Finance Committee on Feb. 16th, 2016

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you, Mr. Chair.

Thank you, everyone, for coming here and presenting to us. I'll start with Ms. MacEwen from the Canadian Labour Congress.

You talked about having more women in trades and more non-traditional workers in the labour union. How do you propose this? Especially given the commitment for infrastructure, if there is a boost in this sector, it would be extremely helpful for the country to have a boost not only in the sector but also in the workforce itself. What is your organization, and probably other organizations, doing to diversify the workforce?

[Angella MacEwen]

Unions such as Unifor and Canada’s Building Trades Unions have programs that run the gamut, because it is a complex problem. There are pre-apprenticeship programs that try to attract women or under-represented workers to have them get some of the skills necessary to enter the trades. They mentor people at work and they try to provide a work environment.

I was in the naval reserve, so I've worked in very male-dominated environments. Sometimes cultures arise that are hostile to people from outside of that culture. They work with mentors to change the culture to make it more welcoming to people who are coming through. It's not, obviously, just getting them into training; it's getting people to complete the training and into jobs.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

My next question is for Mr. Hodgson in regard to his comments about changing the tax system.

There is a short amount of time, but could you elaborate a little bit on some of the pieces you would like us to look at specifically or that you think would have a big impact? I know it's a complex issue and a complex question, but could you elaborate a little in a very short time?

[Glen Hodgson]

I think the starting point is that our personal income tax system is, in theory, a self-administered system, but probably two-thirds or more of us now pay somebody else to do our taxes for us. That's a sign that maybe we've gone a step too far in terms of building the complexity of our system. It's the same thing on the business side. Most estimates would say that businesses spend between 1% and 2% of their operating expenses simply in complying with the tax system. That's a good starting point. There's a lot of personal time and revenue, and business time and revenue, that's being expended to comply with a very complex tax system.

We know from Finance Canada that we have $100 billion in revenue leakage, some of which is on things we would all value, such as the RRSP, for example. Maybe it's time to step back and think about how we can have a tax system that actually boosts the productivity and performance of our economy rather than one that just captures revenue and then selectively provides incentives to different interest groups.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Great. Thank you very much.

I have a question to Mr. Williamson.

You mentioned the analogy of teaching the provinces to fish. You want the provinces to learn to fish, but you seem to want the federal government to implement Energy East without all of the stakeholders or their social licence. How do we teach provinces and other groups to fish if we take back the rod or give it to them when the federal government sees fit? Wouldn't having the social licence actually be exactly what you're suggesting—teaching them to fish—because we'd be listening?

[John Williamson]

That's an interesting question.

I guess Energy East was a kind of tag line at the end. I just wanted to make the point of how important that is. Energy East is something that the provinces do want to do. I think they'll do it in partnership with the federal government review, which is going on now before the National Energy Board.

My point was really that just providing additional transfers to Atlantic Canada is not helping Atlantic Canada over the long term. You might think you're helping in the short term, but if the policies are not geared to local growth, people are going to leave.

Look at Saskatchewan. Saskatchewan had a problem 15 years ago. People were leaving to Alberta to find work. The province hadn't grown since the dirty thirties and the economy was flatlined. Under the NDP, no less, they fixed their balance sheet, they reformed the tax code to take advantage of resources, and they continue to do that under the Saskatchewan Party. That's the kind of thinking we need in Atlantic Canada so that we can take advantage of our opportunities.

It's not necessarily a question of teaching Atlantic Canadians anything. I think Atlantic Canadians need to be liberated to take advantage of their economy. Too often provinces are focused on maximizing revenues from Ottawa and not looking at what they can do in their own backyard to generate growth, economic opportunity, and jobs.

[The Chair, Liberal, Wayne Easter]

Thank you, Jennifer.

Before I turn to Mr. Caron, I had one question for Mr. Hodgson.

You talked about $100 billion in revenue leakage. Do you have some examples?

