Finance Committee on Oct. 5th, 2016

[The Chair, Liberal, Wayne Easter]

Thank you, both.

Mr. Grewal.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you to the witnesses for coming today.

I will continue on my colleague's point about tuition. I recently graduated and carry a lot of student debt from doing a JD/MBA from Schulich-Osgoode. However, I was very pleased with, and one of the reasons I chose to run for the party I ran for was, their commitment to helping students. I just want to mention for the record that the Liberal government has increased access to Canada student grants by about 50%, and Liberal members continue to put pressure on our own government to ensure that post-secondary education is accessible to all Canadians across the country.

Moving right along, Mr. Raymond Orb, I just had Minister Sohi in my neck of the woods in Brampton. Now Brampton is by no means a rural area, but infrastructure is a big part because it is a growing area in the GTA. From your perspective, we made a commitment that phase two infrastructure funds would be more accessible to smaller areas in the country. What are you guys doing on your end to make sure that projects are approved, are ready to go, and that the last piece of the puzzle is just the federal funding?

[Raymond Orb]

From our end and I guess from that of SARM too, we haven't been able to access much money. To be honest with you, this is why we're asking for the changes to the small communities fund.

I will give you an example. In the first round—I'm talking about phase one—there were only two rural municipalities in this province that qualified for the funding. That was because they're up against big projects in some of the cities as far as water and waste water go, and we realize those are important. We have that concern and we're relaying that concern to the federal government through the FCM as well.

That's why in phase two we're asking the federal government to change the criteria to lower the population threshold, but to also allow backing of other program funding, including the gas tax funding and any provincial funding that's available. The federal government is really interested in this because it realizes there are lots of small communities, like you're talking about, that don't qualify for the funding.

[Raj Grewal, Liberal, Brampton East, ON]

Minister Sohi made a point of this, and I met with his staff as well and we relayed the concern that there has to be more discretionary authority at the local level because they understand their needs more than the federal government, where it becomes a bit of a macro play. I very much echo your sentiments.

We recognize that phase one funding wasn't available to small cities because the criteria were transit and ridership numbers. Obviously, small cities wouldn't qualify for that. We really will take your comments here seriously.

One things I have been very surprised by in western Canada is that nobody is talking about pipelines, which seem to dominate the debate in Ottawa. That's a take-away point for me.

[Pamela Schwann]

Oil capacity is taking up that rail capacity that we need for bulk commodities like fertilizer and agricultural products.

[Raj Grewal, Liberal, Brampton East, ON]

I know my colleague would like to talk about that, so I will leave it to him.

Since I have a little bit of time left, I want to talk about the fact that our carbon tax policy, which seems to be of concern to a lot of you, is revenue neutral. The money collected from it will be reinvested back into the province to build infrastructure and to build stronger and more sustainable communities.

Moving right along to Mr. Hall, you're asking for a change to the Income Tax Act because 95% of farms in Saskatchewan are family owned. What would be the impact on the government treasury of that change to the inheritance tax?

[Norm Hall]

I must admit that I don't have the exact numbers. It's more that small business in Canada stays small and family owned, instead of going to the world of Mad Max where one company owns everything. We're seeing that in so many parts of our economy in the mergers of mega-giants.

[Raj Grewal, Liberal, Brampton East, ON]

I don't want to cut you off, Mr. Hall, but I'm doing this because they're going to cut me off.

I just want to get to the point. The point is that if you're advocating, in my humble opinion, for an Income Tax Act change, the number one question that any government official will ask you is, what will be the financial impact on the treasury from that income tax change? I could not agree with you more, coming from a family that used to own a small business at one time. We want to keep these businesses small. There's a certain pride in owning your own farm and a certain history there. I totally agree with you, but there has to be advocacy on your part and your organization's part to say that 95% are family-owned farms, but how many of them are truly small businesses in the sense that they're making less than $5 million a year? Studies like that would go a long way to show how the change would affect the government treasury and how it would affect the economy.

[Norm Hall]

I know we have that information. I don't have it here, but I will get it to you.

[The Chair, Liberal, Wayne Easter]

Thank you, Norm. When you have the information, just send it to the clerk, and she will distribute it to the rest of the committee.

Due to the weather and a family emergency, a couple of people from the next panel will not be here. To relieve the stress in not getting everything you need in, we will go with this panel for another 10 or 15 minutes longer.

Spinning off that question, Ray, is SARM requesting that stacking be allowed for communities less than a certain threshold? It's a complaint I hear all the time. I heard it when I was at your convention. Are you specifically requesting that stacking be allowed through the use of the gas tax?

