Evidence of meeting #38 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was airports.
A video is available from Parliament.
Co-chair, Inter-Provincial EI Working Group
Okay.
What I'll do is simply repeat that we need a reform of the hours system. It's certainly not a magic bullet, but we need to start there. The whole system is premised on a 35-hour week, both for access and duration of benefits. For us that would be the key place to start. The prorating already happens in terms of how much you get and the actual level. If you're low paid, low weekly earnings, you're—
Liberal
Leona Alleslev Liberal Aurora—Oak Ridges—Richmond Hill, ON
If I understand correctly, that is only for employees.
Co-chair, Inter-Provincial EI Working Group
I'll have a separate conversation.
Liberal
The Chair Liberal Wayne Easter
Okay, you'll have a conversation off-line.
I thank everyone for coming. If you have any more brilliant thoughts on how to achieve greater economic growth, we're always open to hearing them.
I'll also thank those of you who sent in briefs. We have over 400, so there's a lot of work for the analysts to do.
I want to thank you all for your presentations.
We'll suspend for three or four minutes.
Liberal
The Chair Liberal Wayne Easter
We'll call the meeting to order.
For committee members, we are one witness short from the schedule. Mr. Ian Lee just got back from Warsaw, I believe, and couldn't make it, so we'll try to schedule him in another day.
We are into our second round today on pre-budget consultations in advance of the 2017 budget. As witnesses were informed, our theme, beyond the pre-budget consultation itself, is how to achieve better growth in Canada. What do we need to do to achieve that growth? We'd really be appreciative of anything you can add in that perspective, because we know we have to do that.
Welcome, everyone, and thank you. For those who have sent in briefs, we have those briefs, and they will all be gone through and looked at in their entirety.
The procedure this afternoon will be five minutes each, if you can hold it to that, and then we'll go to questions.
We are starting with the Canadian Airports Council. Mr. Gooch, go ahead.
Daniel-Robert Gooch President, Canadian Airports Council
Mr. Chair, ladies and gentlemen, thank you for the invitation to appear before you today as part of the pre-budget consultations.
The Canadian Airports Council appreciates the committee's support in the recommendations last year and the opportunity to appear before you today. The CAC has 50 members, representing more than 100 airports across the country. They range in size from global hubs like Toronto Pearson and Montreal Trudeau to smaller, community airports in Fredericton and Kelowna. Canada's air transport sector employs more than 140,000 workers and generates about $35 billion in economic activity.
For nearly 25 years, local airport authorities have been running, operating and funding their airports while paying long-term rent to the government. Those authorities have invested more than $21 billion in airport improvements since 1992...
President, Canadian Airports Council
As I was saying, almost entirely through self-financing, that is, through travellers. This approach has enabled Canada to develop an airport infrastructure that is recognized as the best in the world.
Air travel is essential in a country such as Canada. The number of passengers using Canada's airports has jumped 27% since the economic slowdown in 2009. Although airports are making strategic infrastructure investments to meet this demand, they are being stymied by wait times at pre-board screening checkpoints at Canada's largest airports, as well as increasingly by CBSA at our air borders.
At peak travel times passengers can wait more than an hour to get through security at our largest airports. While the rest of the world is setting service standards and applying innovation and a risk-based approach to security, Canada is falling short. This is why we are calling on the government to establish a service standard, so that most passengers will be screened in under 10 minutes, as well as a more nimble funding mechanism for CATSA.
I will shift gears to small-airport concerns. Airports provide infrastructure that is safe and environmentally responsible. However, while the system as a whole is financially self-sufficient, some small airports with lower passenger volumes are challenged to gain sufficient revenue to cover both operations and ongoing capital needs associated with maintaining a safe airport.
The airports capital assistance program was created in 1994 to assist small airports with infrastructure projects. However, with the evolution of safety regulations, technological advances, and inflation, the amount of money provided through ACAP is no longer sufficient.
