Finance Committee on Oct. 25th, 2010

[Witnesses]

Yes.

[Voices]

Oh, oh!

[Ted Menzies, Conservative, Macleod, AB]

All done? Thank you. I know the timing is bad, but thank you for coming.

I have a few concerns. The five-year block averaging.... I understand where you're going with this. We used to have it. My good friend, Mr. Wallace, raises a good question. If we do it for farmers, do we not have to do it for all industries? What would your comment be?

[Geoff Hewson]

I'll speak to that. Thank you for the question, Ted.

I understand what you're saying. On the way our association looks at it, there is a budget for agriculture. Obviously, a lot of federal dollars go into the agricultural industry. As far as the effectiveness of dollars, like the gentleman from the research council said, I think research dollars are probably far and away the best way to invest money in agriculture; the return on investment is greatest. I look at our farm canola and different varieties of wheat, and there are just staggering returns.

That being said, there are other areas, and maybe an efficient way of providing help to farmers while not spending excessive amounts of money would be the block averaging kind of a high return on investment, if you will.

[Ted Menzies, Conservative, Macleod, AB]

I most liked the part of your presentation where you said it wouldn't cost the Government of Canada a penny if we got rid of the monopoly powers of the Canadian Wheat Board. I can't help but go back to my own experiences, when I sat exactly where you are and explained that to the finance committee, the agricultural committee, and the trade committee of this House of Commons when I was a farmer--before I was ever a member of Parliament. I explained that throughout my career in farming the Canadian Wheat Board, on my wheat alone, had probably cost me a $1.5 million, not to mention barley and the lost potential in other crops.

Share with us why we need to get rid of this monopoly that is only in place for farmers west of the Manitoba border--whoever wants to take a shot at that.

[Gerrid Gust]

Going back to my farm again, it's just inconceivable, as far as cashflow planning. Our farm has 16,000 acres, and we grew approximately 5,000 acres of wheat and 2,000 acres of barley last year, although it fluctuates every year. On the cashflow for that, if I happen to use the pooling option of the Canadian Wheat Board, it's just inconceivable that I would have to wait two Christmases to get my final payment. The initial payments are so low as to be a joke. I don't know if that's a government problem or a Canadian Wheat Board problem, but I know it's only a problem when dealing with the Canadian Wheat Board. It's just inconceivable that I have to wait so long to get money to operate.

You ask about block averaging. It's because I don't get money to pay my bills that I need to weigh things in and out and try to shuffle them around. I think it's an obvious solution that would not cost the government a single dollar.

[Ted Menzies, Conservative, Macleod, AB]

Do you know any other industry that's confined like that and can't sell the products they produce?

[Gerrid Gust]

I believe there's some sort of a fish cooperative....

[Voices]

Oh, oh!

[Gerrid Gust]

I don't know.

[Ted Menzies, Conservative, Macleod, AB]

Are you going to appear in front of the fisheries commission?

I appreciate that.

Geoff may have a comment as well.

[Geoff Hewson]

There's not only the uncertainty of the business model, but you're waiting longer to get less money. We saw that with our own eyes in 2007, when we had the great displeasure of seeing our barley freedom yanked away at the last minute by Her Honour in Alberta. The price of barley dropped several dollars a tonne overnight. It took until the big commodity run of 2008 to recoup half of the market that was lost.

We're getting less money. There's the cost to the system through logistics and personal business relationships. I want to deal with people who want to deal with me on a level playing field, where I feel we're both advantaged equally. I find that the Wheat Board is often more an unnecessary third party than a benefit to my farm.

[Ted Menzies, Conservative, Macleod, AB]

Mr. Stanford, both of you talked about the advantages of certified seed and how we promote it. Remind us again of the dollar value of increased production through using certified seed. What are the disadvantages, and why aren't we using it now?

Whoever would like to comment on that may do so.

[Richard Phillips, Executive Director, Grain Growers of Canada]

This is from a George Morris Centre study, which was commissioned to specifically look at what would happen if we increased the use of certified seed and how much money would flow and accrue. The George Morris Centre looked at it as if we had a 155% tax credit and moved to the full use of certified seed, as Quebec does. If you're a farmer in Quebec, and you want to be in crop insurance, you plant certified seed. So in this case, I think Quebec is well ahead of the rest of Canada.

According to the study, we would see an increased farm income of $170 million a year, over $60 million in tax revenue, and a return to the economy of just over $600 million. That is only for the eight most recent varieties. We have probably over 100 varieties of the various crops. That's just from the eight varieties. There are huge gains to be made by moving in this direction.

A lot of that money flows back to the public sector researchers. If you're an Ag Canada researcher and you develop a variety, you go to SeCAN, which is a farmer cooperative. They go out and sell it, but the money flows back to those researchers. So it would go back to both the public and private sectors. The public sector as well as the private sector have a lot to gain from this.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Menzies.

Ms. Davies, you have seven minutes, please.

[Libby Davies, NDP, Vancouver East, BC]

Thank you very much, Chairperson.

And thank you to the witnesses for coming today.

I just wanted to follow up on the comments and ask some questions based on the presentation of the Co-operative Housing Federation.

First of all, I just want to agree with you that I think it's very, very concerning that we have what, potentially, is a looming disaster, with 600,000 social housing units, including cooperative housing, coming to the end of their operating agreements and funding arrangements. I've actually seen the letter that's come from the minister, because people have been raising it with me, including, certainly, co-ops and social housing facilities in my own community but also those from elsewhere across Canada. I've seen the response that's come from the minister, and all it says is that they are looking at options. It's doesn't even say whether these operating agreements will be continued. It doesn't say whether you'll be involved in it. So I think it is something we should be very concerned about, notwithstanding the fact that we don't have enough affordable housing now.

