FINA Committee Report
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CHAPTER THREE: BUSINESSESWhen it began its pre-budget consultations in advance of the 2017 federal budget, the Committee asked the following question: What federal actions would assist Canada’s businesses – in all regions and sectors – meet their expansion, innovation and prosperity goals, and thereby contribute to economic growth in the country? The Committee’s witnesses responded by commenting on the following: corporate taxes, regulations and fees; supports for new and expanding businesses; employment; research, development, innovation and commercialization; trade and investment; and proposals for specific sectors. A. CORPORATE TAXES, REGULATIONS AND FEESIn focusing on corporate taxes, regulations and fees, the Committee’s witnesses presented a range of proposals related to corporate tax rates and other tax measures, capital cost allowance rates, the transfer of a business to a new owner, and regulations and credit card fees. Federal Corporate Income Tax Rates, Selected Years, 1960–2016 (%)
Source: Table prepared using data obtained from: Income Tax Act, R.S.C. 1985, c. 1, various years. 1. Corporate Tax Rates and Other Tax MeasuresThe Committee was told about the overall corporate tax burden, with the Business Council of Manitoba, the Fredericton Chamber of Commerce, the Halifax Chamber of Commerce and Forest NB requesting that the government reduce the overall tax burden on businesses. In mentioning corporate income tax rates specifically, HSBC Bank Canada, the Business Council of Canada, the Halifax Chamber of Commerce, and the City of Fredericton and Ignite Fredericton suggested a reduction in the general corporate income tax rate, while the Conference Board of Canada and the Chartered Professional Accountants of Canada indicated that corporate income tax rates should remain at – or be reduced from – their current levels, which were characterized as internationally competitive. However, Oxfam Canada, the Public Service Alliance of Canada and the Cooper Institute advocated an increase in the general corporate income tax rate, and the Canadian Union of Public Employees said that large corporations should pay their “fair share” of taxes. With a focus on the small business deduction, the Canadian Convenience Stores Association, the Canadian Federation of Independent Business, Restaurants Canada, the Halifax Chamber of Commerce, the Greater Charlottetown Area Chamber of Commerce and the Canadian Chamber of Commerce supported lower taxes for qualifying businesses. CONTAX Inc. and the Canadian Chamber of Commerce proposed an increase in the income threshold for the small business deduction. The C.D. Howe Institute suggested that a task force be established with the mandate to distinguish between new, growth-oriented small businesses and businesses with limited growth ambitions; the small business deduction should be available to the former. The Fredericton Chamber of Commerce, HSBC Bank Canada and the Business Council of Canada said that large and small businesses should have similar tax rates. In focusing on sectors in which businesses currently do not – or may not in the future – qualify for the small business deduction, the Canadian Medical Association and the Canadian Association of Radiologists requested that group medical structures be exempted from the 2016 federal budget’s proposed changes that would lead many of these structures to no longer qualify for the deduction. The Canadian Camping and RV Council and the Canadian Federation of Independent Business said that campgrounds and storage facilities respectively should be considered “active businesses” for the purpose of being eligible for the small business deduction. Some witnesses urged the inclusion or elimination of certain corporate deductions or tax credits for the purpose of determining corporate taxes owing. For example, the C.D. Howe Institute called for the creation of an allowance for corporate equity that would reduce taxable profits, while Canadian Manufacturers & Exporters proposed adoption of the Atlantic Investment Tax Credit at the federal level. The Canadian Union of Public Employees urged review, and possible elimination, of the corporate meals and entertainment expense deductions. With a specific emphasis on deductions and credits available to businesses in the mining sector and the oil and gas sector, the Green Budget Coalition supported the phase-out of various exploration and development deductions and credits. The Saskatchewan Mining Association asked for tax policies that encourage access to capital for junior companies involved in mineral exploration. The Canadian Federation of Independent Business said that payroll taxes are burdensome, for businesses generally and for small and medium-sized enterprises particularly, and suggested that employer contributions to the Canada Pension Plan and the Employment Insurance program be reduced. According to the Canadian Vehicle Manufacturers’ Association, businesses that provide comprehensive pension plans should be exempted from making Canada Pension Plan contributions. With a focus on digital media and e-commerce, Unifor, the Canadian Wireless Telecommunications Association, the Canadian Union of Public Employees, the Association of Canadian Financial Officers and Friends of Canadian Broadcasting proposed that international companies engaged in these areas – like Netflix and Uber – be subject to Canadian taxation in a manner that is similar to that of comparable Canadian businesses. Furthermore, Friends of Canadian Broadcasting suggested that the government take the following actions: eliminate the deductibility of expenses incurred for advertisements placed on foreign-owned or -controlled Internet platforms; require all digital media companies to allocate part of their revenue to the production of Canadian content; and extend the Canadian Film or Video Production Tax Credit to include local news programming. In mentioning credit unions and cooperative financial institutions, Desjardins Group, Interior Savings Credit Union, the Canadian Credit Union Association and First West Credit Union said that federal tax laws and regulations should reflect the inherent differences between cooperatives and credit unions, and that the additional deduction for credit unions that began being phased out in 2013 should be reinstated. Interior Savings Credit Union requested the creation of tax incentives for cooperative ownership. Witnesses also proposed a range of other corporate tax changes. For example, the C.D. Howe Institute stated that the excise tax on aviation gasoline and jet fuel should be eliminated, and Canadian Manufacturers & Exporters supported elimination of the withholding tax on income earned on services performed in Canada by a non-resident when the non-resident certifies that the income is exempt from Canadian taxation because of a tax treaty. 2. Capital Cost Allowance RatesIn relation to capital cost allowance rates, the Committee was told about the needs of a number of specific sectors, including telecommunications. For example, the Information Technology Association of Canada said that the rates for information and communications technology assets should be standardized and increased, while the Agence interrégionale de développement des technologies de l'information et des communications made a similar request regarding all new expenditures incurred by Internet service providers and cellular carriers serving rural or remote regions. The Canadian Wireless Telecommunications Association advocated a higher rate for depreciable telecommunications assets in general. Regarding capital cost allowance rates for other sectors, the Canadian Chamber of Commerce supported a higher rate for a wide range of capital equipment and technology assets, while the Canadian Construction Association requested an increase in the rate for Class 38 assets; the Canadian Association of Petroleum Producers urged a review of rates in the petroleum-producing sector. The Canadian Solar Industries Association called for a change in the accounting rules in relation to the depreciation of renewable energy assets. The Dairy Farmers of Canada stated that the announced change from an eligible capital property regime to a capital cost allowance regime should not be implemented. 