Finance Committee on Oct. 3rd, 2006

[The Chair, Conservative, Brian Pallister]

You have 20 second, Ms. Cunningham.

[Janet Cunningham]

The money flows through a bureaucracy that is becoming increasingly outdated in the modern age. I can go into any number of ways, but I think the money has to go directly to bands. Bands have to be able to develop their own land and be able to mortgage property if they need to. The Indian Act is antiquated in terms of dealing with property in today's world.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Ms. Ablonczy.

We continue with Madam Wasylycia-Leis.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you, Mr. Chairperson.

I would like to thank everyone for their very helpful presentations.

Ian started off the panel by suggesting we look at competitiveness in a broader light than simply the bottom line, and in fact look at the notion in terms of what we can contribute to our communities for economic and social growth. Given the framework Ian has presented, how would the panel feel in general about the hard choices facing us?

On the one hand, we have Mr. Jon Garson from the British Columbia Chamber of Commerce suggesting that in fact debt reduction, tax cuts, and spending cuts should be our major priority. On the other hand, we have Dr. Kershaw, Michael Clague, Jack Styan, and perhaps others suggesting that we have to have a more balanced approach, to ensure that some the surplus is spent in a way that ensures the kind of competitiveness Ian is talking about.

I need to hear from you about how we convince the government--which does seem to be preoccupied with debt reduction, spending cuts, and tax cuts--to actually open up its mind and heart to investing in child care, in mental health programs, in programs for people with disabilities. That's my first question to Paul, Michael, and Jack. Then I would like to ask Mr. Garson something else on that same topic.

[Paul Kershaw]

I very much appreciate the civic-spiritedness of my colleague from the Chamber of Commerce in coming out and giving recommendations. I do lament somewhat that his recommendations completely ignore that we are at a 55-year low in terms of looking at the rate of our social spending relative to GDP. Fifty-five years--that was in 1950, and that was no heyday in terms of social spending in a welfare state.

When we recognize where we are today relative to that period 55 years ago, it's time for us to recognize that we're not sound economic stewards of our economy only by maintaining taxes at a very low level or by paying down the debt or what not, when we're already leading the G8; being a sound economic steward of our economy means making strategic investments. An early learning and child care program that would be developed in provinces across the country is one such strategic investment, because even the most conservative cost-benefit analyses show that it will pay dividends.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you.

Michael, would you speak?

[Michael Clague]

Thank you.

I appreciate your question, because we have to recall that not just the federal government but a number of governments across the country went through considerable cost-cutting 10-plus years ago, and we're recovering from that still.

What we are looking at is social infrastructure investment. Clearly there is a need to be setting priorities around those areas in social infrastructure investment that are likely to improve, first, the quality of life and, second, the contributions Canadians can make to the economy itself.

When we look at what we can do these days, it's my view that government doesn't have to be the direct provider of all these services, but it sure has to be responsible that the resources are there, and that programs are set up that can also imaginatively leverage other resources to provide supports for the initiatives we're describing here. There is no doubt there has to be a basic commitment to social infrastructure on the part of government.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you very much.

I don't want to cut you off; I just want to make sure I get Jack in. Then, if time permits, I want to ask the Chamber of Commerce a question.

[Jack Styan]

I'll point out that many of our recommendations actually involve tax cuts as well. In a sense, a registered disability savings plan would be administered as a tax savings to a family. From that perspective it represents a tax cut, so we think it would be consistent. What you're asking are very difficult decisions, and I'm not sure I can answer.

One of the things we've looked at is the provincial situation in British Columbia. When the provincial government does its projection for spending over the next 10 years, it shows that if we stay on the present course, 70% of the provincial budget will be spent on health care, and almost the entire remainder will be spent on education. That suggests we need to look at new ideas and different ideas. I wouldn't claim to have the answer for the difficult question you asked. We've tried to provide some solutions that we think are innovative and might lead us down a different path and perhaps help with that dilemma.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you.

Mr. Garson, I certainly appreciate what you had to say. It's not inconsistent with what business and chambers have said across the country.

Considering that we haven't really seen the benefits from the corporate tax cuts, and all the surplus going to the debt that we would have hoped—even the business community says.... Don Drummond just said in a piece that a good part of the productivity gains we've had in the past 10 years has accrued to the business sector, and not to the personal sector. And he says, “as an economist trying to sell the productivity agenda, it gives me a lousy script to work with.”

Wouldn't you agree that we should have some sort of cost-benefit analysis of tax cuts to the corporate sector, so we can see that this money does get invested back in Canada into areas that will help us deal with many of the programs recommended here today?

[Jon Garson]

Absolutely. I don't think any of the chambers across Canada are speaking on behalf of tax cuts from an ideological perspective. We're a member-driven organization, and the policies we advocate actually come from the grassroots.

In terms of the benefits of the tax cuts, that's not something we have the capacity to measure. Something to show that this would have a marked benefit to the economy is obviously something we would be very supportive of.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

I appreciate that. I don't know if you're associated with the business tax reform group. When I asked the representative of that group this question in Ottawa, he said there should be absolutely no analysis of how tax cuts flow to the corporate sector.

