Finance Committee on Sept. 28th, 2009

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

I totally agree with you, and it is the same in many other areas.

[The Chair, Conservative, James Rajotte]

Merci, monsieur Laforest.

[William Otway]

There's no question--

[The Chair, Conservative, James Rajotte]

Mr. Dechert, please.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you, Mr. Chair.

Ladies and gentlemen, thank you very much for all of your comments and suggestions. It's a real pleasure to be here in beautiful British Columbia.

My first question is for Mr. Wilson of the Surrey Board of Trade. I was encouraged by and interested in your comments about tax issues. As a member of the finance committee, I met recently with the chief economists of all the major Canadian banks, and I'm pleased to see that our government is on track to reduce our corporate tax to the lowest level in the OECD by 2012, which, according to the chief economist at the Toronto Dominion Bank and also Mr. McCallum's successor at the Royal Bank of Canada, will contribute greatly to Canada's economic growth, trade, and investment in the future.

I spent the first few years of my career as a tax lawyer. I've dealt with the issue of tax consolidation for many years, so I understand it. I can tell you that it makes for good work for lawyers and accountants, but I don't believe it's good for business. So I'm pleased that you've raised this, as I think it's something we need to definitely look at. Certainly, our major competitor, the United States, allows this kind of tax consolidation, and it's very beneficial to business organizations in the United States and it helps them grow their businesses.

I wonder if you could tell us what the estimated cost to the government in terms of lost revenue might be from making such a change. Also, could you give us a description of what you think might be the estimated economic benefit to Canada, such as a change in the income tax laws?

[Eric Wilson]

I alluded to the lost revenue calculation on consolidated corporate filings in my presentation. There are strategies and techniques that permit it. I'll give you a perfect example, which is the vertical amalgamation of losses going to Profitco. Losses become available to Profitco the day after.

The problem with this is that it's complex. As you say, it's great work for lawyers and great work for accountants, and it's unnecessarily expensive. It can also put a business potentially at risk if there's an unfunded liability in the Lossco, generating losses. The amalgamated entity would assume that liability and put it at a disadvantage.

So from a lost revenue perspective, I don't see that there's a great deal that would otherwise be lost. There would be a cost saving to the business earning the income itself in view of the fact that it has simpler compliance requirements, simpler compliance techniques, and less of a professional fee burden on its cost of doing business in Canada relative to a business in the States. That would be a starting point for the valuation of it.

I am a chartered accountant. I'm a partner with a national firm. When we have different business entities segregated into different corporations, there are techniques that can be applied, as I mentioned, but they're also not without risk. For example, there's transfer pricing domestically. There's a wonderful word in the Income Tax Act called “reasonable”, and that causes more grief for the adviser and the advisee in getting concrete, solid advice they can sleep on as to what is reasonable, because one person's reasonable is another person's unreasonable. It's an uphill “guilty until proven innocent” type of process when you fight an assessment on that basis.

This would eliminate the uncertainty caused by that. It would create, at the business level...the money he doesn't spend on the professional advice goes into the income pool, which generates more tax revenue on the same basis. I think it would require an economic study to give you a concrete example, but speaking from my own experience, and perhaps piggybacking on yours in your other life, I'm not so sure the lost revenue would be significant--if any.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you very much for that. I think it was Lord Bowen of the British House of Lords who said that what's reasonable is what the “man on the Clapham omnibus” thinks.

Do I have more time, Mr. Chair?

[The Chair, Conservative, James Rajotte]

Yes, you have about one minute.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

I'd like to direct my next question to the Prince Rupert Port Authority.

You mentioned that you need more investment in certain kinds of facilities. I believe you mentioned a cold storage facility. I wonder if you could describe for us what commodities or products those facilities are required for. Could you give us more details on that, and where are they going in the Asia-Pacific region?

[Don Krusel]

Fishing is obviously a big industry on the north coast and also on the Alaskan panhandle, and we're the closest port to that industry. A lot of the market is in the Asia-Pacific. Now that we have a container facility located in Prince Rupert, the next stage for integration of that industry into the transportation industry is to have cold storage facilities so that fishers in the region can have access to global markets.

[The Chair, Conservative, James Rajotte]

Thank you.

As the chair, I have two issues I want to clarify. I'll put them both on the table.

With respect to TRIUMF, I have been there. We were there with our last committee, and it was a wonderful tour you gave us, Nigel.

