EVIDENCE

Standing Committee on Finance NUMBER 044 2nd SESSION 40th PARLIAMENT Tuesday, September 29, 2009 Le mardi 29 septembre 2009 Standing Committee on Finance CANADA [Recorded by Electronic Apparatus] EVIDENCE September 29, 2009 Committee Edited Evidence * Table of Contents * Number 044 (Official Version) Official Report * Table of Contents * Number 044 (Official Version) Témoignages * Table des matières * Numéro 044 (Version officielle) 44 29 09 2009 2009/09/29 09:30:00 House of Commons Comité permanent des finances Standing Committee on Finance FINA Chair Mr. James Rajotte 40 2

(0930) [ English ] The Chair (Mr. James Rajotte (Edmonton—Leduc, CPC)) : I call this meeting to order. This is the 44th meeting of the Standing Committee on Finance and the second in our pre-budget tour of nine Canadian cities. We did Vancouver yesterday, on the first day, and we're in Yellowknife tomorrow. We want to thank all of you for being with us today. In this session we have three panels of an hour and a half each. It's very busy, with seven witnesses per panel, so there's a lot to hear and a lot of submissions. We do have members from all over the country here with us today.

We're going to ask each organization to present for up to five minutes maximum and then we will have questions from all members. I think you'll find the exchange with members very worthwhile for all of you. I'll list the organizations in order of presentation: first, the Alberta Pulse Growers Commission; second, Quadrise Canada Corporation; third, the Alberta Chambers of Commerce; fourth, Almita Manufacturing Ltd.; fifth, Treaty 8 First Nations of Alberta; sixth, Kids First Parents Association of Canada; and finally, the Prospectors and Developers Association of Canada. Welcome to all of you.

We'll start with the Alberta Pulse Growers Commission. Ms. Sheri Strydhorst (Executive Director, Alberta Pulse Growers Commission) : Mr. Chairperson, honourable members, and guests, my name is Sheri Strydhorst and I have a farm in northwest Alberta. I'm the executive director of the Alberta Pulse Growers Commission. With me today is Tom Jackson, a farmer who is an adviser to the Alberta Pulse Growers, from east-central Alberta. The Alberta Pulse Growers represent 4,500 pea, bean, lentil, chickpea, and fava bean growers in the province.

While we are here today on behalf of the pulse growers, I've been asked by the other Alberta crop groups to let you know that we are presenting important policy messages relevant to all members of the Alberta crop sector. Today we are going to be touching upon three initiatives that will secure a competitive advantage for our farmers by stimulating innovation with effective policy. Our first request is increased investment in Agriculture Canada's research branch. For five of Canada's six largest crops, 98% of the research is publicly funded.

Over the last 15 years, federal contributions to Agriculture Canada's research branch have been stagnant, with no increases for inflation. In 2009 dollars, this means that funding has dropped from $458 million to $280 million, a cut of nearly 50%. The number of front-line scientists has dropped by more than 10% in just the last couple of years. The majority of Agriculture Canada's scientists are ready for retirement in less than 10 years. Agriculture Canada is suffering a corporate memory loss.

For example, at Alberta's Lethbridge research centre, the plant pathologist there retired in 2006, but since then, a technician, not a trained scientist, has been the only expertise available for the development of disease research. To address this growing problem, we are asking for a doubling of A-base funding to Agriculture Canada. This would cost $280 million phased in over 10 years, or $28 million a year.

These resources would allow for the development of new crop varieties with drought resistance for the southern prairies, cold tolerance for the northern prairies, disease and insect resistance to reduce the use of pesticides, and healthier foods. There's tremendous potential to make our food healthier for consumers. For example, peas and beans can help reduce diabetes, obesity, and cardiovascular disease, but additional breeding to increase the resistant starch and antioxidants could result in even more health benefits for Canadians.

Recent studies have shown a 12-time return for investments in breeding research for Canadian farmers, and we're not asking the government to do this alone. Investments in Canadian pulse breeding and agronomic research by Alberta and Saskatchewan producers exceeded $3 million last year. Our second request is a proposal for a reduced production insurance premium for producers who use green agricultural practices. We're at a time in history when there's increasing national and international public demand for food that is grown using environmentally responsible practices.

However, from a producer standpoint, environmental compliance is seen as a cost. We need to create a system whereby producers can profit from environmentally aware markets. In order to brand Canadian producers as environmentally responsible, we need to implement incentives for producers to access new technologies. We're proposing a reduction in production insurance premiums by 20% for producers who use green agricultural practices that also tend to reduce production risks, such as, for example, reduced tillage, diverse rotations that include pulse crops, reduced fuel use, and more efficient irrigation practices.

Our final request is to provide Canadian producers with easier access to credit. The advance payments program is a financial loan guarantee program that gives producers access to credit via cash advances. This means producers have improved cashflow and better opportunities for marketing their agricultural products. Under the current program, producers can qualify for a maximum of $400,000, with the first $100,000 being interest free. However, these current limits are becoming a constraint to more and more farmers. There have been significant increases in input costs.

The prices of feed, fertilizer, and fuel have risen substantially. In adjusting for inflationary costs, we are asking for an increase in the interest-free limit to $150,000 and in the overall limit to $500,000. In

summary, our request is: increased investment in Agriculture Canada's research branch; reduced production insurance premiums for producers who use green agricultural practices; and providing Canadian producers with easier access to credit. Thank you for this opportunity. We look forward to your questions. The Chair : Thank you very much for your presentation. We'll now go to Mr. Murray or Mr. Lennox.

(0935) Dr. James Murray (Senior Advisor, Government Relations, Quadrise Canada Corporation) : Good morning, ladies and gentlemen, Mr. Chairman, honoured guests, and members of the committee. We are pleased to have the opportunity to make a short presentation of some of our ideas. My role is of senior advisor on government relations to Quadrise Canada, which is a private Calgary oil company. With me is the vice-president of technology, Ross Lennox. He will start the presentation, Mr. Chairman. Mr.

Ross Lennox (Chief Technology Officer, Quadrise Canada Corporation) : Quadrise Canada is a private Canadian corporation based in Calgary. We have 35 employees. We have one of the few R and D labs in Calgary. We have a number of new science graduates who work with us. We have annual revenues of $2.6 million; 2009 is a poorer year. We've raised $42 million in equity over the last three years. We've spent $11 million in R and D spending. Of this, we've received government support for $3.2 million.

What we're attempting to do is provide a wide range of alternative fuels and environmental solutions to oil sands and power generation markets in North America. Our efforts have been very successful in some areas. We've really suffered from lack of clarity on the regulatory front within Canada. We see that continued expenditure in the R and D area is essential to convert a lot of IP that exists and has no venture capital funds to support it in this country any more.

I think our first recommendation is to better utilize the NRC-IRAP network--this is a network that we've been working with for the last five years--and to really develop the NSERC centres of excellence. Across Canada there are 240 IRAP ITAs, and these cover the whole country and all industries. There are more than 1,800 firms that have been funded by IRAP, and more than 500 firms with the youth program in 2008-09. On average, IRAP provides advisory service to well over 7,000 firms each year. A key part of this is that they're dealing with the small and medium enterprises.

These are companies with under 50 employees. To our mind, that's really the kick-off point for a lot of our new successful companies in the future, and they provide long-term employment and opportunity for our new graduates and new Canadian businesses. IRAP has a lot of history with many clients, and it's really the gateway or the clearinghouse for many government departments. That's the first that a lot of government departments see of any of these new technologies. What we think is really important is that this would bring entrepreneurs and the crown R and D into the NSERC centres of excellence. Dr.

James Murray : I'd just like to speak about some aspects of the commercialization of research. I've spent 30-some years of my life in academia and then switched in my declining years to the private sector. It's an interesting time these days, obviously. What we have in Canada is really quite a well-funded research program across the universities, in government, industry, and the private sector. Where we are really very weak and we have been missing the opportunity is in commercializing home run kinds of technologies that come up. I'll give you one quick example.

In the mid 1980s, Doctor Harold Copp at UBC discovered a compound called calcitonin for treatment of osteoporosis in post-menopausal women. Doctor Copp wasn't motivated to commercialize that compound, yet it's by far, even today, one of the most effective compounds for treatment of osteoporosis, and it's been sold with sales of billions of dollars per year for many years. Think what would have happened if we had commercialized that.

There are very similar discoveries across the country, and the challenge is how we can identify these home runs at an early stage and utilize them for the development of additional Canadian industry. We have a suggestion on how we might do that, and I'll turn this over to my colleague to discuss this.

(0940) The Chair : We're running past our time. We'll have to leave that for the question and answer period. Thank you very much. We'll move on to the Alberta Chambers of Commerce and Mr. Kobly. Mr. Ken Kobly (President and Chief Executive Officer, Alberta Chambers of Commerce) : Good morning, Mr. Chair. Thank you for the invitation to speak this morning. For those of you who are visiting Alberta, welcome to Alberta. To those who are coming home and are from Alberta, welcome home. By way of introduction, my name is Ken Kobly, and I'm the president and CEO of the Alberta Chambers of Commerce.

With me is Don Oszlie, our current chair. The Alberta Chambers of Commerce is a federation of 124 community chambers in Alberta that represent in excess of 22,000 businesses in the province. That makes us the largest business organization in Alberta. Fully 80% of those members are outside the metro Edmonton and metro Calgary areas, so we have a very diverse membership group. Our policy process is grassroots driven. Our policies are proposed by community chambers and then adopted at our annual general meeting, so they tend to reflect the desires and concerns of our member communities, as well as their members.

We currently have in excess of 60 policies in our policy book, ranging from the obligatory tax policies to very diverse policies on child care and border issues. We also have a policy on reintroducing an accelerated capital cost allowance for the oil sands. It was a little bit tough to pick which policies to present today. We are aware that a viable and prosperous country depends not just on income taxes and corporate taxes--so again, the reason for our diverse policy base. Our policies are available on the website, should you choose to go and take a peek at them.

They're fully public, as are the responses we've received to date from governments. Our submission is generally about indexing of thresholds. Thresholds have been introduced, and the track record has been that they haven't been amended for quite a number of years to reflect changes in reality, prices, and the economy. We have four examples that we've chosen to highlight in our submission. One is the GST rebate for new housing purchases, which was introduced in 1991 and hasn't changed since then. When it was introduced, houses below $350,000 were eligible for a GST rebate.

The policy was that new homes priced between $350,000 and $450,000 were deemed to be luxury homes, so the rebate would start to reduce and be totally phased out at $450,000. In a number of parts of our communities in Alberta a new house costing $450,000 would not be considered a luxury home. In particular, in northern communities such as Fort McMurray, that range is even further aggravated. I'll give you an example. Currently in Fort McMurray, $440,000 would not get you a new, single family house. It would get you either a condo or a 40-year-old manufactured home.

This is an example of a threshold that was introduced and not amended. The policy that initially brought it forward is completely out of whack with economic realities today. The second threshold that was introduced and has been amended but needs to be reviewed on an annual basis is the capital gains exemption for small business corporations' sale of shares and for farm property. Most small businesses consider their business assets to be their pension plans or their RRSPs for their eventual retirement.

It was most recently updated in 2007, but prior to that the capital gains exemption was not reviewed for 19 years. The third example is the luxury auto threshold. It currently sits at $30,000. Bear in mind that these vehicles are used for individuals in their business endeavours to earn taxable income. While we agree with the general policy that luxury vehicles should not be available for write-off, certainly we need to ensure that these numbers remain reasonable. The last change to that was nine years ago. The last one is the small suppliers threshold for GST.

