Finance Committee on Oct. 25th, 2010

[The Chair, Conservative, James Rajotte]

I call this meeting to order.

Good afternoon everyone.

This is the 38th meeting of the Standing Committee on Finance. On the agenda, we have the pre-budget consultations 2010.

Our committee will hear from representatives of seven associations: the Canadian Museums Association, the Direct Sellers Association of Canada, Magazines Canada, the Canadian Urban Transit Association, the Conseil du patronat du Québec (Quebec Employers' Council, CPQ), the Heritage Canada Foundation and Imagine Canada.

I welcome you to the committee. You will have five minutes to give your presentations.

We will begin by hearing from the representative of the Canadian Museums Association.

[John McAvity, Executive Director and Chief Executive Officer, Canadian Museums Association]

Thank you very much, Mr. Chair.

We are very honoured to be here today to present to you on behalf of museums.

I would like to make note at the beginning that my presentation today will be more focused and a bit briefer than our brief was, as we have chosen to focus on one issue and one issue only.

To begin, I would like to refer to this committee's report from last year. During your consultations you made a recommendation that the government undertake a study of museum policy and funding. We very much thank you for this interest in Canadian museums and for this recommendation. It would be very useful to turn back to this recommendation to see what progress has been made.

I think we can begin by saying that Budget 2011 will be a difficult one in many respects. We recognize that it will need to strike a fine balance between spending and restraint as the government begins to address the deficit that has accumulated in fighting the recession. This will translate, we all know, into difficult choices in 2011-12 and beyond.

Today, we come before you with a creative and innovative proposal, which is basically how the Government of Canada can help museums to help themselves. We understand the fiscal context in which the government currently operates and in which Budget 2011 will be tabled. Accordingly, our input to this consultation is strategic, sensible, and practical, and our single recommendation is modest. It will provide an enduring self-reliance rather than greater dependence.

This committee may be surprised to hear words such as “strategic”, “sensible”, and “practical” come from an organization in the arts and cultural sector. You may even be shocked to hear the words “greater self-reliance” rather than “greater dependence” upon government from an arts organization. We are here today not to ask the government to fund art for art's sake or for entitlement support or to ask the government for a handout. We are here with an innovative initiative that could help reframe and redefine the relationship of the government with this sector. We are here today to invite the government to invest in a new program to increase private sector support for museums, to be called the Canadians Supporting Their Museums fund. This fund would match money raised by museums from the private sector on a dollar-for-dollar basis to an annual ceiling. We call for this to be a five-year pilot project with an annual budget of $25 million.

This would be a wonderful case of museums working with the government, hand in hand in partnership, to increase private sector investments in museums and our long-term stability. We also think this initiative will be well aligned with other current areas of government, namely addressing the country's productivity and innovation gap.

Today, private donations to museums represent just 9% of their operating budgets. Despite a reduction in both individual and corporate taxes in recent years, donations to museums have not seen a substantial increase. At the same time, studies show that programs such as the one we propose, namely the Canadians Supporting Their Museums fund, are powerful incentives for existing private donors and non-donors to increase their donations to charities.

We need to create the right conditions for Canadians to donate more robustly to their museums and galleries, enabling museums to improve their earned revenues and their long-term stability. Our overall objective would be to increase private donations of cash and securities from 9% to between 15% and 20% of their operations.

From our studies, an impressive 45%, almost 50%, of Canadians are more likely to donate if a museum donation is matched by the federal government. Further, among those who have never donated, a full 35% are more likely to donate if there's a matching case.

We will be bringing this idea to Parliament Hill on November 23 in meetings with members of Parliament to celebrate Museums Day.

In conclusion, I would like to say that we believe this proposal is congruent with the priorities, productivity, and innovation set by this government, that this proposal is conceived in the spirit of greater self-sufficiency, and that it is designed to strengthen museums as important cornerstones to our society.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

Next, we have the Direct Sellers Association of Canada.

[Ross Creber, President, Direct Sellers Association of Canada]

Thank you, Mr. Chairman, members of the committee.

On behalf of the 50 member companies of the Direct Sellers Association of Canada, which includes such well-known names as Avon, Mary Kay, Amway, and Tupperware, and the 900,000 independent sales contractors and employees across Canada, I want to thank you for the opportunity to participate in this consultation.

