Finance Committee on Nov. 25th, 2013

[The Chair, Conservative, James Rajotte]

Okay. Order.

[Voices]

Oh, oh!

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Colleagues and members of the finance committee, I know you work very hard, and I appreciate what you do.

The consultations you do matter a lot in terms of the formulation of each year's budget, so I thank all of you for that. I know that you travel a lot and you're away from your families and it's not easy, so I thank all of you for that.

My officials are here tonight in case you ask anything complicated. They will attempt to deal with it.

I would like to thank the committee for its work on the pre-budget consultations.

The committee's pre-budget consultations are a key part of the budget process. Your recommendations inform the budget, and that's for real, because you can go back and look at the budgets over the last six or seven years and see a lot of recommendations that were in the report of this committee over those years.

For the budget this year, this included

ensuring the fairness and impartiality of the tax system while continuing to eliminate loopholes

— which is about tax loopholes; and enhancing the neutrality of the tax system by eliminating inefficient fossil fuel subsidies consistent with our G-20 commitments. I should add that we have eliminated all of the tax subsidies that once existed for the oil sands, and for those who think otherwise, they ought to check the record. We are trying to enhance the neutrality of the tax system by eliminating inefficient fossil fuel subsidies. This is consistent with our commitments in the G-20.

We are reviewing legislation and regulations to ensure the safety and security of our financial sector and modernizing Canada's immigration system to better focus on lever market needs. Let me provide some context to this. When we became the government in January, February 2006, what was there to worry about economically? Well, the Prime Minister and I thought perhaps the United States because they're running large deficits and accumulating significant public debt. So how do we protect Canada? My view was that we pay down public debt, which we did. We paid down about $38 billion of public debt in the first couple of years that we were the government. And then the great recession happened, but it didn't start there, as you know. It started with a credit crisis and then it moved into a crisis in the real economy. Then we had to make a choice about what were we going to do: continue to try to balance or give it up. And what we decided to do was to run a very large deficit of almost $58 billion in January 2009. But the plan always was to get back to balance in the medium term, and we're almost there.

In 2015-16, the budget will be balanced. I think it's important for business confidence in Canada. At the same time—and others have different points of view on this—I think it was very important that we spent that money, borrowed the money and spent it in 2009. And I give the public officials a lot of credit at Treasury Board, Infrastructure, Transportation, and Finance for getting the money out the door because that was the danger. The danger was millions of people unemployed and a long, deep, dark recession.

We can always look back and say that it didn't turn out that way, but we did some things that it helped it not turn out that way. And our plan worked, unlike some of our colleagues in the G-7 who are still struggling.

Moody says, and all the rest of them say, that we have the only economy that has created over a million net new jobs since the depth of the recession. We have, of course, a triple-A credit rating, and now there are only a handful of countries in the entire world that have a triple-A credit rating, which is regrettable.

The World Economic Forum for the sixth straight year has ranked Canada's banking system the soundest in the world.

The International Monetary Fund and the Organisation for Economic Co-operation and Development have forecasted that Canada will have the strongest growth of the G7 members over the coming years.

Now, this is not huge growth, and I don't sit here and say to people who are knowledgeable, like the members of the House finance committee, that things are rosy. Things are okay. But we're only growing at 1.8% or 2%, or a little bit better than that. The American economy is doing a little bit better now, which is a good thing. The European economy, as you've seen in the most recent statistics, is weakening, which is a concern.

Dealing with deficit and debt, I think the most important thing we can do for our country is to get rid of our deficit, which we will do in 2015-16. In the annual financial report, the deficit fell to $18.9 billion in 2012-13. This is nearly $7 billion less than projected. And that's down more than one quarter from the deficit of $26.3 billion in 2011-12, and down by nearly two-thirds from the $55.6 billion deficit recorded in 2009-10.

A lot of this has to do with the way we spend. I won't go on too long, Mr. Chair, but as you know there are three major areas of spending federally. One is transfers to the provinces. We have not reduced transfers to the provinces. We have maintained the 6% health transfer. We have maintained the 3% Canada social transfer. We've stuck to it—even during the bad times. And then with the transfers to individuals, persons with disabilities, seniors, and so on, we have continued at the same level of funding. We've also continued the same level of funding for research, development, our granting councils, the money we give to universities, the money we give for post-doctoral fellowships, and all of those things, because they're vitally important for the future of our country.

So where do you save money? You know this from looking at these subjects. You save it by looking at your own program spending, which we have done, and which we have tightened. The result of all of that is that we have a situation now in which we can easily balance in 2015-16. I'll spare you some of this other stuff.

I think we're doing some important things in this bill, one of which is to extend the hiring credit. It actually works. We're all members of Parliament. I'm sure you hear it at home. It creates jobs, especially among small—or smaller—entrepreneurial businesses, so that's a good thing. We're increasing and indexing the lifetime capital gains exemption, and this is the first increase since 1988, which was a long time ago. And we're expanding the ACCA, the accelerated capital cost allowance, to further encourage investments in clean energy exploration. We're closing some tax loopholes. We're, again, modernizing the Canada student loans program. We are phasing out—and this is controversial in Quebec—the tax subsidies such as the labour-sponsored venture capital corporations tax credit, which quite frankly is inefficient and was not accomplishing the goal for which it was intended, and was phased out by Ontario about five or six years ago.

So there you are. I will hand the chair back to David Frost.

[Voices]

Oh, oh!

[The Chair, Conservative, James Rajotte]

Thank you very much, Minister, for your opening remarks.

We'll have questions from members.

We'll start with Mr. Rankin for five minutes, please.

[Murray Rankin, NDP, Victoria, BC]

Thank you and welcome, Minister, to the finance committee.

