Finance Committee on Oct. 27th, 2016

[Alex Ferguson]

Thanks.

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

We just hope that in this time, when we have such difficulty in your business, that you get back to the spirit of the pioneer who built this fantastic industry for Alberta, but, first and foremost, for Canada.

[Alex Ferguson]

Yes, absolutely. I think you'll see more opportunities like that come forward that will change the game for our economy.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

Go ahead, Mr. Caron.

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

Thank you, Mr. Chair.

Thanks very much to all the witnesses for being with us today.

Thank you to all witnesses.

Mr. Ferguson, I'm just looking at what the position of your association is. Your CEO actually commented last summer that, "the oil industry is agnostic about carbon pricing”, which means that you're not in favour, but you're not opposed; you'll just deal with it, basically.

[Alex Ferguson]

I guess that would be a good interpretation. Our membership at our association has as diverse a view on carbon pricing, and how it's to be applied, as the Canadian public has, more than likely. However, the one thing that is common across it is that we understand this is an issue that needs to be addressed, we have been addressing it, and through all the diversity of opinions around the methods, we will continue to address it.

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

Thank you.

I would like to point out that your association and the Canadian Gas Association are not opposed to a price on carbon. Some associations such as the Mining Association of Canada are even in favour of one. That provides a bit of context for what is going on in the various industrial sectors.

Ms. Teitel and Ms. Tungilik, I ask you the question because you both talked about the same issue, resale rights. I will let you decide who answers my question.

Why is it important for this measure to be included in the 2017 budget? Why not wait until next year or for two years to allow time to plan the measure properly?

[Theresie Tungilik]

We, as artists, have been waiting for a long time. When you look at other artists, whether in the performing arts, in literature, musicians, they get royalties, but the visual artists do not get a cent back when any of their stuff has been resold. This is what we would like to see happening in Canada, as well as the other 93 countries that abide by it.

[Darrah Teitel]

I would just add that every single year that goes by thousands and thousands of dollars that could end up in the pockets of some of the poorest labourers in Canada, all of your constituents, are being missed. These aren't people who have incomes to spare and the money is significant that they are losing as time goes on. We don't have the largest lobby voice in the world. Artists have a hard time acquiring the capacity that other lobby voices have, but this is something that we need and we've been asking for it for over a decade from CARFAC.

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

In fact, the most compelling page in the brief you presented is the last one, which contains the comments by Daphne Odjig and Mary Pratt. At the end, you talk about Mary Pratt and you cite her remarks. She produced paintings that sold for $40 in the 1960s. Today she lives in poverty, even though her works sell for about $20,000. She therefore receives virtually none of the current value of her works. They are the object of speculation and the only ones who benefit from that are speculators in the arts industry. She continues to live in poverty despite her own achievements.

You said the measure was only for public art sales. Why are private sales not included?

[Darrah Teitel]

Simply because of the administration and tracking of such things and also because we believe it would be more onerous to try and track it, private sales are not tracked, but public sales are easily tracked. The galleries, dealers, and auction houses are the only people who really sell publicly. They just have to remit 5% of the sales, which is shared between the buyer and the owner, to the Copyright Collective, which already exists in Canada. The Copyright Collective is responsible for remitting that payment to the artist and the artists are responsible for registering themselves with the Copyright Collective. It's actually an incredibly easy system to track and to administer.

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

Thank you very much.

I have a brief question for Ms. Durdin.

Have you communicated with the government about Bill C-29 and the measures to implement of the Common Reporting Standard, or CRS, of the Organization for Economic Co-operation and Development, the OECD? If so, how has it responded so far to this concern, which I think is entirely legitimate?

[Martha Durdin]

We have pointed this out to the government. I think the government's view is that it has signed an agreement at the level of the OECD, and it's abiding by that agreement. I think there is the opportunity to look at how it's implemented in Canada and to look at a risk-based approach in the implementation. We don't take issue with the fact that we've signed this agreement with the OECD; it's more the implementation that we'd like to see as a more risk-based approach.

