Finance Committee on Oct. 17th, 2018

[Janet Lane]

—so I'm anticipating that it will be published either next week or the week after. I know it's the next thing on the list.

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

Is it possible to make a copy available to the committee as it's coming out?

[Janet Lane]

Absolutely.

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

Thank you very much.

[The Chair, Liberal, Wayne Easter]

If you could send that to the clerk, Ms. Lane, we'll distribute it.

Ms. Rudd.

[Kim Rudd]

Thank you.

I have just a couple of things.

Michael, you talked about the proceeds, if you will, of the price on pollution coming back to businesses for enhancing equipment around energy efficiency and those kinds of things. Is that correct?

[Michael Holden]

That's right, yes. Our position is that we are not necessarily opposed to a carbon tax as a means to achieve a public policy goal, but it's a carrot-and-stick issue. If you tax businesses, you create the stick but you remove their capacity to invest in mitigating products because they have less money available. By taking that money and reinvesting it in these kinds of programs, dollar for dollar, you improve their capacity to take action to mitigate their environmental impact.

[Kim Rudd]

Certainly, in my former role as parliamentary secretary to the Minister of Natural Resources, I learned a lot about the sector and some of the real innovation that was happening around reduction of energy use, water use and a number of things. It actually increased and enhanced the bottom line at the end of the day, which I think is exactly what you're talking about—twofold positivity, if you will.

Wesley is talking about the price on carbon pollution as not being there, and you're finding an opportunity for it. What has happened? Can you talk a little bit about, or provide a bit more information about what Alberta has decided to do in terms of their price on pollution, which they are distributing across the province?

[Michael Holden]

I have to defer that question to somebody else at the table here. The work I do at CME tends to be focused on national issues, so my familiarity with the structure in Alberta is probably not as good as somebody else's here.

[Kim Rudd]

Alberta has its own plan and it decides what to do with the money and whether it goes to businesses. In B.C., they have done a combination of businesses...direct tax returns to individuals. I wonder if that has been contemplated in Alberta and is being done. Maybe someone else has the answer to that.

[The Chair, Liberal, Wayne Easter]

Ken and then Lynette.

[Ken Kobly]

My understanding is that 65% is returned as rebates to low-income individuals. The balance of 35% is used for new projects.

[Lynette Tremblay]

I can speak to this as it relates to heavy emitters in Alberta's industrial heartland.

We have an output-based allocation system for carbon pricing, and the revenues collected from the heavy emitter's price on carbon is returned to industry by virtue of a number of programs through Emissions Reduction Alberta and Energy Efficiency Alberta, which help industry improve its energy efficiency and fund various types of technology pilot projects. Some of those projects have been funded in the heartland around partial upgrading of bitumen, for example, and various other types of initiatives. We think that's an incredibly successful system and should be replicated across Canada.

[The Chair, Liberal, Wayne Easter]

Did somebody else have a hand up? I don't think so.

We will have to end it there. We are a little over time and we have a second panel waiting.

I want to sincerely thank everyone for their presentations and their direct approach in responding to our questions.

We will suspend for 10 minutes and go to the second panel.

[The Chair, Liberal, Wayne Easter]

We'll come to order and welcome the second panel here in Edmonton for the pre-budget consultations for the 2019 budget. Welcome.

For those who did present submissions prior to August 15, they are on people's iPads or computers or units, and they'll certainly be referring to them every once in a while. All the evidence today and the submissions will be considered as part of our work on recommendations.

Before I start, I'll just ask our committee members to introduce themselves so you know where we come from and what region we represent.

I'm Wayne Easter, a member of Parliament from the riding of Malpeque in Prince Edward Island. I'm a member on the government's side.

Peter, do you want to start?

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

Thank you very much, Mr. Chair.

My name is Peter Julian. I am the deputy chair of the committee and represent the NDP.

I'm elected in the riding of New Westminster—Burnaby, which is the traditional territory of the Qayqayt First Nation and the Coast Salish peoples.

I'm very happy to be here in Edmonton.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thank you, Mr. Chair. Thank you, everybody, for being here.

This is home for me. I'm the member of Parliament for the Edmonton Riverbend area, where I represent the Conservatives along with my colleague here.

I want to thank everybody for coming here. I know some of you have travelled to get here, as well, and I really appreciate it. This is important. I'm proud the chair has chosen to bring us here to Edmonton.

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

Thank you.

I'm Pat Kelly. I'm the member of Parliament for Calgary Rocky Ridge, so the northwest corner of the suburbs of Calgary.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Hello.

