Evidence of meeting #21 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was veterans.
A video is available from Parliament.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Thank you.
Ms. MacEwen, I have a quick question for you because I have just a minute left.
You talked about asset recycling and P3. Is there a connection there? Many people see asset recycling as privatization. What impact do you think asset recycling will have? What plans do you think the government has for this?
Senior Economist, Canadian Labour Congress
Our research shows that asset recycling is very often used in order to privatize. It's kind of a back door to privatization. It's sold as something to increase efficiencies. We would sell something that has a revenue stream to the private sector and then we get more money to make more investments. Very often the theory behind that is that the private sector can do it more efficiently. The way that the private sector does things more efficiently is by lowering wages and benefits to workers or by adding fees for users. Either we're not getting the service that we need or the workers aren't getting a fair shot, so we think that it's better to find other ways to raise money to invest in the public infrastructure that we need.
There's no such thing as a free lunch. This seems like it's too good to be true, so it is.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Thank you.
I have one last question for the Fonds de solidarité des travailleurs du Québec representatives. We worked together quite a bit when the tax credit was eliminated.
The government and opponents of the venture capital fund tax credit claimed the funds were under-performing and the tax credit therefore promoted ineffectiveness. Can you talk about the performance and the work that has been done for shareholders over the past year, three years, or five years?
President and Chief Executive Officer, Fonds de solidarité des travailleurs du Québec
Thank you for the question. It gives me an opportunity to provide more detail about the dual mission of the Fonds de solidarité des travailleurs du Québec and tax-advantaged funds.
The first part of the mission is, of course, to invest in Canadian funds and businesses. The second part of the mission is to promote saving. We are accountable to our shareholders and our investors, who are members of the middle class. The average annual contribution is $2,500. We also have to provide them with an adequate return. The return over five years was 6.1%. Over three years, it was 7.3%. Calculated over a longer period since the fund was created in 1983, the 30-year return was 4%.
Liberal
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Thank you to our panel for your patience this morning as well.
I could probably speak to each witness, ask questions and stuff, but I would like to focus my remarks on Mr. Galimberti from the steel association.
On a personal level, my riding president is a member of the buyers' side, and another good family friend has their own steel company in Brampton. I was speaking to the first individual, who is a buyer of steel, and I asked him this morning, “Are the Chinese dumping steel?” His comment was, in two words, “Big time”, and he gave me an example.
There were 30,000 tonnes of steel destined for our largest trading partner, the United States. The U.S. put duties on steel, so the steel came to Canada and was sitting on our docks. Then the internal price for steel was around $50 cwt, versus what this steel was selling at, which went from roughly $18, from some upward price pressure, to the mid-$30s.
I do get it, I do understand it. The jobs that are generated by all of the steel industry and the ecosystem around are well paying, have good benefits, and are in highly skilled advanced manufacturing, and we need to protect this industry. We know that there are steel producers in the world where there is over-capacity, and they're dumping steel. We know that the steel producers in Canada and the whole ecosystem is much more environmentally friendly than the steel industry back in some of the Asian countries, in China specifically.
Within Bill C-15 there is part 4, division 10, on the Special Import Measures Act. I take it, Joseph, you're familiar with that.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
I want to get your comments on part 1 and part 2 and the amendments that we have offered in our bill and how potentially beneficial or significant they can be to the steel industry.
President, Canadian Steel Producers Association
First, to touch on the point you were making about the prevalence of dumping, we know it's going on. Our producers are very aware of it. To give you a particularly prescient example, I get all kinds of solicitations in my email to buy Chinese steel. I get about five or six a week. They're not particularly sophisticated, but the solicitations come in.
I followed up on it. I'll give you a really recent demo, because every once in a while I'll offer or suggest that I might be interested in buying steel, just out of personal curiosity. The willingness on the other end of the email to tell you how to circumvent existing duties, to import product through third countries to get around even the laws or the measures we currently have in this country, is extraordinarily easy to find. I give domestic buyers a lot of credit for staying with domestic producers, because if you're willing to overlook a terrible practice, there are other options out there.
The steps proposed in this bill are certainly meaningful. The continuance of investigations, no more sort of parking investigations at the preliminary stage, giving CBSA more time to get to the bottom of what's going on, is extraordinarily important from our perspective. The changes around the process of expiry reviews that ultimately move the initiation of the review closer to the day of the expiration, change some timelines, and redefine some process, ultimately mean that when the CITT, the Canadian International Trade Tribunal, makes a finding, this will functionally extend that finding, that evidence-based or procedural-based finding, for 10 months.
The ongoing consultation on another range of issues we hope is going to provide additional legislative benefits very shortly. We appreciate that the Department of Finance needs to consult on these matters. That consultation is scheduled to end around the end of June. We're hopeful of additional legislation shortly thereafter to continue keeping us on a level footing with our NAFTA partners.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Not only on a personal level, but as an economist by training, I do believe in the benefits of free trade. I think that it's obviously been beneficial to our economy. We are an open economy, and we are a trade economy, but I'm also very acutely aware of practices that are poor for the environment and poor for our domestic industry.
Whether it's a normative judgment or whatever word you want to use to describe it, I think that in this case we must act like our U.S. partners and not be the boy scouts of the world. Thousands of jobs are dependent on this in various industries across Ontario, and in the riding I belong to, and we need to make sure we're standing up for them. I think these amendments are a big step forward.