Direct selling companies and their independent sales contractors market a wide variety of products directly to the consumer, usually in the consumer's home rather than in a traditional retail establishment or other fixed place of business. In 2008, the Canadian direct selling industry recorded retail sales of $2.2 billion, an increase of 11.5% over the previous five years, and contributed $815 million in total national and local taxes.

The direct selling industry also contributes to community growth and improvement through its charitable donations, with member companies contributing $7.7 million in 2008. Our independent sales contractors' sense of community is reinforced through their generosity to charities, with 91% of our direct sellers making personal contributions to charities that same year.

The direct selling industry provides accessible business opportunities to all Canadians without restrictions with respect to gender, age, education, knowledge, or previous experience. A 2008 socio-economic impact study found that 8% of ISCs were unemployed before starting their direct selling business. One-third of them maintained their businesses as a primary work opportunity or source of income. The balance used direct selling as a source of additional or secondary income, with 90% of the ISCs in Canada being women.

I think we can all agree that Canada's economy fared better than most during the economic downturn. Despite that, we are still in a delicate process of economic recovery, and many Canadians still find themselves either out of work or in need of additional income. With fewer full- and part-time jobs available, Canadians continue to look for other options to meet income needs, including direct selling.

The direct selling industry has met the needs of thousands of Canadians who find themselves in these difficult situations by assisting in and promoting entrepreneurial activity. Direct selling offers flexibility of hours, training, education, and support for running a business. It offers a wide variety of earning situations and the opportunity of maintaining or returning to a meaningful and fulfilling standard of living.

The direct selling industry also has an unlimited capacity to transform individuals who are dependent on social programs such as employment insurance into successful, small business entrepreneurs. The DSA supports improvements to federal and provincial employment programs that encourage individuals transitioning from dependence on EI to independence.

For our part, the DSA has been working with officials at HRSDC to ensure that direct selling is recognized by HRSDC and the provinces as a legitimate form of self-employment, as it has been for many years by Finance Canada, the Canada Revenue Agency, and the Competition Bureau. We believe more needs to be done to communicate these messages to the provinces to ensure that there are no artificial disincentives to pursuing direct selling as a legitimate form of self-employment. The DSA will also engage the provincial ministries on this matter.

I should also acknowledge our industry's appreciation of the measures introduced by Minister Finley to extend EI special benefits to the self-employed. For many in our industry, these changes provide increased financial security and flexibility as they pursue their entrepreneurial goals.

The other item I will briefly address deals with the GST collection mechanism used by our industry. The GST direct sellers' mechanism, as we have stated during many appearances before this committee, is an example of government and business working in partnership to develop a policy that has been beneficial to both. The direct sellers' mechanism, enacted in 1991, is based on pre-collection and remittance of GST by the direct selling companies themselves on the suggested retail price, thereby removing a considerable burden from both the ISCs and the CRA.

Changes to the DSM in the 2009 federal budget made it available to the 20% to 25% of the industry that operates on an independent sales representative basis, as opposed to a buy-resell basis. We appreciate this committee's support for this important tax change and are pleased to tell the committee that companies have begun the process to enter the mechanism.

Mr. Chairman, members of the committee, we are an industry that touches the lives of Canadians from coast to coast to coast by giving them an opportunity to work, to learn, to prosper, and to grow. On behalf of the Direct Sellers Association of Canada, I want to thank you very much for this opportunity to appear before you today.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We'll now hear from Magazines Canada.

[Mark Jamison, Chief Executive Officer, Magazines Canada]

Thank you, Mr. Chair. Thank you for your time today, everyone.

Magazines Canada is the national trade association representing the $2.2 billion Canadian content magazine media. Our members create consumer, cultural, specialty, professional, and business media titles.

There are over 2,000 Canadian magazine titles in French, English, aboriginal, and other languages, in print and through a growing number of new digital delivery platforms. These magazines are based in all parts of Canada and are mainly small businesses. The industry creates work for 15,000 people. These are creative, good-quality jobs. When they buy magazines, Canadians spend more than 40% of their purchases on Canadian titles, so Canada's policy to help make Canadian content accessible is truly working.

l'd like to say that this success results entirely from the creative talent and acumen of the industry, but that wouldn't be correct. Effective federal public policy and programs have played a very important role. However, new technologies and the digital age are changing everything. We all know that policies and programs focused on yesterday's needs will not create the jobs and economic growth we need today and tomorrow. They must be designed for the digital economy.

