deal remains to be done in order to make the employment insurance program responsive to the realities of the working world. The government's initiatives to deal with the specific problems experienced by seasonal workers are worthwhile but insufficient. The measures related to training set out in the last budget and the announcement that was made on August 20 regarding a two-year pilot project that provides for five additional weeks of benefits are steps in the right direction but not a definitive solution. The government needs to recognize the reality of seasonal work and provide lasting solutions for workers in communities that largely depend on such activities. The government must therefore review the employment insurance program and find a lasting solution to the “black hole” experienced by seasonal workers. Some regions of Quebec and eastern Canada are particularly affected by this problem.
I also want to talk about trade relations between Canada and the United States and fine-tune what we said in our brief a bit since, if we are to believe the American President's many tweets, the situation seems to have evolved somewhat since August 1. A new trade agreement has also been signed since then.
Canada and Quebec are being hit hard by the application of U.S. tariffs. The CSN feels that the Canadian government had no choice but to respond to the U.S. tariffs, matching the responses of Mexico, the European Union and China. The CSN applauds the $2 billion in measures announced by the federal government to protect Canada's steel, aluminum and manufacturing industries and workers.
We are disappointed that the negotiations surrounding the newly concluded United States-Mexico-Canada Agreement did not result in the elimination of the tariffs on steel and aluminum. We are also disappointed about the whole supply management issue. I'm sure others will have more to say about that and will say it much more eloquently than I can. The government must follow that issue closely and review, when necessary, the assistance it is granting to the steel and aluminum industries in order to help Canadian businesses in those sectors to withstand the tariffs imposed by the United States.
In the face of the U.S. tax reforms, Canadian employer associations are currently pressuring the federal government to reduce corporate and personal income tax rates.
Do I have a minute left?
October 3rd, 2018 / 9:15 a.m.
Liberal
The Chair Liberal Wayne Easter
I wasn't getting the translation.
Go ahead. We'll see what happens now.
9:15 a.m.
Treasurer, Confédération des syndicats nationaux
I was saying that there is pressure to reduce corporate income tax rates. However, it is far from certain that simply emulating U.S. policy is the right approach for Canada.
Here are some of the measures Canada should put forward to ensure its continued economic and social development. In response to U.S. tax reforms, the government should ensure that Canada continues to be a welcoming place for immigrants, particularly since we are experiencing a labour shortage; adopt measures to foster increased participation of underrepresented groups in the labour force; invest more in labour force training and education; and provide adequate funding to the public health system.
The CSN feels that the federal government’s decision to buy the Trans Mountain pipeline from Kinder Morgan is incompatible with the pledges it made at the Paris climate conference to fight climate change and reduce greenhouse gas emissions. The CSN also feels that there are further inconsistencies in the government's approach since this purchase involves the transfer of public funds to an oil company, whereas substantial investments should be being made in the renewable energy sector. What is more, this decision flies in the face of opposition from the Government of British Columbia and a number of civil society groups. For all of these reasons, the CSN believes that the government must stop encouraging increased production of petroleum products from the oil sands and invest in other sources of energy.
Print media are experiencing a crisis that is having a significant impact on our democratic life. Together with the Fédération nationale des communications, the CSN is requesting the following: access to the Canada periodical fund for daily newspapers, tax credits equivalent to 30% of salary expenditures for print media, and the establishment of a fund for the continued existence of information production. The government must implement measures to support print media.
We are in Quebec's national capital. The Davie shipyard is just across the way. It is very beautiful. I invite you to go to Lévis to see it. The Harper government ignored Quebec when it awarded $35 billion in contracts to build vessels for the Royal Canadian Navy and the Canadian Coast Guard, even though the Davie shipyard in Lévis was fully qualified to obtain a share of those contracts.
Steps have been taken to ensure the continued existence of the Davie shipyard, but much more needs to be done. There have been massive job losses and a lot of expertise has been lost that we will never get back. The Trudeau government should stop making the same mistake as the previous government and recognize the Davie shipyard in the national shipbuilding strategy.
That is the end of my presentation.
9:15 a.m.