[Glen Hodgson]

Well, we have more than 180 expenditures now built into our tax code for individuals and for businesses. When we add up all the expenditures for which we're giving people credit, such as different activities, we end up losing more more than $100 billion annually in revenue. These numbers are actually calculated by Finance Canada on their website. That's the starting point for me. To ask questions about whether we're getting value for money from a $100 billion in forgone revenue....

There are some good things. I don't think anybody would argue that the RRSP has not been really fundamental to retirement savings, but I do think it's time to have a fundamental review of the working of our tax system.

Finn, you were part of the review of our business tax about 20 years ago. We got some benefit from that, but I think we have to go to the next step and ask ourselves whether we have a tax system that works for all Canadians and all Canadian businesses or whether it's too chopped up to really provide any benefit.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Caron, you have three minutes.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I don't have a question as such, Ms. MacEwen.

In reference to your study on the employment insurance program as an economic stabilizer, you mentioned that the existence of that program lessened the impact of recessions or economic slowdowns by 14%.

Can you provide the committee with a document or a study that would confirm that percentage? I would appreciate that a great deal.

[Angella MacEwen]

Yes, I can send an email to the clerk. I have a PDF of the study that I can send from HRSDC.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I would be very grateful.

My question is for Mr. Poschmann and Mr. Hodgson.

Regarding infrastructure, you said that one of the important things was to invest where there will be a return on investment. We agree, and I said the same thing. However, I would like to hear your definition of investments that will increase productivity or produce a positive return on investment.

[Finn Poschmann]

Thank you for the question.

I think the short answer is to contemplate investment in terms of private returns and public returns.

We're used to private investments from which we look for a particular return on equity or a return on investment. In the case of public infrastructure, we look for returns that are more broadly spread. I used a transport linkages in ports as an example. They improve the functioning of the businesses and individuals who take advantage of exactly those things, so there is a public return that we consider or contemplate when we evaluate public infrastructure investments.

What I worry about, though, is the idea that infrastructure is necessarily good or that a dollar spent on infrastructure produces more than a dollar of return, because it vitally depends on what it is spent on. I could just as easily turn that dollar into 50¢ as into $1.50.

[Glen Hodgson]

I can't improve on that answer.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Concerning infrastructure, I agree with what you said about ports, roads and airports, as well as about the means to improve our international trade capacity. I do not disagree with that. However, there are also smaller-scale projects that can help a community develop economically.

I will give you an example. In the new Building Canada Plan, broadband Internet is mentioned, which allows the regions to develop their high speed Internet capacity. For the moment, funding for cell towers is not mentioned in that program.

Can this type of investment in high speed Internet in the regions, which may not directly benefit the economy of large cities, contribute to economic growth? Do you consider that these are productive and profitable investments? Could that produce a good return on investments?

[Finn Poschmann]

That's a tough one. It really depends.

Yes, where you have denser areas, it's going to be easier to make a business case for Internet service. In rural areas, the business case is harder to make, but I don't jump to the assumption that publicly funded high-speed or high-bandwidth communication is the right answer, because we do have other technologies. Satellite is imperfect, but it is one. You really have to ask yourself if it is really the most important thing for this community.

[The Chair, Liberal, Wayne Easter]

Thank you all for your presentations. I certainly want to thank you for bringing forward your information and your briefs on such short notice. We know you didn't have a lot of time, and for seven members of Parliament here, this was their first committee meeting, so thank you all as well.

We'll suspend for five minutes while we bring forward the next witnesses.

Thank you.

[The Chair, Liberal, Wayne Easter]

We'll begin with Mr. Mueller from the Canada Green Building Council.

Thank you for coming.

[Thomas Mueller, President and Chief Executive Officer, Canada Green Building Council]

Thank you for the invitation, Mr. Chair.

The building sector represents a significant opportunity to reduce carbon emissions and other environmental impacts. In Canada, over 30% of emissions come from the building sector. The green building industry, over the last 10 years, has acquired the capacity and the knowledge to deliver results on carbon emission reductions with a positive return on investment.

