Evidence of meeting #5 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was economy.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Peter Weissman  Chartered Accountant, Trust and Estate Practitioner, As an Individual
Daniel Wilson  Special Advisor, Research and Policy Coordination, Assembly of First Nations
Timothy Ross  Executive Director, Co-operative Housing Federation of Canada
Courtney Lockhart  Program Manager, Policy and Government Relations, Co-operative Housing Federation of Canada
Kim Moody  Chief Executive Officer and Director, Canadian Tax Advisory, Moodys Gartner Tax Law LLP
Brian Sauvé  President, National Police Federation
Peter Merrifield  Vice-President, National Police Federation
Brian Kingston  Vice-President, Policy, International and Fiscal, Business Council of Canada
Francis Bradley  President and Chief Executive Officer, Canadian Electricity Association
Pierre Céré  Spokesperson, Conseil national des chômeurs et chômeuses
Bilal Khan  Managing Partner and Head of Deloitte Data, Deloitte
Paul Taylor  President and Chief Executive Officer, Head Office, Mortgage Professionals Canada
Elaine Taylor  Chair of the Board of Directors, Head Office, Mortgage Professionals Canada
Nora Spinks  President and Chief Executive Officer, Vanier Institute of the Family
Kevin Lee  Chief Executive Officer, Canadian Home Builders' Association
Catherine Abreu  Executive Director, Climate Action Network Canada
Pierre Patry  Treasurer, Confédération des syndicats nationaux
Rebecca Alty  Vice-President, Northwest Territories Association of Communities
Sara Brown  Chief Executive Officer, Northwest Territories Association of Communities
Lisa McDonald  Executive Director, Prospectors and Developers Association of Canada
Charlotte Bell  President and Chief Executive Officer, Tourism Industry Association of Canada
François Bélanger  Union Advisor, Labour Relations Services, Confédération des syndicats nationaux
Paul Rochon  Deputy Minister, Department of Finance

6:40 p.m.

Liberal

The Chair Liberal Wayne Easter

I call the meeting to order. We are continuing our pre-budget consultations on the 2020 budget.

I want to thank all the witnesses for coming on fairly short notice. I also thank those who wrote submissions prior to the August deadline. Those submissions have been brought forward, and will be considered as part of the pre-budget consultations. They are not left to gather dust.

We are tight for time. If you can hold your remarks to roughly five minutes, that would be helpful. With that we'll have more time for questions. We have a dead stop just slightly before eight o'clock.

We will begin with Kevin Lee from the Canadian Home Builders' Association.

Welcome, Kevin.

6:40 p.m.

Kevin Lee Chief Executive Officer, Canadian Home Builders' Association

Thank you, Mr. Chair.

As you know, CHBA is the voice of Canada's residential construction industry—new construction, renovation and land development. With over 9,000 member firms across the country, we represent an industry that is the source of 1.2 million jobs and 160 billion dollars' worth of economic activity.

The recent election campaign confirmed how concerned Canadians are about housing affordability. It showed the dream of home ownership is still very much alive in Canada, and the next generation of new Canadians is very concerned about home ownership slipping away. It doesn't have to be this way. We can protect the financial system, and, in fact, strengthen it through policy adjustments around housing.

We know there have been successive demand-side measures to address financial system vulnerabilities, but we also know these have had an impact. The problem is that the impact in some cases has been quite severe, and it's definitely time to recalibrate the system accordingly.

CHBA estimates that 147,000 potential buyers have been knocked out of the market by the stress test. About half of those are first-time buyers. Arrears rates have gone up in some struggling areas. Overall, they continue to be below one-quarter of 1% nationally, and young Canadians have the lowest arrears rate of any cohort. The mortgage system right now is penalizing the wrong group.

We, therefore, continue to recommend adjustments to the stress test to reduce it the longer the term of the mortgage. Leave it at 2% for one-year terms, but decrease it over the longer term down to 0.75% for five-year terms. To encourage even longer-term mortgages, as promoted by the Bank of Canada, there is no need to stress-test seven-year and 10-year terms. This will maintain financial system stability, promote longer mortgage terms and help more well-qualified Canadians achieve home ownership.

We are pleased to see the federal government is committed to review the stress test with a view to making it more dynamic. We encourage the minister to expand consultations beyond just the financial institutions to ensure industry voices are part of the review.

