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.