Finance Committee on Oct. 27th, 2010

[Thomas Mulcair, NDP, Outremont, QC]

Can you clarify your thinking?

[Jeffrey Turnbull]

I'd be very pleased to.

Yes, the Canadian Medical Association is firmly behind looking at comprehensiveness in our health care coverage, all the way from health promotion, acute care, which we currently have with hospitals and doctors, but expanding that to long-term care, chronic palliative care, as well, and including pharmaceutical coverage that is comprehensive for all Canadians independent of their ability to pay.

[Thomas Mulcair, NDP, Outremont, QC]

Thank you very much.

[The Chair, Conservative, James Rajotte]

Merci.

I want to thank all of the witnesses. I want to thank you for your presentations and responding to our questions.

I want to thank colleagues for allowing me to bend the timetable a little bit this afternoon.

We will suspend for two minutes and have the next panel brought forth.

Thank you. Merci.

[The Chair, Conservative, James Rajotte]

Colleagues, ladies and gentlemen, I call the meeting back to order.

We have a shortened panel. I want to thank colleagues for allowing that extra round.

We have four organizations in the second panel: premièrement, le Front d'action populaire en réaménagement urbain, and secondly, the Episodic Disabilities Network. We have, thirdly, the Investment Counsel Association of Canada, and fourthly, we have Enbridge Incorporated.

I want to thank you all for being here today.

You'll have five minutes for your presentation. Then we'll hear questions from members.

You have five minutes, and I will indicate to you when you have one minute remaining in your opening presentation.

We'll begin with the representatives of the Front d'action populaire en réaménagement urbain.

[François Saillant, Coordinator, Front d'action populaire en réaménagement urbain]

Good afternoon.

First, I want to mention that our presentation today follows on the heels of the demonstration held in Ottawa today by 450 persons that ended in front of the Department of National Defence building, the entrance to which was briefly blocked by demonstrators. The purpose was to denounce the fact that, starting on April 1 next year, there will be $1 billion less for social housing, that is for the construction and renovation of existing social housing units.

This cut comes at the same time as the government is deciding possibly to allocate $16 billion in its budget to the purchase and repair of F-35 military aircraft and to increase next year's National Defence budget by approximately $22 billion dollars. We find it very hard to understand the decision to invest in military personnel rather than housing for people who have problems, who are poorly housed or homeless.

We also wanted to recall—we do it every time we come, and we don't think it is pointless to do so—that, in 1976, Canada subscribed to the International Covenant on Economic, Social and Cultural Rights, which, among a number of rights, acknowledged, in particular, "the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions." In ratifying the pact, Canada also undertook to respect, protect, promote and implement all rights and—I think it is important to add this—to act "to the maximum of its available resources."

In the past four years, three different UN bodies have criticized the poor manner in which Canada has honoured the right to adequate housing. The first was the Committee on Economic, Social and Cultural Rights. Second, the Special Rapporteur on the Right to Adequate Housing conducted an observation mission to Canada. And third, the Human Rights Council met for Canada's Universal Periodic Review.

Why is the government saying there will be $1 billion less for social housing? It's simply that Canada's Economic Action Plan, which had enabled Canada to do a little better in the housing field, is coming to an end and no further action is planned, at least on housing. That means that the provinces will receive $250 million less per year across Canada to build social housing and that there will be $500 million less for social housing renovation.

This week we met the Offices municipaux de l'habitation, which manage social housing, the existing low-rent housing in Quebec. The impact of these funding cuts is major. In Montreal, we're talking about $20 million less, which means that 75 buildings that could have undergone major renovations will not be renovated. That's the way it is virtually across Quebec. There will be $300 million less for aboriginal and northern communities, which have an urgent need for this type of housing.

We would like the government to continue this program. We don't think the economic crisis is over. In any case, we would have to be shown that it is. However, we know for sure that the effects of the economic crisis on low-income individuals have not disappeared. The proof of that, and we cite it in our brief, is the astounding increase in the number of complaints to the Régie du logement for non-payment of rent in the Quebec regions hardest hit by the crisis. We are thinking, for example, of Mauricie and the Eastern Townships, regions that were sorely tested during the crisis.

