The Chair: Good. Go ahead. The floor is yours.
Ms. Pauline Finlay: Good morning, everyone.
Honourable members, members of the audience, 130 million girls are out of school. If they were a country, they would be the tenth largest. Let that sink in.
Canada contributes about two cents per Canadian per day to global education. According to the education commission, it is indispensable to double our contributions to education if we want to close the 130 million gap and provide every girl with the opportunity to go to school. This means that with just two more cents—two cents—Canada can lead the way.
Today we ask Canada to contribute to the financing of the Global Partnership for Education in 2018, as part of the solution, so that it can help millions of girls in the poorest countries get the education they deserve.
I want to close by asking this to the honourable members and the audience: where would you be without your education?
Good morning, honourable members and members of the general public.
My name is Kevin Stacey. I'm with the National Association of Federal Retirees. I'm the president of the local branch of the Avalon-Burin branch here. We have about 2,200 members. In Newfoundland we have about 3,500 members, and across Canada we are 180,000 members and growing.
I'd like to make a few key points to you today. First, secure retirements, strong health care, and a national seniors strategy are the best ways to help seniors and their families. On retirement security, I urge this government to scrap Bill . This bill would introduce a new type of pension plan, Canada benefit pensions, while taking away retirement security and killing off good old defined benefit plans that people have worked for and that bring back benefits to both the local and national economies.
For budget 2018, I believe the federal government should lead a national seniors strategy that builds on the home care and seniors housing investments that have been made so far. The strategy needs to include a national palliative and end-of-life care strategy and better pharmacare for seniors. It must continue to tackle infrastructure investment, with age-friendly communities and universal design standards in mind to ensure that seniors' residential needs are met. The government should appoint a minister responsible for seniors to make sure that public policy decisions are always viewed through a seniors lens. These actions would lead to better productivity and a stronger economy, not just for seniors but also for their families and for Canadian communities.
Thank you very much.
Thank you very much. I'll pass that along.
Good morning, honourable members and members of the public. As mentioned, my name is Kevin Bell. I'm a volunteer on behalf of Engineers Without Borders.
In budget 2018 we are asking that the government commit to a predictable annual timetable of increases to our international assistance envelope, of up to 0.31% of GNI within its first mandate. Currently our level of assistance is 0.26% of GNI, the lowest it's been in recent history, and it hasn't increased by a significant amount in quite some time. According to the OECD, global assistance has increased by 9%, but it's disappointing to see that Canada's own contributions have decreased by 4%.
If we increase funding, if we increase assistance, we will be able to achieve the sustainable development goals and grow the economy here and globally. In 2018 we hope to see the downward spending trend end so that Canada can meet its global commitments.
Thank you very much for your time.
Thank you very much, Kevin.
I don't believe there's anybody else here for the open-mike session. I believe we have all of our witnesses here as well.
We'll turn the floor over to Derek in a minute, but first I want to say welcome to the witnesses. Thank you to any of the groups who put in a submission prior to mid-August. Although we are not dealing extensively with those submissions here, other than the remarks that are made, they are on people's iPads. You'll see them refer to them once in a while. The official submissions are being considered as part of pre-budget consultation as well.
I know that Mr. Butler has to leave at 10 o'clock, so if people have any questions in mind for Mr. Butler, you'll need to get those in pretty quickly.
Usually when we're on the road, I like to have members introduce themselves so that you have an idea of where they're from and of the kind of cross-country representation that's here.
I'm Wayne Easter. I'm the member from Malpeque, Prince Edward Island—the other island, not quite as big as this one.
Raj, do you want to start?
Thank you very much, Mr. Chair.
Thank you for the kind invitation to appear this morning. Again, my apologies; I had a prior commitment some two hours outside of town, and I'm sure we could find you a house in Upper Island Cove if you'd like to have some additional connections to Newfoundlanders.
Voices: Oh, oh!
Mr. Derek Butler: The ASP is a typical industry trade association. We represent the majority of seafood producers in the province, both by value and by volume. For the major species, snow crab and shrimp, we're close to 90%, so we're a significant organization.
You've asked us two very important questions. Whether we are responding in the context of question one as individuals or to question two as Canadian businesses, the benefits come back to us all, both as a country and as beneficiaries of a strong and dynamic business sector. Whether as employees or business owners, whether in business or as part of society generally, where we participate in the rewards of business—taxes to government, general services, a strong economy—we all benefit. These are important questions. They represent the core of what we want to achieve as a country for our collective benefit and not for the sake of the dollar, per se.
On behalf of the seafood producers that I represent, I would say one simple thing with respect to the seafood industry: change the model. I called it a simple thing, but it's not easy. Let me repeat: change the model.
There are at least three models of approach for fisheries the world over in terms of structure. The first is what we have been for a long time, which is a harvest-driven or capture model. We fish. We pride ourselves on that. We do it well. We focus on how much we catch, what the quotas are, what the allocations might be, and on the allocation debates—robbing Peter to pay Paul—between industry sectors, we focus on where the stocks might be growing, and yes, still in 2017 to a large measure, because it is a seasonal industry, we focus on the impacts of EI for both harvesters and plant workers.
That is the capture model. It is not, sadly, about innovation. It is not about capital accumulation for reinvestment or research. It's really just about fishing, and we're proud of it. We fish well. There's some processing, and then we sell it. That's our model.
The second model is the market-driven model. In this model we're focused on markets, ocean to plate. The plate becomes the new “cod end”, if you know the expression. It's what consumers want. It's about catching the fish, yes, as always, but also about selling it and really focusing on consumer and market demand. It's about letting that cod end—the plate—and the democracy of the marketplace, the prerogative of the consumer who is going to buy our fish, make the decision of what they want. It's about getting a certain value per kilo and then bringing back those returns.
I underscore bringing back the returns, because we are, above all, a trading industry. It is appropriate that in giving my testimony, my appearances before House of Commons committees have more often than not been made before the trade committee as opposed to the fisheries committee, because that is the nature of the business I represent. We're a trading industry. Some 90% plus of what we catch and produce in Newfoundland and Labrador is exported.
That second model has value. It's a step up from the catching model, the harvest-driven model, but Canada, sadly, is still too much along the lines of the first model in too many regards. That's my simple message this morning, because that represents an opportunity cost. We leave value on the table. It is lost value. We are, as has been said before, more focused sometimes on deriving EI value than on market value. That needs to change, because the world is changing.
I have a Telegram story from this morning. Am I allowed props, Mr. Chair?
It says, “Poor signs for N.L. snow crab. Official DFO survey results available early next year”. We know the world is changing. Stocks are going to be in decline in respect to shellfish in Newfoundland and Labrador and groundfish will come back, but these are the valuable species. These are the species of high value per kilogram in the marketplace, much more so than cod is, so we will need that much more groundfish to make up for the absent shellfish value. The crab, our most valuable species, are in decline, with an aging population and low birth rates. The story is written.
While there are signs of groundfish recovery, we are in no way back to the old days of groundfish abundance. The northern cod stock, the very foundation of our province, remains in the critical zone, and fishery removals must be kept to a minimum.
So the world is changing, but we have not changed. Aspects of the model, such as how capital is used and secured and how harvesters are permitted to access the resource, as well as the business relationships between harvester and harvester and between harvester and producer are all highly regulated, with ostensibly good goals but at high costs.
My message this morning is that the model must change so that industry participants and Canada as a whole can derive greater value from the industry. We need stronger fisheries management, better resource science, and more sustainable fisheries practices. All of those cost money, and a healthier, more sustainable business model can achieve it. As I heard recently in Iceland, “We can't be green until we're out of the red.” We can take better care of the fish in the process. A new model can do better.
There's a third model. I referenced the first one, the capture-driven model, and the second one, the market-driven model, but there's a third model. I'll close by expanding on that briefly.
In many parts of Iceland, and increasingly so, there's a research- and value-driven model that includes innovation, ocean clusters, added value, pharmaceuticals, skin grafts from cod skin, beauty products, high-level food protein, enzyme extraction for food flavouring, and the list goes on. The joke is, “You take the fillet, and we'll take the rack and the rest of the fish, because we'll have higher value from that.” That's not our model.
While Iceland's cod resource has declined over the years, the value per kilogram of catch grows. Their model is such that it allows for extremely high quality, capital development, greater wealth from less resource, and more sustainable fisheries overall, whether measured in terms of economics, fish sustainability, or social sustainability. They go together. That takes a new model with a focus on fish sustainability, on capital accumulation and reinvestment, and on market and innovation.
Thank you very much.
Good morning to you all, and welcome to St. John's, Newfoundland. It was great to hear the introductions from each of you and to hear where you're from. I hope that you have at least a little time to enjoy our hospitality while you're here, if you're not all rushing back to Ottawa.
Thank you, first of all, for the invitation to join this pre-budget consultation. Let me just make a few words of introduction to position my comments.
We are a charitable organization, founded in 1976—and this is an interesting comment—with funds from the federal government as an innovative demonstration project. We all think innovation is a new word that's just hit our lexicon, but in 1976 the federal government was actually encouraging that kind of activity in the community sector.
The Community Sector Council Newfoundland and Labrador has a vision of a prosperous and inclusive society that supports individuals, families, and communities. We support citizen participation and, importantly, the integration of social and economic development. We deliver innovative employment programs, particularly for young people. During the last 20 years we have provided—and this is a clear fact—over 15,000 jobs for young people throughout the province of Newfoundland and Labrador, and we have done that significantly with federal government funds. One of the advantages of our work with the non-profit sector is that we're able to provide work during the summer for young people in very small communities where they live. In fact, our latest statistics show that over 25% of the young people to whom we provide summer work are in communities of fewer than 1,000 people, so the reach that an organization like ours has to build on your youth employment strategy is really very significant.
It's our view that the community sector, which is often referred to as a non-profit or voluntary sector, is absolutely fundamental, and in fact central, to economic and social progress in Canada. A strong civic economy encourages productive citizens, contributes to the private sector, and delivers many programs for public benefit. In fact, each and every one of us benefits every single day from non-profit and community-based organizations. Whether through sports activities, hiking trails, services for seniors or youth, social services, or health services, there's not a Canadian who does not benefit from the work of the non-profit sector.
Let me now turn to the specific questions the committee has posed this year. First of all, let me make some suggestions for federal measures to help Canadians be more productive.
Our first recommendation is that you continue and, in fact, expand financial support for youth employment programs such as Canada summer jobs, skills link, and youth internships. I think we all know that early job experience is very important. It should provide a positive experience and an opportunity for personal growth. One of the things we've learned over the years as we have provided support to so many students is that early career development opportunities should go hand in hand with work opportunities.
Our second recommendation is that in budget 2018 you require that career development learning opportunities be incorporated into all employment programs financed by the Government of Canada. Often the most important skills that young people need to learn are the soft skills, which are not taught in many educational programs but which are of real value.
