Finance Committee on Sept. 26th, 2006

[The Chair, Conservative, Brian Pallister]

I invite the witnesses to step to the plate, as it were, and we welcome you.

The finance committee is mandated by the House of Commons on an annual basis to consider and make reports on proposals regarding the budgetary policies of the government. This year our theme is Canada's place in a competitive world.

As you know, because you've presented your briefs to us already, we are appreciative of those, but we also ask that you hold your presentation today to five minutes so that we can get into the exchange with committee members.

Again, thank you for taking the time to be here.

Let's get under way. Who are we starting with today?

It is Ducks Unlimited. Cynthia Edwards, welcome. You have five minutes. Please proceed.

[Cynthia Edwards, National Manager, Industry and Government Relations, Ducks Unlimited Canada]

On behalf of Ducks Unlimited Canada, thank you to the standing committee for the opportunity to provide input into these important consultations.

As a private, non-profit organization dedicated to the conservation of Canada's wetlands and uplands for the benefit of waterfowl, wildlife, and people, we appreciate being able to share some of our experiences in conserving Canada's natural capital.

Our written submission focuses on how natural capital conservation and restoration can help improve Canada's competitive advantage. As indicated, Ducks Unlimited Canada has a long history of working in this country and has committed our own resources to helping determine the true value of natural areas through pilot projects, research with Agriculture and Agri-Food Canada, and commissioned works such as Dr. Olewiler's report on the value of natural capital in the settled areas of Canada.

In the interests of brevity, I am only going to discuss two of the ten recommendations we submitted.

First, the health of Canada's citizens depends in part on the health of our surroundings. DUC recommends that the federal government establish financial disincentives, potentially through tax reform, to discourage the further destruction or degradation of our natural capital. This country was built in part through the use of government incentives to encourage breaking, clearing, and developing land for cities, agriculture, and industry. But it's not 1905 any more, and our country has reached a maturity level that requires a new approach to maintaining that competitive advantage. We've lost or degraded the majority of our natural assets in the settled areas of this country, yet we still see government incentives to encourage further loss of areas such as wetlands. The time has come to recognize the true value of what remains and invest in it accordingly, such as enhancing the next generation of the agricultural policy framework and Greencover Canada.

Secondly, no one in our organization is naive enough to believe that development and expansion of our cities, industry, and infrastructure will stop, nor should it. However, we can grow our economy while increasing the value of the natural areas and their contribution to Canada's wealth. To start, federal taxation and spending programs related to infrastructure should require mitigation for the loss of natural capital on all projects that receive federal funding or are conducted on crown lands. It is only through the application of a mitigation sequence that includes avoidance, minimization, and compensation that Canada will be able to balance its growing economy with the conservation of the very assets that our country was built upon and that improve our quality of life.

Natural capital is important to Canadians. Society needs to invest in and encourage the conservation, restoration, and stewardship of that capital. There are numerous instruments that are available to do so, to facilitate this important investment in our future, several of which are expanded upon in our written submission and all of which deserve more attention from a sustained competitiveness point of view.

Thank you for your time, and I welcome any questions.

[The Chair, Conservative, Brian Pallister]

Thank you for your presentation.

We will continue with the Canadian Coalition for Immunization Awareness and Promotion, Ian Gemmill.

Proceed, Dr. Gemmill, for five minutes.

[Dr. Ian Gemmill, Co-Chair, Canadian Coalition for Immunization Awareness and Promotion]

Mr. Chair, members of the Standing Committee on Finance, thank you very much for allowing us to speak today on the importance of investing in vaccines for our children.

I'm the medical officer of health for the Kingston area. I'd like to acknowledge my colleague from the coalition, Mary Appleton, who is the director of the program. I'm the co-chair of the coalition.

We've given you a written submission, and we have three points we'd like to make today orally: that vaccines are a good investment; that the national immunization strategy needs to be continued; and that there must be equal access to vaccines for our children across Canada.

