Finance Committee on Oct. 28th, 2014

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

Thank you, Mr. Cullen.

We'll go to Mr. Saxton, please, for your seven-minute round.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you, Chair.

Thanks to our witnesses for being here today.

My first question is for the Canadian Chamber of Commerce.

In Budget 2013 our government introduced the Canada jobs grant, recognizing that Canada faces ongoing shortages of skilled tradespeople and other professional occupations. There are too many jobs that go unfilled in Canada because employers can't find workers with the right skills. Meanwhile, there are still too many Canadians looking for work. Could you speak to the need for skilled training amongst your membership?

[Hendrik Brakel]

Absolutely. Business certainly recognizes that it has an important role in providing that training. The challenge is that there are certain areas and certain regions where they've done everything possible. They've tried desperately to recruit people and they're just not finding them, and it's a problem from coast-to-coast. It's not just an Alberta thing. It's the Montreal pharmaceuticals. It's the tech industry in Vancouver, the financial industry. It really goes right across the board.

So business certainly recognizes they have a huge role to play in training and there has been quite a lot spent on training, but it's a continuing problem. All of the surveys from Canadian Manufacturers and Exporters, all of them right across the board, talk about this challenge of not being able to find the right skills and qualified people.

[Andrew Saxton, Conservative, North Vancouver, BC]

So you agree that there is a skills shortage in Canada?

[Hendrik Brakel]

That's what we're hearing from our members, sir. They tell us that very aggressively

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you very much.

My next question, Chair, is for the Retail Council of Canada.

First of all, you've advocated for a reduction in tariffs, and I'd like to know in particular which import tariffs are causing the most price discrepancies with the U.S.?

[David Wilkes]

The key ones we have listed are where we see tariffs in that 17% to 18% range—so linens and footwear, for example, where the price gap between Canada and the U.S. is compounded by those tariffs. We believe that they are really just adding an unnecessary tax to our economy. It is an opportunity to continue the work that was identified both by the Senate report and the government budget of last year to level that playing field between Canada and the U.S. by addressing those tariffs in that double-digit range.

[Andrew Saxton, Conservative, North Vancouver, BC]

Okay, now we've tested the waters in previous budgets to see how a reduction in tariffs would in fact help to bring the price differences between the U.S. and Canada more in line, and of course the success of these efforts is contingent on the retailers passing those savings on to consumers. Do you have specific examples of where retailers have passed those savings on to consumers?

[David Wilkes]

Yes, I do. Let me highlight a couple. In the hockey equipment example that I provided, there was almost a $51 saving in the cost of equipping a youth hockey player after the tariff was eliminated in 2013. If we look at selected baby clothes, which was the other category where a tariff was eliminated—and I have a chart that I can leave with the clerk that illustrates this—if you purchased a set of pants and shirts, some shoes, a printed hanging bodysuit, and snowsuits, as illustrated here, that family would have saved $12.

So we have very clear evidence where the savings are passed on to our retailers by their wholesalers, and where other factors remain even or equal, as it were, the savings do fall in the price on the shelf.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you very much.

My next question is for the Canadian Federation of Independent Business, also known as CFIB. In 2013, our government announced a three-year freeze on EI premiums to promote stability and predictability for job creators and workers. This measure will leave $660 million in the pockets of job creators and workers in 2014 alone. Then we built on that with our small business job credit, with savings of approximately $550 million for small businesses over those two years, with a seven-year break-even rate in 2015. How important is it for small businesses to have a predictable and stable forecast for EI premiums?

[Corinne Pohlmann]

It's very important. It's one of the things we've been pushing for probably for decades, because the last thing you want to do during a downturn in the economy is to start raising EI rates. The stability that we see coming over the seven-year horizon, starting in 2017, and maybe sooner if we can get there, is going to be extremely important in bringing that stability to small business owners when times get more difficult. We also welcomed the small business job credit. We felt it was an important piece to continue to stimulate growth within small firms, and we congratulate the government for putting that forward.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you. Some members of the opposition have said that the small business job credit will encourage business owners to lay people off. Do you agree with that?

[Corinne Pohlmann]

Not at all. We don't believe that's going to be the case. If anything, you're going to hear of more folks looking at increasing compensation, investing more in training, the types of things that we specifically asked our membership about in a survey. You have fresh data in front of you that shows that their plans with that extra money is to invest it back into their business and back into their employees.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

I'm moving on to the Canada Pension Plan. Enhancing the pension plan is expected to be the focus of the next finance ministers' meeting in December, led by Ontario. We all agree that retirement security is important for Canadians. However, given that economic growth is still fragile, there is concern that now is not the appropriate time to increase payroll taxes on businesses. As your organization represents over 109,000 small business owners, could you describe the impact a CPP expansion would have on small businesses in Canada?

[Corinne Pohlmann]

As I mentioned in my remarks, we have done extensive surveying of this over the last couple of years to understand the impacts, and small business owners have told us in no uncertain terms that it would cause them to freeze or decrease salaries, and reduce investments in their business. CPP is a big amount of money for many small business owners and any increases in that scares them. It will have an impact on their decision-making when it comes to hiring more people and investing in their own business.

[Andrew Saxton, Conservative, North Vancouver, BC]

The Ontario government has stated they're going to go ahead with plans to have their own pension program. How is that going to impact the competitiveness of Ontario?

[Corinne Pohlmann]

We have a lot of fears about what this will mean for Ontario. It will make it a lot less competitive for businesses in Ontario to compete and to attract folks and investment, and so we are fighting hard to try to lessen that blow for our membership in Ontario. We have something called the "axe the Ontario pension tax” campaign going on right now in Ontario to try to make sure that we fight back against it.

[The Chair, Conservative, James Rajotte]

Okay. Thank you. Thank you, Mr. Saxton.

Mr. Brison, please, for your round.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you very much.

To begin with the Canadian Labour Congress, you've said that with cheap money—and yields being so low and real interest rates being negative today—and with crumbling infrastructure, we have a historic opportunity to invest significantly in infrastructure. That's the position of your organization?

[Angella MacEwen]

Yes. That is the position of our organization and has been for a couple of years now.

[Scott Brison, Liberal, Kings—Hants, NS]

The Canadian Chamber of Commerce, would you agree with that position, that we have a historic opportunity to invest in modernizing and improving Canada's infrastructure?

[Hendrik Brakel]

Absolutely we would support more spending, with borrowing costs for 10 years at 2%.

[Scott Brison, Liberal, Kings—Hants, NS]

The Green Budget Coalition, do you agree that investing in and greening and strengthening Canada's infrastructure is something we ought to be focused on?

[Andrew Van Iterson]

Yes, we do, as long as adaptation and environmental considerations are made central to them.