Evidence of meeting #4 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was housing.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Jana Ray  Chief Membership and Benefits Officer, Canadian Association for Retired Persons
Ken Goodridge  Senior Tax Manager, Lazer Grant LLP
Tim Reuss  President and Chief Executive Officer, Canadian Automobile Dealers Association
Trevin Stratton  Chief Economist and Vice-President, Policy, Canadian Chamber of Commerce
Bruce MacDonald  President and Chief Executive Officer, Imagine Canada
Jeff Wright  Vice-President, Corporate Strategy and Business Development, Fanshawe College
Alan Shepard  President and Vice-Chancellor, Western University
Huw Williams  Director, Public Affairs, Canadian Automobile Dealers Association
Aaron Henry  Senior Director, Natural Resources and Sustainability, Canadian Chamber of Commerce
Don Roberts  President and Chief Executive Officer, Nawitka Capital Advisors Ltd., Advanced Biofuels Canada
Jean Simard  President and Chief Executive Officer, Aluminium Association of Canada
Meagan Hatch  Director, Government Relations, Association of Home Appliance Manufacturers Canada
Mac Van Wielingen  Founder and Partner, ARC Financial Corp.
Éric Cimon  Director General, Association des groupes de ressources techniques du Québec
Kimberley Hanson  Executive Director, Federal Affairs, Diabetes Canada
Susie Grynol  President, Hotel Association of Canada

5:30 p.m.

Meagan Hatch Director, Government Relations, Association of Home Appliance Manufacturers Canada

Good afternoon.

The Association of Home Appliance Manufacturers represents manufacturers of major, portable and floor care appliances in Canada and the United States. Our membership includes over 150 companies. The industry supports 40,000 jobs in Canada, including those in manufacturing, sales, distribution and retail.

In Canada, the factory shipment value of these products is $5 billion annually. Home appliances are very energy-efficient. A modern refrigerator uses half the energy it did a few decades ago and less energy than a 60-watt lightbulb does.

Clothes washers can save households 19,000 litres of water and more than $150 in utility costs compared to what they were 10 years ago. Today, washers are 70% more efficient yet hold up to 20% more laundry.

Both NRCan and the U.S. Department of Energy set mandatory minimum energy efficiency standards that appliances must meet. Canada has historically been slow to adopt the stricter energy efficiency standards introduced in the United States. Since 2016, the two countries have made significant strides toward harmonization and alignment. Regulatory alignment is critical to avoid unnecessary double testing and barriers to trade, and it maximizes consumer product choice.

This is why AHAM was disappointed to see the Liberal commitment to make Energy Star certification mandatory for all home appliances by 2022. Although the true meaning of this commitment is still unclear and implementation has not yet started, it has created great uncertainty in the market. Some retailers are rethinking their purchasing decisions because they do not want to be left with inventory that can no longer be sold in two years.

The commitment also contravenes CUSMA. The government sets energy-efficiency levels that all regulated appliances must meet, and these have become stricter over time. Energy Star is a voluntary program that is separate from this process. The Energy Star label makes it easy for consumers to identify energy-efficient products. It is intended to highlight the top 25% to 30%, or best in class of energy efficiency. This competition motivates manufacturers to find new innovation, and manufacturers in turn make significant investments to qualify for the program.

If the Canadian market is limited to Energy Star products, this competition ends and the mark loses meaning. The Energy Star brand is owned and trademarked by the U.S. Environmental Protection Agency. It is highly praised by both NRCan and industry alike. The brand is recognized by 85% of the public, and the logo is used around the world.

Canada is a net importer of home appliances, with the U.S. and Mexico being the predominant trading partners. Manufacturers design appliances for a single North American market. This larger market increases consumer choices, drives down costs and maximizes economies of scale. This is why CUSMA has an energy efficiency annex that promotes the harmonization of test procedures and energy performance standards.

