Finance Committee on April 30th, 2013

[Murray Rankin, NDP, Victoria, BC]

Thank you, Chair.

Thank you, witnesses.

I'm going to follow up on the first of Mr. Adler's questions, not the second. My focus is on federalism.

By way of overview, I'm looking at what practical measures a federal government can take to implement measures to address income inequality. There are three witnesses I'd like to have respond.

First, Mr. Broadbent spoke of welfare reform, acknowledging that it was primarily provincial. He wrote this morning in the National Post about the welfare wall and what we do about it—again, provincial issues.

Professor Fortin acknowledged that education, the minimum wage, and collective bargaining are mostly provincial.

Ms. Yalnizyan recommended that we support provincial poverty reduction measures. Again, all are matters provincial.

We have this federal social transfer, and it tends to be essentially a “no strings attached” type of process more and more, yet we have the federal spending power, which is robust.

I'd like to ask the three of you—Mr. Broadbent, Professor Fortin, Ms. Yalnizyan—what we as federal politicians can recommend to specifically address the issues I've referred to in your various presentations, starting with Mr. Broadbent, please.

[Ed Broadbent]

If I understand the question, and I think I do, a lot of the recommendations that have been made around the table, including those made by me, are within provincial jurisdictional authority. I am in favour of using the federal spending power, but I am also in favour of doing it in what used to be called a cooperative federalist way of working with the provinces and trying one's best to get agreements for changes. I refer in this to the particular form of guaranteed income that I'm saying should be a long-range goal of Canada, which Tom Kent and Hugh Segal have also advocated.

I think those kinds of complex changes in social policy in Canada on the whole require federal-provincial agreement, if we're going to maintain the cooperative kind of attitude in the country. I don't underestimate the difficulty in achieving it, but I think federal initiatives are appropriate, even if to say, “We have money, we have the tax resource as a federal government, and in particular in the case of some provincial governments”—for reasons of inequality that have been raised already—“we're prepared to put up...”, and I'm not naming some of the programs that I mentioned, for example, that are in provincial jurisdictional authority, “and we would like you to cooperate.” That can be done using the prime ministerial pulpit, if I can put it that way, too, showing federal leadership and talking about the necessity of these things to build a more equal Canada and to put public pressure, if you like, on more provinces to get a sufficient number to have effective programs.

[Murray Rankin, NDP, Victoria, BC]

Thank you.

Professor Fortin.

[The Chair, Conservative, James Rajotte]

You have two minutes left, so take a minute each.

[Prof. Nicole Fortin]

It's going to be difficult for me to improve on it.

Some of the increase in after-tax inequality of the 1990s, as was pointed out earlier, can be traced back to some cutbacks in social assistance, but also to the removal of some surtaxes in some provinces. There are some that are coming back. For example, in B.C., some of these are coming back.

Now, at the federal level, there remain a few tools, such as the GST credit, the child tax benefit, and the working income tax benefit, which are important programs. A lot can be done by improving on these programs, but I really applaud the point that was being made about leadership. It seems that bringing the issue of income inequality into the news basically may bring the attention of the public to the boards of governance of some firms concerning how appropriate it is to give bonuses and so on to high-paid workers. I think these tools are within the realm of what will be effective.

[The Chair, Conservative, James Rajotte]

There's about 20 seconds left, if you want to comment.

[Armine Yalnizyan]

I will cede my time so that we can move along.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Rankin.

Mr. McColeman, please; it's your round.

[Phil McColeman, Conservative, Brant, ON]

Thank you, Chair.

And thank you as well to the witnesses for being here.

I'd like to follow the angle of education, and in particular public policy on education. What our government is facing now, and what future governments will face, is the fact that we're on a trajectory of being a million workers short within this decade of the jobs that are available in this country. I know this is real, because I know it's real in certain regions of the country now, having travelled with the human resources committee and in speaking with employers and employees and unions and whatnot on the various sides.

When you reflect on what has happened over the last number of decades.... I remember when I was in elementary school we had a tech room in which there were tools, and there was the ability to find out whether you had the aptitude to do a skilled trade. It might not have been your choice eventually, but it was there and was available. They were available as well in the tech wing at Brantford Collegiate Institute, where I went to high school; it had a full tech wing—automotive, electrical, carpentry, you name it. For the most part, these are gone in Ontario, as far as I can see, at the elementary level, and we have put a focus on.... I'm as guilty as any, with four children—having graduated three of them with general BAs—who were not employable when they got into the workforce and who had to go back to a year of community college.

I'm painting the scenario for you. Is that progress? Is this the kind of thing we need to reinstitute—matching skills with the job sets that are available? If we're talking about the inequity question, as we are today, is it important? We all know how empowering education is at different levels. Not everyone is meant to be a university professor or a doctor, or, for that matter, a politician. Nonetheless, can I ask you your views on getting that right?