Let me just make a side note here. This summer we had a particular program in which we placed 150 young people who were at significant risk and vulnerable. Many of them were already wards of the provincial government. These young people had had very little exposure to networking, to meeting people, and to the world of work. We actually did a workshop with them, which taught them how to look people in the eye, how to shake hands, and how to introduce themselves. While that seems so incredibly simple, you wouldn't believe the impact that had on the young people who came from small communities and who had never been in that kind of environment before.
After a couple of the sessions we did with them, doing those simple kinds of career development exercises, a couple of the young men actually came up crying, saying that it was the most important day they had ever had, being taught those simple skills. It's pretty easy sometimes when we're working in our world, at the level we work at, to forget those simple things that are so important.
Our third recommendation, therefore, is that because career development is fundamental to helping Canadians be more productive, we suggest the creation of a round table of non-profit leaders with on-the-ground career development experience to co-create, with the federal government, a strengthened framework for delivering effective and efficient work and career training programs directed at assisting people to become more productive. This speaks directly to your question about Canadians being more productive. We need to appreciate that all Canadians have a place in our economy and that sometimes some people need additional support.
Our fourth recommendation, in line with budget 2017, is that we recommend that you move forward quickly to improve access to, and take-up of, post-secondary education for lower-income Canadians through the Canada learning bond. This is an incredibly important program. It is available through the registered educational plan, but it is a special program for low-income Canadians who do not have to make any contribution of their own. By the time their children finish high school, they actually have a nest egg of $2,000 for their children's education. This has really a two-pronged benefit. First, it provides cash, but it also creates an attitude toward post-secondary education. We also encourage that the ceiling be increased regularly, in line with CPI, from the current $2,000 limit.
Your second question was around measures to help Canadian businesses become more productive and competitive. We adhere to the view that the term “business” applies not only to a for-profit business but also to a non-profit business that has a mission to build and fulfill charitable missions. As our fifth recommendation, we urge you to augment the collection of key data on the non-profit sector by Statistics Canada that would enable better policy-making and more effective business planning by the non-profit sector. Years ago there was much greater collection of appropriate data. That has been curtailed significantly. We think it's fundamental that we understand more the role of the non-profit sector in the Canadian economy.
Our sixth recommendation is that you consider the creation of a social innovation fund—much like the strategic innovation fund, but with an emphasis on social innovation—to ramp up capacity to address complex social problems and to find ways to meet the needs of Canadians in the face of changing demographics and new economic realities. Many of the solutions that we see to complex problems often come from community-based organizations. We think we need to free up that social innovation capacity. We are pleased to see the creation of a social innovation and social finance co-creation steering committee. We suggest that its work be further advanced in budget 2018.
Our final recommendation is that the federal government should acknowledge more fully the economic contribution of the community sector and provide additional funding for research and development to support social innovation. We know that many non-profits contribute extensively to the economy in addition to improving the quality of life in Canada, yet we don't necessarily know the full impact of the work of non-profits to the economy.
The next comment I would like to make is perhaps a little bit more negative than the rest of my comments.
There is an incredibly prevalent view across the country, and, I have to say, particularly often in relations we have with federal government departments and individuals, that the only real or actual jobs are created by and in the private sector.
This is an extraordinarily short-sighted view, and it leads to many missed opportunities that this country could be developing and moving forward.
In summary, there are opportunities that might be embraced by the Government of Canada to more fully explore the essential role and collective value of the community sector and to more clearly understand and appreciate that social development is absolutely essential to economic growth. We encourage you in budget 2018 to fully recognize this sector as a major economic driver and not just as peripheral to the economy. We call for a mindset shift and bold actions to ensure that its leaders are included as partners in all opportunities for greater productivity and business growth. The sector has an amazing capacity to help Canadians be more productive, and knowledge to spur innovation to enhance Canadian competitiveness.
Thank you for the opportunity to meet with you today and to present our point of view.
Thank you, Mr. Chair. Thank you for inviting me here today. I am thrilled to have the chance to contribute to the important work you're doing on this committee. Merci beaucoup
The Government of Canada has set a goal to boost Canada's productivity, competitiveness, and prosperity, and to do so in a way that helps more diverse groups of people enjoy the benefits of a growing economy. I believe we can all get behind these goals. The message I want to convey today is simply this: to achieve these things, we are going to need a strong research system.
My organization represents 90,000 scholars across Canada.
The Federation for the Humanities and Social Sciences is the largest community of researchers in the country. These researchers teach the largest community of post-secondary students in Canada. About half of all the students in Canada are registered in humanities and social science programs.
Our researchers and students are tremendous resources for Canada. Our economy is increasingly a service and knowledge economy. Service industries now account for 70% of our GDP, and Canadian employers tells us that they are looking for the kinds of skills taught in the humanities and social sciences: critical thinking, creativity, and writing and communication skills. Research in the humanities and social sciences will also be vital in helping us address some of the biggest challenges facing Canada today: climate change, indigenous reconciliation, youth employment, and the integration of refugees and immigrants.
Governments past and present have taken critical steps to support research, and I want to thank you for that, but according to the fundamental science review completed earlier this year, all is not well. Canada is falling behind.
In particular, investments in the humanities and social sciences, which cover research about Canada's people—our greatest asset—are out of line with our needs, receiving just 15% of federal research funding. As a result, only about a quarter of Canada's talent pool in these areas is able to find funding for their research in a given year. This is a lost opportunity for Canada as other countries surge ahead with investments in basic science and research.
Fortunately, the science review has given us clear recommendations to improve the situation. We have more detailed recommendations in our brief, but let me focus for now on just two.
First, as per the expert panel's advice, we recommend increasing the base funding of Canada’s research-granting agencies by $485 million over four years.
Second, as investments are made to the granting councils, we recommend that humanities and social science research receive a share of new injections equal to that for physical and health sciences in order to better balance Canada’s overall research portfolio, a principle also underscored by the expert panel.
Finally, let's not overlook the fact that one of Canada's most important economic drivers is the cohesiveness of our diverse society. In Canada, people from many different backgrounds are able to work together to create amazing things, and not every country has that. This is perhaps our greatest competitive advantage. How did we build it? What sustains it? What risks are we facing today that threaten it? Canadian scholars in the humanities and social sciences are exploring exactly these questions, and I believe that if we truly want to continue to build a sustainable, prosperous, and inclusive economy, their contributions will be vital.
Thank you. Merci beaucoup.
Thank you for the opportunity to appear before the committee and to participate in this pre-budget consultation.
I'm the executive director for Mining Industry NL. Our association represents 60 members actively engaged in mineral exploration, mine development, mine operations, and the provision of supply and professional services in this provincial mineral industry.
Our industry is a significant economic driver in this province and generates in excess of $3 billion annually in mineral shipments to markets around the world. It directly employs over 7,000 people. We account for 50% of Canada's iron ore and approximately 20% of the country's nickel. Overall, Newfoundland and Labrador ranks fifth in the country in terms of our mineral production, and we produce a variety of minerals here. Copper, cobalt, and gold are particularly relevant in our sector, and we have a promising future, we believe, in base metals and industrial minerals. In fact, in this province we have a 150-year history in mining, with a diverse geology and under-explored mineral endowment. We are confident that our industry has a great future and will make a positive contribution for many years to come.
Canada, of course, is a world leader in mining. Newfoundland and Labrador is also well known for world-class mineral deposits, from Buchans in the interior of the island to the iron ore deposits in the Labrador Trough to nickel, copper, and cobalt up in Voisey's Bay.
Newfoundland and Labrador generates billions of dollars in mining-related economic activity. In order for our industry to remain competitive, measures are needed throughout the mining cycle, from geoscience and exploration and beyond to mine operations.
The mining cycle starts with geoscience, and prospecting and early-stage exploration activity are key to our future. Mining Industry NL recommends that both orders of government maintain a strong public commitment to the advancement of geoscience in the province. Companies, after all, access and use this information to guide their exploration activities. Our association would therefore encourage the Government of Canada to continue and to enhance its commitment to the geo-mapping for energy and minerals program, the GEM program. Recent GEM program work has advanced geological understanding of the mineral potential of Labrador. This work has included detailed geophysical surveys, regional mapping, till geochemistry, and regional bedrock mapping in western Labrador.
Raising capital is very important to our industry. Mineral exploration throughout the country has experienced a strong downturn over the past several years. It's been a tough period for junior companies to raise money and undertake the work necessary to find that next mine. I'm happy to report, though, that there has been a bit of a clear reversal of this trend over the past year, at least in Newfoundland and Labrador. With over 33,000 new claims staked since August of 2016, committed exploration expenditures are expected to rise from roughly $20 million to a forecast of around $30 million. That's the direction we're happy to see at this particular point in time. This is a long way off, of course, from our 2012 peak of $192 million; however, our association is encouraged to see this resurgence in activity, particularly in gold and base metals exploration.
To continue this momentum, Mining Industry NL, along with our association colleagues throughout the country, including MAC, the PDAC, and others, would recommend that the mineral exploration tax credit be renewed for a period of three years and that flow-through shares be maintained to ensure continued interest and investment in the sector. By providing Canadians with a strong incentive to continue to invest in mineral exploration activities, we can support the advancement of new discoveries through to mining projects.
In terms of our Atlantic presence, Mining Industry NL is pleased to participate in the Atlantic trade and investment growth strategy. Collectively, industry and government in the four Atlantic provinces are working together to advance a mining sector investment and export development plan. The strong commitment to this and other initiatives through the Atlantic Canada Opportunities Agency and other federal departments serves to ensure that strategic investments for growth are made throughout the mining sector. Industry-wide activities that attract foreign direct investment into the province and bring Newfoundland and Labrador's mining story to markets in Asia, Europe, and the United States are needed.
Initiatives to address productivity and competitiveness through support for innovation, the introduction of new technologies and processes at our mine sites, and the advancement of clean tech and green mining are critical to our industry's future. Mining Industry NL recommends that the Canada Mining Innovation Council be supported to develop the Towards Zero Waste Mining innovation strategy. This, of course, aligns with the government's innovation, climate change, and clean tech agenda. As a small association, we are pleased and interested to collaborate with our national partners to see our firms achieve zero waste in mining and mineral processing in the coming decades.
Without people, we don't have a mine. Of course, investing in people and communities is essential for our industry. MINL strongly supports the full participation of indigenous peoples in mining through education and training supports, business development partnerships, and employment. Efforts are also being advanced in this province to assess the feasibility of a mining centre of excellence that would help engage and support a coordinated approach to education and training, and to research and development activities within our local industry.
