Finance Committee on Oct. 16th, 2006

[Andrew Jones, Director, Corporate and Government Relations, Canadian Dental Association]

Thank you very much, Mr. Chairman and committee members.

Thank you for inviting the Canadian Dental Association to address your committee today. This has become a bit of a fall tradition for us, as the CDA has participated in consultations for the past several years. We always appreciate an opportunity to share our thoughts on financial priorities for dentists.

Regrettably, our vice-president, Dr. Deborah Stymiest, is unable to join us today due to extenuating personal circumstances, so I will be delivering CDA's remarks in her place. I am the director of corporate and government relations of the Canadian Dental Association at our offices here in Ottawa.

I hope that all of you have had the chance to review our written brief. It contains many recommendations that we feel will improve the oral health of Canadians.

More and more, our understanding of the connections between oral health and overall health is growing, confirming the importance of maintaining healthy teeth and gums. We are very fortunate in Canada that the vast majority of individuals are able to access oral health care. This occurs due to an excellent partnership that has evolved over time involving dentists, patients, governments, and the insurance industry. However, while the big picture is mainly positive, there are pockets of unmet need where the view is not so rosy. The reasons for this are varied. Public investments in dentistry and oral health have been shrinking to the point that less than 5% of the $9 billion spent on dental care annually is now publicly funded.

In many provinces this funding is devoted entirely to children's dental programs, and in many cases there have been cutbacks to these programs but at least some level of coverage remains for children. Not so, unfortunately, for seniors. There are exceptions. Alberta is showing some leadership in this area, but for the most part only limited public funding goes to maintaining oral health beyond retirement. We have just learned of a new development that will only make matters worse.

According to a recent survey by Mercer Human Resource Consulting, many Canadian employers have cut or plan to cut their post-retirement non-pension benefits, including dental coverage. Eighteen percent report already having done so, while 25% are considering such a change. This is not good news for retired people. Having insurance is often a main predictor in how often a person visits the dentist. We also know that Canada is entering a period of accelerated population aging that will see the share of seniors, age 65 and over, increase from 13% in 2005 to 23% in the year 2031, and that's a lot of growth in a potentially uninsured population.

I'm sure you will be happy to hear that we have a suggestion. It would be premature to call it a solution, but we certainly feel it's a step in the right direction. The idea is for the government to create a process that would allow a tax incentive for people to put away funds earmarked for health spending. This would include any legitimate health expense not covered under provincial health plans--dentistry, of course, but also perhaps prescription drugs, home care, and the like.

At CDA we are referring to this fund as a personal wellness investment fund, or PWIF. You may hear similar suggestions from other groups under different names with a slightly different focus. Our brief that was circulated earlier, and another copy today, lays out a few possibilities for how this PWIF fund might work. Essentially, we see it as an RRSP or RESP-like entity. Individuals with the registered fund can make contributions to it during their working years, either out of pre-tax dollars or post-tax dollars with a government top-up. Those funds would remain dedicated for health care spending, presumably post-retirement and in the absence of an applicable insurance plan.

Some might say that the fabric is already stretched thin. How are people going to put away for RRSPs, RESPs, and PWIFs, all at the same time. As we see it, RESP contributions for most people will incur in the early part of their working lives, and, by contrast, the PWIF will probably appeal more to those whose children have left the nest. It could work out quite nicely from both a household spending and government planning perspective. At the time that RRSP contributions draw to a close, a similar amount of money could simply be switched over to a PWIF contribution. It is still early days for the idea, and we're not suggesting it would be a cure-all, but it is well worth considering fully.

Our brief goes on to mention a number of other important issues, including funding for dental education, and also one of our traditional issues, that is, recommendations aimed at improving oral health for first nations people. We want to thank Health Canada for some recent improvements to the First Nations and Inuit Health Branch non-insured health benefits program, but we also realize that there's still some work to be done there.

Thank you very much for your time today, and I look forward to answering any questions.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Jones.

