Finance committee  First, I think if you ask which policies are effective in Quebec you will find quite a few of them have been adopted by the provincial government with respect to research and development technology. We have to remember a whole bunch of policies have been directed at venture capital there.

Finance committee  Generally that's the best policy. I've been very supportive over the years of things like the RRSP system and the tax-free savings accounts. These are general policies. They don't tell people how to direct their funds and they'll direct them properly. I think this particular incentive has been harmful to the venture capital industry because a lot of pension funds and others will not invest in venture capital in Canada because the rates of return are so poor.

Finance committee  In terms of what's been missing, first of all, let's go back to the issue of neutrality. People make investments. Right now we have a general RRSP system that encourages people to invest in whatever they wish to invest in, but in the case of the labour-sponsored venture capital credit we have a special credit that is provided for investments that are supposed to go to venture capital.

Finance committee  Primarily, because the actual economic returns are pretty poor on average.

Finance committee  Yes, I am, to some degree. I don't know all the details, since they weren't completely announced in the budget.

Finance committee  Absolutely. When you look at a rate of return that's barely 3% for 20 years, and even for a solidarity fund it's been an inadequate rate of return over 20 years—only half of the treasury bill rate—surely we're not doing very well, especially compared with the United States, where you get far better rates of return on venture capital.

Finance committee  I think one of the things we have to remember is that pension funds and others can't take advantage of the labour-sponsored venture capital credit, so there is a need for a new approach in Canada. When I chaired the savings commission for the Government of Alberta in 2007, we observed that one of the key differences between the United States and Canada was the lack of scale.

Finance committee  As I tried to say in my opening remarks, the rates of return to venture capital firms have not been particularly good. In fact, I would say the policy is broken in Canada, as we've had such a poor performance. I think we have to remember there's a difference between what the shareholders get as a rate of return and what the economy gets.

Finance committee  Yes. I'll very quickly say why there are three reasons for the problems of this credit, and why it should be abolished. First of all, there's been a separation of control and ownership in the LSV and poor governance, and MacIntosh's paper goes into some detailed discussion of that.

Finance committee  Thanks, Mr. Chairman. It's my pleasure to appear before the committee. As you know, tax reform has been a topic near and dear to my heart, especially since I chaired the commission for Paul Martin, the Technical Committee on Business Taxation, back in 1998. We argued very strongly that it's very important to have a business tax structure that has internationally competitive rates but also neutrality, where we have a level playing field amongst different types of business activities to make sure we get a proper allocation of capital resources in the economy.

Natural Resources committee  Well, there have been a number of changes in the past three budgets that I would say are good ones. I'm a great believer in keeping rates low and the bases broad, and trying to have neutrality. I don't think governments are very good at picking winners and losers, and losers are pretty good at picking governments.

Natural Resources committee  That's including both corporate taxes and the way they relate to the royalty. The royalty in Alberta has been very well structured. It's very similar to the supplementary tax they have in Norway, where in principle it's supposed to be a rent tax. There are no rents at the margins, so you shouldn't have any royalties paid at that margin.

Natural Resources committee  I believe that corporate tax should be neutral across industries. It's not right now. This is one point I would totally agree with Gil on, because we have a bias in Canada toward resource industries and manufacturing, but we keep hammering other types of industries in the economy, particularly on the service side where a lot of growth is.

Natural Resources committee  There's one element of diversification you didn't mention. Let me go through it. There are two elements we've been talking about so far. One is what you might call product diversification, which is, in this case, heavy oil versus synthetic oil, which is the one we've been particularly mentioning, although you can also go into other types of manufacturing and other elements that one could talk about.

Natural Resources committee  Actually, when I first heard the question I was wondering whether I was in the right building—whether I was in the Alberta legislature at this point—because this is a provincial issue. As you might know, I did a study for the Stelmach government, back five years ago, arguing that Alberta needed to save more.