Finally, on the regulatory front, the regulatory environment impacts investment decisions and influences where companies choose to explore and advance their interests. The review of federal environmental legislation, including the Canadian Environmental Assessment Act, must find that balance between the public interest and industry's need for an effective, timely, and coordinated regulatory process. We need to ensure that projects advance with greater certainty and that government has the internal capacity necessary to meet these responsibilities and help avoid delays. An improved compliance framework can reduce project costs and increase our industry's competitiveness in comparison with other jurisdictions around the world.
With that, I close my comments. Thank you for the opportunity to share my views with you this morning.
Good morning, and thank you very much for the opportunity to speak with you today.
Nancy and I will be a tag team this morning with our comments for the chair and the honourable members, so thank you very much.
As mentioned earlier, the St. John's Board of Trade did a pre-budget submission in August. I believe you have received a copy of it, but the proposed changes announced in July have overshadowed all sorts of discussions around budget 2018.
The St. John's Board of Trade has been in existence for over 40 years, and never have we seen such outcry from our members. We are receiving daily phone calls in terms of the implications and ramifications of these proposed changes for our members' businesses. The reason is that these changes are so broad, so far-reaching, and have so many unintended consequences.
Honourable members, there is likely not a restaurant or a fish plant or any business that does not have family members working in the business, and almost every single business in Newfoundland and Labrador has the goal of financial stability, with savings of passive income to help through difficult times. In fact, they have been encouraged by their financial professionals to save for these rainy days. It is as though the finance department crafted tax measures that would affect the maximum number of businesses in the most complicated manner, yet has not identified the true revenue that would come from this measure. The amount quoted with respect to income sprinkling is $250 million, but there has been no real communication of what the total tax impact is going to be on the economy or on small businesses.
Here is what our members are worried about. Business owners generally spend their life savings in their businesses. They don't have separate retirement accounts. They don't have that luxury. They accumulate these surplus funds so that they can use them to get through economic downturns or use them for capital investment. We've spoken to one owner who is in the construction business, who says that he needs passive income to grow his business and to weather through these cycles of upturns and downturns. This new proposed tax change is attacking this very measure for him.
If government hits investment income—in Newfoundland and Labrador, that's a 73.88% tax hit—business owners will not have the incentive to retain those investments in their businesses for growth. They'd be better off taking the money out and into their own pockets. This means less investment, fewer jobs, and less of a cushion to make it through the downturn. That means less productivity.
There is a Bank of Canada study called “Productivity in Canada: Does Firm Size Matter?” They say that half the productivity gap between companies in the United States and in Canada is because the companies in Canada are smaller. Smaller companies have less to invest in capital, less to invest in skills. These proposed tax measures are going to cause even less money to be retained for these initiatives.
Imagine a venture capitalist who specializes in green technologies. She takes an equity position in businesses to help those companies grow and to try to start commercialization of environmental technology. These investments are passive investments. If they are taxed at 73.88%, there is going to be very little to help with this initiative.
Try to imagine explaining all of this to foreign investors who want to come into our country and into our province. The apportionment method of taxing passive income allocates income to three pools, a pool for shareholders and pools that you have to keep track of. This complexity is absolutely mind-boggling for professionals who deal in this on a daily basis. Imagine trying to explain this to individuals who are not Canadian and not from this country, but who we want to come in to invest and help us grow. They're not going to come here. They're going to go to the United States or other areas.
What happens as a result of these tax measures? We have fewer jobs. We have less investment. We have less of a cushion to get us through economic downturns, less venture capital, and less foreign investment.
When we point this out, government has said repeatedly, “This is not our intention. It's really about the high-income earners.” I'm confused, because whatever the intention may be, the real consequences of what are proposed through these tax changes will be on small businesses and on the Canadian economy, and it will be negative. Ask any financial accountant professional in the country and they will tell you the same thing.
Ladies and gentlemen, the St. John's Board of Trade has been around for many years, and we have seen some bad ideas. This unequivocally is the worst. That's why we're urging the government to put these changes on hold, take these proposals off the table, launch meaningful consultations with the business community, and address the shortcomings in the tax policy without unfairly hurting unintended victims.
Thank you, honourable members.
Taxes are not the answer. For the past several months we've been focused on these senseless federal tax proposals. It's an unfortunate distraction, because the real problem is not the amount of tax that the federal government collects but the amount of money that it spends. Every business owner and every individual person is willing to pay their fair share of municipal, provincial, and federal tax; what grates on us, though, is how inefficiently it is spent.
We know there is waste. We know there is little innovation, and we know that governments are afraid of unions. The level of debt in this country and in this province is staggering, and it seems to be the dirty little secret that every politician is afraid to face. The federal government is liable in this regard. Canada's debt is $652,303,967,376.95. That was as of Friday, so it's probably gone up a bit more since then.
Each Canadian's share is $17,898.98. This is only the federal portion. In 2016-17, interest payments on the federal debt totalled $25 billion, which is more than what Ottawa spends on transfers to Canadian families in the form of children's benefits—$22 billion. It's also equivalent to the federal government's planned budgetary deficit of $25 billion. To put it differently, in the absence of the federal interest payments, Ottawa could wipe out its deficit this year, despite its marked increase in program spending.
Now let's add in the sub-sovereign debt. If we combine our sovereign debt—the federal government's—and the sub-sovereign debt, we have one of the worst levels of debt per capita amongst the advanced economies of the world. Each Canadian is not only responsible for servicing the federal debt; we have to service the provincial and local government debt too. When we add up just the interest payments on the various forms of governments across the country—federal, provincial, and local—the total in 2015-16 was $63 billion, approximately equal to the $64 billion Canada spent on primary and secondary education in 2013-14, which is the latest year of available data.
This charade over the past few months by has been a great distraction for him and his officials in finance. Instead of trying to generate more revenue, why not better spend the money you already have? Where is the commitment to cost savings? Where is the commitment to reducing debt? Governments should be much more meagre with our money and our children's money, and now, I fear, regretfully, our grandchildren's money.
We don't have the luxury of optimism for the future without commitment. The business people who I represent at the St. John's Board of Trade want Newfoundland and Labrador and Canada to be successful. They are committed to innovating and improving. They have chosen to invest here. They have chosen to employ people here. They have chosen to raise their families here. They are part of the solution. Are you?
Thank you very much, Mr. Fergus.
I am going to speak French first, but I may speak English afterwards.
In my opinion, there are two main reasons why it is important for Canada to increase its support for the social sciences and humanities.
First, it is increasingly obvious that this will be essential for our economy. Over the past 10, 15 or even 20 years, some people have maintained that our economy and future depended entirely on the physical sciences, or new technologies.
However, today, we are not sure how we will develop those technologies in the future. We need flexible employees who are able to meet different challenges. They have to have the intellectual and personal skills that allow them to work effectively with many people, using different approaches that allow them to communicate
and to think critically. That's the first thing.
I think that increasingly we're going to need more adaptive and more innovative people to succeed in a world where technological change is so fast and, frankly, so hard to predict.
The other thing, as this government knows well, is that the country has many social challenges that are issues we want to address as Canadians, not only because we care about our quality of life and justice but also because they have real financial implications. If we take indigenous reconciliation as an example, not only have we made a commitment as a country to reconcile and confront the legacy of that history but there are also potentially huge economic benefits for Canada as well. If we can learn how to free up the potential in those communities and empower those people, they have an enormous contribution to make to our economy.
Very often job creation programs simply create a job.
One of the things we have learned from our colleagues recently, for example, is that the skills link program, which represents a huge financial contribution by the federal government, is really not working very well. There are a lot of stumbling blocks with it that need to be reviewed. Its purpose is to provide career development, but it does not seem to be working well.
Second, I would make the argument that for some people, being put into a job is just not sufficient. Some people can clearly walk into a job and cope, but if we really want to fully engage all of our citizens, then we have to recognize that some people really need an early first step. As you're developing job creation programs and expanding such things as the Canada summer jobs program, perhaps there's a way of more fully integrating career development. For example, for one of the programs we did this year, there was a requirement for employers to release the funded employees for 25 hours during their summer employment specifically for career development opportunities. In our review with those young people, they told us that this was probably the most important part of their job. That was the point I was trying to make. I hope that clarifies things.
I also want to come to the bigger question that you posed to Gabriel. You may have noticed in my submission that I was the vice-chair of the Social Sciences and Humanities Research Council for many years, so I fully support the notion that being able to support that type of research will lead us to more socially innovative ways to deal with our complex problems. Canada is not just about technology; it's about how we do so many other things. With our increasing age and demographics, social problems, and changing economy, we need people who can think critically, as you put it, and who are good at collaborating and finding ways of doing things strategically.
I'll turn to English more quickly than Gabriel did.
Absolutely. Here are my concerns. I'm in the business community. I'm seated at the far right of the table, and some will say appropriately so. I always joke that I have never been green about much, but I'm green about fish. We have the experience of poor fisheries management combined with the ecosystem change. We didn't just lose directives fisheries—as the chair will know full well—we also lost non-directive species. When the moratoriums hit in 1992-1993, it wasn't just commercial fisheries that were missing because we had overcaught or because the ecosystem had changed; we lost species that we had never had a directive for, that didn't come up in the fall surveys. We have the experience of collapse. It's a historical model of collapse, a horror story of collapse, and the world is watching now to see if we get it right this time around.
Under the TAGS program the chair referred to, $5 billion in income supports was spent in Atlantic Canada. Is that sustainable? Was that the best way forward? Are we prepared to do it again in the face of shellfish collapse? We take the basket that Mother Nature delivers to us and we need to fish from it sustainably.
My concern is with the first model, which is harvest-driven to derive wealth. I think we've run the experiment with the lowest population or birth rate of any province in the country or state and an aging population, and nobody is coming here from Manila for 10 weeks' work in rural Newfoundland and Labrador. That model will not run. That dog won't run. I think the third model will prioritize sustainable fisheries. It will allow more rent extraction from ministry participants so we can manage fisheries better. We can do better science and take the right removals from the ocean, and, I think, derive more value from them. I think that's the only model that can be sustainable. Make it environmentally sustainable. Do the right science and derive more value from the marketplace. We owe that to the ecosystem. Our history there is quite sad.
Those pages are an actual truncated document that we've sent, because there are several more examples. We hear from members every single day with respect to the concerns they have.
In terms of public companies, there is only one public company in Newfoundland and Labrador now. There used to be a couple, but there is only one, so as Nancy said earlier, the bread and butter here is the small business owners.
We have seen, through oil and gas in the province, the introduction of international companies that are interested in coming into Newfoundland and Labrador. For those international companies, the Canadian taxation system is extremely complex. For any international company coming into Canada, let alone to Newfoundland and Labrador, there are a number of complexities that they have to learn and they have to understand with respect to the various levels of taxation through the provincial and federal governments.
