Yes, absolutely. Thank you, Mr. Joy.
We'll hear from Mr. Adams now.
Evidence of meeting #22 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was investment.
Evidence of meeting #22 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was investment.
2:05 p.m.
Conservative
The Chair Conservative James Rajotte
Yes, absolutely. Thank you, Mr. Joy.
We'll hear from Mr. Adams now.
2:05 p.m.
David Adams President, Association of International Automobile Manufacturers of Canada
Mr. Chairman, committee members, on behalf of the 16 members of the AIAMC, thank you for the opportunity to appear before the committee today. My name is David Adams, and I'm the president of the Association of International Automobile Manufacturers of Canada.
My intent would be to highlight how our three recommendations feed into the four primary areas highlighted by the committee, to be addressed by stakeholders. Specifically, the committee was interested in hearing recommendations with respect to how to achieve a sustained economic recovery in Canada, how to create quality sustainable jobs, how to ensure relatively low rates of taxation, and how to achieve a balanced budget.
Before I do that, allow me to give you just a few highlights that suggest that, much like other sectors, the auto industry is essentially treading water. Through the end of the third quarter, vehicle sales in Canada were ahead marginally, being 1.5% better than last year, at 1.22 million. Vehicle production in Canada has gone in the opposite direction, being down marginally 1.1%, to 1.56 million.
With the economic and political challenges of the United States, along with the daily news about the increasingly challenging sovereign debt crisis in Europe, it is not surprising that the Conference Board of Canada reports that consumer confidence has dropped 17.5 points from its high point this year in February to 71.8 in October. This is the lowest level of consumer confidence since right in the middle of the recession in May 2009.
Low levels of consumer confidence do not bode well for major purchases, especially discretionary major purchases, which new vehicles often are. While in relatively better economic shape, Canada is not immune to the spillover effects of negative economic events elsewhere, and this has prompted the Governor of the Bank of Canada to lower Canada's GDP growth expectations for both this year and next year. This has also moved the finance minister to recently announce that he is flexible with respect to considering additional stimulus measures, if required.
In that vein, and to address the issues of achieving sustained economic recovery in Canada, as well as ensuring relatively low levels of taxation, our first recommendation is to unilaterally reduce Canada's 6.1% tariff on imported light-duty vehicles down to the 2.5% level of that of our major trading partner, which addresses both issues. A tariff is essentially a tax, which the consumer ultimately pays. Imposing a tariff on imported vehicles at a level that is two and a half times greater than that of the United States is without any justification, and is at odds with the integrated nature of the automotive industry overall in North America and with the increasing trend to harmonize vehicle safety and emissions standards with the United States.
The Canadian Council of Chief Executives has also called for bilateral harmonization of external tariffs, as has the Japan Automobile Manufacturers Association. Further, I believe my colleagues at the Retail Council of Canada have been active in seeking tariff elimination on a myriad of products, in part to stimulate consumer demand and in part to address the price discrepancy of similar goods in Canada and the United States. Many of the advanced technology vehicles being developed for sale in North America to meet stringent new greenhouse gas emissions standards will have to be imported, and a higher Canadian tariff limits access and impacts affordability.
Does it really make sense for one level of government to be offering rebates on certain advanced technology vehicles of $8,500 while another level of government imposes a higher level of tariff that would make a $40,000 vehicle cost almost $1,450 more in Canada than in the U.S.?
With respect to our second recommendation, which is to eliminate the $100 excise tax on air conditioning, this tax has been around since the 1970s, when air conditioning was considered a luxury. This is no longer the case, and virtually all vehicles are equipped with air conditioning. This is a pure tax grab.
Finally, the Canadian Automotive Repair and Service Council, which involves all sectors of the automotive industry, was at the forefront of the development of sector councils in the late 1980s, when it was apparent that vehicle technology was drastically changing the skill set of automotive technicians from a mechanical skill set to more of an electronic and diagnostic skill set. We support the strategic and operational review the government is undertaking to ensure value for money. However, with over a hundred new technologies being introduced on vehicles to address stringent greenhouse gas regulations, we are now at another technological fork in the road where skills identification and training have never been more important.
2:05 p.m.
President, Association of International Automobile Manufacturers of Canada
The CARS Council works and contributes to sustaining and creating quality jobs in the modern automotive industry in Canada, with the full support of and leveraging millions of dollars from the automotive industry as a collective.
Mr. Chairman and committee members, thank you for your attention. I'll be happy to answer any questions.
2:10 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you.