Recognizing this, the industry worked with Minister Moore and his department to update the programs that invest in Canadian content development. The new Canada Periodical Fund is the result. Now in its first year of operation, the new program is well suited to the digital age, better targeted, and more efficient to administer. It helps to move the industry ahead from only supporting postal costs to a more flexible footing, where each magazine brand can tailor its editorial and delivery strategies to the needs of Canadian readers, whether it be print, digital subscription, mobile apps, digital tablets, newsstand sales, or other as yet undiscovered platforms.

The new Canada Periodical Fund, or CPF, is an effective new tool that Canada's magazines can use to manage risk and meet world competition in the new and evolving digital environment. Minister Moore and his colleagues have put in place a new program that will serve the needs of Canadian readers and promote Canadian content in the digital age.

The issue, from the point of view of planning for the 2011 federal budget, concerns the financial support. Magazines Canada urges the Government of Canada to maintain its commitment to the Canadian periodical program at a level of $75 million per year for the next five years. This is not a call for increased support. This is the level of funding that has been in place for many years, and it is currently investing in about 925 magazines and community newspapers across Canada.

Over the past year, Minister Moore and the government have taken action to commit multi-year budgets for cultural programs. We applaud this approach. The predictability of these programs is important to planning for magazines, too, particularly as they launch into new ventures to access readers online and through new digital applications.

We are confident that the new program over time, at the same budget, will deliver similar results. It will provide Canadian readers access to Canadian content on multiple digital platforms. It will promote development of digital applications and delivery systems. It will create new jobs and investment in the creative sector. It is helping now to create more Canadian content on multiple digital platforms and opportunities for our writers, designers and photographers to reach beyond traditional audiences at home and abroad.

We ask that you support our recommendation that this new updated program receive a multi-year commitment. We have provided the committee with our pre-budget submission, and we would be pleased to answer any questions.

Thank you, again, for your time today.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from the Canadian Urban Transit Association.

[Michael Roschlau, President and Chief Executive Officer, Canadian Urban Transit Association]

Merci, monsieur le président. Thank you very much.

Ladies and gentlemen, it goes without saying that public transit supports the access of Canadians to jobs, to schools, to shopping, and to recreation. But transit is also emerging as a key solution to economic competitiveness, urban congestion, clean air, and healthy living. The public transit industry fully recognizes the economic challenges we face today, along with the fiscal realities that governments must tackle in the coming years.

Nonetheless, it's now more important than ever that specific financial commitments to transit infrastructure are seen for what they are, a critical investment in the economy we must build for current and future generations.

A recent study has found that the total economic benefit of investments in Canadian public transit is approximately $10 billion annually, which amounts to close to 1% of gross domestic product.

I only need to quote our Prime Minister, who last month stated categorically that improvements to public transit have a real, long-term positive economic impact. Indeed, according to the Prime Minister, of all the solutions, public transit is the best. It is one area where smart infrastructure investments can make a big difference. Well, needless to say, I couldn't agree more.

In addition, the transit industry directly employs over 45,000 Canadians and indirectly creates an additional 24,000 jobs. Canadians across the country have benefited significantly from key federal transit investment: the Canada Line in Vancouver, Edmonton's light rail extensions, GO Transit in Toronto, le Métro de Montréal, and MetroLink's bus rapid transit in Halifax, just to name a few.

But it's not just the big cities that have benefited. Small communities have also been able to expand and revitalize their systems with federal support, and that has meant an awful lot to those communities.

Clearly, Canadians have long been choosing to use public transit. This is borne out by the ever greater number of users and increase in ridership. Sustained growth needs to be matched with predictable and sustained investment.

Report after report shows that traffic congestion is costing our urban economies billions of dollars every year. CUTA's most recent national survey identifies transit infrastructure investment needs at $53 billion over the next five years. About 70% of that can be covered from existing sources, which is much better than it used to be, but the question remains: how do we bridge the gap?

If we assume this investment might be shared equally across the three orders of government, it implies a federal portion of about $6 billion of additional investment, admittedly at a time of extreme fiscal constraints, as I know all too well that we have to work on eliminating the deficit.

A strategic, dedicated investment can help cover the current funding shortfall. In its next budget, the federal government should develop a five-year timetable in which investments are scaled up in a way that takes into account the economic recovery. Under such a plan, investments would be more modest during the first year and build up progressively as the economy recovers and the deficit is reduced.

