Finance Committee on Dec. 3rd, 2007

[The Vice-Chair, Liberal, Massimo Pacetti]

Good afternoon. We're going to get started.

The way it's going to work is we'll allow all the presenters five minutes for their opening statement, their opening brief, and then we'll have the members ask questions.

Some of the members are obviously missing. There are a few problems, and one of them is the weather, so that's why some of us are not dressed as we normally are dressed. Secondly, there was also some confusion with a bill that has also been referred to our committee. It's a budget bill, so there was lack of planning on the government's side on that one.

What we'll do is when we start the rounds with the questioning I'll explain to you how that works. We need to keep it to five minutes. I'll hold up my finger when you have a minute left in your presentation. If we can keep it on time, I'd appreciate it.

Anything you say is going to be recorded. There will be transcripts, so not to worry. Regular members of the committee will be looking at your briefs or at the transcript of the meeting. They will be made available on the Internet for anybody who wants to look them up later on.

We start with the order that I have here. I have l'Association des infirmières et infirmiers du Canada.

Mrs. Neufeld, go ahead. You have five minutes.

[Kaaren Neufeld, President Elect, Canadian Nurses Association]

My name is Kaaren Neufeld. I am the president-elect of the Canadian Nurses Association. The CNA represents some 129,000 registered nurses throughout the country. Thank you for this opportunity and for having my remarks tabled and appended as minutes.

The CNA believes that the tax system is a powerful tool, and given its importance, CNA recommends changes to the tax system to support the health of Canadians and a healthy economy, in order to sustain the claim made in the October 2007 Speech from the Throne.

In particular, CNA sees the opportunity to encourage actions to modernize health sector infrastructure and to promote innovation in health delivery. From CNA's perspective, a strong health sector has created a strong foundation for Canada's current economic prosperity. By comparison, take U.S.-based Starbucks, which spends more on health care insurance for its employees than it spends on the raw materials to make its coffee.

CNA's brief is organized around four areas for action. Taken together, they strengthen the economy, we believe, and improve timely access to quality health services. These four areas are information and communication technology, skill enhancement training, children's health, and obesity.

Today I will speak to the first two recommendations.

Information and communication technology offers solutions to issues of access to health services. ICT investment will bring the health sector into the 21st century and help make the health system competitive, effective, and efficient. Take, for example, the emergency department at the Scarborough general hospital, which is currently piloting self-serve kiosks, similar to those you see in airports, to register patients with minor ailments, so that the triage nurse is free to deal with critically ill patients.

We also know that two-thirds of deaths in Canada result from chronic diseases such as cancer, diabetes, and mental illness. Canadians with chronic illness are supported by community-based services that occur in their home, in clinics, and in seniors' centres. We know that people with chronic illness do not get the follow-up tests and control that they need for their disease. An electronic system would allow health professionals like the 3,000 oncology nurses across Canada to assess and monitor progress and to generate electronic reminders for patient checkups.

Canadians who live outside urban centres are often required to travel great distances to get health services or to greet and meet specialists. Applications like Telehealth enable service provision 24 hours a day, seven days a week, in every urban, rural, and remote location throughout Canada.

Many of Alberta's 25,000 registered nurses work in rural settings. Community-based nurses throughout Canada use laptops to access test results and clinical guidelines. Providing a GST rebate to registered nurses or their employers for investing in laptop computers and cellphones would cost a mere $96 per nurse. The investment would mean better access to services by reducing visits to emergency rooms and specialist physicians and by averting the need to fly from communities. Throughout the tax system the federal government can create a business environment that encourages efficiencies, so to promote the purchase of ICT tools, CNA recommends that corporations that invest in information and communication technology for the health system receive a 100% rebate of the goods and services tax charged on ICT purchases.

The second issue I would like to address is providing effective economic leadership by supporting skills enhancement training. The Speech from the Throne six weeks ago promised that the government would support Canadian researchers and innovators in developing new ideas and bringing them to the marketplace. CNA applauds this commitment, and we believe that enhancing the skills and knowledge of the workforce is a key element for delivering on this commitment. CNA recommends that the tax system be changed so that Canadian workers and their employees will be rewarded for investing in skills development by receiving a credit against their EI contribution.

