Finance Committee on Oct. 26th, 2009

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Oh, oh!

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

Mr. Flexman, do you have a comment?

[Bruce Flexman]

This is my segue, is it?

I think the issue around tax consolidation is an administrative issue. Quite frankly, many organizations are able to restructure and effectively offset losses with profits in different companies within a common group. I think the major concern is you're asking people to jump through a whole bunch of hoops to do something that eminently makes sense and is in effect able to be effected by most large corporations in any event.

I think it would improve Canada's competitiveness and it would make it administratively simpler for businesses to operate with that provision.

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

Thank you.

I also have another question for you, Mr. Flexman. You mentioned incentives for research and development in your background materials. Some groups have asked us to make the SR and ED tax credits refundable. Do you support that?

[Bruce Flexman]

Yes, that's part of our submission. We believe that for companies that are trying to grow there should be a refundable aspect to the credits.

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

Mr. Chair, I'd like to share my time with Ms. Block.

[The Chair, Conservative, James Rajotte]

You have one minute, Ms. Block.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much.

My question is for the folks from ParticipAction.

I am from Saskatoon, and I remember that pilot project. I was about 10 years old then. It's very interesting to have you here today.

You indicated that $5 million is used as leverage. You need some form of funding from the federal government in order to leverage more funding. What is your total budget for ParticipAction?

[Kelly Murumets]

We operate off that. Over the last two years, we've been able to raise almost $10 million in private sector moneys.

Lots of the private sector moneys, though, we don't use to fund ParticipAction per se. What we do is we attract those dollars and we create a program, if you like, that helps the private sector organization meet its business objectives. Are they trying to drive revenue margin, their profile, or ultimately profitability?

Ultimately with us, we're trying to drive Canadians to be more physically active so that Canadians will be the most physically active on earth. So then we create a program where both organizations meet their objectives, and then we deploy those programs right back through our ParticipAction partner network to the community level.

So most of those dollars go to either creating that program or deploying it back out to the community organizations who deploy it and implement it on our behalf.

[The Chair, Conservative, James Rajotte]

Thank you very much.

I'm sorry; I'm sure we could continue this discussion.

I do want to thank all of you for being with us here this afternoon. Your submissions to the committee, your responses to our questions, we appreciate very much.

Colleagues, we will suspend for a few minutes and then bring the second panel forward.

[The Chair, Conservative, James Rajotte]

We'll continue with our pre-budget consultations.

We have another eight organizations with us here for the second panel. We have the Canadian Artists' Representation, the Canadian Association for Community Living, the Canadian Automobile Dealers Association, the Boys and Girls Clubs of Canada, the Clean Air Renewable Energy Coalition, the Co-operative Housing Federation of Canada, BIOTECanada, and the Railway Association of Canada.

If we could have you present in the order that I outlined, you will have five minutes for an opening statement.

We'll begin with the Canadian Artists' Representation, please.

[April Britski, Executive Director, Canadian Artists' Representation]

Thank you.

My name is April Britski, and I'm the national director of Canadian Artists' Representation, the Front des artistes canadiens. My colleague Mario Villeneuve is our national president.

We'd like to thank you for considering our submission and hearing about them further today. CARFAC is a national association of visual artists. There are over 17,000 visual artists across Canada, approximately 4,000 of whom are our members. We saw our submission as an opportunity to invest in the economy. The arts provide real value for money, we feel.

Visual arts contribute $1 billion to the Canadian economy annually. There are numerous social benefits to the arts, and Canadians value what we do. As you probably heard earlier from the museums association, millions of Canadians attend museums on an annual basis.

At a time when the economy is struggling and job creation isn't a priority, it costs considerably less to create and sustain jobs in the arts sector compared to heavy industry. Other sectors also rely quite heavily on the arts—I'm thinking of tourism in particular, but there are others as well.

