Finance Committee on Nov. 25th, 2009

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Would this proposed tax credit be better or worse than any other incentives that could be available--for example, offering higher salaries to get people to move to an area?

[Johanne Deschamps, Bloc, Laurentides—Labelle, QC]

It looks as though it will be higher. That may be the responsibility of the company concerned. You cannot force a company to offer a salary that is higher than the norm or average. On the other hand, an incentive is given to an individual, who can then decide on his own to go and settle in a specific region because he is being given the chance to access this tax credit. Also, if you look at how it is currently working in Quebec, I'd say it has been very successful.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

So higher salaries would be one example. But would a northern residents tax deduction that everyone in the whole region got, as opposed to a special one for graduates, be more or less effective? I don't know. I just want your thoughts on that.

[Jean-David Beaulieu]

Unlike some other Committee members, members of the Bloc Québécois believe there should be full population coverage and that it is important that there be quality jobs available in the regions.

It is important to understand that a company operating in a remote area faces higher costs, particularly transportation costs. Consequently, it is often difficult for that company to compete with the salaries being offered in the large cities.

That is why we think that, by providing a tax credit to young graduates living in the regions, we can compensate in part for the company's limited ability to pay, while at the same time fostering full population coverage and allowing our young people to live in the regions.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Rafferty.

Mr. Pacetti please.

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

I want to thank our witnesses for being here today.

I just have a few questions. If I'm not mistaken, you said that 16,000 people had availed themselves of the tax credit in Quebec. Are the criteria the same as in Quebec? Are they not more restrictive?

[Jean-David Beaulieu]

The criteria are the same in Quebec. One point that should be made about this tax credit is that, when it was introduced in Quebec, it was refundable. Therefore, you were not required to pay taxes in order to be eligible, which resulted in exploding costs. The government of Quebec wanted to correct that and therefore changed to rule so that the credit would no longer be refundable.

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

So the 16,000 people who benefited from the tax credit were students. Is that what the statistics tell us? Do we know how many of them did it because they wanted to work in the city? Did this initiative really serve to keep young people in the regions?

[Johanne Deschamps, Bloc, Laurentides—Labelle, QC]

In 2003, 4,578 people benefited. I referred to a total of 16,000 people. In other words, in 2007, almost 16,000 graduates availed themselves of the tax credit. So, we are seeing that year over year, there are more and more people using it.

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

Thank you. I have two other quick questions, and I also have a couple of comments.

My view is that the bill should not be too restrictive. Sometimes a B.A. covers a very wide area of study. We could cite a lot of examples, even in medicine; but let's take the example of a Bachelor of Commerce Degree, which gives you expertise in accounting, finance, marketing or management. Supposing someone has expertise in finance but holds an accounting job. That person should not be deprived of a deduction. So, I don't think the definition should be too restrictive. It's not written in the bill, but I don't want it to be too restrictive.

I don't mean to exaggerate. I am not talking about a doctor who goes to work at McDonald's; however, if the person's degree is in political science and he or she wants to work in a business, then to me, that is problematic. Does it have to be that restrictive?

[Johanne Deschamps, Bloc, Laurentides—Labelle, QC]

The purpose of the bill is to attract skilled labour in order to deal with labour shortages. They are a reality in the regions of Quebec. We want to bring in qualified young graduates to take jobs in their area of expertise.

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

Exactly, and sometimes there are job transfers—which is why I want to be sure the bill is not too restrictive. Private members' bills are not always properly drafted, because of our limited resources. So I just want to be sure that the conditions are not too restrictive and that someone with a diploma will not be forced to get in a job in only one area. I can already anticipate that we will have a lot of problems with the Canada Revenue Agency.

Also, if a graduate decides to work in a large city like Montreal, Quebec City or somewhere else, and returns to his home area after the second or third year, how will it work with the deduction?

