Finance Committee on May 24th, 2022

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Blaikie.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you.

[The Chair, Liberal, Peter Fonseca]

That concludes our first round of questions.

We're moving to our second round, members and witnesses, commencing with the Conservatives. We have MP Chambers for five minutes.

Go ahead, please.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Mr. Chair. It's nice to see everyone here. Thank you for taking time this week to be with us with excellent presentations.

I'd like to swing back to the chamber, if I may, for most of my time, Mr. Chair.

Mr. Agnew, you talked about two issues. I'd like to focus on both, but first let's talk about the Competition Act changes.

Are there challenges in principle with these changes or is it mostly around process and interpretation and having some ability to have feedback on some of this legislation before it becomes law?

[Mark Agnew]

Absolutely it is the latter. We don't have any challenge with discussing how to modernize the penalties, because admittedly they are quite small today. We don't have a problem with talking about abuse of dominance, because we want to make sure there is something in there that balances the needs of both businesses and consumers.

Unfortunately, what we saw in the budget document, which was going to be something that was a bit more narrow in scope, has ended up being quite a broad piece now in Bill C-19. Having a more robust consideration of those and a more structured process as part of the phase two the government has committed to doing already I think would be the way to go about having that conversation.

[Adam Chambers, Conservative, Simcoe North, ON]

From your perspective, is there a pressing need that this has to become law by the end of this session—by June? Is it possible that we could perhaps consult on some of these changes over the summer, not at this committee but with respective stakeholders within industry, and then perhaps put a refined version of these in the budget bill in the fall?

[Mark Agnew]

That's correct. There is no need to press through with changes before the end of the spring sitting of Parliament.

As I alluded to in my opening comments, there has been a tendency by some to link the Competition Act changes to what can address the current inflationary environment. Certainly our views is that these changes, if they're enacted in June, are not going to move the dial on inflation. We need to make sure that we get it right as opposed to getting it done quickly.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

We heard last week a stakeholder mention a question around constitutionality of at least one of the sections. Is that a view that you've looked at as the chamber, or have you sought external opinions that give you the same kind of concern?

[Mark Agnew]

Yes. We sought out the views of our members, and we have heard from some of them the concern about the scope of the penalty size and what that means from a constitutional perspective. Thankfully, despite all my sins, I'm not a lawyer—I didn't have to go to law school—but this is the sort of thing where we do need to have a fairly rigorous discussion about it. Again, some members have raised that constitutional concern with us.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

I'll turn now to the recreation tax, or the boat tax, as we've talked about many times here at this committee. You mentioned the U.S. having gone down this road and reconsidering it.

What's the experience that we should be drawing on here in Canada?

[Mark Agnew]

I'm not familiar with all the ins and outs of the U.S. experience, but there are a couple of things to consider. One is the impact on manufacturing jobs, because this is a very real business cost that is imposed upon companies. Certainly in the current, again, inflationary environment and recovery from the pandemic, companies have an even thinner margin and less manoeuvre room to go with.

Then, of course, another thing is that if other jurisdictions aren't doing this, people are going to be looking for circumvention measures. Are those jobs just going to go away and move elsewhere? The people who are intended to be taxed are going to move the economic activity, and we will have nothing to show for it here on the domestic end.

[Adam Chambers, Conservative, Simcoe North, ON]

Would it surprise you to learn that the government did not complete an economic impact assessment prior to the introduction of the tax? They have been talking about it for at least a couple of years, but we haven't seen any economic analysis.

[Mark Agnew]

I haven't seen any economic analysis.

Again, this goes back in some ways to the point about competition, and I think some of the other remarks that witnesses made today. There's a need to make sure we're doing this right and that, as people like to say, it's evidence-based policy-making. What is the evidence base around it, and what are going to be the real-world impacts if we go ahead with it?

[Adam Chambers, Conservative, Simcoe North, ON]

I have one final question.

If you had any advice to the committee over the next couple of weeks, are there amendments that you could perhaps provide in writing to the Competition Act changes, if we're unsuccessful in having it separated out from the bill? That would be helpful.

[Mark Agnew]

Absolutely.

If the chair could just indulge us, the fact that we haven't been able to come forward with amendments from the discussions that we've had with our members thus far, I think underscores just how complex this really is.

