Finance Committee on Nov. 14th, 2023

[Corinne Pohlmann]

Sure.

We have determined, through our own calculations—and we'd love to be corrected on this—that 40% of all the carbon tax revenues being collected in the provinces in which it applies are being collected from small business owners. About 10% is earmarked to go back to small business owners in some form. However, only a fraction has gone back to small business owners in the form of a program back in 2019. The rest of it has been sitting. I think it's $2.5 billion.

There is, I think, a plan now to eventually distribute it to businesses that are trade exposed, but we believe that it needs to be redistributed back to small business owners. It doesn't matter who pays. Everybody should get it, just as Canadians do. The entire carbon tax structure should be rethought so that small businesses get a fair share of the amounts that are collected.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

The government announced a limited carve-out for home heating oil, disproportionately, of course, benefiting people in Atlantic Canada.

Would you be in support of a carve-out for small business owners that would treat them equally and equitably?

[Corinne Pohlmann]

Yes, absolutely.

We have seen support for the federal carbon tax plan go down quite dramatically over the course of the last year. We had fifty-fifty support across Canada. That has gone up to about 80% now who are opposed to it. Times have changed, and things have become tougher. Smaller businesses are realizing they're paying a lot, but they're not getting anything in return. It's been a real challenge. It's coming up more and more now as an issue they'd like to see changed.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Of course, another carve-out that's currently, unfortunately, being held up by Liberal or Progressive senators is Bill C-234, which would give farmers an exemption from the carbon tax with respect to natural gas and propane.

Is that something that your organization and your members support?

[Corinne Pohlmann]

Yes. We have supported Bill C-234 from its inception in the House. We will continue to do so and are encouraging senators to pass it quickly.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you very much for that.

We are now talking about numerous carve-outs that, I believe, would be beneficial.

What about just scrapping the tax altogether? Do you think that would benefit your members?

[Corinne Pohlmann]

We believe that, if the carbon tax can't be fixed in its current form, the best next solution is probably to scrap it and start over, so that it is a bit more fair to smaller companies.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I want to spend a bit of time talking to Ms. Jones with respect to the commercialization ecosystem. I found some of your comments really interesting.

I share your belief, and I think several others on the panel do as well, that Canada is in a productivity crisis—and I'm not putting words in your mouth there—and that one of the keys to getting out of that is innovation. I also share the belief that we have some of the best post-secondary education and some of the best minds in the entire world right here in Canada, but there's a gap between those ideas being generated and our being able to fully commercialize or exploit them.

Could you talk more specifically about what's in that commercialization ecosystem, or what's missing? We have the Canadian Bankers Association right there, in addition to members of the government. I'm sure they'd all love to hear this.

[Krista Jones]

That's a big question. Thank you very much for it.

When you think of our natural tendency as a culture in Canada, we are risk averse. We covet our banking system, which is very risk averse in a lot of ways. The terms in the system for providing loans to small business entrepreneurs to get them the funding and to get from the research to.... We fund the research well, but it's when they actually need the money to pay salaries and to scale that we don't have a lot of early-stage investment into some of our deepest technology companies, whether it's from private individuals or enough venture capital to sustain the amount of research that we need to globally compete on an annual basis. It's not equal.

Personal guarantees by entrepreneurs are expected. They have to put up their homes and their personal situation to actually get their businesses started. It's issues like these that I think are at the really early stage and are part of the commercialization challenges we have.

Then it starts to compound. What we have seen is that, with the restrictions we put on the early stage of companies, by the time they get to.... We have a momentum program that helps companies do $100 million in revenue. By the time they get to that stage, they've already predetermined that the company will leave Canada and the economic benefits will be accrued to other jurisdictions. We have to fix the early stage. That requires regulations. It requires loan guarantees. It requires the removal of loan guarantees and other things at the early stage, so we don't compound the issue.

Our challenge in Canada is that we don't have any foreign multinational in the high-growth industries of technology and life sciences to be the acquirer of IP. If you look at where IP ends up, over 60% of commercially viable IP ends up in the hands of these global multinationals.

