Thank you very much, Chair, and good morning, committee members. Thank you for the opportunity to be here today.
The Canadian Labour Congress is Canada's largest central labour body advocating on behalf of three million workers across Canada. In the brief time I have, I will focus on divisions 5, 6 and 7 of part 4 touching on the guaranteed income supplement, the Canada pension plan, changes to insolvency rules and amendments to the Canada Business Corporations Act. I will also touch on the Canada training credit.
I want to begin, however, by commending the government for a budget measure that is not contained in Bill , namely its initial steps toward the implementation of a national pharmacare plan for Canada. Canada's unions are eager to see a universal single-payer system introduced in this country to address significant coverage gaps and the drug affordability crisis facing Canadians.
Turning to retirement benefits, Bill allows the proactive enrolment of CPP contributors aged 70 and over. The CLC welcomes this initiative as a very positive step. The bill also amends the Old Age Security Act to make improvements to the guaranteed income supplement and allowance for low-income seniors.
Extending the GIS earnings exemption to self-employment income, increasing the full exemption and introducing an additional partial exemption are important improvements that will make a meaningful difference in the lives of low-paid working seniors.
However, the GIS clawback will continue to apply to the first dollar of CPP and pension income, RRSP income, EI benefits and other income in retirement. On these income sources, a 75% or higher effective marginal tax rate continues to apply. For this reason, the CLC urges the government to undertake a comprehensive review of the GIS clawback in the context of all income sources in retirement.
With respect to changes to insolvency rules, in our view, Bill 's amendments to the Bankruptcy and Insolvency Act and Companies' Creditors Arrangements Act are inadequate and represent a missed opportunity to prevent the injustice of defined benefit plan members and retirees suffering benefit cuts when sponsors enter insolvency.
Bill will amend the Bankruptcy and Insolvency Act to allow a bankruptcy court to determine whether a share redemption or a payment of dividends in the year prior to the date of bankruptcy was made by an insolvent company or had the effect of making the corporation insolvent. If so, the court can now allow the trustee to recover these amounts. However, this would not have prevented the $1.4 billion in dividend payments approved by the directors of Sears Canada in the years prior to entering insolvency and liquidation in 2017, despite the windup deficit in the pension plan.
There is still no requirement for corporations to notify the pension regulator, much less seek the regulator's authorization if a sponsor with a pension deficit makes a dividend payment or engages in a share repurchase that represents a risk to benefit security.
To address this risk, Ontario introduced the disclosable event regime last year, and regulators in the United States and the United Kingdom have similar powers. The federal government can and must do far more to protect plan members in insolvency. Labour movement has been urging the government to either grant pension claims superpriority status in bankruptcy or introduce mandatory pension insurance in conjunction with provinces and territories.
Turning to continuous learning, Bill enacts the Canada training credit, part of the new Canada training benefit. The CLC welcomes this lifelong learning benefit; however, we are concerned that the four-week limit on training programs, the 600-hour eligibility requirement and low replacement rates of the EI training support benefit and the fact that the training credit can cover no more than half of tuition and training fees will limit the benefit's effectiveness and reach for low-paid precariously employed workers who most need training opportunities.
With respect to pay transparency, Bill amends the Canada Business Corporations Act to require federally registered public companies to disclose prescribed information regarding the well-being of employees, retirees and pensioners and the diversity of directors and senior management.
The CLC believes that this information should include the ratio between director and senior management compensation and median employee earnings. It should also include total employee compensation and median pensions and pay received by pensioners as well as the funded status of the pension plan.
Thank you, Chair. My time is up. I welcome any questions the committee might have.
I'd like to thank you, Mr. Chair, and the committee, for giving us the opportunity to speak today, regarding Bill .
I'd like to mention that this has been Lutsel K’e's main objective and mission. We have a mandate set by our elders to create and protect our traditional territory around our community within the Northwest Territories.
The first time the government invited the former chief and elder, Pierre Catholique, to come here to do a presentation like the one I'm doing today.... It's been well over 40 years. At that time, the community and the elders weren't ready to pursue a park. Now, after educating ourselves, doing due diligence on behalf of our community and our people and creating a partnership with Canada and GNWT, we're willing to create a national park reserve on our traditional territory. That's why we are here today.
Lutsel K’e Dene First Nation has been working to protect Thaidene Nëné for over 40 years.
Lutsel K’e Dene First Nation has the following objectives with respect to Thaidene Nëné: to recognize and affirm indigenous rights, responsibilities and our treaty relationship with the governments of Canada and Northwest Territories; to protect the natural and cultural landscape of Thaidene Nëné for all time, and for future generations; to share the stewardship and management authority with Canada, using a leading model in the country and in the world; and to foster a sustainable economy, based and rooted in conservation, culture and tourism.
The main reason we want to protect our land is that we want our children's children to have, and to continue to practice, our Dene way of life. This gives them certainty that they are going to be protected in that way, for our culture and our identity
We have done everything that needs to be done on our end to establish Thaidene Nëné, and achieve these objectives. We have concluded establishment agreements with Canada and the GNWT, grown our own management capacity, started local community tourism planning and obtained public and private commitments for long-term sustainable funding for our stewardship responsibilities, including guardianship.
Recently, we had a ratification vote to determine whether our community supported us to go ahead. We had a very high voter turnout. On February 18, 2019, 88% of our membership voted in favour of the establishment of Thaidene Nëné.
We want to get Thaidene Nëné established now, so we can sustain our forward momentum, and fulfill our shared objectives. Bill is consistent with our vision and objectives, and we encourage smooth passage of this bill, to enshrine Thaidene Nëné in law in advance of the uncertainty of the coming election. LKDFN's long-term funding commitments and the creation of long-term jobs and economic opportunities associated with Thaidene Nëné are dependent upon it.
I want to thank Steven Nitah, our chief negotiator, and our negotiation team, as well. They've been at this for quite some time—over 10 years, or maybe it's closer to 17 years. I want to congratulate him and the team on all the hard work they're doing on behalf of our community members. I'm speaking on behalf of my community, Lutsel K’e Dene First Nation in the Northwest Territories.
I would like to give Steven the opportunity to say a few words.
: Mahsi cho
, Mr. Chairman, and mahsi cho
, Chief and committee members.
I also would like to thank you for giving us the time to share the good news that is Thaidene Nëné. As Chief Marlowe indicated, we have been diligently working with both levels of Crown governments over a number of years to create Thaidene Nëné together. Thaidene Nëné was a mandate and vision given to us by the elders, most of whom have passed on since that mandate was given to us. As chief negotiator, I was mandated to take the leadership role on behalf of the community over all these years.
We first started the work in earnest in 2000, once we initialled the Akaitcho lands, resources and governance agreement on July 25, 2000. The elders at that time asked us to move forward to protect the heart of our homeland—not the entire territory of our homeland, but the heart of our homeland. At that time, they identified 55,000 square kilometres as an area of interest.