In 2014 the industry supported 298,000 jobs and generated $23 billion in GDP. However, taking action would require investment, as the construction sector in Canada ranks at the bottom of all industries in terms of expenditures in research and development.

The Canada Green Building Council is proposing a national cross-sector building strategy, led by industry and supported by the Government of Canada, to accelerate the transition toward a low-carbon built environment. Our focus would be on making efficiency gains. Building efficiency is the most cost-effective option by far to achieve tangible results.

We have a number of recommendations.

First, invest in government-owned buildings. The Government of Canada is the largest building owner in Canada and has an opportunity to show leadership in reducing carbon emissions and environmental impacts for a significantly large number of its own buildings. The government could consider upping its current green building policy for real property, pursuing higher-performance targets for all new construction projects to a level of LEED Gold or better, and the government could also consider starting to certify its portfolio of large existing buildings under LEED. Such an initiative would require a cross-departmental initiative, including the real property branch of Public Service and Procurement Canada as well as custodial departments.

Our second recommendation is to support energy benchmarking initiatives across Canada. About 50% of existing buildings will still be in use by 2050; therefore, we consider it to be vital to focus on the existing building stock with a potential for 20% to 40% reduction of energy consumption and carbon emissions. Energy benchmarking, reporting, and disclosure are critical strategies in engaging building owners in reducing energy use.

Several jurisdictions in the U.S. have already adopted mandatory policies, including such cities as New York, Chicago, and Seattle. In Canada, policies are under development at both the provincial and local levels, including the Province of Ontario, the City of Vancouver, and the Province of B.C. In this regard, we recommend that the Government of Canada invest in the development and delivery of a national, industry-led program to support benchmarking efforts across Canada. The government could establish a national centre of excellence on building performance.

A second strategy would be to provide direct funding for provinces and cities to support their policies through incentives or, better, to provide financing to owners to help them drive down energy use.

The third strategy would be to invest in the expansion of the Energy Star Portfolio Manager, which has actually been operated by Natural Resources Canada for the last three years. The expansion would include more building types and reporting capabilities to support the national benchmarking efforts.

Our final recommendation is with regard to moving toward net zero emission buildings. It is essential at this time that we advance the design of net zero emission buildings as a key component of a low-carbon building strategy. This requires investment in applied research and development to support the industry in developing capacity, knowledge, and technologies to deliver net zero emission buildings in larger numbers.

This approach would drive innovation in Canada to invest in the next generation of buildings that would have a significantly lower carbon footprint and would align well with the federal government's leadership and commitments to climate change targets.

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Mueller, and thank you as well for the brief. I don't think you put that together, those 105 pages, over the weekend.

[Thomas Mueller]

It was our pleasure to do that.

[The Chair, Liberal, Wayne Easter]

Thank you.

We have the Canadian Cattlemen's Association, with Dennis Laycraft.

Welcome, Dennis.

[Dennis Laycraft, Executive Vice-President, Canadian Cattlemen's Association]

Thanks, Mr. Chairman. It's terrific to be here. It's nice to see a couple of familiar faces that understand and know agriculture as well as our chairman and Ron certainly do.

On behalf of Canada's 68,500 beef cattle operations, we're grateful to receive this invitation. In 2014 the cattle industry generated $9.8 billion in farm cash receipts and was the largest source of farm income in Canada. We expect that for 2015 we'll top $10 billion.

Our industry is one of the positive stories in our national economy, and it has the potential to continue growing. Global demand for high-quality beef is increasing as economies grow around the world, and we produce the best beef in the world right here in Canada. We're also leading the world on our sustainability work.

We're an industry that depends on trade. Almost half our production is exported. The U.S. is our largest customer, but we also export to many other countries. Export sales complement our domestic market and generate exceptional value for our producers. We estimate that almost $500 per head of additional value is generated by selling a range of beef and beef offal products that Canadians may not like but are delicacies in other parts of the world. Simply put, trade is vital to our future prosperity.

