Finance Committee on Feb. 4th, 2020

[Bruce Ball]

Thank you for the question. There were a few things there, so maybe I'll just comment on each of them as I go through.

There was mention of the technology companies to start off with. Just to highlight, we support the work the OECD is doing on digital taxation. We think it's really important that the world get together and figure out a way to fairly divide up the pie in terms of which countries get the tax profits from digital profits. One of the big issues right now is that you can do a substantial amount of business in another country without a physical presence, which is sort of what our tax system is based on. We believe it's important to look at the digital issue, but we also believe it's important that the OECD finish its work first before moving forward, because one of the concerns is lack of coordination and cost.

In terms of money transfers, money laundering and tax evasion, we fully support what the government is working on. It is important to trace these funds and deal with people who are parking money offshore and not paying tax on it. It also goes to other issues that may not be tax-related, so we fully support what the government has been doing in trying to tackle that.

[The Chair, Liberal, Wayne Easter]

We'll go to Mr. Morantz and then over to Ms. Dzerowicz. It's a five-minute round.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

My question is for FCM. We would all be remiss if we didn't ask you about the investing in Canada plan while you're here. Before I came here, I was a city councillor in Winnipeg and I chaired the public works committee. I can tell you we certainly appreciated the gas tax money because it was like pulling teeth to get money out of the investing in Canada plan. In fact, while I was there, we didn't have a single major infrastructure project funded by the federal government that wasn't announced before the 2015 election. The Waverley underpass and the southwest rapid transitway were both funded under the Harper government. I've been off council now for over a year and there still hasn't been anything.

Last week, you may be aware, on opposition day we passed a motion to have the investing in Canada plan audited by the Auditor General. It got a pass, thanks to support from our friends in the Bloc and the NDP, and it'll be interesting to see what the results of that audit are. I'm wondering if you could give us your perspective on any issues that you see in your role at the FCM with respect to the investing in Canada plan, the signature infrastructure plan of the Liberal government.

[Carole Saab]

Thank you very much for the question. I think it's certainly one that we anticipated, given the events over the last week.

Off the top, it's important to acknowledge that ICIP, the investing in Canada plan, really did raise the bar, both in scale and scope, in terms of investing in infrastructure for communities across the country. From our perspective, and certainly as is noted, there have been challenges with implementing the projects across the country, and it's important for us to be very clear on this point. What is available by stream to provinces across the country is very clear. It's articulated and there's not a lot of confusion about that.

Where we are having challenges and what is less clear from a municipal perspective, and it differs from province to province, is around provincial intake processes. It certainly has been hard for communities in various regions of the country to find the kind of clarity that they are looking for or that they need to be able to have their projects implemented, which is certainly why you consistently see from FCM and from mayors across the country and councillors across the country a push toward more direct allocation-based funding tools like the gas tax transfer.

It's worth noting that of the various ICIP streams, where we are seeing more substantive progress is in the public transit stream. Again, that is the stream that is the most direct and is allocation-based, comparable to the other streams of the ICIP program.

Certainly, it's clear that there are some challenges with this program. We would say, again, that it's quite clear from the federal government what is available to each province by stream and we're going to continue to advocate, with our members and with our provincial and municipal associations, and to work with provinces where there is less clarity around the provincial intake process, because that's certainly the nub of the issue in a number of areas in the country.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you.

That was really the only question I had. I'm willing to share my time.

[The Chair, Liberal, Wayne Easter]

You still have a minute and a half left.

Mr. Cumming, do you want to go?

[James Cumming, Conservative, Edmonton Centre, AB]

Yes, I'll go.

I have a follow-up on that. One of the things that we heard from the government as it relates to the funding and the principles of productivity or reduction in emissions was that it's difficult to get information back to the people they've given the funding to. The nature of the program is that it's a three-party agreement and they're saying they're having trouble getting the data that would substantiate whether they are getting the results they thought they would get with the spending. Can you comment on that?

[Carole Saab]

Yes. Certainly, from our perspective, there are clear reporting requirements with federal infrastructure programs that our members are subject to and follow accordingly, so it isn't our experience that there's a significant challenge with the reporting requirements in terms of providing data back to projects that are being implemented. Certainly, Infrastructure Canada has also been a bit more public through tools on their website around the status of projects across the country. From our perspective, there isn't a significant gap in being able to provide that kind of data back on projects.

[The Chair, Liberal, Wayne Easter]

Ms. Dzerowicz.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

Thanks to all the presenters today. I wish I had enough time to ask questions to all of you because I have many.

The first one I'd like to ask is for the Federation of Canadian Municipalities.

You had mentioned that we've been working very closely around housing, which has been a huge priority for Canadians. I know it was one of the top two issues that was raised in my riding of Davenport during the most recent election. You mentioned that there's a need for more housing dollars for indigenous people as well as more support for housing for those who are most vulnerable. I agree with that.

I'd also say to you, though, there's tremendous stress on homeowners in my riding. I'm in downtown west Toronto. I call it an up-and-coming area. It used to be a working poor area but because of house prices it's now sort of squarely in the middle class. They're really worried about their kids being able to continue to afford Toronto. Seniors who are dying to move out of their houses and are aging out would love to continue to stay within the urban area.

