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Core 1..160 Committee (PRISM::Advent3b2 14.00) Standing Committee on Finance FINA ● NUMBER 022 ● 1st SESSION ● 41st PARLIAMENT EVIDENCE Monday, October 31, 2011 Chair Mr. James Rajotte 1 Standing Committee on Finance Monday, October 31, 2011 ● (0830) the auto industry’s ability to compete for new investments. Given [Translation] that the automotive innovation fund is scheduled to sunset soon and The Vice-Chair (Mr. Hoang Mai (Brossard—La Prairie, that Canada must compete globally for automotive production NDP)): Good morning, ladies and gentlemen. mandates, an automotive investment incentive program that is not just equal to but better than competing jurisdictions around the world We are here for a pre-budget consultation. This is the 22nd meeting remains a necessity. We actually have examples if you wish to get a of the Standing Committee on Finance. We are in Toronto. Although sense of these types of incentives. I am not from this city, I want to welcome you all here. Today, we will be meeting with representatives of the Canadian Vehicle Manufacturers' Association, the Canada Company, the Canadian Energy Pipeline Association, Electric Mobility Canada, Spectra Energy and Financial Executives International Canada. [English] You'll each have five minutes to present your brief and then after that we'll have a round of questions from the members. We'll start with Canadian Vehicle Manufacturers' Association. Mr. Mark Nantais (President, Canadian Vehicle Manufac- turers' Association): Thank you very much, Mr. Chairman. Good morning, members of the committee. My name is Mark Nantais. I am president of the Canadian Vehicle Manufacturers' Association. We're certainly pleased to be here and certainly welcome your comments on our recommendations for the federal budget 2012. In 2010 CVMA member companies Chrysler, Ford, and General Motors produced 65% of all vehicles manufactured in Canada and Recommendation two: Budget 2012 should eliminate the green accounted for roughly 50% of all vehicles sold. Currently our levy excise tax and focus on policies that deliver environmental member companies produce 22 different light-duty vehicles in six benefits through measures aimed at getting the oldest and most high-volume assembly plants along with a variety of high-volume polluting vehicles off the road and encouraging the use of clean and components, including engines and transmissions, at four additional renewable fuels. The green levy was introduced in the 2007 budget facilities. Through their sales, assembly, and research activities, as under the vehicle efficiency incentive before the new fuel efficiency well as their head offices, CVMA companies directly employ 35,000 standards were to take effect in 2011 in order to achieve revenue Canadians and support an additional 50,000 retirees. For every one neutrality of the auto eco-rebate program, which was actually assembly job, seven other jobs are created in the economy. We know established in that same budget. Two significant milestones have of no other sector that has such a high job multiplier. since occurred. First, the government has eliminated the eco-auto Our suggested budget actions are as follows. rebate program in 2009, no longer requiring the green levy to achieve revenue neutrality. So what we now have is the introduction Recommendation one: Budget 2012 should re-introduce compe- of a new additional tax on vehicles that have some of the best fuel titive, flexible automotive investment funds to attract new auto- economy and segments equipped with the most advanced and motive investments as well as investments that upgrade and retain comprehensive safety systems. The auto industry has consistently the existing Canadian automotive footprint. Company decisions are argued against the adoption of the so called “feebate” programs, such now being made every three years or less, and the next horizon for as the green levy, given the inability to meet the stated environmental new investments is already upon us. The existing competitive objectives, not to mention suppressing new vehicle sales. This view challenges facing Canadian manufacturers related to a high Canadian has been supported by the National Round Table on the Environment dollar, high commodity prices, and high energy costs will all affect and the Economy and Natural Resources Canada. 2 FINA-22 October 31, 2011 Second, as mentioned, the government implemented this past business and community leaders from across Canada together to September much more stringent vehicle greenhouse gas regulations support our Canadian military and their families. for the 2011 through 2016 model years, and further expressed its intention to regulate even more stringently for model years 2017 through 2025. This measure will drive significant improvements in Canada Company is apolitical, and we take no government new fuel efficiency and reduce greenhouse gas emissions of the fleet, money. as all vehicle segments will be required to improve performance and reduce emissions. Underscoring the urgency of the elimination is the Some of our initiatives that you might know include our camps for fact that under the green levy consumers will soon be paying even the children of deployed soldiers, and also the scholarship fund, more tax, even though the vehicle's performance may have improved which provides post-secondary school funding for children of or remained unchanged. Natural Resources Canada actually intends military parents who have been killed serving on an active mission. to adopt new vehicle fuel consumption testing protocols and label values, which will determine how much tax is paid in order to facilitate testing of more advanced technologies and provide fuel Today we're here to seek your support for a fair and effective consumption values that are actually more meaningful to consumers compensation program for the employers of Canada's military and world driving conditions. This will have the effect of increasing reservists. We believe that such a program is necessary to recognize the public's fuel consumption values and increase the tax. the sacrifices made by both reservists and their employers and to strengthen a relationship that is vital to Canada's safety and security. Recommendation three: Budget 2012 should introduce a con- Most important, this program will send a strong signal about the sumer incentive for a defined period to encourage the purchase of importance of reservists' public service by sharing its true costs advanced vehicle technologies with complementary incentives that across society. promote the necessary refuelling and recharging infrastructure to support the introduction of a broad range of alternate renewable fuels and a greater electrification of the vehicle. The Canada Company submission is based on recommendations made by the C.D. Howe Institute that were recently endorsed by the In closing, we understand you receive a wide range of policy Pratt report and the Canadian Defence & Foreign Affairs Institute. proposals as part of the budget consultation process and we would This institute is supported by major employer groups, including the suggest full economic studies and corresponding public consulta- Canadian Chamber of Commerce, Canadian Council of Chief tions before implementing major policy shifts. One such example is Executives, and the Canadian Federation of Independent Business. the unilateral tariff reductions under the guise of harmonization with the United States, of which the impacts on local industries may be uncertain. Given the importance of trade to Canada's economic Whether serving in peacekeeping or nation-building efforts or in health, the only time tariff reductions should be considered is in the combat zones, military reservists are a growing component of context in negotiating bilateral or multilateral free trade agreements Canada's security at home and abroad. Last year the C.D. Howe that result in new market export opportunities for Canadian- Institute issued a report that showed that existing federal and produced products. provincial job laws created to protect jobs of deployed reservists ● (0835) actually dissuade employers from hiring reservists. We believe that the stick, as embodied by the current patchwork quilt of various Unilateral action would undermine Canada's current bilateral employment legislation across provinces, must be accompanied by a negotiations, which are intended to provide market access benefits to carrot, our proposed compensation program. By that I mean that both of the involved parties under negotiated and mutually agreed incentivizing employers and covering their true costs will improve upon terms, conditions, and timelines. overall conditions for reservists and signal to employers that their efforts and costs are important to our society. Thanks very much, Mr. Chairman. The Vice-Chair (Mr. Hoang Mai): Thank you, Mr. Nantais. The costs incurred by employers include recruiting and training a Next is the Canada Company. replacement, overtime costs to cover absences, productivity loss, and retraining costs of returning soldiers. These costs are particularly [Translation] challenging for smaller businesses, which find them more difficult to Mr. Blake Goldring (Chairman, Canada Company): Thank absorb within their operations. That is why our proposal is tailored you, Mr. Chairman. primarily for smaller companies. Good morning, everyone. Reservists are also affected by the current system, sometimes [English] choosing not to deploy in deference to employer opposition, hiding On behalf of Canada Company, with “many ways
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