Finance Committee on Sept. 26th, 2006

[The Chair, Conservative, Brian Pallister]

Thank you.

Mr. Dykstra, to conclude.

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you.

Mr. Reycraft, a couple of your comments perked my interest. I guess my question revolves around infrastructure, when you were referring to investment in transit and investment in affordable housing.

[Doug Reycraft]

I'm not sure if I understand your question.

[Rick Dykstra, Conservative, St. Catharines, ON]

I was trying to link the two. When you were speaking about transit, were you speaking about the actual infrastructure to get people from one place to the next, i.e., the bus or a train, or were you speaking to the infrastructure to be able to create it?

[Doug Reycraft]

No, my reference was to the capital that's required to expand infrastructure and to replace aging infrastructure.

[Rick Dykstra, Conservative, St. Catharines, ON]

In terms of looking at this over the last few years and then looking into the future, what prevented municipalities from being able to make those investments over the last few years?

[Doug Reycraft]

Fundamentally, I think it's the lack of the resources to be able to do that. Property tax doesn't generate adequate revenue for us to be able to make the required capital investments in infrastructure. Here in Ontario we claim—and every study I've seen supports this—that we have the highest property taxes in the country. All municipalities have an interest in remaining competitive with other municipalities in the province and those across Canada. So to raise property taxes to a level that would generate that kind of revenue would make our communities unaffordable.

Now we've benefited from gas tax revenues for transit. We are doing so at the present time and will for the immediate future; we hope that becomes long-term.

[Rick Dykstra, Conservative, St. Catharines, ON]

With respect to affordable housing, the investment that was in this budget was approximately $800 million. I wondered what AMO's position was on that. It's a pretty significant investment over the next 12 to 16 months.

[Doug Reycraft]

It is. That investment is certainly welcome. Much of the social housing that exists in Ontario is old infrastructure and requires large investments in roof replacements, balcony replacements, and so on. So the new investment in the 2006 budget is definitely welcome.

[Rick Dykstra, Conservative, St. Catharines, ON]

If you're speaking on a per capita basis from the province of Ontario, for example, do you anticipate that the municipalities, and more specifically the provinces, would match this funding to be able to invest that much more?

[Doug Reycraft]

You're referring to the gas tax revenues?

[Rick Dykstra, Conservative, St. Catharines, ON]

No, I'm referring to the $800 million investment in affordable housing.

The federal government is prepared to make that commitment. Shouldn't the provinces and municipalities do likewise?

[Doug Reycraft]

Certainly we're prepared to come to the table with a contribution. We would hope that the provincial government here in Ontario would do the same.

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Dykstra.

Thank you to all the panellists for your presentations and your responses to questions. We very much appreciate your time here today and in preparation for today.

We will dismiss you now and invite your replacements to come forward from the back.

I'd like to remind our committee that we'll reconvene tomorrow following this session at 3:30 sharp. I look forward—as you do, I know—to the presentations tomorrow.

[The Chair, Conservative, Brian Pallister]

We're back in session here. I invite whoever wishes to testify to get to their seat and we'll recommence.

The House of Commons Standing Committee on Finance is mandated by the House on an annual basis to consider and make reports upon proposals regarding the budgetary policies of the government. Our theme this year is Canada's place in a competitive world. As part of our hearings, we'll be travelling across the country, but of course we're here today in Ottawa to hear your presentations.

I know that each of you received communication that let you prepare for this with the knowledge that you will have five minutes to present. I will indicate—or my replacement in the chair, if there is one, will indicate—one minute or less remaining, and we encourage you to conclude your presentations at that point to allow time for our committee to exchange questions and comments with you.

We thank you in advance for the time that you put into preparations and your briefs.

We'll begin today with five minutes for Mr. Stokes from the Canadian Activists for Pension Splitting.

Welcome, and the time is yours.

[Frank Stokes, President, Canadian Activists for Pension Splitting]

Thank you, Mr. Chairman.

We request the income tax option to allow senior couples to split pension benefits in general, not only CPP benefits, as is currently the case. By “splitting” we mean attributing the collective income of a couple in equal parts to the spouses for income tax purposes and “pension” in a general sense of retirement income. We consider CPP and spousal RRSPs precedence for this, though we do not necessarily consider the CPP as a model for splitting. Also, the CPP and spousal RRSPs themselves create a tax inequity between those unequal-income couples who are able to use them to lower their income tax in retirement and those who are not able to do so. This is a fairness issue.

