Finance Committee on Oct. 26th, 2022

[Julie Dzerowicz, Liberal, Davenport, ON]

Do you think that should be a key priority for us?

[Robert Asselin]

Yes, it requires a lot of political leadership, both at the federal level and at the provincial level, I believe.

[Julie Dzerowicz, Liberal, Davenport, ON]

I just want to make sure that it continues to be a priority. I call it national friend-shoring, something that we should be doing nationally here.

I think you talked a little bit about business investment and why we don't have that. What would be specific recommendations that the Business Council of Canada has for government to stimulate business investment in Canada?

[Robert Asselin]

It's a great question. I appreciate it, but if it were that simple, I think we would have solved that problem. It's an ecosystem issue. Part of it is, as I said, a lack of scale of our businesses. Our ratio of SMEs to large firms is very high compared to the U.S. In fact, the U.S. has three times as many large firms as we do. And then the composition of our economy....

I would say that the most important thing, if you ask our CEOs, would be regulatory predictability; in other words, the confidence that private actors have that the government has clear rules for investments, that they will follow through and that it will be stable and sustainable going forward. I think that's the most important thing.

[Julie Dzerowicz, Liberal, Davenport, ON]

We're running out of time, but if you can articulate what some of those clear rules might be that you think we should look at urgently, I'd very much appreciate looking at it.

[Robert Asselin]

I'll just mention, if I may, that Minister Freeland laid it out in her Brookings Institution speech. She mentioned that Canada was open to fast-tracking some energy projects under certain criteria. I think it would be very welcome if the government could follow through on that and present to investors and to the public, to Canadians, what this would entail going forward.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Dzerowicz.

Now we go to the Bloc for two minutes.

MP Lemire, you have the floor.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you very much, Mr. Chair.

Mr. Tougas, one thing you recommend is to provide stable and predictable funding for agronomic and agri-environmental research and innovation. This is timely, because the Station de recherche agroalimentaire de l’Abitibi‑Témiscamingue in Notre‑Dame‑du‑Nord is interested in agroforestry, among other things. The station is part of Université du Québec en Abitibi-Témiscamingue, or UQAT.

It's in the process of fundraising to create a specialized organic field crop industry. Don't you think that the federal government could play a major role as a financial partner and contribute to this funding on a permanent basis, which would help UQAT get the industry going?

Of course, you could ask that question on behalf of all other research facilities in Quebec and Canada, at both the college and university levels.

[David Tougas]

There are all sorts of ways to enhance support for producers, and that's surely one of them. At the Union des producteurs agricoles, we also have live labs to do tests and find information on these practices.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you very much.

One problem for many farmers, especially those in the cider and honey businesses, was the introduction of the infamous excise tax. Now we're talking about a problem situation in the added flavour community, particularly in the cider business.

Are you concerned about this? What could be done to resolve it?

[David Tougas]

As it turns out, the exemption is fairly limited since it only covers apples and honey. Wed like to see it expanded to other local or berry products, such as maple drinks and sake. You know that in Quebec, we also produce cranberries, blueberries and maple, three businesses that could be exempted from the excise tax in addition to honey and apples.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Now we'll move to the NDP and MP Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Mr. Asselin, I think you touched on the concept of Canada needing a national industrial strategy. The New Democrats have been calling, for several decades, actually, for a national industrial strategy.

I'm wondering, in the time remaining, if you could give us your thoughts on what the key elements of a national industrial strategy should be.

[Robert Asselin]

Very briefly—and thank you for the question—talent is key. We have to ramp up economic immigration to make sure we have the talent we need, given our aging demographics in Canada.

Second, I think we have to do much better on the R and D side, translating R and D—applied R and D and industrial R and D—into the economy. We don't have institutions. We don't have the architecture that the U.S. has on defence with DARPA, with NASA on space, and ARPA-E now with energy. The NRC is a good institution, but one that has been in place since the 1950s and has not renewed its mandate. R and D commercialization is a really important aspect, and one we've been struggling with.

I would say, “Pick some lanes”, as the U.S. just did, on competitive sectors of the future. We have quantum AI. We have some strength in this country—critical minerals, EVs. Let's move forward on ag tech, biotech, clean tech, but let's pick some lanes and let's be very intentional and deliberate on what we want to accomplish.

The outcome of an industrial strategy, in my opinion, is higher productivity so that we can have better living standards for all Canadians.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Davies.

Now we will go to the Conservatives for four minutes.

MP Lawrence, go ahead, please.

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

Thank you very much, Mr. Chair, and thank you to the witnesses.

This will be the last opportunity I have to chat with you. I'll start out with the Canadian Taxpayers Federation.