It was introduced at $30,000, again when GST was enacted. It's been 18 years since that was amended, and we suggest it be raised to $75,000. Thank you, Mr. Chairman.

(0945) The Chair : Thank you very much, Mr. Kobly. We'll now go to Almita Manufacturing, please. Mr. Lawrence Kaumeyer (President, Almita Manufacturing Ltd.) : Good morning, Mr. Chairman. Thank you very much to all of you for having me speak here this morning. I have French and English in both of my presentations, so please feel free to look at both. As a snapshot of Almita, it is Canada's leader in the design and fabrication of screw piles. We employ 75 people south of Edmonton in the small town of Ponoka. The key to our foundation is that we basically are competing against both driven piles and concrete piles.

We'll grow by 25% this year, and we plan on growing by 25% going forward. What has assisted our growth? IRAP has assisted our growth, and Ross mentioned this as well. We've received IRAP funding in excess of $164,000 this year for two key initiatives within the company, both of which fuelled our growth substantially. Without that program we would not have been able to be successful, now competing on a world stage at Curl Lake with ExxonMobil and a number of other companies.

It should be noted that the timing of the increased budget amount for IRAP from the economic action plan by the government coincided with one of our key projects. Without that we would not have proceeded and we would not have been successful in being able to launch that, so the timing of it was perfect. What has assisted our growth also is SR and ED. The tax credits received from SR and ED have totalled $81,000 for our company in the past two years and have provided further support in our key research and development projects throughout the company.

Without that, we would not have been successful on the global stage. We continue to use SR and ED for a number of projects within the company, and it's a huge benefit for us. A number of people have also touched on CCA. Within the small and medium-sized enterprise aspect of the segment of companies and manufacturing industries, capital expenditures are a significant barrier to growth and entry. At Almita Manufacturing we have spent a little over $2.7 million in capital expenditures over the past three years.

We appreciate the recently enacted accelerated tax depreciation for certain manufacturing equipment, and particularly the recent acquisition of a major robot in our manufacturing, which has assisted us greatly, and we intend to use that as far as the eligibility is concerned. What could truly assist SMEs across Canada? Do not cut back on the CCA, please. This was worked on by Jayson Myers at the Canadian Manufacturers & Exporters. It's a vital program for small business. Consider expanding what is truly eligible under CCA.

Unfortunately, currently the definition of what we can actually apply through on an accelerated basis is too narrow for us. We would like to see that expanded to support SMEs across Canada that look at movable equipment, yellow iron, and things we need on a construction basis that would tie in quite nicely with the economic action plan of the government. Specifically allowing any self-propelled industrial equipment such as earthmovers, Cats, hoes, etc., for small to medium-sized enterprise would greatly support our systems. What could also assist SMEs across Canada would be IRAP.

Here again, it would be foolish to cut back this program, and the additional funding that was provided by the government was vital to a number of industries starting up and generating additional cashflow recently. Look for ways to expand this program and look for ways to increase eligibility for it across the country. Concerning SR and ED, CRA should continue to enhance its administrative service. Preparing a claim for SR and ED is difficult for small and medium-sized enterprises at times.

We find it is just very time consuming when you're trying to do it as a small to medium-sized enterprise while you're trying to run the business. So that could be streamlined. Last, but by no means least, I'd like to mention that we have identified, here in Alberta and I'm sure across the country, that Canada continues to lag behind the U.S. and other OECD countries in its productivity. Support for initiatives across Canada that encourage companies to look at both efficiencies and the increasing value of their products and services would address some of our competitiveness challenges.

Alberta has begun this work by establishing Productivity Alberta, a connection point for the industrial sector for all productivity innovation programs, tools, services, and expertise, working in partnership with industry across governments and associations, academia, and related institutions. Perhaps this is the beginning of a model that could be used across the country. Thank you, Mr. Chairman.

(0950) The Chair : Thank you very much for your presentation. We'll now go to the Treaty 8 First Nations of Alberta, please. Chief Rose Laboucan (Chief, Treaty 8 First Nations of Alberta) : Good morning, everyone, and thank you for having us here. I represent 23 first nations communities here in Alberta from Treaty 8. We want to look at a different process for first nations people in our area, and we're hoping the presentation to the finance committee will help us look at a different partnership in the way we look at things. One of the things we look at is not being a tax burden to Canadian society.

With this presentation from an economist, I hope we are going to look at it on a more equitable basis. I'll turn it over to Darcy. Mr. Darcy Dupas (Representative, Dew Paws Consulting, Treaty 8 First Nations of Alberta) : Good morning. I want to particularly thank the clerks for their assistance in bringing us here today. They were very diligent in helping me make the submission and coordinate our participation here today. From 1996 to 1997, direct transfers by the Department of Indian and Northern Affairs to Canadian first nations increased by about 0.59% per capita per year.

This figure was well below inflation of about 2.36% per year over that period, below the growth rate of federal government revenues at 4.21%, and below the growth rate of gross domestic product at about 4.81%. Over that 13-year span of 0.59% growth in real per capita transfers, if you subtract inflation, you get a net contraction of government sector spending in first nations economies of 1.26% per year. The effect of a 1.77% real deficit per year over 13 years is a 26% deficit in the current year.

The net social debt from these ongoing deficits is manifested in first nations housing, education, and in general quality of life outcomes. The funding arrangements are based upon a formula calculated by the department, which allocates according to a trickle-down availability of funds from the main estimates and an internally calculated formula. The effect of the long-term fiscal disparity is an annual recurring deficit.

The current financial transfer arrangements lack transparency, they lack predictability, they lack sustainability, and they in no way reflect an equitable exchange of value compared to the lands described in Treaty No. 8. A history of the treaties lays it out this way. The British North America Act from 1867 contains specific provisions for the equitable treatment of first nations people. This was an extension of the Royal Proclamation of 1763 by the crown of the British Empire.

The guiding principle of equitable exchange with first nations and other aboriginal people around the world was formed by the crown of Britain through more than 200 years of experience in managing the greatest colonial empire in the history of the world. For whatever reason, the crown of Canada has not abided by this time-honoured policy, to Canada's great economic and social detriment. The equitable principles contained in the Constitution Act, 1982, and the Royal Proclamation are there to assist the long-term well-being of all citizens, not just first nations citizens.

The British Empire understood, through experience, that it did not benefit trade and peaceful commerce to marginalize the aboriginal society. How are we for time?

(0955) The Chair : You have one minute. Mr. Darcy Dupas : Skipping to our third recommendation, we're looking to negotiate direct treaty-based funding agreements that create a government to government relationship between the crown of Canada and first nations governments, and appropriate arrangements thereto, without getting into the cost estimates. All first nations in Alberta have a relationship with the crown of Canada through the department, and the current arrangements are consistent with the 142-year-old Indian Act.

The very title of the legislation is derogatory to first nations people, and the content is no better. The act enabled a system of enfranchisement, which is a euphemism for cultural genocide. The act was created unilaterally without consulting first nations. The treaties, by contrast, were enacted through a more consultative and good faith process. Most first nations continue to hold the treaties as a sacred trust between their first nation and the crown; therefore, the treaties are a more legitimate basis for good faith negotiation than the Indian Act. The Chair : Thank you very much for your presentation.

Chief Rose Laboucan : Could I just make a closing remark? The Chair : Sure. Chief Rose Laboucan : We are the only colonized people in the whole world and we need to stop it. Thank you. The Chair : Thank you. We'll go now to Kids First Parents Association of Canada. Ms. Ward, please. Ms. Helen Ward (President, Kids First Parents Association of Canada) : Hi. My name is Helen Ward. I'm the president of Kids First Parents Association of Canada. I'm also the mother of two. Thank you for having me here today.

Kids First is a grassroots, volunteer-run, national charitable organization concerned with children's optimal care and well-being and with support and recognition for parental child care since 1987. We receive no union, corporate, or government funding. Some lobby groups will be telling you to spend even more money on non-parental child care, day care centres, or, in its rebranded form, all-day kindergarten for children three to five. Groups like HELP, the Human Early Learning Partnership, will seem to promise that the more you spend, the more you save.

They imply that you could save more than $400 billion if you spent on high-quality early learning and child care, that for every $1 spent, you could save anything from $1.58 to $17. Spending on day care could pay off the debt, apparently. Now, Kids First supports high-quality child care and early learning, as I'm sure we all do. But what do these terms mean? What is “high quality”, and how is quality measured? Most importantly, what is “child care”? What is “early learning”? The

definitions of these words are battlefields. The devil is in the details. The day care lobbyists frequently cite Nobel Prize-winning economist James Heckman of the University of Chicago as if he supported their agenda, but he does not. In his paper entitled “The Productivity Argument for Investing in Young Children”, he says, “None of this evidence supports universal preschool programs.” He also says, “Advocates and supporters of universal preschool often use existing research for purely political purposes.

But the solid evidence for the effectiveness of early interventions is limited to those conducted on disadvantaged populations.” The reality is that all children need child care, and they need it 24/7, 365. As for early learning, children begin to learn before birth and continue to do so wherever they are. The institutional care lobby has attempted to co-opt these terms as if they had a monopoly on care and learning. But they do not.

We call on the federal government to end the unjust discrimination against parents who do not prefer full-time institutional care and learning settings for our children and the discrimination against our children. We ask you to enforce our charter rights to equality before the law, and our children's rights to security of person, by requiring that laws and policies and programs at all levels of government cease to employ exclusive, discriminatory

definitions of key terms, including work, child care, and early learning. We ask that you cease funding the day care lobby--for example, the Human Early Learning Partnership, the Child Care Advocacy Association of Canada, and the Canadian Child Care Federation, etc. We ask you to redirect funding of child care and early learning and child development to parents so that we can exercise real choice, free choice, in determining our children's care and early education. The day care lobby is telling us that the UN Convention on the Rights of the Child requires government to fund day care preferentially. It does not.

The convention states that the child has the right to be “cared for by his or her parents”. The convention forbids any kind of discrimination. The UN Declaration of Human Rights says that parents have “a prior right” to determine their children's education. Stimulating the economy by transferring the production of goods and services away from the family sector and to the family replacement sector in government business and non-profits is not economically, socially, or environmentally sustainable.

Increasing children's infections and stress, decreasing breastfeeding, and decreasing parental time spent with children may stimulate economic activity and swell the GDP, but only by parasitically bleeding the family. Funding families directly is fair and sustainable. Sweden is held up by the OECD as the model for child policy, but after over a generation of this kind of policy there, we find plummeting academic test scores. Canadian teens score higher than Swedes. We find youth suicide and youth violence rising. We find domestic violence against women rising.

They say that children in day care centres are 6.7 times more likely to be sick, and that's at a cost of $27,000 per child aged one to five. We don't want to follow the Swedish model. Thank you very much.

(1000) The Chair : Thank you very much for your presentation. We'll now go to the Prospectors and Developers Association of Canada. Mr. Philip Bousquet (Senior Program Director, Prospectors and Developers Association of Canada) : Good morning, Mr. Chair and committee members. My name is Philip Bousquet. I work for the Prospectors and Developers Association of Canada. I'm here with Eira Thomas. She is a member of the PDAC board of directors and executive chairman and director of the Stornoway Diamond Corporation. Thank you for providing us with an opportunity to meet with you today.