For over a decade, CUTA has pursued the idea of tax-exempt status for employer-provided transit benefits. This would level the playing field between transit and free parking and encourage employers to offer a choice between driving and transit. Many studies have shown the benefits are tangible and immediate, and at a relatively low cost.

Ladies and gentlemen, let me close with this. Recognizing that the future is shaped by long-term views and bold leadership, CUTA has developed a 30-year blueprint for the future of transport in our cities and communities. We call it “Transit Vision 2040”. It's a six-point plan that sets the course for public transit to maximize its contribution to quality of life.

The first of these points is the development of a Canadian transit policy framework designed in collaboration with provincial, territorial, and municipal governments, and with a long-term sustainable and predictable funding mechanism we can all move forward to build a better Canada. That way, ladies and gentlemen, we wouldn't need to come back to you every year with a new request.

Now is the time to be bold, now is the time to be leaders, now is the time to take action. The Government of Canada can respond and demonstrate leadership in this critical area.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We now move on to the Quebec Employers' Council or CPQ.

[Yves-Thomas Dorval, President, Quebec Employers' Council]

Thank you, Mr. Chair.

We are pleased to be able to share our recommendations with you. I will present a very brief overview of our concerns and suggestions for the next budget.

The Conseil du patronat du Québec represents employer associations from all Quebec industry sectors and most major corporations. With regard to the need to continue to curb growth in operating expenses in order to reduce the deficit and rebalance the budget, we believe that rebalancing the budget as quickly as possible is a top priority. In the 2010 budget, the government announced its intent to review all government programs and to reduce operating expenses for federal departments with a view to achieving that goal. We have congratulated the government on this initiative and encourage it to keep up its efforts in this area.

Now allow me to say a few words about health care spending. For the 2010 budget, the federal government's efforts were all the more impressive due to its intent not to touch transfer and equalization payments. Quebec counts on these payments to provide the health and education services under its jurisdiction. As you know, most of those expenses are paid by the provinces. As we look beyond 2014, we believe that the idea of linking transfer payments for health care to inflation and demographic growth is not the best way to proceed. Such a formula does not take into account the need for new therapies that may be more expensive in the short term, but cost-effective in the long term. The current formula completely disregards demographic distribution. It is common knowledge that health care costs rise as people get older, and the population is aging more quickly in Quebec than elsewhere in Canada.

Furthermore, the CPQ considers that the government should put an end to most stimulus measures, as laid out in Canada's Economic Action Plan. However, we strongly encourage the government to be flexible regarding the payouts for infrastructure projects that will not be completed by March 2011. Since these funds have already been accounted for, the deadline could be extended to June 30, 2011, on the condition that the work begin no later than December 31, 2010.

With regard to corporate taxation and payroll taxes,

The Quebec Employers Council would like to see the government follow through on its plan to reduce corporate income tax to 15% for 2012.

The corporate tax reduction would increase private investment, both domestic and foreign, which would enhance our productivity, create good jobs and improve living conditions for Canadians.

For a closer look at the financing of employment insurance, on September 30, Canada's Minister of Finance, the Honourable Jim Flaherty, announced new employment insurance contribution rates for the next three years. For employers, it represents an increase of 7¢ for each dollar of insurable earnings for 2011 and 14¢ for the following years.

Before EI premiums are increased, we believe the benefits of the EI program and its funding model should be reviewed. A more balanced cost structure, 50/50 employer/employee versus the current 60/40, is now more necessary than ever. If the government is not willing to institute this change, it should strongly consider gradually increasing its own contributions in order to keep employer contributions at a reasonable level, i.e., 40% employer, 40% employee and 20% government. Reintroducing government EI contributions is also justified by the government's decision in the past to transfer EI surpluses to the Consolidated Revenue Fund. Moreover, as we have often said, the EI program covers benefits that are more like fringe benefits and often have nothing to do with insurance.

With regard to training programs, the CPQ believes that the government should consider new ways to increase the effectiveness of funding for EI training programs. Part of these funds should be spent on recognizing skills and providing training in the workplace. We also believe that the government should stimulate training by directing its funding to employers, for example, by creating an EI contribution credit for employers who offer training programs.

Turning now to business assistance, the CPQ believes that, within the same budget, the government should focus its business assistance efforts on structuring projects in the following four areas in order to produce effective results: projects to increase productivity; projects to create added value; projects to improve product or service marketing, especially in less traditional markets; and projects to improve environmental performance.