Immunization is one of the most cost-effective medical interventions because it prevents disease. It's the safest and most effective way to protect Canadians, especially our children, from the preventable complications of communicable diseases.

In the past, vaccines have prevented millions of cases of illnesses and many disabilities and deaths. They have a proven track record of improving the health of our population.

Can you imagine the immense burden on our health system if there were still mass outbreaks of polio, measles, meningitis, or diphtheria? The large outbreaks of these diseases are now mercifully a distant memory, because vaccines work and governments have invested in them. That investment needs to be maintained and expanded to ensure continued protection with the current vaccines and access to the new vaccines that are becoming available to reduce illness in Canadians.

The investment in vaccines is far less costly than the potential cost of treatment, rehabilitation, and long-term care and the disruption to individuals, families, and communities. The federal government and the Parliament of Canada can play a critical leadership role to ensure that vaccines are equitably available to Canadians, regardless of where they live.

The national immunization strategy forms an essential support for vaccine programs in Canada. It paves the way for more coordination across this country, but it needs continued financial support. We are strongly urging that the national immunization strategy be supported and made permanent, as it is in other advanced countries.

The other two recommendations we're making refer to the need for federal government leadership to ensure equitable access to vaccines for all Canadians. The current provincial and territorial decision-making process for determining publicly funded vaccine programs results in inequitable access.

Here's a local example. Just two years ago, families in Ottawa had to pay for a new meningococcal vaccine--a meningitis vaccine--while across the river in Quebec it was publicly funded. The phenomenon happened right across the country as jurisdictions considered these vaccines, but with very little coordination.

There are many other examples. It took 10 years for us to implement hepatitis B vaccine for all Canadian children. It took seven years for the new pertussis vaccine for adolescents to be publicly funded in all provinces. While the provinces took their time to decide whether their children would enjoy the benefit of these preventive measures, thousands of individuals and families suffered unnecessarily from preventable disease, and the diagnostic and treatment costs accumulated. This scenario was repeated with the chicken pox, meningococcal, and pneumococcal vaccines. It will happen again with future vaccines that are coming down for use in our country.

Only in March 2004, when the federal government created a specific fund of $300 million for provinces and territories to buy vaccines, did all jurisdictions implement these publicly funded programs for all Canadian children. Before that fund was created, Canadian children in the wealthier provinces had access to vaccines, while children in poorer provinces did not.

This fund ends on March 31, 2007. If federal funds intended for vaccines are included in the Canada health transfer, they may be lost to other programs, and again we will see inequitable access.

Clearly not all vaccines approved for use in this country should be publicly funded. We have our national advisory committee on immunization that recommends how a vaccine should be used and for which groups. If it does recommend the universal use of a vaccine for children, governments should consider public funding. But implementation and health priorities are variable across the country, and that's where our system is fractured, leaving Canadians with a patchwork of access.

Without leadership and funding for vaccines at the national level to ensure accessibility for all children, some children will benefit from vaccine programs and others will not. Immunization is an opportunity for the federal government, together with provinces and territories, to show leadership in the prevention of disease.

There is a precedent. Four decades ago, the Parliament of Canada began contributing to the treatment sector of the Canadian health system. It is time that it also contributes significantly and consistently to the preventive side of the system. Ensuring that all Canadian children have equal access to the preventive benefits of safe and effective vaccines is a good place to start. And it is consistent with one of the undisputed principles of our publicly funded health system: equal access to service.

This funding cannot wait. There are new vaccines already approved for use in Canada, and there are more new vaccines on the horizon, leaving funding decisions entirely to discretion. Again the fiscal priorities of provinces and territories will lead us inevitably to a patchwork.

Ladies and gentlemen, a separate, permanent fund to be used for vaccines for our children must be established in this country.

Thank you very much.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Gemmill.

We'll continue with the representative from the Canadian Association of Mutual Insurance Companies, Normand Lafrenière. Welcome. You have five minutes, sir.

