Thank you, and good morning.
My name is Ron Watt. As you may have guessed, I'm a senior and I worked for the Canadian public service for 35 years. When I retired, I joined an organization that is now known as the National Association of Federal Retirees. I joined here in Windsor, am a proud member, and I continue to serve as the past president of that organization. We have about 850 members locally, and nationally we have about 180,000. That includes 60,000 ex-military personnel.
Today we have three points that we would like to leave you with for your consideration in the 2018 budget: one, secure retirements; two, strong health care; and three, a national seniors strategy. We feel these are the best ways to help seniors and their families.
On retirement security, I urge the government to scrap Bill . This bill would introduce a new type of pension plan and target benefit pensions, while taking away retirement security and killing off a good defined benefit plan that people have worked for and that bring benefits back to their communities and their families.
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, and it must continue to tackle infrastructure investments with age-friendly communities and universal design standards in mind. To ensure residential needs are met, the government should appoint a minister responsible for seniors. This would allow public policy to be heard that impacts our age group.
In summary, these actions would lead to better productivity and a stronger economy, not just for seniors but for their families and Canadian communities.
Thank you for giving us the opportunity to appear. Good luck with your ongoing work.
Thanks very much, Kamal.
With that, then, we will turn to our witnesses. I know a couple are coming in late. Mr. Fisher just got here. I know he was flying in through Detroit. In any event, we will start with presentations in one moment.
Just to begin, to give an overview of the makeup of the committee, this a subcommittee of the finance committee. The full membership doesn't travel. To give an overview, to know where people come from and where they represent, I'll get members to introduce themselves, going around the table.
I'm Wayne Easter, member of Parliament from Malpeque, Prince Edward Island, which is the middle riding in P.E.I., between Summerside and Charlottetown.
We'll start with our Ontario folks and Mr. Grewal.
Chair and members of the Standing Committee on Finance, thank you for the opportunity to appear before you today. I'm joined today by Adam Thompson, who is our manager of government and external relations with the City of London.
As the largest urban centre in southwestern Ontario, London provides economic and social opportunities for all 2.5 million residents in the region. Southwestern Ontario is a very large region of 2.5 million people. We are embracing our role by providing infrastructure, jobs, and amenities that citizens rely on every day. Those of you who have been councillors in the past know how municipalities are delivering at the local level.
We recognize that we rely on our entire region's success much the same as the region relies on our success as one of the big mid-sized cities in the region, and we do want to speak to some regional aspects today.
Southwestern Ontario, as you may know, is really a region of mid-sized cities. We don't have any one dominant city, but a number of mid-sized cities fairly close together.
To ensure London and southwestern Ontario continue to prosper, we have identified three areas for partnership with the federal government in the 2018 budget, and I want to speak to those today.
Our number one priority is for the city to continue to bring rapid transit to London. We're looking at a bus rapid transit system. We are the largest city in Canada that does not have rapid transit already in planning or in operation. “Shift” is what our rapid transit is called, and it will really unlock our full potential and make it easier for people to move around the city in an affordable way. It will connect our education and health care institutions, universities and colleges, the hospitals, major employers downtown, and our really great neighbourhoods that are scattered throughout, especially at the core of the city, where they're very transit-supportive.
We're expecting about 43,000 new jobs and a lot more people to move to the city of London over the next two decades, so making sure that we do not run into paralyzing congestion problems is very important for our long-term economic success and future competitiveness. Doing rapid transit now before it's, frankly, more expensive and more disruptive is very important for London.
In the last budget, $81 billion was advanced for municipal infrastructure, and we certainly were glad to see that. We're expecting more details to come in the coming months, and we're ready to bring that transformative change to London through rapid transit.
Our second priority relates to providing safe and secure homes for Londoners. It has certainly been encouraging to see governments at all levels focusing greater attention on issues of poverty reduction, affordable housing, and homelessness prevention. Increases to the federal homelessness partnering strategy and support for enumeration events will help us to understand and improve capacity and provide concrete data about what's going on in London when it comes to homelessness. As the homelessness partnering strategy is reviewed in advance of 2019, we would certainly encourage the federal government to commit to an increase in the total funding allocated to the strategy, particularly for mid-sized cities such as London that address regional needs in their communities.
Just to give you a sense, because we have a series of mid-sized cities in southwestern Ontario, we have a disproportionate burden, in that a lot of people from rural areas will move into the bigger cities when they run into issues around precarious housing. Support services are just not available in rural places, so they come to places like London. Unfortunately, sometimes the partnering strategies can be designed for very large cities like Toronto or Montreal, and they don't necessarily work as well for a mid-sized city like London. Those mid-sized cities have particular challenges, and we hope that the partnering strategy recognizes that.
I also want to speak about affordable and social housing, and what we would consider to be a crisis there. I know it's discussed many times in the context of bigger cities, but also in mid-sized cities it's a significant issue. In London we have 3,200 social housing units. In Ontario, the responsibility for that infrastructure was downloaded to the municipalities years ago, and our property managers at the London and Middlesex Housing Corporation are telling us, after doing an audit of the condition of the buildings, that we're looking at maybe a $225-million infrastructure problem in terms of repair and maintenance of those social housing units. That's just in the city of London that $225 million is going to be needed over a 20-year to 25-year period.
A lot of these housing units were built around the same time, so the problem is happening all at once. It is not unique to London; it's common across many mid-sized cities and larger cities.
To begin addressing this looming deficit, we need to start now. It's, frankly, cheaper and easier to start fixing some of these issues now before they get worse. We are looking at for a 10-year, $20-million investment from the federal government, over and above existing funding. That's $20 million a year over 10 years.
Finally, I wanted to speak to public infrastructure. The way we travel, the water we drink, and the spaces where we connect have a profound impact on every aspect of our lives, so we were certainly glad to see phase one of the Investing in Canada fund, which has enabled a number of important infrastructure projects. We have a lot of construction projects under way in the city of London, and I've certainly been hearing about it from residents. Construction is great and the infrastructure renewal is great, but it's also pretty disruptive in the summer, as everyone knows. The reason we have so many under way is the money that was made available in phase one.
We're making some important improvements through the public transit infrastructure fund, the green infrastructure fund, and the community culture and recreation fund.
The PTI funding, the public transit infrastructure fund, has allowed us to make significant improvements to support that rapid transit project. Even in phase one it's helping us do that and it's helping us look at highly congested areas. As an example, we have a number of at-grade rail crossings through the middle of the city and we have a freight rail line running through there for both CN and CP. We're able to deal with some of those issues as well with that federal funding, which is helpful.
The green infrastructure fund is going to contribute for sure to the long-term sustainability of our city and help us address some of the bigger environmental concerns in the region. In particular, I want to talk about the Canada–U.S. domestic action plan for reducing phosphorus in Lake Erie. This is a major regional concern. Frankly, it's of international concern. That's why we have the provinces and the states in the Great Lakes region talking about it, municipalities all over the Great Lakes region, and the federal government and the Government of Ontario and the Government of Quebec and other areas are really working on this issue.
The targets are very aggressive in Ontario. We're talking about a 40% reduction in phosphorus loading into the lake. That is going to require some significant expenditures, and it cannot be done by municipalities alone. The federal government and the Ontario government have set out targets, and we would like to see that funded through the green infrastructure fund but not with the municipal allocation. We don't want it to displace all the other things we need to do around climate change adaptation and green energy. There are all kinds of things that need to be done with that fund, and specifically for the investments we need to make around the domestic action plan and phosphorus, we'd like that to come ideally from the provincial allocation.
The community culture and recreation fund is the last thing I'd like to speak about. That really helps us to do things at a local level that make the city more livable and improve the quality of life. To give you one example, we have a great river valley bike trail, very similar to the one you'd see in Edmonton, for example, but it's disconnected from east London, which is the blue-collar working-class side of our city. There's just a gap. You can't get across the river, so people in east London are really blocked from that area. This kind of funding is going to allow us to do things like connecting those folks with the existing recreation corridor.
