Industry Committee on Nov. 27th, 2007

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Nash.

I'm going to ask a few questions in the next Conservative spot.

I hear what all of you are saying with respect to smarter regulation. Many of you have pointed to internal trade within Canada. I think that's a very fair point. But in terms of regulation, we hear it very often that we need smarter regulation, and we need less regulation in certain cases, but it's often at the abstract level. Do you have a list of regulations that are currently being imposed on your industries that you could submit to the committee, or examples of specific regulations you want to highlight, that are in fact harmful in a competitive sense?

[Nancy Hughes Anthony]

It's a lovely invitation and we will take you up on that.

[Terry Campbell]

Absolutely.

[Nancy Hughes Anthony]

Once again, I think our examples would go along the line of not necessarily eliminating this or eliminating that, but showing where there is regulatory overlap or duplication. That is really I think the frustrating point.

[Mark Yakabuski]

Regulatory streamlining, I call it, and we can give you lots of examples.

[The Chair, Conservative, James Rajotte]

Okay. It would be good if you can provide that.

The second issue is with respect to infrastructure. There is a big debate over infrastructure. I mean, our government has invested what we would consider a substantial amount of money over the last two budgets for infrastructure over the next seven years. Now you've had the FCM report coming out and saying...I think it's a $123 billion deficit. I mean, this is one of the things.... It seems the more money you put in, the more of a growing problem you realize we have.

I think what you say, Mr. Yakabuski, with respect to challenges of weather.... I don't want to get into debate over climate change, but in Edmonton in the last few years we've had severe floods in certain areas. I have to say your industry responded very well, and those are the remarks I got from constituents. But this was infrastructure that was put in place I think in the 1970s, 1980s, and 1990s. So this was not your decaying, old, 1950s-and-earlier infrastructure.

With the growth of cities, like in my city and other cities around the country, has your industry done a critical analysis of the FCM or other reports and come up with an infrastructure plan going forward 20 years? I know certain cities, like the City of Edmonton, have done that, but has this been done on a national scale so we can actually get an accurate picture of what's needed, especially on the water and sewer side?

[Mark Yakabuski]

It has not been done, and it needs to be done. I fully grant that.

Remember that $33 billion over seven years is a very considerable sum of money. I'm certainly not going to say otherwise. Remember that in 1967 Canada spent 5% of its GDP on infrastructure spending.

[The Chair, Conservative, James Rajotte]

And today...?

[Mark Yakabuski]

In 2002, we were spending just over 2% of our GDP on infrastructure spending, so there's a big difference there. Obviously, some of that is related to the baby boom and such. The need is more critical in some of the older cities and the downtown areas and others. We all grant that. I think it is a growing concern.

The fact of the matter is there are lots of areas of this country--I'll give you a perfect example. Last summer, a city in southern Ontario almost had to close its water treatment plant on two occasions. Now what does that mean? It couldn't properly conduct the waste water it was receiving and treat that water. That means that a source of clean drinking water would potentially have been compromised for that city and raw sewage would have been flowing directly into Lake Ontario. I don't want to exaggerate these things. The fact of the matter is that this is not a scenario we want to see happen on a repeated basis in future years.

Let's recognize that we have some issues. Granted, more analysis needs to be done, but we need to understand that the fiscal gap, the total financial gap, is considerable. I don't believe this can be financed quickly and entirely by public sources. That's my response to the other question. Therefore, I think we need greater cooperation among all levels of government, and we need to look at more innovative public-private partnerships to achieve the challenge.

[The Chair, Conservative, James Rajotte]

I'm pretty much out of time, so I'll just state this, and perhaps you could submit this in a written submission. In terms of tax rates, if there are any suggestions you have for the committee with respect to corporate capital, both provincial and federal, with respect to income taxes going forward.... The response we got to the fiscal update was fairly positive, but I think people said some more changes are necessary. If we can get that in as well, we'd appreciate that.

I will now go to the Bloc Québécois.

Monsieur Vincent.

[Robert Vincent, Bloc, Shefford, QC]

Is the rising dollar having a positive impact on your industries? I don't know which organization said that 56% of its income came from outside Canada. The rise in the dollar therefore has a beneficial effect for you because, if you pay for insurance somewhere in the world, you pay for it in Canadian dollars. If the dollar is higher, there is a price difference. Is the higher dollar positive for your industry?

[Yves Millette]

It's neutral in our case because we always pay in the currency of the country where we do business. Insurance policies in the United States are payable in U.S. dollars. Reserves are accumulated in the United States in U.S. dollars. It's only in the area of profits and surpluses that there can be a difference.

[Nancy Hughes Anthony]

I would say the same thing. Obviously, there is a balance between the purchases of businesses that operate in U.S. dollars and expenditures in Canadian dollars. These are the two sides of the same coin. We don't consider that it's very negative or very positive for the banks.

[Mark Yakabuski]

The impact is very minor for the moment.

[Robert Vincent, Bloc, Shefford, QC]

Should the government do something to help you? Perhaps your three sectors are doing very well and you don't have any recommendations to make to the committee. Life is beautiful. The banks are making profits of $6.4 billion, and lower taxes will give them a few million dollars more. Things shouldn't go too poorly. But in your sectors, are there any problems that we could help you with? Is everything going well?

[Yves Millette]

To the extent that our industry has a fair tax system, things are going well. The property and casualty insurance industry receives very few grants from governments, federal or provincial. Even our consumer compensation systems, when a business goes bankrupt, are completely financed by other members of the industry. Governments could therefore add very little, unless they want to innovate and create new subsidies for the industry. Very few industry subsidies come from the federal, provincial or even municipal governments.

[The Chair, Conservative, James Rajotte]

Mr. Yakabuski.

[Mark Yakabuski]

Like Quebec, the federal government must absolutely encourage the other provinces to harmonize the sales taxes. That's absolutely essential to the productivity of the Canadian economy. The same is true of the list that we are going to submit.

[The Chair, Conservative, James Rajotte]

Ms. Hughes Anthony, we're running very close here.

[Nancy Hughes Anthony]

I have some concluding remarks. I would never say tout va bien et il ne faut rien faire when it comes to the banking industry. I feel the Canadian banking industry is a success story domestically and internationally. But it needs that business climate, and that business climate has the factors that were mentioned around the table today--tax, regulatory and federal-provincial relations, and labour--that we have to keep an eye on.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentations here this morning.

Thank you, members. We will be dealing with Ms. Nash's motion after the witness tomorrow afternoon.

The meeting is adjourned.