When we don't protect what I call that messy middle—that wealth generation piece that nobody in Canada likes to talk about—and when we don't solve for those true business problems, we are just setting up the situation where they will end up doing the best thing for the commercialization of their technology.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thanks very much for that.

[The Chair, Liberal, Peter Fonseca]

Thank you MP Lawrence.

MP Dzerowicz.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to thank all of our panellists for their excellent presentations. I'm going to start off with a couple of comments.

Mr. Ferguson, I want to let you know that I agree one hundred per cent with immediate funding for the Canada disability benefit. It's been a long time coming. Residents in my riding of Davenport fully support it.

I'm also going to address this, because Mr. Lawrence talks a lot about the price on pollution here. I think it's important to note that in Ontario.... I'm just reading from the Financial Accountability Office of Ontario, which put out a statement after the cap and trade was cancelled by the Ford provincial government. They said, “the Province's annual budget will worsen by...$3.0 billion” over three fiscal years. Then there is less money going to the provincial government because of the cancellation of the cap and trade system.

The reason I mention that is that it's important to remind all Ontarians that the only reason we have a price on pollution in Ontario and the only reason our small businesses or anybody are paying that price is that the provincial government in Ontario actually cancelled the cap and trade system. It was worse for them. It was worse for everybody in Ontario. On top of that, we have to fight climate change. Climate change is real.

I'm going to go to Ms. Jones, but the question is for all of you.

Ms. Jones, I work a lot around innovation. We do not have a culture around IP in this country. I personally do not believe that we have an understanding that we've moved from a tangible economy to an intangible economy. I do not believe that is fully recognized within the broader population here.

Do you believe that the federal government has a role in promoting IP education, generation and retention?

[Krista Jones]

Having an IP culture is a fundamental prerequisite for the commercialization phase of it. I do believe that Canada needs to do more, but it's not necessarily educating in the start-up world. In the science start-up world that I deal with, the majority of our companies come to MaRS with their patent strategies and IP already in place. I think the issue exists in our general business community, which doesn't actually have that culture of business R and D and the ability to protect and do what they need to do inside businesses that might not have started based on technology and science.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

Just because I'm limited in time, I would really encourage you.... It's something I'm trying to promote as well. If you have specific recommendations on how we do that, that would be helpful. It could be that, for any of the funding we have for innovators, it include that we pay for some of the patenting and trademarks, which often are expensive to actually do.

The other thing I'm realizing is that we give a lot of money around research in research dollars and innovation dollars. What I've realized—and this comes from some universities—is that we don't incentivize our researchers to team up with Canadian innovators. Many of our research dollars are teaming up with some of your international companies abroad, and a lot of them are patenting those ideas that the Canadian government is actually funding.

Do you agree with that? Do you think we should be providing some of those incentives, as we're giving those research dollars, to actually team up with Canadian innovators?

[Krista Jones]

Yes, I agree one hundred per cent that we should be giving those incentives.

I think there's an “and” to that: We actually don't have enough Canadian business innovators to match all of our R and D researchers to. There's a program by the CPA whereby they're training financial professionals on how to deal with high-growth situations. We need to do that with CEOs, with business people and with marketing, not just with engineering and software developers.

We actually have to focus on developing the capabilities in our professionals, such that the researchers can team up with business people who know how to specifically grow through the high-growth phases.

[Julie Dzerowicz, Liberal, Davenport, ON]

If you have any ideas or recommendations around how we can incentivize Canadian businesses to support Canadian innovators—because right now that's not happening enough—and if you have some suggestions for us, I think we'd be very much looking forward to that.

I'm going to shift over to the Toronto Region Board of Trade.

Just over a year ago, I met with your former recent chair or president. She showed me a presentation. It showed that Ontario labour productivity is 42% lower than in the U.S. and 16% lower than the U.K.'s. We know that productivity has been a long-standing issue in Canada. Business investment has been a long-standing issue in Canada.

What would be the recommendations from the Toronto Region Board of Trade around how we improve our productivity and how we incentivize more businesses to invest? I think they're correlated.

I'll leave that to you.