In addition, regarding first-time buyers, we still recommend a return to 30-year amortizations for insured mortgages. The millennial generation, who are now well into their careers, are ready to get a foothold into housing, and can do so responsibly. Given that most will move up the market, the idea that they shouldn't have a 30-year mortgage is a fallacy, since most will take on another 25-year mortgage in a move-up home in a few years anyway, if all goes well. The average time to pay off a 25-year mortgage is also only about 17 years in Canada. Again, we are penalizing the wrong group when we prevent entry into home ownership. All that said, demand-side measures have been a problem, but fixing them alone is not a solution by itself. Prices are affected by both demand and supply factors.

The federal government can set up its leadership to work with the provinces and municipalities to increase market rate housing supply where we see so much in the way of shortages and resultant price increases that are rightly so concerning to Canadians.

We need more homes that meet Canadians' needs in the places they work and want to live, and this includes units for both ownership and rental. A rental can be best spurred on by tax reform, but I'll leave that discussion for another time. Governments at all levels need to target getting more housing supply online using the various levers at their disposal.

The year 2019 saw a decline in housing starts of over 4,000 units nationally, compared to 2018, at a time when we all acknowledge we need more, not less housing supply. We're also seeing severe declines in the value of building permits in western Canada, contributing to weakening local economies and job losses in residential construction at a time when those jobs and economic activity are so desperately needed. It's time to enact policy to help turn that around.

Like housing affordability, climate change emerged as an important issue for Canadians during the election. Undoubtedly, there is an important role that housing can play, but smart policies are required to ensure that addressing climate change doesn't further erode housing affordability.

CHBA and our membership have always been leaders in energy efficiency, and we continue to do so with our net-zero home-labelling program. Our leading-edge builders are pioneering this space to find best approaches to meet these goals by building net-zero houses for Canadians who want to invest in their homes that way, but the affordability gap that still exists must be closed before code changes and regulations are made. Further R and D and innovation are needed for higher levels of energy performance to be affordable for all.

We are calling on government not to go to extreme levels of energy performance and code until they are affordable for consumers. We're also calling for affordability to be enshrined as a core objective in the National Building Code for energy efficiency and for all other code changes.

Very importantly, CHBA welcomed the recognition in the election campaign of the impact that home energy retrofits can have in helping to meet Canada's climate change goals. We have long called for home energy labelling at the time of resale and an energy retrofit tax credit, both using the Government of Canada's EnerGuide labelling system. We encourage more support for the EnerGuide rating system for houses, expanding and promoting this system as the backbone of all currently proposed housing incentives, tax credits and other energy efficiency initiatives by governments, utilities and all other organizations to build on the same system to maximize results. For instance, the new interest-free retrofit loan program should certainly require the use of the EnerGuide rating system.

Elections sent a clear message. Canadians want a government that works together and works for them. Budget 2020 is an opportunity to do just that. All parties rightly identified housing affordability, home ownership and climate change as key concerns in their platforms. CHBA looks forward to working with you to bring those solutions to these key issues for Canadians.

Thank you.

6:45 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, Kevin.

Next, we have the Climate Action Network Canada with Ms. Abreu, executive director.

6:45 p.m.

Catherine Abreu Executive Director, Climate Action Network Canada

Good evening, Chair. I thank you and fellow members of the committee so much for having me.

I'd like to begin by acknowledging that we are meeting here on unceded, unsurrendered Algonquin Anishinabe territory.

Climate Action Network Canada is the largest network of organizations working on climate and energy issues in the country. For 30 years we have been the only national organization with a mandate to promote the interests of the climate movement as a whole. Rather than any one individual organization, we have 120 member organizations across the country, working from coast to coast to coast. While climate action networks exist all over the world, Canada's is uniquely diverse in that we bring together in our membership environmental NGOs; trade unions; first nations; social justice, environmental, development and humanitarian organizations; youth groups; and health groups and faith groups. It makes for a very rich dialogue in the membership.

Our members collectively represent millions of Canadian member supporters and volunteers. In fact, you've already heard from several Climate Action Network Canada members over the course of these proceedings, including the Assembly of First Nations, Clean Energy Canada, the Canadian Parks and Wilderness Society and the other 21 members of the Green Budget Coalition. I will be drawing your attention back to some of their recommendations throughout my remarks.