Now, providing a picture for our members, visual artists are especially financially vulnerable at this point. Visual arts are hard to monetize. There are fewer opportunities for income potential than exist for other artists, where their work is more easily duplicated; I'm thinking in particular of writing and music. The average income of a visual artist is incredibly low. It's under $14,000 a year, and the average visual artist earns less than $8,000 a year. It's not just the underachievers who have low incomes. Award-winning artists also struggle to make ends meet, and many have to take on second and third jobs and still struggle.

While what we're asking for specifically is for visual artists, all three of our recommendations would benefit all artists. Our first is to bring the budget of the Canada Council for the Arts up to $300 million annually. An increased investment for individual artist grants provides not only higher income potential for artists but also a sense of pride, accomplishment, and recognition in what they do.

Every year, projects that are recommended by juries are turned down because there is a lack of funds. In fact, most projects are turned down because of lack of funding. An increased investment to museums and galleries also allows those institutions to pay artists for the work they do in putting an exhibition together, and allows them to purchase work instead of relying almost entirely on donations of artworks to museums to build their collections, which Canadians access on a daily basis.

The other two recommendations are related to tax incentives. Tax is an area where government can have a direct impact on the income flow of self-employed artists. For the visual arts, approximately 65% of them are self-employed.

We ask that we have the ability for artists to pay tax based on their average income over a period of five years, so income averaging. For artists, income levels fluctuate widely. Most permanent, salaried workers have regular salaries so you can plan for your tax year accordingly; for artists, it can vary from year to year. Some years you may have a grant, in other years you may have a sale, but it's variable. Averaging it out over five years would really level the playing field. It would also put us on an equal level to artists in Quebec, where they do have income averaging currently, and it also exists in other countries as well.

The assignment of a zero tax rate to income from grants and awards is also something that we're looking for. The amounts that are awarded are already minimal, and any deduction can make a very big difference to an artist. It's also money that will be invested back into the artist's work, which the public enjoys. It doesn't make sense to us for the government to provide funding only to take a portion of it later on.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll hear from the Canadian Association for Community Living, please.

[Anna MacQuarrie, Director, Policy and Programs, Canadian Association for Community Living]

Thank you. My name is Anna MacQuarrie.

Thank you for inviting me to be with you here this evening.

The Canadian Association for Community Living is a national federation that focuses on advancing and promoting the full inclusion of people with intellectual disabilities and their families.

I want to start by painting a little bit of a picture on the status of people with disabilities in this country, particularly Canadians with intellectual disabilities. When we consider that over two million Canadians with disabilities do not have access to the disability supports they need, that people with intellectual disabilities are less likely to attain similar educational outcomes as students without disabilities, and that over 70% of adults with intellectual disabilities are unemployed, it is no surprise that 75% of adults with intellectual disabilities in this country live in poverty.

Here in Canada more often than not we have created poverty as an outcome of living with a disability. Far too many people with disabilities are confined on outdated, ineffective, inadequate, and stigmatizing forms of income support that were never designed to meet the long-term and real needs of people with disabilities. Too often these systems perpetuate that poverty and increase dependency on government systems.

We believe the next federal budget can address this and can take steps that are both immediate and fiscally responsible. In particular, we believe establishing an advisory committee or a high-level panel on income reform is an excellent first step in beginning to map out the long-term strategy needed to address the income needs of people with intellectual disabilities.

We have seen that the HUMA committee has been hosting hearings on poverty, and we have presented to them. The Senate subcommittee on cities is bringing forward a report shortly that we believe is going to have a recommendation specific to addressing the income needs of people with disabilities. So we believe there is some ground to build on there.

We think the advisory committee should report both to the Minister of Finance and the Minister of Human Resources and Skills Development and be tasked to explore the options for addressing poverty, income reform, and the federal role in income support for people with disabilities.

A possible first step may include introducing a refundable disability tax credit for low-income Canadians. If you do not have a taxable income, as many people living in poverty do not, tax credits don't help you very much. A refundable disability tax credit for those without a taxable income could be a very short-term, relatively inexpensive first step.