In 2006 then chief Addie Jonasson signed an MOU with then minister of the environment Rona Ambrose of the Conservative Party. That allowed us to do further research and due diligence on best practices at the global level and down into Canada. We could have chosen different partners in our relationship in the creation of Thaidene Nëné, but we chose Canada because we have a treaty with Canada. We agreed to share the lands and resources and the responsibility to share them and to benefit from them. In 2010, when I was the chief, I signed the framework agreement with the late Jim Prentice, who was then minister of the environment, to start formal negotiations. In our culture we've never really had a political structure that would have a grand chief, per se. Leaders are chosen for specific purposes. At that time, the elders and the community appointed me to take the leadership role to usher in the negotiations and build the relationship requirement to create Thaidene Nëné.
Thaidene Nëné today is a model of conservation. It's a model of reconciliation between indigenous and Crown governments, collectively between us and the land, and as a form of economic reconciliation. Significant investment will go into our community, where 18 full-time jobs will be created. We will work alongside Parks Canada in the management and operations of Thaidene Nëné equally, as a shared responsibility. An amount of $32 million will go into that area for the first 12 years, and approximately $3 million annually after that for the operations and management of Thaidene Nëné.
Thaidene Nëné is a great example of reconciliation in this country. In fact, Thaidene Nëné has been used by Canada and by many indigenous nations across the country as an example of how to develop their relationships with Crown governments. Together we've created a model of a relationship that's been utilized and emulated by many right across the country. In fact, it's helping speed up the relationship building between indigenous governments and Crown governments and the creation of marine and terrestrial protected areas to help Canada reach its Aichi targets of 17%.
With Thaidene Nëné we're ready to go. The conditions are good. We're in a position to sign and establish Thaidene Nëné in July this summer. As the chief indicated, we have secured funding to allow LKDFN their independence and to be a true partner in the management, operations and governance of Thaidene Nëné. We have the capacity to move forward and diversify our economy. We are in a place in the Northwest Territories where our traditional territory is 280,000 square kilometres. A national park of 14,000 square kilometres, with an additional 12,000 for a protected area, is just a small piece of our territory.
We are not anti-development. We have a relationship with all the mining industries in our territory. We have agreements with Diavik, BHP and De Beers.
Thaidene Nëné went through an extensive HMIRA assessment that informed the final boundaries that we see today. All the highly prospective mineral potential has been taken out of the area of interest. Areas that are unknown geologically have been excluded from Thaidene Nëné as well. We've taken great care to ensure that Lutsel K’e has positioned itself to participate in both the non-renewable and the renewable resource economy.
Thaidene Nëné will provide a long-term, stable, consistent economic base for the community and at the same time create certainty for investment outside of Thaidene Nëné within our territory.
It's a great model for reconciliation in this country, and it's a great model for conservation relationships among indigenous governments and Crown governments, whether at the federal or the provincial level. We have an establishment agreement with the Government of Northwest Territories, and we've helped develop the legislative proposal that has been reviewed by the people of the Northwest Territories through public hearings by the Northwest Territories Standing Committee on Economic Development and Environment. They're doing that as we speak. We hope they will turn that legislative proposal into law in their next legislative session in May so we can all sign off on the establishment agreement and celebrate the creation and establishment of Thaidene Nëné.
With that, I will answer any questions you may have.
Good morning, Chairman, and members of the finance committee.
The fall economic statement and budget introduces measures to address competitiveness and affordability and signals that the government has taken first steps to addressing taxpayer concerns. We believe, however, that Canada must do more.
For over 60 years, MNP has been dedicated to our clients' success. Today we proudly serve more than 180,000 businesses and 19,000 farms throughout Canada. We are the third-largest tax filer in the country.
Our clients are concerned with how their businesses can stay competitive. In addition, they struggle to cope with the increasing complexity and administrative burden of the tax system. They're worried about how affordable Canada will be, especially for the next generation.
In terms of competitiveness, we note that the budget and Bill contain several improvements to capital cost allowance, scientific research and experimental development, legislative changes to section 143 that promote tax fairness, and small business deduction relief for farming and fishing businesses. These are important changes and initiatives on competitiveness. Of note, however, is the fact that the new accelerated capital cost allowance lacks parity with the recent tax reform in the United States. It does not go far enough to provide Canadian businesses with a competitive advantage.
Further, we continue to recommend lowering the combined corporate tax rate to a more modest 20%, and a combined personal tax rate below 50%. With a top marginal tax rate of 53.5%, Canada's is the fourth highest among OECD countries, which hurts our competitiveness.
In terms of the small business deduction, we are pleased that the government corrected the unintended consequences to the agriculture and fishing industries related to the 2016 legislative changes. However, there are other industry groups that were also inadvertently affected. We urge the government to ensure that Canadian start-ups and private enterprises are not subject to the proposed employee stock option cap. These businesses rely on stock options to attract and retain talent in their formative years, and removing access to stock options would severely impact their ability to compete in the global marketplace.
Affordability is clearly a growing concern for Canadians. It's an issue that dominates the daily headlines. MNP has a quarterly national study on affordability that shows that just under half of Canadian families are within $200 of financial insolvency every month. To try to address this issue, the budget and Bill include the following: targeted support for first-time homebuyers, a Canada training credit and an incentive to make zero-emission vehicles more affordable.
We commend the government for focusing on these areas and believe measures could be further enhanced. We find that many first-time homebuyers rely on their parents to help them with their down payments. Parents often take a tax hit in order to do so. We suggest that further incentives be contemplated to provide relief for parents, such as using their RRSPs for their children's homebuyers' plan. Alternatively, the government could consider simplifying related party loans specifically tied to the purchase of a home.
Governments are striving to make education affordable. The Canada training credit helps build our future workforce and ensures workers get the training they need. However, education costs remain a burden to many families. We recommend full tuition credit transfers, rather than the current $5,000 annual cap.
Regarding zero-emission vehicles, the incentive helps businesses but could inadvertently impact their employees. These vehicles are generally more expensive, and the standby charge for employees who drive them could become an affordability issue.
We are pleased with the government's commitment to consult on intergenerational transfers of businesses while protecting the integrity and fairness of the tax system. In our practice many families struggle with how to transition their business. In our brief we've shared Tracy and Marc's dilemma of selling their bakery to their daughter versus a third party. The tax system unfairly penalizes them if they sell their business to their daughter.
In summary, we ask that the government commit to introducing policies and tax measures to make Canadian businesses more competitive and improve affordability for Canadians. At the same time, we need to ensure that these measures are simple and do not increase the cost of doing business in Canada.
Tax policy should be fair, certain and predictable.
Together, we have much work to do and we look forward to working with you to ensure Canadian competitiveness and affordability.
Thank you, Mr. Chairman. Thank you, members of the committee and fellow panellists.
My name is Vivian Krause and I am here as a citizen.
I would like to speak to the changes in the legislation that specifically affect registered charities.
