Industry Committee on April 22nd, 2021

[The Chair, Liberal, Sherry Romanado]

I now call this meeting to order.

Good morning, everyone. Welcome to meeting number 33 of the House of Commons Standing Committee on Industry, Science and Technology.

Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021. The proceedings will be made available via the House of Commons website. The webcast will always show the person speaking, rather than the entirety of the committee.

To ensure an orderly meeting, I'd like to outline a few rules to follow. Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have a choice at the bottom of your screen of floor, English or French audio. Please select your preference now.

Before speaking, please wait until I recognize you by name. As a reminder, all comments by members and witnesses should be addressed through the chair. When you're not speaking, your mike should be on mute.

As is my normal practice, I will hold up a yellow card for when you have 30 seconds left in your intervention, and I will hold up a red card for when your time for questions has expired. Please keep your screen on gallery view so that you can see the cards when I hold them up, as I would not like to cut you off.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on February 23, 2021, the House of Commons Standing Committee on Industry, Science and Technology is meeting today to continue its study on competitiveness in Canada.

I'd now like to welcome our witnesses.

We will hear Mr. Philippe Noël and Mr. Mathieu Lavigne, Senior Director and Senior Consultant respectively with Public and Economic Affairs at the Fédération des chambres de commerce du Québec.

From the Norquay ski and sightseeing resort, we have Ms. Jan Waterous, managing partner. From WoodSource Inc., we have Mr. Tim Priddle, owner. From the Treasury Board Secretariat, we have Mr. James van Raalte, executive director, regulatory policy and co-operation directorate, from the regulatory affairs sector. From Unifor, we have Ms. Kaylie Tiessen, national representative, research department.

Each witness will present for up to five minutes, followed by rounds of questions.

We will start with the representatives from the Fédération des chambres de commerce du Québec.

You have the floor for the next five minutes.

[Philippe Noël, Senior Director, Public and Economic Affairs, Fédération des chambres de commerce du Québec]

Good day to you. I am Philippe Noël, Senior Director of Public and Economic Affairs with the Fédération des chambres de commerce du Québec. With me is my colleague, Mathieu, a Senior Consultant with Public and Economic Affairs.

The FCCQ represents 132 chambers of commerce, 1,100 corporate members and a total of 50,000 businesses. Our members are active in all sectors of the economy throughout Quebec.

We are the biggest network of business people and businesses in Quebec and we are also the province's chamber of commerce, working to defend our members' interests in matters of public policy.

Thank you for inviting us to testify today on a topic which matters greatly to us, i.e. business competitiveness. As the subject is so vast, our introduction will concentrate on a few principles which are of vital importance to us, and then we will answer any questions you may have.

Firstly, our members believe that in order to increase competitiveness, we have to review certain measures currently in place and lessen the regulatory and administrative burden. The current crisis is actually an opportunity to get rid of measures that harm entrepreneurship, measures that were part of the reforms on private corporations taxation. Because of the reforms introduced in 2017, it is still more advantageous in terms of taxation to sell one's business to a stranger rather than a member of one's own family. By selling his or her business to a son or a daughter, an entrepreneur loses tax benefits of up to $860,000 which he or she would be entitled to if the business was sold to a stranger, which is nonsensical given the need for business succession.

Let us not forget that 23% of current business owners in Quebec are planning to sell their business over the course of the next few years, and that one third intend to transfer the business to a member of their family. I should also remind you that the Standing Committee on National Finance recommended in its report...

[The Chair, Liberal, Sherry Romanado]

Mr. Noël, I am so sorry, but can you please slow down for our interpreters?

[Philippe Noël]

Of course.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

[Philippe Noël]

I should also remind you that the Standing Senate Committee on National Finance recommended in its report that the changes made to private corporation taxation be revoked in their entirety.

Facilitating and increasing SMEs' access to federal government contracts could significantly increase businesses' competitiveness. To that end, we are currently working with the federal government's supplier advisory committee.

In our opinion, current changes being made to the CanadaBuys web portal in terms of information and access to public tenders are a step in the right direction.

However, we believe that the new portal needs a more proactive information strategy for businesses. Let us not forget that smart tenders bring innovation and help our businesses, including Quebec ones.

Moreover, the Government of Canada should have a better plan to encourage SMEs to look to export markets by promoting the advantages and terms of our various trade agreements. The government should set a target for the number of businesses who are exporting for the first time and who would benefit from services or financial assistance.