What we're seeing now with respect to our members is that they're trying to entice those dollars in and trying to get individuals to come and invest in our province. When you have tax complexities that already exist and are extremely difficult, and now they are being expanded with further difficulties and restrictions with respect to passive income and investment income, we are hearing from our members that the traction they were trying to make is being met with resistance because of the uncertainty.
The actual tone of the document that was released by the federal government was not business-friendly. That is not an environment that invites individuals outside this country to come here and invest and help individuals in our province and in our country grow. There is very much a significant issue around the enticement of investment dollars.
Those are two good questions.
You are from Montreal and you are learning a lot about fishery. The same goes for me; I do not know French well since I am from Newfoundland and Labrador.
How can the third model be a better model of sustainability as compared with the quota model? Number one, we wouldn't get rid of the quota model. We would always have quotas. We have to do the science and we have to ensure that the level of fishing mortality, what we call “F” in fishery science, is the sustainable level for removals. You never take more than the stock is able to reproduce—all things being equal, based on ecosystem management—so that you ensure an ongoing sustainability. The benefit of the third model, I think, and even the second model, is that you're deriving more value per kilo from the catch.
To make it simple, instead of having to catch 10 fish and get $1 per pound for $10 in return, let's catch five fish but get $5 per value from the marketplace—through pharmaceuticals, binary processing systems, or whatever—and produce $50 worth of landed catch value in the marketplace, so we have to take less fish.
The challenge in our model, which we hear all the time and are familiar with, is that every time the challenge of declining quotas presents itself based on the science, the outcry of industry—because we're on that thin knife edge of economic viability—is “You can't. The consequences are too grave. The impacts will be too severe. Too many people will be impacted.” That is real, and we should be concerned, but is the model to ask the fish to pay the price? Why not ask the marketplace? Why not change the model and produce greater wealth so that we can be more sustainable on the front end? I think that answers the first question.
Regarding the difference in the value- versus market-driven model, I can provide you with some information. In fact, if you're interested, there will be a professor of business from the University of Akureyri from Iceland in Ottawa later this week. I head to Ottawa tomorrow for the Fisheries Council of Canada annual meeting. He'll be presenting at the luncheon on Wednesday. He first defined these three models.
I would say that the market-driven model simply asks what the consumer wants—the head on, gutted, or raw? As we know, lobster goes live. The idea is to just focus on the market consumer, but that might not be the best value.
There is another model. In this one, we ask as an industry what we want from the resource. Well, we want higher value so that we can take less fish from the water. We ask what the market wants. The market will still be buying our products, but now let's consider leather coats from cod skin. I've seen that in Iceland. Let's consider the enzyme extractions. Let's consider the skin grafts, which are about $500 per kilo. Don't quote me on the math, but it's high value.
We just focus on the fillet. If you're Alaska, 70% of your pollock goes to China for processing. If you're Norway, it's 70% of your groundfish. That's a volume model. Is that the model we want? Are we going to go back to that? Once we lose workers, which we are now losing because we've had a certain model, there is nowhere else for it to go. We have to do something better, I think.
Mr. Butler, I found your presentation really interesting.
I was here in July. I went cod jigging with my family, but my family has never been in the fishing industry. It was all for personal consumption. I have to admit that I don't know a lot on the commercial side.
I am following up on Mr. Boulerice's question, because I had a similar line of thinking. As the finance committee, after we finish all of our hearings, we'll go back and make recommendations to the . After hearing your recommendations for changing the model, what would be the type of recommendation...? If you have a brief, I didn't see it, or maybe you don't have a brief. What would be the types of recommendations to the that would start to shift this model?
What you're saying all sounds very interesting, but we have to make specific recommendations. Do you have something we should consider?
I have a question now for Mr. Miller.
I must admit that I'm particularly sensitive to what you said, since I come from the social sciences milieu. I agree entirely that we cannot have good public policy if we do not have good research on the labour market, immigration, workforce skills, and so on.
Recently, I was in Saguenay—Lac-Saint-Jean. I met with some people from a group called Agrinova, which does research in agricultural innovation. Farms and small businesses ask the government to invest in this sector. However, these people told us that despite what we hear in official speeches, our country invests three to four times less than Japan, South Korea and Sweden in agricultural innovation.
In your presentation, you said that Canada was beginning to lag behind. Do you have any comparative international data showing that our country does not do enough social sciences and humanities research to improve our understanding of Canadian society?
I'm going to answer this part in English, if you don't mind. When it gets too technical, my French becomes even more difficult to listen to.
In terms of Canada's research investments in the higher education sector—and this is across disciplines—between 2007 and 2014 Canada fell from fourth in the OECD to seventh. Seventh is still pretty good, but it certainly shows a dramatic decline in terms of our performance relative to that of other countries.
It is very important to acknowledge that Canada does well when it comes to investments in universities, as the major part of investments in research are investments in university research.
We invest relatively little through other mechanisms in research and development, so, for instance—and I stand to be corrected—based on the Naylor report, we're not in the top 30 OECD countries any longer for total R and D investment.
We do better in the amount we invest in universities as a share of that, but if we see a decline there and if we see our ranking falling there, it means that the most important leg on our research and development tool is starting to weaken.
I'll approach this in two ways. First, very often federal government funds purport to be open to non-profits, but because of the way in which a non-profit works, it can't comply with all of the requirements, so we need to try to improve that.
In terms of a specific example, I can think of times when our own organization, for example, has been looking for federal funding. I've never encountered the challenge that some charities speak about. It is very complicated for them because of the Canada Revenue Agency requirements. I do know that many charities will argue that it's challenging to become social enterprises and to generate revenue because of the ceilings that are placed on what you can earn and what you have to spend, so we need to start to more clearly understand that enterprising opportunity.
In Quebec, for example, I know that you have some very well-honed approaches to using community organizations for generating employment, and that's a model that many of us in the other parts of the country look at as a way to deploy revenues. As an example, much of the work that gets done at a community level needs to filter down to the local level. It's not all national. Many of us don't work at a national level.
There are some significant barriers. One would be the Canada Revenue Agency guidelines. Second would be the guidelines in many economic development funding bodies that say you have to clearly show your economic contribution, as opposed to the way in which the social contribution feeds into that economic contribution.
I can speak to one example in the Baie Verte Peninsula. There was an open-pit mine, and the open pit was reaching the point of exhaustion. The company was interested in bringing other deposits, both from the local area and from Nova Scotia, into their mill. They proposed that they use the pit as a tailings facility. That's probably not so much an innovation as it is a practicality—looking at the reality of what you have on the ground and utilizing that to your benefit.
Second, the company entered into an agreement with a number of other partners to sell their waste rock as aggregate into the Carolinas. That's another way of getting value from what you have by thinking a little bit beyond the box. Sometimes it's a little bit about being creative.
Looking ahead at the mining industry as a whole, relative to other extractive industries, you start with a large amount of land. Let's say you need the whole table area here to do exploration. You get down to some targets, and you find that you need to narrow it down and narrow it down. Your footprint, at the end of the day, can be small, but we believe we can, as an industry, do better internally over time to improve our processes—Canada being a leader in this area—and leverage our technologies to better ends.
Digital mining is another area where we need to step up a little bit further. We also need to look at the benefit of what we're going to do for the world in terms of the low-carbon economy. Minerals are very much necessary for the electrification of vehicles and for changes in how we approach a low-carbon economy. We're very encouraged on that aspect.
We've done some things in this province. It's interesting that the mining sector can be a little bit slow to adopt. We had a program here locally called GeoExplore. When it was first rolled out, people were a little bit hesitant to get engaged, but once one or two companies got engaged and people got talking, the next thing we knew, we had 27 projects being pursued.
We have good relationships with the university community, with the College of the North Atlantic and others, to leverage our activities in this regard. We're very proud of that.
It's all about attitude and opportunity.
One of the things we've learned through the work we do is that there are some young people who are all over every opportunity. They are the sharp kids who have already made up their minds, and they're progressing. The question we have to deal with is the young people who haven't really found a way yet.
The program we offered this summer, called AMPLIFY, was quite extraordinary. These were young people who were primarily from small communities, from households where work may not have been the norm, and we found that just giving them a job where they were connected with people who cared about them made them blossom. It was that mentorship. It was that connection.
Sometimes that can happen well in the private sector, sometimes it can happen well in the public sector, and sometimes it can happen well in the non-profit sector, but if the program is not well designed, we're not going to find the young people who will take advantage of it.
I'll answer both ways on this.
The university has done a phenomenal job here in Newfoundland. It has one of the lowest tuition rates in the country. It has served to attract both international students and students from across the country. The trick is keeping them here and mentoring them.
We have what is called the connector program, which we've been doing off the side of our desk for a while. It is just to introduce people. It tends to be a lot of international students who come through that program. It introduces them to business people and sectors or areas where they want to work. We've had about 60 people come through. We're only supposed to set up connections, but 20 of them have become employed. We are hoping to get that program funded through the LMDA and for that money to come through. That sort of program has worked with phenomenal success in Halifax and in Prince Edward Island.
We need to come up with ways to help integrate the local community with the graduate students who are coming through.
As I said, the immigration program tends to be express entry, and the point systems tend to go toward skilled labour. One of the things we have advocated for is similar to what happens if an individual, say, speaks French; he gets into Canada right away. In the same way, if you indicated you'd like to go to a rural or remote part of Canada, be it northern Ontario or Saskatchewan or Newfoundland and Labrador, you should get points for that as well. We encourage medical doctors and the like to go to rural parts of Canada. Why can't we do that with our immigration program? There are ways to do that.
You're right about the challenges facing this province from the aging demographic. That's why one of our biggest concerns is with respect to the level of debt that this province and this country have. We have a huge geography. There are huge levels of personal debt. The aging demographic means more demands on health care. We have a tsunami coming our way, and if we don't get our debt under control, we won't be able to survive any of the challenges that come our way.
Good morning, Mr. Chair, and committee members.
The views I am going to be expressing today are my views, but are grounded in my capacity as the head of the school of fisheries here at the fisheries and marine institute of Memorial University, and in my capacity as industry co-chair of the Canadian seafood value chain round table.
The seafood value chain round table provides leadership to the Canadian seafood industry by providing a forum for value chain participants to identify significant industry impediments, collaborate on solutions and innovation, and influence decision-makers. Its vision is for a prosperous and competitive Canadian seafood industry that's a world leader and the preferred supplier of high-value seafoods domestically and internationally.
In February 2016 I actually appeared before your committee in Ottawa as part of the pre-budget consultation process at that time. Today what I'd like to do is reiterate some of the key points I had raised in my prior session and highlight some of the key progress that's also been made in terms of both industry development as well as government support.
The Canadian fish and seafood industry, both the wild capture fisheries and the aquaculture sector, is an important producer of high-quality food and a significant contributor to Canada's economy, especially in rural, coastal, and aboriginal communities. Thousands of Canadian families, businesses, employers, employees, and their communities depend on this industry to provide for their well-being. In total, more than 76,000 Canadians were employed in harvesting and production in the seafood processing sector in 2015.
