:
Thank you, Mr. Chair and members of the committee, for the invitation to be here with you this afternoon.
I'm a registered nurse representing the Canadian Nurses Association, CNA, the national professional voice representing more than 139,000 registered nurses and nurse practitioners. Across Canada, there are close to 5,000 nurse practitioners who provide care to over three million people in Canada.
I am pleased to be here today to speak about the specific measures related to nurse practitioners, or NPs, in Bill , budget implementation act number two. We are pleased to be here to discuss this important bill ahead of nurse practitioner week, which starts on November 12 and ends on November 18.
On May 17 of this year, CNA appeared before this committee to inform members about the important role played by NPs in our health care system. Our official testimony before the committee on Bill , budget implementation act number one, noted that NPs conduct physical assessment, order and interpret tests, write admission and discharge orders, and prescribe medications.
As an update, I am pleased to say that NPs enthusiastically joined our October 24 webinar entitled “Updates of Form T2201 Federal Disability Tax Credit Certificate: New Authority for Nurse Practitioners”. NPs have certified the DTC since March 22, 2017, budget day, the day the changes took effect. The proposed amendments in Bill will provide Canada's NPs with the capacity to treat patients to the full extent of their qualifications. As this committee is aware, these qualifications include the ability to complete documentation about their patients' medical conditions.
CNA has gone through the proposed amendments in Bill . We are pleased to let the members of this committee know that the amendments complete the remaining clauses where NPs needed to be added to fully modernize the legislation. As a result of these changes, NPs will be identified in the Income Tax Act and the income tax regulations as eligible to provide certifications or reports related to other tax measures wherever certification or reports are currently provided by medical doctors.
We are pleased to see that these changes will lead to amendments to the medical expense tax credit, the child care expense deduction, the definition of qualifying student, the registered disability savings plan, and the registered pension plan regulations. We therefore encourage members of the committee to accept the proposed changes. These changes will enhance access for patients whose primary care is delivered by an NP in rural/remote and urban communities across Canada.
As we move forward, CNA anticipates that similar changes will be made to the Canada pension plan disability benefit. CNA has met with both ministerial and departmental officials at ESDC about changes that will authorize NPs to complete the disability-related medical reports for patients. These changes will not only enhance access to care but also lower health care costs.
Finally, I would like to take this opportunity to encourage members of the committee to support the recommendations that were outlined in CNA's 2018 pre-budget submission. The recommendations outlined in our brief aim to strengthen public health education of health care providers, including nurses. Our key recommendations to the federal government include investing $125 million over the next five years in public education in advance of the passage of Bill , including a one-time investment of $1.5 million to increase the level of cannabis education for nurses. We also recommend an investment of $45 million over the next five years to scale up provincial and territorial acute care and community-based antimicrobial stewardship programs, including a one-time investment of $1.5 million to increase AMS competence and capacity among nurses through a nursing profession-led knowledge, education, and mobilization program.
In closing, I encourage members of this committee to support Bill . We are pleased that the bill builds on the important changes that were found in Bill .
Thank you. I look forward to your questions.
Thank you for the opportunity to speak to you on Bill today.
Diabetes Canada is very pleased to see Bill grant nurse practitioners the ability to certify applications for the disability tax credit. For many patients, they are their closest and most expert health care providers.
The matters referenced in Bill affect Canadians living with type 1 diabetes the most. Type 1 is a debilitating, chronic, progressive autoimmune disorder that threatens its sufferers with death on a daily basis. Its sufferers lack the ability to produce insulin, which is essential to metabolizing carbohydrates, which are in turn essential to sustaining life. While we don't know exactly what causes it, we know there is nothing anyone can do to prevent it. Type 1 is a painful, invasive, relentless disease from which none of those who live with it ever get a reprieve. It puts us all at high risk of serious complications like blindness, kidney failure, amputation, and heart disease, and it shortens our life spans by as much as 10 years.
Managing type 1 diabetes has been likened in complexity to flying an airplane. A study in 2009 found that there are 600 steps required to manage it each and every day, and even if its sufferers perform each of those tasks perfectly, their blood sugar doesn't always respond in kind. The same dose of insulin for the same set of circumstances on two different days often results in completely different responses, each of which frequently debilitates the patient. Its variability means it requires constant vigilance, each and every day.
Some people with diabetes don't like to refer to it as a disability, preferring to focus on achieving their dreams despite this challenging condition. That is an appropriate coping mechanism for some, but by any objective measure, it is a disability for which there is no cure.
Even with our publicly funded health care system, living with type 1 costs its sufferers up to $15,000 per year for supplies essential to delivering insulin and monitoring blood sugar. Insulin is life-sustaining therapy.
Given those costs and how imperative these drugs and supplies are for us, the DTC and RDSP offer welcome financial support and security. Although the DTC is only worth on average $1,500 per year, that's $1,500 that a person with diabetes can use towards their medical supplies and health. There's a strong chance that a person with type 1 will face periods of disability during their working life, and perhaps even have it cut short by the complications of the disease. An RDSP can therefore also provide a great deal of peace of mind for those with type 1 and their families.
Recently, that peace of mind has been denied to most Canadians with type 1. Whereas a year ago more than 80% of applicants with type 1 were being granted the DTC and RDSP, since May 2017 that number has plummeted to less than 20%. As the committee well knows, the Income Tax Act hasn't changed, nor have the eligibility criteria. What has changed is the interpretation by CRA agents.
Notwithstanding the difficulty of managing type 1 diabetes and the certification of hundreds of expert doctors and nurses, since May 2017 agents within the CRA have been overruling these certifications and stating that adults independently administering insulin therapy don't spend the required 14 hours a week treating their illness and therefore are ineligible. This change has been made without consultation or notice.
Diabetes Canada has received hundreds of complaints from people with type 1 diabetes who have recently been denied the DTC. Some were applying for the first time, but many had previously received the DTC and were reapplying. Some have been told they'll have to close their RDSPs in consequence of no longer qualifying. Every one of them had a certification from expert doctors and nurses that they meet the eligibility criteria. Not one has been cured.