For most of my work life, I have been involved in charity, a decade with the United Nations and more than a decade with registered charities here in Canada. I have also done extensive research on the funding of environmental charities and their campaigns. It is my personal experience in the charitable sector and my research that inform my comments today.
In the 2019 budget, several changes are introduced to the law regarding the conduct and privileges of registered charities. The main changes are the removal of restrictions on the extent to which charities are allowed to engage in political activity, and the introduction of a new category of organizations that will now have the privileges of charities—journalism organizations.
I would like to offer some context to the discussion of these changes. To sum up in a few words, the main point that I would like to make is that these changes tinker at the edges of minor issues, meanwhile major issues are not addressed. It's to those major issues that I would like to speak.
Several years ago I first testified to a House of Commons committee on the U.S. funding that environmental organizations were receiving, and continue to receive, for their participation in a well-funded, anti-pipeline initiative called the Tar Sands Campaign. In response, the federal government allocated several million dollars in the 2012 budget to enable the charities directorate to conduct audits and education to improve compliance with regard to the conduct of political activities by registered charities.
What initially concerned me wasn't the anti-pipeline activism. It was what I saw as “garden variety” corruption. In one case, the president of a charity had paid more than a million dollars into his personal company.
As part of my first testimony in 2012, I urged that changes be made to the Income Tax Act to increase the disclosure requirements with regard to the revenue and expenditures of registered charities.
Over the past seven years I have continued to keep an eye on what is going on in the charitable sector. I am now even more concerned that changes need to be made to our charitable system to make it more robust to fraud. I've come to this conclusion based on my analysis of the grant making going on in a network of charities run by a lawyer in Vancouver. This individual claims publicly at his website that he has created 650 charities and executed more than two billion dollars' worth of charitable giving.
During 2017 and 2018, I went through the Canadian tax returns on about 130 of these charities. The revenues of these charities totalled $1.1 billion. By my analysis, less than 10% of that was actually spent on charity. Of the $1.1 billion, $600 million was tax-receipted donations. As far as I can tell, the amount of charity that has actually been conducted falls short of that by about a half a billion dollars.
In the fall of 2017, I provided my research on this file to the Globe and Mail. One of their investigative journalists, Kathy Tomlinson, reviewed my work and did further research of her own. Her findings were reported in a front-page story that ran in the Globe and Mail in October 2017.
As the Globe and Mail reported, the charity that is at the centre of this monkey business is the CHIMP foundation. My analysis of CHIMP's tax returns finds that CHIMP has granted roughly $100 million to a network of charities. If that money had been spent on charity, that would have been good, but that's not what happened. Instead, those charities regranted most of the $100 million amongst themselves and back to CHIMP.
If I may, I just want to illustrate this because it's hard to understand. CHIMP gave $100 million to a bunch of charities, and that's fine, except that what then happened is that those charities regranted the money, road-tripped it around and around, and then the money went back to CHIMP.
I found another example of this. In fact, the first one I found was actually just $3 million. It was with Tides Canada, a charity in Mississauga that I would characterize as a fake charity because all it did was receive money from another charity in Pawtucket, Rhode Island, road-trip the money to Vancouver, then to Tides Foundation in San Francisco and back to Pawtucket. In the process, this charity in Mississauga issued tax returns for three million dollars' worth of charity in Canada that never happened.
Our whole charitable sector is subject to this type of abuse because of what I would call shell charities. When charities are audited just on a one-on-one basis, this goes undetected, basically. You have to look at the bigger picture to see what's really going on.
I would like to suggest that increasing the disclosure requirements and transparency would be a cost-effective way to reduce the risk and to discourage this type of abuse within the charitable sector.
Another cost-effective measure to discourage fraud would be an online searchable database accessible to the public. In fact, several of these already exist, notably one provided by Mark Blumberg and another by a company called Ajah. Blumberg's is free, while Ajah's is not. While it's very good, it's quite costly and accessible for a fee that most Canadians would find cost-prohibitive. A combination of increased disclosure requirements and a publicly available searchable online database would go a long way to preventing the type of tax fraud scam that, under our current system, is all too easy.
Last, I just want to take a few moments, if I may, to flag for the committee that there are some significant issues with regard to the ultimate outcome of the controversial audits of political activity, which were initiated in 2012 under the previous government, and how these have been handled subsequently by the current government.
In 2016, the CRA reported that 42 charities were audited as part of the so-called political activity audits. In its report the CRA reported that, out of those 42 charities, 41 were not fully compliant. I have a reproduction of the CRA's own diagram. In only one case no problem was found.
When the current government came to office, the characterized these audits as “political harassment” in his mandate letter to the national revenue minister, and the finalization of the political activity audits was suspended. The law regarding limits on political activity has since been changed retroactively. As I understand it, the audits have been or are being finalized under the new law.
In practice, what this means is that some of the charities that would have had their status revoked will be off the hook because the law was changed retroactively. Back in 2012, when the fuss first broke out over the foreign funding of anti-pipeline activism, the charity in the hot seat was Tides Canada, based in Vancouver. Tides Canada has repeatedly denied any wrongdoing, but according to its own financial statements, the CRA audit of the Tides Canada Initiatives Society is still unresolved seven years since it began in 2011. This suggests to me that the CRA did not give Tides Canada an all-clear, as it has suggested. Furthermore, according to Tides Canada's financial statements, it was only audited for 2008 and 2009. This raises questions in my mind about why the charity at the centre of the fuss was apparently not audited for any of the relevant years.
One of the findings the CRA reported was “serious non-compliance” unrelated to political activity, including “undue benefit”. This was what I was concerned about with regard to a payment of roughly $400,000 to the president of an environmental charity. Subsequently, the individual who received this payment, Mr. Gerald Butts, became the principal secretary to . Mr. Butts has confirmed via Twitter that he did receive this payment as severance after he voluntarily resigned.
If the political activity audits were carried out as a form of “political harassment,” as the has characterized them, then of course it would have been correct for the Prime Minister to characterize these audits as such. But as we now know from the results of these audits, as reported by the CRA, this was not the case. This raises questions about why the Prime Minister characterized these audits as something that they were not and why the audits were suspended until the law was rewritten retroactively. From the way these audits were handled, some charities and individuals may have benefited. Some of these charities and individuals have very close involvement with the Office of the Prime Minister and his former principal secretary. Therefore, I believe the handling of these audits raises serious questions that merit answers.
Thank you, Mr. Chairman.
Thank you all who came here to present to us today.
I wanted to, first of all, mention the members who are here from my riding, presenting on Thaidene Nëné.
This has been a park that's been in the making for quite a long time. My involvement through former chief Felix Lockhart was many, many years ago. It's always been amazing to see the number of players who were involved, but the number of governments that had to come together has been really amazing, even from the time of Rona Ambrose's involvement, as the Conservative government representative of the day, to Jim Prentice, and I think John Baird was also involved.
