Finance Committee on Sept. 29th, 2011

[Sandra Schwartz]

Currently, from a federal government perspective, as we put forward in our submission, what we're seeking primarily right now is regulatory certainty and predictability and consistency in application.

We have a number of federal statutes that we have to apply and abide by, whether it's the Species at Risk Act, the Canadian Environmental Assessment Act, the Migratory Birds Convention Act, the Fisheries Act, etc. We're looking for some reforms in those acts to allow for expediency.

But I do want to note that what we are not looking for is a reduction in environmental protection. We are working quite closely with the environmental community in Canada to ensure that we maintain environmental protection while at the same time ensuring our projects can get built quickly.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Nicholls.

Ms. Schwartz, you mentioned you can share more detailed recommendations. Please feel free to provide that to the clerk and I'll ensure that all members get that.

We'll finish with Mr. Jean, please.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair.

Most of my questions were going to be in relation to electricity in Canada, but I was surprised to hear Mr. Giguère advocate for a military industrial complex in Canada. I was kind of interested in that. I'd like to take that up with more discussion.

But I would like to talk about what Mr. Eyking mentioned in regard to Marine Atlantic in particular. I think it was his premier who identified Marine Atlantic in 2005 as being on life support. I understand that at that time the ships' on-time performance was a joke because there wasn't any. In fact, if I'm not correct on anything, Mr. Cairns, I'd like to say that in my constituency of Fort McMurray, most of my constituents who are from Atlantic Canada refer to Marine Atlantic as “maybe arrive” because it was so bad. For clarification, my information is that if we had ordered those ships in Canada, a made-in-Canada solution, they would not be operating until 2014-15. That was my understanding.

I understand there are some discrepancies on that. Maybe if a Liberal government had ordered them in 2003-04, they might have been done by 2010. I know there are some different things, but the biggest issue I think is that now we have on-time performance at somewhere around 85% or 95%, and the people of Atlantic Canada are actually receiving the ability to go back and forth as they require. The issue of Marine Atlantic in 2006 was an issue of safety, a real issue of safety. You're nodding your head, but I think you agree with everything I've said.

I do want to ask a question, if I can, in relation to electricity in particular, because this government did make some serious investments in electricity: the northwest transmission line project, $141 million; $71 million in Mayo B.

[The Chair, Conservative, James Rajotte]

I'm sorry, there is a point of order.

Mr. Eyking.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Mr. Chair, with all due respect to the witnesses, I know Mr. Jean is going on a bit of a tantrum about what didn't happen with Marine Atlantic, but I think in all fairness, if he's going to load up his question and not give time for the witness to answer the question—

[The Chair, Conservative, James Rajotte]

Order.

Mr. Eyking, as an experienced member, I think you well know it is members' time in committee, so Mr. Jean can make a statement and ask a question.

Mr. Jean, please continue.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you for the intervention.

I will note for the record that the witness was answering in the affirmative to all of my comments.

Notwithstanding that, there were serious investments in the green infrastructure fund. I understand, for instance, that Mayo B took five communities in the Yukon off diesel. There's an eight-year payback on that particular investment of $71 million.

Do you have any other recommendations that you could forward to the committee? We are limited on time. And I would like an exhaustive list of your suggestions on changes of statutes, in particular the duplication with provinces and territories. I think that would be very helpful. Also, I think specific requests in those would be very, very helpful. Obviously, you're not seeking money here. You're seeking a change in regulatory behaviour, and I think that's what taxpayers want us to do, and that's what we should do. So please do provide that to the committee.

[Sandra Schwartz]

Yes, we will. We certainly will, and if the committee wishes to have us present again in more detail, we'd be happy to do so.

[The Chair, Conservative, James Rajotte]

Thank you very much.

I want to thank all our guests here this morning for your presentations and your responses to our questions. We appreciate that very much.

We do have a panel immediately after this, so we are going to suspend for a minute or two and ask the next panel to come forward as soon as possible.

Thank you.

[The Chair, Conservative, James Rajotte]

Could I please ask colleagues to take their seats? If people wish to continue a conversation, they can do that outside, please. Thank you.