The seafood industry in Canada is very much export oriented, with nearly 80% of its production exported to foreign markets in 2015, making it the highest export-oriented sector of the food manufacturing industry in Canada. In 2015 the industry exported about $6 billion of high-quality seafood. In fact, the numbers for 2016 are now out, and I believe we're at about $6.6 billion. For 2015 we were ranked as the world's eighth largest seafood exporter. Approximately 65% of those exports were destined to the United States, followed by China and the European Union at 11% and 10% respectively. Overall, the Canadian seafood industry is very proud of the contribution it's making to the Canadian economy and to global food security.
In my prior appearance before your committee, I highlighted that the sector is not without its challenges and that there are certainly steps the Government of Canada could take to help expand the global competitiveness of the sector and leverage its economic potential. At the time I outlined two key areas for priority investment, namely, around market readiness and social licence.
On the topic of market readiness, the seafood industry in Canada is extremely excited about the expansion of the Government of Canada's efforts around global trade agreements such as CETA, which has now been ratified; its ongoing efforts around TPP; the Canada-Korea agreement, which is in place; as well as the potential for a free trade agreement with China. As an export-oriented industry, these agreements provide Canadian seafood producers with improved market access opportunities through the reduction and elimination of prohibitive tariff barriers, ideally resulting in increased industry competitiveness.
However, significant market readiness barriers exist in the Canadian seafood industry that impact its ability to fully leverage the potential of these trade agreements as well as other global market opportunities. Examples include the need for improved market intelligence that supports the market development needs of the industry, which is a particular issue for SMEs in this country, as well as the need for investment in innovation and automation in the sector. There is also the need for a strategy to address labour retention challenges in the industry given the current demographic profile, which is very pronounced in this particular region of the country right now, but an issue which I would say is across the country.
On the topic of social licence, there is a need for continued engagement and investment on the subject of science requirements for eco-certification in particular. Issues around traceability and eco-certification are now considered requirements for global market access and represent a non-tariff trade barrier if Canadian producers cannot meet robust international eco-certification standards.
Key public investments in fisheries and oceans science, including sustainable aquaculture development, are critical to ensure that the industry continues to meet and exceed best practices globally.
Related to these challenges, I was very pleased with the announcement earlier this year of the federal-provincial cost-shared Atlantic fisheries fund. The seven-year, $400-million-plus fund aims to help Atlantic Canada's seafood sector transition to meet the growing market demand for products that are of high quality, value added, and sustainably sourced.
I am also pleased that a national component has been created under this fund to support market access and development issues for the Canadian seafood sector. I believe that component will be funded in the range of about $30 million.
There are also two key points that I would like to make related to the Atlantic fisheries fund. First, I believe it's critical that initiatives supported under this fund be principally focused on advancing the competitiveness of the seafood sector in Canada. Key metrics that we need to be focusing on include increasing value per kilo of catch, increasing utilization per kilo of catch, as well as overall industry productivity improvements.
Second, this fund, in my opinion at least, cannot be looked on as a one-time investment. Comparable seafood-producing nations such as Iceland and Norway, which in many ways are recognized as the gold standard, have been heavily investing in the competitiveness of their seafood sectors for decades now. We need sustained comparable investments in Canada to keep pace.
We are currently living in a period of unprecedented global change that will significantly impact seafood production in the years ahead. For example, the Food and Agriculture Organization of the United Nations, or the FAO, currently estimates—and this is a really conservative estimate—that an additional 40 million tonnes of aquatic food will be required by 2030 just to maintain current per capita consumption. It is also estimated that the average price of traded seafood products is expected to grow by 30% by 2022, based on factors such as increased health awareness, rapidly expanding middle-class societies, as well as growing disposable incomes globally.
In conclusion, the Canadian seafood industry is well positioned to address these grand challenges by providing high-quality, safe, and healthy sources of protein to the global community. Key strategic areas of investment and policy supports by the Government of Canada present a tremendous opportunity for Canadian seafood producers to take advantage of globally expanding markets for sustainably and responsibly sourced seafood.
Thank you very much.
Good morning, Mr. Chair, and committee members. Welcome to Newfoundland and Labrador.
On behalf of the more than 500 members and the board of directors of Hospitality Newfoundland and Labrador, I would like to thank you for the opportunity to participate in the consultation process for the 2018 federal budget and share our perspective on how the federal government can ensure high levels of productivity and competitiveness among Canadians and Canadian businesses.
Globally, tourism is the world's fastest-growing sector. The United Nations World Tourism Organization estimates that in 2016, 1.2 billion people travelled the world and Canada welcomed nearly 20 million international travellers. As the global travel market flourishes, Canada must take steps to improve its competitiveness on the international stage. The tourism and travel industry offers real and sustainable economic development opportunities, versatile employment, and prosperity for all Canadians.
In Newfoundland and Labrador, the tourism industry generates more than $1 billion in annual spending, supplying more than 8% of provincial jobs and encompassing nearly 2,600 tourism businesses. Tourism is an important source of employment in the province, especially in rural communities.
Hospitality Newfoundland and Labrador recommends that the federal government commit to funding for Marine Atlantic at appropriate levels over an extended period so that it enables longer-term planning and reliability, allows for pricing that does not erode the level of service or deter travellers, and is sufficient to drive continuous improvement and cost efficiency in the service. Price is a deterrent, and the ever-increasing portion of Marine Atlantic's operating costs that users have to bear is very concerning. Furthermore, steadily increasing costs for commercial traffic is concerning as it places further financial pressures on tourism operators trying to obtain goods and services required to meet the needs of travellers. Because Marine Atlantic is a primary gateway for growing inbound tourism, user fees must be set at affordable levels for extended periods, facilitating an increase in ferry usage rates.
Hospitality Newfoundland and Labrador recommends that the federal government commit to implementing fair rules for the accommodation sector in Canada. Recently the Hotel Association of Canada released a study on Airbnb and the hotel sector in Canada with a focus on hosts with multiple units. In Canada, the average number of active Airbnb units has almost doubled in two years. What started as true home sharing has expanded into commercial operations. Legitimate and regulated businesses cannot remain competitive in a business environment that is unlevel and unfair. Hospitality Newfoundland and Labrador maintains that the key to success in the new reality of the sharing economy is equity.
Hospitality Newfoundland and Labrador recommends that the federal government help businesses address labour capacity issues by supporting timely labour market research and industry relevant export readiness and workforce development programming. According to research conducted by Tourism HR Canada, it is estimated there will be 240,000 unfilled tourism positions by the year 2035, costing the economy $31.4 billion in forgone revenue and over $4 billion in taxes.
Tourism in Newfoundland and Labrador will experience one of the most acute labour shortages of any province in Canada. More investment is required in training and educational resources and funding programs for national and provincial organizations that are working to address labour shortage issues in the tourism industry. It is important that Employment and Social Development Canada work with industry and business to continually monitor current and future employment needs. Additionally, facilitating the transition of unemployed and underemployed persons as well as new immigrants into the workforce is a positive step toward addressing the labour shortage in the industry.
Concerning proposed federal business tax changes, Hospitality Newfoundland and Labrador asks that the government ensure the impacts on small business owners and tourism operators be given serious consideration. The vast majority of Hospitality Newfoundland and Labrador members are small businesses on whom proposed federal tax changes could have considerable impact. Many small business owners have built their lives, succession plans, and retirements around the existing rules and are expressing disappointment and fear of such fundamental changes to the business tax.
Some tourism operators have cited a change in their business practices until they are fully able to assess the impact that these changes will have on their businesses and the tourism market and visitation levels.
Travel and tourism are economically important to every riding of Canada, and one of Atlantic Canada's most strategic economic sectors. In addition to job creation, tourism attracts international visitors, who consume goods and services and pay value-added taxes. With a strong commitment and strategic, deliberative action on behalf of the federal government, tourism will bring further stability and diversity to the economy, and prosperity to Canadians.
Thank you for your time.
Mr. Chair, thank you for giving us the opportunity to make a presentation before the Standing Committee on Finance, here in St. John's.
My name is Ian Russell. I am the president and chief executive officer of the Investment Industry Association of Canada.
It gives me great pleasure to be before this standing committee, to present to you as you proceed with your budget consultations. As some of you may know, I represent an industry that employs 40,000 individuals and is a source of high-paying jobs. It raises capital for governments. Last year, the industry raised $200 billion in debt capital for Canadian federal and provincial governments, and another $96 billion for Canadian corporations. We are also very significant contributors to the Canadian economy beyond employment, in terms of taxes paid. It's an industry that has been very generous in terms of charitable donations throughout communities in Canada.
I am going to constrain my remarks primarily on comments related to the small business sector in Canada. It's an important policy agenda for you as a committee and for the government to deal with. I just want to sketch one aspect of a problem and then talk about some possible remedial action.
Quite rightly, in last year's budget, the government put a priority on trying to augment the sources of equity capital for small and mid-sized businesses. The statistics would show that the amount of capital flowing to small and mid-sized Canadian businesses has declined, particularly in the public venture marketplaces, where we've seen a significant decline in the amount of financing, the transactions, the volume of financing, and the turnover activity generally. We have seen that the private equity market has had virtually the same level of financing over the last five or six years. This is a combined result that is not satisfactory in the context of a growing Canadian economy.
We can get into the reasons for that as we move forward, but our view is that there is an opportunity here. It's one we've reiterated, not just with this government but with previous governments. There is a need for a robust, proactive reform or initiative to boost financing in the country.
In the last couple of years, we have advocated the Canadian equivalent of the U.K. enterprise investment scheme. It's a scheme that does not rely on a particular expert running a venture capital fund or labour-sponsored fund who is somewhat detached from the investment, but it's a scheme that is open to all British citizens. That would be the equivalent in Canada: an incentive that would be available to all Canadians to invest in small businesses, businesses they are familiar with, primarily local businesses. They would receive a personal tax deduction. In the U.K., it's 30%. If they held the investment over three years, it would be exempt from capital gains tax.
It's a program that has been in place for over 20 years. It has provided financing for 26,000 companies. It has raised over 26 billion pounds, and it's been audited by the U.K. treasury. For that reason, we thought that this is a well-run, proven incentive for small business.
But I am coming to you here with another idea. The second idea I have is what I would term a “rollover provision”. There is an opportunity, through this incentive, to accomplish two things. First is to unlock capital so that it can be directed to small business. Second, it's a way that would not impact on the federal treasury, and that's been one of the biggest concerns around this.
The two big concerns have been around the tax break to encourage Canadians to invest in small businesses and a perception that there's a political undertone of benefiting wealthy Canadians. I might add that, on that score, if you look at the U.K. enterprise investment scheme, all the investments are in small amounts, and there are a lot of small investors that are active in that particular program.