That's why Diabetes Canada is urgently asking for the following: one, that the CRA revert to its pre-May practices, accept clinicians' certifications, and grant people with type 1 diabetes access to the DTC; two, that the CRA engage in open and transparent consultations with Diabetes Canada, JDRF, and diabetes experts to create eligibility criteria and a certification process that reflect the reality of this disease; and three, that the government consider granting eligibility for the DTC to all Canadians living with type 1 diabetes on the basis that it is incurable and that subjective application of criteria is both unfair and unethical.
That's why we respectfully request that the committee rectify inequities in the application of the Income Tax Act where it concerns the access of people with type 1 diabetes to the DTC and RDSP. Please help alleviate some of the burden these hundreds of thousands of Canadians carry.
Thank you.
:
Thank you very much for the opportunity to speak to Bill and, more specifically, the provisions to amend the Income Tax Act in relation to agricultural and fisheries co-operatives. As the legislation indicates, the changes are to ensure that qualifying farmers and fishers selling to agricultural and fisheries co-operatives are eligible for the small business deduction.
Briefly, Gay Lea Foods is the largest dairy co-operative in Ontario. We have recently expanded our membership to eligible dairy farmers within Manitoba, and we are the first North American dairy co-operative to include both licensed dairy cow and dairy goat members. At our nine facilities across Ontario, our employees produce a wide range of dairy products, from the consumer favourite, Spreadables Butter, to North America's first smooth cottage cheese, and more recently, Nothing But Cheese, an innovative snack product made with 100% cheese. We also recently added a cheese-making facility in Alberta to our growing business.
With members on more than 1,300 dairy farms and more than 4,000 members overall, Gay Lea Foods is as renowned for its co-operative-inspired values as it is for being a preferred supplier of award-winning dairy products and high-quality dairy components.
Back in the spring, we became aware that certain changes in the 2016 federal budget would have an unintentional but significant impact on co-operative member-owners. A number of co-operatives, financial and agriculture groups, and experts communicated to Finance Canada about this interpretation and the potential impact on members of co-operatives. We were pleased to receive the proposed changes that Finance Canada published in May of this year, and we acknowledge the efficient time frame in which they provided clarification on this technical matter.
We support the proposed changes in Bill , and are satisfied that they will ensure that recently enacted amendments to the Income Tax Act do not inappropriately deny access to the small business deduction for a farmer selling farm products to an agricultural co-operative.
Co-operatives play an understated but vital role in enhancing Canada's economic and social prosperity, and they support our local communities.
I am tremendously proud that many of the values that define co-operatives are the same ones we celebrate as Canadians. As a proudly Canadian co-operative, Gay Lea Foods invests in our employees and members with training and leadership opportunities. We support the local communities where our employees and members live, work, and raise their families, by donating product, sponsoring local activities, and providing stable, long-term, skilled employment. I am humbled that we are able to do all these activities while growing a 100% Canadian-owned co-operative.
We are empowered by our member-owners who see great value in supporting an innovative, dynamic, and profitable co-operative. With that in mind, as government develops policies and programs to grow the Canadian economy, we encourage you to consider the broader spinoffs and benefits for Canadians that come from supporting Canadian co-operatives like Gay Lea Foods.
Thank you very much.
:
Thank you, Chair, and honourable members.
Thanks very much for allowing me to speak with you today about a very important aspect of Bill , beer concentrate taxation.
As industries grow, it's imperative that they innovate and find better ways to do business. The beer industry is no exception. Innovation has always been core to Molson Coors' success and culture. From the invention of the aluminum can in 1959, right though to the introduction of the first light beers to the market, our pioneering spirit continues to drive us forward.
Our latest innovation is a new draft process that will reduce beer's impact on the environment, ease day-to-day operations for retailers, and make beer available in more places without sacrificing our valued consumers. By allowing the distribution of beer concentrate in place of the standardized keg, Molson Coors is building on an already solid reputation of being a responsible corporate steward. This latest innovation will allow for a reduction in the overall carbon footprint of the beer industry on the production, storage, and consumption sides of our industry. Additionally, we believe that businesses will realize positive economic impacts, as well as injury reduction in their workplaces. I'm not sure if anybody has lifted a keg, but it's a bit of a workout.
The capital costs of beer concentrate for customers are significantly less than the capital expense of having a keg room, maintaining its temperature, and ensuring regular cleaning, all of which can be costly in themselves. In addition, the reduced carbon footprint of having fewer trucks on the road to deliver the kegs, the reduction in electricity consumption, and the reduced material usage on the production side, makes this innovation a cause for excitement.
Molson Coors has been working with our research and development team to ensure a safe and high-quality end product that is strictly regulated and monitored for quality in every step of our process. As such, we have created and invested in a multi-million dollar innovation hub for this industry based right here in Ontario, and we will be looking to expand the reach of the project as soon as possible.
We are in the early stages right now of testing this new system in Toronto with a limited group of customer accounts, with plans to expand the pilot later in this year and into 2018. We look forward to sharing more details in the coming months as we continue to prove out this concept. I can say to the panel that the early reviews of the pilot are very positive, from both our licensees and the consumers. We're confident that this innovation will revolutionize the industry and begin a new path in beer production and distribution.
Molson Coors is very pleased with the direction the government is headed, and we look forward to the passing of this bill and important regulations.
Thank you very much for your time, and I will be pleased to answer any questions the committee may have.
:
Thank you so much. Thank you to the honourable members for inviting Startup Canada and Canada's entrepreneurs to the table today.
Startup Canada is the national rallying brand, community, and voice for Canada's 2.3 million entrepreneurs. Since I launched it as a social entrepreneur, along with my co-founder, in 2012, Startup Canada has grown to represent more than 200,000 entrepreneurs across Canada and across 50 grassroots start-up communities that volunteer-led and entrepreneur-run from coast to coast to coast.