Article 12.D.5 in annex 12-D also clearly states the support for voluntary programs such as the Energy Star to promote energy efficiency. This is in direct contrast to the government's proposal to make the Energy Star program mandatory. If the government moves forward with making Energy Star mandatory, not only will Canada be contravening CUSMA but, more importantly, Canadians will experience a significant reduction in products that are available on the market and prices are likely to go up, especially for entry-level models that are more likely to be purchased by low-income Canadians.

In fact, a staggering 41% of what is currently sold in Canada will no longer meet these requirements. More specifically, 71% of top-load washers and 50% of top-freezer refrigerators will be non-compliant and removed from the Canadian marketplace. Low-income Canadians will be disproportionally impacted. Consumer research says that 74% of consumers with incomes under $25,000 purchase top-freezer refrigerators. As noted previously, half of those would no longer be available to consumers if Energy Star were to be the new minimum standard.

Instead of making Energy Star mandatory, the government should create a regulatory framework that can more quickly update its standards. This can be done in two ways. One, the government can enact the proposed energy efficiency regulations that were announced in budget 2017. This would give the minister the power to modify standards and tests more quickly to maintain harmonization. Two, the government could also update the Energy Efficiency Act to streamline this process.

AHAM has been a strong advocate for advancements in energy efficiency standards, but making Energy Star mandatory would have negative consequences for middle-class Canadians.

Thank you.

5:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much, Ms. Hatch.

On what date did you say Energy Star will become mandatory ?

5:35 p.m.

Director, Government Relations, Association of Home Appliance Manufacturers Canada

Meagan Hatch

It's less than two years, in 2022.

5:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you.

Turning to ARC Financial Corporation, we have Mr. Van Wielingen.

5:35 p.m.

Mac Van Wielingen Founder and Partner, ARC Financial Corp.

Thank you very much.

I presume I am coming through here.

5:35 p.m.

Liberal

The Chair Liberal Wayne Easter

You are coming through, and you have 40 people watching you, so you are on the spot.

5:35 p.m.

Founder and Partner, ARC Financial Corp.

Mac Van Wielingen

Okay, that's fantastic. Thank you so much. I wish I were there in person. I was, in fact, in Ottawa just three or four days ago, meeting with a number of people within government.

I am the founder of ARC Financial, which is the largest private equity investment manager in the energy sector in Canada. I'm also the former chairman of the Alberta Investment Management Corporation, which today is managing about $110 billion.

My background is primarily in capital markets, investment management with a specific focus and understanding of the energy sector globally and in Canada.

Policy and politics in Canada relating to our energy sector, I would expect most of us would agree, have been discordant and dysfunctional. There is a search under way, and I'm very much part of that, for what I think of as a unifying vision. That's happening at the Business Council of Alberta. It's happening at the Business Council of Canada. It's also happening at the Public Policy Forum. I'm participating in all of that.

What I wanted to do is a bit different, I think, and it is very important. What I want to do is very quickly outline the emerging trends in these policy discussions, for your benefit. Then there's a point I want to make that's specifically relevant to the 2020 budget.

The first theme that is clearly emerging is a shift in the mindset, to speak bluntly, among energy sector leaders, where they are clearly embracing a customer-first mindset. Basically, the view is that our customers want low-carbon, high-ESG products, and we can deliver. We have been delivering, but we really need to step it up and come through.

We've been reducing emissions significantly over at least the last 10 years, and this is accelerating. Most of you will be aware that in new oil sands projects, for example, the emission levels per barrel are coming in now roughly equivalent to what you see in the U.S. market for crude oil being refined in that market. We have now about 50% of Canada's oil supplies being produced within corporations that have committed to net-zero targets. That is extraordinary, and I'm not sure that a lot of Canadians appreciate that fact.

We also have an electricity sector that is the cleanest in the world, with 80% of our electricity being from non-emitting sources. We are a global leader in methane and methane regulations and reductions. We're a global leader in carbon capture and storage, and the oil and gas sector, very importantly, is the largest investor in energy clean tech in Canada, and it's exceptionally well positioned.