Liberal
The Chair Liberal Wayne Easter
Thank you very much, Mr. Patry.
Turning to the Quebec City Chamber of Commerce and Industry, we have Mr. Paradis.
Welcome.
Good morning.
9:15 a.m.
Michel Paradis Director, Entrepreneurship International, Québec City Chamber of Commerce and Industry
Good morning.
The Québec City Chamber of Commerce and Industry represents over 4,500 members, businesses, and delegates. It speaks for Quebec City's business community, and Quebec City will be the focus of my presentation today. We are well aware that the three subjects we will be raising today, two of them in particular, demand federal-provincial collaboration. This morning, we'll consider the broad strokes, but the chamber of commerce will of course look at things in much greater detail after the budget is tabled.
The three subjects we want to focus on this morning are immigration and its potential for addressing the labour shortage; tax fairness, specifically in relation to online commerce; and our businesses' ability to compete following the latest developments in negotiations for the newly renamed NAFTA.
With respect to the labour shortage and immigration, as you know, many believe we must resolve immigration issues if we are to resolve the labour shortage plaguing our capital in particular. While immigration is not the only solution—we also have to consider labour market reintegration measures and find ways to keep older people on the job—it is undeniably key to addressing this situation.
According to an Institut du Québec study on immigration and the labour market, one thing we know for sure is that most of the people who immigrate to Quebec settle in Montreal, with other regions suffering as a result. In 2017, 76% of permanent residents settled in Montreal and 42% were French-speaking. It is clear to the chamber of commerce that we need to work toward a better distribution of immigrants across Quebec. I should add that, between 2012 and 2017, 6.2% of international immigrants to Quebec settled in and around the capital, a region that accounted for about 10% of the population. While the situation is improving, it is very clear to us that more can be done.
To that end, the chamber of commerce believes that employment is one of the best ways to integrate an individual into the community. That makes the Quebec City region a great place to optimize retention and integration, and it is clear to the chamber of commerce that immigration is a great way to address the labour shortage. The chamber of commerce is therefore counting on the next budget to create the right conditions for achieving this goal through federal-provincial collaboration.
Now I'll move on to tax fairness.
Tax fairness is an extremely sensitive issue in our area. Community leaders have publicly expressed outrage over this issue, and the chamber of commerce has every reason to support their demands.
As far back as 2015, the Institut du Québec observed that Quebec businesses are behind the e-commerce times. At the time, Quebeckers made $6 billion worth of purchases online, but spent only $1.7 billion of that on Quebec-based websites. We kept encouraging Quebec businesses to focus on online sales to strengthen Quebec's ability to compete internationally. The problem is that provincial and federal tax systems are not designed for the world of online commerce. Goods purchased online from vendors outside Quebec are not subject to GST or QST. That makes it impossible for our businesses to compete.
The chamber of commerce would like to see our governments follow in the footsteps of countries such as Australia, New Zealand, Norway, and India, which have taken action guided by OECD recommendations that consumption taxes should be collected by the country in which the consumption takes place and that vendors should collect the tax.
The chamber of commerce firmly believes that this issue deserves more attention and that Quebec and Canada should work together to fix or at least improve the situation.
Lastly, with respect to competitiveness and the NAFTA context, the chamber of commerce is certainly glad that an agreement in principle has been signed, which should stabilize the economic climate and dispel uncertainty. Even so, some organizations have expressed various concerns and raised quite a few questions about the agreement. I'm talking about the agricultural sector, of course.
The chamber of commerce hopes that, in the near future, the concept of fairness will become the norm in order to keep all of the country's economic sectors healthy and safe. Here again, the chamber of commerce will be paying very close attention to all measures implemented to resolve or at least mitigate this issue.
In closing, the Québec City Chamber of Commerce and Industry's purpose in appearing before the Standing Committee on Finance is to bring the committee's attention to issues of concern to its members. Specifically with respect to the current context, the chamber of commerce wishes to emphasize that collaboration is key to preserving a stable economic climate, helping our businesses grow, and creating wealth here at home.
Let me reiterate that the chamber of commerce will be paying close attention to any measures taken as it advocates on behalf of Quebec City's business community.
