Finance Committee on Oct. 18th, 2006

[Ward Griffin]

All Canadian stamps are produced in Canada today.

[Pierre Paquette, Bloc, Joliette, QC]

So that we don’t have to put Made in USA, as NAFTA requires us to do, at the bottom of each and every tiny stamp.

In your document you mention the Jobs and Growth Tax Relief Reconciliation Act. In your recommendations, you say that this measure that was adopted in the United States could hurt small and medium Canadian businesses. Do you have more information for the committee about this American legislation?

[Ward Griffin]

Do you specifically mean the depreciation?

[Pierre Paquette, Bloc, Joliette, QC]

Basically, what is it about?

[Ward Griffin]

It relates to a question about the productivity of Canadian companies. Between May 5, 2003, and January 1, 2005, manufacturing companies in the U.S. could write off 50% fully of all equipment purchased, so a company that bought a $1 million press could take a 50% depreciation. In Canada, you would take 25% and half of that, so it would be 12.5%; you would record a cost of $125,000 versus $500,000. That was a stimulus plan from the U.S. It was a graduated plan starting after September 11, 2001.

[The Chair, Conservative, Brian Pallister]

I'm sorry, Mr. Griffin, we'll have to stop you there, .

We are forced, I'm sad to say, to conclude this discussion--not because it's concluding with you, Mr. Dykstra, but the conclusion is what I regret.

We'll continue. It is three minutes to you.

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

All right. I'll ask folks to answer questions quickly, because we're down to three minutes. That would be great.

Mr. Vukanovich, your final recommendation talked about safeguards to ensure that homebuyers benefit from this increased competition. Could you list a couple of them? It would be appreciated.

[Peter Vukanovich]

Mr. Dykstra, thanks for the question on safeguards.

Basically what we're trying to ensure is that it's lenders who choose the insurer. They are providing information and expertise to consumers, and we want those lenders to choose the insurer based on the products and services that we provide as suppliers. Any incentive, any commission, any sort of payment back to a lender to incent them to do business with an insurer should be returned to the consumer.

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

Thank you. I appreciate it.

The next question is for a representative from the airports.

A couple of times now the point has been made about the reduction in rents at the airports and the benefits that would occur. Just for interest's sake and also because it's about the third time we've heard the request, could you give me a couple of points on that?

[Jim Facette]

I'm surprised you haven't heard it more than that.

Suffice it to say that the immediate benefit is to reduce the costs to the airport. There are only so many sources of revenue that airports have available to them. Many of the airports have already committed very publicly to passing on any savings from rent reduction to the airlines and then hopefully on to the passengers.

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

Will they do it for sure?

[Jim Facette]

Yes.

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

All right. Thanks.

The next question I have is for Mr. Stewart-Patterson. I'm sorry, Mr. Stewart-Patterson, I'm going to nail you again. I just wanted to get your thoughts.

Employer training is one of the areas that you looked at and recommended with respect to tax credits. I'm just wondering if you could flip the switch the other way a bit and comment on the benefits of the apprenticeship tax credit process. It benefits employees, obviously, but it also does benefit employers. Do you support it as a group? Do you think we did the right thing there? Could we take further steps?

[David Stewart-Patterson]

I think support for apprenticeships has been useful. Skilled trades are basically an area in which we're already facing severe labour shortages, and it's only going to get worse. I think tax credits, on the other hand, are maybe not the most important thing on that front because the demand is there. Perhaps the most important thing comes down to interprovincial cooperation and the fact that apprentices who change provinces in the middle of a program lose their status. We need to have a more national approach to the apprenticeship process, because people are dropping out along the way. The biggest issue isn't getting people into apprenticeships; it's making sure they stick with the program and complete their qualification.

[The Chair, Conservative, Brian Pallister]

Thank you very much.

Gentlemen, I thank you for your time today. It's been a stimulating panel. We do regret that we don't have more time to spend with you, but I assure you that the committee members will be reviewing the briefs you submitted in detail, and again I thank you on behalf of the committee for being here.

I will dismiss this panel. I encourage the next panel to immediately ready themselves, so that we can have maximum time for discussion.

We will suspend briefly.

[The Chair, Conservative, Brian Pallister]

We will commence.

We are going to proceed immediately to testimony. I will give you a visual indication when you have a minute remaining, and of course I'll be forced to cut you off at five minutes to allow for questions. We are short on time because there is a vote today, unfortunately, so we'll move right to your presentations.