Canada has a well-educated and highly skilled workforce. However, consider these facts:

The Conference Board of Canada reports that 42% of Canadians between the ages of 16 and 65 have literacy levels too low to allow them to be fully competent in most jobs within our economy. In 1996, employers invested $842 per employee in training, while in 2006 they invested only $699. CNA recommends that the tax system be changed to encourage investment in skills enhancement training. CNA sees the employment insurance program as a vehicle to achieve this. The purpose of Canada's employment insurance program is to maintain a stable workforce; the EI program currently has a multi-billion-dollar surplus. Employees and employers both pay payroll taxes for EI.

In conclusion, CNA notes that in the previous budget the government made positive steps to promote a healthy environment and a prosperous economy.

Given Canada's leadership role in today's knowledge-intensive global economy, CNA recommends tax changes that will enhance the productivity of all Canadians, in particular, the health sector and its employees.

Thank you.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you.

Next we have Ms. Jessen from the Canadian Parks and Wilderness Society, B.C. Chapter.

[Sabine Jessen, Conservation Director, Canadian Parks and Wildnerness Society - B.C. Chapter]

Good afternoon, Mr. Chair and members of the committee. I'd like to thank you for this opportunity to present on behalf of the Canadian Parks and Wilderness Society.

We'd like to start by acknowledging the investments that were made in last year's budget to begin addressing conservation needs, in particular for protected areas in the Northwest Territories, species at risk, and for health of the oceans.

I'd like to tell you a little bit about the Canadian Parks and Wilderness Society. We are Canada's voice for wilderness. We were established in 1963 and we've been instrumental in protecting over 400,000 square kilometres of Canada's most treasured wild places. We operate from 13 chapters that cover nearly every province and territory and we have a strong base of support in our 20,000 supporters across Canada.

Nature is at the core of who we are as Canadians. Our spectacular land and seascapes and their natural riches have shaped our past and our current identity. How we treat Canada's lands and waters and the ecosystems they support will determine our future.

The need for decisive action to implement a conservation vision is more important than ever because of climate change. As the world gathers in Bali, Indonesia, to determine the actions needed on a global scale to combat climate change, we need to recognize that Canada will need to take action on both mitigation and adaptation fronts. There is a strong scientific consensus that human-caused climate change is already harming the health of the earth's ecosystems, which are our planet's life support system.

To ensure the survival of healthy ecosystems in this era of climate change, Canada needs to take immediate and decisive action to reduce our greenhouse gas emissions. It's also extremely important that we act now to protect our remaining wilderness. Canada's wilderness is vital to Canadians and to the world as a source of clean air, clean water, and a vast carbon storage reservoir, as well as being a key factor in protecting biodiversity.

Canada needs to follow Australia's example by completing systems of protected areas on land and sea and ensuring that these are linked together as a network by encouraging compatible activities on working landscapes. The federal government needs to lead Canadian action towards this bold nature conservation vision.

Delivering on this vision in Canada will require strong collaboration among the federal government, provincial and territorial governments, first nations, private landholders, and other partners. The federal government has a critical role to play in delivering on conservation priorities within its own jurisdiction and providing leadership among all levels of government and other partners to implement Canada's commitment.

We've identified six key actions that the federal government should take to protect healthy ecosystems in the face of climate change. First of all, we need to include land, ocean, and freshwater wilderness conservation as part of a comprehensive climate change strategy. Second, we need to complete the national parks system and other forms of federal protected areas across Canada, and ensure their connectivity and long-term ecological integrity. The third key action is to protect large ecosystems in Canada's north in advance of industrial development. The fourth is to protect ocean and freshwater ecosystems through better planning and management of human activities. The fifth is to complete Canada's network of marine-protected areas, including national marine conservation areas and marine wildlife areas in all of our oceans and great freshwater lakes. And the sixth key action is to protect and restore habitat for species at risk.

I'm going to just focus on two of these, which are national parks and oceans, in this presentation.

Canada's national parks have been a source of great pride for Canadians for over 120 years. However, our parks system is not yet complete and our existing parks face growing threats to their ecological health.

