Finance Committee on Oct. 26th, 2009

[The Chair, Conservative, James Rajotte]

I call to order the 55th meeting of the Standing Committee on Finance, continuing our pre-budget consultations in Ottawa.

This afternoon we have two panels of an hour and a half each. We have eight organizations per panel, so there are a lot of witnesses to hear from and a lot of discussion.

I'll read the organizations in order of presentation to the committee.

We have with us this afternoon the Canadian Public Works Association, the Canadian Museums Association, the Canadian Institute of Chartered Accountants, the Canadian Library Association, the Canadian Home Builders' Association, the Canadian Bankers Association, the Canadian Centre for Policy Alternatives, and ParticipAction.

Welcome to all of you. Thank you very much for being here with us.

Each organization has a maximum of five minutes for opening statements.

We'll start with the Canadian Public Works Association.

[Gary Losier, President, Canadian Public Works Association]

Thank you, Mr. Chair.

I'm Gary Losier, president of the Canadian Public Works Association. The CPWA was established in 1986 as a national voice for the Canadian public works community. Our members are drawn from across Canada and encompass all disciplines of public works.

As you know, public works is the backbone that helps make our communities safe, healthy, sustainable places in which to live, work, play, and invest. Public works includes the obvious, from waste water treatment to roads to mass transit, and the less obvious, such as traffic signals, utility systems, snow removal, waste removal, recycling programs, and parks.

Our presentation today will focus on two topics. First is our recommendation for funding for the National Round Table for Sustainable Infrastructure. Second, and in accordance with the committee's request, we will provide feedback on the effectiveness of the government's infrastructure stimulus fund and suggest some enhancements moving forward.

Recent governments deserve credit for the considerable investment being made to Canada's infrastructure deficit. This is a move in the right direction. With tens of billions at stake, we along with many other infrastructure stakeholders believe that investment ought to be maximized. The National Round Table for Sustainable Infrastructure helps to achieve value for taxpayers' dollars. Begun in 2003, the NRTSI is a forum comprising leading infrastructure authorities from across Canada, all levels of government, and first nations. NRTSI is not a policy-making body. Rather, its work provides industry and governments with access to a one-stop shop for analysis, research, and consolidated opinion from a broad range of infrastructure experts unmatched elsewhere.

The federal government has provided a direct, short-term contribution towards the round table's activities, a clear indication that it sees value in the NRTSI format. However, beyond this initial commitment, no assurances have been provided for the NRTSI despite its valuable work to address capacity issues surrounding small community infrastructure, to explore infrastructure financing solutions such as public-private partnerships, and to develop consistent structures for use by the various professions and jurisdictions that are responsible for aspects of asset management.

NRTSI members have made financial and human resource commitments, and we feel there's a role for the federal government to complement these contributions to assist in setting up a management office and hire permanent staff. The upfront cost to the federal government would amount to $1.5 million per annum for the first three years, diminishing to $750,000 per year in years four and five. The reduced federal contribution for the final two years of the five-year plan would be offset by anticipated contributions from the provinces, territories, and municipalities.

Let's quickly talk about the infrastructure spending announced in budget 2009 that formed the cornerstone of the federal government's economic action plan. In many instances, it was our members who worked directly with municipal councils in completing the applications for stimulus funds.

In response to the finance committee's pre-budget study, the CPWA has surveyed its membership about the effectiveness of the infrastructure stimulus fund, the $4-billion two-year fund announced in the budget. Our members were asked to comment on government communications, the accessibility and user-friendliness of the application process, the funding specifications of the various stimulus funds, and the speed with which the money has been disbursed.

I will start first with a positive. More than 60% of members felt that the provision for matching funding did not complicate the process and was based on sound rationale. Criticism of the program focused on the short timeline for completing projects. We were pleased that the government decided not to proceed with clawback provisions initially planned under the ISF for projects not completed by March 31, 2011. However, in some instances work has not proceeded because paperwork and agreements to initiate work have not been received in a timely manner.

Recently Atlantic mayors and FCM called for an extension of two construction seasons, and we support that recommendation. The federal government has done a commendable job in moving quickly, but it should not punish the applicants by strict interpretations of the March 31, 2011, date for ISF-funded projects.