3. Transfer of a Business to a New OwnerIn informing the Committee about the transfer of a business to a new owner, the Fredericton Chamber of Commerce suggested that the government examine the capital gains taxes related to intergenerational transfers of businesses, while the Association des Marchands Dépanneurs et Épiciers du Québec and the Agricultural Producers Association of Saskatchewan said that Bill C-274, An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), should be adopted to facilitate intergenerational business transfers. According to the Conference for Advanced Life Underwriting, intergenerational business transfers on a tax-neutral basis should be expanded to include any family member. Desjardins Group said that the government should improve the quantity and quality of business transfer-related information, and should establish a process to ensure coordinated efforts among groups involved in business transfers; these groups include professional and trade associations, as well as government organizations. The City of Fredericton and Ignite Fredericton advocated expansion of Fredericton’s succession planning matching program, which pairs immigrants with business owners wishing to sell their business. In commenting specifically about intergenerational farm transfers, Keystone Agricultural Producers, the Agriculture Alliance of New Brunswick, the Union des Producteurs Agricoles, the Prince Edward Island Federation of Agriculture and the Canadian Federation of Agriculture requested that rollover provisions and capital gains exemptions for family farm transfers be extended beyond children to include other family members. The National Farmers Union suggested that the government introduce measures that do not rely on loans to, or interest payments by, the individual who is purchasing the farm from an older generation. 4. Regulations and Credit Card FeesThe Committee was told about regulations that businesses consider to be burdensome. For example, the Canadian Convenience Store Association, the Canadian Federation of Independent Business, and the City of Fredericton and Ignite Fredericton highlighted the need to eliminate government “red tape.” Moreover, the Halifax Chamber of Commerce, the Manitoba Chambers of Commerce and the Canadian Convenience Store Association called for the government to consult with businesses before adopting new regulations. With a focus on regulations that are specific to financial institutions and the financial sector, Desjardins Group, the Canadian Credit Union Association and Interior Savings Credit Union supported a comprehensive review of the treatment of smaller and cooperative financial institutions, and of financial services legislation to address the balance between creating financial stability and increasing competition. According to the Canadian Credit Union Association and Interior Savings Credit Union, financial institutions with up to a certain percentage of their assets held by non-residents should not have to implement the Organisation for Economic Co-operation and Development’s common reporting standard. As well, the Canadian Credit Union Association stated that regulations regarding mortgage lending should be subject to a “regulatory pause,” with the result that the impact of the recently implemented mortgage-related rules would be examined before additional rules regarding lender risk-sharing for government-backed insured mortgages are put into effect. The C.D. Howe Institute proposed the adoption of digital cheque processing, and upgrading of the Automated Clearing and Settlement System to increase its speed and reduce its cost. The Canadian Health Food Association made specific reference to several regulations that affect health food products, and suggested that Health Canada’s Import and Export Policy for Health Products under the Food and Drugs Act and its Regulations be modified to prevent suppliers from selling products in Canada through the Internet that do not comply with the Food and Drug Regulations. It also stated that implementation of all proposed food labelling changes should occur at the same time, and indicated that the government should require mandatory labelling of genetically modified ingredients in all food products for human consumption. With a focus on business reporting and tax planning, the Association of Canadian Financial Officers advocated the following: implementation of the Organisation for Economic Co-operation and Development’s country-by-country reporting standard at a lower financial activity threshold; the vetting of all tax products by – and registration of them with – the Canada Revenue Agency; and the disclosure of beneficial ownership of all entities incorporated in Canada. The Quebec Employers Council thought that Canada should adopt deferred prosecution agreements to ease the burden of legal proceedings on the justice system, and to encourage tax-related self-reporting and compliance. Unifor said that the government should issue a Cabinet order to direct the Canadian Radio-television and Telecommunications Commission to lift its digital media exemptions for online broadcasters and distributors, which would require foreign firms with digital operations to apply for licences in Canada. The Canadian Federation of Independent Business and the Canadian Federation of Agriculture suggested that the extent to which regulatory systems are a barrier to innovation be minimized. The Association des Marchands Dépanneurs et Épiciers du Québec, the Retail Council of Canada, Restaurants Canada and the Canadian Convenience Stores Association stated that credit card interchange fees should be capped, while the Association des Marchands Dépanneurs et Épiciers du Québec called on the government to support Bill C-236, An Act to amend the Payment Card Networks Act (credit card acceptance fees); the bill would give the Governor in Council the power to set a limit on these fees. 5. The Committee’s RecommendationsFeeling that businesses seeking to engage in succession planning should be able to consider as many options as possible for transferring their business, that the tax treatment of business income should reflect the nature of a business’ operations and that capital cost allowance rates should be linked to the useful life of assets, the Committee recommends: RECOMMENDATION 30 That the Government of Canada conduct an exhaustive review of the tax treatment of intergenerational transfers of businesses. RECOMMENDATION 31 That the Government of Canada recognize the income earned by campgrounds and storage facilities as “active business income” for the purpose of determining eligibility for the small business deduction. RECOMMENDATION 32 That the Government of Canada review and alter capital cost allowance rates to reflect changes in technology and the useful life of assets. B. SUPPORTS FOR NEW AND EXPANDING BUSINESSESThe Committee’s witnesses highlighted a number of ways in which new and expanding businesses could be supported. In particular, they commented on regional development agencies, entrepreneurs, clusters and incubators, and access to financing. Entrepreneurs (Self-Employed with Employees) as a Share of the Canadian Labour Force, by Region, 2006–2011 (%)
Note: The term “entrepreneurs” includes those who work independently and those who hire employees. In Canada, there were 1,835,100 entrepreneurs in 2011. Source: Table prepared using data obtained from: Business Development Bank of Canada, 2012 BDC Index of New Entrepreneurial Activity, pp. 4–7, accessed 21 September 2016. 1. Regional Development AgenciesThe Committee was informed about the federal regional development agencies, with the Fredericton Chamber of Commerce stating that the Atlantic Canada Opportunities Agency should be better funded in order to meet the needs of all businesses, and Western Economic Diversification – Alberta requesting more funding for its Western Innovation Initiative program. The Atlantic Canada Opportunities Agency – Nova Scotia, Western Economic Diversification – British Columbia, the Atlantic Canada Opportunities Agency – Newfoundland and Labrador and the Federal Economic Development Initiative for Northern Ontario said that, while they are adequately funded, additional funding would be useful. However, the Atlantic Canada Opportunities Agency – New Brunswick said that it has adequate resources and does not require additional funding. BioVectra Inc. asked the government to increase support for the Atlantic Canada Opportunities Agency’s Atlantic Growth Strategy platform. Regarding the operations of the regional development agencies, Economic Development Winnipeg Inc. believed that the government should review the ways in which these agencies are regulated, meet policy objectives, and communicate both among themselves and with the other levels of government. Similarly, Western Economic Diversification – British Columbia identified a need for better coordination among these agencies and other agencies involved in regional development. The Dairy Farmers of New Brunswick said that the Atlantic Canada Opportunities Agency should promote itself better, and the Dairy Farmers of New Brunswick and the Maritime Fisherman’s Union proposed that the Atlantic Canada Opportunity Agency’s criteria for identifying the activities that it will fund be less restrictive. Economic Development Winnipeg Inc. urged more funding for local economic development agencies, such as itself. 