Thank you, Mr. Chair and honourable members.
We are pleased to be here before your committee today.
As we all know, Canada is operating in a global economy that is facing increasing uncertainty.
Slower growth, environmental sustainability, aging demographics and an incredible pace of technological change are just some of the factors that make the job of supporting growth very challenging.
A considered view of policies in other jurisdictions suggests that microeconomic conditions at the firm and industry level need a focused approach, building on strong macroeconomic fundamentals of sound monetary and fiscal policy and competitive general tax rates.
The current structure of our support for business innovation requires modernization to generate greater impact and allow for the flexibility needed to succeed in the challenging global innovation race.
This is the policy direction that the government has been pursuing through the innovation and skills plan.
Over the past four and a half years, our department has led and implemented new initiatives under an innovation agenda to create better jobs, spur cutting-edge technologies and support a culture of innovation across all sectors.
Our department led a broad engagement with Canadians to understand the challenges and drivers of innovation.
What we heard throughout this process was that there were three areas where the government could make a difference.
The first area was equipping Canadians with the skills they need to succeed in the innovation economy, both in terms of developing talent within Canada and attracting and retaining global talent.
The second area was to support technologies by building world-leading clusters, establishing business innovation partnerships and enhancing science excellence.
And, finally, to support and invest in companies to help them scale up and become leaders in global markets.
These were the lenses used to align policy work on where Canada needed to make changes to improve Canada's innovation performance.
With that in mind, the government has focused on equipping Canadians with the skills and access needed to succeed in the digital economy. CanCode, computers for schools and connect to innovate are just a few of the programs supporting that.
To put those skills to use, support was provided to Mitacs to create 10,000 paid internships annually so it could help Canadian students to better prepare for the STEM jobs of tomorrow and bring new talent to Canada.
To respond to the critical talent needs of Canada's high-tech sector, our department helped support the creation of the global talent stream of the global skills strategy, making it easier for companies to recruit in-demand workers from around the world.
To make the most out of the skills and talent base, it was recognized early on that government needed to play a convenor role in bringing the players together.
Partnerships are key to any successful innovation ecosystem, and the evidence supported that we had to improve our rate of collaboration between large and small firms, researchers and other players in the innovation ecosystem. Through the innovation superclusters initiative, we are building ecosystems that will bridge the gaps from science to commercialization, to investment to scale-up, to help Canada grow and compete on the world stage.
Smaller businesses, in particular, have been a key focus of these measures.
Through the innovation superclusters initiative, anchor companies are bringing SMEs into large supply chains, further strengthening the backbone of Canada's economy. Further, in support of SMEs, we studied other jurisdictions and found that when the government acts as a first customer, start-ups flourish and more innovative products are developed. Therefore, the government decided to expand the market for innovation itself, launching the innovative solutions Canada program to encourage innovation and support early-stage research and development and to test late-stage prototypes from Canadian innovators and entrepreneurs.
All of this progress, of course, rests on a foundation of research and scientific excellence that give rise to the innovative ideas of tomorrow.
That is why the government has made significant investments in science.
This support for scientific research is leading to new products and improvements to existing ones, and is generating the talent and new ideas that find their ways into companies, jobs and economic growth.
Companies looking to scale up into globally competitive companies that export and operate at the cutting edge of innovation need a clear point of entry to a streamlined suite of relevant government programs that meet their specific needs.
That is why, as part of the innovation and skills plan, the government undertook a whole-of-government review of business innovation programming. One outcome of the review was to cut the number of programs by two-thirds. Overall funding for direct measures was also increased.
And to make it easier for SMEs and high-growth firms to navigate these programs, we created the innovation Canada platform.
Innovation Canada enables Canada's innovators and entrepreneurs to find the federal, provincial and territorial programs that will help them grow and innovate.
We have also improved services for early-stage innovators and high-growth firms by doubling the number of innovation advisors.
In partnership with other government officials, these innovation advisers offer the accelerated growth service, a whole-of-government advisory service delivered directly in boardrooms, stores, plants and communities across Canada.
Another of the key outcomes of this review was the creation of a streamlined business innovation program in our department. It's called the strategic innovation fund.
It supports projects that have the potential to help companies grow and strengthen Canada's position in industries like automotive, aerospace, clean tech, digital technologies and life sciences.
Of course, accessing venture capital has been a persistent challenge for many Canadian firms that are ready to take the next step.
That is the reasoning behind the $450-million venture capital catalyst initiative, which makes that all-important late-stage capital more accessible
There is strong evidence that foreign investment infuses companies with fresh capital investment, introduces new technologies and provides Canadian companies with access to global value chains. As a consequence, programs were introduced to secure critical investments by multinationals.
Canada needs a clear path for growing larger, globally competitive companies.
By helping firms attract investments, scale up and access federal programming, the innovation and skills plan established a focus on execution and new policies to build momentum, working with the private and public sectors.