A longer funding horizon for projects that were delayed due to circumstances beyond their control is good policy at no additional cost to taxpayers.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now hear from the Canadian Museums Association.

[John McAvity, Executive Director, Canadian Museums Association]

Thank you very much, Mr. Chair.

My name's John McAvity. I'm the executive director.

I have a handout, available in both English and French, that would supplement my comments.

We're very pleased to be here today. Thank you very much for the invitation.

As stated in our brief, we have two recommendations for you to consider.

I'd like to start off by saying, right off the top, that we understand the myriad of spending requests that will be coming before this committee in this process, and this at the very time when Canada is just emerging from a recession and is facing a deficit. As a result, our recommendations, which have been scaled back, are, we believe, modest and practical.

We're very often asked why museums cannot be more self-supporting. I'd like to address this right at the beginning. Far from viewing government as a cure-all, museums view government as a foundation upon which to build. Museums are working very hard at becoming more financially self-sufficient. They've been achieving significant results. We have reduced reliance on governments significantly over the past decade.

Today, museums earn about a third of their revenue from earned sources, including entry fees, admissions, memberships, store sales, etc., and we want to continue this trend. Fundraising activities are up 23%. We are also focusing on increased private sector donations. This is a point I'd like to address in a minute.

We have two key recommendations for you, both, again, modest and practical, which will enable Canadian museums to continue to contribute to the economic and social fabric of our communities, large and small, east to west.

Our first recommendation is that the museums assistance program, administered by the Department of Canadian Heritage and currently under review, be updated to reflect the context in which museums operate today with a revised policy and program design, including program administration and an annual budget of $20 million, increased from the current level of $6.7 million.

This program, MAP, supports travelling exhibitions, outreach activities, improvements in museum management, and aboriginal heritage initiatives. The program's budget is $6.7 million per year, which is in fact less than it was when it started in 1972. Funding is primarily available for short-term one-year projects and is often delayed due to heavy administration. It is our view that MAP's budget and overall policy framework have not kept pace with the growth and the success of the Canadian museum sector.

The museums assistance program, as I mentioned, is undergoing a summative evaluation, with the renewed program set to launch in April 2010. We support this comprehensive review and call for a revitalization of the program, including revised and updated objectives, streamlined delivery, access to multi-year support, and an overall increase in its spending authority.

The second recommendation we bring to you is that the federal government invest annually in a five-year initiative, which we call the “Canadians Supporting Their Museums Fund”. The objective is to encourage greater private sector contributions, individual and corporate, to museums. Despite having a healthy tax environment in Canada for philanthropy and despite a reduction in both taxes of individuals and corporations in recent years, museums lag behind other charities when it comes to private support. Currently, museum donations represent only 9% of the museums' operating budgets. In the United States it is closer to 40%. To be sure, the recession is part of this cause, but it has existed beforehand.

Canadians need to be encouraged to become more active supporters of heritage, and a program like the one we're proposing, where private financial donations to museums would be matched dollar for dollar, where $1 effectively becomes $2, is the way to do it. I should mention that the Department of Canadian Heritage does have a similar program for endowments, but it is only available to performing arts companies. Museums are not eligible.

We believe it is time to build a special program for museums that meets their needs and increases their self-reliance. It is important to stress to you that we see this as a short-term program to leverage private donations to help our sector become more self-sufficient.

I'd like to conclude with a word about the recession, the transforming nature of jobs in Canada and around the world, and why the government ought to consider investment in the cultural sector for job retraining and development of new skills.

The Conference Board of Canada pegged the cultural sector's contribution at $84.6 billion per year. This recession has signalled profound changes in the Canadian economy, and as we emerge from it, the jobs of tomorrow are going to look very different from the jobs of today.

Creativity, research, innovation are going to be the drivers of the new economy in Canada, and jobs that emphasize this are going to propel us forward. Jobs in culture offer stimulating opportunities to develop new skills for those in transition. Jobs in culture cultivate creative minds. They are creative incubators for retraining those in the unemployment ranks. We urge the government to invest in such a program.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We'll now hear from the Canadian Institute of Chartered Accountants.

[Bruce Flexman, Chair, Tax Policy Committee, Canadian Institute of Chartered Accountants]

Good afternoon.