Climate and biodiversity emergencies touch on all aspects of life in society, exacerbating existing inequalities, social injustices and economic hardships, so budget 2020 and all future budgets must take a really multi-faceted approach to addressing environmental challenges and take advantage of the opportunities associated with environmental action.

The three areas of intervention on which I want to focus my comments today are Canadians' everyday lives, Canada's institutional and fiscal frameworks for climate action, and Canada's role in the world.

The story of climate change is fundamentally a human story. We often hear people speak about saving the planet or protecting a particular species that is in peril, and these are of course very noble and necessary motivations, but my motivation comes from acknowledging the fact that climate change poses a real threat to the people in the communities that I care about.

At this point in human history, taking action on climate change is essential to caring about the people that I love. For Canadians to get on board with climate action, they have to see that action touching and improving their lives and the lives of the people they care about. That's why, when considering budget 2020, it's essential to reflect on the recommendations made by the Federation of Canadian Municipalities, the mayor of London, from whom you heard recently, and other municipal leaders who have come before you. Cities are really on the front line of climate change, and municipal governments are the order of government that most Canadians interact with most closely.

With 493 municipalities declaring a climate emergency in the last couple of years, it is clear that resources have to flow to these governments to develop and effectively implement climate change action plans.

The cities caucus of Climate Action Network Canada is a working group of about 20 of our municipally focused member organizations. It recommends that the federal government work to empower local governments to take climate action by providing directed financial resources to municipalities, tying this funding to eco-fiscal policy implementation, and requiring full life-cycle climate tests on expenditures. Second, it recommends incentivizing municipalities to achieve carbon neutrality before 2050 by covering the costs of conducting emissions inventories, developing best practices for real-time GHG measurement, and providing guidelines to identify low-carbon jobs and encourage growth in those sectors.

Recommendations from the Insurance Bureau of Canada on flood plain mapping are also really an essential piece of this puzzle, as are investments in public transportation, electric buses, electric vehicles, building retrofits and green infrastructure, as you heard from Clean Energy Canada and the Green Budget Coalition.

Having just left 400 people gathered at Canada's first nature-based climate solutions summit at the National Arts Centre, it's very clear to me how essential it is to invest in work that lives at that intersection of climate and ecosystem protection.

Twenty per cent of Canadian renewable energy projects are owned, at least in part, by indigenous communities. Indigenous leadership has always been at the forefront of Canada's environmental action, and the climate crisis is really no exception.

As Chief Ghislain Picard highlighted yesterday, indigenous community housing is in critical need of investment in Canada, and that investment can help communities be more resilient and prosperous.

When it comes to Canada's institutional and financial frameworks for climate action, let me state the obvious. If we're going to seriously invest in the solutions, we need to stop investing in the problem. It is essential that Canada follow through with its G7 commitment to phase out fossil fuel subsidies by 2025, and beyond dealing with domestic subsidies, Canada needs to deal with the fact that we continue to fund fossil fuel development via Export Development Canada. While EDC has committed to reducing the carbon intensity of its portfolio, Canada, alongside just three other countries—Japan, Korea and China—has substantially funded fossil fuel development abroad using its export credit agencies.

Just to give an example, Canada, from 2012 to 2017, facilitated 12 times more investment for oil and gas projects than what they classify as clean-tech projects. That's a $62-billion investment in oil and gas projects versus a $5-billion investment in clean-tech projects.

Many witnesses have mentioned the good work of the panel on sustainable finance. We, too, support its work and encourage the committee to consider the potential to support the work of the Institute for Sustainable Finance, which brings together more than 20 academic and private sector institutions with the goal of aligning mainstream financial markets with Canada's transition to a prosperous, sustainable economy.

Finally on this point, budget 2020 must necessarily provide resources for regulatory and legislative processes related to Canada's legislation for net zero by 2050 and the development of a just transition act, both of which were promised in the current governing party's election platform.

The year 2020 is also a big year for the Paris Agreement. It is the moment when Paris Agreement parties are welcomed back to the table to review their Paris pledge and improve upon that pledge, and so the revision and enhancement of our climate commitments is essential in 2020. We have missed every single climate target we have set in this country since the early nineties, and so let's make sure we never miss another one.

6:50 p.m.

Liberal

The Chair Liberal Wayne Easter

You need to wrap up fairly quickly. We're substantially over.

