Okay.
Evidence of meeting #117 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was education.
A video is available from Parliament.
Evidence of meeting #117 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was education.
A video is available from Parliament.
9:45 a.m.
Professor, Department of Economics, McMaster University, As an Individual
I'll just say, really quickly, that these are really long-term things. Even when you look at the last 10 years, it's correct, as Stephen Richardson said, that when you look at that period there isn't much of an increase in inequality. In fact, this is a roller-coaster period. We had the dot-com bust, we had the financial crisis—it goes all over the map. Really the big increase in inequality was, roughly speaking, from 1985 to 2000, and since then it's hard to tell.
But the question was also about intergenerational mobility. Of course, intergenerational mobility by itself is a very long-run thing; you're talking about how parents' income affects their children's income. It's a very long period. The best data we have suggests that in Canada, intergenerational ability is still pretty good.
9:45 a.m.
Conservative
9:45 a.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
Thank you very much.
When Governor Carney spoke on this issue, he said that those who say income inequality is not an issue are wrong, and those who want to make it into one of class warfare are wrong, but that the real focus ought to be on that issue of equality of opportunity.
The issue of disparity between provinces is one that ought to concern us. There's a growing gap in terms of the fiscal capacity and situations of individual provinces. To what extent does that represent a threat to equality of opportunity in terms of the capacity for provinces, for instance, to fund public education?
9:45 a.m.
Professor, Department of Economics, McMaster University, As an Individual
I agree. I think that is where the focus should be. Of course, education, kindergarten to grade 12, is a provincial responsibility, but there are interactions with the federal government. But that is essentially the problem. In a country where people can move across the country, you could not invest sufficiently in the education of children in one part of the country and then they move across the country and they're not as productive as they might be. It's obviously an issue that has a national repercussion.
9:45 a.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
Zanny Minton Beddoes, the economics editor for The Economist magazine, said when she was in Ottawa a few weeks ago that one of the reasons why income inequality is so great in the U.S. is that education is funded by the local tax base, and of course rich communities get great schools and poor communities get poor schools. So we could see, with the balkanization of the economic situation to provinces, a direction not dissimilar to that.
She also said that the greatest area of equality of opportunity investment to address this is investing in children. To what extent does Canada need to have a more focused approach to early learning and child care in Canada?
9:45 a.m.
Conservative
The Chair Conservative James Rajotte
We have Mr. Broadbent, who wants to comment.
Is that who it's to, Mr. Broadbent?
9:45 a.m.
Chair and Founder, Broadbent Institute
I'd like to reply specifically to Mr. Brison's question, and to the earlier one on the whole notion of equality of opportunity.
There isn't a sane adult in Canada, whatever the ideological perspective, I think, who would be against equality of opportunity. For me, the serious debate, though, is between those who see a link between equality of opportunity and substantive equality and those who don't. The evidence is I think very clear, whether it looks at the work of Wilkinson and Pickett, and I'm sure the committee is familiar with that work, The Spirit Level, or Joe Stiglitz, a Nobel prize winner who has written on inequality.
The clear point I would make, but I won't elaborate because of the time, is that it becomes almost meaningless to talk about equality of opportunity—and the data supports this—unless you narrow the gaps. If kids growing up don't have adequate housing, if they don't have early education opportunities, as upper-income people do for their kids in many countries, the beginning in life with serious inequality undermines the notion of equality of opportunity. I'll just make that point and pass over to Scott's question.
I think increasing the allocation of funds for pre-school learning, pre-school opportunities for children, is of fundamental importance. And to make a non-partisan comment, I think the Government of Ontario and its initiatives recently in trying to deal with that issue are very progressive.
So beginning with pre-school children, with a lot of emphasis...again, I think the evidence around the world is that it's a very important initiative to take.
9:50 a.m.
Conservative
The Chair Conservative James Rajotte
Mr. Brison, you have one minute.
If we can do it very briefly, Madame Taillon....
9:50 a.m.
President and Chief Executive Officer, Canadian Council on Social Development
I want to reinforce this. I talked about dealing with inequality through building stronger communities and social cohesion. Early learning and child care do that. Obviously, there are huge benefits and lots of evidence to support the benefit to kids of putting them in school earlier, with full-day kindergarten. As a mom of a six-year-old, I see the benefits in my son.
The other benefit is that once you're attached to a school, your family is attached to a school and attached to a community. If you consider a new Canadian, for example, coming in, feeling very isolated and really unsure, when their kids start school, all of a sudden the family is part of a community as well. Many women who are staying at home in very traditional roles, as new Canadians, feeling very isolated, are now all of a sudden interacting—dropping their kids at school, speaking to other parents. It's a huge way to build the fabric of a community and to create a cohesive society.
9:50 a.m.
Conservative
The Chair Conservative James Rajotte
Thank you.
I'm trying to be very fair with time. We are going over.
Professor Fortin, make a very brief comment, please.