You talk about the operational fund. This is sort of the issue of the operational funds for big science projects. It's an ongoing challenge that we've discussed. Do you have any recommendations as to where the funds should come from? Should it be a separate fund? Should it be through granting councils or specific to each institution?

The second question is for the Prince Rupert Port Authority with respect to the third recommendation, about amending the Canada Marine Act. It seems to be a fairly reasonable recommendation that I've heard before. I'm not sure what the argument is against it. Could you highlight for the committee why you're getting opposition? What sort of opposition are you getting, or is it just the fact that it has not been acted on in the past?

Mr. Lockyer, very briefly, because we are running out of time.

[Dr. Nigel Lockyer]

This was discussed with Minister Clement. His suggestion was multiple envelopes, which may mean something to you. We were sent off to a couple of other ministries to discuss our impact on them—for example, NRCan.

As concerns the national science facilities getting support, I think they need process. They don't have process now.

TRIUMF has process because it has been around for 40 years, so every five years we get this international peer review. The NRC reviews it, makes a recommendation, and writes an MC. There should be something similar for SNOLAB, Canadian Light Source, NEPTUNE Canada and VENUS, and the Canadian Arctic icebreaker. It's obvious from my standpoint that they need the same thing that TRIUMF has.

[Don Krusel]

A quick, succinct answer to your question is that the Canada Marine Act was recently amended. There were some really good amendments in there that have improved the ability of port authorities to operate. However, for a port authority such as Prince Rupert, we still have severe limitations on our ability to go out like any commercial private sector company and get funds elsewhere. We probably would not be seeking the same type of funding from the federal government if we had access to commercial markets in the same way as a private sector entity has. That, in a nutshell, is what we would like to see, so that we can go out and not only borrow, but find other creative ways of getting financing for some of these projects that we're trying to develop in our gateways.

[The Chair, Conservative, James Rajotte]

Thank you. I appreciate that.

I want to thank all of you for your presentations here today and for responding to our questions. Thank you very much for your input.

Colleagues, there are a few logistical issues. We were supposed to meet downstairs immediately for our site visit. For those of you who have not checked out, we'll do so after we come back from the site visit. We'll take a quick break and meet down there in about five minutes.

Thank you.

[The Chair, Conservative, James Rajotte]

I'd like to call the meeting to order.

This is still the 43rd meeting of the Standing Committee on Finance. We have our third panel with us here this afternoon. We have two panels continuing our discussion in pre-budget consultations across Canada.

We want to thank all of the witnesses for coming before us. We're sorry that we're a few minutes late, but we had a tour of the port of Vancouver at lunchtime.

We have here with us eight groups for this panel, so we have a large number of groups. First of all, we have the Canadian Federation of Students, British Columbia; the Association for Mineral Exploration British Columbia; and we have as an individual, Mr. Graham Mowatt. We also have the Downtown Surrey Business Improvement Association; the Child Care Advocacy Association of Canada; the Federation of Community Action Programs for Children of British Columbia Association; the Rick Hansen Foundation; and finally, we have the Human Early Learning Partnership here with us.

Welcome to all of you.

We'll have presentations to start with and we'll go in the order outlined above. We'll have presentations of up to five minutes maximum and then we'll go to questions from members.

Will the Canadian Federation of Students start please?

[Shamus Reid, Chairperson, Canadian Federation of Students (British Columbia)]

Thank you.

As you introduced me, my name is Shamus Reid. I'm the chairperson of the Canadian Federation of Students, British Columbia. Joining me today is Ian Boyko, who is our research and communications officer.

The Canadian Federation of Students, British Columbia, represents over 150,000 university and college students across British Columbia, and on behalf of our members I would like to thank the committee for the chance to provide input today.

Our recommendations to this committee will focus on how the federal budget in 2010 and beyond can enhance access to post-secondary education and reduce student debt, with a particular emphasis on the provincial context in British Columbia. Committee members, I understand, have our written submissions as well, so that provides further detail and context.

Over the last few years, the federal government has made some important decisions that were wholeheartedly welcomed by the Canadian Federation of Students and others in the post-secondary sector. The $800 million increase to the Canada social transfer in 2007 was the largest single increase to federal funding in three decades. Replacing the Millennium Scholarship Foundation with an accountable and transparent grants programs was enthusiastically embraced by students and has been successfully implemented this fall in B.C., but there is much more to do before the government can rest on its laurels.

