Finance Committee on Oct. 16th, 2006

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

I want to thank everybody. There are some very good presentations here.

Ms. Harvey, chronic disease is a big issue where I come from in Atlantic Canada. Outside of Canada's aboriginal populations, I think we have the highest incidence of chronic disease. Diabetes is out of control, and so are cardiovascular diseases, cancer, and arthritis. A lot of things contribute to this, and there are a number of risk factors. One thing I didn't see in your brief—it may have been in some of the other documents—is the part that economic conditions play. Poverty is the biggest socio-economic determinant of poor health. Do you agree?

[Jean Harvey]

The socio-economic determinants are extremely important in chronic disease prevention. We have a conference coming up in November, and we have quite a number of sessions linking chronic disease prevention and the whole economic piece. You're right, it's huge.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

I come at this from spending a number of years working as a volunteer with the Heart and Stroke Foundation of Canada, who are colleagues of yours. I want to follow up on Mr. McCallum's question: How do we invest in a way that helps the greatest number of Canadians with the greatest needs?

I agree that there is a role for the tax deduction system. My son just started playing hockey this year. That will help me, but he probably would have played hockey anyway. I don't need the help. There are lots of other kids not too far from where we live who can't play hockey. We don't have enough infrastructure, and we don't have enough support for low-income families. Would it not make sense that, whatever we invest and however we invest the 1% in health and sport, there should be some priority given to those most in need?

[Jean Harvey]

Absolutely. That's what I was trying to get at when I was saying I wasn't sure the tax piece would work by itself. It's nice to have people able to go and play hockey, but if the rinks are in bad shape, if you don't have the infrastructure for it to happen, then it's still not going to happen. To say not to put it into infrastructure or government spending, but totally into taxes, is probably not the answer. You need both. It needs to be multi-pronged. The issues around obesity and lack of physical activity are complicated. It's going to be a huge issue for this country, what with the rising rates of obesity right now.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Thank you.

Andrew, do we have enough dentists in Canada?

[Andrew Jones]

Our projections show no shortage. We may hit some challenges down the road, but right now, overall, there's not a problem. We have some regional issues, but overall the numbers are reasonable.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Do you think we're training enough dentists?

[Andrew Jones]

Our issue with training has to do with funding of dental schools. We mentioned that in the brief. We have some challenges around high tuition and the amount of funds going into our schools. Our deans in the ten dental schools are facing a number of challenges. We're advocating for more money to go into the system. Obviously, we have some federal-provincial challenges along those lines. We're looking at infrastructure challenges and tuition challenges. There is a whole area within oral health and the funding of education that's a big concern for us.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

On page five of your brief, you say that “The Canadian Dental Association recommends a needs-based approach to the creation of a social safety net aimed at providing oral care services to socio-economically disadvantaged Canadians.”

I certainly applaud that. In my own community, I was at a school last week in a low-income area in which Dalhousie Dental School operates a clinic. I guess that's something that dentists do around Canada, and I applaud it. Do you have any sense of what this might cost? How far along are you in recommending a specific approach?

[The Chair, Conservative, Brian Pallister]

Mr. Savage, your time has elapsed.

Mr. Friesen, I just had a couple of quick questions for you. You mentioned that one in seven jobs in Canada is related directly to agricultural production. What percentage of those jobs is held by farmers versus the value-added side? Is the vast majority of these jobs on the value-added side? Is that correct?

[Bob Friesen]

Yes, that's correct. If you look at the primary production sector, of course, it's much lower.

[The Chair, Conservative, Brian Pallister]

My questions relate to the concern, the thesis that some have advanced, in terms of the rationale for the reform of the single-desk mechanism, which is that the single desk results in a reduction in value-added initiatives in those commodities in western Canada. It seems to be supported by the growth in value-added employment in the areas of non-board grains--canola, beans. You know better than anyone that there seems to be growth there. Certainly, as a Manitoban, you know about oats.

For those of us who would like to see more economic development in western Canada, particularly in rural communities, and who would like to see more value-added initiatives there, do you support the thesis that there is an opportunity for us here to look at reforms that would encourage and promote the idea of more value-added, or does your organization maintain that having farmers continue to market or be forced or compelled to market through a single desk is the best way to develop the economies of rural communities?

[Bob Friesen]

We would say that the single-desk aspect of the Canadian Wheat Board empowers Canadian farmers in the marketplace. But a single-desk monopoly also has to be relevant in today's environment, so whatever flexibility needs to be created within that single-desk monopoly is something the board needs to look at. The board needs to make sure they continue to evaluate the environment within which they work, and perhaps they can create flexibility within that single-desk monopoly.

