Evidence of meeting #27 for Finance in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was federal.
10:30 a.m.
Conservative
The Chair Conservative Brian Pallister
Thank you, all of you, for a very stimulating morning of discussion. I appreciate the time that you took to be with us, to prepare your materials, and to present them today. We offer best wishes to you in your organizational work, and so on.
I'll invite the next panel to move into these seats.
We will suspend for five minutes only.
10:38 a.m.
Conservative
The Chair Conservative Brian Pallister
What a cheerful looking bunch of people. Welcome to our finance committee consultations. We look forward to your presentations and thank you for being here with us this morning.
If you were here for the previous presentations, you'll know that I'll give you an indication when you have a minute to go. We ask that you keep your presentations to five minutes, in the interests of fairness and further discussion thereafter.
We will begin with a shared presentation by the Coalition of Child Care Advocates of B.C. and the Kids First Parent Association of Canada.
Who will start, Sharon or Helen?
10:38 a.m.
Sharon Gregson Chairperson, Coalition of Child Care Advocates of British Columbia
We're actually two different organizations.
10:38 a.m.
Conservative
The Chair Conservative Brian Pallister
Yes, I'm aware of that, but I was told you're sharing your time.
10:38 a.m.
Chairperson, Coalition of Child Care Advocates of British Columbia
We weren't aware of that. We have differing opinions.
10:38 a.m.
Chairperson, Coalition of Child Care Advocates of British Columbia
We don't typically ask to share our time.
10:38 a.m.
Conservative
The Chair Conservative Brian Pallister
Okay. The Coalition of Child Care Advocates, Sharon Gregson, proceed with your presentation. I'll give you an indication when you have a minute to go.
10:38 a.m.
Chairperson, Coalition of Child Care Advocates of British Columbia
My name is Sharon Gregson. I'm the spokesperson for the Coalition of Child Care Advocates. I'm also a Vancouver school board trustee. Thank you very much for the opportunity to speak to you on this important issue.
The Coalition of Child Care Advocates is a voluntary organization of interested citizens, parents, grandparents, employers, employees, and community organizations. We agree that families and communities, business and governments can and should be partners sharing responsibility for creating a healthy economy, stronger communities, and a better society. We believe Canada needs to be proactive and implement social policy and funding that nurtures the development of skills that will maximize our potential as individuals, as vital communities, as regions, and as a nation.
There are a few key points we would like to emphasize.
In the first six years of life, a child goes through the most critical periods for brain development. These periods help determine future capacities. High-quality, regulated child care offers appropriate intellectual, social, and emotional stimulation and teaching for children in the critical early years.
Research affirms that high-quality, regulated child care is an essential component of a comprehensive family policy—one that nurtures children and supports families. Indeed the recent Statistics Canada release of August 2006 shows us that in 29% of cases, women are now the family's primary breadwinner. More than three million children under the age of 12 currently have mothers in the paid labour force in Canada.
Canada's productivity relies on working mothers with young children, who contribute $53 million annually to Canada's GDP. That statistic is from the Canadian Council on Social Development. We believe that child care strengthens the economy and builds community. Employed parents contribute to the economy as workers and as consumers. Employers and employees in regulated child care services contribute to the regional economy and to the federal tax revenues.
Labour shortages are a growing problem in Canada, but without regulated child care, parents—especially mothers—can't work.
You've asked for our views about specific federal tax or program spending measures that should be implemented in the upcoming budget. We see worrisome evidence that some Canadians and members of Parliament have lost sight of the connection between the taxes we pay and the vital services we receive.
Over the last several years we learned in British Columbia, as we are now experiencing federally, that tax cuts mean program and service cuts, increased user fees, and loss of federally funded social programs—all of which impact negatively on communities, particularly low- and moderate-income families, women and children.
We believe Canadians would be much better served by our investing the surplus in a range of public services that address the most important problems facing the country today. We in the Coalition of Child Care Advocates of B.C. think it makes sense to invest in a regulated child care system through the tax system, because families are usually at their lowest earning power when their children are youngest, and because children's development is time sensitive and can't wait until their families are more affluent. The benefits of investing in regulated child care now outweigh the costs and will lead to future increased tax revenues.