I am Bruce Flexman, chair of the CICA tax policy committee. On behalf Canada's 75,000 chartered accountants, I thank you, Chairman, for the opportunity to appear before your committee.

In my remarks today I will highlight our views on the federal tax and program spending measures needed to ensure prosperity and a sustainable future for Canadians. Although there are encouraging signs that Canada is expected to return to economic growth, the country continues to operate in uncertain fiscal times.

As outlined last month, the country's fiscal position is now forecast to be weaker than projected in the 2009 budget. It is essential that the next budget include measures aimed at creating wealth, boosting job creation, and facilitating capital mobility, and that strong controls be placed on program spending. In doing so, there's no question that the government faces a difficult balancing act.

Let me make the case for corporate income tax reductions. We continue to believe that our tax system should create wealth and enable individuals to maintain a relatively high standard of living. Central to this is the need to further reduce corporate income taxes. There are solid reasons for doing so. Studies show that taxes on capital investments have the most profound effect on our productivity. Evidence also shows that an increase in the tax burden placed on capital investment substantially reduces the income paid to workers when business productivity is impaired. Finance Canada's research acknowledges that lower corporate income taxes result in increased business investment.

We note that Canada has made important progress in reducing corporate taxes, and we applaud the government's goal of establishing the lowest marginal effective tax rate on new business investment in the G-7 by 2010. We also welcome recent announcements that Ontario and British Columbia will adopt a harmonized sales tax and that the federal government will provide funding to these provinces to support the transition.

We urge the government to stay the course in reducing the corporate income tax rate to 15% by 2012. Canada simply cannot afford to abandon the progress that has been made in reducing corporate taxes.

At the same time, we can't afford to stand still while competing. Countries make continued progress in reducing their corporate taxes. A recent report by the C.D. Howe Institute acknowledges that tax changes planned by federal and provincial governments in Canada will result in our marginal effective tax rate falling to 18.9% by 2013, bringing Canada close to the average rate among 80 countries worldwide. However, it also cautions that in a changing world it is unrealistic to assume that other countries will not reform their corporate taxes.

Further business tax reductions must be undertaken in order to truly drive wealth creation, increase prosperity in Canada, and allow profitable companies to grow and prosper—those that are often in the best position to expand and compete internationally.

As finances improve, we urge the government to reduce the corporate tax rate to the small business level. We also urge the adoption of recommendations contained in the report of the Advisory Panel on Canada’s System of International Taxation aimed at ensuring that Canada is better able to compete globally.

Canada must also stay attuned to the personal income tax burden placed on Canadians in order to stay competitive and to attract and retain human capital. We believe a closer look is needed at the personal income taxes paid by those earning between $80,000 and $150,000.

There are two additional measures that we believe should be considered to boost investment in Canada. In order to ensure they act as incentives to investment, tax depreciation or capital cost allowance rates should be continuously adjusted to line up with the true economic value of the asset. Under the SR and ED program, the scientific research and experimental development program, investment tax credits are fully refundable only for smaller companies. We urge the government to make credits available for all claimants.

I also want to comment on program spending restraint. The government has now confirmed a deficit for 2008-09 of $5.8 billion, and it is projecting that the deficit this year will be $55.9 billion, numbers that are significantly larger than those projected only months ago. Deficits are now expected to continue until 2015.

Amid a global financial crisis, it is understandable that the government has embarked on an infrastructure stimulus spending program. The challenge is to ensure that the deficits that will result from this are temporary.

We also believe a framework should be established under which overall program spending does not rise at a rate faster than the rate of inflation, adjusted for population growth.

In conclusion, we believe economic prosperity and sustainability are best achieved through future income tax measures that create wealth, boost job creation, and facilitate both capital mobility and corporate liquidity. At the same time, strict control on program spending is needed to avoid structural deficits and allow further corporate tax reductions, as is the elimination of the deficit over the medium term.

Mr. Chairman, this concludes our comments. Thank you for the opportunity today.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We'll now hear from the Canadian Library Association.

[Kelly Moore, Executive Director, Canadian Library Association]

Thank you, Mr. Chair.

