Finance Committee on May 5th, 2009

[Martha Hall Findlay, Liberal, Willowdale, ON]

I would appreciate that. I'm reiterating that it costs $10 million to set up an office, while setting up a corporate entity doesn't cost us that much. Knowing what the office expenditures are for would be helpful.

On the second part, there's a specific number of $72.8 million at a time when we have expressed significant concern in opposition that infrastructure funding has been announced repeatedly since 2007—and in a number of cases there has been the same announcement multiple times on infrastructure spending. Can you elaborate on what that $72.8 million is supposed to be for?

[Richard Botham]

Again I'll have to get back to you on that. I know that the corporation plans to launch its first call for proposals in the coming weeks. I expect the $72 million is connected to that. I can provide you with additional details based on the corporate plan that the corporation filed.

[Martha Hall Findlay, Liberal, Willowdale, ON]

There hasn't been a call for proposals yet, and that's expected to be launched at some time. Most of the infrastructure programs announced almost three years ago have not nearly come through with the money originally promised. So I'm concerned about the timeframe and what this money would be even considered for, absent an idea of what the proposals might be. It strikes me as a bit odd that I have no answer for that.

I would like to have the details on that, but how would those numbers have been arrived at, especially the $72.8 million?

[Richard Botham]

It is not unusual for there to be a request to Parliament to seek funds for something for a general purpose--a call for proposals--in advance of knowing what those proposals are. I don't think that's extraordinary.

[Martha Hall Findlay, Liberal, Willowdale, ON]

But how was that number arrived at? There has to be something behind it. Maybe you could tie that in with a bit of an explanation on what kinds of proportions that $72 million or $73 million would play in the world of P3 infrastructure investment.

[Richard Botham]

I will come back to you with the details on how those estimates were derived and how that fits into the corporate plan for the coming year.

[Martha Hall Findlay, Liberal, Willowdale, ON]

That information would be very helpful.

Thank you very much.

[The Chair, Conservative, James Rajotte]

I'm going to follow up on Ms. Hall Findlay's question, because as parliamentarians we are going to be asked to vote on that. If we can get that here within the next week or so, it would be very helpful. All committee members are going to be asked to allocate that funding.

I have a couple of questions here, and the main one relates to the Canada health transfer. I note there is a substantial increase in the Canada health transfer to the provinces in the main estimates for 2009-10. A concern has been raised in my home province of Alberta by the finance minister that Alberta will be receiving $700 million less through the Canada health transfer than it ought to receive. I would like to get a formal response on that.

[Alfred LeBlanc]

Provinces receive equal support from the Canada health transfer through a mix of tax points that were transferred in 1977 and the cash transfer. The cash transfer is increasing at 6% a year. The government announced in budget 2007 that the Canada health transfer would move to an equal per capita cash allocation, so the tax points would no longer be considered in the calculation after 2013-14. Until then, they are still part of the calculation.

Provinces receive equal support through this mix of tax points and cash. Alberta's tax points are worth significantly more than tax points in some other provinces, so its cash is correspondingly lower.

[The Chair, Conservative, James Rajotte]

So the $700 million figure is arrived at only if you look at the cash transfer and exclude the tax points.

[Alfred LeBlanc]

The total support is the same for all provinces, but the share that comes from cash for Alberta is lower because the value of its tax points is higher.

[The Chair, Conservative, James Rajotte]

So if you add in both, Alberta is receiving equal per capita amounts for both tax points and cash.

[Alfred LeBlanc]

Yes.

[The Chair, Conservative, James Rajotte]

Thank you.

The second point I want to raise is on the CRA. I think in general you hear from colleagues around the table that there's a lot of respect for the CRA from both citizens and parliamentarians. But I want to raise one concern from both individual taxpayers and businesses--they have raised it anecdotally with my office, and I presume with other offices--about how they are treated by auditors from CRA at certain points.

The concern is about continuity in dealing with someone at CRA. A citizen, family, or business will often deal with one, two, three, or four tax auditors, and that increases difficulties for the taxpayer because they almost have to start over again to explain the situation to the person from CRA. In their view, it prolongs the case and makes it more difficult.

Is this the case in many instances? If so, is CRA doing anything to address that?

[William Baker]

It is the situation, in some cases anyway. The issue we're managing as a large institution is that, like everybody in the world today, we're experiencing quite a demographic change. There's quite a turnover in staff right now, and a number of people are taking their retirement. The CRA is essentially a career organization, and as someone leaves on retirement, it creates a domino effect inside the organization. People get an opportunity to compete for a more senior position.

One of the consequences is that we are experiencing some challenges with continuity on certain of our audit files. There are two things in response to that. This problem will mitigate over time as the bulge works its way through the system. But secondly, we're investing a sizeable amount of money in what we call the compliance system's redesign project, which is designed to automate and create information technology tools to support auditors. So even if the auditor changes, we don't miss a beat moving forward. That is just starting to unroll this year and is a multi-year project. As that takes hold, we're expecting taxpayers will feel a higher level of service.

[The Chair, Conservative, James Rajotte]

I appreciate that. Any information you have on the length of time a case typically takes from start to completion would be much appreciated.

Ms. Hughes is next, please, for five minutes.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Thank you.

Mr. Baker, you said that the Single Administration of Ontario Corporate Tax is one of the main elements. In fact, $78.2 million will be used to finish implementing this initiative. Have you done any model-based studies of the harmonization of the sales tax, and how much it would cost?

[William Baker]

In fact, we have carried out many studies to determine current and future costs. I do not have the projections in front of me, but a part of the costs have to do with the implementation that was done last year and this year, because it came into force on April 1. Afterward, we will of course monitor our expenses, but we think that we will be able to make some savings as we carry on.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Very well.

Let me go on to another part. You also mentioned an amount of $429 million for softwood lumber. Does this amount include management fees?

I do not know if you can answer the following question. Once the funds have been paid to the provinces, will it be a part of the general fund or will a certain percentage be returned to the forest industry?

[William Baker]

Mr. Chair, I would like to ask my colleague Mr. Ralston to answer this question. I also have other information regarding the cost of the project in Ontario, if you agree.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Okay.

[James Ralston, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency]

I'll deal with the softwood lumber first. The amount shown, $429 million, is the net amount. The law provides that we administer an export charge, deduct the costs of the administration, and then distribute the net amount to the provinces in which the exporters live. That's the general scheme of financing for that program.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Do you have an estimate of the administration cost?

[James Ralston]

It would be about $8 million a year.

And now perhaps I can go back to the question about the corporate tax administration for Ontario. As Mr. Baker mentioned, we did expend a large sum in the early years to get it up and running. But our current estimates show that in the long run we should level out at about $43 million, roughly speaking, as the ongoing cost of administering that effort.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

I find the bulk of our work in the constituency offices deals with the child tax benefit. There are a lot of issues pertaining to the administration, especially when a couple separate and one of them doesn't indicate there is a change of address. I'm just wondering if you are revisiting that, because it's causing a lot of hardships for these families. We find there certainly is a demand out there to have that revisited.

I'm just curious about that.