Finance Committee on Oct. 19th, 2016

[The Chair, Liberal, Wayne Easter]

Thank you all.

We are now turning to Mr. Aboultaif.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Good morning, all, and thank you very much for all your presentations. We are learning a lot about Atlantic Canada throughout this session today.

I believe that the economic downturn, the oil price crisis in Alberta, is affecting everybody on this side of the world. In looking into how we move forward, we've seen many panellists come forward and many people ask for money. You seem to bring a different atmosphere to the discussion today, which from a business perspective makes a lot of sense.

I'd like you to comment on this, especially Marco, Finn, and Patrick, and maybe Melissa. If you can contribute to the conversation in a way that.... In my opinion, the government should not always be coming up with money when there is a crisis. Sometimes that works and sometimes it doesn't. We believe that if we are to spend $30 billion, we need to be able to create 300,000 jobs. The math did work in the United States, and I think we should be on the same path.

Right now the government is taking some measures on a CPP increase or extension, on EI—which is a payroll tax—and on carbon taxes. I believe that now is the time for the government to step up and ease those taxation measures to give private businesses the opportunity to perform well in Canada and to make sure they find solutions to the job losses, the immigration issues, and all the economic problems we have.

What do you think the private sector can do in order to take this economy where it should be going?

We'll start with Marco.

[Marco Navarro-Genie]

Thank you.

We dispute the belief that it is the government's job to create jobs. When governments set out to create jobs, they essentially have to remove large amounts of money from the productive sectors of the economy.

As we have seen time and time again, governments are not necessarily the best managers of other people's money. The best managers of that money are the people who earn it. We believe that the more money we leave in people's pockets, the better it will be.

In spite of the gloomy picture that I painted a couple of seconds ago, we have scintillating points in this region. The start-ups are one example. We have a growing number of new high-tech, high-paying, extremely innovative businesses in New Brunswick, in P.E.I., and here in Nova Scotia. These are focuses of know-how and entrepreneurship that need some nurturing.

I'm not sure that it's the state that should nurture them, but we should establish a framework of rules that would allow for more investment, and certainly foreign investment, to come in and nurture them. If this committee could do something for this sector, it would be to set up the appropriate framework for it.

[Finn Poschmann]

Mr. Chairman, the honourable member is threatening to draw out my libertarian side.

I agree with much of the premise and with many of Marco's comments. There are arguments for and against the expansion of the Canada Pension Plan and the liberalization of EI, but these expansions are certainly not growth-enhancing measures.

Beyond that, there are things that government can do. Mostly these have to do with ensuring that we have stable finances in the long haul. At the federal and provincial levels, that involves not spending a lot more than we take in. It would be very encouraging to see the federal government plotting a trajectory to get itself back to fiscal balance in rather short order.

The impetus for infrastructure spending grew out of a financial and economic crisis that is long since past. The message that interest rates are very low and that, therefore, it's a great time to borrow and to spend on infrastructure is tantalizing. However, it is a seriously misleading message, because infrastructure investments can only be worthwhile to us collectively as a society if the returns on those investments are, one, complementary to private sector activity and productivity growth and, two, exceed the carrying cost of the debt that's incurred.

The carrying cost of that debt is not just the interest that is required to be paid on the debt: it is the cost of public funds associated with taxation that necessarily is required to support that borrowing or to pay down borrowing in the future.

The message that we can borrow money at 1% or 2% rather fundamentally misrepresents the cost of current investment in public sector infrastructure. We should think about this very carefully when we make our spending allocations.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Mr. Sullivan, would you comment?

[Patrick Sullivan]

I will quickly echo much of what the other two gentlemen stated. I would say that 83% of our members are small businesses. They pay corporate taxes in Nova Scotia. Unfortunately, Nova Scotia's proportion of those taxes is extremely high, at 15%, versus another area such as Ontario, which is at 11.5%.

Federal corporate taxes could be reduced by a couple of per cent. That would certainly help. Putting additional dollars in people's pockets to stimulate spending in the particular region will be a great step, I think. People tend to invest in their business when they're a small business.

Finally, I think Nova Scotia and the federal government are beginning to recognize the value of some of the great natural assets we have here. There has been a recent significant investment of approximately $200 million in oceans, funnelled through Dalhousie, Memorial, and, I think, UPEI. We believe that that will be a helpful spend. However, as Marco suggested, it needs to be accompanied by perhaps some additional opportunities for innovative new businesses in oceans and a stimulus for those small businesses to set up and grow.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I have a question, and I think Melissa can contribute to the answer.

I do believe that we need to encourage the entrepreneurship mode and spirit for youth and for women, and that is where we can play a fundamental role. We have young generations who have seen the world through the Internet or otherwise, and they have very creative ideas. They are well educated. It's the same with women. Hopefully you agree with me that we need to encourage entrepreneurial methods and ideas through government programs, college, or whatever in order to do that.

Would you comment on that?

[Melissa Sariffodeen]

I think I'm probably preaching to the choir now about technical skills, but I think they're really important. For us, we would argue and advocate mostly for teaching coding and the broader concepts of computational thinking. It's this idea of teaching our youth problem solving, innovation, and failure, which is a huge, undervalued concept that we're not teaching properly in the education system. We see coding right now as the mechanism to teach those things, specifically to the under-represented groups that aren't part of the conversation right now.

I would agree that there is a lot of opportunity to focus on that, and I think coding can be the mechanism to do it.

[The Chair, Liberal, Wayne Easter]

Thank you all.

Go ahead, Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

Thank you, all of you, for being here today.

I may not be able to ask a question to all of you, because the chair is very tough on time.