[Normand Lafrenière, President, Canadian Association of Mutual Insurance Companies]

Thank you for allowing the Canadian Association of Mutual Insurance Companies to appear before this committee.

CAMIC represents 92 property and casualty mutual insurers in Canada, and as most Canadian-owned insurers are mutuals, CAMIC represents the majority of Canadian-owned insurers in Canada. In 2005 our member companies had approximately four million policyholders, employed in excess of 10,000 managers, employees, and agents, and underwrote 12% of the Canadian market.

We are owned by our policyholders. Each member is allowed to exercise one vote, even if the member has more than one insurance policy with the insurance company. The companies have a strong balance sheet and are involved in the development of their communities. As most of these companies were established by farmers, today they are still located in rural and semi-rural areas.

Over the long term, mutual insurance companies act as non-profit organizations. Profits are returned to members in many forms.

The federal government is also owned by the people it serves. It is elected under the one-person, one-vote principle and it provides its services at cost. Surpluses, if any, should be returned to the people it serves.

In your invitation to appear before this committee, you asked that a number of issues related to Canada's place in a competitive world be addressed. As made evident in your invitation's backgrounder, most government services impacting on the competitiveness of our nation fall under provincial responsibility.

CAMIC supports the notion that there is currently a vertical fiscal imbalance between the federal, provincial and municipal governments and that this imbalance does not serve the taxpayer well. The federal government currently raises money for which it has no use under the responsibilities provided for in the Canadian Constitution, while most provincial and municipal governments have too few resources to meet their own responsibilities.

My association commends the federal government for having initiated the process of rectifying the fiscal imbalance. CAMIC hopes that this review will lead to provincial and municipal governments raising most of their funds directly from their constituents and being accountable only to their constituents for the way they spend that money.

The Canadian population deserves and expects all levels of government to generate their revenue equitably and to spend responsibly. In this respect, CAMIC applauds the 2005 federal budget decision to hire additional Revenue Canada employees to monitor offshore investments by Canadian individuals and corporations in tax haven countries. According to a March 2005 report by Statistics Canada, offshore investments in tax haven countries, in particular those made by Canadian financial institutions, have grown substantially in the last decade.

The Canadian insurance industry has its own challenges. It needs to operate under a taxation regime that is conducive to fair competition. The federal financial services legislation is now in the process of being reviewed, and CAMIC commends the federal government for its recently announced intention not to change the insurance retailing powers afforded to the banking sector. Clearly, the additional insurance retailing powers sought by banks would create an unlevel playing field in which banks would be able to effectively eliminate the competition, just as they did in the mutual funds, securities, and trust industries.

The general insurance industry also needs tax changes to operate more efficiently and more fairly. Foreign-owned insurance companies doing business in Canada often benefit from taxation provisions in other countries that allow them to set aside, free from tax, reserves to meet their obligations in cases of large catastrophes.

The Canadian companies, on their side, in order to have the same treatment, set aside money or set up companies outside of Canada to benefit from tax haven countries. Mutual insurance companies do not do so. We hope the federal government will look at the possibility of setting up a tax-free reserve in Canada, similar to those in Europe and Japan, and similar to the U.S. system, the goal of which is provide compensation in the event of a catastrophe.

Thank you.

[The Chair, Conservative, Brian Pallister]

Merci, monsieur.

We continue with the presentation from the Association of Labour Sponsored Investment Funds. Les Lyall, president, is here. You have five minutes, sir. Please proceed.

[Les Lyall, President, Association of Labour Sponsored Investment Funds]

Thank you.

Good afternoon. My name is Les Lyall and I am the president of the Association of Labour Sponsored Investment Funds. I'm also a senior vice-president of GrowthWorks Capital, based in Toronto. Thank you for the opportunity to speak to the committee today.

Today's presentation is specifically about three key items. Number one, I want to let you know how successful the retail venture capital program has been for Canada. Secondly, I'd like to then give you a brief update on the current market conditions and other factors that are leading to a serious gap in venture capital funding. Finally, I'm going to go over our recommendations to the committee to enhance their retail venture capital program in Canada.