There is an opportunity for this government to step in and complete the national parks system, an initiative that would be hugely popular with Canadians. However, a funding gap still exists to secure long-term protection for all of our national parks.

On the oceans front, the scientific evidence is conclusive. Globally, marine ecosystems are imperilled and scientists around the world have demonstrated the important benefits of establishing marine-protected areas to protect biodiversity, ensure the resilience of marine systems, and facilitate species' response to climate change.

I'd like to focus on the key financial implications of what we are suggesting and the investment that we believe is required.

We are also a member of the Green Budget Coalition. This is consistent with the recommendations we have developed as part of the coalition for an investment over five years of $851 million, and $212 million thereafter. This includes, on the oceans front, $286 million over five years, with $82 million per year thereafter; and for national parks and other federal protected areas, $565 million over five years, with $130 million per year thereafter.

This funding would produce enormous results in biodiversity conservation in Canada. It would result in 35 new marine protected areas, eight integrated oceans management plans, 11 new national parks, six completed national parks, more effective protection of these treasured ecosystems, and a revitalized system of national wildlife areas and migratory bird sanctuaries.

[The Vice-Chair, Liberal, Massimo Pacetti]

Next, from the Partners for Rural Family Support Center, is Ms. Hyde.

[Jo Ann Hyde, Executive Director, Partners for Rural Family Support Center]

I'm Jo Ann Hyde, and I'm the executive director of Partners for Rural Family Support in east-central Saskatchewan. We are a non-profit charitable organization.

I'm going to talk today about the effects of domestic violence, our financial responsibility towards that.

Probably the greatest issue, the issue that is most widespread and most costly to society today is domestic violence. Its ripple effect is felt in our communities, economy, businesses, law, justice, health, education. It's pervasive.

We currently spend approximately $4.2 billion annually on the fallout produced by domestic violence. That's an old figure, about three years old. I couldn't find one more current, so it's likely we spend more than that now.

We have safe houses in Canada, and when I think about that, when you think about safe houses, it doesn't make sense to me. Is that not like a refugee camp? Why do we have to have places that keep women and children safe? We have those because we are tolerant towards the continuation of violence. Instead of focusing on prevention and intervention, we're focusing on the fallout, on the crisis.

Domestic violence is pervasive in that it knows no income restrictions and it is across all ages, all religions, all cultures, the geography of Canada. Domestic violence is everywhere. It is true, however, that some conditions allow it to flourish, for instance, isolation. And we know that to be true because all we have to do is listen to what is happening in our Northwest Territories or Nunavik, or unfortunately, in my own home province of Saskatchewan.

For Saskatchewan women, isolation is a way of life, and I see that daily in my agency. My agency is located in a very small, tiny city of 5,000 people in central Saskatchewan, and we offer services to a surrounding district of a 100 kilometre radius. Of course those lines are quite loosely defined. If someone calls me from 250 kilometres away and she is isolated and she is in danger, I'm going to help her. She obviously doesn't have the kind of help she needs right there.

This agency works in terms of prevention, education, and information. Four days ago I had an incident happen in my agency that with the help of the police we managed to dissipate; we managed to control the situation. If we had not been there, quite likely the amount of money that would have been spent for the woman in the hospital in intensive care, for justice to become involved, for foster care to become involved, for welfare to become involved, would have been between $200,000 and $1 million, just for that one family unit, just for that one incident that happened last week. Instead it cost three hours of my time, an hour of the RCMP's time, and a wee bit of overhead.

Funding is the most difficult thing for us to garner, and I don't know why. We operate 80% on grants. Grants are criteria-specific, so while they are wonderful to get, it means that we have to gear it specifically towards, say, cyber-safety.

I've never yet read on a grant where it says, “And oh, by the way, feel free to use some of this money towards your rent or your utilities or your wages.”

I am going to have to close my doors. December, somewhere around Christmas, I'm out of money. My next grant comes February 1, and I can't find any federal, provincial, municipal, or urban government that will say to me, “Here is $10,000 to pay for your bills.” Yet last week I saved all levels of government between $200,000 and $1 million.

Thank you.