I would like to thank the committee for inviting us here today. We're certainly very excited about the infrastructure funding. We also want to make sure that it flows in a practical way that allows us to execute on the projects quickly. As phase two is coming up, the details of that phase are very important in terms of how we deliver the projects.
I would certainly be happy to answer any questions. We really hope that London and southwestern Ontario will be a priority in the budget process.
My name is Rob Baker. I'm the vice-president for research at McMaster University. I want to thank the committee for the opportunity to speak to you today about McMaster and our views on the country's productivity and competitiveness.
At McMaster, we put a lot of emphasis on integrating research and learning, helping our students develop the skills they will need to move into the workforce. The federal government's investment in research and education drives productivity by developing a talented workforce who discover innovations and address tomorrow's big challenges.
This year we have a real opportunity. The commissioned the fundamental science review, which highlights the critical role of scientific research in shaping a dynamic society and a competitive economy in Canada.
The fundamental science review recommended changes to funding programs, governance, coordination, and budgetary recommendations. It is quite simply a road map for research.
At McMaster, we support the review's recommendations for the further investment in the tri-councils, those being CIHR, NSERC, and SSHRC. The review also recommends a stable annual budget for the Canada Foundation for Innovation so that we can continue to reap the benefits of our world-class research infrastructure, which enables us to attract world-class researchers and train tomorrow's innovators and helps us discover the solutions to tomorrow's challenges.
Lastly, the fundamental science review calls on the federal government to fund the full cost of research by increasing investments in the research support fund. We strongly support the science review's findings and recommendations and believe that they are a critical way to increase productivity and Canadian competitiveness.
At McMaster, our researchers find new solutions to Canada's big challenges. We have several areas of expertise that align with Canadian priorities, areas where we would encourage government investment. One example is our research on antimicrobial resistance. At the Michael G. DeGroote Institute for Infectious Disease Research, our researchers have helped position Canada as an international leader in drug-resistant infections. The institute has cutting-edge equipment and leading experts working on global solutions to the ongoing threat of these very dangerous microbes. Addressing this challenge will reduce health care burdens and costs.
Another significant research initiative at McMaster is our longitudinal cohort studies. The 2016 census showed that there are more Canadians over the age of 65 than under the age of 15 for the first time ever. This demographic shift will create new challenges that can be addressed only by understanding issues facing aging Canadians. Improving the quality of life and enabling Canadians to make positive, healthy choices are federal objectives that will directly impact Canada's productivity.
McMaster's longitudinal cohort studies study many large groups of participants over an extended period of time in order to determine the effects of various risk factors on healthy aging from birth to death. Due to their length, these longitudinal studies often face difficulties in securing consistent funding over the entirety of the study period. McMaster encourages you to consider alternative methods of providing long-term funding.
McMaster also leads in advanced manufacturing research, working with industry partners to develop more innovative solutions to industry problems. McMaster leads Canadian universities—all Canadian universities—in industry-sponsored research. Over the last five years, we have attracted over $588 million in corporate research money, which helps drive competitiveness in our region and the country.
We also leverage targeted government funding to attract international investment. One example of this is McMaster's biomedical engineering and advanced manufacturing project, supported by FedDev, other government partners, and Germany's Fraunhofer Institute.
Lastly, McMaster's nuclear reactor is in a critically important position with the upcoming closure of the reactor at Chalk River. Chalk River and the McMaster reactor supply Canadian and international researchers with neutrons for research in environment, energy, medical sciences, and nuclear physics. Our reactor is the only facility in the country able to absorb some, but not all, of this research demand. At McMaster, we are constantly working to improve neutron access for Canadian research and building national and international partnerships to ensure this critical research continues. Without access, we will lose industries, business, and our competitive basis in this most critical area.
I want to thank the committee for the invitation to speak to you today and I look forward to any questions you may have.
The Sarnia Lambton Chamber of Commerce is a nationally accredited membership organization, representing over 700 businesses that together employ 17,000 employees in the Sarnia-Lambton area. This chamber has been fostering prosperity in our community for over 112 years by empowering business to succeed and by initiating major tourism, health, and education projects that have a lasting impact to this day. We thank the Standing Committee on Finance for inviting us to comment on the 2018 federal budget.
Over 95% of our members are small businesses, and what we've heard from them is that they are finding it increasingly difficult to succeed because of increasing costs and regulations, labour market changes, and trade uncertainty. These factors can lead to profoundly negative consequences, including job losses, inflation, and business closures. There's much to be said about how the federal government can tackle these challenges, but the past couple of months, and especially this week, have made it very busy for us, and I must first address the most recent events, which have left our members confused and uncertain, which is never a good thing for business.
As you know, about two and a half weeks ago the government concluded its rushed dead-of-summer consultations on the most significant corporate tax changes in 50 years. Then it was revealed that Revenue Canada was going to start taxing employee discounts. There was a huge outcry, and the government backtracked. Now this week, which also happens to be Small Business Week, the government announced a small business tax reduction and its intention to rethink the proposed corporate tax changes. The government appears to have heard the enormous outcry by business organizations and is scrambling to make improvements. After months of uncertainty, we are now informed that the capital gains on intergenerational business transfers will not be touched, that income splitting will be permitted for family members involved in a business to some degree, and that a maximum of $50,000 annually can be invested passively into a company, but that's all that we know. The details remain to be seen, and other announcements are expected this week. As you can understand, we've been a bit preoccupied and are cautiously waiting to see what will happen.
Of course, we're pleased to see that finally the federal government is fulfilling its campaign promise to lower the small business tax rate to 9%. It's something that chambers of commerce and boards of trade across Canada have been calling on for years. It will indeed help our members reinvest back into their businesses and the economy and to become more competitive. Unfortunately, it will not come soon enough. The reduction is already late by two years, and it will not be fully implemented until 10 months after the next federal election. It's hard to say how much it will offset the new costs of the proposed corporate tax changes.
We're also pleased to see that the federal government appears to be backtracking on the flawed and unfair corporate tax reforms. When the government released its white paper in July, our members were left reeling, not just by the measures proposed in the documents but also by the tone and language used. We welcome further improvements, but it must be done in consultation with the business community. The devil is actually in the details, and we know that it will take the expertise of accountants, tax preparers, and those affected to understand the real impacts.
In fact, what would be fair to business and to all taxpayers would be a full, independent review of the tax system. Chambers and boards of trade across Canada are calling for an immediate and thorough review. The United States is conducting one, so it is critical that Canada do the same to remain competitive. We cannot risk losing professionals, entrepreneurs, and start-ups to the U.S.
Before my time is up, I'll quickly mention a number of other priorities that we think the 2018 budget could address to help business.
The first is increasing the GST/HST tax filing threshold for small businesses from $30,000 to $50,000, and indexing it to inflation. The second is developing a national bioeconomy strategy so that communities like Sarnia-Lambton could attract new businesses and develop bioeconomy clusters. The third is enabling VIA Rail to improve its financial position and services by supporting its plan to invest in a high-frequency corridor using dedicated tracks. The fourth is establishing a task force to harmonize the transportation of oversized load shipments across the country.
I would be happy to answer any questions. Thank you.
Thank you. On behalf of 3M Canada, I'd like to thank the Standing Committee on Finance for the opportunity to appear before you as part of the consultations of the 2018 budget.
Ranked as the third most innovative company in the world, behind only Apple and Alphabet, 3M remains focused on utilizing technology to meet Canada's current and future needs in key areas such as energy, health care, safety, automotive, aerospace, and general industrial.
Research and development is at the very heart of 3M. That is why we reinvest 5.8% of sales annually into science. This investment helps 3M produce more than 3,000 patents each year. In collaboration with our customers, 3M is helping solve the world's toughest challenges by leveraging the power of 46 technology platforms to create better, safer, and more economical solutions for different market spaces. Headquartered in London, Ontario, since 1952, 3M Canada continues to invest in science, research, innovation, and talent.
There are several federal measures that would help Canadian businesses become more competitive.
One of the most powerful levers any government has at its disposal is taxation. Taxation can and should be used as a tool to incent investment in Canada and drive innovation. In an increasingly globally competitive environment, both manufacturing and research and development investments are subject to competition when it comes to choosing one jurisdiction over another. Half of 3M Canada's sales are generated by our nine Canadian manufacturing facilities, and the great majority of these sales—more than 85%—are exported to the United States.