The PDAC is a national association whose members are involved in the mineral exploration and development industry, both in Canada and around the world. Our membership includes approximately 1,000 corporate members and 6,000 individual members, comprising mineral exploration and mining companies, service and consulting firms, geologists, geoscientists, students, environmental consultants, and the financial, legal, and investment sectors. The PDAC organizes an annual convention in Toronto, which is the world's premier mineral industry trade show. In 2009 our convention attracted 18,000 delegates from 120 countries.

As the research and development branch of the mining sector, exploration companies do not have production revenue and therefore must rely on investors who are prepared to support high-risk activities. In the past year, the global financial crisis and a steep drop in commodity prices have had a dramatic and negative effect on the exploration sector. Reduced investment in companies leads to fewer drilling programs and impacts negatively on regional employment and income, particularly in rural, northern, and aboriginal communities.

Working with our members, the PDAC has developed proposals to reduce the impact of the crisis on the mineral industry in Canada. Number one is a mineral exploration tax credit. As many of you know, this was introduced in 2000 and has consistently provided Canada with one of our competitive advantages. In January the credit was extended for one year to March 31, 2010. The mineral industry is recommending that the current 15% METC become a permanent feature of the federal income tax system. This will provide additional certainty for companies and for investors.

In order to counter the current economic crisis and encourage investment in Canadian projects, we are also recommending a temporary increase of the mineral exploration tax credit from the current 15% rate to 30% for the next two years. Number two is investing in transportation infrastructure. For instance, all-weather roads, bridges, and upgrades, as well as improvements to seaports and airports in Canada's north and remote regions of the provinces, greatly improve the economics of exploration projects, increasing access and allowing for extended exploration seasons.

As well, maintaining a long-term commitment to the geo-mapping for energy and minerals program, or GEM program, will improve our knowledge of Canada's resource potential and encourage new exploration. In number three, we are looking to improve an exploration company's ability to retain employees by allowing issuance and compliance costs, that is, costs associated with financing legal and accounting expenses, to qualify for renunciation as Canadian exploration expense, or CEE, under flow-through share arrangements.

We believe these recommendations will have an overall positive impact on the economy by encouraging investment in research and resource activities that are critical to Canada's economy. A vibrant mineral sector in Canada creates jobs in all regions of the country, sustains communities, fosters new business opportunities, and raises tax revenues that allow government to meet social needs. I will now ask Eira Thomas to offer her perspective on issues faced by exploration and development companies. Thank you. The Chair : You have about a minute and a half. Ms.

Eira Thomas (Member, Board of Directors, Prospectors and Developers Association of Canada) : Thank you very much. I'm very pleased to be here on behalf of the PDAC and the Canadian exploration sector. Mining is a globally competitive business. Canadian exploration companies can and do explore for minerals all over the world. In response to the impact of the financial crisis on the minerals industry, we have an opportunity, and I believe an obligation and responsibility, to ensure that Canada remains competitive as a jurisdiction for investment in mineral exploration.

Canada is routinely ranked and assessed as one of the world's most attractive jurisdictions on the basis of its geology. It remains highly under-explored, particularly in the north. However, we also face many challenges. Most of the geology is extremely remote and lacks infrastructure access, making exploration and development extremely expensive. Our northern climate limits the exploration season. And our regulatory regime is expensive, inefficient, and lacks transparency.

Mining is a vital industry in this country and, we think, can play a very important role in our economic future, so we really urge you to consider the recommendations that the PDAC has submitted in order to ensure that the Canadian mineral exploration industry and companies can contribute to Canada's economic recovery. Thank you very much.

(1005) The Chair : Thank you for your presentation. We'll now go to questions from members. We're going to start with Mr. McCallum, for seven minutes. Hon. John McCallum (Markham—Unionville, Lib.) : Thank you, Mr. Chair, and thank you all for being here. It's a pleasure for me to be in Edmonton. I went for a little walk this morning and was accosted on the road by an enthusiastic Liberal--in Alberta. So that was a great pleasure. It made my day.

The Chair : Do you want an election? Hon. John McCallum : Well, I'll move on. Four of you focused on either the importance of government contribution to research or active government measures to help companies out, whether it's IRAP, the mineral exploration tax credit, or SR and ED. All of that is music to my ears, because we believe very strongly that a lot of the jobs lost in the current recession won't come back, and we must have active government policy to create the jobs tomorrow. That involves research and commercialization, which implies an active role for government.

Even though I'm in Alberta, I'll say that this is in contrast to the government's position, which has actually cut back on funding for research and science. I agree with the thrust of those who have argued for this more active approach. My first question will be for Mr. Murray. While I agree with what you have said about finding the winners or home runs early, there is also the view that governments aren't always very good at choosing winners. For governments to find the home runs early kind of sounds like choosing winners, and we may not choose them well.

I'd like you to speak briefly about your plan for allowing governments to identify these home runs--not necessarily governments, but government funding. Dr. James Murray : Basically we need a more integrated approach to utilize the expertise--not just in government, academia, or the private sector--and form teams that can evaluate these discoveries at an early date. To date we've basically looked at government, academia, and industry to identify them. That approach hasn't worked. We have all the elements in those three planks, but we have to use them together. Hon. John McCallum : Thank you.

That's very interesting. I'll study it further, because I think it is a key issue. If we could identify home runs, we'd do really well, but it's always a challenge to know in advance which one will be good and which one won't. On agriculture, your presentation was really clear. In a minority situation one has to be ready for an election at any time, so I will pass it on to Wayne Easter, our agriculture critic. That's not really my area of expertise. If I may ask Mr. Bousquet a question, I was NRCan minister for a brief time in the dying days of the Martin government.

On the mineral exploration tax credit, it strikes me that to make it permanent would make sense. Governments seem to extend it each and every year, but there's always that uncertainty. Would it help your industry quite a bit in terms of certainty if it were officially made permanent? Mr. Philip Bousquet : It would. The investors and companies are looking for some measure of certainty on tax policy, tax credits, and regulatory regimes. That's why we've asked for this to be made permanent. It would allow companies to plan on a longer timeframe. Eira, do you have any comments? Ms.

Eira Thomas : I'll just comment that exploration takes a long time. For diamonds in particular, it could be seven to 10 years before you know whether you have an economic project. So for us to have the assurance that we could go back to the market year after year and raise funds on the basis of that tax credit would be very helpful.

(1010) Hon. John McCallum : It wouldn't cost the government anything. Whichever party is the government has tended to renew it every year. That has been the pattern for quite a number of years--correct? Yes. On aboriginal matters, in the past we brought in the Kelowna accord, and we're committed to having something not necessarily identical but similar come the next election. Under the Kelowna accord the last time there was approximately $1 billion a year for five years.

However, if I look at this complicated formula in your presentation and read it correctly, are you saying that aboriginal people in Alberta alone are underfunded by approximately $1 billion per year? It shows $999 million on page 3, which is pretty close to $1 billion. Mr. Darcy Dupas : The calculation was based upon all levels of revenue collected. Alberta is a special case because we have to compete with the provincial jurisdiction when it comes to education. It makes it very challenging to retain teachers and so on. To be accurate, that formula doesn't include the health transfer or the HRSDC transfer.

So you'll have to subtract those out as well. In about 2003 or 2004, the acting regional director general of the Alberta region sat before the chiefs of Alberta and assembly and made a carte blanche admission that there was a $110 million deficit for K through 12 education alone. That's just in terms of fiscal parity, and it has nothing to do with outcomes. The Chair : You have 30 seconds, Mr. McCallum. Hon. John McCallum : A few of you mentioned IRAP, but maybe I'll ask Mr. Kaumeyer. My impression is that it is a pretty good program. Do you agree? Mr. Lawrence Kaumeyer : It is a good program.

It's just that the direct funding that was provided through the economic action plan is temporary. We would want to make sure that it becomes permanent, because it has supported a great deal of additional investment recently that has helped stimulate growth—which will show up and is showing up. Hon. John McCallum : That's certainly my impression. Thank you. The Chair : Thank you, Mr. McCallum. We're going to go to Monsieur Laforest. [ Translation ] Mr. Jean-Yves Laforest (Saint-Maurice—Champlain, BQ) : Good morning everyone. I am extremely pleased to be here with you, in Edmonton. My first question is for Mr.

Kobly from the Alberta Chambers of Commerce. You made recommendations on threshold limits that have practically never been reviewed. You are recommending setting the “small supplier threshold” at $75,000. It was introduced at $30,000 in 1991 and has not changed since. What is the figure based on? Is it an arbitrary number? Are there studies proving that a $75,000 threshold is preferable? Why not $100,000? [ English ] Mr. Ken Kobly : Well, there aren't studies currently available to determine or support the $75,000 number we picked.

We took a look at the intent of that threshold when it was originally introduced at $30,000 in order to eliminate and/or save on compliance issues, as well as the compliance costs of reporting GST—or taking it off to their accountant to figure it out. We've seen a great proliferation in the last number of years of individuals who are working on a subcontract basis. They may be working for one contractor or two contractors. So these are truly the smallest of small enterprises.

As for the number of $75,000, if you look at what was considered low income in 1991 and then carried that forward with the effects of inflation, I think it would bring you pretty darn close to the $75,000 range. If you take a look at what would be the overall impact on government, it would be very minimal, in our opinion, in that individuals who work for GST-registered companies or who provide services to GST-registered companies get that GST back on the items they pay.... So as far as the impact on the Government of Canada is concerned, it would be minimal.

The true benefit of this would be for small enterprises, by reducing the burden on them. (1015) [ Translation ] Mr. Jean-Yves Laforest : Would that affect independent workers? [ English ] Mr. Ken Kobly : Definitely, if they are working as a subcontractor or as a self-employed individual. [ Translation ] Mr. Jean-Yves Laforest : Perfect, thank you. I now have a question for Ms. Strydhorst. On the issue of agricultural insurance, your group proposes to reduce production insurance premiums by 20% for producers who use “green” agricultural practices. What is the rationale behind that?

We rarely ever hear from groups that advocate reducing payments. [ English ] Mr. Tom Jackson (Advisor, Zone 3, Alberta Pulse Growers Commission) : Thank you very much for the question. I think it's clear, in this day of energy conservation and the green movement, that growing crops like pulses that fix their own nitrogen, reduce chemical inputs, and all of those things that conserve the environment should be encouraged by our government. There's the production of forage and a whole number of things. Crop insurance has really emphasized traditional crops, monoculture.

This would be very good for our environment, for encouraging value-added processing, and there are a number of ways that our crops that are environmentally friendly have always been discriminated against in crop insurance. We're asking for a level playing field. Particularly, risk management is a problem for our industry. If we could have that help, it would put our crops on an even footing with many of the major crops like wheat. Ms.

Sheri Strydhorst : To add to that, there was the national farm stewardship program that was essentially achieving the same results, but funds in that program did run out in August 2008. This is seen as another way to implement a similar type of approach where there is more producer buy-in to it by its being a reduction in crop insurance premiums that they pay. [ Translation ] Mr. Jean-Yves Laforest : In your opinion, will producers of green products, or those who use “green” agricultural practices react strongly to the recommendation you are making?

You argue that their costs vary slightly and are lower than yours. When the proposal is made to reduce insurance payments to a different group than one's own... I can imagine that there will be a strong reaction. I am just seeing things from their perspective.

