Finance Committee on Oct. 19th, 2010

[Kithio Mwanzia]

That's right. If consumers in Quebec wanted to order Ontario wine online, for instance, and went on the winery's website and asked to order it, they wouldn't be able to have that wine delivered to them, because--

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

He can buy it through LCBO, can he not?

[Kithio Mwanzia]

No, he can't buy it through the LCBO and take it to Quebec, because that would technically be considered illegal. It is a technicality, but it does become difficult for a business to say that although it's technically illegal, they're going to design it so that--

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

If my favourite wine comes from Ontario, the winery cannot sell it to the SAQ. They could, technically, sell it through the SAQ, could they not?

[Kithio Mwanzia]

That's right. They can sell it through the SAQ, but the issue becomes the markups associated with it. Certainly that might be one venue that a winery might decide to go with, either through the SAQ or the LCBO, but the concern has been the markups associated with it when they do put it through that process. That's one element of their business model, but what we're trying to do is make sure they can fully leverage the opportunity available to them in Canada by having this ability to direct deliver wine to consumers.

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

Are other products in the same vein? I thought there was a restriction on beer, but I thought that was removed. Are you aware of that?

[Kithio Mwanzia]

I'm not aware of any of the exemptions that exist, associated with the act.

My understanding was that the existence of the act covered all sectors. The beer industry hasn't necessarily indicated one way or the other, but I know that from a SME perspective, it's--

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

Have you spoken to any of the provincial people on this? Is there a will to change this?

[Kithio Mwanzia]

Absolutely. As I mentioned--

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

Is there a problem at the federal level then?

[Kithio Mwanzia]

It's more of a coordination piece. The Intoxicating Liquors Act is a federal piece of legislation, while the provincial boards, the points of sale, are provincial bodies. There is an impetus from the business community—as Mr. Brison mentioned, as I mentioned, and as Mr. Dykstra mentioned—with all these chambers of commerce at the provincial level that are urging their provincial governments. Then there's this piece we're presenting today as the Canadian Chamber of Commerce has done, which talks about the need for federal coordination with the provinces to work through this.

The legislation, the Intoxicating Liquors Act, is federal legislation.

[The Chair, Conservative, James Rajotte]

Thank you.

Colleagues, we are pushing up against time. I do have a request from Monsieur Paillé for a brief question. It's not his round, so what I propose is that if the committee agrees to it, we have a Conservative round and then a Bloc round. I know it's out of order. We have seven organizations for this panel, and we have five in the next.

We do have more time for questions in the next panel, so that's one option. I'm just putting it to the committee. We can do a Conservative round and then a Bloc round.

Ça va? Okay. We'll go to Monsieur Paillé and then we'll do a Conservative round.

Monsieur Paillé.

[Daniel Paillé, Bloc, Hochelaga, QC]

I simply want to make sure that what was just said does not mean that Mr. Pacetti's friends are doing anything illegal.

[The Chair, Conservative, James Rajotte]

Order.

Is that it? You should know that I was one of those friends who brought something back for him.

I just have a clarification. I was going to ask the Sarnia Lambton Chamber to talk about their point on extending small-business tax bracket consideration to related companies. Do you want to expand on that? You can do it now, or if you want to submit something further to the committee, I'd appreciate that.

[Garry McDonald]

It's been mentioned before that being a tax expert is not really all of our strength, but we are under the impression that related companies at this time face an additional red-tape burden with the many different tax forms they have to create.

[The Chair, Conservative, James Rajotte]

If there's anything further you have on it, I'd certainly appreciate it.

My final point is for Ms. Pearson. As two of our colleagues mentioned, private member's Bill C-470 deals with the charitable sector. We hope to deal with that at the end of November, beginning of December. I know we have a lot of witnesses who want to appear on that bill, but I just want to highlight that for you. We have to report it back to the House on December 17.

[Hilary Pearson]

We'll come to speak again on that, among many other organizations.

[The Chair, Conservative, James Rajotte]

Okay.

I want to thank all of you for being here this morning, for your presentations, and for responding to our questions.

We will suspend for a couple of minutes and bring the next panel forward.

[The Chair, Conservative, James Rajotte]

We will resume our pre-budget consultations. I will ask members and witnesses to find their seats, please.

We have five organizations in the second panel: the Saskatchewan Association of Rural Municipalities; the Edmonton Chamber of Commerce; the Federation of Saskatchewan Indian Nations; the Canadian Federation of Apartment Associations; and the Saskatchewan Rental Housing Industry Association.

