Evidence of meeting #162 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was inuit.
A video is available from Parliament.
Director, Domestic Policy, Macdonald-Laurier Institute
My last point is on investment in electric vehicles. We're certainly not seeing that yet in the investment numbers. If that shows up, that's great, but I'm talking about—
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Chair, may I have a point of order, please? I wish to comment on Mr. Sargent's testimony in terms of the foreign direct investment, because you can measure Canada's foreign net investment position in different manners, and Mr. Sargent is measuring in one way. It's not—
Liberal
The Chair Liberal Peter Fonseca
Calm down, everybody.
Thank you, MP Sorbara. It's not a point of order. Maybe you'll have an opportunity after, but we're going back to MP Kelly.
Conservative
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
With that, and with the time I have remaining, I think Mr. Robson may have a further comment or two about some of the things that were raised in the previous intervention.
President and Chief Executive Officer, C.D. Howe Institute
I'll continue on the topic.
Foreign direct investment, like Canadian direct investment abroad, tends to happen in big lumps. Therefore, it's very important that we look over a reasonable period of time and not seize on a single quarter.
In general, though, I take the side of Mr. Sargent in saying that the trends have been a bit unfavourable. One of the biggest things foreigners are investing in when they buy Canadian assets is government debt. It seems to me that's a problem because, unlike the sorts of assets that produce incomes and growth in Canada, all that a purchase of government debt will produce is interest outflow.
I think it would be a good idea for governments to absorb fewer of the savings in our domestic economy. That would create more room for domestic investment to be funded domestically. I think the size of federal and provincial government borrowing, notwithstanding that it's less than in the United States, is a problem for us and something we'd be better off....
We've had 10 years of continual deficits and very rapid growth of debt federally. Over those 10 years, we've not seen a lot of economic progress. Under previous governments—including those of Prime Minister Chrétien and Prime Minister Harper, when the federal fiscal situation was under better control—we had better investment and economic growth. I think those things are related.
October 31st, 2024 / 5:30 p.m.
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
Thank you for clarifying all of those points.
It would be fair to summarize this and say that we have growth of government and government deficits that are choking out and absorbing savings, rather than resulting in investment in the economy. We have regulation preventing projects from being completed. Mr. Sargent pointed out that nothing has been approved under Bill C-69. Everything is stuck in the bureaucracy of approval. We have rising taxes and shrinking living standards.
Is that a fair summary of the current course of this government?
President and Chief Executive Officer, C.D. Howe Institute
May I quickly comment?
We've had quite a bit of discussion in this session just now on the fact that GDP income per capita has been falling. I will point out that capital stock per worker, which is a consequence of low investment rates, has now fallen for seven straight years. That hasn't happened since the 1930s. It would be very surprising if you could sustain higher living standards when your capital stock per worker is falling.
Look across the world. In countries where the worker is digging with an excavator, there is higher income and productivity than in countries with low capital stock per worker, where they're digging with shovels. We want to be digging with excavators, not shovels.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Thank you, Chair.
I have a question for Mr. Robson.
You're an esteemed economist, sir. I have much respect for you and everything.
One of the things I believe in.... I can make the analogy that, if you're a hockey team, you can only put so many players on the ice. We know the Toronto Maple Leafs have not won the Stanley Cup since 1967, if memory serves me. You want to invest in them and make them as good as possible so they continue to win. In terms of investing in the Canadian worker and ensuring that....
You know, now we have the immigration plan for 2025 to 2027, which will see a large reversal in this GDP per capita conversation. Some of the economists on Bay Street have said this. You know this, and I know this. We'll have increasing GDP per capita. Remember, businesses wanted a lot of these temporary foreign workers. We've had commentary on immigration plan levels from businesses saying, “Please don't do this.” We want businesses to invest in human capital and the physical capital stock.
What would you recommend, Mr. Robson, in terms of how to get that human capital stock—that elusive economic growth and productivity—and that standard of living up? If you could recommend two or three policies, I would love to hear them, sir.
President and Chief Executive Officer, C.D. Howe Institute
You mentioned the analogy of a hockey team. You're not equipping your workers well. At the moment, investment rates in Canada per worker are about half of what they are in the United States. That is a dramatic decline from the 70% to 80% range we saw a decade ago. We have a big problem there. We are putting our players on the ice with old Eaton's catalogues for shin pads, instead of modern equipment.
One thing we could do is expensive, but I think we need a bit of a jolt. We might have a general investment tax credit, because that would catch people's attention. It would be an unambiguously positive move. My former colleague Jack Mintz would object, quite rightly, that it wouldn't have completely neutral effects in terms of different types of investment. However, a temporary move along those lines would send a very strong signal. It would provide, as I said, a jolt to the economy. Even just the competitive impact of your counterparts tooling up, I think, would make a difference.