[ English ] The Chair : There's about one minute left. Mr. Tom Jackson : From a producer's point of view, because we are a non-traditional crop, there aren't good records. We are generally discriminated against on cost of risk management because of those issues. We need to look at this issue of green production and the true cost, both to us individually as farmers and to society. We hope this committee will look into that. [ Translation ] Mr. Jean-Yves Laforest : That is fine, thank you. The Chair : Thank you, Mr. Laforest. [ English ] Mr. Dechert, please. Mr.

Bob Dechert (Mississauga—Erindale, CPC) : Thank you, Mr. Chair. Thank you, ladies and gentlemen, for your presentations this morning. It's a real pleasure to be in Alberta, in this vibrant and dynamic city of Edmonton. I have a number of questions, and I'd like to start with the Alberta Chambers of Commerce, Mr. Kobly. I took great interest in your suggestions for indexing various thresholds in the Income Tax Act. I think that's something we should certainly follow up on.

I wonder, in addition to that, if you could comment on the competitiveness of our current Canadian corporate and business tax rate, especially when they're fully implemented by 2012. Do you see that as advantageous for encouraging growth of business investment in Canada? What more, if anything, do you think we ought to do in that regard?

(1020) Mr. Ken Kobly : Definitely, with a few exceptions, I think our corporate tax rates are competitive, especially in Alberta, because we have a very low corporate tax rate, particularly on small business. I think the importance of a competitive tax regime cannot be overstated. Capital can move, as you well know, from country to country very easily. The gentleman to the left of me knows that all too well with the commercialization of intellectual property. It's not the end-all and be-all to keeping or attracting business in Canada, but certainly it is a contributing factor. Mr. Bob Dechert : Thank you.

Yesterday in Vancouver we heard from the Canadian general accountants association, and one of their suggestions was simplification of our tax system. Specifically they suggested that the government appoint a panel of experts to undertake a fundamental review of our tax system and suggest changes to simplify it to make it easier for businesses and individuals to comply. What's your view on that suggestion? Mr. Ken Kobly : Perhaps Don might want to supplement this answer, but both of us have a background in public practice accounting. Certainly, anything that government can do to reduce the compliance burden, the

interpretation difficulties with the act, and the simplification of the act would be welcomed by not only tax practitioners but by individual businesses as well. Mr. Don Oszli (Chair, Alberta Chambers of Commerce) : Yes. Certainly I would echo that comment as well. The cost of compliance is steadily increasing, particularly when we get into globalization issues, transfer pricing issues, and the studies that have to be undertaken. Those things are horrendous and cost a lot of money to do.

As for complying with a lot of the transfer pricing issues we have, it can be in excess of $50,000 to $100,000 merely to comply with that part of our Income Tax Act. Mr. Bob Dechert : Thank you very much for that. My next question is for Mr. Kaumeyer of Almita Manufacturing. I'm pleased to hear that some of the government programs for IRAP, SR and ED, tax credits, and CCA acceleration have benefited your business and small businesses generally across Canada. That's certainly very good news.

On this side of the table, we understand that small business is the backbone of the Canadian economy and that more people are employed in small and medium-sized enterprises than in any other form of business organization. I had a question for you with respect to your suggestion about acceleration of capital cost allowance and including additional types of equipment. My question is this: why should we restrict the definition at all? If it's capital equipment that a business needs to expand and to add to its productive capacity, shouldn't it just qualify for accelerated CCA? Mr. Lawrence Kaumeyer : Absolutely.

Yes, that's the key. Within some of the frameworks of small and medium-sized enterprises, the

definitions are narrow, so a lot of things don't fit within that definition. For example, of the $2.76 million that we've invested in capital in the last two years, we find that a very, very small percentage of that is eligible. We'd like to have this accelerated program in place for that. It's a substantial cashflow issue for companies, particularly now with the credit crunch, because you need to ensure that you have your capital turning over and that your cashflow is available to you for future growth.

When you're growing as fast as we're growing, your cost of capital relative to its impact in being able to put it back into the company is dramatic. If you can accelerate that down payment, it just helps fuel the growth of the company even further. So yes, we would love to see that expanded. Mr. Bob Dechert : Thank you. Congratulations, Ken, on the success of your business. I have another question for the Prospectors and Developers Association, Mr. Bousquet. One of your suggestions is to increase, for a temporary period, the mineral exploration tax credit from 15% to 30%.

First of all, can you tell us what the recent experience has been in your business during this global recession and what impact you think doubling that METC would have in terms of new investment in your industry in the short term? Mr. Philip Bousquet : Thank you for the question. There has been great impact on companies' ability to raise flow-through share financing. It's decreased over the past year.

For this year, some estimates are that it would be approximately 50% of the 2008 total, so what we're looking for is to try to offer additional incentives to bring investors back to encourage them to consider mineral exploration. Manitoba is an interesting example. Earlier this year they announced an increase, both for this year and for next year, for their own Manitoba mineral exploration tax credit. So there are precedents where some jurisdictions in Canada are looking at this. Perhaps Eira could offer a comment on what she's seen on the financing side from companies.

(1025) Ms. Eira Thomas : Yes, further to that, in addition, jurisdictions like the Northwest Territories and Nunavut, which don't have the ability to bump up on the flow-through credit, would really benefit from this increase because it would put them on a more competitive playing field with some of the other jurisdictions in Canada. But certainly from our own perspective, if you look at the costs to government associated with this tax credit, they are somewhere in the order of $55 million over a couple of years, but that's translated into, in 2007, an investment of $1 billion.

It was less last year, obviously, at about $750,000, I think, and of course we're expecting lower numbers this year. But again, if we can get that investment back into the market through extra incentive with this increase in the METC, I think we will certainly speed up the recovery of our industry overall. Mr. Bob Dechert : Thank you very much for that. The Chair : Thank you. Thank you, Mr. Dechert. We'll go to Ms. Duncan for a seven-minute round. Ms. Linda Duncan (Edmonton—Strathcona, NDP) : Thank you, Mr. Chair.

I, along with the chair, am happily an Edmonton, Alberta, member of Parliament, and it's a delight to be here. I'm sitting in for the regular member, and it's a delight to be with you today. My first question is for the Alberta Pulse Growers Commission. It's delightful to see you. I have a long personal history with organic pulse growers, mostly in southern Saskatchewan. I really appreciate the value of your industry and the struggles you go through. Today, I'm unfortunately missing a presentation on the Hill by Dr.

David Sauchyn from Regina, who edited and led the NRCan report on the impacts of climate change in Canada. He wrote the big

section on agriculture, and he identified a lot of issues similar to those you've raised today. I'm also aware, through my 35 years in the environmental and energy fields, of the crisis we have in science. I was previously on the board of a group called ECO Canada, which is the environmental sector table for the Government of Canada, and they do market studies on who's demanding jobs in the environmental field and what's available. We are fast reaching a crisis, and you've identified one of the key areas.

I'm glad you raised that, and I hope you emphasize that, because in the area of the impacts of climate change and other issues, it's going to be a critical one for your industry. I welcome your request for financial incentives for greening agriculture. I'm wondering if your sector is looking into offsets and if that is of any help to you at all. Ms. Sheri Strydhorst : Offsets have been looked at and doing some life cycle analysis to quantify exactly what kinds of benefits we are contributing.

One of the struggles we're facing, though, is the issue of early adopters, so producers who have been farming and growing these pulse crops for the last 20 years are not going to be eligible for any of those offsets. That's a very big frustration, that the people who were the early adopters don't succeed in getting those benefits. I think this is one thing that needs to be considered in terms of offsets. Ms. Linda Duncan : Thanks. I have a question for Chief Laboucan. It's a delight to have you here. I appreciated your brief. I wonder if you could talk a bit about your feeling about contribution agreements.

In areas such as safe drinking water, one of the areas I'm aware of--and it may well be that there are contribution agreements for other things, like education and other public facilities--do you run into any kind of frustration where, as I understand, you can receive federal financing to do water treatment or waste water treatment, but only if you've signed the contribution agreement that passes liability over to your first nation? Chief Rose Laboucan : That's exactly true. I'll speak of my first nation because we got a $6 million water treatment facility.

My question to the federal government was, why invest that kind of money if it's not feasible to even run it and maintain it? Even with the ability to hire somebody to run it, that's a $75,000 to $80,000 cost these days. When we train somebody, they get scooped up and have to go and work somewhere else because they're willing to pay them that cost.

(1030) Ms. Linda Duncan : Chief, I found very interesting your recommendation that you should be given a greater level of independence in how the money is spent. There's an ongoing battle in the federal transfers to the provinces that the provinces don't seem to think they see fit to be accountable. Are you suggesting that perhaps you should be treated on par with provincial and territorial governments? Chief Rose Laboucan : Definitely so, but not only that. One of the things that happens in this whole process is the inability to really look at the equitable way we can utilize it.

I met with the Auditor General in 2007, and it seems that every time there's an issue with first nations and governments and the issue of accountability, it is the first nations themselves who have to bear the burden of a process. Like now, are we going to be funded differently? In 2011, there's a new scheme up front. Why couldn't we just fix what we had and make it better and more accountable? We have no problem with the accountability part of it. It's just costing the government many more dollars in waste that could be going to first nations communities. Ms. Linda Duncan : Do I have time for one more question?

I have a question, but I'll put it to both Almita and Quadrise, because you seem to be seeking in the same direction. I had the opportunity last week to go to the oil sands trade show. I wandered around and talked to the various entrepreneurs, from people who are selling lined pipes that don't have to be replaced as often, to people doing worker safety, to people doing technology to contain or to treat tar ponds waste or control sour gas emissions.

One of the things they pointed out to me was that the issue isn't so much the taxation, although one always wants lower taxes or capital cost writeoffs, the issue is the lack of regulatory drivers. I also sit on the parliamentary committee on environment and sustainable development, and we heard from very renowned scientists here in Alberta, engineers who are working on the technology, and one of the frustrations raised to us was that there seems to be money trickling in from government and some from industry to develop technologies, but there is little money out there to actually pilot or field test them.

I'm wondering if you could comment on whether you think a stepped-up regulatory agenda might actually shift the dollars over until you could improve private investment as well, in the uptake of your technologies. Mr. Ross Lennox : I'd like to speak on that first. Our company has developed two environmental solutions. One is a zero-emissions oil sands plant, which we've tried desperately to get piloted. We've also developed a low NOx fuel solution, which we're now marketing in the United States because we have no regulation here.

Those are both tragedies, to our mind, to work and invest money to develop solutions and still wait for regulation to follow. Part of our suggestion of having government involvement in some of the NSERC centres of excellence is that it gives government a view of what's out there. Right now there isn't a good understanding on the regulatory side of what solutions there may actually be. The Chair : Thank you. Thank you, Ms. Duncan. We'll go to Mr. Pacetti. Mr. Massimo Pacetti (Saint-Léonard—Saint-Michel, Lib.) : Thank you, Mr. Chair, and thank you to the witnesses for appearing.

Again, this is a challenge for us, because we're limited in our time and we have a lot of questions to ask, so we might not get to all of you. I'm from an urban centre, so I like to know where my food comes from. I'm not a very knowledgeable person when it comes to food. The question is to Ms. Strydhorst. We're promoting products like the ones you're trying to promote, the peas, the beans--the unknown products--and there are a lot of people saying they want more environmentally friendly products. The grocery store has a section, but it's always the smallest section, because they're the highest priced.

In your experience, price on price, if we do subsidize these types of products, would there be an increase in demand? I'm asking about your personal experience.

