Finance Committee on Oct. 19th, 2010

[The Chair, Conservative, James Rajotte]

Good morning, everyone. I call this meeting to order.

This is the 35th meeting of the Standing Committee on Finance. We are continuing our pre-budget consultations for 2010 for the 2011 federal budget.

I want to welcome you all here this morning. We have on our first panel seven organizations to present to us. First of all we have Philanthropic Foundations Canada; then we have the Ontario-Quebec Grain Farmers' Coalition, the Juvenile Diabetes Research Foundation Canada, the Sarnia Lambton Chamber of Commerce, the RCMP Heritage Centre, the Canadian Association of Agri-Retailers, and the St. Catharines-Thorold Chamber of Commerce.

Thank you all for being with us here this morning. You each have five minutes for an opening statement, and we'll proceed in the order mentioned. Then we'll proceed to questions from members.

I believe we'll start with Ms. Pearson.

[Hilary Pearson, President, Philanthropic Foundations Canada]

Thank you very much.

Honourable Chair, honourable members, thank you for the opportunity to speak to you on behalf of my members. This is about the sixth time I've come to the committee. I noticed Donald Johnson was saying a couple of weeks ago that he was going to keep on coming back until you did what he said—so, check.

I represent Canadian charitable foundations and grant-makers from across the country. Collectively my members manage over $6 billion in charitable assets and disperse around $290 million into the community annually to support all types of charitable activity. As private funders, we remain concerned about the lingering impacts of the recession on Canadian charities. The endowments of most foundations decreased in value by up to 20% in 2009, and generally, grants to charitable organizations have not increased over the past year, although funders have worked hard to avoid reductions.

These restrictions, combined with continuing reductions in government funding as well as reductions in our own endowment and business income, are confronting Canadian charities with difficult budget realities for 2011.

We have two recommendations to address the problem of financing charities. The first is to examine regulatory options to foster more access to capital by charities, and the second is to promote new charitable giving through a stretch tax credit. I'll just speak briefly about both of those, although more details are obviously in our brief.

Private funders are important catalysts for social innovation and entrepreneurial activity in the non-profit sector. In a business context, innovation or growth is often financed through a loan or investment, but in a charitable context there are fewer financing options. Canada's charities remain undiversified in their financing structures and models. Operating capital is obtained year to year from a range of funding sources, such as fees and gifts, and investment capital is practically non-existent. Capital accumulation is discouraged by the federal regulators. There are few funding intermediaries that can provide both loans and financial capacity training to charities and non-profits, although such intermediaries flourish in the U.S. and the United Kingdom.

Foundations can make loans below market rate to registered charities, but the Income Tax Act does not allow them to provide this type of finance to non-profits such as housing corporations or other social enterprises. Even a non-profit loan fund structured as an incorporated non-profit cannot access foundation capital at less than market rate, because it is not a qualified donee. This has limited the establishment and growth of non-profit intermediaries, which cannot register as charities under the Income Tax Act.

On the investment side, federal and provincial laws only allow investments prudently made with a secure expectation of return. Federal regulators have ruled that even passive investments in limited partnerships by private foundations are not permitted, because under the law of partnerships these investments could mean that the foundation is engaged in running a business.

The attempt to maintain a strict dividing line between charity and business has meant in practice that private funders remain confined to a funding paradigm focused on grants. This has not encouraged the full deployment of the approximately $34 billion or more held in foundation endowments across Canada. Charities benefit from the 3.5% to maybe 5% of endowment dispersed in grants, but typically don't access the 95% of assets held in endowments.

The federal government could adopt a regulatory framework that encourages more philanthropic investment. We urge the committee and the government to be pro-active in examining all regulatory options, including clarifying CRA guidance on program-related investments by foundations, reviewing CRA's position on investments in limited partnerships, qualifying specific social investment projects as qualified donees, and clarifying CRA's guidance on the relationship between mission investment activities and business activities.

We believe that an in-depth review of federal policies is long overdue in order to improve access to growth capital, whether by way of loans or private equity investments in organizations within Canada's charitable sector. In that regard, the recommendations put forward by Imagine Canada are worth considering. They would allow non-profit organizations to access the current federal programs in support of small business.