You each have a maximum of five minutes for an opening statement and we'll proceed in that order.

Mr. Marit, I believe you'll be presenting for the Saskatchewan Association of Rural Municipalities.

[David Marit, President, Saskatchewan Association of Rural Municipalities]

Thank you very much, Mr. Chair.

It is indeed a pleasure for me to be here today. I want to take this opportunity to thank the standing committee for inviting us here to share our federal budget priorities with you today.

SARM represents all 296 rural municipalities in Saskatchewan and acts as the common voice of rural Saskatchewan. All members belong to our association on a voluntary basis. In addition, we are mandated by our act of incorporation to act on behalf of Saskatchewan's agricultural producers.

I would now like to outline two areas of greatest need for federal support in rural Saskatchewan, those being both local roads and bridge infrastructure, and the agriculture industry.

Local road and bridge infrastructure is vital to Saskatchewan’s commerce and industry as a landlocked province. We have very few transportation options. Rail line abandonment and elevator consolidation over the past 15 years means thousands more trucks use our road and highway system. Our rural road bridge system continues to deteriorate as more trucks travel more miles to access markets. Associated Engineering reported in 2008 that approximately $567 million over the next 15 years would be required to replace and repair the rural bridge system. In 2009 AECOM reported that approximately $225 million per year would be required to maintain and replace 130,000 kilometres of rural gravel roads. It is estimated that in order for RMs to fully fund only roads and bridges, an additional $389 million would have to be levied from the rural municipal tax base annually. Because the tax base of most RMs is predominantly agriculture and because the present agriculture economy is struggling and therefore unable to carry these increased costs, SARM has asked for support from both our provincial and federal governments. The province has provided us with $47 million in 2009 and $23 million in 2010, but unfortunately this falls short of the total investment required. Today we ask that the federal government consider introducing a new and expanded rural bridge and road infrastructure program to address the special needs of rural Saskatchewan.

I would like to highlight our second priority, agriculture programing. The Saskatchewan agriculture and agrifood sector accounted for nearly 13% of the provincial gross domestic product in 2008 and contributes 12.7% to the total Canadian agriculture and agrifood processing sector. Over the last several years SARM has noted the obvious dramatic swings in prairie weather patterns that have greatly impacted our agriculture industry. Many parts of the Saskatchewan grain belt are feeling the effects of two to three times the normal yearly rainfall in only a few short months. This has put many farms in small rural communities in peril. At this time we believe there are approximately 12 million acres of land in the province that are either unseeded or have been flooded after being seeded. Some economists believe this could result in a $12 billion shortfall due to the excessive moisture.

SARM understands the intent of the federal AgriRecovery program is to provide disaster relief when disasters strike, filling gaps that are not covered by existing programs. That should mean that if a producer triggers a payment from the AgriStability program, then AgriRecovery funding should be above and beyond that. It also means that AgriRecovery payments should not be included in a producer's income when determining eligibility for the programs. SARM understands this is currently not the case.

SARM asks that immediate adjustment be made to the current excess moisture program and that funding provided to producers from the AgriRecovery program not take away from payments received from any other business risk management programs. In addition, SARM also asks that municipal government associations, such as SARM, be included in negotiations surrounding federal-provincial disaster assistance programs. Municipal government is the level of government that is closest to the people, and as such has a greater understanding and can provide a different perspective around circumstances affecting them.

Thank you again for this opportunity to present. I'm happy to respond to any questions.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We will now go to the Edmonton Chamber of Commerce, please.

[Robin Bobocel, Vice-President, Public Affairs, Edmonton Chamber of Commerce]

Thank you, Mr. Chairman, for inviting the Edmonton Chamber of Commerce, the nation's largest local chamber, to provide input at the committee's hearings today.

My name is Robin Bobocel, vice-president for public affairs, and I'm here with Rick Hersack, our chief economist.

We realize the difficult job you, as a committee, have in balancing the many and diverse requests for the federal government to provide financial incentives and support expenditures while at the same time you try to provide fiscal recommendations that will ensure that our economy is not saddled with debilitating debt. We are mindful of that challenge. And we were pleased when the federal government reiterated its commitment to balance the books by winding down fiscal stimulus measures as the economy recovers, by reducing the growth rate of direct program spending, and by undertaking a comprehensive review of government administrative functions and overhead costs in order to identify opportunities for additional savings and improved service delivery. These plans are entirely aligned with our chamber's priorities.