The lack of information on the advantages provided by the trade agreements is a soft spot that SMEs regularly mention. SMEs feel that the government should offer them better post-sale services. Despite the supports that are already in place, the information does not always seem to reach SMEs as efficiently as they would hope.

The government should be more proactive in letting businesses know about the advantages of our trade agreements as well as the benefits that they could reap by conquering Asian and European markets, especially by helping them during their first forays into export markets.

Monday's budget does provide support for clean technology exports in conjunction with work done with Export Development Canada, or EDC, but more could be done.

Finally, we still have the outstanding problem of Quebec businesses having to file two income tax returns, which is a distinct disadvantage.

Quebec is the only province in which businesses have to file two income tax returns and sometimes pay thousands of dollars in extra costs. Quebec says it's Ottawa's problem, and Ottawa says it's Quebec's.

We hope that the federal government and Quebec will finally sit down at the table and hammer out a solution that works for both jurisdictions and that allows Quebeckers to file one single tax return every year. There are different options on the table. Taxation harmonization would allow both governments to save public funds and better serve the taxpayer.

In conclusion, we would like to thank you again for inviting us. The FCCQ encourages our elected officials to follow up on our recommendations for increasing business competitiveness.

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you, Mr. Noël.

We will now go to Ms. Waterous.

You have the floor for five minutes.

[Jan Waterous, Managing Partner, Norquay Ski and Sightseeing Resort]

Good morning and thank you for the invitation today. I'm going to briefly speak to three topics.

First, I will speak to some of the projects my family and I have been engaged in with various levels of government over the last six years in Banff to address the impact of personal vehicles on the park. These include our efforts to develop a multimodal green transit hub at the Banff train station and to raise funding and government support for a passenger rail service from the Calgary airport to Banff. These projects have the potential to help transform Banff from a laggard in transportation GHGs into North America’s first net-zero emissions community.

Second, I'm going to share my perspective on why at least two components of the corporate culture at Parks Canada pose significant barriers to its ability to successfully advance transformational projects.

Finally, as an extension of this last point, I'll provide my view as to why a public-private partnership business model must be adopted to make real change.

By way of background, I have been a resident of Banff for 24 years. During that time, my family—like so many others in the park—have grown increasingly concerned about traffic congestion in the town and around the national park. Traffic jams are commonplace and are a national embarrassment. In fact, in the time I have lived here, it has become routine for me to hear in our community comments like, “What are they going to do about it?” One day my husband and I stopped and asked ourselves, just exactly who is this “they” anyways?

Over the years there have been many great ideas put forth by others to address congestion, which failed to get advanced. We observed that the big transformational ideas were dead on arrival because the groups that advocated them lacked the real estate and some of the infrastructure to make them happen.

With this as background, six years ago my family and I essentially lost our minds and decided to throw our hats into the ring to see if we could become part of this “they” and attempt to bring some of the change that had been passed over in decades past. At the time, our view was, “How hard can this be?” We're going to invest in some real estate; we're going to work with government to build some infrastructure, and all of this will be done hand in hand with the Government of Canada. It would be Kumbaya.

To this end, we purchased the multi-decade lease for the historic Banff Train Station with the hopes of using the station and our new role as a stakeholder to spearhead the return of passenger rail service.

Next, we purchased the multi-decade lease from CP rail for the 32 acres of land around the station, so we could finally build intercept parking. That had been official town policy for 40 years, yet not a single intercept parking lot had been built.

Finally, a year later, we purchased the long-term lease for the Norquay ski hill, with the hope of creating aerial transit between the station and the hill. Our vision was to create a multimodal transit hub.

Since embarking on these projects, our experience in working with government has been very mixed. With respect to intercept parking, we have some good news. Back in September of 2019, we opened Banff's first-ever intercept lot, with 500 free parking stalls available to Banff's 4.2 million visitors.

As for Calgary Airport-to-Banff passenger rail, with considerable help from the Canada Infrastructure Bank we are helping to advance the project and are making great progress. I'll be happy to talk about that in the Q and A.

With respect to aerial transit, after waiting 18 months, Parks Canada came back to us regarding our first proposal and told us that they are declining our gondola. We are resubmitting a different proposal to them in the coming months.

Finally, we spearheaded the creation of Banff National Park Net Zero 2035, which is one of the projects we're very proud of. It's a grassroots, bottom-up initiative to create sustainable vehicle and visitor transit systems and low-carbon energy and waste solutions to transform Banff National Park into North America’s first net-zero community by 2035.

