Evidence of meeting #6 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.
4:30 p.m.
Liberal
The Chair Liberal Wayne Easter
I don't hear any point of order not to let you put it there, so it is a matter of debate and it is on the record.
4:30 p.m.
Conservative
Phil McColeman Conservative Brantford—Brant, ON
It's on the record. Thank you.
Moving to Mr. Morrison, on social housing or public housing, I'm curious to know how much the ask of the government is for the program that you're outlining. What's the total ask?
4:30 p.m.
Executive Director, Canadian Housing and Renewal Association
Mr. Chair, the ask regarding renewal and rehabilitation of existing stock is approximately $1.7 billion per year. The ask regarding the 100,000 new homes is approximately $1.5 billion per year. What we call sector transformation or sector innovation to diversify, sort of a post-operating agreement, is roughly $200 million.
Part of this would be taking from the existing envelope. This is not necessarily new money, but given what the government has spoken of regarding the size of the social infrastructure pot, we think this is reasonable.
4:30 p.m.
Conservative
Phil McColeman Conservative Brantford—Brant, ON
You made a comment that I want to be sure I'm clear on. Are you saying there's already an envelope that includes this money, and it's not new money?
4:30 p.m.
Executive Director, Canadian Housing and Renewal Association
At present the government funds through its operating agreements approximately $1.6 billion in social housing. As we've talked about, those agreements are set to expire over the next 20-some years.
Rather than see that money disappear, we're asking for a continuation and reinvestment in both renewable and rehabilitation, and in building up new stock. There would be significant new money that we're also seeking.
4:30 p.m.
Conservative
Phil McColeman Conservative Brantford—Brant, ON
When I studied the agreements, they were between the CMHC and the government for a co-operative or a public housing provider to provide for the operational costs of the project, or the development was to provide the money to pay the mortgage and to provide for maintenance of the property.
All of those things were in the line items of those agreements. So when you talk about—and I've talked to many social housing providers about this—how they're governed by a governance body for that development, let's say a board of directors for XYZ co-op, they had money in each of those years to maintain the properties in good shape and to spend capital expenditures on things like roofs and such. All the while the mortgage was being paid down and that was all funded in the operating agreement.
Am I mistaken or am I correct?
4:30 p.m.
Executive Director, Canadian Housing and Renewal Association
Mr. Chair, it would be important to note there's no one standard operating agreement. There's no template agreement. Every operating agreement has a different approach and a different mix of what is covered.
To your point earlier, you are correct in saying that essentially agreements would pay the mortgage, but I should add that's at what today would be considered extremely high interest rates. Most long-term mortgages that providers are paying are at an 8% interest rate. I think anybody here who would pay 8% for a home mortgage would be crazy.
There are in some agreements lines for some operational items and some for, although very little, maintenance renewal and rehabilitation. Those are areas that have been flagged as needing some significant reinvestment.
We should add that when the federal government got out of the business of constructing new units, back in the early 1990s, we saw no new additions at least from the federal perspective to the existing stock. We all know needs have grown. That's why we're seeking those new units to be built to the existing stock.
4:35 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Thank you, Mr. Chair.
I think we'll do a trio here.
First, on P3s, in Ontario we have achieved great success through the P3 programs. I want to add that in Vaughan and next to my riding, about 100 metres away, the request for proposals for the new Mackenzie Vaughan Hospital is out now and we hope to see construction started this year. It will obviously be done through P3 financing.
It's a great financing vehicle. It's been proven to come in on time and on budget. I wanted to make that plug because I think it's very important to point out.
I come from a riding where we have many successful manufacturers. In fact, FedDev was in my riding last week and we presented one of the manufacturers with a grant and so forth.
I can look to two entities in my riding, a company called Micron Group of companies and Vision Group. Both are Canadian success stories. Both export over 50% of their products to the United States. They're hiring. They're investing. My concern is that we're not seeing enough of that in our manufacturing sector in Ontario.
Martin, could you point out two or three things that you think would help our manufacturing sector that we could do that would be great?
4:35 p.m.
Director, Business Tax and Innovation, Canadian Manufacturers and Exporters
Yes.
4:35 p.m.
Liberal
4:35 p.m.
Director, Business Tax and Innovation, Canadian Manufacturers and Exporters
I'm sure these two companies are highly R and D intensive if they export to the U.S.
4:35 p.m.
Director, Business Tax and Innovation, Canadian Manufacturers and Exporters
What we've seen hurting companies across the board in manufacturing, as I said in my introduction, are the cuts to the research and development tax credit.
In 2013-14 the tax credit went down from 20% to 15% for large corporations and the capital expenditure was eliminated from the eligibility criteria. As you know, innovation in manufacturing is not the same as it is in other sectors, such as software or services. It's very capital intensive. What we're lacking now is a good incentive for capital expenditures, either for R and D or for automation, because our productivity is lagging.
The second point I want to make is we need to start looking at productivity as a long-term solution to our demographics problem. That goes to skills, but it also goes to capital expenditure. Automation in industrial robotics is coming. We heard about it in a lot of discussion at Davos. It's not a do it or don't. It's a do it or die.
