Finance Committee on Oct. 27th, 2009

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Mr. Minister, could it be that the Minister of Finance doesn't know whether the government invested $20 billion in the lumber industry this year? I'd like to know, Mr. Minister.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

I don't know what the exact figure is. I'll get it for you.

I'm advised by my officials that the minister responsible, of course, is the Minister of International Trade. The figure seems very high and is not likely, so we'll get you the accurate figure.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

That is highly unlikely. In this instance, Mr. Minister, can you ask your colleague responsible for Canada Economic Development in Quebec, Mr. Lebel, to retract his remarks? On several occasions, he stated publicly that the federal government invested $20 billion in the lumber industry last year. He made that statement as recently as last week in La Pocatière and Rivière-du-Loup. It was repeated and reported by all media outlets in Quebec.

Mr. Minister, such statements are unacceptable when we know full well that the federal government invested $80 million in the lumber industry. These data and these numbers are in your document.

I would like your assurance that this type of behaviour will not be repeated and that this is completely unjustified from a minister who has no financial responsibilities.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

I'm not sure who said what to whom or what was said publicly, and I don't know over how many years this was supposed to be, but I'll get the accurate figures for you.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Minister.

I would like to talk to you about another matter, namely tax deferral for some livestock producers in eligible regions following a drought, flood, etc. How many farmers have been able to defer taxes? Looking at the current income of Quebec farmers, almost all of them are in a precarious situation, like those in the rest of Canada. Very few farmers are turning a profit. When it comes down to it, what purpose does it serve to give a tax credit to someone who isn't making a profit?

One of my colleagues here today used to sit on the agriculture committee. How many farmers have been able to use the tax credit that was announced, that is, tax deferral? Climate change is putting some producers in a tough situation.

Once again, it appears that you are unable to give me an answer.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

As you know, we've provided some tax relief with respect to drought this year. I can't tell you how many have taken up the tax credit because I don't look at their tax returns.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Can you give me some idea of the amount? How much has it cost the federal government? If farmers aren't making a profit, tax deferral isn't much of a benefit.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

I could ask the Minister of National Revenue for that data on the take-up on the tax credit, if that's available. I'm happy to check on that and get you the information if it's available.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Do you plan to extend this measure? The reality is that we're going to be dealing with climate change on a recurring basis. It will be extremely difficult because we will have to adapt agriculture to those changes. Most farmers will not have to pay taxes because of what is going to happen in the years ahead.

Do you plan to extend this measure?

[The Chair, Conservative, James Rajotte]

Minister, if you want, you can finish your other answer as well and then answer that question.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Yes.

We have not started to make budget decisions yet.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Thank you.

[The Chair, Conservative, James Rajotte]

Okay, merci.

We'll go to Mr. Dechert, please.

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

Thank you, Mr. Chair.

Mr. Minister, thank you for your time this afternoon.

Minister, as you know, this committee has spent the last several weeks travelling across the country consulting with Canadians with respect to their many suggestions and thoughts regarding the government's 2010 budget.

I can tell you that in every city we visited, we heard multiple groups representing labour, business, social service agencies, and arts guilds praise the enhancements of the working income tax benefit included in Budget 2009. I wonder if you could explain for the committee how Bill C-51 expands this important benefit and why it's crucial that this legislation be passed as soon as possible.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Thank you, Mr. Dechert. You raise an important point.

The working income tax benefit is refundable, and therefore low-income Canadians can, assuming this bill passes in time, claim it as of January 1, 2010. They can file their tax returns early in January, if they want to, and claim the refund.

The money cannot be paid out unless it's authorized by Parliament. For this reason, I urge the committee to return the legislation to the House as soon as possible, so that the enhanced working income tax benefit will be available promptly in the new year. The proposed changes will increase benefits by an additional $580 million. As I know you know, Mr. Dechert, the purpose of the working income tax benefit is to help people over the welfare wall, to make it advantageous financially for people who are receiving social assistance to enter the workforce.