6:50 p.m.

Executive Director, Climate Action Network Canada

Catherine Abreu

Okay.

Finally, when it comes to Canada's role in the world, 2020 is a big year for Canada reviewing its international climate finance commitments. We see this as a big part of Canada's fair share of the global effort to hold warming to 1.5° C. We calculate Canada's fair share of that global investment as about $4 billion U.S. annually, and we currently sit at just under $800 million. Thinking through what Canada can invest internationally for those international climate finance commitments is an essential part of the picture for budget 2020.

Thank you.

6:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much.

Turning to the confederation of national unions, we have Mr. Bélanger, union adviser, and Mr. Patry. Welcome to you both.

6:55 p.m.

Pierre Patry Treasurer, Confédération des syndicats nationaux

Thank you very much, Mr. Chair.

Good evening, ladies and gentlemen.

I represent the Confédération des syndicats nationaux, a labour organization with about 300,000 members, mainly in Quebec but also in the rest of Canada.

Given the time allotted to us, I will present the recommendations in our brief, and I will briefly comment on them because we cover a great deal of subject matter.

The first recommendation, which is directly related to the previous presentation—I agree with just about everything that was said—is that the government must stop promoting fossil fuel production to honour its commitments under the Paris Agreement, in particular by gradually phasing out fossil fuel subsidies by 2025.

The most recent report by the Intergovernmental Panel on Climate Change, or IPCC, notes that, if we want to hold warming to 1.5°C as set out in the Paris Agreement, we need to reduce our greenhouse gas emissions by 45% by 2030. I would remind members that Canada's targets are less ambitious, at 30% from 2005 levels by 2030, and that, in addition, GHG emissions continue to rise in Canada. We are not moving towards the target at all, we are moving away from it. We need to get back on track in a number of ways, including reducing fossil fuel production.

Our second recommendation proposes that the government must take a tougher stance against tax cheaters and accounting firms that develop aggressive tax avoidance strategies.

We all remember the KPMG affair a few years ago, which exposed the accounting firm's use of tax strategies to benefit wealthy Canadians. In the end, there were even secret deals made between the Canada Revenue Agency and the cheaters. Far from being punished, the cheaters were even encouraged because secret deals were cut with them. Clearly, this creates a very real perception of unfairness among Canadians and we must put an end to this type of strategy.

Our third recommendation proposes that, while the OECD is deciding on how to regulate the global tax system, the government must create a temporary tax system to ensure that the digital giants are paying their fair share of taxes. In that regard, we find that the digital giants are unfairly competing with Canadian businesses. The digital giants are getting our content but are not paying their fair share of taxes. In fact, they are not paying any tax at all. While the OECD works on these issues, some countries have taken action to create a temporary tax system. That is the case for Great Britain and Australia and, to a certain extent, for Quebec. We believe that Canada should act in this area.

I believe that the Yale Report, which I have not had the time to fully read, covers these issues. We therefore hope that the Minister of Canadian Heritage will look into the report very soon.

The fourth recommendation specifies that the government should no longer make it possible for companies to repatriate dividends from tax havens without paying taxes. I remind members that the Harper Government amended the tax treaty with Barbados to enable practices of that kind.

In fact, Gabriel Ste-Marie of the Bloc Québécois tabled a motion in the House about this. I believe that the motion was supported by the NDP, but it was sadly struck down because the two other parties in the House opposed it. Here again, there is a very real perception of tax unfairness. We believe that the House should take up this debate again to ban such practices.

In our fifth recommendation, we urge the government to take every opportunity provided by trade agreements to ensure that Canadian content is featured in government procurement.

A number of trade agreements have been signed in the past few years: the Comprehensive and Economic Trade Agreement, or CETA, with the European Union; the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP; and more recently, although it is still being debated, the Canada-United States-Mexico Agreement. If we enter into such agreements, we must be able to retain our ability to encourage Canadian content in government procurement—the government must ensure we do. Many jobs are at stake, and they are great jobs.

Our sixth recommendation aims to ensure the survival of the Davie Shipyard, particularly by incorporating it into the National Shipbuilding Strategy. Obviously, we produced our brief in August. Announcements were then made on the subject in December.

