Finance Committee on Oct. 29th, 2009

[The Chair, Conservative, James Rajotte]

Pursuant to Standing Order 83.1, I call the Standing Committee on Finance to order. This is meeting number 59. We're continuing our 2009 pre-budget consultations.

Colleagues, we have two panels this morning. Each panel is an hour and a half. We have eight organizations in the first panel: the Association of Equipment Manufacturers, the Canadian Mental Health Association, the Cement Association of Canada, the Canadian Association of Fire Chiefs, the Juvenile Diabetes Research Foundation Canada, the Canadian Federation of Apartment Associations, the Ontario Funeral Service Association, and the Ontario-Quebec Grain Farmers' Coalition.

Each of you has up to five minutes for an opening statement. We will proceed in that order, and we will start with Mr. Mains, please.

[Howard Mains, Consultant, Public Policy, Association of Equipment Manufacturers]

Thank you, Mr. Chair.

Good morning, and thank you to members of the committee and staff for providing the Association of Equipment Manufacturers with the opportunity to address you today.

Allow me first to say a few words about the members of the Association of Equipment Manufacturers. AEM is a trade association representing manufacturers of agriculture, forestry, construction, mining, and utility equipment. Members include Canadian manufacturers such as MacDon Industries of Winnipeg and Sellick Equipment of Harrow, in Essex County, and some 700 other members that manufacture equipment that allows Canadian farmers, manufacturers, and natural resource companies to compete in the global marketplace.

We have two recommendations that we ask the committee to consider in its report to Parliament. First, like so many other sectors of the economy, equipment dealers are having difficulty financing their equipment inventories. This became more acute when one of the major players in the sector, Textron Financial, withdrew from the Canadian market. In speaking with equipment distributors and some members of Parliament, my understanding is that there is a role for Farm Credit Canada to engage in this area of equipment financing, which is otherwise known as floorplan financing. We ask the committee to provide FCC with this extended mandate, which fits well into its existing financial services.

Second, we urge the federal government to modernize the capital cost allowance rates pertaining to heavy equipment. Specifically, we encourage the government to increase depreciation rates for CCA classes 10 and 38 from 30% to 40%. Those are the classes of equipment that are tractors, bulldozers, motorized machinery, and combines. Modernizing the CCA rates would have positive economic results, with faster replacement of older equipment, which increases productivity and promotes environmental savings. Improvements to the CCA rates would also bring Canada in line with its major competitor and customer, the United States, which has seen a rapid acceleration in its depreciation schedule.

Let's take the example of farming in Canada to illustrate why CCA rates need to be modernized. Canadian farmers use high-tech equipment, such as precision agriculture systems, assisted steering systems, monitors for planting, fertilizing, pesticide applications, and harvest yields, which allows them to drive down fuel and crop input costs, reduce environmental impact, and maximize revenues. The application of these types of technologies has led to tremendous productivity improvements over the past 40 years. As a result of these ongoing technological improvements across the full line of agricultural equipment, Canadian farmers are replacing their equipment much faster. In some cases they are upgrading every three to five years to take advantage of technological improvements to reduce operating costs and increase operator efficiencies as much as possible.

In addition, I've circulated the CCA schedule as it is currently published, and I have highlighted horse, harness, and tractors. You'll note that the harness and tractor both have the same CCA depreciation rate of 30%, which is just one example of how the CCA schedule is out of date. Unfortunately, budget 2009 did not address the need to modernize CCA rates fully.

At the same time, our neighbours to the south were boldly moving forward with their accelerated depreciation rates schedules. You'll see by the chart I have distributed that an American farmer is able to claim more than 93% of the capital cost of a $300,000 combine in the first year of ownership as a result of the implementation of the American Recovery and Reinvestment Act of 2009. On a go-forward basis, depreciation costs will be claimed over a five-year period, as compared to seven years previously. His Canadian counterpart, on the other hand, can only claim 15% of the capital cost in the first year. Budget 2010 strikes us as an appropriate time to correct this.