Secondly and finally, Philanthropic Foundations Canada supports the recommendation made by Imagine Canada and others for a stretch tax credit to stimulate new charitable giving. Imagine’s proposed credit would apply to donated amounts that exceed a donor’s previous highest giving level--using 2009 as a baseline--up to a ceiling of $10,000.

We support this measure because of its potential to attract newer and younger donors of smaller amounts. We need to draw more new donors into the diminishing pool of donors in Canada. This measure would have the merit of benefiting charities of every size in every region and should over time broaden the base and increase the giving levels of Canadians across the country.

Merci. Thank you for your consideration

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Pearson.

Now the Ontario-Quebec Grain Farmers' Coalition.

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

Mr. Chair, honourable members, thank you for the opportunity to talk to you today.

My name is William Van Tassel. I'm president of the Ontario-Quebec Grain Farmers' Coalition. I am joined by Leo Guilbeault. He is my Ontario counterpart. He is chair of the Ontario grains and oilseeds committee.

In 2007 we joined forces to address some the market challenges that we face. The Ontario-Quebec Grains and Oilseeds Farmers’ Coalition represents 41,000 Ontario and Quebec farmers from one end of the province to the other end of Quebec. Our members produce every kind of grain you can think of that's growing out here, and we represent the backbone of rural communities throughout Ontario and Quebec. Our work is to feed Canadian cities--more than that, to feed the world.

I am here today to address some of the challenges that eastern Canadian grain farmers face. In particular, I am here to ask the committee to consider a new approach to agricultural business risk management.

As farmers, there are some elements of risk that we cannot control, such as the BSE crisis—mad cow—or the recent flooding out in the prairie provinces. These risks are partially managed through the current crop insurance programs. But these programs cannot help us manage the chaos and volatility of market prices, constantly distorted by international agricultural subsidies and international currency fluctuations.

As a result of these global economic pressures, eastern family farms have struggled in recent years to keep their businesses healthy and sustainable in the long term. Year over year, we suffer from a lack of certainty and reliability: we do not know what price we will get for our crops from year to year. But we have a solution that we believe can bring some reliability and certainty--as much as possible anyways--back into farming in eastern Canada.

[Leo Guilbeault, Chair (Ontario), Ontario-Quebec Grain Farmers' Coalition]

Our coalition, in collaboration with the Canadian Federation of Agriculture, has designed a program that will meet the needs of flexible regional programming and fit seamlessly into the Growing Forward initiative.

We are here today to urge the government to implement a regional flexibility program, which includes funding for provincial business risk management, in the Growing Forward policy framework as administered by Agriculture Canada. Our solution is a federal funding envelope that is designed to allow specific regions of Canada to address unique challenges specific to their region.

Our proposal achieves two goals. For the federal government, it's a more efficient use of money it already spends. For the farmer, it provides long-term predictability for important regional programs. This is done by bolstering regional programs and investing funds where they will do the most good. These regional funds will reach producers who need them the most.

[William Van Tassel]

For example, in Quebec, regional flexible funds can be used to shore up ASRA—Le Programme d'assurance stabilisation des revenus agricoles—which is a critical element in keeping many different sectors on a sustainable path in times of low world prices. In other regions that might not be facing significant income support challenges, regional funds can be unlocked to invest in research and development to help future generations.

[Leo Guilbeault]

And in Ontario, it could be used to fund a very successful grains and oilseeds risk management program. This program has been used by over 12,000 farms of all sizes in a successful way to ensure against price volatility in the grain markets.

Recently, at the end of July 2010, Ontario Premier Dalton McGuinty and Agriculture Minister Carol Mitchell recognized that the program is working as a risk management tool for Ontario grain farmers and renewed the risk management program. This was welcome news to all farmers. We hope the federal government follows the lead of Ontario.

[William Van Tassel]

Quebec has also recently renewed its commitment to the ASRA program, while addressing some of the program's shortcomings. Grain farmers are grateful that they have such supportive partners in the Ontario and Quebec governments for these needed programs. However, the federal component is still missing from both programs and is a critical component to making RMP, ASRA, and other regional programs work effectively. Like all long-term farm programs, we need the participation of the federal government to be truly effective.

