Finance Committee on Oct. 4th, 2018

[Mark Rowlinson]

That's a big question that's hard to answer in short order. Let me give you some quick thoughts.

The government needs to invest in a massive way in renewable energy, but it needs to do so with a lens of creating jobs here in Canada. I'll give you an example. There are no wind turbines being installed in Canada right now that are built using Canadian steel—none. There have been attempts in Sault Ste. Marie and in Trenton, Nova Scotia, but at the moment Canada has singularly failed to connect investments in renewable energy with the need to invest and create those jobs here in Canada.

I'll give you another statistic. A tonne of steel that is imported from China has five times the carbon footprint as a tonne of steel manufactured here in Hamilton, Sault Ste. Marie or Contrecoeur, Quebec.

I agree with your premise 100%, but if we're really going to build a renewable energy economy that would actually create jobs for Canadians, we need to do in a way that would ensure that the benefits at all levels of that economy are going to Canadians and that Canadians who are currently employed in high energy sectors, like steel, can see themselves and their communities in that green energy future.

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

Thank you.

Mr. DeRochie.

[Patrick DeRochie]

I would second the thoughts of my colleague from Blue Green Canada. One thing I would say is that the government deserves credit for the work it's done on the just transition for coal, including with communities, with former coal workers, with governments, and with the industry to make sure there is a plan going forward for those workers who will be affected by the phase-out.

Where I think there's an oversight is that we're focusing on one fossil fuel that we've acknowledged will be phased out, while ignoring that other fossil fuels, such as natural gas and oil, will also need to be phased out in the medium term to meet our Paris commitments and our domestic climate targets.

The government needs to start doing some thinking about how to manage that transition for oil and gas workers, in addition to coal workers, when we see global oil demands peaking and then decreasing within the next five to 10 years.

As we saw with the just transition panel that was struck for coal workers, we need to start thinking about oil and gas workers. We can start doing that by repurposing some of the subsidies that we're giving to oil and gas companies and using them for clean energy, for retraining programs, for just transition for the most affected workers in communities.

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

Thank you very much.

The Canadian Association of Petroleum Producers came before this committee and said that they're not being subsidized, which I thought was a fascinating comment.

I'd like to go to Ms. Murray. Those are very compelling cases that you brought forward, particularly Jennifer's, who at 21 years of age was diagnosed with MS. My cousin Julie Serle suffered from MS at about the same age, in her early twenties, and died a horrible death about 15 years later. As a teacher she lost her job. At no point did she get any sort of recovery. So the work the Stem Cell Network is doing is fundamentally important. I'm surprised to learn that you're fighting to keep the doors open to get that funding to sustain you.

How important is it that the federal government shift from what we currently see, which is year-to-year funding or small numbers of years where funding is provided, to a multi-year funding commitment? It may not be good politics. You can't make the announcement, but you can sustain that research that's so vitally important for Canadians who suffer from those kinds of degenerative diseases.

[Cate Murray]

First, let me say I'm sorry to hear that story; that's very sad. Unfortunately, there are many similar stories across the country.

With respect to your question, sustainable, predictable funding for translational research is absolutely essential. You can't do clinical trials on a short shoestring from one year to the next. You can't build durable partnerships with industry or research institutions or charities on a short time frame. Nor can we do big international collaborations without that time frame that allows for the research to be done and seen.

When we're in the health research business, we're looking 15 and 20 years down the road. It's not like we're a young Ph.D. graduate out of Waterloo who's able to do something with his or her roommates in their dorm and then spin it out and commercialize it. We're talking about therapies that are meant to go into humans and so we need clinical trials, and clinical trials take time. Therefore we need the funding to help support those early stage clinical trials.

In the case of stem cell research, many of the trials that we want to invest in and need to invest in won't be picked up by the pharma industry because they're not necessarily about drugs.

[The Chair, Liberal, Wayne Easter]

Thank you all.

We'll go to Ms. Caesar-Chavannes for six minutes.

[Celina Caesar-Chavannes]

Thank you. I'd like to start with Ms. Kuzmyk.

We know that our government has increased funding for the Canada Council for the Arts, from $300 million to over $600 million. The Canada arts presentation fund, established in 2001, has not received any additional funding since its inception. The Canada arts training fund, once there has been creation, helps the presenters go on the road, and clean up what they need to do domestically before that export.

How does not investing in a domestic fund—and I'm speaking to your ask for stable funding and increased partnerships—hinder your ability to export?

