Finance Committee on Sept. 17th, 2009

[John McKay, Liberal, Scarborough—Guildwood, ON]

I'd love to pursue it, but I have to keep on moving here.

To Ms. Pasma with the CPJ, I think the committee should note the contribution of the CPJ to the deliberations of this committee over many years, particularly in the form of Gerry Vandezande. I know Gerry is ill, and I would be remiss if I didn't wish Gerry all the best and a speedy recovery, personally and on behalf of the committee.

I would like you to speak to recommendation two, which has a certain attractiveness. The real issues become what's the real cost and what programs do you cut to get to the cost? There's quite a mish-mash of social net programs. Presumably the idea is that you eliminate all of that and go to a basic income.

So can you tell me what you'd cut and what it would cost?

[Chandra Pasma]

First of all, thank you for your best wishes for Gerald. I'm sure he will really appreciate that.

On the issue of a guaranteed livable income and what it would cost, one of the reasons I said that this would take time to structure and design correctly is that there really needs to be work done on what programs get eliminated. There needs to be a conversation with Canadians. I think it's really the moment when Canadians can have a dialogue about what kind of country we want, what kind of social programs and infrastructure are necessary for that country, and then how economic security plays a role within that context.

Strictly speaking, though, in 1994 the human resources department did a study and a supplementary paper on guaranteed income. They pegged the total cost for a universal demi-grant at $146.1 billion, and the cost for a negative income tax, which only pays those below the poverty line, at $37.3 billion. Taken by themselves, those sound like giant numbers, but in 2004, government transfers to individuals in Canada—that excludes spending on all collective programs—was $130 billion.

So if we're talking about eliminating programs and rolling them into this program, then we're not talking about a great overall cost. And if any payments are being made to people whose incomes are over the poverty line, that money is being taxed back.

That's a bit of a complicated way of saying there's not a good answer for costs without doing the study.

On programs that should be eliminated, I think social assistance is the most glaring example of what should be eliminated. I believe old age security and GIS and the Canada child tax benefit could easily be rolled into a program like this. They're already structured as guaranteed annual income; they're just targeted at particular demographics.

On employment insurance, I think there's a legitimate debate. The real goal of employment insurance is wage replacement, but we've been using it as an income security program. Perhaps if we have a real income security program, then it can get back to its original goal of being a wage replacement program.

I think there are still areas of public infrastructure where we would still need spending. Obviously, health and education are the biggest examples. Child care is another example.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you.

I'd love to pursue that a little bit further, but obviously I'm running out of time. I'll just finish up with the building and construction trades guys.

You don't seem to be overly thrilled about this home renovation tax credit. It seems, from your perspective, a little too little, it doesn't really do much, and it's going to end quite quickly. Could you expand your views on that, please?

[Robert Blakely]

If you look at it, the home credit itself is small. With the current limit, if you spend the maximum, you can get roughly $1,000 back. No one is going to spend $100,000 on a major home renovation because they get $1,000.

Take a $100,000 renovation. The cost of that is roughly 50% labour and 50% materials. If you created a program that would give somebody $10,000 back, it might be a real encouragement to go out and hire somebody to go to work. The 50% of the labour that is on that job, taxed at the lowest marginal rate, basically pays for whatever the people of Canada expended by way of a credit.

On the materials that are being supplied, it basically works against the underground economy, gets the GST and HST, wherever, paid for the materials. It makes people contribute to WSIB. It makes people contribute to CPP. It's a winner.

I mean, the $1,350 that's in there currently is, for most people, nice to have, but it's not going to make them do a major renovation and it's not going to put anybody to work.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. McKay.

We'll go to Monsieur Laforest, s'il vous plaît.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chair.

Welcome to all of the witnesses.

My first question is for Mr. Pellerin. You have laid out some of your demands or suggestions. I don't know if you have taken a page out of the Bloc Québécois' election platform, but your brief contains several planks of that platform, for example, the recommendation that young farmers be allowed to cash in their RRSPs to purchase a farm. I fully agree with you that it is important, to ensure the future of farming, that measures be adopted to help young people get a start in farming.

I recently met with several farmers from my riding of Saint-Maurice—Champlain. All of them mentioned the same problem, namely the lack of slaughterhouses in close proximity which would allow them to continue farming. You mentioned beef and hog farming, but these farmers talked about chickens, rabbits and other small species. They also talked about the Levinoff-Colbex slaughterhouse that is experiencing some financial problems.