Today we would like to bring to your attention recommendations in a variety of areas, including a call for the deferral of capital gains taxation and the implementation of consolidated joint filing for corporate tax returns. In the interest of time, we have provided written briefs to the clerk on both of these recommendations.

Our intention this morning is to highlight three key priorities related to the upcoming budget and Canada's economic recovery.

First, we offer support for the government's stated budget direction through our own fiscal policy. We will promote a no-cost stimulus to economic growth with accelerated capital cost allowance recommendations. And we will recommend strategic investments to support economic drivers of the economy with policies on northern infrastructure development.

Budget 2010 answered the chamber's call to stay the course on the recovery plan, to lay out a strategy to return to balanced budgets over the medium term without raising taxes, and to focus on making Canada more competitive in the international marketplace. It is our hope that the government continues its efforts to act in a responsible, reasonable, and realistic manner. As such, we have four recommendations for this upcoming budget from our current fiscal policy: continue to work to ensure that the debt-to-GDP ratio falls below 30% by 2015; refrain from hiking taxes or reneging on promised corporate tax-rate reductions to return to balanced budgets by 2015; restrain program spending growth to balance the budget over the next five years; and broaden the scope of spending review beyond direct program expenses.

Similarly, with respect to our position on applying the accelerated capital cost allowance, or ACCA, to all mining and resource processing investments, we recommend that the federal government retain ACCA for oil sands and mining projects in Canada and that it extend ACCA to resource-processing investments, including upgraders and other high-conversion capacity investments and shared processing infrastructure.

ACCA rules specify the rate at which capital assets can be expensed annually. They allow the normal costs of capital to be deducted as fast as income from the project will allow rather than having the deductions deferred over time. As corporations recover their initial investments sooner, ACCA reduces the investment risk associated with the mine or project, thus improving the overall economics of the project.

It is also worth noting that ACCA is not a subsidy. Rather, it is simply a deferral of tax revenues to government that might otherwise not have accrued, because productive investments are less likely to occur in the absence of this accelerated writeoff, especially when these projects face enormous amounts of risk, such as cost of capital, global commodity prices, and uncertainty around mitigating climate change, all in tenuous economic environments. Strong evidence of this risk can be seen in the number of upgrader projects recently cancelled in Alberta.

Finally, we would like to discuss the need for strategic northern infrastructure investments. Recent news attests to the importance of Canada's northern resources as a significant driver of our economy and to the importance of the need for government action to support private development. According to NRCan, investment for mineral exploration in Canada's Northwest Territories is expected to more than double this year to $99 million. Nunavut is forecast to see a 50% increase in exploration budgets, to $280 million.

In our opinion, the Government of Canada, in its budget, must be strategic in converting stimulus dollars to investment in northern infrastructure that leverages private-sector spending and that will result in accelerated long-term growth that drives economic activity throughout the country. In addition to it being a long-term economic investment, northern infrastructure development will also enhance our northern presence and sovereignty.

With this in mind, the Chamber of Commerce would like to recommend that budget 2011 allow for funding required for the completion of an all-weather, north-south trans-Canada highway through the Mackenzie Valley. In addition, we believe that it is vital to move ahead with this project immediately as a means of improving the economics of the Mackenzie gas project by reducing logistical challenges related to construction of the proposed pipeline.

With respect to the Mackenzie gas project, we urge that through budget 2011, the federal government ensure that the Mackenzie gas project is not placed at a competitive disadvantage in relation to other large-scale North American energy projects. This may include mechanisms such as direct investment, tax breaks, loan guarantees, or a combination of all three, including programs to ensure that sufficient workforce development and training opportunities occur to maximize first nations and Inuit involvement.

As part of any future stimulus and clean energy initiatives, the Edmonton chamber would like to recommend that budget 2011 allow for strategic investments in hydro developments in the Northwest Territories. Just as an east-west power grid is a national priority, the federal government should look for ways to fund a north-south grid to facilitate the export of clean northern hydroelectric power to southern markets.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now go to the Federation of Saskatchewan Indian Nations, please.

[Chief Guy Lonechild, Federation of Saskatchewan Indian Nations]

Thank you very much, Mr. Chair.