3M Canada must compete with other countries around the globe for manufacturing capital investment. In 2012, the “Global Tax Competitiveness Report” ranked Canada the 19th-highest tax burden on new business investment among 34 OECD countries. By 2014, Canada had moved up to the 14th place. Consequently, the proposal that we will highlight today focuses on incentives to attract investment in Canada.
The most impactful proposal, in our opinion, is to implement an innovation box system, also called a patent box system. To help accelerate the commercialization of intellectual property developed in Canada, we echo the recommendations set out by the Advisory Council on Economic Growth in February 2017 to create a patent box. A patent box would incent R and D investment in Canada and encourage businesses to develop and commercialize patents in Canada. It provides a preferential tax rate to manufacturers on income derived from patents and other intellectual property.
More than 12 countries now have some form of patent box. A version of this plan has also been introduced in Quebec and in Saskatchewan in 2017. The Quebec program applies an effective tax rate of only 4%, and Saskatchewan 6%, on qualifying patent income. While action at the provincial level is needed and most welcome, action is also required at the federal level to develop a truly effective and compelling Canadian patent box system to help attract manufacturing and R and D investment.
In addition to a patent box, we also recommend a permanent accelerated capital cost allowance reduction for environmental and advanced manufacturing technologies to allow manufacturers to claim an immediate first-year writeoff of all qualifying capital expenditures, including software.
Another tax measure to spur investment would be to expand the Atlantic Canada investment tax credit program to the rest of Canada and increase the tax credit rate from 10% to 20%.
Finally, as NAFTA negotiations continue to be top of mind, we would like to take this opportunity to further emphasize the importance of negotiating a successful NAFTA trade agreement and avoiding trade retaliation measures that could impact integrated supply chains. 3M is committed to Canada and will be part of its growth in the long term. We have a long-standing history in both Canada and the U.S. and would like to see that strong trading relationship continue. We have a fully integrated North American operation. 3M Canada is a net exporter from Canada to the U.S., and more than 1,000 of our Canadian employees' jobs are dependent on our ability to sell globally.
In conclusion, thank you for the opportunity to present to you today. I look forward to your questions.
Thank you, sir, and thank you for the opportunity to appear before you today.
As the record shows, my name is Mark Fisher. I'm the president and CEO of the Council of the Great Lakes Region. I'm also pleased to have with us today one of my board members, Rakesh Naidu, the COO of the WindsorEssex Economic Development Corporation.
The council was established in 2013 with the help of Gary Doer, Canada's ambassador to the U.S., and his U.S. counterpart, David Jacobson. Our goal is to bring government, business, academia, and the non-profit sector together to find new ways of growing the Great Lakes economy while protecting the environment. We achieve this mandate by conducting insightful public policy research, convening dialogues with diverse interests at events such as our Great Lakes Economic Forum, and serving as a strong voice on regional matters.
My introductory remarks today will focus on the importance of the Great Lakes economy and, more importantly, on what more we can do to strengthen our long-term competitiveness and sustainability.
I'll begin with a number: $6 trillion. That's U.S. dollars, and it's the estimated value of the region's economic output in 2016. It's pretty big. Did you know that if the Great Lakes region were a country, it would be the third-largest economy in the world, behind only the U.S. and China?
Home to 107 million people, this region directly supports 51 million jobs, or a third of the combined U.S. and Canadian workforce. Over 50% of Canadian and one-fifth of U.S. manufacturing is based in the region, including over half of Canada's SMEs—roughly 650,000. Ontario and Quebec account for roughly 58% of Canada's $22 billion in agriculture and agrifood trade to the United States. The Great Lakes region is also an important energy hub, from clean natural gas to nuclear energy to hydro power.
Twenty of the world's top 100 universities are Great Lakes institutions. They help to attract three-quarters of Canadian and a quarter of U.S. R and D spending. There is a growing services sector in the areas of health care, education, engineering, legal services, and banking. In fact, though manufacturing employment is down roughly 15% from pre-recession levels in the Great Lakes region, education and health care are up by 21%, and professional services are up by 16%, according to BMO.
What's more, education, health care, and professional services have added 2.5 million jobs over the last 10 years, dwarfing the nearly one million job losses in manufacturing. Contrary to popular belief, the Great Lakes region is thriving and serves as the economic engine of the U.S. and Canadian economies.
However, the global economy is changing at an accelerated rate, and in unimaginable ways. We need to keep pace and figure out a way to get ahead of the curve, so where do we go from here?
First, we need to continue to support advanced manufacturing, invest in technology advancements, and get our SMEs export-ready.
Second, we need to build smart, energy-efficient transportation systems and increase our connectivity to global markets through supply networks and value chains.
Third, we need to accelerate investment in public and private sector R and D, as well as the backbone infrastructure that drives innovation, such as data science, analytics, and computing.
Fourth, we need to build a skilled and mobile workforce to respond to short-term labour gaps and long-term demographic headwinds.
Fifth, we need to double down on protecting and restoring the Great Lakes and investing in Great Lakes science and monitoring. Securing a clean environment, as well as an innovative and connected economy, will be our competitive advantage.
Sixth, we need to invest in high-growth sectors such as advanced manufacturing, sustainable food production, and services like tourism. If we can make these investments and do so by leveraging provincial and city investments in these and other areas, we will be positioning the Great Lakes to compete and win in the new economy.
Thank you. I'm happy to take your questions, especially with respect to the modernization of NAFTA. I also have a more detailed backgrounder that I'll leave behind; I'm more interested in your questions today.
In London we approach this issue at a regional level, because it's certainly a regional problem.
The sources of phosphorus going into the watershed are many. In London, around 15% is coming from urban sources, so we certainly contribute our fair share to the problem. A lot of that is coming through the wastewater treatment plants, and it's certainly coming through when we have overflow events. In some areas of our city that are older, we have combined sewers that are overflowing. They flow directly into the river. It's a very bad situation. We're working to separate those, and that's part of resolving the issue in terms of phosphorus.
There is a push at the provincial level, and I think almost an expectation, that we'll move to tertiary treatment for all wastewater treatment plants. We believe we have a better way of doing it that is cheaper and is going to solve the problem. We want to pilot that. In London, we have a great firm, Trojan Technologies, that works on wastewater treatment and sells all over the world. They have a suggestion about how we can bolt their technology onto our existing plants. It's going to be a lot cheaper. It probably will get us down to 0.1 milligrams per litre of phosphorus, which is a reduction of about 75% in what we have coming out of the wastewater treatment plants now. If that works, I think it will help with the urban sources.
The other parts of this are primarily rural. In southwestern Ontario, you are in the heartland of agriculture. There's a lot of farming going on, and there's runoff that comes from those operations. That's tougher to deal with, because a lot of it's coming off private properties owned by many different people, and a lot of the solutions are not easy to implement on private property.
Some of the solutions, such as tertiary treatment, are expensive. We don't think that's the right approach. We want to go with a more cost-effective approach that's going to let us achieve those targets. Hopefully, that pilot will prove out and other municipalities can benefit from it.
Again, thank you, everyone, for your presentations today. They're very illuminating.
I'm going to start first with the Sarnia chamber of commerce. Thank you, Ms. de Silva and Ms. Shepley, for being here today. I certainly appreciate the fact that 95% of your members are small businesses and they're who you're here to represent.
I've done a lot of travel throughout Canada, as many of the other members have, and what I hear from many business owners is, first of all, that because of the uncertainty, they are not hiring. Second, they are not investing, because they are waiting for the changes. As you've said, the government has given some indications of what it'll do, but, as you also said, the devil is in the details. Are you concerned that your entrepreneurs are not going to be hiring and that they're not going to be investing until they have complete certainty as to where these changes are going?
Probably, unless you can understand the language of Molière.
Good morning, everyone. I'm happy to be with you today. Thank you for making presentations before the Standing Committee on Finance.
I confess that this is my first time in Windsor, and I hope that Mr. Chair could give me some free time this afternoon, so that I can see some of the city and its beautiful spots.
