Finance Committee on Oct. 22nd, 2009

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Pacetti, please.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chairman.

It's tough asking questions to everybody, because we have limited time, so bear with us. But I want to ask Mr. Oberman a question. Nobody got to him yet.

In your proposal, you give the example of a rebate of 40% on a property paying $200,000 in realty taxes. Are you saying that, on a project of $200,000, you would be able to get a rebate of 40%? How would that work?

[Paul Oberman]

Under existing heritage programs, rebates are available in Ontario, for instance, on a sliding scale of between 10% and 40% of the taxes charged on the property.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

But it would be the municipality or the provincial government that would be giving the rebate.

[Paul Oberman]

Yes, the municipality.

The current legislation says that those rebates are to be shared equitably between municipalities, school boards, and other interested parties proportionate to the rates that they collect.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

So how would the federal government fit in?

[Paul Oberman]

I think the federal government fits in, in a couple of very important ways. Many years ago, when I started dealing with Heritage Toronto, they had a staff of 142 people. Today they have a staff of six people and they administer two and a half times the number of properties that they did several years ago.

Heritage property defence is not well funded. The private sector puts up a pretty good battle in arguments to demolish heritage properties because it's so expensive to restore them relative to the cost of just demolishing them and rebuilding them. I think where municipalities need help is to coordinate a program at a national level and perhaps for some municipalities to provide a form of bridge financing so that they can afford to take the revenue hit for--

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

So the money would flow from the federal government down to the municipalities. Is that your proposal? It's not clear.

[Paul Oberman]

Our proposal is not for you to necessarily fund the municipalities. I'm just saying that if your plan is to implement program that will be stimulative quickly, there is, according to Heritage Canada, $8 billion to $10 billion worth of construction that could be performed very quickly on already-identified properties. The challenge for municipalities is that if they forego revenue of up to 40% on these properties for a one- to two-year period, or perhaps longer, while the work is being done, they wouldn't have a net gain. But once the work is completed, under market value assessment, the property values increase significantly and the net take to municipalities would be significantly higher in all likelihood than it currently is.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

You're saying they would be able to borrow in excess of $1 million, in the same example, just because they're getting an annual rebate of $80,000.

[Paul Oberman]

At current interest rates, if we were to set up a federal system as we're proposing, I believe funds would be available at CMHC-equivalent rates, which for five years today is under 4%, plus amortization.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Why wouldn't you be able to get that funding now?

[Paul Oberman]

We have a large portfolio of heritage properties, most of which are restored, some of which have not been restored because we cannot get funding for them. There are no lenders that we're aware of in Canada of any particular size that want to fund the restoration of heritage properties even in a strong economy, let alone a weak one, because the costs are so high relative to the—

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Would CMHC give you the backing if it was a residential heritage property?

[Paul Oberman]

If it met their residential lending criteria, presumably they would.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

But this would be a proposal for non-residential?

[Paul Oberman]

This would include residential and non-residential properties. The key is to create an incentive, to use a carrot rather than a stick, and to make it desirable for people to restore properties.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you.

I just want to ask a quick question of Mr. Rosenberg.

You talked about productivity. We all agree that productivity has not been productive, let's say. It hasn't been high, especially here in Canada. But you haven't really presented any solutions. Would you happen to have any solutions? Do your statistics say anything that can help us?

[Michael Rosenberg]

Canada isn't necessarily any worse than anywhere else; I think that's a bit of a myth. Basically, Canada is a very well-organized society where companies work, the government works, things get done. So in that sense, I don't think we're bad compared to other places, as some people would suggest.

To me it's more a question of what do we have to do to keep it that way, because I see certain things that could cause productivity to fall.

So I don't want to see—

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

What would you recommend to keep it that way?

[Michael Rosenberg]

—too much emphasis on spending money on innovation and technology. I think that kind of continual change is what leads to unproductive results. There's a lot of expenses involved in that: staff turnover, training, time, money, hardware. That's what's taking away from productivity.

There is another thing I wanted to say that I didn't really get to say too much about before. I think there's a real danger if we don't do something to stop the emissions of carbon dioxide and greenhouse gases. Once the effects start to occur it will seriously impact the economy in a negative way. So doing something about that is also part of being productive in the economy. We have to stop emitting carbon dioxide.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Okay, thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Pacetti.

We'll go to Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chair.

Thank you for coming. I'm going to be very quick because I'm trying to hit most of you.

Just so the opera folks know, the same ask has come from a number of arts groups. I know you've kind of coordinated it. I'm sure CanDance, which is coming next, will ask for the same thing.

I'm interested in pursuing number two to see where that goes. I'm not sure asking for a $40-million increase this year in the Canada Council is realistic, but I can understand why you put it out there.

I have a question for Mr. Oberman on the designated homes...and I'm familiar with this chiefly because I was on LACAC in Burlington.

Is it designated homes only, or...? We tried to get a heritage district when I was on council and we basically got thrown out of the neighbourhood for trying to do a heritage district, which I was very much in favour of.

Who do you expect to be able to track that benefit that you're talking about?

[Paul Oberman]

I think you attract everyone who has a qualifying heritage property.