Finance Committee on Oct. 19th, 2016

[Ron MacDonald]

Yes, we have. I'll speak specifically to the north, and I'll make one other comment on that because we do business all over Canada, although the north is my priority.

Let's look at economic development. I'm going to talk a little about the community of Sandy Lake. It's a great community. It's an indigenous community in northern Ontario. Sandy Lake has great leadership. It's about 2,400 people. It's growing at about 6% a year, so if you do your math, you see that about every 12 years it doubles.

It has one of the highest rates of diabetes in the world. It was the highest rate 10 years ago, and it's still one of the highest rates. It has a diabetic clinic. It also has, because there are a lot of kids there, a great arena. When they turn the lights on at that arena, they have a brownout over at the clinic.

They constantly have to make a decision about where their priority is in the community. I would always say it should be the kids. The kids are lacking in opportunity, but there's also a lack of economic opportunity, because if somebody goes in there and tries to operate a business, they're going to pay a much higher rate than the subsidized rate. The way the rate structures are, you cannot have economic development. It's straight, clean, and simple.

With a renewable system, just by its very nature, you build it out to more than the capacity. I'll give an example. If it's a solar system, then you're going to try to maximize the penetration of a renewable to displace the diesel. For the summer months and the shoulder seasons, the spring and the fall, you have excess generation capacity.

We've looked at and started to model what you could do with that. If it's already paid for by what we call a power purchase agreement with the utility, so that you already have your economics there, and you have excess capacity for eight to nine months a year, what would that mean to the community?

We started looking at that excess capacity that has to be built in and we looked at giving it to the community for free, because you're going to be in a community partnership. The community is going to have 51% ownership in any of these partnerships.

What would that do for economic development? It means that in the winter months they'll pay more, but in the summer, spring, and fall they pay a little bit or they pay nothing. That is an economic generator for those communities.

Some of the employment opportunities that would come from an investment that takes a lot of power are not possible. It is possible with these renewables, but it is not possible with diesel. It's impossible.

One of the other things that it does, and we looked at this, is grow Nutrition North. It's a federal policy. There's a big problem with nutrition in these northern communities. It's not just that they traditionally don't eat a lot of produce, but when you go into a northern store and you see a head of lettuce and it's $9.95 and it looks like it was kicked around as a soccer ball, and then you can get a two-litre bottle of Coke for $2.99, what are you going to take? I think the answer is fairly clear.

We started to ask, if you put renewable energy in, what are the other opportunities? There are things called vertical greenhouses, and they're incredible. The technologies are here today, and they work in the north if you have power that is affordable.

We see a lot of these secondary and tertiary economic opportunities that could be realized through getting rid of these diesels and all those things that you don't want for economic development, and it is real.

I have one last comment. In the province of Ontario, we also do compressed air. We have the first compressed air contract in southern Ontario, and our president has written an article, an op-ed piece, that says that if Ontario maximized storage in compressed air caverns around Ontario, they'd save over $11 billion in 20 years. That is economic development. That frees up government money to invest in another sector.

[Steven MacKinnon, Liberal, Gatineau, QC]

I'm sure Ms. Wynne could use a couple of those.

[Ron MacDonald]

She probably needs the help right now.

[Steven MacKinnon, Liberal, Gatineau, QC]

I want to turn to Mr. Greenwood and Mr. Blackwood, which is an interesting juxtaposition of names.

One of the things that we're talking about in this country, and arguably one of the great debates we're having, is over pipelines. One of the fundamental arguments against pipelines is the danger of spills in rivers or tanker spills in our harbours as a result of export activity.

A lot of the work you would be doing clearly would address these two things. You didn't specifically talk about rivers. I assume that is a component of your work, along with harbours. Can you elaborate on that a bit more?

[Dr. Robert Greenwood]

Sure. I think both Glenn and Charles can add to that. Glenn could go first, and then Charles.

[Glenn Blackwood]

Thank you.

I talked about the building. One thing I didn't mention is under Canada's oceans action plan, back in 2006, we launched SmartBay, which was a Placentia Bay initiative. The study that was done on tanker safety in Canada identified this as one of the highest-risk regions of this country. Most of our oil and gas goes in and out of Placentia Bay. It is, I think, next to Vancouver in terms of total value of product coming in and going out. We wired Placentia Bay, basically, with buoys that upload to satellites every 15 minutes. If you go to smartbay.ca, you can see all this.

We've since expanded that around the island, and we've since expanded it into Halifax and the partnership up here, and with the pilotage authority into Saint John, New Brunswick. With Ocean Networks Canada, out of British Columbia, we're now looking at setting up a national oceans observing system to give better information and better decisions for tanker safety. Basically, all these tankers will be in direct communication through these buoys and through an AIS system with all the fishing vessels in Placentia Bay, one of the foggiest places in Canada.