I'll start with Mr. Poschmann. You talked about the interprovincial trade barrier. There was a recent case in court about someone who bought beer in Quebec. When he got back into New Brunswick, he was arrested by the RCMP. He was fined for that, and he's challenging the laws of New Brunswick because he thinks it's not constitutional to impose trade barriers between provinces.

I want you to comment more on that. Would you recommend that the federal government should make sure the Constitution is respected, and that there be no trade barrier between provinces?

[Finn Poschmann]

Thank you, Mr. Chair and honourable member, for the question.

I don't know what made you think I would be interested in talking about beer, but....

Yes, it's a great case, a great case study, and a great constitutional test. The provincial control over the distribution of alcoholic beverages goes back to a federal resolution coming out of the Prohibition era. In other words, the federal government wanted to get out of the field, and the saw-off it found was to turn over responsibility or authority to the provinces, where it previously did not reside, and as of 1949 you could even buy beer in P.E.I.

The question outstanding is whether that extends to trade across borders and how the trade and commerce clause is intended to be interpreted within the Constitution. My personal opinion is that it would be within a superior or supreme court's authority to determine that the barriers are unconstitutional. Whether a court will do so will depend on the arguments that are eventually presented in court, should the case get there. I wouldn't like to predict the outcome.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you.

Staying with trade, but now international trade agreements, to the chamber of commerce, are you worried if we enter into trade deals with bigger economic superpower countries or a group of countries? If it's open for us to sell in that market, then it is open for them also to sell to our market, so do you think it's in our favour to do that?

Are you in some way worried about that and the fact that it may be more favourable to the biggest economies, which are more predictive and maybe will have an advantage with those trade deals?

[Patrick Sullivan]

That's a very difficult question.

My quick answer will be we already have trade deals with large trading partners like the United States and Mexico with NAFTA. Contrary to what Donald Trump may think, I believe that was a net benefit to Canada. There were certainly losses, but overall it would seem that has been an improvement.

I think that with the opportunity to open up additional markets as a province that has significant exporting capability, particularly in seafood and other areas, we would likely be a net beneficiary. I couldn't speak to every province, but I think we would likely be a net beneficiary, particularly with the opportunity to ship more product to the European market.

That is, I suppose, more my personal opinion, since I have not surveyed our members. We would have to ensure that the agreements are reviewed and written by folks with much more experience and skill than I would have.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you for that.

Maybe now we could talk about fundamental research. Are you satisfied with NSERC? Are you satisfied with the current process when money goes to projects, or in addition to giving more money, do you recommend changing the process of how the money goes to organizations or people who are doing research?

[Dr. Kristin Poduska]

Thanks for asking that question. That's always a big question.

I'm pleased to say that what we found from our members and other people in other science and technology disciplines who get funding from NSERC is that on the whole, people are quite happy with the overall process. When the government gives a large chunk of money called “discovery money”, it's used very wisely by the NSERC organization. The general consensus is the process is quite good for NSERC. Of course, for health funding and social sciences funding there are different organizations that run under different models, but we're quite happy with NSERC. The real challenge is just the number of dollars, but the overall process has been great.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Seeing part of that money going to fundamental research is also part of your issue.

[The Chair, Liberal, Wayne Easter]

By “fundamental”, you mean “discovery”, right?

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Yes.

[Dr. Kristin Poduska]

Exactly. Just to provide a little bit of background, a typical average grant to a researcher is under $35,000 per year. That money can be used to hire students, send them to conferences, or pay for lab supplies. We're basically running a small start-up in our own labs on $35,000 a year.

There are other programs, of course, that are more targeted that can help supplement that funding, but it's that key, that discovery funding, that nucleates everything else. That's where we can get our ideas that we can use to partner with companies to go off on other things.

The scholarship and fellowship programs help support additional students who have merit and fantastic records on their own, but without that key piece from NSERC to get everything rolling.... It's a small amount, but it's seed funding that really generates a lot.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you.

Mr. Navarro-Genie, you mentioned employment insurance and the fact that businesses provided 52 weeks of work a year. Do you also take into consideration the reality of seasonal workers?

At our meetings in the Atlantic region, we were told that seasonal work was different and that the workers in this category needed an employment insurance program adapted to seasonal work.

To support the seasonal industry jobs, and there are many in the Atlantic region, should the federal government ensure that the employment insurance system enables workers to remain in their sector rather than find work in sectors that provide non-seasonal jobs?

[Marco Navarro-Genie]

Thank you, Mr. Dusseault, for the question.

Some industries operate here on a seasonal cycle, but that's not at all new in Canada. There are also seasonal jobs in the rest of the country, for instance in the Prairies. Obviously, wheat can't be grown in the middle of February, for example. We need a framework that motivates people to find other sources of income. If not, government assistance will keep being requested.

Here in the Atlantic region, almost 100% of people who work in fisheries rely on social assistance or employment insurance. In other regions where there are also seasonal activities, the percentage of people who rely on those programs is much lower. That's the case in Alberta and Saskatchewan in particular, where 60% of people rely on those programs. Something isn't working.

About 15 years ago, Mr. Chrétien's federal government tried to correct the situation, but the cycle of giving money to everyone so they could stay home doing nothing resumed.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Aren't you worried—

[The Chair, Liberal, Wayne Easter]

We'll have to cut it off there, Pierre.

Before I turn to Francesco, I'd like to talk about coding.

A number of us were at the Republican convention. Governor Hutchinson spoke there on a panel. He ran a whole campaign on coding for children and youth and won. I still don't understand coding. Can you explain it?

[Melissa Sariffodeen]

Putting it simply, it's the language you use to get a computer to do something for you. For anything from an app to a website, a language is used to communicate with a computer. It's about giving a set of instructions to the computer. There are lots of different languages, not unlike English or French, that you could use to communicate with the computer. We're teaching the language.

[An hon. member]

It's programming.