The rollover provision, simply put, is that if you have a building, an asset, or possibly a financial stock, the idea would be that you would be able to sell that investment and as long as you rolled the proceeds into an eligible asset—that would be defined obviously by the incentive itself—and into small or medium-sized businesses with maybe a proven track record that could be defined, then there would not be capital gains tax on the proceeds.
Now when I say “not”, I'm saying a deferred capital gains tax, because the tax certainly wouldn't be paid at the time the funds were reinvested into small business, but over time as those investments grew, obviously capital gains tax would apply when the ultimate assets were eventually sold. The reason I'm saying the deferral should be something that's acceptable is that without the deferral, you probably wouldn't see the assets sold to begin with. So those revenues would not accrue to the government unless somehow you felt that the assets would be sold. In some cases they are, but in many cases they are not.
That's just a second idea that I put forward. I'm happy to discuss those proposals and any of the background related to the small business sector or the economy in general.
Thank you, Mr. Chair.
Thank you, Mr. Chair. Thank you to the committee for the opportunity.
I provided the clerk with a copy of the paper that I'll touch upon today, which is on collaborating to accelerate sustainable growth in the aquaculture sector in this province.
This document has been a collaborative effort between the Government of Newfoundland and Labrador, the Government of Canada, and the industry. We formed a 25-person committee and we looked at the industry as it is today and how we grow that. The provincial government under Dwight Ball's leadership has identified aquaculture as a number one strategic investment sector for the province because of the benefits that we realize or that we provide to rural coastal communities.
If you're familiar with Newfoundland and Labrador, we all look back at 1992 and the collapse of the north Atlantic cod stocks. Many communities that saw no future, didn't see the bright light at the end of the tunnel, now, because of the industry that we provide, whether it's mussels or salmon, do have a future. Many communities such as Gaultois and Hermitage, once far removed from anywhere, like here in the city, now see 100% employment in the industry. We are revitalizing rural coastal communities.
I've mentioned this paper. What we've done is identified all the barriers. Premier Ball and his government have agreed with industry to double Atlantic salmon production at 50,000 metric tons by 2022 and to triple the shellfish production by the same year. How are we going to do that? We have a plan. We've released two documents. The first one is a 28-point work plan that would fall under the regulatory framework of the provincial government. We've also released this document that's been provided to for his consideration and the consideration of the Government of Canada. This contains 12 points on what the Government of Canada can do to help grow the industry, not just in Newfoundland and Labrador but from coast to coast to coast.
In Newfoundland and Labrador we currently employ about 1,000 people directly on farms. For every one of those jobs, it's about a 3.5 ratio, so it's spin-off jobs in the service supply industry, for example. Those jobs may not be as recognizable here in the city, but in the rural coastal communities where we operate they certainly are a huge benefit. As I've mentioned, communities that saw no future now have a future. But there are some recommendations. Of the 12 that are mentioned in this document that I've provided to the clerk, I'll touch on six very briefly.
The first one is a national act for aquaculture. In Canada right now we are governed under the Fisheries Act. I think it was written in 1867, Mr. Chair. The word “aquaculture” is not mentioned in the act. What that does is it creates uncertainty for investment, as Mr. Russell talked about, capital investment, foreign investment. We don't have the confidence of investors right now because we don't have an act that even has the term for the industry of which we're regulated, so we're pushing for that.
I know that Senator Manning, the chairman of the Senate Standing Committee on Fisheries and Oceans at our conference last year had released a report called, “An Ocean of Opportunities: Aquaculture in Canada”, which has identified and acts as a major priority for that committee. They support that. We've been talking to and his counterparts in the federal government to do that. It doesn't have a budget. I don't think it's a budgetary item, Mr. Chair, but it's something for the committee to certainly consider before we move forward as an industry.
There are four or five others that I would certainly touch on. One is CSSP—being from Prince Edward Island—the Canadian shellfish sanitation program, which is there to ensure safety to Canadians and safety to foreign markets. The problem is that, in order for us to grow the industry, all of our sites have to be classified. When someone comes to the government, whether provincially or federally, and wants a new site to expand mussels or oysters, whether in Newfoundland and Labrador, or in P.E.I., those sites have to be surveyed. They have to be tested to ensure that they are safe to farm seafood sustainably and responsibly for local domestic markets and markets abroad.
The issue that we find is that there's so much interest in expanding our aquaculture industry on the east coast that there's not enough money through the CSSP program to enable government employees to do that, so there's a bottleneck of applications. Really, we're stalled in that. I think we can certainly triple shellfish production in this province, but that's one barrier that we need to overcome. I would certainly ask that more monetary investment be considered for the Canadian shellfish sanitation program.
As well, under the former administration, the only certified CFIA, Canadian Food Inspection Agency, laboratory was closed in St. John's. In Newfoundland and Labrador we have no certified lab. This fourth point is critically important not just to the food industry within which I'm responsible for aquaculture, but to all food industries. Closest to Newfoundland and Labrador, we would choose between either Moncton or Dartmouth. I'll give you an example. If we had heavy rains today and our shellfish program were shut down—because after a heavy rainfall we can't operate—it takes weeks to get samples back from mainland Canada.
I ask that you to review the monetary expenses and look at the value proposition for the expansion not just of aquaculture but of poultry or cattle, for example, and make a future monetary investment in and re-establish a CFIA lab here in Newfoundland and Labrador.
As well, there's the cost recovery. CFIA is currently undergoing public consultations about the cost recovery of certain services offered by the Government of Canada, which would be prohibitive to most shellfish operators and their ability to expand in the future.
My fifth point is about infrastructure. Telecommunications and wharf infrastructure are absolutely critical not just to wild harvest fisheries but also to the expanding aquaculture industry. We have great support in this province from small craft harbours through the Department of Fisheries and Oceans; however, there's always a necessity for more.
In looking at future expansion with additional companies coming to Newfoundland and Labrador, the largest salmon producer, Marine Harvest, now has seven sites in this province and 17 in some various levels of approval. Grieg, another Norwegian company, is looking at major expansion plans, but we have to provide the infrastructure for them to do that, not just environmentally responsibly but safely.
In many areas in which we operate in rural coastal communities, there are no telecommunications and Internet. In today's society, with technology and the high level of technology that we utilize in the industry, it's absolutely paramount that we get further investment into infrastructure, whether it's telecommunications or wharf infrastructure or roads, for example.
The final point I'd like to touch on very quickly is business risk management. Unlike terrestrial farmers in the agriculture industry, there is no insurance currently in which the government could certainly play a part. For agriculture we have agri-insurance so that in some unfortunate circumstance where some catastrophic event created a crop fail, for example, the government would help subsidize a national insurance program for agriculture. That doesn't exist for aquaculture.
In aquaculture, we should be looked at as being as important an industry as agriculture. An aqua-insurance program would mitigate any type of loss, but would also create assurance for future investors that Canada is open for business in aquaculture.
On that, Mr. Chair, I'll end. Thank you for your time.
I could spend a lot of time on that topic.
We are in the midst of a shift here right now in our industry. We've gone from a shellfish-dominated industry in this province, which has been very lucrative. Our industry last year was worth about $1.3 billion and snow crab and northern shrimp had historically been a big part of that. Now those stocks are declining, largely around an environmental shift, which is the overwhelming opinion on that, and we're seeing groundfish stocks recover, so there is a lot of dialogue around northern cod as we're seeing signs of recovery.
The thing we need to keep in mind is that the world has changed a lot in the last quarter-century since we fished cod and my personal view is that we need to shift from an industry that was largely a volume-based industry with a focus on employment maximization in the day—which served the purpose, I don't dispute, as I grew up in the fishing industry and saw the value in that—to an industry that's more value based and that has quality of employment as its major consideration. That's where technology and innovation are going to be a major part of it.
We have labour demographics in this province right now that are scary, to say the least. To think that in the next several years we're going to have an available workforce in this province to support the growing aquaculture industry, the transitioning capture fisheries industry, or hospitality or some other sector, it's just not realistic. Technology and innovation are going to have to be a critical part of the fishery of the future, in my view at least.
I'm just back from a trip to Iceland where I saw how things can work. In Iceland in the seafood sector, it's amazing to see how they're focusing on maximizing value throughout the value chain, in every aspect focusing on quality improvement. Their metric, which I referred to in my opening comments, is around increasing value per kilo of catch, increasing utilization per kilo of catch.
They're in the process now, over the next five years, of trying to get more value from the traditional waste stream of a codfish than from the fillet. Think about going out tonight and having a nice meal of pan-fried cod—and that's valuable, don't get me wrong—but there is a big effort afoot right now in Iceland to get more value from the gut content, the oils, the heads, and all the various components of the animal through innovation, technology, entrepreneurship, and new business start-ups. It is the model of the future and it's the model we need to be adopting here, in my opinion.
Thank you. That's a great question.
I'm very familiar with British Columbia as well. I served a number of years out there with the military and I also worked out there as a salmon farmer.
I'll go back to the cod moratorium. We've seen hard times because of the fishery, before oil and gas and before aquaculture, and communities had out-migration no different from any other rural community but the degree to which it was happening in Newfoundland and Labrador was staggering. They moved to Fort McMurray, Toronto, anywhere but rural Newfoundland. We're still seeing that a little bit.
Aquaculture is a shining light. It benefits rural coastal communities and people see that. I'm not saying there are no critics or opponents to our industry. Every industry should have its critics as long as criticism is founded on science and fact, and not necessarily emotion. We accept that too, but I prefer to deal with the facts.
Here on the east coast right now, even with the downturn in oil and gas, I've seen an even higher level of acceptance of aquaculture as a sustainable farming operation. We need to do it. As Carey mentioned, the United Nations FAO has forecast a massive shortage of seafood in the future, in the not-so-distant future, in 2030. We're looking at a 50-million tonne to 80-million tonne deficit.
Why our government in particular has taken an interest in this is that they see it as a renewable resource that benefits Newfoundlanders and Labradorians from outside what we call the overpass, outside the metro city. It benefits Newfoundlanders and Labradorians in rural coastal communities, and because it's renewable we're here this year, next year, and every year after.
We have both. As farmers of the sea, every one of our Atlantic salmon—which seems to be the most contentious from coast to coast, so just taking that one particular species, for example—that enters our oceans in net pen aquaculture for grow-out spends the first 18 months of its life on land. We, as farmers of the sea, do that, from egg to plate, responsibly and environmentally sustainably. People ask why we don't put it all on land. It's not possible. It's not financially feasible.
People use Norway, for example. I just presented before I came here to an inbound Norwegian mission. I've spent a lot of time in Norway. Our critics say that Norway is moving away from ocean-based farming, which is absolutely the furthest thing from the truth. They're looking at different levels of technology to do things differently in the ocean, but not necessarily moving the entire process to land.