Positioning Canada to compete on a levelling playing field, attract new business, and improve the attractiveness of our exports will require the federal government to adjust the CCA rates. As the federal government considers how to stimulate economic activity and build a stronger, more competitive, and prosperous Canada, we urge policy-makers to realize the positive benefits derived from modernizing the capital cost allowance and also from extending the services of the Farm Credit Corporation to include floorplan financing for inventory.

Thank you very much, committee members.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We'll go now to Ms. Craig, please.

[Ruth-Anne Craig, Executive Director, Manitoba Division, Canadian Mental Health Association]

Thank you, Chair and committee members, for having us today. I'm here alone from the Canadian Mental Health Association, as the chief executive officer of our national office. Dr. Taylor Alexander is unable to make it today due to illness, so we apologize for that.

I am the co-author of the brief presented to you. Dr. Sid Frankel, associate professor at the faculty of social work at the University of Manitoba, is the other author of the brief.

Thank you for your audience this morning. I'm here today representing, as I said, the Canadian Mental Health Association. We are Canada’s only voluntary charitable organization that exists to promote the mental health of all people and support the resilience and recovery of persons experiencing mental illness. We do this through advocacy, research, education, and service. Our vision of mentally healthy people in a healthy society promotes both individual and collective health and a sense public accountability and provides a framework for the work we do.

We have submitted our brief to you detailing the recommendations we are putting forth for your consideration today. In the five minutes that I have to speak to you I will summarize those recommendations and explain why they focus on both creating a mentally healthy society through initiatives that focus on eliminating poverty for children and families, as well as examining the implications of mental illness and how it so often results in poverty.

In our brief we advocate that income support and other measures to prevent and reduce poverty can play several roles with regard to mental illness and mental health. We have attempted to mainstream our advocacy to cover three areas of importance to the configuring of the upcoming federal budget. These areas cover modifications to the national child benefit supplement, Canada's social transfer, and development of basic income support programs for persons living with mental illness and other disabilities. Of course there are many other areas to consider, but we'll have to leave those for another day.

First, let's focus on the promotion of mental health and the children of Canada. We believe the federal government should increase the national child benefit supplement to create a full child benefit for low-income families of $5,200 per year per child in 2009 dollars. In this, we join the Campaign 2000 movement to end child poverty, because of the psychological damage to children living in poverty, which often has lifelong effects. The Canadian child tax benefit and the supplement have been an important measure in decreasing the depth of poverty for many children. The recommended increase would render the benefit even more effective in preventing sometimes lifelong mental health problems. We've come a long way here, but there is much further to go.

The Canadian Mental Health Association is making this recommendation because of its interest in preventing mental illness and because of the overwhelming evidence that poverty is a determinant of health, especially mental health. Research has shown that growing up and living with persistent poverty is detrimental to one's psychological, physical, and educational health. Social causation studies also show that poverty contributes to the development of a wide range of child and adult psychopathology and has numerous other negative consequences to children, their families, and the community at large. A study undertaken by Campaign 2000 referred to in our brief demonstrates how increasing the national children’s benefit has reduced family poverty significantly and how its continued application could result in an enormous decline in the child poverty rate.

My focus now turns to the impact of mental illness. We also believe the federal government should take a leadership role in establishing a federal basic income benefit for persons who cannot reasonably be expected to earn an adequate income from employment. This has especially been recommended by the Caledon Institute of Social Policy. We support this, because this initiative would include many persons with mental health problems. Those with severe and prolonged disabilities would clearly be eligible, but a combination of limited training, advanced age, inconsistent labour market attachment, and psychiatric disability should also be considered for eligibility.