[The Vice-Chair, Liberal, Massimo Pacetti]

From RESULTS Canada, Mr. Salmon.

[Blaise Salmon, President , RESULTS Canada]

Good afternoon. I'm Blaise Salmon. I'm president of RESULTS Canada. RESULTS is a citizens' advocacy group with chapters across Canada, and we work to generate the political will to end the worst aspects of hunger and extreme global poverty.

We are members of both the Canadian Council for International Co-operation and the Make Poverty History campaign, with the support of more than a quarter million Canadians.

Extreme global poverty has a negative impact on global security, on public health, on the environment and on the economy. The reality is that 1.2 billion people around the world live in extreme poverty, attempting to survive on less than $1 a day.

Globalization has been good for Canada. Our economy is among the strongest in the world according to the OECD, and global trade has been a key driver of our economic strength. The value of trade as a percentage of GDP in 2005 was 60%. However, global poverty and instability can have serious implications for our economic outlook.

The millennium development goals are the global blueprint designed to focus international effort to fight extreme poverty. These goals, agreed to by most nations of the world, including Canada, have set practical, achievable measures intended to cut extreme poverty in half by the year 2015, but in order to achieve these goals the world's rich nations need to provide approximately 0.5% of GNI in aid. To go a step further than that and eliminate extreme poverty altogether, estimated aid of 0.7% is required.

Currently, Canada's foreign aid is about 0.3% of gross national income, so during the last election Prime Minister Harper promised to bring Canada's aid up to at least the average of other donor countries--which is currently about 0.46%. Instead, Canada's aid has actually dropped, from 0.34% in 2005 to 0.30% in 2006.

All these figures are from the OECD, by the way.

Despite the continued large budget surpluses, there is no sign that Canada's moving even toward the average level of generosity promised by Mr. Harper. Clearly, we must do more.

What would it cost? Annual increases of about $650 million, less than 5% of the $14 billion surplus--which is projected to be even higher next year--or a fraction of 1% of the overall federal budget, less than one-half of 1%.

In addition to the issue of the quantity of aid, we have the quality of aid. Canada must provide better aid. We support the initiative of Mr. McKay's Bill C-293, the proposed Development Assistance Accountability Act. This would bring Canada closer to better poverty-focused international aid. However, it is currently stalled in the Senate. For Canada's aid to improve, it is vital that this bill become law.

My main point, however, is that it doesn't really make sense to wait until all possible reforms to CIDA are completed before increasing Canada's aid. There are many good examples of cost-effective multilateral aid vehicles that Canada should be supporting right now. Many of these are quite separate from CIDA. These include the global fund to fight aids, TB, and malaria; the global TB drug facility; Canada's international immunization initiative; the fast track initiative for basic education; UNICEF's micro nutrient and nutrition initiatives; and the global TB drug facility, as well as the new global sanitation fund.

All these vehicles have track records of success and established transparency and accountability mechanisms. All that is missing is a fair share of level of funding from donors such as Canada.

In fact, Prime Minister Harper provided a good example last week in Tanzania, when he announced the $105 million initiative over five years to save a million lives. This partnership with UNICEF, the Gates Foundation, and other donors will deliver basic health services, such as immunization, bed nets, antibiotics, micro nutrients, and other measures for women and children in countries where the needs are greatest. It is a very worthwhile program.

However, I think the media coverage had it right. The Canadian Press headline said “Harper pledges more money to Africa but admits Canada's foreign aid declining”. Canada's initiative to save a million lives is quality aid with a good start, but it ultimately will not reach its potential, simply because it doesn't receive enough funding.

The remedy is a simple one. Canada must reach at least the average level of aid given by other countries, as promised by Prime Minister Harper in the last election.

Thank you.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you.

From the Women Elders in Action, Ms. Westlund.

[Jan Westlund, Coordinator, Women Elders in Action]

Thank you.

My name is Jan Westlund. I'm coordinator of Women Elders in Action.

WEACT, which is an acronym for the organization, is a provincial network concerned about economic security for unattached senior women, as most will be at some point in their lives. We've focused on the pension position of already retired women in our research.

We've also developed an understanding of the financial retirement readiness of women in the labour force today.

