Finance Committee on Oct. 6th, 2011

[Shelly Glover, Conservative, Saint Boniface, MB]

Now, unfortunately I have to ask you about some of the comments you made earlier. Mr. Masse asked you about two options: the accelerated capital cost two-year deduction, and a choice between that and corporate tax decreases. I just want to make it very clear that under this government you don't have to make a choice. You actually benefit from both of those. Second, that party actually voted against the accelerated capital cost allowance. So to suggest that they extend it for five years seems ironic to me.

But you also bit on a $130 billion infrastructure increase, and I'm wondering how, sir, and where, sir, you plan to cut to pay for that.

[Howard Sellick]

To be honest with you, I'm not an expert in that area. My brother is our CFO. I really can't comment intelligently on that.

[Shelly Glover, Conservative, Saint Boniface, MB]

That's my problem here, sir. When we do these budget consultations we're trying to get ideas on how we move forward to continue to create jobs, to continue to support a country that is in debt. When you mentioned your company is free of debt, I was so happy for you, but then we also ask if there are inefficiencies where we, as a government, could cut so that we could actually do a better job to promote that job creation, etc.

When people make comments like let's put $130 billion more into infrastructure, and we've just put in $56 billion, I'm asking you to tell us where you think we're paying for that. As Mr. Masse said, is it your desire that we raise corporate taxes? Is it your desire that we cancel the accelerated corporate tax allowance? You said you liked the fact that we removed tariffs. Just making blanket statements about going into debt.... I want you guys to really think about how we might find inefficiencies. After this committee, if you think of some, please submit them, because that is invaluable to this committee. It would be highly beneficial.

The other thing I'd like you to submit is information on anywhere else you might have made some purchases of state-of-the-art technology using the accelerated capital cost allowance. The software you mentioned was an excellent specific example. I'd like to ask each of the panel members to submit to this committee those investments that you were able to make, because that deduction in fact is made in our budget. I would ask that you do that.

I see Howard has approached. If you'd like to comment, Howard, I'd love to hear your comments.

[The Chair, Conservative, James Rajotte]

You have a minute left.

[Howard Mains]

I have a very good example of how the government could make things move forward quicker so that investments can be made. The Mackenzie Valley gas project took about six years to go through the regulatory approval process. A certificate was issued this past December. That regulatory process took at least twice as long as it should have. So it doesn't matter whether it's an energy project like the Mackenzie Valley project or a number of other projects, if that regulatory time can even be cut in half, that will put boots on the ground, shovels in the field, and get people working.

[Shelly Glover, Conservative, Saint Boniface, MB]

Very good.

Do I have 30 seconds?

[The Chair, Conservative, James Rajotte]

You have 15 seconds.

[Shelly Glover, Conservative, Saint Boniface, MB]

I just want to mention there are six to eight coast guard vessels, specifically geared toward icebreakers, that are right now being considered, and the procurement process is proceeding. I would assume that you support that commitment by this government.

[Bruce Bowie]

Yes, certainly.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Bowie.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Glover.

I just want to clarify a couple of points for our committee and for the analyst in drafting our report.

First of all, Mr. Shaw, on your second recommendation in terms of the study, you referenced the NRCan report. Do you have a recommendation as to who or what type of body should do this study? Should it be an external one? Should it be internal to the government? Should it be a parliamentary committee? Do you have any thoughts you want to share on that, just very quickly?

[Sam Shaw]

I do. I think it should be a parliamentary committee and I think it should be looking at all aspects of the incentives in North America, at what the incentives are that will drive the adoption of natural gas. That kind of committee could then come forward with some great recommendations for budget 2013.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

Mr. Bateman, the second and third recommendations we're familiar with. The first one you can provide now or later. Do you have a costing of the investment tax credit for the committee?

[Patrick Bateman]

We would be pleased to provide that to the committee at a later date.

[The Chair, Conservative, James Rajotte]

Okay, we appreciate that very much.

I want to thank Mr. Sellick for all of his comments about showing the supply chain across this country and showing the linkages between industries in my province, Alberta, and industries here in Ontario. I think that was essential, and your comments about the work-sharing program were certainly the same types of comments I hear in my province.

