Finance Committee on March 26th, 2013

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

With the government closing whole sections of Statistics Canada, I might conclude from its actions that I should just resign rather than get some kind of picture, albeit an imprecise one, of the situation. I wonder what its intentions really are.

Listen, Mr. Chair, let me use another analogy. You know that the unemployment rate in Canada and in its various regions is done by surveys. You do not count each jobless person one by one. It is done by sampling.

My colleague Mr. Rankin is trying to achieve the same goal, to get some idea of the size of the problem and, as a result of that, to stop moving forward completely in the dark. That is perfectly reasonable. I hope that the government will decide to confront it one day. Otherwise, the fight against tax evasion will always be a very half-hearted one with disappointing results.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

Mr. Jean, please.

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

Thank you, Mr. Chair and I won't belabour the point, but I think fishing is a good analogy for this particular issue. I think sonar is great, but unfortunately, it only covers a very limited amount of any particular lake at a time, so it doesn't get in every body of water just as this particular proposal won't do very well.

But I would like to know bluntly, what is the benefit? What is the end result you hope to achieve? Because as a government, and a good government that takes care of taxpayers' money efficiently and with some sense of responsibility, we have a finite amount of resources.

So I'm wondering what the cost-benefit ratio is here and whether there is, from Mr. Rankin's perspective, some endgame that he sees to be a benefit. Because ultimately, I don't think people—like taking a survey—are going to step forward and volunteer the information. You actually have to catch them in the act, so to say, in order for it to be a benefit.

I'm kind of curious as to what the benefit is because our witnesses indicated to us that, frankly, many of them did not see a benefit in this data being collected. I don't really see a benefit in the data being collected either. In fact, I think it's a misnomer. But I'm curious if Mr. Rankin could actually identify for me what end result he expects to receive or at least what he hopes to get, and what he will do with that data or what he expects the data to be used for. How will it benefit Canadians on a cost-effort ratio? Because we do have finite resources and we do have an obligation to spend money wisely. I just don't see this as a wise spend.

[The Chair, Conservative, James Rajotte]

I'll go to Mr. Rankin and then Ms. McLeod.

[Murray Rankin, NDP, Victoria, BC]

Thank you, Mr. Chairman.

It used to be said that you cannot manage what you cannot measure. My view is that if the U.K., the U.S., and Australia have methodologies that they've used effectively to do what we're proposing, I don't understand why Canada would deprive itself of what could be useful data.

My colleague, Mr. Caron, mentioned that this budget, which contains some measures that I think we could all agree on, is a step in the right direction on an aspect of the tax gap, the tax evasion issue. It would be really useful to put that in context a few years down the road if we have methodologies to see just how effective those measures are and where we might improve them going forward. Until we measure it, we'll never really know.

I'm the first to acknowledge that this isn't a simple measure, but as Mr. Côté says, you don't count people who are unemployed and say that's the unemployment rate. There are sophisticated statistical methodologies that have emerged and evolved over time like there are in the United States and the U.K. where they do this very work.

Not being a statistician, I'm not able to say what those methodologies are, but I'm confident that our CRA is up to the task. I don't see any benefit in depriving ourselves of information which our allies believe to be valuable.

[The Chair, Conservative, James Rajotte]

Mr. Jean.

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

Mr. Chair, the question still has not been answered. Just because some of our allies may see it as a benefit doesn't mean it's going to be a benefit for us.

What I'm asking him and he still hasn't answered, is what is the benefit? What do you see as the end result in this? What do you see in this data that would actually be valuable to us, instead of spending resources and significant amounts of money gathering data that really, in my mind, doesn't mean anything? It's like taking a shotgun to a mosquitofest; you're not going to accomplish anything in the end.

So what do you see as the end result in this? Because we can get the data as well from people we catch, which I would think would be much more important, to find the people who are caught and then do surveys of them and find out how we can catch additional people rather than just a conglomerate of information that really doesn't accomplish anything? That's why I'm asking, what do you see as the end game in this?

Just because our allies put this data together doesn't mean that it's of any interest to us and maybe they have a lot more money than us. Just because Italy and Greece are doing very well economically doesn't mean we should follow their path. What I'm asking is, what's the endgame, what's the benefit that he sees?

[The Chair, Conservative, James Rajotte]

I'm going to go to Ms. McLeod.

Then, Mr. Rankin, I'll come back to you, if you wish.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Chair.

