Finance Committee on Dec. 3rd, 2007

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you.

The next thing he will be speaking French.

So for any of you who have your headphones, we're going to....

Let us see if the translation system works. Can everybody hear me?

Mr. St-Cyr, you have five minutes.

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

Thank you, Mr. Chairman.

Thank you to all the witnesses. I am very pleased to be here with you today. I have a first question.

[The Vice-Chair, Liberal, Massimo Pacetti]

I hear you.

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

My first question is for Mrs. Susan Stiene. It relates to duty-free purchases on arrival. I want to make sure I understand your suggestion. At this time, someone leaving an American airport after having purchased alcohol or duty-free goods would not have to pay taxes on arrival in Canada if the personal exemption level is not exceeded. That is the situation today, is it not?

What is your proposal? Are you suggesting that the purchases could be made in Canada, within the personal exemption? Or are you suggesting that travelers could make unlimited purchases on arrival in Canada?

[Susan Stiene]

Thank you for the question.

Actually, no, we're not asking for any increase in personal exemption. We are asking that the passenger be able to purchase their duty-free upon arrival, and they will actually put that amount of purchase in their declaration.

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

Very well.

This is my next question. In your grief, you referred to the impact the restrictions on liquids, gels and aerosols have had on the duty-free shops and you say that your suggestion would mitigate some of those losses. You also say that it would provide additional revenue to airports.

I would like to understand the linkage. If the sales of those shops increase, they will make more profit but how would the airport renting the space get any additional revenue?

[Susan Stiene]

Thank you.

The way retail operates at an international airport is that the tenants actually pay a percentage of rent from the sales, so a percentage of the sales goes to the airport authority.

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

So, they have the same interests. Thank you.

My next question is for Mr. Friedrich. First, there are two groups and I do not always see the difference between them. There is especially the Canadian Federation of Students. One of the groups is proposing that all the money that is now invested in tax credits to cover tuition and interest expenses be instead directly reinvested in education, either as transfers to post-secondary education or as financial assistance to students. In fact, this Monday is generally used only after graduation because, during their studies the students simply do not to have enough income to make use of the credits. Their argument is that it is during their studies that they need assistance, not later on.

What is your opinion?

[Jeff Friedrich]

First off, it's important to acknowledge that in Canada post-secondary education is an issue of provincial jurisdiction, and we recognize that. The federal government plays a strong role in funding universities—$2 billion in tax credit supports each year—so there's a reality around how the government is already participating in post-secondary education.

Regarding your question of whether it would be better to invest that money directly in transfers, which I think is your point, yes, certainly. We've called for a dedicated transfer. We've acknowledge the special conditions in Quebec. In renegotiating Millennium or some other program, those arrangements can be made because it's a program that negotiates independently with the provinces. So we think it's a good example of effective federalism.

As for your point about whether a lot of those tax credits would be better spent as transfers to the provinces, yes. We're talking about just reallocating that to front-end supports. Certainly transfers to the provinces, and the provinces' ability to then put that on the front end, is an important idea.

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

I only want to underline that it is less my opinion than that of the Federation of Students. I wanted to have your opening in about that.

[The Vice-Chair, Liberal, Massimo Pacetti]

Ms. Savoie, you have five minutes.

[Denise Savoie, NDP, Victoria, BC]

Thank you very much. As the member for Victoria, I want to welcome the members of the committee to our city.

I welcome those of you who are not from Victoria.

Each one of your presentations was very interesting. I wish we had time to tackle all of them. I'm going to focus on some issues I'm working on, particularly in Ottawa. I'll start with the issue of climate change and some of the proposals that were raised this morning.

Mr. Garrison said he didn't particularly support a carbon tax.

Mr. Hackney, I think you indicated that you did, and that you felt there were ways to address the issue of hardship to low-income people. Now, I'm wondering if you could address that, and how you think that can be done.

Also, given that we know the biggest portion of pollution or greenhouse gas emissions relate directly to the large emitters like oil and gas, and a huge percent of our increase has been related directly to the accelerated development of tar sands, I'm wondering if you don't think it might be better to first focus on a mandatory cap and on pricing carbon at that point first, to tackle where the biggest pollution comes from.

[Tom Hackney]

Thank you.

The position of the BC Sustainable Energy Association is that a cap and trade or a cap system, presumably with trade, is absolutely vital precisely because such a large portion of our greenhouse gases do come from point sources. However, we don't take an either/or position in saying the cap on large emitters is more important than a carbon tax. We think they're both vitally important.

The reason for a carbon tax, in our view, is to send a signal to all of society so that everyone feels involved, so that the government is signalling that it intends to act and do something significant, and so that the whole society will be brought along and will contribute to this.

We believe the question of hardship on the poor or low-income people can be dealt with effectively through a rebate. For example, you can have a carbon tax based on your fuel consumption, and you can have a flat rebate to all Canadians, as an example.

[Denise Savoie, NDP, Victoria, BC]

Thank you.

I'll address another question to Mr. Friedrich. We've had the opportunity to talk and I think agree on many points. I want to come back to the question of a more holistic review of post-secondary education assistance than that which is happening right now, because, as you said, there's a review of the loan program, but it's siloed, whereas we should be overhauling the whole system.