[The Chair, Conservative, James Rajotte]

Is this for Professor Fortin?

[Phil McColeman, Conservative, Brant, ON]

Yes.

[Prof. Nicole Fortin]

I think you rightly mentioned that many of the technical jobs now almost require some post-secondary degree. A mechanic today uses a computer quite a lot more than before. I think this emphasizes the point that high school completion has to be an important goal of public policy, because indeed many of the skilled worker jobs are increasingly skilled and many of these skills are taught at post-secondary institutions.

[Phil McColeman, Conservative, Brant, ON]

I see that Mr. Broadbent would like to weigh in here.

[Ed Broadbent]

To comment briefly, I really strongly agree with your orientation. I grew up in a town with a high school that had what we called “technical training” of the kind you've talked about, and it has disappeared too.

I've been spending some time in recent months in the United Kingdom. A big debate is being waged there. Like so many countries, they're looking at Germany as a model, where they make a distinction between formal academic training, like you and I probably had, and technical training. There's no low status allocated, to put it bluntly—quite the contrary—to working-class men and women who get technical skills. They're being recognized not only all over Europe but elsewhere.

In addition to what's been said already, a point I would make is that it seems to me that an industrial policy for Canada, in the manufacturing sector in particular, might use some kind of incentive in terms of tax systems in regard to corporations—and they have to really do it—for them to have apprenticeship training programs in the industry. That, by and large, as I understand it, is the emphasis in Germany. Also, we should encourage our children. As you say, not everyone is going to be a doctor, and being a skilled worker should have the same kind of positive response from the rest of us.

One thing a federal government could do, it seems to me, is look at the idea of having a tax policy for corporations that is related to skills training.

[The Chair, Conservative, James Rajotte]

Mr. McColeman, you have 30 seconds. Madame Yalnizyan wanted to comment as well.

[Phil McColeman, Conservative, Brant, ON]

Can I use my last 30 seconds? I just wanted, with Mr. Broadbent here....

[The Chair, Conservative, James Rajotte]

It's your time.

[Phil McColeman, Conservative, Brant, ON]

Is it fair to say that it will help this inequity gap that we're talking about at this table today if we get the education system back to producing matching people with the jobs that are available?

[Ed Broadbent]

Well, if it's done and they get the skilled jobs, then it can be, but there's a point that I and a number of others made today. It's that the other thing we have to address, frankly, is unionization.

Germany has one of the highest rates in Europe for unions, and one of the major reasons.... People with the technical expertise that I don't have and who produce the data show that there's a good correlation between good, high-paying jobs and more equality and union presence, so I think we have to encourage that as well.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. McColeman.

We'll go to Ms. Glover now, please.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you.

I'm thrilled to have all of you here. What's interesting, as we progress in this study, is the disparity between opinions on whether or not we in fact have income inequality problems here in Canada. It's mind-boggling to see how many surveys are on one side and how many surveys are on the other side, but we'll have to sort that out in the report phase.

Mr. Broadbent, I would like to continue with you for just a moment, as you answered Mr. McColeman. The Canada job grant was announced in the recent budget. Have you had a chance to look at it? What are your thoughts on it? Because it certainly appears that it would solve some of the problems you discussed with Mr. McColeman.

[Ed Broadbent]

I have not.

[Shelly Glover, Conservative, Saint Boniface, MB]

Okay, and that's fair enough. Thank you.

How about if we look to one of the reports you did, Mr. Broadbent? I found it interesting, to say the least. It's a 2012 report that of course we're familiar with. It's called Towards a More Equal Canada, and it repeatedly advocates for higher taxes as a way to solve income inequality. In fact, one of the quotes from the report says the following:

Tax cuts have squeezed the services we already have, and made it difficult to talk about expanding the social programs....

Taxes are the hinge that links citizens to one another.

I'd like you to expand on that. What tax cuts are you referring to in that quote? I'm assuming you would recommend that we reverse those?

[Ed Broadbent]

The tax cuts that I refer to, or that we do, because it was a collective enterprise to produce that report.... A lot of people were involved. A lot of academics across the country contributed to it.

I'm not going to give the statistics off the top of my head, but on the general reduction on taxes going to upper-income Canadians from both Liberal and Conservative federal governments, a disproportionate benefit has gone to upper-income Canadians.

One measure among many that we indicated was to reverse this, to not drive tax rates up to what they were, to the same level of half a dozen or 10 years ago, but to consider, seriously and positively, increasing taxes on the rich.

[Shelly Glover, Conservative, Saint Boniface, MB]

So tax the rich? What are the other—