So we would like the housing renovation budget to be maintained and the social housing budget to be increased. The target we have set is $2 billion in investment per year for new housing. Knowing the expenditures incurred by National Defence, we are satisfied that there is a chance that this can be done.

Very briefly, I would like to mention a problem that we are increasingly encountering. And that is the end of the social housing agreements reached in the past. Very specifically, that is what we are currently seeing in relation, for example, to housing cooperatives. These are low-income renters who are losing the subsidies that enabled them to pay rents commensurate with their incomes. We believe those subsidies must absolutely be maintained.

Lastly, we note that funding under the Homelessness Partnering Strategy for agencies that work with homeless persons has not been indexed since the program was introduced. The first announcement made on the subject dates back to 1999. We believe that those amounts at least should be indexed.

[The Chair, Conservative, James Rajotte]

Merci beaucoup.

We'll hear from the Episodic Disabilities Network, please.

[Martine Mangion, Manager, Canadian Working Group on HIV and Rehabilitation, Episodic Disabilities Network]

Dear members of the Standing Committee on Finance, thank you for inviting the Episodic Disabilities Network to present today.

My name is Martine Mangion, and I'm from the Canadian Working Group on HIV and Rehabilitation. I'm joined by Lynn Moore from the Arthritis Society.

The Episodic Disabilities Network brings together a wide range of key stakeholders from across Canada who have a shared interest in episodic disabilities. We are pleased to provide input on how Canada's disability income support programs can be improved and better created to create incentives and reduce barriers for the enhanced labour force participation of people living with episodic disabilities.

[Lynn Moore, Director of Public Affairs, The Arthritis Society, Episodic Disabilities Network]

Each of you almost surely has been touched by an episodic disability. An episodic disabling condition or disease is lifelong, but it differs from persistent or progressive disabling conditions. The period of disability in an episodic condition can vary in severity and duration. There may be advance notice of an episode, or it may come on quite unexpectedly.

Examples of conditions that can be episodically disabling include mental health disease, arthritis, HIV/AIDS, multiple sclerosis, Crohn's disease and colitis, and asthma. I could list more. All too often these conditions have a negative impact on workforce participation and income security.

An increasing number of Canadians have an episodic disability. In part, this is probably because we're better at diagnosing and managing these chronic conditions. It is estimated today that over four million Canadians live with arthritis; about 20% of Canadians will have a mental health disease episode during their lifetime; between 55,000 and 75,000 Canadians have MS; and about 63,000 Canadians live with HIV/AIDS. The combined impact is staggering, and the current income support policies are inadequate.

More flexibility in disability income support programs would facilitate increased labour force participation for Canadians. Creative solutions are required.

I want to give you an example of an episodic disability. I want to tell you about “Jill”. Jill isn't a real women, but her story is built from the realities of thousands of Canadians whom the Arthritis Society talks to every day.

Jill is a 50-year-old woman. She has worked for over 25 years. Seven years ago she was diagnosed with rheumatoid arthritis. As a result of prompt diagnosis and good management, Jill lived a very full and complete life until last year.

Last year she started to exhibit flares in her arthritis. Sometimes she'd have to be off work for a day, sometime for a week, and more recently a month. Unfortunately, Jill only gets 10 sick days a year, so she's struggling. Her doctor is telling her that he cannot guarantee that her disease will be better managed.

Last month Jill faced the choice that she had to quit her job. However, if Jill had been able to use the employment insurance sickness benefit in a more flexible way over a longer period of time, she would have been able to stay engaged in the workforce.

It's not about more; it's about different.

We have three recommendations for you today. Our first recommendation is to make the employment insurance sickness benefit more flexible, making it easier for people with episodic disabilities to stay in the workplace by allowing people to work part time and receive partial sickness benefits for 75 full or 150 half days, instead of the current 15 weeks.