Furthermore, we welcomed those announcements. So it seems quite clear that the Davie shipyard will be incorporated into the National Shipbuilding Strategy. But now it needs contracts. Including it is fine, but let's see the contracts. During a labour shortage, the longer the contracts take to arrive, the more people will have found work elsewhere and the harder it will be to recruit workers when they are needed.

Our seventh recommendation is that the government should enhance the employment insurance program by adopting a hybrid standard that would make people eligible after 420 hours or 12 insurable weeks of work. The minimum number of weeks of benefits payable should be raised to 35 and the replacement rate to 60% of the maximum insurable earnings.

I want to insist on one point that was supposed to be addressed and, in our opinion, is still not. This is the famous black hole faced by seasonal workers who, because they do not have enough hours of work, can still access the employment insurance program, but not for long enough. So they go through a period when they are still unemployed but not receiving employment insurance. Using a minimum of 35 weeks as a measure should almost solve the problem. This is an important issue in the east of Quebec but also in eastern Canada. In Canada generally, some regions are affected by this issue more specifically.

Our eighth recommendation is that the federal government should introduce a public and comprehensive pharmacare program. Work has been done on this in recent years. Canada is one of the few, if not the only, OECD country that does not have public coverage for prescription drugs.

In Quebec, we have what we call a hybrid system that has been in effect since 1997. It is a step in the right direction, of course, but it has its share of problems. We are therefore proposing a public, comprehensive program, which, by the way, would result in decreased costs for medications and better protect all Canadians. We want it to be done in compliance with provincial jurisdiction and there should be the right to opt out with full compensation if, of course, an equivalent or superior program is put in place.

Our final recommendation is that the federal government must, as soon as possible, adopt the expert panel's recommendation and provide greater assistance to print news media. You do not need a long presentation for me to convince you of the precarious situation in which the media find themselves. The media are important in a democratic society, especially in terms of a diversity of voices. We feel that the situation is urgent. There have been some commitments from governments in this regard, but they have to become specific, because a lot of media are still in danger in Quebec and in Canada as a whole.

Thank you, Mr. Chair.

7 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much.

Turning to the Northwest Territories Association of Communities, we have Ms. Alty, vice-president, and Ms. Brown, CEO, welcome.

7 p.m.

Rebecca Alty Vice-President, Northwest Territories Association of Communities

Thank you, Mr. Chair. As mentioned, my name is Rebecca Alty. I'm the vice-president of the NWT Association of Communities, and I'm joined today by Sara Brown who is the CEO for the NWT Association of Communities. We're here on behalf of the 33 communities in the Northwest Territories.

Unfortunately, we did not have the opportunity to translate our documents, because we received the invitation to appear only on Monday. However, if you ask questions in French, we will be able to answer them.

Thank you so much for the opportunity to come and speak today and for the opportunity back in August to provide a written submission. Today we'll provide a bit more information on our written submission and take this opportunity to answer any questions you might have.

First, on infrastructure funding, I want to highlight how much we appreciate gas tax funding, particularly last year with the doubling of the gas tax. We're the front-line government. We're there providing clean drinking water, proper treatment of sewage and proper disposal of garbage, as well as providing community recreation, ensuring that Canadians can remain healthy all year long. With the gas tax, we are able to ensure that we are meeting our community priorities and keeping residents healthy, and really making sure that those assets stay up to date.

Housing is in a dire state in the Northwest Territories. In Yellowknife, in our 2018 point-in-time counts, 338 people were experiencing homelessness. We're talking about the north. It's -42° today in Yellowknife and we have 338 people who are homeless.

In 2019, the NWT Bureau of Statistics calculated that 43% of housing in the Northwest Territories has at least one housing problem. A housing problem is affordability, adequacy or suitability, and the proportion of dwellings with at least one housing problem ranged from 30% in Sachs Harbour, which is up in the Arctic Ocean, to 90% of houses in Colville Lake. Therefore, a long-term federal funding commitment on housing is much needed in the Northwest Territories.

In regard to truth and reconciliation, it will be five years this June since the commission released its report. I would like to draw attention to TRC's call to action number 21, which calls upon the federal government:

to provide sustainable funding for existing and new Aboriginal healing centres to address the physical, mental, emotional, and spiritual harms caused by residential schools, and to ensure that the funding of healing centres in Nunavut and the Northwest Territories is a priority.

In the upcoming federal budget, we do hope this recommendation is actioned.