2. EntrepreneursIn informing the Committee about entrepreneurs and the supports needed for their success, Opportunities NB indicated that federal and provincial governments should make additional efforts to fund entrepreneurs. The Shaw Rocket Fund requested support to create a fund for young online entrepreneurs; this fund would be accompanied by financing for online discoverability tools so that the work of these entrepreneurs could be found on the Internet. The Greater Charlottetown Area Chamber of Commerce suggested that a two-year tax waiver for first-time young entrepreneurs be introduced. Some witnesses focused on entrepreneurial immigrants, with the Business Council of Canada asking the government to bring these types of immigrants to Canada. The Greater Charlottetown Area Chamber of Commerce advocated more funding for the PEI Connectors program, which supports immigrant entrepreneurs. Western Economic Development – Manitoba believed that the government should support small and medium-sized businesses as they attempt to access human resources skills and other resources, as well as new markets, while the Board of Trade of Metropolitan Montreal said that small and medium-sized businesses require help to adopt new technologies. General Motors of Canada Limited asked the government to support businesses that wish to start up or scale up by helping to foster strategic intellectual property strategies that will provide protection as these businesses expand globally. The Business Development Bank of Canada thought that supports should be targeted at a limited number of issues related to small business development. 3. Clusters and IncubatorsThe Committee was told about clusters, with PEI BioAlliance suggesting that clusters be a key area for support throughout Canada, and Financial Executives International Canada urging continued support for Canada’s innovation hubs. A number of witnesses supported funding for clusters in specific sectors: Alberta-Pacific Forest Industries Inc. and the Forest Products Association of Canada for the forest sector; Dairy Farmers of Canada for the agri-food sector, specifically for the Agri-Science Cluster Initiative; Canadian Manufacturers & Exporters for the digital manufacturing sector; the Canadian Association of Petroleum Producers and Canada’s Oil Sands Innovation Alliance for the existing innovation super-cluster framework in the oil and gas sector; and General Motors of Canada Limited for the automotive sector. In mentioning the role that colleges and polytechnics play in clusters, Polytechnics Canada requested additional funding for the College and Community Innovation Program. It also supported the creation of a national post-secondary business voucher program that would allow small and medium-sized businesses to access the expertise and equipment of post-secondary institutions. Some witnesses highlighted the need for partnerships in order to foster innovation and commercialization, with the Manitoba Chambers of Commerce asking that the government foster improved partnerships among businesses, governments, universities and public research institutions, and Financial Executives International Canada indicating that the government should establish partnerships among businesses, start-up organizations, governments and academia. General Motors of Canada Limited proposed that the government implement initiatives for collaboration and the building of innovation ecosystems. The City of Fredericton and Ignite Fredericton advocated a clustering strategy at the regional level. According to the Canadian Chamber of Commerce, the government should invest in incubators. 4. Access to FinancingIn commenting on ways in which the government could enhance access to financing for Canadian businesses, Opportunities NB urged governments to work with capital providers of all types to ensure that all Canadian businesses have sufficient access. It stated that increased access could be facilitated through initiatives in which the public sector and the private sector match funds. However, the Canadian Taxpayers Federation suggested that the government not fund or otherwise support private-sector businesses. In highlighting methods to increase venture capital financing, the Fredericton Chamber of Commerce said that the New Brunswick Small Business Investor Tax Credit Act should be added to the list of acts under which a corporation may be registered to qualify as a prescribed venture capital corporation for the purpose of the lifetime capital gains exemption. The Canadian Chamber of Commerce and General Motors of Canada Limited called for a refundable tax credit for venture capital investments in eligible businesses. As well, the Canadian Chamber of Commerce proposed the creation of a tax exemption for capital gains earned from venture capital financing, as well as increased investments under the Venture Capital Action Plan and a possible limit on the government’s rate of return on its investment; any returns above this limit would accrue to private venture capital investors. The C.D. Howe Institute supported the continued phase-out of the federal tax credit for labour-sponsored venture capital corporations. Regarding angel investors, the National Angel Capital Organization urged more financing by these investors in new and expanding businesses. As well, it asked the government to support expansion of the organization’s regional programs across Canada. The National Angel Capital Organization also indicated that the government should continue to fund existing measures that help to build the capacity of angel investors, and made particular mention of the regional development agencies. As well, it stated that the government should support the organization’s collection of data and reporting of angel investment outcomes. Interior Savings Credit Union, Financial Executives International Canada, PEI BioAlliance and the Canadian Chamber of Commerce suggested that flow through shares would be an effective means by which to increase private investment in new and expanding businesses. With a focus on businesses in rural communities, Opportunities NB advocated enhanced support for new and expanding businesses in these communities, including through increased access to capital, marketing, mentorship and training. As well, according to it, the government should either increase incentives for venture capital and angel investors to make investments in rural areas, or make such investments itself. As a means of increasing private investment in high-potential firms, Canadian Manufacturers & Exporters asked the government to create investment programs in which risk would be shared between the government and the private sector. 5. The Committee’s RecommendationsRecognizing that businesses need to be supported as they establish themselves and grow domestically and/or internationally, the Committee recommends that: RECOMMENDATION 33 That the Government of Canada take the following actions to enhance Canada’s federal regional development agencies and ensure their full participation in, and implementation of, the country’s innovation agenda:
RECOMMENDATION 34 That the Government of Canada support angel investment by investing in a nationally coordinated network supporting angel investment, and enabling both data collection and the reporting of angel investment–related outcomes at the national level. C. EMPLOYMENTThe Committee’s witnesses discussed employment issues that affect businesses, with a particular focus on labour shortages, and incentives for businesses to create jobs and train employees. Firms Reporting Being Affected by a Labour Shortage, Canada, 1997–2016 (%)
Source: Figure prepared using data obtained from: Bank of Canada, Business Outlook Survey, various years. 1. Labour ShortagesRegarding labour shortages, the Committee was told that immigration may be a means by which to address this issue. For example, the Conference Board of Canada, the Atlantic Provinces Economic Council and the Canadian Home Builders’ Association suggested that allowing a higher number of immigrants to enter Canada would help to alleviate at least some labour shortages. The Canadian Chamber of Commerce advocated improvements to the Express Entry program to enable more timely processing of entrants under this program, and the Business Council of Manitoba proposed expansion of the Provincial Nominee Program and greater provincial flexibility to address unique regional differences. To avoid population decline and sustain the labour force needed for economic expansion, the Greater Charlottetown Area Chamber of Commerce indicated that the government should implement immigration measures that reflect specific provincial needs. The Chartered Professional Accountants of Canada said that a concerted effort should be made to integrate internationally trained professionals into the Canadian workforce. Similarly, the Fredericton Chamber of Commerce, Forest NB and Supporting Employment & Economic Development Winnipeg Inc. highlighted a need for greater funding to improve qualification recognition programs, while the Halifax Chamber of Commerce believed that more funding should be provided for immigrant settlement services. The Halifax Chamber of Commerce also supported increased funding for language training. As well, the Temporary Foreign Worker Program was mentioned, with the Quebec Employers Council and the Canadian Chamber of Commerce calling for more flexible rules for this program, and the Canadian Chamber of Commerce also asking the government to address processing issues. Restaurants Canada said that the program should be reformed to make it a pathway to permanent residency, and the Union des Producteurs Agricoles characterized the program as integral to alleviating labour shortages. The