Finance Committee on Oct. 4th, 2016

[Dan Wicklum]

Yes, both I and representatives of the innovation space, meaning companies, and frankly partners, including universities, are very well meshed in with both Minister Bains's office and the civil service.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you both.

Before you go, Ron, I have a question.

On the RCMP, one problem on the finance committee is that though it isn't said—it isn't on the record—we can't make many recommendations on it.

However, the RCMP isn't something we've heard a lot about at committee yet, but I've certainly heard a lot about the problem. With the officers you talk to in your communities, is it a problem of not enough RCMP officers being trained so that they have the full complement to fill those positions?

[Lisa Holmes]

Yes, and I'll give you a specific example. The town of Daysland is a small town in central Alberta. They have a detachment that is in another municipality and has the RCMP coverage for their area. I believe they have five officers allocated in their budget. Two to three are on maternity leave, so they only have two to three that are available to service that entire region. Maternity leave officers count on the allocation, unfortunately, even if they're not physically present and able to do the job.

It is a budget consideration, but it's also the fact that there are not enough recruits going through the training at the RCMP depot in order for us to be able to access them. One thing that we have said we need is better screening for the dropouts who are going through the program because there is a high number of dropouts who go through partial training and then leave. It is a serious concern, especially in rural Alberta where municipal councils are funding these positions. They're putting them into their budgets, and they have the money available to fund them, but there is no RCMP officer available to come. It's causing a significant concern.

We're also seeing that there is a problem when we are supplementing RCMP officers by adding more clerical staff. In order for RCMP officers to be efficient with their time, we need to have clerical staff to be able to do the majority of their paperwork. We're paying out in any way possible to get the coverage, but we're not able to access what we need.

[The Chair, Liberal, Wayne Easter]

Okay. Casey, maybe you could re-emphasize the importance of.... I know there's a committee looking at temporary foreign workers, but I do know that even the Cargill plant here sometimes ships cattle stateside because they don't have enough workers to handle the slaughter capacity at the Cargill plant. Is that correct?

[Casey Vander Ploeg]

Yes, you're correct, Mr. Chair.

I appeared before the HUMA committee in May on the temporary foreign worker program, and we made a submission to that committee. We stressed the importance of agriculture continuing to serve its role as a gateway into Canada.

I speak from experience. I am the son of Dutch immigrants. My father was an electrician in the coal mines in the Netherlands after World War II. He had a very important job there, a good job, that he left behind to come to Canada and hoe beets. The price of entry into Canada was a two-year commitment as a farm labourer, which he happily did. Afterwards he proceeded to establish his own business and the rest is history, so to speak.

Yes, labour is very much on our agenda. We know the recommendations of that committee have been tabled with Parliament. I've communicated to Brian May, the chair of that committee, that we're happily pleased with what we see in those recommendations. We've communicated that to the minister as well. I was in Ottawa last week, and we communicated to Minister Mihychuk our support for those recommendations. We sincerely hope they go forward.

The labour is not the only thing. It's infrastructure as well. It's ensuring that those trade agreements that we've negotiated can be passed, and we can free up trade and agricultural products. Therein lies the potential for Canadian agriculture, I believe.

I would end with this one thought. There has been a lot of talk about urban and rural. Conceptually I think that's how we look at the world. I'm now in urban Alberta. I'm going to be going back to another part of urban Alberta in about 15 minutes, and I'm going to be travelling through rural Alberta as I do that, but it's still one nation. It's still one country. It's still one economy.

The urban and the rural places of this country are connected with roads, bridges, and rail and air transportation. All those things move people, move products, and move goods to serve the domestic market and to serve the international market.

We need to ensure that connectivity stays there. A lot of the primary economic activity in Canada is in the rural areas, whether it's mining, forestry, fishing, agriculture, or oil and gas, you name it. It happens in rural Canada, but rural Canada needs to connect to urban Canada to get those products out to the ports and get them out to the world. We need that connectivity, and that's what I'm talking about when I'm talking about rural infrastructure. Let's get this system and keep it robust, and in that way we can do a lot to secure our economic future in this country.

[The Chair, Liberal, Wayne Easter]

Okay.

Mr. Liepert, go ahead with your last questions, please.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

I want to ask one question of Lisa, but before I do that I have one clarification for Dan in his answer to Raj. If I understood you correctly, you were saying the innovation fund already exists. It's in the 2016 budget and the dollars are there. You were saying that you want them to consider your organization to be eligible for some of those dollars. You weren't asking for additional dollars.

[Dan Wicklum]

Correct.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Thanks.

Lisa, as a final question, I've always felt that the municipal governments were the level of government that's closest to the people. You have 1,000 of your delegates coming into Edmonton starting tomorrow. Now everybody wants more money, so if you set aside the request for more money, what would be the number one issue on the minds of your delegates that you could leave with this committee today?