My first question is to ask about how you were able to bring everybody together. We have so many other issues that this model could work on. If this is something that is well supported, it should be able to work in other areas. We have many other things we're working on with indigenous governments, the federal government and the territorial government.
Maybe just in a short answer you could tell me how you were able to bring the interests of everybody in line to get this done.
A good thing always brings people together and Thaidene Nëné is a good thing. Thaidene Nëné has certainly brought, from the indigenous side anyway, the descendants of the ancestors together to pursue the protection of the land of the ancestors. Thaidene Nëné means land of the ancestors.
The process has brought people together, not only for Thaidene Nëné and what we're doing with Thaidene Nëné. We're going to create Thaidene Nëné together and we're all going to benefit from Thaidene Nëné and create a conservation economy around that.
This relationship also translated into a working relationship between the Government of Northwest Territories, the Government of Canada, the Akaitcho Territory—of which Thaidene Nëné is a side table—and the NWT Métis Nation. We are currently in the process of developing the land use plan for the southeast of the Northwest Territories collectively.
We're very close to finalizing the terms of reference for a public planning process, which will build on a draft plan that will be developed by both Akaitcho Territory Government and the NWT Métis Nation. We're developing and building on Thaidene Nëné on what I like to call a land relationship plan for the southeast of the Northwest Territories that will create certainty for all: certainty for investors and certainty for the indigenous governments and their roles and responsibilities. There will be the creation of a management board under the Mackenzie Valley to make decisions on behalf of all in that region.
We are hoping to have a finalized land use plan that's going to contribute to both the finalization of the Akaitcho lands and resources government agreement and the NWT Métis Nation lands and resources government agreement.
Thank you for the question.
The transition of a business from one generation to the next is something that's very near and dear to our hearts at MNP, because we deal with owner-managed businesses quite frequently. This is one of the things they struggle with all the time. How do they transfer the business to the next generation?
In our brief, we have given the example of Marc and Tracy and their bakery. They're trying to transfer this business, which is worth $2.7 million, to their daughter. A lot of unwary people in this situation are going to walk into a tax bill for mom and dad and another tax bill for the daughter. There's going to be double tax on that transition. On a business worth $2.7 million, they could be paying $1.8 million in tax, at Ontario rates, which is very punitive. If they sell to a large consolidator, they are going to have a tax bill of under 10%, because they can get their capital gains exemption, and it could be funded with corporate dollars.
We have been advocating and asking for quite some time for the ability to put intergenerational transfers on an even footing with arm's-length, third party transfers. It is not fair that within a business, we cannot transfer to the next generation without a very punitive tax rate. The very best we can do, with proper planning, is get it to about a 27% tax rate, but that still leaves a lot less money in mom's and dad's hands for retirement than if they had sold to the arm's-length party.
We do know that the government is looking at this, and we applaud that. We think this is very important. It's important to get it right. We don't want to see a situation where we have such stringent, severe requirements that we can't get any businesses to meet the requirements.
We want to make sure that this is flexible enough that businesses can transition to the next generation in an effective manner. It helps keep businesses private, grow the middle class and make jobs for working-class Canadians.
Do you have anything to add to that?
Filing tax returns in Canada has become increasingly complex over time. It's not just the existing government but it's also prior governments that have made things a lot more complex in Canada, and we can see this going back to, say, 2015. There were changes to section 55 that were very complex and it makes it very difficult for many businesses to structure their affairs and look at the best overall corporate structure for their business because there is so much ambiguity in what they do.
There's complexity in structuring, in filing and for individuals. The specified corporate income changed in 2016. We've made a correction for farmers and fishers this year but a lot of other businesses are still impacted by that. There probably were unintended consequences to it. I will touch on one of those in a minute, if that's possible.
We also have complexity even with respect to something as simple as selling a house in Canada. With the changes that have been made to combat some of the issues going on with houses and principal residences in Vancouver, for instance, or in Toronto, those now have to be reported. Essentially, it is very difficult for an individual to file their personal tax return on their own and get it right, with the complexity of today's system.
For instance, I had an email from some person I've never met who found my name on the Internet around the 29th of April asking a big, convoluted question about selling their house. They were asking what to put on their tax return and how to file it. I gave them a recommendation to find an accountant who would help them at that point because it was beyond their being able to do it on their own.
Going back to the specified corporate income, for instance, there are businesses in Canada that are also caught up in these changes that we believe were unintended. Those changes were meant to capture multiplication of the small business deduction.
If a computer sales business, for instance, happens to have a client that is a marketing firm and that marketing firm has, let's say, three business owners, one of whom is related to the owner of the computer company, that computer company could lose access to their small business deduction, and they don't even know it. That's not multiplication of the small business deduction but they've been caught in these rules.
I think there are problems with the complexity and the compliance because it is so complex.
Thank you, everyone, for being here.
Before I get into questions, I want to congratulate you on the establishment of the Thaidene Nëné.
I know it has been a long time coming and it has been a process and not something that you as a first nation have given up on. It takes perseverance and a lot of hard work, so congratulations, Steven, on your negotiation and on its formation. It couldn't have been easy.
One of the things you mentioned was the work you continue to do with mining companies and the importance of mining exploration in NWT specifically, but generally in the north. The extension of the mineral exploration tax credit to the junior miners, to the explorers, if you will, has been very important. I was speaking with some of them last week and heard how important that is to them as they try to find those deposits of the very rich minerals there as we move further and further north.
One of the things that I think is important to point out is that we don't get to our green economy, to the innovation and technology of a low-carbon economy, without that mineral exploration because minerals are so important to that economy. So thank you for the work you're doing and congratulations.
There are many things I want to talk about and I'm not sure about my time. Do I have five minutes or seven?
Okay. This will be fast.
Kim, we've chatted with each other before, and there were a couple of things in your remarks I just want to come back to.
I must say, I like the format of the MNP submission, acknowledging the good work that has been done and recommending some thoughts about where we could take it further.
On the Canada training credit and your paragraph as to what can we do better, the post-secondary education piece, the other things I would note in there are the interest-free six-month period that was added in budget 2019 for students, which also helps parents, and the lowering of the interest rate.
You've used a couple of examples, including a business here in Ontario. I would just note that as we've moved forward with our interest-free period, Ontario has pulled its back. There is sometimes non-alignment between the provinces and the federal government. Where we take a step forward and a province such as Ontario has taken one back, it makes it hard for parents and students to figure out where their opportunities are. I want to mention that.
You also mentioned the housing affordability measures. You made a comment about parents and how parents often help with buying the first home. I'm thinking back to 15 years ago when we helped our daughter buy her first condo in downtown Toronto. She had some RRSP room from the work she had done as a student. We actually lent her the $15,000 to put in her RRSP so she could borrow it back and pay it over the nine years. It sometimes takes a bit of creative thinking, but that is a vehicle for parents to assist, which provides advantage to both the young person or first-time homebuyer gaining that advantage of being able to use the RRSPs.