Since this is another omnibus bill that affects matters far beyond the world of finance that you've referenced, I want to talk about something quite different and quite distinct, if I may.

I have a question that begs another question. Namely, why are health and safety protections that are found in the Canada Labour Code in a budget bill in the first place?

Minister, my specific question is on something very troubling that was just brought to our attention. It appears that departmental officials at the human resources committee might have provided misinformation. My colleague, the member for Newton–North Delta, asked how many refusals of unsafe work resulted in some sort of enforcement action. Officials told her the “administrative data doesn't allow us to make that direct link”. However, this committee has just been provided with evidence that that claim is not true. Somewhere between 45% and 52% of work refusals could result in an enforcement action.

Minister, could you explain why officials presented only the fact that 20% of refusals result in a finding of danger while failing to tell us that nearly half of refusals result in an enforcement action?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

That's part 3, division 5, so....

[The Chair, Conservative, James Rajotte]

Yes, I'm sure.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Ms. Baxter, can you introduce yourself, please?

[Brenda Baxter, Director General, Workplace Directorate, Labour Program, Department of Human Resources and Skills Development]

Yes. I'm Brenda Baxter, the director general of Workplace. In fact, I was one of the officials appearing at the committee.

On the question of the link between refusals to work and directions issued by our officers, to start with, we had provided information on the number of refusal-to-work situations resulting in a situation of danger or no danger, and we stressed that in the proposed amendments, the protections provided to workers are not changing.

Concerning further details on the data available through our administrative data, we are looking at trying to compile the information requested by the committee. We are working on that information. We have not completed that compilation because it is looking at a 10-year period, and we're required to do any sort of connection to that data on a manual basis.

[Murray Rankin, NDP, Victoria, BC]

Apparently, that's not the end of what we've been told, and you may be appropriately here to answer this question. Apparently, the relevant ADM told my colleague the member for Cape Breton–Canso that the number of health and safety officers had not declined from 150 to 85. However, we have evidence in front of us that shows that's not the case.

Do you have any response to that?

[Brenda Baxter]

Yes I do. I think the information provided is looking at all the labour affairs officers in the labour program that enforce both part II, which is health and safety, and part III, which is labour standards. It's the collective workforce that enforces part II and part III of the Canada Labour Code. Under that, there is a subgroup that enforces health and safety, and this number has remained at an average of 80 over the past 5 years.

[Murray Rankin, NDP, Victoria, BC]

There has been no reduction—

[Brenda Baxter]

No, there has not.

[Murray Rankin, NDP, Victoria, BC]

Minister, I wonder if you could explain then, how the definition of “a severe and imminent danger” makes Canadians safer?

[Brenda Baxter]

I guess I'll take that one on too.

In fact, what we're doing is clarifying the definition of danger. Throughout all the other occupational health and safety jurisdictions across the country, there is no definition of danger. What we've provided is a clearer definition that removes some of the ambiguities in the previous definition. The clearer definition still provides protections for imminent or serious situations that impact life or health, such as an immediate cut or broken bone, as well as for longer-term impacts on health, such as an occupational illness.

Essentially, it clarifies that definition of danger, and it goes back to the data that you identified; where we looked at our refusals and saw that 80% of those did not result in a decision of danger.

[The Chair, Conservative, James Rajotte]

Very briefly.

[Murray Rankin, NDP, Victoria, BC]

Just a quick question for the minister. Why are changes to health and safety protections in the Canada Labour Code in a budget bill?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

As you know, colleague, they are references to the ability to pay. That's important in terms of collective negotiations because there has been a dearth of attention to the ability of the people of Canada to pay for all these bills. We want the arbitrators and the mediators to pay attention, as they do in some provinces, to making sure that the people of Canada can afford their recommendations.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

Thank you, Mr. Rankin. We're going to Mr. Saxton, please.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you, Chair, and thank you, Minister, for being here today.

First of all, Minister, I want to thank you for the leadership that you've shown in governing the Canadian economy over the last almost eight years. These have been very challenging times, especially during the great recession of 2008-09. Canada has emerged very strong, thanks in no small part to the sound economic policies you've introduced during that time.

My question today regards small businesses. We all know small businesses play a vital role in the creation of jobs and economic growth in Canada. While Canada has performed very well with respect to our peers, small businesses across the country continue to face challenges: too many Canadians are still out of work.

What in economic action plan 2013 will be supporting small businesses and encouraging job creation?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

I want to thank my parliamentary secretary for that challenging question.

I think the biggest thing is the hiring credit for small business. This is a big deal. All of us are members of Parliament, we talk to people in our ridings, we talk to small business people. Tons of people have been hired because of this hiring credit for small business, so this is important.

It's also not inexpensive to the federal treasury, but it is important, so we're going ahead with that again. Since 2006, we've reduced the small business tax rate from 12% to 11%. We've increased the small business limit to $500,000. We've also provided up to $1,000 to help defray the cost of hiring new workers.

But the more important thing is to try to get people into the workforce. I see it in my riding, you probably see it in your constituencies as well, young people who are talented, who are good men and women; they just need a chance. And I think the hiring credit for small business helps give them that foot in the door.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you, Minister.

I know that during your time as finance minister you introduced P3 Canada, public-private partnerships Canada. How do you see this helping our infrastructure development in this country?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

I think it's evolved very well. It had its growing pains, as a lot of new institutions do. It is really into the transportation business now around Edmonton, Calgary, Union Station in Toronto, and Vancouver. It's a very useful function. We have large pension funds in Canada, as you know, and it always struck me as peculiar that we did not access them...bid on airports in Australia and not talk to us about our airports.

Things are changing, improving I think, and the board at P3 Canada and the CEO are both very strong.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you very much.