Finance Committee on Nov. 7th, 2024

[David Clarke]

It is, for a number of reasons.

First, the basic 15% credit, which is non-refundable, doesn't do much for a company that is pre-revenue. About 75% of the companies on the TSX Venture Exchange, which is our junior market, are effectively pre-revenue. When you're talking about incentivizing investment in research and development to a company that's not paying income tax because they're just not that big yet, the benefit of the basic credit, which public companies are eligible for, just really isn't there.

The second thing is that it's about a level playing field. Whether you're a company, an entrepreneur who's elected to raise capital on our markets already, or you're thinking about it, there are lots of reasons why you would or would not go public, but the more roadblocks we can remove and the smoother we can make that decision-making process, the easier it is for the entrepreneurs to make those decisions to access capital and to focus on the things that we all want them to, which is creating jobs, creating IP, growing and contributing to the economy.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

For those folks who aren't familiar with the SR and ED program, how would offering that benefit to those smaller businesses that you're talking about help to incent entrepreneurship?

[David Clarke]

Really, it's access to capital. The 35% refundable credit is actually, essentially, a cheque in your hand at the end of the year. It frees up capital to make those investments.

Again, these companies are also competing directly with private companies—Canadian-controlled private corporations—that are eligible for the credit. It's really a fairness issue. We're talking about Canadian companies that are doing their R and D in Canada and employing Canadians. It's really just removing those barriers and those elements that make the playing field unlevel.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

What I hear you saying is that there are two key areas of benefit.

One is that those small businesses can compete more fairly with the larger businesses in Canada that already benefit from that program. Second, presumably it would create a greater incentive for those small businesses and those small ventures to start up and continue to grow here in Canada, rather than move to the U.S. or somewhere else.

[David Clarke]

Yes, that's exactly right.

Going public is not for everybody, but I would say that if a company lists in Canada, it's a lot more likely to stay in Canada. We've already been investing in these these Canadian entrepreneurs since a lot of them were in high school, basically. If they can't access the capital that they need to grow here, they will go elsewhere.

One option is to list on an exchange like ours. If we're putting roadblocks in the way, like telling an entrepreneur that they're going to lose access to their 35% refundable credit if they go public.... We want to try to remove those barriers whenever we can.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

That's understood.

Thanks very much, David. I appreciate that.

Professor Pineau, I have just two minutes left. I will try to be brief, and I would also ask you to answer concisely, if possible.

Our Conservative colleagues often tell us that carbon pricing is responsible for increasing the cost of living in Canada. Is that really the case? Do you have any comments on that?

[Pierre-Olivier Pineau]

No, that is absolutely not the case, even though it obviously contributes in a very minor way to some price increases.

The biggest contributor to inflation is energy. Energy prices exploded in 2022. Canadians are very dependent on oil and petroleum products, so prices have skyrocketed. That increase has had a ripple effect on all prices. We are too dependent on energy, and we have to make changes.

The second contributor is housing. Canadians want houses. They want more space. This is a problem because people can afford to buy big houses and they live in their big houses and big apartments. That creates pressure, because we can't build housing quickly enough to accommodate everyone. Those are the two major contributors to inflation.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

I would like to ask another question about carbon pricing. I would like to know what Canadians are paying and what they are getting back. Am I right in saying that what Canadians pay is given back in the form of rebates?

[Pierre-Olivier Pineau]

Absolutely. In fact, the majority of Canadians benefit because those who are subject to the federal carbon pricing regime receive a cheque from the federal government. The majority benefits from the way this system has been set up, and I commend the government.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Baker.

Now we will move to MP Ste-Marie.

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

Thank you, Mr. Chair.

I want to thank the witnesses for being here. As Mr. Baker said, our speaking time is limited, unfortunately. We won't be able to ask all our questions to the witnesses.

My questions are for the representatives of the Union des producteurs agricoles, whom I thank for being here.

Mr. Ross, I will start by inviting you to finish your presentation.