To go back to the honourable member's opening question to me, we're not actually seeking to have the entirety of the Competition Act provisions removed from the BIA. We've really tried to give it some diligent thought to say what the real problems are that need to be consulted on more. Hence, that's why I've come to the committee today seeking for those three specific provision to be removed.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you. Thank you, MP Chambers.

Now we're moving to the Liberals, and I have MP Chatel, for five minutes, please.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you, Chair, and thank you to all the witnesses with us today.

My first question will be for Mr. Agnew from the Canadian Chamber of Commerce.

In its newsletter, the chamber said that “it has never been more important for the federal government to focus on economic growth”, which was a good positive mark for the budget. On that, I think I completely agree with you. I would add that we should focus on inclusive growth—although some would say that we should focus rather on our deficit. I agree with that too. However, we should also focus on having the best net debt-to-GDP ratio of the G7 and the G20.

As the world is transitioning towards a green and digital economy, I think it's very important that we focus on key sectors of our economy—where it could grow and where we could all succeed in tomorrow's economy.

On economic growth and the key sector investments, may I have your thoughts on them and our budget's focus on those sectors?

[Mark Agnew]

Again, there are a lot of sectors that I could talk about, being from a multi-sector association, but I'll pick up on two that were addressed in the budget specifically.

One is around the critical minerals industry. I think this is an opportunity for Canada to step up on the world stage and show that we have some heft and something useful to bring to the table for our allies. Critical mineral products are used in everything from cellphones to industrial applications, through to and including defence and military applications. So certainly, in the current environment, that was something we were happy to see the government make an investment in to get more of those products out of the ground and then develop the downstream supply chains. Of course, that will also help in the transition to a lower carbon economy.

The other measure, of course, that we were also quite happy to see included in the budget was the CCUS investment tax credit. This is very expensive technology to deploy, and certainly there isn't going to be any hope at all of hitting our already very ambitious targets by 2030 without the use of CCUS technology. I think to help maintain the viability of the oil and gas sector, that's quite a critical measure to have happen, and we're happy to see that in the budget as well.

[Sophie Chatel, Liberal, Pontiac, QC]

You mentioned the green transition in the budget and the investment in new technologies to position Canada ahead of the pack in the new green economy. Often the concession towards a green economy are these costs at a higher level, a more fundamental ecological level, but could you talk to this committee about how this is also an economic issue?

[Mark Agnew]

As much as there's going to be a transition, it creates new opportunities for Canada. For instance, in lower emissions-intensity products like natural gas, what does this mean for us, particularly, again, in the context of what's going on in the war between Russia and Ukraine?

Nuclear is another area where we have a potential to deploy SMRs. Again, we need to make sure that we're on the forefront of that, and also hydrogen. I think hydrogen is still a bit more of a ways off, and there are still a lot of details that need to be worked out, but those are other fuel sources where, if we're making the investments now, then we're going to position ourselves to be a much more competitive global player in the future.

[Sophie Chatel, Liberal, Pontiac, QC]

If we were to focus only on our deficit and the fiscal balance and not focus on how important it is to invest in those sectors of growth, what could happen on the world stage for Canada?

[Mark Agnew]

Well, certainly there does need to be de-risking of a lot of these products. They are expensive, and companies need to be able to have assistance in that transition. I wouldn't want to leave the impression that we see it as an either/or proposition. There does still need to be work that's quite critical to our sustainable public finances.

What you'll often hear us talking about as the Canadian Chamber is ensuring that when we are spending those public dollars, they're going to the areas that will support sustainable economic growth that will set up future generations for success rather than being spurious investments that may not have a long-term benefit to the Canadian economy.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Chatel.

Now we'll hear from the Bloc and MP Chabot for two and a half minutes, please.

[Louise Chabot]

Thank you, Mr. Chair.

I have trouble understanding how the employment insurance appeal process got shoved into a budget bill of over 400 pages. It would seem to me to be a highly specialized subject. We could have studied it in connection with the reform of the Employment Insurance Act. Our hands are tied.

Mr. Beauregard, you said that there were four essential elements that should be in the reform: the new appeal board should report to the Employment Insurance Commission rather than the chair; employment insurance recipients should be entitled to regional representation and an in‑person hearing; all members of the appeal board should be appointed on a part-time basis to guarantee equity; and last, the Employment Insurance Commission should be in charge of the selection process for employer and employee members.

Is that an accurate summary of your main positions on what needs to be studied in greater depth?