Meanwhile six small NAS airports in Charlottetown, Fredericton, Gander, London, Prince George, and Saint John are located on federal land, and through a quirk of federal policy are barred from even applying for ACAP or other federal infrastructure programs.
We've received a great deal of support from several of you and your colleagues in the Atlantic caucus on this file, and it is much appreciated. We are calling on government to develop infrastructure options for these small NAS airports, and to reform ACAP so that the program can continue to play a valuable role for the airports that need it.
My final area, airport rent, is a long-standing concern for many airports and air carriers. Last year, NAS airports of all sizes throughout the country paid $323 million in rent to the federal government; that means more than $5 billion since transfer.
Canada's user-pay approach to aviation puts a high emphasis on recovering revenue from air travellers, but as airports operate as not-for-profit businesses, rent is passed on to airport users and air travellers through airport charges.
At 5% to 12%, rent is charged on all of the money raised to build and maintain airport infrastructure so that the taxpayer doesn't have to cover these costs. As a tax on gross revenue, it acts as a disincentive that keeps airports out of business lines with low-margin financial returns. It is also charged on all of the revenue raised from food, shops, and other businesses that airports develop to keep costs to air carriers low.
A reduction in rent would be passed on to users through lower airport charges and debt requirements. At the very least, we say that rent should be eliminated for all airports with fewer than three million passengers. This includes airports like Charlottetown, Moncton, and Victoria, where rent can have a significant financial impact.
If rent is to be charged to larger airports, we contend it should no longer apply to revenue from non-aviation businesses developed to keep airline costs low or to revenue raised to fund capital projects. Ideally, we would like to see a cap on rent so that it no longer continues its upward trajectory. This cap would deliver significant savings-building over time. Any rent collected by government should be more fully redistributed within the industry to fix the challenges I'll outline later such as screening, border services, and capital funding for small airports.
When it comes to air transport, the good news and the bad news are the same: traffic continues to grow; runways and buildings need to be maintained; security threats continue to evolve; our work never ends; we are never done. But the fundamentals of our sector are solid, and there are ways that we can do some of this a lot better.
Thank you for your time.
Liberal
The Chair Liberal Wayne Easter
Thank you very much, Mr. Gooch.
We will now turn to the Canadian Association of Radiologists.
Dr. Miller, go ahead.
Dr. William Miller President, Canadian Association of Radiologists
My name is Dr. Willy Miller. I'm a neuroradiologist at the Ottawa Hospital, just about five kilometres away. I've been practising for 25 years in both Canada and the United States. I present today in my capacity as the president of the Canadian Association of Radiologists.
It is an honour to speak to you today. My statement is based on our organization's pre-budget submission to this committee, which of course I am sure you've all read. I know this is the end of a long day.
Thank you for giving us the opportunity to make this presentation.
Today I want to focus my remarks on investments for medical imaging equipment, clinical decision support tools, and the value of group medical practices.
Medical imaging is the hub at the centre of health care. Although Canada has long prided itself on its record of achievement in health care, the rhetorical vision of what Canadian health care is and should be is increasingly distant from the reality.
Canada is ranked 10th out of 11 nations based on a comparative study of system-wide health spending and health outcomes. Canada is in the lower 50th percentile of OECD nations in terms of the number of MRI and CT units per million people.
Forty per cent of Canadian primary care physicians report that their patients have difficulty getting specialized diagnostic tests. People in Canada wait nearly twice as long on average as their OECD peers to get CT and MRI scans that are necessary for their treatment and optimal care.
We are at a tipping point for health care in this country, and I believe we all know that. It's not just about the numbers, the finances, and the investments. Health care is personal. The need for medical imaging is personal. We all have a sister, brother, father, or grandmother who is ill and awaiting an important diagnosis or cannot access the imaging they need. When one arrives at the correct diagnosis using the appropriate test at the optimal time, lives are literally changed and can even be saved.