We are always looking at new approaches to improve our efficiency and effectiveness, and to provide the tools that businesses need to succeed.
We know that there is no one answer and that it is important to debate and assess what is the right approach for Canada.
We look forward to your report and interest in how supporting businesses plays a part in pursuing long-term prosperity.
Thank you, Mr. Chair.
It's important to have a context for understanding the discussion, which is economically focused, but there are some big picture issues that I think ought to inform the discussion.
If you could provide data that lets us know what unemployment was at 2015 and where it is now, along with the debt-to-GDP ratio and where that ranks, where Canada ranks in the wider G7 on that measure, and the number of people who have been lifted out of poverty since 2015, I think that would help the committee from a big picture perspective in terms of establishing context.
There is another important question to be asked here. It has been hinted at, but we haven't delved into it in a very direct way.
Mr. Poilievre opened up questioning, and Mr. Cooper followed. If some around the table question the philosophy behind investing when governments take the decision to invest in business, that is actually curious, because in 2008 the then Conservative government invested $350 million in Bombardier. However, I leave that aside and maybe my colleagues would care to offer an explanation at a later time.
The question in my mind is not why governments invest. They certainly do make the decision to invest. What would happen if governments did not invest? That's a crucial question.
Ms. Johnson, you just cited figures under SIF. You said that 60,000 jobs have been created or maintained, or at least that's the projection. Is that correct?
In the Library of Parliament paper that was prepared, there is a chart on page 7 that outlines how we compare with our major competitors in the G7. I think that's an important chart for members to look at. It shows that we are the fifth-lowest in the G7 following France, the United Kingdom, the United States and Italy. I think that's a factor that we need to consider as well.
Ms. Johnston, I think there were several questions that perhaps you could provide further information on. Mr. Cooper asked for a list related to a particular project that he was talking about. You could provide that to the clerk. I believe Mr. Fragiskatos had a question, if finance can provide it, on the unemployment and debt-to-GDP ratios.
There's been a lot of discussion here on cost, taxation and investment. I wonder, Mr. Davies or someone, if you could give us further information on maybe the comparative return on strategic public investments, if there's a way of doing that, because it's always a question: Is government getting a return for the dollars spent on investment in a number of areas? I think it would be helpful to us if you could find some way to give us your perspective on the comparative return on strategic public investment. Please provide what you can.
With that, I want to thank each and every one of you for coming forward.
We'll take a five-minute suspension while we get ready for the next panel.
Thank you very much.
Mr. Chair, thank you for this opportunity to appear before your committee to discuss our audit reports on fossil fuel subsidies. Joining me at the table is Heather Miller, the principal who was responsible for our most recent audits on this subject.
Fossil fuels are a non-renewable source of energy, including coal, oil and natural gas. While playing an important role in Canada's economy, they can have a negative impact on the environment and on the health of Canadians.
In 2009, Canada and the other G20 countries committed to phase out and rationalize inefficient fossil fuel subsidies. In November 2015, the instructed the and the to work together to fulfill our G20 commitment and phase out subsidies for the fossil fuel industry over the medium term.
In June 2016, Canada committed to phasing out inefficient fossil fuel subsidies by 2025. The Department of Finance was responsible for identifying the tax measures covered by the commitment, while Environment and Climate Change Canada managed the process to identify non-tax measures.
We recently presented three reports on this issue: one in 2017 and two in 2019. The audits examined whether Finance Canada and Environment and Climate Change Canada supported decision-making in order to meet Canada's commitment to phase out inefficient fossil-fuel subsidies.
In 2017 and 2019, we asked the departments to explain how they defined “inefficient fossil fuel subsidies” and whether they had identified inefficient tax and non-tax subsidies. Without a clear definition, the departments cannot identify which fossil fuel subsidies are inefficient and which should be considered for phase-out.
ln 2017, we found that the Department of Finance Canada had not defined what an inefficient fossil fuel tax subsidy was, nor could the department tell us how many there were. At the time, we could not provide assurance that the department analyzed the social, economic, and environmental aspects of all tax measures to support informed decision-making.
As a result, we followed up on this issue in 2019 and found that the Department of Finance Canada did not have a clear and meaningful definition of inefficient. We also found that, although some tax subsidies for fossil fuels were eliminated, the department's assessments focused almost exclusively on fiscal and economic considerations. lt did not consider how economic, social, and environmental factors, which are the components of sustainable development, were integrated into the decision-making on fossil fuel subsidies over the short, medium, and long terms.
I would like to turn now to Environment and Climate Change Canada.
In 2017, the department developed a plan to guide the initial stages of its work. However, it did not know the extent of federal non-tax measures that could be inefficient fossil fuel subsidies. In 2019, the department's work to identify inefficient non-tax subsidies for fossil fuels was still incomplete and not rigorous.
The department considered only 23 of more than 200 federal organizations to compile an inventory of potential non-tax subsidies. The department did not include all regulatory organizations with mandates in the fossil fuel sector, nor did it include all research granting organizations or publicly funded projects. In our view, this is partly because the department used unclear definitions to guide its determinations.
