Finance Committee on Oct. 21st, 2016

[The Chair, Liberal, Wayne Easter]

Thank you, David. The broader submission will be given to committee members as well.

Turning to questions, and we'll have to hold it to five minutes, members, to stay on track. I'm sorry about that. So keep the questions concise and targeted, if you could.

Mr. Sorbara.

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

Good morning, and thank you everyone for your presentations.

I would like to start off with Earth Rangers since they're from my riding of Vaughan—Woodbridge although they're a pan-Canadian organization, I wish to think. Peter, if you can just talk about the importance of the educational component of what Earth Rangers does across Canada that would be great.

[Peter Kendall]

This government has a very ambitious environmental agenda from things like at DFO the 5% marine protected areas by the end of 2017 and 10% by the end of 2020. We have some ambitious development goals. Certainly we've seen the issue of the LNG terminal recently and pipelines that we want to develop in a sustainable fashion, and of course we're moving the carbon pricing through as well. All of these projects require an engaged and informed public. We certainly feel one of the best ways to do that, especially when dealing with new Canadians and other communities that aren't traditionally part of the conservation community, is to work through children.

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

Thank you.

Turning to mood disorders, Mr. Upshall. Mental health is obviously damaging to our economy, and the damage to people's lives is well-documented. I hope the focus of our government is on taking concrete and substantive steps on this. We've had everyone from the former finance minister Mr. Wilson to you come before the committee in the last year. It's more of a statement than anything. I fully support the organizations involved in pushing that. This evening I'm going to a hats off gala raising money for CAMH in my riding. There's Mens Sana...all these organizations.

If we look over the landscape do you see measures we should be looking at in getting some immediate hits, in breaking down barriers...whether it's stigma or your organization. Is there anything out there that we should be looking at that we're not looking at?

[Philip Upshall]

I think you're looking at the right things. I would just ask all members of Parliament from any side to pat Minister Philpott on the back and ask her to please hold tight on her negotiations with the provinces on the new health accord, particularly with regard to the issues of mental health. The Prime Minister has said that the discussions in the new health accord will be about 33% of the time spent on this discussion. The provinces are quite resistant to having targeted funding, but as many of you know Senator Kirby many years ago in his Standing Committee on Social Affairs, Science and Technology recommended ring-fence funding as the only way to move mental health issues forward in Canada. We've been the poor cousin for years, principally because we haven't had a significant capacity to advocate or engage in other health care related activities in Canada. I would hope that the Minister of Health would have your support in standing very firm, both with regard to the amount of money that's being transferred to the provinces, and with regard to how that money is spent. It's really important to get it to the ground.

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

Thank you for the term “ring-fencing”.

Ms. Long, the de minimis threshold you mentioned was $200. Is it different? I just want to clarify. Is it not $20 in Canada for imported items, or is there a different level for it?

[Helen Long]

No. The proposal, I think, is to increase it to $200. It's currently $20, which is where we'd like to see it stay.

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

Okay. Exactly. The proposals we've seen, just to put it out there, are to increase it to a level of $80, $100, or $200. There are three levels that have been advocated for by certain organizations.

With regard to the health association's submission, there are concerns about proposed packaging guidelines, if I'm not mistaken, with your association.

[Helen Long]

Yes. In terms of natural health products or the food labelling changes?

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

I want to say both, because there's a lot of information being dispersed out in the media and so forth.

[Helen Long]

Currently, yes. That's related to the natural health product regulations.

On the food side, there are two sets of labelling changes coming in. We're very supportive of both sets of changes. We'd just like to see some alignment in terms of the announcement of when the changes go into effect, because every food label in the country will be impacted. That's a massive shift for our manufacturers, so we'd like to do that once as opposed to twice.

On the natural health products side, Health Canada is currently proposing some changes to the regulations, which are a bit confusing. They're based on what appears to be a single study. We're not really sure what the end goal is, but that would also have huge ramifications for a program that, quite frankly, has only come into true compliance in the last three years.

[The Chair, Liberal, Wayne Easter]

Thank you.

Let's turn to Mr. Deltell.

Welcome, Gérard. I believe this is your first time at the committee as the critic for the official opposition. Welcome to the new job. You have five minutes.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Thank you so much, Chair, for your warm welcome, and hello to all my colleagues.

I can tell you that I learned a new word in English, “vertigo”. When my leader called me and said that I would be the critic for finance, I said that I had vertigo right after the announcement. I will get used to that.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Ladies and gentlemen, I am pleased to meet you.

I am a member from the Quebec region.

Don't be afraid. I just want to make some remarks in French. After that, I will ask you questions in English.

So it is with a great deal of humility that I accept this task my leader has given me. We will always keep in mind our concern for the taxpayer's wallet. We have to seize the opportunities that come up to make our economy stronger.