Given the complexity of today's topic, at a later date we will also provide your offices with more detailed information on retail venture capital funds.

I'll provide a brief explanation of the funds and how they operate. We generate 70% of our capital from private sources; 15% of the remaining 30% is raised from tax credits, both from the provincial and federal government levels. We raise money to help high-tech and life science companies undertake research and development, commercialize innovative products, and expand operations to global markets. There are about 30 funds in Ontario, and together we have about $2.7 billion in assets under management in Ontario.

Ontario retail venture capital funds have exceeded their original policy objectives under the program. Ontario labour-sponsored funds add about $2.6 billion annually to the Canadian economy. Again, Ontario labour-sponsored funds have added about 30,000 jobs for the period 1997-2002--those are the most recent numbers available. Again, the Ontario program provides a 13-month payback for the federal government portion of the program, and that, I think, is mirrored across Canada in all other jurisdictions.

Investing companies exceed the national norm benchmarks when compared to traditional companies. These companies have doubled the amount of expected exports from $612 million to $1.2 billion; tripled the employment, based on the national norm, from 32,000 jobs versus 10,000; and quadrupled their R and D spending from $178 million before the ALSIF investment to $703 million after investments from the program.

Since the late 1990s and 2000, extraordinary circumstances have begun to shape our industry. The technology bust that most of us are familiar with, which occurred in 2000, occurred on a global basis. The effect has been that we've seen reduced merger and acquisition opportunities, a very limited IPO window for our exits from our investments, and longer investment horizons for the funds as a consequence. Finally, in Ontario we have faced the Ontario government's 2005 decision to phase out the program in Ontario by 2011.

As a result, Ontario is now experiencing dramatically reduced fundraising. In 2005 fundraising sales were down 19% compared to 2004; in 2006 our fundraising dropped a further 30% from the previous year. This means that virtually no new deals are taking place in Ontario. We can't invest in new start-ups because we may not have the funds available to take the company through to a profitable exit. Money we generate is reserved for follow-on investments for our current portfolio.

Retail venture capital represents 50% of Ontario's venture capital technology investing and about 80% of life science or biotech investing in the province of Ontario. Venture capital investing in Ontario is declining. Ontario alone experienced a decline of 37% in the second quarter of 2006. We need to stabilize the venture capital sector in Canada and ensure the government's return on investment for the tax credits is realized.

We have one key recommendation to the committee, and that is to increase the size of the ticket from the current $5,000 for individual investors to equal the maximum RRSP contribution.

Thank you for your patience.

[The Chair, Conservative, Brian Pallister]

Thank you for your presentation.

The next speaker will be Richard Gauthier from the Canadian Automobile Dealers Association.

Welcome, sir.

[Richard C. Gauthier, President, Canadian Automobile Dealers Association]

Thank you, Mr. Chairman and committee members. I applaud your committee's commitment to finding ways to keep Canada competitive and prosperous in a changing world, and it is exactly competitiveness that I am here to speak to you about today.

Many of you may know that the Canadian Automobile Dealers Association represents over 3,000 active small and medium-sized businesses. Our members employ over 145,000 Canadians in every province, city, and town in the country. Canadian automobile dealers are in touch with the pulse of the nation. We are among the first to know when the mood in the country is buoyant and confident or when there is uncertainty or concern about the state of the Canadian economy. In that regard, CAD is constantly canvassing members to determine the areas where improvements can be made. While trade and regulatory reforms are frequently mentioned, the number one area where dealers need reform is in Canada's taxation policies.

Our written submission makes it clear that our industry was pleased with the many measures contained in the May 2006 federal budget. I invite you to review these comments in detail--they were handed out at the outset.

While we appreciate that the budget was focused on the five priorities highlighted in the 2005-06 election campaign, we believe the next budget should focus on specific tax policies that are currently restraining productivity as well as addressing inherent issues of fairness in the system.

