Finance Committee on Oct. 20th, 2016

[Lauren Ravon]

No, that's fine. I think the studies show that a reduction in the corporate tax rate has not helped the economy and it has increased government deficits. That is one thing that—

[Raj Grewal, Liberal, Brampton East, ON]

The study doesn't say what an increase in corporate rates would do to the economy.

Anyway, we'll move on. I'm not here to debate. I just want—

[Lauren Ravon]

Well, thank you for listening and thank you for the work on the CRA.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you.

The housing market is extremely important to the country, obviously, and you've added a lot of commentary on that, so I will leave that point there.

This question is for the Quebec Employers Council.

You mentioned an immigration investment program for Quebec. We used to have a good investment program in which a lot of foreign direct investment came into the country. Immigrants came into the country, and they invested I think $500,000 to $1 million, and they had a path to permanent residency, and then a path to citizenship. That program was unilaterally cancelled in 2008.

Do you have any comments on what type of program we should be looking at—because I know the minister is looking at one—and what the amount should be?

[Yves-Thomas Dorval]

Thank you for the question.

I reinforce what you have said about impacts from increasing corporate taxation, but there are plenty of studies that show also the impacts of not doing so.

First of all, remember that immigrant investors, if they are not coming here to invest, will go away. If we are not able to attract them to come and invest, we will not get this money, if it's not invested here. It's money we will never get if we don't have programs that will make it attractive for them to come here.

We invite the committee and everybody to look at the study we published exactly 11 months ago, in December 2015, about the economic impacts of immigration. We have a specific section about positive economic impacts from immigrant entrepreneurs and immigrant investors, and we have all the details about how we can generate more and what we have lost in reducing the attractiveness of the investment immigrant.

I am also concerned about the impact that can happen. Immigrant investors that get into real estate and create an artificial increase in the value of the real estate are not necessarily, I would say, the best way of looking at this. It's the same with losing ownership, like in agriculture sectors, our farms. It's always delicate to go there. But it is important to bring this investment.

In Quebec, by the way, a large portion of a program that deals with the first experience of working for immigrants is funded by investments from the investor immigrants. We can generate a huge leverage with that money in different programs, and I think it's a good idea.

[The Chair, Liberal, Wayne Easter]

Thank you both.

Mr. Godin, you have one question and then Mr. MacKinnon will have the last question.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Thank you, Mr. Chair.

My question is for Mr. Dorval, who represents the Quebec Employers' Council.

In the context of the premise of your presentation, you said that economic growth improves the quality of life of Canadians, and I fully agree with you. You also said that our country must be able to attract investors. I have two quick questions for you since my time is limited.

First, is Canada currently attractive to investors and what should we do to be more so? Second, what is your view on start-ups?

[The Chair, Liberal, Wayne Easter]

He fit in three questions.

[Yves-Thomas Dorval]

Yes, Canada is attractive. We have a competitive environment for operating costs, taxation and so on. These are not a problem. However, the same isn't true for predictability and approval times. A company that wants to invest in a natural resources project or in a large factory, for example, must wait a while before getting authorization, environmental or otherwise. Predictability is another problem because the environment might change before there is a return on invested capital. This happened in the mining sector, the hydrocarbon sector and other sectors. These are extremely important factors.

In short, our conditions are attractive, but investors find that the processes for obtaining authorization are lengthy and complex, and there is a lack of predictability in the fact that the objectives are often changed along the way.

What can we do for new companies?

I can't speak on behalf of all these companies.

I will give you an example because it is related to a very important concern: clean technologies. We need to invest in them right now, but we have a lot of research, little innovation and very few patents. We are losing this market. Yet, we have expertise in venture capital funds for clean technologies, particularly in Quebec.

However, the problem is that the critical mass of these funds is modest compared to other countries. We are investing in the start-up phases of our new companies, but when we get to the marketing stage, we have no means left. That is when foreign interests with much more robust funds come in and appropriate what we created and the associated intellectual property.

The greatest danger for us is not reaching this critical mass. So we are making a request to the federal government. We would like to have an investment fund for clean technologies. It would be $300 million, and $100 million would come from the federal government, $100 million from the provinces that could be provinces other than Quebec, and $100 million from the private sector. With $300 million, we could reach the critical mass necessary to realize—not just in a single portfolio, since there needs to be some diversification—the subsequent phases, phases C and the others, and get to marketing. It would be a good way to help our new companies.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. MacKinnon.

[Steven MacKinnon, Liberal, Gatineau, QC]

I'll ask my next two questions one after the other, and they are for Mr. Brun and Mr. Dorval, respectively.

Mr. Brun, could you give us your opinion on business transfers?

Since there are a lot of family businesses in my region, people often talk to me about the need to improve the system for transferring a business from one generation to the next.

Mr. Dorval, I don't know if you used the word “linking” in your brief, but I would like to know whether you think Quebec is open to a linking exercise between Revenu Québec and Revenue Canada.

What possibilities do you think such an exercise would offer?

[Bernard Brun]

Thank you, Mr. MacKinnon.