On that point, I would like to ask Mr. Paterson and Madam Thompson two questions.

First of all, Mr. Paterson, we all welcome the fact that your business injects a lot of money, thousands and millions of dollars, into innovation. That's the way to deal with this. If we want to create wealth, we inject money in innovation.

I'm not sure if in my life I will be able to be inside an autonomous car. It's a long way for me just to accept the fact that there will be no driver. Maybe one day I will, but today it's quite difficult for me. I'm 52 years old. I'm an old guy, so it's tough for me.

Here's what I would like to know from you. What kind of co-operation do you want to see from the Government of Canada with regard to your industry?

[David Paterson]

I think there's a set of policies that are difficult, but are needed for us to continue to compete in the traditional manufacturing area. I'm sure you're hearing that from other groups, and I would support their recommendations in that area as well. The list of headwinds is well known and understood, from electricity prices to a number of uncertainties in policies that need to be aligned with other jurisdictions when we have a global industry, etc.

For 100 years, we've been manufacturing vehicles. Right now in the auto industry, we have the biggest transition happening since we moved off horses. As for autonomous vehicles, we have them on the road today. They're coming. I'm like you, in that I like to drive my vehicle, but that will be an important part of the change that's taking place.

We can either be part of that, on the front edge of that change, and have the high-value jobs in Canada that can be part of it, or we can continue to put the pieces together at the end of the value chain. If we're only going to put the pieces together at the end of the value chain, we're at risk. If we actually invent the products that others will assemble—perhaps here in Canada, but wherever—we will have the high-value jobs and we'll be at the front end of this industry.

I think we're at a turning point in policy as well, where we have to think about that front-end innovation aspect as well as just defending what we've had in the past. We want to keep the manufacturing base that we have, and we're delighted that we're doing that at General Motors, but it's not good enough. We'll always be fighting if that's only what we're going to focus on. We have to shift into the front-end development, engineering, and invention of things here in Canada. The good news is that we have the ability to do it. We just need to get organized.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Thank you so much, Mr. Paterson.

We hope that any government.... I hope that one day we'll get back—you know we will get back—to follow your advice on that issue. The government should be a partner with private business, when one is talking about high technology and innovation. This is how we create wealth.

Madame Thompson, let me tell you that you have made my day, because as some have stated, when there is a crisis there is always opportunity. An entrepreneur sees opportunity when there is a crisis, and there is a crisis right now in the petroleum industry.

What you suggest is quite inspiring. You propose new ways to deal with the fact that people have skills and suggest we can use those skills with the new reality and with what you're talking about, geothermal energy.

Do you have an easy-to-understand example from elsewhere in the world by which we can see what to do in our provinces and our country while there are some existing projects still moving on? When you talk about food, when you talk about fruit especially, do you have any good examples, from wherever it may be in the world, that we can use and inspire our people with?

[Alison Thompson]

Good morning. Thank you for the question.

There are 82 countries around the world that are using geothermal heat. There are whole cities on geothermal heat in Europe. Reykjavik in Iceland is a good example. There's also Klamath Falls in Oregon, and there are places in California.

The example I had last night is from Kenya. Kenya would furnish an example of a remote community, one that we could follow for Quebec's north as well as for our Arctic and northern areas. They take the heat coming off a well. If it's hot enough, it will go through a power plant to make steam, which is going to be turned into electricity. But what comes off the well is also very high-temperature.

We'll talk about starting at maybe 100° Celsius. The first thing it goes to is a dairy. They are able to pasteurize milk or make cheese locally.

The same molecule of water is actually sold four or five times, which is why there are all these jobs created.

From the power plant, it goes to a dairy. Next it goes to a greenhouse. The greenhouse is heated at 40° Celsius. Then it goes down to a fish farm, and the fish use the water at about 23° Celsius. From there it goes down to drying. It can dry some of the fruits and the fish for export or just for storage for the year. The very last use is soil heating.

In the Okanagan, we have a lot of greenhouses and glass. It doesn't just stop at constructed buildings. You can actually do soil warming. Iceland, for example, has been able to extend their outdoor growing season to nine months of the year. This brings a wealth of diversity of food that is available as well as a surplus of food that's available not only for the local community but for export.

There are, again, 82 countries, and there are so many examples. We'd love to take the finance panel on a field trip where you could touch it and kick the tires for yourself. Iceland is a direct flight from Toronto. I know some people; we could go there.

[The Chair, Liberal, Wayne Easter]

We would love a field trip that is anything beyond hotels. That's all we've seen in two weeks.

Mr. Dusseault.

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

Thank you, Mr. Chair.

Thanks again, everyone, for your presentations this morning.

For my first question I will stay with Madame Thompson.

