Evidence of meeting #58 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was budget.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Ted Cook  Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
Sean Keenan  Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
Brian McCauley  Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency

3:45 p.m.

Conservative

The Chair Conservative James Rajotte

Order, Ms. Nash.

I'm going to allow the minister a brief amount of time to answer.

We are over time, Minister, but we'll allow you to answer the question.

3:45 p.m.

Conservative

Jim Flaherty Conservative Whitby—Oshawa, ON

I'll do it again.

Part 1 is income tax amendments. Part 2 is sales and excise tax measures. Part 3 is responsible resource development measures, and part 4 is the various other individual measures dealing with the Currency Act, cross-border law enforcement, financial institutions, CMHC, and so on.

There's nothing unusual about this at all, particularly for members of a finance committee.

3:45 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

Thank you, Ms. Nash.

We'll go to Mrs. McLeod, please.

3:45 p.m.

Conservative

Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC

Thank you, Mr. Chair.

I'd like to thank the finance minister.

I also want to make a quick mention of the fact that, as you're probably aware, we were in New York and Washington last week. We had many meetings, and almost without exception we heard from our friends and neighbours in the United States about how envious they were. Again, each meeting started with sort of complimenting Canada on our banking system, on our economy.

That, to me, as we learned about the challenges in the U.S., or heard from the IMF, just reconfirmed in certainly my mind how fortunate we are to be heading down the track that we're heading.

I would really like to target in on two specific areas. The first is health care transfers, because I think health care is near and dear to all our hearts. I heard the announcement you made in terms of how we're increasing transfers for health care. The NDP of course, falsely, are standing up in the House on a regular basis saying we're cutting transfers.

I would also like to make note of the quote from Scott Brison, the current Liberal finance critic. He said that shifting the burdens to provinces—which the Liberals did in the nineties—is the “easy but cowardly way to accelerate deficit reduction.... The Chrétien-Martin cuts sent the health care and education system into crisis in every Canadian province.”

I repeat and underline the word “cut”, because it points to an important contrast. Unlike the Liberals in the 1990s, we're not cutting transfer payments; rather, we're ensuring that they can continue to grow at a sustainable level. Indeed, health care transfers will continue to grow from $27 billion in 2011-12 to a minimum of $38 billion in 2018-19.

I'd like you to focus in on how this new health care transfer arrangement proposed in Bill C-38 will provide certainty and stability to the provinces.

3:50 p.m.

Conservative

Jim Flaherty Conservative Whitby—Oshawa, ON

Thank you for the question.

One of the key elements of fiscal sustainability in the long term is dealing with the rate of growth of transfers to the provinces and territories. About 25% of the federal revenues are transferred. That is, Canadians' tax dollars that they pay to Ottawa are transferred back to the provinces and territories, in primarily three ways: first, in equalization; second, in the Canada health transfer; and third, in the Canada social transfer. In the long term, these transfers will grow at the rate of nominal GDP, which is the rate of growth of the economy.

Specifically with respect to the health transfer, it will continue to grow for five more years at 6%. Then, starting in 2017-18, it will grow at a three-year moving average of nominal GDP growth, with a guaranteed base of 3% or more per year. This provides certainty and stability to the provinces in their planning.

It is generous, going out to 2024. If one looks at the provincial budgets and territorial budgets so far this year—and most of them are here—there is only one province that is planning to increase its health care spending at greater than 6%, and that is the Province of Alberta at 7%. The average, in fact, of the provinces is 3.8%, although for the next five years the federal government will increase the Canada health transfer by 6% to the provinces and territories.

3:50 p.m.

Conservative

The Chair Conservative James Rajotte

You have about a minute.

3:50 p.m.

Conservative

Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC

Great.

My next question is really focused in on the registered disability savings program, which is really an important achievement. I understand that about 55,000 Canadians already have an account. I think many of us have constituents and families in our ridings who have had an enormous benefit from the changes we've made.

While it's a great program, we want to ensure that we do whatever we can to make it better, which is why we recently undertook the three-year review, and we made some important changes in economic action plan 2012. Could you focus in specifically in relation to expanding the definition of who the plan holder may be for the RDSP and why we took this temporary step?

3:50 p.m.

Conservative

The Chair Conservative James Rajotte

Just a brief response, Minister.

3:50 p.m.

Conservative

Jim Flaherty Conservative Whitby—Oshawa, ON

A brief response, yes.

The measure that's in the budget bill before you deals with a situation where someone has an intellectual disability but reaches the age of majority and then goes into a financial institution, and the person in the financial institution who is going to draw up the contract for the RDSP is unsure of whether that person has capacity to enter into the contract.

Rather than go through the huge procedure—which it is in most of Canada—to have an administrator appointed, or a trustee, which is often demeaning to the individual in question, who is capable of handling his or her own affairs for the most part, there's a very good mechanism in the province of British Columbia. I've encouraged all of the other provinces to emulate that. Some are. Some have not, and this is a concern, because there are many people—including in Ontario—who have been in effect prohibited from opening an RDSP because of the absence of a mechanism.

So we're creating a mechanism in the Income Tax Act in this budget, a temporary one out to 2016, whereby other family members will be able to be the holder of the RDSP.

3:50 p.m.

Conservative

The Chair Conservative James Rajotte

Okay. Thank you.

Thank you, Ms. McLeod.

Mr. Brison, please.

3:50 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Thank you, Mr. Chair.

Minister, the OECD, the Parliamentary Budget Officer, and others tell us that currently the OAS is sustainable. You're saying it's not sustainable in its current form but the changes you're proposing will make it sustainable.

As such, these changes you're making must have a figure attached to them in terms of what they will actually save the treasury, because you're saying that amount is going to make OAS sustainable. So what would that figure be? What is the figure that your changes will make to save the treasury, to make OAS sustainable, according to your calculations?

3:55 p.m.

Conservative

Jim Flaherty Conservative Whitby—Oshawa, ON

Well, what we're doing, as you know, out in 2023, and gradually after that, is raising the eligibility age from age 65 to age 67. This is a recognition—

3:55 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

But what—

3:55 p.m.

Conservative

Jim Flaherty Conservative Whitby—Oshawa, ON

It's a recognition of the fact—

3:55 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Minister—

3:55 p.m.

Conservative

Jim Flaherty Conservative Whitby—Oshawa, ON

—that we have an aging population that is relatively healthy.

3:55 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

But, Minister, what's the figure?

3:55 p.m.

Conservative

Jim Flaherty Conservative Whitby—Oshawa, ON

Most of the western economies are doing the same thing.

3:55 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Minister, what's the figure?

3:55 p.m.

Conservative

Jim Flaherty Conservative Whitby—Oshawa, ON

The figure will be, then, the number of people who claim OAS. As you know, that figure changes from time to time.

3:55 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

So you—

3:55 p.m.

Conservative

Jim Flaherty Conservative Whitby—Oshawa, ON

This is a social program. It is not a pension plan.

3:55 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

So you can't tell us the figure of how much this government will save, but you'll tell us that the change will make OAS sustainable.

3:55 p.m.

Conservative

Jim Flaherty Conservative Whitby—Oshawa, ON

I can tell you that—

3:55 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

If you can't tell us the figure of how much it will save, how can you tell us it's unsustainable in its current form?