Lastly, we believe there's an opportunity to address emerging issues related to the recent registered disability savings plan. There are continued concerns that some people, particularly those with intellectual disabilities, are having their capacity to contract questioned. Many parents and many individuals are having to choose between a life of autonomy or potential long-term savings. There are steps that the federal government can take to address its role around ensuring that people have access to these really valuable savings mechanisms.

Those are our three concerns or our three suggestions. We believe that they are fiscally responsible, that they are doable, and that they will have a significant impact in both the immediate and the long-term lives of people with disabilities.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We'll now hear from the Canadian Automobile Dealers Association.

[Huw Williams, Director, Public Affairs, Canadian Automobile Dealers Association]

Hi. My name is Huw Williams, and I'm the director of public affairs with the Canadian Automobile Dealers Association.

It has been a very interesting year in the car business, so we appreciate the opportunity to come and update you on the situation.

As you know, we represent 3,500 franchised automobile dealers of all makes and models from across the country, 140,000 employees, so we are the largest employer in the car sector.

I'm proud to say that we just got back from our board of directors meeting in Edmonton, where—tying into our last speaker—the Alberta motor dealers were recognized as the largest contributor to the Special Olympics, hitting over the half-million dollar mark in terms of contributions.

One of the things I'm conscious of is that our written submission to the committee deals with vehicle scrappage. Events have overtaken us a little bit with respect to that, because the Minister of the Environment has made it clear that we're not going to see an advanced vehicle scrappage program like they have in the United States with the cash-for-clunkers program. We respect that decision, but we feel it's important to highlight a couple of public policy elements of that decision and the overall need to support getting older vehicles off the road.

First of all, many committee members may not be aware that Canada already has a $300 program, the Retire Your Ride program, to get older vehicles off the road. That $300 program was world-leading when it was introduced in January of this year. We got calls from jurisdictions all around the world asking how that program worked and how it was applicable. The genesis of that program was a $92-million government investment over four years to get older vehicles off the road. The public policy objective behind that was basically to get older, higher-polluting vehicles off the road.

Picture a 1990 or pre-1990 vehicle, an older vehicle, at a stoplight. It produces 33 times more smog and regulated emissions than a new vehicle. For each one of those older vehicles you remove from the road, it's like getting 33 new vehicles off the road. Overall, removing 100,000 older vehicles is like removing 3.3 million new vehicles from the road.

So there's a significant air quality investment that is part of the equation to get older vehicles off the road. Even if you look at a 1995 vehicle, for example, that produces 18 times more regulated emissions in smog than a new vehicle does today.

Our major message with respect to vehicle scrappage is that this $92-million investment over the next four years should be maintained and perhaps modestly adapted to reach the public policy objectives going forward in the future.

One of the ironies, and I'd be remiss if I didn't point this out to the committee, is that while the government on one hand is paying $300 to get older vehicles off the road, there's a loophole in Canadian importation legislation that allows older, higher-polluting vehicles to be dumped into the Canadian marketplace. Vehicles that are over 15 years of age are allowed to be imported into Canada, and they don't have to comply with either the Canada Motor Vehicle Safety Standards or emission standards.

Most of these vehicles are coming from the Japanese marketplace, where they're banned from the road. The steering wheels are on the right-hand side, so you're talking about vehicles that are a safety danger. Obviously they don't meet the emissions requirements, with up to 30 times more regulated emissions than Canadian vehicles. Independent studies by the insurance industry show—this is just common sense, with the steering wheel on the wrong side of the car—that they get into 40% more accidents than ordinary vehicles.

These vehicles are being dumped into Canada because the rules that deal with vehicle importation were set up in the early 1970s, and at that point in time, a car that was over 15 years old was considered an antique. If you think about that, it kind of made sense that a 1955 car was an antique in that day and age, but now what is happening is that these vehicles are being dumped into the Canadian marketplace.