We call ourselves a “do tank”, not a think tank, and we are actively pursuing our work in this area. We've done a lot of research to show that this is not a solution in search of a problem. The key research shows that Banff National Park has 63 times the transportation GHGs of Zion National Park in the United States—63 times.

[The Chair, Liberal, Sherry Romanado]

Ms. Waterous, you're over time. Could you kindly wrap up?

[Jan Waterous]

I'm sorry.

Our vision is not a solution in search of a problem. What we need is for government to come on board and work with us so that we can reach a solution that will work for all Canadians.

Thank you very much.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

We'll now go to Mr. Priddle.

You have the floor for five minutes.

[Tim Priddle, Owner, The WoodSource Inc.]

Thank you, honourable members of the committee, for taking time today to listen to one business person's story.

As policy-makers, one of the most important things you can do is consult with stakeholders and make decisions based on their input. I know of many instances where stakeholders weren't consulted and policies ended up not working out. I think of the story of the butternut tree in Ontario and more recently the federal government's rapid housing initiative.

The WoodSource has grown from two employees and two owners in 1998, to 70 employees today. That growth has come at a cost, as you can see by looking at my grey hair. Running a small business in Canada today is very complex. The WoodSource Inc. went through a major expansion in 2004 and again in 2014. After each expansion, I said, never again. The journey from concept to completion of an expansion will be at a minimum four years—often longer. The soft costs are typically half the cost of the total project, which makes our products more expensive and makes us less competitive on the international scene. We discussed a further expansion in 2018, but after meeting with a consultant decided our energy level was not high enough to tackle the expansion.

We are currently considering a further expansion, buoyed by a friend, who said, “Tim, the problem is, you're always using your own money to expand. Why don't you use government money?” We have always used our own money to expand. However, he introduced me to a consultant who makes a living accessing government money for people. Apparently I may be able to access resources from up to 18 different provincial and federal programs. I have a list of them, but I don't want to go through them. It would take too long.

This kind of makes my head spin. The consultant just takes a cut of what they access for you. I always thought I had to do it alone. I am not completely comfortable with this approach. My business sense smells a rat. I've always thought if a business sees an opportunity, it should be able to capture it on its own. I believe that if government helps provide a level playing field and sets the parameters, businesses will operate efficiently and invest where investments need to be made. I'm still trying to process the information and decide what to do with it.

Our business exports wood to both the United States and Europe. All of our European exports travel through the port of Montreal. As a business, anything that affects our supply chain affects us, and our supply chain is quite fragile. We've come to realize this through labour unrest in Montreal at the port and the almost complete shutdown of our nation's railway system in early 2020 because of protests in the Belleville area. These are major concerns.

In order to operate our business, we need to be competitive in the various areas where our business supplies product. If we hope to sell into the U.S. or Europe, we have to operate in a way that allows us to compete with Americans and Europeans. We have two disadvantages before we even start producing: one, our electricity rates are much higher than our peers in Europe and the U.S.; two, we have much higher cost of real estate here. Our cost per square foot of production facility is almost 40% higher than similar U.S. facilities, and 18% higher than European facilities.

Domestically, we're very involved in the supply to the home building industry with various products. This industry is, generally speaking, archaic. We still build homes the way we did 60 and 70 years ago. Because of the high costs and difficulties of building businesses, most homes are still built by a number of carpenters, a few saws and a pickup truck. The number of skilled trades is shrinking, and the cost of construction is going through the roof. Unfortunately, most home building companies consider employees to be a liability. They hire as few as possible and subcontract as much as possible, and that is true for many businesses.

There are a few things the federal government can do to help Canada innovate and compete. First, make it easier and less burdensome to hire people. If that occurs, businesses will do that. Two, there are many small businesses attempting to transfer businesses from one generation to the next. Succession planning is complicated and expensive. The changes to the dividend rules for family businesses make this more difficult. Members of the next generation are heavily invested in technology and innovation and need the hope of achievable ownership to motivate them.

In keeping with number two, support SR and ED tax incentives with more emphasis on small business in such a way that new ideas being brought forward by the next generation can be nurtured with less financial risk to others. Business owners like certainty. The ongoing, never-ending softwood dispute needs to be resolved for the long term.

Ensure that CFIA and European counterparts are on the same page for export documents. Ensure that we have good supply channels within Canada. Support Canadian manufacturing. We should be proud of making stuff in Canada.