Work-life conflicts cost Canadian organizations an estimated $2.7 billion annually—again this is from the Canadian Council on Social Development. The earlier we invest in our children, the longer we all reap the benefits through economic contributions, a civil society, and a healthier population.
Regarding the implementation of the federal universal child care benefit program, as you are well aware, the taxable benefit is a new form of direct financial assistance of $100 per month for a child under the age of six, as stated on the government's website. While it is an allowance to individual parents, and well received by them, it is not supporting progress towards building an early learning, regulated child care system for Canadian families.
In fact, this benefits higher-income families with one at-home parent more than it helps lower-income parents who need and would choose regulated child care because both parents are at work or studying. Families with young children who qualify for the new benefit can no longer collect the young child supplement paid under the Canada child tax benefit program. Families with children aged six to twelve with equally critical regulated child care needs receive zero through this new taxable allowance, and we believe that's unfair.
The website information says it provides parents with more choice in child care.
10:40 a.m.
Conservative
The Chair Conservative Brian Pallister
Madam Gregson, thank you. We appreciate it.
We move on now to Ms. Ward, representing the Kids First Parent Association of Canada.
10:40 a.m.
President, Kids First Parent Association of Canada
Thank you.
Kids First is a 100% volunteer-run charity that receives no government, union, or corporate funding. We work for the support and optimal well-being of children and support for parental child care.
Canada is now at a stage where the goal of economic growth, narrowly defined as GDP enlargement, is openly in conflict with the goal of improved quality of life. Harm and hurt produce GDP growth, employment increases, and profits, but this is a false economy. We need to replace the GDP as a measure.
There are two parts to the problem: faulty definitions, and measures of production. We need inclusive definitions of work—work must be defined to include the caregiving work that parents and others do—and inclusive definitions of child care and early learning. These must be defined to include the child care and early learning—all of it—provided by parents and by anybody who does it.
We also have a second problem, with the destruction of the conditions for optimal child rearing, which damages quality of life and the very formation of human and social capital. This problem has been exacerbated by the circulation of misleading data and suppression of other data by the publicly funded day care lobby researchers concerning mothers' work, effects of day care on children, demand, costs, enrolment, vacancies, etc.
I'm willing to answer questions on this information problem, and I have the most recent unpublished study by the NICHD, from Dr. Jay Belsky of Birkbeck College in London. That is the most prestigious study that's out there--the NICHD's.
The child rearing work of parents is currently undermined both by the fact that it is not even included in the GDP and by the negative impacts of many GDP-boosting activities. Perversely, although children who needlessly become adults who are unhealthy, immature, and unethical are very costly to society, providing them with compensatory goods and services is profitable and is counted as a source of growth to the GDP. As one example, the recent violence in Montreal will boost the GDP, with paid hours for police, doctors, and therapists. Devastation produces growth that is not socially sustainable.
Government policy has caused this. Families with dependent children have been massively de-funded over the last generation. The child rearing work of parents, the vast majority of which is done by women as mothers, is simply no longer considered work. A journalist calls parenting a sucker's game.
What did governments do? Direct financing to parents for their care work has been cut and transferred to services, academics, and bureaucrats in the family substitution sectors. This has been done under the OECD policy called post-maternalism and post-familialism. We call it McJobs for moms.
For example, single mothers used to be eligible for welfare until their youngest child was 16. It's age three in much of Canada, and six months in Alberta. Tax deductions for dependent children that used to go to age 17 have been eliminated.
This is the very money that once financed both the so-called unpaid work of child rearing and civil society work—the village it takes to raise a child. In short, in the past the parents who did most of the child care and much of the volunteer work of elder care and civil society volunteering were financed by the state, if not exactly paid. Now they are not. The result is increasing inequality for women as mothers, deterioration of children's well-being, an unsustainably low both rate, and an erosion of the civil society sector.
