Finance Committee on Nov. 9th, 2006

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

Thank you for the question, Mr. Savage. It's a very broad question.

There's no question that the federal government has and takes a role in post-secondary education, in terms of research and development, Canada research chairs, and so on. I'll have more to say about that two weeks hence. That relates to access, of course, and as the universities and colleges say to us, every dollar we get is a good dollar, and we use it for the benefit of our students ultimately.

With respect to tuition itself, if you're thinking along those lines, that is an area of provincial jurisdiction.

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

I'm not thinking of tuition so much. Statistics show us that enrolments haven't gone down while tuition has gone up, but among low-income Canadians, aboriginal Canadians, and persons with disabilities, enrolments have gone down. We have set up instruments like the Millennium Scholarship Foundation, Canada access grants, and the Canada learning bond, which are playing a very significant role. The millennium scholarship, which had some stumbles earlier, is now widely supported across the country and by the provinces with the exception of CFS.

You mentioned earlier that direct grants were straying into an area of provincial jurisdiction. Are you suggesting the federal government should not have any role in direct grants to students?

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

No, I was speaking about setting tuition rates, which I think most people agree is a provincial matter.

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

The 10-year mandate of the Millennium Scholarship Foundation, as you know, is running out in 2009, and there was a strong cry from people who appeared before us to replenish that money to the tune of some $3.5—

I'd like to ask you about the fitness credit. On January 15, the Conservative Party responded to David Hardy from Fitness Industry Canada by saying the Conservative government would consider extending such a plan, that is, the physical fitness plan for children to promote physical activity, to cover gym memberships for all ages, should the fiscal framework allow such a measure.

Is the $13 billion surplus sufficient, in your view, for the fiscal framework to allow such a measure?

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

Well, it depends on what choices one makes, of course, which is what budgeting is all about.

That issue was raised before the special panel I appointed to review the children's fitness tax credit. They just reported within the last couple of weeks. It's a very good report; I've had an opportunity to read it. Now we have to give it proper consideration in terms of how we formulate the credit that will come into force January 1, 2007—it's quite close. So we're focusing on children and the physical activity of children because of the concerns with obesity, of course.

In Canada, yes, we can look at a broader tax credit in the future, but it has to compete with many other priorities.

[The Chair, Conservative, Brian Pallister]

Mr. Paquette, you have four minutes.

[Pierre Paquette, Bloc, Joliette, QC]

On December 19^th, Mr. Harper made a commitment to eliminate the fiscal imbalance. He repeated that commitment in the throne speech, and you repeated it in the budget speech. What kind of work has the department done on this? How far along is the process? What do you see happening between now and the next budget? We expect to see significant measures in the budget that you will be introducing in late winter or early spring. I would like to have an explanation from you on that.

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

Yes, a great deal of work is being done in the Department of Finance and other relevant federal departments on issues relating to moving from fiscal imbalance to fiscal balance. The process is being followed, as was outlined in budget 2006. Various ministers have been consulting with their colleagues in other governments in Canada, and I've had consultations, of course, with the other ministers of finance. I'm going to ask the other ministers of finance to come together and meet with me. We'll meet in December of this year, obviously.

[Pierre Paquette, Bloc, Joliette, QC]

Has the December meeting with the other ministers of Finance been set up already or are you saying that you wish there would be one?

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

I do wish to have the meeting, and we intend to have the meeting, in December. I hope everyone can get together. In the past couple of weeks we've been trying to find a mutually convenient date; it's not so easy with 14 ministers, or a bit of a challenge, but we want to do that.

And you're correct that we want to move forward in the new year with initiatives, we hope with consensus—not unanimity, which is unlikely—on issues of fiscal imbalance and equalization.

[Pierre Paquette, Bloc, Joliette, QC]

Do you intend to produce a document before the budget, or will the measures you plan to take to deal with the fiscal imbalance be contained in the budget?

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

In terms of public documents and the issues being discussed, it's no great secret there is a health care agreement between the provinces and the government that is being honoured, a 10-year agreement with a 6% fixed escalator built into the base, so it's more than 6% going forward. And post-secondary education, which Mr. Savage raised, is one of the primary areas of discussion in the ongoing discussions, and of course, infrastructure and some kind of sustainable long-term plan for infrastructure is also a major part of the discussions with our colleagues.

[Pierre Paquette, Bloc, Joliette, QC]

You increased the budget for the Financial Transactions and Reports Analysis Centre by nearly $9 million. Does that take into account the extra responsibilities that the centre will have if Bill C-25, the money laundering bill, is passed?

[Jeremy Rudin, General Director, Economic and Fiscal Policy Branch, Department of Finance]

The estimates contain funding to do more to fight money laundering, but the money being sought today is aimed at meeting existing pressures on FINTRAC. When the new act is implemented, the department will have to ask for additional monies for that purpose.

[The Chair, Conservative, Brian Pallister]

Merci beaucoup, monsieur.

We'll continue with Madam Wasylycia-Leis.

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

Thank you, Mr. Chairperson.

Mr. Minister, your department estimates that the extension of the war in Afghanistan will pose additional costs of $1.9 billion over the remaining three years in that region. My first question is, do you agree with that estimate?

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

Yes.

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

Yesterday the Prime Minister said that we really can't afford, or he can't afford, to keep his promises, your promises, to veterans of this country. How much fiscal pressure is the war putting on program expenditures?

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

The cost of the reconstruction and the military effort in support of the reconstruction in Afghanistan is part of the fiscal framework. It has been built into the fiscal framework and therefore is not putting pressure on other initiatives, which are also part of the fiscal framework. We did this together when we planned budget 2006.

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

Do you see that you might have the fiscal flexibility to actually keep your promises to veterans, then, in the near future?

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

It's a very good question.

In terms of veterans programs, we will review them, of course. As part of the preparation of budget 2007, we made a very substantial change just on October 31 with pension splitting, because many veterans have only one pension coming in, or unequal pensions coming in, and this will give them an opportunity to save significant amounts of money so that they can live better.

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

We had Mr. Jack Frost, who's the president of the overall national Royal Canadian Legion, before our committee, and he made a very simple request, that we extend survivor benefits from 50% to the going rate in other areas, of 65% or 66%. Is it going to cost a lot to do that? Why can't we do it now?

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

I don't have the figure off the top of my head, but I'll take it under advisement, certainly, and consult with the Minister of Veterans Affairs.

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

Thank you.

Specifically in the Department of Finance, you have a direct responsibility for FINTRAC. The budget has been increased with the supplementary estimates by about $8 million. We know by the description that's to deal with the additional charges, the costs, with Bill C-25.

I would like to know how much of that you will actually put towards the increased regulations, being regulatory costs that will have to be incurred by small financial institutions. I'm thinking of credit unions and other small institutions that help send money overseas, a whole raft of tiny little organizations that are going to face enormous costs. How much of this will go to help them, and what specifically are you planning to do to ease the burden on them?

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

I think the answer to your question is none. I think the money that's allocated for FINTRAC is for the operations of FINTRAC.