Canadian Vehicle Manufacturers’ Association supported the creation of a “trusted employer” program to expedite the permit process for employing temporary foreign workers in the automotive sector. Similarly, General Motors of Canada Limited suggested that the government replace the Temporary Foreign Worker Program with either a trusted employer visa or a global talent visa. The Greater Charlottetown Area Chamber of Commerce thought that the government should assess the negative impacts of limiting the number of temporary foreign workers, and expand the eligibility requirements for the Temporary Foreign Worker Program to include other sectors experiencing labour shortages. In identifying education as a tool that could help to address labour shortages, the Canadian Home Builders’ Association requested support for employer-led training, as well as government promotion of skilled trades to youth. The Business Council of Manitoba suggested that Manitoba’s skilled labour shortage could be alleviated if governments were to ensure that Indigenous students have the same educational outcomes as the rest of the population. General Motors of Canada Limited mentioned the creation of a “capacity development” advisory group to match students’ skills with the needs of businesses, while the Canada West Foundation said that employers should be helped to identify the competencies – rather than the credentials – that they need for a particular job. HSBC Bank Canada, the Regina and District Chamber of Commerce and the Greater Charlottetown Area Chamber of Commerce stated that education and skills training should be more accessible and consistent with employer needs. Restaurants Canada highlighted the need to retain labour in the tourism sector. 2. Incentives to Create Jobs and Train EmployeesThe Committee was informed about the need to provide employers with incentives to create jobs. For example, Colleges and Institutes Canada supported financial incentives to help employers – particularly small and medium-sized businesses – to reduce the costs of hiring co-op students and interns. With a focus on reducing payroll taxes in order to lower employment costs, the Canadian Chamber of Commerce requested a reduction in employers’ Employment Insurance contribution rate, while the Canadian Federation of Independent Business asked the government to implement an “Employment Insurance holiday” for small and medium-sized businesses that hire youth; Restaurants Canada believed that this “holiday” should be available to all employers. CONTAX Inc. advocated reintroduction of the small business job credit, which provided a tax credit based on the change in Employment Insurance premiums that an employer paid. In highlighting incentives for businesses to train employees, Restaurants Canada proposed the creation of a job training tax credit for employers. Similarly, the Quebec Employers Council said that the government should establish an Employment Insurance contributions credit in relation to training expenses. BioVectra Inc. suggested that it needs financial support to attract – and provide training to – individuals in the fields of microbiology, biochemistry and biomedical engineering. 3. The Committee’s RecommendationsBelieving that actions are needed to ensure that employers can easily access the domestic and international employees that they need, the Committee recommends: RECOMMENDATON 35 That the Government of Canada address processing issues and inflexible features of the Temporary Foreign Worker Program that are negatively affecting employers’ access to workers in a range of sectors. RECOMMENDATION 36 That the Government of Canada improve the Express Entry program, with a view to enhancing service standards and processing applications more quickly. RECOMMENDATION 37 That the Government of Canada address the processing issues and inflexible features of the Temporary Resident Visa Program, particularly in order to assist Canada’s tourism sector. RECOMMENDATION 38 That the Government of Canada improve the Temporary Foreign Workers Program Agriculture Stream and the Seasonal Agricultural Workers Program. RECOMMENDATION 39 That the Government of Canada work with provincial/territorial governments to provide greater financial incentives to small and medium-sized employers that hire people with disabilities. RECOMMENDATION 40 That the Government of Canada increase its contribution to the various federal and provincial/territorial labour market agreements in relation to people with disabilities. D. RESEARCH, DEVELOPMENT, INNOVATION AND COMMERCIALIZATIONA number of the Committee’s witnesses commented on research, development, innovation and commercialization. In that regard, they focused on the following: tax and program measures; discovery and applied research, and research granting councils; and commercialization. Process Innovation Expenditures by Canadian Businesses, by Employee Size, 2012 (%)
Note: “Process innovation” is the implementation of a new or significantly improved production process, distribution method, or support activity for goods or services. The figure illustrates the percentage of businesses making “process innovation” expenditures and the amount that they spent. Source: Figure prepared using data obtained from: Statistics Canada, Table 358-0242, “Survey of innovative and business strategy, process innovation expenditures, by North American Industry Classification System and enterprise size, all surveyed industries,” CANSIM (database), accessed 21 September 2016. 1. Tax and Program MeasuresIn highlighting tax measures designed to encourage research and development by businesses, the Committee was told – in particular – about the Scientific Research & Experimental Development investment tax credit. Canada’s Oil Sands Innovation Alliance and the Greater Charlottetown Area Chamber of Commerce said that the credit should be continued, with Canada’s Oil Sands Innovation Alliance proposing a possible expansion. Alberta-Pacific Forest Industries Inc., the Canadian Wireless Telecommunications Association, the Chartered Professional Accountants of Canada, the Canadian Vehicle Manufacturers’ Association and the Canadian Association of Petroleum Producers asked the government to reinstate the ability to claim capital expenditures; the Canadian Association of Petroleum Producers believed that this ability should apply specifically to expenditures on clean technology and climate change mitigation measures. As well, Alberta-Pacific Forest Industries Inc. requested that the Scientific Research & Experimental Development investment tax credit apply to a higher percentage of eligible costs for large, non-Canadian–controlled private corporations, and that adjudication occur differently in order to increase the number of successful claims. The Chartered Professional Accountants of Canada, General Motors of Canada Limited, the Quebec Employers Council and Canadian Manufacturers & Exporters suggested that the credit be refundable for large businesses. The Fredericton Chamber of Commerce advocated a higher credit rate for expenditures exceeding $3 million, while the Board of Trade of Metropolitan Montreal said that the credit should be re-examined in order to ensure a better balance between direct and indirect assistance. Canadian Manufacturers & Exporters asked for a full review of the Scientific Research & Experimental Development investment tax credit, with a particular focus on the following: updating the definitions of innovation; clarifying the definition of government assistance; fast-tracking the claims process; increasing the threshold for the credit’s cash refund for small and medium-sized businesses; and ensuring clear explanations of evidence requirements. The Information Technology Association of Canada stated that a comprehensive consultation on the tax conditions that foster research and development spending should occur, with those consultations including consideration of whether a tax credit to supplement the Scientific Research & Experimental Development investment tax credit should be created. The Manitoba Chambers of Commerce thought that the government should create more effective tax or granting strategies to foster research and development for both processes and products. According to the Business Council of Canada, supports for research and development should be simplified, although it also proposed that – in some cases – governments not interfere with business decisions regarding investment and innovation. The Canadian Chamber of Commerce and General Motors of Canada Limited requested the development of patent pools to allow small and medium-sized businesses, as well as entrepreneurs, to access a broad range of patents with which to expand their business. The Greater Charlottetown Area Chamber of Commerce said that it supports the Industrial Research Assistance Program. It also urged the creation of innovation and commercialization infrastructure that would accelerate new product development, support local manufacturers and help to scale up export-oriented businesses. Western Economic Diversification – Saskatchewan called on the government to increase investments in innovation in order to diversify Saskatchewan’s economy. 