Finance Committee on May 22nd, 2013

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

If you were really interested in reducing the tax burden on Canadian families, you could have made these revenue neutral by reducing other taxes.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

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

Instead, this bill—or your budget—actually increases tariffs on Canadian families by $250 million net.

[The Chair, Conservative, James Rajotte]

Thank you.

A brief response to that, Minister.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

We're not interested in subsidizing countries that are developed and selling their goods to Canada.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you very much, Mr. Brison.

Mr. Adler, please.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Mr. Chair.

I want to thank you, Minister, for being here today. I know your time is very limited, so thank you for appearing before our finance committee today.

I just want to let you know that in the riding of York Centre I conduct numerous round tables—with individuals, with business leaders, and with associations and organizations—and I have heard nothing but praise for this budget, particularly in the area of creating a fair and neutral tax system. The closing of a lot of the tax loopholes has been met with a lot of praise, as has the extension of the accelerated capital cost allowance, because people recognize the stimulative effect of the ACCA. It's very beneficial to business. Also, certainly, on the super credit for first-time charitable donors, a lot of people see that as encouraging, trying to create a culture of younger people donating and getting into charitable giving.

I want to talk to you specifically about the price gap between Canada and the United States. You indicated in previous answers about the Senate and their study that they seemed to reach the conclusion that it was largely a result of tariffs. In the budget, you have taken the initiative of lowering tariffs on a number of important items, including baby clothing and sports equipment. As the father of twins, I thank you, because I have to buy everything twice, so the baby clothing and the sports equipment initiative is much appreciated.

But let me just ask you this. This is a test case, which you have indicated. How will those prices be monitored going forward—

[The Chair, Conservative, James Rajotte]

I'm sorry, Mr. Adler, but the bells are ringing.

As members know, I need unanimous consent of the committee to continue. I'm going to recommend that we continue as long as we can with questions to the minister, and then we'll go to vote. My understanding is that it's a 30-minute bell.

Do I have unanimous consent?

[Some hon. members]

Agreed.

[The Chair, Conservative, James Rajotte]

Thank you.

Please continue, Mr. Adler.

[Mark Adler, Conservative, York Centre, ON]

How will these in fact be monitored, Minister?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

We're going to do it with consumer groups, including the Retail Council of Canada, and follow up with them. Of course, we'll report back. We have a duty to report back, which we will do in the budget next year, and maybe that will make more changes to make it more effective, depending on what the retail experience is for Canadian consumers.

I welcome Canadian consumers to let all of us, as members of Parliament, know how we're doing with this. We'll see whether baby clothes become less expensive on a retail basis, or sporting equipment.

I congratulate you on the twins. It's 22 years too late for our triplets.

[Voices]

Oh, oh!

[Mark Adler, Conservative, York Centre, ON]

Thank you.

Minister, you recently wrote an article in The Globe discussing why the general preferential tariff is being scrapped for 72 countries and how it was initially set up as a foreign aid program. You indicated in the 2012 budget that you were going to be proceeding down this path, and you called for consultations. Consultations were held at the end of last year. Hundreds of groups appeared in the consultation process. However, I would add that neither the NDP nor the Liberals had any representation in the consultation process.

I would like to ask you why it's important to eliminate the general preferential treatment for 72 of these countries. Perhaps you could expand on that.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Well, it's because they've gotten themselves into a position—and this is good news—through their own economic development, their own economic growth, where they no longer require this form of foreign aid from Canadian taxpayers. This includes, of course, China and South Korea.

We did consult. I thank you for all the consultation work that I know you do as the member for York Centre, particularly on economic and fiscal matters. This is supported by the Canadian Manufacturers & Exporters, because preferences to these various countries that are now developed significantly economically is a negative for our own manufacturing sector in Canada.

[Mark Adler, Conservative, York Centre, ON]

In terms of creating fair—

[The Chair, Conservative, James Rajotte]

You have about 30 seconds.

[Mark Adler, Conservative, York Centre, ON]

Thirty seconds? Okay.

Could you just talk a bit about eliminating tax loopholes and why it's important?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Yes. It is becoming more and more of an issue. We eliminate some every year, but I do not underestimate the skill of people who work on Bay Street—as Mr. Brison used to—in finding ways around the rules.

We work at it. The people and my officials are here, if you want to get into specific tax loopholes. Some of them are very complex. They all have esoteric names, so one is not really supposed to know what's going on. We have various tax havens around the world. The OECD took a leading role on this at the G-7 meeting we just had in the U.K. The ministers, all of us, had a detailed discussion about doing more together on tax loopholes.

One of the challenges we have, of course, is arbitrage, that companies are free to move around the world in terms of where they choose to pay tax, or they pay some here and some there, and so on. We need to coordinate our efforts internationally.

[The Chair, Conservative, James Rajotte]

Great. Thank you.

Thank you, Mr. Adler.

Mr. Caron, you have five minutes.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Good afternoon, Minister.

I'd like to come back to the issue of securities regulation. You spoke of the Supreme Court's decision, and you mentioned the fact that the Supreme Court has said that the federal government still has responsibilities with regards to systemic risks. Furthermore, I would like to quote the Supreme Court's decision: “The proposed Securities Act represents a comprehensive foray by Parliament into the realm of securities regulation.”

It is clear that the provinces, including Quebec, Alberta, and British Columbia, want nothing to do with a single organization regulated by the federal government or on the federal level. It is also clear that the provinces wish to work together; at least, 9 of the 10 provinces want to work together. Indeed, they've created a passport system that would allow them to more easily establish the goals of pan-Canadian securities regulation. Why stubbornly insist on going in this direction when the provinces are ready to work together? Why insist that the federal government should hold the reins, rather than work with the provinces who wish to do so? It seems to me that the vast majority of them want to now.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

We want to work with the provinces, and we respect their constitutional jurisdiction in this matter. However, Quebec's provincial government must also respect the Government of Canada's constitutional jurisdiction as regards systemic risks, which the Supreme Court recognized a year ago.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I would submit, however, that Quebec's government did accept it, as did Alberta's government and that of British Columbia. Currently, they are working together to create a passport system that would grant instant accreditation to all securities brokers, to all portfolio managers, etc. The provinces are therefore ready to work with the federal government in implementing these goals now.

One thing is causing a problem, and that is the federal government's will to establish a transition office to an organization under its responsibility. This blocks its implementation. Why not change course, and extend its hand to the provinces, who have already done a great deal of the groundwork, rather than stubbornly insist on creating a Canadian securities office?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

That's not a new challenge. When I was Ontario's finance minister, 12 years ago, I held discussions with Quebec's finance minister, who is now Quebec's premier. There was no agreement between Ontario and Quebec. It's the same situation now between Quebec and Ontario. I'm familiar with it.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

It's not just Quebec, it's also Alberta and British Columbia. Currently, 9 out of the 10 provinces work together. In order to move forward, it would be much easier to use the criteria that the provinces are working on establishing, rather than imposing the federal government's vision from on high.