Finance Committee on Feb. 16th, 2016

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Or chefs.

[Erik Queenan]

Exactly. Absolutely. Those are two ways to help with some of the issues that were brought up earlier.

[The Chair, Liberal, Wayne Easter]

Thank you very much for that information.

Mr. Grewal.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair, and thank you to all the panellists. Excellent presentations.

My first question is to Erik. You advocated for additional funding to be expanded to graduate and Ph.D. programs. As a recent graduate, and not too far removed from law school and carrying student debt myself, I couldn't agree with you more in terms of supporting our students and educating our youth.

Don't you feel more funding should be given to the undergraduate level so all Canadians can have access to a level of post-secondary education as opposed to putting more money up at the graduate and Ph.D. levels?

[Erik Queenan]

I think we absolutely agree. Of course we want to see more funding go to the undergraduate level as well, which is why we are advocating for a 50% increase to the Canada student grant program as a whole.

I mentioned expanding it to graduate and doctoral students because currently the Canada student grant program doesn't provide any funding for graduate students or for people looking for their Ph.D. That's the reason why.

Absolutely we want to see more funding for students at the undergraduate level as well because student debt continues to rise.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you.

Mr. Kelly, you're passionate about the small business industry, as you should be. Explain the rationale behind why the professional element should be given the tax cut as well, because that also encompasses Bay Street lawyers—not that I have anything against Bay Street lawyers, having practised law at a big firm—and it also encompasses their partnership because their partnership structures are small businesses for lawyers. They would be benefiting from this 2% tax decrease.

[Daniel Kelly]

Yes. From a fairness perspective we don't feel there's any difference if somebody is a good mechanic and is earning several hundred thousand dollars, or if they are a good lawyer, doctor, or dentist and earning several hundred thousand dollars. It's the level of income you should be treating in the same way. The threshold is now at $500,000 where you can access the small business rate. We think the government should be agnostic as to the way in which that's done, as long as these are legitimate businesses.

Many professionals have told us they are graduating—as I think your previous question alluded to—with hundreds of thousands of dollars of debt to become a professional in Canada. While certainly there are some professionals that do very well, and we're happy for that, it is a bit of a myth that every doctor, lawyer, and dentist in the country is wealthy. That's why we think their incomes should be treated the same as any other Canadian business owner and not subjected to specific provisions.

At the very least we urge you not to go down the approach Quebec has taken, which is an across the board elimination of access to the rate for those that have three or fewer employees. In our view that is especially punitive.

[Raj Grewal, Liberal, Brampton East, ON]

I think the status quo.... I was having this discussion with a professional last week. He said, “You're raising my taxes”, and I said, “No, we're keeping them the same.”

The economic rationale when you're walking around in your riding and you go to the mom and pop pizza shop, is that—as my honourable colleague mentioned—for many small businesses the margins between profit and going bankrupt are tight. I think they benefit from this 2% decrease proportionately higher than a professional would benefit.

The economic rationale for me is that small businesses outside the professions deserve the reduction, and the professions remain as status quo. I appreciate your testimony on that.

Mr. Lee, you made a great point on the amortization and changing the mortgage rules for 30 years. Is there any data on the percentage of uptake in purchases that would incur? Would there be an amount, say under $500,000, to ensure those mortgage rules aren't being taken advantage of?

[Kevin Lee]

Certainly, given the most recent move on down payments, it would make sense under the current regime for it to be under $500,000. We think that would be just fine. We're really talking about entry-level people and getting them into home ownership. Our calculations suggest that by moving from 25 years to 30 years....

It was really that we went from 40 years all the way down to 25 years. It was that last piece that really bumped a lot of people out of the market. By going from 25 years back to 30 years for well-qualified first-time buyers, about 80,000 new home buyers would be capable of affording to get into the housing market. How many of them actually would is a question of market dynamics. It really opens a big window for people who have a long time and are early in their lives and their families and careers to become homeowners and pay it off over a slightly longer period.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Aboultaif.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I have a couple of questions. One is for Ms. Gray.

By the way, thanks to the panel for all the wonderful information. We learned a lot today.

You mentioned several social assistance plans. One is the national pharmacare plan for retirees and so forth. You mentioned the figure of $3 billion. Can you elaborate further on how this amount would be distributed among the different programs or different plans, and over what period of time?

[Janet Gray]

The short answer is that I don't have that information in front of me, so I'll have to get back to you on that.

Our interest in the pharmacare program is that there are different policies amongst the provinces. There's no continuity province to province on what drugs are covered and what drugs are not. We'd look for some conciliation between all of that. We also want to ensure that there are some bulk purchasing priorities that can be done, so that if all the provinces are buying together, they're going to get a much better cost per unit of that drug. That's our concern. We want to be able to level the playing field so that people in British Columbia are not getting a drug that a person in New Brunswick cannot get.

I can get those particulars back to you.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I have a small question for Mr. Marotte.

You've mentioned your organization being involved in creating or helping to create jobs. Would you be able to give us some data on how many of those jobs you've created or have assisted in creating?