This is not a tourism commercial. We have some of the most severe sea states. We have the famous ice that sank the Titanic, and there have been other catastrophes over a period of time. It is a harsh environment. A lot of what we do on the project side is generated by working with industry. They identify their challenges and we work on the solutions.

[The Chair, Liberal, Wayne Easter]

Charles, perhaps you would speak specifically on this when you're answering a difficult question from Ziad on the $35 million. Are you looking for matching dollars from the federal government? As well, how is this package put together?

[Charles Randell]

Yes, sir. Thank you for the opportunity to actually answer your question, because I realize I didn't.

Yes, we will take the $30 million from industry. For the facility, the estimate for the capital is $65 million. One of the reasons it's so expensive.... It is generally expected by the oil spill practitioners that this facility is needed in the world, so it will be built somewhere. The question is, is it going to be in Canada? Wherever it's built, there's going to be a whole industry built up around it. That's why we're so keen to have it here.

To answer your question, there are two other significant initiatives around oil spills going on, for the Arctic and for rivers. We're all talking to each other because this is a big problem and there's not one solution, so we're making sure that we're not duplicating efforts anywhere, that they will all be compatible, and that the information goes from research to application to actual use.

In terms of the coastlines, one of the reasons this facility is so expensive is that it has a removable beach—which is unique—so that we can simulate any of Canada's 200,000 kilometres of coastline to look at cleanup. We can look at effects on vegetation, effects on fish. This facility is primarily for salt water because there are going to be other much smaller facilities that can do the freshwater research, but when you need to scale up the equipment—if you have a skimmer that comes in on a transport truck normally, you can't do that in a lab-sized tank—that's where we'll go to this facility. We are all in concert, and yes, it is very applicable to freshwater and rivers as well.

[Steven MacKinnon, Liberal, Gatineau, QC]

Do you work with other entities and centres on rivers?

[Charles Randell]

There are two other groups right now in Alberta and British Columbia that are looking specifically at oil spills in rivers. We communicate regularly. A research facility is going to be built in Churchill, Manitoba, so we meet with them as well. It's not that we're working together to pursue funding; we're working to develop a national network for oil spill response research and training.

[The Chair, Liberal, Wayne Easter]

We will have to cut it there.

Does anybody have anything quickly they need to clarify?

All right. With that, we will thank the witnesses for your presentations. We were fairly well across the map on issues during this panel.

Thank you also to any of those who sent in briefs. They arrived in August, and we do have them.

We will suspend for 10 minutes and go to the open-mike session.

[The Chair, Liberal, Wayne Easter]

We have a number of people for the open-mike session. We'll go to two minutes. We have six, not 20, so rather than have you stand at the floor mikes, we'll ask you all to come up to the table together, where there are six mikes. We'll start from one side and go to the other.

Welcome, and thank you for taking the time. When everybody is settled, I'll go with the order I have on the list.

Evan Johnson, do you want to start?

[Evan Johnson, As an Individual]

My name is Evan Johnson. I'm with Engineers Without Borders Canada. I'm here today to speak to you guys about increasing the ODA budget, the official development assistance budget, in the federal budget for 2017.

Engineers Without Borders Canada is asking for it to be increased by 10% every year for this Parliament's tenure and then show predictable increases until 2023 to get it up to 0.7% of the gross national income. That might seem like an arbitrary number, but that was set by the UN in 1969. You might be skeptical of anything put forth by the UN on funding, but that was set by a commission chaired by none other than Lester B. Pearson. This was a Canadian goal they were aiming for, and as this government has stated, they are trying to re-engage the world, especially on the international assistance side of things, with added focus on women and girls.

Besides being a moral request, it also makes economic sense, since the entire point of the ODA budget is to develop unstable regions of the world, particularly the poorest. Any economist will tell you that if they're looking to trade and invest, they want stable markets. The ODA budget tries to provide social, political, and economic stability to these regions. Overall, that creates a better business environment for Canadian businesses and mutual trade coming from these markets to consumers here in Canada.

All in all, I think it's a worthwhile venture, and I thank you for taking the time to hear from us in every city.

[The Chair, Liberal, Wayne Easter]

Thank you, Evan.

Obviously we need an engineering school in P.E.I. I congratulate your organization across the country, because you have a consistent message.

Brian Gifford is next.

[Brian Gifford, As an Individual]

Thank you for this opportunity.

I'm a member of Nova Scotians for Tax Fairness. I have a six-page brief; I've given several copies of it to your staff, but because it wasn't translated, it can't be in front of you until the translation is available.