Good afternoon. My name is Kelly Moore. I'm the executive director of the Canadian Library Association.

With me is Jan Harder, a member of CLA's executive council and president of the Canadian Library Trustees Association.

We appreciate this opportunity to meet with you in the context of your 2009 pre-budget consultation.

The Canadian Library Association is Canada's largest national, broad-based library association, representing the interests of public, academic, school and special libraries, as well as professional librarians, library workers, and library trustees.

Sustainable investments in libraries pay long-term dividends in having economically stronger and more socially inclusive communities. We would like to briefly highlight three critical issues for the library community as they relate to federal spending and taxation policy.

[Jan Harder, Executive Council Member, Canadian Library Association]

The first issue is public library infrastructure. Public libraries are in vital need of further investment to build and/or upgrade their infrastructure, and this need is essential for three reasons: one, to incorporate the latest information and communications technologies for library users; two, to increase access to the physically disabled; and three, to become more energy efficient.

Canadians know they can get the information services and assistance they need from their public library. Public libraries are beneficial not only for entertainment and leisure purposes, but they also provide essential resources to help stimulate Canada's national economy.

As the demand for library services and resources continues to rise, essential programs are in extreme danger of being cut due to lack of funding. The library community acknowledges and appreciates recent federal initiatives that support libraries. For example, budget 2009 provided a targeted two-year fund of $60 million to support infrastructure-related costs for local and community cultural and heritage institutions, including libraries. In addition, a selection of public libraries has benefited from the $4-billion infrastructure stimulus fund.

These short-term initiatives demonstrate that progress is being made, but there is much more to be done. Canada still lacks a long-term, sustainable approach to public library infrastructure investment.

[Kelly Moore]

The second issue we would like to discuss is the library book rate, a Canada Post service that, since 1939, has provided a reduced rate for mailing library books both between libraries and from libraries to their users. With over 2,000 libraries actively using the library book rate and more than one million Canadians benefiting from it annually, the library book rate is an indispensable part of the service delivered by Canada's libraries. This rate supports and encourages the sharing of taxpayer-funded library books in Canada. At relatively little cost, it acts as a bridge among all Canadians, including the disabled, shut-ins, and residents in remote locations. It is also a way of creating a more literate and informed population.

The library book rate is not a government program and is not currently financially supported by the federal government; therefore, librarians in all constituencies continue to be concerned about its sustainability. Currently decisions for renewal of the rate are made by Canada Post on an annual basis. If this program were to be discontinued, it would severely reduce access to books for people living in rural and remote parts of Canada and it would deprive the rest of the country from being able to access the unique information resources often preserved in local libraries.

Finally, I would like to highlight the urgent need to enhance library services for Canadians with print disabilities. According to Statistics Canada's 1991 Health and Activity Limitation Survey—this is the most recent data available on this topic—three million Canadians are unable to read print, and this group has access to less than 5% of all public library material in alternate formats, such as Braille or audio books.

While the library community welcomes the alternate format library services provided through Canada Post and allowances through Canadian copyright legislation for alternate format producers, Canada still remains the only G-8 country that does not provide annual support for the production of alternate format library materials.

In 2005 a landmark CLA report entitled Opening the Book was produced. This report outlines how the current fragmented resources serving Canadians with print disabilities could be organized into an efficient and equitable nationwide library network. We acknowledge the Government of Canada for its support, through Library and Archives Canada, of the initiative for equitable library access, but there is still much more work to be done to realize the vision for accessible services, as outlined in the “Opening the Book” report.

[Jan Harder]

These are our three recommendations to the finance committee.

CLA recommends that the Government of Canada implement regulatory changes to encourage long-term sustainable infrastructure funding for public libraries.

Secondly, we recommend that the Government of Canada allocate permanent funding to maintain a reduced rate of postage for library materials.

Last, CLA recommends that the Government of Canada allocate long-term funding for the continued support of the initiative for equitable library access, to ensure greater access to information for Canadians with print disabilities.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now hear from the Canadian Home Builders' Association.

[Gary Friend, President, Canadian Home Builders' Association]

Thank you, Mr. Chairman, for inviting us to be here today.

My name is Gary Friend, and I'm president of the Canadian Home Builders' Association.