The figure I use is that about three million Canadians are in need of affordable housing. But this is housing we already have. This is housing that was funded through previous programs and arrangements, and if we lose this or we see mass evictions, because co-ops or social housing basically can't maintain the subsidies they have or the operating agreements, then we're in big trouble.

You're saying the government should study this. I guess that's fine, but I just wonder if you're actually putting forward some suggestions or a direction for addressing this. We're talking about the next few years, I believe, or even within five years. These agreements will be up, and we'll face a crisis.

Could you just respond to that in terms of what more specifically we should be ensuring we do?

[Nicholas Gazzard]

First of all, we have to recognize the value these housing assets represent. It costs a lot of money to develop new housing. It costs a lot less money for the public to support existing community housing assets that were built a generation ago and that probably need reinvesting in now but still represent a very good deal. Our proposal is that the governments, if you like, make sure that these projects are able to continue to house at least as many low-income Canadians after their federal funding arrangements come to an end as they do now. Otherwise, we'll suffer a real setback in housing.

I agree with your estimate, Ms. Davies, of three million. What we don't want to see is that number grow merely by dint of existing social housing assets, if you like, going to waste.

The other concern we have is that absent some renewed commitment from governments and renewed partnership arrangements with governments, we might simply see the loss of these assets, a loss because of a failure to reinvest in them or even a loss at the hands of unscrupulous groups that might wish to convert these assets to equity housing. This is housing Canadian taxpayers have paid for over a generation, and it should remain available.

So we're saying maintain the purposes and maintain the affordability as it is now.

[Libby Davies, NDP, Vancouver East, BC]

Okay. I have a further question.

We're talking about the existing housing, but because this is the finance committee, I think there's a very good case to be made that an investment in affordable housing not only meets a critical social need in our country, a very basic human need to know that one has housing security, but is a great economic investment. We're hearing presentations from the Forest Products Association of Canada. We look at all the lumber we're shipping overseas. This is something that could be a further “Made in Canada” success story.

I just wonder if you could spend a couple of minutes talking about the economic investment and the impact, the positive impact, it has in terms of basically good jobs when you build housing. And what are the economic indicators of that in terms of the investment?

[Nicholas Gazzard]

I spoke earlier on in my brief about this, of the general impact that good housing has on the economy and the kinds of other costs it may reduce. If you want to look at the actual construction of housing itself or its renovation, it's an incredibly effective way to invest if you want economic activity. After manufacturing, housing construction and renovation have the biggest multiplier effect. In other words, for every job that's created directly, the indirect job creation is one of the most efficient in the country. As you say, it does put Canadian suppliers together with Canadian developers and builders.

There's no question that building affordable housing does cost money. I find it quite interesting, for example, that the Conference Board of Canada, which is not known for its communist leanings, together with other notable spokespeople, like Don Drummond, the economist for TD, have said numerous times that an investment in housing is an investment in the economy. In other words, putting people closer to jobs, whether it's the multiplier effect of construction jobs, whether it's a happier, healthier, and better house community...the fact of the matter is that people who are housed well work well.

[The Chair, Conservative, James Rajotte]

Ms. Davies, one minute.

[Libby Davies, NDP, Vancouver East, BC]

I know in B.C. we have a study that we use on the flip side to show that the cost of keeping a person homeless is about $55,000 a year. So it's very high. That's just the other side, and I think you made that point.

Anyway, I hope we will keep the pressure up about at least the existing housing that we have, because otherwise, I agree with you, we're going to have a terrible crisis of people facing eviction. Then we're just going to see a greater crisis in terms of affordable housing in this country.

Thank you for your presentation.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Davies.

We'll go to Mr. Szabo for a five-minute round.

[Paul Szabo, Liberal, Mississauga South, ON]

Thank you.

To the Canadian Bankers Association, I've been working with the document of August, particularly in the area of personal income tax measures. Delaying the age at which RRSPs are converted to payout mode like RRIFs, and I guess combining that with the second one, adjustments or elimination of minimum annual withdrawal amounts from RRIFs in view of the lower investment returns because you're taking them out of one instrument that may be all consolidated in something, how does this tie into the objectives of the government to address the deficit?

[Nancy Hughes Anthony]

I think, Mr. Szabo, our recommendation here was to look at a number of linkages, as you can see here. Actually, if it's useful to you, we have a larger, more extensive paper that we can provide that we have done on specifics around retirement income.

I think the point here is to review all of these possibilities and linkages, not necessarily to drive toward a silver bullet but to definitely have the focus—I think we all probably have the focus—of encouraging more Canadians to save. That was the intent of this particular recommendation.

[Paul Szabo, Liberal, Mississauga South, ON]

If I may, let me just get the other couple in here.

The third one here was a lifetime rather than an annual contribution limit on the tax free savings accounts. This would seem to provide an instrument for those who had significant cashflow availability for investment to top up much quicker and that the skew would be a benefit to higher income earning Canadians versus low.

The fourth item, and this one I'm not sure, says, “equity in the amount of tax deferral room provided in, and tax treatment of retirement income from, various types of deferred tax plans”. I assume an RRSP would be something in that basket and I assume this is an indirect way of saying increase the limits on RRSPs.

I went through this because it just struck me that very few of these things really had anything to do with addressing the deficit. I think the Canadian Bankers Association's position is that it is important for us to address the deficit as early as possible. Is that the fact?