Thank you very much.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Priddle.

We'll now go to Mr. van Raalte.

You have the floor for five minutes.

[James van Raalte, Executive Director, Regulatory Policy and Cooperation Directorate, Regulatory Affairs Sector, Treasury Board Secretariat]

Thank you, Madam Chair.

Thank you for the invitation to join you here today. I want to focus my remarks on how regulations can impact Canada's competitiveness. This issue has been a recurring theme and has significantly influenced the current federal approach to regulation-making as well as most regulatory reform initiatives to date.

Let me start by saying that regulations are essential to protect consumers, ensure the health and safety of Canadians and safeguard the natural environment. It is understood that when government imposes any rules, like a labelling or testing requirement, it will create costs for those who need to comply. When we at TBS talk about a regulation's impact on competitiveness, we are referring to the unnecessary costs or inefficiencies, or “sludge”, created by a regulation or its program. These can be the result of duplication and overlap across jurisdictions, slow and manual processes, or requirements that are too prescriptive and thus impact a firm's ability to use technologies and adopt innovative approaches.

The Government of Canada governs the development, management and review of federal regulations through a policy called the “cabinet directive on regulation”. One of the four key principles of the directive is that regulations must support a fair and competitive economy—that is, regulations should aim to support and promote inclusive economic growth, entrepreneurship and innovation for the benefit of Canadian business.

To limit the costs imposed on Canadian business and to achieve other public policy objectives, the Treasury Board of Canada Secretariat requires that regulators undertake significant analysis when designing and planning the implementation of regulations. For example, they must look at the impacts on small business, the impacts on international trade and regulatory alignment with other jurisdictions, modern treaty implications and environmental impacts, and conduct gender-based analysis. There are also measures in place like the legislated “one for one” rule under the Red Tape Reduction Act, which works system-wide to control the growth of administrative burden on business. For every new dollar of administrative burden imposed on business, federal regulators must find a dollar in savings.

Since the implementation of the cabinet directive in 2018, TBS has focused on initiatives to improve regulatory competitiveness, agility and innovation. We have regulatory co-operation fora with the U.S., the EU and the provinces and territories to reduce regulatory misalignment and barriers to trade. We are undertaking comprehensive regulatory reviews to identify rules and practices that are creating bottlenecks to growth and innovation. We have established a centre that focuses on building capacity for regulators to design flexible regulations in order to enable new and innovative products to come to market. We are developing other tools, such as an annual TBS-sponsored piece of legislation to remove requirements that stand in the way of modernizing regulations—for instance, requirements for wet signatures or the use of outdated technologies like fax machines.

The advice of TBS's external advisory committee for regulatory competitiveness has been crucial in helping shape the direction of these modernization initiatives and provide advice on others being considered. The committee has highlighted some challenges that are real in trying to address the issue of regulatory competitiveness.

First, regulatory costs are not limited to federal regulation. Burden stems from all governments—federal, provincial, territorial and municipal. All rules, programs and taxation create burdens for stakeholders, whether they be business, not-for-profits or individuals. Very often, there is a misunderstanding of what is truly in the federal regulatory sphere.

Second, there is no universal way or accepted methodology of measuring cumulative burden or the impact of regulation on competitiveness. In 2019, TBS commissioned the OECD to examine the approaches used around the world to better consider regulatory competitiveness. I can tell you that there is very little to work with in this area.

To address this gap, we've been working with the University of Waterloo's Problem Lab to pioneer an approach on measuring cumulative burden by examining a real situation, that of building a meat-processing plant in the municipality of Hamilton. One can imagine the complex interactions between zoning bylaws, environmental regulations and food inspection regimes—and those are the known administrative hurdles.

To conclude, I want to reiterate that regulatory competitiveness continues to be a priority for TBS. We share your interest in ensuring the regulatory system supports economic growth and regulatory efficiency and take seriously all recommendations to minimize the adverse impacts of regulations on competitiveness while maintaining Canada's high standards for health, safety, security and environmental stewardship.

Thank you, Madam Chair.

I'm happy to answer any questions you may have.

[The Chair, Liberal, Sherry Romanado]

Thank you so much.

We will now go to Ms. Tiessen for five minutes.

[Kaylie Tiessen, National Representative, Research Department, Unifor]

Good morning, and thank you. My name is Kaylie Tiessen. I'm an economist and policy analyst. I work in the research department at Unifor.

