Evidence of meeting #6 for Finance in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was students.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Pierre Le François  General Director, Association nationale des éditeurs de livres
  • Claire Morris  President and Chief Executive Officer, Association of Universities and Colleges of Canada
  • Darryl Smith  President, Canadian Dental Association
  • Bob Harvey  Member, Tax and Fiscal Policy Committee, Certified General Accountants Association of Canada
  • David Bradley  Chief Executive Officer, Canadian Trucking Alliance
  • Pierre Sadik  Senior Policy Advisor, Sustainability Specialist, David Suzuki Foundation
  • Nathalie Bourque  Vice-President, Global Communications, CAE Inc., SR & ED Tax Credit Coalition
  • Peter Look  Vice-President, Tax, Nortel, SR & ED Tax Credit Coalition
  • Carole Presseault  Vice-President, Government and Regulatory Affairs, Certified General Accountants Association of Canada
  • Susan Mullin  Vice-President of Development, Association of Fundraising Professionals
  • Margaret Lefebvre  Executive Director, Canadian Association of Income Funds
  • Chris Tabor  Manager, Queen's University Bookstore, Canadian Booksellers Association
  • Michael Atkinson  President, Canadian Construction Association
  • Gerry Barr  President and Chief Executive Officer, Canadian Council for International Cooperation
  • Amanda Aziz  National Chairperson, Canadian Federation of Students
  • Mark Yakabuski  President and Chief Executive Officer, Insurance Bureau of Canada

5:20 p.m.

Conservative

The Chair Rob Merrifield

Thank you very much.

Now we'll move on to the president of the Canadian Construction Association, Michael Atkinson. You have five minutes.

5:20 p.m.

Michael Atkinson President, Canadian Construction Association

Thank you, Mr. Chairman. We certainly welcome the opportunity to present our views and recommendations.

As mentioned, I am the president of the Canadian Construction Association, which is the national voice of the non-residential construction industry. We represent some 20,000 firms from coast to coast to coast in Canada, who build everything except single-family dwellings.

Mr. Chairman, you have our written submission of last August, which outlines the specific measures we are recommending in response to the then committee's questions relative to the appropriate criteria to be used in considering changes to taxes, fees, and other charges.

Given the time constraints, I do not propose to mention all the specific recommendations in that submission, but I would like to draw the committee's attention to three main areas where we believe further action is required.

The first one is with respect to infrastructure and investment. A lot has been said in recent weeks about the size of our public infrastructure deficit, particularly in the municipal area. There's no doubt that to address this and other critical areas of Canada's strategic infrastructure that are very important to our nation's future economic and social well-being, it is going to take a concerted effort at all levels of government.

We were pleased with the efforts of the current federal government, building upon the initiative shown by the previous Liberal government, when it agreed to make available a portion of the federal excise tax on gasoline for municipal infrastructure reinvestment purposes. For the first time in Canada, we had the makings of a certain and long-term federal commitment to infrastructure. That program, however, currently runs to 2013-14 only. It needs to be made permanent.

We also acknowledge the establishment of the new Building Canada Fund that was announced in the last federal budget. We would encourage the federal government to conclude the necessary agreements with provincial and territorial governments as soon as possible, and in doing so to show some flexibility and understanding for the varying priorities and needs in the different provincial and territorial jurisdictions.

With respect to the EI fund, the EI rate-setting mechanism is still very broken and needs to be fixed. Despite the introduction of the new EI rate-setting mechanism that was supposed to ensure that EI rates would be set on a break-even basis, the EI fund continues to generate billions of dollars in annual surpluses, which are then diverted to the general revenue fund because of the inability of the chief actuary and the EI Commission to take into account the actual performance of that fund when they set future rates. EI continues to pick the pockets of Canadian employers and workers in order to feather the federal fiscal nest. If more aggressive rate reductions are not in the cards, look at some of the other specific recommendations, including the introduction of a yearly basic exemption similar to the Canada Pension Plan, that previous versions of this committee have in fact recommended. The throne speech did make a commitment to review the governance and management of the EI fund. Now is an opportune time for this committee to make substantive recommendations and get the EI fund back where it's supposed to be.

The third and last area I want to talk briefly about is the taxation of employer-provided vehicles. Many employees in the construction industry are required, as a condition of their employment, to take employer-provided vehicles--primarily pickups and vans--home at night for security reasons and are expressly forbidden to use these vehicles for personal or family purposes. These vehicles are usually filled with specialized equipment used in the employee's work. These individuals will then proceed directly to a construction work site, which is often further than the employer's principal place of business. Gone are the days when employees first report to the employer's principal place of business to pick up a company vehicle. Gone are the days when employers kept their company trucks and vans in a common yard at their company's offices. In fact, many of these employees never do “go to the office”. These company vehicles, in a sense, become their mobile office.