The former situation, before the working income tax benefit, was that the system itself discouraged people or made it hardly worth their while to go to work rather than not go. That's not good for the economy and not good for the country, and we've changed it.

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

Thank you very much.

We're all concerned about the value of the Canadian dollar, and we had a good discussion about it this morning with Governor Carney. We all know it's a double-edged sword. It hurts our manufacturing, but it helps consumers in other areas.

Isn't the value of the Canadian dollar really an international vote of confidence in the Canadian economy and the management of the Canadian economy?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Sure. I think that's a nice way to look at it. I hope the vote of confidence doesn't get too strong too suddenly, because as you know, volatility in the Canadian dollar is a concern of businesses, particularly of businesses that export.

We are seeing downward pressure on the U.S. dollar broadly, and that affects all the market currencies: the kiwi in New Zealand, the Australian dollar, the euro, the pound, and our dollar as well.

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

Thank you.

If the Canadian dollar remains relatively high compared, say, to the value of the U.S. dollar and other currencies of countries with which our manufacturers compete, how important do you believe it is that Canadian corporate and business taxes remain relatively low in order to continue the competitiveness or enhance the competitiveness of the Canadian economy?

Where do you see Canadian corporate tax rates going over the next few years in comparison with those of, say, the United States and other countries?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Our corporate taxes are going down in Canada. The American government has a large challenge with respect to a very large deficit. They'll have to address that in some way, I'm sure, going forward.

In 2007, we urged the provinces to reduce their corporate tax rates to 10%. When we became the government, the corporate tax rate federally was slightly in excess of 22%. We will have it down to 15% by 2012. We urged the provinces to get to 10% with their taxes by 2012 so that we would have a combined corporate tax rate in Canada of 25%, which is a tremendous way to brand the country as a relatively low-corporate-tax jurisdiction.

I'm thrilled, frankly, that the majority of the provinces are going in that direction, including the Province of Ontario, which intends to get to 10% by 2013. Alberta is already there, Manitoba is going in that direction, Saskatchewan is going in that direction, and so is New Brunswick, and so is British Columbia. Some of the other provinces as well have been reducing their corporate taxes.

We're going to have a good part of Canada with a 25% combined federal and provincial corporate tax rate by 2012 or 2013. It's tremendous branding. As you know, Tim Hortons decided to come home to Canada and bring their corporate head office back here because of the reduction in the corporate tax rates. I'm hearing very good stories from some of the manufacturers about wanting to do more here because they can see the stability and the predictability of corporate taxes in this country that are relatively low in the near term.

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

Thank you very much.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

We have time for a short round for Mr. Pacetti.

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

Thank you, Mr. Chairman.

Thank you, Mr. Minister, for coming before committee. It's always fun to have you here.

Let me make a technical comment on the working income tax benefit. Usually the tax forms are not ready before February, and we don't start receiving our T slips before February, so it's going to be tough for us to ask for the working income tax benefit in the month of January. But I understand where you're going with that. I agree with you: the faster we can pass this type of legislation, the better it will be.

My question is more geared towards the home renovation tax credit. You seem to be pretty confident that the home renovation tax credit is going to work and that people are jumping at the door. But when we ask for precise numbers, you're not able to give them to us because, you said, nobody has filed a tax return claiming the home renovation tax credit.

So you can predict that the home renovation tax credit is working, but you can't predict what your deficit is going to be—you've changed it three or four times in the last 12 months.

So what are we supposed to believe, that people are going to be able to use the home renovation tax credit according to the estimates you've given us? You haven't given us any. All you have said is that it's going to make a big change in the economic recovery. When we asked Mark Carney, the Bank of Canada governor, he said that the renovation market, the housing market, is a very small component of any economic recovery that this country is going to see.

Could you comment on that?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

The home renovation tax credit has been a huge hit. Canadians love it.

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

Based on...?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Well, based on the surveys that have been done, we know that the majority of Canadians know about it and intend to use it, and we know from the retailers—I certainly do, because I talk to them regularly—how successful it has been. In my opening remarks—