[Lisa Holmes]

It is improved regulation, and I'll give you four bullet points. The CRTC needs to make broadband a basic service.

The marijuana conversation needs to have very good consultation with municipalities. We need very clear regulations in regard to the homegrown aspect of its distribution and consumption because it impacts us at the local level more than anyone.

We need to harmonize the federal and provincial water and waste-water standards because right now, we report to two different levels of government. It would be great if we could save the money and the time and just have harmonized standards in that area.

Alberta needs a regional policy for temporary foreign workers like Quebec has. Our hiring is very unique and we have our own unique circumstances, as you were saying. We need our own policy. Those cost no money.

[The Chair, Liberal, Wayne Easter]

That was a quick sum-up and to the point. Unless there's one quick question, we will leave it at that. Thank you all for coming and thank you for your briefs as well. For those who had sent them in by early August, we have those briefs and they have been gone through as well, so thank you.

I don't know how many meetings there are in Calgary this week, but everybody we asked as a witness seemed to have a Calgary commitment, Casey's group being one. The Canadian Association of Petroleum Producers was another, but they're going to meet in Ottawa now, I believe.

Thank you all for your presentations and the straightforwardness of your answers. The meeting is suspended for 15 minutes.

[The Chair, Liberal, Wayne Easter]

We will come to order for our second panel. I think the panellists know that pursuant to Standing Order 83(1), the finance committee is doing pre-budget consultations for the 2017 budget.

We welcome you here as finance committee members from across the country. We would like it if you could hold to as tight to five minutes as you could for presentations so we get time for questions.

We will introduce the MPs who are here as well.

We'll start with you, Raj. Please introduce yourself and say where you're from so panellists know.

[Raj Grewal, Liberal, Brampton East, ON]

My name is Raj Grewal, and I'm the member of Parliament for Brampton East. That is right by Pearson International Airport.

More importantly, I know we're in Alberta, but I hope you all watch the Blue Jays game tonight and cheer for Toronto.

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

I'm Jennifer O'Connell. I'm the member of Parliament for Pickering—Uxbridge on the other side of Toronto, on the east side, in Ontario.

[Steven MacKinnon, Liberal, Gatineau, QC]

I'm Steve MacKinnon. I'm the member of Parliament for Gatineau, just across the river from Ottawa.

[The Chair, Liberal, Wayne Easter]

I'm Wayne Easter. I'm the member of Parliament for Malpeque, Prince Edward Island, which is between Charlottetown and Summerside.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

We're the good guys from Alberta. I'm Ron Liepert. I'm the member of Parliament for Signal Hill in Calgary.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I'm Ziad Aboultaif, member of Parliament for Edmonton Manning, which is northeast Edmonton.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I'm Richard Cannings. I'm the MP for South Okanagan—West Kootenay. It's where all Albertans go for their holidays and retirement.

[Voices]

Oh, oh!

[The Chair, Liberal, Wayne Easter]

That's true.

Following our briefs and presentations, we do give an opportunity to anyone who happens to be here as an observer to take about two minutes to give their points of view on where the country should be going on finances. There will be a deadline of about 12 o'clock on that.

Mr. Kershaw is with the University of British Columbia.

Welcome, and the floor is yours.

[Dr. Paul Kershaw, Professor, Human Early Learning Partnership, University of British Columbia]

As you noted, I'm a professor at the University of B.C., and I'm here today on behalf of an organization called Generation Squeeze, which is engaging Canadians in our 20s, 30s, and 40s to realize our potential as change-makers on a grand national scale in the world of politics for ourselves, our kids, our country, and the planet. We take inspiration from the Canadian Association of Retired Persons, which has been advocating for decades on behalf of those age 50 and older. We're now building the corresponding voice for those of us who are younger to help our world of politics work for all generations.

As we pursue that quest in the world of politics, our allies often make use of what we sometimes call playfully a generational spyglass, something we can look through to bring clarity to how the world has changed for young adults today compared to 1976 when today's aging population were young adults.

The spyglass is powerful. It's built on some of the best social science evidence from UBC and best generational budget analyses that exist, and it shows the following kinds of changes.

Compared to 1976, Canada's economy today is twice as big as it used to be. When you control for population growth, we produce on average an extra $35,000 per household. That's fabulous, but despite all that extra prosperity, the social science data show that increasingly the deck is stacked against younger adults.

The typical 25-year-old to 34-year-old in this country earns thousands of dollars less for full-time work than did the same age person a generation ago once you adjust for inflation. We earn thousands less even though we are more than twice as likely to have post-secondary education, and since so many more of us go to post-secondary, so many more of us start with student debt.

After going to school for longer to take jobs that pay less—and often in positions that don't have generous pensions like they used to—young adults are then asked to do the most amazing thing, spend hundreds of thousands of dollars more for the privilege of trying to live an average home. Also, more often in big cities, those average homes are smaller places with balconies and not yards.