The most complete surveys of the impact of wait times and their downstream economic burden are a few years old now, but the reality hasn't changed much. Lost output, reduced productivity, and forgone tax revenues while people are waiting for care cost the Canadian economy $13.8 billion in 2007. By 2020, that impact will be closer to $23 billion.
Medical imaging has not received significant infrastructure investment since the 2004 health accord. We are well past the point of needing to make replacements.
We need new investment in imaging equipment. Many of the machines we have are old and outdated. Canadians deserve the best care they can get, and that requires current, updated equipment. New equipment emits less radiation, and provides better high-resolution images and new capabilities.
We propose an investment of $600 million over five years to address the equipment needs of Canadian patients and communities. However, infrastructure investments aren't made in a vacuum. Our goal must be the integration of these investments into data-driven, patient-centred approaches to care. We can make better use of medical imaging with the use of clinical decision support tools. These tools assist referring physicians when they order tests by helping physicians request the best test for every patient, reduce waste, and ensure top-quality care. Such a system advises referring physicians of the best and most appropriate test for a given patient in a given clinical situation immediately at the point of ordering. Evidence shows that patient outcomes and system performance both improve when clinical decision support systems are introduced.
We propose an allocation of $65 million over five years for clinical decision support. These funds would be managed by Canada Health Infoway. Infoway's experience and leadership in digital health should be leveraged to the greatest possible effect for patients and physicians alike. The CAR, the Canadian Association of Radiologists, has had discussions with Infoway about how we can work together to achieve these goals.
At the end of the day, radiology and the delivery of medical imaging services is not just about updated technology and integrated systems. The care providers matter. Radiologists across Canada mostly work together in groups. This structure allows them to pool resources and expertise to deliver comprehensive care. For example, at the Ottawa Hospital, where I work, we are organized in a group of 62 radiologists. This structure enables us to provide quality care across a broad range of body systems using various imaging modalities. It also enables us to work together in education and research. The proposed tax code amendment is a strong disincentive for doctors to work in groups. This will have far-reaching, unintended consequences.
Radiologists stand united with other medical professional groups in asking the government to reconsider the proposed change to the federal tax code for the sake of ensuring patient access to quality care and for the sake of Canadian medical education and research.
In conclusion, we urge this committee to consider how the government can leverage investment to spur additional innovation and to improve health outcomes for our patients. Let's put Canada back in its rightful place as a health care leader in the global community.
Thank you for your attention.
I look forward to your questions. Thank you.
Liberal
Carl Weatherell Executive Director and Chief Executive Officer, Canada Mining Innovation Council
Thank you, Mr. Chair.
First, let me thank you and the committee members for the opportunity to discuss innovation and economic development today. I'm joined by Jean Robitaille. Jean is the senior vice-president of business strategy and technical services for Agnico Eagle. More importantly, Jean is here representing CMIC as the chair of the board of Canada Mining Innovation Council.
The mining industry in Canada is foundational to Canada's economy, providing the raw materials that enable other sectors of our economy to flourish, including high tech, transportation, aerospace and defence, manufacturing, and clean tech. As we move toward a clean economy, the need for raw materials produced from mining will only increase. As an example, it's estimated that Tesla will consume 5% of copper production—that's 900,000 tonnes of copper—for its electric motors by the year 2030. That's one example from one company.
Innovation is not new to the mining industry. Our innovations include highly complex industrial processes that have required billions of dollars of investments to technologies incorporated into the lunar lander. Much of this technology development and associated investment occurs in metropolitan centres such as southwestern Ontario, Vancouver, Saskatoon, Calgary, and Ottawa. The industry desperately needs innovation, but adoption is hindered by its capital-intensive nature and current stress related to volatile commodity markets, increased costs, and significant competition from other jurisdictions.
With our partners in the mining industry and the Mining Association of Canada, CMIC created an innovation strategy for the mining industry—namely, the towards zero waste mining strategy. Towards zero waste mining defines the future of the industry in 20 years, focusing on the grand challenges common to the industry related to energy, environment, and productivity. Towards zero waste mining includes a full business case, transformational targets, technology road maps, and projects in various stages of execution.