This benefit would be income-tested, with eligibility based on a demonstration of disability. However, eligibility criteria must be sensitive to the restrictions that flow from mental illness, which can be substantially different and more difficult to assess than those that flow from physical disability. Arbitrary and restrictive interpretation of disability related to mental illness has been a major barrier for many persons disabled by chronic mental problems. This has been demonstrated by difficulties in accessing both CPP disability benefits and the disability tax credit and has resulted in the systematic discrimination and exclusion of persons with mental illness.

One of the best outcomes of initiating a basic income benefit would be the removal of many persons with significant and persistent employment-related disabilities based on mental health problems from provincial and territorial social assistance programs.

The federal government should seek agreements with provincial and territorial governments that they use the resulting savings to deliver a more comprehensive range of disability supports. Its design could be similar to the old age security and the guaranteed income supplement program, with similar benefit levels. Income would therefore be much more adequate than that provided by provincial and territorial welfare programs, which perpetuate a cycle of poverty for thousands of Canadians. This initiative could also assist persons with episodic or short-term labour market attachment, who would greatly benefit from this income. Such involvement is often an important component of mental health treatment and recovery. Recovery from mental illness is completely possible.

Approximately 70% of unemployed individuals with a psychiatric disability are subsisting on social assistance payments and living in abject poverty. According to the National Council of Welfare, in the ten provinces the yearly income of an individual with a disability can be as low as $7,800, two-thirds below the low-income cut-off.

We believe that the federal government could work collaboratively with provinces and territories to establish conditions that are more equitable and humane, and set standards that require provinces and territories to establish programs that pay adequate benefits, that do not punish recipients for obtaining employment that allows the assembly of a reasonable level of assets, and does not increase stigmatization for persons with mental illness. In the meantime, we believe that income assistance payments in all provinces and territories should be increased to 80% of the low-income cut-off.

We believe that these recommendations are realistic and realizable, and that they have the potential to promote mental health and wellness and optimize psychological as well as economic functioning. Positive policy implementation, such as that connected to healthy families and early childhood intervention, can also contribute to the prevention of the original occurrence of mental illness and relapse, because income is a determinant of mental health.

Re-examining the Canada social transfer and redesigning basic income supports—

[The Chair, Conservative, James Rajotte]

Ms. Craig, we're well over time here. Could we ask you to wrap it up?

[Ruth-Anne Craig]

I'll wrap up now and just say that we feel that these are very reasonable and that they could be administered very easily through federal initiatives.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We will now go to Mr. Boucher.

[Pierre Boucher, President and Chief Executive Officer, Cement Association of Canada]

Good morning, Mr. Chair and honourable committee members.

My name is Pierre Boucher and I am the President of the Cement Association of Canada.

I'd like to thank committee members for the opportunity to appear today and to provide the cement industry's perspective on budget and stimulus measures.

The eight member companies of the Cement Association of Canada operate 15 plants in five provinces. Canada's cement industry produces on average 15 million tonnes of cement a year, with 10 million tonnes being consumed here in Canada and five million tonnes being exported to the U.S. markets.

As many of you know, cement is a grey powder that is mixed with crushed stone, sand, and water to make concrete. Cement is the glue that holds the concrete together. Cement is a strategic commodity and a critical component of our nation's infrastructure. Cement underpins the construction industry as the key ingredient in concrete, and there is little built without concrete. Each year, Canadians consume on average 33 million cubic metres of concrete, one cubic metre of concrete for every Canadian.

The current recession has seen the largest decline in Canadian and U.S. cement consumption since the Great Depression. Since peak consumption in 2006, Canadian cement consumption is down by almost 30%, and the U.S. consumption is down by almost 40%.

Canada's cement industry applauds the Government of Canada for introducing a stimulus package that has committed to significant renewal of the Canadian infrastructure. We recognize the challenges created in implementing the stimulus package and accelerating investments. We believe we need to encourage governments at all levels to maintain the pace of investment. Even though there may be weak signs of a recovery in the general economy, the global financial crisis has hit Canadian cement manufacturers hard, and we are still feeling the worst of the recession. The recession is not over for cement. The cement industry was the first to feel the impact of the recession, and we'll be the last to see the benefits of recovery.