Thank you all for your presentations.

We'll move to six-minute rounds. Mr. McCallum, you'll begin.

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

Thank you, Mr. Chair.

Thank you all for your presentations.

My first question is to Mr. Woolford. If we look at the bottom of page two of your submission, you say--and I quote:

Although RCC sees greater benefit to Canadians in personal income tax cuts, RCC supports the federal government's commitment to implementing the second proposed cut in the GST rate.

I take it purely as a matter of logic in terms of that sentence that you support the second GST reduction, but if you had a choice between GST cut and income tax cut, you'd go with the income tax cut. Is that correct?

[Peter Woolford]

Mr. McCallum, that is correct. The reasons are those that I explained in my opening remarks. Changing the income tax allows for a greater concentration on the needs of low- and middle-income Canadians. The GST, of course, goes right across the full range of incomes and increases as people spend more.

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

So, for example, if one lowers the lowest income tax rate--the rate on income up to about $35,000--then clearly one is focusing on the lower-to-middle-income group, because no one gets a benefit of more than, say, $300, no matter what your income; that would be the same logic that you're using.

[Peter Woolford]

That's correct. That's the type of change we would like to see. Frankly, we made a mistake in doing our pre-budget simulations and didn't look at income ranges when we modelled our income tax changes.

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

I think it's significant, Mr. Chair, that of all groups, the Retail Council of Canada isn't all that keen on GST cuts, but let me move on to Ms. Harvey.

[Peter Woolford]

That's not what I said, Mr. McCallum.

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

No, but you said that given the choice between income tax cut and GST cut, you'd go with the income tax cut.

[Peter Woolford]

We think an income tax cut will allow for greater focusing. We are strongly in favour of GST cuts as well, and we said so.

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

Right, but then just let me repeat my earlier question. You did say in response to my question that if you had your choice between a GST cut and an income tax cut, you would take the income tax cut.

[Peter Woolford]

Yes, we would.

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

Okay; well, that's my point.

Ms. Harvey, we'll go on to something uncontroversial. In terms of physical fitness, I think basically there are two ways to go. One is through government investments of one kind or another, as described in your brief. Another method would be through tax reductions or tax incentives of various kinds, such as the tax credit that was in the budget.

As I read your brief, I take it that you're really more on the side of government investments than tax measures. Is that right?

[Jean Harvey]

It's not that we don't support the other side of it as well. I know that the Heart and Stroke Foundation of Canada came forward with the tax incentive piece around physical activity, and we certainly support their view on that as well. We feel that this, in terms of the investment in the physical activity strategy and some of those pieces, has not happened, so we thought that was probably the more important thing to put forward at this moment.

It's not that we don't support the other piece as well, because I think you're right: it's not a one-stop solution; it's going to take a number of different strategies to get to these issues.

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

My question is similar in a way to the one about GST versus income tax cuts. It's easy to say you want both of something, but if you had a choice between tax measures versus government investment measures, which do you think should be the higher priority?

[Jean Harvey]

That's a bit of a difficult question. I think there needs to be government investment in pieces like physical activity for our population, so that it goes across the ages and across the spectrum, so I think if I had to go with one or the other, I would go with that, because we've seen the benefits of it as well. We're not exactly sure what this tax incentive and disincentive is going to do; is it going to be more that those who already go to gyms are the ones who are going to take advantage of it? We don't know yet. That's not to say we shouldn't try it, but that's where I would put it.

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

Thank you very much.

My next question is possibly for Mr. Konow and Mr. Campbell. It goes back to the time when I was briefly NRCan minister. One of my favourite programs at that time, and one that I thought was really good, was the EnerGuide program. You've both talked about energy efficiency; in different ways, I think that sector is important to both of you. It was my impression when I was there that this was a really good program--that it improved energy efficiency in an efficient way and that it focused in particular on lower-income Canadian households. As you know, it doesn't exist any more.