Thank you.
9:25 a.m.
Liberal
The Chair Liberal Wayne Easter
Thank you very much, Mr. Paradis.
We now turn to Réseau Trans-tech and Ms. Déziel.
9:25 a.m.
Nancy Déziel Chairman of the Board, Réseau Trans-tech
Good morning Mr. Chair, committee members and guests. Thank you for inviting me to share our recommendations with the committee this morning.
My name is Nancy Déziel. I am the president of the board of Réseau Trans-tech, a network of college centres for the transfer of technologies, or CCTTs. There are 59 such centres in Quebec, many of which are members of Tech-Access Canada. Every year, our 59 CCTTs conduct 7,000 applied research projects for over 4,000 businesses, mostly small and medium-sized ones. CCTTs collaborate with universities and other research centres.
We are pleased that the Government of Canada is supporting this work by investing in three major funds, NSERC, SSHRC, and the Canadian Institutes of Health Research, as well as the NRC, the CFI, and Canada Economic Development.
However, our members' ability to support entrepreneurs' progress toward innovation is threatened by the fact that colleges and CEGEPs are financially responsible for much of the cost of their research activities. At present, that is the only thing standing in the way of Canada having world-class applied research capabilities.
The funding situation means that a number of Quebec CCTTs have to put the brakes on development and restrict access to some of their ultra-high-tech equipment so they can reduce the cost of maintaining and updating it and renewing licences. These limitations mean that considerably fewer SMEs and organizations that can access support services.
We believe there is no better time to invest. More than ever before, SMEs have to upgrade and modernize their operations in order to position themselves upstream of market demands and carve out a niche for themselves in the globally competitive knowledge economy.
NSERC's college and community innovation program allows colleges to use up to 20% of a grant to cover certain costs. However, our surveys show that indirect costs associated with research in colleges eat up between 27% and 35% of the funds, so 20% is not enough. Furthermore, this solution applies only to expenditures related to ongoing projects, not those required to maintain the research capabilities of institutions in the network.
Our recommendations are as follows.
First, we recommend that the government establish the regional innovation acceleration fund, the RIAF. We submitted this proposal to the Minister of Science and Sport and the Minister of Innovation, Science and Economic Development. This fund would ensure the continuity of college research and enable SMEs across Canada to access it.
Second, we recommend that the government invest $135 million in the fund over five years.
Third, we recommend that the government assign delivery of this fund to regional development agencies such as Canada Economic Development for Quebec Regions or NSERC.
Implementing this initiative would generate inclusive innovation access opportunities, accelerate the creation of stable, well-paying jobs in all Canadian communities, and increase experiential learning opportunities for students in order to foster innovative talent throughout the country.
How would such a program work? Participation by colleges and CEGEPs would be voluntary. The program would be open to all institutions eligible for NSERC, SSHRC, and CIHR programs. The amount of financial assistance would be calculated on the basis of the average of the amounts received over the last two years from competitive NSERC, SSHRC, and CIHR programs exclusive to colleges. Hence, colleges receiving an average of less than $375,000 in grants would receive $150,000 per year to support applied research development in their region and allow them to establish a critical mass of research.
In closing, I can assure you that Réseau Trans-tech is collaborating with Tech-Access Canada and with Colleges and Institutes Canada. We are working together, and we represent these organizations, which operate across the country.
The committee and the Government of Canada can count on Réseau Trans-tech's full participation and collaboration in implementing these major initiatives and driving society forward. We are prepared to answer all of your questions and to help implement this project.
Thank you very much.
9:30 a.m.
Liberal
The Chair Liberal Wayne Easter
Thank you very much, Nancy.
Turning to the UPA, we have Ms. Bouffard and Mr. St-Roch. Welcome.
9:30 a.m.
Isabelle Bouffard Director, Direction recherches et politiques agricoles, Union des producteurs agricoles
Good morning.
My name is Isabelle Bouffard. I am the director of the Direction recherches et politiques agricoles, Union des producteurs agricoles (UPA). I am here with my colleague Marc St-Roch, who is a tax expert.
