Evidence of meeting #50 for Finance in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was funding.
A video is available from Parliament.
Manager, Green Budget Coalition
Where to start? We focus relatively explicitly on policies that can go into the budget, so fiscal and funding measures. You're absolutely right. I was having a conversation yesterday with someone.... How to stimulate the innovation that drives and helps to transform the economy is a pivotal measure and will require some competence on the government's part.
We have in our backyard Sustainable Development Technology Canada as a good example of how to drive green innovation. They have staff who are willing to take the risks and understand that to get the three big winners, you may have seven losers. I know that's not necessarily a perspective that everyone in government is comfortable with, but that kind of idea would be very positive.
Executive Director, Canadian Climate Forum
I'm not an economist, but if there's one thing we know, it is that the dialogue is new in this area. Our symposium only emphasized that. Having long discussions with Mr. Balsillie about the first time ever that 12 clean-tech CEOs came to Ottawa to speak to the federal government, it was last week, and he brought them. That's the role that we see. The dialogue needs to happen. The silos need to open, and you need all those people around the table to come up with the best policies.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Thank you.
Perhaps then I'll throw that out as a challenge. I was with Chatham House, so following Chatham House rules, I can't tell you who said what or who was there, but I can tell you the investment banking industry understands this. There are trillions of dollars in private investment looking for renewable funding.
What I'm looking for, and what I'd like to bring forward—and if it's not this budget then in the future—is knowing what the policies are that create that stable environment so that investors choose Canada. I'll leave that as perhaps a challenge, but I want to move on quickly because I know I don't have a lot of time here.
CPA, you mentioned in your brief—and I know you're aware of our motions, and that's great—why a fair and efficient transparent tax system is needed. You mentioned that sometimes it's unfair to certain folks. I'm sorry I don't have the exact quote in front of me.
Could you highlight an example of where it is unfair, and therefore, demonstrates the need for a simplification or a review?
Board Member, Chartered Professional Accountants of Canada
That is right. This tax system has had a number of changes over a period of time. We believe a full review is required at this point in time.
Look at the SR and ED program and stand back from that program, and ask if it is achieving what we want it to achieve. There's an impact on that program where there is a tax credit. The tax credit is very useful to a lot of smaller businesses, but a lot of larger businesses, which have to compete internationally with their various divisions, find that tax credit is not a very effective method of doing their innovation. That's an area we have to have a look at in the tax system, to see where the SR and ED should go and see if it is achieving what we want to achieve.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
Thank you, Mr. Chair.
Thank you, everybody, for being here in Ottawa. I would like to pay my respects to those who are with us by video conference.
By the way, for my question I will go to Vancouver, British Columbia, to talk with Mr. Derek Nighbor from the Forest Products Association of Canada.
Sir, I wish you the best even if we don't have a deal on wood. We are with you all the way. Speaking of that, I would like to know what you think about the imposition of a new carbon tax for your industry. How will it affect your business?
Chief Executive Officer, Forest Products Association of Canada
That's a good question, thank you.
We've long been on the carbon, climate change-fighting train, if you will. We're one of the few sectors that lent our support to the Kyoto Protocol many years ago. As I said, we're one of the few sectors that has launched a comprehensive plan.
There are a couple of outstanding questions I would say to the member. One is the significant impact on transportation costs, especially in rural communities and northern and remote communities where most of our mills are, and then also there's the question of global competitiveness, which either this committee or the international trade committee has been doing some work on to better understand how we would benchmark against our global competitors in this space if they don't move in a similar direction.
On the other side, we see opportunity. We are using a lot more fossil fuel alternatives based on biomass in the forest sector, so although we see some challenges on the one side, we see a lot of opportunity as well. The way this national program is rolling out, it is going to be absolutely critical. Most of the power here clearly is going to be with the provinces, so we're right now working with our provincial counterparts to see how this is going to track across the country.
Liberal
The Chair Liberal Wayne Easter
I have to interrupt for a minute. The bells have started and I think we have agreement, but technically we need the unanimous consent of the committee to stay an additional 15 minutes. Do we have that? Are we okay until 5:45?
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
Thank you, Chair.
I will share my time with Mr. Aboultaif.
Conservative
Ziad Aboultaif Conservative Edmonton Manning, AB
Thank you all.
I have just one quick question for Mr. Cross.
