Evidence of meeting #103 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was innovation.
A recording is available from Parliament.
12:30 p.m.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
Just to add to that, Germany came here asking for LNG. In the last eight years, this government hasn't been able to get even one project of LNG, even though they have many on their desks, but the U.S. has been able to create seven or eight of those projects in that eight-year time period.
Are we missing out on being able to help reduce world emissions with our low-carbon, responsibly made energy here? Are we missing that boat?
12:30 p.m.
Senior Fellow, Macdonald-Laurier Institute, As an Individual
We are, very much so. I mean, that's what I was alluding to in my opening statement. If you look at the U.S., they were able to regard what's happened over the last 10 years as an opportunity. It was an opportunity to increase oil and gas production and at the same time lower their emissions. It was not one or the other. At the same time, they were in a position such that when a fellow G7 member came and asked for help....
Europe was in desperate need of help last winter. I was there. When you walked into buildings in Paris, it was cold. The temperature was turned way down. These people had a serious shortage of natural gas. We should have been in a position to help fill it. Instead, we ended up exporting our cheap natural gas to the U.S., which was more than happy to pay nothing for it while they exported the expensive stuff to Europe and reaped...and then we wonder, “Gee, why are incomes there higher?”
I was reading a paper recently by Pierre Fortin. He was comparing per capita incomes in New York and Quebec. On a purchasing power-converted basis, per capita incomes in New York are almost twice as high as in Quebec.
12:30 p.m.
An hon. member
Wow.
12:30 p.m.
Senior Fellow, Macdonald-Laurier Institute, As an Individual
That's ridiculous. How does this happen? I don't know how much longer that can go on before people start voting with their feet and saying, “If not for myself, then for my children, there are better opportunities elsewhere.”
12:30 p.m.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
I'd like both of your opinions on this. As I said, we've seen things like the carbon tax. The U.S. doesn't have that, and they've been able to lower their emissions. Canada's emissions have actually gone up. Are some of these really bad bills and some of these policies by this federal government stifling investment coming here in terms of bigger companies wanting to invest here in Canada?
12:35 p.m.
Associate Professor of Economics and Philosophy, Carleton University, As an Individual
Yes, indeed. I would echo what we just heard from Mr. Cross. The basic problem is that we have excessive bureaucracy, excessive red tape, a high tax environment and a loose monetary policy. Again, if you look at the data adjusted for the cost of living, per hour, Canada is basically at the bottom of the league table now in the rich countries of the west. We are way behind Scandinavia, the U.S., Germany—everyone—and that's really shocking.
12:35 p.m.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
If I have any time left, I'll ask you this: What needs to happen for us to be able to compete with the rest of the world, or even with the U.S.? How do we keep up?
12:35 p.m.
Liberal
The Chair Liberal Peter Fonseca
We don't have time for an answer there. I'm sorry, MP Hallan, but we are at time.
MP Thompson, you have five minutes, please.
12:35 p.m.
Liberal
Joanne Thompson Liberal St. John's East, NL
Thank you.
I would like to begin by once again referencing something that my colleague did a moment ago, and that is the severity of the climate crisis. I certainly think we also need to acknowledge, and I haven't heard this today, the real cost of responding to climate and extreme weather events and the understanding that this is impacting every aspect of society.
On that note, I would like to move to the Canadian Federation of Agriculture. I'm sorry that I don't have time for everyone today.
Perhaps both of you could answer this question. I'd like to zero in on the specifics around the economic impact of forest fires and other extreme weather events on your exports.
12:35 p.m.
President, Canadian Federation of Agriculture
That's always the struggle. It's a guessing game how that's going to impact in the long term. We have many free trade agreements around the world. We are an export nation, and we rely.... This is not only in primary agriculture but also in the whole agri-food industry. As an example, in Ontario there are 860,000 people working in the agri-food industry. A good majority of them are in the processing sector, so it affects not just farmers; it affects the economy of the country a lot.
Not being able to fulfill a market potentially means a loss in that market despite the free trade agreement, because somebody else will come in and fill that market. What we're experiencing with the various climate issues is that it takes a long time to recover. The drought in the prairie provinces isn't just going to be over if we happen to get a little bit of rain or some snow through the wintertime. There are long-standing effects that occur because of that. The floods that have happened in Atlantic Canada, the atmospheric river that happened in B.C..... You just don't fix those quickly. That will have negative economic impacts not only on the farm community but throughout the entire economy.
One thing about agriculture is that we're recession-proof. We've proven that we're pandemic-proof. How many industries can say that? We continue to do what we need to do to produce food for people both domestically and internationally. That's a tremendous economic driver. We need to figure out how to not only maintain that but also capitalize on that for the economy of the country.
I don't know if you want to add anything else, Brodie.
12:35 p.m.
Director, Government Relations and Farm Policy, Canadian Federation of Agriculture
The only thing I would add quickly to that is that part of the basis behind the recommendation around the accelerated capital cost allowance is to create the incentive for farmers to invest in their own equipment to make them more sustainable and productive. We see that intersection between food security and climate change.... Innovation is right there. I'm sure our colleagues would agree.
That is a very concrete measure that could be put in place in the short term, immediately. It would support an investment in capital on farms to make them more productive and more climate resilient. Ultimately, it would support our sustainability objectives.
12:35 p.m.
Liberal
Joanne Thompson Liberal St. John's East, NL
Thank you.