The overarching objective I'd like to imprint on the committee would be the need to help the Canadian beef sector compete against international beef competitors here in Canada and around the world. That takes investment, both in opening export markets and in ensuring we have a competitive and innovative domestic industry.

It is paramount that the Trans-Pacific Partnership be approved and implemented as quickly as possible so that we can reclaim Japanese customers lost to Australian beef. Australians currently benefit from a free trade agreement in that market and have lower tariffs than we do when going into that market. Furthermore, if we're not part of the Trans-Pacific Partnership but others are, we will ultimately lose all access to that market.

We also want to see progress in addressing the technical barriers to Canadian beef in Europe and then have the CETA come into effect. There are some plant approval issues that still require work, and it's important that we bring dedicated resources to addressing those issues in a timely manner that results in commercially meaningful beef exports.

As we've found out, once various trade agreements are implemented, there are often issues that arise later on. That's why we advocated the creation of the agriculture market access secretariat. We'd ask that the agriculture market access secretariat be fully funded so that it can continue to carry out its important work in paving the way for Canadian agri-food exports. One thing I will say is that we truly believe that Canadian agri-food exports will continue to be an engine of growth for our country.

We also ask that there be sufficient funding to support incoming missions of foreign government food inspectors, since that is often a prerequisite to export approval. In recent years, that cost has been downloaded to the industry, but it's really bringing in foreign regulators to assess our regulatory and inspection systems to ensure they meet their conditions.

One of the key ways in which the government can facilitate a competitive Canadian agriculture sector is to help us innovate by investing in research. Industry/government funded research clusters have been one of the great success stories in Canada. We strongly support continuing this exceptional approach to collaborative research and encourage the Government of Canada to continue to maintain and modernize its research infrastructure.

On environmental sustainability, we've created the Canadian Roundtable for Sustainable Beef, and we're working with McDonald's in their first-ever pilot project to source verified sustainable beef.

To ensure we continue to be a world leader, we encourage the government to support ranchers' conservation actions and ensure funds are available for the continuation and expansion of agri-environmental programs and the development of market-based instruments. Collaborative research on beneficial management practices and an adaptive management approach to implementing and incentivizing them is more efficient than an expansive and expensive regulatory framework.

Investment in infrastructure is also needed.

A major water management project in Manitoba is long overdue to mitigate the impact of the flooding of agricultural lands, largely caused by water diversion. Expanded port and border facilities to eliminate the bottlenecks that often occur in trying to export our products remain very important. As well, as we look at northern Ontario, there's the opportunity to release some federal lands and provincial crown lands for sale so that they could go back into agriculture production.

We also need to modernize our research facilities. A number of them have required some investment for a period of time. Research is very important to the work that's done in our industry.

I also want to talk about the labour shortages that are preventing more value-added processing from occurring right here in Canada. There's a shortage of people willing to work in Canadian agriculture and agri-food processing. This is a chronic and long-term challenge that will only get worse, given Canada's workforce demographics. We need viable immigration programs as an integrated component of a national agricultural labour strategy. We're also looking to work with the refugees who are coming in. We view that as an important stream as well, but as a long-term adequate solution, we need people who want those positions.

Turning to risk management, cattle production is a long-term business that involves many risks. We have long recommended that the federal government ensure there be sufficiently funded national business risk management programs. We also support some flexibility in the government's contribution to regional and provincial livestock insurance programs, assuming that the overall level of support is even across the country and that the programs are market neutral.

We believe that western livestock price insurance is a forward-looking, market-based insurance-style program that's designed to be actuarially sound. It allows producers to manage price risk. It's a pilot project, but it should be made permanent.

I want to talk for a moment on capital requirements. Cattle prices have increased in the past few years to record levels. For many producers who purchase cattle for breeding, backgrounding, or finishing, their credit requirements have almost doubled. The limits on lending programs will need to reflect this new reality as we move forward.

In closing, our sector encourages finance policies and a fiscal environment that support long-term growth and continuous improvement through innovation and collaboration and expand our capability to competitively produce and market our products to the world.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, Dennis.