CMIC incorporates an open innovation business model that includes all members of the supply chain, including academia, government and other laboratories, start-ups, SMEs, Fortune 500 companies, and of course mining companies, co-operatively focused on solving specific industry-defined challenges. Technologies from information and communication technology, genomics, aerospace, and defence have been identified as potential solutions. This highly collaborative innovation model accelerates technology development, deployment, and wide-scale adoption, and reduces the financial risk for all collaborators.
As an example, the process of crushing and grinding rocks consumes approximately 3% of the world's electricity, enough electricity to power Germany, of which 90% to 95% is lost as waste. Our energy and processing technology group, composed of senior volunteers from mining and engineering companies, a federal government lab, small and medium enterprises, and original equipment manufacturers, has identified a technology that has the potential to reduce energy consumption in this process by 50%. We're about to launch the first phase of a six-phase project next week to move this to a commercial product.
Our greatest challenge is the immense complexity of the innovation system in Canada. The existing funding mechanisms—over 7,000—to support research, development, and innovation are generally focused on research and academia, restricted to select regions of Canada, or generally are not compatible with the requirements of mining-related innovation projects. As a result, innovation and investments in technology development in Canada are significantly impacted.
A number of Canadian mining companies are placing innovation-related investments in foreign jurisdictions. Our proposal is modest. We're seeking a direct investment from the Government of Canada of $50 million over five years. This investment will result in the development of technologies that will significantly reduce energy consumption, greenhouse gas emissions, tailings discharge, and water use. These new technologies will be deployed in Canadian mines and globally. This will increase foreign direct investment in Canada by international technology companies, make Canada a global centre of mining innovation, and increase Canada's export market share for new and cleaner mining technologies.
The Mining Association of Canada has identified up to $145 billion in potential new mining investment in Canada over 10 years. Through the work of CMIC, we can help ensure that this investment represents the most energy-efficient, low-waste mines the country has ever seen. Zero-emissions fully electric mines are possible within the next five years, but it will require a concerted effort to make this happen.
Thank you for your time. We welcome your questions.
Liberal
The Chair Liberal Wayne Easter
Sorry. I was just asking if anybody knew whether or not that would fit under the green infrastructure program. I guess we'll find that out as we get into the discussion.
Mr. Khan.
Sahir Khan Executive Vice-President, Institute of Fiscal Studies and Democracy
Thank you, sir.
Mr. Chair, vice-chairs, and members of the committee, on behalf of Kevin Page and my colleagues at the new Institute of Fiscal Studies and Democracy at the University of Ottawa, I would like to thank you for the kind invitation to participate in this committee's pre-budget consultation process.
Mr. Page is sorry he could not be with you today. He had another engagement in his capacity as an expert at the Slovak Fiscal Council on the reform of European Union fiscal rules. He sends his greetings.
Budget 2017 is set up to launch an innovation agenda and new programs for long-term health care. It also has the opportunity to frame the government's plan on fiscal management and budgetary performance, and to deliver on campaign commitments for fiscal transparency and enhanced parliamentary fiscal scrutiny.
Our first message is that budget 2017 will have to address a sluggish economy. The Canadian economy is struggling. Growth remains weak, and we face relatively high unemployment for this stage of the business cycle. The goods sector is in recession, and we have not seen growth in real business investment in years.
Budget 2017 faces the dual challenge of stimulating short-term economic growth and laying the foundation for long-term sustainable growth.
While there may be consensus on the state of the Canadian economy and the need for fiscal measures to address these challenges, their success will depend on performance; that is, the ability of public institutions to perform effectively and transparently to meet desired policy outcomes. For instance, the government may wish to move forward on phase two of its public infrastructure program. Should that be the case, a framework that ties spending to performance will be critical. This will not only promote rigorous front-end due diligence to help ensure that investments with good multiplier effects are made but also require transparent reporting of results, rather than solely relying on ex post assessment of rules compliance.
