Finance Committee on Oct. 25th, 2016

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you, Mr. Chair.

Thank you all for coming.

Mr. Lavoie, you talked about investment in a green initiative fund, but I'm wondering if you have tangible goals for your industry that you'd like to achieve. For example, how much CO2 are manufacturers emitting currently and how much do you think it takes to get to x level? Do you have those tangible things that this government could consider if you're asking us to invest in this area?

[Martin Lavoie]

I have a couple of things.

Emissions in manufacturing have decreased significantly in the last 20 years, but half of that is as a result of huge investments made by manufacturers. As you know, manufacturing is highly dependent on energy, so there's a return on investment when you invest in new machinery and equipment that consumes less energy.

The other half is, of course, because we lost a lot of capacity during the financial downturn. A lot of pulp and paper mills, for example, shut down, so obviously the emissions went down as a result of the shutdowns.

The trick for our sector is that we want companies to export more, to produce more. By doing that, necessarily there will be more emissions. The way we look at it is the number of emissions per unit produced. We want to lower that intensity of emissions. At the end of the day, if we want to double exports by 2030, we can't do that by shutting down plants and machinery and equipment. We would prefer a direct investment in green machinery and equipment. If there's a carbon tax, as I said, at least if the revenues associated with this tax are reinvested in plants, that would be our favourite option.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you, but you don't have specific numbers in order to say....

You understand the Paris agreements and the numbers that are required in terms of reductions and the timelines. I would assume your industry has to reach those targets at a certain point, and you would require a systematic plan. You would have to say, “By this year we're going to cut emissions by this much, and this is what it takes.”

Therefore, it would require more than a slowdown in economic conditions, because if you want to continue manufacturing and in fact expand, then you would have to find a way to be effective at reducing emissions so that you can actually grow your economy in the new green world that we're moving towards.

[Martin Lavoie]

Yes. We'll see what happens with the carbon tax and what other provinces will do.

Some of our members are being captured, as we speak, in the carbon trading system in Quebec, and I guess soon in Ontario. It's difficult to make a plan if you don't know exactly what the regulation will be. That's a bit of a tricky question for us to respond to now, but as soon as we know what the regulatory framework will be, both federally and provincially, we will definitely have a plan.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

To the National Pensioners Federation, you spoke about women facing greater poverty risks, but I didn't hear any specifics in terms of how you address the poverty amongst women specifically, because assuming we did all the things you've asked for, that would just invest and continue. The gap would just move along in that regard. Do you have specific policy recommendations to help shrink that gap? I understand your overall request for additional funds for pensioners, but specifically how do you shrink that gap?

[Susan Eng]

There are a number of issues.

Over the longer term, of course, increasing pension availability is going to help everybody. Women are now in the workforce, and their CPP is a major source of income. The OAS was considered the women's pension for the longest time, because it is true that women worked in the home and did not have contributions to CPP. Those things—increasing the OAS, the greater availability of work, and increasing workplace pensions—will go a long way, and in fact in the past went a great deal of the way toward reducing poverty rates among all Canadian seniors.

At this point there are a number of issues, such as the cost of drugs, the cost of housing, and access to work after a certain age. A lot of people are having to go back to work after their children are grown or after they've lost jobs. In those cases, those jobs are denied them, mostly because of workplace age discrimination. There's a need to ensure that workplaces are discrimination-free. Even the availability of health coverage has to extend beyond certain given ages. All of those things will go a long way to removing all of the elements that contribute to poverty.

Housing is one of the major issues now, especially for single people. As you can imagine, if you are in a couple you can share the cost of one dwelling.

Access to seniors housing is limited. There has been promise of some several billions being available for seniors housing over the next several years, but right now people are facing that stress, so there's a need for housing assistance to help them with that.

Women still are making less than men in the workplace, so workplace equity rules have to be enforced, and there has to be significant improvement in working wages for women. The lack of workplace pensions in workplaces where women tend to work is a concern, but I don't see how that's going to change, since the number of private pensions is decreasing dramatically and there's no turnaround in sight. This is why it's so important that the CPP come to fruition as soon as possible.

[The Chair, Liberal, Wayne Easter]

Thank you both.

Mr. Albas is next.

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

Thank you, Mr. Chair

Thank you to all of our witnesses today for your testimony. It's very helpful.

I obviously don't have time for everyone, but hopefully I can be succinct, and our presenters in return, so we can get as many people in as possible.

