Finance Committee on Dec. 6th, 2007

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Mr. Bird, thank you for your presentation. We've had a chance to talk about this before, and you have always well articulated your advocacy at this committee.

You know my issue. I think we need to do a lot to support our elite athletes in Canada. I think it's important for the nation.

My bigger interest is how we get more kids active generally. We're in Nova Scotia, the first province to have had a Department of Health Promotion and Protection. I know Scott Logan, who was the first deputy minister. There has been some very good stuff done in Nova Scotia to support animators and a lot of other stuff done by health promotion.

How do we get more kids to be active? My son plays hockey and my daughter plays soccer. In my son's school, there are a lot of kids who don't play hockey. They can't afford $350 to register. They can't afford the equipment. They can't afford the trips. I don't think it's an issue of tax cutting. I'm not saying families shouldn't have some benefit from having their kids active, but I think it's the same as the public transit situation. We want to find a way to get more kids active, give them more opportunity.

You mentioned a multi-billion dollar sport and recreation infrastructure deficit. In my own community of Dartmouth, I think we have fewer rinks now than when I grew up. A major one closed this year.

So it's a difficult situation. It seems to me that we have to have some direct investments or else find some other way for investments to provide more opportunity for kids. Do you agree with that in general?

[Ian Bird]

I appreciate your support for the role of Canada's athletes, coaches, and teams in the international milieu. I do think the challenge you point out is significant. It's complex.

I'll speak to three different barriers. One is the infrastructure crisis. The solution to the infrastructure crisis, whether it's in sport and recreation or in other hard capital costs, requires multiple interventions. We've argued at this committee in the past for a designated fund. We're arguing here today for a rethink of the whole economics behind the development of infrastructure, so that it addresses government investment but also poses other fiscal tools, such as sports having a charitable status so that local communities can raise the kind of capital funds that they do in other parts of the voluntary sector.

The other point I would make is that programs such as kids' sports, which provide accessible opportunities for all Canadians, are critical. Creating the right support for those kind of initiatives is key.

The third thing I would mention is the human element. You talked about the animators who have been put in place in Nova Scotia. This is a strategy that could be rolled out across the country. The human leadership is a key part of this in our communities.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Thank you very much.

Valerie Payn, whether one agrees or disagrees with all the issues of the chamber of commerce, it has been one of the most successful advocacy groups here in Nova Scotia, not just on finance issues but on a whole host of issues. I think that's important.

I want to ask you about something I've discussed with the Greater Halifax Partnership folks, with whom you have a close relationship, and that's program review in the 1990s. I raise this as a Liberal and a supporter of program review in the 1990s. It hit this area very hard in terms of the reduced federal presence, of people working for the federal government in this area. Many other parts of the country have had that difference made up over the years. Ottawa certainly has, but that's not the case in Halifax. We still lack. I think Halifax was the area most hurt by the program review of the 1990s.

Are you familiar with that? Would you agree with that? Would you have any comment on that?

[Valerie Payn]

Yes, I am familiar with it. The numbers are staggering in terms of the exit of the federal presence as a result of that review, and things have not been reinstated over time. Other areas of jurisdiction in Canada have had reinstatement. In fact, we have not recovered on the federal side. Of course, what we like to say in the chamber of commerce is that the private sector has stepped up to fill that gap; nevertheless, the inequity exists. In terms of spreading around the federal services, that has never been restored to where it was originally. It's nowhere near its original capacity. We're talking about thousands of positions here.

[The Chair, Conservative, Rob Merrifield]

Thank you very much. Your time has gone.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Thanks, Chair.

[The Chair, Conservative, Rob Merrifield]

Mr. St-Cyr, it's your turn.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Thank you very much. I'm going to start with Mr. Lamoureux.

Mr. Lamoureux, your first recommendation in your brief is that a law on postsecondary education be put in place. You know that, in Quebec, there is solid unanimous opposition to any interference in education. I asked the two student federations that appeared before us, which would also like a law on postsecondary education, whether they agreed that there should be an opting-out provision for Quebec, that is an unconditional right to opt out with full financial compensation.

Would you be able to support that?

[Marc Lamoureux]

Thank you for that question.

Absolutely. In fact, the purpose of this exercise is mainly to make it so that there is a uniform program in Canada, to at least allow funding to be contributed to postsecondary education programs. If Quebec decided to exercise an opting out option, that would be entirely possible.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

All right.

Mr. Oram, you talk about a measure that would enable employers to pay employees tax-exempt supplementary benefits for public transit. That somewhat resembles the tax credit we already have.

Do you have any studies or figures demonstrating the effectiveness of that measure?

We know that public transit is already much less costly than motor vehicles. And yet a majority of people continue to use motor vehicles. If we compare the money the government currently allocates to the tax credit and what it would allocate under your measure, would that additional discount really make a difference? Shouldn't the government allocate the money directly to transit infrastructure in order to improve the quality of service and supply, and thus hope to attract more people?

[Richard Oram]

Yes, I agree that investment in public transport is very valuable, but I'll speak to the transit benefits particularly.

It is very effective. It has been studied and concluded by dozens of studies, including ones done by the National Academy of Sciences in the U.S. In fact, it is surprisingly effective.