Allow me to outline these priorities for you: one, establish fairness in the access to the small business deduction for automobile dealers; two, further reduce corporate income tax rates; three, establish equitable tax treatment on the sale of used vehicles; four, reduce capital gains taxes on the sale or transfer of dealerships under specific circumstances; and five, we would offer to work with CRA to improve the professionalism and efficiency of audits.

While our written submission deals with these items in great detail, I will highlight only two of these priorities during today's presentation.

The first deals with establishing fairness in the access to the small business deduction for automobile dealers. Most automobile dealers are small businesses run by entrepreneurs and family members. The small business deduction, or SBD, is a vital component to a reinvestment strategy. The SBD helps to defer income tax until such time as an owner withdraws profits. Unfortunately, the level of the SBD is inadequate to meet the requirements of most auto dealers. Not only is the deduction inadequate, but access is frequently and unfairly denied to auto dealers.

Automobile dealers begin to lose access to the SBD once their accumulated taxable capital exceeds $10 million and is completely eliminated at the $15 million threshold. This is unfair to capital-intensive industries like automobile dealerships. Other less capital-intensive businesses of similar size and profits enjoy far greater access to the SBD. Two issues compound the problem in the manner that capital is computed. First, a corporation's capital is defined to include all forms of indebtedness, including the lien notes, which is the method by which automobile dealers finance inventory. Most retailers finance the acquisition of their inventory through trade accounts payable, which are not included in the definition of capital. This discrimination against auto dealers is an unwarranted and unjustified tax penalty.

Second, capital includes assets or investments of other corporations with whom the dealer is associated. In these circumstances, the capital of different businesses is aggregated, which, if certain thresholds are met, will result in the loss of the SBD.

To alleviate this situation, CAD proposes the following options: one, eliminate the “grind” on the SBD for private business; two, redefine taxable capital to exclude lien notes--this unintended imposition has already been remedied in some of the provinces that levy taxes based on business capital; three, allow more flexibility in the definition of associated corporations for purposes of allocating the SBD; and four, increase the SBD to $1 million.

In closing, Mr. Chairman, I would like to highlight the issue of equitable treatment on the sale of used vehicles. There is an inherent and illogical inequity in the tax system as it pertains to the private sale versus dealer sale of used vehicles. Currently, dealers are required to charge GST on all vehicles sold while private individuals can sell GST exempt. Dealers can partially reduce the inequity on the trade-in of a used vehicle by charging GST only on the net difference. However, if a dealer buys a used car from an individual for resale, the full amount applies. If the individual sells the car to another individual, no GST applies.

There are a number of different approaches that would achieve a more equitable treatment in the sale of used cars involving automobile dealers versus individuals. One would be to eliminate GST on the sale of all used vehicles, whether they are sold by an individual or a business. Second, require that GST be applied on the sale of all used vehicles. This would require an administrative arrangement with provincial authorities so that GST could be applied at the time of transfer. The tax could be applied on the basis of a predetermined book value or the system for notional input tax credit to dealers could be restored.

Thank you very much, Mr. Chairman, for your time.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Gauthier.

We'll conclude our presentations with Doug Reycraft, with the Association of Municipalities of Ontario.

Welcome.

[Doug Reycraft, President, Association of Municipalities of Ontario]

Thank you, Mr. Chairman and members of the committee.

I'm a mayor in the municipality of Southwest Middlesex, a councillor with Middlesex County, and president of the Association of Municipalities of Ontario.

AMO believes that all three orders of government must work together to build a strong and competitive nation. It's a shared responsibility that no one level of government can accomplish alone. Now is the time to act, and it's essential that all governments be present and accounted for as we move ahead to address key issues that we face.

As the providers of service, municipalities are where many issues of national importance intersect. These services include public transit, immigration settlement, environmental protection, public health, affordable housing, income support, child care, and public safety. In many cases, it's the municipal government that provides other orders of government with local service delivery capacity.