9:50 a.m.
Professor, Vancouver School of Economics, University of British Columbia, Senior Fellow, Canadian Institute for Advanced Research, As an Individual
I would simply like to mention that the big educational divide in Canada is with aboriginal communities. This is really where a lot of emphasis should be placed. If we're thinking that the basic building block begins with education, this is where the big gaps are.
9:50 a.m.
Conservative
9:50 a.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
Thank you, Chair.
I welcome everybody here this morning.
Ms. Yalnizyan, you make a comment in your tax measure recommendations:
Avoid expanding TFSA[s] and do not introduce income splitting for families with young children. Both measures widen, rather than reduce, disparities.
Can you explain why you think those are bad programs? What data lie behind your thesis on that?
9:50 a.m.
Senior Economist, Canadian Centre for Policy Alternatives
The Library of Parliament in 2006 released a document, presumably at the request of the government because you were interested in these measures, showing that the distribution of benefits from these two measures combined.... Well, the income splitting was divided between seniors and young families. That package of income-splitting measures cost roughly $5 billion at that time.
At that time, they said that $2.2 billion went to families with young kids, and that 8% of that bundle of money would flow to the bottom 50% of families. The higher up the income ladder you went, the more the benefits of income splitting accrued to very high-income earners. The bottom 50% of families in 2006 were at less than $60,000, so the 50% of families raising kids who were making less than $60,000 would get 8% of the benefit of that measure. Single parents, who are the poorest parents, would see nothing of it because there's no income to split.
With respect to the tax free savings account, the tax expenditures report that came out two months ago, in February 2013—note that it was the first time we lifted the hood on the tax free savings account—showed that people who were most likely to benefit from that measure were older than 65 and of high income. Although there was quite a large take-up of the program, the real benefits accrued to those with high incomes who had surpassed their ability to contribute to RRSPs. What was clearly created was an ability to expand tax sheltered accounts.
You've probably heard from the chartered accountants of Canada, who have referred to this tax measure as revolutionary. It's revolutionary, sir, because it is going to create a huge hole in the public purse as time progresses.
9:55 a.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
I find that interesting, because if you go back to my constituents in Prince Albert, you'll find that the tax free savings account, no matter what age group you're in, has been viewed as very positive.
9:55 a.m.
Senior Economist, Canadian Centre for Policy Alternatives
I'm sure it has been viewed as very positive, because there's a general culture out there that says taxes are a burden and we shouldn't pay them. Anything you can do that communicates to people that you don't have to pay taxes seems to be a winner, which is what you guys campaign on. But at the end of the day, by not paying for the system we have, we're going to be transferring the costs to the next generation. It's a deficit that we pass to the next generation like any other.
If we're not collecting enough revenues, we can't maintain our standard of living down the road.
9:55 a.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
I guess I take an approach that is a little different. When you leave that revenue with the family and let them choose how to spend it, it's better for society as a whole, because they're spending money as a family unit; they're maintaining the family as they choose. I guess we differ a little on how the benefits of those funds will flow through.
9:55 a.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
Unfortunately, I only get five minutes. I just wanted to understand your logic behind that.
Mr. Veall, you talked a bit about loss of shareholder democracy. I want to pull this back into the study we're doing here.
Can you elaborate on that?
9:55 a.m.
Professor, Department of Economics, McMaster University, As an Individual
There's obviously an issue with accountability, if shareholders do not get to have meaningful input into decisions at the corporate level. I suspect that in a large number of cases it doesn't make much difference.
The problem is that in cases in which it does make a difference, we'll have some small group of insiders who are effectively controlling the corporation, and whether we like it or not, the rest of us are, at some level, stakeholders. In particular, there are cases in which shareholders would probably change management and end up with a new, more innovative group, and they simply can't, because of the way the shareholding is structured in that particular entity.
9:55 a.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
You also made a comment about a national securities regulator. Do you feel this would be one way to stop that process?
April 30th, 2013 / 9:55 a.m.
Professor, Department of Economics, McMaster University, As an Individual
At the moment, somebody starting a corporation in Canada can choose their regulator, and it may be that they choose regulators who are not as careful as I would expect a national securities regulator to be.
9:55 a.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
You also talked about intergenerational opportunity. I believe you talked about how Canada is doing so well that no matter what generation you're born into, those opportunities are there, whether in education or health.
Can you expand on that?
9:55 a.m.
Professor, Department of Economics, McMaster University, As an Individual
It is of course a problem with data that we know what happened to a previous generation but we don't really know what's going to happen to the current generation. It could be that intergenerational opportunity is deteriorating, but we just will not be able to record that as data. If you think essentially about the previous generation, the work by Miles Corak, whom you have heard from, tends to say that Canada does as well in intergenerational mobility as other countries that have much more equal distributions of income than we have.
This is why I emphasize the threat that comes through provincial government deficits in many of the provinces: they are the deliverers of education, and it matters to that.