In British Columbia we've seen tuition fee increases upwards of 100% since 2001, which has had a serious impact on the ability of students from lower- and middle-income backgrounds to pursue a post-secondary education in our province. Average university tuition fees have risen from $2,592 in 2001 to $5,040 today, 7% above the national average. The benefit of Canada's new grants program will decline as long as the federal government continues to allow tuition fees to rise year over year. The increase to the Canada social transfer that I mentioned earlier should have gone towards undoing the damage wrought by tuition fee increases. The fact that it didn't exposes a terrible flaw in the federal approach to financing universities and colleges.

B.C.'s share of the 2007 increase to the CST was approximately $110 million. The windfall from that funding could have taken many forms: lower fees, larger institutional budgets, student debt reduction, or all of the above. Instead, overall funding to advanced education in B.C. in the year of the transfer was actually cut by nearly $100 million; $110 million in new federal funding failed to benefit a single British Columbian.

We have no reason to believe the scenario will change without a new federal-provincial strategy for post-secondary education. To ensure that Canada has a plan for becoming the best place in the world to study and research, no matter what province a student happens to reside in, the federal government should work together with the provinces to implement a national post-secondary education act. That's our first recommendation.

Akin to the Canada Health Act, a national piece of legislation would clarify roles and ensure accountability for the billions of federal dollars transferred to the provinces each year. In return, the provinces would gain a written commitment from the federal government to issue long-term support for post-secondary education under mutually agreed-upon principles.

In the area of student financial aid, in terms of our second recommendation, I have already mentioned the government's wise replacement of the Millennium Foundation. The new Canada student grants program is promising, but one area where I think most committee members can agree that there is room for growth is the level of assistance currently offered by the grants.

As we have outlined in our written brief, increasing funding to the grants program can be done, and should be done, without any new budgetary expenditure. Each year the federal government allocates more than $1 billion to education-related tax credits. That's more than double the budget for the grants programs. The fact is that the higher up the income scale one is, the more one benefits from such tax credits, meaning that higher-income earners benefit twice as much from non-repayable financial aid as those who qualify for low-income grants.

We recommend refocusing this massive federal expenditure to those who actually need the dollars by reallocating all budgeted funding from the tax credits to the new Canada student grants program. Such a move could allow the federal government to triple the size of new grants, making a very significant dent in student debt.

Our final recommendation is especially important, I think, to western Canadians. Canada's aboriginal peoples have been denied justice on many fronts. One area that is fundamental to improving the lives of aboriginal peoples and is well within this committee's grasp is post-secondary education. The federal government has an obligation to guarantee that aboriginal learners who require financial assistance get it, and more broadly, the government has an economic obligation to prepare our workforce for the future. The federal government can begin to accomplish this by removing the unnecessary 2% cap on funding to the post-secondary student support program.

I'll end there with those three recommendations and perhaps go into more depth during the question period.

I thank you all for the opportunity again to present, and I look forward to your questions.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now go to the Association for Mineral Exploration British Columbia.

[Gavin Dirom, President and Chief Executive Officer, Association for Mineral Exploration British Columbia]

Good afternoon. I'm Gavin Dirom, the president of the Association for Mineral Exploration, and I'm here today with my colleague, Byng Giraud.

We have three recommendations to present in follow-up to our paper.

As a bit of background on AME, we represent over 3,500 individual members and 300 corporate members, and we were established in 1912. This province actually produces about $6 billion of investment every year to explore here in B.C. and around the world, and in production money, production equates to about $8 billion of revenue.

With that, there will be three presentations today: one related to infrastructure, one related to tax cuts, and one related to harmonization of the federal and provincial regulations.

Before I do that, perhaps Byng can give a quick thank you in regard to the Highway 37 power line.

[Byng Giraud, Senior Director, Policy and Communications, Association for Mineral Exploration British Columbia]

In one of my other incarnations, I served as general secretary of a coalition of industry, independent power producers, first nations, and 40 local governments in the north of this province. We've been pushing for funding and support of a power line in the northwest, which some of you may have heard of, the northwest power line or Highway 37 project. It was actually part of our recommendation.

Since the recommendation letter was forwarded on August 14, we are very pleased that the federal government to date has chosen to put $130 million towards the construction of this line in the northwest of British Columbia. So one of the most significant elements of our asks has perhaps already been fulfilled, but we wanted to thank you for that.