Is that what you had in mind when you mentioned hog and beef farming?

[Laurent Pellerin]

We are calling for three main initiatives: a cooperative investment plan; a program to help maintain agricultural land and a program that would allow young people to cash in their RRSP for a one-time capital purchase for their farm. These measures target all Canadian farmers. I admit that the Government of Quebec has already brought in a cooperative investment program as well as certain programs to help young people get a start in farming.

Regarding your second question, I mentioned that some sectors of Canadian farming are doing relatively well, while others are going through a particularly difficult period. Generally speaking, beef and hog farmers are having a very difficult time of it. Beef farmers never recovered from the BSE crisis in 2003. For the past three years, hog producers have been grappling with problems linked to the health of their livestock, to the economic crisis and to fluctuations in the Canadian dollar. These sectors play a role in export markets. More recently, the H1N1 flu has seriously affected hog farming. The sector was beginning to recover slightly, but prices have again tumbled dramatically.

All sectors in Canada are encountering a major problem where slaughtering is concerned. I recently returned from a two-day trip to Calgary, the site of a roundtable on beef and this was a important topic of discussion. Canadian BSE regulations are very costly for Canadian slaughterhouses, so much so that they cannot compete in any way with US slaughterhouses. Large Canadian slaughterhouses are in the process of losing the critical mass that they need to be profitable operations. Increasingly, live animals are being shipped to the US for slaughter.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

What's the solution?

[Laurent Pellerin]

Small slaughterhouses face the same problem because their costs are the same. It's even more complicated for small diversified slaughterhouses. I personally invested in a slaughterhouse close to your region, in Saint-Grégoire. We completely rebuilt the facility, then were forced to shut it down because our operating costs were too high.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

I assume that you have some specific recommendations to make with regard to slaughterhouses.

[Laurent Pellerin]

Regarding specific risk material, further to the BSE crisis, we are calling on the Canadian government to cover the cost difference between Canadian and US regulations, until such time as the two countries have harmonized their regulatory regimes. Markets are too open to allow such vastly different conditions to exist in Canada. The situation jeopardizes our industry.

I urge people to consider that not only do we run the risk of losing a share of the volume handled, but also the risk of losing these facilities completely. In many parts of the country, the critical mass for operating slaughterhouses has disappeared. Therefore, these operations could disappear completely in Canada if action is not taken quickly.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you, Mr. Pellerin.

I have a question for Mr. Clayton.

In this forum, people are free to express their views. Earlier, you said that you were a non-smoker. May I ask why, as a non-smoker, you promote smoking?

[John Clayton]

The reason I'm a non-smoker is that I recognize that smoking carries real and serious health risks. I personally understand that, and my company recognizes that as well.

With regard to the second point, I don't believe that my company promotes smoking. We offer brands to adults who are aware of the health risks. We hope they choose our brands over our competitors' brands.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

However, in some respects you are promoting your company. I find your position somewhat contradictory. I understand that you are completely free to do as you wish. I also understand the full extent of the problem surrounding cigarette smuggling. That is truly a whole other problem. You find yourself in a difficult position, but it is unusual to see a major tobacco company defending its interests and addressing another problem. Overall health is not the only problem. Taxation is also a problem. Regardless, I find you quite brave. The issues involved are complex.

[The Chair, Conservative, James Rajotte]

Do you want to respond briefly, Mr. Clayton?

[John Clayton]

Yes.

In regard to the first point, I believe in the fundamental principle that an informed adult has the right to choose, which is probably why I feel comfortable working for this company.

Regarding the second point you raised, certainly our company is losing hundreds of millions of dollars, but I didn't think that was of concern to this committee, whereas I think the issues I raised regarding the availability of these products to children, the impact illegal tobacco is having on small business, the fact that it is not abiding by any of the regulations, and the fact that it supports organized crime are a concern to all of us, whether you like a cigarette company or not.

[The Chair, Conservative, James Rajotte]

Thank you, merci.

We'll go to Mr. Kramp, please.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you.

First of all, Mr. Blakely, I certainly respect your representation of your organization, but I just have a little thought process, as you twigged my sensitivities when you suggested that the home renovation tax credit was in essence almost a waste of time from your perspective.

