Finance Committee on Oct. 27th, 2011

[Ray Pekrul]

Certainly the incentives for a stronger economy will increase employment. There is no doubt about that.

But increasing employment is really only one segment of reducing poverty. If we look at a poverty reduction strategy, it's usually made up of many components, including housing. Employment and training are certainly part of that, but health care and education are part of that. Transportation is a concern. There's a whole myriad of things that go into helping an individual really access the economy that's there--

[Mark Adler, Conservative, York Centre, ON]

But you really can't have any of those things without a consequence.

[Ray Pekrul]

Well, I think the association's position, and my position, is that while Canada has certainly been very good at regulatory banking and capital protection, I think we have a great capacity to become a world leader in terms of developing our social capital, which is our future generation and those who will make the good labourers and employees of the future.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll come back in another round.

Mr. Marston, please.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Thank you.

Again, I've scribbled so many notes that I'm going to have to pause for a second.

One of the things we lose sight of when we hear the mantra of lower, lower, and lower corporate taxes.... Let's pause for a second and look at our banks. They made $22 billion one year in profit and gave $11 billion to their executives. Those are the birds who are flying around in jets.

I agree with you, and with Mr. Adler, that the small business person in this country has been screwed over. Pardon my language, but it could have been worse; I'm from Hamilton.

There has to be a balance between our infrastructure investment and our social infrastructure investment in this country. Mr. Martin took our corporate tax rate from the mid-thirties or high thirties down to 20%. Our argument with the folks across there is not about raising taxes, but over the last five years, they've headed for 15%. They've taken $16 billion a year out of the corporate taxation that funds our ability as a nation to make proper investments. These are investments like those Ms. Kozak talks about, investments in education and in bridging people to employment.

The Conference Board of Canada says we should be addressing $130 billion in the infrastructure deficit. Mr. Pekrul is talking about how we invest in taking care of our seniors. The reality is that we can do those things, and we can still have a change in our tax structure, as you're calling for. A review is well past due.

This poor man beside me had to study it in university, so he'll tell you first-hand of the complexities. In fact, in some ways, our tax system has been written by lawyers and accountants for lawyers and accountants.

There's a number of things we probably could agree on here. The significant thing, to my mind, is that we were just in Prince Rupert, where we saw what investment could do in that small community and how they've turned it around. We were in the Yukon, where they're crying out for investment in transmission lines. Is this not time for the government to invest? Canadians are indebted, so they can't boost the economy. Businesses are afraid to release their capital. Is this not the time for our government to invest?

Anybody...? I'll start with the chamber.

[James Merkosky]

One of the principles we believe about the taxation system is that the taxation system is there to tax taxpayers appropriately. It's not the government's purpose to be involved in business. The government's purpose is really to facilitate business.

The corporate tax reductions you're talking about, in a lot of views, really do facilitate that. They allow corporations to retain more money within their corporation, which they can then invest back into the business.

At the end of the day the taxpayer is, as Martin said, the individual. Again, with Canada's tax system, the way it works is that, ultimately, the same amount of tax is paid individually or through a corporation with the ultimate payout to the shareholder. A corporate tax deduction is a tax deduction, but it—

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

My point is that I wasn't quibbling with the fact that the first tax is focused at 20%; we were in the mid-range of the G-20. We were extremely competitive, far and away ahead of the U.S.

Going that extra step is crippling our ability as a nation to invest properly. That's where my concern lies--and the concern of our party.

I must be getting close to being out of time.

[The Chair, Conservative, James Rajotte]

You have about a minute and a half, but Ms. Kozak wanted to comment as well.

[Carla Kozak]

I'd like to comment from my background in international business.

I was involved in helping to implement business deals between Alberta and Mexico in the 1990s. It seems to me that one of the most important jobs we have as Canadians in business is to make potential investors aware of how great it is to do business in Canada.

We have the strongest investor protection in the world. That's a big plus for investors. We have excellent tax laws. Quibble about the rates, but we have very good tax laws. They're fairly clear. We actually have less red tape than almost any other country you can imagine. We have very low corruption rates, which is very important to a lot of people.

We are a very highly innovative and highly technological country. We have a labour force that is very well educated.

We need to be getting out there and telling people, investors inside Canada and outside Canada, how great it is to do business in Canada. Invest in Canada. Invest in Canadian businesses. The government doesn't have to do all the investing. We can let some of the individuals invest too. We have to make them understand how great it is and how beneficial it will be to them to invest in Canada.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I agree wholeheartedly. We're suggesting, given the turbulence of the times, that it is time for our government to take the lead.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Marston.

We'll go to Ms. Glover, please.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

I, too, was born here in Saskatoon, although I represent a riding in Manitoba. I left Saskatchewan when I was four, but I'm proud to be home once again, where most of my family lives.

I have to say that we live in absolutely the greatest country in the world.

Here's why. I was a pregnant teen. I was on welfare with two children. I was a single mother in 1988. I remember all of those points you brought up, Ms. Kozak. I remember thinking what a wonderful thing it would be not to have to be on welfare, but I didn't think that the way to do that was to ask for more money on my welfare cheque. I wanted a job. I wanted education.

I agree with you. We have presented, through policy in Canada, the opportunity for pregnant teenagers to become members of Parliament, for poverty to be erased from those situations, for all of us to be lifted up so that we can support ourselves and be proud of what we've done.

That's why I disagree wholeheartedly with what Mr. Marston had to say. If I were on welfare now and someone said to me, “Do you know what? I'm going to raise all the taxes for all the corporations”.... Six hundred and fifty thousand jobs were created because of the low-tax agenda we have. Those jobs would disappear. That's because Mr. Marston wants those corporations to pay more.