I think I will go back to my original statement. This is an appropriate discussion within the context of the report that we're going to do, whether it is a recommendation or not.

Second of all, to sort of presume that there are some systems...we are being very prescriptive in terms of what we're asking for here, with no idea in terms of the cost and whether it would even create something of value. I do understand the CRA has responded to the PBO in terms of this particular area, but again, I'm going to encourage my colleagues to vote this motion down. We will have a comprehensive discussion within the framework of the report in terms of appropriate recommendations.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. McLeod.

Mr. Rankin, did you want to speak further to this?

[Murray Rankin, NDP, Victoria, BC]

I can only repeat what I said. You're asking what the outcome will be, what the results of this analysis will be, and the point is, we don't know until we do it.

Is the budget going to be effective—the one that's currently before Parliament—in addressing the tax haven issue? There are a number of measures in there. If we had a broader context in which to put that, we would be able to know whether we were going after the right fish or hunting in the right place. Maybe there are other things that could be done. I don't think we know how much the cost of this will be, but we can certainly find.... All he's asking for are some pretty straightforward things that can be analyzed by his officials. I don't see this being an expensive proposition.

I guess I'm just concerned that we would deprive ourselves of information, which admittedly some witnesses, in an individual capacity.... Mr. Saint-Amans from the OECD expressed that there was little value in this, but so many others did say that it was valuable. Mr. Murphy and others who testified told us they thought this was a key element in the whole exercise. So to me, to simply deprive ourselves of information that others think is valuable just seems wrong-headed.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Brison.

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

On the reference to cost to conduct this, my understanding is that the cost to do some sort of analysis of this wouldn't be that great. We just emulate the methodologies that other countries have used. I don't believe there's a significant cost, and I don't see the question—Mr. Jean's argument—of what is the benefit of doing this. I would counter that with, what is the advantage of not having this information? We may be surprised that either the number is significantly lower than that of our trading partners or it may be higher. We don't really know, but in a small open economy with a disproportionately large presence in the international banking sector, having some estimate from our perspective, I think, is even more important than for some of these other countries.

[The Chair, Conservative, James Rajotte]

Thank you.

On this, Ms. Glover, please.

[Shelly Glover, Conservative, Saint Boniface, MB]

As I'm searching my iPad to look at Australia's situation, I see an article here by a Mr. Richard Highfield. He's a senior adviser with the OECD Centre for Tax Policy and Administration, and he's an adjunct professor at the Australian School of Business. In this piece, it says he “argues reporting and matching information about incomes and tax paid are proven and 'highly effective' means of detecting and deterring non-compliance by taxpayers”.

He goes on to say later that, “Estimating the size and composition of the aggregate tax gap in Australia with any degree of precision is difficult because of the complexity of the tax system and the numbers of taxpayers involved”.

And he goes on to talk about the fact that they don't actually look at the situation like other countries because they're having a hard time estimating it. Again, there are a number of reports; I just picked the first one. This is not a good use of taxpayer funds. Australia has had, obviously, huge problems in trying to estimate their own, so again I think our resources are better, as Mr. Highfield says, trying to actually match the reporting with the information that we're collecting, which is what the CRA has been doing and we've advanced significantly since the previous Liberal government.

Thank you.

[The Chair, Conservative, James Rajotte]

There are no further speakers, then?

I will call the question.

(Motion negatived: nays 6; yeas 5)

I understand, Ms. Nash, you wanted to move your motion today?

Does everyone have a copy of Ms. Nash's motion as well? Okay.

If you could, please read that and then speak to it.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you, Chair.

I'd like to move the following motion:

That the Standing Committee on Finance a) undertake a study to examine rising household debt in Canada, including, but not limited to: the root causes of rising household debt, the nature of household debt in Canada, and the social and economic impacts of high household debt levels; b) that the Committee make recommendations to the Government of Canada to address rising household debt levels; and c) that the Committee report its findings to the House of Commons.

[The Chair, Conservative, James Rajotte]

Is there any discussion on the motion?

[Peggy Nash, NDP, Parkdale—High Park, ON]

Yes. I know we've heard at this committee concerns raised about the level of household debt from the Bank of Canada. We've certainly seen in the media concerns about this, from our major banks, from the IMF, from the OECD. Our level of debt has risen significantly, about fourfold since the beginning of the 1990s, and the pace of the increase of debt has created a lot of concern.