2. Discovery and Applied Research, and Research Granting CouncilsThe Committee was informed about measures that are designed to support discovery research. For example, Universities Canada and the University of British Columbia advocated sustained investments in such research through the research granting councils. The University of British Columbia supported a review of these councils’ policies with a view to allowing greater flexibility in funding for international research partnerships. Similarly, Universities Canada stated that more funding should be allocated to international research and collaboration. Regarding applied research, the City of Fredericton and Ignite Fredericton urged the government to create incentives for applied research. Polytechnics Canada and the University of British Columbia thought that additional support should be given to the Research Support Fund, and the University of British Columbia proposed that at least a portion of this funding be allocated to universities. The University of British Columbia also suggested renewal of the Canada First Research Excellence Fund and, as part of the innovation agenda, Colleges and Institutes Canada indicated that the government should increase support for applied research that occurs in colleges and institutes. In commenting on specific research granting councils, the Canadian Association of Physicists asked that more funding from the Natural Science and Engineering Research Council of Canada be allocated to merit-based post-graduate and post-doctoral fellowship programs, and suggested that the Discovery Grants Program’s funding be adjusted to account for inflation, as well as for gross domestic product and population growth. According to Polytechnics Canada, the government should create a permanent annual program within the Social Sciences and Humanities Research Council that would be based on the College and Community Social Innovation Fund pilot project. The Board of Trade of Metropolitan Montreal suggested that funding for the three federal research granting councils and the Canadian Foundation for Innovation be predictable and stable. Universities Canada also requested support for the Canada Foundation for Innovation, which it suggested should be mandated to lead a national “big science” strategy. 3. CommercializationThe Committee was informed about the commercialization of new and innovative products or technologies into sellable goods and services, with – for example – Financial Executives International Canada, as well as the City of Fredericton and Ignite Fredericton, urging greater support for commercialization. To that end, Canadian Manufacturers & Exporters, the Canadian Chamber of Commerce, General Motors of Canada Limited and the Atlantic Provinces Economic Council proposed the creation of a “patent box” regime in which income generated by intellectual property developed in Canada would be taxed at a lower rate than other intellectual property income. The Manitoba Chambers of Commerce suggested that greater efforts be directed to integrating, into innovation ecosystems, businesses and institutions that focus on the commercial application of intellectual property. The Business Council of Manitoba proposed that the federal innovation agenda support pre-existing programs or partnerships; particular mention was made of the Enterprise Machine Intelligence and Learning Initiative in Manitoba. 4. The Committee’s RecommendationsRecognizing that Canada needs adequate research and development to occur, and that the results of those efforts must be commercialized, the Committee recommends: RECOMMENDATION 41 That the Government of Canada support the establishment of a Canadian centre for international research partnerships dedicated to building multisectoral, multinational research programs focused on late-stage technology development. RECOMMENDATION 42 That the Government of Canada consider the establishment of an automotive research and development centre within the National Research Council of Canada. RECOMMENDATION 43 That the Government of Canada establish targets for investments in discovery research, and develop a long-term strategy for achieving these targets. RECOMMENDATION 44 That the Government of Canada commit to a multi-year increase in direct federal investments in applied research at colleges and institutes. RECOMMENDATION 45 That the Government of Canada contribute to cluster capacity–building through the establishment of a small cluster coordinating office. The Government should also develop tools to collect and share data about the performance of globally competitive innovation clusters. RECOMMENDATION 46 That the Government of Canada work with stakeholders to encourage the growth of innovative Canadian companies by promoting their integration into high-value global supply chains. RECOMMENDATION 47 That the Government of Canada create a first patent program, with a design that is similar to that launched by the Government of Quebec. This program should subsidize the expenses incurred by small and medium-sized businesses obtaining a first patent. E. TRADE AND INVESTMENTThe Committee’s witnesses provided comments on a range of topics related to trade and investment, including international trade, foreign direct investment, duty and border issues, and domestic trade. Share of Exporting Businesses, By Employee Size, 2009 (%)
Note: For 2009, the number of businesses in Canada that reported exporting was 74,829. In the figure, the percentage share represents the number in each group as a proportion the total. Source: Figure prepared using data obtained from: SME Research and Statistics, Canadian Small Business Exports 2011, Table 1.1, 20 September 2016. 1. International TradeThe Committee was informed about a number of international trade–related issues. For example, regarding trade agreements, the Regina and District Chamber of Commerce, the National Cattle Feeders’ Association, the Atlantic Canada Opportunities Agency – New Brunswick and Western Economic Diversification – Alberta asked the government to continue to expand trade opportunities. The Conference Board of Canada and the Business Council of Canada urged the government to make efforts to limit the effects of what they characterized as increasing anti-trade sentiments globally, while the Manitoba Chambers of Commerce called on the government to consult Canadian businesses with the goal of developing more comprehensive international trade strategies. The Canadian Union of Public Employees stated that the government should pursue free trade agreements that promote improved work, social and environmental conditions worldwide, while the Cooper Institute said that the government should not sign trade agreements that would have the effect of accelerating climate change. The Canadian Taxpayers Federation believed that free trade agreements should be used as a vehicle to reduce subsidies. Some witnesses focused on specific free trade agreements, notably the Canada–European Union Comprehensive Economic and Trade Agreement, as well as the Trans-Pacific Partnership agreement. The Business Council of Manitoba, the Manitoba Chambers of Commerce, the Canola Council of Canada, the Board of Trade of Metropolitan Montreal, the Canadian Chamber of Commerce, the Business Council of Canada, the Halifax Chamber of Commerce and the Atlantic Provinces Economic Council urged the government to support and ratify these agreements. The Quebec Employers Council and Restaurants Canada mentioned ratification of the Canada–European Union Comprehensive Economic and Trade Agreement in particular, while the Association des Marchands Dépanneurs et Épiciers du Québec focused on ratification of the Trans-Pacific Partnership agreement. According to the Canadian Union of Public Employees, the government should not ratify either the Canada–European Union Comprehensive Economic and Trade Agreement or the Trans-Pacific Partnership agreement. The Cooper Institute indicated its lack of support for trade agreements that include investor-state dispute-settlement mechanisms; both of these agreements include such a mechanism. The Union des Producteurs Agricoles said that the government should ratify the Trans-Pacific Partnership agreement only if supply-managed products would not be disadvantaged, and the Canadian Vehicle Manufacturers’ Association proposed that the Trans-Pacific Partnership agreement be amended so that tariffs would not disadvantage Canadian automotive producers relative to those in the United States. Desjardins Group advocated compensation for sectors that might be negatively affected by ratification of trade agreements. The Dairy Farmers of Canada asked the government to alter the dairy sector compensation package that was announced in October 2015 in the context of possible ratification of the Canada–European Union Comprehensive Economic and Trade Agreement, as well as the Trans-Pacific Partnership agreement. In particular, it proposed that compensation in relation to the former agreement not depend on ratification of the latter agreement, and suggested that the compensation package ensure that dairy products are excluded from