(1035) Ms. Sheri Strydhorst : I don't know if we're necessarily looking for subsidizing these products in particular, but I think we need to brand them environmentally so the consumer is aware, and maybe that would increase demand and create a market pull in that respect. Looking at carbon footprinting of the products would start that. I guess that's the later stage, but we need to make sure all the producers are onboard with the right equipment to be able to further enhance those environmental attributes. Mr. Massimo Pacetti : So you want to make sure that the product is actually environmentally green?

Have you tried it locally, so that locally you'd be able to experiment and say, well, this does work if we price it at a certain point? I think it's price point that's important. Ms. Sheri Strydhorst : Pulses are very cost-competitive. They're not an expensive protein source. I think it's more that we need more things for the consumer to realize that, branding them as that environmentally friendly type of food product. Mr. Massimo Pacetti : So a lot of it is marketing? Ms. Sheri Strydhorst : Yes. Mr.

Tom Jackson : If I could just add something, the Government of Canada has helped us with a science and innovation program where we have doctors and many studies that examine in the diet what it does for obesity, so we would maybe-- Mr. Massimo Pacetti : No, I agree. I don't mean to interrupt; it's just that our time is limited. My point is that I understand that it's good for you, healthy and all that, but in the end, when somebody goes to a grocery store, they look at price. Mr.

Tom Jackson : But to actually get the claim on the package so that consumers know it's important that they add it to their diet--that's part of the science and innovation that the Government of Canada is helping us with. Mr. Massimo Pacetti : I agree, yes, but people have to believe what's on the package, first of all, and they have to be able to read what's on the package, correct? Mr. Tom Jackson : And that's all with Health Canada, what we need. Mr. Massimo Pacetti : Okay. Thank you. I have a quick question for Almita Manufacturing.

You were talking about productivity, and you were very complimentary in terms of all the programs that you were able to take advantage of, whether it be IRAP or R and D credits and so forth. But you spoke about productivity being below par. I'm just wondering if your company has made any evaluation of how your productivity has been, because you've taken advantage of some of the programs the government has offered. Mr. Lawrence Kaumeyer : The program I was referring to, Productivity Alberta, isn't actually a federal program. It's a provincial program.

Really it's a non-profit board that basically has a business-led governing board and is supported by Alberta Finance. Mr. Massimo Pacetti : But we hear the statistics that Canadian companies have not done a good job in terms of upping their productivity. So I'm just wondering, with the help of IRAP and R and D, has productivity in your company gone up? Mr. Lawrence Kaumeyer : It has, but it's broader than that. In other words, lean marketing principles and understanding what truly drives productivity isn't just about IRAP and SR and ED and making an investment.

It's about getting down to the shop floor and understanding what they do individually, day by day, to increase productivity. It has very little to do with what government can provide. Mr. Massimo Pacetti : So how do we make these programs easier for SMEs to use? To both Mr. Lennox and Mr. Kaumeyer, how do we make IRAP more accessible? I think, Mr. Lennox, you had a limit where you said we should probably make it more available to larger companies. Perhaps you could also comment on R and D refundability. We didn't hear anybody asking for R and D credits to be refundable.

The Chair : Very briefly, then--two comments on the two issues. Mr. Ross Lennox : Okay. I think there's a big gap between the SMEs and the large companies in terms of programs. The ITAs in particular are doing a fabulous job in terms of diversity of program and all the different industries they touch. I think it's really important to look at expanding their mandate, though, to talk about commercialization and what we call technology acceleration. They see lots of good ideas, but they don't have the capability of expanding the program to help companies where the B.C.s and other investors have disappeared.

I think that's where the gap of commercialization is missing. Mr. Lawrence Kaumeyer : I'll just add that the dollar amount provided through EAP last year to the Province of Alberta was approximately $19 million for IRAP. The previous year it was $9.6 million. Without that additional funding for IRAP this past year, you would not have a significant number of uptakes in this SME area that would help drive additional growth in this province.

(1040) The Chair : Thank you. You might have another round, Mr. Pacetti. Monsieur Laforest, s'il vous plaît. [ Translation ] Mr. Jean-Yves Laforest : Thank you, Mr. Chair. My question is for Ms. Laboucan. In your opening remarks, you stated that the funding provided to various band councils and aboriginal groups has not been consistent with the rate of inflation since the 1990s.

In your opinion, do funding rules apply equally for all band councils across Canada, or are you talking exclusively about your own band council? [ English ] Chief Rose Laboucan : They're actually applied to all first nations across this country, a majority of which are not well-to-do. [ Translation ] Mr. Jean-Yves Laforest : Either you or Mr. Dupas said that education falls within provincial jurisdiction. I presume that you must reach agreements with the different provinces so that you can hire teachers.

Does the band council hire teachers and is it obliged to pay salaries as stipulated in the collective agreement in effect, be it in Alberta or elsewhere, as is the case in Quebec? Do the individual collective agreements of each one of the provinces apply when it comes to hiring teachers and meeting working conditions? [ English ] Chief Rose Laboucan : Tuition agreements across this province manifest some of the issues that are occurring, because just a certain number of dollars come to first nations in our FTA, the federal transfer agreement.

For example, I will get $5,400 per student, but for the tuition 40 kilometres down the road, I'm charged $9,500, so I have a shortfall already of that amount. Because I have a school that operates only to grade 9, I have to send my grades 10, 11, and 12 to that school, so I'm going to have a shortfall of more than $3,000 per student every year. Our funding has been capped since 1993. That was the last time we got an increase. [ Translation ] Mr. Jean-Yves Laforest : I would like to know if the funding you receive takes the disparities in your obligations from one province to the next into account.

For example, in Quebec, a teacher is entitled to a given salary,

whereas in Alberta and Ontario and elsewhere, a teacher will receive a different salary. Is your federal government transfer always the same amount, or does it take into account educational, health care, and other types of disparities? Is it one general envelope? [ English ] Mr. Darcy Dupas : Multi-year funding agreements, to which you refer, have been capped at an increase of approximately 2% per year, for the past 13 years.

So, no, they do not accommodate any inflation, demographic shifts, which are massive in first nations communities, or general cost structure changes, such as the Alberta Teachers' Association agreements, etc. [ Translation ] Mr. Jean-Yves Laforest : Therefore, it is almost as though some band councils are underprivileged, compared to others. I am convinced of this. In fact, the costs for education and health care are higher for certain band councils, and I presume that the funding method is totally inadequate because it does not account for disparities. That is how I see it.

Is this correct? [ English ] Chief Rose Laboucan : At the start of this year I had a young child with special needs. Last year the parents moved away so that child could access special needs resources at a special school. They've moved back to the community because that's where their family is, and now that child is suffering because I can't afford to get a special one-on-one teacher's aide for that child to accommodate his school year. That's how bad it is. (1045) [ Translation ] Mr. Jean-Yves Laforest : Thank you. The Chair : You have 30 seconds remaining. Mr. Jean-Yves Laforest : I will be brief. Mr.

Bousquet, you state that in order for you to remain competitive, there must be more tax credits. Yet, the mining industry is already competitive. Compared to other industries, it is in relatively good health. [ English ] The Chair : A very brief answer, sir. Mr. Philip Bousquet : It's competitive in the respect that we are competing for investor dollars going anywhere around the world. We are a competitive industry; keep the costs low.

As Eira Thomas mentioned, we have good geology, but in a period where investor confidence is low, we need additional incentives to ensure that investors are considering mineral exploration. The Chair : Thank you. We'll go to Mr. Cannan, please. Mr. Ron Cannan (Kelowna—Lake Country, CPC) : Thank you, Mr. Chair. It's a pleasure to be back here. I was born and raised in Edmonton and moved to Kelowna 20 years ago, where I've had the honour of being the member of Parliament for the last three and a half years. It's a pleasure to be back. Interestingly for Mr.

McCallum, I thought the Liberals were an endangered species here in Edmonton, but I guess he found one. So I'm glad he found a friend—friendly Edmontonians. I appreciate all your comments. Maybe I'll just go around the table, because we don't have much time. To the Prospectors and Developers Association, we had a presentation yesterday from the Association for Mineral Exploration British Columbia with a similar request for the mineral exploration tax credit, so I'm well aware of that, and some of my local constituents keep reminding me as well when you have your annual conference in Toronto.

Hopefully that will be able to continue, as I know it's a valuable asset for your industry. Ms. Ward, I really appreciate your comments. As a father of three adult children now and grandfather of a two-and-a-half-year-old, I appreciate your Kids First Parents Association of Canada presentation. In regard to a couple of your recommendations, could you comment, first of all, on the universal child care program and the benefits you've seen from some of your members? Also, on your third recommendation, I think it's a creative concept, but do you have any idea of the cost and how it would be implemented? Ms.

Helen Ward : The universal child care benefit benefits me. I'm a low-income single mother. I don't pay taxes on it. Most single mothers don't earn enough income to pay taxes on it, so we get the full $100. Families with higher incomes pay some tax on that. I've heard positive things. Certainly $100 a month isn't going to pay for everything, or pay for a day care centre, or pay all the costs that we undergo as parents who forgo income to look after their own children, or opportunity costs, but this amount is significant. Some people think it's a token gesture.

Well, a token gesture is better than a kick in the face. On transferring funding to families that is currently going to non-families, to researchers, to lobbyists, to day care centres and the people who build them, and all the rest of it, there are so many different programs that fund anything but families. You have researchers earning $70,000 or more in researching poverty and families. They're studying low-income families on welfare who have been kicked off welfare, but there is a gross injustice there when we have people who are being funded so much to do anything.

It's not actually to look after children, and we want to see the money going to children. To create real equality for women, you would have to fund the care, the work of child-bearing and child-rearing--it's work--on an equitable level with all other socially essential work. Through our tax dollars, we pay people to plant flowers in our parks, to build our streets, to research things in university, to teach our kids, and all these things.

In the past, those things were not funded by tax dollars, so the family as a sector is being underfunded while the other sectors have grown in their prestige, in their money, and in their power. It's very difficult to even be here. I have a child under two years old who came here with me on the plane from Vancouver. Parents are marginalized politically as parents. If you speak as an educator or a researcher, you have more clout, more power, and more money. We would like to see parents and the family sector being funded on an equitable basis for the valuable work we do. Mr. Ron Cannan : Thank you very much.

I wish you continued success in your work. Ms. Helen Ward : Thank you. Mr. Ron Cannan : I'll move around the table as there's limited time.

(1050) The Chair : You have one minute, Mr. Cannan. Mr. Ron Cannan : To the Chamber of Commerce, I commend your efforts. We did reduce the GST from 7% to 5% and I know that's been very helpful in the housing industry. Many Albertans have come out and bought homes in the Okanagan, so we're thankful for that as well. It's still a continued growth industry and a big employer for our community. For the agricultural community and my colleague Sheri beside me, what is the annual contribution of R and D right now or for research? You're asking for $28 million over 10 years or $280 million.

What's the annual contribution right now? Ms. Sheri Strydhorst : Annually right now I believe it is $280 million today, what is being spent, so a 10% increase.... Mr. Ron Cannan : In one of your recommendations I think the idea is to reward, as my colleague across the way mentioned, someone who is promoting sustainable food production. How would you monitor or measure someone using a green sustainable measure? How would that reduce their insurance premiums? How would you use that as a benchmark? The Chair : Very briefly, please. Ms. Sheri Strydhorst : How would we use...? Mr.