In order to save time, I will quickly present the main recommendations found in our pre-budget submission.

I invite the committee members to examine our written submission. Let me focus on two important areas: infrastructure investment and climate change legislation.

With infrastructure spending in Canada, we have three messages: firstly, continue to get the committed funds out the door as quickly as possible; secondly, do not turn off the committed stimulus funds; and thirdly, make sure that we are spending infrastructure money wisely.

Concrete is a cost-effective, energy-efficient, and sustainable construction material essential to rebuilding Canada's infrastructure. Better highways, green buildings, and water and sewage installations are all made from sustainable concrete. The primary building material in public works and commercial construction, concrete creates jobs throughout the economy. For every 10 construction jobs created by a project, a community gains 17 additional jobs that stay in the region.

Infrastructure investments, whether using federal funds alone or matched by other jurisdictions, should also be accompanied by program guidelines that ensure that all new projects contribute to achieving Canada's sustainable development objectives. These objectives include enhancing energy efficiency, life-cycle costing, reducing greenhouse gases, reducing urban air pollution, ensuring clean water is available, managing waste efficiently, and ensuring safe and efficient mobility of citizens and trade.

Here's an example of a misguided policy. The engineering and construction industries are the best qualified to recommend the most suitable construction material for sustainable infrastructure. A private member's bill that would force the federal government to choose wood over other construction materials has been introduced in the House. This is a misguided bill that will not necessarily ensure that the best construction material is used for the job.

On climate change, in designing a greenhouse gas regulation, the government should align Canada's trade and climate change efforts with those of the U.S. on such issues as price signals, alignment on mid- and long-term climate objectives, and avoiding disruption of cross-border trade and border adjustments due to perceived differences in approach in greenhouse gas mitigation.

Finally, I would encourage committee members to take these key considerations into account and use this report to influence the budget for 2010. I hope these messages will be conveyed to other members of Parliament.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Boucher.

We'll now to go Mr. Simonds, please.

[Robert Simonds, First Vice-President, Canadian Association of Fire Chiefs]

Thank you, Mr. Chair.

While I am a fire chief in Saint John, New Brunswick, I am here today as the first vice-president of the Canadian Association of Fire Chiefs. Normally, our association president, Calgary's fire chief, Bruce Burrell, would be addressing you. However, he is currently leading a delegation of Canadian companies to the China Public Security Expo.

The CAFC is the only association that speaks for the many elements that comprise Canadian fire services. Our 1,000 members are located throughout Canada. They include chief fire officers from hundreds of Canadian municipalities as well as fire chiefs from Canada's first nations, industry, airports, seaports, major health care facilities, and Canadian Forces establishments. Our national board of directors includes the presidents of each provincial and territorial association of fire chiefs. Collectively these associations include the vast majority of Canada's 3,500 fire departments.

Our submission relies heavily on the results of two recent CAFC surveys. The first measured the importance of personal income tax relief for volunteer firefighting personnel. The second provided input on a wider variety of issues pertaining to budget 2010.

Of the 108,000 fire services personnel in Canada, 78% are volunteers. In no other emergency first-responder service do willing volunteers play a more significant role. The CAFC's survey indicated clearly that the volunteer fire services in Canada are under stress for a variety of reasons. They range from volunteer fire department members being unable to find work locally to the competing demands of families, aging local populations, and inadequate reimbursement for out-of-pocket expenses, such as gasoline costs.

While many factors contribute to problems in recruiting and retaining volunteers, over 70% of responding volunteer fire chiefs believe that personal income tax relief would be of major help to them in addressing these challenges. Accordingly, our first recommendation is that budget 2010 provide significant personal income tax relief for all volunteer firefighting personnel. The support of the standing committee for this recommendation is imperative. Many private members' bills on this subject have been before the House in recent years, including BillC-219, which made its way out of this committee with all-party support. All these private members' bills ultimately failed. It's time that the cry for help from the volunteer fire services be heeded and supported.