This is leaving entire generations of young adults today squeezed between time and money pressures at the very moment they are also in their prime child-bearing and child-rearing years. Then they often have to take on large mortgage-sized costs like child care or parental leave, especially outside of Quebec.

We often look with our generational spyglass not only at how problems are changing for younger Canadians, but at the national response. Here's where the data gets really interesting. We can show that each year governments combine to spend around $33,000 per person over 65 on important things like medical care and old age security. These are the kinds of things we need to protect, because Canadians are more likely to become unhealthy when we are older, and nobody wants my grandmother to be working when she's elderly.

By contrast, we find ourselves spending less than $12,000 a year per person under 45. When you add up everything in the kitchen sink, grade school, post-secondary, medical care for young people, family supports, employment insurance, workers' comp, that is less than what we do for medical care alone for my mom and my grandmother.

Interestingly, the federal government is actually the primary driver of that age gap. Each year, the federal government spends around $21,000 per person over 65, compared to a little over $7,000 per person for those aged 45 to 65, and around $4,300 per person under 45.

So far in Canada, and at the federal level in particular, we aren't talking about the pros and cons of that age gap. One of the reasons we don't talk about that age gap is because we don't report it publicly in our budgets.

That is Generation Squeeze's first ask of the budget process this year. It's a really inexpensive ask. It doesn't cost any money, save a bit of staff time for either those in Treasury or the Department of Finance, to replicate and/or refine the kind of methodology we've developed at UBC to measure how spending breaks down by age, and to begin reporting that starting in the 2017 budget. We'd be delighted to lend our support and expertise in that cause.

Once we start reporting the age distribution of spending in our budget, we can routinize annually important conversations that ask if decision-makers in the federal government are finding the right balance with investing across generations these days. That's why we're wanting, in particular, to task the Prime Minister, in his capacity as the Minister of Youth and young adults, to task staff either in Treasury or Finance to begin that reporting.

Once we do that reporting, we think we can identify a range of interesting and important intergenerational issues that can tie together some negotiations that the federal government is currently leading with the provinces.

Take health care, for instance. It's important, from an age perspective, to recognize that Canadians are ranked amongst the countries that spend the most on health care each year. By contrast, however, we don't necessarily get the best results with international comparisons. Typically, we're at average or below average. As we think about what to do with our health care system going forward, it's going to be important for us to consider that more money, in of itself, isn't always the answer, when other countries are already getting better access to doctors, CT scans, and pharmaceuticals.

If we can recognize that and achieve the kinds of outcomes that other countries do at their costs levels, could we not take some of those savings and allocate them to things that we're weak on? UNICEF ranks us as very weak on things like child care and parental leave.

Similarly, when thinking about health care from an age perspective, it's important to recognize that we don't prepay for the health care we use when we're older in the same way that we prepay for CPP and the Quebec pension plan. Whereas our pension system is relatively fair intergenerationally, demographics are creating some tensions with respect to health care. When today's seniors were young adults and working, there were seven of them for every retiree they were supporting with medical care. Now, as they're retiring, there are only four workers coming behind them. Soon it will only be two, which effectively is asking their kids and grandchildren to shoulder much larger expenditures for health care, while earning less.

How might we square that circle? One way to do that would be to actually link the health care debates we're having right now to our national housing strategy. I'll wind up in just a minute with two points on housing. At Generation Squeeze, we know this is an important strategy because housing is at the crux of the declining standard of living for younger Canadians.

We want it to be recognized that two people may both make $45,000. One is a young renter. One got in the housing market decades ago and now owns a home outright that's worth $700,000. They're not really the same, but our tax system largely treats them the same for the purpose of measuring their ability to pay for things like medical care and other social services.

Were we to recognize some of their important differences, we could not only send new signals to dampen the growth of high housing prices, which is alarming us from coast to coast, but also potentially create revenue in new ways to cover the additional costs that our aging parents and grandparents are counting on for their health care system.

My last point about housing is we know there's a generation squeeze. Despite the fact that housing prices really hurt a younger demographic today compared to the past, there's no appetite to really bring housing prices down, in part because our parents and grandparents are counting on that for their own equity and financial security in retirement. If that means we're asking younger Canadians, going forward, to tolerate much higher housing prices than in the past, could we not bring young and old alike to say, what other big costs are facing younger Canadians at this time, that are squeezing them, that we could reduce with policy without hurting our parents and grandparents? Because parental leave and child care add a second and third mortgage, those would be great places to start. If those costs are reduced then young adults can better deal with high home prices without trying to impose the ideas that could hurt our parents and grandparents.

With that, I would emphasize that now is the time for us to start reporting how we break down spending by age, so that we can ensure that the Government of Canada is working for all generations.

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Kershaw.

