Thank you, Mr. Chairman.
It's a pleasure to be here this morning in Saskatoon.
I represent the Investment Industry Association of Canada, which is the trade association for the Canadian securities industry. We represent 200 investment dealer firms coast to coast across the country. We provide advice to retail and institutional clients, we provide corporate finance advice to corporations, and we structure and raise equity and debt financing for governments and corporations.
My presence here in Saskatoon is indicative of the national framework of the association. Our members are located in all parts of Canada and play a very important role in strengthening the regional economies by raising local capital and advising investors right across the country.
This budget is going to take place in difficult circumstances. Investors in Canada are under a lot of strain and stress. We're seeing low rates of interest, a lot of market turbulence, investors concerned about their portfolio values, and a need for income for retirees. These deflationary conditions are quite difficult.
On the issuing side, similarly, the evidence suggests that companies are increasingly having difficulty attracting capital. Overall, in common equity financing, we're down 54%, third quarter over the second quarter, and we don't think that circumstances will change much in the fourth quarter. Small and mid-sized companies are having a great deal of difficulty raising financing.
We recommend that the government stay the course to meet its G-20 targets for deficit and debt reduction. I think this is the linchpin in ensuring confidence. It is very important for the government to continue with the final year of reducing the corporate tax rate in Canada. This government has withstood a lot of pressure in holding to its reductions in corporate tax rates, and that is very important. There are three reasons. First, it's critical to growth. Second, it's important, particularly in the corporate tax rate side, to get those rates competitive, because there are huge opportunities for Canada to attract business from abroad. Third, our track record of managing our finances, holding growth, and minimizing the impact of the financial crisis in 2008 is the envy of the rest of the world, and it's given Canada, with its open economy, a lot of leverage in encouraging our other partners in the G-20 to get their houses in order. This is important, in light of what we've seen with the problems in Europe.
Finally, I have a couple of recommendations that I could explain later in questions.
We've argued for a number of years that there should be an incentive to help small and mid-sized businesses raise financing, especially in these conditions. When companies reach mid-size, say $500 million in market cap, that's when they really run into problems raising capital. This would be an important incentive, which could take the form of a lower capital gains tax rate, extending flow-through shares beyond resource companies, or extending the advantages of the preferred corporate tax rate to these companies.
On pension reform, group RRSPs are an important retirement program for small companies. It's cost effective and it's the fastest-growing component. There's $40 billion outstanding and about three million Canadians with these programs. The employers who offer these programs should be on an equal footing with employers who offer other defined benefit plans, which is to say that they should be exempt from payroll savings tax.
Finally, we commend the government on increasing the arsenal of retirement plans through the PRPP. We have a number of specific recommendations to improve the effectiveness of that instrument, some of which are still in discussion.
Thank you for the opportunity.