I want to start with Ms. Cianfarani. It was a very excellent presentation today. I appreciate your views.

I met with the Navy League today, and they emphasized some of the very same points. One was that when you set a long-term program—for example, the national shipbuilding strategy—it builds certainty for businesses to invest in their companies because they know there will be work on a continuous basis. Would you agree with that?

[Christyn Cianfarani]

Yes, absolutely. It comes back to our comment that it's not just the initial acquisition phase; we happen to like to keep our equipment for 20, 30, or 40 years in this country, which means that every evolution of that equipment and the servicing of it over time means labour and a value to the Canadian economy.

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

It's those kinds of points where the current government has a mandate to change things, but I really hope that they keep the programs that previous governments have put forward that really do work and that those decisions aren't made ideologically. I appreciate your presentation today.

I'm going to move on to Sport Matters and Canadian Parks and Recreation.

First of all, I do appreciate what you do. I hope the government does take a look at the 24% increase you've been asking for. I've met many of the athletes, and they are excellent representatives. It's part of investing in our brand and in our excellence. I'm going to go specifically to the Canadian Parks and Recreation Association.

I believe that in 2014 we made changes to the gas tax, which allowed municipalities.... By the way, we indexed that, we doubled it, we put it into legislation, and then we allowed municipalities to look after recreational infrastructure with it. That's ongoing sustained funding.

The problem I have with your suggestion is that by designating a particular fund, you're going to have some municipalities that jump on it, whether their finances are there or not. Some will apply and some won't. By using that method, you're going to see that some areas receive the money and some don't.

To me, the fairest way to do it is through a gas tax. Do you still think that putting it in a particular fund is the best way to fund this?

[Cathy Jo Noble]

Thanks for the question.

What I'm basing it on is that CPRA represents the directors of recreation and parks across Canada in the municipalities. One of the challenges with being within the gas tax fund, and why I say a dedicated fund is needed—and the government recently included this as a category in the new Building Canada fund—is that we're competing in the gas tax against 16 other categories of infrastructure.

All I can speak to is from the experience that my members speak about. When a municipality needs to choose between roads, water, sewers, a new track, a new trail, or a new pool, often they tell me that we were trumped by those other categories. That's why we're seeking the dedicated fund.

I know the practice has been to allow municipalities and communities to set their own priorities, but what we are looking for here is federal leadership on healthy Canadians and active Canadians. To do that, we do need that federal direction.

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

I realize there's competing interest or what not.

To me, local decision-makers get to say, “This is our priority, and we're going to put money into it.” To me that's the fairest, because everyone gets it, versus some people apply and some don't. Then it's all over the country. However, I do take your points. Thank you very much for that.

I'm going to go right now to Miss Amirault.

Thank you very much for your submission. Stephen Gordon has done a wonderful job of illustrating how a lot of the money goes to families who probably don't need it and how focusing it more on people with low incomes so that they can get a quality education is important.

I wanted to talk to you about another area, and that is about what students need to know ahead of time before they go down a path of student loans and working toward a degree or toward a certificate of some sort. We need to give them better labour market information so that they know if they take courses at this particular area and they want to stay within the region, then here are some job opportunities.

Have you seen what BCIT does in British Columbia, where they have a site where students can find out what the labour market demands are for particular programs and people with those skills?

[Jenna Amirault]

I'm not personally familiar with that, but I do want to make a comment. It's good to inform students about the labour market, but I think what we really need to do is make sure that low-income students have access to education in the first place, which ensures that they can enter into the labour market.

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

I think that's agreed here. I appreciate that.

[The Chair, Liberal, Wayne Easter]

Sorry, Dan, that's it.

Mr. Sorbara is next.

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

Thank you.

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

Thank you, Mr. Chair.

Welcome, everyone. I have a few questions for a number of you, and I will try to make them short.

Mr. Lavoie, on manufacturing, the United States came out a couple of years ago with a national strategic plan for advanced manufacturing, done under the president, and then one of the economic councils. I'm a big advocate of that. I'm a big advocate of the Fraunhofer model, the German model, and its U.S. mimic. I want you to comment on that within the patent box, because manufacturing is about 9% to 11% of our economy, depending on which month the data come out.