We will begin our second panel here. We have, again, seven presenters before us. First of all, we have Canada Without Poverty. The second organization is the Association of Canadian Community Colleges. Third, we have the Canadian Conference of the Arts. Fourth is the National Coalition Against Contraband Tobacco. Fifth is the Canadian Association of Mutual Insurance Companies. Sixth is the Canadian Institute of Actuaries. Seventh, we have the Canadian Nurses Association.

Thank you all for being with us here this morning.

As you have probably seen from the previous panel, we have a very tight timeline here. We have seven organizations, and members all wish to ask questions. We're going to ask you to limit your presentation to a maximum of five minutes. I'll indicate to you when a minute is left.

We will start with Canada Without Poverty, please.

[Harriett McLachlan, Director, Canada Without Poverty]

Hello. My name is Harriett McLachlan. Can you hear me?

[The Chair, Conservative, James Rajotte]

Yes. The microphone will be operated for you.

[Harriett McLachlan]

My name is Harriett McLachlan. I am the Quebec representative for Canada Without Poverty. Joining me today are Rob Rainer, our Executive Director, and my colleagues.

They are in the audience. Could the Canada Without Poverty colleagues and friends stand up?

Thank you for allowing us to have this opportunity to speak with you today.

Just to let you know about myself, I'm a social worker with a master's degree, and I work with youth. I work with young offenders in an alternative justice organization and youth in difficulty. I've been working as a social worker for over 20 years, but I've also lived the experience of poverty, like many of our board members. I have lived 35 years in poverty. I have been a single mother for 18 years. I've lived with rats in my home for 10 years. I've lived and struggled daily for 35 years in poverty. I'm here today as a witness to that and as a Quebec board member. I am really delighted to be here today.

I will pass you on to Rob Rainer.

[Rob Rainer, Executive Director, Canada Without Poverty]

Thanks, Harriett.

Thank you, Mr. Chair and the committee, for giving us this opportunity to appear.

The June throne speech highlighted the government's desire to advance a caring society. What we all want is not only a caring society but a society that is healthy and as prosperous, safe, and secure as it can be, as well as a society that honours its human rights commitments.

These ends cannot be realized while millions of people live in poverty today, while millions more are highly vulnerable to becoming poor, particularly now in these troubled economic times. The good news is that by making the prevention, reduction, and elimination of poverty one of the highest public priorities—we urge within the top three priorities—multiple benefits will flow back to us all, in fact, helping to address many of the concerns of our colleagues who are also meeting with you today.

Simply put, ending poverty has the most compelling business case. We are at a moment in time that has never been better for capturing this opportunity. We are not here to ask for money but in fact to help save money, for poverty costs 5% to 6% of our gross domestic product each year.

We are here to urge the federal government to set targets and timelines for poverty reduction and elimination. We are also asking the government to act on all fiscal mechanisms that are available, federal as well as intergovernmental, to help reach these targets and then to lay out options for this committee's consideration and consultation.

Knowing the scale of the cost of poverty to Canada, we are confident that the return on investment in poverty prevention and elimination will be massive. We also know that when governments set targets and timelines and then let the players figure out the how, great things can be accomplished.

This government has the opportunity to leave a very great legacy. We and hundreds of other organizations that have endorsed Dignity for All, the campaign for a poverty-free Canada, are ready to help make that happen. We'd be pleased to answer questions when the time comes.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We will now hear from Mr. Knight, please.

[James Knight, President and Chief Executive Officer, Association of Canadian Community Colleges]

Thank you, Mr. Chair.

I hope that our input will help you in your efforts to ensure continued economic recovery and, most importantly, to create sustainable employment.

The Association of Canadian Community Colleges is the voice of Canada's publicly funded colleges and technical institutes. Our 150 members serve Canadian learners of all ages in every corner of Canada through 1,000 campuses.