Let me begin by introducing John Kenward, chief operating officer of the Canadian Home Builders' Association.

I'm a new home builder from Surrey, British Columbia, and for more than 25 years I've been building single-family homes. Most recently my company has been focused on low-rise wood frame condominium projects in the Vancouver suburbs.

The Canadian Home Builders' Association represents Canada's residential construction industry. Our members includes new home builders, renovators, developers, suppliers, trades, manufacturers, lenders, and other professionals. The CHBA has more than 50 local home builders' associations and eight provincial associations.

A year ago we were very unsure about the future; the impact of reports about collapsing housing markets was weighing heavily on our industry. Earlier this year we were experiencing even greater uncertainty with the declaration that global economic conditions rivalled the Great Depression.

I won't go into detail other than to say that we commend the federal government for its fiscal measures and the Bank of Canada for its monetary approach. We were fortunate, indeed, to have a strong financial system and a responsible mortgage insurance environment due to Canada Mortgage and Housing Corporation.

Looking forward, CMHC's medium-term forecast indicates that starts will rise to 150,300 in 2010 and will gradually increase to more than 175,000 starts by 2013. This is a very robust level of housing activity, well above the averages of the 1990s.

On the renovation front, we expect that renovation spending should continue to be strong. Since the early 1990s, renovation expenditures have been greater than the expenditures on new housing construction. Spending on residential renovations is forecast by CMHC to total roughly $51 billion in 2009, down slightly from the estimated $53 billion in 2008.

The picture I am painting is of an industry that has the potential to continue to make a substantial contribution to Canada's economic recovery and the economy over the long term. However, as the Governor of the Bank of Canada has observed, the recovery is accompanied by significant fragilities.

Beyond those fragilities, we have other concerns. Let me address three of them in brief: first, the proposed harmonized sales tax in British Columbia and Ontario; second, the underground cash economy, particularly in the renovation sector; and third, the federal tax regime for purpose-built rental housing.

Let me emphasize that our industry believes that tax harmonization is good for Canada's economy and competitive position. That being said, it is important to note that harmonization has a particularly significant impact on the housing industry and on housing affordability. This was recognized by the federal government when it implemented the GST in 1991. A GST new housing rebate was introduced, with a commitment to adjust the rebate over time to protect housing affordability.

Unfortunately, the rebate has not been adjusted, even though Canada's new house price index has increases of more than 50%. Tax harmonization will add substantially to the tax burden on new housing and, therefore, the price of new housing. As well, harmonization will nullify the benefits that came with the reduction of the GST rate from 7% to 5%.

Consequently, in order to protect housing affordability under tax harmonization, and given that the current GST rebate thresholds are frozen, the CHBA calls on the federal government to adopt the rebate approach being proposed by Ontario and B.C., with a commitment to adjust the thresholds in the future, in line with rising housing prices.

Tax harmonization will also further increase the tax burden on renovation work. The federal government did not provide a renovation tax rebate when it implemented the GST, resulting in a substantial additional tax burden on Canadians carrying out renovations using the services of tax-paying renovators. This tax burden will be exacerbated by the proposed HST in Ontario and B.C.

As a result, the CHBA calls upon the federal government to introduce a renovation tax credit to achieve revenue neutrality with the pre-1991 federal sales taxes on renovations. In this regard, I should note that harmonization in Atlantic Canada, which did not include the renovation tax rebate, led to a dramatic increase in the underground cash economy.

With respect to the underground cash economy, we have two points to make. The contract payment reporting system should be replaced with an effective approach to change the underground cash economy.

In sum, Mr. Chairman, we are nervously optimistic about the future. As I've said, the industry has great potential. There has been pronounced improvement in housing activity over the last little while. Nevertheless, we believe that caution should prevail. We need more evidence that the economic conditions are clearly in place for stronger markets going forward.

I can tell you, on a more personal basis, that recently I have been experiencing slower activity.

In an economic environment with significant fragilities, we have to be concerned about what the consequences will be for our industry and consumers of such new factors as tax harmonization.

We're leaving you with two reports from the CHBA, one on long-term housing demand and another on Canadian housing performance and trends.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll hear now from the Canadian Bankers Association.