We've drawn heavily on current research from StatsCanada regarding women's average annual earnings, their prevalence in non-standard work, their overburden of society's caregiving duties, their lack of occupational pensions, and their inability to contribute significantly to RRSPs.

We see that many will be disadvantaged when the majority of retirement income depends on an individual's lifetime earnings and savings.

In 2004, 40% of employed women held non-standard jobs, commonly offering no benefits and low wages in Canada. These days it is being suggested that they need to work until 67, or even 73, to achieve some semblance of economic security. This warning fits with the government's desire to have aging workers stay in the workforce longer to increase productivity.

The calls to keep people working longer have been enabled by a movement to eliminate mandatory retirement where it exists. Inevitably, we also hear from those who want Canada to increase pension age or to eliminate access to an early Canada Pension Plan. These would be harsh developments for many employed women. A delayed pension age is an unreasonable imposition on those with low-paying work and little chance to contribute to RRSPs. Extending work life will do little to improve their financial situation when they do retire.

This is the scenario that exists as you posed the question regarding the targeting of taxes. Our members have noted a considerable reduction in the tax rate of corporations over the years. However, corporate investments in buildings, machines, equipment, research and development, skill-building, which would lead to higher productivity, have lagged.

Profits are being invested outside the country in record amounts, placed in offshore tax shelters, or paid out to corporate insiders and shareholders. In short, we are rewarding corporations for not improving our lagging productivity.

According to David Dodge, the Bank of Canada governor, in June 2007:

Canada’s disappointing productivity record is attributable to industry not taking full advantage of new information and communications technologies, and insufficient investments in equipment, research and technology and worker training.

WEACT would like the finance committee to focus on corporations as the most important source of productivity improvements. This is preferable to fretting Canadian women with part-time work or low-paying service sector jobs with the notion that they must work until they drop.

We need government leadership in strengthening corporate tax policy at a minimum, to require more reinvestments in this country with the goal of increasing productivity.

We would also like to suggest that you use personal taxation policy to diminish our inequalities. The government's use of tax policy should be designed to benefit those who need assistance the most. Many seniors qualify for this consideration. They are at the stage of life when they are least able to improve things for themselves.

We believe pension income-splitting denies the government revenue, while it ignores the needs of unattached women at greatest risk for poverty. We recommend a revised program that could be more equitably applied to low-income couples and the unattached alike.

The corporate profits that make their way to shareholders here are often enjoyed by individuals through their RRSP portfolios and through occupational pensions. The combined projected net tax expenditure for those Canadians able to contribute to these private plans for 2007 is more than $21 billion. This is an enormous figure when one considers that three out of ten Canadian families possess neither of these pension assets.

In 2005 WEACT published Pensions in Canada: Policy Reform Because Women Matter. It offered 23 recommendations to improve the pension position of women. To date, 40 organizations across the country have endorsed our call for change.

Our recommendations dealing specifically with personal taxation from that paper are relevant to today's subject. We suggest the elimination of taxation on income below the low-income cut-off, and we also suggest converting deductions for RRSP and RPP savings to credits. This would make the reward for contributions more equitable between those in higher and lower tax brackets.

This last recommendation has generated considerable discussion, as you can well imagine. Today we are willing to consider an alternative recently put forward by Monica Townson, in her brief for the Canadian Association of Social Workers, entitled “Financial Security for Women Seniors in Canada”. She recommends that the ceiling on RRSP contributions be reduced and that the resulting savings in tax expenditures be redirected to improved old age security and GIS benefits for low-income individuals. This would reflect the finding that RRSPs are of most interest to higher-income Canadians, who are in the least need.

One final point. For the last several years we've discussed economic issues with senior women all over the province. We hear that it's increasingly difficult for them to find affordable housing in their own communities. Some are now paying between 50% and 60% of their limited income for shelter. Their plight is only one facet of a severe housing crisis facing many middle- and lower-income Canadians today.

The government appears incapable of augmenting the guaranteed income supplement sufficiently to keep up with skyrocketing market housing costs. We would like to strongly suggest that the tax surpluses be assigned to begin funding a substantive national housing strategy that would benefit the poor of all ages.

That's it.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you.