We need a strategy to improve productivity in all sectors, including manufacturing.
4:35 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
I appreciate your comments on productivity. I've kind of thumped all week about how productivity will allow us to maintain and improve our standard of living.
Productivity, what does it mean? It means a lot of things, but it means us living a richer life and leaving a better future for our children.
We should have some more best practices for manufacturers. We need to do that. I'm proud to say that our government is focused on an innovation agenda. That's the way we need to go. We need to compete and we're competing globally every day.
On to housing, and I believe it's Mr. Morrison.
We have a lot of old housing stock in the GTA that needs to be refurbished and energy retrofitted. It's a great idea for some infrastructure spending. We can do it now. It's shovel-worthy and shovel-ready even though it's just an existing brownfield site, if I can use that terminology. I think it's a great idea.
I'd love to hear your thoughts on that.
4:35 p.m.
Executive Director, Canadian Housing and Renewal Association
Mr. Chair, we're ready to go. There are no shortages of projects across the country that are shovel-worthy. There would be no shortage of projects that could have an energy efficiency or some sustainability angle to them. The needs are great out there, so absolutely, we're ready to go with those projects.
4:40 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
I have one last question, Mr. Chair, for Mr. Morrison.
Is there anything you can recommend? In York region, where I come from, there isn't that existing housing stock to the degree such as there is, say, in the city of Toronto, where we could potentially entice the private sector or the private developers to work on the public side.
Is there anything in your agenda that addresses that?
4:40 p.m.
Executive Director, Canadian Housing and Renewal Association
That's been a really key and interesting question for a lot of municipalities in Canada: how to essentially incent or entice private developers to include an element of social housing within private builds.
Clearly, the rental market has been somewhat on the decline. There's not a lot of builders that are into the rental market these days. There have been some municipalities that have essentially mandated that private development needs to include a certain percentage of units set aside for social housing. Clearly, we would support that, and we would encourage other municipalities to consider doing so.
If we look, for example, at a city like Ottawa, where we have a light-rail transit project that's about to get going, that creates billions of dollars of value in the land surrounding that LRT project. If private developers are looking to develop on those lands, and that's going to be valuable land, it's a prime opportunity for the city, in this case, to essentially require that again a certain percentage of those new units be set aside.
We see it as a win-win project. The private sector is still going to be doing very well, but it also helps meet the needs of the social sector.
February 18th, 2016 / 4:40 p.m.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
I have a couple of questions for Mr. Lavoie.
I'm going to ask you a question, and then I want to explain what I mean by the question.
On average, how modern is our manufacturing industry in Canada?
The reason I ask that question is that there's this belief that the lower Canadian dollar helps exports in manufacturing, and I don't quarrel with that. The other side of the equation that I've heard is that if manufacturing wants to expand and create additional jobs, most of what they have to purchase is outside of our country, so they're paying foreign dollars for any upscaling of their production facilities.
Could you make a comment on that?
4:40 p.m.
Director, Business Tax and Innovation, Canadian Manufacturers and Exporters
Yes, you're quite right.
One of the answers I give when I get this question is that I don't know any exporters who don't have to import something to fabricate what they export.
That being said, labour costs are usually the biggest costs, the biggest input in what you make. Labour costs are still in Canadian dollars, so there is a gravy effect of the lower dollar just there.
Keep in mind labour costs are not what they were 15 or 20 years ago when the dollar was at 64¢. Labour costs are now higher per unit produced in Canada than they are in the United States. It used to be lower back in the day. The positive effect of the lower dollar is offset by higher labour costs.
If you want to expand, you also need to have the right skills for our labour. That's something we see. We don't have a lack of people who want to work; we have a lack of skilled people who want to work.
4:40 p.m.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
What are some of the major skills that you're lacking?
4:40 p.m.
Director, Business Tax and Innovation, Canadian Manufacturers and Exporters
I'll give you a couple of very simple examples.
One emerging field of workers that is required, especially in companies like, for example, Siemens, a German company in automation and software, is mechatronics. Mechatronics is a combination of electrical engineering, mechanical engineering, and IT. Right now if you train students at university, you train an electrical engineer and a mechanical engineer. You're not going to give an overview of the three disciplines.
What Siemens did was they started their own academy. They assigned one college, Seneca College in Ontario, to start a mechatronics program. They need people who have the skills in those three disciplines. That's only one example.
Another example I'm going to give you is the CNC, computer numeric controlled, machinist. It used to be the kind of job that if you didn't want to go to university, you'd do that. That's a great job for middle-class people, like my father and many other people. I was talking to somebody at Sheridan College who said that now 80% of the machinists need strong mathematics and a knowledge of IT and software. It's no longer the kind of job you do because you don't want to go to college. Actually, you need to go to college if you want to do this job.
4:40 p.m.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Mr. Bain, I know what your organization represents, but what I don't understand is.... One comment that caught my attention was you said that public-private partnership facilities all remain owned by government, was it?