Maybe the third element is artists. I have a lot of artists and creators in my riding and they feel like they're being pushed out both from a performance perspective but also a live-work perspective.

How is it that we can work together better to be able to address this issue?

[Carole Saab]

I appreciate your question very much.

Obviously, as I've stated, housing affordability, including affordable and social housing and community housing like supportive and indigenous housing, is a top priority. So too is the spectrum of housing affordability issues playing out in our communities across the country.

One of our top recommendations for addressing the housing affordability crisis is centred around this question of how better to work together. The recommendation from FCM is to launch a housing forum that would bring together provinces, territories, municipalities and the federal government for a conversation, given the respective levers that each order of government has to bear on the issue, through FCM, in order to have analysis and action on key issues that affect housing affordability, from speculation, demand-side measures and supply needs to short-term rentals and supply and data gaps. There's really a suite of things within the various tool boxes of the various orders of government. There's a need to initiate an intergovernmental conversation in a more deliberate way around the housing affordability crisis through the mechanism of a forum.

We also have some specific recommendations that are really aimed at fostering this kind of a conversation, including the development of an affordability indicator in the housing space. This is all the type of work that we would recommend be vetted and initiated through an intergovernmental approach, through a housing forum.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

I meant to also ask about rental because I know what the reality is. I know we, as a national government, over the last few years have put a significant amount of money into trying to encourage more rental housing to be built. I'm assuming you would suggest that the forum would also look at housing where we could promote that.

Do you have another specific recommendation on how we can increase that?

[Carole Saab]

Rental preservation and construction, and stimulating the rental market, is from our perspective one of the key ways to address the housing affordability crisis on an ongoing basis. Certainly, we would see this as part of the work that a forum would tackle, but we do have specific recommendations as well. In particular, we think there's a near-term opportunity in budget 2020 to create a market rental preservation program. We see this as a way to continue to keep units in the rental housing space, and in the affordable rental space in particular. There's also an opportunity to tie this in with our climate targets in a significant way and ensure that this is geared towards an incentive for landlords to repair—

[Julie Dzerowicz, Liberal, Davenport, ON]

Sorry, Ms. Saab.

I have to cut you off because I have one more question and I only have 45 seconds.

[Carole Saab]

Okay.

[Julie Dzerowicz, Liberal, Davenport, ON]

I'm going to ask this question of Mr. Fletcher.

Mr. Fletcher, yesterday we heard from Barbara Zvan, who wrote a sustainable finance report with Tiff Macklem, which came out last year, mid-year. Basically, it reflects a lot of what we hear from people like Mark Carney in the world. They say, “The financial sector must be at the heart of tackling climate change”.

I'd like to understand how the TSX Venture Exchange is adhering to this and how the federal government can help support this.

[Braden Fletcher]

When you look at a program like flow-through tax credits, for resource sector companies with a long path to commercialization and to generating revenue and a heavy amount of capital expenditures—not dissimilar from that of clean-tech development or deployment—what's been hugely efficient for them is to be able to take those future tax benefits of write-offs against their expenses and bring those to the present day. They would be able to monetize those by selling their shares with that tax benefit to a private investor.

In 2011, over $1.1 billion was raised by the mining sector alone in Canada, with $400 million of what we would call hard dollars. When you do flow-through financing you can't use any of the flow-through funds to pay for commissions or to pay for management salaries—

[Julie Dzerowicz, Liberal, Davenport, ON]

How does that help us move toward a low-carbon economy or achieve our climate goals?

[Braden Fletcher]

What we've looked at with the flow-through share program is at developing a mechanism whereby a company developing clean technology could flow the expenses of developing that technology.... Think about General Fusion or Nano One's technologies. They're spending $100 million developing a new battery cathode, or in the case of General Fusion, a nuclear fusion reactor in Burnaby, B.C. If they could flow those expenses back to a private investor, it would unlock private investment capital.

In 2011, there was over a billion dollars that went into the mining sector. We could be leaders in developing these new technologies. Then, when you look at the decarbonization of Canada, thinking about how much is being spent on energy efficiency or water treatment, those same expenses could still be flowed back through to the private sector and billions of dollars could be unlocked.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

I'm wondering, Mr. Fletcher, if you could write a note to the committee explaining that. You said earlier that part of the problem for some of these innovative companies is that they're not making a profit yet.

[Braden Fletcher]

Yes.

[The Chair, Liberal, Wayne Easter]

If you could send us a note on how something similar that works in the mining sector could work for those companies that are innovating in terms of the economy, it would be helpful to us all.

Ms. McGuire, you want in. Then, I'll come to Mr. Cumming for questions.

[Rosemary McGuire, Director, External Reporting and Capital Markets, Chartered Professional Accountants of Canada]

Thank you, Mr. Chair.

I wanted to comment in response to the question from the member regarding the expert panel on the sustainable finance report. That was a key pillar of our prebudget submission. We supported the recommendations that came out of the report. What we have heard today is that there are a number of different actions that are occurring, whether in infrastructure through the work of the FCM or through the tax code. I think it just re-emphasizes the importance of mapping what that path for Canada looks like in this transition, and all the different steps and different actors in the space. I wanted to re-emphasize that point.

[The Chair, Liberal, Wayne Easter]

Thank you.

We'll go to Mr. Cumming. Then we'll come back to the governing party for the last question.

Mr. Cumming.