I'll turning to Mr. Rabik, with the Alberta-Pacific Forest Industries Inc. The floor is yours.

[Brent Rabik, Unit Leader, Business Development And Government Affairs, Alberta-Pacific Forest Industries Inc.]

Thank you very much for the opportunity to speak today, and thanks to Paul for reminding me that I'm not young anymore. It was the glasses that did it to me.

Alberta-Pacific Forest Industries, Al-Pac, is the last greenfield pulp mill built in Canada. We directly and indirectly employ over 1,000 people and spend over $220 million annually in Alberta, of which over $150 million is spent in the local region. We're a critical employer to at least four communities in northeast Alberta.

We began operations in 1993, and since then we have witnessed remarkable change in our business. The pulp and paper industry has shifted to Latin America and Asia where mills two to four times our size are being built every two to four years. The use of genetically modified tree species, lower labour and regulatory costs, and better access to Asian markets have made new investments in Canada almost impossible.

The dramatic switch to electronic media has resulted in shrinking markets for traditional printing and writing papers, except here. Thanks for the use of the paper.

Canada does have the largest amount of third-party certified forests in the world, and Al-Pac manages the largest single-certified land base in the world. That's a big deal since most of that is done overtop the oil sands of northeastern Alberta. We have an industry that has made investments in bioenergy, biofuels, biochemicals, and biocomposite products. We realize this is just the beginning of the transformation of Canada's third-largest manufacturing sector.

We're not going away. We have many opportunities to transform our business and build upon some of the best environmental credentials in the world.

At Al-Pac we have a new owner, Hokuetsu Kishu Paper out of Japan, which is looking at making global investments in the pulp and paper business. We'd like to help them to invest more of their money in Canada.

Here are some facts about the Canadian forest industry. We employ about 288,000 people directly and indirectly, and over 12,000 in Alberta. Approximately 70% of aboriginal communities are located within the forest regions of Canada, and approximately 9,000 aboriginal people are employed within the forest sector.

There are over 231 forest-dependent communities in Canada. There are about 12 forest-dependent communities in Alberta. Over 50 communities identify forestry as a primary industry. The forest industry remains one of the key industries in Canada for stability and growth within our rural and aboriginal communities.

Today I'd like to highlight three areas that we would like for consideration not just in this year's budget, but also in recognizing that investments in transformation take time. Like this industry where we have 100-year planning horizons, we encourage the government to think in longer timeframes.

With respect to carbon, government needs to establish a framework to ensure that carbon prices are comparable across Canada and do not adversely affect our competitiveness in jurisdictions where this type of policy is lacking.

Government needs to establish compliance mechanisms, such as offset mechanisms that are consistent and available across Canada. The offsets mechanism should include forest sinks, as well as carbon displacement projects such as biofuels and bioenergy.

We also need government to promote biofuels and lower carbon emitting fossil fuels for the transportation sector by increasing the minimum fuel-blending levels to 10% for gasoline and 5% for diesel, with minimum requirements for advanced biofuels.

Finally, government should adopt a carbon first principle for infrastructure spending and procurement.

With respect to innovation, the government should invest $100 million over four years in the Natural Sciences and Engineering Research Council of Canada, NSERC, for R and D in the forest industry, and $200 million over four years as core funding for FPInnovations at the national level to support provincial research organizations like Alberta Innovates Technology Futures. This funding should be done in parallel with provincial funding. While FPInnovations' current funding does not expire until 2018, early renewal is critical for FPInnovations' organizational planning and as a signal to the provinces as they prepare their budgets.

For broader deployment of clean technology, invest $250 million. Many of the technologies can be replicated across the industry, and there are still risks involved with which government can help.

Invest $200 million over four years in the investments in forest industry transformation program, or IFIT. All of the current budget allotment within this program has been allocated, and there are no further calls for proposals for this obviously successful program. IFIT is set to expire in 2018, and a signal of long-term support is required.

Invest $40 million over four years for the business cluster, starting in 2017-18.

Quickly, on SR and ED, scientific research and experimental development, reinstate the ability to claim capital as part of the SR and ED eligible cost structure. Increase the rate for SR and ED programs to something higher than the current 15% of eligible costs for large, non-Canadian-controlled private corporations. Increase the certitude of obtaining SR and ED credits by adjudicating the claims in the spirit that the program was intended when it was developed in 1986. It is an incentive-based program and not a compliance-based program.

The forest industry in Canada is transforming. It's based on a foundation of world-leading environmental practices, innovative thinking, and recognition for the need to change. We're the backbone of so many rural communities, and we desire to work with aboriginal communities who are our neighbours and partners. We support the decarbonization of the economy, and we believe we are part of the path to get there. How this path unfolds will be strongly influenced by the actions the government takes, not only in the next budget but in clearly outlining a long-term strategy aligned with where we as an industry know we need to go.

Thank you.