Transport Committee on Nov. 1st, 2012
Evidence of meeting #50 for Transport, Infrastructure and Communities in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was tax.
A recording is available from Parliament.
On the agenda
Pierre Poilievre Nepean—Carleton, ON
Here's the difference. The motion I propose is about making existing infrastructure dollars go further. Ms. Chow's proposal is to make more dollars available for infrastructure. Every single one of the proposals here is revenue-generating. There's nothing in here about how to deliver infrastructure more efficiently. That's not what the document proposes. All six points are about raising more money.
I'm not even commenting on the merits of the proposals; I am simply saying they are completely different in their purpose than the motion itself.
We could have a study on how to raise more money for municipalities; that is possible. However, I would submit to the committee that it's been done over and over again. We can easily invite municipal leaders here, and they will simply tell us they need more money, which is what they've been telling us for two decades. Basically, they've had everything they've asked for, and now there are new demands. We can hear them again, but I don't know what the benefit is to the national discussion of having the same conversation that we've had since 1992 when, at that time, the Liberal government took office in 1993 and started funding municipal and provincial infrastructure, something that hadn't been a practice of prior federal governments. Then in the 2000s we had the gas tax program come in, and then that gas tax program was doubled, and then capital funds available for municipal projects were vastly increased in the Building Canada program.
The issue of increasing money to municipal projects has been thoroughly treated by both governing parties over two decades, to the point at which municipalities have had an increase in their funding that vastly outpaces population growth and inflation. It's not even close.
I simply don't think there's any benefit in having yet another conversation about how much more taxpayers should have to spend on their municipalities. Instead, I think it would be more fruitful to study how we can make the infrastructure dollars we already ask of Canadian taxpayers go further in delivering the needs they want delivered. For us, this is about delivering the result, rather than filling the coffers .
Olivia Chow Trinity—Spadina, ON
Mr. Chair, there are no more “existing dollars”, because the Building Canada program is going to expire. On top of that, we noticed yesterday that $2 billion was cut from the existing program, so there really isn't a new pot of funds, so to speak, that we can talk about.
Even if we are saying that there is an existing pot of money—let's say, for argument's sake, $1 billion—should the government do a direct funding transfer? Should it be done through a grant program? If so, what criteria should one use? Should it be a tax-point transfer? There are different ways of dealing with existing funds, if you're even talking about existing funds—never mind that there aren't going to be any, because that program is now expiring—which is why we need to look at how the fund could be used.
At the committee level, we know that we cannot tell the minister how much money he should allocate. That's really up to the minister and the cabinet. We're not talking about more dollars; we are talking about how the dollars that we have—even though we don't know how many—are going to be divided up. Is it more gas tax transfer? Is it grants? Is it tax points?
To reduce red tape is important, but reducing red tape could also mean that we may not get value for the money spent. If we say we'll have more bidders, what's there to study? Yes, we need more bidders; that's pretty straightforward. If we say we need more private-sector involvement, okay, we know that, but what's there to study about that?
I think that in order to do the new program justice or to deal with the $123 billion infrastructure deficit that the cities and communities are facing, I think this committee should look at what kind of funding program should be in place. We're not talking about how many dollars, because that's really not up to this committee; we're talking about what kind of program. There's a real difference there.
I'm not putting before you the view that we need to spend x billions of dollars; that's not within the mandate of this committee. To use that as an excuse to not look at how we spend the money is, I think, a complete red herring, because the committee cannot deal with how much money we have; we know that.
We're not saying how many billions need to be in place, but if the money is available, we are saying how it should be spent and what kind of program it should be. To look at other countries and look at the best practices is, I think, the way to go.
I just want to be very clear so that other members know precisely what I am seeking by way of a study.
Jeff Watson Essex, ON
Thank you, Mr. Chair.
When a study is proposed, I think it's assumed that the items proposed for study are being advanced because there's a belief that there is merit to the proposal. On our side I could say, for example, if we can make the administration of a program much simpler, let's investigate how to do so; if we can make it simpler, we can deliver more infrastructure for the same dollar.
Principally, the idea of looking at bidding practices is to ask whether there are ways to increase the amount of competition in the way projects are bid. I think there's merit to this; that's why we want to advance the idea. On the idea of increasing the participation of the private sector and of private sector dollars in the funding mix, we can look at how we can improve on that. Are there ways to get more private sector investment leveraged against existing public dollars? What is it going to take to do that? I think studying that idea has merit.
On the opposite side, I think it has to be understood that the opposition believes there are merits to such proposals as backing increased municipal borrowing, which is item number two. Why else would you want to study this, unless you think there's merit to the proposal? Is it simply to shoot an idea up and then shoot it down? I don't think so.