We'll now hear from the Canadian Chamber of Commerce, please.
2:10 p.m.
Tina Kremmidas Chief Economist, Canadian Chamber of Commerce
Thank you, Mr. Chair.
My name is Tina Kremmidas and I am the chief economist at the Canadian Chamber of Commerce.
It gives me great pleasure to come before this committee to present the views of the Canadian chamber on the four issues that are the focus of this year's pre-budget consultations.
As many of you know, the Canadian Chamber of Commerce is the largest and most broadly based business association in Canada, a network of over 420 chambers of commerce and boards of trade representing 192,000 businesses of all sizes in all sectors of the economy and in all regions of the country.
Many of our members entered the summer with great optimism. Canadians were also brimming with confidence. Now, in the face of alarming events abroad, some are less sure.
The G-20 leaders summit in France this week presents an opportunity for the G-20 to restore confidence by taking urgent and decisive action to rein in debt and refocus on delivering strong, sustainable, and balanced growth. Our president and CEO, Perrin Beatty, is heading the Canadian delegation to the G-20 business summit.
With the current economic climate, some would prefer that the government change course. This is not our view. The Canadian Chamber continues to call on the federal government to balance its books by fiscal 2015-2016 and to do so by restraining annual government spending growth. As we have seen from experiences abroad, as well as in Canada in the 1990s, deficits can quickly spiral out of control, triggering a financial and economic crisis. Investors and markets need assurance that the government will not veer away from the current plan to return to surplus in the medium term.
Slaying the deficit dragon is also in the long-term interest of the country. We need to get our finances in order to gain the financial flexibility to deal with the gale force of an aging population and tackle areas that are crucial to Canada's long-term competitiveness. This includes reducing high and uncompetitive marginal personal income tax rates that discourage people from working, saving, and upgrading their skills.
To create quality sustainable jobs in Canada, we must embrace a culture of innovation. Innovation has led to new industries and new jobs in high tech and advanced manufacturing sectors. Yet when it comes to the capacity for innovation, the World Economic Forum ranks Canada in 24th place. Canada ranks near the bottom among OECD countries in getting innovative products and services to the marketplace.
To foster innovation, the government must focus on implementing a re-invigorated national strategy, with a spotlight on research, training and retraining, and education. We must build a strong interface between post-secondary institutions and the private, public, and non-profit sectors to accelerate the pace of discovery and commercialization, and turn Canadian research efforts into successes in the marketplace.
We must strengthen Canada's intellectual property rights regime and ensure SR and ED investment tax credits are being delivered in a predictable, consistent, and timely manner. At present, this is not the case.
Ensuring ongoing job creation also requires an ambitious and comprehensive strategy to boost our country's trade and investment ties with other nations.
Policy-makers should always be looking for ways to enhance the flexibility of Canada's economy and improve its performance. Eliminating interprovincial barriers to trade and labour mobility as well as eliminating burdensome regulatory procedures and reducing the tax compliance burden come to mind as areas in need of urgent action.
We recommend that the government launch a national consultation process focused on identifying ways to reduce the complexity of Canada's tax system and improve tax administration. As part of this, the government should undertake an independent review of the 260 or so tax preference measures that are part of the federal tax system, to determine if they are cost-effective and are achieving their intended purpose.
2:10 p.m.
Chief Economist, Canadian Chamber of Commerce
Those measures that are not effective should be phased out. A more comprehensive tax base would facilitate lower tax rates so all Canadians would benefit.
I will end my remarks here.
I look forward to the committee's report, and I wish you success in your deliberations. I would be pleased to answer any questions you may have.
2:10 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you very much for your presentation.
We'll now hear from the National Aboriginal Caucus, please.
2:10 p.m.
Patrick Smoke National Aboriginal Student's Representative, Canadian Federation of Students, National Aboriginal Caucus
My name is Patrick Smoke, and I am the national aboriginal representative for the Canadian Federation of Students. I am a member of the Mississaugas of the Ojibway. My community is Alderville First Nation.
I want to start by acknowledging that we are meeting on traditional land of the Mississaugas of the New Credit First Nation. Toronto was, and still is, a meeting place for a great number of different people and nations. We all have a responsibility to respect the land we occupy.
I would like to thank the committee for the opportunity to make the voice of aboriginal students heard here today.