The CAFC's other recommendation addresses the inadequacies of funding available through JEPP, the joint emergency preparedness program. The government calls this the primary vehicle for enhancing the national capability to manage all types of emergencies and to ensure a reasonably uniform emergency response and recovery capacity across Canada. Yet it allocates just $5 million per year through JEPP for emergency preparedness and critical infrastructure protection projects. CAFC has requested an increase in the level of JEPP funding in its pre-budget submissions since 2003, but the $5 million remains in effect, and its value, in the face of inflation, is being eroded with every passing year.

With almost 3,500 fire departments in Canada, $5 million does not go far. The inadequacies of JEPP financing are underscored by the fact that these scarce JEPP dollars must be shared with other orders of government and other municipal departments, including police, emergency medical services, public works, water works, and emergency management organizations. JEPP's relevance has been undermined by the federal government's unwillingness to maintain the available money at required levels. An increased financial injection is needed to restore the meaningfulness of JEPP and to ensure that the Canadian fire services are prepared to deal with large-scale emergencies at the municipal level. Therefore, our submission recommends that JEPP funding available to Canada's fire departments be increased to $20 million per year.

Thank you for the opportunity to appear before you. I look forward to your questions.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now have the Juvenile Diabetes Research Foundation of Canada.

[Andrew McKee, President and Chief Executive Officer, Juvenile Diabetes Research Foundation Canada]

Thank you, Mr. Chairman.

Members of the committee, thank you for the opportunity to appear before you today.

I am joined here today by Mr. Bob Hindle, who is also a board member of the Juvenile Diabetes Research Foundation.

Firstly, I'd like to say we're very grateful to the committee and many of its members for their continued support and interest in JDRF and their compassion for Canadians living with diabetes. In its 2008 report, this committee recommended the following, and I quote:

The federal government create a specialized fund for medical research for children’s health. In this regard, priority should be given to the establishment of a partnership with the Juvenile Diabetes Research Foundation of Canada.

We are seeking a similar recommendation for budget 2010, which is why we're here today. We are the leading charitable funder and advocate of type 1 diabetes research worldwide, and in Canada we have been a strong voice for innovation, commercialization, and increased funding for diabetes research, an area of Canadian pride and excellence.

JDRF has been at the centre in the support and delivery of diabetes research advances that have improved the lives of children diagnosed with type 1 diabetes and of the many adults also living with this disease.

Our proposal is a unique funding partnership that combines $125 million from the federal government and a matching $50 million from JDRF. This is a funding requirement over a five-year period.

The benefits of this proposal to taxpayers, the government itself, and our important knowledge-based economy are numerous. Among them are the following: social benefits and a general reduction in the incidence and prevalence of diabetes, an implementation of a proven knowledge translation model, and creation of a virtual nationwide infrastructure that all disease groups can utilize. Fiscal benefits will be achieved through more effective use of government investment in a partnership that will catalyze results and bring Canada to the cutting edge of longer-term commercialization opportunities. Entirely consistent with both Advantage Canada and the government's science and technology strategy, this partnership will attract world-class researchers to our hospitals and universities and address squarely the issue of keeping these jobs in Canada. Canada will continue its legacy of being a world leader in diabetes research by substantively filling a critical gap in clinical research worldwide.

I ask the committee to take these benefits into consideration and the cross-departmental benefits of the partnership as you formulate your recommendations.

More precisely, I would like to highlight some specific industries that will benefit from JDRF's artificial pancreas project, an exciting project that will benefit from this partnership and provide much needed economic stimulus in many sectors of interest to this committee.