[Leo Guilbeault]

So by becoming a full partner in flexible, regional-focused programs like Ontario's RMP and Quebec's ASRA, we can help the federal government save money it currently spends on ad hoc emergency aid—about $1 billion a year. Farmers across Canada continue to be extremely frustrated by the Growing Forward suite of programs, Ottawa's one-size-fits-all program, and specifically the AgriStability program.

At our last four meetings of federal and provincial agriculture ministers, the minister agreed to review the federal farm programs, yet little if any progress has been made. It's clear that the system needs to be improved, and it's also clear that improvements will save everybody money.

[William Van Tassel]

Farmers are not asking the federal government for a bailout program. As is the case with Ontario's RMP program and also Quebec's ASRA program, it is a cost-shared insurance-style program where farmers contribute premiums to protect them against pricing collapses caused by international subsidies. If commodity prices are healthy and sustained, the government can actually make money. Wouldn't that be something?

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now go to the Juvenile Diabetes Research Foundation Canada.

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

Thank you, Mr. Chair.

On behalf of the Juveniles Diabetes Research Foundation, I'd like to thank the committee for the opportunity to present this morning. My name is Andrew McKee, and I'm the president and the CEO of JDRF Canada.

The Juvenile Diabetes Research Foundation is the leading charitable funder and advocate for type 1 diabetes research worldwide. Our mission is to find a cure for diabetes and its complications through the support of research. As such, we have been a strong voice for innovation, commercialization, and increased funding for research and development—all areas of Canadian pride and excellence.

In the last ten years, JDRF has funded over $95 million worth of diabetes research here in Canada. On behalf of our entire organization, the families who live with the burden of diabetes, I'd like to express our sincere appreciation of this committee's continued interest in and support for our cause. In 2008 this committee recommended that the federal government create a specialized fund for medical research for children's health and that in this regard priority should be given to the establishment of a partnership with the Juveniles Diabetes Research Foundation of Canada.

We're pleased to be able to report to this committee that on November 23 of last year, JDRF Canada, along with the Federal Economic Development Agency for Southern Ontario, launched the government's first partnership to benefit diabetes and the diabetes research community. The Government of Canada has committed $20 million as part of a $33.9-million partnership with JDRF to support the development of the Canadian Clinical Trial Network. The network's aim is to accelerate research advances for type 1 diabetes by capitalizing on southern Ontario's well-established leadership in medical research and innovation.

This initiative marks a pivotal achievement of our organization and is the significant first step in positioning Canada as the premier hub and home for international, cutting-edge diabetes research. Since last year's announcement, we are pleased to report that significant progress has been made in achieving our goal. In March 2010 we announced that the University of Waterloo, in alliance with McMaster University, and additionally since then the Robarts Research Institute at the University of Western Ontario, would act as the coordinating centre for our Canadian Clinical Trial Network.

The infrastructure of this network is currently being established, and future investment will go directly into breakthrough clinical trial research. Already, there are many shortlisted trials under the CCTN that have been designed to enable commercialization within the near to medium term. The network has also succeeded in attracting global interest in conducting research at Canadian hospitals and universities. As an example, the Immune Tolerance Network, a non-profit, government-funded alliance of researchers working to establish new treatments for diseases of the immune system and based in the United States, has partnered with the CCTN to conduct trials here in Canada.

The CCTN has also received proposals for the expansion of a number of clinical trials started abroad, trials that would not have been conducted in Canada without the leadership of the CCTN. It's important to note that the Clinical Trial Network is not disease-specific; the platform serves as a template that is accessible by other disease researchers, organizations, and funders, and promotes other disease research through commercialization.

Companies and organizations around the world have already recognized Canada's leadership and expressed an interest in using the Clinical Trial Network as a model for clinical trial work abroad. The CCTN model has attracted the attention of JDRF Canada's global counterparts. JDRF Australia has been granted $5 million from the Australian government to emulate the CCTN. An interest in adopting similar networks has also been expressed by the JDRF in Europe, India, and Israel. In addition to attracting global interest and conducting research at our hospitals and universities, the CCTN is creating highly skilled jobs in Canada and contributing to the shift towards a knowledge-based economy.

JDRF's partnership with the Federal Economic Development Agency for Southern Ontario, and the federal government more broadly, is a concrete example of the important role that research excellence and scientific success plays in improving the competitiveness and productivity of our economy while also serving as a means to achieve a better standard of living for all Canadians. It also emphasizes the importance of direct government investment in research and development and commitment to public-private partnerships that lead to real societal gains and economic gains.