The number one reason is that the ocean is a natural habitat. The ocean is there to be utilized. Once a salmon biologically requires salt water for smoltification to grow into an adult we place them back in their natural habitat. To put it in perspective, I think Carey mentioned that when you have a steak, for example, on a Friday night, not many people think about traceability or how it ended up on their plates that night. Salmon farming, outside of shellfish farming, is the most efficient form of protein farming on the planet. We use less water than beef or swine, and this is no slander toward terrestrial farming, but it is a fact. We use less water. We use less space. To provide 15 billion meals of salmon last year we used 0.00008% of the world's oceans.
It's efficient, so why not use it?
That's another great question, and without controversy, I'm sure.
In Newfoundland and Labrador, we have had interbreeding with wild and farmed salmon. We've worked with the Department of Fisheries and Oceans and independent scientists. We have provided genetic material so that we know they can trace it back to a particular farm or to the industry. We've worked it because we want to know. We are also stewards of the sea. We operate in this province, and I think in most jurisdictions, as openly and transparently as possible.
Does it have an impact? We don't know, so we continue to work with those scientists to make a determination. If these fish are less fit, do they die off generation after generation, or if they're more fit, does it help a stocking assessment?
In my background, in addition to being a traditional wild harvester, I worked in salmon enhancement under a conservation corps for four years as an undergraduate student, and I'm an angler, so it's close and dear to my heart.
First and foremost, as an industry and as individual companies, we have invested tens and tens of millions of dollars to prevent it from happening. Second, we have a rapid reaction response plan, in case there is some type of catastrophic event as they saw in Washington a number of weeks ago. If it happens, then we have a plan to deal with that for recapture.
Yes, it has happened in Newfoundland, and we're working with scientists to determine the facts based on science.
Thank you very much, Mr. Lane.
My next question is for you, Mr. Foley. You spoke about the negative repercussions of the abusive use of Airbnb on the Newfoundland and Labrador hotel industry. That phenomenon is happening everywhere, and Montreal is no exception. Over the Formula 1 Grand Prix weekend in Montreal, to mention only that, the government lost at least $200,000 in GST revenue alone.
Certain provincial elected members like Amir Khadir, from Québec solidaire, are proposing bills, not to forbid the sharing economy and the renting of apartments, but to provide a good framework for it. For instance, we need to make sure that the person lives in the apartment he or she rents to a tourist or another person. To ensure that this is a marginal activity and that the apartment rented to a third party should not be considered a hotel, we could limit its rental to 60 days a year.
Would your association see that in a positive light?
That's a very good question and we talk a lot about it.
In my view the solution is probably a three-pronged approach for maintaining an available workforce for the industry of the future. One is to attract and retain to the degree that we can the existing workforce in the local communities in which we operate. Additional work is needed there. The challenge is that we have a structural problem in our seafood industry in that many of our fisheries are highly seasonal. It's very difficult to attract labour into a 12-, 14-, or 16-week fishery with relatively low wages, generally speaking. No young people are going to choose that as a career option when they have other options. There's an opportunity cost associated with that, but there's work to be done to extend seasons and to extend operations.
I'm just back from Iceland. I visited a plant in Reykjavik. It's a modern processing operation run by HB Grandi where 80% of the workforce in that operation are what would be considered former immigrants; that is, they would be Filipinos. In some cases they are second generation and in some cases third generation, where you have mothers and daughters or fathers and sons and siblings working together. That's a year-round operation. They work Monday to Friday with eight-hour shifts and great lifestyles. The minimum salary there, if you take it on an annual basis—I think the cost of living in Iceland is much higher than it would be here—is about $50,000. Even then, they have a significant foreign workforce, or formerly foreign workforce, and through immigration they've addressed it.
Here we need a three-pronged approach. We need to attract and retain to the degree that we can. We need to innovate and automate. Mark made the point earlier about feeding mechanisms and having a young student using something that would be comparable to gaming technology. We're doing work now in automation. We have three engineers in one of our research facilities, and we think there's room there through the automation of the industry to provide some really good, highly skilled employment opportunities that would attract people. That's number two.
Part of the solution is going to be an immigrant workforce. That's the reality. The challenge we have is that we don't have the value proposition in the seafood sector right now. For the most part, temporary foreign workers are the stopgap measure. In the long term we're probably going to need a model similar to what Iceland has and other jurisdictions like Norway, where they have longer operating seasons and they can attract a workforce in these operations that is able to become part of the communities and societies.
I'm quite familiar with small craft harbours; it's a passion of mine. I served on municipal council a few years ago, and we were trying to lobby to have a small craft harbours establishment established in my town of Holyrood.
One of the biggest issues is that the federal government has a huge inventory of infrastructure that needs to be maintained. Newfoundland's climate is not necessarily conducive to breakwaters and wharf infrastructure, so one big thing that small craft harbours should look at is a divestiture program, potentially, of places where they're not utilized. I think a lot of the investment is made, and rightly so to some degree, on the landings—specifically landings—for the most part, for wild capture fisheries, not necessarily aquaculture, which is the industry we work in.
One challenge is the limited pot of funds. I think the last time I looked, it was somewhere around $25 million or $30 million for Newfoundland and Labrador. If you look at the landing ports for cod only in Newfoundland, I think you'd see about 300 around the province. There's a huge inventory of property. They need to look at the total market value of the species. The fishery's changed so much in the last number of years. Some of these wharves are decades old.
I think we really need to take a look at a strategic investment, not just for today but for tomorrow. What do we see upcoming? We know, for example, that salmon aquaculture and shellfish aquaculture are increasing, but because of the limited funding available to maintain such a huge inventory, some of which may not be used at all, the government really needs to look strategically at future investments.
That's interesting. Thank you.
Mr. Bonnell, in the earlier panel we heard a lot about changing value. I mentioned at the outset that my family is from here. My experience with cod is that people eat everything. My grandfather eats everything. I'm not that brave, but I think it's a generational mentality. He grew up here with 10 brothers and sisters and was extremely poor, so when you have any food source you utilize it.
On the commercial side, and obviously with cod in particular, but I'm sure this is the case for other species as well, are you essentially...? For example, I don't think I could convince somebody to eat cod tongues, but my grandfather loves them. Are you helping to create the market? I'm not talking specifically about tongues, but in terms of utilizing the entire fish, are you helping to advocate to create a wider market, or does the market exist and it's now changing not only the way it's caught and processed here?
Then whether it's overseas or across the country, how are you working toward changing that model? Really, specifically, are we creating the market or advocating for the market, or does the market already exist and we're just trying to enter into it?
The market already exists for cod. Norway produces almost one million tonnes of cod per year, Iceland about 230,000 tonnes of cod. I've always advocated, and I think most would agree with me, that there is always a market for good-quality seafood. The key differential is the value proposition. We produce 15,000 to 20,000 tonnes right now because it is a re-emerging industry. Right here, right now, our industry, because we don't have scale, is highly seasonal. You're operating for two to three months of the year.
We still use a lot of past practices like gillnets, as an example. In Iceland, about 7% of cod production comes from gillnets. Long-line production is growing. That's what we're advocating here, shifting to a value-based approach, a quality-based approach. The market opportunities are there.
Is there a need for an investment in market intelligence and market research? Absolutely. I've indicated that in my statement, but that's not the overwhelming consideration. The overwhelming consideration is to look at that market and work your way back through the value chain to see what steps we need to take to ensure we're maximizing value. We're doing a lot of work on that front, and I'm encouraged by the dialogue that's taking place on this right now. As we scale up, how do we become more scalable as the industry rebounds?
The one final point I'll mention is utilization. We discard, in Canada, about 450,000 metric tons of seafood per year. That's in both wild capture fisheries and aquaculture. That's shell products. That's fish frames. That offal. That's what we don't utilize. There is a tremendous opportunity to derive value from that, and again, I would encourage a visit to Iceland to see what they're doing because they are doing an amazing job.
We spoke earlier and I told them I would advocate for them—no, I'm joking. I'm joking.
There is an amazing job occurring there but it's not focusing on food grade. We're talking about pharmaceutical, nutraceutical, biomedical types of applications.
There is a group in Iceland called the Iceland Ocean Cluster. They have a building on the waterfront with 70 businesses, young start-up entrepreneurs, the fishing industry, universities, technology companies, all collaborating and working together under the same roof to increase value from cod in Iceland. That's the strategy they're on now, to get more value from the traditional waste stream than from the actual fillet. It is achievable but it takes a lot of R and D. It takes a lot of time, a lot of effort, and we need to create that enabling environment here.
I'll stop there. That's what we need to create here.
That's both a public policy consideration and an industry consideration. Again, looking to Iceland, they have a zero discard policy. If you catch it, you bring it in, and they deal with it through the quota structure and arrangement they have in place. We don't have that here, and that's a bit of a problem, I think, in Canada. That's a public policy issue.
On the culture side, there was a great quote made by the head of the Ocean Cluster House in Iceland, Thor Sigfusson, when we met with him a couple of weeks ago. I asked, “How did you get here, Thor? How did you get this far ahead?”
He said, “We had to move away from the culture of 'good enough'. We'd always fished with gillnets, so it's good enough. We've always only used the fillet, so it's good enough”. Boy, I took that message and brought it back home and I've been talking a lot about this in various forums in the past number of weeks, because here we have that culture, the culture of “good enough”, and we have to shift that culture more toward the value proposition that I have been outlining here today.
There is tremendous opportunity, some great stuff, but we have to shift our mindset and shift that position. We can indeed get more value from what we've traditionally thrown away.
As your colleague mentioned earlier around legislation, part of the problem we're finding as we work through this is that there is no one real piece of legislation that affects every piece of operation that an operator has.
In a hotel you're dealing with not only the tourism licensing legislation, but you also deal with a liquor board, you also deal with workers' compensation, and you deal with municipal legislation. Because there is so much complexity around the legislative piece, things are able to fall through the cracks, or there is not one bullet that takes care of it all.
That's where the equity piece comes in because if somebody is not in the legitimate business, we'll say, of paying the business tax or being registered or licensed with the government, they don't have those extra responsibilities and commitments.
By bringing people into the business, and that's what we're really asking for—not to get rid of them, but to bring more in and have them apply and use the same rules as the other operators—we would achieve equity. That then allows for equity in pricing, it allows for equity in profit, and it allows the growing of the tourism industry.
It's a great question. The answer would be yes, for two reasons. The first is the overall shortage of risk capital for small business. What typically happens is that we don't have a problem incubating new companies and starting them out. The clusters have worked very well in Toronto, Waterloo, and in other parts of the country. Montreal would be another example. The problem that comes as these companies become profitable and start to grow—they could be tech or non-tech—is access to sufficient capital, particularly if it's a rapid growing phase. That has an adverse impact.