Coming back to your point about renewing the Canadian Millennium Foundation, you said, quite rightly, that some of the reviews indicated it had been providing aid in an effective way. I guess the mandate of the reviews was never about looking at the most effective way of delivering it. It was just looking at whether they did indeed give money appropriately to the right people and so on.

I'm wondering if you think that in order to have a comprehensive review, it's time to stop saying, okay, it should be delivered by this foundation and this piece should continue to be done here. Wouldn't it be time to open it up and look at ways of bringing together what is now a patchwork quilt of tax credits here and savings there and a little grant here, and look at it holistically, and look at an upfront, needs-based grant system in Canada to offset this huge debt that's spiralling out of control?

[The Vice-Chair, Liberal, Massimo Pacetti]

Ms. Savoie, to allow Mr. Friedrich to answer--

[Denise Savoie, NDP, Victoria, BC]

Yes, sorry. I got carried away here on a subject I feel very passionately about.

[Jeff Friedrich]

To the first point on reviews, this is a program that's been reviewed three times. Compared to other programs, it compares very favourably on issues of displacement and accountability. If you look at other programs--tax credits are a good example--from my point of view, I'm not aware of any reviews done at the federal level that talk about whether or not tax credits are improving access for under-participating students. That's just a quick point.

[Denise Savoie, NDP, Victoria, BC]

It's a good one.

[Jeff Friedrich]

I think the review conversation gets really lost in the political legacy of the Millennium Foundation.

On your point about a wider review, I think the appetite is absolutely there, and that's something we support. That's what we're trying to get at in a pan-Canadian accord, looking at all these patchwork programs in a holistic way, so I would applaud your efforts to address that.

The only other thing is on the issue of why go after this particular program as opposed to going for that, and that is because the reality is that this program will be done next year and that represents a $350 million hole. So there's an immediate need.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you.

Mr. Dykstra, five minutes.

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

Thank you, Chair.

I do have a question for Mr. Ruel.

I found your presentation very enlightening, so thank you for that, not that any of the others weren't, but it's the first time we've actually heard a specific presentation on the issue of disabilities, and I appreciate that.

You commented I think very briefly about the piece the government had in the budget of 2007, which is basically the whole issue around financial security of a child with a severe disability. What we introduced, and what I want to get your comments on, is the Canada disability savings grant, and also the matching rates and contributions the federal government will play on that. On an individual basis, obviously, a lot of investment can be made. It doesn't mean, based on the numbers you suggested, that thousands of dollars will be placed into an account each and every year, but I think it does suggest we're taking a step in the right direction in terms of preparing the future for some of the folks you talked about. I wonder if you had a bit of knowledge about it and if you want to comment on it further.

[Albert Ruel]

Thank you very much.

I don't have a great deal of knowledge about it, but anything that allows an individual with a severe disability to be able to live further above, or at least gets people to, the poverty line--there are far too many below it--and helps along that continuum is a tremendous asset to persons with disabilities. So if parents are able to get a tax shelter while putting away money for future care of their disabled children, by all means, let's do more. But let's also do a great deal more for those persons with disabilities who have the ability to work and care for themselves. They, too, are living way below the poverty line on welfare and are not getting opportunities for jobs and are not being considered very fairly or carefully in society. So we applaud that move and ask for a great deal more.

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

Thank you.

Mr. Garrison, you did an amazing job in talking about tax cuts, infrastructure, the state of finances in our country, and about health care. The one area with respect to health care you focused on was the issue of AIDS, and I wasn't sure why you did and I wanted to get your reasons. There are a number of large health issues that the federal and provincial governments deal with, and we as individuals deal with, whether they be breast cancer or AIDS or cancer in general.

I just wondered why you specifically targeted AIDS, from your perspective, as the most important one we have to face. The reason I say that is you talked about the further investment we have to make in it in 2008-09. I certainly don't want to disagree with you, but I do want to point out and get your comments on the fact that in the 2008-09 budget we will be spending over $84 million a year specifically on the issue of AIDS. It is historic. It's the most that's ever been spent in one particular year, so I have to say that we're listening to what you're saying. Furthermore, last February the Prime Minister and Melinda and Bill Gates announced a $111 million investment in an AIDS research facility in Canada.

So I just want to get your thoughts on the fact that we are addressing that issue in a very serious way.

[Randall Garrison]

I guess I would say, first of all, as a gay man living in the west end in Vancouver, it's a natural thing for me to be talking about. I do appreciate the amount of money being spent on care and research. However, there's been a decrease in the money being spent on AIDS prevention work. In the last two years we've seen a spike in the rate of new infections among young gay men in downtown Vancouver. Somehow people aren't getting the message, or they mistakenly believe there's a solution or a cure for AIDS. The reason I'm highlighting this is that we really have to go back to the community-based groups that are doing prevention work, because prevention is the only cure for AIDS.

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

Thank you.

Mr. Friedrich, I did want to get your thoughts very quickly. I probably don't have a whole lot of time left here.

Regarding the whole issue of the $800 million investment we've made, one of the concerns of a number of your colleagues I've met over the last months—which I think you alluded to—was the continuation of that $800 million and confirmation that it will in fact get a cost of living increase every year. That $800 million is fixed and will not be going away. It sounded like you were mentioning that. I just wanted to make sure that it was very clear to you that the money for this commitment, the 40% increase this government has made, is not going anywhere; it's staying in the budget.