In your opening remarks, you referenced—which I'm grateful for, because I think it's incredibly important—sustainability and the supports needed for intergenerational farm transfers. Would you speak in more detail to that?
12:35 p.m.
President, Canadian Federation of Agriculture
There were some measures taken in earlier budgets to allow for intergenerational transfers. The issue becomes that, because of the size of farming operations now and because they're multi-generational or large family operations, our businesses are becoming incorporated. We are all small businesses, but we're becoming incorporated because it makes good business sense.
Under the current tax laws for transfer, it's become easier to sell to a stranger than it is to the family, because the capital gains exemption applies specifically to a sole owner, let's say. When you have several siblings or several family members who are all involved in the business and are owners, you lose that capital gains exemption.
As I said, it's easier to transfer the farm to an individual who is not a family member than to keep it in the family. We're looking for some adjustments in the tax act that will allow for that intergenerational transfer and still allow the capital cost exemption to apply.
12:40 p.m.
Director, Government Relations and Farm Policy, Canadian Federation of Agriculture
I think that's exactly it. Again, I would just highlight that it is another very concrete, very specific tax amendment that could be made and that would support the next generation of farmers, who are inheriting a very difficult situation in this, as we said, high inflation, high interest rate environment.
That was one of several very specific, concrete proposals that we think would have an impact in the short term.
12:40 p.m.
Liberal
The Chair Liberal Peter Fonseca
Thank you, MP Thompson.
Now we're going to MP Ste-Marie for two and a half minutes.
12:40 p.m.
Bloc
Gabriel Ste-Marie Bloc Joliette, QC
Thank you, Mr. Chair.
That's a very good recommendation. Let's hope that it is implemented quickly.
I don't know if Mr. Hurteau wanted to answer Mr. Blaikie's question. If not, Mr. Lopez‑Asselin, would you like to continue to explain your recommendations?
Thank you.
12:40 p.m.
Coordinator, Collectif Échec aux paradis fiscaux
I can answer the question.
Thank you, Mr. Ste‑Marie, for letting me answer Mr. Blaikie's question. I will do it in two parts.
Mr. Blaikie was pointing out that it was probably a good investment to properly fund the CRA. By comparison, large accounting firms will often present tax services fees to their clients as investments for the future. I would say that the situation is more or less the same in the public sector, particularly for the Canada Revenue Agency. I would even approach the issue in a negative way. Stagnant and even reduced funding for the CRA for years attests to the Canadian government's and the various governments's lack of seriousness and willingness to tackle the problem of tax avoidance and the use of tax havens head‑on.
I will continue to answer the question afterwards, but I would like to take this opportunity to quickly come back to the CRA's funding. The mechanisms, the tax avoidance schemes, are becoming more complex. Today, we must be able to continue developing expertise within the CRA to ensure that we recover this money that is leaving Canada.
I want to come back to the issue of tax treaties, which I think is central. One of our recommendations has to do with those treaties. Their review is one of the central points in our claims book, but it's also a huge and extremely important work. I can quickly mention the Supreme Court's decision in Canada v. Alta Energy Luxembourg, where Justice Côté, who signed the decision reflecting the majority opinion, rejected the CRA's appeal. She explained quite well that the reason, the source of the tax benefit that was claimed by Alta Energy Luxembourg, was provided for in the tax treaty between Luxembourg and Canada.
These tax treaties are riddled with loopholes, problems and gaps that allow not only foreign companies but also Canadian companies to avoid paying their dues here or elsewhere, where they actually conduct their economic activities.
12:40 p.m.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
Thank you very much, Mr. Chair.
To the Council of Canadian Innovators, we've heard a lot around this table about Canada's low productivity growth compared to its competitors, and about low business investment. We've also seen over the last 20 years or so a decrease in the corporate tax rate and some pretty sizable capital reserves on the part of Canadian companies. I'm wondering what you think is required of government if there are a lot of companies that have cash on hand. We've heard about industrial policy and creating better investment conditions. What do you think are some of the things that are required in order to get Canadian companies to invest in themselves?
October 5th, 2023 / 12:40 p.m.
Director, Federal Affairs, Council of Canadian Innovators
I think we have to create the incentives and the freedom to operate for companies to want to invest in that R and D. There are many recommendations I can offer, but one very concrete one is around reforming the SR and ED tax credit. There was a promise in budget 2022 to update this nearly 80-year-old program, which is a $4-billion program. It's integral for our members and for the innovation economy. It is a huge source of capital, of R and D, and it can be a source of intellectual property if it's updated correctly. Where's the consultation? Where is that review and that reform to that critical program? We have not seen it.
In the fall of 2022 we developed a comprehensive report with companies across Canada to provide six concrete recommendations to the government, and we've continued to push the Department of Finance to make good on that promise. What we've heard behind closed doors that is quite concerning is that nearly half of that program, around $2 billion, goes to about 15 corporate giants. Unfortunately, I can't offer the committee evidence, because it's shrouded behind corporate privacy prohibitions, but the point I'm making is there needs to be transparency for that program. There needs to be an update so it can help small and medium-sized enterprises.
12:45 p.m.
Liberal
12:45 p.m.
Conservative
Philip Lawrence Conservative Northumberland—Peterborough South, ON
Thank you, Mr. Chair.
On a quick administrative note, has the Minister of Finance accepted our invitation?