We know our children are in many ways worse off than were children in the recent past. There is a de-evolution in many respects. We hear about increased rates of child obesity, allergies, asthma, youth violent crimes, suicide, cheating. We know there are decreased rates of time with children and of literacy, and of course the birth rate is down 60% in 40 years. Optimal child rearing will improve the quality of life for all, it will improve our economy, and it will raise the birth rate.
It cannot be overstated that there is no evidence that shows that day care centres produce better long-term outcomes for children than other care forms. On the contrary, the majority of day cares have been repeatedly found to be of low quality. Day care centres especially have been repeatedly found to increase levels of illness, aggression, and stress in children. Staff-to-child ratios in these centres must be improved.
Thank you.
10:45 a.m.
Conservative
The Chair Conservative Brian Pallister
Thank you, Ms. Ward.
We continue with the representative from the Vancouver Board of Trade, Janette Pantry. Welcome. Five minutes is yours.
10:45 a.m.
Janette Pantry Director, Vancouver Board of Trade
Good morning, ladies and gentlemen, welcome to Vancouver.
My name is Janette Pantry, and I am the chair of the Vancouver Board of Trade's government budget and finance committee. With me in the audience is Dave Park, the assistant managing director and chief economist of the Vancouver Board of Trade. He will answer your questions later on behalf of the board.
Thank you for making the trip to Vancouver for your pre-budget consultations.
We are here today representing approximately 5,300 members of the Vancouver Board of Trade, which employs hundreds of thousands of people and carries on business throughout British Columbia and elsewhere.
We provided you with a detailed copy of our recommendations for the upcoming budget. You asked us to focus on Canada's place in the competitive world, and in particular on four specific questions. We circulated a PowerPoint handout that we'll refer to during our remarks.
The first question you asked us to address is, what specific tax and/or program spending measures should be implemented to ensure that our citizens are healthy and have the right skills?
Focusing on the health aspect of this question, if you turn your attention to slide 2 of our package, you will see that Canada's spending ranks in the top third of OECD nations, yet our outputs are near the bottom: the number of hospital beds, 21 out of 27 countries; the number of physicians in Canada, 26 out of 29 countries; and number of MRI machines in Canada, 11 out of 23 OECD countries.
In considering Canada's place in a competitive world, this slide raises questions—
10:50 a.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
I don't want to interrupt the presenter, but she's been referencing a document that neither I nor my colleagues have.
10:50 a.m.
Conservative
The Chair Conservative Brian Pallister
Because we only have that document in English, we have to await for translation to distribute it to members.
Please continue.
10:50 a.m.
Director, Vancouver Board of Trade
The data in the slide that you will receive raises questions about whether Canadians are receiving value for their health dollars.
Prior to announcing any health care funding, the federal government should work with the provinces to ensure that meaningful reform of the Canadian health care system is undertaken, in part guided by the more successful health care models in some European countries. To the extent changes are needed to the Canada Health Act to implement these reforms, the changes should be made.
Turning to the skills aspect of the question, it's very topical here in British Columbia, where we are facing a growing shortage of skilled workers. The board recommends that the federal and provincial governments introduce tax credits to encourage employer-provided training; take actions to ensure that the skills of immigrants are not underutilized; and phase out the seasonal component of the EI program, which roots Canadians in areas of high unemployment.
Turning to the second question, you asked, what federal tax and/or program spending measures should be implemented to ensure that our businesses are competitive?
As recently reported, Canada's tax rates on business investment are the eighth highest of 81 developed and developing nations. In the slide package that will be circulated, you will see that Canada's income taxes, as a percentage of GDP, are the highest of G7 nations. This is a concern because Canada has very high taxation levels in the areas that discourage working and investing, and therefore hurt the competitiveness of Canadian businesses. Canada should reduce taxes to encourage working and investing.
The third question you asked us to consider is what federal tax and/or spending measures should be implemented to ensure that our nation has the infrastructure required by its citizens and businesses.
If you take a look at slide 4 in the slide package, you will see data from the Federation of Canadian Municipalities and the Canadian Council of Professional Engineers from 2005 that outlines the infrastructure deficit in Canada. The infrastructure deficit was estimated at $60 billion; the annual growth of the deficit, $2 billion; the annual federal investments in infrastructure average $1.1 billion since 1993; the average useful life of infrastructure remaining, 20%; and the average age of 30% of our infrastructure, over 80 years.