[Martine Mangion]

People living with episodic disabilities face a complex and bewildering array of income support programs. I'd like to emphasize that government, private, and quasi-government bodies spent an estimated $28 billion in 2008-09 in direct income support benefits to individuals with disabilities, without any comprehensive oversight respecting what the programs do as a whole or purport to achieve for Canadians with disabilities. Currently there is no single coordinating body to oversee and report on any aspect of the programs and services. Although taken individually each program or service may work well, the system as a whole is hard to access and does not work for people with episodic disabilities.

Our second recommendation is that the government develop a body—a commission, a ministry, or a department—to oversee and report on the coordination between the array of disability support programs and service areas and to establish options for people with episodic disabilities within disability benefit programs.

Our third recommendation is that the government develop a program or combination of programs that provides partial disability income support to complement earned income from part-time work for people who are living with life-long episodic disabilities and who have a partial capacity to work.

A critical next step would be to convene a national policy dialogue of key stakeholders to discuss the long-term future of disability and service programs and address approaches to making programs and services more flexible. The Episodic Disabilities Network is well positioned and would be pleased to collaborate with the federal government and all key stakeholders to move this dialogue forward.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from the Investment Counsel Association of Canada.

[Katie Walmsley, President, Investment Counsel Association of Canada]

Thank you very much, Mr. Chair.

We are pleased to have the opportunity to appear before the committee today. My name is Katie Walmsley. I am president of the Investment Counsel Association of Canada.

I am accompanied by Barb Lockhart, who is senior vice-president for finance and administration with McLean Budden Limited and who serves as past chair on the ICAC board of directors.

The Investment Counsel Association of Canada is composed of firms from across Canada who manage more than $700 billion in assets for Canadians.

In our submission we focused on four specific recommendations that are tax-related, which, if all implemented, would help Canadians' retirement savings. Today my comments are going to focus on the most critical of the four issues, GST and HST.

Whether an individual lives in Alberta, Manitoba, or Nunavut, as of July 1, 2010, most Canadians with any savings in a mutual fund, a company pension plan, or a personal portfolio are likely paying HST. Canadians have been paying GST to manage their savings since 1991. The cost of managing those savings went up on July 1.

We don't think this is right; nor is it consistent with the other stated priorities of this government.

We don't think this is right.

We would like to highlight, however, the fact that one arm of the government is addressing the retirement savings issue while the tax policy arm of the government has increased the cost of saving for retirement.

Many of the retirement savings solutions that are being contemplated by this government are very costly to implement. As part of the solutions being considered, we urge you to consider exempting GST and HST for services that help Canadians save for their future and save in a manner that does not make them dependent on governments in the future.

Why do we urge this? At a high level, GST and HST are both a consumption tax. We fundamentally disagree with the fact that Canadians are paying a tax to manage their savings. They are not consuming; they are trying to build their savings such that they have adequate savings for their retirement years.

We don't disagree with GST and HST being paid at the time of consumption. We respect the government's direction to harmonize tax. But GST and HST are both a consumption tax and should come at the time of consumption, not while Canadians are trying to manage their savings.

In the EU, as an example, a variety of forms of investment management exemptions exist for this very reason. We strongly recommend that the government revisit the new tax on retirement savings.

I will now turn it over to Barb Lockhart to provide three specific examples of impacts on Canadians' retirement savings.

[Barb Lockhart, Past Chair, Board of Directors, Investment Counsel Association of Canada]

For example, a B.C. couple with $200,000 invested in an RRSP who have invested under normal market conditions can expect to pay an extra $175 a year in HST. This leads to an extra $3,500 of tax over the life of the investment, or, if compounded, $6,000. This is an amount of money that matters to every Canadian.

Canadian portfolio managers manage mutual funds across the country that now face different tax rates provincially. Albertan investors in mutual funds will now likely face higher consumption taxes on their investments by virtue of investing in a Canadian mutual fund. This is unfair and we believe was not the government's intention.