the Duties Relief Program. A number of witnesses mentioned the need for the government to be successful in negotiating a renewed softwood lumber agreement with the United States, including Western Economic Diversification – British Columbia, Western Economic Diversification – Alberta, the Atlantic Canada Opportunities Agency – New Brunswick and the Quebec Employers Council. Witnesses also identified other trade agreements that they think the government should pursue. For example, the Business Council of Manitoba stated that – in the absence of a signed and ratified Trans-Pacific Partnership agreement – the government should pursue bilateral trade agreements with the most significant Asian countries that are members of the Trans-Pacific Partnership. Similarly, the Business Council of Canada suggested that the government negotiate a bilateral trade agreement with Japan or a regional agreement with the countries of the Association of Southeast Asian Nations if the Trans-Pacific Partnership agreement is not ratified. The Canola Council of Canada, the Business Council of Canada and the Canadian Chamber of Commerce supported expanded trade opportunities with China. The Canadian Chamber of Commerce and the Board of Trade of Metropolitan Montreal advocated a free trade agreement between Canada and the United Kingdom, with the Board of Trade of Metropolitan Montreal also supporting an agreement with India. Some witnesses focused on trade promotion activities. For example, the Saskatchewan Mining Association stated that the government should continue its trade missions to emerging markets, while the Manitoba Chambers of Commerce suggested that the government expand its trade and investment promotion services, including by ensuring that its supports remain at least as generous as those of other countries. The City of Fredericton and Ignite Fredericton asked the government to customize export development and leadership programs, and to create partnerships between businesses seeking to enter a market and those already in that market. The Board of Trade of Metropolitan Montreal indicated that the government should increase its funding for CanExport and make it available in 2017, and it also said that the government should work with world trade centres in major Canadian cities. Canadian Manufacturers & Exporters suggested that the government work with public- and private-sector trade experts to build a national export accelerator program, similar to the Technology Accelerator Program. A number of witnesses highlighted the importance of trade promotion services to specific sectors, with the Union des Producteurs Agricoles and Keystone Agricultural Producers noting the agricultural sector; the Prince Edward Island Federation of Agriculture requested that the government help the agriculture and agri-food sector in the development of a plan to expand international market access. The Forest Products Association of Canada advocated renewed funding for the Expanding Market Opportunities program and for the Canada Wood Group. The Manitoba Chambers of Commerce indicated that the government should increase its efforts to harmonize Canadian standards with those of the country’s trading partners. The Canola Council of Canada said that Canada’s food safety standards should be better harmonized with those of the United States. The Canadian Vehicle Manufacturers’ Association called for all trade agreements to have consistent regulatory standards, including with respect to the Federal Motor Vehicle Safety Standards, the Canada Motor Vehicle Safety Standards and emissions. Witnesses also commented on policies to foster international competitiveness, with the Chartered Professional Accountants of Canada asking the government to ensure that its policies help businesses to compete in international markets and the Canadian Association of Petroleum Producers suggesting that the Bank of Canada continue to manage inflation appropriately in order to ensure international cost competitiveness. Western Economic Diversification – Alberta stated that the government should work with the energy sector to help it reduce production costs and thereby remain competitive. The Business Council of Canada, the Business Council of Manitoba, the Canadian Chamber of Commerce, the Canadian Construction Association, the Manitoba Chambers of Commerce, Export Development Canada and the Halifax Chamber of Commerce supported investments in trade-enabling infrastructure. The Canadian Construction Association urged the government to make decisions about this type of infrastructure using merit-based criteria, and proposed that the government and the private sector form a national trade infrastructure committee. The Board of Trade of Metropolitan Montreal, the Canadian Chamber of Commerce and the Canadian Construction Association said that the government should renew its commitment to trade corridors. The Canadian Steel Producers Association highlighted the Special Import Measures Act and proposed changes that it believes would better protect Canadian businesses from dumping in international markets. As well, it encouraged the government to continue its senior-level participation at the Global Forum on Steel Excess Capacity. 2. Foreign Direct InvestmentIn providing comments to the Committee about foreign direct investment, the Quebec Employers Council indicated that the government should develop a plan to facilitate private investments in Canada and in Quebec, particularly by ensuring a competitive tax policy and regulatory framework. The Canadian Association of Petroleum Producers urged the government to create a stable and competitive investment climate in Canada’s oil and natural gas sector, while Unifor said that the government should create a “one-stop” system to encourage new investments in Canadian automotive and automotive parts plants. The Atlantic Institute for Market Studies advocated the establishment of a framework to attract foreign investments that would nurture small and medium-sized businesses. The Advisory Council on Economic Growth proposed that Canada create a foreign direct investment agency to target specific investments, with a particular focus on encouraging the creation of new businesses rather than purchases of those that already exist. With a focus on foreign acquisitions of Canadian companies, the C.D. Howe Institute said that the government should replace the “net benefit” test that is applied when a foreign investors makes a large acquisition in Canada with a screening process focused on national security concerns. According to Unifor, the 2012 amendments to the Telecommunications Act regarding foreign ownership should be reversed. In mentioning foreign direct investment by Canadian businesses abroad, the Manitoba Chambers of Commerce highlighted the need for a national development finance institution that would help these businesses deploy technology and capital in emerging markets. 3. Duty and Border IssuesThe Committee was told about Canada’s de minimis threshold, with the Canadian Vehicle Manufacturers’ Association, eBay Canada Limited and the Canadian Chamber of Commerce supporting an increase in the threshold. However, the Recreation Vehicle Dealers Association of Canada, the Retail Council of Canada and the Canadian Health Food Association urged the government to maintain the threshold at its current level. Witnesses also highlighted various other duty- and tariff-related issues. For example, the Canadian Airports Council suggested that Canadian airports be permitted to provide duty-free sales upon arrival in Canada from international destinations, while the Greater Toronto Airports Authority supported the creation of arrival duty-free shops and the ability for duty-free shops to sell to both domestic and international passengers. The Retail Council of Canada called for the elimination of import tariffs in certain situations, specifically: where the volume of Canadian production of a good is limited; where products are subject to high tariff rates; and where the products in question are considered necessities for Canadian families. The Recreation Vehicle Dealers Association of Canada advocated elimination of the duties on aftermarket recreation vehicle parts. Regarding rules of origin and the threshold at which they apply, the C.D. Howe Institute urged a change from the face value of shipments to the most-favoured-nation tariffs payable on them. According to the Canadian Vehicle Manufacturers’ Association, the Generic Harmonized System Codes should be expanded to include commercial goods. It also suggested that communications about delays at the border occur promptly, that the government harmonize Canada’s border policy with that of the United States, and that border infrastructure be made a key priority. 