All of what I just said is one point, and it's probably my most important point, but there are a few other perspectives I want to quickly touch on. One is the realization that we are not solving for one variable. We can't simply solve for lower greenhouse gas emissions as a single variable. All these policy groups understand that, and they're reaching that conclusion.

There are environmental goals, but there are also economic aspirations, and that links to the funding of our social aspirations in this country. Very importantly, the other factor that is coming up repeatedly is what I'm calling governance excellence, and that is making decisions in a way where we're really able to preserve a high level of trust in our Canadian decision-making processes and maintain our social fabric, our sense of national union.

One perspective I want to mention, one choice of words, one set of words that is being used quite frequently is that, in a long-term transition to decarbonize, the last barrel to be phased out should be the best barrel, and the best barrel should be Canada's barrel. I specifically want to make you aware of that. A lot of different groups are rallying around that view.

There's another view about being global first and Canada first. We have to be very careful with strict compliance to international agreements that may well be incomplete and inadequate in areas that are of critical importance to Canada's interests and notably trade.

The last point is around clean energy and clean energy technology. Canadian industry aspires to be a global leader in clean energy technology. The industry and many industry leaders were extremely discouraged when the federal government rejected their proposal to create a supercluster around clean energy technology, and many people are still mystified by it. There already is a de facto supercluster in substance, and the discussion that's now occurring is around recommending, in a sense, what's been described as a megacluster, putting all this together and aligning it with Canada's national policy and emissions goals.

Thank you very much.

5:40 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much. From many of the presentations we've had between environment and energy, we do need to bridge the divide, for sure.

Turning to the Association des groupes de ressources techniques du Québec, we have Mr. Cimon and Ms. Macé.

5:40 p.m.

Éric Cimon Director General, Association des groupes de ressources techniques du Québec

Good afternoon, everyone.

Thank you for welcoming us to the work of the committee and allowing us to highlight the importance of housing in the budget planning exercise.

I will make my presentation in French but will happily answer questions in English or French.

Let me start by introducing ourselves. My name is Éric Cimon. I am the Director General of the association. I am joined by Aurélie Macé, who is in charge of training.

The Association des groupes de ressources techniques du Québec, or AGRTQ, brings together 25 technical resources groups that serve all of Quebec. Technical resources groups are businesses in the social economy that have grown up as more than 83,000 cooperative or not-for-profit housing units have been established. This represents more than half of Quebec's entire supply of social housing. They are also involved in many community real estate projects, including multi-use community centres and early childhood centres, CPEs, or daycares.

The AGRTQ is also the trustee for two funds, a Quebec acquisition fund, valued at $20 million, providing bridge loans for the purchase of land and property, and a social housing fund, with $20 million in patient capital, which is used to buy and renovate properties in order to transform them into community housing. Those funds are capitalized by the Fonds immobilier de solidarité FTQ and the Lucie and André Chagnon Foundation, among others.

Technical resources groups have been the key to the development of housing projects for more than 40 years. We are at the table through all the stages of bringing a housing project to fruition, from identifying the needs as the projects move forward, through the completion and financial strategies, overseeing the site and forming groups, to the financial and property management.

Technical resources groups are the key to projects because they bring together all those involved locally: municipalities, elected representatives, working groups, health networks, housing committees, organizations and institutions. Technical resources groups act as catalysts in completing housing projects to meet the varied needs of the most vulnerable.

We are proud that we have helped to provide a unique development model that has inspired other areas of the social economy and that has been exported to other parts of the world.

We would first like to stress how significant it is that the federal government is funding housing once more. It was absent for 20 years, but establishing the National Housing Strategy was warmly welcomed. This is first because of the very principle that the government is contributing leadership, and investing in order to solve a major problem, but it is also because it is developing a strategy with long-term thinking and planning.