My first questions will be for the London representatives, Mr. Helmer and Mr. Thompson. My first two questions are related, since you talked about challenges and problems in several areas. I first want to focus on transportation, public transit and traffic congestion. As a Montrealer, I can tell you that you are not alone in having to deal with those challenges. I am sure that people from Toronto could say the same. There are environmental challenges involved, but there are also economic challenges. Clearly, when people are late for work or goods cannot be moved properly, our collective productivity drops.
What are you seeing for your London urban region in the announcements made concerning public transit infrastructure? Do you think that what has been announced meets the needs, or would you need some additional help without which you won't be able to meet that challenge?
In no order of preference or priority, as we move to that innovation economy and we are looking at the movement and storage of data, data localization is increasingly going to be an important issue for both the Canadian and the U.S. economies. I think we have to be open to unique possibilities around what that would look like in a trade agreement.
Obviously IP is attached to that in many ways in terms of how we support innovation and entrepreneurship. What we see often is co-creation of IP, particularly in multinational companies and universities, which are increasingly shared, so thinking about modernized approaches to IP will be important.
Beyond the innovation ecosystems that we share in regions like the Great Lakes and the ways in which we support those, we need to continue to move forward on regulatory alignment and look at unique ways of finding opportunities to align the enforcement and the inspection of how we regulate. I think doing that will be an easy win. It wasn't in the original NAFTA; it should be in a modernized NAFTA in terms of institutionalizing the way that we look at regulations.
Freeing up the border is a constant struggle in terms of security versus trade facilitation. The bottom line is that this region is responsible for roughly 50% of the total value of goods that cross the border between the United States and Canada every single year. We have to get the security and the trade facilitation right. I think developing a smart border and using technology, including single-window systems, will ultimately help enable that future.
The new pre-clearance agreement that was signed by the two governments a couple of years ago, as well as an examination of the way we pre-inspect goods coming into North America, Canada, and the U.S. together, will help free up that border.
I would say that those are probably the three biggest challenges we face, outside of what I mentioned in terms of how we deal with labour. The categories of labour in NAFTA are woefully outdated, as you know. Jobs that exist today were never even contemplated when NAFTA was written, nor was the service economy, so we need to update the labour chapter in NAFTA to reflect the nature of work today, and we also need to look at the mobility piece. If we could look at having enhanced mobility across the border, I think we'd be doing ourselves a major favour in terms of supporting competitive growth, which is missing in the region.
Unfortunately, I don't have the study in front of me to tell you where we rank with the U.S. Obviously our corporate tax rate is lower.
As to how we keep innovation, attract innovation, and attract new manufacturing through the patent box, first, does everyone understand what the patent box does? Yes? Not sure? Okay.
The patent box is a tax regime that applies a preferential tax rate, obviously a lower tax rate, to taxable income earned from the sale of property that includes an intellectual property component. That intellectual property component was either developed in Canada and licensed exclusively for use in Canada or else acquired by a Canadian company. This IP could be a patent. We call it a patent box, but it doesn't always have to be a patent. It could also be a copyright that relates to computer programming code. It could be trade secrets. In certain cases it could be plant breeder rights.
The patent box is used in over 12 countries already, and, as we mentioned, in Quebec and Saskatchewan, but not one jurisdiction uses it in exactly the same way. They tailor it to meet the needs of their country. Our recommendation is that we implement a patent box model such that.... 3M Canada does not own the R and D that we are developing here in Canada. It is owned by our parent, which is a regular situation with multinationals, but we would be licensing it back. If we can put forth an argument that we should be charged a lower tax rate if we manufacture and commercialize that IP, it makes Canada more competitive when 3M is making the decisions about where their manufacturing mandates will be located around the globe.
On this concept that we're good innovators but not good at commercializing, we certainly believe that's very true.
There are two other points I'd like to bring up that we discuss in universities an awful lot. One is the procurement of devices and infrastructure that are made by our innovators. One of the great difficulties, of course, is they're not going to ramp up their profits or their sales internationally if the various provinces and the federal government don't bother to support them. If they don't buy it out of Canada, why would we invest it in another place? I would like to see some kind of policy that would lead to better procurement of IP that's generated at home.
The other issue we see—and perhaps this is peculiar to McMaster, because of its strength in medical research—is that there are a number of government programs that support the development of IP and commercialization. Many of these programs, however, are too short in duration for that to come to fulfillment. If you think about putting anything in a person's body—drugs, devices, or anything like that—there is an incredible range of analysis and hoops and jumps that you have to go through, particularly for things like clinical trials. These take years and years and many millions of dollars to do. Frequently it takes more than five years to run through all the clinical trials that are needed. By that time, the funding has run out and there's no place to go when the project fails.
Many of my colleagues in medicine say we need something like a seven-year runway on some of these programs before we can really figure out whether something is going to work or not. Five years is just too short.
As a contrast with other technical things, if someone is developing an app or a small technical thing in their basement, sure, five years is great, but in the more complicated things, you need more time.
On that, I found it interesting, considering your presentation talked about the $50,000 for passive investments. Talking about bad communication, to be clear, the implication is $50,000 of interest earned on the small business assets they have. I found it interesting that my colleagues on the other side didn't correct you on it. However, even in the media, both sides have been proposed as the correct answer, which is that you can have $50,000 of assets or $50,000 of interest, and then you have the new tax rates kick in.
On scaling up a business, Jack Mintz, Canada's leading tax expert, has already analyzed some of the implications of these tax changes. He said that new effective tax rates, the smaller small business rate, the higher taxes on dividends, and the new earnings stripping rules—which are still going ahead, as far as we know—would basically mean that businesses would now face a higher effective tax rate, going up an extra 3.5%.
When you talk about scaling up a business, once you get into the asset range where you have enough assets to generate income—for example, $10 million's worth of assets, buildings, a second business, and employees—at that range you are looking at the tax rate when determining whether you're going to make a merger and acquisition, hire new people, or expand and scale up your business to get into the medium and larger range.
What do you think your members will say when they see that effectively their tax rates are going up 3.5%?
I think it's fair to say that if you're in business in the Great Lakes region and you have operations on both sides of the border, you're thinking about plans B and C.
Three months ago I was probably more of an optimist about where we started, but I'm probably sitting at about 50/50 with respect to where we're going with the negotiations from a modernization standpoint.
The challenge is that there are issues from the last 25 years—real issues, technical issues—that we need to address, but we seem to be overloading the conversation with new issues and proposals, particularly from the U.S., that are unworkable. From my perspective, unless there is a major shift in that conversation, I'm not sure how we get to a successful outcome.
It's still early days, though. We just finished the fourth round, but each round seems to be getting a bit tougher. I'm hoping that cooler heads will prevail among the negotiating teams, and that businesses in the United States will start speaking up very loudly over the next couple of weeks about the importance of doing trade with Canada and Mexico. If we end up in a position where the talks break down and a decision to withdraw from NAFTA is ultimately made by the President, the default is going back to most favoured nation status, which would obviously create some new tariff structures.
From what I understand from business, as much as they don't want to go in that direction, they would probably live with it. It's certainly going to add costs to consumers. I was speaking to a company yesterday that makes appliances, and the tariff rate for them would likely go to 8%, which would probably add between $50 million to $60 million to their supply chain. That's going to be passed on to the consumer in additional costs. I think people are starting to figure out what that world looks like in new MFN tariff rates, but I hope we don't get there, to be honest.
The second point I would make as we're thinking about NAFTA is that there are new opportunities with Europe through CETA, and this region needs to start thinking really hard about how this region serves as a platform for serving Europe. We've been very focused on north-south engineering of our business and supply chains, and there are reasons we did that. However, with the opening of a 500-million-person marketplace in Europe, I think it's time for us to also start thinking about how this region can serve Europe.
In general, yes, I can. We have been working a lot with various universities across Canada. The $19 million on an ongoing basis represents a sum of about $7 million that would be needed at McMaster to increase the amount of time the reactor runs there. We run it a certain number of hours per day; if we had about $6 million to $7 million more, we could run it literally 24-7. Simply, the more you run the reactor, the more neutrons you get out of it. We could also upgrade the power; right now, we're running at a relatively low rate.