To begin, Robert Gillett, welcome. You are here on behalf of the Association of Colleges of Applied Arts Technology of Ontario. Five minutes to you, sir.

[Robert Gillett, Association of Colleges of Applied Arts Technology of Ontario]

Thank you, Mr. Chair.

I'm Bob Gillett, president of Algonquin College, in Ontario, but I'm also representing all colleges of Ontario today.

I'd like to begin by thanking the committee for giving us this opportunity to present to you. We would like to also say how much we support the recent decision by the Honourable Jim Flaherty to set capital funding aside for post-secondary education. It certainly is a necessity at this time.

We'd like to reiterate our support for the brief you've already heard from the Association of Canadian Community Colleges, and we'll reiterate some of the six points they've already made to you.

For those of you who don't know community colleges in Ontario, they represent 160,000 full-time students and 500,000 part-time students and offer programs and courses from apprentice courses right up to full degrees, and they have a long, successful history of doing that. They are very much a partnership organization with industry, labour, non-profit community-based groups, and others, and graduate approximately 60,000 new employees into the system every year. They serve about 25,000 apprenticeships, about 11,000 people in literacy, and about 27,000 young people in Job Connect. They also work in about 100 countries around the world.

Just for the members of the committee, employers express 90% high satisfaction with the quality of graduates they are receiving.

To turn to the central point of the presentation today, Mr. Chairman, we'd like to reiterate some of the points made by the ACCC--first of all, that we need to increase access to post-secondary education in Ontario. As you've seen, HRSDC has said that almost 75% of all jobs now require some form of post-secondary. We think that is going to continue to increase. Already in Canada we are seeing labour shortages in trades, manufacturing, nursing, and others. We believe that's a scenario the federal government should be paying a great deal of attention to.

We believe that for our country to continue to be as prosperous as it has been, we need to invest in quality, capacity, and access to Canada's post-secondary systems. Of course, we are speaking on behalf of colleges, which are the institutions that deliver most of the skills education. We believe that the massive cuts made to post-secondary education in the past have had serious impacts. We furthermore believe that the blend of post-secondary education transfers into the Canada health and social transfer group has actually taken away transparency and accountability back to the Parliament.

We would like to make the suggestion to your committee, Mr. Chair, that like health, we get exempted from that grouping and have a separate fund set up for colleges or post-secondary education in general.

We also see great needs in the infrastructure forefront, and because we have to take more students, because we need to increase access and get more people with a post-secondary education, we would like to see funding come from the federal government directly to the institutions to allow access to increase, and to increase the infrastructure and the equipment to meet the standards that employers need today.

We also see the need for training, and skills, and apprenticeship. There is a study that shows about $600 million is required to upgrade equipment to meet current standards for the new employment work sites. Mr. Chairman, we also believe that since there are equipment challenges in health, applied sciences, engineering technologies, and other skills training programs, we recommend that a very specific fund be set up with clear accountability to help that happen.

Mr. Chairman, we echo the six recommendations of the ACCC, and we would like to thank the members of the finance committee for giving us the opportunity to reinforce the points that have already been made to you. Colleges do create the skilled labour pool for the future, and we want to be key partners with all levels of government to ensure that every young person in Canada has that opportunity to have the prosperity that their parents and others have had in the past.

We thank you for that opportunity.

[The Chair, Conservative, Brian Pallister]

Thank you very much, sir.

Mr. Everett Colby is here on behalf of the Certified General Accountants Association of Canada.

Over to you, sir.

[Everett Colby, Chair, Tax and Fiscal Policy Committee, Certified General Accountants Association of Canada]

Mr. Chair and members of the committee, on behalf of the Certified General Accountants Association of Canada and our 68,000 members, we wish to thank you for this opportunity to appear before you and give voice to our thoughts and concerns regarding Canada's economic competitiveness, productivity, and prospects for growth.

By way of background, most of you know me from previous appearances. For those who don't, my name is Everett Colby, FCGA, and I'm chairman of CGA-Canada's tax and fiscal policy committee. I'm also a public practitioner here in Ontario. My client base is principally small and medium-sized businesses, as well as individuals across Canada and around the world.

Accompanying me today is Carole Presseault, vice-president of governmental and regulatory affairs.

You've received copies of our brief, as well as my remarks. They're available in both official languages.