A second concern that would reinforce the need to try to boost domestic Canadian capital, and as you say there are some good reasons, is that there's a lot of risk aversion in the Canadian marketplace, for sure. We've seen that half the private equity venture capital—this is the venture capital that comes in—is U.S. based, so it's coming from a lot of either U.S. venture capital outfits, a lot of them focused on tech, or it's coming from some of the large tech enterprises in the U.S. such as Google, Apple, Facebook. They all have a big presence in Canada. They're ready to pounce on any Canadian company that has a great idea, great technology, and an opportunity to take it to the next stage. Then, even though a lot of these entrepreneurs want to stay independent, they end up getting lucrative deals to simply sell out. At the end of the day, whether it's a U.S. venture capital company or an Apple or a Google or whatever, technology is mobile and those companies are probably gone from Canada over time.
It has happened in Canada not just in high-tech companies. If you look at a company like Lululemon or Aritzia, these are very successful. They were in the fashion business, athletic fashion business in the case of Lululemon. Once you get capital from U.S. venture capitalists, there are usually controls around it and the management, the direction, starts coming from offshore. Then when it comes time to list the company, if it does go public, it will list on Nasdaq. It will bypass the Canadian marketplaces completely. I'm not saying that capital is the only answer, but I think it is an important element in this whole small business equation.
To comment a little further, one concern...and we raised it in the context here of the private corporation tax proposals. I'm not going to get into any of the discussion around that, but I'll just say that Mr. Foley made the comment that they really didn't have time to assess the impact of those proposals on his members. I think that's generally a problem. Whether you think the tax proposals are good or bad, and there's some fluidity obviously in what they were, there just wasn't enough time in the 70-day comment period over the summer.
Now the government is going forward with a reduction in the corporate small business tax, from 10.5% apparently down to 9%. Again, there is an argument out there that we shouldn't have two separate tax rates. That creates a disincentive for small companies to grow—to come back to the point I was talking about—because suddenly you move to a different level. Tax rates are higher, but more importantly, incentives such as the SR and ED benefits, which are very attractive to smaller companies, especially the SR and ED grants, are a real disincentive to get bigger.
Without commenting on the proposals per se, why don't we have an open consultation over a considerable period of time and maybe covering the broader aspects of tax, when these proposals come forward? Again, I don't want to belabour the point on the small business tax. Maybe it's a good idea, but I think it's being taken as a reaction to the small business tax proposals.
I think the bigger issue here is that we need to come at these tax changes in a more comprehensive way, taking our time and assessing what the impacts are going to be on the Canadian economy.
I'll take one specific example, Mr. Chair.
In terms of the Canadian shellfish sanitation program, which I mentioned previously, let's say that today we had more than 80 millimetres of rain. Because Environment Canada doesn't have weather monitoring stations throughout coastal Newfoundland and Labrador, it closes the entire shellfish industry, blankets it, because you can't pick one bay from another in terms of weather monitoring stations.
How does that relate to CFIA? We have a limited live holding capacity in this province. Our industry has to shut down for a minimum of seven days according to the CSSP, and on the seventh day we're allowed to start testing the water through Environment Canada and the shell stock through CFIA. However, again, Environment Canada because of the lack of monetary resources that it has—and the staff do the best they can and kudos to those who do—they go out and begin to test the water.
The problem with the shell stock testing is that we had collected it from somewhere in Green Bay, we had to then ship it to the nearest airport, we had then to fly it to Dartmouth or to Halifax, and we had to get it driven from Dartmouth or delivered to Moncton. It usually takes about another 10 to 12 days to get those back. The entire shellfish industry of Newfoundland and Labrador, because of a single rainfall event, could be closed for two to three weeks. In terms of competing with P.E.I., of course, and the New England states, for example, or others, or just providing a reliable supply to our foreign buyers, it's almost impossible without having a CFIA-certified lab.
Then it goes back to Environment Canada not having the appropriate weather monitoring stations in place, but it's needed, and it's the same for salmon.
I think there's interest. I know there's interest, and I see the industry here. They're talking much more about moving towards more of a value-based approach. They're realizing, particularly with capture fisheries.... I think the argument on capture fisheries in this region is about quality of employment, more so than the number of people employed. In the aquaculture industry, I think a lot of growth is going to occur that's going to create job opportunities. On capture fisheries, we need to create a value proposition that keeps people in the industry. It's about quality of employment, and moving toward that sort of value proposition is critical.
I think one of the challenges we have in overcoming that right now is that the seafood sector, you could say in Canada, but let's say eastern Canada including Quebec, is historically more about production. We buy fish from a harvester, we process it in traditional forms, and we send it to market. We look at niche opportunities, where possible, of course, but that's our focus.
When you're getting into the kinds of things that Iceland is now looking at in terms of getting into pharmaceutical, nutraceutical, biomedical types of applications, the scenarios are a little different and the innovation requirements are different. We need more entrepreneurial engagement.
I look at Iceland and what I see is young entrepreneurs coming out of university, and their energy is going into deriving more value from seafood because Iceland is singularly focused, in many ways, on seafood. We have entrepreneurs coming out of institutions here and they're looking at technology, they're looking at other sectors, and they're not looking at the seafood sector in terms of a value proposition.
I think we have to change that perception and get youth who are coming out of our universities and young entrepreneurs thinking more about that 450,000 metric tons of seafood I just mentioned earlier, and the fact that it's currently a waste product. I'm looking at that as an opportunity to derive value. We have to shift perspectives and become more entrepreneurial. I think the seafood sector would buy into that but it's going to mean newer players and younger innovators coming into the industry who are focusing on that value proposition for it to be successful.
Thank you very much. I must commend your pronunciation of my last name. It's a hard one to get.
It's so wonderful you came down here to St. John's. Thank you so much for providing this forum for us to be able to speak. I'm here on behalf of the Public Service Alliance of Canada. We're an organization across the country with 170,000 proud members from coast to coast to coast.
It's an exciting time in Canada right now. There are a lot of things being done, and it's an exciting panel this morning. I got to sit in and listen. There's a lot of talk about Scandinavian countries and the things they do right. I'm proud to be here today to talk about something else Scandinavian countries do a little better than we do, but our government has made commitments to follow that same policy decision, and that's providing affordable and accessible child care for every Canadian across Canada from coast to coast to coast.
I'm very happy that our government made a commitment this June with provinces and territories to negotiate an agreement and a separate agreement on indigenous early learning and child care. I think it's absolutely commendable and wonderful the government has taken this on.
The PSAC have some things we would like to see done on this. Originally the amount of funds earmarked only came in at $500 million. The International Monetary Fund put forward a proposal of around $8 billion in Canada. That's a lot to take on, especially for a government with the budget constraints we have, but we would like to see something in the ballpark of $1.2 billion.
You're interested in growing the economy and adding value. One of the ways we can do that is to make more Canadians able to go out and work and participate in the economy. We have parents who have to miss work day to day because of child care needs. There are gaps. We don't have one system that fits all. We have lots of jurisdictional issues. Quebec, like some provinces, is delivering affordable child care to Quebeckers. It would be great if we could do that in Newfoundland and Labrador as well.
We talk about labour shortages. One of the ways we can address labour shortages is by allowing Canadians to have that free time to be able to go out and participate in the economy, start a business, and go to work at any types of work that could be there. Child care jobs are jobs too.
I'm rambling a little, and I'm getting the signal. With that, I want to thank you again.
I'm here to change the subject. I'm here primarily because one of the contributors to this book was the president of Saint Mary's University, Dr. Colin Dodds. Some of you may know him. He basically said that this book that he's written needs to be in front of policy-makers, and that's you folks. The issue is demographic. The second issue is the complacency about the role of small business within that context.
Let's take one minute to put this in perspective. We have 1.1 million business owners in Canada who employ 90% of the private sector workforce. Somewhere between 65% and 75% of those business owners are boomers. Two-thirds of those boomer owners say they have to sell their businesses to help finance retirement. Now the issue I've seen in terms of the tax stuff they just rolled out is that all these people are so rich that we can just take money from them. There seems to be a lack of recognition that most of these savings these guys have is their retirement money.
My issue is pretty simple. If we have 65% to 75% of the total business owner population who are boomers about to retire in the next four to six years, and the critical mass of all boomers reaches 70 years of age in the year 2020—the first wave of boomers will be 75, the second wave of boomers will be 70—they are facing a situation where they have to sell, and guess what. The Business Families Foundation says 84% have no plans to sell their business, no plans to get their money out of the business, no plans for business continuation. My question is pretty simple. If, within that context, these people don't succeed, what happens to the businesses and what happens to the workers?
Now in the bigger context we have 20% of the workforce about to retire because they're boomers themselves, so all of your members are going to face some hard decisions as well. Now it's easy for a typical worker to say, “I'm going to retire”, because it's just a decision. It's not so easy if you're a business owner. You have to have some planning. Guess what. There isn't any planning process available to them.
If we look at that context, we have 84% without a plan and no one to give them a plan. Now that's not just a Canadian problem. It's a U.S. problem, it's a British problem, and it's an Australian problem. As we move into this four- or five-year period, we are about to see massive changes in economic performance, economic demand, tax base, and you name it.
Good morning, folks. Thank you for allowing me to appear before you. I appeared before this committee some years ago regarding a fish campaign that the Public Service Alliance of Canada was promoting.
I'm here supplementing Matt's presentation from just a few moments ago, and I'd like to talk to you about child care and the Child Care Advocacy Association of Canada. The PSAC is proud to join with them and lobby you for good public policy on child care.
I'm a father, and 11 years ago my wife was not able to return to work because of the lack of child care space and the competition in for-profit child care and infant care, so I have first-hand experience with this pressure that we all suffer under in Canada.
The Child Care Advocacy Association of Canada recommends that you make child care the cornerstone of family policy. You all make great policy, and sometimes policy is complex. Tax policy is complex. Over the last few weeks, Canadians and you have been embroiled in tax reform. I ask you to turn to policy about family, and realize that affordable child care is a public policy that needs your attention just as much as tax reform. We need to provide publicly funded access and support with a comprehensive, quality, inclusive program that provides a range of options not only for infant care and small child care but for after-school care as well.
It's an equality issue for you, as well. One of this government's major pillars and platforms is gender equality. I submit to you that there's no equality when those who need to get back to the workforce and contribute to their pension plans are restricted from doing so.
I'd like to summarize by supplementing the figures that Matt mentioned earlier in terms of what the Child Care Advocacy Association needs and what research shows it's time to return to, in terms of policy. With the other panel members having been dismissed, I'll borrow one of their phrases, which is that it's time to move away from a culture of “good enough”. I ask you to think that over and use that lens as well when you develop good policy for child care.