4. Domestic TradeThe Committee was informed about a range of barriers to internal trade. For example, the Manitoba Chambers of Commerce and the Business Council of Manitoba asked the government to continue negotiations with the provinces/territories regarding liberalized internal trade, with the Manitoba Chambers of Commerce also suggesting that one negotiating goal be an expanded ability for private parties to seek redress in the courts. The Atlantic Provinces Economic Council proposed that the government support provincial efforts to liberalize internal trade, particularly by addressing barriers under federal control, such as supply-managed systems. The Canadian Federation of Agriculture stated that the government should increase funding for Canada’s Internal Trade Secretariat and enhance its leadership in seeking reduced internal trade barriers. Regarding specific internal trade barriers, Restaurants Canada called on the government to urge the provinces to allow the foodservice sector to purchase alcohol from any jurisdiction without limitations, and to make this alcohol available to customers in any jurisdiction. According to the Canadian Federation of Agriculture, governments should harmonize transportation regulations, and coordinate federal and provincial food processing standards. In focusing on barriers to the free movement of labour between provinces, Financial Executives International Canada asked the government to continue to provide leadership, and to enhance collaboration among governments and businesses to eliminate these barriers. 5. The Committee’s RecommendationHolding the view that people, goods and services should flow as easily as possible within Canada, the Committee recommends: RECOMMENDATION 48 That the Government of Canada continue its vigorous pursuit of the removal of internal trade barriers through direct negotiations with provincial/territorial governments designed to ensure the free flow of people, goods and services throughout Canada. F. SECTOR-SPECIFIC PROPOSALSThe Committee’s witnesses made proposals that were specific to the agriculture and agri-food, forestry, fisheries, manufacturing, and charitable, not-for-profit and social economy sectors. Selected Federal Measures for Specific Sectors
1. Agriculture and Agri-FoodIn informing the Committee about issues specific to the agriculture and agri-food sector, Farmers of North America focused on AgriInvest and requested that farmers be allowed to make a withdrawal from Fund 1 without first having to make a withdrawal from Fund 2, provided that any such withdrawal is invested in eligible projects. According to the Saskatchewan Association of Rural Municipalities, the government should eliminate the cap on government contributions to AgriInvest, and fund the measure at previous levels. With a focus on AgriStability, the Saskatchewan Association of Rural Municipalities and the Union des Producteurs Agricoles asked for payment eligibility–related changes. The National Farmers Union proposed the creation of an income assurance plan for beginning farmers. Regarding research and innovation in the agriculture and agri-food sector, the Union des Producteurs Agricoles said that these activities require greater funding. The Canola Council of Canada requested that the government allocate adequate funding to the next Agricultural Policy Framework, including for science clusters, and ensure that agriculture is a part of the federal innovation agenda. The Dairy Farmers of Canada urged the government to continue its partnership with it and other dairy organizations with a view to supporting both research and initiatives that target producers’ priorities and strategic objectives. It also said that the government should maintain support for the dissemination of research results and new technologies, and renew – as well as increase funding for – the Agri-Science Cluster Initiative. The Canadian Wheat Board Alliance suggested that all new funding for seed variety development be undertaken as a partnership between Agriculture and Agri-Food Canada and the Western Grains Research Foundation, with all patent rights being held in trust by the Crown for the sole benefit of Prairie farmers. The National Farmers Union called on the government to take the following actions: restore Agriculture and Agri-Food Canada’s research funding to pre-2012 levels and provide additional funding to rebuild scientific, technical and support staff capacity; ensure that sector-specific research data are in the public domain; and provide more funding for research and extension programs with the goal of reducing emissions from livestock production, promoting the adoption of low-input production methods and encouraging on-farm energy conservation. It also advocated the addition of a public interest surcharge on funds that businesses spend when collaborating with universities and Agriculture and Agri-Food Canada; surcharge-related revenue could be used to fund agricultural research in the public interest. Regarding trade issues that are related to the agriculture and agri-food sector, the Chicken Farmers of Canada stated that the government should require mandatory certification of imports classified as spent fowl, with this certification based on a forensic DNA test. It also asked that chicken be excluded from the Duties Relief Program and the Drawback Program, and that the government reinstate the sauce and cooking requirements in the definition of specially defined mixtures contained in the Customs Tariff. Restaurants Canada and the Business Council of Canada called for fewer trade restrictions by addressing barriers in supply-managed systems. Regarding farm labour, the National Cattle Feeders’ Association, Keystone Agricultural Producers and the Canadian Federation of Agriculture said that the government should work with agricultural producers to identify and alleviate labour shortages in the agriculture and agri-food sector. With a focus on marketing, the National Farmers Union proposed that the government support orderly marketing institutions, while the Canadian Wheat Board Alliance urged the creation of a single-desk marketing agency for all Prairie grains. The Canola Council of Canada stated that the next Agricultural Policy Framework should contain adequate funding for the AgriMarketing program. Regarding regulations that affect the agriculture and agri-food sector, the Canadian Supply Chain Food Safety Coalition advocated support for businesses to implement the forthcoming Safe Food for Canadians Regulations. In particular, it urged the government to take the following actions: re-allocate funding under the Growing Forward 2 program to provide direct financial assistance to affected businesses; establish a new implementation assistance program to ensure that all businesses meet the proposed regulatory requirements; and establish other forms of financial assistance, such as temporary tax incentives, targeted at the period during which the forthcoming regulations are to be implemented. It also suggested that the government set out a five-year plan, beginning in 2017–2018, to ensure that federal agencies have the resources that will be required to meet their new responsibilities under the forthcoming regulations. To protect Canada’s agriculture and agri-food sector from imported products that do not comply with Canadian regulations, the Canadian Convenience Stores Association, the National Cattle Feeders’ Association and the Union des Producteurs Agricoles advocated stronger border controls. The Canadian Wheat Board Alliance stated that the government should reinstate Kernel Visual Distinguishability and restore funding to the Canadian Grain Commission. The Canadian Wheat Board Alliance and Friends of the Canadian Wheat Board indicated that the government should undertake an audit that would provide information on the disposition of the Canada Wheat Board’s assets. Friends of the Canadian Wheat Board said that this audit should also identify the effects of the disposition on Western Canada’s grain handling and marketing systems. The Canadian Wheat Board Alliance also requested the release of the un-redacted audited statements of the Canadian Wheat Board’s final year of operations. In focusing on the wine sector’s marketability and competitiveness, the British Columbia Wine Institute said that the government should establish an innovation program that would help to fund investments in tangible and intangible winery assets. The Canadian Federation of Agriculture suggested that the government partner with the agriculture and agri-food sector to develop a strategic vision to identify and capitalize on current and future opportunities. It also proposed that the government reinstate the Supreme Court of Canada’s interpretation of section 31(1) of the Income Tax Act in order to ensure that multiple factors are considered when deciding the amount that can be claimed for farm losses incurred by farmers who have off-farm income. The Dairy Farmers of Canada stated that the government should invest in food processing infrastructure, increase dairy-related promotional efforts and fund on-farm implementation of the proAction initiative. Regarding the transportation of grain by rail, the Canadian Wheat Board Alliance proposed that the government continue to apply the Maximum Revenue Entitlement, including in relation to any expansions of interswitching distances. According to the Agricultural Producers Association of Saskatchewan, the government should increase funding for water management programs and create a grassland trust to support ranchers who operate in the former Prairie Farm Rehabilitation Administration’s pastures. The C.D. Howe Institute said that the government should amend the Farm Credit Canada Act to ensure that Farm Credit Canada’s activities complement those of private lenders, and that Farm Credit Canada is subject to the same statutory review requirements that exist for other federal financial Crown corporations. 