We'd first like to congratulate the government, past and present, for one of the largest debt repayments in the history of Canada. The recently announced $13.2 billion payment will reduce the debt-to-GDP ratio to its lowest level in 24 years. Bravo Zulu to all of you for doing that.

This huge debt repayment is a testament to how well Canada has done in recent years. Truth be told, Canada has enjoyed a stellar performance in terms of inflation, economic growth, and employment, and we're leading the G7 in several macroeconomic categories. In fact, Statistics Canada recently released a notable report stating that employment has increased by 1.3% since the beginning of this year.

Notwithstanding these great achievements, we believe Canada can and must do better in order to remain competitive. We believe the best way that one can ensure the creation of real new wealth in an economy, both for individuals and families, is through the enhancement of productivity, which has been a focus of this government. In an increasingly globalized world where we're competing with everyone from China to Russia, Brazil to the United States, we have to be smarter, better educated and trained, and more productive. Frankly, we're not there yet.

In a recent study released by the World Economic Forum, Canada slipped from fourteenth to fifteenth place in the measure of business competitiveness. In 2001, we were eleventh. In 1988, we were in sixth. This is not a good trend. Since we've drifted down in the rankings, our trading partners have stepped up their competitiveness. We believe this is the main reason for this reversal.

We must ask ourselves the important question: how do we reverse this trend and re-establish ourselves as a world leader?

Mr. Chair, although our brief contains detailed recommendations on a number of areas, all of which would help restore Canada's economic competitiveness, my comments today will focus specifically on the need to reduce business tax and the need for regulatory efficiency.

In a recent address in Kingston, the Minister of Finance acknowledged the need to liberate the forces of investment in Canada, as well as the need to reduce federal taxes. The high effective tax rates that businesses must pay are, in our opinion, the most important issue to address at this time.

In 2006, Canada laid claim to having the sixth highest effective tax rate among the world's 36 leading industrialized economies. Although an improvement from 2005, this is hardly a stellar performance when it comes to going toe to toe with our leading competitors.

High taxes on capital pose a serious impediment to investment, and thus to future growth and productivity. Paradoxically, government's attempts to help the corporate sector with a host of policies, subsidies, and special programs actually inhibit a number of sectors of the economy. Many agree that lowering taxes on corporate investment and reducing subsidies and tax expenditures is a better approach. We agree.

Our second proposal addresses the growing consensus that to increase productivity, we must remain globally competitive. We have to reform the regulatory structures. Accordingly, we recommend to the committee these specific measures.

Simplify the tax structure while introducing consistency into the tax compliance system.

Regulate smarter. The government should streamline the regulatory regime in a concerted effort to reduce the compliance burden on business.

Finally, the government, along with the provincial and territorial governments, should address labour and trade barriers within Canada. Indeed, the Agreement on Internal Trade should be reinforced to include sanctions that would ensure that governments respect their internal trade obligations.

We thank you for your time. As always, we appreciate the opportunity to participate in this process, and we welcome any questions that the committee might have on these or other recommendations contained in our brief.

Thank you.

[The Chair, Conservative, Brian Pallister]

We appreciate your participation, sir. Thank you.

Tyler Charlebois is here on behalf of the College Student Alliance. Welcome. Five minutes to you, sir.

[Tyler Charlebois, Director of Advocacy, College Student Alliance]

Thank you. I am Tyler Charlebois. I'm the director of advocacy for the College Student Alliance, an advocacy and services organization that has proudly been representing Ontario's college students since 1967.

The alliance currently represents 16 colleges and 22 member councils, with over 109,000 full-time college and university-college students throughout the province of Ontario. CSA continues to be the strongest college-focused student organization in Canada.

Education is a life-long learning process. The future of our society depends on informed and educated citizens who, while fulfilling their own goals of personal and professional development, contribute to the social, economic, and cultural development of their community and of the country as a whole. Over the past decade, Canadians have let our investment in post-secondary education and training diminish, and now we can either sit aside and place blame or we can do the right thing, take responsibility, and start to fix that.

Provincial and territorial governments have started to take the first step toward reinvestment in post-secondary education, but financially strapped provinces and territories can only invest so much.

In 2005, the Ontario government laid out the Reaching Higher plan for post-secondary education and training. At the end of 2009-10, that will invest an additional $6.2 billion into colleges, universities, and training within the province. As a result of fifteen years of cuts and underfunding, though, you can imagine that this $6.2 billion is just going to start to lift our students' and our institutions' heads above the water. In order to make real progress in investments, the federal government needs to make post-secondary education and training a national priority once and for all.

