Finance Committee on June 2nd, 2026

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

You talked about the importance of investing in municipal infrastructure. A number of municipalities, particularly in Quebec, are going to hit a wall.

How can the government better support municipalities with their municipal infrastructure to help our businesses develop?

[The Chair, Liberal, Karina Gould]

A very brief answer, please, because there's 10 seconds left.

[Michelle LLambías Meunier]

Municipal infrastructure priority must be given to housing and water. Focusing on that first will go a long way to helping municipalities become more sustainable.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Lefebvre.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

Thank you.

[The Chair, Liberal, Karina Gould]

We're now going to Mr. Leitão for six minutes.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

Thank you, Madam Chair.

Good morning, ladies and gentlemen. Thank you all for being here. Our speaking time is a bit limited, so I might not have time to speak with everyone, but I'll do my best.

Professor Laurin, you talked about a concept known in English as orgware, and I find that quite interesting, especially since, as you said, a lot of SMEs tend to overestimate risk.

How could we organize this in practice? Who would set it up? How could this concept be operationalized?

[Frédéric Laurin]

To shed some light on this concept, I'll talk about the three stages of regional economic development.

The first stage is computer equipment: infrastructure, telecommunications, industrial parks, ports and highways, to name a few. They're essential, but still not enough.

Then there's software: supporting businesses in terms of productivity, innovation, exports, tax credits, and so on. That's essential, but it's not enough.

What's missing is the organization of all that and making the connections, what I call “orgware”. Let's say companies want to export. They have to be more productive and they have to solicit markets. They also need to ensure workforce training and funding. All this means a lot of elements and different stakeholders would be mobilized for export.

Well, someone needs to coordinate the strategy. Currently, in the regions, particularly in Quebec, there are no stakeholders playing that role to prevent work from being done in silos. It's about having a coherent strategy across all of those elements and engaging companies in what I would say is far upstream, meaning the initiation of projects on the ground.

What I propose is for organizations like the Business Development Bank of Canada, or a department like Canada Economic Development, to try and do more work on the ground. I know they're already doing a lot, but they should be out there a lot more and paying more attention to the projects that require coordination. Coordination is not always included in project‑related budget envelopes; it comes out of salaries, and government programs often don't like paying salaries. In some cases, such as collective projects, that's what will be needed to put things together.

I could summarize the operationalization in two points: really working upstream on the ground with companies and making sure things are done collectively.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

I'll go back to business associations and mention one of them, because I met with them earlier last week. It's called STIQ, or Sous-traitance industrielle Québec, an association of SMEs and large companies in the industrial sector.

Could those business associations also help better organize the strategy?

[Frédéric Laurin]

Yes, absolutely.

The issue is these are either sectoral organizations, which intervene in a sector and are already useful, or provincial or national organizations. It doesn't solve the coordination issue at the regional level. We really see it at all levels.

Let me give you an example. In Trois‑Rivières, we try to intervene far upstream, meaning a 360° intervention where we look at the company's engineering, human resources, capacity and funding, because we know it's all interrelated. The problem is organizations are already providing support for innovation and exports, which means we can't do a 360° turnkey intervention. We're told there are already funding programs left and right, but none of those are connected or coordinated.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

That's great. Thank you.

Mr. Godbout, it's a pleasure to see you again.

[Luc Godbout]

Likewise.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

You made a number of very concrete proposals. Thank you.

I'd like to talk about the digital services tax. How do you see that evolving? Should it have a broader scope than the one that was abolished, which was much more recent? Is there a practical way to implement a digital services tax?

[Luc Godbout]

I especially think it was abolished a bit quickly. We lost our lever, even though its application was starting the next day. We're talking about a billion dollars a year. The issue is mostly that at least three of the other G7 countries still have one.

We have to think about how to bring it back. I agree with you that its scope could be broadened, but it has to be brought back, especially in the AI logic, where large companies might be the ones profiting from this type of business and some Canadian or Quebec companies, regardless of their size, might decline. That's why I think we absolutely need to continue thinking about this.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

Thank you.

I see my time's up. I'll speak to the Fédération des chambres de commerce du Québec and the Conseil du patronat du Québec in the next round of questions.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Leitão.

Mr. Garon, you have the floor for six minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Madam Chair.