If economic growth remains weak and incomes are stagnant, fiscal and political credibility will depend on budgetary performance and a reallocation of funds within a framework of overall fiscal discipline.
Our second message is that budget 2017 must lay out a fiscally sustainable budget. The government must have credible fiscal targets over the medium term supported by analysis that demonstrates fiscal sustainability over the longer term, for example, a stable debt-to-GDP ratio.
The medium-term plan should include presentation of complete profiles of major programs over a five-year period, along with a rigorous estimate of the costs of any proposed legislation, as was promised by the government in its campaign platform.
The transition period for the new government certainly has obstacles, in particular when its plan is ambitious and depends largely on the capacities of government institutions inherited from its predecessor.
Nonetheless, after a year in office, the government now owns the levers of its success. Budget 2017 offers an important opportunity to address the shortcomings of budget 2016, which included significant transparency gaps over the medium term, no fiscal targets, and no fiscal sustainability analysis.
Analyses by the Parliamentary Budget Office have helped to fill some of these gaps, but they do not replace proactive fiscal transparency on the part of the current government.
Our third message is that budget 2017 provides a historic opportunity to reform parliamentary fiscal scrutiny. Scrutiny of the estimates and the appropriation of public money is the most fundamental role of Parliament as the surveyor of the public purse.
Executive Vice-President, Institute of Fiscal Studies and Democracy
This fall, our Institute of Fiscal Studies and Democracy will release the results of its survey of Canadian parliamentarians, and the results presented show the difficulties they face in meeting their obligations in terms of fiscal scrutiny.
Without adequate decision support, Parliament appropriates over $250 billion per year, watches tax expenditures valued at over $100 billion per year roll over from year to year, and votes on a plethora of new policies and programs.
We can applaud the government for its 2015 campaign promise to improve the expenditure budget system. The government should present its plans regarding that commitment.
While it did not happen last year, a useful step to signal positive action on estimates reform would be the tabling of departmental spending plans consistent with the 2017 budget, before Parliament votes on main estimates in the summer of 2017.
In terms of substantive structural change, the government should lay out an implementation plan on estimates reform consistent with the plan outlined by the government operations and estimates committee, OGGO, in 2012, a report supported by all the Liberal, Conservative, and NDP members of the committee. At the heart of the report was to include spending control gates based on program activities. Under such an approach, rather than voting on highly aggregated votes, such as capital, operating, and other expenses, parliamentarians would vote on program activities representing key business lines within government departments. Parliamentarians would get both financial and performance information, i.e., inputs, outputs, and outcomes, to support their scrutiny, and public servants would have to manage for budget and performance within these discrete envelopes. Any transfer of funds across these program activities would have to be reported to Parliament, and variances from both budget envelopes and performance standards would have to be explained to committees such as this one.
This one change eclipses all of the others in terms of impact for parliamentary financial scrutiny. It can be described simply as “historic” and would tower over any other initiatives to strengthen reporting, align budget and estimates, and even enhance the role of the parliamentary budget officer.
I would like to thank you for your attention. I will be pleased to answer your questions.
Liberal
The Chair Liberal Wayne Easter
Thank you very much.
We have four distinct areas, from airports to health care and imaging equipment, to innovation in mining, and to fiscal studies, so we're going to cover the map.
Turning to questions, we have Mr. MacKinnon, for five minutes.
Liberal
Steven MacKinnon Liberal Gatineau, QC
Thank you, Mr. Chair.
Thanks to all of you for being here today. It's a great pleasure.
Our biggest challenge is probably to find growth in the Canadian economy in circumstances where opportunities to do that seem very weak. My first question is for Mr. Weatherell and Mr. Robitaille. I would also like to thank you for being with us today.