We represent the diversity of Canada's entrepreneurial community. It's so cool that I'm here beside Molson Coors, a great Canadian success story. Many of my members wish they could be so successful one day. We represent women, indigenous persons, mompreneurs, and hackers in their basements. We represent farmers. We represent every Canadian entrepreneur.
We work in the best interests of every entrepreneur to foster an inclusive economy and a growing middle class through entrepreneurship. Through digital programs and flagship events, Startup Canada is the network promoting, inspiring, connecting, and giving a voice to Canada's entrepreneurs, supporting their start, operation, and scaling up of their businesses to build a better Canada.
Our entrepreneurs are among our economy's most important natural resources for the future. Canada is home to 2.3 million entrepreneurs and 1.1 million small businesses, accounting for 78% of private sector job creation in Canada, 30% of exports, and 27% percent of GDP. More than 8.2 million Canadians work for small businesses in Canada.
From my comments, I want you to really understand that the world is competing for this natural resource and the rest of the world is vying for this talent. They're vying for the investments and their share of international markets. What we need to do is to really build a Canada in which our entrepreneurs can flourish, and to keep them here in Canada. We believe that being fair and competitive are not mutually exclusive.
From the recent tax consultations on changing the taxation of entrepreneurs, we have never felt more concern among our community than now, and certainly every member of Parliament who has met with their small business community has felt this. There has never been such an outcry before as when we started to look at our tax system and talk about fairness and our entrepreneurs. That was an opportunity for a conversation, which our entrepreneurs had with members of Parliament across the government.
As we're building tax policy and looking at Bill in all respects, we need to ensure that we do not inhibit entrepreneurial ambition in our country but that we are our entrepreneurs and demonstrating that Canada is behind our dairy farmers, our Molson Coors', and every entrepreneur. We need to recognize and acknowledge the risk that entrepreneurs take on personally, financially, and professionally when they start a company. We need to increase incentives for Canadians to participate in our entrepreneurial economy, as angel investors and through crowdfunding platforms to unleash entrepreneurial capital. We need to ensure that there are no unintended consequences in supporting the succession or transfer of businesses across generations, or any other unintended consequences, as we look to modernize and create a fairer Canada.
Rather than looking to see where we can tax more, our goal ought to be to grow our entrepreneurial tax base and unleash the entrepreneurial potential of every Canadian.
We have seen the difference that has resulted when entrepreneurs and government work together. Through consultations, we saw the Government of Canada begin to step back and recognize that there were unintended consequences for entrepreneurs in some of the proposed tax reforms. We also saw a recognition of the value of entrepreneurs with the reduction of the corporate tax rate. When we work together, we can create a better Canada for entrepreneurs, as we've shown in the last few months. We're really excited about the possibilities for the future.
In closing, we believe that the government, as it relates to entrepreneurs, can provide the best possible environment and culture for entrepreneurship. In Canada, this is our opportunity today.
There are six things that we can do and that we ask the finance committee to consider as you're looking forward to building our economy.
We need to continue to reduce red tape for every entrepreneur. There is more red tape in this binder here. We need to relentlessly reduce red tape.
We need to make it easy for entrepreneurs to understand and access government services and support. Here in this binder, once again, we're talking about changes to the labour tax code. We're talking about changes to the GST and HST. We need to educate our entrepreneurs on the impact these changes will have on their businesses. We need to ensure that we're making it easy for entrepreneurs to understand what's happening and to plan for the future.
We also need to ensure that we have the best possible tax environment to provide incentives for entrepreneurial growth. As I mentioned, this is through unleashing innovative capital solutions to seed our economy of the future. We need to ensure that every analysis of Bill takes into account the impact on Canada's entrepreneurs and their ability to create jobs and invest in each other. Whether it be amendments to the Income Tax Act related to legislation that closes loopholes around capital gains exemptions or ensuring that our farmers and fishers are eligible for the small business deduction, we really need to ensure that our tax environment is conducive to entrepreneurial growth.
Moreover, we need to continue to improve domestic and international market access and access to international capital. How will the Asian Infrastructure Investment Bank help us to expand trade links with China and investment between Chinese investors and businesses and our entrepreneurs? How are we looking at this investment in regional consolidation and regional collaboration as an investment in our small businesses? How are we ensuring that qualifying farmers and fishers are eligible for the small business tax deduction?
In addition to opening up new markets and capital, we really recommend that the Government of Canada work with entrepreneur support organizations like Startup Canada and other industry partners to continue the dialogue and conversation. It's only by working together that we can identify that there are implications for entrepreneurs from many of the aspects of Bill . It's our opportunity as a nation to shine as an entrepreneurial nation.
Thank you so much for the opportunity to bring entrepreneurs to the table. We look forward to taking your questions.
I apologize to the witnesses, but I would like to take a minute to table a notice of motion. Right after, I will ask my questions.
Mr. Chair, I would like you to reserve time during Thursday's meeting so we can discuss this matter, so that there is no interruption during our time with the witnesses. It will allow me to debate the motion and hear the opinions of my colleagues.
The motion is as follows:
That, given ongoing media revelations that could implicate some Canadians in aggressive tax avoidance or tax evasion, the Committee invite Stephen Bronfman, Revenue Chair for the Liberal Party of Canada; and Leo Kolber, former Senator and former chief fundraiser for the Liberal Party of Canada, to appear before the Standing Committee on Finance before November 30, 2017, to answer questions relating to their offshore assets in jurisdictions that are considered to be tax havens.
I'll wait until Thursday to provide more detailed comments to motivate the motion. Today, I just want to mention that this study is important to understand why these two people say they have acted in a completely legal way. This could enlighten the committee on ways to correct the situation, so that these immoral actions become illegal.
So that's my introduction to the topic we could discuss on Thursday.
:
That's an excellent question.