With regard to land claims, our request is for an increase to the staffing levels in land claims negotiations to speed up and finalize agreements. Right now, about 1.5 days per year are allocated to each land claim table. In the Northwest Territories, Colville Lake has a work plan to get to its self-government agreement in five years, but based on the federal government's allocation of 1.5 days of work per land claim table, that would draw it out to 20 years. From a reconciliation perspective and from an economic certainty perspective, this needs to be addressed. There are a lot of land tenure issues and it's important that they be resolved in the Northwest Territories, as elsewhere in Canada.

With regard to the Arctic policy framework that was approved in the summer of 2019, we hope to see funding for it in the upcoming budget. We all know that without money there will be no progress made. There are many initiatives in the Arctic policy framework that are great; we need work to progress.

With regard to telecommunications, we've identified three areas: broadband service, redundancy and cell service. We've highlighted some recommendations on those.

Right now in the Northwest Territories, all communities have cell service, but for the Internet, it's quite difficult for residents to participate in the digital economy or even stay in contact with one another. Fax machines are still required when the Internet goes down; that's all that you can rely on.

When it comes to cell service, most of our highways have no cell service. If you are about 10 minutes outside the capital of the Northwest Territories, you lose cell service. It isn't so bad if you're in an accident there, because you can probably make it back to town. However, if you're two hours outside Yellowknife, you have no way to reach anybody. Again, at temperatures in the -40°s, if you're in an accident with your family, you have to wait until the next vehicle comes, which means you could be waiting quite a while.

Therefore, we do think cell service, broadband and redundancy of Internet are important issues to be resolved, not only to allow residents to participate in the digital economy but to also ensure their safety and health.

I will turn to Sara, who will discuss our climate change recommendations.

7:05 p.m.

Sara Brown Chief Executive Officer, Northwest Territories Association of Communities

Thank you very much. I'll be brief.

First of all, I want to make it clear that everybody in the territories is on the front line of climate change. We're seeing lots of evidence of it. It's affecting lots of ways of life and it's going to start affecting infrastructure. The reality is quite different from what you experience here and we are going to need lots of resources in the way of both supports and dollars in order to address it.

We've just looked at one risk: permafrost. The decay, just on public infrastructure, will be in the order of $1.3 billion, which is huge for a little jurisdiction of 42,000 people. Neither the communities nor the territorial government has the ability to absorb those sorts of additional costs.

We're in the process of studying it and we've given you some additional materials that speak to that, but I want to stress the importance of this issue for all our members and all the residents of the NWT.

7:10 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you. We finished faster than I thought we would.

We now turn to the Prospectors and Developers Association of Canada, with Mr. Killeen, director, and Ms. McDonald, executive director.

Lisa, go ahead.

7:10 p.m.

Lisa McDonald Executive Director, Prospectors and Developers Association of Canada

Thank you, Mr. Chair.

I'm Lisa McDonald. I'm executive director of the Prospectors and Developers Association of Canada. I'm joined here today by my colleague Jeff Killeen, director of policy and programs. We appreciate the important matters before the committee. I thank you for the opportunity to offer comments on behalf of the mineral industry.

PDAC is the leading voice of Canada's mineral exploration and development sector, representing over 7,500 members. Our work centres on supporting a responsible and competitive mineral industry. The mineral industry generates significant economic and social benefits across Canada in remote and indigenous communities and in metropolitan centres, employing over 600,000 workers and contributing nearly $100 billion annually to our GDP. It is the largest private sector employer of indigenous people on a proportional basis in Canada and a key partner of indigenous businesses.

Mineral exploration is a multi-staged process that aims to discover economically viable mineral deposits. It is highly technical and the odds of success are very low, with only about one in 10,000 mineral claims reaching the advanced exploration stage and just one in 1,000 advanced projects becoming operating mines.

Junior exploration companies do the bulk of this high-risk, high-reward exploration work and account for upwards of 70% of all mineral discoveries made in Canada. These companies typically generate no revenue and are highly reliant on capital markets to access the necessary investment capital to advance prospective projects. We have seen the competitiveness of Canada's mineral industry waning as overall investment in this sector and early-stage exploration activity reached decade lows in 2019.

The Government of Canada has recognized the importance of the mineral industry based on the significant effort and public outreach undertaken in developing the Canadian minerals and metals plan. The five-year renewal of the mineral exploration tax credit by government in 2019 is further recognition of the importance of exploration companies in the mineral supply chain. PDAC members very much appreciate this support.