Post-secondary education is not only about meeting the needs of learners, advancing, interpreting, and adapting knowledge, and providing an essential public service. As important as these functions are, education is also an investment, both prudent and visionary, in health and in combating poverty, crime, and unemployment. It is a major source of social cohesion and mobility, and it is essential to the development and continued prosperity of Canada and all of its regions.

The College Student Alliance would like to focus on three main priorities: a pan-Canadian accord for post-secondary education and training; through that, seeing a dedicated transfer for post-secondary education, echoing comments made by the Canadian Alliance of Student Associations and the Association of Canadian Community Colleges, echoed today by the Association of Colleges of Applied Arts and Technology of Ontario; and on the issue of accessibility and affordability of our post-secondary education and training system in Ontario.

In recent years, both the federal and provincial governments have responded to the needs of Canadians by introducing new financial and legislative initiatives aimed at improving our post-secondary education system. Unfortunately, these initiatives have often proven to be stop-gap measures at best.

Many of the problems facing our post-secondary education system are not simply a result of underfunding, but rather a lack of vision and cohesion. Various federal and provincial programs are not integrated toward a common purpose. As Canadians, we need to spend an enormous amount of time worrying about jurisdiction and how to get around it. It has become quite clear to all Canadians and students that a pan-Canadian dialogue on post-secondary education is desperately needed.

Competing for Tomorrow, the Council of the Federation's summit on post-secondary education and training, started the dialogue with stakeholders, but for accurate progress to be made in this development, the federal government must be at the table. The CSA firmly stands behind that and the development of a pan-Canadian accord on post-secondary education. We also believe that within that accord, there should be provisions acknowledging recognition of prior learning and mobility.

Regarding accessibility and affordability, we believe there needs to be a comprehensive review of the entire Canada student loans program, ensuring a focus on up-front grants to those underrepresented groups: those from the francophone community, aboriginal communities, students with disabilities, and those from low-income families.

We'd also like to have the government start a dialogue on the communication of what's going to happen to the Canada Millennium Scholarship Foundation. We firmly believe and support the Canada Millennium Scholarship Foundation. We've handed a letter out supporting that in the continuation of the millennium.

On behalf of the College Student Alliance, I'd like to thank the committee for giving us this time to present. I hope you'll take our recommendations and the recommendations of our colleagues in post-secondary education seriously and look at a real and proven investment and commitment to post-secondary education on the national stage.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, sir. I assure you that we will take them seriously.

We'll continue with Mr. John Toft from Families Matter Co-operative Inc. John, you have five minutes.

[John Toft, Secretary, Families Matter Co-operative Inc.]

Good afternoon. Thank you for this opportunity to speak to you about the concern outlined in the written brief presented to this committee on behalf of Families Matter Co-operative. That brief was prepared by me, John Toft, secretary of the co-op, and by Kenneth C. Pope, a Henson trust specialist. Copies of this brief have also been sent to the expert panel that is considering changes to legislation to help in estate planning for people with development disabilities.

The Families Matter Co-operative Inc. is for and about people with developmental disabilities. It is an Ottawa-based social cooperative with a mission to improve the lives of people with developmental disabilities.

I come to this committee as a parent of a developmentally disabled person, my adult autistic son, Adrian, and as a co-op member. My personal interest begins and ends with the perpetual support and advocacy for my son that my family and I undertook the day he was diagnosed with autism. This concern and advocacy is lifelong, and it will extend well beyond my lifetime and affect the lives and interests of my other sons, as they continue to advocate for and support him.

I want my son to live in reasonable comfort for the rest of his life. I want him to have a reasonable standard of living, reasonable housing, sufficient supports, worthwhile employment, and social and recreational opportunities. In short, I want him to be able to live as close to a normal life as possible and to be a valued member of society.

These goals are hindered by current taxation policies. My goal here is to urge you to take a leadership role in changing such policies at the federal level and in working with the provinces to see that the changes you make are not clawed back but enhanced.

One personal example illustrates the current taxation system. I am a retired teacher receiving an Ontario teacher's pension. On my death and the death of my wife, Ann, my son will receive a survivor's pension at 50% of my pension. Current provincial legislation allows for a dollar-for-dollar clawback for Adrian from his provincial support benefit, ODSP, of every dollar of my pension benefit that he receives. Through that clawback, his benefit could be reduced to zero, and he would lose his eligibility for drug and dental benefits too. If he then paid for such benefits from his survivor's pension, he could end up worse off receiving the pension than not receiving it.