[Terry Campbell, Vice-President, Policy, Canadian Bankers Association]

Good afternoon. My name is Terry Campbell. Accompanying me today is my colleague, Darren Hannah, Acting Vice-President of Banking Operations.

We wish to thank the chair and members of the committee for providing us the opportunity to present our point of view.

As you know, the Canadian Bankers Association works on behalf of 50 domestic banks, foreign bank subsidiaries, and foreign bank branches operating in Canada, and on behalf of their 263,000 employees across the country. We're proud of our member banks for their continued strength and stability at a time when many banks around the world have required massive taxpayer bailouts to continue operating—and, quite frankly, while others just no longer exist. By contrast, our banks are well managed, well regulated, and well capitalized and have not been a burden to taxpayers. In fact, they are continuing to provide financing to consumers and businesses throughout this tough economic period. This is an advantage for Canada as we begin our economic recovery.

In addition to sound management at our banks, Canada's regulatory system is robust. There are clear benefits to consolidated regulation, and we believe these benefits would be further enhanced if Canada were to move to a single securities regulator. While Canadians are able to have confidence in the regulation of the banking sector, securities regulation is one area where further work is needed. So we congratulate the government for its initiative to move quickly to a single securities regulator.

As I mentioned, despite tough economic times and global financial turmoil, Canadian banks have continued to make credit available to creditworthy businesses across the country. Lending to businesses has grown at a pace in line with business demand. A year ago, just as the financial markets were the most fragile, Canadian bank lending to businesses accelerated as other sources of financing contracted. Despite the fact that banks stepped in to provide some of the shortfall that emerged in the business financing market, they were not able to fill the credit gap completely. The federal government recognized this in budget 2009 with the introduction of the business credit availability program—BCAP, as it is known—which provides at least $5 billion for additional lending to firms through Export Development Canada and the Business Development Bank of Canada, and in cooperation with private sector lenders. Banks are actively working with these programs in an extra effort to find credit solutions for creditworthy business clients during this challenging economic time.

As the economy gradually regains strength, the need for extraordinary government financing programs should abate and the balance between banks and other lenders in the overall financing market should return to more traditional levels.

In the wake of the global recession, Canada has been faced with major challenges on the domestic front. However, Canada has a number of advantages that will hasten its economic recovery, including a sound fiscal base and an ongoing strategy to achieve international tax competitiveness. This fiscal policy direction has served Canadians well by providing fiscal stimulus in the short term while helping to put the economy on a strong foundation for sustainable growth.

The CBA believes that the government should stay the course on its taxation program, and we believe there are revenue-neutral tax measures that can be undertaken to further enhance Canada's tax competitiveness. As outlined in our submission, these revenue-neutral tax measures include continuing to implement the recommendations of the report of the Advisory Panel on Canada's System of International Taxation and amending tax legislation to allow for consolidated tax reporting by Canadian companies.

We'll be very pleased to answer your questions and to elaborate on some of these points.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now hear from the Canadian Centre for Policy Alternatives.

[Armine Yalnizyan, Senior Economist, Canadian Centre for Policy Alternatives]

Thank you, Mr. Chair.

The CCPA is Canada's leading progressive think tank supported by 10,000 individual and institutional members across Canada, with offices in Ottawa, Vancouver, Winnipeg, Regina, and Halifax. Thank you for inviting our views today on how to prepare the next federal budget.

Today I'm putting forward three recommendations that are immediate, medium term, and long term for inclusion in budget 2010 that will meet the objectives stated by the chair of this committee, James Rajotte, in his invitation to advise this committee and the government on how to attain sustainable, economic, social, and environmental prosperity for all Canadians.

The first recommendation is to improve employment insurance so that it operates more effectively as an automatic stabilizer for the economy.

The second measure, medium term in nature, is to extend and reorient the home renovation tax credit so that it targets home renovations that advance the energy efficiency of all Canadian households across the income spectrum.

Recommendation three is to limit the tax-free savings account to redirect this taxpayer-supported initiative away from high-income individuals to low-income individuals, to give them the ability to build a modest financial cushion.