You also asked us what actions the federal government should take to ensure the tax and/or spending measures needed for Canada to prosper can be made.
First, we must recognize the positive steps taken recently with the $13.2 billion in debt reduction and identifying the spending reductions of $2 billion over the next two years.
One of our significant concerns has been the sustained increase in the level of government spending. From 2000 to 2005, federal government program spending increased by almost 50%.
With global economic slowdown a real possibility, and with Canada's aging population, we are recommending a comprehensive program review with a reallocation target of 5% of annual federal spending. So that would be $9 billion reallocated. Why is this necessary? If you look at slide 6 of the presentation, you will see that over the next two years, before any announcements are made in this upcoming budget, federal spending is projected to rise by 6% annually. This is not sustainable.
Thank you for allowing us to present our views on behalf of the Vancouver Board of Trade.
10:55 a.m.
Conservative
The Chair Conservative Brian Pallister
Thank you for your presentation, Madam Pantry. I assure you the committee members will receive your information; however, because of our rules it has to be, of course, in both official languages. And that's my explanation for the bemused and confused looks some of my colleagues had.
We continue with Verna Semotuk, who is here with the Greater Vancouver Regional District. Welcome. Five minutes is given over to you.
10:55 a.m.
Verna Semotuk Senior Planner, Policy and Planning Department, Greater Vancouver Regional District
Thank you, Mr. Chair, and thank you to the committee from the Greater Vancouver Regional District for this opportunity to address you this morning.
The Greater Vancouver Regional District is a federation of 21 member municipalities in the Lower Mainland. Our board is made up of the mayors and councillors of those 21 local governments. The GVRD—I shall use that acronym throughout my remarks—has particular roles in housing, and it is on the issue of affordable housing that I wish to address the committee this morning.
Probably next to transportation, affordable housing is the most critical issue local governments in our region are facing today, and have been for the last ten years.
The GVRD's role in housing is as a direct provider of social housing. Most of its housing is underwritten by CMHC. It has 3,500 units of social housing in the region. It's also an implementation partner on the homelessness programs that were initiated under the national homelessness initiative in 1999. It also is responsible for regional housing policy, so it works with the mayors and councillors of all the 21 member municipalities on regional housing policy.
There are four aspects to the housing crisis in this region that I would like to provide a brief background on with respect to giving some foundation to the requests and major messages we have for the committee at the end of my remarks.
The first aspect of the issue is of course poverty and income. In this region, the incidence and the rate of poverty have increased significantly in the last 10 years, and not only are the incidence and depth of poverty increasing, but the profile is markedly changing. Sixteen per cent of our regional households are in core need, and one-third of these core-need households are of persons who own their own housing. Core-need households that are paying more than 50% of their household income for rent are considered one rent cheque away from homelessness and are considered at risk of homelessness.
The profile of poverty in this region has meant that single-parent families, aboriginal households, and immigrant households are the three most overrepresented demographic groups in poverty in this region. Also with respect to poverty in this region, owners and renters of households are increasingly disparate in their circumstances: renters have one-half the annual income of owners in this region, and also have less than one-half of the assets or accumulated wealth. CMHC data have told us that those who move into home ownership almost double their incomes within six years of home ownership, so we know there is a direct link between long-term household prosperity and home ownership.
Finally, with respect to poverty, Human Resources and Social Development Canada just two months ago released a report that shows this region has the highest proportion of working poor families in all of Canada: 9.6% of our workers are considered poor, well ahead of Toronto, in second place at 5.3%.
The second aspect of the housing crisis has to do with housing costs. I don't think it's any secret to any of the committee members that Greater Vancouver continues to share the dubious honour of having the highest housing costs in Canada. The 2006 data shows us that the average selling price of a residence in this region was $508,000; in comparison, in second place was the city of Calgary, at $367,000. Less than 18% of renters in this region can afford first-time home ownership, given those costs of housing.