[English]
There's no question that technology has improved vastly in the area of management of diabetes in recent years. It's even stunning for me to think about what's happened in the last 20 years, to say nothing of what's happened since insulin was discovered in 1921 by a Canadian doctor. That technology and the improvements and advancements in it have made it very possible for people with diabetes to manage their diabetes much better than they used to. Countless studies have shown that it has strengthened our ability to minimize the risk of complications and death. It minimizes the costs to the health care system in terms of the amount of emergency health care required by people with diabetes, and so on. However, there is absolutely no reason to assume that it takes less time or that it makes the management of type 1 diabetes quicker or easier.
In fact, the reverse is often true. I'll expand on that slightly. In my grandfather's day, he took his blood sugar by a urine strip once a day, took a fixed amount of insulin by injection a certain number of times a day, and then just basically ate the same kinds of things day after day after day. That was how you managed it.
Now, a person with diabetes often has an insulin pump that needs to be primed, calibrated, programmed, and responded to. They wear continuous glucose monitors that buzz them many times a day to indicate their blood sugar is rising or falling, or they need to take another dose of insulin, or it has low batteries, or what have you. We take our blood sugar with glucometers, as I mentioned, six to 10 times a day. It's a much finer process for managing the disease, but it is not quicker. It's quite the contrary. In fact, the costs of the technology that help us live better and protect our health, and the costs to the health care system, are more reasons why people with type 1 diabetes can ill afford to lose a $1,500 tax credit, let alone their RDSPs.
As a new member of this committee, I'm getting a little confused. Diabetes Canada is here on behalf of the Conservatives, who've asked them to come as witnesses, and now they're kind of scolding us for asking questions.
The submission that Diabetes Canada has made is not clear. I'm sure they also represent the disability promoters. That's something new. I didn't know they did that. I don't know if we have that in Northwest Territories, which I represent. Diabetes is very widespread amongst aboriginal people. My mother was diabetic. Almost everyone in my family is diabetic. I'm not there yet, but with the pattern that has established itself, I'm sure at some point it is something that will challenge me.
I'm also stuck for questions for everybody else, because most of the presenters don't have a presence in Northwest Territories.
The Canadian Nurses Association has really done a lot of good work in my riding. I'm very happy for some of the efforts that you've put in to try to get nurse practitioners in the north. They've done so much good in that area.
I think I'm the only MP who lives in a small aboriginal community. I never in my life have seen a doctor twice in a row. Every doctor flies in and leaves. We have a very tight schedule. They come in once every two weeks, or sometimes once a month. Nurse practitioners are doing a lot of good.
The issue of disability promoters and such is very concerning. I want to ask the Canadian Nurses Association if you think our government should form an advisory committee to work on this whole issue to make sure it's clear, to get to the root of some of the discussion that's happening. It's not something that I take lightly, and I think we need to do more work in that area.
Can you maybe tell us what your opinion is on it?
Thank you, witnesses, for your testimony here today on Bill . I would like to pursue the topic du jour, the disability tax credit.
Ms. Hanson, thank you for your advocacy, not just at this table but your ongoing commitment to making sure people get the help and resources they need. I would like to ask a little bit about the disability tax credit. Obviously, the typical type 1 diabetic who receives it gets on average, I believe, around $1,500.
There is a bigger cost, which I don't think we've discussed here today. In order for people to qualify for a registered disability savings plan, they must first be eligible for the DTC. Is that correct?
:
That's absolutely correct, and you're right in saying that it's a larger issue and really a huge source of worry for the people we represent.
As the committee knows well, in order to be eligible to have an RDSP, a person must first qualify for the DTC. Once you form an RDSP, you can make contributions to that plan and then you can attract grants and bonds from the federal government that help the individual who is suffering from a disability or their family provide financial stability for their future against the risks that they will experience periods of inability to work.
The grants and bonds relate to a contribution made by the individual, but they are multiples of it. RDSPs were introduced only in 2008 and so nobody has yet been able to vest them. You can't contribute after you're 50 and you can't cash them out before you're 65, so no one has been able to vest any of their RDSPs yet.
However, notwithstanding the fact that they were introduced only in 2008, I know a number of my counterparts, people approximately my age, working folks with type 1 diabetes, who have $50,000 in their RDSPs, which they're counting on for their retirement and which they are at risk of losing because they've now been disqualified.
:
Thank you very much, Mr. Chair.
[English]
Thank you all for coming.
[Translation]
Ms. Lennox, I could have asked you about Startup Canada, an initiative that I'm very supportive of. We had the opportunity to meet already. I'm very pleased to hear that you are satisfied with the cooperation with BDC regarding capital to encourage start-ups.
Mr. Thompson, I'm very pleased to hear that consultations with people in your industry to ensure equal treatment of beer products went well.
Mr. Dolson, thank you very much for your testimony.
Ms. Roussel and Ms. Hanson, it is impossible not to have questions for you, since your remarks raise many questions.
[English]
Ms. Hanson, thank you very much for your testimony. Also, thank you for the good work that Diabetes Canada does in helping out. It's certainly a real scourge of a disease. It has affected my family, and it's one that I'm very sensitive to, as are millions of Canadians.
Because of some of the questions and answers, I'm trying to get my head around this, and perhaps you can help me out. Has the law changed? That's a short question.
Good afternoon. My name is Karen Cooper. I'm a lawyer with the law firm of Drache Aptowitzer LLP. My clients are almost exclusively charities and not-for-profits. I also teach tax law and the law of charities and not-for-profits at the University of Ottawa. I chair my local hospital board, and I'm the past chair of an organization called the Canadian Land Trust Alliance. I expect it's in respect of that latter role that I was invited to speak.
The Canadian Land Trust Alliance is an organization that represents land trusts across Canada, and the particular measure of concern to them in Bill would be the changes related to the ecological gifts program. I was given the understanding that this is what you wanted to hear from me about.
Land trusts are non-profit charitable organizations whose main objectives include the long-term protection and management of ecologically sensitive lands. Sometimes they own those lands outright; they acquire them through donation or purchase. Sometimes they enter into something called a “perpetual” conservation agreement, and sometimes an easement or covenant; in Quebec, they're called “servitudes”, real or personal servitudes. The general objective is to preserve or restore the ecological features of the land.