Any strategy focused on job creation must take account of two immutable realities. First, in our knowledge-based economy, the workplace is increasingly laden with technology. Entry level positions in virtually every sector require sophisticated knowledge of complex systems. Seventy per cent of new jobs now require a post-secondary credential. Within a decade, we expect that will be 80%. Our post-secondary achievement rate in Canada is now an inadequate 60%.

The second immutable reality is that Canada has a challenging demographic deficit. With a rapidly aging population, we are not at a replacement level. In addition, an exodus from the labour market of mammoth proportions is under way as millions of baby boomers retire. The first baby boomer turned 65 this year. Even with immigration, Canada's labour market participation rate will drop from somewhere above 60% to the low 40% range within a generation. The implications are enormous.

Canada's current shortage in advanced skills has been masked by the 2008 recession and slow economic growth since then, but nevertheless, industry leaders are expressing profound concern about the availability of qualified human resources. Unless something changes, within 10 years employers will not find qualified candidates for 1.5 million positions in Canada.

The remedy is not difficult. We must increase the proportion of Canadians with the advanced skills associated with post-secondary education. To do this, we must reach out to traditionally marginalized populations, including the disabled, poor immigrants, disengaged young men, aboriginal Canadians, and multi-generational, welfare-dependent families, to lift them into the economic mainstream through education. A highly skilled workforce that exploits the talents of every Canadian is our only path to a sustainable economy.

Canadian colleges and institutes excel at providing accessible, cost-effective post-secondary education and lifelong learning. They possess a unique ability to nurture the marginalized through to graduation and employment. Despite the sluggish economy, upwards of 90% of college students find employment within six months of graduation.

As we approach the renegotiation of the Canada social transfer, the $3.8 billion now committed annually for post-secondary education is at play. With pressure on health budgets, some provinces may back away from higher education. We therefore recommend separating the PSE component into a dedicated post-secondary transfer at least at the current level, with some performance standards. We are not calling for new spending. We are focused on the continuation of current investments.

Most new jobs in Canada are created by small and medium-sized enterprises, or SMEs, and because of their limited capabilities, these companies increasingly turn to colleges for innovations through applied research. Colleges and institutes help SMEs innovate and grow by focusing on improvements in technologies, processes, products, and services.

This year, 4,444 private companies, primarily SMEs, partnered with colleges on applied research projects. The Government of Canada and the governments of some provinces support these initiatives; however, on the federal side, these investments represent only 1.25% of the $2.9 billion invested annually by federal funding institutions.

To unleash the full job creation potential of the SME sector and to boost its productivity, we recommend that investment in college-SME applied research partnerships be increased over time to 5% of federal investment in R and D. We think it's a reasonable ask. We are not recommending an increase in federal spending. We are talking about a retargeting of existing spending.

In order to remain competitive, Canada must invest in post-secondary education and develop a plan to increase the number of persons with advanced skills.

We urge the federal government to launch a national dialogue with provincial and territorial governments, educational institutes, the private sector, and civil society to identify measures to mitigate the demographic and skills challenges we face.

[The Chair, Conservative, James Rajotte]

Okay, thank you very much.

We'll now hear from the Canadian Conference of the Arts.

[Alain Pineau, National Director, Canadian Conference of the Arts]

Good morning. My name is Alain Pineau, National Director of the Canadian Conference of the Arts, Canada's oldest and most broadly based cultural umbrella organization. The CCA provides the national forum for the entire arts, culture and heritage community, from all disciplines and regions.

In this submission, the CCA will emphasize the wisdom for the federal government to maintain and, if possible, to increase its investments in the arts, culture and heritage sector. We will also argue that, in order to sustain and create employment, the government should take tax measures that recognize the large numbers of self-employed artists and creators as entrepreneurs running small and medium-sized enterprises.

The CCA submits that, in the current environment, making sound and prudent investments in areas of growth is the most appropriate strategy to adopt. It is the CCA's position that, in order to achieve a sustained economic recovery in Canada, or at least to soften the impact of another increasingly possible economic crisis, it would be wise to maintain or, better still, immediately increase federal investments in arts and culture, in particular through the Canadian Conference of the Arts.

I will now discuss employment.