This is why this year JDRF is urging the committee to recommend that the federal government continue supporting our science and technology industries through a significant and sustained commitment to partnerships between private and public sectors that promote cutting-edge research, innovation, and commercialization. New treatments and scientific discoveries for diabetes is a proud Canadian legacy, and through JDRF's historic partnership with the government we will continue to work to bring it to new heights.

We are very pleased with what we have achieved today and hope that success for our unique funding partnership with the federal government will prompt the continuation of support and growth of Canadian science and technology industries through significant and sustained commitment to partnerships between the public and private sectors.

Thank you for your time today, and I'd be happy to answer any questions you may have.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. McKee.

We'll now hear from the Sarnia Lambton Chamber of Commerce.

[Katherine Walker, Chair, Board of Directors, Sarnia Lambton Chamber of Commerce]

Thank you for the opportunity to present the concerns most important to businesses in Sarnia Lambton and the Canadian economy. We offer solutions to improving the business environment in Canada in order to allow for growth and to attract business investment to this country. Our submission was developed with input made by Sarnia Lambton's commercial, industrial, and small-business communities, representing over 19,000 jobs.

First, we would like to congratulate Parliament on the actions taken to date assisting in the economic recovery. When the depth of the financial crisis became apparent, our members understood quick and drastic measures were needed to lessen the impact of the economic decline and that managed short-term debt would be tolerated. A great amount of uncertainty still lies ahead, however, and it is vitally important that this government get it right going forward.

[Garry McDonald, President, Sarnia Lambton Chamber of Commerce]

With respect to our submission and the area of tax and duties, achieving competitive rates in order to maintain and improve Canada's ability to attract capital investments and jobs is an important step. It must continue to ensure global competitiveness and attract investment. We urge you to continue the reduction of the federal corporate income tax rate, as scheduled in the current legislation, to 15% by 2012 and to continue the staged reduction of the most favoured nation import duties.

Further, we believe the GST/HST threshold is too low. It's remained unchanged at $30,000 since inception in the early 1990s. Other nation thresholds are $80,000 to $125,000, and we ask you to support our resolution to increase the threshold to $75,000 effective January 2011. This would result in allowing for real growth and a solid financial base before adding the additional burden of red tape for both government and SME start-ups. Your long-term strategy should ensure that the debt-to-GDP ratio falls below 30% by 2015.

Program spending should be limited to about 1.6% per year, returning to a balanced budget by 2015. I believe these are supported by the Canadian Chamber of Commerce in their submission as well.

Reducing red tape is important to business. Changes are needed to the Income Tax Act permitting the consolidation of owned company tax returns. Further, reducing the administration burden that ineligible versus eligible dividend tracking creates should also occur. Standardized T-forms and box locations are needed to reduce filing errors in a lot of forms, our accountant members tell us. Creating a standard charitable donation T-form would go a long way in reducing red tape as well for many existing charities that create their own forms.

When completing program reviews we urge the government to ask basic and fundamental questions when reviewing spending beyond direct program expenses. A full-scale review of all programs should include a cause and effect analysis.

Border crossing support.... In southwestern Ontario, manufacturers have proximate and strategic access to over 50% of United States markets and supplies as measured in terms of GDP economic activity. These Canadian businesses are vulnerable to increasing complexity and costs of crossing the border between Canada and the United States. Presently, importers and exporters must apply to both the Canadian partners in production program and customs self-assessment programs to gain benefits such as FAST. If the programs were harmonized with the American customs-trade partnership against terrorism program, then there would only be one application, like NEXUS, thereby reducing the red tape and burden on business to comply with both programs. Right now there is a mutual recognition of these programs by both countries.

Canada Border Services Agency is in the process of establishing service delivery standards. The elimination of summer student programs means inspection lanes during the busy summer season are not being staffed during peak times. CBSA has done a very good job this past summer by adjusting some schedules, but budgetary pressures still leave the busiest ports--such as ours in Sarnia-Point Edward, at the Blue Water Bridge--inadequately maintained, affecting trade and tourism with our largest trading partner, the United States.