Also respecting fairness, the current generation of seniors qualifies for special consideration in this regard. Many of them formed their marriage style and their career plans when single-income families were the norm. The work world discriminated against married women. Moreover, in 1988, changes to the income tax formula caused the now well-known tax penalty against unequal-income couples to increase significantly for many and caught many of them out with too little time to adapt their employment and investment patterns to minimize their tax penalty in retirement. For many current seniors, the splitting instruments, CPP and spousal RRSPs, came too late to make much difference in their post-retirement tax situation.

The former government, at least, by their own admission, justified allowing the tax penalty to remain to avoid discouraging married women from joining higher-paid husbands in the workforce. This policy is certainly not applicable to retirees, so they should not have to continue paying the tax penalty on that account.

As for cost, it is much cheaper and should certainly be feasible for the revenue department to allow splitting for seniors than for the general taxpaying population. This would not be exclusionary because every income earner can expect to eventually be a retiree. We know organizations who have been lobbying for general income splitting for decades, and they actively support us in the quest for pension splitting. A recent study by the Library of Parliament shows the cost of pension splitting to be $300 million per annum, one-tenth of the cost of general income splitting.

This tax reform is urgent because those who are already in their senior years are missing out if they are subject to this unfair tax situation, and they have limited time to wait for the reform.

In our full written brief we have answered as best we can all the questions posed by the committee in connection with the theme, Canada's place in a competitive world. Given the nature of our request--fairness in personal taxation--and the target segment of the population--retired persons rather than workers--the following is a summary of our answers.

The prospect of much greater fairness in the taxation of seniors, which pension splitting would create, would help the morale of workers who foresee their retirement years. Pension splitting would leave many seniors with more disposable income to remain independent and thus not be a burden on the economy.

Development and utilization of marketable skill can sometimes be maximized by married individuals if they can concentrate on that while their partner takes on household and child-raising duties. However, those people are all the less inclined to do that if they know the tax system is going to penalize them, even through all their senior years.

By their increasing numbers, seniors will become increasingly important as consumers to provide an economy of scale necessary for production, including new technology and perhaps especially medical technology. Their consumption of goods will foster business growth within Canada. But this consumption depends on disposable income not being significantly reduced by unfair taxation in retirement.

Saving by workers would be encouraged in the knowledge that they will be able to split pension income with their spouse, if necessary, to avoid high taxes due to unequal pension incomes.

We need to keep skilled Canadians from emigrating, as well as attract others to Canada. This would be aided by a personal tax system that does not punish them to their dying day for a family lifestyle. It is significant that there is no tax penalty in the U.S. for having unequal spousal incomes.

We refer the committee to our full written brief for more detail and more points of argument.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Stokes.

Here on an individual basis is Mr. Amott.

[Jeremy Amott, Independent Insurance Broker, Life Insurance, As an Individual]

Thank you.

Mr. Chairman and committee members, I am very pleased to have the opportunity to share with you my ideas on how the government can most effectively help young Canadians as they face the challenge of paying for their post-secondary education.

The rising cost of such education is a given in our society, and too many bright young Canadians with limited financial resources are either increasingly deterred from embarking on university or college studies in the first place or, having graduated, find themselves weighed down by the large student loans they are having to repay.

Caps on tuition fees, increased grants, and scholarship programs such as the millennium fund have not solved, and will not solve, this problem. As a result, these bright young Canadians are prevented from making full productive use of their skills and talents, and Canada loses much of the contribution they would have made to the country.

My approach provides a social safety net for those undertaking post-secondary programs. At the same time, it ends the heavy government costs inherent in traditional student aid programs.

The plan uses a group life insurance framework called the student insurance trust, or the SIT. It provides a platform enabling the government to do three important things: eliminate the losses it currently sustains as a result of irretrievably defaulted loans; extend a fair and cost-effective form of relief to defaulting ex-students with no prospects of repaying their loans; and generate substantial revenues over the long term for recovery of costs of the Canada student loans program and potentially investment in other government initiatives. In addition, the SIT can be easily structured to recover the costs of other programs and activities deemed strategic to Canada's well-being now and in the future.

As Canadian citizens reach the age of 24 to 27, they will be allowed, if they want, to participate in an insurance trust, the purpose of which is to throw a generational lifeline to debtors who cannot pay their bills, or to spur economic development in areas that sorely need developing. There are no fees or premiums to pay by Canadian citizens who decide to participate, and the insurance is placed in a random way, based on geographical, actuarial, and insurable interests. In return, these participating citizens will have a say in solving the economic and social problems that are a threat to the quality of life of not just Canadians but also the rest of the world.