[Raymond Orb]

Yes. We're asking that the gas tax be one of the programs that we use for stacking. We're asking the federal government to really create a rural infrastructure fund. That would be something new. We're not exactly sure how that would work. We know there are federal programs as well, so we're leaving it up to the provinces and the municipal organizations like ours to deal with each province, because most municipalities can't really go beyond that. I mentioned that 17% to 25% is something that's affordable for most municipalities, especially the ones that don't have the finances available.

It is really important that the federal government get this message. They are receptive to it. Minister Sohi asked us a lot of questions about it. I think they know that they have to make some kind of a change. It's a big factor.

[The Chair, Liberal, Wayne Easter]

Mr. Liepert.

We'll give you six minutes.

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

Six and a half.

I would like to ask you folks about the carbon tax and so on, but I think by now our government colleagues have probably got the message that Brad Wall is representing his constituents when he's talking about the lack of support for a carbon tax. I won't continue to beat on that. I'll give my colleagues a break across the way.

Dale, first of all, you used to be a Leader-Post guy, didn't you?

[Dale Eisler]

Yes.

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

Yes, that's what I thought. Same guy, right?

[Dale Eisler]

Yes, in a previous life.

[The Chair, Liberal, Wayne Easter]

If you give him any bad press, Dale, you may be in trouble.

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

Oh, no, no.

In fact, I think he and I both worked in the media at the same time way back when. I started my career in radio at CHAB so I think we were at the Leader-Post at about the same time. I don't want to burn up all my time talking about history.

[Dale Eisler]

Under Premier Lougheed.

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

Yes, that's right.

Dale, I want to talk a little bit about CCS, because I had the privilege of being the energy minister in Alberta when we launched a couple of CCS projects. I think the one thing that is misunderstood about CCS is that there is a significant up-front capital cost, but I believe the project in Estevan is being used now for enhanced oil recovery, is it not?

[Dale Eisler]

That's right. Carbon capture storage and usage is that project, so it is used for enhanced oil recovery in the Weyburn-Midale oil fields.

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

That's right. I think it's an important acknowledgement that those who are opposed to CCS always talk about the subsidization or the up-front costs. At the end of the day, it's also a way of getting the heavy oil out of the ground. That is a revenue generator, which is important. Do you see any prospects of other CCS projects in Saskatchewan?

[Dale Eisler]

I'm not aware of any at this point. Boundary Dam has become a model in terms of carbon capture, and it is attracting a great deal of global interest. I don't want to speak for what SaskPower and the provincial government might be planning, but I'm not currently aware of any other carbon capture projects.

The university's involvement in this, of course, is because our researchers believe that climate change is a global challenge. There's no question about that. The belief is that carbon capture is part of the solution to the global issue. We may be diminishing the use of coal in Canada, but certainly in Alberta, Saskatchewan, and Atlantic Canada, coal is still an important baseload for power generation. Beyond that, globally, coal remains a major source of energy and will for decades to come. This is the case particularly in developing and third world nations, which need cheaper energy to raise their standards of living and the quality of life of their people. In that kind of a world where coal is going to be a source of power—a diminishing source of power, but nonetheless a source of power—we need to be able to address the climate change aspects. We believe that carbon capture is an important part of the solution.

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

I agree.

Pamela, I come from Alberta where we've been hit hard by the energy downturn. Saskatchewan has been hit equally hard, although its energy sector is probably a lower percentage of that province's gross domestic product than ours. For a number of years, we've had some really good years in agriculture. I don't know if we can continue to expect those same really good years, but I know that in Alberta, we have some issues around beef. We have renewal of the softwood lumber agreement pending, and it could be devastating for our province and the country if we don't get a renewed softwood lumber agreement.

Mining has gone through some struggles in the last few years, especially in potash. Can you give me an update of where you see the economy? Potash especially, but also mining, are big parts of Saskatchewan's gross domestic product. Give us an overview of that.

[Pamela Schwann]

Thanks for the opportunity to provide a snapshot. Mining provides about 6% directly to Saskatchewan's economy. That's direct employment and not spinoff value-added. There are over 30,500 people directly and indirectly employed by the Saskatchewan mining industry. There's additional information in my package, but the royalties and taxes are over a billion dollars, and over $2.5 billion is spent annually on wages, goods and services purchased by the industry. It's significant.

The main commodities that we mine in Saskatchewan—and we're world leaders—are potash and uranium. We provide 30% of the world's potash and 22% of the world's uranium. Both have been under extreme pressure from price declines. Uranium is down about $22 a pound right now from highs of around $80 a few years ago. It's the same with potash. We were above $800 a tonne, but now we're around $230 a tonne, so there are significant price challenges on that front.

Fortunately, the world is looking for improved quality of life, particularly the middle class, so the use of potash to help support better food production and the uranium to provide cleaner energy are things that have good long-term fundamentals.