Evidence of meeting #122 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was countries.
A video is available from Parliament.
10:05 a.m.
Conservative
10:05 a.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
Again, thank you to the witnesses for coming.
Mr. Lavoie, thank you for talking about repatriating products. You're absolutely right, Canada has some huge potential.
I have to correct something you said earlier. When we talk about SR and ED, which isn't even in this budget implementation act, the savings that we have garnished from the SR and ED we've put into venture capital, so that we can have these manufacturing companies develop products that will in fact start to come out the doors of Canadian companies and compete better with China.
I want to say for the record, when we're talking about economies, that Canada's economy is about $1.4 trillion. China's $7.3 trillion; they don't need our help. We're going to help Canadian manufacturers, Canadian companies, with the changes that are proposed in the BIA.
I do have to clear up some confusion on the credit union stuff, if you would allow me.
First, our government reduced the small business rate to 11% from 12%, which of course was to incent many small businesses to do better and to grow in a tough economy. The way the deduction is working is that the small business rate of 11% normally applies to the first $500,000 of income, then it gets phased out as the business gets larger.
Until recently, credit unions had been entitled to 11% on all their income, no matter how much they had. Some of our credit unions are making a lot more than $500,000 a year. As a result, we're saying with these changes that they should get the small business rate on the same amount as all other small businesses are, and no better. But they still get the 11% on the first $500,000, which means—to clear up the confusion—that this is a tax change for large credit unions, not small credit unions.
We need to clear that up because we seem to be saying that all credit unions are going to be affected, but they are not all going to be affected. Isn't that so, Mr. Phillips?
10:10 a.m.
President and Chief Executive Officer, Credit Union Central of Canada
There are many good things in this budget. We've heard about them today—
10:10 a.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
No, I'm just asking you whether all credit unions are going to be affected by this change, or is it only those making over $500,000? It's a quick question, as I have other things to say.
10:10 a.m.
President and Chief Executive Officer, Credit Union Central of Canada
We've done an impact assessment and we've determined that 90% of the aggregate net income in the credit union system last year will be affected by the tax increase.
10:10 a.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
You're aggregating again. Most credit unions will not be affected. That's the question.
10:10 a.m.
President and Chief Executive Officer, Credit Union Central of Canada
That is less than 3% of what the large Canadian banks made last year. Mr. Jean referred to—
10:10 a.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
I'm curious to know why you're not answering the question, Mr. Phillips.
10:10 a.m.
President and Chief Executive Officer, Credit Union Central of Canada
Mr. Jean referred to the competitiveness of credit unions, which has has clearly been assisted by this tax provision. I mentioned my perplexity earlier on—
10:10 a.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
I'm going to have to interrupt you, Mr. Phillips, because I do have some other questions. I was asking for a simple answer to a very simple question.
There are over 1,000 credit unions, not just 348. I know you said there were 348, but there are actually more than 1,000 credit unions across the country. Most of them are small credit unions that are not going to be affected. I also want to say that credit unions—
10:10 a.m.
President and Chief Executive Officer, Credit Union Central of Canada
There are not more than 1,000. There are 348 credit unions. In fact, there are fewer than that right now.
10:10 a.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
Well, there are 191 branches in Manitoba, we just heard.
10:10 a.m.
President and Chief Executive Officer, Credit Union Central of Canada
If you add in the caisse pops in Quebec, you get a larger number, but there are 348 credit unions. When you add up all of what they earned in 2012, you get 3% of what the large Canadian banks made, and this provision is not consistent—
10:10 a.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
But as I said before, only the credit unions that earn more than $500,000 in income are going to affected.
10:10 a.m.
President and Chief Executive Officer, Credit Union Central of Canada
—with what the budget says on page 147. This provision is a mistake.
10:10 a.m.
President and Chief Executive Officer, Credit Union Central of Canada
This is a mistake. You've got advice out of the bureaucracy without any analysis of the competitive impact.
This has come forward. It's not connected to the jobs and growth agenda. It's not connected to what you say on page 147.
10:10 a.m.
Conservative
10:10 a.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
And it's pretty telling when you don't want to answer the question.
10:10 a.m.
President and Chief Executive Officer, Credit Union Central of Canada
I did answer the question.
10:10 a.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
In fact, there are 191 branches, we heard, in Manitoba. There are over 1,000 credit unions.
10:10 a.m.
President and Chief Executive Officer, Credit Union Central of Canada
There are 1,760 physical locations—
