Finance Committee on Nov. 9th, 2006

[Jeremy Rudin]

The amount for which approval is being sought today is for existing pressures on FINTRAC. Bill C-25, of course, has not been passed yet, and so it will be after the passage of the bill that we'll have to come back and ask for any additional appropriation for FINTRAC for its additional costs in relation to new responsibilities arising from Bill C-25.

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

This is an issue we heard about during our hearings on Bill C-25, and I think it's incumbent upon us to deal with them. Can you at least give us some indication of how you plan to deal with them? In particular, is there the possibility—

[The Chair, Conservative, Brian Pallister]

Thank you.

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

Can I just finish that question?

[The Chair, Conservative, Brian Pallister]

No, I'm afraid not.

We'll continue with Mr. Dykstra now.

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

I'm not going to give up some of my time to Judy, I'm sorry.

The minister mentioned the work of the committee that went across the country to listen to presentations with respect to the child fitness tax credit, under the leadership of Dr. Kellie Leitch. Could you comment further on what was the outcome of those hearings and the nature in which we'll move forward with that credit?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

The committee consisted of three people. They did a great job and gave a lot of their time for their country. They were paid for their work, a grand total of $1 each, and they were willing to do that. All three of them are busy, professional people. One is the head of the Y in Canada and the other gentleman was an investment dealer from British Columbia. They gave of their time freely to consult with Canadians. To me, that's the right spirit for those kinds of endeavours.

They wrote a terrific report that's quite detailed, focusing on physical activity for children. They get into cardiovascular testing, and that there should be an element of that in the activity. They heard a lot from Canadians, of course, about other activities that children engage in that aren't necessarily physically active and whether there should be some consideration for that in tax policy. Certainly that's something that can be looked at. But this credit was designed and announced in the budget for physical activity because of the concern we have, which I think many Canadians share, with the sedentary behaviour these days of children and the associated long-term health consequences. Those are also reviewed in the report in some detail.

It's a great report. It's available through the website of the Department of Finance, and I encourage people to take the opportunity to read it. As I say, I've read it, but I have to now, with my colleagues, consider it and decide what steps to take before January 1.

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

One of the points that Mr. McKay made, and I don't know if you got a chance to finish it up, was on the $234 million that we're investing in public transit infrastructure. I also want to tie that in a bit to the $800 million that was announced in the budget with respect to affordable housing across the country. The way we're actually handling the distribution of those funds is through a capital trust or a housing trust fund.

Could you describe the rationale behind that?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

The rationale behind it is that we use a third party trust mechanism and then the provinces access the trust moneys for the purposes the trusts are designed for, one being the public transit trust, which is already being used to acquire rolling stock, which is important and expensive. In particular, environmentally friendly rolling stock is quite expensive in Canada. Also, the affordable housing trust is designed to try to alleviate housing needs of low-income people in Canada. That's very important in an increasingly urban society in our larger cities.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Dykstra.

We'll continue now with three-minute rounds. Mr. McCallum.

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

Minister, this group spent many hours and days crossing the country and listening to Canadians. And more to the point, I would say hundreds of Canadians, if not thousands of Canadians, put together briefs and information that they wanted to convey to the government through us. My concern is whether those Canadians will effectively be listened to, because I note that your new economic plan for Canada will be presented on November 23 and we're only meeting on November 21 to do our report, which will report on those views of Canadians. I would imagine that two days before your presentation that economic plan for Canada will pretty well have been crystallized, and you won't have much opportunity to hear the input of all these hundreds of Canadians that we have heard.

How are you going to take these views into account when there are only two days between our doing our report and your doing your plan?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

The plan, of course, is directional and thematic and something more than that. It's not just that, but it's primarily that. It's not designed to be a mini-budget or a substitute for the budget. The budget process in which this committee plays such an important role continues to be the important budget process that it is. And I will take into account, I assure you, the report from this committee and what I've heard from this committee.

I've already heard from various members about different things that were heard in different places, including from Diane Ablonczy, my parliamentary secretary. We will be carefully reviewing the report of this committee as we prepare the budget, which I view as the implementation of the economic plan--what steps does one take in order to implement the economic plan. I think the report of this committee will be very helpful in that regard.