Ron Cannan : How would you measure that? Ms. Sheri Strydhorst : I guess we would measure it in terms of doing life cycle analyses to measure what are the improvements in water use and what are the reductions in soil losses and so forth, so it's measuring the sustainable metrics that these new technologies implement. The Chair : Thank you, Mr. Cannan. We're going to Mr. Pacetti or Mr. McCallum. Mr. McCallum. Hon. John McCallum : We'll share our time. Mr.

Dechert asked the business people if they'd like it if the accelerated capital cost allowance could be applied to every kind of equipment, and of course they answered yes. So while we're at it, why don't we have a 100% accelerated capital cost allowance applied to every kind of equipment? I suspect they'd say yes again. My point is that you have to keep your eye on fiscal responsibility. A year ago, the government said we'd have nothing but surpluses forever. Then it was a $34 billion deficit. Then it was a $50 billion deficit. Now it's a $56 billion deficit.

Such a blanket application of accelerated capital cost allowance would cost a fortune, raise the deficit, and increase the burden on our children and grandchildren, so it's entirely irresponsible. I have one question to Mr. Kaumeyer. In a fiscally responsible way.... Of course, you'd like everything, but if there were to be one kind of expansion that's not huge, not costing tens of billions of dollars, what single measure would you urge the government to adopt? Mr.

Lawrence Kaumeyer : The single measure I would look at, honourable member, is that the restrictions are too tight relative to most construction equipment--excavators, yellow iron. Most of the things that are carried on that have been a substantial stimulus for the government recently have been in the heavy equipment and construction industry. That's the area where there is very limited application. It's far too narrow. Hon. John McCallum : Thank you. Now I will pass it over to my colleague. Mr. Massimo Pacetti : At the end of the last session, Mr. Kaumeyer, we were talking a little bit about IRAP and R and D.

Should we be making the R and D refundable? Some companies are not taking advantage of it. I guess that would be more for Mr. Lennox or even Mr. Kolby on the bigger companies that are not getting all their R and D numbers back, all their R and D credits. Have you heard anything on that? Mr. Ross Lennox : There has to be some balance. I think you have to look at where the jobs are being created and where the IP is being created, and that is primarily in the SMEs. The refundability to the larger companies is 20% for SR and EDs. Mr. Massimo Pacetti : Okay, that's fine. In terms of paperwork, is it easy to get IRAPs?

I'm talking about people who are applying for between $20,000 and $50,000. One of the big complaints I get is that it is tough to get the money. It's not worth their while to get the money, but when they do get the money, it is worth their while. Mr. Ross Lennox : It requires a process, and there is a team of 12 technical experts who look at your applications. One of the things that would help us is this. If I receive an IRAP, I have to go through the same process with SR and ED again, so if it's an IRAP project, I should automatically get SR and ED for it. Mr. Massimo Pacetti : That's what I wanted to hear.

Do you agree with that? A witness: Absolutely. Mr. Massimo Pacetti: Thank you, Mr. Chair. The Chair : I have some time for a final round because people have been very concise. I certainly appreciate that. I have a series of questions. The first is for the Alberta Chambers of Commerce. I certainly have some sympathy for your recommendation concerning the threshold, so the first recommendation you make, committee members, can look at and perhaps adopt, but in terms of the second one, or in terms of actually committing to do that, is there a cost?

Obviously, the biggest question the finance minister and the finance department would have is, what would be the cost of actually implementing ongoing thresholds for any tax changes?

(1055) Mr. Ken Kobly : As far as the actual cost involved to implement is concerned, we don't have those numbers. I would suggest that Finance could probably come up with a pretty good estimate, and we'd encourage them to take a look at it. The one that would cost the least amount to implement, in my opinion, would be increasing the threshold of GST for small suppliers. It's effectively revenue neutral. The Chair : Certainly I think the first recommendation in terms of an ongoing review of that is very practical. Just turning now to the prospectors and developers, I am very heartened by Mr.

McCallum's comments on perhaps this committee recommending that we stop doing this every year and having this constant debate on whether we are going to do it or not do it. That is certainly very hopeful. I don't know if you want to comment on that, but the thing that really hit me when I was up at the diamond mine in the Northwest Territories was the massive structure, but then they showed how long it actually took to construct it, how long it will be in operation, then how long it will take to actually reclaim that land.

Obviously, that is the reason you're asking, to have a long-term framework fiscally so that you can actually make decisions. Ms. Eira Thomas : Absolutely. It is an investment in the future. Further to Mr. Laforest's comment about our competitiveness, for 25 years mineral reserves in Canada have been on the decline, so despite the fact that we've had quite strong commodity prices, minus the last year where we had significant pullback, we haven't been replacing our mineral reserves. That is because Canada is probably losing its competitive edge.

A lot of that comes down to the things we spoke about earlier, about a lot of the geology being in remote areas. The last major road development into northern Canada was Diefenbaker in 1959, so that gives you an indication of the lack of investment in infrastructure. All of those things are important for the long-term sustainability, but for now and survival, I think this mineral exploration tax credit is very important. The Chair : Thank you for that. Also, I appreciate your comments about the IRAP program.

It is certainly a program that we support very strongly and we will certainly look at what we can do on an ongoing basis. I did want to return to the accelerated CCA. It's a bit of a special issue for me because we worked on it at the industry committee, and Jay Myers certainly drove that issue forward. The industry committee adopted it unanimously. The finance committee adopted it as well. I do take Mr. McCallum's point.

You can't have 100% CCA on everything--obviously not--but with respect to the manufacturing sector, I get a little sensitive when people say a two-year writeoff for capital machinery and equipment is a subsidy. Mr. Kaumeyer, I want you to respond to the people who say this is a subsidy and actually tell us what accelerated CCA actually means for a company or a plant in terms of their own operation. Mr. Lawrence Kaumeyer : On what it means and why it's so vital right now, we're in very unique circumstances with SMEs across Canada right now.

Probably the most predominant aspect that has hit small and medium-sized enterprises across Canada has been the ability to access cash from financial institutions. We all know what has happened with the credit crunch. The reason why it ties back so directly within CCA and the acceleration is that the ability to depreciate that faster enables you to increase the amount of cash flow you'll have in the business for other things. It's absolutely vital right now. We're not a big business, but we are the lifeblood of what's going on across the country in that.

We've invested $2.76 million in capital expenditures in the last two years. Our ability to have some leverage in looking at where that could expand would further assist in our cashflow management. That's really what's taking companies under right now. I toured Ontario in the spring and saw dramatically what had occurred there in manufacturing. Basically companies were running out of cash. So the acceleration would assist that dramatically. The Chair : Thank you. Mr. Oszli. Mr. Don Oszli : An accelerated capital cost loan is really a deferral of taxes.

From the government's standpoint, it doesn't result in reduced taxes overall; it's simply a deferral. You invest the money now and reap the benefits of that when the equipment is disposed of, or you reap the benefits of taxation from the growth of the companies that invest in that.

(1100) The Chair : Thank you. I'd love to continue this discussion, but we're out of time. As I enforce the time on others, I'll enforce it on myself. I want to thank you all for your presentations, responses to our questions, and submissions. Members, we're going to suspend for a few minutes. We'll ask the other witnesses to come forward to the table, and we'll resume immediately thereafter. Thank you. (1100)

(1105) The Chair : I call the second panel of the 44th meeting of the Standing Committee on Finance to order, as we continue our pre-budget consultations across Canada in our second city of hearings—and my favourite—Edmonton. It's lovely for all of you to be here. We have with us a number of individuals and organizations, and I'll introduce them in the order they'll be presenting. First of all, as an individual, we have Mr.

Peter Bulkowski; and then we have Meyers Norris Penny LLP; the Edmonton Social Planning Council; Volunteer Alberta; the United Way of the Alberta Capital Region, Success By 6; and His Worship, the Mayor of Edmonton, Stephen Mandel. Welcome to all of you. Thank you so much for being with us. Because of time constraints, you will have up to five minutes for an opening statement, and after the last presentation we will go to questions from members. So we'll start with you, Mr. Bulkowski, for five minutes.

(1110) Dr. Peter Bulkowski (As an Individual) : Thank you. There is no free lunch. Every dollar you spend means money that's going to have to be recouped through increased taxes or through the destruction of savings by inflation. There's no free lunch. I was born in 1950 in Canada. I have lived here all my life. I studied hard. I have three degrees in science from Toronto and Queen's. I've worked hard. I'm a conserver. I've lived frugally. I have a 14-year-old daughter and I'm not quite sure what to tell her now. The path now taken by all levels of government in Canada is unsustainable.

It is unsustainable economically, it is unsustainable socially, and it's unsustainable environmentally. My first recommendation is: you need to balance the budget. No deficit. No off-the-book deficits. No unfunded liabilities. I'm 59 years old. In my lifetime, you gentlemen have destroyed the value of our currency by a factor of about 20. I've given you the example here of a postage stamp from 1966. I was 16 then, and five cents got you a letter then. Today it's 54 cents, an increase by a factor of 10. It's the same thing for a candy bar. It cost a nickel when I was a kid, but now it's a buck.

If you look at the coinage, you've debased our currency. The first coin I show here is from 1967. That coin was 80% silver. It's worth about two and a half bucks in today's money. By the end of 1967 it was down to 50% silver. In 1969 it was made of nickel, and then at the turn of the millennium you converted it to iron with nickel plating. You have debased our currency. I've seen it debased four times during my lifetime. You carry a huge debt and you're adding to the debt.

I guess I'm different from most of your other presenters, who are asking for more spending, more deficits, and more debt at all levels of government. I showed you the Canadian stamps and the Canadian coins. The other stamps there are German. Germany had some fairly significant inflation. The cost of stamps went from 20 marks in 1920 to 100,000 marks in 1922, and then the cost went to 50 billion marks to mail a letter in 1923. We're heading the same way, gentlemen. With that destruction of the currency, Germany removed its debts; they were inflated to nothing.

It destroyed social stability and it brought in Hitler. There is no complexity. The only way to spend more than is being earned is to inflate the currency. That is neither stable nor sustainable. There is not a trade-off between economics and social and environmental stability. Without economic stability, you will not have social stability. You cannot defend the weak if you have no financial abilities. You cannot protect the environment. You need to balance the budget: no deficit, no off-the-book deficits, no accounting games, no unfunded liabilities. Where you're going to spend, you need to spend productively.

That means accountability. You need to show that what you're spending actually generates some wealth. I heard a lot about IRAP and other things. After spending 40 years in science, I'm telling you that you need to show that you're actually getting something back, because a lot of it doesn't come back. You need to rebuild the tax system so it's fair, and seen to be fair. Simplify, simplify, and simplify. There are a bunch of examples there. No deficits; accountability for all spending; a simplified fair tax system. No free lunch. Thank you. The Chair : Thank you for your presentation.

We'll now go to Meyers Norris Penny, please. Mr. Gordon Tait (Partner, Meyers Norris Penny LLP) : Thank you for the opportunity to appear before this committee. Meyers Norris Penny is here to make a presentation on behalf of our 300 Hutterite colony clients who represent approximately 95% of the 30,000 Hutterite people in Canada.

Section 143 of the Income Tax Act applies only to communal organizations and outlines the specific rules that Hutterite colonies need to follow in order to file and pay income tax on their earnings. We have been requesting a change to these provisions for many years, and we appeared before this committee in 2007. Through the years the message has been the same: it is unfair to restrict the Hutterites' ability to allocate income for tax purposes when there are no other similar restrictions in place for any other business in Canada.