2. ForestryWith a focus on innovation in the forestry sector, Alberta-Pacific Forest Industries Inc. and the Forest Products Association of Canada told the Committee about the need to fund specific initiatives; particular mention was made of FPInnovations and the Forest Industry Transformation Program. As well, Alberta-Pacific Forest Industries Inc. and Forest Products Association of Canada stated that funding is needed to help the forestry sector adopt market-ready technologies, and supported more funding for the Natural Science and Engineering Research Council of Canada for forestry sector–related research and development. Forest NB called on the government to allocate funds to silviculture in New Brunswick and – through the Atlantic Canada Opportunities Agency – to continue to fund the Spruce Budworm Early Intervention Strategy. The Agricultural Producers Association of Saskatchewan proposed that the government restore funding for agro-forestry initiatives in order to provide producers with access to affordable trees. 3. FisheriesThe Committee was informed about commercial and recreational fisheries. The Maritime Fishermen’s Union asked the government to amend the Fisheries Act and its regulations to include commitments to maintaining fleet separation policies, which do not allow fishing licences to be issued to corporations, and the owner-operator model; similarly, the Prince Edward Island Fishermen’s Association said that the government should continue to support the owner-operator model. The Maritime Fishermen’s Union also urged the government to ensure that retiring fishers are able to sell their business by providing new loans or loan guarantees to those wishing to purchase such a business. The Prince Edward Island Fishermen’s Association also requested that the government contribute funding for the retirement of licences. Regarding fisheries-related research and sustainability programs, the Maritime Fishermen’s Union called on the government to increase funding for collaborative research among owner-operator fishers, Canadian universities and the Department of Fisheries and Oceans regarding lobster sustainability in the context of climate change. As well, it supported the creation of a national centre of excellence for applied lobster research. According to the Pacific Salmon Foundation, the government should provide additional funding to the Pacific Salmon Endowment Fund. It also suggested that the price of the federal Salmon Conservation Stamp be increased in order to help fund conservation and habitat restoration programs. 4. ManufacturingIn commenting on the manufacturing sector, the Committee was told about the needs of a number of sub-sectors. For example, the Quebec Employers Council, the Board of Trade of Metropolitan Montreal and Unifor said that the government should invest in Bombardier’s C-Series program. Regarding the automotive sector, Unifor, the Canadian Vehicle Manufacturers’ Association and General Motors of Canada Limited suggested that financing under the Automotive Innovation Fund be given in the form of grants, rather than loans; the Canadian Vehicle Manufacturers’ Association and Unifor suggested that the proposed grants be non-taxable. As well, according to the Canadian Vehicle Manufacturers’ Association, the government should lower the investment threshold that must be met in order to qualify for the Automotive Innovation Fund. According to the Canadian Association of Petroleum Producers, the government should create incentives to facilitate growth in the chemical and petrochemical manufacturing sector. In relation to innovation in the manufacturing sector, General Motors of Canada Limited proposed that governments be active facilitators and coordinators of large-scale demonstration projects and the testing of new technologies. It also advocated the creation of an inventory of Canada’s skills – as well as its research and development capabilities – that exist within businesses, universities and other research institutions; this inventory should be compared to the needs of global automotive producers. As well, General Motors of Canada Limited asked the government to make efforts to reduce barriers between academic institutions in order to enhance collaboration in automotive research, and to consider the development of an automotive research and development centre within the National Research Council of Canada. It also urged the government to assist the Canadian Automotive Partnership Council in completing research designed to define an innovation plan in Canada’s automotive sector, as well as to identify automotive technology and customer needs. The Quebec Employers Council supported continued research through Innovation, Science and Economic Development Canada’s Industrial Technologies Office. Unifor and the Canadian Labour Congress advocated funding for the creation of sectoral development strategies. 5. Charities, Not-For-Profit Organizations and the Social Economy SectorThe Committee was informed about measures that are needed to assist charities, not-for-profit organizations and the social economy sector. Imagine Canada stated that the government should work with the charitable sector to address its difficulties in accessing and using the data that it needs to develop and deliver programs. As well, it urged the government to explore a new legal and regulatory framework for charities and not-for-profit organizations; the framework should recognize the convening role played by associations of charities and not-for-profit organizations. According to it, the House of Commons Standing Committee on Finance should undertake a detailed examination of any proposals to change such a framework. The Canadian Community Economic Development Network and Supporting Employment & Economic Development Winnipeg Inc. said that the government should extend its initiatives that support small and medium-sized businesses to not-for-profit organizations and hybrid business models, such as social enterprises. As well, Supporting Employment & Economic Development Winnipeg Inc. requested that the government co-create policies and co-develop funds with the social economy sector. 6. The Committee’s RecommendationsFeeling that certain of Canada’s sectors require supports that are specific to them, the Committee recommends: RECOMMENDATION 49 That the Government of Canada, in supporting western Canadian grain and oilseed producers, suggest that the Auditor General conduct a complete audit of the sale and disposition of the assets of the Canadian Wheat Board since the Marketing Freedom for Grain Farmers Act received Royal Assent. RECOMMENDATION 50 That the Government of Canada provide additional funding to rebuild scientific, technical and research capacity at Agriculture and Agri-Food Canada. RECOMMENDATION 51 That the Government of Canada enable the agricultural sector to contribute to Canada’s economic growth through reversing the reductions made to AgriStability and AgriInvest. RECOMMENDATION 52 That the Government of Canada enhance AgriInvest by allowing farmers to make a withdrawal from Fund 1 without first having to make a withdrawal from Fund 2, provided that any such withdrawal is invested in eligible projects. RECOMMENDATION 53 That the Government of Canada establish a limited statutory deemed trust that protects produce sellers and growers during bankruptcy in Canada. RECOMMENDATION 54 That the Government of Canada support innovation in the Canadian wine sector through improved operational and infrastructure investments. RECOMMENDATION 55 That the Government of Canada strengthen its commitment to Canada’s forestry sector through the following actions:
RECOMMENDATION 56 That the Government of Canada continue to support Canada’s fisheries through the owner-operator model. RECOMMENDATION 57 That the Government of Canada develop a national auto strategy that would ensure a timely and coordinated approach to maintaining current, and attracting new, assembly plants. As well, the strategy should facilitate innovation within the sector – including among auto parts suppliers – through tangible and effective supports. RECOMMENDATION 58 That the Government of Canada continue its commitment to innovation and technology by supporting advanced manufacturing through investments in sectoral development initiatives, particularly in the aerospace and space sector. RECOMMENDATION 59 That the Government of Canada work with, and provide direct support to, Canada’s resource extraction sector to assist in the development of clean technologies designed to reduce energy consumption and greenhouse gas emissions. RECOMMENDATION 60 That in order to ensure the competitiveness of the mining sector, the Government of Canada review the recent changes made to:
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