We thank the Standing Committee on Finance for allowing the UPA to present the requests of Quebec farmers as part of the pre-budget consultations in advance of the 2019 budget
The UPA represents all Quebec agricultural businesses and producers. As you know, the agricultural sector is a major contributor to Canada's economic growth. However, government investments will be required to support the development of this sector and increase its rate of growth. Our presentation today is based on the brief we sent to you on August 3.
First, we will talk about safety nets for sustainable growth. When we talk about safety nets, we mean risk management programs for agricultural businesses. Those programs are the basis for growth in the agricultural sector. The insecurity related to the current market environment—including the concessions for the dairy sector made under the recent United States-Mexico-Canada agreement, but also the effects of tariffs being imposed, for example, between the United States and China, which significantly affect the price of pork and grains—justifies more than ever the need for business risk management programs that address the real risks faced by agricultural producers.
We would like to remind you that, since the implementation of risk management programs under the first agricultural policy framework in 2007, and the last year of growing forward 2 in 2017, program payments have decreased by 40%. Over that same period, farm cash receipts have increased by more than 60%.
These observations, shared by all stakeholders during the consultations surrounding the adoption of the latest strategic framework, the Canadian agricultural partnership, must be reflected in government policies and budgets.
We ask the federal government to provide access to risk management programs tailored to the needs of agricultural producers, to provide proportional increases to the budget of Agriculture and Agri-Food Canada, including the risk management program envelope, that reflect the growth of the agricultural sector. We also ask that it quickly put in place programs to fully compensate Canadian dairy producers following the concessions set out under the United States-Mexico-Canada Agreement, as announced by Prime Minister Justin Trudeau.
The second point we would like to present to you today is the harmful impact of amendments to the Income Tax Act on shareholders of private companies that do not have the status of agricultural cooperatives. Some agricultural businesses join forces to improve the marketing of their products by processing and distributing them, in order to deal with competition from the major players.
To do so, they become shareholders in a company whose marketing activities are similar to those of an agricultural cooperative. These groups are not created as a way to increase access to the small business deduction (SBD).
We are asking the federal government to allow these joint-stock agricultural companies to have access to the SBD on their sales made to the group, as is the case for sales made to an agricultural cooperative.
The third point also deals with risk management programs. The agricultural sector is taking proactive action on climate change—we are the first to experience it directly—and societal expectations. One of the winning conditions for sustained growth in agriculture and its benefits is adequate protection through risk management programs, as mentioned above. It is therefore essential that these programs be improved to address climate risks.
The response to natural disasters must be consistent across the country. In recent years, differences between provinces have created unfair competitive situations.
Societal expectations must also be met, which, for farmers, often means changing their practices and making additional investments. These expectations, which affect animal welfare, the use of inputs and the conservation of resources and the environment, are taken seriously by agricultural producers, even if meeting them requires significant investments.
Markets rarely reimburse such investments, however.
We are asking for the necessary funds to meet the producers' needs during natural disasters and to ensure that the programs put in place are uniformly applied; to fund projects and tools to improve the management of climate risks for farm businesses; and to support the necessary investments for adapting to societal expectations that significantly change practices, such as those related to animal welfare and the environment.
The last point is about the next generation of farmers, which affects all Canadian businesses. If we still want agriculture to exist, intergenerational transfer must be facilitated. We therefore ask the government to exclude from the anti-avoidance rule in section 84.1 of the Income Tax Act the transfer, under certain conditions, of a taxpayer's shares to his or her child or grandchild.
Finally, in the agricultural sector, the cost of assets is extremely high. The cost of land has become a major issue when it comes to transferring to the next generation. In 2016, the average value of the land held was $2.1 million per farm or 68% of total assets.
We therefore ask that the federal government take the following measures: ensure that risk management programs provide a sufficient safety net to allow the next generation to access the necessary funding; reduce participation costs and provide a higher rate of government contribution to risk management programs in the early years of operation; offer a refundable tax credit of 40% of the interest paid by the transferee to the transferor through a seller-lender agreement; and create incentives for financial institutions and governments to provide patient capital for next-generation farmers.
Thank you.