Of course climate change is a very real concern, but my challenge with some of these Liberal policies is that, one, they haven't once hit the emission targets. My second concern is that, as they increase the burden on taxpayers, on companies, on individuals and on corporations, it gives them less ability to innovate, to be more sustainable and to embrace the technologies that are coming out, such as carbon capture.

Could you comment on whether you would agree with that?

[Franco Terrazzano]

I think making it more expensive for people to fuel up on their way to work is a tax plan, not an environmental plan. I think many Canadians right now are struggling. They have been struggling through two years of the pandemic, and they are struggling now with high inflation.

I think we also need to look around the world at what other countries are doing. We saw Australia cut its gas tax in half. We saw South Korea providing gas tax relief and Germany providing gas tax relief. I mentioned the United Kingdom providing gas tax relief.

Immediately the government could hold a press conference and help save drivers about $20 every time they fuel their minivan at the pumps. They can save drivers between 18¢ and 30¢ per litre by scrapping or suspending federal gas taxes.

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

Of course, part of your mandate would be to examine tax policy and the equity and fairness of it.

One thing that's always struck me about it is the charging of GST on the carbon tax. I never understood the rationale. In fact, when I asked the Department of Finance, they just said, “Because it's easier”, which seems like such a wrong answer. That makes no sense from a tax policy perspective, from an equity perspective, or really from any perspective other than the ministry of finance just saying that it's easier.

What are your thoughts on that?

[Franco Terrazzano]

The tax on tax is completely unfair, and as inflation increases, Canadians are paying more because of the tax on tax. When fuel goes up, the tax on tax costs Canadians more. When the carbon tax increases, the tax on tax costs Canadians more.

I've spent a lot of my time talking about the carbon tax hike, after carbon tax hike, after carbon tax hike in the middle of the pandemic, but there is also going to be a second carbon tax coming in through fuel regulations. This one has no rebate, and the government's own analysis has shown that it could cost up to another 13¢ per litre on the price of gasoline by 2030.

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

Thank you very much.

I'm just going to go to the Business Council of Canada.

Mr. Asselin, I just want to give you a little bit of an opportunity. I was very much intrigued by many of your comments. I thought they were terrific.

Are there specific recommendations—and maybe you can just point to them—with respect to tax policy where maybe we could emulate some of the things the U.S. has done otherwise, to really spur on innovation and productivity in our country? As you and I agree, it's weak right now.

[Robert Asselin]

Thank you, Mr. Chair.

We've had the SR and ED tax credit for a long time. I think it's unfocused. I think there's a huge imbalance between large firms and small firms. It goes toward, unfortunately, rewarding more small firms that don't really do R and D at scale. I would say that reforming SR and ED would be an important aspect in terms of tax credits, because it's a big tax expenditure, at least $3 billion per year.

I think you have to be very surgical with respect to sectors. You need to focus on EVs and on critical minerals to spur investments. Accelerated initiatives on capital are very important. I would recommend that we continue this on an ongoing basis. Anything, really, that attracts capital is important. I think the issue there is being focused, as opposed to being broad-based.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Lawrence.

To finish off our third round, we'll have the Liberals. I have MP Baker for four minutes.

Go ahead, please.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks very much, Mr. Chair.

Mr. Koffler Fogel, I'd love to come back to you, if I could. When you and I had an exchange earlier, I asked you about some of the points you had raised around social media literacy. I'm wondering if you could take a moment or two and just expand on what you were saying. I think we had to end our conversation. Tell us a little bit more about how we would establish social media literacy in Canada.

[Shimon Koffler Fogel]

I think we had to cut it early because I talk too much. I'll try to be a little more succinct.

I'm not an expert in education. What I do know is that when the majority of Canadians are engaged in an activity without an appreciation for what the potential consequences are, that leads to challenges. When people better understand and appreciate the potency of the tool or instrument they're using, they express greater responsibility in using it.

The proposal for a social media literacy campaign is to assist Canadians and provide them with insight in unpacking the danger spots in the use of social media.

I don't pretend to understand. People of my generation are not as fluent with social media as are our children and those who are young and immersed in it, but there are traps. We know there are some serious concerns about the seductive nature of social media lures by those who have really malicious intent. Similarly, those who promote hateful views and incitement to hate and violence have taken to using social media because it's much safer.

We have to equip people, especially young people, with the knowledge and understanding to be able to identify it, to step back from participating in it, and to flag it for both the social media platforms and the various public agencies so that it can be addressed in an effective way.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you very much for that.

One of the things I'm concerned about when it comes to social media—and I'd like to hear your reaction to this—is how social media is used to incite violence, for example, or incite hatred. When I think about anti-Semitism and I think of hate, I also think the foundation for that is often in misinformation.

Do you agree with that? Please tell me if you agree with that, because if you do.... Perhaps you can answer that question, and I'll come back to you with my follow-up.