I have a little experience in the mining sector. As you said, mining is essentially a high tech industry and it is entirely in its interests to improve its performance and technological efficiency. On your request for $50 million, my question is very simple. Obviously, the strategy seems attractive, but if it is as attractive as it seems, why does the industry not make those investments itself?
Jean Robitaille Senior Vice-President, Agnico Eagle Mines Limited, Canada Mining Innovation Council
Good evening, everyone.
At present, the mining industry is contributing substantially to Canada's economic growth. As you may have noticed, our industry is not especially thriving at present. Prices of metals have fallen across the board.
To answer your question, what we are proposing is to combine the efforts of all mining companies so we can acquire a better lever. Various mining companies are currently investing millions of dollars in various initiatives, some of which overlap. Rather than letting the various mining companies each spend $1 million, we want to get them to stop competing among themselves on the details and combine their efforts, through the Canada Mining Innovation Council, and thus bring mining technology up to the level where it should be.
If we compare ourselves to other industries, the mining industry is 30 years behind. In comparison to the aviation and automotive industries, we are behind. There are a lot of gains to make in this regard and good potential for Canada.
I am wearing two hats here: as president of the CMIC board of directors and as a senior executive of Agnico Eagle, which is a Canadian company. Last year, Agnico Eagle celebrated 60 years in the market. Agnico Eagle is a very well-known producer in the gold sector.
Agnico Eagle has a development strategy for mining platforms. We have developed a platform in Quebec. We have several mines in Quebec and we produce more than 800,000 ounces of gold per year. To be honest, we had to write off $1 billion from our balance sheets after our investments. We are staying in Nunavut; we have more development projects and we are there to stay for several decades.
Now, to address innovation, I will take the example of Nunavut where there is a lack of infrastructure. We use diesel to fuel our plants and that is also what the communities in Nunavut, and probably also communities in other remote regions, use to fuel their outmoded facilities.
The Meadowbrook mine alone employs 400 Inuit contractors and employees, directly and indirectly. We have Inuit people in our employ who started in the company as caretakers and now work as operators.
Liberal
The Chair Liberal Wayne Easter
Excuse me, sir. Mr. MacKinnon needs time to get his second question in.
Liberal
Steven MacKinnon Liberal Gatineau, QC
Thank you.
Gentlemen, the message has been received and I thank you for your constructive approach.
Mr. Khan, I'm very intrigued by estimates reform. I'm sure that some of my colleagues will want to take you up on this, so you don't have to give us all the information in one fell swoop.
For my purposes, let's focus on performance indicators. We're all looking for evidence that allocations work and that budgets are effective. We're looking for results. Can you spend a little time on indicators of success and how they could be best encapsulated for parliamentarians as we go through future budgeting exercises?
Executive Vice-President, Institute of Fiscal Studies and Democracy
I think this is actually quite fundamental in the role of Parliament in holding the government to account, but also in effective implementation on the part of the government.
One of the things we focus on when we look at program expenditures is looking not just at the inputs—what is being spent, the broad allocations—but the outputs and the outcomes. It's something we learned in the parliamentary budget office. There was a tradition of often looking at things after the horses have left, closing the door after the horses have left the barn. The issue is whether the government can, for example with infrastructure, frame out performance in terms of economic outcomes, policy outcomes, GHG reductions, or congestion reductions. There are economic and other policy objectives that can be stated that are well within the current Treasury Board policy, but these need to be communicated to parliamentarians and the information provided so that you can ask questions to hold the government to account on how it executes on these programs.
I think this infrastructure initiative of the government can be quite effective in terms of addressing some of the sluggishness of the economy, but not all infrastructure is equal. It's very important that we look at not just how much money is getting out the door, but for what types of projects. Are they being implemented well, on time, on budget? Again, that's important for outputs, but then is there a return on investment? That ends up being really critical. If parliamentarians don't get that information on the results—financial, economic, and other—then it's very hard for you to hold the government to account without those details.