[Gavin Dirom]

Related to that, perhaps there's an opportunity for investment in knowledge infrastructure, and on that one I'd like to recommend further investment in the Geological Survey of Canada.

We have two other recommendations.

The first one is for tax cuts. We've had something called the mineral exploration tax credit here in Canada since 2000. No matter the government, every year it's been recommended that it go forward and be maintained. So the proposal today is that we make it a permanent fixture of our tax credit system here in Canada to maintain our competitiveness with Australia and other jurisdictions. So our primary recommendation is to maintain the METC and make it permanent. In terms of specifics, it could perhaps move from a 15% rate to a 30% rate. That's in support of PDAC, our national body representing explorers and developers.

The other main recommendation, or third overall, relates to harmonization. Canada and the Province of British Columbia, for instance, are challenged to harmonize the environmental assessments, the permitting process for new mines. What we'd like to see is a concerted effort with respect to delegation of authority or work from the federal government to the province, perhaps a devolution of decision-making to the province from the federal government, and going forward, perhaps an amendment to the Canadian Environmental Assessment Act that would include timelines one way or another to address the fact that these projects are stalled and that it takes many, many years to get billions of dollars' worth of projects into operation, which is unnecessary and inefficient. This isn't about effectiveness; this is about it being efficient.

With that, I'd like to thank the committee and members of Parliament.

[The Chair, Conservative, James Rajotte]

Great. Thank you for your presentation.

We'll go to Mr. Mowatt, please.

[Graham Mowatt, As an Individual]

Good afternoon.

Unlike other presenters, I am not requesting funding from the government. Canada is at a crossroads. A major paradigm shift is essential, not only in how the federal government operates but also in the expectations of Canadians, in order to prevent an end to what we all enjoy and expect as Canadian citizens.

Our world has changed in a dramatic way. Canadians, however, still believe the federal government exists solely to provide moneys for everyone's pet project. The economic demands resulting from global warming, global terrorism, an aging population, and the possibility of a pending pandemic require a major shift in federal spending practices.

The budget deficit now projected to last several years will be difficult to pay off and will hamper the necessary spending shifts needed to address this new reality, without a total change in the way that government operates. The fact that the application for submissions to this hearing only speaks about additional spending, new ways to spend moneys we don't have, and doesn't even mention the possibility that perhaps spending less may actually be beneficial indicates how out of touch our government and politicians are with reality.

Areas where spending should occur include the historical downsizing of the federal bureaucracy. Essentially, one result of the constant expansion of the public sector is that Canadians are refusing to vote, as no party is willing to deal with the ever-increasing growth and subsequent waste of the bureaucracy. As a result, governments are being elected by an ever-decreasing fraction of the electorate.

The Canadian public considers the federal government a body that ensures the waste and bad practices of the past continue, instead of being the body providing the solution to our problems. Only the federal government could justify the spending of $3 billion in order to manage the spending of billions more in the infrastructure program. We can no longer afford this insanity, either economically or socially. Change is essential. It is time for someone to say, “Enough”.

A decision must be made to determine which body is responsible for governing Canada, the PMO or cabinet. The PMO is a control issue and it's totally superfluous. Its funding should be cut dramatically.

Major reduction in the size of cabinet is also essential to demonstrate to Canada that government is serious about cutting costs. All ministers of state should be eliminated, along with much of their bureaucracy. Necessary agencies could be combined with existing ministries. As an example, opportunity agencies could be placed with intergovernmental affairs.

Several ministries should be collapsed and placed, again, in existing ministries—heritage to citizenship, natural resources to environment, public safety and veterans affairs to national safety. Considerable downsizing of government is essential.

The tens of millions of dollars presently given away for so-called multicultural special events such as parades, fairs, and celebrations is badly needed elsewhere. It is absolute insanity that Canadians are required to wait for months for pain-relieving or life-saving operations due to the lack of funding while moneys are given away to support social activities.

Due to our aging population, the Canada Health Act must be amended to permit access to private care for all Canadians, similar to what is already enjoyed in Quebec. If we in fact are living in a free society, Canadians should be allowed to spend their own money to speed up their diagnostic or surgical operations that they choose. The only requirement necessary to preserve the concept of universality would be to require physicians to maintain their current commitment to the public system. Prohibiting them from earning an appropriate living by limiting the amount of time they can practice due to the lack of public funds encourages them to leave Canada and must end. The implementation of competition will encourage the public system to reduce waste, especially in administration costs, and improve service and access.