My name is Francis Bradley, and I am the chief operating officer of the Canadian Electricity Association, or CEA.
CEA is the national voice of electricity. Our members include generation, transmission and distribution companies, as well as technology and service providers from across the country.
The sector employs 81,000 Canadians and contributes $30 billion to Canada's GDP. Over 80% of Canada's electricity generation is non-emitting, making it one of the cleanest in the world. In fact, the Canadian electricity sector has already reduced GHG emissions by 30% since 2005.
Electricity will play an essential role as Canada transitions to a low-carbon economy. The electricity sector is uniquely positioned to help advance Canada's clean energy future, and the measures in Bill help this.
The 2019 federal budget and 2018 fall economic statement included a number of significant measures for the electricity sector.
The budget's measures to encourage the purchase and use of electric vehicles will help electrify the transportation sector—a low-hanging fruit for significant GHG reductions. These come at a time when EVs are increasingly a consumer expectation, including for reasons beyond environmental benefits.
Consumer purchase incentives and business writeoffs will help to get more EVs on the road, and funding to install charging infrastructure in workplaces, apartments and public parking garages will make sure that everyone has a place to charge them.
The budget's investment in energy efficiency measures in buildings, which will be administered through the Federation of Canadian Municipalities, is a significant step forward. Our sector is always very happy when customers can find new ways to use less of our product and use it more efficiently. Doing so has real advantages for the users of the building, but it also reduces the need and the pressure for expansion of electricity grids. A kilowatt not used is cheaper than producing a new one.
Our industry was also pleased to see the budget include the creation of a new Canadian centre for energy information, a central repository for national energy data that will compile various sources into a single, easy-to-use website.
In total, almost $1.5 billion was included in new spending on these important initiatives.
Cybersecurity, though, is also receiving significant funding in the budget. There's an ever-increasing threat from cyber-attacks. We're seeing that in our sector, and this helps us keep pace.
Beyond the budget, the CEA is very pleased to see the government move forward with its first piece of regulatory modernization legislation, particularly given that it includes amendments to the Electricity and Gas Inspection Act that will facilitate the expansion of new technologies such as EV fast chargers and adaptive streetlights.
It's no secret that technology often moves much faster than legislation, and electricity meters are an example of this.
The CEA is eager to work with Innovation, Science and Economic Development Canada and Measurement Canada to prioritize some early areas of focus in order to enable technologies such as EV DC fast charging that are essential to Canada's clean energy future. This will help Canadians to make the clean energy choices they want to make.
In summation, Bill takes steps forward that allow Canadians to make choices that are more sustainable, take advantage of new technologies, and can help reduce costs and increase convenience. Central to all of these is Canada's safe, sustainable and reliable electricity system. We look forward to working with government to continue to leverage these advantages.
Thank you very much, Mr. Chair.
Thank you, all.
We are pleased to have this opportunity to explore budget 2019, especially the tools that it provides to municipal governments to help them build a better life for families and workers in Canada.
I'm Carole Saab. I'm the head of policy and public affairs for the Federation of Canadian Municipalities. I am joined today by my colleague, Chris Boivin, who is the managing director of FCM's green municipal fund.
FCM's 2,000 municipal members represent more than 90% of all Canadians. These are the governments that are closest to people's everyday needs and challenges. When the federal government works with them directly, municipalities deliver cost-effective solutions that work. That's why successive governments have taken steps that empower municipalities to do more for Canadians, steps like allocation-based public transit funding. That's already empowering cities to lead major system expansions.
Even so, budget 2019 stands out as a turning point. The budget takes our federal-municipal partnership and fundamentally elevates it to build better lives.
This budget strengthens our federal-municipal partnership because it's the surest way to improve the living conditions of our fellow Canadians.
For instance, there is this budget's unprecedented investment in rural broadband infrastructure. This implements the urgent, front-line advice of FCM and our rural members.
I'll note that Bill enacts legislation for the national housing strategy, a generational priority for our communities.
This budget also builds on the gas tax fund, or GTF, transfer. FCM worked with successive governments to launch the GTF, then make it permanent and ultimately index it with a 2% escalator. It's our most reliable infrastructure funding tool. Municipalities can turn every dollar into real outcomes, such as better roads, bridges and public transit; better water, waste and energy systems, and better places to live, work and raise our families.
In Ontario's Clearview township, GTF funds powered a new affordable transit service linking residents to grocery stores, parks, retirement homes, schools and clinics.
In Granisle, B.C., a new biomass boiler is reducing emissions and saving money by heating the village office, arena, elementary school, curling rink, fire hall, public works office and tourist information centre.
The City of Terrebonne, Quebec, is building a modern and safe pedestrian and cycling trail next to a busy street, thanks to predictable long-term gas tax funding.
The gas tax fund is proof that when you put tools directly in local hands, we build better lives for Canadians.
The GTF's one Achilles heel is its scale. Every year it leaves key projects unfunded. Budget 2019 recognizes this by doubling this year's GTF transfer to move more local projects forward. In short, this budget doubles down on working directly with municipalities to achieve national economic and quality-of-life objectives. There are no delays or roadblocks. This is direct fuel for projects that build better lives for Canadians.
This same principle, which underlies the objective of providing tools directly to Canadians, is at the heart of a second element of budget 2019. Over the past two decades, the Federation of Canadian Municipalities' Green Municipal Fund, or GMF, has funded 1,250 local sustainable development projects. These projects have eliminated 2.5 million tons of greenhouse gas emissions and have enabled the citizens of our country to enjoy a safer and more affordable life.
I should also point out that we have achieved these GMF results while preserving every dollar received from the federal government.
Budget 2019 substantially scales up FCM's mission to drive cost-saving energy efficiency across Canada through the green municipal fund, and it extends FCM programming that boosts local asset management capacity. Practically, this means greener community buildings that cost less to run, from social housing to libraries to local arenas. It also means making it more affordable for hard-working families to retrofit their own homes through smart local financing programs that will also reduce their energy bills. It means good jobs in communities across Canada. Once again, it means working directly with municipalities to get things done for Canadians.
Naturally, we want to see the budget implementation act move forward so that important work can move forward, but we want to see the principle that this budget implements continue to guide Canada's federal government moving forward. That's the principle of working together directly as orders of government to build better lives.
On behalf of our president, Vicki-May Hamm, and FCM's 2,000 members, I thank you very much for the opportunity and look forward to taking your questions.
I'm Brendan Marshall, vice-president, economic and northern affairs.
I used to work for an MP so I appreciate the work that you do. Sometimes this can be a misunderstood place, but rest assured, I think the work that you're doing is very important for our country.
Thank you for the opportunity to appear before the committee and participate in this important pre-budget consultation process.
The Mining Association of Canada, or MAC, is the national voice of Canada's mining and mineral processing industry, representing more than 40 members engaged in exploration, mining, smelting and semi-fabrication across a host of commodities.