With regard to innovation, the government could implement fiscal measures, such as tax credits, and procurement policies to encourage marketing innovation and existing clean technologies in order to accelerate their implementation in Canada and their exportation around the world.

Finally, I would like to say one word about the national securities regulator: If it's not broken, don't fix it.

[The Chair, Conservative, James Rajotte]

Very well. Thank you, Mr. Dorval. I have a feeling that you will be getting questions on that issue.

We'll now hear from the Heritage Canada Foundation.

[Natalie Bull, Executive Director, Heritage Canada Foundation]

Thank you.

Mr. Chairman, distinguished committee members, thank you for this opportunity to present our recommendations.

The Heritage Canada Foundation is a national non-governmental charitable entity created as Canada's national trust. We believe that historic places are the cornerstones of community and national identity and the key to a sustainable future. We are seeking measures to stimulate private investment in the rehabilitation of historic buildings. This is truly work worth doing on many levels. Rehabilitation creates new jobs because rehabilitation is 66% more labour intensive than is new construction. Further, rehabilitation projects and the jobs they create have been shown to increase tax and tourism revenue and have a positive ripple effect in surrounding areas. Think of places like the Saint-Roch district in Quebec City, Edmonton's Old Strathcona district, or Toronto's Distillery District.

We also know that measures to encourage the rehabilitation of existing buildings will have important environmental benefits. The greenest building is the one that's already built. New construction, no matter how green, cannot compete with the environmental imperative of wisely using the buildings we already have. Yet rising land values and development pressure in urban areas encourage demolition and new construction, and many important historic buildings owned and operated by non-profit organizations are at serious risk due to lack of funding. We need measures that would assist and reward businesses that invest in existing buildings as well as measures that support the efforts of non-profit owners and encourage charitable donations.

Our first recommendation is inspired by special measures already in place in Canada to encourage private sector preservation of Canada's environmental heritage, namely Environment Canada's “ecogifts” program. In contrast, there is currently no tax measure to encourage private sector action for another type of national treasure, Canada's heritage buildings. In fact, the tax system contains powerful disincentives to preservation. For example, the GST new housing rebate favours demolition and new construction and does not accommodate the careful renovation of existing buildings. The unpredictable tax treatment of rehabilitation expenses can result in a variance of as much as 60% in a project balance sheet, a fact that deters investors. And worse, owners of income-producing properties, including houses and apartment buildings, can actually earn a federal tax deduction by demolishing those buildings.

Accordingly, our first recommendation is to introduce a federal rehabilitation tax incentive for heritage properties in Canada. Rehabilitation tax credits have been hugely successful in the United States for over 30 years. In fact, the U.S. historic tax credit program was introduced as an economic stimulus measure in the 1970s and has since leveraged over $25 billion in private investment and created an average of 45 new jobs per project. There is broad support in Canada for such a measure, notably from the Federation of Canadian Municipalities and the Royal Architectural Institute of Canada. The cost to government of such a program can be managed through eligibility criteria and/or by setting ceilings on the amount of credit available per property owner.

Our second recommendation is to build on the success of 2009 funding provided to Parks Canada's national historic sites of Canada cost-sharing program. The cost-sharing program provided up to 50% of eligible costs incurred in the conservation of national historic sites. The program has stimulated private investment in a number of historic sites that will yield spinoff economic activity in addition to the construction costs incurred, sites like the Toronto Power Generating Station at Niagara Falls; the Atlas #3 coal mine in Drumheller, Alberta; and the Légaré Mill national historic site of Canada at Saint-Eustache, Quebec.

There has been very strong demand for this program, and the modest $20 million made available is already fully committed. In fact, applications were received for over 200 sites, seeking a total of $53 million in funding. Those projects, if they had all been approved, would have leveraged an impressive $300 million in construction investment.

We recommend that government continue to fund this program with at least $10 million to $20 million per year, or even better to re-profile it as a national heritage conservation endowment fund. This recommendation is inspired by the Canadian government's significant investment and cost-share funding for the land trust movement in 2007. It's also based on our knowledge of U.S. public-private partnerships, such as Save America's Treasures, established by the White House with seed money from Congress, and successfully attracting funds from individuals, businesses, and foundations.

In closing, I thank you very much for considering our two recommendations, which represent proven approaches to leveraging private sector investment and making heritage and older buildings the cornerstones of a sustainable economy. Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Ms. Bull.