We have about 200,000 individual members and donors and 20,000 volunteers. Collectively, they've protected over seven million acres. That's seven million acres of privately protected land, and this protection contributes to our network of diverse natural landscapes. They play a really important role in delivering on the government's species at risk, biodiversity, and climate change goals.
One of the reminders I like to provide folks is to say that when we're dealing with the ecological gifts program, we're dealing with an incentive in the Income Tax Act that in fact relates more to environmental policy than philanthropic objectives, necessarily. It's a measure that's designed to serve both needs, not just to support philanthropic giving.
Most land trusts are eligible recipients under Environment and Climate Change Canada's ecological gifts program, and there's a whole series of amendments in Bill that are related to that program. To the end of October 2016, there were 1,260 ecological gifts made, valued at over $807 million. It's a tiny program with an environmental focus, but the dollar values tend to be fairly large because they relate to fairly significant pieces of land.
Most of these ecological gifts contain areas designated as being of national or provincial significance, and many are home to Canada's species at risk. To participate in the ecogifts program, donors must have the ecological value of the land certified in advance, and then also the monetary value of the land certified in advance. Normally, these transactions don't close until the government or an independent panel has in fact certified that this is land that's important to protect and that there is no further disagreement with respect to the valuation.
In addition, for land trusts to participate in the program, the land trusts have to adhere to and implement Canadian land trust standards and practices. These practices promote integrity, perpetual sustainability, fiscal diligence, and good governance. There's an adherence to these standards and practices because generally land trusts recognize that actions of an individual land trust reflect upon the trust community at large.
As I said, Bill proposes a number of measures to better protect these gifts of ecologically sensitive land. I actually have no specific comments. I was invited to speak and, I believe, take your questions about these provisions given my expertise in the area. I'm more than thankful for that, and I welcome that opportunity.
:
My name is Michael Robinson. I'm just an old lawyer, but I did have a letter to the editor printed that said I was a former board member of Transparency International Canada, an organization you may have heard of and know about. It's an anti-corruption organization. I suspect that I was therefore invited to speak on the inclusion in Bill of measures to allow Canada to become a member of the Asian Infrastructure Investment Bank. There are implications for corruption prevention that would arise in that context. I think that's why I'm here.
First, one should understand the great power and influence of the world's major international development banks, or IDBs. This sixth one, as of 2015, is this new one, the Asian Infrastructure Investment Bank, which commenced business in 2016.
Infrastructure projects in the developing and lesser-developed world are and will continue to be created significantly through public-private partnerships, or P3s, involving the private sector bidding for the financing of these projects to these banks. The banks are absolutely critical to anybody getting a contract for a piece of infrastructure, because they are the touchstone of respectability and financial credibility for the project when there's a private sector involved. The original five international development banks have the skills and finances to advise upon and become significant financiers, and even equity investors, as many of them are, in these projects in those countries.
Next, one should be aware that the construction industry, which performs these projects, is one of the most corrupt industry groups in the world. I don't think there's anything to debate about that. We've all seen what happened in the province of Quebec when the construction industry was investigated.
The World Bank is clearly the leader in the development of corruption controls and sanctions on the corrupt when so found by the bank, respecting infrastructure and other projects which it finances or in which it invests. The World Bank embarked on its corruption prevention and sanctions regime development in the early 1990s, under the direction of then president Wolfensohn. They've done a terrific job.
In April 2010, the other four established international development banks entered into an agreement for a mutual enforcement of debarment decisions with the World Bank group. The leader of the anti-corruption motion, which really was only effective from the 1990s forward, encouraged the other four banks to join. They are the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank group. This is a very potent agreement in controlling international corruption, because all five banks mutually debar the corrupt participant from participating in any other projects in which any of the banks are a financier.
On March 7 of this year, the Asian Infrastructure Investment Bank issued a statement in which it recited its progress in creating comprehensive corruption controls and sanctions. It noted that it had, quote, “voluntarily and unilaterally” adopted the list of sanctioned entities and individuals under the aforementioned agreement made by the Big Five, the one that I mentioned, the so-called AMEDD—there are too many acronyms here, I'm afraid—and this was a welcome development.
Now I will skip forward in my notes to leave more time for questions.
Based on the fact that the World Bank's regime represents the gold standard for corruption controls and sanctions, and the fact that it has a wealth of experience in developing that regime, I recommend that Canada condition its membership in the Asian Infrastructure Investment Bank on the AIIB's going the next step and becoming a member of this corruption and debarment recognition agreement, the AMEDD.
It's encouraging to notice that the AIIB stated in its March 7, 2017 public statement that it is actively engaging with these banks in an effort to join them as a signatory to the AMEDD. Once they have become a full signatory, they would be a full formal participant in the efforts of what would then be the big six international development banks to fight together the scourge of corruption.
That's my recommendation. I'm not criticizing the new bank at all. I think we must be aware that it is dominated, in terms of its share ownership and location, and the power to elect its board of directors, by China. China is not exactly at the top of the list that Transparency International maintains for lack of corruption. However, they are progressing, as they stated in March of this year, and that's why I'm making the recommendation I am.
As an addendum, for any of the committee members who might be concerned about risks that Canada is taking on by investing significant sums in the shares of AIIB, as well as creating its own infrastructure bank, it's worth noting that the AIIB stated that it had received in July of this year the highest rating from the Standard and Poor's global rating agency, namely AAA/A-1+, with an outlook of “stable”. Also, the world banking regulator in Basel has given a zero risk to the securities of the AIIB for purposes of investment in securities by regulated financial institutions like banks.
Those are my comments, Mr. Chair.
Thank you for the opportunity to speak today to the Standing Committee on Finance. I'm here today representing Amalgamated Dairies, or ADL, which is a dairy co-operative located on Prince Edward Island. We currently we have 165 farmer-owners and employ over 300 Islanders.
ADL was established in 1953 and has grown and expanded to now have 100% of P.E.I. dairy farmers as owners. We are recognized nationally as a leader in cheese processing. We export our products across all of Canada and to other international markets.