With the aging population, business transfers are becoming an increasingly alarming issue. It's a problem we've seen for ourselves. The Mouvement Desjardins serves about 400,000 businesses, mostly small and medium enterprises. Business transfers can be addressed in various ways. They can be set up differently. With that in mind, we created Capital régional et coopératif Desjardins. So businesses can be converted to co-ops, with managers and employees as shareholders.

With regard to business transfers, I think that taxation is a key aspect for the governments, particularly the federal government. We need some tax tools for these family businesses and private businesses, which are not on the stock market. It involves being able to report the impact or, at the very least, amortize all the capital gain issues, which are untenable for successors. Otherwise, foreigners can scoop up clearly established businesses, sometimes even at a discount. By keeping them here, we are also keeping the feeling of belonging and all the economic development that goes along with it.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Dorval.

[Yves-Thomas Dorval]

As for your second question, obviously if you ask the manager of a business or even an individual who now has to complete two tax returns, who now has to deal with two series of audits and so on, we see that there is a problem. As such, I won't address the political aspect of a provincial government that wants more independence. Certainly, when we group things together, we sometimes lose some of that independence. I will not venture into the political issue concerning those matters. However, when we link things, when we have people or businesses that are subject to a multitude of procedures, checks and administrative obligations, having an administration to do it would be much easier and much less costly. It is also interesting that this is done in Quebec with regard to sales tax. Quebec administers the federal sales tax and the provincial sales tax. In short, it can go one way or the other. There is interest in this, and you asked the question.

Another thing of great interest to businesses working in retail and on which the federal government could act is the entire issue of taxation with respect to e-commerce. There is a lot of concern about it in Canada, and many of these responsibilities fall more on the federal government than on the provinces. It is a major issue because of the huge loss in that regard. We're talking about over $200 million in Quebec for several businesses. We're talking about a huge impact on competitiveness because of this inability to ensure that e-commerce transactions are taxed in the same way as those of convention retail. This gives a competitive advantage to global giants outside Quebec and Canada, and that is a significant disadvantage for us.

[The Chair, Liberal, Wayne Easter]

Okay, thank you all.

There are a couple of points of clarification.

Ms. Ravon, the CRA report that we did on tax avoidance will be tabled, I think, next Wednesday. We did fairly substantive hearings on that issue.

Mr. Toye, you mentioned the safe water projects in indigenous communities. We did make a recommendation, recommendation 31, in our report last year. We suggested to the government that the safe water project that we'd looked at—and I just can't think of what exactly the name was—a first nation initiative that has been successful in ending boil water advisories, should be considered by the government in going forward. On your point, I'm trying to figure out if we're on the same wavelength in terms of the proposal from the first nations community. If you could have a look at that recommendation, and the commentary before it, then we can sort that out.

Thank you all for your presentations and for answering the questions.

We'll suspend for 10 minutes to allow for the next panel to prepare.

[The Chair, Liberal, Wayne Easter]

As witnesses understand, this is the Standing Committee on Finance. Pursuant to Standing Order 83.1, we're doing pre-budget consultations for the 2017 budget.

We are missing a couple of members. They must be thinking it's more important to talk on the phone at the moment.

In any event, we would hope that witnesses in their presentations can hold their remarks to about five minutes. All the presentations that have come in have been translated and are on our iPads, so you'll find that the members will be going to their electronic documents now and again during a presentation. Some people do find that distracting.

Before we start, I'll ask those members who are here to introduce themselves so that the witnesses know they you're talking to.

Perhaps we could start with you, Pierre-Luc.

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

My name is Pierre-Luc Dusseault, MP for the riding of Sherbrooke and member of the NDP caucus.

I am very pleased to be in Quebec and to meet with you. Thank you for being with us today.

[The Chair, Liberal, Wayne Easter]

Mr. Albas.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

My name is Dan Albas.

I am the MP for Central Okanagan—Similkameen—Nicola, a riding in British Columbia. I am pleased to be here with you. I hope that—

I will learn a little more about your organizations. Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Dan.

Raj.

[Raj Grewal, Liberal, Brampton East, ON]

I'm Raj Grewal, the member of Parliament for Brampton East, just outside of Toronto. I'm excited to be in Quebec City.

[The Chair, Liberal, Wayne Easter]

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

The Union des producteurs agricoles is here. I'm a farmer by trade, and I used to be president of the National Farmers Union.

We will ask Mr. MacKinnon to introduce himself.

[Steven MacKinnon, Liberal, Gatineau, QC]

We have had discussions with previous witnesses, and we are eager to speak with you today.

My name is Steven MacKinnon, MP for the riding of Gatineau. I am pleased to be in Quebec again as part of our national tour.

Thank you for appearing before us today.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Good morning and welcome. My name is Francesco Sorbara.

I represent the riding of Vaughan—Woodbridge, and I am Raj's neighbour as well. I'm happy to be here.

Thank you.

[The Chair, Liberal, Wayne Easter]

With that, we'll start the presentations. The first presenter is Mr. Nepton, who's with the Agence interrégionale de développement des technologies de l'information et des communications.

André, the floor is yours.