Just to be as precise as possible for this committee, you said the tax rules are not the same for drilling other types of energy sources. Can you point out exactly the sections of the tax code that we could recommend the government change and suggest what that change would be?

[Alison Thompson]

Thank you.

I'm a chemical engineer, not an economist, but I had to learn about the tax code probably more than most people.

Specifically, classes 43.1 and 43.2, under NRCan's rules, are where they describe accelerated depreciation of accelerated capital cost allowance. Solar, thermal, biomass, wave energy, hydro, and wind are all in there, but the funny thing is that so is geothermal power. Geothermal power is in there as an eligible renewable energy, but like solar you have to start first with heat, and then you use a power plant to make it into power. In some kind of quirky way in the tax code geothermal heat was never enshrined as a renewable energy. As an example, if we could drill some wells, and all of that exploration for the heat is not favoured with accelerated depreciation, then the minute we start to make power, that equipment is favoured.

The moment of truth for entrepreneurs is raising money to do the exploration. I don't want to overplay the risk. There's risk, and then there's costly risk. Our dollar has to compete with other people who have their risk addressed. It's that whole exploration part that is not accounted for. Furthermore, in classes 43.1 and 43.2, for geothermal power, we don't have access to transmission costs, but other renewables do. Even wave producers, who go further back than geothermal in Canada, have access to things like getting transmission included in their capital cost allowance. It seems like geothermal is somewhat there, but not fully there, and the part that's missing is early stage. Of course, you have to have early stage to get to late stage, and by encouraging late stage and not early stage it has completely put a roadblock up for finance. Even when we're comparing apples to apples, and where we are included, we're not given parity with all the different capital cost eligible expenses as the other renewables.

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

Thank you. That's very good. Thank you for that presentation. It was very interesting.

Maybe Mr. Cohen could talk about EI, and more precisely about the Social Security Tribunal, as we look forward to having discussions about what we could recommend to the finance minister.

Would you recommend to change that tribunal to get it back to what it was before instituting the Social Security Tribunal, or invest more money in that tribunal to make it function, because right now there's an enormous backlog in that tribunal?

[Neil Cohen]

There's a huge access-to-justice movement in this country, spearheaded largely by Chief Justice Beverley McLachlin. It certainly informs a large part of our work, because information, advice, and representation are absolutely essential to people to be able to exercise their rights in a free and democratic society. Part of the difficulty with the Social Security Tribunal is that you have a single adjudicator, which has replaced the former board of referees, which was a three-person tripartite system. It included a representative of labour, a representative of business, and an independent chairperson. The current commissioner of the Social Security Tribunal has tremendous powers to determine whether or not a hearing will be in person or not. Recent data has indicated that about 80% of hearings have been by video conference and teleconference. When we look at the EI program, we have a number of stakeholders. We have business, labour, and government. Whose needs are currently being met by the current Social Security Tribunal? Clearly, labour is not represented and business is not represented. Certainly the interests of government are being addressed, because the new model was created primarily to save money. When the previous government created this model, they put forward a number of assertions, including that the old system was inefficient and costly. They combined four tribunals, as you may be aware: Social Security, CPP, OAS, and EI. I won't go into detail, but there were four to deal with those particular programs. The model is ineffective.

We've also been pushing in our proposals for a long time.... When the model was created, and I think this is critically important—and I would call upon the government to address this, because this wasn't a making of the current government—and it is almost without precedent, there is no statutory requirement for the commissioner of the Social Security Tribunal to table a report in Parliament. This is highly unusual when we look at other statutory schemes, agencies, boards, and commissions. We've called upon and had discussions with the chairperson to table a report, and she has given assurances, since the body was created that, yes, she intends to so. We have yet to see those reports, and they're not required to do so. Surely every tribunal should be required to talk about their experience, to talk about the number of appeals, to talk about the effectiveness, to talk about those issues, and to publish decisions. None of those things are being done. I think it's certainly within the mandate of the government to ensure that there is more accountability.

[The Chair, Liberal, Wayne Easter]

We will have to cut you off there.

Just to Pierre's question—you didn't answer this part—are you suggesting to go back to the old system or to put money into the new system to fix it?

[Neil Cohen]

I think the current system fails to address issues of procedural fairness. Whether it's the old system or the current system, there should certainly be a tripartite.... There should be more opportunity for in-person hearings. A lot of the powers should be taken away from the current entity.

Whether we go back to the board of referees and an umpire, and I'm not sure that will happen, certainly elements of those that were effective, with stakeholder involvement and participation, could be integrated into a current system.

[The Chair, Liberal, Wayne Easter]

Thank you.

As an individual who has appeared before both set-ups with EI recipients, the new one, honestly, is impossible. That's maybe a biased opinion, but that's where I'm at on it.

Mr. MacKinnon.