[The Chair, Conservative, Brian Pallister]

I have to cut you off because I don't want to use too much time from other questioners, but I would suggest that I agree with you only in part. The creation of value-added opportunities for Canadians in employment and wealth creation isn't solely in the domain of the Canadian Wheat Board as an export agency; it should certainly also be in the domain of the federal government.

I would make that point to you, if you would like to comment on it.

[Bob Friesen]

In that case, I think all the information has to be put out there. There has to be a discussion from people on both sides of the issue--a good evaluation, a good analysis--and then a producer plebiscite to decide where we go with the single desk.

[The Chair, Conservative, Brian Pallister]

Again, my point is that there are a lot of us in Canada who care deeply about rural communities who aren't farmers who have a stake in this as well.

We'll move on to other questioners. Monsieur St-Cyr, four minutes.

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

Thank you, Mr. Chairman.

Thank you for being with us.

First, let me address Mr. Tinkler, because I am glad that we have a CMA representative with us to talk about capital cost allowance, among other things. It is being debated widely; some of your colleagues want certain amendments. I just want to be sure that my understanding is correct.

In my mind, capital cost allowance has to do with the useful life of some given material. I think that this is why, for example, you want to have a higher depreciation rate for ITC material, that currently has a shorter useful life.

When I see the oil industry enjoying 100% capital cost allowance rates, I infer that the government believes that certain asset has only one year of useful life. This is my understanding. Theoretically, am I right? Within the whole Canadian fiscal system, are there other industries and types of equipment that enjoy a 100% depreciation rate?

[Michael Tinkler]

First, with regard to the link between the useful life of an asset and the CCA, as far as the oil industry is concerned, this is a measure that was implemented to encourage investment. We wanted to speed up the fiscal cycle. We recommend similar measures for information and communication technology equipment.

With regard to other industries, I am not sure, but I think that a previous government implemented accelerated capital cost allowances for environmental equipment. Basically, this has nothing to do with useful life; it is more like an incentive.

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

It is more like a tax rebate granted to selected companies than anything having to do with the real useful life of a...

[Michael Tinkler]

That is what it is. It is just another credit, somewhat like a tax credit.

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

Mr. Konow, you spoke of amending the GST to help the wind power industry. What kind of capital cost allowance would the wind power industry want? Would it be 100%, as is the case for the oil industry, or would it be less?

[Hans Konow]

I'm not familiar with the precise rate they are currently accorded, but I believe they have an incentive rate; plus they do receive the wind power incentive payment, which helps make it a more attractive situation for them.

Our particular representation had to do with the burden that accrues to developers of wind energy with respect to their payments to landowners and the GST characterization that is required of them. In some cases you may have up to a hundred landowners in a major wind development receiving a payment flow, and it becomes administratively burdensome. So one solution would be to treat them like every other basic defined natural resource, and you would not be subject to GST.

[The Chair, Conservative, Brian Pallister]

Okay, Monsieur.

Mr. Turner, four minutes.

[Garth Turner, Conservative, Halton, ON]

Thank you.

I'd like to congratulate the Retail Council of Canada, in particular, and the Certified Management Accountants of Canada for your submissions. I think you made some very solid points indeed, which are very much along the lines of the thinking in the government's agenda so far.

I'd like to turn my attention for a minute to Mr. Campbell with regard to RRSPs and the housing industry. I have a few concerns about the housing industry. The cost of housing now is at the highest level it's ever been in history; mortgage debts are at the highest level they have ever been in history. Households now have some 85% of their family assets tied up in one commodity, which is real estate. The American real estate market has certainly had some problems lately; we've seen lenders bring in 40-year amortizations. Scotiabank's brought in 0%-down mortgages. And here you are recommending people increase the amount of money, in fact double the amount the money, they can take out of their RRSPs to invest in the housing market.

Do you not feel, in addition to very cheap money and low interest rates today, this is adding a further impetus to an industry that may be wavering a little bit from having too many no-money-down mortgages or too little equity put into it?

[David Campbell]

Our purpose for suggesting we increase the rate is to stimulate more people in the rental market who are renting homes and those with lower incomes to have the opportunity to invest. If they haven't got quite enough capital to invest in the housing market, it would give them an opportunity to do so. Also, the rate hasn't been adjusted since its inception, and it's time to look at an opportunity to provide for those people to get into the housing market.