[Charles-Félix Ross]

We are calling for improved risk management under the AgriStability program. In addition, because of the hike in interest rates, although cuts are coming, and because farm debt is high, we are also asking for an increase in advance payments under the advance payments program that would extend to $350,000 per year. Finally, we have a series of requests to improve the Canadian taxation system, on which the competitiveness of Canadian farm businesses also depends.

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

Thank you.

I'm going to move on to something else. We just learned something today. The Bloc Québécois introduced Bill C‑282 to exclude supply management from all trade agreements. This bill received support from all parties in the House, but it has been held hostage by the Senate for a year and a half.

After being pressured several times, the Standing Senate Committee on Foreign Affairs and International Trade decided to start studying it, and it has just adopted an amendment that completely guts the bill. The amendment states that supply management will not be protected in future renewals of agreements such as CUSMA, the Canada-United States-Mexico Agreement, and in current agreements such as the one with the United Kingdom. What is your reaction to what this Senate committee has done?

[Charles-Félix Ross]

My analysis of the situation is the same. The Senate committee's decision is extremely disappointing. Indeed, it has the effect of nullifying Bill C‑282, which we had pinned our hopes on. I want to mention that Canada is a signatory to more than 15 trade agreements with large groups of countries. Supply management has never hurt Canada's trade position in general, and that includes the agriculture and agri-food sector. As I said earlier in my presentation, we export $100 billion in products a year to 200 countries. Supply management is essential for poultry, egg and milk production. We need to protect them in Canada. This is a sensitive sector like many other sensitive sectors that are defended by our trading partners in their respective countries. We are really disappointed with the decision made by the Canadian senators. This shows a lack of respect for the vote of the members of the House of Commons, who were overwhelmingly in favour of the bill.

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

Thank you for that answer.

There's also the fact that they waited a year and a half and did this a few days after the U.S. election, knowing that the president-elect wanted to make this a key issue. In our opinion, that really adds fuel to the fire.

My understanding of the rules of procedure is that, as far as the bill is concerned, the Senate could reject the amendment. If not, the bill will be returned to us as amended, and it will be up to the House to reject the amendments and send it back. However, with the election looming, time may be running out. So I find that truly shameful. They're thumbing their noses at all of our farmers under this system. As you were saying, just about every country has safeguards, and the United States is no exception. It's truly shameful.

I want to come back to your presentation. You talked about investments to help adapt to climate change. You said that the United States is already doing this, and if Canada were to invest as much, that would amount to $2 billion a year over five years. Can you tell us what these programs do, in concrete terms?

How would farms and farmers adapt to fight climate change and protect the environment?

[Charles-Félix Ross]

There are three main types of investments.

The first type manages risk. The U.S. has a farm bill that allows it to invest heavily in its crop insurance programs. In Canada, our crop insurance programs are not adapted to climate change, as we saw with the floods in Quebec in 2023, which had a huge impact on the produce sector.

The second type of intervention aims to help producers and support businesses that adopt environmentally beneficial practices. These practices often reduce the profitability of businesses. So, if we want to change practices, we have to support and promote those businesses as they transition to better practices, which presents risks. The United States does this by supporting its farmers through various programs. In addition, these programs are generous, because their purpose is really to change these practices so that farmers can improve their environmental footprint.

I would say that risk management, support for environmentally beneficial practices and crop insurance are the support measures to advocate. There is support in Canada, but we're very far from what our main competitors American farmers can receive, even though we're in the same markets.

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

Thank you very much. I will have other questions to ask during my next turn to speak.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste‑Marie.

Now we'll go to MP Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chair.

Thank you to all the witnesses for being here.

Ms. Crocker, just two days ago, the AMSSA published the following response to the federal government's 2025-2027 immigration levels plan. I'm quoting from it:

The 2025-2027 Immigration Levels Plan indicates a reduction in immigration levels by approximately 20% for 2025.

Canada doesn't have an immigration problem; it has a planning problem.

The need for a coherent and compassionate immigration strategy is imminent.

Can you elaborate on why you believe Canada has a planning problem rather than an immigration problem?

[Katie Crocker]

I can, absolutely, and thank you, MP Davies, for the question.