[Hans Marotte]

We do not help people to find jobs, but to obtain employment insurance benefits. We are funded by the United Way, which provides funds to us so that we can help people who have lost their job to obtain employment insurance benefits while they look for another job.

We are not in the business of creating jobs as such. We are a small community organization with four employees, so unfortunately we do not have those resources.

[The Chair, Liberal, Wayne Easter]

You do have time, if you have another question, Mr. Aboultaif.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

That's fine.

Thank you.

[The Chair, Liberal, Wayne Easter]

Mr. McColeman, we'll give you a minute.

Go ahead.

[Phil McColeman, Conservative, Brantford—Brant, ON]

I just want to come back to the point of the added taxation, not to housing but to small business, and the comments that were made regarding treating certain categories or professions differently if you're running a small business.

Again, it's the popularized perception that if you own a business, you make a lot of money. I know some professionals who struggle at, let's say, their surveying business or their engineering business. This is the very group that's been targeted. There have been gestures—and there isn't anything we've been told is coming down the pipeline, but it's been indicated that these are the people who have small businesses to reduce their taxes and for no other reason. They might employ two people in the office, a receptionist and maybe an assistant. I want to revisit that and come back to the thoughts on the panel regarding that point.

From what you've seen, Mr. Kelly, and your members, are people in this category rampantly abusing the small business tax format? Should they not be treated the same as any other small-business person?

[Daniel Kelly]

We're trying to figure out if this is a solution in search of a problem, and we suspect that it is. Again, if the Prime Minister is talking about abuse, that businesses are not legitimate and they're setting this up, and it's basically an employment income that they're hiding in a certain fashion, we will be the first to support that. However, for legitimate business owners, whether they're in one profession or another, we feel that the treatment from the federal government should be the same. Again, I do want to compliment the new government. It has endorsed the reduction from 11% to 9%. Our request is that it be made possible for all, and that there's no threat to it.

Responding to Mr. Grewal's question, one of the things he was saying is that it wouldn't actually be keeping it at the current 11%; it would be taking the professionals and bringing them up to the big business tax rate of 15% right now. It would be a significant increase in taxation for professionals, not basically a wash.

[Phil McColeman, Conservative, Brantford—Brant, ON]

I have some analysis from the accounting associations—

[The Chair, Liberal, Wayne Easter]

I'll have to stop you there, Phil.

Mr. Ouellette.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Thank you very much.

For Mr. Fred Phelps, I was interested more in the basic income concept.

We often talk about social workers in Winnipeg and indigenous communities, and how a lot of social workers are trying to do a good job but often they're taking indigenous children from their communities. In the province of Manitoba, 88.3% of all children who are taken into the care of the state are taken because of negligence, the inability of parents to provide good housing and food for their children. There are about 11% where allegations of abuse are put forward. Of that 11%, only 11% of that are actually substantiated abuse. Those are telling statistics. If there's 11,000 kids in care in Manitoba, it would work out to around 140,000 in the province of Ontario, 90,000 in the province of Quebec, 350,000 to 360,000 across this country. People would be up in arms in revolution over this if it were their kids.

Since we are looking at this level of poverty, I am wondering if you could elaborate on perhaps the impact it might have on keeping these families together so they can one day hopefully succeed in life.

[Fred Phelps]

Thank you very much for that poignant question. Being a past child protection worker and bringing children into care, many of the instances of neglect are on the basis of poverty, not on the basis of a family not wanting to provide for their children. It's an inability to provide for their children.

A basic income, coupled with the ability for people to meet their basic needs with housing, would take a tremendous burden off of families themselves. They would be able to maintain...and reduce the harm, to keep their children with them, with their families. It would greatly benefit extended families, who are often exasperated trying to keep kids out of care. Bringing those children back into extended families is breaking those families financially as well. It compounds the issues for children, and intergenerationally, from year to year.

I think addressing the fundamentals, the housing, basic income, would allow families to be able to maintain children in the home, more so than any policy we have right now.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Thank you very much.

For Mr. Daniel Kelly, it's interesting that you talk about how the people feel in your organization, but I'm going to use the example of Singapore concerning pension plans.

In 1955, there was the introduction of a central provident compulsory savings scheme. It was expanded in 1968. In 1984, it was expanded again. In 1987, there was a minimum retirement sum scheme, again conceived as a fifty-fifty split between the employer and the employee. People didn't want it, but today Singapore is an economy that I think a lot of us can look up to. It came from the developing world into the developed, if not one of the top-tier countries of the world. It's great that we feel things, but sometimes we have to look to concrete examples based on data.

My real question, though, is that looking at the professionals, I fail to understand how it perhaps works. I've never seen a homeless practising doctor. I believe that in our society everyone should pay their fair share. We are citizens first and foremost, and last we are taxpayers. That means that as taxpayers we are citizens. I fail to understand. Does that mean a doctor has his small business—he pays 9% or 10% or 11%, or whatever the rate might be—and then on his income that he earns as a doctor, he will pay income tax on top of that?