To address the immediate needs through EI improvements, we noted in April of 2009 in a report called Exposed that unemployed Canadians have not been this exposed to the economic risks of joblessness since the mid-1940s. The government should move immediately to improve access to jobless benefits by decreasing the variability of entrance requirements and introducing a lower hourly threshold. It should extend the duration of benefits uniformly, as it did in Bill C-10 but has not yet done in the proposed latest round of extensions to Bill C-50, and it should raise the income replacement rate, particularly for low-paid workers with dependants who have lost their jobs and cannot find alternative work.

It should be noted that all three ways of improving EI were agreed to in all-party approval at two readings but narrowly missed passage in Bill C-269 in November of 2007, when the present government refused royal recommendation at third reading. We have known for years that the EI system was not recession-ready. There is literally no more time to waste in fixing this automatic stabilizer so that the recession is not unnecessarily prolonged or deepened.

In the medium term, we ask the government to consider extending and reorienting the home renovation tax credit. The recession and widespread job insecurity has led many households that might have otherwise spent up to $10,000 on renovations to postpone taking advantage of the type of supports that the home renovation tax credit offers, which are largely in the category of decorative upgrades. With most household incomes stagnating during this period and many households experiencing significant income losses, Canadians are rightfully concerned with the possibility of rising energy prices. Cutting costs and improving energy efficiency is a welcome solution to both constrained household budgets and growing awareness that our individual energy use habits contribute to the pace of climate change.

The federal government could provide a second year of stimulus, this time targeting tax credits specifically to home renovation projects that improve energy efficiency of homes and apartments. We propose that the government apply any tax expenditure room not taken up in that window of January 27, 2009, to February 1, 2010, and add it to a further $2 billion in tax credits to be made available for work undertaken up to November 2011, and that these amounts be also matched with $2 billion in federal grants so that low-income homeowners and landlords can also participate in a program that improves energy efficiency across the country.

Finally, we recommend that for the longer-term sustainability of our public finances, this government limit the tax-free savings account. At a time when most governments around the world were trying to devise ways of increasing aggregate demand and private sector spending, this government chose to use scarce public revenues to encourage people to save. It did not wait until the recovery was under way to introduce what the Certified General Accountants Association of Canada has called a “revolutionary” new savings instrument. This undercuts the government's argument that the revenue hole caused by the recession is a serious public finance concern.

Budget 2008 showed an anticipated cost of $920 million to the public purse over the first five years of introduction, and went on to state that in 20 years, it was estimated, this measure would leak a minimum of $3 billion annually from the Treasury. Current tax expenditures of about $20 billion a year are provided through the RRSP and RPP tax shelters, which primarily advantage those with high incomes.

The tax-free savings account continues this bias. Given concerns about emerging financial pressures caused by an aging demographic, such revenue losses will add to the difficulties faced by all future governments. The Government of Canada should limit lifetime TFSA contributions to $50,000, or 10 years' worth of contributions, and cap the growth in such accounts to a lifetime limit of $150,000.

The full submission that I have made to this committee, available in English and French, outlines how that could be done. This would amply provide for low-income individuals to create a small financial cushion in case of unforeseen exigencies should they be able to save from their income stream or find themselves in receipt of an inheritance or lottery winnings. Those who find themselves at the top of the income spectrum need no further tax-supported assistance to increase their holdings beyond the tax shelters that currently exist.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll finish with ParticipAction, please.

[Kelly Murumets, President and Chief Executive Officer, ParticipAction]

Thank you.

Good afternoon. My name is Kelly Murumets. I am the president and CEO of ParticipAction.

I am joined by my partner, Donovan Bailey, who is a member of our ParticipAction board. He needs no introduction, so I'll give you a little introduction of me.

I come from the private sector. I most recently ran a publicly traded telecom company. I left the private sector to join the not-for-profit sector because I'd like to change the world. ParticipAction is my second cut at it. I left an MBA for a Master of Social Work; that was my first cut at it, and this is my second cut at it.

I truly believe it's possible for ParticipAction to change the world. Our vision is that Canadians will be the most physically active on earth. We can only do that if we're partnered with our other not-for-profit partners, with the public sector, and with the private sector, and I believe 100% that it's possible.