Australia has moved to put a 30-year threshold on this. A raft of other Asian and European countries have moved in a similar direction. The United States has a 25-year threshold that they've put in place. As a result, Canada is really the last bastion where they're allowed to dump these older, higher-polluting vehicles.

We're talking about 15,000 vehicles a year. It's not a sales issue for us. We sell 1.6 million new vehicles a year, so losing 15,000 sales is not a concern for us on this issue, but this is an environmental and public policy issue that needs to be addressed.

I'd be happy to answer the committee's questions with respect to the rollout of the Canadian secured credit facility program. We highly support the government's initiative on the $12-billion worth of financing.

I'd also be happy to address other issues related to the budget going forward.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We'll now go to the Boys and Girls Clubs of Canada.

[Marlene Deboisbriand, Vice-President, Member Services, Boys and Girls Clubs of Canada]

Good afternoon. Thank you for inviting us.

My name is Marlene Deboisbriand. I'm the vice-president of Members Services at Boys and Girls Clubs of Canada.

I'll give my presentation in English. However, I'd be pleased to answer your questions in either French or English.

Thank you for inviting us.

I'm here with a colleague. Her name is Sandra Schwartz.

My presentation will be in English, but we can respond to questions in either language.

We actually know that many of you are already great supporters of our clubs across the country in your own ridings, helping with golf tournaments and various special events. Thank you for that.

We have 104 clubs, providing services in 700 community locations, including schools and shopping malls, basically anywhere where children and youth hang out. We provide services to over 200,000 young Canadians, quality, affordable, accessible, out-of-school programs—after-school and out-of-school. Our mission is to provide a safe place where children and youth can experience new opportunities, overcome barriers, build positive relationships, and develop confidence and skills for life.

We're here today to ask you for an investment in crime prevention. There is strong evidence that shows that youth crime and violence are not reduced by severe responses and by incarceration, but rather by effective crime prevention. We believe at Boys and Girls Clubs of Canada that, as a society, we need to create the conditions for youth to experience success through meaningful activities, positive role models, and viable education and employment opportunities, and that the policies and investments that sustain these conditions should have a prominent place in our country's crime control strategy.

According to a survey we did in 2005, funded by Sears Canada, a survey done by Ipsos Reid of Boys and Girls Clubs' alumni, or adults who came to our clubs as children and youth, 73% of the respondents say that their involvement with our clubs helped them avoid trouble with the law; 81% say that the club had a very positive impact on their lives; 97% say that their experience with the club made them better off today; and 69% say that their involvement with clubs saved their lives.

Violent crimes have been on the rise. According to Statistics Canada, violent crimes were 12% higher in 2006 than they were in 1997, and drug crimes committed by youth were 91% higher in 2006 than they were in 1997—91% higher. Youth crime is often gang-related. Gangs have a powerful appeal. They offer status, they offer protection, profit, mentoring, affiliation, and excitement. These are normal developmental needs that are being fulfilled in unhealthy ways. Boys and Girls Clubs provide a constructive alternative, as do other youth-serving organizations. There's an urgent need to invest in these opportunities that provide for healthy development and positive engagement of young people.

Numerous studies clearly demonstrate that investment in prevention reduces incarceration costs and criminal justice costs. Well-known researchers such as Dr. Michael Chettleburgh and James Alan Fox have demonstrated that high-quality after-school programming for youth have much greater payoffs than their minimal investments.

It's important to note that the prime time for juvenile crime is really after school and out of school. U.S. Vice-President Joe Biden, in a study done in 2002, noted that, wherever there is a Boys and Girls Club in the United States, there's a significant reduction in crime.

We have successful examples that have been funded by the National Crime Prevention Centre, such as the youth employment and local leadership program in an east Scarborough location, or Project Early Intervention, which was here in Ottawa. Those are great programs that were funded by the Government of Canada that produced great results. That's short-term funding.