In 2017, mining contributed $97 billion to Canada's GDP, employed 630,000 workers and accounted for 20%, or $97 billion, of Canada's overall export value. Proportionally, mining is the largest private sector employer of indigenous peoples. Canada leads global mining finance, with the majority of the world's public mining companies listed on the TSX.
Historically, the sector has helped build Canada, both literally and figuratively, as it holds an important space in our cultural fabric. Canadian mining is broadly recognized internationally for best practice, and our knowledge and expertise are widely sought.
In recent years, however, the sector has faced challenges in attracting investment. The value of total projects planned and under construction from 2018 to 2028 has reduced by 55% since 2014, from a total of $160 billion down to $72 billion. Only four new mining projects were submitted for federal environmental assessment review in 2018. They were all gold mines.
Over the last five years, Canada has lost more ground than it has gained in the commodities for which it is the top five global producer. In 2017, capital spending in the Canadian mining industry accounted for 4.4% of Canada's total. That's a value of $11.7 billion. That's down 0.5% year over year, and it's the fifth consecutive year that capital spending has fallen.
At a time when global mining investment is increasing, Canada is not keeping pace. While much work remains to be done, budget 2019, building off measures in the 2018 fall economic statement, proposes several measures to begin to address the challenges our sector is facing.
In Canada's north, mining is the largest private sector driver, directly employing 8% of the total territorial population. However, it is much more expensive to operate. It costs two to 2.5 times more to build the same precious or base metal mine in the north than in a centrally located region, and 70% of this cost differential derives from the infrastructure deficit.
The future of Canada's mining industry lies increasingly in remote and northern regions but will remain unrealized unless we close the infrastructure gap. Commitment to renew the allocation of the national trade corridors fund to arctic and northern regions by $400 million is good news and a direct response to a MAC recommendation.
Further, the creation of a universal broadband fund, capitalized at $1.7 billion and further leveraging more than $3 billion through the Canada Infrastructure Bank, is also welcome. Enabling universal high-speed Internet access in rural, remote and northern communities and industries helps to improve operational efficiencies at mine sites and reduce costs.
On the innovation front, the proposed immediate tax deductibility of certain zero-emission vehicles is a positive first step to further enabling electrification in the mining industry. Looking forward, MAC commits to working with Finance Canada and Environment and Climate Change Canada decision-makers to broaden the provision to include all vehicles deployed at mining operations, including above-ground and below-ground heavy equipment.
Further, $100 million to the strategic innovation fund in support of the activities of the Clean Resource Innovation Network, or CRIN, is welcome. This investment will support groundbreaking clean tech and emission-lowering solutions leading to cleaner energy production from source to end use.
On the investment competitiveness front, Canada's tax regime has fallen behind international competitors in recent years. Budgets 2012 and 2013 reduced or eliminated several direct and indirect mining-related tax credits. Most recently, the U.S. Tax Cuts and Jobs Act reforms significantly reduced Canada's mining tax competitiveness vis-à-vis the U.S.
The 2018 fall economic statement proposed several measures that will enhance the investment competitiveness of Canada's mining and metal manufacturing sectors. These included the accelerated investment incentive, which will enable miners to write off three times the eligible cost of newly acquired assets in the year the investment is made; extending the mineral exploration tax credit for a five-year term, bringing greater investment certainty for early-stage mineral exploration; and allowing businesses to immediately write off the full cost of clean energy equipment.
While MAC supports continued improvements to Canada's mining tax competitiveness, including bringing dividend withholding tax in line with our competitor jurisdictions, more than anything, the measures establish a positive platform to build from.
Thank you for the opportunity to speak. I look forward to answering any questions you may have.
Good afternoon, committee members. Thank you for the opportunity to appear before this committee. My name is Kim Moody. I'm a chartered professional accountant and director of Canadian tax advisory services at Moodys Gartner Tax Law in Calgary. I have a very long history of serving the Canadian tax profession, with a variety of leadership positions.
Bill , as you know, is a 367-page bill that contains measures that are both tax and non-tax in subject matter. Accordingly, my brief comments will be restricted to my practice area, which is tax, and specifically to the tax content or lack thereof of Bill C-97 as it relates to the March 19 budget.
From a tax perspective, there was some content in the budget that was good, like the changes to the specified corporate income rules; amendments to the change of use rules in section 45 of the Income Tax Act; and positive changes to the registered disability savings plans, although much more work needs to be done in this area especially as it relates to the use of trust for people with disabilities.
However, I believe that the budget and Bill are noteworthy for two broad reasons: one, what the budget and Bill C-97 do not contain, and two, the journalism tax incentives. Accordingly, I'll restrict my comments to those.
What do the budget and Bill not contain? The first thing is targeted and broad measures to deal with competitive concerns. While some have argued vigorously that the accelerated tax depreciation numbers for M and P equipment and certain green equipment and accelerated first year depreciation claims introduced in the fall economic update have solved or gone a long way to competing with our U.S. friends who are benefiting from a massive package of tax reforms, I would argue strongly that is not the case.
I live and see it every day with Canadian private businesses scrambling to remain competitive. Many are expanding their businesses into the U.S. and bringing capital with them. After 11 months of the government saying it is not going to respond in a knee-jerk fashion to U.S. tax reform, the fall economic statement measures, which introduced accelerated depreciation measures, were disappointing.
As Jack Mintz and Philip Bazel wrote in the Canadian Tax Journal last month:
Overall, a much deeper corporate and personal tax reform was needed to deal with the many competitiveness issues raised by the US tax reform for Canada. Accelerated depreciation focused only on a narrow set of issues, and not necessarily the right ones.
I agree. Many were waiting for additional measures in the March 19 budget, only to be disappointed again. There was nothing. To be clear, the package of tax reform measures released by the U.S. is historical in its breadth and in its impact to U.S. businesses. By any measure, including my anecdotal experience with my firm's clients, it is significantly impacting in a negative way Canadian businesses' ability to remain competitive.
Corporate and personal tax rate reductions should have been at the top of the list of considerations for competitiveness responses.
The second highlight-reel omission from the budget and Bill was the fact that there was no announcement with respect to the government taking the large initiative to undergo comprehensive tax review and reform.
As you know and I'm sure you've heard many times, numerous credible bodies like CPA Canada, the Canadian Chamber of Commerce and others have been requesting for a long period of time a fresh and comprehensive look at how Canada raises necessary revenues to provide good government. I agree. The last time Canada had a comprehensive review of its tax systems was the Royal Commission on Taxation, which released its landmark six volume report with recommendations in 1966 after approximately four years of studies.
I'm sure some of you were not even born when that commission released its report. I certainly wasn't. Such recommendations were studied and debated for a lengthy period following its release, and it ultimately was the impetus for many of the foundational changes introduced in 1972 tax reform.
