Evidence of meeting #29 for Industry, Science and Technology in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was bdc.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Bob Masterson  President and Chief Executive Officer, Chemistry Industry Association of Canada
Pierre Gauthier  Vice-President, Public Affairs, Chemistry Industry Association of Canada
Susan Rohac  Vice-President, Growth and Transition Capital, Ontario and Atlantic, BDC Capital, Business Development Bank of Canada (BDC)
Karen Kastner  Vice-President, Partnerships and Government Relations, Business Development Bank of Canada (BDC)
Neal Hill  Vice-President , Market Development, BDC Capital, Business Development Bank of Canada (BDC)

4:20 p.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Bob Masterson

To go back to the point you made first, I just want to say very clearly that carbon pricing is but one cost of production. There is absolutely nothing wrong with the approach Canada is taking, but we have to remember that it's one more cost at a time when competitors aren't putting that cost in. If we wish to do that—if we think there is a strong policy imperative to do it—that's great, but what are we going to take away somewhere else so that we can get more of what we want, which is more investment and more jobs in Canada?

Regarding downstream recycling, I think the best examples for me to talk about are on the plastics side. We have an event here on Parliament Hill tomorrow morning on the health of our oceans, and certainly a major concern is with plastic debris that ends up in the oceans. We've done a number of things as an industry. In fact, this year the federal government caught up with the work of the U.S. states, but as an industry we've been phasing out plastic microbeads from our products and consumer products for some time. We were in support of what the federal government did; we thought it was the right thing to do. As an industry in North America, we are putting millions of dollars into research and development and changing citizens' behaviour so that we can keep plastic debris from ultimately finding its way into our waterways and into the oceans.

4:20 p.m.

Conservative

Earl Dreeshen Conservative Red Deer—Mountain View, AB

Do I have a minute or so?

4:20 p.m.

Liberal

The Chair Liberal Dan Ruimy

You have a minute and a half.

4:20 p.m.

Conservative

Earl Dreeshen Conservative Red Deer—Mountain View, AB

Thank you.

I thank Mr. Lobb for giving me a quick moment to bring up one of the other points you mentioned.

You went through three points: working with the provinces, ACCA, and supporting industry to get to global markets. Our chemical industry allows us to do a lot of value-added work in order to move our products offshore. I'm wondering whether you can comment on any barriers that you see at the present time, or things that we can do differently to make it a little easier to move those products.

4:20 p.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Bob Masterson

I'm not sure it's for this committee, but certainly we made very healthy interventions into Mr. Emerson's report last year on the Canada Transportation Act, and we even met, as recently as last week, with Minister Garneau.

We have a simple message: when shippers have access to more than one rail carrier, they pay significantly less per mile shipped than when they are captive to a single railway. As we are looking to strengthen the competitive position of Canada's manufacturers, there are implications for competition in the transportation area as well.

Canada is a huge country, and in almost all the sectors—not just grain or forest products—what we produce is moving by rail.

Pierre, is it 75% of what we ship?

4:20 p.m.

Pierre Gauthier Vice-President, Public Affairs, Chemistry Industry Association of Canada

Yes.

4:20 p.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Bob Masterson

Roughly 75% of what we ship—I can get the exact number—goes by rail. Again, those who have access to competitive rail service do much better than those who do not.

4:20 p.m.

Liberal

The Chair Liberal Dan Ruimy

Thank you.

We're going to go to Mr. Baylis.

You have four minutes.

4:25 p.m.

Liberal

Frank Baylis Liberal Pierrefonds—Dollard, QC

I'm going to expand on some recommendations you made, from a fiscal perspective. I think these are recommendations that you made in the pre-budget consultations.

You have talked already about the accelerated capital cost allowance. In my understanding, it is temporary, but you would like to see it become permanent. Then you mentioned two other points. Could you elaborate on them? Specifically, you mentioned an investment tax credit. You were talking about upgrading resources into manufactured products. Could you elaborate on that?

4:25 p.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Bob Masterson

Yes. We're suggesting a straight 100% writeoff as a temporary measure over the life of a business investment of perhaps five to 10 years. In our best estimate, which we can provide to you and which will be in our submission, if you took a typical $2 billion investment, yes, the federal government would forgo revenues, but one thing to remember is that those revenues would never appear if the investment hadn't been made in the first place. There's no cost if the investment doesn't come.

4:25 p.m.

Liberal

Frank Baylis Liberal Pierrefonds—Dollard, QC

You'd like to be able to write it off over what period of time?

4:25 p.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Bob Masterson

This is a straight 100% depreciation right up front. For a $2 billion investment, you're looking at about half, $1 billion of that, the year it comes in.

4:25 p.m.

Liberal

Frank Baylis Liberal Pierrefonds—Dollard, QC

But you'd like to see 100% in the year of—

4:25 p.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Bob Masterson

In the year it comes in. For a $2 billion investment, we're suggesting, based on our previous analysis, that about half of that, or $1 billion, would be eligible for that treatment.

If we look at what the incremental taxable profits would be once an operation starts up, in year four or year five...we're suggesting a break-even point for that would be about eight years.

For the 100% immediate forgone revenue, after six years the federal government will have forgone about $60 million in revenue. That's if the investment takes place. If there's no investment, there's no forgone revenue.

4:25 p.m.

Liberal

Frank Baylis Liberal Pierrefonds—Dollard, QC

This is something that you see as a fiscal tool, as you mentioned, to try to bring back that 10% we're not seeing.

4:25 p.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Bob Masterson

It is a fiscal tool. I think that's the important thing here. As a country and in our other jurisdictions, Canada has taken certain tools off the table that no one else has taken off the table. We're not saying to put in place tools that you don't want to use. We're realists here—

4:25 p.m.

Liberal

Frank Baylis Liberal Pierrefonds—Dollard, QC

Were those tools on the table and taken away? Is that what happened?

4:25 p.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Bob Masterson

I think it's been a long time since Canada has provided direct tax relief or tax holidays to manufacturers at the provincial or municipal level. It's not in our makeup to do that, and I'm not saying we should. I'm just saying that's what the competitors do. We have to pay attention to that and make sure that whatever we come up with is going to be competitive from an investment standpoint.

4:25 p.m.

Liberal

Frank Baylis Liberal Pierrefonds—Dollard, QC

Do we have an example? If we focus on that $200 billion coming into North America and you're saying our share should be $20 billion, plus or minus, but we're getting $3 billion, there's a huge opportunity there. Do you have a comparative table you could provide to the clerk that would show that in the last five years.... Was that $200 billion in the last five years?

4:25 p.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

4:25 p.m.

Liberal

Frank Baylis Liberal Pierrefonds—Dollard, QC

These are the ones we've lost, and by the way, this is a direct—

4:25 p.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Bob Masterson

We don't know which ones we've lost. We know which ones we haven't won.

4:25 p.m.

Liberal

Frank Baylis Liberal Pierrefonds—Dollard, QC

Yes, well, it would show which ones we haven't won and what happened in those specific jurisdictions. Are you privy to that?

4:25 p.m.

President and Chief Executive Officer, Chemistry Industry Association of Canada

Bob Masterson

In broad terms, there will be project-specific arrangements made that are not always public detail. We are involved in a study right now with the the Canadian Energy Research Institute and Natural Resources Canada that will benchmark Alberta, Ontario, and Canada's investment regime versus that of key U.S. jurisdictions.

I'll give you an example—

4:25 p.m.

Liberal

Frank Baylis Liberal Pierrefonds—Dollard, QC

When is that going to be ready?