While the educational attainment of the Canadian population has been steadily increasing since the 1950s, aboriginal peoples' participation has not risen to comparable levels. A lack of necessary resources and support to pursue post-secondary education is one of the many barriers that have prevented Canada's aboriginal peoples from achieving socio-economic equality with other Canadians. In order to fulfill treaty obligations and to address the needs of Canada's fastest-growing population, the federal government must ensure that every eligible aboriginal student is provided with adequate funding to attend post-secondary educational institutions. Doing so is critical to maintaining the strength of the Canadian economy in the decades ahead.
Our first recommendation is that the government remove the 2% funding cap on the post-secondary student support program, the PSSSP, and ensure that the program receives sufficient funding so that every eligible first nation and Inuit learner is provided adequate support to attend post-secondary educational institutions.
Prior to the implementation of the funding cap, approximately 27,000 aboriginal students were provided support to attend college or university. After ten years, the number fell to 22,000. At least 19,000 students have been denied funding because there is simply not enough. Students across the country, both aboriginal and non-aboriginal, see this funding shortfall as indefensible and harmful to first nation and Inuit communities, and also to the economic well-being of the country.
Students met with nearly 200 senators and members of Parliament last week and were pleased to hear support for these recommendations from members of all five elected parties. We need to translate the support into action.
Our second recommendation is that the government, in cooperation with aboriginal organizations, develop a plan to extend non-repayable student financial assistance to Métis and non-status first nations. The Métis population represents 33% of the total aboriginal population in Canada. Non-status first nations and Métis people face the same challenges in accessing post-secondary education as first nations and Inuit. On average, income levels remain lower than in the general population, with non-status and Métis people earning only 75% of the average income of the total population.
Our final recommendation is that the federal government continue to support aboriginal-controlled education by increasing long-term, sustainable core funding for aboriginal-controlled institutions. Aboriginal peoples have always educated their own communities, but need comparable resources that exist for non-aboriginal educators. Aboriginal educators and leaders have developed and delivered courses and curricula in aboriginal-controlled institutions across the country. They reflect the perspectives and foundations of our traditions and world views. Unique indigenous methodologies are fostered. They have strengthened the identities of aboriginal students, and have dramatically improved opportunities for success, strengthening the confidence and self-determination of aboriginal communities.
The economic and social benefits of widening access to post-secondary education for aboriginal communities greatly outweigh the costs. These costs are also part of the commitments made through legally binding treaties. Most first nation and Inuit students who are eligible to access funding through the PSSSP succeed in completing post-secondary studies and find meaningful work. The majority of these students who graduate return to work in their communities and are employed in their field of study, achieving economic self-reliance and helping to develop healthy and sustainable communities. There is no doubt the PSSSP works for those who can access it. We believe the best and only means to improve aboriginal education attainment in institutions while representing Canada's treaty obligations is by eliminating the PSSSP funding cap and replacing it with a per-student funding model so that no student is denied access to post-secondary education.
Thank you. I look forward to questions from members of the committee.
2:15 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you for your presentation.
We will now hear from the Retail Council of Canada.
October 31st, 2011 / 2:15 p.m.
Diane Brisebois President and Chief Executive Officer, Retail Council of Canada
Thank you, Mr. Chairman.
We've distributed a bilingual presentation—with the blue and white RCC logo and cover—and I'll refer to it during my presentation.
My name is Diane Brisebois. I am president and chief executive officer of the Retail Council of Canada.
It's a privilege to appear before this committee.
As a whole, members of the RCC account for more than 80% of total sales in general merchandise, drug, and grocery retail in Canada, and the RCC represents 12% of the Canadian labour force.
We represent more than 45,000 independent retailers, regional, national and international chains and online merchants.
Retail sales in Canada reached $437 billion in 2010, with the auto sector representing approximately 30% of the market, and food and general merchandise 70%, or approximately $304 billion.
Total sales in the retail sector exceeded $437 billion in 2010.
In 2010 retailers contributed close to $75 billion to Canada's GDP.
Last year, the sector's direct contribution to Canada's gross domestic product was $75 billion.
I can confidently say that Canadian merchants both big and small continue to be a critical component of Canada's economy. We look to the federal government to help ensure that market conditions for merchants remain viable and competitive across Canada.
With that in mind, I will outline three issues, detailed on page 7, that present the greatest concerns for retailers: first, we'd ask for the elimination of duties on imported consumer goods wherever the duties are no longer needed. Second, we continue to support a regulated “made in Canada” debit and credit card system that provides greater transparency and accountability, that drives competition and cost efficiency, and that functions across all future platforms, such as mobile technology. Finally, we ask that current and future reviews of Canada's employment insurance program take into account the employment insurance employer form recommendation.