Our submission to the committee included a fair amount of detail and background regarding the information on colonies, and we trust you've had a chance to review that. Today we would like to focus on two critical issues.

One, by denying an allocation of income to Hutterites under the age of 18 who are actively engaged in the business, the Income Tax Act penalizes Hutterites; and two, in some of our discussions with the Department of Finance it has been suggested that the current legislation is fair because it allows colonies to allocate income to members over the age of 18 without regard to their age, physical or mental capacity, and without distinguishing between activity and responsibility on an individual basis. Our analysis and the numbers will show that an inequity still exists.

There are approximately 3,000 members of Hutterite colonies between the ages of 14 and 17 who are actively engaged in the business of farming and who at this point in time are not allowed to file an income tax return based on the provisions in

section 143. Meyers Norris Penny, as I said, prepares the income tax returns for approximately 95% of all Hutterites in Canada, so we got this from our demographic data. As you're all aware, an individual in Canada can earn approximately $9,500 of income, tax free. It's that inability to file an income tax return and the loss of those resulting non-refundable personal tax credits that amounts to about $25 million of non-refundable credits per year that the colonies lose access to. That loss of non-refundable tax credits results in an actual tax loss of about $3 million per year.

The income allocated to taxpayers for Hutterite colonies over the last number of years averages less than $20,000 per year, per person, for the people who are allowed to file a tax return. The average income allocated to a senior or disabled person in the 2008 taxation year was less than $10,000. The reason I point those numbers out is that they are very reasonable and supportable based on the contributions the individuals are making to the colony business, and they demonstrate that Hutterites do not receive any significant benefit from the current allocation rules.

There is no trade-off or benefit that in any way offsets the loss of the non-refundable personal tax credits. Let's also remember that no other business in Canada, farming or otherwise, is subject to any restriction whatsoever when it comes to the payment of salary or wages or the allocation of income. The only requirement is that the amount be reasonable given the circumstances. It is fundamentally unfair to put restrictions on Hutterite people that are not in place for any other business. This is not a social policy issue; this is an income tax issue. We've been asking for this change to

section 143 for a number of years, and we've met with many MPs and department officials who agree that our request is fair and reasonable. In terms of government spending and budgets, the change we are requesting will have a very small impact, approximately $3 million per year. This amount is very significant to the Hutterite community.

You should also be aware that Hutterites believe in growing and maintaining their existing culture and establishing new communities, so you can rest assured that any tax savings achieved as a result of this request that we are making will be reinvested back into the Canadian agricultural economy, into the western Canadian economy, which I think is in line with the committee's mandate. We can seek fairness in income tax and grow the economy at the same time. The request we are making is not to get something special for Hutterites--quite the opposite.

We are trying to bring the taxation of Hutterites in line with the taxation of other farm businesses. You might be interested to know that Hutterites were not allowed to file separate income tax returns for a married couple until 1997, more proof that the legislation regarding colony income tax has lagged behind all others.

(1115) The rules in place today do not result in fair and equitable treatment. The numbers and analysis prove that colonies are losing access to $25 million in non-refundable tax credits each and every year. We respectfully request that this committee make a recommendation that the income allocation rules contained in

section 143 of the Income Tax Act be updated and modernized in the next federal budget. Thank you. The Chair : Thank you for your presentation. We'll now go to Mr. Kolkman, please. Mr. John Kolkman (Research and Policy Analysis Coordinator, Edmonton Social Planning Council) : Thank you. Thank you to committee members. The Edmonton Social Planning Council is pleased to participate in these pre-budget consultations. The ESPC is an independent, non-profit social research organization focusing on issues of poverty and low income, with the goal of building a more healthy, just, and inclusive community.

This ESPC brief responds to the first question posed by the committee, which asks, what federal tax and program spending measures are needed to ensure prosperity and a sustainable future for Canadians? Any recovery from the current economic recession is likely to be slow. Poverty generally goes up during recessions. This makes it imperative that next year's federal budget expand investments in Canada's people, especially its children. These investments should support the development of a poverty reduction strategy complementing the initiatives under way in most Canadian provinces.

The ESPC therefore makes the following recommendations: one, that Budget 2010 increase the basic Canada child tax benefit by $400 annually, in addition to normal indexing, for the first child, with proportionate increases for additional children; two, increase the basic Canada child tax benefit by $200 annually, in real terms, for the subsequent four budget years, starting with Budget 2011; and three, index the working income tax benefit starting in Budget 2010, with further increases beyond the indexing being phased in after the economy recovers from the current recession.

I want to speak in more detail about the child tax benefit. The child tax benefit, including the national child benefit supplement for low-income families, is an important social policy measure that helps reduce child and family poverty. The child tax benefit is also a parental recognition program designed to compensate parents for the extra expenses involved with raising children.

Budget 2009 made a modest additional investment in child tax benefits by raising the upper limit on net family income required to receive the maximum benefit; however, there is the potential to do so much more as government revenues recover in coming years. To help pay for the recommended changes, the non-refundable child tax credit should be eliminated. It is a poorly targeted program disproportionately benefiting higher-income families. The $1.5 billion in savings should instead be invested in the basic child tax benefit, allowing it to be increased by about $200 annually at no extra cost to government.

The ESPC's position is that any real increases to child tax benefits should be to the basic benefit, with indexing only of the NCBS portion, that is, the supplement, in future years. This avoids creating a poverty wall caused by the already steep phase-out rates of NCBS benefits as family income rises. We propose that benefit reduction rates remain the same as those currently existing. Applying the real increases in child tax benefits to the basic benefit will also assist more Canadian families with the costs of raising children, thereby helping to offset the loss of the non-refundable child tax credit.

Currently, child tax benefits are fully phased out at $107,000 of net family income. Under our proposal, by July 2014, child tax benefits will only be fully phased out above $200,000 of net family income. The universality of the universal child care benefit should be retained as it provides extra support to younger families with children of preschool age, who incur extra child care costs compared to parents of school-aged children.

The UCCB also replaced the supplement for children under age seven that existed prior to July 2006; however, the UCCB should be non-taxable, indexed, and better integrated with the child tax benefit system. The effect and estimated additional cost of these recommended changes is summarized on the table on page 4 of the written brief that I have presented. Also, phasing in benefits over five budget years recognizes the constraints the current economic recession is placing on government expenditures.

As the economy recovers, the federal government will have increasing fiscal capacity to make these investments in Canada's children. We estimate that this single measure of enhancing child tax benefits, once fully implemented, could lift at least one in five Canadian children out of poverty.

(1120) While I recognize that this is a little bit of a technical presentation, I'd be pleased to answer any questions you may have. The Chair : Thank you very much for your presentation. We'll now go to the Consulting Architects of Alberta for their five-minute presentation.

(1125) Mrs. Vivian Manasc (Architect, Consulting Architects of Alberta) : Thank you, and good morning. It's great to be here to speak with the Standing Committee on Finance on behalf of the Consulting Architects of Alberta. The Consulting Architects of Alberta is a relatively new organization. It was founded to represent the business interests of the architectural community in Alberta. It works in collaboration with the Alberta Association of Architects, which is our regulatory body, and the Royal Architectural Institute of Canada, our national advocacy body.

When we looked at your questions and identified the wide range of interests that architects have in the environment, in the economy, and in the future budget of this country, we identified three areas that we could speak to among the many of interest to us as architects. Those three are the environment, the federal stimulus program and actual infrastructure construction, and the cultural infrastructure of our country. All of those are part of the wide range of issues and interests that we as architects address on a day-to-day basis.

Starting with the environmental issues, we're delighted to see the ongoing commitment of the Government of Canada to reducing greenhouse gas emissions from the built environment, recognizing the very large contribution that buildings and the communities make toward greenhouse gases. We can dramatically reduce energy consumption and greenhouse gas emissions from buildings by improving their energy performance for both existing and new buildings. That we can do, and incentive programs are of great assistance to that.

We would invite the government to consider reinstating or expanding new incentive programs to replace those that have been eliminated. For instance, the LEED green building rating system, which has taken off across the country, is one that should be recognized and incented. We would appreciate an incentive program that would recognize and reward both private sector and public sector owners who get their buildings certified to a green building standard.

Secondly, on the issue of the economy and the federal stimulus measures, certainly it's been great to see the number of dollars that have been committed to infrastructure, but it's interesting to hear the focus on “shovel-ready”. That, of course, is of great concern to us as architects and as engineers. We recognize that about 10% of the man-hours involved in the world of infrastructure are actually related to the knowledge economy, or the architecture and engineering of the work. We suggest that a term such as “pencil-ready” might be more appropriate than “shovel-ready”.

That way, when projects are in the process of being developed and imagined, there's an opportunity to spend time on design and construction. Many of our clients are very frustrated by the very short timeframes that have been provided for shovel-ready projects, and as a result have been proceeding with less urgent road repairs instead of more urgent building design. The building design simply takes too long to design and construct within the very tight windows that have been established. Finally, I think there's an opportunity to look to Canada's future. We're coming to 2017, our 150th birthday.

It's an opportunity to create a cultural buildings program across the country, and the time is now. It's important that we start to think about designing libraries, new museums, new cultural facilities, and buildings of all manner that will celebrate the richness and diversity of the culture of our country. We have heritage buildings that need preservation and we have new buildings that need to be designed and constructed so that our children will have an even richer cultural environment.

If we cast our minds back to 1967, we are reminded of the number of centennial projects that we all enjoy today, including auditoriums and libraries and recreational facilities. We would invite the government to consider including in this year's budget a fairly substantial initiative around the planning and design of a whole new set of cultural facilities in every community, as well as in first nations communities, across this country. In

summary, there are basically three areas that are of particular interest to the architects in Alberta. Those are the environment, infrastructure, and cultural infrastructure. We welcome your questions.

(1130) The Chair : Thank you very much for your presentation. We're going to go now to Mrs. Lynch. Mrs. Karen Lynch (Executive Director, Volunteer Alberta) : Chair and finance committee members, my name is Karen Lynch. I am the executive director of Volunteer Alberta, a 20-year-old provincial organization connecting the non-profit voluntary sector, and specifically volunteer-engaging organizations. I'm also a volunteer on three boards. I have with me today in the audience three current or former Volunteer Alberta board members: Dr.

Christina Nsaliwa, executive director of Edmonton Immigrant Services Association; Mr. Ryan Stasynec, a fourth-year business student presently in a co-op position with Meyers Norris Penny, and Mrs. Mary O'Neill, the executive director of the Glenrose Rehabilitation Hospital Foundation, a former member of the legislative assembly and an educator. Some Canadians might question why an organization with the word “volunteer” in its name might be concerned about an economic stimulus plan. The fact is that in the 21st century volunteers are not free.

This statement may further confuse committee members who are painting a visual picture of volunteers reflecting the warm adages of motherhood and apple pie and wondering, “Since when did volunteers start getting paid?” I can assure you that you have not missed this important detail as you search to find an economic silver bullet for Canadians in this worldwide recession. What costs is developing the leadership in volunteer-engaging organizations.

Investing in both defining the knowledge and then transferring it efficiently and effectively throughout all 12 sectors, not just the social service delivery sector—which is the one that most government and elected officials think of when the word “volunteer” is spoken—but the entire range of organizations, from faith, sports and recreation, and arts and culture to environmental groups, requires more than just “business as usual” during not only the current economic downturn but also to be the partner in delivering your public policy on the ground.