We are also very encouraged by the level of government foresight and the tremendous opportunity created by the Canada-U.S. joint action plan on critical minerals. In this context we must work to ensure that junior mineral exploration companies remain competitive on the global stage. Without new discoveries there will be no new mines, and Canada's capacity to produce the minerals that are critical to our economy and the transition to a low-carbon future will be greatly constrained.

Last August, we offered a comprehensive suite of recommendations to this committee with respect to the upcoming budget 2020. I would like to focus on a single theme and related recommendations for the committee this evening, and that is a renewed commitment to public geoscience. The federal government plays an instrumental role in mineral exploration processes by facilitating public geoscientific research. Given the significant risks involved in exploration, public geoscience is instrumental in identifying mineral prospective regions to attract and accelerate exploration activities by private industry. Recent government research has shown the effectiveness of these programs, in that every dollar in public geoscience spending is estimated to generate more than seven times that much in overall economic benefit to Canada.

The two principal federal geoscience programs—the targeted geoscience initiative, or TGI, and the geomapping for energy and minerals, or GEM—are set to end next month. There has been no commitment to date by the government to fund future public geoscience programming beyond March 2020. Therefore, we recommend to this committee that the federal government make such a commitment. We also recommend continued investment in public geoscience, and we support the development of a pan-Canadian geoscience strategy by renewing and expanding the TGI program to $50 million over five years, to support continued development of new models and tools to improve efficiency by industry in exploring at depth and to extend the lifespan of mines currently in operation.

We also recommend renewing the GEM program with a minimum budget of $200 million over five years. The program should include a dedicated allotment to identify, geologically map and model critical mineral prospective regions in Canada to support evidence-based land management planning.

We recommend creating a federal funding mechanism to help provincial and territorial governments undertake comprehensive mineral resource assessments, based on geoscientific studies, in order to understand and incorporate the value of mineral potential into land management decisions.

We recommend expanding public collaboration by establishing an interdepartmental government-industry task force to investigate policy options and make recommendations to accelerate exploration and development of mineral resources critical for Canada's transition to a low-carbon economy.

The recommendations we have offered will support the establishment of a pan-Canadian geoscience strategy between federal, provincial and territorial governments by 2022, as outlined in the government's Canadian minerals and metals plan.

Thank you for the committee's time this evening and for your consideration of the recommendations we have provided.

7:15 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, Lisa and Jeff.

We will go to the Tourism Industry Association of Canada, to Ms. Bell, president and CEO.

Welcome, Charlotte.

7:15 p.m.

Charlotte Bell President and Chief Executive Officer, Tourism Industry Association of Canada

Thank you very much.

Simply put, tourism matters. It matters to our economy through the $102-billion contribution it made last year. It also matters to the 1.8 million people who work in this industry from coast to coast to coast. It's in every single one of your ridings, providing good jobs for Canadians, stimulating development and regional economic benefits, building national pride, and surpassing many sectors of the economy.

Canada's travel economy includes millions of travellers who visit each year for business, meetings, study and leisure. The meetings and conventions sector alone represents $33 billion in economic activity. Travel fosters trade. There's a direct correlation between rises in international travel and subsequent increases in export volumes. According to McKinsey research, each 1% increase in Canadian arrivals can generate upwards of $800 million in Canadian exports. A recent Nanos poll conducted for TIAC found that a majority of Canadians, 77%, believe creating a positive experience for international visitors has a positive impact on how proud they are to be Canadian.

Tourism is one of the few sectors that has seen consistent growth, and it is projected to keep growing worldwide. Considering that more than 1.3 billion visitors travelled the world in 2018 and surpassed global GDP growth for eight consecutive years, tourism continues to be a bright light in uncertain times when other sectors are experiencing challenges and decline. The World Travel and Tourism Council projects that by 2029, one in four new jobs globally will be in tourism, and 1.8 billion travellers will cross international borders.

Here in Canada, we've just recently started to see year-over-year growth after a long decade of decline due to a variety of factors. We're just starting to get back on the upside, but we're still lagging behind other countries. International travel is on the rise. Last year's record-breaking 21.1 million travellers represents only 1.4% growth. Despite all efforts, Canada remains 17th worldwide compared with other countries. Without proactive policies and investments that support growth, we'll continue to fall behind globally. As you well know, we're now entering another period of uncertainty with the coronavirus.