That would be a relatively easy fix for the problem of Chalk River shutting down in the spring. We can turn it on more, but we need more staff to run it, obviously.
For the other part of the funding—let's say we had $6 million or $7 million for McMaster directly for the extra running of the reactor—the other thing that has gone on is access to international neutron sources around the world, and again, this has been led by McMaster. A little while ago, the Canada Foundation for Innovation, the CFI, had international access to international infrastructure. We put forward a CFI grant that generated many millions of dollars and would allow Canadian researchers to visit nuclear sites around the world to do their experiments and use neutrons in specialized facilities around the world.
Unfortunately, that program has now come to an end, so we're talking about this perfect storm. With Chalk River shutting down, there are no neutrons there. We have the only active research reactor in the entire country, and, at the same time, we now have no funds to access neutron sources around the world.
We are very concerned about access to neutrons, particularly in advanced manufacturing materials. These sources are incredibly important in understanding the safety of materials, the development of new materials, and the creation of medical isotopes. They're incredibly important.
Of that $19 million on the ongoing thing, we'd probably need something like maybe $8 million or $9 million for access to international sources. There's also a small amount in the budget—and to be honest, I'm not so sure we need all of that—to organize the access to international sites. We obviously have to contribute to these international sites to get access, but to be honest, I think we may be overestimating the amount we need to organize and strategize that kind of discussion.
However, I would argue that, yes, on an ongoing basis, close to $19 million is probably what we need.
Thank you very much, Mr. Chair, for the opportunity to present the convenience channel's recommendations for the upcoming budget.
Let me first start by acknowledging the measures announced this week by the government relating to small businesses, particularly around rate reduction, which we had recommended. I'm very happy with the series of announcements that have come out this week. The remarks we put out earlier this week on those measures are in your kits. I'm certainly looking forward to working with all parliamentarians, including the Minister of Finance, to provide additional feedback as we get it from our members.
I'm going to speak directly from our slide deck, which is in the kit you have before you. The first four slides really give you an overview of the convenience retail channel in Canada.
Let me start with the number of convenience stores throughout the country. I'm very proud to represent a channel that, through over 27,000 retail locations in the country, provides goods and services to Canadians in urban, rural, and remote parts of the country. I also want to take the opportunity to thank many of you who helped us and supported us on national Convenience Store Day at the end of August, when we raised over $80,000 for the Children's Wish Foundation to help children in need.
In terms of employment, we have a nearly even split between full-time and part-time employment among the 27,000 locations. Approximately 234,000 jobs are directly attributable to the retail locations across the country.
As you see on the slide on taxes collected by convenience stores, our channel collects over $22 billion in taxes for all levels of government in Canada. It's something that certainly, as one of my members said, “We don't get paid to do this”, but we do it. It's an obligation that we take very seriously.
This takes me to the first issue I wanted to raise with the committee, credit card fees. That is on slide 5.
Our members use a number of methods to collect dollars from their customers, most notably credit cards. I think I've spoken to this committee before about the fact that Canada has among the highest credit card fees in the world, ranging anywhere from 1.5% to 4% per transaction. We certainly would like to see these fees come down. We believe that if other jurisdictions such as Europe and Australia can bring them down to 0.3% or 0.5%, Canada can certainly do the same.
We support Minister Morneau's review of credit card fees. Our understanding is that his review will conclude at the end of this year, and it's certainly our hope that, in time for the next budget, there will be some good news for retailers with respect to those fees.
On slide 6, in terms of some of our regulatory concerns, there are two bills currently in Parliament that are of concern to us. One is Bill , which is the vaping and plain packaging legislation. We are very worried that this legislation will make the illicit tobacco market even worse while adding additional costs to small-business retailers, and at the same time doing very little to correct the unfair advantage vape shops currently have vis-à-vis convenience stores when it comes to selling vape products.
On slide 7, I want to highlight that as the largest channel for selling age-tested products, most notably tobacco and lottery, our members take their responsibilities very seriously. We have training modules in place that our members take on an annual basis. It was our channel that abided by Health Canada's rules on e-cigarettes, preventing them from being sold in our channel.
On slide 8, you will see some of our specific concerns and the feedback we received from our members with regard to plain packaging. Most notably, at the very end security concerns have been highlighted by our members, as well as increased costs to their businesses. Again we want to impress upon the committee and the government that our channel should not be an afterthought with some of these policies, but that in fact they will have a serious impact on them.
On slide number 9 we highlight the illicit market in Canada, which is fairly big. I would note that the government's marijuana policy specifically does not recommend plain packaging and also recommends low levels of taxation, which is counter to what you find with the tobacco policies that are being advanced. Certainly we believe that action needs to be taken on the illicit market first and foremost, to bring it under control, before Bill is looked at.
Slide number 10 looks at vaping, specifically providing for a level playing field, which we don't think currently exists in the legislation.
Moving on to slide 11 and 12, with regard to Bill , which is currently moving into the House of Commons, there are serious concerns around the downstream implications for our members. For example, will employees under age 17 now be prevented or prohibited from handling products such as a box of chocolates or a bag of chips? These are some of the concerns that our members have. Will they have to change the layout of their stores to abide by the rules that could be coming as a result of this legislation? Again, there are a lot of unknowns, and the feedback we're getting from our members involves questions on the government's intent on this front.
I would say that our channel is committed to working with the government and all parliamentarians to ensure that there is a wide selection of goods available in convenience stores. In certain communities, convenience stores are the only game in town.
One of the things we have recommended in the past—and we will continue to do so—is to provide targeted tax relief, including measures that can help convenience stores to carry fresh fruits and vegetables.
On my final slide, committee members, you will see our list of recommendations. The issues I've just spoken to are provided in more detail on the left-hand side of your kits.
I would be more than happy to take any questions you might have. Thank you very much.
Thank you for the opportunity to take part in these consultations. More than that, on behalf of Canada's music publishers, I would like to commend the government on the new creative Canada framework.
We are a membership-based organization committed to providing opportunities for our music publishers and to promoting their interests and those of their songwriting partners. These companies all represent and invest in thousands of Canadian songs and songwriters who are heard daily on the radio, on streaming services, in video games, and in film and television productions around the world. By combining this country’s talent, entrepreneurial expertise, and global reach, we strive to advance the music publishing industry and our songwriting partners by providing a competitive edge, both at home and abroad.
Indeed, Canadian music publishing companies have recently grown their revenue to $280 million; that's a growth of $120 million in 12 years. The industry is transforming itself into an increasingly export-driven endeavour, with two-thirds of our revenues coming from foreign sources.
We are asking the government to contribute to the ongoing growth of the music publishing sector. recently announced an investment of $125 million in Canada's creative export strategy. CMPA welcomes this funding. It will go a long way toward growing the businesses of medium and small-sized music publishers in Canada.
We recommend that a portion of this future trade money be directed to a fund that benefits all music companies, including the music publishers who are driving this growth. In our ongoing discussions with Canadian Heritage, we continue to stress that our needs are different from those of the rest of the music sector.
The news that the Canada Music Fund will be modernized is definitely something we welcome. This increase is helpful, because the music publishing industry is a focus of increased global competition, and the Canadian sector is very much in need of better access to capital to compete internationally, particularly for the acquisition of catalogues of musical works, which are a key to revenue generation.
Specifically, we would like to see the music entrepreneur components of the music fund enhanced. Despite our strong track record, the maximum annual contribution that a publisher can receive is currently out of step with the rest of this sector. We would recommend that the Canada music fund increase its support to Canadian entrepreneurs to finance the development of their companies and the creators they invest in. We would like to see an increase from approximately $24 million to $30 million a year, and we would like to see music publishers have the ability to access other federal programs that provide access to capital, which would allow them to grow and compete internationally.