The third aspect of the housing crisis is housing supply. Rental housing continues to be the most critical need in this region: rental housing with respect to purpose-built market rental housing, social housing—we have 11,000 households in this region on the waiting list for social housing—and supportive housing. We need 5,000 units of supportive housing to address homelessness in this region over the next 10 years.
And that leads me to the fourth aspect of the housing crisis, which is homelessness. The number of absolute homeless persons in this region has doubled since 2002, and also the hidden homeless and “at risk of homelessness” numbers are alarming.
Our message to the committee is threefold. The first message is that homelessness is not an intractable problem. We urge the continuation of federal funding and involvement in the reduction and prevention of homelessness under the national homelessness initiative. Secondly—
11 a.m.
Conservative
The Chair Conservative Brian Pallister
Thank you.
We continue with David Levi, who is here with GrowthWorks Capital Ltd. Welcome. We'll give five minutes to you.
October 3rd, 2006 / 11 a.m.
David Levi President and Chief Executive Officer, GrowthWorks Capital Ltd.
Thank you. This will be my speed reading course.
Thank you for allowing me to speak to you this morning about an important issue in the economic development of British Columbia. I'm here simply to ask for one thing, which is an increase in the “ticket size”, as we call it—the amount that individuals can invest—in the working opportunity fund, and I'll tell you why now.
The working opportunity fund, to give you a sense of our size and skills, is $400 million in assets under management. We're the largest single point of venture capital in all of western Canada, and we're 20% of all the venture capital here in British Columbia. Over the last 13 years, through this labour-sponsored fund, we've invested $426 million in 108 entrepreneurial companies. We have been very active. These companies, between them, because they're mostly small companies, have added up to a lot of jobs—about 10,000, according to the provincial and federal input-output models they use for tracking jobs of companies we invest in.
For every dollar we put into an investment, $4 is put in by other individuals from outside the province, so we're a very big attractor of funding here. If, for example, you look at the contribution of the federal government, which is a 15% tax credit, for every $1 million the federal government puts up, $20 million has been invested alongside it. It is a very tax-effective, very highly-leveraged opportunity for government to interact with venture capital.
On average, the companies we invest in have fewer than 15 employees at the beginning, and they rapidly grow to 50 to 60 employees, with our largest company having over 800 employees. That started, by the way, with fewer than 200 employees when we first invested in it.
One of the big things we're actively involved in, and it's something you would be concerned about, is all the money the federal government has been putting into basic research hoping there would be commercialization. We've commercialized over 30 companies from universities, allowing scientists to bring their research to life and then allowing it to start to earn income here in British Columbia, and obviously for all Canadians through the taxation system.
This is definitely not a domestic product we're talking about, as 85% percent of the money these companies earn as gross revenues comes from export-oriented products. Almost all of our companies are active internationally and are world-competitive players, although they're not generally 5,000 or 10,000 employees; they tend to be much smaller, as I said earlier.
You may think a 30% tax credit given to investors is sufficient. While it looks good on paper, there are lots of other options for investors. For example, flow-through shares, which go to mining and oil and gas companies, give investors the effective rate of 44% credit compared with the 30% we have, and also allow them to invest them into their RRSPs. These flow-through shares raised $1.1 billion last year at a cost of $484 million to government. By contrast, the cost to the two levels of government of the $1.2 billion—so we raised more money than they did—in 2005 was only $360 million, so it was far less cost.
I'm not asking, though, for an increase in the credit. That's not why I'm here. The real problem we have is that the program itself hasn't been updated in a large number of years. I'm here to ask for an increase in the tax credit limit, which would result in an increase in the maximum individual purchase size. The legislation for this program was created in 1985. Over the last 21 years there has been no increase to the maximum purchase size for investors. The RRSP contribution limits, on the other hand, have increased from $5,500 in 1985 to $15,500 today and will go to $18,500 in the next two years. As a result, the relatively small $5,000 purchase of our funds has become a nuisance trade for most investment advisers.
In fact, since the banks have taken over most of the major brokerage firms they've created new compensation grids, and these grids pay far less on trades under $5,000 compared with those of $10,000. Because of this we've seen a decline.