[Johanne Deschamps, Bloc, Laurentides—Labelle, QC]

The bill provides that, from the date of graduation, a person has 24 months to move or find a job there. So, we are talking about two years. If, in the year following his graduation, the individual decides to work one year in a larger urban centre and, following that year, decides to return to his region because he found a job in his field, he will then be in a position to take advantage of the new measures.

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

But if it's three years, he won't be able to.

[Johanne Deschamps, Bloc, Laurentides—Labelle, QC]

He has 24 months. You have to draw the line somewhere.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Pacetti.

Mr. Bouchard, please.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

I am going to ask one question, and my colleague will pick up from me after that.

My question is for Ms. Boucher from the FEUQ. We know that an identical program is currently in place in Quebec. Bill C-288 is very similar to it. Also, you have received a lot of support in Quebec and from your members, who are in Quebec.

Can you tell us whether you know of groups outside Quebec who are or would be supportive? Can you tell us which groups outside Quebec would have an interest in supporting this bill?

[Lysiane Boucher]

Our student federation is provincial, but we do deal with two national federations that defend the same interests, sometimes based on a different approach or adopting different positions. However, the Canadian Alliance of Student Associations represents 300,000 students across Canada. Having discussed this with representatives of CASA, they are supportive insofar as they have also noticed that there is a problem in the regions. They are very much alive to the fact that there is a problem, and that young people are gravitating towards the large urban centres. They also come from the regions or represent people who do. They are experiencing the same difficulties that we are in Quebec; so, we share the same viewpoint on this. Also, our two organizations are trying to find solutions. We support Bill C-288, although I cannot speak for my colleagues all across Canada. However, I do know they have been seeing the same thing happening in their areas.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

At the time this bill was first proposed, by Mr. Bouchard who was then the sponsor, figures were presented showing that the cost associated with the bill would be $180 million for Canada. That calculation was based on what the tax credit had cost the Quebec Treasury. Subsequently, Conservative MPs tabled an estimate showing that the cost would be $600 million. As a result, we asked the Parliamentary Budget Officer to give us his opinion on these two estimates. There was a significant gap of $400 million between the two. The answer, even though it was not entirely clear, was that the cost of the measure would be about $180 million and possibly a little less. It could also be $600 million, but that depended on how the regions were defined.

In your opinion, does this bill propose a more restrictive definition, for a cost of $180 million, or a definition that is more likely to cost $600 million?

[Johanne Deschamps, Bloc, Laurentides—Labelle, QC]

Based on the estimates prepared by the Bloc Québécois, one eighth of Canada's population lives in an eligible region. That is how we came up with the amount of $180 million. There are two assumptions underlying the cost estimates, which have to do with the number and size of the regions to be designated and the take-up rate among eligible individuals.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

A little earlier, we were talking about eligibility. However, the Parliamentary Budget Officer, who will be appearing later, talked about the importance of applying fairly specific criteria in terms of determining which regions will be eligible. In Quebec, all the regions are not necessarily designated—for example, the region I represent, which is Saint-Maurice—Champlain. It is in Mauricie. Now Mauricie was a designated region, but only some municipalities were designated.

Do you think this bill should apply in the same way? Ultimately we are talking about sub-regions where the unemployment rate, even compared to the rest of the region, is much higher. Is that what you have in mind in proposing this bill?

[Johanne Deschamps, Bloc, Laurentides—Labelle, QC]

Quebec set three criteria. It must be a single-industry region with a weakening economy, one where there has been a significant exodus of young people—in other words, lower population—and also a high unemployment rate. Those are the three factors that the government of Quebec relied on to designate resource regions in Quebec. It will probably be up to the Governor in Council to designate the regions, in cooperation with the provinces.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Laforest.

On a point of order, Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

I'd like a quick clarification. Mr. Beaulieu has provided me with different information from what was in his answer. It's not $3,000 off the gross--

[Jean-David Beaulieu]

Would you like me to give an example to all the committee, or do you want to do it?