The impact of this project will involve and enhance the following key industries: firstly, pharmaceuticals. The delivery pathway of a new device—the artificial pancreas—builds upon JDRF's established record of partnerships with key players in the industry. JDRF set the standard in Canada by obtaining Eli Lilly's $400 million-plus U.S. investment into a Canadian company, Transition Therapeutics Inc. in Toronto. Pharmaceutical companies are now prepared to fund the majority of the financial burden to bring that product to market over the next five years. This partnership lends itself to generating increased economic activity around the commercialization of new technologies while retaining intellectual property rights in Canada.

Additionally, manufacturing will benefit because this device consists of two pre-existing technologies—an insulin pump and a continuous glucose monitor. The current task being addressed by JDRF is the mathematics that link these two devices, required to enable the communication via algorithms. Given that important pieces of the critical research required to bring this product to market will occur under this partnership, it also dramatically increases the likelihood of the finished product being manufactured in Canada, among several other sites worldwide.

In telecommunications, Canada's world-leading telecommunications companies have already indicated their intention to expand each company's existing partnerships with a world-leading Canadian academic institution, regarding the design and manufacture of two new functions for the artificial pancreas, which will be added to mobile communications devices.

This is a concrete and immediate example of how JDRF's unique business management of research has attracted intense interest from an entire industry previously unrelated to the commercialization of health technology devices.

This brings us to our recommendation. At JDRF, we are asking this committee to again recommend that the Government of Canada enter into a 10-year strategic partnership with the Juvenile Diabetes Research Foundation, funding an initial five years to the tune of $125 million to be matched with $50 million of JDRF money. Given the synergistic impact the proposed clinical trial network between JDRF and the Government of Canada would have on research and commercialization in Canada, I ask that you give serious consideration to including a favourable recommendation in your pre-budget report.

The time to act is now, and by working in partnership we can succeed.

Thank you very much, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from the Canadian Federation of Apartment Associations.

[John Dickie, President, Canadian Federation of Apartment Associations]

Good morning.

The CFAA represents the owners and managers of close to one million private rental homes across Canada. The need for the reforms we propose arises from the current divergence in the tax treatment of homeowners from the tax treatment of renters. Some of the policies that lead to that are set out on page 2 of our brief. Most low-income Canadians are not homeowners, and the larger part of the income tax benefits of home ownership do not accrue to low-income households, even if they are homeowners.

The tax treatment of rental housing has been made steadily worse since 1972, and on page 2 of the brief we have a rather lengthy list of those detrimental changes to the competitiveness and affordability of rental housing. In the French version the list spans pages 3 and 4.

In order to move toward a balanced housing policy, we suggest that Parliament provide improved tax rules for rental housing, providing a tax deferral on reinvestment by rental property owners, and zero-rating rental housing for the GST or HST.

First, allowing tax deferral on a real estate sale and reinvestment would reduce the cost of rental housing and improve affordability and housing supply. Second, it would promote efficient capital allocation across the economy. Third, it would promote more compact, environmentally sound urban redevelopment. Fourth, it would help small investors, middle-income families, and seniors, since investment rental property is much more widely held than shares or other assets. Fifth, it would permit relocation by owner managers and reduce absentee ownership. Sixth, it would level the rules between rental property and other businesses that already have a similar deferral. Seventh, it would level the rules between businesses that rent and businesses that own their premises. Finally, it would level the rules between rental property and shares in companies.

Three-quarters of company shares are held in tax-deferred vehicles, such as pension plans and RRSPs, but real estate is not eligible for RRSPs or TFSAs. We submit that the deferral cost would be reasonable and merely a deferral--not tax revenue permanently given up.

On zero-rating rental housing for the GST or HST, residential rental housing is an unusual business, in that it is GST-exempt. That means rental housing providers pay GST on their inputs but don't charge GST on rents. So the GST is effectively a cost of doing business that by economic forces is passed through under the price of the product, in our case into rents.