Environmentally, Sarnia industries responsibly manage hundreds of chemicals as raw materials, process intermediates, and products. The overlap between federal and provincial chemical management and inventory programs creates unnecessary costs and inefficiency. We urge the federal government to work with the Province of Ontario to harmonize their new Toxics Reduction Act requirements with Environment Canada's more established chemical management plan.

Under next-generation sustainable industries, there are significant gaps in the design and application of programs supporting Canada’s vision to be a leader in new technologies, including biotechnology. A more comprehensive scope is required to accomplish this vision. The federal government should work with other levels of government, private sector lenders, innovator companies, and venture capital firms to develop an action plan to promote and finance the development and commercialization of new technologies, as possible grant programs are declining in the future.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. McDonald. Sorry, I'm trying to keep everyone to time just to be fair to everyone.

We'll go to the RCMP Heritage Centre, please.

[Robin Etherington, President and Chief Executive Officer, RCMP Heritage Centre]

Mr. Chair, ladies and gentlemen of the Standing Committee on Finance, fellow colleagues and presenters, I am Robin Etherington and I have the honour of serving as president and CEO of the RCMP Heritage Centre, Canada's cultural flagship for heritage. The RCMP Heritage Centre was designed by Arthur Erickson, a renowned Canadian architect, who infused his respect and admiration for the RCMP into a unique and innovative design that represents the Royal Canadian Mounted Police's rich history and proactive future.

The RCMP Heritage Centre was opened in May 2007, so it's three years old. The federal government contributed $25 million in capital funding, the Province of Saskatchewan contributed $3 million, and there was a $2 million community fundraising campaign. However, no operating funding model was developed, and the RCMP Heritage Centre is singular in Canada as a museum that does not receive operational funding from any level of government. Museums of this stature in Canada receive 65% to 67% of their operating budgets from a combination of three levels of government.

The RCMP Heritage Centre is not owned or operated by the Royal Canadian Mounted Police. Rather, it is a cultural organization completely separate from the RCMP. It is a registered charity, a not-for-profit organization that I repeat does not receive any funding from the federal, provincial, or municipal governments.

The turndown in tourism over the last two years has had a dramatic and negative effect on admissions and retail revenues. The Heritage Centre responded by tightening operations, including staff reductions and reductions in hours. This is not sustainable or beneficial for a world-class museum and its mandate to promote Canada's national police force across Canada and around the world.

The RCMP Heritage Centre is in critical need of operational funding to maintain the Heritage Centre to the standard befitting a national cultural centre and cultural flagship for Canada. Without the appropriate level of government operating funding, the Heritage Centre is not going to be able to do justice to the story of the Mounties or the community of Regina forever. All energies will have to go toward fundraising rather than to program and exhibition and visitor services development. Without this assistance the Heritage Centre will be restricted to offering only minimal availability to the public, and its programming and exhibition renewal will be inconsistent with the standards befitting the representation of Canada's iconic police force.

Between 1996 and 2007 the federal government funding to not-for-profit museums and art galleries in Canada increased by 27%. The RCMP Heritage Centre is asking for $600,000, or approximately 25% of operating revenue per year below the comparative national level. Federal funding will leverage the Heritage Centre's ability to receive provincial and municipal operating funding as well as leveraging the ability to put in place sponsorships and other funding opportunities. It will stabilize the operations. It will provide necessary resources to strengthen operations to be consistent with national museum standards, and it will be able to increase its marketing and communications activities to broaden its national and international reach and in turn bolster admission, retail, and other revenue streams.

In addition, it will allow us to renovate or renew our exhibitions and our programming at a level consistent with museum standards. That includes web-based education and using technology such as the SMART Board. We have innovative programming in treaty, aboriginal, and Métis that is curriculum-based.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from the Canadian Association of Agri-Retailers.

[David MacKay, President and Chief Executive Officer, Canadian Association of Agri-Retailers]

Good morning, Mr. Chair and members of the committee. Thanks for the opportunity to present today.

Canadian agri-retailers are the stewards of critically important crop input products like fertilizers and chemicals that are responsible for boosting yields and protecting crops while they grow. We are the suppliers to Canadian farmers, and our sector contributes nearly $10 billion in trade towards the Canadian economy. But we are struggling with an unforeseen burden that has nothing to do with crop production. It's the prohibitive costs of securing crop inputs within the current regulatory scheme.