The last thing is, I did cut off Mr. Westcott in responding to Mr. Hoback. Mr. Westcott, do you want to finish that response, just very briefly?

[Jan Westcott]

Could you refresh me again on the question?

[Randy Hoback, Conservative, Prince Albert, SK]

I believe you said there were some inherent barriers here in Canada that made you uncompetitive, that you needed to overcome.

[Jan Westcott]

The barrier is mostly margin. We don't have enough margin to reinvest to keep the business vibrant in Canada. If you are going to go and develop or expand new export markets, you have to have the dollars in your jeans to do that.

It is interesting that we are all talking about tax reductions. We appreciate things like the capital cost allowance and the reduction of corporate income taxes. Those affect our members. At the same time, since 2006 the Government of Canada has taken $170 million more from our industry on a year-on-year basis just from spirits. We are sitting here saying this is great, but these more direct things impact us and take money that should go to investment out of our pockets.

If you look around here, we buy 50 square miles of corn right around this area. In western Canada we are the single largest purchaser of rye, which we source in Alberta and Saskatchewan. Those linkages you refered to are extremely important. We also have those linkages through the supply chain. We just don't have the dollars in our pockets to drive the business forward.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

I want to thank you all for appearing with us here this morning, and for your comments as well as for your responses to our questions.

Colleagues, we will suspend for about two minutes, and then we will bring the second panel forward.

Thank you.

[The Chair, Conservative, James Rajotte]

Okay. We are here for our second panel in Windsor on pre-budget consultations.

We have five organizations presenting in this panel. First is the Greater Kitchener Waterloo Chamber of Commerce. Second is the Sarnia Lambton Chamber of Commerce. Third is the Canadian Urban Transit Association. Fourth, we have the European Aeronautic Defence and Space Company. Finally, we have Fair Pensions for All.

You all have up to a maximum of five minutes for an opening statement, and then we will have questions from all members of the committee.

We will begin with Mr. Sinclair.

[Art Sinclair, Vice-President, Greater Kitchener Waterloo Chamber of Commerce]

Thank you, Chair, and members of the committee.

Thank you on behalf of the membership of the Greater Kitchener Waterloo Chamber of Commerce for the invitation to present our recommendations for the 2012 federal budget.

Briefly, our chamber is an association of approximately 1,700 employers in the Waterloo region. For any of you outside the province of Ontario, that's an area about an hour's drive west of the greater Toronto area. We have a diversified economy. Manufacturing, information technology, the universities—all play a main role in our economic development. So we have a very diverse economy.

With respect to our recommendations, we submitted a brief two months ago in the middle of August regarding our recommendations. I had a phone call yesterday from somebody on one of our advisory committees who said that based on some recent economic developments across the globe our recommendations might be a bit outdated. But I think there are still some priorities here that we would like to see next year in the budget.

We made a recommendation for restraint in program spending of about 1.6% annually. That was the number advanced by our colleagues at the Canadian Chamber of Commerce. Given the economic realities and the need to see some significant belt-tightening across the administration of the federal government, we feel this is a reasonable projection.

There is one other recommendation that we've made that I'd like to underline for the committee this morning. I think we're quite supportive of the federal government's direction in this particular area. We recommend that you not decrease in any way transfers to the provincial governments. We've just come through a provincial election here in Ontario. One of the key issues in the provincial election and in the federal election last spring is the health care portfolio. In the community we come from, the per-resident funding for hospitals, mental health, and senior services is significantly lower than the provincial average. We are a growing community, and the transfers, the funding for health care in our community, has not matched our population increases, so the per-resident funding is somewhat lower than in the rest of Ontario. Any cuts in federal transfers would be detrimental to our community, so we'd like to send a strong message that we would not like to see cuts in this area. Minister Flaherty has indicated in his last three budgets that he won't be doing this. And we would strongly support him in that area.

Another area that's a huge priority for our membership is the need to cut red tape for business. We heard this in the federal campaign and we also heard it quite strongly in the provincial campaign. The Canadian Chamber of Commerce made a submission to the Red Tape Reduction Commission earlier this year. They identified cutting red tape in taxation as a key priority. They pointed out that the per-employee cost of compliance in the taxation area for small business is significantly larger than for larger business. I think those are some areas we'd like to address. We support Minister Flaherty's initiative with the establishment of the commission to review this area, and we look forward to the recommendations coming out of this process.