My name is Greg Fergus. I am the Member for Hull—Aylmer, in the Outaouais region of Quebec. I am a Liberal MP and have been a member of this committee for two years. I am very pleased to be here. Like Mr. Julian, I want to acknowledge that the riding I represent is on the unceded territory of the Algonquin and Anishinabe peoples.

[Kim Rudd]

Good morning, and thank you for coming.

I'm Kim Rudd. I am the member of Parliament for Northumberland—Peterborough South. For context, that is a rural riding in southeastern Ontario.

It is good to be back in Edmonton. I really look forward to your presentations this morning. Thank you.

[Michael McLeod, Liberal, Northwest Territories, NT]

Good morning. My name is Michael McLeod, I represent the Northwest Territories.

Welcome to all of you.

[The Chair, Liberal, Wayne Easter]

With that, thank you everyone. Welcome again.

We'll start with the Agricultural Manufacturers of Canada.

Ms. Andreas, chair of the board directors, and Mr. Hamil, welcome.

[Richelle Andreas, Chair, Board of Directors, Agricultural Manufacturers of Canada]

Thank you, Mr. Chair.

My name is Richelle Andreas. I'm the CEO of S3 Enterprises. We're a small manufacturing company out of Swift Current, Saskatchewan. I'm also the board chair of Agricultural Manufacturers of Canada or AMC.

AMC is very pleased to be able to take part in the consultations by the House of Commons Standing Committee on Finance in advance of the 2019 budget. I'm humbled to have a chance to address you on behalf of our members at a time when there's such an incredible opportunity through innovation and smart policy in the agri-food sector to make expanded and long-term contributions to Canada's economy.

With over 250 members, AMC is a national organization dedicated to sustaining a strong, viable and highly respected Canadian farm equipment manufacturing industry. It can be said of our members that innovation is truly in our blood. Many Canadian farm equipment manufacturers started out as farmers or members of small rural communities. Over the years, they have used their experience and ingenuity to develop cutting-edge farm equipment that met the unique needs of local farmers, given the harsh climate and growing conditions of the region.

Today our agricultural equipment is among the highest quality and most sought out in the world. In 2017, AMC member companies exported more than $1.9 billion in agricultural implements to 154 countries.

Let me point out that AMC's member companies see themselves as playing a significant part in helping to advance the federal government's goal of increasing Canada's exports of agri-food and agricultural products to at least $75 billion by 2025. As you know, our manufacturers and farm customers are dealing with significant challenges arising from uncertain trade patterns and our commitment to balance growth with ensuring a safe, secure and environmentally sustainable agricultural sector.

The agricultural equipment manufacturing sector is an important one for Canada's economic success. For our sector to thrive and ensure Canada's competitiveness, budget 2019 should include measures that support the innovation that is already taking place and help us get our products into global markets.

Our number one recommendation for the 2019 budget is for the federal government to provide a better incentive to invest in the purchase of farm equipment by raising capital cost allowance rates available to farmers. Specifically, AMC recommends the government modernize the capital cost allowance rates for purchases of new farm equipment and machinery by combining the two classes they now fall into and providing a higher rate of amortization.

At a rate of 50% amortization, the writeoff period associated with farm equipment purchases would more closely match their technological obsolescence and incent Canadian farmers to invest in technologies that will reduce their emissions, decrease their carbon footprint and increase the overall productivity of their operations, better positioning them against global competitive threats.

I should mention in this context that the federal government-commissioned economic strategy tables on the agri-food sector recently singled out improved CCA rates as a significant incentive that would accelerate investments and enhance Canada's competitiveness.

AMC also recommends that the federal government continue pursuing free trade agreements and diversifying Canada's export markets. Based on the favourable global reputation of specialized Canadian-made farm machinery and equipment, Canada's manufacturers are in a strong position to take advantage of the expanded market access in Asia, Europe, South America and other regions. We also recommend the government encourage Export Development Canada to continue and strengthen its support for Canadian exporters active in developing markets such as South America.

Canada's manufacturers of specialized farm machinery are proud of their unique, made-in-Canada success. We are national in scope and play an important role in rural communities where AMC companies employ approximately 12,000 people, primarily in communities of less than 10,000.

Innovation starts at home. Modern farm practice is advancing at an unparalleled rate, and our members are creating the solutions to execute the science of tomorrow's farm. As a leader in the global advancement of agronomy with good public policy, Canada stands poised to increase our exports and become the worldwide model for sustainable agricultural practice. We believe with improvements and crucial incentives from the federal government we can greatly increase our contribution to the country's long-term success.

Thank you. I would be happy to take any questions you may have.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

We'll turn to Mr. Malloy with the Alliance of Canadian Comprehensive Research Universities.

Welcome.