For four years the Canadian Association of Agri-Retailers has been asking for one thing: government assistance to help us secure agricultural inputs that are essential for modern crop production, sustaining Canada's food supply and enabling a multi-billion dollar grain and oilseeds worldwide export market. We are not asking for the government to pay for our business expenses. We are asking for it to help implement a proactive security plan in the interest of public safety so we can prevent malicious diversion of our products.

Our sector has never regarded crop inputs as a threat to public safety, but the reality of today's world necessitates renewed vigilance and preparedness. Some products carry more inherent risk than others, but only if they are misappropriated by those who have intent to cause harm. Fertilizers like ammonium nitrate, which can be used as explosive precursors, have received the greatest amount of media and regulatory attention recently. Explosive precursors have been regulated under the Explosives Act for two years.

CAAR members both support and comply with all existing federal regulations pertaining to these products. We are not here to object to the content of any one regulation as it relates to the product that it governs. However, we are here to inform you that the cumulative effect of a product-by-product, piecemeal approach to regulating crop input security is both impractical and cost-prohibitive, and diminishes the agri-retailer sector's ability to stay competitive. Inevitably our costs will have to be passed on to our customers, the farmers, and the only other alternative for agri-retailers would be to stop offering the products altogether, and that is already becoming a more common outcome in our industry. For example, ammonium nitrate is no longer sold west of Ontario.

I'm sure all of you have heard the expression that death by 1,000 cuts can be just as lethal. That is exactly the experience that is unfolding at over 1,500 crop input dealerships across Canada. Although no single regulation is prohibitive in and of itself, it's the cumulative effect of having to endure a separate set of rules for each and every product that becomes unreasonable and unworkable. Whether these rules are developed as part of an industry code or a government regulation, the net result is a myriad of unharmonized requirements that are either redundant or conflicting and therefore inefficient when considered from the perspective of an agri-business owner.

So it should come as no surprise that the desired solution for this impractical scenario would be to harmonize and integrate all high-risk crop inputs into a single comprehensive security protocol. Because there is no single regulation that currently regulates such a protocol, CAAR is being criticized by government officials as advocating for funding for something that is not mandatory. But that's the whole point: we're trying to do the right thing to prevent an incident and avoid having to deal with it in hindsight, and with its consequences. Just because something is voluntary does not mean it is not a good idea or in the best interest of public safety and the Canadian economy. Suggesting we should not invest in sensible programs until it becomes mandatory is a ridiculous circular logic, obviously generated to be argumentative rather than open-minded and genuinely considerate of real solutions. Our industry has several examples of very useful voluntary programs that save taxpayer dollars, including training events, educational seminars, and the implementation of best management practices.

But the key difference about implementing an integrated crop input security protocol as a voluntary program is that we cannot afford to do it alone. We believe it has all the merits of being a small investment now to avoid a much bigger problem later. But the impediment is that it is too costly for our sector to bear alone. If the ultimate objective of the program is to enhance public safety, then it makes sense that the federal government partner with us to meet the objective. When it comes to securing crop inputs, CAAR and its members want to do our part, but we're asking for your assistance to help us do it once and do it right, versus the current piecemeal approach that is both inefficient and cost-prohibitive for agri-retailers.

In closing, the specific details of our proposal have been included in our original submission to the committee. We would like to point out that it's been officially supported by recommendations from both the House and Senate Standing Committees on Agriculture as well as several trade associations, including the Grain Growers of Canada, the Canadian Federation of Agriculture, Western Canadian Wheat Growers Association, the Canadian Fertilizer Institute, the Canadian Federation of Independent Business, and the Saskatchewan Association of Rural Municipalities.

We're pleased to answer any questions you may have.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

Our final presenter is from the St. Catharines-Thorold Chamber of Commerce. You have a five-minute-maximum opening statement.

[Kithio Mwanzia, Policy Coordinator, St. Catharines - Thorold Chamber of Commerce]

Good morning.

The St. Catharines-Thorold Chamber of Commerce is located in the heart of Niagara, for a bit of geographical reference, in Ontario's wine country. It's one of the largest chambers in southern Ontario and represents a large breadth of businesses of different sizes.