We're going to a round of questions. The members have five minutes to ask questions and for you to reply; it's all-inclusive, for the same price.

I'm going to go directly to Monsieur St-Cyr.

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

Thank you, Mr. Chair.

Thank you, everyone.

First I'm going to speak to Ms. Westlund.

I'm very sensitive to all the issues concerning assistance for seniors and fairness within the various classes of society. However, I don't think the recommendation that RRSP and RPP deductions be converted to tax credits is a good path to take. In the case of RRSPs, what is called a tax credit is not a tax exemption, but a tax deferred. As a result, when people claim a tax refund, those who have larger incomes receive more than individuals in the less well-to-do classes. On the other hand, when they retire, when they withdraw the money from their RRSPs, these people obviously pay more tax than those who have invested less in their RRSPs.

I think this deferred tax system should be preserved. However, other measures are of much greater concern to me, among other things the fact that the Guaranteed Income Supplement is not fully reimbursed to seniors on a retroactive basis. That seems to me to represent much larger amounts. The program that you're proposing would not constitute a saving: it would simply amount to deferred taxes.

However, in the case of the Guaranteed Income Supplement, this is net money that the victims of this problem still don't have and that is owed to them. If a person has owed the government money for five years because he or she has failed to pay taxes, the government will inform that person of the fact and go back. However, if the government owes a senior the equivalent of five years of the Guaranteed Income Supplement, that person is only given the equivalent of 11 months of benefits.

Were you aware of that? Does that issue concern you as a group?

[Jan Westlund]

Yes, that could certainly be improved.

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

All right.

[Jan Westlund]

Was there a question in there?

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

Yes, I'd like to know whether this situation concerns you.

[Jan Westlund]

Yes, it could be improved.

But can I draw your attention back to the comments you made regarding the fact that income tax deductions would be deferred and paid at a later time? That directly refers to our suggestion that pension income splitting is not as great as a lot of people seem to think it is. In our minds, what we see is that people who are getting those tax deductions on their RRSPs right off the bat will again be allowed to benefit when it comes to paying the tax on those, because they will split their income—supposedly with a spouse of less income—and that way, they've received a deduction upfront and get it again at the end.

We see that as a real problem; we don't think it's fair. It certainly benefits people with enough wealth to stockpile money in RRSPs, and we know they are the top earners. Something like 76% of people who have incomes of $80,000 can afford to put money into their RRSPs, and are doing so with great alacrity. But poor people are not doing that; people whose incomes are $25,000 or $30,000 are not doing that. They have hundreds of thousands of dollars of room in their RRSPs and cannot do that.

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

I agree with you that the issue of retirement income splitting is a problem with regard to fairness. But this is another problem. I don't think that we're going to solve matters by changing the way RRSPs operate. To my knowledge, these aren't subject to income splitting. Only registered pension plans are.

[Jan Westlund]

No, no, no, it's RRSPs and occupational pensions, not old age pensions, nor the guaranteed income supplement, nor the Canada Pension Plan. So it's obviously the income of people who have had enough money to put it away in the first place.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thierry, we're going to come back to this.

Ms. Savoie.

[Denise Savoie, NDP, Victoria, BC]

Thank you for your presentations.

I'll start with you, Ms. Neufeld.

You touched on a subject that is particularly interesting to me, because of an employability study we are doing in Ottawa on an all-party committee looking at that. You talked about skills enhancement training and suggested that it would be useful to give employers an incentive to invest in skills development, and that somehow the contribution should be tied to their EI contribution.

I just wondered if you would elaborate on that and explain to me what that would entail.

[Kaaren Neufeld]

Sure, we are recommending that employers and employees who invest in skills development receive a credit against their employment insurance contributions.

[Denise Savoie, NDP, Victoria, BC]

Employers and employees?

[Kaaren Neufeld]

Yes, both.

That way, depending on who takes the initiative to invest, we think you would have employees investing in their own skills enhancement and you would have the employer investing.

We are noticing—as I believe I heard from one of the other presenters, as well—a reduction in the amounts employers are investing in skills enhancement.

[Denise Savoie, NDP, Victoria, BC]

Absolutely.