Thank you, Mr. Chairman.
Good evening, and thank you for the opportunity to make this presentation to you today.
For the purpose of these hearings, the NEF wishes to discuss the northern residents tax deduction, referred to in our submission and this presentation as the NRD.
In the past weeks and months northerners have heard more and more that our interests are at the forefront of national interest and that the north is a main concern for the federal government, which has developed four priorities under a northern strategy, recently referred to in a speech by the Minister of Indian Affairs and Northern Development to the northern development ministers forum. These points are: strengthening Arctic sovereignty; promoting social and economic development; protecting our environmental heritage; and improving and evolving northern governance. At the same time, we have heard messages and seen action from the federal government regarding tax reduction and tax fairness.
In our submission to the standing committee, the NEF makes five recommendations for improvement to the northern residents deduction that would fall in line with the government's tax fairness and tax reduction objectives while supporting the priorities of the northern strategy, in particular the promotion of social and economic development.
In the short term the implementation of these recommendations would help reduce the burden of the high cost of living, provide greater access to federal programs geared toward lower-ncome earners, and help achieve taxation parity for northerners when compared with southern Canadians.
In the longer term, an enhanced northern residents deduction will contribute to the building of human resource capacity by making working and living in the north a better financial option. This will assist in the attraction and retention of experienced skilled workers who will provide the services and training required to help develop a fully capable local labour force, ensuring increased participation and benefits for northerners.
According to the document prepared in 2004, previously referenced by Mr. Ryan, special tax treatment for northern and isolated areas has been a justifiable policy based on the following points: to maintain remote population to defend Canada's Arctic sovereignty claims; regional development; to facilitate the recruitment of workers; to offset regional differences in wages and the higher cost of living; equalize regional differences in the level of available goods and services; and to offset environmental hardship and isolation.
It is interesting to note the similarities between these five points, the priorities of the northern strategy and the recommendations included in the NEF submission. Each has a significant economic development component.
The NRD has been seen as a cost-effective way to help attract and retain the skills required for the labour force in northern Canada and to provide some compensation for the higher cost of living and lower levels of service compared to the south. However, the landscape in which this policy is functioning has changed dramatically in the 20 years since it was implemented. There is now intense nation-wide competition for a far too shallow pool of skilled labour in many sectors. With the challenges and opportunities of a young and rapidly growing population, a quickly emerging resource development sector, the need for improved education, health, and financial services, the north requires more human resource capacity than ever before.
However, we require a competitive edge. We deal with basic capacity challenges in both public and private sectors that impact on all aspects of our lives. There is urgent need to support human capital development objectives, building capacity that will be to improve governance, a thriving private sector, better education and health outcomes, which will lead to a higher living standard and greater self-reliance.
The ability to attract and retain the skilled labour required to meet current demand and to facilitate skills transfer to northerners is critical for our economic development.
The tax system provides a mechanism to raise funds for public purposes to provide for redistribution of wealth in order to reduce poverty and inequality for individual Canadians, specific segments of society, and for geographic regions with particular development needs.
The NRD is one component of the tax system intended to achieve a range of objectives for Canadians living in the north, in particular the far north, where the cost of living is much higher than the Canadian average.
An increase and enhancement of the NRD would be consistent with the government's tax relief and tax fairness objectives, and in order to achieve the objectives for economic development in the north the Government of Canada should carefully consider the objectives and effectiveness of the NRD in the context of the northern strategy and take appropriate steps to enhance the deduction to provide appropriate incentives and benefits for northern residents.
The need to support the development of the north has never been greater.
Thank you again for your time and your consideration today.