Municipalities recognize the tremendous progress that has been made in recent years on the GST rebate, affordable housing, transit investment, and the federal gas tax transfer, to name a few examples. We recognize that competing demands and limited fiscal resources are a reality for each order of government.

While Ontario's municipal governments are proud of our contributions across Canada, we believe Ontario should be treated fairly by the federal government. The federal-provincial fiscal imbalance in Ontario has a direct impact on municipal governments. The property tax base in Ontario is simply insufficient to meet all the needs of our communities and a growing country.

In Ontario, we have the compounding problem of the province's reliance on property taxes to fund a range of provincial health and social services. Fixing the federal-provincial fiscal imbalance will allow the Ontario government to end its reliance on municipal property taxes--a reliance that costs Ontario municipal property taxpayers more than $3 billion each year.

Over the past few months, more than 100 municipal governments in Ontario have passed resolutions that this committee should consider as part of its deliberations. Those resolutions support Premier McGuinty's position on the federal-provincial fiscal imbalance and his position that federal funding programs should be allocated to provinces and territories on a per capita basis.

Municipal infrastructure is the foundation of our local, provincial, and national economies. But in Ontario we face a massive and growing municipal infrastructure deficit, estimated at about $5 billion a year--one that limits our ability to provide safe, clean water, to protect the environment, and to provide reliable transit and efficient transportation networks. Municipalities are grappling with the needs to replace aging transit infrastructure while expanding municipal systems and integrating municipal commuter, intercity transit, and high-speed rail systems. Investment in transit is one of the best strategies for limiting congestion, for improving environmental outcomes, and for keeping our economy strong.

The availability of affordable housing is also critical to our country's economic competitiveness. High housing costs affect labour markets, labour mobility, and the successful integration of new Canadians. Lack of affordable housing and increasing homelessness affect the competitiveness of local communities and compromise the quality of life for our citizens. A national and long-term strategy to provide affordable housing and sustained funding to support homeless initiatives, including programs such as the Supporting Communities Partnership initiative, make good economic sense.

A great deal needs to be done if Ontario communities are to be livable, sustainable, and competitive in the national and global marketplace. The municipal sector must play a further part in determining infrastructure investment priorities. It must see a demonstrable commitment for a national, long-term, sustainable funding approach that will help us plan and budget infrastructure capital and maintenance and eliminate the municipal infrastructure deficit over time.

In Ontario we have gained an important role in guiding provincial and federal investment in local infrastructure through our memorandum of understanding with the province and through our role in helping to develop federal gas tax revenue sharing, an important new source of funding that must be made permanent.

The upcoming budget is an opportunity to renew the federal interest in strong communities. Ontario's communities provide an important foundation for the national economy. Strengthening that foundation begins at the local level.

Thank you, Mr. Chairman.

[The Chair, Conservative, Brian Pallister]

Thank you very much, sir, and thank you to all of you for excellent presentations.

We will begin with Mr. McCallum, for seven minutes, sir.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Chair.

Thank you all for your presentations. I won't have time to ask you all questions, but I do appreciate the time you've devoted to this.

My first question will be for Mr. Gemmill.

Obviously, the subject you're talking about is very important. As clarification, does anything you're talking about have to do with a risk of pandemic or anything of that nature? Perhaps not.

[Dr. Ian Gemmill]

The reason we're here today is to ensure that the routine immunizations that can protect all children are available to all children across Canada. When new vaccines become available, and there's been a flurry of them, and there will be more because the vaccine technology is exploding, there will be so many more preventive measures available to us.

What we observed was that there is a variable implementation and a variable uptake of these programs, especially for kids, and the two examples were hepatitis B, which took ten years to implement across the country--a very safe and effective vaccine that will reduce the long-term complications of that disease--and the seven years it took to get the new pertussis vaccine for adolescents.