We'll now hear from Imagine Canada, please.

[Marcel Lauzière, President and Chief Executive Officer, Imagine Canada]

Mr. Chair, members of the committee. Imagine Canada is a national umbrella organization for Canadian charities and non-profits. These organizations work in every community across Canada, and in countries around the world, to help address some of today's most intractable social, economic, environmental and cultural challenges.

Charities and non-profits are a major economic resource. We employ 2 million Canadians and mobilize more than 12 million volunteers each year. We also contribute 7% of GDP—much more than, for example, the automotive or agricultural industry.

As Canada emerges from the economic challenges of the last couple of years, charities and non-profit organizations continue to be in the front line of responding to growing and changing community needs. However, like other economic sectors, our sector has been affected by the recession. Donations as well as government support from all levels have decreased. The pressure is on to further diversify our income streams.

In our brief we make three recommendations.

First, we recommend the adoption of a stretch tax credit that would apply to new and increased charitable giving on the part of individual Canadians. The proposal was endorsed by the finance committee here last year, and we hope it will receive serious consideration in the 2011 budget. The stretch tax credit would expand the donor base and help existing donors to give more by adding 10% onto the standard charitable tax credit for every dollar in excess of a person's previous highest donation level. It would apply from the first dollar donated, encouraging all Canadians from all walks of life, of all income levels, to stretch their giving. If someone, for example, increased their donation from, let's say, $250 up to $350 next year, they would get a 39% tax credit on that extra hundred dollars rather than the 29%.

We believe the stretch tax credit would lead to changes in behaviour and would be a better public investment than simply boosting the tax credit overall. This would be a powerful message to Canadians that anyone in Canada can actually be a philanthropist.

A vital component of adopting the stretch tax credit would actually be public education. Every year Canadians would be informed of their eligibility for the enhanced credit. This could be accomplished in a very similar way to the way we inform people of their RRSP contribution limits, and it would encourage Canadians to consciously assess and plan for their charitable giving. This would be, I think, a great step forward. The stretch tax credit is about building and strengthening the donor base for decades to come.

However, donations are not the most important revenue source for the charitable and non-profit sector. Self-generated income accounts for around half the sector's revenue. This is where our second recommendation comes into effect. We know that many organizations have great ideas about how to expand their entrepreneurial activities. However, they don't always have the expertise or financial resources to turn their good ideas into reality. The federal government already has a number of initiatives that actually help SMEs get off the ground. Assistance is available for everything from early business and market planning to securing capital and scaling up successful ventures. Programs such as the Business Development Bank, Community Futures corporations, and IRAP do excellent work with private entrepreneurs.

Despite the important economic contribution of charities and non-profit organizations--I would remind you, 7% of GDP--it is not clear why charities and non-profit organizations cannot get similar federal assistance. We therefore recommend that the federal government put social entrepreneurs and non-profit organizations on an even footing with other entrepreneurs. We're not asking for more money for business development programs, just that we be given equal access to these programs at a time when these are really needed. As I already mentioned, we are one of the largest economic sectors in Canada, and we believe that more can and should be done to support the sector.

Finally, we have a recommendation that is more technical and regulatory in nature, one that would reduce costs for charities without any significant costs to government. As things stand today, decisions by the Canada Revenue Agency to deny or revoke charitable status are subject to review in the first instance by the Federal Court of Canada. This is an expensive and cumbersome process and moreover does not allow for the introduction of new evidence. It seriously limits charities' ability to appeal decisions.

Several years ago, the Joint Regulatory Table recommended that the Tax Court become the first level of appeal. This would be a much simpler, cheaper and more accessible way of doing business. The Federal Court would still be available as a higher level of appeal. We are recommending that this reform, which has already been examined and endorsed, be implemented. This would greatly strengthen the regulatory environment for charities.

Thank you, and I would be happy to answer any questions you might have.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll begin members' questions with Mr. Szabo, please.

[Paul Szabo, Liberal, Mississauga South, ON]

Thank you, Mr. Chair.

To the Canadian Museums Association, with regard to the recommendation for creating this new Canada museum fund, which includes the $25 million dollar-for-dollar matching, we're basically re-profiling existing funding envelopes.

Can you clarify how this re-profiling, including the matching, will affect other initiatives the museum association had that may not get the same level of support?

