Finance Committee on Oct. 26th, 2016

[Warren Blatt]

Yes.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

—when we expanded on the use of capital gains back in the 1970s.

[Warren Blatt]

Correct, and Quebec happens to be leading this initiative, which is exciting.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Quebec actually voted and changed that part back in the 2015 budget.

[Warren Blatt]

Correct.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Gallant, you know about the example that was given by Mr. Blatt, regarding family transfers. You know about the situation or the problem that we have right now.

[Gregory Gallant]

I'm not aware of that particular circumstance, no. But I can understand exactly where you're coming from in relation to the transfers. Capital gains exemptions was put in at a point in time and was very beneficial, very good tax planning, in relation to smaller businesses. That's an example of a tweak that maybe should be looked at in relation to how the system should be changed to prevent situations like this.

[The Chair, Liberal, Wayne Easter]

I'll have to cut it there.

Mr. Ouellette, you're sharing your time with Mr. Sarai.

Go ahead.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Yes, thank you very much.

This is a question for Andrew Van Iterson.

It's concerning your mention of the Assembly of First Nations and diesel electricity on reserve. A lot of the electricity used on reserves comes from diesel engines, so it's not very environmentally sound. I was just wondering if you knew a little bit more about the proposal.

[Andrew Van Iterson]

I have a little of it. They're recommending, I think, roughly $800 million. There are three funds together that total in the range of $1.4 billion to $2.3 billion over three years. I know this has been a challenge with the Green Budget Coalition. It's been talked about for years, so there's certainly bright people working on it, and we've been talking to the Indigenous and Northern Affairs department. The challenge is to find a couple of models that work and can be replicated across roughly 180 communities.

I think biodiesel can be part of the solution. I'm not sure that they've landed yet on a solution that could work for all of them.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Thank you very much.

Now I'll be very short because I know we have to get on to Randeep.

For the chartered accountants, you mentioned in one of your outlines here the national strategy for financial literacy. I'm wondering if you could talk a bit about your ideas, for instance, on postal banking, because a lot of rural and indigenous communities don't have access to banking facilities as such. A postal bank, for instance, might be very beneficial for increasing financial literacy because you could open a bank account. You could be doing all sorts of other small types of banking to generate a profit for Canada Post at a reasonable fee.

[Gregory Gallant]

Yes. In relation to CPA Canada, we see financial literacy as a very big thing for moving Canada forward. We have approximately 11,000 volunteers at the moment who are involved in financial literacy, trying to educate the overall general public around the level of savings they're going to need for their retirement and the impact of CPP for saving effectively. Something like you just mentioned is another aspect to this that probably is very important to further educate the whole Canadian population about financial literacy. We're living longer at this time, and we need to start dealing with all of the financial aspects of our lives. What you just brought up there is potentially one of them.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Thank you very much.

Now I'm going to pass it on to my good colleague here, Randeep.

[The Chair, Liberal, Wayne Easter]

I would mention on the previous discussion, there was a good presentation in Halifax by Ron MacDonald from NRStor on this issue of diesel in the north and green proposals.

Mr. Sarai.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Being from the west, I have a question for Mr. Nighbor from the Forest Products Association.

I know you're facing a very critical time with the softwood lumber agreement coming up as an issue out west and across the country. How does the $200 million for advanced wood products help you export goods that perhaps would not come under any tariff or countervailing duties? Does that help you create better products that you can export, not only to outside of the U.S., but does it also allow you to export innovative products to the U.S.? I want to know, if you can elaborate.

[Derek Nighbor]

Yes, there's definitely an export strategy with the U.S., but we're also looking to diversify those markets. Back in 2002, we had about 86% of total forest product exports going to the U.S. It's about 67% to 70% today, so we've definitely diversified already but there's huge opportunity.

One of my CEOs says China is the new China. There are a lot of other opportunities still in China and throughout Asia, and we believe it's a two-part play, first, get more taller wood buildings in Canada to support domestic demand, and then support exports to new and emerging markets.

[The Chair, Liberal, Wayne Easter]

Mr. Albas, you can ask one quick question.

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

Thank you, and I'm going to ask Mr. Cross. I appreciate everyone's contributions today.

Mr. Cross, I understand from a macroeconomic viewpoint that Canada is a small open economy, and because of that, stimulus by our own government in response to any desired outcome makes it very difficult to say that all you need to do is put in x amount of dollars and you'll get y out. Would you agree that it is a difficult thing for a small country like Canada to stimulate its economy versus what we had with the United States when that mutual stimulus at the same time actually had a greater result during the great recession?

[Philip Cross]

Very much so, since the standard economic model is that there's a yin and yang between monetary and fiscal policy. We've seen recently that when you increase fiscal stimulus the markets go, “Okay, the economy is going to pick up.” Therefore, they expect interest rates to go up. They bid up the exchange rate and much of the benefit you get from fiscal policy is offset by monetary policy. We've seen the reverse now. As expectations for growth are revised down and as people expect the stimulus from fiscal policy to yield fewer bangs for the buck than expected, lo and behold, we've seen the exchange rate fall back and give back about half of its gains. It jumped from 70% to 80% and recently, it's fallen back to about 75% as markets factor in a weaker outlook for the Canadian economy.

[The Chair, Liberal, Wayne Easter]

Sorry, my apologies, we'll have to cut it at that.

For members, the buses are waiting outside so don't dilly-dally. We have to get to the vote. Tomorrow morning, we are meeting at 8:30 with Dominic Barton followed by the presidents of BDC and EDC. The meeting is here.

Thank you all and sorry for the rush.

The meeting is adjourned.