Industry Committee on May 31st, 2016

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

Thank you.

Mr. Chair, I appreciate the answers on that and I know that my colleagues will have more questions. With that, because I know we're going to be tight on time today, I'll use some of my time to put this motion on the floor. It doesn't have to be dealt with right now. We can deal with it afterwards when we have time.

[The Chair, Liberal, Dan Ruimy]

You are just going to give notice of motion?

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

Yes.

That the committee send out a media advisory for the Industry Committee's Manufacturing Study tour of Bombardier and other facilities by end of day June 1, 2016, and that media be invited to join the committee on the tours taking place as part of the manufacturing study.

I know you have a copy. I have copies for everyone else as well.

I have a quick question for you, Mr. Chair, if I have time. I know we haven't had confirmation of an appearance before the committee from Bombardier as of yet. Could we ask the clerk to officially reach out to them?

[The Chair, Liberal, Dan Ruimy]

If we can.

We have two more questioners: Mr. Baylis and Mr. Masse. We're going to wrap it up after that, which will gives us quite a bit of time to have—

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

You're going to wrap up. I didn't realize that.

[The Chair, Liberal, Dan Ruimy]

I want to leave enough time to address all of those.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

Thank you.

I'm sorry for the interruption there.

[The Chair, Liberal, Dan Ruimy]

You only used 40 seconds more.

Mr. Baylis, you have five minutes.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I'm going to be fast, rapid fire, because I have lots of questions.

Mr. Roberts, is the temporary foreign worker program something your congress is for or against?

[Chris Roberts]

We're critical of it, frankly, especially for the lower-skilled and lower-wage streams. We don't feel there's a case for that.

With respect to the higher-skilled streams, we believe that if Canada could do something about its terrible training record and find a solution that would require employers to invest in training the workforces they already have, we wouldn't have to poach skills from offshore as much as we do.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Fair enough, so you're not for it.

How would the manufacturers' association see that same question?

[Mathew Wilson]

We're in favour. The temporary foreign worker program historically has been a release valve for companies that can't find workers in all kinds of manufacturing sectors, including a lot of heavily unionized sectors of the economy. It's an important measure, when companies can't find the right skills, to be able to find those skilled workers.

On the other hand, the immigration changes are coming through and should create the release valve that we need in the sector by allowing companies to hire directly through the express entry system. This will create, I think, a lot better streamlined matching between new immigrants coming in.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Switching gears now to the SR and ED program. Can I get a quick overview of how your associations see that? What are the opportunities to improve upon it?

[Mathew Wilson]

I'll turn that over to Mr. Lavoie.

[Martin Lavoie]

As you guys know, the SR and ED program has been cut significantly in the last four or five budgets as a result of the Jenkins report back in 2011.

We would like to see capital expenditure being reintroduced as an eligible expense under the program.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Accelerate capital...

[Martin Lavoie]

No. Capital expenditure for R and D purposes, which used to be eligible for the tax credit. It was eliminated last year.

We would like to see how we could unlock the accumulated tax credits that large corporations have in Canada. I'm glad to hear that you might visit Bombardier. It's one of the firms that probably has a large pool of unused tax credits.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

If there is a way we could redirect those into R and D for smaller companies in some way. Okay.

[Martin Lavoie]

Exactly. I think we need to also look at how we can use the tax credit for commercialization of new products. We need to look at the ED part of SR and ED, namely, experimental development. The way they look at ED, if the experimental development has a technology enhancement purpose, if you're a company and you say you're doing experimental development because there is a prototype that you want to commercialize, more than likely you're going to get refused because it's not a primary research purpose.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

So you find the ED part to be too restrictive. Have you seen problems across the country? Have you seen regional issues? Is this another problem, or is it the same everywhere? Is the implementation regional, with some better and some worse?

[Martin Lavoie]

We've heard of some problems with regional differences in interpretations and acceptance of the claims, especially in Atlantic Canada. In the past, a lot of companies from there seem to have had some problems. We raised it with the CRA, which meets with their technology reviewers every year.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

You've seen problems in Atlantic Canada. Do you know how we could unlock built-up tax credits that companies can't use? In your report you mentioned that companies do not use the program anymore. Why are those companies choosing not to use it?

[Martin Lavoie]

A lot of companies don't.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Why is that?

[Martin Lavoie]

Uncertainty.