There is a lot more detail in what we've presented than in what I will say. We recommend 12 ways to make the federal tax system more equitable and to raise additional revenue for progressive public programs. We applaud the government's sensible view that deficits are a way to stimulate the economy while funding nation-building change, but we believe such change is only sustainable if revenues are increased.

We make eight recommendations to increase revenue and fairness. Four of those are to change tax deductions to refundable tax credits. That's one of the four. Another is to raise the corporate income tax rate toward the level in the U.S., one of our main competitors and the one that we're always comparing ourselves with.

A third is to exclude companies that use aggressive tax evasion and avoidance techniques from competition for contracts to supply publicly funded goods and services. This, we think, would be a very important incentive to reduce tax avoidance and tax evasion.

The fourth was to implement the key recommendations presented by Canadians for Tax Fairness to raise $20 billion per year.

We also support two public finance ideas that are important to the Maritimes. The first of those is to reinforce the principle of equal citizenship by restoring equalization funding to historic levels of 1.36% of GDP and by establishing an arm's-length body to oversee the transfers.

The second one is to reinstate the 6% annual increase in the federal contribution to medicare in 2017 and beyond, recognize increased costs due to an aging population as part of the formula, and make universal pharmacare and other improvements conditions for expanded federal funding.

On carbon taxes, we applaud the government's decision to establish a nationally coordinated carbon pricing system. It is essential, in our view, to continue to raise carbon prices beyond 2022 to change industry and consumer behaviour. It's also essential to require provinces to compensate most households for increased energy costs and to invest in the transition to a low-carbon economy.

A carbon tax benefit similar to the child tax benefit, which the government has instituted this year, would be a good model for compensating low- and middle-income households as carbon prices rise.

Thank you for your attention, and we look forward to a progressive, forward-looking 2017 budget.

[The Chair, Liberal, Wayne Easter]

Thank you, Brian.

Just so we're clear on the record for committee, you're speaking on behalf of the Nova Scotians for Tax Fairness?

[Brian Gifford]

Yes.

[The Chair, Liberal, Wayne Easter]

Okay.

Dr. Michael Bradfield is next.

[Prof. Michael Bradfield, As an Individual]

I am used to lecturing, so I have to cut 55 minutes down to two.

I'm not here as an individual. I'm here representing a group called the Face of Poverty Consultation. It's an area group that is a faith-based group trying to work for the elimination of poverty.

Thanks for the opportunity to speak, but our group is disappointed that once again there's been very limited notification of this consultation, as in previous consultations. With proper notice, we could have submitted a full-fledged brief, as we have done in the past.

However, we are pleased with a government that recognizes the important role of government in meeting Canadians' collective needs, and thereby also stimulating the economy. We face significant social, environmental, and infrastructure deficits because of decades of program cuts and a failure to introduce new programs, such as funding for pharmacare or dental care programs. This societal deficit was caused by the hysteria over the financial deficit, which was the result of tax cuts favouring corporations and the wealthy, and of misguided monetary policy.

Budgets are also about taxes, and the tax system has become increasingly regressive, raising the tax rate on low-income Canadians while cutting the tax rate for the wealthy. Much can be done to help our most vulnerable and to increase revenues for a more progressive tax system. For instance, we could, one, restore upper tax brackets and close tax loopholes such as the 50% inclusion rate for capital gains, and two, define taxable income as total income, as is done in Quebec.

Third, we could convert tax deductions to tax credits. Brian mentioned that. Deductions generate the greatest tax advantage to the highest income tax bracket. Credits carry the same potential savings for all taxpayers; therefore, the credits should be switched to deductions.

Fourth, we could remove the boutique tax credits, which few Canadians can fully access.

Five, we could make tax credits refundable. This is crucial. If your income is so low that you do not pay enough taxes to use all your credits, you should receive a refund for the difference

Six, we should pursue tax dodgers using tax havens, and seven, we should join with other nations to put a small tax on international currency transactions, the so-called Tobin tax.

Finally, some say it is immoral to impose debt on future generations. Much of government's expenditures are investments in people, with health, education, and social assistance, and in physical infrastructure. These benefit current and future taxpayers. It is immoral not to make these investments and thus deny everyone access to quality health care, education and training, adequate income support, and safe and efficient infrastructure.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Michael.

Edd Twohig is next.

[Edd Twohig, As an Individual]

Thank you very much. I'm here as an individual, but at the request of a Canadian senator who spent two or three hours listening to me rampage over what I have learned in the last few years about Canada's economy and the history of it, and further, what I started writing about the bad base of our taxation policy in Canada, on which I started ranting about 50 years ago.

Looking at the history of Canada, I look back at when I was born at the beginning of the Great Depression, and it appears that the Great Depression had a lot to do with the creation of money by the financial sector, which caused the excesses of the 1920s, which we now see being repeated again.