Governments around the world are contemplating spending billions of dollars to deal with global warming. No money should leave Canada in the insane idea that giving another country funding for carbon credits somehow will remedy the greenhouse gas issue. Credits should be only spent internally, if at all. The fact that the greatest sinks for greenhouse gas are the oceans of the world is not only being totally ignored, but they continue to be destroyed by countries around the world that use them as a disposal zone for every toxic pollutant known. It will end up destroying this planet. The entire ecosystem of the oceans is being destroyed by pollution, acidification, and warming of the water.

One possible solution would be to implement a pollution tax on all products, determined by the amount of pollution created by their production and delivery to market—and not just carbon, but all gaseous, liquid, and solid pollutants as well.

The notwithstanding clause must be enacted to correct a major error made in the sixties. Canadians should have rights. However, in return, they must accept some personal responsibilities for their actions. Rights should not be available regardless of one’s lack of responsibility. A person who commits serious crimes against the state should lose their rights. Immigrants or those allowed to enter our country as refugees must respect the laws of our society. Immigrants and refugee claimants guilty of committing serious crimes against Canadian society, for example, murder or the production and selling of drugs, should be deported immediately, as is presently done in numerous other countries. The spending of any funds to defend people who have spat on the hands of our of kindness is unacceptable. Those found guilty of entering Canada illegally should be deported immediately. The government's responsibility to protect and provide security for law-abiding Canadian citizens must take precedence.

Thank you for the opportunity to speak to you this afternoon.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Mowatt.

We'll now go to Ms. Model.

[Elizabeth Model, Executive Director, Downtown Surrey Business Improvement Association]

Good afternoon, everyone, and members of the Standing Committee on Finance.

My name is Elizabeth Model and I'm representing the Downtown Surrey Business Improvement Association, the City of Surrey, and the Surrey Campus of Simon Fraser University.

With 465,000 people—and growing—Surrey is British Columbia's fastest growing region and our 12th largest city in Canada. Put into perspective with the United States, we would rank 35th population-wise—larger than Sacramento, California, that state's capital, and Miami, Florida. It's a youth-oriented city. It's rich and diverse, with an intertwining of ethnic and cultural backgrounds that brings a special vibrance and mix to the City of Surrey.

Our forward-thinking mayor, Dianne Watts, and her team of councillors and city staff have commenced work on the very large first-phase civic centre project in downtown Surrey, for which you have brochures. It comprises the commercial, business, residential, educational, and entertainment sectors, all brought together in one metro downtown core.

The first funding we're going to request is to complete a project on the Surrey campus of Simon Fraser University. It's an internationally recognized and innovative university. It's repeatedly ranked first in Maclean's survey of universities as Canada's premier university, due to its innovative teaching and scientific research and development activities. It targets and attracts future entrepreneurs, who are supported in the student venture program, which utilizes internationally recognized business people who participate in the program as mentors for enrolled students. This fall they have surpassed their target enrollment by 20%, and they have waiting lists.

Simon Fraser University requires a new health sciences and technology building on previously purchased SFU-owned land, a project budgeted at $16 million.

The second thing we're requesting is a proposed arts and cultural component for the downtown core, a 1,600-seat flex theatre and 250-seat studio theatre, which will be a draw for arts, entertainment, cultural, and learning activities. It will also act in conjunction with Simon Fraser University for large-scale lectures, conferences, conventions, and multimedia presentations. It will act as a catalyst, bringing the community together to create a positive, upbeat designated area for drawing more people to the metro downtown core of Surrey.

The economic spinoff is huge. More people equate to more jobs; more jobs, more services; more services, more business, more activity, more investment. It equates to a larger tax base and also has a multiplier and trickle-down effect within the community, where everyone will benefit, both the profit and not-for-profit sectors. It creates a healthy, vibrant, and balanced community.

The required funding for the City of Surrey's arts and cultural component is $150 million.

Finally, we ask for your continued support and endorsement of Service Canada's student employment program, which obviously allows for wonderful learning opportunities for our youth—and our youth are our future. We all remember our first job and what it taught us, or didn't teach us, in life and where we wanted to go. So we ask for your continued support with regard to that program.

So what are we asking of you?

We're asking you to lay the foundation for our future growth in Surrey—liveable, vibrant, downtown Surrey. It's exciting, it's happening, it's Surrey. So believe in us, invest with us. The future lives here in Surrey.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now go to Ms. Harney.