As to surplus revenues from fuel duty, currently 5¢ of the gas tax goes into our infrastructure programs; the other 5¢ supports other programs funded by the government. There are no surplus revenues, unless you're suggesting that you increase the amount of gas tax that goes to funding infrastructure, and then those programs will either be cut or taxes will have to be raised somewhere else—an indirect tax increase.
These ideas aren't being floated simply because they might be interesting. The opposition believes there may be merit to a 1% value-added tax that municipalities can implement.
I think this is a bit of a phony debate. We already know that the opposition supports, at least at a minimum, indexing the gas tax revenues to municipalities, which would mean that whatever funds are taken out of the excise tax would have to be replaced by a higher tax somewhere else in order to fund the existing commitments of the government. They suggest the Canadian Centre for Policy Alternatives.
It's no secret that they support increased taxes, Mr. Chair. I think it's phony to now suggest that they just want to study the idea; no, they want to make a case for the idea, and I don't think we should be under any illusion about that.
I'm happy to make the case for the three items in the subcommittee's report that we support; I think there is value there. I'm not ashamed to say that we should study the precise ways and factors whereby we can make those things work.
That's what they're suggesting, but they don't want to come out and say it, maybe because their ideas are unpopular.
I'll be voting against their amendment.
Denis Coderre Bourassa, QC
Jeff, you forgot to mention the carbon tax.
Oh, Hallowe'en was yesterday.
Denis Coderre Bourassa, QC
I'm just having fun with you.
Mr. Chair, I am in agreement on one thing, which is that we cannot amend this to the point where witnesses will be asking for more money. That will lead nowhere.
However, we want to make sure that we can not only validate the current situation regarding our own infrastructure, but also find a way of spending taxpayers' money in the best possible way; we must determine what tools we need to avoid some of the experiences that other sectors have gone through.
That is why I am emphasizing the fact that looking at the process is essential. In any case, to my mind, we could both look at the process and implement Olivia's comments. There is no doubt that when you study infrastructure, you have to know the current status of the infrastructure in question.
I would invite our colleague to reformulate things so that we can find a solution we all agree on. At the Standing Committee on Transport, Infrastructure and Communities, infrastructure has always been the poor cousin. However, we don't want things to change in such a way that the municipalities tell us that they need more money. In any case, they will be saying that.
While emphasizing a recommendation on the need to renew the investment plan, I think we should go much further. I think that the committee's study should be far more technical, so that we can define what we mean by “expertise”. Our role as parliamentarians is to accompany the state, in a way, so as to give it additional tools and guidance on how situations are to be managed.
That is why, given that, the committee's study could become really important. This must not become an exercise that drags on indefinitely, where all we are doing is buying time and hearing a whole lot of witnesses who will all say the same thing, while everyone plays a partisan game.
Here we have the opportunity of saying that the private sector has to play a role, and that we have to reduce red tape, and not only increase the number of bidders, but also take a close look at the issue of the lowest bidder. I think we aren't that far apart. In fact, I don't know what game is being played, but we are somewhere between the two. We must not talk about increasing taxes, because people are taxed enough already. Perhaps we should check first to see whether there are additional sums of money available, and examine how funds are being managed now, and determine whether there are any measures...
called best practices. When we're talking about best practices, we see what's going on in some other countries.
I believe that we should take a vote on what Olivia is proposing, Chair, but I would come back to the procedure for managing the way you attribute contracts. If Pierre wants, he can put a little bit in the fourth report saying that we should also include some of the studies to see what the best practices are outside. We'll pick it up from there.
The Chair Larry Miller
Mr. Holder is next.
November 1st, 2012 / 11:55 a.m.
Ed Holder London West, ON
Thank you, Chair.
My sense, having just read this, is that Ms. Chow's various ideas are implicit in the opening statement, where she says, “Canada's urban infrastructure is crumbling, and overburdened municipalities are struggling to fund maintenance and expansions”. When I look at the various points, they all appear to me to be spending mechanisms, and for the most part, additional spending mechanisms. The one that particularly caught my attention, because I agree with Mr. Coderre on his point that Canadians pay enough taxes now as it is, is number 4, the penny tax.
In my experience, a tax is a tax is a tax. When I look at that, I see that it's levied by the municipality. I'd just like to ask a question to Ms. Chow, through you, Chair, just to help clarify so that I can understand.
I remember when our Mayor Gosnell had a sewer tax. It was called the GST, the Gosnell sewer tax. I don't think our current mayor, Mayor Fontana, would want this to be called the Fontana tax or the Fontana penny tax or something. He wouldn't want anything such as that.
It's a 1% municipally levied value-added sales tax. I can't imagine the infrastructure you would need to put in place to actually collect that. Would it be like a municipal GST or HST? I'm not sure how much we would drive the underground economy even that much more underground.