[Jenn Kuzmyk]

In terms of the Canada Council for the Arts in particular, which is demonstrative of a lot of the funding that seems to be available for the arts and for media in general, with regard to the festival, actually, it's a question of not fitting into the required parameters for the funding. The Canada Council for the Arts in particular is for artists; that's not for the festivals that support the artists necessarily. We don't get tourism dollars because it's not a consumer event. With regard to Global Affairs, we don't fit into that box, because we're kind of reverse exports. We're not bringing people from Canada overseas; we're bringing people from overseas to Canada. So it's kind of a problem with definition.

To answer your question about what we can do with more funds—is that what you're looking for? We have a program, and we've actually applied to Creative Export Canada as well, to create the Banff global financing forum. One thing that I think is really important to know is that only a minute portion of Canadian programs, Canadian content, and Canadian stories is financed by Canadians. When you look at global success stories, like Anne with an E, for instance, the new Anne of Green Gables series, which is, I think, the fourth-most binge-watched series in the world on Netflix, a really Canadian story, only a small portion of that was financed by Canadians. Any content that's made, anything that supports the Canadian media industry requires international financing, and that's where we meet, in bringing that international financing to Canadian parties.

[Celina Caesar-Chavannes]

Thank you.

My second question is for Mr. DeRochie.

I appreciate your recommendations to invest any money from the price on carbon back into communities in various ways. How do you reconcile your recommendations with the current actions, for example, by the provincial government here in Ontario, which clearly does not take climate change seriously, as most of these investments that you're talking about will fall under provincial jurisdiction? Are you saying you go directly to the municipalities or invest those directly in Canadians?

[Patrick DeRochie]

You might have noticed that some of the ideas I was recommending for using those carbon pricing funds were exactly what was cut in the Ontario climate change action plan. I think that really highlights that if you have a government that doesn't want to put a price on pollution and doesn't want to invest in all of the measures and programs that also reduce pollution, I'm not sure what is left other than command-and-control regulation. I think it's a good solution to go directly to those municipalities, directly to school boards, and to use the infrastructure we already have, for example at NRCan with the home energy retrofits, to do it right from the federal government.

I know the government's also considering direct dividends to taxpayers, carbon dividends. We've seen that model work in Alberta, and we're okay with that, but we'd like to see at least some of the money also apportioned to those programs and policies that reduce carbon emissions further.

[Celina Caesar-Chavannes]

Thank you.

Lastly, I would like to direct my comments to Mr. Murphy.

As you and Mr. Sorbara mentioned, our government has made significant investments in post-secondary education. The Prime Minister was at UOIT not too long ago to make an investment in ACE. Some may say that we should divert our attention away from making further investments. We have seniors, for example, for whom we could make further investments. What do you say to that statement? Why is your ask for investment in experiential learning so critical at this particular time?

[Dr. Steven Murphy]

Obviously, we recognize that governments are under pressure from all stakeholders. What I would say is that if we aren't investing in our future, our economy and our social fabric all break down.

Work-integrated learning is so essential because it allows our students to get the first-hand experience in the workforce that supplements their learning on our campuses.

I will use the opportunity to enlighten the committee somewhat. Sometimes the old, dated notions of a what a university is need to be challenged. A lot of the work-integrated learning actually happens on our campus. If you are learning about aerodynamics and engineering and you have a wind tunnel, you can imagine that you don't need to go to an employer. Those investments are used by our students. If you want to be a forensics scientist and you are learning about a crime-scene house, and and you have one on campus, that's where you do it.

The notion that you're always going out to an employer isn't so much as real as sometimes our employers are on campus. The answer to your question is that work-integrated learning, whether on our campus or within the purview of the employer's residence, allows our students come out more ready to push the labour force and our economy. That's exactly what we need.

I hear from CEOs every day that the biggest thing they want is to make their cultures more innovative. Young minds thinking about old problems in fresh ways will help our economy to thrive. That's what's going to allow the tax base to pay for the other essential elements.

I appreciate the question.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

Mr. Kelly, you have six minutes.

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

Thank you.

I'll maybe begin with Mr. Mizzen.

You spoke of the PMPRB. I'm not fluent with all of these acronyms that we use. I'm learning about the issues behind this. We heard testimony from Merck—I believe, yesterday—in Quebec City. They warned of catastrophic consequences for investment in pharmaceutical research as a potential consequence of these proposals, if I understood them correctly.

