Finance Committee on Oct. 16th, 2006

[The Chair, Conservative, Brian Pallister]

Unfortunately, you will have very little time to answer.

[Bob Friesen]

Yes, and similar examples could be used. We would very much support that as well.

[The Chair, Conservative, Brian Pallister]

Thank you, sir.

We'll continue with Mr. Dykstra, six minutes, sir.

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

Thank you, Mr. Chair.

I want to direct my first question to Mr. Woolford.

On page 2 of your executive summary, you put forward an interesting statistic in terms of the reduction in the GST and what that would mean to household incomes. You say here that it has actually raised the household income “by more than the annual average increase for the past 15 years”.

Could you expand on that, on exactly what you mean?

[Peter Woolford]

I'd be glad to.

When we did our simulations this year, we found that the average household real disposable income went up by about 0.27% a year over the last 15 years. In 2005 it went up by an average of 0.47%. Sounds pretty good; that one change that the government introduced on July 1 increased real disposable household income by over half a percentage point.

So that one policy move by the government did more than twice as much for Canadians' real disposable incomes than they'd been able to do for themselves over the last 15 years, and more than was done for themselves in a strong economy in 2005. This was a very powerful tool for increasing the incomes of Canadians.

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

Thank you.

One of the things you commented on in your presentation was that federal revenues grew--if I understand this correctly--20% faster than did personal disposable incomes.

[Peter Woolford]

Actually, you've understated it; they grew 20 times faster. The average rate of growth for federal revenues was over 5% a year, over those 15 years, while Canadians were chugging along at 0.27%. The federal government, with its power to tax, made sure it paid itself first.

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

Interesting.

When you were presenting to the committee in the past, what kind of recommendations would you have made to the former government?

[Peter Woolford]

We've been a broken record on this, Mr. Dykstra. For many years the Retail Council has come here asking for tax reductions.

We did support previous government efforts to get the deficit under control, and reluctantly we agreed to some very heavy tax increases in the mid-90s. But since that time, we've been speaking with increasing urgency about the need to return money to Canadians.

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

Thank you.

I have another question for the Electricity Association.

Again, talking about the GST, I know my good friend across the way will continually ask the question of whether a GST cut is better than a personal income tax cut. I think that compares itself to asking whether you love your son or your daughter more, so I hope you'll at least understand where it's coming from.

When I look at the point made that Canadian consumers would save an estimated $220 million per year on gasoline when the GST is reduced to 6% from 7%, I have two questions for the Electricity Association: one, is that a positive impact, and two, has the industry, you feel, passed along those savings to the consumer?

[Hans Konow]

Any time money is left in the pockets of consumers, I think it's a good thing. Certainly in the area of electricity, where changes were made, it would automatically flow through to consumers.

Most of our provinces are...well, they're all provincially regulated, but most of them live in regulated electricity markets, so the price of electricity is determined by regulation, not by the functioning of a market. Only Alberta has a more or less conventional open market.

On most occasions, then, it has become part of the cost of doing business, and therefore it is passed along to the consumer.

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

In terms of the first recommendation you made—to re-enact the class 24 for air and class 27 for water to incent the electricity industry to improve air quality—how would that work in the short term? Also, have you projected what the cost might be to the federal taxpayer?

[Hans Konow]

The benefit would be to incent the investment in these clean technologies by reducing the associated tax burden. Basically the technologies involve the bolting on of large chemical facilities to the back of a power plant. So any way in which we can reduce the cost of doing this would reduce the cost of power and flow through to consumers.

[The Chair, Conservative, Brian Pallister]

Merci, monsieur.

We'll continue now with Ms. Wasylycia-Leis, for six minutes.

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

Thank you very much. I've got a ton of questions.

Let me start with Bob Friesen. Thank you for your excellent brief.

Do you want to make any comments about the government's decision to put a gag order on the Wheat Board? Because I know you talk in your paper about the whole movement for cooperation and a cooperative approach in agriculture.

Secondly, on the international issues you raise, given the breakdown of the Doha round of talks, what should our government be doing next to get that moving?

[Bob Friesen]

On the question about the Canadian Wheat Board, the CFA has been on record for a long time that farmers need all the tools possible to empower themselves in the marketplace. To the extent that there are farmers who believe the Canadian Wheat Board does this, we believe that the monopoly powers of the Canadian Wheat Board should stay in place.

Having said that, if there are those who would like to evaluate this and have an analysis done, we further believe that this should be done. Then farmers should vote on whether they want to maintain the monopoly powers of the Canadian Wheat Board.

With regard to Doha, we need to get the legs back under Doha as quickly as possible. However, no deal is better than a bad deal. If you look at the issue of domestic support, the proposal the U.S. put forward to reduce their domestic support simply wasn't enough to make a significant difference where our farmers continue to compete against the U.S. government treasuries.

If you look at the E.U. proposal on market access, that wasn't enough either, because we need more profitable market access around the world to develop our export markets.

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

Thank you.

Peter, let me ask you about your suggestion for the harmonization of the sales tax. The concern from some provinces—especially from my own, Manitoba—is that this would be tantamount to seeing people pay tax on such things as fuel and children's clothing, which are now exempt. I know you reference some ways to prevent this, but I don't know how you would make that not happen.

[Peter Woolford]

No, we would continue to support the current GST base, so we would not support removing any products from it. We feel that a broader base is better than a narrower one.

Our concern is simply that merchants have the opportunity to show their prices without the tax included in the price, because if you don't allow that, you destroy the national market.

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

Michael, you have a number of really important recommendations for helping small business. Based on the way you put your list, I gather that the first priority would be to increase the level to $500,000 for a small-business cut-off.

[Michael Tinkler]

In terms of quick hits, Ms. Wasylycia-Leis, I think the recommendation that would probably have the most impact would be the increase in the capital cost allowance on information and communications technologies.

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

Do you have any idea how much that would cost?

[Michael Tinkler]

We haven't done that calculation.

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

Okay.

Andrew, on a very important presentation on dental care, we had a debate in the House, and Parliament adopted a seniors charter, which called for moving towards free pharmacare and dental care for seniors.

I'm not under any illusion that this government is going to act on that. It would be nice, but in the absence of this, which of your recommendations would be most likely to get support from the Conservatives? And which would be most cost-efficient from their point of view?

[Andrew Jones]

We're not here to advocate for universal coverage for seniors. We support optimal oral health for all Canadians, to be provided through a delivery system that's open and flexible. I talked about the current system being positive between insurance, patients, government, and dentists themselves. We advocate five points to an open and flexible delivery system. First, patients should be free to attend a dentist of their choice. Second, long-term relationships between dentists and patients should be encouraged and fostered. Third, dentists and patients should be able to make treatment decisions in joint consultation free from third-party interference based on coverage. Fourth, we should recognize that dentists are the only oral health care providers able to diagnose and make full oral health plans for patients. Fifth, a patient's private health information should be protected, both by the dentist providing care and by the government institution funding it.

We realize that in the future we may be looking at many different options. Today we presented our options. The key is that any system we come up with should be open, flexible, and based on these five points.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Madam.

We continue now with Mr. Savage for four minutes.