It takes time to develop housing and to involve communities, especially the more vulnerable ones. The National Housing Strategy is most welcome because it has set objectives and mobilized people to attain them. To that end, it is providing funding over a very long time.

Housing is becoming an important, not to say urgent, issue all over the country. For some years, cities and municipalities have been systematically adding housing to their priorities. Let us not forget that shelter is at the base of Maslow's pyramid, just like food and clothing. When families are in good housing at an affordable price, their food and clothing gets better. While we see the increase in food banks, we unfortunately do not make the direct connection with community housing as a permanent solution to the problem.

Budgets for housing are not only a cost item, they are also a long-term investment. They also result in savings in the areas of health, education and public safety, to name but three. Let us not forget that a lack of affordable housing puts a brake on economic development and that community housing is an amazing solution to the labour problem, especially in the regions.

The National Housing Strategy calls for major investments in housing, reaching $55 billion over 10 years. While this is a lot of money, and a clear indication of the importance of housing, it is my sad task to tell you that it is not enough, for two main reasons.

The first is because of the need. According to the last census, in 2016, Canada had 1.2 million households with pressing housing needs, including 309,000 in Quebec alone. So 1.2 million Canadian families are living in housing that is too expensive, too small, too unfit, or that simply does not meet their needs. In addition to that number, there are all those who uproot themselves from their villages to search for the answer to their housing needs in larger centres. This has become a real issue in land occupancy all over the country.

They are also human tragedies, especially for the seniors who are uprooted from their environment, which they have built with passion and enthusiasm, to be brought to the major centres. None of you, as a member of Parliament or as an individual, can accept that your fellow citizens cannot obtain health services. None of you can accept that your fellow citizens cannot have access to an education system.

So why would we accept that in 2020 in Canada, over one million families will be without adequate housing? This is a very important basic need. The national housing strategy calls for the creation of 125,000 new housing units over 10 years. You will understand that, without massive additional investments, it will take several decades to successfully meet current needs. And the needs are growing.

There is a second reason why the strategy is not enough, and it is that our programs, whose conditions are legitimate, are unfortunately not supported by the money needed to meet them. Let me explain. The government is showing leadership and consistency in its housing programs by asking for legitimate and laudable conditions to be met, namely universal accessibility, energy efficiency measures and greener construction. We fully support these measures. However, their application increases the cost of projects and, by the same token, jeopardizes their completion or increases the price of rents.

The government requirements—

5:50 p.m.

Liberal

The Chair Liberal Wayne Easter

Can you fairly quickly wrap up? We're going to rapidly run out of time. We're trying to hold people to close to five minutes. I don't want to interrupt, but if you can, please quickly get through to your recommendations.

5:50 p.m.

Director General, Association des groupes de ressources techniques du Québec

Éric Cimon

It is therefore important that the government's additional requirements, apart from the rules of the National Building Code, be accompanied by subsidies so that these conditions do not impede the development of the housing so eagerly awaited by the vulnerable population.

In Quebec, we have a special ecosystem that, for the past 40 years, has worked in a complementary way with federations of co-operatives and housing NPOs, municipal housing authorities, cities, the health sector and housing committees. The success of Accès logis Québec, which is the major program in this province, is due to the fact that the programs are established in collaboration with local partners.

I'll now move on to the important part of my presentation, which is what we are requesting. The Front d'action populaire en réaménagement urbain has done an important exercise to determine the needs and to put a number on them. For the maintenance of the current housing stock in the country, the demands amount to $1.7 billion. An additional $2 billion per year is needed to build new housing. We would also need a quick agreement between the federal and provincial governments to invest $70 million in Quebec. That would be a major boost for development. Finally, an investment is needed to maintain and renovate the existing rental and social housing stock.

It's here in this committee that you will determine, through the budget, how much tolerance we will need to maintain our families in inadequate housing. Housing is expensive, but not taking care of it is much more expensive, and the situation lingers much longer.