There is a lot of investment in pandemic preparedness right now, at both the national level and also at the provincial level, at least in Ontario, where I live. So my comments are really directed much more towards the routine vaccines. We feel very strongly that this principle of equal access to services in our health system should be applied not only to treatment measures but also to prevention measures.

[John McCallum, Liberal, Markham—Unionville, ON]

Well, I totally agree, and this was new to me, that this agreement was about to expire in March 2007. If it's not refinanced, I gather that people in poor provinces will not have access to these vaccines. So my question is, do you have any indication from the government of any decision or the timing of such a decision?

[Dr. Ian Gemmill]

That's the problem. As I understood it, this was a three-year trust fund that was set up. The governments could draw upon it to start implementing vaccine programs for chicken pox vaccine, for meningitis vaccine, for pneumococcal pneumonia vaccine, and for the new pertussis vaccine. They were able to draw upon it in proportion to population. Before that program was set up by the former Prime Minister and the former Minister of Public Health, we had provinces like Alberta, where all these vaccines were available to all children, and provinces and territories that were less able to afford these programs, with competing other priorities, so we ended up with kids who had different access.

[John McCallum, Liberal, Markham—Unionville, ON]

I understand that point, and I totally support your case, but have you not heard any indication, however, of funding?

[Dr. Ian Gemmill]

I've not heard any indication. We have not heard any indication that there will be any continuation of it.

[John McCallum, Liberal, Markham—Unionville, ON]

At least you weren't on yesterday's list of cuts. That's one good thing, I suppose.

[Dr. Ian Gemmill]

Well, I suppose. This is one of the issues. We don't know what's happening with it and—

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you. I don't want to cut you off, but I don't have much time.

Mr. Reycraft, the previous government had a major initiative in terms of its new deal for communities or cities, and I think there's a bit of a different philosophy between us and the new government in that we respect the provincial jurisdiction. We had a somewhat closer relationship between the federal government and the cities or communities than in the past. The new government seems less inclined. Does your association have a position on that issue?

[Doug Reycraft]

As I indicated in my opening comments, I think healthy communities are essential if we're going to have a prosperous nation. Municipal governments alone can't begin to fund the infrastructure programs that are required for a modern society, so we will continue to require support from both of the other orders of government, federal and provincial, in order to provide that infrastructure.

We were very pleased to be able to work directly with the federal government for the delivery of the federal gas tax to municipalities across Ontario. I think we're the only province in the nation that was able to do this. I think it is an excellent example of where municipalities can play a role in making financial resources that are made available to us by the other orders of government more efficient. Our AMO flows that money to our 445 municipalities in the province.

In order to do that, we require two staff and a little time from a couple of our other full-time staffers. So our delivery cost in that program amounts to about 1% of the total amount of money that's being flowed to municipalities. I think that's a case where a direct federal-municipal relationship has worked effectively for the good of all of our citizens.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you very much.

Mr. Gauthier, two of us on this committee are former revenue ministers. I think I heard you questioning the professionalism of CCRA officials or auditors. When I was there, it was drummed into us how professional they are. I'm no longer here to defend them, not that I necessarily would before if I didn't think they were doing a good job, and I know there are many challenges. But are you basically saying that they're incompetent, that they don't know their business, that they don't know your business, and that they need to have a training course from your sector in order to carry out their function?

[Richard C. Gauthier]

That's a good point, Mr. McCallum.

I don't recall questioning the professionalism. The point we are making is that we believe there should be coordination between the various departments so that we end up having audits conducted that are efficient and to the point, as opposed to having what we're seeing among our membership constituency: three, four, or five different audits going on at any time during the year and none of those departments speaking to each other.

There is certainly a level of education we would like to help with, if that is possible. We would certainly be more than happy to work with CCRA in order to provide some insight, some background, some education, with regard to the specific issues that relate to our business. But mostly the point we are making—and which is contained in the white paper we presented this afternoon—is that we would like to be able to see if we could find a way to coordinate those various departments and have one streamlined, efficient audit process.