You mentioned cyclical policies and structural policies, short term, long term. Economically speaking, and you're better at economics than I am, for the short-term policies, mostly the results of these should be predictable. At least you can gauge what you're going to get out of it. Long-term policies can be hit and miss within margins.
What are we doing wrong? The short-term policies for spending money based on last year's budget and this year's budget aren't working. We're not creating jobs. Things are not working really. What are we doing wrong and what can we do right in order to be able to be safe moving forward, and at least dealing with the issues? Is the situation bigger than us? Is the problem deeper than we think?
Senior Fellow, Macdonald-Laurier Institute
It's certainly a problem that is bigger than us. It's affecting all the major western advanced industrialized nations. In fact, many of them appear to be in a much worse position than Canada. Think about Japan, which has had 15 fiscal stimulus packages over the last few years. Europe is in much worse condition. North America is relatively well off. We have a younger, faster-growing population than these other areas. Canada, in particular, has another advantage. Our banking system wasn't destroyed in the last crisis. Guess what? That actually helped a whole lot.
We do have these advantages, but the point of the work coming out of BIS is that the stimulus you're going to get from monetary and fiscal policy is going to be limited. When you're operating in an environment of very low productivity growth, that puts a very low ceiling on which the economy can grow. You can pour more and more stimulus in and you very quickly hit this upper limit.
The BIS advocates that we adopt more policies that would raise that productivity ceiling over the longer term.
Senior Fellow, Macdonald-Laurier Institute
In the short term they recommend that we withdraw some stimulus, even if it slows growth a bit on the short term in order to get back some of that long-term potential.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Thank you, Mr. Chair.
I will start with Mr. Nighbor.
He's from the Forest Products Association of Canada. Probably the most important recommendation was not in your presentation. What should we do regarding the industry with the lack of a signed agreement on softwood lumber? Your members will actually be facing a very tough time, as they did before 2006. I know that you have some recommendations for the government. I think it might be good for the committee to actually know what would be required for the industry to be able to weather the storm.
October 26th, 2016 / 5:35 p.m.
Chief Executive Officer, Forest Products Association of Canada
That's an excellent question. FPAC is the national voice of the industry across Canada. As this committee knows, there are different regions of the country that have had different opinions on what a deal should or should not look like. Our board made a conscious decision to say that, for the benefit of the industry, FPAC is going to step back during the negotiation time and is going to allow the regions, Quebec, B.C., Alberta, Atlantic Canada, and others across the country, to partake in the negotiations at a regional level. This pre-budget submission, of course, was done parallel to this conversation happening. As we get closer to the possibility of no deal or significant tariffs I think there are a couple of things we should talk about as a group, and that government could partake in, about other ways that would not further incite a trade war with the U.S.
Some examples are investment in doing more building domestically with wood, for example, through some of those building code changes, and supporting a pan-Canadian reforestation plan to plant trees similar to the announcement Premier Clark made in B.C. as part of her plan. In our industry for every tree that is harvested we plant more than one to replace it, but there are areas of pests and fire and whatnot that could be planted. Also we need more money to even further diversify markets and grow them in Asia.
I think there are a number of levers the government can pull to build on this submission in a worst-case scenario.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Thank you very much
I will now turn to the
Conference for Advanced Life Underwriting, or CALU.
Thank you very much for explaining the situation for family transfers. I cannot help myself, because my private member's bill wants to solve this exact same situation. I want to assure everybody that I did not ask Mr. Blatt to make this presentation. I was surprised to see it here.
Chair, Government Relations, Conference for Advanced Life Underwriting
I never met him before.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I actually met other members of CALU and you had the support of the organization. They didn't know it would be part of their pre-budget submission. But the example you're giving is actually very telling. You're talking about the sale of a $2-million business. If you're selling to a member of the family you're going to pay basically $800,000 in taxes. If you're selling to a stranger you will pay $250,000 in taxes. That's about $500,000 more, if there is no tax planning, that you're losing in your retirement fund.
Chair, Government Relations, Conference for Advanced Life Underwriting
That's exactly it. All we're saying is that we're looking for a level playing field in this area. There is a lot of detail in the submission and it's somewhat technical. I know we're in a time crunch but the bottom line is that we want to give Canadians the opportunity to decide who they want to sell their businesses to. Sometimes it's the family that's the right decision. Sometimes it may not be. We want to level that playing field. Right now it's punitive to the family and we think that can be adjusted somewhat.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
That's a fairly recent change because my understanding is that it came to be separated or differentiated like this—