Our recommendation is to invest $350 million per year in long-term funding commitments to organizations providing programming that have been proven as effective in crime prevention and in positive youth development. We strongly believe that if adequate federal funding, policy, and support is directed to youth prevention, a prosperous and sustainable future for Canadian children and youth, and their families and communities, would be achieved.

We also want to indicate our endorsement of the recommendations made by Imagine Canada, particularly the one recommendation related to the stretch credit for donations.

Thank you for your attention, and we look forward to your questions.

Merci.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now hear from the Clean Air Renewable Energy Coalition.

[Mark Rudolph, Coordinator, Clean Air Renewable Energy Coalition]

Mr. Chair, I just want to check, did everyone get a copy of the slides?

[The Chair, Conservative, James Rajotte]

Everyone got a copy of the presentation.

[Mark Rudolph]

Great. Thank you.

My name is Mark Rudolph, and I'm the coordinator for the Clean Air Renewable Energy Coalition.

With me is Tim Weis, the director of renewable energy and energy efficiency at the Pembina Institute.

In the interests of time, I'm going to skip through the slides, especially the first two, just to point out a few quick things.

We're pleased to be here today, obviously. The coalition itself has been around for almost nine years. It was co-founded, interestingly, by Suncor Energy Inc. and the Pembina Institute. Indeed, we're made up of 17 different corporations and six environment organizations. As you can see from the slide that shows all the members, we're not your usual coalition, and frankly, we're quite proud of it.

Let me just jump into the meat of the matter here. For decades this country has invested, and invested heavily, in emerging technologies and specifically in emerging energy technologies. Since 2001, the federal government has had a number of support programs for the renewable power industry, and the current program, known as ecoEnergy for Renewable Power, ostensibly is almost dead. It probably will run out some time in late November or early December. At the moment, there is no commitment as to what is next, which is why we're here today.

We have two recommendations. One relates to expanding and extending the existing ecoEnergy program to support the deployment of an additional 8,000 megawatts of power. The current program that was announced by the Prime Minister and the former Minister of Natural Resources Canada, Minister Lunn, in late January of 2007, supported 4,000 megawatts, while in essence we're asking for an additional 8,000 megawatts of support.

The total cost over the four years when you would apply is $600 million, but at the same time we're looking at an investment by the private sector of approximately $7 billion—we're looking basically at a 10:1 ratio. Over the entire 14-year timeframe of the program, the total cost to the federal government would be $2.9 billion. That's at 1¢ per kilowatt hour.

People in the room should know that the U.S. tax credit program offers three times that amount. If you're looking at where to get the best return on the investment, there should be a flight of capital to the U.S., and indeed we're already beginning to see that.

Our second preferred option basically takes what is a 10-year program, or an operation-and-maintenance type of program, flow of money, and puts it all together. If you were to get, let's say, $70 million, you would get the net present value of that amount as an upfront capital grant. This we see as a program that would only run for four years, until 2014, and would cost the federal government approximately $1.8 billion. It's not at all dissimilar from the fact that in the U.S. recently they've taken their production tax credit and are allowing 30% of the money flow to be a capital grant as well.

There is, and probably will be in the not-too-distant future, a lot of talk about carbon offsets and carbon credits. We see that carbon offsets in no way, shape, or form are a substitute for the federal government providing some form of support, as it has in the past.

Last but not least is sort of the whole question as to why we'd like to see this. For many, many years, we've come to this committee and presented. For many, many years, the committee has listened to us and passed on recommendations to the finance minister of the day. The original program started in 2001, with a couple of other programs in 2005, and another one that came about in 2007. Indeed, we've always argued for the fact that we're trying to build an industry. What we've seen is that things have indeed started to take off, but with the demise of the ecoEnergy for Renewable Power program, we'd prefer not to see them crash and burn.