President, Canadian Steel Producers Association
You make an excellent point about fair trade and free trade. We believe that all of the measures proposed here are WTO-compliant. This is really about a level global playing field. We're talking about the prevention of dumping and subsidy. We're not talking about the prevention of fairly traded goods.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
I'm going to give the last minute of my time to Mr. MacKinnon.
Liberal
Steven MacKinnon Liberal Gatineau, QC
I thank my colleague.
Thank you, Mr. Chair.
My question is for the Fonds de solidarité des travailleurs du Québec representatives.
I would like to begin by thanking you for joining us today. We were so pleased to make what turned out to be very fitting changes to this budget.
The committee is discussing venture capital and the venture capital climate in Canada. Since I don't have much time left, would you briefly describe your role in Quebec with respect to venture capital and tell us about some success stories?
President and Chief Executive Officer, Fonds de solidarité des travailleurs du Québec
I will respond by talking about our role in Quebec as well as Canada.
We do our work two ways. Over the past 10 years, we have invested $2 billion in pure venture capital. We do this indirectly by investing in funds.
One of those funds is Lumira Capital, a Toronto-based biotechnology and life sciences fund.
In our field, you often hear about “lead order”. Even in tough times, we have always been there. Our consistent activity in the life sciences sector has enabled the sector to thrive in Quebec and Canada. In Lumira Capital's case, we invested $35 million in a $125-million fund. We were the lead order. The people at Lumira will tell you that without our investment, the company would not have managed to raise $125 million.
That has knock-on effects. Lumira Capital itself then invested $20 million or $25 million in a Vancouver company called Zymeworks, which is in cancer research. We ourselves invested directly in Zymeworks with the help of Lumira Capital. You often hear about a multiplier effect on the order of four to one or five to one for the investment we made.
We have been investing directly in the life sciences sector for about 20 years. The FTQ's Fonds de solidarité was an investor shareholder in BioChem Pharma, which had discovered an HIV drug at the time, a drug that has saved hundreds of thousands of lives around the world.
Following our success with BioChem, we have steadily invested close to $1 billion—$950 million—over the past 20 years in the life sciences sector. BioChem is a good example. There are plenty of other good examples that have propelled the biotechnology sector forward not just in Quebec but across Canada in collaboration with funds in Toronto, Vancouver, and elsewhere.
I don't know a lot of institutional investors that have committed $2 billion in pure venture capital over the past 10 years.
Liberal
The Chair Liberal Wayne Easter
Thank you, Mr. Morin.
For the witnesses who have come in for 12:30, due to the vote, we have decided to extend this session until 1.
Mr. Aboultaif.
Conservative
Ziad Aboultaif Conservative Edmonton Manning, AB
My first question is for Ms. Reynolds.
I was a restaurant owner more than once in my life. The last time was in 2015 before the election. I see that two things that impact the industry are the CPP premium and the employment insurance increases.
Could you please tell us a little bit about the impact of these on business ownership? The restaurant industry is very fragile, as I call it. It is one of the businesses that is exposed to being closed down in a matter of time because of low profits or no profits and running around the clock to see if one can find a balance to make money. Could you tell us what the impact is going to be on the number of restaurants we have in Canada and how that's going to affect the industry at large?
Executive Vice-President, Government Affairs, Restaurants Canada
Payroll taxes tend to have the biggest impact on the restaurant business because it's so labour intensive. As I mentioned before, we're a number one first-time job provider. We have about 25% of our workforce under the age of 25, and payroll taxes are regressive in a sense, because you pay disproportionately more when you have entry-level workers at a starting wage. It does have a very detrimental effect on businesses.
That's why we are very supportive of the year's basic exemption in the Canada pension plan, which helps to make CPP a little bit more progressive. What we are looking for with the CPP is the restoration of inflation protection to $3,500 and the inclusion of something similar to the year's basic exemption as a part of EI. We don't want youth losing out on those foundational skills they get in their first job, reaching the age of 28 without ever having held a single job and losing the opportunity to progress within the labour force, but instead can have that all important experience on their resumé so they can increase their earning power at a later date.
Yes, for all those reasons, payroll taxes have a very big impact.
Conservative
Ziad Aboultaif Conservative Edmonton Manning, AB
Ms. MacEwen, historically we know in business that public-private partnerships or P3s, when governments invest or take on projects on their own using public money, the experience seems to be unsuccessful because governments should not be in business. At most, governments should be involved with legislation, making the rules, and putting in place the proper tools. Don't you believe that's where we fail with the P3s—and you mentioned some reports from Ontario and others—as a result of government negotiations with the private sector rather than our using the business model?
Senior Economist, Canadian Labour Congress
No. There are public services that can be efficiently and effectively provided by the public sector. The private sector is not necessarily better at providing those services, because those services don't necessarily generate profit, which is what the private sector is interested in. Those services serve the welfare of society as a whole.
I'm talking about services that businesses benefit from: having efficient water, roads, electricity, education, and health care all publicly provided. You get better service, and it's more efficient if the public sector is providing it. The research shows that to be the case.
Conservative
Ziad Aboultaif Conservative Edmonton Manning, AB
I want to disagree but I don't want to turn this into a debate. You talk about raising money. Where is the government going to raise money to fund such projects? That means going back to taxpayers to ask for more money instead of using private sector money that could be negotiated up front. At least you know that your costs are fixed and you know that you don't have some surprises down the road. That's exactly where I see this. I believe with better negotiation, governments can get better deals for people without having to go to the public treasury for taxpayers' money.