Volunteer Alberta's position on specific economic investment measures that our government could take that would generate great returns not only in the traditional way of measuring return on investment, or ROI, but in terms of service delivery and creating community is in the brief respectfully submitted to you in August. There are three points. First, investment in infrastructure needs to include the powerful social investment of volunteerism, not just capital infrastructure but the people infrastructure, the very foundation of Canada's wealth.

Funding to Canadians most negatively impacted by the recession must also address the infrastructure required for the service delivery mechanisms: non-profit organizations. Secondly, although thankfully Canadians do not have the fractured American financial system model, there are a few American initiatives in the Edward M. Kennedy Serve America Act that should be considered in Canada to act as a catalyst to increase the opportunities for Canadians of all ages and demographics to serve our country—most importantly, investing in the non-profit sector's capacity to recruit and retain volunteers.

This is where the “volunteers are not free” comment comes in. It is not true that volunteers are in short supply in this country. What is true is that the types of Canadians interested in volunteering are dramatically different from the motherhood-and-apple-pie volunteer. Engaging and keeping volunteers engaged is challenging, but the bigger challenge is for non-profit leaders to adjust and learn an entirely new approach to 21st century volunteerism. Knowledge is there; capacity is lacking.

That leads to our final recommendation: leverage the existing academic research and best-practice learning to eliminate inefficient and outdated voluntary sector practices; create funding opportunities for capacity-building organizations so the government receives value for its investment. The responsibility for transferring this knowledge in leadership organizations across the country is again an investment in the infrastructure. Like others presenting today, I follow media reports on the economic action plan and applaud you for the investment made today in the non-profit sector.

As a recipient organization of the extra investment in the Canada summer jobs program, thank you. Just a word, though: it would be really helpful if the grant approval process were actually six weeks earlier so non-profits could actually attract the best of student populations. Many volunteers and elected leaders toy with the suggestion that tax credits would be incentives to offset the perceived declining rate of volunteerism.

Earlier this year, Volunteer Alberta commissioned a research study, of which your chair received a copy, that finds that the wide-scale implementation of the tax credit policy for volunteer time donations is potentially problematic. The research, undertaken by a CA and funded by the Muttart Foundation, revealed the complexity of the issue. The research is available to inform you about the fallacy of volunteer tax credits as a quick fix to improving volunteer rates in Canada. On that note, I would like to leave you with one memorable statistic.

According to government data from StatsCan, the non-profit voluntary sector represents nearly $80 billion, or 7.8% of the national GDP. It's a larger share than the manufacturing sector, and that is only when you use traditional accounting methods.

(1135) The passion, the commitment, and the civic engagement levels are immeasurable. Thank you. The Chair : Thank you very much for your presentation. We'll now go to Success By 6. Mrs. Ilene Fleming (Director, United Way of the Alberta Capital Region, Success By 6) : Thank you very much for the opportunity to present to the House of Commons Standing Committee on Finance as you deliberate on your budget for 2009. Success By 6 is a community partnership whose mandate is to see that all Edmonton children from zero to six have the supports they need to ensure a lifetime of healthy growth and development.

Success By 6 works under the direction of a council of partners, which engages a broad range of stakeholders to direct the work of Success By 6. These stakeholders include representatives from a variety of institutions and include parents, service providers, and the health, education, and social services sectors, and we have representatives who provide funding in our community. The commonality of all of the people who sit on our council of partners is the interest of supporting all children to have what they need to have the best possible start.

We work to educate people on the importance of early childhood development in our lives and their ongoing health and well-being. We engage stakeholders as much as possible in being a part of creating an optimal environment for child development. We know that children grow up in families, that families work in communities, and that the outcomes within those communities can be shaped with our investment, with your investment, of Canada's dollars.

We thank you for the opportunity to bring forward some recommendations on the difficult investment decisions that you're going to have to make with the limited resources that Canada has. Mr. Christopher Smith (Chair, United Way of the Alberta Capital Region, Success By 6) : In terms of recommendations, we have three. The first recommendation relates to making maternity and parental leaves more accessible and better funded.

In terms of the arguments in favour of parental leave policies, they present two rationales: first, that such policies are now a necessity, giving the increasing numbers of women who participate in the labour market; and second, that there are benefits, both health and well-being benefits, that flow from allowing new parents an opportunity to spend time with their children during those first years of life. Unfortunately, based on the current policies, there are individuals, groups, and families who do not have access to maternity and parental leaves.

If we summarize those groups, it's single, younger, and less-educated women who are much less likely to be eligible for maternity benefits than other groups. This primarily relates to the structure of the EI program, which means that, at present, seasonal workers and those women who are self-employed are ineligible for maternity benefits. Second, when we look at the length of the leave women take, primarily it's women in vulnerable circumstances, younger women, and those facing financial hardships who take shorter leave.

Our recommendation to you today, first, is that you extend the maternity and parental leave benefits program to include those working Canadians who do seasonal work or part-time work and those who are self-employed, and, secondly, that you look to enrich the value of the benefit to those lower-income families. The second recommendation relates to income support for families and refers to some of the information that Mr. Kolkman presented. It remains a disturbing fact that children and their families continue to live in poverty in Canada. Child poverty has a high price that we all pay.

Children who grow up in low-income families do less well in school, they earn lower incomes, and they have higher levels of use of social, health, and justice services. One fiscal vehicle the federal government has to reduce child and family poverty is the Canada child tax benefit. We encourage you to enhance that child tax benefit to ensure it targets low- and modest-income families, and our recommendation is that you do that by eliminating the universal child tax benefit and the non-refundable child tax credit and flowing those moneys into an enhanced child tax benefit. As Mr.

Kolkman points out, that would immediately elevate 50,000 families above the low-income level. Finally, we commend the Government of Canada for your recent investments in infrastructure. Those investments in infrastructure need to be added to by investments in social infrastructure. There is a large body of evidence that supports the value of early childhood education and care as a vital social infrastructure that supports families and their children.

Public investments in early childhood education and care support the healthy development of children, they enable parents to participate in the labour force, and they create community jobs. We therefore recommend that the government re-establish the funding transfers outlined in the 2005 early learning and child care agreement. Thank you.

(1140) The Chair : Thank you for your presentation. We'll now go to Mayor Mandel, please. [ Translation ] Mr. Stephen Mandel (Mayor, City of Edmonton) : Welcome to Edmonton. I apologize for not speaking French. [ English ] My city's economic reality has changed a lot in a year. One year ago we were managing a boom. This year our economy has slowed significantly. Like you, we are streamlining our spending priorities while investing in major infrastructure, which has the dual purpose of building the city's infrastructure and supporting economic growth.

It is clear that when it comes to stimulating economic recovery, Ottawa understands that this is a city issue. It is also clear that when the government points to cities like Edmonton, money spent here quickly recycles into economic output. All this means that our goals are aligned. We already know that we have common constituents, which means that the targets of our efforts are the same. What remains is to understand that the actual application of federal policies and programs needs to better reflect our common goals. This is a question of not just the size of allocation but of structure and delivery.

I want to go over two main themes, but first I'd like to talk about process. Big-city mayors have long called for the federal government to take meaningful steps towards addressing the infrastructure deficit. I would be remiss if I did not acknowledge that the government response to this recession does focus on this very issue, and the commitments have been significant. Edmonton is the beneficiary of federal commitments; $25 million, as an example, is being spent in transit upgrades that were applied across our system to help make it more effective.

These upgrades complement the successful south line extension, which was made possible by leveraging a gas tax transfer, which was already leveraged to finance a $700 million extension. In addition, the $75 million announced by the federal government, plus matching provincial and municipal funds, will allow us to build the first leg of our NAIT line, in a project worth more than $200 million. We appreciate the political and funding support we have received for these projects, as well as the efforts of our local representatives to align federal spending with city priorities, but the city has done their share too.

We've invested close to $1.8 billion this year in infrastructure. We're committing debt financing for large-scale projects, such as LRT and new multi-purpose recreational facilities. We have earmarked an increase in tax of 2% a year to cover neighbourhood renewals. We have also introduced a new program, called Community Revitalization, that will allow us to pay for major rehabilitation. I'm talking so quickly because my speech was longer than five minutes. What we should notice, in all of these initiatives, is that they allow us to create long-term funding pools for financing purposes.

Just as the city's budgeting has migrated support for this type of cash management, so too must federal funding. It must be delivered in a long-term, sustainable form under a program that allows for fast scale-up and easy flow-through. When the goal is to see a quick distribution of funds, the funding mechanism is of equal importance to the funding amount. An increasing part of our infrastructure need is found in larger, system-wide investment that can only be addressed with long-term, stable financing, which in turn allows us to leverage funds and manage major projects. The best example of this is the gas tax.

It is a tool that meets most urgently the needs we have, as cities, for long-term investment. We accept that our goals are the same and the people we serve are the same. The missing component is certainty. Without it, our SLRT line expansion would not have been built. Under this program, we understand what we can expect. We know how to react to it and how to plan. We can balance between immediate small-scale needs and the need to tackle some of the bigger challenges. We allocate money accordingly. The accountability framework is similarly straightforward and transparent.

Further, under this program, certainty means that we do not compete with provincial priorities, nor do we apply for funds at the same pool as community stakeholders, many of whom not only compete with our funding but also come to us to ask for money to match the federal funding. Under the gas tax framework, cities are treated as a significant economic partner, not as a separate entity. This brings me to the next major point I would like to address today, which is the need to better align federal goals and objectives with the on-the-ground realities in places like Edmonton.

Edmonton has received great political support on files. Our urban aboriginal file is an example. The minister has a very strong understanding of the reality that the issues of off-reserve migration have created in Edmonton. The desire to address this issue with new and unique partnerships allows us to better integrate members of our aboriginal community in our city. But the reality is that gaps exist between objectives and procedures. Program alignment does not match political will.

Thus, resources are not easily applied where they are most needed, as in the case of a city like Edmonton, which is becoming Canada's largest aboriginal community. Here, the real challenge for the government is not what is being spent--indeed, I cannot believe that sufficient resources are not available--but the urgent need to facilitate changes in the institutional and jurisdictional processes that prevent resources from being targeted where they are most needed.

(1145) Just as with the overall approach to funding, new and innovative approaches are needed to reflect the reality of the issues we face. Processes need to acknowledge that today's aboriginal communities exist in cities like Edmonton. Resources must follow the need or we'll all regret what could happen in the future. A new order must be found to allow us to better match our goals with what's really happening on the ground. There's a common theme to what I've said today. Very quickly, it is that truly solving issues cannot be done when cities of the size and skill of Edmonton remain mere provincial stakeholders.

As your partner, we need certainty and alignment to be built into our processes. We need to be able to break through barriers to become full partners who are going to solve problems and create opportunities alongside the federal and provincial partners. The key to our shared success will be in applying solutions to allow us to begin to overcome some of those challenges. I speak to you today not simply about the need to apply money to our issues but about the much more urgent need to overcome the structural challenges that hinder our flexibility, our nimbleness, and ultimately our success. Thank you very much.

The Chair : Thank you very much, Mayor Mandel. Thank you to all for your presentations. We'll now go to questions from members. In the first round, each member will have seven minutes. We'll start with Mr. McCallum, please. Hon. John McCallum : Thank you, Mr. Chair. Thank you to all the witnesses for being with us today. It's a pleasure for us to be in Edmonton. I'd