There have been a number of recent decisions by the Tax Court of Canada that refute the government's position that there is a taxable personal benefit in such circumstances, but since these decisions have been rendered under the court's informal procedures, they are not binding upon the crown. The tax treatment of employer-provided vehicles in these circumstances needs to be reformed to reflect modern-day business practices and realities, and to recognize the total absence of a personal taxable benefit in such circumstances as described.

There is a current review by the CRA on streamlining administrative practices with respect to the treatment of taxable employee benefits. Again, now is the opportune time to make a change in the act, if necessary, to reflect current business practices.

Thank you very much.

5:25 p.m.

Conservative

The Chair Rob Merrifield

Thank you very much.

Now we'll move on to the Canadian Council for International Cooperation. We have Gerry Barr, president and CEO, for five minutes.

November 27th, 2007 / 5:25 p.m.

Gerry Barr President and Chief Executive Officer, Canadian Council for International Cooperation

Thank you very much.

My name is Gerry Barr. I'm president and CEO of the CCIC, the Canadian Council for International Cooperation, Canada's coalition to end global poverty.

The council is a membership-based organization with almost 100 non-governmental organizations working around the world and in Canada on international development, cooperation, and global issues.

I want to thank the committee for the invitation. As you approach the budget this year, I know you are thinking about taxes and tax mechanisms. Millions of Canadians who pay taxes believe Canada ought to continue with its foreign aid effort; millions more believe Canada is not yet contributing sufficiently to its share to help poor nations.

I know that talk of tax cuts is in the air. I know that almost all who are elected and who watch politics full time believe that Canadians as a whole approve of the idea of tax cuts. It is just an accepted truth.

Well, here is another truth, perhaps a little counterintuitive: Canadians also approve of the idea of tax increases to increase foreign aid spending. In a poll conducted by government in 2002, 57% of Canadians said they would be ready to pay 1% more income tax, but those same Canadians also wanted to know this money would be spent on directly improving the lives of those living in poverty.

It's just one reason Bill C-293, which is being debated in the Canadian Senate today, is so important. It gives Canadians the assurances they want that Canada's aid dollars will be spent to reduce global poverty.

Bill C-293 sets out a three-part test: first, aid must reduce poverty; second, it must be delivered in a way that is consistent with human rights standards; and finally, it should take account of the ideas and priorities of those supposed beneficiaries of aid who actually live the experience of poverty.

That's the “better” part of the more and better aid proposal of the Make Poverty History campaign, supported today by hundreds of thousands of Canadians and by organizations like CCIC.

What about the “more” part of more and better aid? I think that's where the committee comes in.

In previous reports this committee has urged successive governments to set a plan to achieve the internationally accepted donor state target of 0.7% of gross national income dedicated to the assistance of poor countries. In 2006 your committee proposed the government strike a plan to reach the target, a plan that in its words “should be developed no later than 31 December 2007”. I note that there's still time to do it: it's about a month from now.

It's now more than two years since all parties unanimously supported the idea of achieving 0.7% by 2015. On his way into office, the Prime Minister pledged his government would do better than previous governments in growing Canada's aid spending. He said that his own target was to see Canadian aid spending equal to the average donor effort. Little enough, you might say, for a country whose economy is more robust than almost all of those that have already pledged to achieve or surpass the 0.7% mark by 2015.

CCIC estimates Canada could almost achieve average donor country effort by 2010, the Prime Minister's goal, with 15% increases to its official development assistance annually; going forward, the same plan and approach would achieve 0.7% by 2017, and that's what we need.

I'd like to ask the committee to suggest that the government set out a 10-year plan to achieve the 0.7% target. It's reasonable, it's affordable, and Canadians will support it.

Mr. Chairman, I've provided the clerk with CCIC's pre-budget backgrounder; together with some charted projections, it will provide a fuller explanation of the points I've made here today.

5:30 p.m.

Conservative

The Chair Rob Merrifield

Thank you very much.

Now we'll move on to the Canadian Federation of Students. We have Amanda Aziz, national chairperson.

The floor is yours for five minutes.

5:30 p.m.

Amanda Aziz National Chairperson, Canadian Federation of Students

Thank you.

I just want to thank the committee for this opportunity to present again on behalf of more than half a million university and college students at over 85 student unions across the country.

I only have a few minutes today, so I'm going to focus my remarks on a few key areas: replacing the Millennium Scholarship Foundation with a system of need-based grants, increasing transfers to the provinces, and redirecting money currently being spent in areas that are of little assistance to those who need help the most. Of course, I'm very happy to take questions on anything that's in the brief after my presentation.