Thank you for listening.

5:50 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much.

Ms. Hanson, from Diabetes Canada, welcome again.

5:50 p.m.

Kimberley Hanson Executive Director, Federal Affairs, Diabetes Canada

Thank you, Mr. Easter.

Ninety-nine years ago, in a Toronto hospital, a ward full of children who were dying of type 1 diabetes lay in comas. A group of doctors, led by Frederick Banting, moved through the room, injecting the children one by one with a new extract they had discovered and called “insulin”. By the time they were injecting the last child, the first one was waking from his coma. These children were among the first of the countless millions whose lives have been saved by the momentous discovery of insulin in Canada in 1921, which gave Canada its first Nobel Prize in medicine.

In less than a year, the world will celebrate the 100th anniversary of that discovery, and all eyes will once again be on Canada, but when the world looks to Canada to see how we are faring at treating diabetes, they will be disappointed.

Canada is in the worst third of developed countries for prevalence and costs of treating the disease. The problem of diabetes is very bad and rapidly getting worse. People are highly concerned right now with the coronavirus, despite the fact that by all reports it is less deadly than SARS. For context, a total of 44 people died of SARS in Canada. That many die of diabetes every two days.

Diabetes is growing in prevalence at a rate of more than 40% per decade. Every three minutes, a Canadian receives a diagnosis of diabetes, joining the ranks of the 11 million Canadians who already live with diabetes or prediabetes.

Vulnerable Canadians are particularly at risk. Seniors, Canadians with lower incomes and people of Asian, Latin, African and indigenous ethnic backgrounds are more likely to develop diabetes and its complications, so much so that whereas a 20-year-old in Canada today now faces a 50% lifetime chance of developing diabetes, if that 20-year-old is first nations, that risk is 80% or greater.

This year, more than 5,000 Canadians will receive a lower-limb amputation due to diabetes. More than 7,500 will die of it. Our health care system will spend $30 billion this year on the direct costs of treating the disease. Diabetes is a runaway train.

The solution to this growing epidemic is diabetes 360°, an action plan developed by the whole diabetes community that will result in greater prevention, screening, treatment and management, leading to better health for all those affected by diabetes. It is an evidence-based strategy to achieve measurable patient health outcomes, which will be assured by a data dashboard that will help us all monitor the diabetes burden in Canada and assess our progress in reducing it.

We expect that we can reduce the number of Canadians diagnosed with diabetes by 110,000 per year once diabetes 360° is implemented. I should note that those benefits begin to accrue from year one. At a cost of only $150 million total over seven years, diabetes 360° would only need to prevent 12,000 cases of type 2 diabetes to pay for itself. Put another way, the payback period for this program is less than a month and a half.

Diabetes 360° would not only save the health care system $11 billion in the seven years that it would take to implement, but it would also save employers a further $9 billion. At an average corporate tax rate of 26.5%, that represents an additional $2.4 billion in corporate tax revenue for our government over those seven years.

The Standing Committee on Health studied diabetes 360° and the need for a diabetes strategy in Canada in depth during the last session of Parliament, and their recommendation was that diabetes 360° should be implemented.

The diabetes community is united behind diabetes 360°. It was developed by more than 120 stakeholders, including academia, NGOs and private industry. Canadians fully support this strategy. Tens of thousands of them have been emailing their MPs, signing petitions and speaking out on social media in support of diabetes 360°. An Ipsos Public Affairs poll conducted last fall showed that 87% of Canadians feel that the federal government needs to do more to help the provinces and territories address diabetes.

Provinces want diabetes 360°. Three have already publicly committed to implementing provincial versions of it—British Columbia, P.E.I. and Manitoba—and many others are actively exploring it. More than 100 health care providers from the provinces sent letters to Minister Hajdu and their provincial health ministers just yesterday, asking for the leadership of the federal government in implementing the diabetes 360° strategy.