We are in the midst of an inactivity crisis in our country. More than half of Canadians are deemed to be physically inactive, almost half of Canadians are overweight, and childhood obesity rates have tripled in the last three decades. Our kids--not American kids, our kids--spend at least six hours a day on screens, meaning television, text messaging, Internet. If you multiply that by seven, it's 42 hours a week. Our kids spend as much time on screens as their parents do in their jobs.

The data in my sector is crummy, but I know that $5.3 billion of health care costs in 2001 were directly attributable to physical inactivity. In addition, 25 chronic diseases are directly attributable to physical inactivity. We have a crisis in our country, and our proposal is that if the government would invest $5 million per year for a long-term sustainable investment in ParticipAction rather than pouring more and more money into treatment, we could deal with prevention and make sure we have healthy living for all Canadians. Donovan and I are here to tell you why that would be a good investment.

ParticipAction is the national voice of physical activity and sport participation in our country. With that, over the last two years we have been able to take small investments, get things done, and realize great returns on those investments.

I'm going to talk about two different track histories. One is a track record that's a bit more historical. The ParticipAction of old was around for 30 years. Many of us--depending on our age--remember it. You'll remember either the 60-year-old Swede, or Hal and Joanne, or the Canada Fitness Awards and the flexed arm hang. I sit on planes almost every day, and someone beside me always tells me some beautiful, fond memory they have of ParticipAction.

ParticipAction of old was wildly successful: we have an 84% brand recognition. I've run two companies in the private sector, and I would have died for those kinds of brand awareness and brand equity numbers. We have that in this Canadian--

[The Chair, Conservative, James Rajotte]

I'm sorry, Ms. Murumets; the interpreters have asked that you slow down just a little bit.

[Kelly Murumets]

That's my normal style. Can you tell that I have a little passion for what I get to do every day? I will slow down, sorry.

We have an 84% brand recognition. ParticipAction is a Canadian icon, and it is an amazing iconic brand.

Let me tell you about our more recent history. When I took over ParticipAction, it was just about to be relaunched. We had no employees, no office, no processing systems, and no strategy. In two years, we have taken something that was simply a brand and have recreated an organization. We have achieved several successes, and I'd just like to go through a few of those.

We've raised in excess of $10 million cash from the private sector and therefore leveraged the federal government moneys. We've raised in excess of $20 million of in-kind moneys from the private sector, again leveraging federal moneys. We've touched over 10 million Canadians.

We have established a ParticipAction partner network. I believe this truly should be our legacy. In my sector, there's a lot of competition, as opposed to working together to marshal resources to work most efficiently together. So we have been working with organizations right across our sector so that we actually take one plus one and come up with 10.

We have been able to deploy programs to over 1,000 communities. Our job is to use our iconic brand to attract dollars to our sector. We deploy resources and dollars back out to the sector, to the community organizations from coast to coast to coast where the expertise and the passion exists, and we really help create demand for programs that currently exist.

We have been in every one of the 13 provinces and territories. I know that lots of organizations say they're national. We truly are.

One of our programs, for example, is youth-based, the most vulnerable population when it comes to physical inactivity. I would be sitting with kids in Iqaluit, saying, “You know what? You can carry the torch in the 2010 Winter Olympics.” We've been able to leverage the Olympics. ParticipAction is involved with that. We have worked with blue-chip organizations--Sun Life, Loblaw, Wilson, Forzani, Coca-Cola--to leverage those.

Quite often when I have conversations with folks from the federal government they ask me, “Well, if you're so good at raising private moneys, why do you need the federal government?”

I can tell you that I've met with the CEOs of several of these blue-chip companies, and they always ask, “Are you endorsed by the federal government?” They need to know that we are in fact endorsed and funded by the federal government. The $5 million will be a reduced percentage of our total budget, but we need long-term sustainable funding from the government in order to attract those private sector dollars.

The last point I would make is that clearly I have passion. I love what I get to do. I'm very proud of the team that I get to work with every day. We would work our tails off, just as we have for the last two years, to make the federal government proud as well.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

As chair, I should have recognized Olympic and world champion Donovan Bailey.

Thank you for being with us here today.

[Voices]

Hear, hear!

[The Chair, Conservative, James Rajotte]

Mike Wallace said to me that he thinks he might be able to take you in a race now.

[Voices]

Oh, oh!