[John McAvity]

Presently the Department of Canadian Heritage offers a variety of programs, which are mostly individual, stand-alone programs. While re-profiling is an excellent word that you have used, our suggestion is that these programs need to be brought up to date. They are currently not meeting the needs of the museum community. The programs need to be refreshed and made more efficient. Many of them require great administrative burdens for reporting, let alone application processes. We believe there are opportunities to streamline the programs to make them more cost effective and efficient.

In addition, by bringing those together into a single portal, as it were, it will be much more user-friendly to museums and art galleries, and so on, across Canada.

We do make the recommendation for adding this new program to support private sector donations. Currently culture is at the very bottom of the heap of charitable giving in Canada. This is something we would actively like to change.

We think we can do it. Museums are well supported and looked to by Canadians. They are highly respected: 96% approval ratings.

We believe we have an opportunity that we would like to move on.

Thank you.

[Paul Szabo, Liberal, Mississauga South, ON]

I'd like to ask you very briefly about the Young Canada Works program in museums. This is basically apprenticeship and summer jobs for young people, which is not in good shape.

How are we doing there, or what can we do? What are the dimensions of the assistance here?

[John McAvity]

That program is currently at a total of $7 million, and it works very nicely. It is administered outside of government by third-party delivery, and it is run very efficiently at a 9.6% overhead, which is well within the blue ribbon report's recommendations.

One area of concern we have is that there's a component for internships for graduates of universities, and that program is over-subscribed. We are turning down 92% of the applications to that program.

Last year Mr. Flaherty added $30 million in the budget for youth internships, which is wonderful news, but unfortunately none of that money came over to museums. That is a very big area of concern.

[Paul Szabo, Liberal, Mississauga South, ON]

Thank you. That's extremely helpful. It's an opportunity....

I want to deal with direct sellers. First of all, thank you for all the years of coming to Parliament Hill. You are well known to parliamentarians. We've had an opportunity to meet so many of the people who are involved with the various selling groups. When you talk about employing 900,000 Canadians, full- or part-time, it's not insignificant, and it's much appreciated.

Your recommendation is a generic one, though. Is there anything specific you feel would enhance the progress you've been able to make in the past?

[Ross Creber]

Thank you for your very positive comments. It's always been our pleasure to be on the Hill to speak with parliamentarians.

I think you're right, it is generic. We're not asking for any funding. We're looking to increase awareness, especially within the provinces delivering the EI programs, so that direct selling is recognized as a legitimate form of self-employment.

We've worked through the minister's office to put that in place in the federal area, but we are going to have to do that on a province-by-province basis.

[Paul Szabo, Liberal, Mississauga South, ON]

Thank you very much.

I have two minutes left. I want to skip over to Imagine Canada.

Your organization has been invoked by a number of groups that have already been before us on the stretch tax credit issue, which I think members are getting more familiar with.

As a result of all the feedback and discussions you've heard so far, have you got any more information about how this fits the equity it brings, and whether it's going to be the most strategic or effective way to promote first-time giving, or increase giving by those who give modestly?

[Marcel Lauzière]

We think it is an innovative measure. It's never been tried before and it's never been tried elsewhere. It is very much about trying to change behaviour. We feel, for example, that if you were simply to increase the tax credit, it would cost government more money and you wouldn't see any more given, most probably.

I think this one here would be a real incentive and a way for us to get a message to Canadians of all income levels that they should be giving. I think it would make a difference for both first-time donors and people who have donated for a number of years, but perhaps could do a bit more. It has all kinds of indirect benefits, because we know that people who donate also get engaged in their community. So in that sense we think it would be a really important measure.

I guess the other thing I would reinforce is the public education aspect. If this were to go through, as I was saying in my presentation, CRA would have to tell each tax filer how much eligibility they have for this stretch.... That in itself, I think, would make it really enticing for people to start thinking and planning for their giving in the long term.

[Paul Szabo, Liberal, Mississauga South, ON]

Very quickly, to the magazines, on the Canadian Periodical Fund, the request for...I guess the confirmation of...what is it, $75.5 million of funding for a five-year period? What is the current situation there, and why are you asking for this?

[Mark Jamison]

The current situation is that funding is in place. It is the result of bringing together the publications assistance program, and the Canada Magazine Fund under one umbrella, called the Canada Periodical Fund. The challenge in the budgeting, of course, is that $15 million of that is potentially at risk because it was put in as part of the economic action plan and not in the core funding.

So while it is a carry-over fund, it has been split into another pot, if you will.