My question to you is this: Where do we want to be in five years? Do we want Canada to continue to lag behind global markets or be a leader? Access barriers remain a significant irritant for international travellers. We're competing with the world and we're not investing enough. We need a visitor visa system that works. You'll be hearing more on that from our sector.

More importantly, there's marketing. Canada's capital investment in tourism falls well below that of Australia, the U.S., the United Kingdom and New Zealand, just as examples. As the Government of Canada continues to focus on creating a competitive Canadian export market, let's remember that tourism is Canada's largest service export. But here too we fall below competitors. Canada could easily improve its competitiveness by raising Destination Canada's base funding to $135 million per year. That would put us on equivalent footing with Australia, for example.

Last year the Minister of Tourism unveiled an ambitious tourism strategy to take Canada to the next level by 2025, seeking to add 54,000 new jobs, increasing tourism revenues to $128 billion, and increasing international tourist arrivals in the winter and shoulder seasons by over one million people. Investments in the new Canadian experiences fund are much needed, but we need more investment to ensure that we meet those targets. That's why we're asking for $500 million over four years.

Honourable committee members, you have the opportunity to enhance the economic performance of one of Canada's major growth sectors.

In our brief, the Tourism Industry Association of Canada has made a number of recommendations on ways to strengthen Canada's competitiveness on the international stage.

Thank you for the time you have granted me. I will be pleased to answer your questions.

7:20 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you all.

We'll go to four-minute rounds, and we'll have to stop wherever we are when we get to five minutes to the hour.

We'll start with Mr. Poilievre.

7:20 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Mr. Lee, you said that in 2019 housing starts were down 4,000 units. To what do you attribute this reduction?

February 5th, 2020 / 7:20 p.m.

Chief Executive Officer, Canadian Home Builders' Association

Kevin Lee

I think at this stage we'd have to say it's becoming very hard to become a homebuyer. There are lots of mortgage rule changes and certainly in some places like Atlantic Canada and the Prairies, Saskatchewan and Alberta, they are facing other economic challenges. Normally, in those times we would be inciting construction rather than trying to slow it down.

We would certainly like to see some changes around making those rules more appropriate so that we can get construction back on track. Even in Vancouver and the Lower Mainland in B.C., where things were going...probably price acceleration was definitely too much. We've gone completely the other way and now we basically have a policy-driven housing recession in Vancouver. We definitely need to turn things around.

7:20 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

You mentioned demand-side factors. Are there any supply-side factors?

7:20 p.m.

Chief Executive Officer, Canadian Home Builders' Association

Kevin Lee

We've got a lot of supply-side issues. Definitely in our largest urban centres it's very difficult to bring new residential construction online. There are lots of delays, red tape and development taxes that are affecting affordability. There are a lot of factors affecting things and it's very inelastic, so in our largest cities—where we have a lot of immigration—it's very difficult to bring new construction online quickly enough to meet demand. You're seeing that in the house prices, especially in the GTA and the Lower Mainland in B.C.

7:20 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Has there been any improvement in these big markets in the delays for approval?

7:20 p.m.

Chief Executive Officer, Canadian Home Builders' Association

Kevin Lee

There's a little bit starting in Ontario. There's not a heck of a lot going on in B.C., although there is a new joint panel trying to work on that, so we shall see.

7:20 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Do you find it ironic that we hear municipal politicians tell us there's a housing crisis and yet municipal, and sometimes provincial, policies prevent the construction of housing in the first instance?

7:20 p.m.

Chief Executive Officer, Canadian Home Builders' Association

Kevin Lee

Yes, although usually when they're talking about a housing crisis, it's more around homelessness and low-income housing. Obviously it's a concern when there's not enough shelter for people in need.

By the same token, the problem we have right now is that the whole housing continuum is stuck. We don't have enough new construction. We don't have enough people able to get out of rentals and into their first home because of the mortgage rules. Normally, 80% of new rentals that come online every year come from people vacating rental units because they've become a first-time homebuyer. When we no longer have enough first-time homebuyers, we have tight rental markets, and it works its way through the whole rental system and into those in housing need as well.

7:25 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Right.

What would be the fastest way to increase supply at this point?