Finance Committee on Feb. 2nd, 2023

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

Okay.

We are seeing that innovation is a real struggle for our country going forward and we're seeing the struggle in the labour market. I'm going to talk a little bit about capital now and go to you, Mr. Mueller.

When we talk about taxation and the luxury tax and we take money directly from a company, does that worsen or improve your members' ability to invest in their businesses to make them more competitive on the global market?

[Mike Mueller]

Yes, I think it would, but there's also the international reputation piece to that. When I speak to my international counterparts, they ask how it's going in Canada. When I talk about the luxury tax in particular, they look at me with disbelief. They say, “We want the industry that you guys have. We can't believe the government is putting a tax on your industry when we want what you have.”

It's almost good for them, but they can't believe that the government would be doing that. I think it's important to point out also that fewer aircraft being built equals fewer jobs. It's also very rare for industry and unions to come together on the same side of the table and to say, “Don't do this because it's bad for jobs.” These are high-skilled, high-paid jobs on which there is going to be an impact.

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

Thank you very much, Mr. Mueller. My time is limited.

We've heard from three separate industries strong proof points that innovation, capital and labour have all been undermined over the last eight years. Canada is indeed broken, and these Liberals have broken it.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Lawrence. Now we move to MP Dzerowicz.

Go ahead, please, for five minutes.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to say thanks to all the amazing presenters today. I wish I had time to ask all of you questions.

I will begin with the Council of Canadian Innovators and see if I can find my way back to the table here.

We, as a federal government, are recognizing that we need to do more around innovation and invest more to set Canada up for continued success in moving forward. In our last budget we announced the creation of a Canadian innovation investment agency as well as the review of SR and ED, among many things.

Mr. Schiavo, I do want to delve more into your recommendations, to make sure I'm very clear. I think they are very important. You were quite clear about the federal procurement strategy and the need for it to be less complicated and much easier for Canadian innovators to enter into. Thank you for that.

In terms of SR and ED, I heard you loud and clear: We need to begin the consultation on that review. As well as that, I appreciate that you have a full report out, which I will be reading. I think we're anxious to get going on that as well.

My first question is really around your third point, around talent. There actually is a global talent stream. It was very deliberately set up for technology talent and some of the most sought-after, highly skilled workers around the world. It's supposed to be able to bring in workers within a two-week time period.

Can you talk to why that program is not working for you? What specifically would you be looking at adjusting in that program so it could better ensure that we are attracting some of the best talent around the world?

[Nicholas Schiavo]

Thank you for that question.

Let me begin by saying I think the global talent stream is an initiative that has helped our industry tremendously. CCI is actually a designated referral partner in that program, so it's something we interact with all the time.

In terms of ameliorating that program, I would say increasing the thresholds in terms of the amount of skilled talent we can bring into Canada would be very helpful. To speak to some of our recommendations, we're also looking at other strategies whereby we can have skilled talent come to Canada without a job offer on what is known as a high potential tech talent visa. This is something other countries have implemented quite well. The idea is to really bolster the labour density in these communities. The more you bring this high tech talent into these communities and bring that connective tissue, the more likely they are to embed themselves in our SMEs.

I would also say we would love to see federal leadership in terms of convening research institutions and the provinces and territories and bringing people together to have a national summit around high-tech talent.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you. That's very helpful.

You talked about an IP strategy, which is very important. As well, you talked about patent collectives. We did invest $30 million into a patent collective pilot that's been focused on clean tech.

I want to know whether you think that's been successful, whether you think it needs to be renewed and how you think we should expand that project.

[Nicholas Schiavo]

Absolutely: I think the Innovation Asset Collective has been a huge success. This is an organization that we work quite closely with.

Actually, in the most recent months, we submitted a letter of support not just for the renewal of that program, but also for its expansion. Really, I think our ask to government is to see that program renewed, yes, but with more funding and a greater focus on other sectors as well—health tech, fintech and cybersecurity—just because the model works quite well.

Yes, we would love to see that program continue and grow.

[Julie Dzerowicz, Liberal, Davenport, ON]

I'll go to my next question.

There's a huge shift in our economy. We're moving more from “tangible” assets, as they say, to intangible assets, which is why we talk a lot about IP protection, data and freedom to operate. What would be some of your next-step recommendations to make sure we're putting some of those rules into place so that Canadian businesses know what those rules are and they'd be able to succeed?

[Nicholas Schiavo]

I'll give two very tangible examples.

One, as you mentioned, comes from budget 2022, and that is a patent box regime. Again, this is something that many other countries do very well. The idea is that you are taxing commercialized technologies that are developed here in Canada at a lower corporate tax rate to really encourage those patents. This is something that we should get up and running as soon as possible.

Another idea, which Israel does quite effectively, is a payback clause in terms of IP. When a company decides to offshore or sell technology that has been publicly invested in by Canadian taxpayers, there would be an obligation to repay that investment back to taxpayers, typically at a multiple of two or three times, just as a private sector investor would expect. Again, the idea is really to stimulate opportunities to protect that intellectual property and create that wealth over time.