Mr. Egan, on the Canadian Gas Association, that's an innovation story, in my view. I think Canada has a huge role to play in both the North American and global markets on gas, whether it's LNG or domestic production. Could you comment on the potential we have to displace diesel with natural gas, specifically in northern communities, and the role it can play in reducing our emissions, even though it does produce CO2 but at a lesser degree than other fuels?

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Egan and Mr. Lavoie, or whoever wants to start.

[Tim Egan]

On diesel replacement, in our submission we're clear on the opportunity that's represented. There are already examples of diesel replacement by gas utilities in various provinces. We cite three in our submission. I'd be happy to talk in more detail about those at some point.

The fact is that a diesel replacement strategy is fundamentally about replacing a reliable fuel and a reliable technology with another reliable fuel and reliable technology. We would argue that LNG offers both of those as a more affordable alternative. We are very interested in participating in the off-diesel strategy that the federal government is announcing, and several of our utilities are active in conversations about that.

On the opportunity for overall reduction of emissions that natural gas presents, we released a report commissioned by us from ICF Kaiser a few weeks ago. This report detailed specific emission reduction opportunities in our sector. We identified how we could reduce as much as 30% against our current baseline by 2030, highlighting specific areas where that could be done. We noted that our diesel replacement strategy in the north is one possibility, connecting communities is another, and natural gas for transportation is a third renewable option.

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

Let's switch it over to Martin now, so that I can ask another one.

[Martin Lavoie]

The last budget had $800 million for national clusters. We just submitted a brief to the Department of Innovation, Science and Economic Development for its innovation agenda consultations, in which we said that we would like these clusters to reflect the U.S. national advanced manufacturing initiatives you made reference to.

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

Mr. Littler, on the issues you raised—interchange, tariff reduction, and de minimis—I can tell you that a few years ago we increased the duty-free limits to $750, I believe, when Canadians leave. We were told that the sky was going to fall out, and it didn't fall out.

I'm a huge supporter of retail and a huge supporter of retail in my riding, the mom-and-pop shops. After reading a couple of the non-partisan reports, non-political reports that have come out from C.D. Howe and a few others on de minimis, there does seem to be an argument for raising it from, say, $20 to an $80 level, or from $20 to a $50 level. I want you to comment on that.

Before you do, though, I want to ask about the defence industry, though I have to admit that I am not an expert in defence or procurement. Could you briefly comment on the opportunity for recapitalization and a made-in-Canada strategy, without running amok to any WTO issues or anything like that?

I'd like to hear from Mr. Littler and then from Christyn.

[Karl Littler]

We have done some estimates on the value of shippable goods under $80. Obviously, it's constrained to some degree by price at the top, by bulk, by weight, and so on. There are some things that fit under that threshold that would not fall into it, and by our estimate $55 billion's worth of goods fall into that category. It is not a minor category. It includes the bulk of apparel and a significant amount of consumer electronics. These are pretty significant areas, and they're very hotly contested areas at the retail level.

The implications of being able to operate at a tax advantage of 12.3% on average across the country are potentially devastating in that sector.

It is not the same thing as crossing the border periodically. We are looking at a situation in which you have a tax incentive from the comfort of your living room for pushing a button, and a very significant number of Canadians will take that opportunity and will choose to buy the tax-free option. That is going to affect the members in your ridings, the stores in your ridings, the workers in your ridings. We don't know with certainty what the sensitivity to that will be, but understand that it's $55 billion's worth of goods at risk, so any significant contraction in that is going to have a real impact at the ground level in your communities.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Littler.

We'll come back to you, Christyn, following Mr. Liepert's questioning. I have a question to tie into what Francesco asked.

Go ahead, Ron.

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

Thank you.

Welcome, everybody.

Mr. Egan, I am sure it's no surprise that as an Alberta representative I'm going to ask you a few questions about natural gas.

It seems as if somehow natural gas gets missed out in this whole discussion about the environment and carbon. It seems that the option that is always discussed is whether it is oil or highly expensive renewables. Gas is somewhere in the middle, and we don't seem to ever focus on that. It's the same thing with automobile manufacturing. It seems as if we've gone from trying to move from oil to electricity. We all know in Ontario what green electricity has done to the cost of electricity.

I recall that a few years ago in Alberta, Encana launched a fairly aggressive refuelling operation. It seems that hasn't gone anywhere. I'd just like your sense as to why that hasn't. Is there something that could be done to speed that up? We all know that tailpipe carbon is probably more excessive than just about any other carbon source. I would like you to comment on that.