The dairy industry is very important to the local economy, accounting for over $100 million of farm gate cash receipts and a total of over 3,000 industry jobs generating a payroll value in excess of $100 million.
Our co-operative is a source of great pride for our members, who are highly engaged and rely on their united voice to promote the dairy farmer and the dairy processor voice.
My remarks today will be focused on budget Bill and the subsection 125(7) amendment that would ensure that the rules preventing the multiplication of the small business deduction do not inappropriately deny access to small business deductions for Canadian-controlled private corporations owned by farmers or fishers selling farming products or fishing catches to an agricultural or fisheries co-operative.
I will admit that, as a dairy co-operative, the original budget bill was a major concern for our industry. As a dairy co-operative that relies on farmer-owners to supply 100% of our milk, we heard loud and clear from our farmers that the proposed changes to the tax system would be detrimental to their operations and their future.
Co-operatives are very important economic drivers, particularly on Prince Edward Island. At ADL, our annual sales of over $200 million are an important foundational piece of our province's great tradition of food production. Dairy farming is an important part of the fabric of our rural communities and a critical part of their continued viability. The original budget bill changes would have had a significant negative impact on family-owned farms, rural businesses, and co-operatives throughout the country.
Access to the small business deduction, which was threatened by the proposed budget provision, provides a significant tax incentive to incorporated farm and fishing business enterprises. Many farmers have incorporated their operations to take advantage of the reduced level of corporate income tax. In P.E.I., the difference in the combined federal/provincial tax rate is 15%, compared to 31% for income deemed ineligible for the small business deduction.
Many farm operations today involve multiple farm families, and many farm operations and rural businesses provide goods and services to corporations that they or family members have an interest in, such as agricultural co-operatives. I'd like to commend the Government of Canada for listening to our lobbying efforts and introducing an amendment to ensure that qualifying farmers and fishers selling to agricultural and fishing co-operatives are eligible for the small business deduction in respect of income from those sales.
Co-operatives have a long history of providing a model of fairness and success. They have proven very successful in the dairy industry by providing farmers the opportunity to be directly involved in the decision-making process and governance of an important part of their industry.
At ADL, it is very clear from our board of directors that they want to remain a strong and vibrant independent co-operative. They are eager to continue to make investments both in their farms and at the dairy processing facility to grow their communities and the economy. In a global marketplace with frequent turbulence, co-operatives provide an important vehicle for this investment, and a method to ensure a fair return for producers, with direct input to governance.
Lastly, we have a comment about future policy changes or initiatives. I would like to take this opportunity to invite the Government of Canada to work with our industry and other co-operatives to determine ways to work together on policies and programs that will see co-operatives grow and expand. The decisions that are made all across government have an impact on our industry and our future. A commitment to collaboration, consultation, and discussion would ensure that policies and programs benefit co-operatives and do not inadvertently cause harm.
I'd like to thank the finance committee once again for the invitation to speak here today on this important budget bill amendment, and I look forward to answering any questions you may have.
Thank you, Mr. Chair.
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Okay, fantastic. Then it's all for my privilege and for the other witnesses.
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Good evening, everyone.
[English]
Thank you very much for having us. I'd like to acknowledge that we're on the traditional territory of the Algonquin and Iroquois first nations. I equally bring you greetings from Kitselas First Nation, who will be mentioned later in this presentation, as they are developing a geothermal project.
We represent CanGEA, the Canadian Geothermal Energy Association. I'm the chair of the association. I'm also a member of CanGEA, and I work with two companies that are also mentioned later in the presentation.
Cutting right to the chase, on slide number two, Bill and geothermal energy, thank you to this committee. Because of this committee and the March budget, geothermal heat is now considered an eligible renewable energy. Up until March 22, geothermal electricity was renewable, but geothermal heat was not. This kind of inequity in how geothermal was treated was holding the industry back. We want to reach out to you personally this evening and say thank you. We are now eligible for the Canadian renewable and conservation expenses, as well as the accelerated capital cost adjustment.
On the next slide are our five members. I want to bring to everyone's attention the fact that because of your work, what you did as a committee, and because of the budget that was tabled, we now have five heat and power projects going forward. The ones I'm highlighting tonight are from western Canada, starting with Borealis GeoPower out of Valemount. They're making a power and a heat project. Then we have the Kitselas First Nation leading a project out of Terrace, B.C., and that's also for heat and for power. DEEP, out of Saskatchewan, is also heat and power. Up until March, these companies would have been ineligible to claim the heat part.
What Bill will also unlock—in the bottom—is that we have two Alberta companies who are also developing heat only projects and, again, up until recently, they wouldn't have been considered renewable.
All of these companies are using clean tech, but they're also using technology transfer from the oil and gas industry and repurposing talent from the oil and gas industry.
What's further interesting to note is that in Yukon, the Northwest Territories, Nunavut, and Quebec, projects are also progressing. I hope that the next time I have an opportunity to appear here, I can report on those areas as well. I would especially note that Nunavut right now is running an RFP for a feasibility study to use heat in the Nunavut territory. That RFP closes on November 15. They have been absolutely inspired that geothermal heat can now be classified as renewable, and hopefully used abundantly in that territory to decrease our fossil fuel reliance.
I could stop the presentation here, but since I have five minutes, I'd like to go on. I want to bring to your attention that there are further improvements that our industry requires. I'm hoping that the committee is able to make these amendments as well.
Most notably, other renewable energies currently achieve both test turbine status and transmission expenses, so there is parity that is not yet being achieved by geothermal. When people ask why the industry isn't progressing, people start to make up reasons why. However, they're really economic, and it's because other industries are provided with incentives or are eligible for programs that geothermal is not.
I want to bring a consequence, a real life example, of that home. I'm now on the slide talking about geothermal test turbines. The wind industry has been granted test turbine status for up to 20% of its projects. Here we have a project in Valemount, B.C., that's going to be a demonstration, not just demonstrating and testing of a reservoir, but also demonstrating the capabilities of the geothermal industry.