Good morning to all members and of course a special recognition for MP Kelly Block from Saskatoon-Rosetown-Biggar. Good morning.

She got us here. She invited us. So thank you very much.

I'm joined by Chief Marie-Anne Day Walker-Pelletier. My name is Chief Guy Lonechild, from the Federation of Saskatchewan Indian Nations. As chief of the FSIN I represent 74 first nations in Saskatchewan. Our organization is committed to honouring the spirit and intent of the treaties. This means promoting, protecting, and implementing our rights under treaty.

It has been almost a decade since the FSIN last presented to this committee during a pre-budget submission consultation. The last time was October 30, 2001. Unfortunately, not a whole lot has changed from ten years ago. Although some gains have been made, the disparity between first nations and other Canadians remains virtually unchanged in many areas. I'm going to highlight only the most important priority areas where all levels of government should focus their resources to effect positive change.

First nations education is a prerequisite to all other issues on the agenda. It is key to improving the overall economic and social wellbeing of first nations. However, a majority of first nations people in Saskatchewan are failing to utilize education as a foundation for building better lives for themselves, their families, and communities.

Only about one-half of the aboriginal adult population in Saskatchewan has a high school diploma, at 51% compared to 72% of the non-aboriginal population in the province. The situation is worse on reserve, where only 46% of residents have graduated from high school.

Saskatchewan first nations have outstanding capacity for delivering improved education services to first nations. There's no other region in Canada that can clearly demonstrate a more comprehensive educational infrastructure, which has been built over the last 30 years of experience and capacity. The FSIN is committed to addressing the issues preventing first nations living on and off reserve in Saskatchewan from achieving a level of education comparable to the rest of Canadians.

What is required for us to tackle these longstanding issues is a new partnership with the federal and provincial governments in the area of education. What happens in Saskatchewan can be a model for the rest of Canada.

The federal government is cognizant of the need to collaborate on education. In the 2010 Speech from the Throne, a commitment was made by the federal government to work hand in hand with aboriginal communities and provinces and territories to reform and strengthen education, and to support student success and provide greater hope and opportunity. I expect a similar commitment from the throne this year, accompanied by financial support.

Currently the FSIN is advancing two important initiatives targeted at significantly improving the substance and quantity of the first nations educational attainment. These include a trilateral task force and a youth action plan with the FSIN as an equal partner in the development, design, and delivery of first nations education in Saskatchewan. It will address major issues such as comparable funding and incorporating language and curriculum into the education system, both on and off reserve.

As mentioned in our written brief, we urge you to provide support for first nations education by providing capacity funding for the urgent work of the education task force and providing a level of funding for first nations schools comparable to that of the province.

Although we couldn't go into detail in this verbal briefing, we also need support for an aboriginal youth employment strategy in Saskatchewan and additional financial support for the restructuring of First Nations University of Canada. Increasing funding for the post-secondary student support program is also necessary.

On March 3, 2010, the Minister of Indian Affairs introduced Bill C-3, an act to promote gender equity in Indian registration by responding to the Court of Appeal for British Columbia decision in McIvor v. Canada. Bill C-3 proposes to make the grandchildren of women who lost status as a result of marrying non-Indian men eligible for registration for Indian status in accordance with the Indian Act. The proposed amendments do not extend to other situations. Approximately 40,000 people nationwide would become eligible. Additional funding will need to be provided to first nations for this increase to the population, as this will affect housing, health, education, and social assistance for first nations.

In July 2009 the FSIN created the chiefs' task force on citizenship to develop a first nations citizenship framework to support the first nations legislating their own citizenship act. The treaty governance office and the chiefs' task force on citizenship developed a proposal to which INAC has not yet responded. The work of the task force must continue, so we are asking for support on this.

Finally, INAC is not consulting on Bill C-3, promising only to provide an engagement process after Bill C-3 is passed.

Chief Marie-Anne Day Walker-Pelletier insists that first nations have a right to self-government. A fundamental part of this is determining the criteria of their own citizens. INAC has established a financial impacts working group to analyze and make recommendations on how to address the financial requirements and the impact of additional registrations on first nations and the department.

We have not had full disclosure from this committee. We will file an access to information request to get full disclosure. Canada and INAC should not be setting our Indian governments up for failure. On a matter of citizenship, the first nations' agenda is far ahead of INAC's, which is simply to plug one more small hole in a sinking ship called the Indian Act.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now go to the Canadian Federation of Apartment Associations.