Ms. Bérubé, I guess this thick presentation is yours. Welcome.

[Annie Bérubé, Coordinator, Green Budget Coalition]

Thank you, honourable Chair. Committee members, thank you for inviting the Green Budget Coalition to present before you today. You should have before you our comprehensive recommendations for budget 2016.

The Green Budget Coalition represents 16 national environmental organizations. We've been operating since 1999. We make an annual submission to the federal government to ensure that the federal government has the resources to address the most pressing issues regarding environmental sustainability in Canada.

This year the focus of our budget 2016 recommendations is to ensure that the federal departments and their respective ministers have the resources not only to deliver the commitments and the mandate letters of the new government but also to deliver on some ongoing statutory obligations and international commitments.

I will take you very briefly through our detailed recommendations.

With regard to clean energy and climate change leadership, we make a series of recommendations for strategic federal investment in advancing the generation of renewable energy in Canada. This includes modernizing the electrical distribution grid and providing some fiscal incentives for electricity storage technologies, which are absolutely critical to ensure Canada meets its full renewable energy generation potential.

Complementary to renewable energy, we make a series of recommendations on energy efficiency and to encourage energy conservation in Canadian homes and businesses. This includes a national home energy retrofit plan with a grant program that low-income families would be able to access to retrofit their homes.

We make a recommendation to begin a complete phase-out of all the tax preferences to the fossil fuel industry sector. As you know, this is a commitment that Canada made to the G20, and it is in the current mandate letter of the Minister of Finance. We want to see a complete phase-out of the tax preferences to the fossil fuel sectors over the next five years.

Complementary to that, we would like to see a review of the public financing portfolio of Export Development Canada, as Export Development Canada continues to provide public financing to the oil and gas sectors for explorations overseas.

We have a recommendation to develop a national carbon pricing standard to ensure that we reach a common, coordinated carbon price across Canada of at least $50 per tonne of CO₂ by 2020.

We make a very comprehensive series of recommendations to protect our changing Arctic from the impacts of climate change. That includes ensuring the safety of marine transportation, building climate-resilient infrastructure, and bringing renewable energy and energy efficiency projects to Canada's north.

With regard to infrastructure spending, this is about to be a very large investment of this government. We want to ensure that any federal funding for infrastructure meets some strict criteria to ensure that it meets core policy objectives to reduce greenhouse gas emissions, sequester carbon, and enhance the resiliency of our communities against climate change.

We recommend a minimum investment of $2 billion per year for public transit in Canada. We make a series of recommendations to bring green infrastructure into first nations communities as well as to ensure clean drinking water across first nations communities.

With regard to Canada's international conservation commitments, the Government of Canada has made commitments under the United Nations Convention on Biological Diversity to protect 17% of our land and inland waters by 2020. This requires investment in areas of strict federal jurisdiction, including species at risk protection, creating new national parks, creating national wildlife areas, and protecting migratory birds.

The Government of Canada, under the same convention, also committed to protecting 10% of our oceans by 2020. This will require significant federal investment to create new marine protected areas and to improve ocean science and monitoring.

Finally, it is critical that private landowners be engaged and be supported and compensated for their stewardship initiatives, and that they contribute to meeting our international conservation commitments.

We make a recommendation to engage Canadians in nature to ensure Canadians have the opportunity to experience the outdoors and to create employment opportunities for youth in the environmental sector.

With regard to protecting Canada's fresh water, we recommend the creation of a Canada water fund to ensure that the Canadian clean technology sector implements best practices in waste water treatment technologies and water quality monitoring.

We also have some international commitments with regard to the Great Lakes Water Quality Agreement. Significant new federal funding will be required in order to deliver on those commitments.

Our final series of recommendations is related to a healthy environment and healthy Canadians. We want to ensure that we address inequity in environmental risk exposure within the Canadian population. We would like to see a new tax credit being provided so that Canadians can remediate the impacts of radon in their homes.

This is a very brief overview of our comprehensive submissions for this year.

Thank you very much.