Pension plans face similar realities to those of mutual funds. Many people will be paying a lot more consumption tax and yet be completely unaware of the new reality. They will simply get smaller returns for their existing contributions.

[Katie Walmsley]

You may ask why there has not been a public outcry. For the majority of Canadians, the taxes are hidden. They are hidden in mutual fund statements, they are hidden in pension plan communications, they are not visible. The time will come, however, when they are aware--15 to 20 years from now, when many Canadians see that their savings are not adequate for retirement.

We believe our tax system should be part of the solution and not part of the problem when it comes to saving for all Canadian families.

Thank you. We will be pleased to answer your questions.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now hear from Enbridge Incorporated, please.

[David Teichroeb, Manager, Fuel Cell Development, Clean Technology, Enbridge Inc.]

Good afternoon.

I represent Enbridge Inc., a Canadian leader in energy transportation and distribution. Our green energy footprint exceeds 850 megawatts of wind, solar, geothermal, fuel cell, and heat-to-power systems. We believe our pre-budget submission aligns with Canadian energy and environmental policies. It also creates and fosters new ideas and the ability to transform these ideas into new products and services for both our domestic and export economies.

Canada has stimulated significant investment in wind energy. As this technology matures, opportunities exist to diversify our low-carbon energy supplies with a portfolio of technologies having low or no incremental emissions. We call them non-combustion technologies. They include fuel cells and systems that harvest waste energy to generate low-impact electricity.

Fuel cells are like a continuous battery. They operate electrochemically without burning fuel, so they're very clean and efficient on both renewables and fossil fuels.

Waste-energy recovery technologies use expansion turbines. They include pressure recovery from natural gas pipelines and also the recovery of industrial waste heat for power.

To support Canada's energy and environmental objectives, the Government of Canada should consider early purchase incentives for non-combustion technologies by extending support to non-combustion technologies if Canada's ecoEnergy or ecoEnergy RP programs are renewed, or it should provide supportive tax policy environments for these technologies. Such measures could include investment tax credits for qualified non-combustion technology.

These recommendations support our energy priorities, which include clean power, energy efficiency, and cleaner use of fossil fuels. Stationary fuel cells support all three. They don't burn the fuel, so they provide clean electricity without smog, particulate, or sulphurous emissions. They have a very high electrical efficiency, so the greenhouse gases are reduced. They operate on a variety of energy feedstocks, including natural gas, renewable methane, hydrogen, synthetic gas from wood-waste gasification, paint fumes, etc. In short, they represent cleaner and wise use of fossil, renewable, and waste energy supplies.

Recovering waste energy for power also supports these priorities. It increases efficiency by using less energy per gross domestic product. Many waste-energy streams occur every day in Canada. We can harvest this for power with low or no incremental emissions. A few examples follow.

Enbridge developed a hybrid fuel cell for pipeline pressure control. It's more efficient and less polluting. A plant in Toronto was operated in 2008 with the support of NRCan and Environment Canada. It produces low-carbon electricity for about 1,700 homes without burning fuel, by harvesting waste pipeline energy. Canada's extensive natural gas pipelines offer many repeatable opportunities.

Ford Motor Company in Oakville operates a fuel cell on paint fumes. The fumes are extracted from the paint line and the fuel cell creates power without emissions. Many industrial processes across Canada could benefit from a similar approach.

In Saskatchewan, pipeline compressors have been installed with heat-to-power technologies. Before, hot air was dumped into the atmosphere. Now clean power is produced for the grid. The technology can be applied to cement plants, steel plants, and other high-temperature exhausts. The investment creates green jobs, but more importantly it helps preserve our existing industrial employment by making industry more competitive.

As part of the clean energy dialogue with the U.S. we're focusing on more efficient grids with renewable and clean generation. The dialogue encourages clean energy research, development, and deployment. Due to the integrated economies, Environment Canada is considering opportunities for policy and regulatory harmonization with the U.S.