This small project, again just as a test facility, is looking to employ 50 to 80 people. If this sounds incredible, a few slides later I talk about how it's not in fact incredible. If you look at countries like Iceland, New Zealand, and the U.S.A., they routinely achieve huge employment numbers based on deploying geothermal heat along with power.
The Iceland example I bring for you this evening shows that at a mere 175 megawatt plant, they're able to employ 60 people, but also an additional 840 people in other businesses that are using their heat. This is all off of two power plants that are commingled and have the heat part.
Going back to Sustainaville, it is pitching to get test turbine status so it too can have a test facility and demonstrate geothermal power and heat, but as well create 50 to 80 jobs. We're not making that up.
I'll end by talking about another item that we did not get. Wind, solar, and even tidal and hydro power all get transmission expenses. Our industry too would like to have transmission expenses. Here's a real world example from Valemount, where British Columbia power, BC Hydro, is serving the town. It's a 300-kilometre transmission line. Unfortunately, it stops short of the village.
There's a new load developing as an ecotourism resort. Because BC Hydro cannot serve the ecotourism resort, the province has approved a seven megawatt diesel power plant to be installed. Here we are, in the era of a pan-Canadian framework for clean growth and climate change, trying to shut down diesel and switch away from fossil fuels, and here's an example of a brand new diesel power plant that could go into operation. Standing between that spewing out of up to 50,000 tonnes of CO2 a year, or about 1.5 megatonnes over 30 years, is a 26-kilometre transmission line. If I were tidal, wind, solar, or hydro, geothermal wouldn't have to ask for this amendment.
I want to close by saying, in the United States they're targeting an additional 30,000 megawatts to build. They currently have about 3,500 megawatts on line, and 1,200 megawatts in development. Just to frame that, 1,200 megawatts is about a $4.5 billion contribution to GDP. We could have this too. We have the technology and the talent. We just don't have parity with the other types of energy.
Thank you.
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Thank you. Thank you for having me back.
The Asian Infrastructure Investment Bank is a Chinese-founded alternative to the U.S.-led World Bank. It's far from clear why Canada wants to help pivot the world economy away from the U.S. to China. Nor is it clear that there is shortage of capital in Asia that Canada needs to help finance, especially at a time when plans are being made for a new infrastructure bank to help make up for our own infrastructure deficit.
While Asia's infrastructure needs are massive, so is their available pool of capital, as reflected in their large trade surpluses. Many Southeast Asian nations have savings and investments rates of over 30% or 40% of the GDP. Their priority should be finding a mechanism ensuring that capital is deployed where it is needed the most.
It is well known that it is not the amount of investment that drives long-term growth, but the efficiency of investment. Many Asian countries like Thailand, Malaysia, Indonesia and Taiwan had high rates of investment leading up to the Asian crisis of 1997. But these investments, often state-directed as part of their industrial policy, did not pay off.
Canada's enthusiasm to have a place at the table when the AIIB chooses investment bodes ill for investment being driven by market considerations alone. Canada and other late joiners to the AIIB appear motivated to get a share of the contracts for infrastructure work in the region. This suggests that a certain cronyism is anticipated in the process of awarding contracts, with local citizens in Asia ultimately paying more for investments they may not value highly.
What's the reason for Asia's emphasis on infrastructure? Well, good infrastructure is certainly necessary for sustained growth. Maintaining growth beyond the early developmental phase requires an ability to move into consumer products with the flexibility and ability to adapt to rapidly changing consumer tastes. Japan and South Korea have auto and electronic companies that have demonstrated that capacity. China and other Southeast Asian countries have not. It is not clear that more investment in infrastructure would help make that leap.
Canada's contribution to the AIIB also appears premised on the idea that China inevitably will be one of the world's dominant economic powers. This is far from a sure thing. Before the global financial crisis of 2008, its rapid growth was built on exports. However, since 2009, it has relied more on domestic demand for the growth, much of it fuelled by debt. This is not a sustainable foundation for growth.
In The Rise and Fall of Nations, Morgan Stanley's chief global strategist, Ruchir Sharma, observed that nations posting increases of over 50 percentage points in their debt to GDP ratios inevitably experienced a prolonged period of slow growth, if not financial crises. China's debt to GDP ratio has almost doubled from 150% in 2007 to 282%. Canada has nearly kept pace with an increase from 250% to 350%. He predicts that China will face poor growth prospects over the coming years as a result of its recent debt binge, as well as steep population decline.
Projecting that China will sustain rapid economic growth seems to echo claims by experts in the 1970s that the Soviet Union would surpass the United States. Then, in the 1980s, there were claims that Japan was poised to become the world's dominant superpower. Finally, there were forecasts in the 1990s that the European Union would dominate. All of these predictions were wrong.
There are other reasons to be wary of increasing our reliance in China as the emerging power in Asia. It's policies are often the exact opposite of what economists usually advocate for in achieving economic growth. Rather than encouraging liberty and the free flow of thought with innovation protected by property rights, China controls its own Internet and social media, steals intellectual property, initiates cyber-attacks on nations and companies around the world, makes unsupported territorial claims in the South China Sea, engages in human rights violations, has rampant corruption, and increasingly pursues a cult of personality instead of fostering democracy. Even more than infrastructure or investment, growth in emerging market economies beyond the middle-income range requires good institutions, something China sorely lacks. It is not clear that the AIIB will help or retard the development of good institutions.
It briefly became fashionable among the Davos elite to speak of the new Beijing consensus on state-directed economic growth as the successor to the IMF's so-called Washington consensus. Belief in the Beijing consensus peaked in 2014 just when the AIIB was being launched in Beijing. Confidence in the Beijing consensus was soon undercut by the sharp drop in growth in emerging market economies in 2015, when slumping commodity prices and a strong U.S. dollar revealed that this model of growth was ultimately another illusion underpinned by debt, the most precarious source of growth.