[David Malloy, Vice-President, Research, Alliance of Canadian Comprehensive Research Universities]

Thank you. Good morning. You have our submission. This morning I'd just like to read some excerpts from it to call attention to some salient points.

Before I do that, I'd like to give you a brief overview of what ACCRU actually is. The Alliance of Canadian Comprehensive Research Universities represents 38 small and medium-sized comprehensive universities and 56% of all undergraduate students from across Canada. ACCRU is not intended to be a lobby group. Instead, it strives to be the voice to discuss challenges and issues that smaller universities face.

By acting as a collaborative whole, ACCRU is able to accomplish the following objectives: identify best practices to enable the most effective execution of research at ACCRU member universities; identify and encourage collaborative research initiatives among its members and other research institutions nationally and internationally; enable its members to respond to new research opportunities and developments in a coordinated and timely fashion; and act as a voice for communications on research and scholarly activity issues important to its members with research funding agencies, policy-makers and the public at large.

We've submitted three recommendations, all of which focus around increasing funding to undergraduate students for research and experiential learning opportunities and increasing access for those students at our member institutions.

Our first recommendation revolves around supporting skills training for undergraduate students. There's an urgent need to renew our commitment to undergraduate students and at the same time to raise the level and quality of university education. Placing increased and more pervasive emphasis on research at the undergraduate level has been identified as a high-impact educational practice. Increasing our training and education in—and through—undergraduate research is the way forward for Canada. It enhances the qualifications of bachelor's graduates by equipping them with the skills required by the knowledge economy and stimulates the desire to pursue scientific education and skills development in graduate education. It also provides an intimate linkage between universities and the communities and industries they serve.

This is especially true for smaller communities where the university is frequently the hub of the knowledge economy. The data clearly identifies the importance of vibrant post-secondary institutions as a basis for the driver of small and large business ventures as well as the attraction and recruitment of new Canadians into these communities.

With that said, our recommendation is focusing on increased funding particularly to undergraduate research awards across each of the tri-councils. Currently the undergraduate student research award is focused on NSERC. We're suggesting that should go across to CIHR as well as to SSHRC. As well, we are recommending that increased funds go to Mitacs to allow undergraduate students to access Mitacs funding.

Our second recommendation is focused on accessibility. The principles of equity, diversity and inclusion in Canada's research investments set out in the most recent federal budget are undeniably a step forward towards a research ecosystem that can draw on a full range of talents. To achieve this objective, however, the ACCRU member universities continue to observe the persistence of a significant imbalance with respect to the representation of small and medium-sized universities in the distribution of federal funds. Certain research program requirements can effectively exclude researchers or applications from many smaller or regionally located universities. As a result, the 85 or so Canadian universities that host 56% of students, including international students, at all university levels receive only 26% of the total funding awarded by the three tri-agency funding councils and the CFI, 15% of funding from the Canada first research excellence fund, and 8% of funding awarded to CERCs.

The disparity obviously has not only an impact on an individual institution's ability to compete in the domestic and global knowledge economies to attract and retain excellent researchers capable of training diverse students across Canada, but it also has an impact on the communities in which our universities seek to be economic and multicultural drivers.

With that said, our second recommendation asks the federal government to provide financial incentives and enhance the federal government's requirements for equity, diversity and inclusion in the distribution of Canadian granting agency award budgets to include, among the target groups, faculty, students and trainees working in small and medium-sized institutions located in regions or communities outside major urban centres.

Our final recommendation has to do with the research support fund. Let me begin by quoting from the Canadian Association of University Business Officers, “Without adequate funding for the indirect costs of research, efforts to maintain a competitive and high-quality research environment in Canada could be in vain, even as global competition becomes increasingly fierce. Universities would be forced to limit their investments, thereby reducing the productivity of their researchers....”

Since 2000, the funding provided to institutions to cover these infrastructure and administrative indirect costs is based on a formula that combines fixed thresholds and reimbursement rates covering the first $7 million of eligible direct research costs. Direct funding in excess of $7 million is funded at a rate based on the balance of the RSF envelope.

This formula takes into consideration small institutions' limited capacity to pool resources, and it provides them with a minimum support for covering the basic costs of a research environment. Like our income tax provisions, it's a progressive system. However, research infrastructure and administrative costs have significantly increased since 2000, and these thresholds have not been adjusted consequently.

This is the reason why ACCRU's third recommendation proposes that the federal government increase the amounts allocated to the research support fund to reach levels supported by the Naylor report and Universities Canada, as well as take into consideration the cost of inflation since 2000.

This investment will provide a high rate of return in skill development, international attractiveness and an engaged society.

With that, I'll close. Thank you so much for hearing our submission.