Can you comment on that? You're supporting this. Do you disagree, perhaps, with other critics, or are these different problems that are perhaps not your problems? Tell me what the arguments are for and against these changes.

[Brent Mizzen]

Sure.

I've heard the arguments and concerns of pharmaceutical about lower prices. My understanding of those arguments is that, to the extent that prices are lower in Canada than they are today, maybe that wouldn't attract the same level of investment from abroad, or the establishment or maintenance of head offices here in Canada. That's my understanding of their concern.

From the perspective I was speaking to, we have amongst the highest prices in the world for pharmaceuticals. We have scarce resources. We have concerns about Canadians and other payers being able to afford the medicines they need. I think it's critical that we have lower-priced medicines, which the changes to the PMPRB would achieve. Even to have them at the median price levels amongst the G7, for example, would bring them down dramatically and the reduce the effects on Canadians.

I haven't seen what evidence might exist of the impact of that on investment or the pharmaceutical offices maintaining headquarters here. I can't speak to that. I haven't seen.

Those are sort of the two sides of the perspective. I hope that addresses your question.

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

Your testimony is that the PMPRB is necessary to reduce costs for the betterment both of your industry and for all Canadian consumers of pharmaceuticals?

[Brent Mizzen]

Yes. I would clarify is that it's not for our industry; it's for Canadians and for payers of medicines. You have public payers and you have private payers. The way it would work in the private industry is that you have employers ultimately paying, and Canadians paying for their drugs. It may be facilitated through an insurance company, but really, lower prices would be to the benefit of both employers and Canadians, as well as the public payers—governments.

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

You didn't mention the tax on capital in your presentation, but I saw it in your submission. We are here to talk about the competitiveness of the Canadian economy. I'd give you a minute to address that if you want to.

[Brent Mizzen]

Sure. I'll just give you a very quick background. Our request or ask is the elimination of the capital tax on financial institutions. The reason for this is that the capital tax adds a cost of doing business to the industry and other financial institutions. I guess the added effect is that there's a new capital requirement or regime in Canada that's come into effect this year. The short form for that is LICAT. I apologize for the acronym for that as well.

We are unique amongst the G20 in that respect, in that there's a capital tax on top of this LICAT regime. We think that it's punitive and has a significant negative impact on the industry in terms of cost, and that it is not necessary from the capital regime. Life and health insurers already maintain a robust capital buffer.

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

Regulation is imposed on you to compel a behaviour that then turns into a tax that you have to pay?

[Brent Mizzen]

Correct, and it influences behaviour.

[The Chair, Liberal, Wayne Easter]

Mr. Fragiskatos.

[Peter Fragiskatos]

Thank you, Mr. Chair.

Thank you to the presenters.

Mr. DeRochie, what I will say is more of a comment on my part. I like to think that I'm a positive person, so we'll agree on some things and disagree on others. When it comes to Trans Mountain, I strongly disagree with you. I think that Trans Mountain is certainly in our economic interest, in our national economic interest in particular, so I can't take what you said there.

With respect to carbon pricing, I'm glad you've put forward some imaginative ideas and answers to my colleague's question in particular. I think there's an emerged consensus—I was going to say “emerging”, but I would say it's an emerged consensus—on this issue. Even Preston Manning is behind the idea of putting in place a price on pollution and carbon pricing mechanisms, which I think is tremendously important. There are still some holdouts, unfortunately, but hopefully we'll get there.

Ms. Murray, I sympathize very much with what you said about multi-year funding. We have some outstanding researchers where I'm from in London, Ontario, working in our hospitals, researching stem cells in particular, so I support what you've brought to the table. It's a really important issue, to get that multi-year funding for organizations. Unfortunately, it can't happen every time because there are limited resources, but the examples you've brought with you that you stated at the outset were deeply moving, so thank you very much.

My question is for Mr. Mizzen.

In your comments, sir, you talked about pharmacare. You spoke about rare diseases. In London, Ontario, we have an outstanding organization, the Bethanys Hope Foundation, which has done incredible work in advancing the research around metachromatic leukodystrophy or MLD, an extremely rare disease. I wonder if you could just restate what you said about rare diseases. I just want to make sure that it's on the record.

[Brent Mizzen]

Do you want me to state it specifically?

[Peter Fragiskatos]

Well, I mean.... What is your view on how pharmacare policy can address concerns that have been raised in the community among those who are dealing with rare diseases?