Current enrolment data suggests that students from the highest income quintile are more than twice as likely to participate in post-secondary education than those from the lowest income quintile. When discussing participation rates between aboriginal and non-aboriginal Canadians, the gap is even more pronounced. Of those who are able to access post-secondary studies, students who have to borrow the most to participate, and as a result carry more debt, are twice as likely to drop out of their studies as students with little or no debt.

The key policy question for the government, then, is how to close the gap in participation and create an equitable and high-quality system of post-secondary education. The Canadian Federation of Students has long advocated that post-secondary education be paid for through a progressive system of taxation rather than through upfront fees. Graduates of post-secondary education earn more through their lifetime, thereby contributing more in taxes to pay for the cost of their education.

The accessibility gap in Canada's universities and colleges is driven primarily by the costs of a post-secondary education. Over the past decade, tuition fees have more than doubled because universities and colleges have scrambled to make up for the lost revenue from federal funding cuts. With the increasing core funding announced in the 2007 federal budget, the next logical step for the federal government is to institute federal legislation to guide the funding set aside for post-secondary education. In cooperation with the provinces, the federation recommends that the federal government create a post-secondary education cash transfer payment for the purpose of reducing tuition fees and improving quality at universities and colleges. We believe the transfer should be guided by the principles set out in a post-secondary education act; obviously a specific part of it would have regard for Quebec and Quebec's ability to opt out.

On the student financial assistance side, at present Canada has a confusing patchwork of student financial aid programs, many of which are probably too generously labelled “aid”. Student debt, under the existing model of financial aid, has ballooned to more than $12 billion in federal debt alone. Average student debt now ranges from $21,000 to $28,000, depending on the province of study.

The main federal responses to the student debt crisis, tax credits, and the Millennium Scholarship Foundation, have failed to improve access to post-secondary education or make a noteworthy dent in student debt for differing reasons. Hundreds of millions of federal dollars are spent each year on tax credits but are blind to financial need and are not available to students when most of their expenses are due. In addition to tax credits, the federal government spends millions on ineffective savings programs that are disproportionately being utilized by wealthier families, hardly the demographic they were created to assist.

Although the foundation is calling for its own renewal, there's very little evidence to suggest that the foundation is the most effective delivery mechanism to improve access and reduce student debt. In fact, the foundation is rife with accountability concerns, and its organizational culture confirms that it must not receive another cent of public funding.

According to its own reports, the Millennium Scholarship Foundation's administrative costs have increased over 500% since its inception, and literally millions of dollars have been funnelled to a foreign company run by two former employees of the foundation. Just two months ago, we learned, through access to information, that the foundation has also transferred close to a quarter of a million dollars to an organization that vocally supports the foundation's renewal. The management of the foundation is out of control.

Of course, students need non-repayable grants, and that's not the issue. The issue is how the Government of Canada administers grants, and the record is clear: the foundation has failed in doing so. We believe there is a better way.

To avoid the accountability pitfalls of a private foundation, we recommend replacing the Millennium Scholarship Foundation with a new system of need-based grants administered through the Canada student loans programs and phasing out the education, tuition fee, and textbook tax credits, as well as savings programs, and redirecting the money currently allocated to each of these programs into a new national system of need-based grants.

We believe the timing for an ambitious reorientation of student financial aid could not be better. Not only is the foundation's tenure coming to a close, but the federal government has the tools and opportunity to cut student debt by at least half if the political will exists.

Finally, I just want to talk about the need to decrease the gap in participation between aboriginal and non-aboriginal Canadians. Funding for the Department of Indian and Northern Affairs post-secondary student support program has remained frozen at the same level since 1996, with an inadequate 2% annual increase. The Assembly of First Nations estimates that more than 13,000 eligible students in the last six years alone have been denied funding to participate in post-secondary studies.

The federation, therefore, recommends that the federal government immediately remove the funding cap on the post-secondary student support program and increase funding to and opportunities for all aboriginal learners.

In closing, I just want to thank the committee again for the opportunity, and I look forward to your questions.

5:35 p.m.

Conservative

The Chair Rob Merrifield

Thank you very much.

Now we have our final panellist, Mark Yakabuski, president and CEO of the Insurance Bureau of Canada.

The floor is yours for five minutes.

5:35 p.m.

Mark Yakabuski President and Chief Executive Officer, Insurance Bureau of Canada

Thank you very much, Mr. Chairman.

My name is Mark Yakabuski. I am very pleased to be appearing once again before the Committee.

There are three points in particular that I would like to make.

First, I must commend the government for the measures announced several weeks ago by the Minister of Finance with respect to corporate and personal tax cuts.