Might I just remind you that while megaprojects are certainly important, whether a nuclear project...and given all of the labour needed out of the hiring halls, we also have hundreds of thousands of entrepreneurs, small business people, and contractors who contribute greatly to this country's success and prosperity. Just from the ones I've talked to across my riding and the anecdotal evidence we're seeing from the uptake of this program, I am absolutely shocked you would suggest it is not having a positive impact, the simple reason being that when I talk to people in my riding, they tell me it's difficult to get a small contractor right now because there's been such a huge uptake.

I respect that you are representing your constituents, and not only your constituents but also the trades and the union halls, which all serve their purposes, but I don't think you could adequately back up your point when the statistical data we're see coming in right now are just totally contrary to that. So I just make that comment.

My only other comment is regarding your very, very strong concern about labour mobility. Mobility definitely is a concern. I think you're dead on the money there. We have to somehow get around to that. One of the difficulties we have, of course, is the overriding provincial responsibility there, but I do think that as a federal government there are ways we can be effective in lobbying, leveraging, whatever. So I think your point there is very, very well taken.

Perhaps I can now flip to Mr. Pellerin.

[Robert Blakely]

Could I just respond very briefly, sir?

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Very quickly, please. I have too many other questions to go through.

[Robert Blakely]

Don't think I'm sneering at the tax credit you currently have. I'm not. It does create some jobs. But you don't create jobs that employ significant numbers of people. You get contractors--

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Well, I take issue with that. In my particular riding--I am in a rural area--my self-employed people outnumber the trade union people by probably 40:1. Now, that is not the same across the country and it's certainly no reflection on the trades. We have wonderful trade and union people, whom I respect, but in a lot of small communities that is just not the fact of life. We don't have megaprojects; we have many, many small projects, and we cannot exclude them. That is all.

Mr. Pellerin, the one recommendation you brought forward with regard to the RRSPs being tax free for our young people is a marvellous suggestion. When I take a look at the average age of people in the agricultural community, I see that in my particular riding and in our region, it's 56 to 60 years. There's a dramatic transition that has to take place here. For a young farmer to start right now it's almost impossible; it's so capital intensive. They do need a way to be able to effectively manage this transition. This is one suggestion that I think is powerful and positive. It is not something that's going to commit government to long-term structural deficit, but for a transition period I think it's an excellent idea. I thank you very kindly for bringing that forward.

I do share your concern over delays in funding for programs, whether it was anything over the past five, ten, fifteen, twenty years to programs that are now in place. Delay is time and money lost. And for many people in the agricultural community, particularly in livestock right now, their difficulties are so time-sensitive that they need the money now. So I can assure you that the committee, and certainly I as a member, will be bringing all the pressure we can to bear on the respective ministries to ensure the speediest flow possible. So your concerns are well registered with this committee.

I thank you very kindly.

I hope I have time to get to everybody here.

Mr. Ogilvie, I have a couple of questions and thoughts on this. My concern is that we don't build another major bureaucracy that doesn't deliver results. We've seen too many fiefdoms being created, and great ideas, but then they end up becoming a think tank that goes nowhere. So how do you propose that we take this from more than just a great collection of people who are well intended to a model that can be delivered?

[Kenneth Ogilvie]

My colleague may want to answer this too, since she does a lot of work in this area.

We actually don't want a new bureaucracy. We'd like to work with existing structures and existing programs. One of our main asks is coordinating this in pursuit of a vision of where we're going, not creating another structure on top; we have too many already. And we probably have more barriers because we have too many, rather than because we need another one. So I totally agree with that. We have existing programs. They could be organized and focused to advance this agenda. There's no need for a new structure.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

I like the idea of pilots or demonstrations. It's great to spend a little bit of money to ensure we're on the right track, but how do you suggest it, and who is going to get involved with prioritizing and making these decisions?

[Dr. Shahrzad Rahbar, Vice-Chair, Quality Urban Energy Systems of Tomorrow]

Reiterating what Ken said, we do not see value in recreating a bureaucracy. The Government of Canada is spending billions of dollars through the gas tax, going through municipalities; through the suite of eco-programs delivered through Natural Resources Canada; and with specific initiatives through Environment Canada on waste management, water, and then the work on transportation. We hope to have some means of coordination within the government machinery for delivering those with some insight and assistance from an advisory group composed of this group that has been energized around this agenda, which includes the private sector--builders, developers, as well as the energy companies and civil society--to help set criteria. We do not at all see the need for creating new machinery.