[The Chair, Conservative, James Rajotte]

You have one minute.

[David Teichroeb]

U.S. energy policy offers an investment tax credit of $3,000 per kilowatt, or 30% of the cost, whichever is less. Canada could benefit by harmonizing some of the tax policies with the U.S. to maintain competitive investment climates for clean technology. Harmonizing energy, environment, and tax policies can assist in developing economic advantage and a culture of innovation.

Recently, the Conference Board of Canada stated:

Canada’s report cards on innovation and environment are still below average. We do not do a good job of identifying and capitalizing on those areas where we can be globally competitive.

In short, Canada is blessed with many energy resources, but we can and should increase our capability to develop and use clean technology. It can only strengthen our competitiveness, and early purchase incentives for non-combustion technologies can support our Canadian priorities on energy, environment, and innovation.

I'd like to thank you for your time and your consideration of these recommendations.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll start members' questions with Mr. Brison, please.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you very much.

I'd like to start with Enbridge, on the need to modernize our energy systems in Canada. It's certainly not a one-off, it's a much broader discussion.

You mentioned harmonizing some of our policies with the U.S. in terms of tax policies and some other areas. The American government, the Obama government, spent six times what we did in Canada on a per capita basis on modernizing and greening energy systems. So I would agree with you. We need to do more here and work together to modernize both production and grid.

One area where we have a comparative advantage in some ways is in the area of clean conventional energy. It's estimated that in 20 years, 80% of the world's energy will still come from hydrocarbons, so it's clear we've got to increase efforts to develop clean conventional energy, whether it's CCS or coal gasification and other approaches to that.

I'd appreciate your thoughts on what we ought to be doing, not just on alternative but also cleaner conventional energy systems.

[David Teichroeb]

We would offer that energy in general should be used more efficiently and through less polluting technologies, and that's where some of what we've outlined today comes into play. So the opportunity in the near term for reducing greenhouse gases and pollutants is likely greatest just by energy efficiency alone.

The Pew Center on Global Climate Change in Washington is on record stating that, and clearly we have an opportunity to start diversifying--even things like our pipeline grids--with more renewable content. It's not all that dissimilar from renewable content in gasoline.

[Scott Brison, Liberal, Kings—Hants, NS]

And even in terms of modernizing energy or electricity grid, it makes a huge difference in terms of old grid losing 20% of your electricity before you even flip a switch, and smart grids, and the rest; eco-efficiency. So thank you for your presentation.

On the episodic disability issue, it's a very important issue you bring to the committee. It's an issue that is one of compassion but also one of economic productivity when you consider the number of people who prematurely are taken out of the workforce because of episodic disability. If they could participate, if we had a more flexible approach to labour and support systems....

In fact I'd like to meet with you and have a longer discussion around what some of the public policies might be. I'd urge you to consider a focus on the economic cost of inaction. A lot of times when we meet with people at finance committee, we hear proposals for more investment. I think yours has a significant savings to the economy and a real benefit to the economy that could be quantified.

I really thought it was very compelling. You can comment on the economic and competitiveness issue. We're very concerned with the aging demographic and the impact on our productivity as a country, and I think some of your proposals may be very helpful economically to us.

[Martine Mangion]

Thank you so much.

Yes, and that's why in 2003 we set up the Episodic Disabilities Network, because we saw that this was an issue that spanned across different types of disability. Employment and income support were the two main issues and challenges facing people living with episodic disabilities.

We've done a lot of research on what's happening in other countries, in Europe and in Scandinavia, and partial income support is something that Sweden and the Netherlands have adopted.

[Lynn Moore]

I would just like to comment on the fact that the key aspect of an episodic disability is that it often strikes in people's productive years but it is lifelong. So the more we can adapt policy to allow people to remain engaged in the workforce, even in a part-time way, the more we increase Canada's productivity.

[The Chair, Conservative, James Rajotte]

Thank you.

You have about two minutes, Mr. Szabo.