You asked for a recipe. There's one ingredient.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Thank you, Mr. Robson.
When you talk about investing in workers, the onus is also on Canadian corporations. If I look at the profitability levels—StatsCan has them—they have done pretty decently in the last couple of years. If you look at ROE, return on equity, or ROIC, return on invested capital, they also need the onus to invest in their workers. Many of them do, and I applaud them. I love wealth creation and the whole bit. The onus is also on Canadian companies investing in workers, and you're one of those saying, do a general investment tax credit.
We do know fiscal finances are limited. Think about what the official opposition is asking for with the two policies it has brought up, and what it would cost the fiscal purse. Those are, roughly, the OAS measure and the removal of the GST on new builds. If you add those two measures together, you're roughly getting almost $8 billion of new tax expenditures. How are you supposed to pay for that?
There are limitations on what a government can and can't do with regard to the fiscal purse. I agree with you on that measure there.
Chair, how much time do I have?
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
I will just move on. I know Mr. Di Candia from CHIN Radio and broadcasting.
Mr. Di Candia, welcome. Obviously, the Lombardi family here in the city of Toronto, and in the York region, have been pillars of the multicultural broadcasting community for decades, and their legacy lives on.
I know it's Lenny's birthday today, so I do want to wish him a wonderful birthday and the best to him, his wife and family.
Mr. Di Candia, regarding multicultural media here in Canada, and please be as frank as you need to be, how would you characterize the environment, sir?
General Manager, CHIN Radio TV International
There is a need to sensitize all of the advertising agencies out there to think outside the box and to include multicultural radio and television broadcasters. Right now, they're turning their heads.
We are always offering statistical data from Statistics Canada and census data. We also have live data, because of the streaming that we offer. We can prove and show how many listeners we have on the streaming platforms, which are clearly identified, when we download the analysis. We definitely need the government, however, to also direct all these agencies to spend more money with us, because they don't. They really give us a very minimum number of dollars to cover many ethnic groups.
Like I said in my opening statement, CHIN Radio offers more than 50 languages. We are the radio that is available to people who don't have access to mainstream media, either because they don't understand it or because they don't really like the programming they hear.
We bring into their homes—
Liberal
Liberal
The Chair Liberal Peter Fonseca
MP Sorbara, we're well past the time now. Thank you.
Thank you, Mr. Di Candia.
Next, we are going to hear from MP Ste-Marie.
Bloc
Gabriel Ste-Marie Bloc Joliette, QC
Thank you, Mr. Chair.
Mr. Mueller, once again, my question is about the tax affecting your sector, manufacturing.
You said it was affecting the Canadian industry's reputation internationally.
Can you give us an example?
President and Chief Executive Officer, Aerospace Industries Association of Canada
Yes, it's of great concern to me.
We have something in Canada that we should be celebrating, promoting and figuring out how we can grow the industry. That's the aerospace industry. There are 200,000 jobs right across the country. We're one of the very few countries from a certification perspective that can build a plane from nose to tail, certify it and put it into production. Many countries internationally are jealous of what we have. They want what we have. They want the workers, the technology and the know-how.
When I go and speak internationally, I talk about what's happening from the perspectives of individual countries. I talk about this tax on manufacturing, and the response I get is twofold. One is, “Why are they doing that to your industry? Our governments are doing everything they can to promote this industry.” The second response is, “Well, that's good”, because it's driving sales and revenues to their industries in their countries.
I think I mentioned it before, but we're the only country that I am aware of that has this kind of tax on aircraft manufacturing. Every time we've seen it happen in the past.... There's one clear example in the United States. I think it was two or three years ago, and because of the negative impact, it was repealed. Again, we're two years in, and we're seeing the real-world negative results of this tax. We're asking the committee and government to take steps to repeal it.
Bloc
Gabriel Ste-Marie Bloc Joliette, QC
I hope you'll be heard.
You talked about the importance of Canada having an aerospace strategy. It's the only country that has put so much into aerospace but that doesn't have a strategy.
On my way here, I ran into the Minister of Innovation, Science and Industry. I reminded him how important it was to have a strategy. He told me that his department was hard at work on it.
In your view, what more does he need to do to ensure that Canada has a strategy?
President and Chief Executive Officer, Aerospace Industries Association of Canada
One is that we're very thankful to this committee for recommending the need for a national industrial strategy. We're very pleased with Minister Champagne's commitment to that strategy. A strategy is absolutely essential not only to send that signal internationally but also to identify aerospace as strategic, because it is.
Thank you, Mr. Chair.