Our written submission to the committee outlines our position in detail, but I'll summarize our core concerns.
Regarding the elimination of import duties, we believe that the government can help reduce costs for retailers and consumers by eliminating duties on certain imported goods. Many of the duties are as high as 18%, compared to 0% paid by retailers in the United States. The Retail Council is also looking forward to contributing to the study announced by the Minister of Finance concerning price differentials on consumer products sold in Canada and the U.S., and will be appearing shortly before the Senate committee.
Another issue that continues to be a concern for retailers is the development of a regulated “made in Canada” debit and credit card system. RCC commends the government on the creation of the voluntary code of conduct for the credit and debit card industry. However, the code addresses only credit and debit card transactions at the point of sale in a store. With the advent of new products such as mobile and touch-and-go payments, the code is now outdated. RCC recommends that the code of conduct be revised to include provisions regarding new forms of payment such as mobile and contactless payment, and that this committee support the recommendations of the task force for the payments system review.
Lastly, I would like to point out that employers are key stakeholders in the employment insurance system that extracts some $11 billion from them annually in EI premiums.
Employers are seeking an approach that addresses the current challenges of socio-economic change and qualified labour shortages in order to boost the economy and prosperity for all.
The Employment Insurance Program should be operated as a true insurance program. It should provide temporary income support to individuals who involuntarily lose their jobs. This also means the social-program aspects of EI should be handled separately, outside this employer-employee paid insurance program. At minimum, this segment must now grow as a proportion of the system, and the related spending must be carefully tracked and its utility justified.
We have also included for your information additional slides relating to mobile payments as well as some of the task force comments and findings.
I thank you again for this opportunity to address the committee.
I will be pleased to answer all your questions. Thank you.
2:20 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you for your presentation.
We'll now hear from Quality Urban Energy Systems of Tomorrow, please.
2:25 p.m.
Brent Gilmour Executive Director, Quality Urban Energy Systems of Tomorrow
Thank you, Chair and members. It's a delight to be here this afternoon.
My name is Brent Gilmour. I'm the executive director of Quality Urban Energy Systems of Tomorrow, QUEST. QUEST is a national, non-profit organization that was established in 2007. It is a non-member-based organization. We are focused on advancing integrated community systems across Canada with a focus on linking energy with land use, buildings, transportation, waste, water, and waste water.
We are a collaboration of organizations of which many will testify in front of you over the next few days or testified prior to that, including CEPA, Spectra, Canadian Water and Wastewater Association, Canadian Urban Transit Association, Canadian Institute of Planners, and many others.
We have a very focused mission and mandate. We are here to help mobilize community builders across Canada in all 5,400 urban, rural, remote, first nations, aboriginal, as well as Inuit communities. We are focused on a vision and hope that by 2035 all communities in Canada could operate as an integrated energy system.
The approach we're taking to advance this is really simple. We are focusing on encouraging people to adopt six basic principles: improve efficiency; energy optimization; better manage heat; reduce waste and collect waste opportunities; use renewable resources; and use grids strategically.
The approach we are taking to do this really addresses one key focus and one key concern. Energy planning across Canada tends to occur in silos. It is separate from land use, transportation, waste, water, and so forth. It's hence difficult for many communities to understand how to address energy demand needs. At the same time, many of these communities face a number of infrastructure challenges, such as the delivery of heating and cooling services and mobility, with a focus on transit, as well as goods movement.
It is why QUEST is responding by focusing on integrated community energy solutions--ICES--a concept that was introduced by QUEST and Natural Resources Canada. A road map was created, a road map for action that was endorsed by the Council of Energy Ministers in 2009 and then reaffirmed by the Council of the Federation in 2010. Due to these two affirmations, this document has gained traction across Canada. It is now starting to provide a coordinated approach based on QUEST's six principles on how we might address some of the challenges.
ICES is not only about buildings. It's about the entire community and how you might advance those energy challenges. It is why QUEST endorsed and undertook a national study with three leading firms across Canada that was endorsed by a number of organizations and presented at the Standing Committee on Natural Resources last year. The information looked at the following.
When applied, ICES could save money, create jobs, grow the economy, and reduce Canada's greenhouse gas emissions while simultaneously addressing some of the energy challenges. If ICES is applied as a whole, we could at times address between $14 billion and $29 billion in terms of capital spending reductions. We could achieve a $3 billion to $6 billion reduction in terms of energy expenditures and a minimum of $12 billion to $31 billion in terms of annual household energy costs. This doesn't include indirect costs.