In closing, faced with an epidemic of staggering human and financial costs, and with the 100th anniversary of one of Canada's greatest discoveries right around the corner, the time for action is now. Fund diabetes 360° in budget 2020.

Thank you.

5:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much, Ms. Hanson.

The last witness on this panel, with the Hotel Association of Canada, is Ms. Grynol, president.

Welcome.

5:55 p.m.

Susie Grynol President, Hotel Association of Canada

Thank you for having me.

My name is Susie Grynol and I am the president of the Hotel Association of Canada.

Thank you for inviting me to appear before you today.

The Hotel Association of Canada is proud to represent more than 8,200 hotels, motels and resorts, which encompass the $21.9-billion Canadian hotel industry in Canada. Our country's hotel sector directly and indirectly employs over 300,000 people in almost every riding in Canada. Hotels are a significant contributor to the Canadian economy, generating tax revenues estimated at $9.5 billion for all three levels of government.

I am here today to discuss the impact of short-term rental companies like Airbnb on the hotel industry and communities. Our message today is about fairness. Our ask is that you amend your tax laws to level the playing field for all accommodation players.

Nightly rentals on platforms like Airbnb have exploded across cities and communities in Canada. At issue is the fact that there are big developers and landlords hiding behind these rental platforms, running a comparably sized business to a hotel, but they don't have to comply with any of the same business responsibilities: taxation, health and safety standards, accessibility and zoning, to name a few. The impact of this rapid growth has delivered unexpected and quite serious consequences in communities, such as housing availability and crime rates, and we are now seeing cities like Toronto, Ottawa and Vancouver enact regulations to rein in the commercial use of rental platforms and put strict enforcement in place.

Recognizing that cities across Canada are grappling with this, we have developed a best practice guideline for municipalities and would be happy to share it with any of the members if the issue is of interest in your riding.

I want to make one thing clear. Competition is a good thing and the hotel industry welcomes it, but there needs to be a level playing field. To achieve this, all levels of government need to take action, but the tax fairness component requires leadership by the federal government.

Our sector was very pleased that during the recent federal election there was a consensus among all major political parties to take action to equitably tax digital companies like Airbnb in Canada. We have extensively researched this matter and can assure you that our three key recommendations, if adopted, will be effective, simple to administer and difficult to avoid.

Number one is a quick and easy win. Close the information gap. Our laws today already include a requirement for Airbnb hosts to pay income tax on their revenue, but Airbnb refuses to issues T4A slips that would promote voluntary compliance and also provide CRA with an audit tool.

Number two, we recommend that GST be charged at the platform level from dollar one, with much of the tax remitted to the government and the balance of it going back to the hosts in order to offset their GST-related business costs. This approach recognizes that hosts are running a business and should be getting a GST offset for their business expenses. Because it would be calculated as a fixed percentage of total revenue, there is no need to track the GST they pay, or to keep receipts. It is called “quick method” and it has been used by thousands of small businesses across many industries since the GST was introduced in 1991.

Charging tax from dollar one is another feature that is being used in the Canadian taxicab industry and it now applies to the ride-sharing industry. Here HST is charged through platform companies like Uber. We believe it should be applied through online platforms like Airbnb in the accommodations space as well.

Number three is that we recommend the government follow the example of France and Great Britain and impose a tax on the Canadian revenue of major international operators at the rate of 3% in lieu of corporate income tax. This solves the problem of trying to track down digital companies with no physical presence in Canada, and the issue of shifting profits to low or no-tax jurisdictions. It is simple to administer and hard to avoid.

This was the essence of the consensus of all major political parties in the last federal election. The implementation date could be pushed to allow the OECD the current calendar year to conclude a broader framework, but failing that, Canada should proceed with its own revenue tax.

These three recommendations are about fairness. Canadian hotel operators pay corporate income tax and must charge and remit HST at the point of sale, but digital players today get a tax holiday.