[The Chair, Conservative, Brian Pallister]

Thank you, Madam.

We continue now with Mr. McKay.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you, Chair, and thank you, presenters.

My first question is to Mr. Paddon. You are probably one of the largest public-private partnerships currently operating in Canada. Usually when you mention the phrase “P3“, it's cause for blasphemy, with riots in the streets and burnings in effigy. Can you tell me how P3 is operating? Is it on budget and on time?

[Robert Paddon]

We actually have two P3s under way. One is the Canada Line project, which is operating on budget and, for all I know at this point, on time. It's a very aggressive construction schedule, but it's under way.

The other project is a bridge that's being constructed over the Fraser River to the east of us, called the Golden Ears Bridge. That will also be a P3, in terms of the consortium that's going to construct the bridge and then operate it.

What it's enabled us to do at this point is this. On the Canada Line project, for example, without the private sector stepping forward to put in capital—albeit they'll get a return on this investment—we would not have been able to raise the funding for the project. So they've stepped in to make a project that levels of government on their own would have been unable to do.

[John McKay, Liberal, Scarborough—Guildwood, ON]

My second question has to do with your advocacy of transit passes. Any study I've ever read on transit passes shows that it's a huge cost. It doesn't bump your transportation usage significantly, and then of course you move it from becoming a tax credit. In your paper, you actually advocate that it be tax exempt.

I'm somewhat surprised, given the early days and the contrary academic opinion, that you're actually advocating that it be tax exempt.

[Robert Paddon]

First, we're very pleased with the tax credit. From what we're seeing, we think it's helping. We have the experience in this region. We've been implementing an employer-based program that was never to exceed 5,000 people; it's at 15,000 at this point in time.

One thing we've heard from businesses, and particularly small businesses, is that they think it would be helpful to be able to offer the opportunity for a discounted pass to their employees as a benefit, just as many offer free parking. One thing the employee pass program does for us is lock that person in for a year, which helps secure some of our revenue.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you. The academics are cautious and somewhat concerned about it.

The other question I have is for Mr. Styan. It has to do with when you're a family contemplating a death, and you have a child with a disability. In effect, you have to set up a discretionary trust in order to get funds into the hands of the beneficiary, otherwise the actual disability money is impacted.

If you created a registered disability plan, presumably at the point of death the money would have to be recognized. How would it then pass to the intended recipient, absent some sort of discretionary trust?

[Jack Styan]

We envisioned it being, in many respects, similar to a trust. Someone would need to be set up to administer it in many situations, where the family feels the individual with a disability is not in a position to do so. In some cases a person with a severe disability may be able to administer it after the death of the family.

[John McKay, Liberal, Scarborough—Guildwood, ON]

You'd still have to maintain the fiction that this is a discretionary trust, that the trustee could pay moneys at his or her discretion and have no obligation to the beneficiary.

[Jack Styan]

We would like to see it not necessarily be discretionary, but some of that interplay will come between provincial policy and the plan itself.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I'm sorry to move along like this, but that's the way it is.

My third question is for the B.C. mental illness group. I agree with you; you are the poor cousins of illness generally, and clearly the best bang for the buck would be doing something in your field. Of your $97 million, which frankly strikes me as a modest ask, what of that is with respect to research, and what of that is with respect to this almost insoluble conundrum between the rights of the patient and the desires of the family and the medical needs of the person?

[The Chair, Conservative, Brian Pallister]

We have used the time available to Mr. McKay. I sincerely hope you get another question that allows you to share that information with us.

We will now go to Mr. St-Cyr.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Thank you, Mr. Chairman.

My next question is for Mr. Kershaw.

Regarding childcare services, you are surely aware that Quebec has had a fairly progressive system for a few years now under which parents pay only $7 a day rather than the full amount. The rest of the cost is covered by taxes paid by parents and other Quebeckers. As a result, Quebec has the highest taxes.

Quebec parents claim less in tax credits on their federal income tax return, since they pay less in childcare per day. This means that the federal government saves $250 million a year. But Quebec parents are in fact spending that money, not in cash but through their taxes.

The Bloc Quebecois has been calling on the federal government for years to return that $250 million in savings to the government of Quebec. After all, Quebeckers have chosen to create a progressive childcare system, and that money should be used to further improve the Quebec daycare system.

In your opinion, should that money be given back to the Quebec's state to found its daycare system or put into the debt consolidation fund, as it is currently done?

[Paul Kershaw]

Speaking as an academic who doesn't necessarily need to negotiate the realities of the political arena, it does seem strange that the federal government would not pass on that $250 million to the Province of Quebec, because it's akin to penalizing Tommy Douglas for starting the health care program that became the model for the entire country, much like when Lucien Bouchard's government put in place the child care program that arguably, in time, will prove to be the Tommy Douglas of child care down the road.

Yes, strictly speaking from an academic position, there's no reason not to pass on that $250 million.