As the government, we are also collecting income taxes for those 650,000 jobs and giving every person who has a job pride in what they're doing, pride in their achievements.

So I thank you, Ms. Kozak, for mentioning many of these wonderful things you've put forward. Earlier, you mentioned seniors and the excellent measures that have been put forward to help lift seniors out of poverty. Can you just touch on the ones that you think were most effective in doing that?

[Carla Kozak]

A couple of items are very important. One is to make sure that seniors have access to information about programs they are eligible for. One reason that we are most proud of our government is that you actually came forward and said, “Look, we have all these programs, and you don't seem to be aware of them”.

You've made it possible for seniors to find out what they actually should be aware of. You have this wonderful portal on the government website that says, “Here are things that you may be eligible for”. We think that's wonderful. I thank you for that.

[Shelly Glover, Conservative, Saint Boniface, MB]

God bless you, because I heard the same thing in my office. Seniors didn't know where to get the information, so providing it.... I'm a person who believes in the glass being half full, not half empty, and that is why we also have to celebrate the measures that have really put us on the map.

I'm going to turn my attention to Mr. Pekrul.

I read your brief very closely. I want to know if you costed your measures. Because, to be honest with you, I'm looking at hundreds of millions of dollars. What was the cost of the measures you put forward? Where do you expect the government to recoup those costs, knowing very well that if we raise corporate taxes, we lose jobs? Even a governor in the United States says he has companies running to Canada to create jobs for those people who want those jobs.

What is the cost of the measures that you've put forward?

[Ray Pekrul]

I'm sorry. I don't have those figures. The only figure I had was the increase in the guaranteed income supplement. If it had been $700 million, it would have raised this whole group of women out of poverty and above the poverty line.

I have no idea about the other costing. I'm sure it would be somewhat substantial. However, looking at--

[Shelly Glover, Conservative, Saint Boniface, MB]

I'm going to interrupt you for a minute, because I'd like you to cost these. To come to the government and say to us to do this, without costing...we need your help. If you really want us to look at it, we need you to cost it. Also, I'd like you to say where you think we have ineffective programs or inefficiencies, where we can cut that money to transfer it over to what you're asking for. I'll tell you right now that it's going to be difficult to make up the hundreds of millions of dollars without figuring out where to find the money.

[Ray Pekrul]

We did indicate that if the level of CPP benefits were to be increased that would result in an increase of payments currently--

[Shelly Glover, Conservative, Saint Boniface, MB]

And our small businesses--

[Ray Pekrul]

-- and of unemployment insurance, that--

[Shelly Glover, Conservative, Saint Boniface, MB]

On our small businesses, the head of the CFIB said very clearly that if we do a CPP increase, which was proposed by the NDP in their platform, it would cost them 50% to 70%. They would cut jobs across the country.

[The Chair, Conservative, James Rajotte]

Thank you.

I believe that is a debate that is ongoing.

We'll go to Mr. Van Kesteren, please.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Chair.

I wasn't expecting to be up collecting my thoughts yet.

Thank you for coming.

I think I'll start with Ms. Kozak.

You and I had an interesting conversation just before we got started. We got talking about the things we're talking about today, and we both agreed that this isn't rocket science. As a matter of fact, the word “economics” comes from the Greek word, and I think it means household finance. We talked about how that's exercised and practised in every home. Maybe our generation is different from today's generation.

I have to take issue with you. You said that lowering taxes does not help the poor. I have to point out that this is incorrect. For the most part, higher taxes are harder on the poor than they are on the rich. I can afford to pay $1.30 for a litre of gas. For a guy making 15 bucks an hour or 10 bucks an hour, that nickel on a litre could make or break him, to the point that he has to sell his car. I'm in the car business. I know that if you have to sell your car, you're in trouble. It's going to cost you money. In light of what we've talked about--economics--raising taxes does hurt the poor.

Mr. Marston, we've had some great chats, but always check your premise. Where's your start-up point? You raised the issue of CPP. The panel did too. I remind you that maintaining a lifestyle is difficult not only for those in lower pension brackets, but for individuals who have managed to save $100,000 and expect to take that investment and possibly supplement their income. When you're getting 1% or 2%, that's bad enough, but when you start seeing inflation start to creep up and that $100,000 is really worth $80,000, people start to flee.

We've heard this theme repeatedly over on this side. Our government maintains that we need a strong economy. It's not that we don't have a heart for the poor. I remember the first time that I really saw poverty. I went to Jamaica. It was the first trip that my wife and I took. We had been married 15 years. I wanted to get back on the plane and go back home; I mean, I had culture shock. Then I went to Africa.

Poverty is an awful thing and we all have a heart for that, but what has happened, as we lose that investment, and as corporations become.... Again, Mr. Marston, I take issue with your $20 billion and $11 billion. I think that's $11 million. We need to put that on the record too. We can have that discussion another day.

When I'm listening to the BIOTEC people about the exciting developments they've managed to introduce and are introducing today, I remember when we were on the industry committee, Mr. Chair, and we talked about the first form of financing. We called angel financing the “three Fs”--friends, family, and fools. That's the first group that'll invest. But if you don't have that group, you'll never get to the venture, let alone the investor. That's the situation we're in today. I think we agree on those things. I just wanted to bring it back to the basics, the basics of economics.

Is my time up?

Okay. I got a little bit taken on a sidebar. I'll just pass it on to the bio folks. Maybe they can explain to us the difficulty of financing.

[The Chair, Conservative, James Rajotte]

You have 45 seconds for a response.

[John Hyshka]

When you're starting off and getting angels, you can raise less than $1 million and can start advancing your technology.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Is it tougher now than it was?