We have seen immigrants scapegoated for many of the systemic issues that we have here in Canada. The most recent is housing, but this is not new. Over the years, we have seen many burdens placed onto newcomers to shoulder the responsibility for lack of planning. We have had an infrastructure planning problem in this country for decades.

Housing supply has been neglected. It has been extremely difficult for builders to be able to get permits. There has been a very poor connection between the provinces and the federal government in terms of planning for immigration and looking at where newcomers are going to be able to settle once they get into communities, because once newcomers come into Canada, they settle in communities. Couple with that the temporary worker program and the international students and the lack of planning that has been done there. All of this has led to the culmination of a series of events that amounts to a significant housing shortage that has nothing to do with the newcomers.

This housing shortage is a planning problem. It is an all-of-government problem, and we are seeing more and more people wanting to put this on the shoulders of newcomers.

We know that we are going to have a significant labour shortage in this country in areas where we have leveraged newcomers to fill job gaps. We already have a significant labour shortage in this country, and the only way we have population growth is through the arrival and successful settlement of newcomers.

We're seeing people landing in Canada, after going through very strict processes to get here, who are not able to find housing and are not able to work in the jobs in which they are trained. This brings us to the foreign credential recognition challenges that we are having, which is also a planning problem, not a newcomer problem. We continue to see ourselves going round and round in circles, scapegoating the newcomers we are leaning on in order to keep our country and our economy moving.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

You've touched on this, but I want to lead into the impact this might have on our economy. After all, we're talking about pre-budget planning here.

How might the reduction in immigration levels for 2025 and thereafter impact the communities and sectors that rely heavily on immigrant contributions, and also, I guess, impact our economy at large?

[Katie Crocker]

We can start by simply looking at the facts. The majority of the workforce that is going to be leaving are going to be leaving for retirement. We're estimating that about 30% of the remaining workforce is not remaining because of retirement; it's due to growth and the lack of labour to fill that need.

We've leaned on the temporary worker program for far too long, and we've done this without creating pathways to permanency. All of the investment that goes into bringing people into Canada, settling people in Canada and then having them unable to work in their area of expertise has cost our economy a lot of money.

I don't have the data in front of me right now, but you can pull this up quite easily to see the discrepancy between what people can earn and contribute if they're able to have their credentials recognized versus what they're actually earning and contributing because we're not recognizing credentials. That in and of itself is causing a massive gap.

As more and more people need to settle outside of urban areas because of the cost of living in the urban centres and start to settle into smaller centres, we're seeing those communities deeply impacted because they're not able to fill the jobs to keep their communities running, and they're also going to be facing problems with taking over small businesses. We're starting to see this as a really significant issue in smaller communities, where small and medium-sized businesses do not have people who are able to take them over and are shutting down. This is having a very significant impact on the community as a whole.

[Don Davies, NDP, Vancouver Kingsway, BC]

I've done a bit of research. According to Statistics Canada, immigrants play a key role in a number of Canada's key sectors, including the construction sector, accounting and others.

I want to focus a bit on health, because we know that we have a shortage in the health sector, and immigrants play a key role. They make up 25% of registered nurses, 42% of nurse aides and related occupations, 43% of pharmacists, 37% of physicians, 45% of dentists and 61% of dental technologists.

Again, you've touched on this, but in your view, what impact will a reduction in planned immigration levels—or a lack of planning—have on Canada's labour force in the coming years in the health sector?

[Katie Crocker]

This is where we're seeing the current plan being quite reactive and not particularly proactive.

Here in British Columbia, we have three million British Columbians who can't get a family doctor. Where is this going to leave us in the next 10 to 15 years as we start to see increased retirements, but we don't have the population growth to be able to fill those positions? Even if we did start having miraculous population growth right now, we're decades away from having it impact our labour market.

The health care and construction sectors are going to take a significant hit here. I know that there's been talk of prioritizing areas in the levels plan and that we would prioritize the health care sector in the 395,000 permanent residents that we're going to be welcoming in 2025. We also have 300,000 people in Canada who came on the CUAET visa from Ukraine who are going to be expecting permanent residency or pathways to permanent residency. We have a huge number of temporary residents—

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Crocker.