Sustainable jobs. The cultural sector's direct contribution to the Canadian economy is over $46 billion, and it provides direct employment to over 640,000 Canadians, three times the number in the insurance industry and twice the number in the forest industry. At 26%, the percentage of Canadian cultural workers who are self-employed is more than twice the percentage of self-employed people in the overall economy.

A large segment of the cultural sector comprises small and medium-sized businesses that are continually adapting to changing markets and evolving business models. To make a living in the cultural economy, cultural workers must develop entrepreneurial skills. Beyond their economic contribution, the cultural businesses they start, such as art galleries, craft shops, bookstores, and entertainment venues, are essential to the unique character and quality of life in our urban neighbourhoods. And in the new creative economic environment provided by digital technologies, artists are more than ever at the forefront of innovation and entrepreneurship. I will open a parenthesis here to say there's one area where we're really ahead of the Americans, and that's in the use of new technologies in cultural production. With, for example, Robert Lepage at the Metropolitan Opera and Cirque du Soleil in Las Vegas, we are dominating in that field, and it's important to keep investing in that area.

Rooted in its increasing cultural diversity, Canadian creativity is a non-polluting and inexhaustible natural resource helping to grow Canada's economy. Thus we suggest that it is essential that the federal government invest in the development of markets both internally and abroad through programs supporting touring of artists' works and cultural institutions.

Issues of taxation. A number of economists argue that to stimulate the economy it is better to cut taxation to small and medium-sized businesses. Culture falls into that category. Over the years, recommendations have been made by the CCA and its members concerning income averaging for artists and creators whose revenue may fluctuate greatly from one year to another.

It remains our conviction that rather than taxing revenue from a single extraordinary year at maximum bracket rate, taxing income averaged over a few years creates a more stable financial environment for artists and creators and recognizes the multi-year investment that sometimes a single creation requires.

An alternative solution to income averaging, which we put forward in our memoir, is to allow professional artists and creators to use the current year of revenue to establish the level of tax-free contribution to a registered retirement savings plan. Such a regime already exists in Quebec and could easily be extended to the whole country at the federal level.

Similarly, revenue derived from copyright or from residual payments and grants to individual artists and creators should be exempt from taxation. For several years now, again, the Province of Quebec has exempted a certain level of copyright revenue from taxation. By taking this fiscal approach, encouraging those who seek revenue from their intellectual property, and by setting a reasonable ceiling to such tax exempt revenue, the government could make sure that only artists and creators whose revenue is modest benefit from this measure, which would not cost much to the treasury and would be easy to administer.

I will now talk about budgetary balance.

While the CCA understands the necessity to start eliminating the annual budget deficit, we submit that it would be very short-sighted to deeply diminish investments in the cultural sector, for all the reasons I brought up earlier. The cultural sector is an important component of the knowledge economy, which is Canada's future and provides excellent returns on investments in terms of creating jobs. In the digital age, it is of the utmost importance for a small nation to invest not only in digital infrastructure, but also in content development and production. Canada has a duty to support the development of all forms of cultural content that reflect our identity as a nation, contribute to the country's standing abroad and support our commercial objectives on the international scene, while making a significant financial contribution to the domestic economy.

The government has other tools to support the economy...

[The Chair, Conservative, James Rajotte]

We're well over our time now, so please be very brief.

[Alain Pineau]

As for other tools, the government will shortly introduce a new bill on intellectual property. The CCA urges all members of Parliament to make sure that artists are fairly compensated for the use of their work in the digital economy.

In closing, I want to emphasize once again that, like all other sectors of the economy, the arts and culture sector and the different levels of government need accurate and timely statistics to plan and evaluate.

[The Chair, Conservative, James Rajotte]

Thank you.

[Alain Pineau]

Thank you. I will now answer your questions.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll hear now from the National Coalition Against Contraband Tobacco, please.

[Gary Grant, Spokesperson, National Coalition Against Contraband Tobacco]

Good morning, Mr. Chair, and thank you. I appreciate the opportunity to speak with you today.

I am a spokesperson for the National Coalition Against Contraband Tobacco. I'm also the chair of the Toronto Crime Stoppers program and a retired 40-year veteran of the Toronto Police Service.