I would like to extend my greetings to all the witnesses and thank them for joining us today.

I will begin by addressing the FCCQ representatives.

The government has introduced what is known as the productivity super-deduction, which is simply a marketing term for accelerated depreciation. They gave it a fancy name and thought it was a generational initiative, but it's actually quite standard in many countries.

The difference is that, in Canada, the Minister of Finance has handpicked the winners; some sectors have access to it, but others do not. Take the fibre-optic sector, for example. Investors tell us that, if we want to roll out fibre-optic infrastructure to improve our digital sovereignty, we do not have access to the super-deduction under the current parameters.

Do you agree that significantly broadening the application of this super-deduction by selecting fewer winners would serve as a catalyst for growth and potential economic development?

[Hubert Rioux]

Thank you for your question, Mr. Garon.

Yes, indeed. If we were to expand it, that could be a step in the right direction. Of course, we are also aware that such a measure poses challenges in terms of public finances. It involves significant costs. We believe it would be more beneficial in the short term to simply make it permanent, as the United States has done, particularly for all manufacturing sectors. So far, a phase-out period is planned for this measure between 2030 and 2033.

However, we know that most companies plan their investments several years in advance. Therefore, it is counterproductive to plan a phase-out period for this measure, especially since the United States is currently very effective at attracting manufacturing investment domestically through its tariffs and tax policies. So, we are shooting ourselves in the foot a bit by telling companies that after 2030, they will no longer be eligible for it.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you.

Professor Godbout, you are the research chair on taxation and public finance at the University of Sherbrooke, I'll continue with you.

You mentioned the accounting for defence investments, and I recall that, when we debated the economic update, we asked officials during a briefing whether submarines had been ordered and whether there were appropriations for submarines. We got the impression that massive defence expenditures that hadn't yet been budgeted were imminent.

It's a bit difficult for parliamentarians—and, consequently, for a research chair such as yourself—to understand what's coming, how much will be allocated, for which year, and to know what's included in the amounts already allocated.

If you had a concrete proposal to make to the government about how to report expenditures for the coming years, how would you go about ensuring it is transparent and predictable?

[Luc Godbout]

Greater transparency is essential. If, right now, when we read the budget, we cannot tell whether we are on the right track for investment—if the funds aren't budgeted—then transparency is a problem. I think this is the issue we need to address above all else.

The government has already presented a five-year framework, which is good. We are able to track changes in the deficit ratio and the debt-to-GDP ratio, among other things. However, for other government policies—particularly if we want to invest more in defence—those intentions need to be included in the financial framework. Otherwise, we cannot keep track.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Okay.

I'd like to come back to the issue of anchors. What you are telling us is that the anchor—whichever one it is—must be stable and not change over time. Do we have a problem here in Ottawa with the government changing the anchor when it no longer suits its purposes?

[Luc Godbout]

Let's face it, in Ottawa, the anchors are not very solid. We can even go back to Prime Minister Harper, who managed to pass anti-deficit legislation. At the first opportunity, the new government scrapped that law. Consequently, the anchors would need to survive election years and votes. We can see that the anchors have also changed with each successive finance minister, which is another problem.

Some anchors are actually quite easy to establish. For example, having a deficit-reduction ratio as a percentage of gross domestic product is not very difficult; it might be appropriate and even legitimate. We should sit down and define anchors that could withstand the vagaries of political and economic life.

[Jean-Denis Garon, Bloc, Mirabel, QC]

I understand.

I want to briefly touch on diesel. At some point, in the House, I explained that, in real terms, the price of gasoline hadn't risen much over the past 10 to 15 years, though it has fluctuated significantly. It's important to note that the real purchasing power of the wealthiest 80% of households has increased. These people have been able to buy large cars and become more dependent on fuel. In contrast, the least affluent 20% of Canadians are vulnerable to these fluctuations. As a result, the fuel excise tax exemption ultimately benefits 80% of people who may not actually need it. Furthermore, it hinders the transition to a green economy.

You said that if you were in the minister's position, you would not renew this exemption when it expires. Is that because it's too expensive?

[Luc Godbout]

If I were in the minister's position, I would not.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Indeed, a number of us agree. Is it because it did not achieve its objectives, it costs too much or all of the above?