[Julie Dzerowicz, Liberal, Davenport, ON]

Do I have time? No? Okay.

Thank you so much.

[Nicholas Schiavo]

Thank you.

[The Chair, Liberal, Peter Fonseca]

I know. It goes quickly.

We now go to the Bloc and MP Ste-Marie, please.

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

Thank you, Mr. Chair.

Mr. Mueller, you echoed the position of the aerospace union and the concerns they have about the luxury tax.

I'd like to quote David Chartrand, who represents the International Association of Machinists and Aerospace Workers in Quebec: “We agree that we need to get the wealthiest to do their fair share, but this tax does not do that. In its current form, this tax is hurting aerospace workers and our economy, the government needs to review how its tax works”.

Do you agree with his analysis, Mr. Mueller?

[Mike Mueller]

Yes, absolutely. The government should review it and take a look at the impacts of the tax. It is hurting workers. It's hurting manufacturers.

Again, as I said before, it's interesting when you have union representatives and industry representatives coming to the same table at the same meetings and saying the same things, like: “Please don't do this. It's going to hurt workers and it's going to hurt high-skill, highly paid jobs.” Also, then, it's going to hurt the capability and the capacity of the aerospace sector in Canada.

If I could just go back, I think the overall piece is that aerospace strategy. That was my first point in my opening remarks. It's absolutely critical that we have an aerospace strategy. It's my firm belief that if the government—and I hope all parties would agree with the need for an aerospace strategy—identifies aerospace as strategic and puts in place a strategy, you wouldn't have these one-offs and you wouldn't have policies working in contradiction to each other, which is what we're seeing now.

There's money being put into innovation, which we are grateful for, but then the luxury tax is hurting manufacturers, hurting jobs and hurting the capacity and capability that the other funding is looking to build up. There's a little bit of a contradiction there.

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

Yes, it's important to have an overall strategy to support such a significant sector.

I'd like to remind my colleagues on the committee that every country with an aerospace industry of this size and scope has a strategy focused on support, vision and cooperation. All those countries have one, except Canada. That needs to change.

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste‑Marie.

Now we go to the NDP and MP Green.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you very much.

I want to go back to Ms. Sarangi and the 2023 “A Just Recovery for Hamilton” report. I want to highlight something she talked about in terms of food banks.

In Hamilton, 75% of people accessing food banks are on social assistance. Poverty among seniors and those with disabilities in Hamilton has increased over the past several years. From 2016 to 2021, our seniors' poverty rate, which had been 11%, rose to 12%. People in Hamilton on provincial social assistance have seen their supports completely stagnated, with people on ODSP having an annual income of $9,600 below the low-income poverty line. For the folks on Ontario Works, in many cases for them it's even worse, with their supports being frozen at $733 a month. There's stagnation in social supports coupled with the astronomical increase in the cost of food and rent and the basic necessities for survival.

I'm wondering if you could take the remaining moments here and share what you're hearing in terms of the human impacts of legislated poverty across the country, based on the stories that you've heard and the work that you've done.

[Leila Sarangi]

Thank you for that question.

No social or disability assistance program in any jurisdiction across the country brings people's incomes to that low-income measure. That low-income measure is not a thriving income; it's just getting by, day to day. The stories I hear are horrendous. People call my cellphone all the time in desperation. There is nowhere—nowhere—for people to turn.

We are really encouraging this government to not make things worse and to implement a CERB amnesty immediately, and to then look at the Canada social transfer. That's the block transfer that goes to provinces and territories to fund these programs. Increase investments in those and tie them to conditions to make sure they're advancing our human rights obligations.

[Matthew Green, NDP, Hamilton Centre, ON]

On that note, I'm sure you're familiar with the Liberal government promise to introduce the Canadian disability benefit without delay. That was some 870 days ago. I'm wondering if you would see a national disability benefit program for consideration in this 2023 budget to help lift people out of poverty as well.

[Leila Sarangi]

Absolutely. That is an urgent priority.

We would also like to see a disability benefit for children and a caregivers benefit for their caregivers. Children and the families who are caring for children with disabilities are not included in that federal disability benefit. Both of those things are extraordinarily urgent and should be moved on as a number one priority.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Green.

Now we will move to the Conservatives and MP Chambers.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

Mr. Lansbergen, you mentioned in your opening remarks the willing buyer and willing seller model. Just to clarify, are you suggesting that this model isn't actually occurring or that there are circumstances in which that's not the case?

[Paul Lansbergen]

Yes. We have two live cases in which the willing buyer and willing seller policy of the federal government, as stated by Minister Jordan on March 3, 2021, is not being followed. There is the elver fishery in Atlantic Canada and the Dungeness crab on the west coast. The government is essentially expropriating part of the individual licence-holder's access to reallocate to indigenous interests.

[Adam Chambers, Conservative, Simcoe North, ON]

Indigenous reconciliation is obviously very important. It includes economic reconciliation, so it makes sense that the government is trying to increase participation in the industry. At the same time, having a licence-holder's property expropriated with no compensation doesn't really seem to be the principle or the initial intention of the policy. Is that correct?