Do you think it was a good program? Would you favour either reinstituting it or having something similar? It sounded as though such a move might be consistent with what you were saying in your brief. That's my question to you.

[The Chair, Conservative, Brian Pallister]

There are just a few seconds remaining.

[Hans Konow]

Okay, I'll be quick.

I certainly think that the type of programming EnerGuide provides is very useful and necessary. I think it has proven itself. The changes made in the program have caused the provinces to pick up some of what was done by the federal level.

It's probably timely to have a look at how the federal level might re-engage, and what priorities might be set for them to be partners with both utilities and the provinces in pursuing the particular benefits that program represents. There are national opportunities in codes and standards that are very important. They should be delivered, for efficiency reasons, through at least a partnership with the federal level.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. McCallum.

Mr. Crête, six minutes.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chairman. My questions are for Mr. Friesen, of the Canadian Federation of Agriculture.

In your brief, there is a paragraph in which you talk about the Canadian Agricultural Income Stabilization Program, CAISP. You clearly say that the existing program needs to be completely revamped. For example, in my riding, the whole farm income — even if the farm is diversified — is taken into account in the eligibility assessment, when some crops might be profitable while others are not.

For the committee's benefit, could you provide some concrete examples to show what the weaknesses of the current program are, and why the government needs to take action quickly. That table in your brief showing the drop in net farm income speaks louder than words. It clearly illustrates the crisis now facing the industry. I think that revamping CAIS — if it was done properly — could provide part of the solution.

Could you give us some concrete examples?

[Bob Friesen]

Thank you.

First of all, CAIS is a margin-based program. We've had a long period of very low prices, especially in the grains and oilseeds sector, so it has reduced margins on the farm. Because the amount of money you can trigger in the claim year is based on your historical margins, farmers have had hardly any historical margins and haven't been able to trigger any money out of the program.

We've suggested—and there's been a lot of talk about this over the last few years, you will recall—there needs to be a separation of stabilization from disaster. So if you would look at putting a contributory program in the top tier of CAIS, it would at least make the top tier of CAIS more predictable and more bankable.

If you asked farmers whether they would rather have an assured $7 or a possible $10, they would all pick the assured $7. It would allow them to stabilize their incomes much better in the top tier. We already know, especially if you have a low reference margin, that many people fall in the first or the second tier of CAIS. So it would make the program much more predictable and bankable.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

In your brief, you also said that the program should be more flexible. You believe the federal government should “[...] help fund provincial companion programs”. Agriculture is very different from one province to the next. One weakness the Bloc Quebecois had identified, and which has now been confirmed, is this: the national program is not flexible enough at present. If I understand correctly, you are suggesting that the federal government help fund provincial programs.

Could you give us an example of what form this might take, in Quebec or in another province?

[Bob Friesen]

As you know, the industry was dragged kicking and screaming to the table when companion programs were eliminated. That meant that for every 60¢ the federal government put into agriculture in a province, the province was required to contribute 40¢. The problem was that when the APF was implemented, they decided that none of the federal money could be used for provincial-specific companion programs.

You're absolutely right that one national program cannot deal with all the provincial-specific or regional-specific needs. So we would like the provision brought back where provinces can use some of the federal 60¢ if they contribute their 40¢ to design provincial-specific companion programs. In Quebec's case, this would help with the ASRA program or some of its other provincial programs. It would help Ontario bring in their risk management program for the grains and oilseeds sector. It also would allow all the other provinces to define a provincial-specific need and a provincial-specific tool that would adequately address that need in the province.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

In an other part of your brief, you talked about the need to be proactive in terms of research and product support. In my riding, I have been aware of a problem that affects Canada as a whole — the renewal of orchards to grow apples and similar fruits.

In Canada at present, over 50% of apples for industrial consumption — prepared pies and similar products — come from China and other Asian countries. For a long time now, apple producers have been asking for the kind of infrastructure program that would enable Canada to facilitate the renewal of orchard stock.

Is this be kind of thing you would like to see for this crop and others?