The other key issue that no doubt will be raised as we ask for this change is what the cost to the treasury will be. We've looked at the cost to the treasury. Because there are maximum amounts in almost every province in the country, the maximum increase in the cost to the government would be about $20 million.
Thank you very much.
11:05 a.m.
Conservative
The Chair Conservative Brian Pallister
Thank you very much, Mr. Levi.
Mr. Kim Brandt is here from KAIROS. Welcome, sir. You have five minutes.
11:10 a.m.
Kim Brandt KAIROS - British Columbia
Thank you. Good morning and bonjour.
The Fraser Valley KAIROS group represents a group of committed people from the faith community. We are not experts in the field of economics and competitive international business, but merely deeply concerned citizens. Like most Canadians, we believe in the values of family, community, true justice, equity, and fairness.
There are some issues that weigh heavily on our hearts. You are interested in what Canadians have to say about keeping Canada competitive in today's economy. No doubt you've heard from many more learned than I on these issues, but we wonder what your plans are for tomorrow's economy and how you plan to measure its success.
There are two points here: one, how do we, as a nation, measure the well-being of our citizens in an all-inclusive way, beyond the indices of the GDP; and two, is our current economic model truly sustainable for our long-terms needs? When I say long-term, I mean well beyond the next general election, and forward-thinking for the next several generations of Canadians. Perhaps we can enhance our national stature even more by being a nation that can lead in new and innovative ways. We must find another way to measure success than by just how much money we generate. Surely you'll all agree that there is more to life than just how much money you make.
There are many wonderful aspects to life in Canada; however, there are also deeply troubling conditions. The fact that it is necessary for our little church, Langley United, to feed hungry children at a local elementary school is unacceptable to us. These types of activities go on across our country every day, and honestly, we sometimes feel overwhelmed by all of this.
But we have hope. There is a project so inspiring it involves some federal agencies already, and both the private and non-profit sectors, and it has already finished its first round of public consultations to determine how Canadians want to see their well-being reflected in a set of indices. It is known as the Canadian Index of Wellbeing, and details about this new tool to measure what counts are outlined in our brief.
Our primary focus is on policy reforms in the following areas: a streamlining of national standards for professional services to enable new immigrants to participate at their skill level sooner rather than later; banning the new coal-fired power station that B.C. is planning, including a federal ban on the building of all carbon-emitting power generation systems.
Add to that a tax on all existing carbon-emitting power generation systems, with all tax revenues going directly toward R and D of green energy production; a cash or tax incentive of $1,500 for every person who purchases a new vehicle that gets an increase of 5 kilometres per litre over their previous one; broadening the federal child fitness tax credit to include participation in drama, music, and the arts; increasing the basic personal exemption to $15,000 and changing the highest tax bracket so that it begins for those earning over $100,000; removing bureaucratic red tape so that one government agency can oversee grants and subsidies for housing.
Commit to giving back to poorer Canadians 1% of our prosperity towards housing grants, interest-free mortgages, or some such hand-up.
Withhold funding for any aspect of the Pacific Gateway project that funds the twinning of the Port Mann Bridge or increases the lanes of Highway 1.
Federal funding must be tied to public transit. Ten years ago Environment Canada reported that nearly 100 people died prematurely as a result of air pollution in the Fraser Valley. This is unacceptable. The federal environment act states: “projects are considered in a careful and precautionary manner in order to ensure that such projects do not cause significant adverse environmental effects.”
Finally, we believe water is a sacred gift to all. While we live in a boreal forest here, we have recently undergone a long drought, which culminated in the mayor of Tofino, on Vancouver Island, closing the town's business over the Labour Day weekend for lack of water, causing significant financial losses.
Global weather patterns are changing, and that is a reality. This government must put resources into developing long-term water strategies that ensure that Canadians have access to this life-giving resource for all the generations that will follow. Water is too valuable to be commodified and must remain in the public trust.
Thank you for your time and attention.
11:10 a.m.
Conservative
The Chair Conservative Brian Pallister
Thank you very much, Mr. Brandt.
We continue with a representative from the Canadian Manufacturers and Exporters, B.C. Division, Werner Knittel, vice-president. Welcome. It's over to you.