I go back and look at the history of the golden years of Canada, the years when everybody seemed to be working. We did all the great things. We built the Trans-Canada Highway, seaways, hospitals, and everything. These were the golden years, but they stopped. When did they stop? They stopped when the financial interests again took control of the finances and the economy of Canada.

What's happened since then? Our manufacturing sector has diminished. We look at economic growth and see it has been up and down. We've had bubbles grow and burst, and we have seen a decrease in the distributive justice of our country.

We've seen a death spiral start. We've seen the growth of debt for Canadian homes and people and workers. We've seen personal savings go down and debts go up. All of these things have happened in the last half of my lifetime.

In the first half of my lifetime we got out of a depression, we paid for a war, and we did all these great things in Canada, but then the policies changed around the 1970s, and this wasn't just the policy of Canada.

I have been studying some of these things and hoping that the rest of the Government of Canada, the members of Parliament, would look at these various ideas and debate them and learn them, just as this senator suggested they should.

If I look back at the study and the rational thought that I've applied to these matters, I think that if MPs do not even make the effort to understand them, then I believe they will be negligent, and I would think that I would deem them as being traitors to our society.

[The Chair, Liberal, Wayne Easter]

Thank you, Edd. We do have your submission. I think it was dated July 19 when it came in to the committee.

Next is Jim Cormier.

[Jim Cormier, As an Individual]

Thank you. I'm here on behalf of the Retail Council of Canada.

My appearance was a late addition, but we will be presenting to this committee next week, from what I understand. My colleagues will be doing that, but I thought that since I'm here, I would give you a little teaser on what will be coming next week and maybe give it a little Atlantic spin.

We're here on the de minimis level. We respect the opinions of eBay, which presented here today. They're good members of ours, but on this issue we couldn't disagree more with their comments. If you want to look at the impact this could have on the economy, retail is the number one private sector employer in every single province in this country. There are over two million employees nationally, over 60,000 of them here in Nova Scotia alone. We're talking about an economy in a province like Nova Scotia that's over $12 billion annually in retail revenue.

It's a moving target with eBay. They used to talk about an $800 de minimis. That didn't fly. Up until late this summer, they were talking about a $200 de minimis, and now they have come here today talking about an $80 to $100 de minimis, so we're not quite sure where they're going to land next. We're sticking with $200 because that's the one they've used the most.

If you were to look at it, they talk about the customs duties, and that's one, but there's also provincial and federal tax revenue. We talked to every provincial finance minister this summer. We pointed out—I'm responsible for Atlantic Canada—that you're looking at shippable goods between $20 and $200 if we stick with their $200 de minimis level. For a province like New Brunswick, that would be about $2.05 billion in shippable goods that fall into that category. A lot of our members have crunched the numbers, and over time, if you were to allow this type of huge advantage to U.S. online retailers, you'd see about a 20% change in the spending habits of Canadians. That could result in a loss of about $40 million annually to the Province of New Brunswick. In Nova Scotia, you'd be looking at $48 million annually. Even in your province, Mr. Chair, there would be a $1.42 million loss in HST revenue. That pays for a lot of roads, as well as the social services we all want and need.

The point is, why would government here in Canada provide a tax incentive for consumers to shop everywhere else but Canada? It seems like a no-brainer for us. Again, we're the largest private sector employer. Even our American retailers that have set up shop here in Canada are paying taxes. They're employing people. They're contributing to communities. Just look at the drought here on the south shore over the last summer. It was Walmart, it was Loblaws, it was Canadian Tire, American and Canadian retailers, all jumping to provide free water and supplies to folks down there whose wells had gone dry. These people contribute to communities because they're in these communities.

eBay is not in those communities. We are providing the people with the retail products they want and need. If it gets to a point where Costco can just build a bigger distribution centre in the northern U.S. and ship it on through, they will. It's a business decision. That means fewer Costcos or fewer retailers of other types here in Canada. It also has an impact on small independent retailers.

I'll end with this. Folks like the Bookmark in downtown Charlottetown or Proud Shoes out in Sherwood Parkdale have been active members on this file because they know that this would devastate their businesses. These are small businesses. Maritime Hobbies and Crafts , three blocks away from here, a small third generation hobby shop, would basically have to close up shop, because people could easily ship a board game from the U.S. into Canada. That puts them out of business.

I'll leave it at that. That's the teaser for next week. Thank you for your time.

[The Chair, Liberal, Wayne Easter]

Thank you, Jim.

Jacqueline Landry, you're on.

[Jaqueline Landry, As an Individual]

Good afternoon.

I come from the region of Yarmouth County. I'll try to make this in two minutes, but as a Parkinson's patient—