A 2017 research study revealed that Canada's Airbnb sector alone has the potential to contribute almost $100 million in consumer taxes and fees. That number is much likely higher today.

We are asking the federal parties to move on their election commitments in this next budget. Implemented together, we are confident that our three simple solutions can ensure fairness for all Canadians.

Thank you for your time.

6 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much, Susie.

We'll now go to five-minute questions. We can probably only get six in.

Mr. Martel.

6 p.m.

Conservative

Richard Martel Conservative Chicoutimi—Le Fjord, QC

Thank you.

My questions are all for Mr. Simard.

Is it true that $6 billion worth of projects are at risk because of the new NAFTA?

6 p.m.

President and Chief Executive Officer, Aluminium Association of Canada

Jean Simard

First of all, I'm wondering about the amount. I don't think that as many projects have been studied or planned. In any case, there are three fundamental factors that make it impossible today to consider major investment projects, because that is what we're talking about here, be it expansion phases or something else.

The first factor is the market price. At the beginning of my presentation, a table was handed out showing that we are working on the basis of a price that is 30 years old, while our costs are at 2020 rates, which drastically reduces our profit margins. So, when we have to make a decision on an investment worth billions of dollars, this fundamental element is not in our favour.

The second factor is the instability of the U.S. market, where we export 90% of what we produce. This instability is due to the tariffs imposed on other producing countries. Tomorrow morning, Mr. Trump could get up and announce that he is ending the tariffs imposed on India and the Middle East, which would affect the whole price dynamic. That is unpredictability.

The third factor is what we call capital expenditures, that is, the construction costs of major industrial projects in Quebec and Canada. Building an aluminum smelter tomorrow or carrying out an expansion project would cost $8,000 per tonne. So, a 500,000-tonne aluminum smelter project would require a $4 billion investment. It would take 36 months to put it in place. In China, it costs $1,800 a tonne, and it is done in 14 months. So, before such a $4 billion project was completed, China would have had time to complete three in half the time.

Because of these three fundamental factors, we are unable, today, to design investment projects.

6:05 p.m.

Conservative

Richard Martel Conservative Chicoutimi—Le Fjord, QC

In your introduction, you said that we need to make a shift to production 4.0, which includes robotization, megadata, and automation, and that these are not expansion phases or large capital investment projects.

Does that mean that you are questioning investment projects like phase 2 of AP60 in Arvida?

6:05 p.m.

President and Chief Executive Officer, Aluminium Association of Canada

Jean Simard

These projects have certainly been put on hold and are not on the table right now for the reasons I have just outlined. We must continue the modernization process while maintaining current capacity. These are two different types of investment. One seeks to maintain operational efficiency, and therefore to integrate technologies that are more extensive and advanced in order to improve competitiveness, while the other is to proceed with expansion phases as such, which is a whole other ball game.

For the three fundamental reasons that I've expressed, the tariffs that are being imposed on other parts of the world and that are being maintained, the capital expenditures, and the market price, which is very low—we're certainly going to see more closures in 2020, with costs approaching $1,600 a tonne—we're forced to put these projects on hold.

6:05 p.m.

Conservative

Richard Martel Conservative Chicoutimi—Le Fjord, QC

I want to make sure I can ask my question. How much time do I have left? Three minutes, perhaps?

6:05 p.m.

Conservative

The Acting Chair Conservative Pierre Poilievre

You have 30 seconds.

6:05 p.m.

Conservative

Richard Martel Conservative Chicoutimi—Le Fjord, QC

Seriously?

6:05 p.m.

Conservative

The Acting Chair Conservative Pierre Poilievre

Yes, and now you only have 20!

6:05 p.m.

Conservative

Richard Martel Conservative Chicoutimi—Le Fjord, QC

Okay.

Mr. Simard, do you think that the three partners—Mexico, the United States and Canada—are capable of agreeing on a low-carbon purchasing policy? Do you think it is possible that those three countries could come to an agreement in that respect?