Groceries, another basic necessity, are treated differently. Groceries are zero-rated. So when Loblaws pays GST on rent, electricity, etc., the government gives them and other grocers rebates so those costs are not transferred to the cost of groceries and do not impact on that basic cost of living.

So we are asking for rental housing to be treated in the same way as the grocery industry through zero-rating. I recognize that would be a significant cost to the federal treasury--although it's not an insurmountable cost--but there is a very low-cost solution.

As an alternative to zero-rating I suggest that Parliament substantially increase the allowance for the governments of British Columbia and Ontario to create special rules for their portions of the HST. The industry is facing something of a crisis, because through harmonization additional costs will come to be subject to the provincial portion of the new HST in those provinces. The government agreement allowed certain exemptions and rebates to be made by the provinces, but both of them have used up all of their rebate and allowance amounts.

For the federal government to increase the allowance amount would put the ball back in the court of those provinces as to what they do when they bring in the HST, and the cost to the federal treasury would be negligible because it would merely be the administrative cost of dealing with another exemption when a whole variety of exemptions are currently being put in place.

Thank you for your attendance today.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from the Ontario Funeral Service Association.

[Patrick McGarry, Member, Ontario Funeral Service Association]

Good morning, Chairman Rajotte and finance committee members. Thank you for the opportunity to present to you today.

The Ontario Funeral Service Association represents over 220 independent family funeral homes in Ontario. We are here today to highlight the preferential tax treatment enjoyed by our competitors, the religious cemeteries in Ontario, due to their charitable status. This issue may be further magnified when the Ontario provincial sales tax is harmonized with the goods and services tax in July 2010.

The formal position of our association is as follows: All providers of funeral goods and services, regardless of their corporate structure, will be required to levy the GST in a uniform fashion when providing goods and services to the public. The OFSA wrote the Minister of Finance in the spring of 2008, and the minister's response was positive. The minister's letter stated: “Burial and cremation services are not currently among the particular services to which the exception from the exempt status for charities applies.” In other words, if you provide burial and cremation services, you should apply GST.

Despite these assurance, we have significant concerns. During follow-up discussions with the minister's office, officials recommended that our issue be brought before the pre-budget consultations in 2009. We followed this advice and made a submission to the pre-budget consultations, but have not had a satisfactory resolution. Since then, we have reinitiated dialogue with the minister's office and are awaiting a response.

We would like to bring to your attention a brochure produced by our competitors highlighting the savings on the GST their clients received by using their services. It says, “Save the GST on select service fees”, including burial, entombment, cremation, and hydro. The minister’s letter also states that “the application of the GST is regularly reviewed and your comments will be taken into consideration”. We offer the federal government our experience in dealing with this inequity as part of the GST review.

The GST exemption for our competitors coupled with the harmonization of the Ontario provincial sales tax gives religious cemeteries a significant and unfair competitive advantage. The inherent unfairness undermines the marketplace and ultimately is unhelpful to consumers in their time of need.

In terms of how this relates to the theme of this year's pre-budget consultations, we are of the opinion that tax fairness is the ultimate tax and program measure. If taxes are administered unfairly, then it undermines our tax system and the economy.

Thank you all for your time today.

[The Chair, Conservative, James Rajotte]

Thank you very much for that presentation.

We'll now hear from the Ontario-Quebec Grain Farmers' Coalition.

[Leo Guilbeault, Chair, Ontario, Ontario-Quebec Grain Farmers’ Coalition]

Chairman Rajotte and finance committee members, thank you for the opportunity to present to the pre-budget consultations.

William and I are members of the Ontario-Quebec Grain Farmers’ Coalition. We represent 41,000 farmers from Windsor, Ontario, to Rimouski, Quebec.

In the context of this year's pre-budget consultations, we are very fortunate to live in Canada. Our land is vast and fertile and our work ethic and entrepreneurial spirit have given us the resilience to weather these difficult economic times. Agriculture is the backbone of our rural communities and economies, providing employment, creating wealth, and providing Canadians with an affordable and secure supply of food.