We also welcome the support for the protection of creators' intellectual property and fair compensation for those who help contribute to Canadians' creative content. Changes to the Copyright Act are needed to ensure Canadian works are competitive with international standards, and reform of the Copyright Board is essential so that we can have a thriving music publishing industry. The government needs to act quickly to allow us to remain globally competitive. We seek a wide-ranging review of the Copyright Act and hope to see a detailed commitment to reform the act from innovation Minister Bains and Minister Joly. Initial signals have been positive, and we appreciate that our voices are being heard.
Thanks to our partnership with the federal government, in the past year we were able to sponsor trade missions to L.A. and Germany. I just returned from Berlin. The Canadian Music Café showcases our country's talent to screen-based industries worldwide, and our music tech summit is becoming a very important part of our calendar. These projects have been a success, and we are greatly enhancing global opportunities as an innovative sector.
Our goals are closely aligned with the government's cultural and economic strategies. We are convinced that Canadian creative industries represent a key and growing innovation sector. We hope to be able to continue working to expand and improve Canada's music publishing industry and take full advantage of the progress that Canadian publishers and songwriters are already achieving internationally.
In closing, we hope to see you all at meetings in Ottawa, November 6-8, as our global partners meet to discuss copyright, sector growth, and much more.
I would like to thank you for this invitation. I'm happy to answer your questions.
Thank you, Mr. Chair, for inviting me to speak to members of the committee today. My name is Tovah Barocas, and I'm the vice-president of external relations for Earth Rangers, which is the only national charity in Canada focused on empowering children and families to take action for the environment.
Earth Rangers is committed to engaging Canadian families in learning about and protecting species and their habitats, as well as addressing the impacts of climate change. For Canada to become a world leader in protected areas and in mitigating and adapting to climate change, public engagement is critical. With the digital community of 170,000 members and their families, in-school programs that reach 250,000 students annually, and a national television presence that garners millions of impressions, Earth Rangers reach is unmatched in the conservation community.
We are well positioned to help nurture and sustain a culture of environmental ambition, which is an important foundation to the Government of Canada's belief that the environment and economy go hand in hand.
Given Canada's dependence on our resource-based economy, it is critical that families understand the intrinsic link between our country's environment and economy. Through partnerships with industry, Earth Rangers effectively promotes sustainability and the need to balance environmental considerations and economic growth. This includes educating our audience on issues like sustainable forest management, land reclamation, and carbon offsets.
One of the most powerful and effective ways we reach children with these important messages is through our no-cost, in-school programs offered across Canada. From rural areas to inner cities, and most recently in the far north, we have grown to reach 900 schools in only four years, in large part due to our partnership with Environment and Climate Change Canada.
These in-school programs are complemented by a robust and active membership base, which includes francophones, indigenous peoples, and new Canadians. We have surpassed our initial goal of activating 150,000 members ahead of Canada's 150th birthday. Earth Rangers currently has over 170,000 members across Canada. These members put what they learn into action in their communities through various sustainable activities and fundraising initiatives.
Our partnership with Environment and Climate Change Canada not only contributed to this growth but also supported our French-language program in Quebec and our successful pilot program in northern Canada, which reached schools in Yellowknife, Whitehorse, and Iqaluit.
In addition to our work with the federal government, Earth Rangers has also developed new partnerships with provincial governments in Ontario and Alberta, as well as with various private sector partners.
Success in achieving Canada's climate change conservation and biodiversity goals is significantly dependent on sustained public education and engagement. Earth Rangers harnesses the inherent optimism and altruism of children through a program that provides tangible activities and outcomes for them to engage with their families and communities. The sense of pride and accomplishment that results from seeing the impact of their actions drives the ongoing participation of kids and parents and, in turn, our growth as an organization.
We believe that Earth Rangers is well positioned to help nurture and sustain a culture of environmental ambition and to help avoid the polarization that can happen around some of the policy choices that are needed to achieve important goals related to both conservation and decarbonization. Across the country, people need continuous reinforcement of the idea that our society can achieve environmental ambitions and fulfill economic hopes as well.
To meet these goals, Earth Rangers would like to diversify our programming and how we offer it to ensure we are reaching all Canadians with our conservation messages. This plan for growth and inclusion is the basis of our 2018 pre-budget request, which centres around three core initiatives.
The first is cultivating a generation of engaged, environmentally minded Canadians through the growth of our membership program. We have set an ambitious target of expanding membership from 170,000 youth to 300,000 young Canadians by 2020.
The second is expanding our digital programming to ensure we are able to reach youth in all parts of Canada, including rural and remote communities.
The third is developing new, long-term, indigenous-focused programming that will build off our successful programs in northern communities. It is important to note that we are not only focused on bringing our programs to indigenous communities, but also on educating and building an appreciation among non-indigenous youth for the rich history and contributions indigenous people have made and continue to make toward protecting our environment.
I would be pleased to elaborate on these three goals as a part of the question-and-answer period.
Given the important targets Canada has set for climate change and protected areas, we believe there is a significant need to communicate with and educate Canadians on the importance of conservation today for a healthy environment tomorrow.
We see a role for Earth Rangers to help communicate this with our expansive and growing audience of young Canadians and families across the country.
We want to establish a partnership with the Government of Canada that provides long-term, reliable, and sustainable funding to achieve our shared objectives. To that end, we have asked the Government of Canada for a commitment of $6 million over three years as part of the 2018 pre-budget process.
This funding would directly support the expansion of our programming, allowing us to engage more youth and their families across Canada in a real, tangible way.
We are confident we can build on the success of the last four years to communicate the importance of climate change adaptation, conservation, and the environment to children and families across the country.
I would like to invite you to ask more about our programs and about how, with your continued support, we can partner in engaging families on climate change education, action, and results.
Thank you, Mr. Chair, and thank you to the committee for the opportunity to speak to you today about the importance of the investment in fundamental science, in particular quantum science.
Quantum science and technologies are poised to be the economic engine of the 21st century. Today Canada sits among the global leaders in quantum research, in large part due to the investments from the federal government. We have the potential to lead the coming quantum revolution and bring quantum technologies to the world. To maintain our leadership position, strategic, consistent, and sustainable funding for quantum science is needed.
Some of you may be wondering what quantum science is and why it is important. Quantum science involves the behaviour of atoms and molecules. This behaviour is fascinating and completely different from the behaviour of objects around us. Some even call it completely counterintuitive. The ability to harness this quantum behaviour gives us a richer and radically more powerful approach to building new technologies. These quantum technologies will have impact on computing, information security, drug design, cancer detection, natural resources exploration, artificial intelligence, and areas we have yet to discover. Quantum technologies promise profound and transformative opportunities.
Canada was one of the first countries to make significant investments in quantum research, and right now, as I mentioned, we are a world leader. Canada's “Quantum Valley”, in the Waterloo region, is known worldwide as a hub for quantum science and the development of quantum technologies. Our public-private partnership model is one that other nations look to as they ramp up initiatives in quantum research. Our investments in people, infrastructure, and educational programs have attracted researchers and students to Waterloo from around the world. Waterloo is the only place with a full ecosystem, from theory to technology to commercialization, ready to bring quantum technologies to life.
The Institute for Quantum Computing at the University of Waterloo is the driving force behind the quantum innovations to come. IQC's community of over 200 researchers is exploring quantum technologies with game-changing applications, such as those involved in early cancer detection, targeted drug design, and unlocking the mysteries of Parkinson's and Alzheimer's. They are building quantum computers with unprecedented power, which will play a critical role in materials for efficient energy harvesting and transport, machine learning, and other critical scientific challenges. Our researchers are developing quantum technologies that will have transformative societal impact right here in Canada.
Hwever, we're not alone. Global investments in quantum research by both government and industry have grown substantially in recent years. The U.K. has launched an initiative of 450 million pounds. The EU has created a $1-billion flagship in quantum research. Japan, Singapore, and the United States all have bold investments in quantum technologies, and just last week China announced a $10-billion investment to create a laboratory for quantum information science. In addition, companies like Google, IBM, Microsoft, Intel, Alibaba, Lockheed Martin, and others are also heavily investing in quantum science.