9:35 a.m.
Liberal
The Chair Liberal Wayne Easter
Thank you very much, Ms. Bouffard.
Before we start, Mr. Julian managed to get here from Ottawa after leaving us in Saint John last night.
Peter, do you want to introduce yourself and tell us where you're from?
9:35 a.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
I apologize for being late. I left Ottawa at 5 a.m. this morning to come to Quebec City.
My name is Peter Julian and I am the member for New Westminster—Burnaby, British Columbia. I am extremely happy to be back in Quebec City.
9:35 a.m.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
Thank you very much, Mr. Chair.
Once again, my thanks to all the witnesses who have come here today to share their recommendations for the upcoming federal budget.
I would like to start with the people from the Association pour la recherche au collégial. My questions will also touch on what Ms. Déziel's said.
I must admit that I'm particularly interested in this issue. Before I became a member of Parliament, I worked for the Association of Universities and Colleges of Canada for four years. I'm really interested in what you said about college research. The problem that has been going on for 12 years now has to do with the indirect costs of research.
Mrs. Lapostolle, I would like to give you the opportunity to further elaborate on this for the benefit of my colleagues around the table.
Here is the real problem. In many other countries, whether in the United States, Europe or Asia, governments subsidize the indirect costs of research, whereas in Canada, this is not the practice. Year after year, you are encouraged to do research, but the government does not cover the costs needed to carry out those research projects.
I come from the Quebec college system. Can you tell us how much it costs you per year?
9:40 a.m.
Director General, Association pour la recherche au collégial
In terms of university teaching, we mentioned the research support fund, which sends money back to universities. Direct costs are also paid by the Government of Quebec. The program provides funding to cover research facilities, research resources, management and administration of research activities, regulatory requirements and accreditation standards, intellectual property and knowledge mobilization.
At the college level, the fund provides very limited resources to colleges because the rate used to calculate the amount an institution can receive is proportional to the sum of the grants received from the three research councils. My colleague gave you some figures for 2016-2017: the total amount paid to college institutions in Quebec is only $233,487. Much of the research done in colleges is funded by a program that the Government of Canada put in place about 10 years ago, which the colleges greatly appreciate. Ms. Déziel also mentioned it. It's the college and community innovation program (CCI). More recently, the government also established the social innovation fund for colleges and communities.
Those two programs are excluded from the research support fund. An amount of 20% can be included. We mentioned it, and so did Ms. Déziel. However, that's not enough. All the things I mentioned earlier that are covered by the research support fund—
9:40 a.m.
Liberal
9:40 a.m.
Director General, Association pour la recherche au collégial
In Quebec, it's 27%.
9:40 a.m.
Director General, Association pour la recherche au collégial
It's not enough.
Given the structure, the architecture, the programs, but also the research in colleges, we receive too little money. Colleges do not receive funding for the indirect costs of research, which would allow them to support its development. This would allow them to work better with the companies that use their services, which are often referred to as very small businesses, or small and medium-sized businesses that need to work with colleges to be supported, even through partnerships. They do not have the resources for that themselves.
Mr. Poulin, would you like to add anything?
9:40 a.m.
Retired Manager, Association pour la recherche au collégial
No, you said it best.
9:40 a.m.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
Very well. Thank you very much, Mr. Poulin and Mrs. Lapostolle.
Mr. Patry and Mr. Bélanger, thank you for your comments on the tornado in the Outaouais. I very much appreciated them. We also appreciate the work of many of the unions you represent in helping us deal with this situation.
I was very interested in your suggestion about the tariffs imposed by the United States on Quebec aluminum products, and the issue of dairy products under the agreement between Mexico, the United States and Canada. You said it was possible that other people might talk about it. I imagine that Quebec dairy farmers will be making a presentation soon.
I would like to hear what you have to say on what L'actualité published yesterday or the day before yesterday, on class 7 diafiltered milk.
Do you have any comments on that? Perhaps you don't.
9:40 a.m.
François Bélanger Union Advisor, Labour Relations Services, Confédération des syndicats nationaux
I believe you are referring to the milk proteins sold for industrial use.