Without having clear definitions of inefficient fossil fuel subsidies, and without providing decision-makers with advice that is based on complete assessments, the departments cannot ensure that they are providing the support needed for Canada to meet its commitment by 2025.
The Department of Finance and Environment and Climate Change Canada did not agree with our 2019 recommendations to clarify their definitions of “inefficient”; however, Environment and Climate Change Canada did agree with our other two recommendations on the identification and assessment of potential subsidies.
Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.
Good afternoon Mr. Chair, vice-chairs and members of the committee. Thank you for the invitation to appear before you today, our first official appearance of the 43rd Parliament before this committee. We are pleased to be here today to discuss the committee's study on corporate subsidies.
As you mentioned, Mr. Chair, with me today I have Jason Jacques, director general, casting and budgetary analysis. I take credit for the good work and often assign blame to him for mistakes we might make. It hasn't happened yet, but if it does, that's a big part of the arrangement Jason and I have.
Under the Parliament of Canada Act, I am mandated to support Parliament by providing analysis of macro-economic and fiscal policy for the purposes of raising the quality of parliamentary debate and promoting greater budget transparency and accountability.
Some of you may know that the act also states that this committee can request that I undertake research into and analysis of matters relating to the nation's finances or economy. This special legislative provision is only available to the four committees listed in the act, which in addition to this committee, include the Standing Senate Committee on National Finance; the House of Commons Standing Committee on Public Accounts; and the House of Commons Standing Committee on Government Operations and Estimates.
In the 42nd Parliament, this committee benefited from this legislative provision by passing a motion to engage my office to prepare a regular economic and fiscal outlook. These types of motions not only allow my office to provide advance notice of the publication to facilitate committee scheduling and follow-up but also more importantly allow us to share our reports with committee members under embargo prior to publication, which provides members with the opportunity to conduct early in-depth analysis and review.
Jason and I will be pleased to discuss any suggestions you may have regarding how my office can best serve and support the work of this committee for this study and throughout the 43rd Parliament.
Although my office has not published any specific analysis of corporate subsidies, Jason and I will be pleased to answer your questions on this topic or any other issues of interest to the committee.
Thank you to all of the witnesses for being here today.
Mr. Giroux, I'll start with you or Mr. Jacques. Either of you can probably deal with this.
We heard from other witnesses today on some specifics, For example, BlackBerry received money from the federal government towards subsidy of a larger program that they put capital into. The argument was that, in the work plan or the application that was put forward, there would be jobs retained or added. It strikes me that this would be difficult to determine because the private sector had already put money into the project. Which was responsible for which? Did it really add that much value?
I get to Mr. Julian's point of view on a study of the use of public dollars towards these sorts of events. The list of departments within the government that are in the business of handing out money for a variety of different programs is enormous. I went through it in preparation for this meeting, and I was shocked by the depth of it.
Within the study, would there be the opportunity to look at...? We could look at the efficiency of those programs, whether there were jobs created or whether the loans were repaid and the efficiency of that.
I want to come back to my colleague's observation. Would there be a way to study if that capital was made available to the private sector through a reduction in taxes or a reduction in burden and the potential job creation of having that money back in the economy rather than picking companies or picking sectors? It strikes me as incredibly dangerous. We have a lot of small businesses that do not partake in any types of subsidies. They're just trying to make a living, and without having measurables or being able to figure out the efficiency of these programs, perhaps we'd be better off just coming up with a tax strategy that creates investment and brings investment in.
Do you have any comments on that?
I have probably one general comment.
Based on my general knowledge of businesses in the country, what I've seen is that when you ask entrepreneurs and business owners what their biggest irritant is, they will always rank as the top two—and they will compete for top spot—taxes and red tape. I've rarely seen the lack of government support or subsidies being in the top two.
Maybe it's a policy choice, and maybe I'm venturing too close to the line of policy choice, but reducing taxes, if that's the trade-off to reduce subsidies, reduce taxes and reduce red tape, based on what I've seen, it wouldn't seem out of line.
That said, there are very valid policy reasons that some subsidies are being provided. As elected individuals, you are in the best position to make these judgment calls—for example, on the need to have a defence sector that is strong so that Canada does not rely on other countries to procure its weapons or in the defence sector.
What I'm trying to say is that there are a lot of considerations, but it certainly would be possible to look at what the impact would be in terms of reducing taxes, and how many jobs that could potentially create.
The part of the ledger that would be more difficult to determine is how many jobs would be lost if we took away all these subsidies to corporations. It's very difficult to measure. As you alluded to, sometimes it's jobs created, sometimes it's jobs maintained, and that's quite difficult to determine. Is it true? Is it 40 jobs? Is it just two or more than that? Evaluating these programs is very difficult.
I've given free range to Jason to kick me, but the table separates us so he can't.