Our presentation will focus on the agricultural flexibility fund, or AgriFlex, announced in the 2009 budget. The federal government has shown strong commitment to agriculture, and we are encouraged by some of the government's measures, including opening up world markets to Canadian farmers by signing free trade agreements, replacing CAIS with the new “Growing Forward” agenda, investing in infrastructure, and making changes to the Canadian Agricultural Loans Act by freeing up credit for young farmers.

In the 2009 budget we saw the announcement of the agricultural flexibility fund, or AgriFlex. This fund allows the provinces more flexibility in delivering needed programming. However, more needs to be done. The federal government must open the agricultural flexibility fund to business risk management programs.

It is imperative that we have agriculture programs in place that are responsive and sufficiently funded. The original AgriFlex proposal, as proposed by the Canadian Federation of Agriculture, was intended to fund BRM programs. This would allow Ontario to support the risk management program for its grain growers and allow Quebec to support Le programme d'assurance stabilisation des revenus agricoles, or ASRA.

[William Van Tassel, Vice-President, Ontario-Quebec Grain Farmers’ Coalition]

I will continue in French.

Each year the government disburses ad hoc payments to address unpredictable hardships faced by farmers. This ad hoc funding—defined as funds in excess of CAIS and Production Insurance—–averaged $2.5 billion per year for 2004-2006 according to Statistics Canada.

Traditionally, approximately 60% of total money spent is federal funding, making the federal contribution to ad hoc spending $1.53 billion per year in excess of CAIS and production insurance.

AgriFlex, with BRM, would provide sufficient flexibility in program design and delivery to respond quickly to emerging regional agricultural priorities. AgriFlex, with BRM, compliments and advances key objectives established in the Growing Forward documents. AgriFlex, with BRM, would be distributed to provinces and territories for flexible funding that will be used to address the unique needs of regions and agricultural sectors across the country. Fund distribution would be based on a formula that addresses the total agricultural value of production in individual provinces and territories.

AgriFlex, with BRM, would allow provinces and territories to direct their portion of funds to agricultural sectors where the need is greatest, complimenting existing federal programs, or to areas that are not sufficiently addressed by existing federal programs, or to start new programs.

When used to complement existing federal BRM programs, payments through AgriFlex could offset payments of other programs. Producers would only be allowed to receive payment from one program that addresses the specific need in a given year.

We are not alone. At the last federal-provincial-territorial meeting in July, the provincial ministers of agriculture asked the Minister of Agriculture and Agri-Food, Mr. Ritz, to conduct a strategic review of risk management programs. They also asked that an industry engagement strategy be developed as quickly as possible. The federal minister has committed to reporting back to the provincial ministers in early 2010. We offered our experience and expertise to the federal government for this review but have not yet heard back. Furthermore, Quebec, Ontario, Alberta and Saskatchewan have also indicated that they would like to work with the federal government under companion programs.

Thank you again for the opportunity to present to the pre-budget consultations and we look forward to working with the federal government to keep agriculture strong in Canada.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We will now go to questions from members.

Mr. McCallum.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Chair, and welcome to all of our witnesses.

Chief Simonds, I'm sympathetic to the first point you made, about income tax relief for volunteer firefighters, but that doesn't seem to get you very far. You said that this committee gave all-party support and it still didn't happen. Do you know why it didn't happen?

[Robert Simonds]

I believe it was because it was coming through as a private member's bill. It would not have been feasible to move forward on a money bill. For this reason, we need the support of government to move this through.

[John McCallum, Liberal, Markham—Unionville, ON]

I guess it's up to the government, then. If there's all-party support here, it's up to the government. You're suggesting a private member's bill won't do the job.

[Robert Simonds]

That's correct.

[John McCallum, Liberal, Markham—Unionville, ON]

Perhaps we'll hear what the government side has to say, but I think it had all-party support in this committee before.