We're here to present three suggestions to you in terms of federal budget recommendations. QUEST is calling on the federal government to continue to invest in the actions it has already undertaken, such as ICES. We believe it will be able to continue to save money, create jobs, grow the economy, and reduce energy consumption. It's why we're suggesting that $8 million of existing federal support, divided among four or five departments, could be redirected to three specific ICES activities.
The first activity would address remote urban, rural, first nations, Inuit, and Métis community energy needs with ICES. It would allow for a reduction in energy use through a variety of opportunities and means.
Secondly, we would encourage the strengthening of national competitiveness and international trade by investing in ICES. As of this year, we noted that DFAIT was directed to encourage energy in terms of trade.
We lastly recommend that they close the known national information gaps and remove policy barriers to ICES while specifically encouraging congruent policies that might easily be undertaken through a better working, coordinated body among five or six identified agencies within the federal government.
These are the recommendations we believe support the federal budget direction focused on sustained economic recovery, sustainable jobs, lower tax opportunities for residents and businesses across Canada, and a balanced budget in every urban, rural, remote, and aboriginal community of Canada.
Thank you for the opportunity to present.
2:30 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you very much for your presentation.
We'll begin members' questions with Mr. Julian on a five-minute round, please.
2:30 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Thank you very much, Mr. Chair.
Thanks to our witnesses. Those were terrific presentations. I want to get right to it, because part of our role as the finance committee is to look at existing programs to see whether or not they're functioning. That's part of the choices the government and Parliament should be making over the next few months.
I'll start with you, Madame Brisebois. Reading from your testimony, you talk about the voluntary code saying that the only competition that exists is among the banks to provide customers with greater incentives on the backs of merchants. But what we have heard from our merchants is that the payments industry has continued to engage in practices that result in high fees that have no connection to the service provided, and some players have blatantly violated the voluntary code. So my question back to you is, is the voluntary code working for retailers?
2:30 p.m.
President and Chief Executive Officer, Retail Council of Canada
There are two parts to my answer. One, the voluntary code was working, but the voluntary code was developed around a more traditional payments model, meaning looking at the payments that customers were making traditionally in-store. There was very little focus on online business, because it represented a very small portion of the entire market.
What we have noticed—and I think I've added a few statistics at the back of the chart—is that the mobile and what we call the card-not-present market has grown substantially. The code does not truly deal with the mobile and online payment world. We believe that it's extremely important that it be updated to ensure--
2:30 p.m.
NDP
2:30 p.m.
President and Chief Executive Officer, Retail Council of Canada
As most members would know, since we have appeared several times in regard to this issue, we have always asked for regulation.
2:30 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Thank you very much.
I have to move along to Mr. Smoke now with the PSSSP program.
You cite the figure of 10,500 students. We know that aboriginal students come from lower incomes, and one of the things that has been a constant theme today is the increasing level of poverty we're seeing, including among aboriginal people.
Would you say that this program needs major changes, funding, so that we're not seeing thousands of very good aboriginal students being denied funding?
2:30 p.m.
National Aboriginal Student's Representative, Canadian Federation of Students, National Aboriginal Caucus
Yes. Currently, about one in three receive no funding at all. Obviously with the treaty obligations that's pretty unacceptable.
What we're trying to do is see the removal of the 2% cap. That means that the program cannot grow by more than 2% every year. The provincial governments and provincial legislation are undermining this program by allowing tuition fees to rise by 5% to 8% annually. As well, having the fastest-growing population within Canada means that there is less and less funding being made available and fewer and fewer students are able to receive funding.
That's what our major focus is. The program itself is currently working for those who receive it, but--
2:30 p.m.
National Aboriginal Student's Representative, Canadian Federation of Students, National Aboriginal Caucus
--we really need more funding.
2:30 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Thank you.
I'll move on to Mr. Joy.
I really appreciate your presentation in which you talk about the existing moneys available for infrastructure projects, and also the ongoing transit system deficits. You're saying that we're getting $2 billion in, but the annual deficit is $10 billion for Canadian transit systems.
What we surmise from your presentation is that you're really calling on the federal government to make substantive investments in transit systems.
2:30 p.m.
Vice-President, Policy and Government Relations, Toronto Board of Trade
I guess we're asking that the federal government continue its substantial investment and that it make permanent those.... Longevity is key. You can't build transit infrastructure on short-term projects. You need to have a long-term strategy.