Canada currently holds about a 7% share of the worldwide quantum science investment, yet forecasts expect global budgets to increase threefold, potentially leaving Canada with a significantly reduced share relative to other jurisdictions. The race to realize the opportunities of quantum science is tightening, but Canada still has the potential to maintain a leadership position in bringing these technologies to life. To do that, to remain a leader in quantum science, we need to do a few things. We need to continue to attract and retain top talent; we need to continue to make significant research and infrastructure funding available to quantum research and technology development; we need to maintain a focus on the importance of fundamental research as a driver of innovation and economic prosperity; and we need to establish a funding stream for high-risk and high-reward research initiatives.
Strategic, consistent, and sustainable funding will keep Canada in a leadership position in quantum research and its resulting technologies. We can't take our leadership position for granted. We have to go further. We must keep the pace through strategic investments in quantum research and development so that Canadians—all Canadians—can experience the immense economic and social impacts of the quantum revolution.
Thank you again for this opportunity. I invite you to join us in Ottawa in December when we launch “Quantum: The Exhibition” at the science and tech museum.
I'd be happy to answer any questions. Thank you very much.
Thank you. It's my privilege to be here today and to be among what is a very diverse set of witnesses.
Results Canada is a national grassroots advocacy organization that is committed to creating the political will to end extreme poverty globally. Extreme poverty is a place where hunger and disease thrive, and where too often children don't live to reach school age, let alone attend school. It's a place where home might be a corrugated tin shack in an urban slum. One in ten, or 767 million, people live there.
At Results we champion cost-effective, proven, tangible, and high-impact solutions and approaches that address the causes and mitigate the impact of poverty. Our volunteers across the country are parents who think that no parent's child should die needlessly from a lack of immunization that costs pennies. They are neighbours who think that nobody around the block or around the world should suffer from a disease that costs dollars to treat. They're everyday citizens from coast to coast. They're your constituents. I'm honoured to be here today to represent their views.
The most important message I want to bring today is that Canada does not stand alone in the world. In our interconnected globe, ensuring that our international aid envelope is increased is not only about being charitable or about making good on global commitments but also in Canada's strategic interest, and not to give away the ending, that is my single recommendation today: ensure that the next federal budget, unlike the last, commits to increasing Canada's international assistance envelope.
As members of the finance committee, you know that how we allocate our resources paints a picture of who we are as a people—what we stand for in the world, what we hold as values—and right now, when it comes to foreign aid, that picture is more Dorian Gray than it is Group of Seven.
There are three key reasons that this matters and why I hope you will include this recommendation in your report to the House.
First, it matters because our credibility is at stake globally and here at home. Canada used to be a leader when it came to foreign aid. In fact, we literally set the bar. This week 47 years ago, a commission led by Lester Pearson set the target that called for rich countries to commit 0.7% of GNI to international assistance. That was 70¢ for every $100 we earned. Today Canada's support for international assistance hovers around 26¢ for every $100 we earn. Despite leading the G7 in growth, that puts us at the bottom of the list compared with international allies and far below the global target. It's also a new low historically for Canada. If we stay on this track, this government will have the worst record on aid than any government in decades, Conservative or Liberal.
It's time to right this situation. It's time to make good on a recommendation that came out of this very committee last year, when you called on the Government of Canada to increase its investments in ODA to reach 0.35% of gross domestic product within three years.
Second, it matters because the world is increasingly interconnected. What happens over there matters over here. In my earlier days working in development, I used to say that our neighbour's house is on fire and we can stand by and watch it burn or we can work together to put out the flame, but now that house is a duplex. We live on the other side of the wall. If we watch it burn, we do so at our own peril. In our increasingly global economy and community, in an instant external events or trends could impact our own economic interests, national priorities, policies, and directions.
Consider these facts. Today, with rampant migration and displacement, there are more refugees in the world than in any other time in recorded history. Diseases like Ebola, which shook the world a few years ago, or tuberculosis, which has been with us for centuries, are airborne infectious diseases that do not respect geopolitical borders. Right now, as we sit in this room, alarm bells are sounding on what the UN is calling the largest humanitarian crisis since the creation of the United Nations. A catastrophic famine has 20 million people starving, or at risk of starving, in Yemen, Somalia, South Sudan, and Nigeria. These challenges have global impacts, and they demand global solutions, interventions, and investment. The duplex is on fire. Doing our part to quell the fire is in our own strategic interest.
Third and finally, it matters because there is tremendous potential and opportunity to tap, and Canada is well positioned to be a leader in unlocking and benefiting from that potential. Aid works, and aid coupled with smart development policy has seen tremendous wins. Child deaths have been cut in half and the number of people living in extreme poverty is lower than ever before, but hard-won gains require smart, sustained support. Today's generation of young people is the largest in history. Globally, half the world's population is under 30. Nine out of ten people aged 10 to 24 live in low-income countries. This massive wave of youth could be alarming—or it could be viewed as an opportunity to support a generation of young people who are equipped to transform the world. There are many things we could be doing, with support for education being at the top of the list.
With 263 million children out of school globally, investing in education, gender empowerment, and other critical inventions will be critical to quelling the alarm in favour of opportunity.
In the coming months, Canada has two opportunities to shine in this space. In February, the Global Partnership for Education will be hosting a replenishment in Senegal. Canada can and should be leading in contributions. Beyond that, when Canada hosts the G7 next year, we could lead on a development initiative that prioritizes actions to support girls' education and training within fragile contexts.
Educating girls is a best buy in development. Every dollar invested in an additional year of education sees a return of $10 in future earnings and health benefits. Together, these investments could really make a big difference, but they won't if we are just cutting off a bigger piece of an increasingly shrinking pie.
In conclusion, aid matters, and Canada's leadership matters beyond our borders now more than ever. Please consider recommending that aid, especially impactful and effective aid, is prioritized in your recommendations, as you did last year. The eyes of the world will be on Canada in 2018. Let's live up to the leadership, compassion, and vision that this opportunity affords.
Thanks, Mr. Easter. It's good seeing you again. I'm a big fan of P.E.I. Actually, I've been to Summerside and Charlottetown. You come from a very nice part of the country. I hope to get back out there before long, and maybe I'll see you.
Good morning. Thanks for inviting the Windsor-Essex Regional Chamber. We've been representing this region for over 141 years, so we have a our fingers on the pulse on the community.
I'll get right to the key points. Before getting too far, though, I want to thank the government for following through on its commitment to lower the small business tax rate from 10.5% to 9%. We also want to thank our local MPs Tracey Ramsey, Brian Masse, and Cheryl Hardcastle for standing with small business. I also want to thank you, Mr. Easter, for your work in that regard.
Chambers across Canada take the government at its word that meaningful consultation with us will follow. We will be vigilant on this ongoing small business tax issue and offer ideas and solutions. The one thing we need is a full economic assessment of what these changes mean in terms of investment, jobs, and tax revenue. We also believe this raises an opportunity for a full review of the tax system.
The said on Monday that the problem isn't individuals, but the system. We agree. The tax system is too complex, and we need to simplify it. We need to make our tax structure more competitive. The U.S. government right now is embarking on the most massive tax reform package of our lifetime. Its goal is to improve the competitiveness of the American economy. We urgently need a policy response; hence our call for a comprehensive tax review here in Canada.
The big issues that affect our economy locally are jobs without people and people without jobs. This is one of the top concerns of business here and across Canada. Right now, Canada is leaving tens of billions of dollars of economic opportunity on the table in lost wages as companies are unable to bid on work and find workers. More than half of Windsor-Essex and Ontario businesses cannot find qualified staff. The local impact here is about $600 million a year.
Skills Canada reports that 40% of the jobs in the next 10 years will be in the skilled trade sector, yet only a quarter of our young people are considering a career in skilled trades. The problem is only getting worse.
Here are some quick ideas to drive jobs and productivity: encourage the provincial government to address the skills gap by changing the apprentice ratios, encourage young people to take on skilled trades as a career, and use the power of government to drive changes in attitudes. In addition, we would suggest tax incentives to get more people in the trades and reward them for graduating. We need to be aggressive if we want to be successful.
Another top issue is the skyrocketing cost of doing business in Canada. For example, our competitor states in the U.S. Midwest, such as Ohio, have one-third the electricity costs, no carbon taxes despite using 50% coal, lower regulations, no border or political risk, and a much lower wage structure. We need cost offsets to be competitive and to maintain jobs and investment here in Canada.