This plan is about people helping other people, and the student insurance trust will allow the government to act as a facilitator of good deeds between generations, from municipal pollution problems tied up in endless litigation to third-world debt restructuring on the multilateral level, so that these poor countries can free up more money to spend on education and health care; to help provide clean water to all Canadians and to begin tackling the environmental problems in the world's oceans; to help solve poverty and hunger within our own borders and to help provide similar relief to those who need it around the world; to help solve the shortage of family doctors and other medical services so that Canadians can receive medical help in a timely way; to help spur the development of alternative energy that pollutes less; or to protect Canadian cultural and historical treasures using the cost-recovery provision.

Today l'm presenting a program development proposal. It is presented as a “learning by doing” opportunity for the government. l would be pleased to work with the Canadian government and the Canadian life insurance industry in order to take the SIT concept to the next level.

Canada's success in the world economy and our current prosperity owes much to hard-working and creative Canadians, but our future depends on forward-looking investments in education, infrastructure, and economic activity.

Mr. Chair, if possible, l would like to dedicate the remainder of my five minutes to addressing questions.

Thank you.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Amott.

We now turn to Mr. McAvity, from the Association of Canadian Museums.

[John McAvity, Executive Director, Canadian Museums Association]

I'm actually the executive director.

I'm going to defer to the president of the association, who's the top elected officer. His name is Cal White. He is the director of the Toronto Zoo.

[The Vice-Chair, Liberal, Massimo Pacetti]

You have five minutes, please.

[Calvin White, Chairman, Canadian Museums Association]

Thank you, Mr. Chair, and thank you to the finance committee for inviting the Canadian Museums Association to provide our views and recommendations for the 2007 budget. My name is Cal White and I'm president of the Canadian Museums Association, and I'm joined by executive director, John McAvity.

I had some speaking notes prepared for today, but I've thrown those out, given the results of yesterday's announced cuts. We were surprised by the federal cutback in the amount of $4.6 million to the museums assistance program, which was announced yesterday. We were surprised because this committee has consistently called for stable, long-term funding for Canadian museums in general and for the museums assistance program specifically. In the recent election campaign, all the political parties supported the development of a new museum policy, including the Conservative Party, which committed in writing to develop a new policy.

The Auditor General of Canada has called on the federal government to invest in its heritage programs. The provincial and territorial ministers of heritage have unanimously supported the development of a new policy. The CMA has been pleased to appear before this committee in years past, and we have been pleased that the committee has supported our recommendations, but we wonder what value comes from it when its recommendations are not taken seriously. The CMA has called consistently for a new museum policy to replace the outdated policy of the 1980s. Just last week, after studying museum issues in the spring, the House of Commons Standing Committee on Heritage released its report calling on the government to implement the new museums policy as soon as possible.

The reality facing Canadian museums is that public financial support, currently operating at 1972 funding levels, has not kept pace with rising costs. In recent years, museums have been diligent about decreasing the reliance on public funding; however, many still face critical shortfalls. When coupled with rising costs and a challenging operating environment, we're at a point today where many museums are unable to properly maintain facilities or preserve and display collections. One of the biggest challenges we face with the current outdated museum policy is the limited scope of one-year project funding. If we were to move to multi-year investments, it would enable museums to plan their development, research, and programming initiatives. This would result in better services, information, and programs for Canadians.

I'd like to make a couple of points about what museums contribute to the lives of Canadians and to our communities.

Culture plays an important role in the quality of Canada's community life. It is widely recognized that these quality-of-life factors directly affect decisions of businesses and individuals looking to relocate or invest. A creative and vibrant community attracts and retains talented people, and businesses want to go where talented people go, resulting in greater business investment. Museums are sources of inspiration, innovation, and knowledge creation. They create opportunities for lifelong learning for all of us: our children, our youth, new Canadians.

Museums contribute to building a strong national identity and secure for Canada a role of pride and influence in the world. We think of this international profile building in terms of our creative economy. Museums are a leading force in Canada's tourism promotion strategy, and, today, 60% of international tourists visit a Canadian museum during their stay. As a result, there is an economic spinoff from the cultural and museum sector, which helps to create employment in complementary sectors of regional economies, including tourism, hospitality, transportation, printing, and many more. Ensuring viable and strong cultural institutions is an investment that drives future investment.