[The Chair, Liberal, Wayne Easter]

Perhaps I could follow up on that, Martha. You said earlier that these mortgage insurance requirements will affect the credit unions' ability to raise capital. I do know that the credit unions are in a lot of rural areas versus the banks. But that puts the credit unions in a much more difficult position.

My question would be this. First, what is the impact? Secondly, why would the impact be so much greater on the credit unions than it would be on the banks? I think we need to hear that explanation. Also, how could it affect growth? This committee's mandate is to look at how it could affect growth.

[Martha Durdin]

This is new news. It was announced last week, as you know. We're in the process of modelling some accurate data, which we will share with the committee and with you when we get it done.

But suffice it to say that credit unions securitize mortgages as a way to raise capital. The ability to securitize mortgages under this approach will be constrained, and therefore so will our ability to raise capital. Chartered banks have other ways to raise capital. They go to the markets. They raise it through shares and they go to the public market. So that's essentially the difference.

[The Chair, Liberal, Wayne Easter]

How could that affect economic growth? We're trying to find ways we would better achieve economic growth in this country. Could that have a negative impact on our doing that?

[Robert Martin, Senior Policy Advisor, Canadian Credit Union Association]

I just want to finish up the answer in relation to securitization. Credit unions have been traditionally institutions that take deposits and make loans and we earn money off of a margin on loans, and retained earnings are of course important to our growth. In recent years, more credit unions have been getting into securitization as another conduit to fund loan growth. Actually, the CMHC has almost promoted it, in a way, in previous years by increasing allocations for credit unions to engage in securitization.

We're co-operative institutions, so now, unlike the banks, we're not allowed to go to private markets to raise capital. They can get access to covered bond markets because they have the volumes to do so. I just wanted to finish up that.

The second question was in relation to economic growth. The measures haven't all come into force; some will come into force on November 30. The Bank of Canada, in its recent monetary policy report, suggested that in terms of the impact of some of the measures that are taking hold, it is projecting that the housing sector will become a drag on economic growth, down 2%, I think. So let's put it this way. Other sectors are going to have to pick up that slack.

Frankly, we have to do a deep dive on the data side to determine what's going to happen. We're in a lot of rural and remote areas. I think the other thing you have to keep in mind is that the logic of these measures makes sense in the context of the lower mainland possibly, and parts of Toronto, and maybe the greater Toronto area. But a lot of the housing markets in the Prairies, in western Canada, the Maritimes, and parts of Quebec actually have housing surpluses or new builds that aren't being absorbed by the market right now. So I think you'll see that it would make it more difficult to absorb that excess capacity.

[The Chair, Liberal, Wayne Easter]

Mr. MacKinnon, you have five minutes. Then we'll have Mr. Albas after that.

[Steven MacKinnon, Liberal, Gatineau, QC]

This is the last segment, just to be clear.

[The Chair, Liberal, Wayne Easter]

Yes.

[Steven MacKinnon, Liberal, Gatineau, QC]

I will give a question at the end to Mr. Sorbara.

I wanted to ask you a question, Mr. Ferguson, very quickly, just to put a finer point on Mr. Caron's questioning, and Mr. Deltell's. You have members who in fact support the approach of taxing carbon put in place by Ms. Notley.

[Alex Ferguson]

Oh yes, absolutely. I think it's pretty common. There are quite a few, actually.

[Steven MacKinnon, Liberal, Gatineau, QC]

I don't want you to put words in their mouths, but why do you suspect that is the case?

[Alex Ferguson]

There are a lot of business drivers. A lot of these companies are in different segments of the sector. They're in different conditions in terms of what their exposure is to debt and equity markets, so they're looking at longer term, shorter term, cost implications, and where they're at in the innovation technical cycle for their businesses. There are a ton of factors that are driving differences of opinion, as you would expect.

[Steven MacKinnon, Liberal, Gatineau, QC]

Is it also because it's a global industry and this is a global effort, and they're looking for certainty from Canada?