At the moment, the program will be fully allocated literally within a month, which is one and a half years earlier than had been expected. The U.S. government under the Obama administration has taken some very decisive measures. Indeed, they're outspending us 14:1 on a per capita basis. Basically because of that, we're seeing a situation where, at the end of the day, money goes where money should go based on return on investment. We're seeing a flow of money.

There is no certainty left for the industry in this regard. To that end, we are calling for a renewed and intensified commitment by the federal government to adopt one of these two options for the future.

Thank you kindly.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now have the Co-operative Housing Federation of Canada.

[Nicholas Gazzard, Executive Director, National Office, Co-operative Housing Federation of Canada]

Thank you very much, Mr. Chairman.

You have our brief. It has the distinction, I think, of being a brief that does not propose any increase in program spending. I think it's a proposal for the times.

We are proposing three things. I'm going to outline two of them and then dwell a bit longer on the third one.

The first is what we see as a need for an accountability framework for federal housing dollars that are passed to the provinces and territories.

Over the last three to four years, the federal government has put significant dollars on the table. Most of that money has been the subject of federal-provincial agreements, and the provinces are pretty much on their own in deciding how they want to spend it. The result of this is that you don't get any tie-in between the federal housing spending and reduction in actual housing need.

There's a very significant core housing need problem in this country, with 1.5 million households considered to be in core need by Statistics Canada and CMHC. We think federal spending should be tied to reducing those numbers. There's a good opportunity coming up, because the federal government is going to redesign the affordable housing initiative. The accountability framework should be part of it, in our view.

The second has to do with the fact that a lot of what we call the legacy programs are coming to an end. The federal government's sponsorship of affordable housing will come to an end, in significant numbers, in the next decade. By 2020, some 55,000 units of housing presently assisted under a variety of federal programs will no longer see any assistance. That's going to be a problem, because the capacity of the housing providers—it applies to housing co-ops, but to all kinds of other providers as well—to continue to house people on fixed incomes, seniors, people with disabilities, and so on is going to be significantly compromised, if there's not a renewal of federal funds to assist people in meeting the housing needs of low-income Canadians.

What we're proposing is again not increased program spending, but that, as program commitments come to an end, the money be left on the table and negotiated into new frameworks with housing providers.

The third one I want to talk about has to do with lending. I want to turn quickly to the social housing renovation and retrofit initiative that was part of the 2009 budget, part of Canada's action plan.

It has been hugely successful. The federal unilateral component, which comprised $75 million in each of two years, has been vastly oversubscribed. The response has been overwhelming. Some 2,200 applications altogether were received by the Canada Mortgage and Housing Corporation. They were only able to fund 500 of those in the first tranche. The demand out there is for considerably more money. What this shows is that social housing providers—cooperatives and others—are ready to reinvest in their aging properties. They take their responsibilities as property owners seriously.

There are ways that they can reinvest without actually dipping further into the federal treasury, through loans. The Canada Mortgage and Housing Corporation has an excellent loan program called direct lending. It was expanded in the 2009 budget so that municipalities could repair housing infrastructure using the loan program. The interest rates are historically low. CMHC has renewed some of those loans under the program. It's a less-than-1% interest rate this year. It's quite amazing. I know it's a sign of the times, but they are able to offer very competitive rates.

What we're saying is why don't we expand that program, especially with interest rates as low as they are, so that existing providers can bundle up their existing debt—they still have outstanding mortgage debt—and refinance it together with new borrowing, so that they can reinvest in their properties? The stimulus effect will be remarkable, and as I said, it doesn't require any program spending, because it would be a loan program on commercial terms: borrowers would have to qualify on commercial terms, and they would have to buy CMHC mortgage insurance. There is no risk of wholesale default or anything like that, if the mortgages are insured.

We've already been talking about this to the minister responsible for CMHC. To me it seems to be a no-brainer. It's a loan program, not a grant program; there is a slew of providers who are ready to line up and refinance and borrow. As I said, the stimulus effect will be amazing. It's a real win-win situation, and I hope you will support it.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much.

Now we'll hear from BIOTECanada.