Our third recommendation has to do with infrastructure. We would like to see some significant investments in post-secondary education. We have a board of directors of 17 to 20 people. Three of those people represent our local post-secondary institutions: Conestoga College, the University of Waterloo, and Wilfrid Laurier University. They have been quite supportive over the last number of years in telling the chamber that we need to support, as a community, investments in the post-secondary institutions across this province and country, particularly bricks and mortar. There were some earlier discussions on the last panel about the need to increase our skills and training capacity. From our perspective in our community, we've identified this as being a priority as well. Our initial way to address this concern is by investing in campuses, bricks and mortar, buildings, so that universities have the capacity to meet the training demands of our community and communities across Canada. Economic circumstances may be difficult this year, but over the longer term we would like to see the investments in the post-secondary system.

Thank you, Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Sinclair.

We'll now hear from the Sarnia Lambton Chamber of Commerce.

[Garry McDonald, President, Sarnia Lambton Chamber of Commerce]

Thank you, Chair, and committee members.

We're pleased to present to the panel again this year. Last year I remember being cut off by the panel, so I'll try to be much quicker this year. Our presentation will be by our board chair, Debra Taylor.

I'll open by saying that we didn't include broad statements in our submission to you in August. We included unique statements looking at ways government programs could change that would benefit business, consumers, and the government.

Debra will start off.

[Debra Taylor, Chair, Board of Directors, Sarnia Lambton Chamber of Commerce]

Thank you.

It's a pleasure to be here today, Mr. Chair and committee members.

Our first recommendation is to ask the federal government to increase the GST-HST threshold to $75,000 as of January 1, 2013. The participation threshold for this tax has remained at $30,000 since it was introduced in 1991. The Canadian government recognized the burden it would be creating for itself and small business if all businesses were required to register and, for this reason, set a threshold.

Smaller businesses often face a proportionally higher burden than larger businesses in complying with harmonized tax. Exempting them from collection and filing requirements can reduce the net burden a harmonized tax imposes.

Businesses that are approaching the current threshold may also be inclined to slow business in order to avoid being forced to register. It may also be a contributing factor to the underground economy. By increasing the threshold, administrative costs and compliance burdens can be reduced, making businesses more competitive. This could also reduce the number of returns CRA is required to process, the number of businesses seeking services, the number of input tax credit refunds, and the number of businesses that are subject to audits.

The loss of government revenues associated with raising the threshold can be offset by the lower administrative costs and the lower input tax credit refunds. In fact, many countries that Canada competes with have higher thresholds than Canada--namely, Australia, France, New Zealand, and the United Kingdom. For those reasons, we recommend that the government increase the GST-HST threshold to $75,000 as of January 1, 2013.

Our second recommendation is to have the federal government extend the income tax filing due date for individuals to June 15--this would be the same as the filing deadline for small businesses--while keeping the balance due date for payments owing for the previous taxation year at April 30. This will improve CRA's efficiency in handling the returns, eliminating the present deadline crunch by April 30 and maintaining revenue flow.

The filing crunch is caused by more individuals becoming involved in income trusts and limited liability partnerships. These organizations have an issuing date of March 31 for their information slips. So by the time mailing occurs, it gives the individual taxpayer a very short window of opportunity to file that tax return in a timely manner.

Extending the tax filing deadline would reduce tax compliance costs, as the number of assessments or reassessments and adjustments from the slip-matching process that occurs at CRA later in the taxation year will be reduced, as will any late filing penalties to the individual.

Our final recommendation is that the federal government create a working group comprised of representatives of provincial and federal transport ministries and various regional and private sector organizations involved in air and rail transport, who would develop and propose polices to the federal government that will improve competitiveness of air and rail transport systems in all regions of Canada. Rural--not just remote--communities like ours need to participate and want to participate in the Canadian economy. We want to attract and retain business and jobs. We feel the government needs to ensure that air and rail services remain accessible to rural communities.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from the Canadian Urban Transit Association.