The U.S. is pursuing an America-first, jobs-first agenda. We need a policy response, and we recommend that a manufacturing strategy including auto and steel, two big pieces of the Canadian economy, be developed and executed.
The Windsor—Essex chamber can assist in that regard. We have resolutions, and the Canadian chambers are supporting us. Included in a manufacturing strategy would be the goal of a level playing field. It's unfair to expect Canadian entrepreneurs and workers to compete with one set of rules for labour, environmental, and safety standards while other countries we compete with for investment and jobs have far lower standards along with much lower costs. Some of our competitors aren't even companies at all; they're essentially government departments.
For our agricultural community, PACA, the Perishable Agricultural Commodities Act, is the key issue. We are waiting for the agriculture minister and the industry minister to follow through on their election commitments to provide the agricultural sector, which is largely made up of small businesses, with an alternative to PACA.
Work visas for Canadians working in the U.S. are another key issue. Just so the committee understands, right now, every day, we have 6,000 people in the Windsor-Essex region commuting to Michigan for employment, predominantly in health care and automotive-related industries. We need certainty that the work visa issues will be addressed in the current NAFTA discussions.
Last but not least is innovation. While it's exciting that many communities across Canada and the U.S. are trying to land tech companies, Windsor—Essex would also like to create and build more of them here. How do we do that? Our ideas include investing in 5G network technology, looking at funding models to support training and retraining due to technology advancement, and supporting community-led accelerators and innovation centres.
That's a great question, and thanks for asking it. I could spend all afternoon responding to it, but I'll just take about two minutes.
There are a couple of things. In automotive investment, for example, we've lost arguably tens of billions of dollars in investment in the auto sector to the southern United States and Mexico. The cost of doing business is one of the reasons, along with the permitting time in the different levels of government. It could take three or four years for something to go through here in Canada. Down in the southern United States and Mexico, it can go much more quickly.
It's an attitude adjustment that has to happen. We have to compete for business. We have to say to people “Hey, do you want to spend money and employ people here in Canada, here in Ontario? We're going to make it fast for you. Here's what we're going to do. We're going to fast-track this, we're going to have concierge service, and we're going to get this department involved and that department involved.” For example, in Mexico it's one-stop shopping. We've been arguing for that here in Canada.
When a large company wants to invest here in Canada, instead of shuffling them off to different departments—I know that's the way things are done in Ottawa, since I've been through it a number of times—we have to have the attitude of how to make it happen in the quickest amount of time to get it done. We could be more competitive. If we cut our time in lending investment from where it is now to where it should be in line with the southern United States, Mexico, and even the Midwest, we'd be in a far better place.
The top of the list is a concierge service. Second is a change of attitude in the administration so that private sector investment is to be heralded and welcomed and should be done as quickly as possible. It shouldn't be, “Here's what the problems are, and here's what our department's answers are.” We should give civil servants targets in terms of how quickly they're driving the permit process through. We should be coordinating with the federal and provincial offices to get things done, and they should be held accountable for targets, jobs created, and speed of permitting. That goes to the local level, too. We've talked about that here at the Windsor-Essex chamber with our local folks here.
Again, thank you to all the people here today to share their expertise. I learn something new every day, and you're certainly giving me a lot, for at least a week.
I'd like to start with the Institute for Quantum Computing. I was terribly disappointed by your presentation, particularly when you didn't address how political particles are just different. They act differently, they seem to do weird things on their own that regular particles, behaviours, don't do.
Voices: Oh, oh!
Seriously, I appreciate the position, because your organization is part of the reason Canada has taken a world role. Given the fact that we see more investment by multiple actors, I think that's a good thing. I think it's certainly going to extend human knowledge and it's also going to disperse the costs of that human knowledge over a wider tax base, because it shouldn't just be up to Canada to do that.
As a smaller player, we have one of the greatest, most highly educated population, so I certainly think Canada can continue to play a leading role, but given that context, I would much rather hear from you how we are creating a specialized niche, an area of leadership where Canada can contribute more than any other country in the world, given our own context and our own work. Could you elaborate on what that position is?
I just want to make a comment in front of the committee before asking questions. It's more about actual physics than quantum physics. This week we witnessed the collision of two neutron stars at 130 million light years—not really close, but very interesting. The collision produced, surprisingly, gold, so let's not say that science can not produce wealth. It's a little bit of a stretch, but....
I will continue in French.
I am extremely sensitive to all aspects of scientific research, be it of the applied or basic variety. The latter is just as important because, someday—we never know—it may become applied. I am very happy to see that you are in a position of leadership in quantum computing research.
However, I would like to understand something. I know that, in other sectors, such as particle accelerators, various countries are working together at CERN, in Switzerland. When it comes to very focused research of this kind, which has a very good chance of commercialization, I assume that you are competing much more with other countries and that, if you fall behind, others will manufacture the computer and flood the market, ultimately leaving us with nothing.
That's a great question. Thanks for asking it.
As to what we can ask from the federal government, I think there are a couple of things. Use the power of the microphone. Have your senior ministers and MPs engage your communities back home and tell them, look, skilled trade is important. It's a very well-regarded profession. There are lots of good reasons to go to university and get a liberal arts degree. There's nothing wrong with that. But if you want a job that pays well, if you want a path to entrepreneurship, if you want to be your own boss, if you want a chance to make lots of money, this is where you need to be.
In countries like Germany, the skilled trades are well regarded. We need the message. It's one thing for the Windsor-Essex chamber and for my colleagues to say it, but we need the leadership of the Canadian government across the board—MPs, ministers, even as high as the Prime Minister—to talk about the importance of getting into skilled trades.
I can go on and on. We're having the minimum wage debate here in Ontario, and it's a nice debate to have. At the end of the day, we have hundreds of jobs that are paying well more than minimum wage, often twice times more, in the skilled sector that are going unfilled. Let's get people skilled up, let's drive incomes, but we need help from you folks to drive home the message that the skilled trades are a very important career path and are well respected and well regarded. You can be your own boss. You can be your own employer. It's the way to go. We're going to do our part, but we need you to help us out.
I just want to add that it is not about condemnation; it is about wanting to work with the government to try to get back on the right course. I hope I've made a compelling argument about the reasons why.
Maybe I'll just make one point—because we're in Windsor and this is my hometown—in terms of the interconnectedness of the world, bringing together the idea that aid works, that it matters, that Canada's leadership has been immense, and the idea in a border town that borders are important but that they are also dissipating.
I used to work for an organization called Nutrition International. It does tremendous work in terms of addressing malnutrition issues around the world. Our huge Canadian success story is in something called vitamin A. Many millions of children have died over the years because of a vitamin A deficiency when they are under five. It makes them susceptible to things like measles and other deadly diseases that kill them.
Over the years, Canada has been a tremendous leader on that. It costs two cents for a little capsule of vitamin A, and kids get it twice a year. They cut the end, and they put it in their mouths while they are getting other immunizations and getting treated at health posts. Because of that little two-cent intervention, Canada's leadership has contributed to saving about three million children's lives over the last decade.
The interesting connection to Windsor is that the Government of Canada funds the Nutrition International organization to procure the world supply of vitamin A—the vitamin A that is at health posts from Afghanistan to Zimbabwe, by the way. Those vitamin A capsules are manufactured right here in Windsor at Nutricorp, which is a manufacturing plant down the street, and Accucaps, which is a manufacturing plant in Strathroy. I had the opportunity to go and open that plant and cut a big ribbon. It was one of my key moments. I think I even had giant scissors. I engaged the people who work in the plant, those people from the area of Windsor, and told them their work is actually having an impact around the world, and we had a conversation about that. It was significant.
I bring that point up because in coming back and speaking to you here in my hometown, I'm thinking of that. It just illuminates the connectivity between here and there.
On the aid question, the one last point I would make is that I think it is about setting a global goal and target, about Canada being back—not way back, but back—and being willing to work with the government on what a realistic on-ramp could be to meeting our global obligations.