While limited form studies—and an embarrassing attempt at reform that arose from the July 18, 2017, private corporation tax proposals—have been completed since 1972, nothing comprehensive has been undertaken since the royal commission. Accordingly, since 1972, our Income Tax Act has become a patchwork quilt of changes. However, a patchwork quilt can quickly become busy and complex, and there is no doubt that our current income tax statute is just that: overly complex and busy. It's time for a fresh quilt.
To those who say to be careful what we wish for or, worse yet, Canada is not ready for comprehensive tax review or reform, I say this: Canadians are a lot smarter and well-intentioned than you are giving them credit for. The average Canadian simply wants a tax system that works for all. It's time that this important initiative be undertaken and it was extremely disappointing that the budget did not address this.
Number two is the journalism tax incentives. As you know—and I won't repeat the budget measures because you all know them—these measures are horrible and a threat to our country's free press, given the likelihood that some of our country's media will likely be incentivized to receive these tax goodies and perhaps cater to big so-called donors.
As respected journalist Andrew Coyne stated in his March 20, 2019, article in the Financial Post about these measures, “There are any number of objections to the government getting into the game of propping up failing news organizations: that taking money from the people we cover will place us in a permanent and inescapable conflict of interest”, and he goes on to criticize. I very much agree.
Can you not see how dangerous this is and how littered with problems these so-called incentives are, as are having a so-called independent panel to pick winners and losers and using an overly complex tax system to administer these indoctrination instruments? Our charitable sector already has significant tax issues, as we heard from the first panel this morning, and is long overdue for a thorough review and rethink. These incentives will add a new class of charity that will no doubt compound these problems.
While I acknowledge that our country's journalism industry is certainly struggling and that Canadians need to have unbiased and truthful news articles provided to them, perhaps a thorough review of what other countries around the world are doing to try to protect, support and preserve this crucial industry should be done before these poorly thought-out proposals are implemented. It seems to me that the crucial aspect that has harmed our country's journalism industry tremendously is the fact that Internet giants such as Google and Facebook have sucked away tremendous advertising dollars from our country's newspapers without producing original content.
Is it time to target these companies like France has? France has recently proposed a 3% tax on the French revenues of Internet giants. When the proposals were released, the French finance minister stated that the estimated tax will raise about 500 million euros, but that should increase quickly. He also said the tax will not affect companies that are directly selling their own products online. It will mostly affect companies that use consumers' data to sell online advertising.
The French finance minister stated, “This is about justice. These digital giants use our personal data, make huge profits out of these data...then transfer the money somewhere else without paying their fair amount of taxes.” It's hard to disagree that there is a problem with Internet giants using personal data to then deploy online advertising. Beyond the obvious privacy concerns, such methods greatly harm our Canadian journalists.
Will a tax like that introduced by France solve the problems facing our country's journalism industry? Likely not. A Wall Street Journal article from last weekend highlights how dire the situation of the newspaper industry is in the United States. It seems to me that the Canadian industry is in similar dire straits. Accordingly, a targeted response that deals with the root causes of the industry issues is a better response.
With respect to the current journalism tax incentives in Bill , these so-called incentives should have no place in our democracy.
Thank you for your time. I'd be happy to answer any questions.
Good afternoon Chair and committee members.
I'd like to start by acknowledging that we are on the lands of the Algonquin people.
I'm Lisa McDonald, executive director of the Prospectors and Developers Association of Canada, otherwise known to many of you as PDAC. I'm joined here today by my colleague Lesley Williams, director of policy and programs.
Thank you for the opportunity to offer comments on behalf of the mineral industry. PDAC is the national voice of Canada's mineral exploration and development sector, representing nearly 8,000 members. Our work centres on supporting a responsible and competitive mineral industry.
Canada's mineral exploration and mining industry generates significant economic and social benefits in remote communities, indigenous communities and cities, employing over 600,000 workers and contributing $96.5 billion annually to the GDP. It is the largest private sector industrial employer on a proportional basis of indigenous peoples in Canada, and a key partner of indigenous businesses.
I'd like to provide a brief overview of mineral exploration in Canada. Mineral exploration is a staged process of information gathering with the hopes of discovering an economically viable mineral deposit. Junior exploration companies do the bulk of this high-risk, high-reward, grassroots exploration work in Canada, which leads to new discoveries. They find the new mines of the future. These companies are a key feature of the mining ecosystem, accounting for upwards of 70% of all discoveries made in Canada. Essentially, without new discoveries through exploration, there will be no new mines.
Junior exploration companies are small businesses. They operate projects on limited budgets and timelines. Most do not generate revenue, and fund their activities by raising financing from investors, primarily by issuing shares.
The Canadian mineral industry faces strong global competition for investment dollars. Sourcing investment to fund exploration activities has become increasingly challenging. Financing is quite volatile and difficult to come by due to increasing competition, and it has been in general decline for a number of years.
A variety of factors affect the decisions made by investors about where to invest in projects, and by companies about where to explore and mine among competing jurisdictions.
As an industry that operates across the country, generating significant economic impact and social benefits, it is critical that the mineral sector has the means to responsibly capitalize on Canada's natural resources while also being able to compete globally.
In conjunction with many other policy measures, effective fiscal policies in support of a strong mineral exploration and mining sector will help to support Canada's mineral industry competitiveness. One of these fiscal tools is the mineral exploration tax credit, METC. The inclusion of a five-year renewal in budget 2019 was widely celebrated by the mineral sector. As you may know, this is the first multi-year renewal of the METC since its inception in 2000, and something that PDAC has long championed and advocated for.
Five-year METC renewal will provide longer term stability for exploration companies, including multi-year exploration program funding and planning. Exploration companies and investors need certainty that they can finance not only the current year of their exploration programs but also any subsequent exploration necessary to fully scope the mineral potential of a particular property. It will also provide a sense of stability for suppliers and service providers, as well as for the cities and northern and indigenous communities across Canada that depend on exploration and mining for growth, employment opportunities and local trade.
Flow-through shares and the METC have proven to be effective tools in raising financing over the past 18 years, including during difficult times. We can see the manifestation of the success of these fiscal tools through the many exploration projects financed by flow-though financing that later became mines: the Éléonore mine in Quebec, the New Afton gold mine in British Columbia, and the Meadowbank mine in Nunavut, to name a few.
Furthermore, the future of Canada's mineral industry lies increasingly in remote and northern regions. These regions experience economic and geographic circumstances that impact their ability to harness the vast potential for mineral development in many ways, particularly with respect to costs.
Measures included in budget 2019 that are targeted towards northern Canada are important. We welcome additional funding for northern economic development programming, and measures to enhance skills training and education, particularly for indigenous peoples.
Also of interest is the inclusion of commitments in budget 2019 to invest in various types of infrastructure, for example, the national trade corridors fund and hydroelectricity in the Northwest Territories. Due to a significant infrastructure deficit, it can cost up to six times more to explore and 2.2 times more to build new mines in remote regions. As a result, a disproportionately high percentage of known mineral deposits also remain undeveloped in Canada's territories, compared to non-remote regions.