The employer-focused transit benefit is more effective than simply reducing fares. The reason for its effectiveness is that it focuses on the problem at the work site. Many employers in Canada, and certainly in the United States, get free parking at the work site. When you offset that, you are leveling the playing field right on the playing field, if you will.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

All right, thank you very much. That was a good point.

Mr. Bird, you talk about studying the results of the tax credit that was granted for physical exercise among young people.

In that same spirit, do you have any analyses that demonstrate that that measure was effective? If you don't have any analyses, what is your perception in the field of the results of that measure?

[Ian Bird]

I think it's very early days. Not a single taxpayer has yet filed a tax return that includes this credit, though there are a few things, anecdotally, that we've already identified. A number of non-sport or physical activity programs for children and youth have adapted their programming to make it inclusive of physical activity or sport. It's anecdotal, and we won't know over time.

The important thing, I think, is that this is the first time we've used the tax system to enable sport and physical activity by children and parents. I think we want to give it time to assess its effectiveness and then come back and look at other tax measures that may be supplementary.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Glauser, a few months ago, a private member's bill was voted on in the House providing for the use of the surpluses of Canada Mortgage and Housing Corporation, CMHC, the federal agency concerned with housing. Under that bill, CMHC would have retained $1 billion for eventual crises, if it had an actuarial role to play, but the rest of the surpluses would have been remitted to the provinces so that they could invest in social housing.

Unfortunately, that bill was defeated by the Conservatives and the Liberal Party. If such a bill were to be put before members again in a future Parliament, do you think they should support it or not?

[Gary Glauser]

Definitely, that would be an excellent move, I think. Instead of having the surpluses from CMHC go into general revenue, it makes terrific sense to put it into affordable housing, whereby we continue to build on the stock we have on the ground and ensure its longevity. So I think that would be a great move.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much. Your time has gone.

We'll go to Mr. Keddy for six minutes.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chairman.

I thank our witnesses for appearing here today.

I have a question for Erika Beatty with Symphony Nova Scotia. Erika, you mentioned the $30 million, and I appreciate the fact you did that, but you didn't mention that this is on an ongoing annual basis. That's secured funding.

The question I have for you is this. In the 2006 budget, we announced the elimination of the capital gains tax on donations of publicly traded security. Have you been able to benefit from that, or is that something that hasn't really kicked in yet?

[Erika Beatty]

No, we've noticed a great difference at Symphony Nova Scotia, as have other orchestras. They've mentioned that as well. I can't give you national stats on that, but what I can say is that we've noticed an increase in the number of donors who are using this option, about a fivefold increase, which is wonderful. Some of them are new and some of them were existing donors. But this is really exciting. This is the reason we're asking for consideration that this be extended as well to privately traded stock.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you.

Just as a comment, before I move to my next question, I want to say that your outreach program is fantastic. The string quartet that played at St. John's Anglican Church in Lunenburg, which is a terrific setting--it's a big setting and it seats 350 to 400 people--was absolutely magnificent. It works well.

Valerie Payn, we had some discussion over lunch, and you mentioned the high dollar and some of the competitive--I wouldn't go so far as to call it a disadvantage--challenges this causes. One of the great issues we faced in the export industry in the last 15 years was a deliberate low-dollar policy on behalf of the government, a dollar that was 10¢ to 15¢ lower than it really should have been. One of the things this caused was a lack of productivity, and that's straight across the board. The dollar is now at par, with all the challenges that brings with it, and the companies that have done the best have figured out that they have to cut costs and they have to increase productivity. Some of that means greater mechanization and innovative ways of cutting costs.

I'd like a comment from your point of view and your group's point of view on this.

[Valerie Payn]

Thank you very much.

Yes, indeed, there are some who have benefited. Obviously people whose business model includes a great number of imports have benefited. Canadian exporters have been hit hard in many cases. But there are also critics who would say that Canadian businesses have long been hiding behind the Canadian dollar, especially as it relates to our productivity levels, which are traditionally way behind those of the United States. We've begun behind them, and our growth has lagged behind them year after year.

It seems to me that this might be an opportunity for the federal government, kind of like the perfect storm. If the need for productivity improvement is there and the dollar is strengthening, a lot that has to do with improving productivity includes upgrading capital, technology, and so on, a lot of which is purchased from outside our own country to do that, and this might be a good time to somehow incent Canadian business, maybe through the tax system, to spend more on improving their productivity.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Part of that was an increase in the capital cost allowance, and I just want your opinion, again, on that. Certainly that's one of the directions in which to go.

[Valerie Payn]

On the capital cost allowance in terms of aligning them....

The thing is, too, with technology, as we all know, it changes as you blink. Technology has changed, and what was new last year is suddenly old technology. I won't speak to that specifically, but we need to make sure that we're constantly re-evaluating the capital cost allowance to make sure it reflects the actual life of an asset, which is where that can get a little away from us, especially in a big business like the federal government and the Department of Finance, in trying to keep up with current trends and what's happening in the environment.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Technology, in particular, faces that great challenge with the capital cost allowance, because you buy technology today and tomorrow it's obsolete.

[Valerie Payn]

Exactly, and it's not just technology firms you're talking about here. Pretty well all Canadian business would be impacted.