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

Thank you.

My last question returns to this issue of a panoply of little tax credits versus broad-based tax relief. I have always favoured, and our previous Liberal governments have favoured, broad-based tax relief, partly because generally it's agreed that this is better for productivity than the panoply of tax credits. It's also less costly to administer.

As well, as I've said before--and I know you don't like this very much--there's an element of social engineering when the government says you get money if your children play soccer or hockey, but you don't get money if your children play the violin or do dancing. My contention is that it's up to families, not government, to make the decision as to what is best for their own children. That's another reason to be in favour of broad-based tax relief versus little tax credits.

Can you or your officials tell us--this is my specific technical question--the cost of implementing these tax credits, which would not occur with broad-based tax relief?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

I can go through each tax credit, since each tax credit is costed, but I don't think—

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

The administrative costs, I mean.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Oh, the costs of administration. I don't think I can give you that answer.

I'm sorry I'm not living up to your standard as a conservative. I know that you and Mr. McKay are concerned that I'm some kind of failed conservative, in your eyes. I'll try to do better going forward.

[Some hon. members]

Oh, oh!

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. McCallum--and thank you for trying to do better, Mr. Minister. We appreciate that too.

I'll use my chair's prerogative here to venture one observation. I think it's unfortunate, many times, that the message we send as parliamentarians to Canada's youth is that you should sit and sometimes act less appropriately than one might hope. That we don't often exercise in front of the Canadian people is kind of self-evident; this process we've just been through has required us to sit and listen for six weeks.

I want to particularly speak in support of and to thank you for the tax credit encouraging children to become more active, encouraging families to pursue that. I think for lower-income families in particular this tax credit will be more significant, more meaningful.

So I want to speak positively to that--and put a plug in for bowling while I'm at it. We can argue about the various things that should be included, and of course that's part of the criticism of the plan, but including nothing is not the answer.

That doesn't require an answer, Minister. It's just a positive comment.

Monsieur St-Cyr.

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

Thank you, Mr. Chairman.

This morning, before you arrived, we were discussing the GST rebate for foreign visitors who make a claim once they are back home. There were not many people who supported that measure, which was announced earlier in the fall along with other measures. It seemed to me that even our Conservative colleagues were not showing great enthusiasm for that proposal. Did you look at other possibilities for reducing the administration costs of that program, while maintaining the competitive advantage that it provides to the tourism sector in Canada?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

I would describe that tax exemption as inefficient to achieve the goal. If the goal was to encourage tourism in Canada, the evidence wasn't there in any strength that the exemption was doing that. In fact, it was a very expensive tax to collect, and it was not claimed by most people who came to Canada.

As well, it was not reciprocal. Canadians do not have a similar benefit when they visit the United States, for example--except, as I recall, in the state of Louisiana, where one can get a reciprocal treatment for consumption tax.

So it was an inefficient tax that was expensive to administer. That does not mean that we ought not to support tourism in Canada, because we do, substantially. And perhaps we should do more.

[The Chair, Conservative, Brian Pallister]

Thank you, Monsieur St-Cyr.

Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Mr. Chairman.

Mr. Finance Minister, I have just a quick question. I want to go back to something that was mentioned by Mr. McCallum a little while ago pertaining to the Canada-Ontario agreement.

I appreciate, first of all, that the agreement is fully funded, but did that agreement preclude the government from giving benefits to Canadians living elsewhere? Mr. McCallum seemed to be indicating that because we are funding programs elsewhere, we're somehow not living up to our Canada-Ontario agreement, but to me the two are completely unrelated.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Obviously, I share that analysis. The agreement was not exclusive of benefits that might be extended to other people in Canada, clearly, but there are very substantial benefits for Ontario in that agreement. It's a generous agreement to our home province of Ontario. As I noted in the example earlier, there's $300 million for infrastructure that no jurisdiction in Canada will receive other than the province of Ontario.

[Dean Del Mastro, Conservative, Peterborough, ON]

Right. Thank you.

[The Chair, Conservative, Brian Pallister]

Mr. Pacetti.