Unifor represents 315,000 members across the country, including thousands who have been affected by decisions made by the Competition Bureau, even just in the last few years.

The last time Unifor appeared before this committee to discuss competition in Canada was July 6 of last year. You were investigating the potential collusion of three grocery giants when they all cancelled pandemic pay on the same day. The results of your study revealed that Canada's Competition Bureau is ill equipped to protect Canada's economy from many anti-competitive acts, including those that affect workers, and that's what I will be addressing today.

Unifor members have been directly affected by at least four of the Competition Bureau's recent investigations: the Air Canada-Transat A.T. merger, the investigation into Torstar and Postmedia newspaper closures, the current investigation into the proposed acquisition of Shaw by Rogers, and the accusations of wage fixing at Canada's grocery giants, which I just mentioned.

In each of the cases, the effect on workers could have been positive or it could have been negative, but in all cases the Competition Bureau had limited capacity and political will to investigate the impact those mergers or other firm behaviours could have on workers. The most blatant example is the accusations of collusion in wage fixing to cancel pandemic pay.

As its rationale in declining to investigate, the Bureau released a statement on the application of the Competition Act to no-poaching, wage-fixing and other so-called “buy-side” agreements that involve the purchase of a product or service. That statement acknowledged that wage-fixing agreements can have anti-competitive effects in the labour market, and they raise serious competition issues. The same document, though, also states that the bureau cannot investigate companies for these actions under the criminal provisions.

This is the result of a change to the Competition Act in 2009 that removed the word “purchase” from section 45 of the Act. Unifor is recommending that change be reversed. That's our first recommendation.

Another issue I would like to address is the bureau's failure to use the powers at its disposal to investigate the impact of mergers on jobs. A growing body of research shows how a firm may develop outsized power to set wages within the labour market. This is sometimes called monopsony power.

We know that unionization acts as a countervailing power in a monopsony situation, but the government should also be creating better conditions to encourage unionization, and Canada needs additional tools to ensure that competition policy drives healthy outcomes for working people.

The bureau should develop specific merger enforcement guidelines to assess a merger's impact on wages, working conditions and whether or not the number of jobs decreases as a result of the merger. That's our second recommendation.

I called the bureau directly on this in the last couple of years, asking where I should direct my questions. The customer service representative who took my call had no idea. Where should I ask these questions about the effects on workers? They said they didn't know. There was nowhere to send me. That was a bit baffling, and that needs to be rectified.

Next, I would like to address the efficiencies defence. First, it should be eliminated, and second, the bureau and, frankly, the Canadian government and all of us in general should adopt a broader definition of efficiency that considers the actions we should take or avoid to create a fair and more equitable society.

Currently, the bureau and tribunal use this narrow definition, or a definition that focuses only on lower costs or increased savings and profit as a gold standard in efficiency. That ends up valuing corporations over people, and we need to change that. This approach is unfair and harmful to workers, and it undermines the public good.

Finally, my last point, the administrative penalties provided for in the act are minuscule compared to the balance sheets of many large corporations. In my opinion, this means they are at risk of just becoming the cost of doing business, a situation the bureau has stated it wants to avoid.

Our members are directly affected by Canada's competition policies every day. In our experience, the bureau lacks the power it needs to ensure that mergers do not negatively affect jobs or that firms do not collude to keep wages and working conditions low.

Thank you. I look forward to taking your questions.

[The Chair, Liberal, Sherry Romanado]

Thank you so much.

We will now start our rounds of questions. Our first six-minute round will start with MP Poilievre.

You have the floor.

[Pierre Poilievre, Conservative, Carleton, ON]

Mr. Priddle, you employ people in my riding. How many people work for you at The WoodSource?

[Tim Priddle]

We have 70 full-time staff here.

[Pierre Poilievre, Conservative, Carleton, ON]

About four years ago, you concluded an expansion of a large warehouse in which you do milling and other work on lumber products. How much did you spend on government in order to get that built?

[Tim Priddle]

We spent about $600,000 in architect fees, consultant fees, development fees, planning application fees and building permit fees. The building itself was just over a million dollars.

[Pierre Poilievre, Conservative, Carleton, ON]

You spent $600,000 on government for a million-dollar building.

[Tim Priddle]

That is correct.

[Pierre Poilievre, Conservative, Carleton, ON]

Does that million dollars include the $600,000?

[Tim Priddle]

No.