The corporate and personal income tax changes announced recently by the Minister of Finance will tremendously improve Canada's productive and competitive position around the world. I certainly want to take the time to applaud those changes. There's still more work to be done. This is a never-ending game. As a result of the changes announced by the Minister of Finance, Canada moved from the second-worst record with respect to capital taxation in the OECD to the eleventh-worst place in the OECD. A lot of other countries are moving in this direction and we have to make sure we keep up with them, but the measures announced by the Minister of Finance are very important.

The second thing I'd like to say is that the single, most important tax measure the government could take to improve productivity in this country is to convince those provinces that have not done so already to harmonize their provincial sales taxes. No other measure would add more to the productive capacity of this country. I have the pleasure of dealing with many provincial governments every day, and I believe very firmly that with an innovative combination of the carrot and the stick, we can convince those provinces that have not done so to harmonize their sales taxes. It would be a tremendous competitive boost for Canada.

The last thing I want to say is that we have a tremendous infrastructure deficit and a tremendous infrastructure challenge in Canada. The $33 billion allocated by the government in the last two budgets, over a seven-year period, to renew the infrastructure in Canada is obviously a very considerable sum of money. However, I think we have to bear in mind that in 2005, for example, total world economic losses related to weather-related events cost $850 billion to the world's economy.

Lord Levene, the head of Lloyd's of London, arrived in Canada yesterday and he's here in Ottawa today. He will remind all of us that climate change is not something we are looking forward to; climate change is something we are dealing with today. The fact we have to keep in mind is that even if we were to reduce the vehicle population of the planet by 50% tomorrow, or close every coal-fired plant around the world, or delay the development of the Alberta tar sands, there is still enough CO2 in the environment to motor the forces of climate change for at least the next 50 years, according to the International Panel on Climate Change.

What does that mean? It means I think this is the real challenge. Let's make Canada the country that most successfully adapts to climate change, and let's do that by taking hold of this infrastructure challenge, by encouraging our municipalities and our provincial governments to, of course, invest vigorously themselves, and by encouraging private-public partnerships at every opportunity. I believe, quite frankly, that the federal government should in fact tie much of its infrastructure spending allocations to the provinces to some component that relates directly to measures that help Canada adapt to climate change. That means rebuilding our water and sewage systems in a very big way.

It's a major challenge, but it is doable. What is needed is the will to do it.

Thank you very much.

5:40 p.m.

Conservative

The Chair Rob Merrifield

Thank you very much.

We will now move to the question and answer part of our meeting, and we'll start with Mr. McCallum.

Mr. McCallum, you have seven minutes.

5:40 p.m.

Liberal

John McCallum Markham—Unionville, ON

Thank you, and thank you to all the panellists.

My first question is to Amanda Aziz, and it's a question about Bill C-284, which I think your organization supports. As you know, I'm sure, this bill would extend access grants for low-income Canadians from one year to four years. On the topic of this bill, you said:

the measures in Bill C-284 in fact are long overdue and there's plenty of research out there that concludes that upfront financial assistance is the most effective aid measure to improve access to post-secondary education.

My question is simply whether you were disappointed that this bill didn't pass in the House last Wednesday.

5:40 p.m.

National Chairperson, Canadian Federation of Students

Amanda Aziz

Thanks for the question.

We certainly did support what Bill C-284 was trying to do, and that's provide more assistance for low-income Canadians and for low-income families. Of course, we understand there is some concern with regard to Quebec students also receiving funding, but I think from our perspective we are very much in support of measures that are going to increase assistance for low-income Canadians and also provide assistance that is needs-based. So that's part of what we're proposing here today in terms of the replacement of the foundation, something with a comprehensive program that's going to assist both on a needs base and on an income base.

5:40 p.m.

Liberal

John McCallum Markham—Unionville, ON

Right. That bill seems to respond to your priorities. I guess you're disappointed that it didn't get through?

5:40 p.m.

National Chairperson, Canadian Federation of Students

Amanda Aziz

We think there need to be more measures that the government is pursuing. In the context of the expiring Millennium Scholarship Foundation in the context of this bill, I do think we are in support of what of the bill was trying to do. We do think that obviously the bill could have been broadened.

5:40 p.m.

Liberal

John McCallum Markham—Unionville, ON

Thank you very much.

Mr. Atkinson, I certainly think you make a good point when you suggest this government is feathering its nest by overcharging companies and workers on EI, particularly when they're just drowning in money. Can you say, in concrete terms, how we could end this feathering of the nest? What kinds of legal changes would be required?

5:40 p.m.

President, Canadian Construction Association

Michael Atkinson

I think I should point out first that this new EI rate-setting mechanism was put in place by the Liberal government--