[Reid McKay]

Yes, I definitely agree with MaRS and Krista that transitioning innovation from R and D into commercialization and deployment is definitely key.

In addition to that, and recognizing the vast manufacturing sector that is supported by southern Ontario, we feel that aiding investment in capital infrastructure for the manufacturing sector, particularly as it pertains to technology, robotics and AI, could help to drastically boost that productivity. We've seen that happen in the States with the various acts I mentioned, but yes, we're hopeful that we can realize the same gains in Canada.

[Julie Dzerowicz, Liberal, Davenport, ON]

Can I have one quick question, Chair? Okay. Next time....

Thank you so much.

[The Chair, Liberal, Peter Fonseca]

Yes, it will be in the next round. Thank you.

We have Monsieur Ste-Marie.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

Greetings to all the witnesses and thank you for being here. All of your testimony is very interesting. I imagine that many of your recommendations will wind up in the committee's report.

My first questions are for Pierre Ouellette, the president of the Université de l'Ontario français.

Thank you for reminding us of the progress you've made and for telling us about the growth you're experiencing, among other things.

You cited a statistic that struck me. You've apparently enrolled more than twice as many students as expected. Am I right?

[Pierre Ouellette]

Yes. We introduced a new bachelor of education program in September. As you know, there's a shortage of French-language teachers virtually across the country, including in Quebec. So that's the first program that UOF has added to the four initial programs that the university introduced in 2021. Ontario's Ministry of Colleges and Universities originally granted us 40 spaces, and then we promptly received 145 applications, with very little time to advertise the program.

That means that more than 80 students enrolled in the program this past September. We worked quickly with the Ministry of Colleges and Universities, which agreed to double the number of spaces, bringing it to 80.

It was an overnight success, which isn't that surprising considering the shortage, but it's nevertheless a nice win for UOF.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

That's fantastic.

Can a francophone student in Ontario easily study in French these days? What's the situation of these students?

[Pierre Ouellette]

Absolutely not. It's a terrible situation.

As I said in my presentation, the central and southwest regions of Ontario represent 36% of all francophones in Ontario. Nearly 4 out of 10 francophones are from our region, and the movement that led to the founding of the Université de l'Ontario français resulted from that fact.

Toward the end of the 2010s, we conducted what we called a gap study to determine the percentage of French-language programs that francophones could access as compared to anglophones. The gap between the two ranged from 0% to 3% in central and southwestern Ontario.

It's critically important that we quickly add more significant programming. The purpose of the financial support we're requesting is to expand the range of programs offered in order to make us an attractive option for francophones and newcomers. As I said in my presentation, it's also extremely important because the City of Toronto attracts a lot of francophone immigrants. If they can't study in French upon arrival in Toronto, in central and southwest Ontario, they'll very quickly be anglicized.

Francophone newcomers don't come here to speak French; they come to improve their quality of life, and they can easily choose to study in English.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you.

So the Université de l'Ontario français has enjoyed a wonderful history and strong growth, but you're telling us that growth has to be sustained in order to meet the needs of francophone students and newcomers.

Do you think that francophone newcomers in Ontario, particularly in Toronto, will continue living and studying in French given the present situation?

[Pierre Ouellette]

I'm a Franco-Ontarian. I was born in a small town called Kapuskasing, in northern Ontario. I've lived all my life in Ontario. I've studied and I've always worked in French in Ontario.

I'm very optimistic by nature, but I have to tell you that the situation troubles me. We acknowledge that the greater Toronto area and central and southwestern Ontario are the places where francophone immigrants arrive, and we acknowledge how important immigration is for the vitality and growth of Ontario's francophone community. If we don't provide access soon—and I mean soon—to French-language programs, whether at colleges and universities or French-language schools, and to French-language health services, there's a significant risk that those francophones, who should be adding to the vitality of francophone community, may move over to the anglophone side. That wouldn't help us expand the community.

We saw in the 2021 census that the demographic weight of francophones outside Quebec had fallen to 3.3% of the population from 6.1% 50 years earlier.

Consequently, we need to act very quickly so the community can develop.