Even the Chinese seem to be losing faith, judging by the increasing amount of capital that local investors are moving out of China—$1.7 trillion in 2015 and 2016—leading China to impose capital controls this year. Such capital flight by local investors also preceded the Asian financial crisis in 1997. The steady outflow of capital from China, including an unknown amount into Canada's housing market, reflects that China's own leaders are skeptical about the sustainability of economic growth and political stability.
It is worth recalling that the growth breakthrough in many emerging markets in recent decades was not remotely the result of investments made over time by multilateral institutions such as the World Bank. It reflected countries adopting capitalism—tentatively at first, in China—around 1978, then in eastern Europe after 1989, and then increasingly around the world, as nations realized that it was institutions and not government-directed investments that fuelled economic growth.
Thank you.
Thank you to all the presenters here today for coming out to share your information with us.
I was very excited to hear from the Geothermal Energy Association. I'm from the Northwest Territories, and it's a very big riding. There are a lot of issues with generating power and heat. It's a very costly place to operate, and over the period of my life I've seen a lot of initiatives come forward. I was involved with a lot of projects. We looked at biomass, and we're still working on biomass.
However, the farther north you go, the smaller the tree is, to the point where there are no trees. Even in the southern part of the territory, it takes probably four trees to make up what is a normal tree in the southern part of Canada.
We looked at wind turbines. Every projected that we tried had issues. The turbines are expensive, the technology is expensive. If you're way up in a remote community and it breaks down, it takes about six months to get a part shipped up from another country, and it will take another six months to a year to get somebody who is willing to come up to fix it. It's very expensive to look at wind.
We are trying some projects around the community of Inuvik this coming summer, and I hope they work well, but we have problems with freezing rain and ice and those things. Solar has huge potential. In the summer, we have 24-hour sunlight, but we don't have that from October to February, so it doesn't work at all. We're looking at hydro. Hydro is very costly.
For us, geothermal is the solution, but geothermal hasn't been able to move forward. We've tried several projects and they didn't work. We just couldn't get geothermal right. We didn't have the expertise, all the ingredients, but we know that the ground is suitable. We have everything else.
I wasn't aware that there are projects being looked at in the far north, especially in Nunavut. I never expected to hear that. As we move forward, I think this area is going to get a lot of interest.
Could you tell me a couple of things? First of all, you talked about a number of different companies. The reason I want to ask this is because there's a lot of interest from indigenous corporations, indigenous people, on renewable energy. There is a huge need for us to convert in the north, and our government has committed to doing that.
Can you tell me, first of all, if there's any way, with some of the initiatives you're looking at, for indigenous people to play a role?
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Absolutely. Let's start right in your territory. In the Northwest Territories hamlet of Fort Liard, the National Energy Board has already granted a geothermal permit to one of CanGEA's member companies, one of the ones I work with. It was 51% Acho Dene Koe, which is with the local first nation, and then the CanGEA member company, Borealis GeoPower. They were able to do a front-end engineering study with the support of NRCan. The project did not go forward, and this was several years ago. At the time, the Northwest Territories Power Corporation could not come to a power purchase agreement with the Acho Dene Koe and Borealis GeoPower.
Since that time, the governments, both federal and territorial, have changed. There is also a new initiative that NRCan is supporting that is trying to get the remote communities off diesel. That particular project has reapplied, and we hope that it goes forward.
The discovery well was actually drilled by Chevron, decades ago. The funny thing about Chevron, an oil company, is that it's actually the largest geothermal company in the world—it's not even a renewable company; it's an oil company—because of course it knows how to drill really well. Here we have an example of Chevron drilling the well and leaving the area and the country. Now other companies are coming in after Chevron and using Chevron's discovery wells, and they would like to take it forward.
Kitselas Geothermal Inc. is a first nation-led project. Kitselas First Nation is out of Terrace, B.C. It owns 51% of the Terrace project, and it's looking to move that forward under a first nation banner. Local employment means a great deal in skills training opportunities.
With regard to the Nunavut feasibility study, I'd like to applaud Qulliq Energy Corporation, which is the crown corporation for both power and heat. Most utilities are just power, but in its situation, it's power and heat. Its CEO, Bruno, is a visionary about the fact that this works. It has worked in 25 other countries for power and in over 80 countries for heat, so why not in Nunavut, why not in the Northwest Territories, why not in Yukon and in the rest of Canada?
There is an Inuit minimum concentration that needs to go towards the feasibility study, so many of our members are now expanding our network and working with the Inuit and with the Nunavut people to help them fulfill their energy dream of energy sovereignty and security, and do it in a renewable way.
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Thank you for giving me the opportunity to say that there are two reasons.
I think one is the two-for-one. You may have heard that geothermal is costly. For example, an average international statistic to take with you is $5 million per megawatt installed. That's about double what it costs for wind and double what it costs for natural gas. Of course, you get that with having no emissions, and you get that with basically a 100% online factor versus wind perhaps being at 25% or 33%. On the levelized cost, even though the installed cost is higher, you actually get more electricity out of that power plant.
But here is where it gets better: from that power plant you also get heat. I don't want to call heat “waste”, because it's obviously a very valuable product, but in that paradigm shift of people thinking that geothermal is expensive, they're not considering that you're going to be selling two different things. In some cases—and B.C. and Alberta are prime examples—there is already a carbon tariff or a carbon tax, and that's obviously coming federally by 2022, so now you're selling three things for that same capital build: carbon credits, heat, and power—all renewable. There is the number one thing.
Second, we cannot talk about this industry without thinking about the jobs. There are 1.7 jobs per megawatt. We are the highest job creator of all energies. The first thing people say to me is, “Oh, your operating costs must be huge if you have so many jobs”, but these aren't jobs that are just associated with the operating costs. These are induced jobs that are created because people are using the heat.
Here's an example: 175 megawatts of power employ 60 people at the power plants, but employs 840 people in the geothermal industrial park or the geopark. That tiny half a megawatt....
You have a 500 kilowatt demonstration project, Sustainaville, that's looking for test turbine treatment. That's aimed at creating 50 to 80 jobs—these are clean-tech jobs—in using clean technology.