The coalition's mission is to raise public and government awareness of the seriousness of the problem posed by contraband cigarettes. Our 13 members represent a broad spectrum of organizations, including retailers, industry, and law and order organizations.

Contraband tobacco is cigarettes and other products that do not comply with Canada's tobacco regulations. It is manufactured in illegal factories that straddle the Canada-U.S. border. More than 50 illegal manufacturing sites operate in Canada.

Contraband tobacco is distributed in a number of fashions. It is readily available at more than 300 smoke shacks that operate outside of government regulation. It is also sold through a vast network of smugglers in communities across Canada. They bring these cigarettes directly to the doorsteps of consumers, or act as street vendors, selling cigarettes out of the trunks of their cars.

A carton of illegal cigarettes can cost as much as $70 less than the legal product, but carries none of the regulatory display or packaging requirements. Indeed, illegal cigarettes are often sold directly to consumers in clear, resealable plastic bags.

This price disparity, paired with the fact that contraband dealers don't check for ID, has made illegal cigarettes a prime source for youth smoking. In fact, a recent study by the Centre for Addiction and Mental Health indicated that 43% of cigarettes smoked by Ontario high school students were illegal, flagging contraband availability as a reason why youth smoking rates in the province have remained relatively high.

Contraband tobacco's price tag for consumers may be low, but it has proven to be extremely lucrative for the criminals who make it and sell it. The RCMP estimates that there are more than 175 organized criminal gangs that use contraband as a cash cow to finance their other illegal activities, including drugs, guns, and human trafficking.

It should be an important government objective to reduce the prevalence and availability of illegal cigarettes, as the social costs, as outlined above, are very high. However, the strength of the contraband tobacco market also brings serious financial impacts to the Government of Canada. Canada loses as much as $2.4 billion a year in tax revenue--$1.1 billion from the federal government--because of the contraband tobacco market. Every dollar the government loses to the illegal market represents money in the pockets of some of society's least desirable elements.

There is much to do to reduce the prevalence of illicit tobacco in Canada. The coalition suggests three courses of action focusing on reducing the supply of and demand for illegal cigarettes.

First, we need to create a Canada-Ontario-Quebec government task force on illegal cigarettes. Enforcement is important but cannot alone solve the contraband tobacco problem. The RCMP estimates that only 5% to 6% of the $13 billion contraband tobacco trade is being stopped.

The illegal cigarette problem is one that crosses provincial and departmental lines and it is important that our approach and strategy reflect the scope of that challenge. To do so, the Governments of Canada, Ontario, and Quebec should strike an interdepartmental task force that coordinates response to illegal tobacco. Such a task force will allow for more effective communications between jurisdictions, greater information sharing, and more effective response to the contraband. The criminals who run the illegal tobacco trade operate without regard to borders. We should not allow ourselves to be hampered by those borders.

Second, we need to expand the scope of existing anti-contraband tobacco enforcement task forces. The Cornwall Regional Task Force has demonstrated that collaboration among federal, Ontario, and Quebec police agencies can yield tremendous results. We should build on this and create a broader task force of law enforcement officials from Canada, Ontario, Quebec, and the United States.

Stiffening penalties and broadening seizure powers for police will make enforcement efforts even more effective. The government made a platform commitment for a new anti-contraband RCMP task force of 50 officers. Such resources, especially if tied to greater interjurisdictional coordination, are an important step towards addressing this problem.

Finally, it is important to target the supply of illegal tobacco by inspecting and then shutting down illegal cigarette factories and enforcing Health Canada regulations in smoke shacks. We should inspect the 50 illegal manufacturing sites in Canada. When they are not in compliance with regulations, they should be shut down. There are at least 300 smoke shacks operating within Canada, usually located within a short drive of most Canadian cities. They are the prime source for contraband tobacco and should also be inspected regularly to ensure they're complying with Health Canada regulations. When they are not, they should be shut down.

Thank you for your time.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now hear from the Canadian Association of Mutual Insurance Companies.