So in conclusion, Mr. Chairman, our recommendations to the committee remain the same. One, it is now more critical than ever that the government make the new museum policy a priority and introduce it at the earliest opportunity. Second, we recommend that the committee support the need for more robust, predictable, long-term funding for national and community-based Canadian museums.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. White.

From the National Association of Friendship Centres, Mr. Dinsdale.

[Peter Dinsdale, Executive Director, National Association of Friendship Centres]

Thank you very much.

I'd like to thank the committee for the opportunity to present this evidence before you today. We have previously submitted our brief, which highlighted a variety of measures that we believe the committee could consider to address areas of early learning, justice, and housing. But with the brief time I have with you today, I'd like to highlight our core recommendation within that briefing, and that's funding provided to the aboriginal friendship centre program.

Of the questions you asked of us, the first one was, what specific federal tax or program spending measures should be implemented in the upcoming budget that will ensure that our citizens are healthy and have the right skills for their own benefit and for the benefit of their employers? I submit to this committee that enhanced funding for the aboriginal friendship centre program is one of those program spending areas you can look at. We know that the urban aboriginal population is rising, and the challenges are becoming more and more complex: 71% of all aboriginal people live off reserve; 50% of all aboriginal people live in urban areas; half of our people are under the age of 25; and half of our people do not graduate from high school.

Within Canada we have an emerging, growing racialized underclass: urban aboriginal youth. Friendship centres are on the front line of providing services to this population. There are currently 116 community agencies across Canada from coast to coast to coast, which are set up to provide services for this emerging population. These community agencies do so in a way we call status blind. We don't give consideration to whether an aboriginal person is a status Indian according to the Indian Act, a non-status Indian, a Métis person, or an Inuit person. You simply want to have and need services in the community for a friendship centre to be there for you.

Last year, through these 116 community agencies, we provided 1,260 programs across the country. We provided 1.1 million client contacts to people in communities requiring desperate services. The total friendship centre program revenue is $115 million. The Department of Canadian Heritage provides us with $16.1 million in core funding. That means for every dollar we receive in core funding, the friendship centre movement leverages $7 from other government and private-source areas to provide services for urban aboriginal people.

The aboriginal friendship centre program, the program I want to talk to you briefly about today, is the program that enables all of this work to happen in communities. If it wasn't for that core funding you provide for local friendship centres to hire their executive director, bookkeepers, and to keep their buildings open, none of these other activities would happen.

Like our museum brothers here, in 1993 we too were cut back after an expenditure review by 25%, and that funding hasn't been reinstated since. These community agencies today are spending 1993 dollars on 2006 problems.

The real question is, if it's an emerging population, the challenges are becoming more and more complex, and if we're able to serve an emerging population, it's time to reinvest in that capacity.

We recently went through an evaluation, which found the program to be effective, cost effective, relevant, with no other federal government overlaps or duplication in services. We are a unique program within the federal and provincial government jurisdictions, and we provide essential services.

More funds need to be reinvested. If we take into account the original 25% reduction in the early nineties, in real terms today that's a 40% reduction in spending power of these local community agencies. These are people in all of your ridings providing the most essential services. We would like the committee to consider recommending funding enhancements to this program.

On April 28 we met with Minister Oda, who is the minister responsible for our program, to discuss the current funding levels, and she has endorsed a joint review of our staff and the departmental staff to look at the appropriate funding levels for the program. We're pleased to say that we're about to bring a report back to the minister for her consideration.

We found a number of areas requiring reinvestment. The amount of money we provide local community agencies to provide their services needs to be increased. We need increased supports for training for local community members, for communication and policy supports, and for translation services of our documents and of our meetings.

We need to expand the friendship centre programs to new locations. There hasn't been a new friendship centre door open within the last decade anywhere across Canada, yet the need continues to grow.

So we believe additional funding of the program is merited. Additional investment will provide greater opportunity for aboriginal youth to access better and more diverse programming. It's going to improve the administration of existing centres and ensure continued federal stewardship of your investment. We're going to have improved service delivery standards with more training and better remuneration.

We're going to meet minimum federal government standards for official languages obligations, and we're going to service the growth of the urban aboriginal client base.

I'm just about done, sir.

The question is about the specific tax or spending program measures that should be contemplated. We believe the ASEP funding will ensure that urban aboriginal citizens have access to programs that will ensure they're healthy and that they have the skills and services they need.

Thank you.