Challenges related to the high costs of operating in remote and northern Canada must be addressed to support mineral investment and project advancement and to enhance economic development opportunities for northern and indigenous communities. It will take a long-term, well-funded, coordinated infrastructure plan to address the lack of transportation and energy infrastructure in the north. This would truly unlock the potential of the region and enhance economic activity.
We would be remiss if we did not note that while fiscal policies can help to boost mineral industry competitiveness, getting other legislative and policy mechanisms right, such as the proposed impact assessment act and the Canadian ombudsperson for responsible enterprise, is absolutely critical for the success of our sector. These policy decisions must work in conjunction in order to ensure that Canada does not lose out on development opportunities and associated benefits to more competitive mining jurisdictions.
Finally, I would like to thank this committee for including the recommendation of a multi-year extension of the METC in your report to the . No doubt the consideration by this committee went a long way to securing this multi-year renewal.
Thank you for the opportunity to appear here today. We'd be pleased to answer questions.
To make a long story short, companies don't invest where they don't have confidence they can put in a project. If they have confidence they can put in a project, they don't invest where they don't think they can make money off building or operating one.
There are a number of points made about tax competitiveness here, and I think in many respects they're good points, but the nuance is really important.
My colleague and co-panellist, Kim, mentioned that we're at a significant disadvantage with respect to the U.S., and I think in some sectors that's very true. In the mining sector, we're not as much as a competitor with the United States of America as we are with other gold mining jurisdictions, so there's a limitation to the degree and extent to which that comment is directly applicable to us. It is applicable to oil and gas, absolutely. We also represent oil and gas members, so we're sensitive to that.
I think that the measures that were announced in the fall economic statement are welcome because for a long time there was so little attention given to improving the competitiveness of Canadian industry vis-à-vis the tax system.
In budgets 2012 and 2013, we saw the removal of indirect and direct mining tax credits. I think those measures that were put forward in the fall are a recognition that they need to do more. Are they enough? No, I would not suggest that in and of themselves they're enough to turn the tide of investment leakage out of this country in mining, oil and gas and other sectors as well, but I think it's a positive first step.
When we responded to that, and we did respond to that positively, we did so in the context that there's more work to be done, and we want to make sure that we do that with governments to make sure that our sectors remain competitive going forward. I don't think anybody sitting around this table, regardless of their political stripe, wants me to come back next year and say we've lost another $10 billion, $15 billion or $20 billion in projects, because I've done that year over year consecutively over the last five years.
Let's work together to avoid that happening going forward.
Thank you very much. I want to put a question to Lisa, from PDAC, and Francis, maybe you could chime in as well.
The Governor of the Bank of Canada was here earlier this week, and one of the things he talked about was foreign direct investment. I want to highlight that a couple of months ago, Bloomberg pointed out that FDI rose to $51.3 billion last year, as reported by StatsCan. That was the highest annual total since 2015.
Even as investment in the oil sands has somewhat levelled off, investment is coming in to other sectors of the economy. I'd like to talk a little bit about those sectors, one being relevant to both PDAC as well as the Canadian Electricity Association.
At PDAC, just a few months ago, there was, for the first time ever, a discussion between mining and the nuclear sector around the deployment of small, modular reactors as a form of energy, removing diesel from the mix. As we know, there are mines that have become electrified in Canada.
In your submission you spoke about the strategic innovation fund and how that will help move that along in terms of cleaner energy production for mining. There was a really interesting meeting attended by about 150 people, including lawyers, people from the finance sector, mining and nuclear, in a room, in Toronto, for the first time ever, talking about how we can electrify the mining sector.
Lisa, perhaps you could talk about how you see that helping the.... I know the METC was huge for the mining sector, but this is also a game-changing next step. Francis, you can talk about electrification.
Yes, we were on the panel together, Kim.
We used to be in a NIMBY space and then that moved to BANANA: build absolutely nothing anywhere near anything. MAC underscores again, unequivocally, we are agnostic about fuel type. We do not discriminate on the products extracted from this country. We think we need to have all solutions on the table. We have a world-class nuclear industry, from extraction in Saskatchewan through to refinement in Ontario, through to generation of power in a number of different jurisdictions.
The advent of small modular nuclear reactors presents a tremendous opportunity for current off-grid circumstances to have lower-cost clean power. The benefits from that are many because it is virtually emission-free. It is lower cost. You can bring that to parts of the country that, if we wait at current timelines, will probably not see a connection to a piece of energy infrastructure in my lifetime.
The potential is huge. It has to be managed appropriately. We support a strong role for the Government of Canada in that. I understand that, at this time, prototypes of this technology are slated to be pilot tested at Chalk River facilities. MAC will remain involved in that.
We've also strongly encouraged the government to make sure there is a significant indigenous engagement as part of that pilot project, and through the entire application of this endeavour, wherever it may lead.
Well, we can go the way of trickle-down economics, or we can go the way of investing in people.
The managing director of the International Monetary Fund, as you know, is Christine Lagarde. Speaking favourably a few years ago, and this continues with the IMF's assessment of Canada, she said, “When you open a big construction site, you have people working, you have income being paid, you have income being consumed, so you enter into that virtuous cycle which can be net positive.”
My question is for the FCM. Thank you very much for being here and for the work that you do.
We are seeing delays by the provincial government of Ontario in rolling out infrastructure investments. We want to partner. We want to work with municipalities. Indeed, we want to work with the Ford government to fund infrastructure for Canadians. But, as I say, we see delay after delay in the assessment of projects that have come in from municipalities, and ultimately decisions on those applications.
How critical is it for the Ontario government, for all provincial governments—I'm from Ontario, so I'll focus on the Ontario government—to make these decisions and keep the ball rolling?
I think, to make a long story short, there is tremendous potential, and while infrastructure is a barrier, it's most certainly not the only one.
I think one of the barriers is giving northerners a greater level of autonomy to make decisions on what they want for their own future. Historically, when we looked at infrastructure funding programs, the north has been unduly limited through per capital allocation formulas.
One of the things that the current government should be commended on is the departure from that and having a per capita plus formula, and also specific northern carve-outs for infrastructure, allowing our region of the country to participate on a more level playing field in competition for limited pools of resources.
I think even beyond the policies and the programs—and we could talk about that for a long time today, which I am happy to do, not only as a professional but as a personal advocate for responsibly developing northern Canada—we need to move away from having this Garden of Eden mentality about the north in people's minds in southern Canada.
It is not a massive expanse of 3.4 million square kilometres of parkland. It's people's homes. It is a place where people are born and raised. It's where people's families are. It's where people raise their children. We cannot be continually unilaterally making decisions about what that part of the country means to us without elevating the perspectives of the people who live there to a level playing field.
I would say that is a really important piece of balance in this discussion—