The key this morning to our presentation, the salient point, concerns removing interprovincial trade barriers for Canadian VQA wine delivery as a critical piece in the future of this industry and the future of Niagara.

As a bit of background, in Canada it is illegal to “direct deliver” alcohol across provincial borders to an individual or to a business not affiliated with the provincial liquor board or approved seller. Since 1928, the Importation of Intoxicating Liquors Act has prevented the direct sale of liquor across provincial boundaries. Some wineries ignore the rule, even using Canada Post to transport their products; others will not “direct deliver” beyond provincial borders. In addition, the law actually prohibits individuals from taking even one bottle across provincial boundaries. In Canada, where we have 100% world-class VQA wines, there is a certain opportunity here to take away a competitive barrier that exists within the industry.

The growth of the B.C. and Ontario wine industry is extremely beneficial to Canada. Not only does the domestic wine industry create jobs, preserve valuable agricultural land, and create vibrant tourism destinations; it also adds value to the economy in many other ways. A 2002 study of KPMG commissioned by the Wine Council of Ontario found that the sale of a litre of wine adds $4.20 in value to the Ontario economy, compared with $0.56 in value from the sale of imported wines, demonstrating the higher value associated with the wine produced locally in Canada.

With strong wine markets in B.C. and Ontario as well as emerging markets in Quebec, Nova Scotia, New Brunswick, and Prince Edward Island, the issue is particularly salient. Similarly, the Ontario Chamber of Commerce, the British Columbia Chamber of Commerce, and the Canadian Chamber of Commerce, as well as the Canadian Vintners Association, have all passed resolutions that the provinces and the federal government work together to eliminate the barriers associated with the wine industry in interprovincial trade. This demonstrates that there is a real grassroots impetus from the business community to see this law changed.

You have seen the additional comments that were provided in the submission from the St. Catharines-Thorold Chamber of Commerce. We are urging that, similar to the case in 2007, when the throne speech was used to begin an important process of eliminating interprovincial trade barriers related to this industry, the 2011 budget process be used as a starting point to begin working with the federal and provincial governments to eliminate this particular interprovincial trade barrier.

Last, but certainly not least, I'm pleased this morning to have our member of Parliament, Mr. Rick Dykstra in the room and as part of the Standing Committee on Finance. He has been working with the St. Catharines-Thorold Chamber of Commerce on this particular issue.

I'm happy to take any questions as proceedings continue.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll start with Mr. Szabo for questions.

[Paul Szabo, Liberal, Mississauga South, ON]

I want to speak to Ms. Pearson from Philanthropic Foundations Canada. I am very supportive of the stretch tax credit. Yesterday I flew in with the head of the Arthritis Society, Steve McNair by name, and we talked quite a bit about the challenges facing the charitable sector. I think the move within philanthropic giving and strategies supports this idea.

I have a question, though, with regard to communicating this to those who probably aren't accustomed to giving. There's a little bit of complication to it. On top of that, under the Income Tax Act, one or the other spouse can take the credit for both, and as you can see there may be the opportunity for a double benefit by one, depending whether they manage their affairs properly: with one claiming all of the deductions or credits in one year, there might be a double bump, for a family as opposed to a single giver.

Is there any way to deal with that? Could you explain to the committee why it wouldn't have been just as simple to enhance the credit itself totally, other than the reason that it would encourage new giving?

[Hilary Pearson]

Let me preface my reply by saying that I am not a tax policy expert, thank God. It's necessary, but it's not the kind of thing you want to perhaps spend your career doing--designing tax policy. But it is very important. And on the record I want to say thank you very much for your support for the idea of the stretch tax credit.

The fundamental concept here is that it's a stretch credit. The idea is that rather than simply topping up the credit we wanted to.... And I am speaking here on behalf of our membership, which supports the recommendation that is actually led by Imagine Canada. I believe you'll hear from Marcel Lauzière in a week or so, and you will hear a lot more about the stretch tax credit from Marcel. That being said, we thought it was important to support this because we do think it is something that might encourage donors who give small amounts--because this is meant to apply only to smaller amounts--to give a little more. This would be a good thing. We're trying to enlarge the base of donors. As you know, the base of donors is decreasing.

[Paul Szabo, Liberal, Mississauga South, ON]

All right. Are you aware if there is anybody who is actually doing this now?