It's a sincere question, Ms. Chow, through you, Chair. How does my city of London collect that tax you're proposing?
The Chair Larry Miller
I'm going to stray from the list to let you answer that question.
Olivia Chow Trinity—Spadina, ON
Mr. Chair, a few years ago, the Federation of Canadian Municipalities and the big city mayors came up with the one-cent GST proposal. If you want me to go and find details of how that one-cent GST works, I could do so. This is not a new idea. It is something that has been proposed by the municipalities and the big city mayors. They ran a big campaign on it.
Is that a good idea? I don't know. I think it's useful to take a look at what had been proposed in the past and what other countries have done. I'm not saying that any of them make complete sense, but at a bare minimum, we should look at and seriously consider some of the proposals that have come directly from municipalities and big city mayors.
That was a substantive proposal that was given to us, I believe, seven years ago. Is it in this kind of format? Not completely, but I think at a bare minimum we should take a look at it. Does any of this make sense? Is it applicable to Canada? Perhaps yes, perhaps not. That is why at a committee we should look at other examples and decide whether this whole GST question does or doesn't work for us.
I was trying to answer the question about where that came from.
Ed Holder London West, ON
I think I know enough now, Chair. Thank you.
Olivia Chow Trinity—Spadina, ON
The one-cent GST came from the big city mayors.
The Chair Larry Miller
Are you finished, Mr. Holder?
Ed Holder London West, ON
I am. Thank you, Chair.
Mike Sullivan York South—Weston, ON
If the other side of this committee believes that these proposals are only about creating some kind of new tax stream, then feel free to take out those proposals that you feel are somehow creating a new tax stream.
I don't believe they are. I think the purpose of Ms. Chow's motion is to suggest that if this government is spending money on infrastructure—and it may not be, but if we are and if there is going to be a 2014 renewal of the infrastructure program for municipalities—then should we not provide the most comprehensive and well-informed advice to the policy-makers before they design that program? If there are problems with the way the program was administered in the past or if there are better ways of spending taxpayers' money in the future as you design a new program, wouldn't it be smart for this committee to look at whether or not there are better ways?
I like the notion that the federal government act as a guarantor of debt, for example, because there is no money to be spent. It's just backstopping and therefore reducing the debt charges to a municipality so the municipality itself can then build its own infrastructure without federal help. That seems like a no-brainer. Maybe there's a small additional piece of that money, because in backstopping the debt, there might be some that default, and how do you handle that? I don't know, but it would seem to me that would be a smart way of looking at infrastructure generally: staying away from anything that has the word “tax” in it.
A number of proposals in Ms. Chow's proposed amendment would seem smart to study or at least look at. If other jurisdictions have found better ways of spending federal infrastructure dollars, why wouldn't we look at that, rather than limit ourselves to increased private sector infrastructure? Look what private sector infrastructure has done for the city of Windsor and the bridge to Detroit: the company that owns that bridge is trying to block the building of another bridge every step of the way.
Private sector infrastructure is not necessarily the be-all and end-all, but maybe we need to look at the appropriate mix of private and public creation of infrastructure in the context not just of those three very small points, but in the context of how other countries do it. What other ideas are out there?
If we come to the point where the federal government says it doesn't have any more money, it's not going to spend any more money, and the taps are shut, why would you oppose a municipality having the ability to create a new revenue stream for itself when it's deemed necessary and voted upon by the citizens of that municipality?
The citizens of the city of Toronto—in polls, not by any kind of referendums—seem to be willing to pay more if the money goes directly to public transit infrastructure, but there's no mechanism for the City of Toronto to do that. They have limited taxing abilities, including only property tax and a few limited other things that the province has given them. They can't levy a sales tax. They cannot levy income tax. Sales taxes and property taxes are both regressive taxes, and I would rather that everything was based on income tax, but we're not there yet.
The problem for cities is that their tax base only grows if they build, so as a city you can't grow your tax base the way the federal government can. Federally, as incomes go up, so does the tax revenue for the federal government. Every time the average industrial wage goes up, the revenue of the federal government goes up; not so with a municipality. In fact, in Ontario they are forbidden by law from raising taxes through changes in the property values alone. They have to equalize those increases and decreases in property values across the entire municipality and then say that they are raising taxes. They can't do it any other way.
It's a very tight set of ropes around a municipality that make it very difficult for those municipalities to create necessary infrastructure. They turn to the provincial government for help and they turn to the federal government for help. One of the things we are suggesting is that we give them more tools—not necessarily that the federal government give them more money, but more tools.
Why would we turn a blind eye to even looking at that? It baffles me that the people opposite would be so rigid and blinkered that they would not want to study things that may in fact do a better job and a more efficient job of delivering infrastructure to taxpayers.