Pension plan advisers tell me it is necessary to change legislation at both the federal and provincial levels to eliminate this effect. They and Ken Pope advise me that the solution is to allow such pensions to be placed in Henson trusts. There the money would be protected with no effect on a person's eligibility for ODSP benefits.

Legislative changes to enable parents and grandparents to roll over RRSP and RIF moneys into Henson trusts for the benefit of their children and grandchildren with development disabilities were considered in the February 2003 budget. Proposed amendments to the Income Tax Act to put these changes into practice were drafted and ready in 2003. We ask you, the finance committee, to recommend implementation of these changes, as well as similar changes to also allow pensions to be placed in Henson trusts.

The brief we submitted contained a number of other recommendations you may consider. However, the implementation of the specific changes just discussed would make significant improvements to lives of people with developmental disabilities.

The written brief concluded as follows: “By taking these measures and others along similar lines, more people with developmental disabilities would become contributing members to Canada. People currently considered to be burdens on society could become assets to that society.”

Members of the Finance Committee, you have the opportunity to recommend changes in legislation to provide that federal leadership and societal change. My dream and hope is that you will provide that leadership.

[The Chair, Conservative, Brian Pallister]

Well presented, Mr. Toft. Thank you very much.

We'll move to Mr. Art Field, who is here on behalf of the National Pensioners and Senior Citizens Federation.

[Art Field, President, National Pensioners and Senior Citizens Federation]

Yes, thank you. And thank you, members, for letting us come on. It was a last-minute thing. I have one package here, so I'll give it to the chairman.

We had a press conference today on income trusts. But first I want to explain our organization.

The National Pensioners and Senior Citizens Federation is a cross-Canada organization. It was formed in 1954 in Saskatchewan. I am a member of the executive and I live in Little Britain, Ontario. The first vice is Don Holloway from Marystown, Newfoundland; the second vice is Edda Ferguson from Truro, Nova Scotia, where we had our convention last month; the third vice is Lorraine Foster from Clarke's Beach, Newfoundland. She's a new member of our board. The treasurer is Joyce Mitchell from Trenton, Ontario, and the secretary is Fern Haight from Hanley, Saskatchewan. So we have a fair mixture across the country, and it wasn't designed this way. Our first vice--it was changed at the last the convention--was Art Kube and he was from Surrey, British Columbia. So we have a cross-section there.

Our mandate is try to make things better for seniors, to protect their interests. At our convention we had 90 resolutions that were debated and passed. We put those resolutions in a brief and then we came here to Ottawa to meet with government officials, opposition and whatever, and we sent them to every member, asking for a report.

A resolution on the income trusts was passed at the convention. I'll read you the resolve: “Therefore be it resolved: The National Pensioners and Seniors Citizens Federation resolves that the Canadian federal government use its constitutional jurisdiction to introduce new federal investor protection laws and enforcement governing securities, the setting of accounting and auditing standards.

We are starting to get a few horror stories on this income trust. Most people, even seniors, don't like to admit they've been taken and there is a problem on the income trusts with their broker or whatever. But here is one horror story: “My parents, ages 81 and 76--all the money invested is lost. This was most of my parents' life savings. My father became depressed from losing all his money. Coupled with the cancer that he had, this caused him to take his own life. A small investor.”

These are some of our problems. I have a couple of things I want to bring up that came from our convention. I'll just read the resolve: “Therefore be it resolved that the NPSCF go on record requesting our federal government to eliminate tax on all expenses.”

Now, I understand this came from the Newfoundland provincial senior citizens organization. I also understand there are some problems in the west. They don't do this, but we do it. It's all little bits of money that's hard to get if you don't have it.

Here is another one: “Let it be resolved that the National Pensioners and Senior Citizens Federation request the federal government to continue implementing the heating subsidy for seniors and low income families and that all heating costs be included.”

There was a government program for this. I was at the convention in Nova Scotia when there was a government person there outlining it, and it was eliminated in the next budget, maybe a week or two after that. Our brief mentions a few things that go on.

With that, I'd like to thank the committee for letting us come on at the last minute, and I hope you can ask some questions. I have one brief that I'll give to the chair.