The Royal Bank recently identified this issue of household debt as the major challenge to the Canadian economy. There have been many concerns about whether the financial position of Canadian households is sustainable going forward or whether there are going to be significant cutbacks on the part of Canadian households, and what the impact of that will be on our economy.

We are at the greatest level of household indebtedness ever. Some are very concerned about it. Others say it is manageable. I think it's incumbent upon this committee to really determine why household debt is rising so significantly. There are some obvious things one could point to, like rising housing prices, but I think there are other factors that should be looked at as well. I think it will be the responsible thing for this committee, following an examination of household debt, to then make recommendations going forward so that the House of Commons and our members of Parliament can be better informed on this issue and so that the government and the House can take appropriate action if necessary.

[The Chair, Conservative, James Rajotte]

Thank you very much.

Monsieur Côté, and then Ms. Glover, please.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

Preaching to households about their debt is completely stupid, in my view. Clearly, the interest of this motion is in understanding, as we must, the objective conditions that have brought households to this level of debt. We were able to see what the situation was in the United States. Actually, the rate of household debt is going down there because the Americans really had their backs against the wall.

There is always a cause, even a number of causes, that can be determined by this. While households in North America were getting deeper into debt, the Chinese government was very active in encouraging individual Chinese people to save. We have to understand what is going on, what has happened to push households to become so indebted. Only then will we be able to find solutions and to hope to be able to get ourselves out of trouble if ever a real danger presents itself, which is a strong possibility.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

Ms. Glover, please.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

I want to say, first and foremost, the government has been very vocal about expressing our concern with regard to Canadians overextending themselves and has put in a number of policies to try to address this. Unfortunately, most, if not all, have been opposed by the opposition. We continue to move forward in that endeavour regardless. We are going to continue to remind Canadians that tax rates right now, interest rates, and whatnot, are low, but interest rates are bound to go up.

With regard to this particular motion, Ms. Nash and I had discussions about it previously and it was presented surprisingly in committee because we had discussed the fact that our committee calendar is intense. It is absolutely intense. So I want to know from Ms. Nash where exactly she sees this falling into the calendar. I see that we already have our calendar developed to about June; we'll be discussing it further in subcommittee.

We still have things such as Mr. Hoback's study that will be coming forward. We'll have the pre-budget consultations that will keep us busy in the fall. The supplementary estimates will be presented. We have a BIA one and two that will be coming. This committee has some responsibilities that must be addressed.

Having said all of that, we're going to be starting very shortly a study put forward by Mr. Brison on income inequality. As I said before, there have been discussions about some similarities between household debt and income inequality. I suspect we may get some information out of the income inequality study that might be helpful in that endeavour. They are similar. That one is about to start shortly.

I think the timing to continue to bring forward as many motions as possible every single time we have a meeting is keeping this committee tied up in talking about studies that we never get to. I suggest that Ms. Nash may want to consider listening to the income inequality study, seeing what we find there, and really adjusting the timing of her motion when there's time, because right now, as I look at the calendar before us, there is no time before Christmas. I think she may want to put forward this motion perhaps when the next session—basically, it's not even a session—the next year starts.

I think Mr. Brison's income inequality study is going to address some of this, which will be helpful in making some recommendations sooner rather than later. If that's really her intent, it ought to come out in Mr. Brison's study on income inequality, because it's not going to be very timely if it's not until Christmas.

[The Chair, Conservative, James Rajotte]

Thank you.

Just before I go to Monsieur Caron and then Ms. Nash, in terms of process, the way I handle this as chair is that if a second motion is passed, then obviously the first motion would take precedence, unless the committee explicitly directs me to reverse the two. Mr. Hoback's motion is the first one after Mr. Brison's in terms of studies. That's for everyone's planning purposes.

Who wanted to go first?

Ms. Nash.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Yes, thank you.

I was going to address the issue of timing. Given that this is the number one preoccupation of Canadians right now, as indicated in recent polling, I would think it's something that this committee ought to look at this year. As Ms. Glover knows, there's no time limit for a motion, and if the committee adopts this and gets it on our list of planned work, we could take a look at trying to find time for this in the fall, I would think. Obviously, there's not going to be time this spring.

I don't know what the government's plans are in terms of how extensive budget implementation bills will be and how much time that's going to take. This committee has decided that it's going to duplicate a study that was just done by the industry committee, with Mr. Hoback's motion. Surely, if we have time to duplicate something that was just completed by another committee, we can find time to study something that this committee has not undertaken and that is a real concern for Canadians.