Evidence of meeting #64 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was csis.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Andrew Jackson  Chief Economist, Canadian Labour Congress
Pierre Céré  Spokesperson, Conseil national des chômeurs et chômeuses
Jason Clemens  Director of Research, Macdonald-Laurier Institute
Greg Smith  Vice-President, Finance, Risk Administration and Chief Financial Officer, PPP Canada Inc.
Paul Kennedy  As an Individual
Jane Londerville  University of Guelph, As an Individual
Michael Zigayer  Senior Counsel, Criminal Law Policy Section, Department of Justice
Jerome Brannagan  Deputy Chief, Operations, Windsor Police Service
Stephen Bolton  Director, Border Law Enforcement Strategies Division, Public Safety Canada
Superintendent Joe Oliver  Director General, Border Integrity, Royal Canadian Mounted Police

6:20 p.m.

Chief Economist, Canadian Labour Congress

Andrew Jackson

You'll have to remind me, because....

6:20 p.m.

Conservative

Shelly Glover Conservative Saint Boniface, MB

Okay. Well, the mechanism is this. We've said that what we're going to do is to allow it to be set annually, and then once we return to balance, we're going to look at the seven-year historical data—which was agreed almost unanimously by all of those who partook in the EI report consultations, including you. So we've actually followed the advice about doing the historical stuff.

So I ask you again, what do you think of the mechanism?

6:20 p.m.

Chief Economist, Canadian Labour Congress

Andrew Jackson

Well, I will refresh my memory and reread it. It always seems so far off that we get to that point of balance that I—

6:20 p.m.

Conservative

Shelly Glover Conservative Saint Boniface, MB

Okay. I—

6:20 p.m.

Chief Economist, Canadian Labour Congress

Andrew Jackson

We're going to take at least five or six years before we return to balance, I believe.

6:20 p.m.

Conservative

Shelly Glover Conservative Saint Boniface, MB

Well, no. Because you've spent so much time talking about the EI stuff, I thought you'd looked at the other stuff. This is a really big book, and there are only two sections that have been talked about. The whole section on EI hasn't been talked about, but it surprises me that you aren't aware of that very important issue.

Nevertheless, I'm going to turn to Mr. Smith, because I come from the city of Winnipeg, where the Chief Peguis Trail was a tremendously successful project that was run through PPP Canada. For the benefit of my colleagues, I want to read a couple of quotes from some city officials with regard to this project, because the project was on budget and finished a year early.

Here's what city councillor Jeff Browaty said:It's quite miraculous...I think it's a lot to do with the innovation of it being a (P3 Canada fund project).

Here's what Mayor Sam Katz had to say: It's a pretty phenomenal performance. I think that just goes to show how in certain situations, a P3 is the ideal approach to take on projects...we're very happy with the result.

Having said that, I note that there are some changes in this budget that are about to come about. I want you to explain for us, Mr. Smith, how the amendment in today's act will actually better allow P3 Canada to interact with federal departments to provide expertise on public-private partnerships, if you wouldn't mind.

6:20 p.m.

Vice-President, Finance, Risk Administration and Chief Financial Officer, PPP Canada Inc.

Greg Smith

Thank you.

The Chief Peguis project was very successful, and we're proud to be a part of that.

Bill C-38 will allow us to enter into very formal, direct relationships with federal departments and agencies to provide our advisory services and pass on to them the knowledge and expertise we've acquired from implementing the P3 Canada fund over the past three years. That's what it will do for us.

6:20 p.m.

Conservative

Shelly Glover Conservative Saint Boniface, MB

If I take the Chief Peguis project, can you just explain to us how it worked before these changes were made and how it will work once these changes are made? Can you just verbalize for us in what way it will look different?

6:20 p.m.

Vice-President, Finance, Risk Administration and Chief Financial Officer, PPP Canada Inc.

Greg Smith

I'll respond first by saying that there is a well-established best practice with respect to implementing a P3 project, all the way from doing a needs assessment for the asset to working your way through a procurement options analysis, where you will in fact look at whether the P3 option is better than a traditional procurement. If that is still generating value for money, you then go into the procurement process through an RFQ, usually qualifying three proponents to bid on it. You move into an RFP process, which culminates in your choosing a preferred proponent with whom you will enter into a long-term contractual arrangement. That process would operate the same way for a federal project as it would when we provide funds to provinces, municipalities, and first nations. So that would be the same. What this does, though, is to bring us into the federal family. As a crown corporation in the federal business, we are outside of the federal family. By being an agent of the crown, we're able to share confidential information and provide departments with the very frank advice they're looking for when they're doing their business planning process.

6:25 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you, Ms. Glover.

We have a couple of minutes left.

As the chair, I just wanted to follow up on some of Mr. Clemens' comments with respect to the changes to OAS.

You talked about how OAS will interact with the RRIF guidelines. You also talked about looking at the marginal rate of taxation.

As you know, we've moved the age from 69 to 71. Some witnesses who appeared before the committee on previous issues have said that we ought to look at moving it up more. Others have said that we ought to look at the mandatory withdrawal amount. I wanted you to perhaps address that question first, in terms of your preference or any advice you'd have on it—and then I have a second question on marginal rates of taxation.

6:25 p.m.

Director of Research, Macdonald-Laurier Institute

Jason Clemens

The thing I would stress most on the RRIF is a flexible framework. Whether that is dealing with the mandatory minimums to be withdrawn or the age, as I say, my preference would be to have a flexible framework so that it recognizes different people in different circumstances. But clearly the implication is that the age would be increased. If we're going from 65 to 67, it seems to me we should be looking at 73. Again, I think the move from—

6:25 p.m.

Conservative

The Chair Conservative James Rajotte

You mean looking at 73 for the RRIF.

6:25 p.m.

Director of Research, Macdonald-Laurier Institute

Jason Clemens

That's right. It's for the RRIF.

Again, I would also include in that the mandatory amount that's withdrawn on a regular basis. But, again, the larger concern I have is how OAS and GIS interact with the private, public, and provincial plans, programs, and regulations.

6:25 p.m.

Conservative

The Chair Conservative James Rajotte

To what extent? Can you expand on that for me then?

6:25 p.m.

Director of Research, Macdonald-Laurier Institute

Jason Clemens

If we're talking, for example, about the private pension, much of the legislation is at the provincial level. We then need to understand what changes are going to be made at the provincial level so that they're congruous with what's being made at the federal level so that, to the greatest extent possible, there is harmony between the regulations at the different levels. This plays in, to some extent, to benefit programs and the marginal tax rate comment that I made.

6:25 p.m.

Conservative

The Chair Conservative James Rajotte

On the marginal tax rate, then, we have, obviously, the four brackets. There's a sizeable jump from the 15% rate to the 22% rate. When you're talking about marginal rates, is that where you're focusing most of your attention?

6:25 p.m.

Director of Research, Macdonald-Laurier Institute

Jason Clemens

Well, in fact, I think the key consideration is the scaling back of benefits. So I think the marginal effect has much more to do with whether, if I get an extra dollar of income, I am putting benefits in jeopardy. Again, if you have a pension that you're now having to take income out of while you're working, depending on the marginal effective rate, it could be such that there's a disincentive for you to work, which is why I think coordination is key.

6:25 p.m.

Conservative

The Chair Conservative James Rajotte

Just so I understand correctly, you're saying that if someone is collecting OAS and then returns to work, and they collect more, then their OAS gets clawed back. So at the end of the day, they're not sure why they're returning to the workforce because there's no benefit.

6:25 p.m.

Director of Research, Macdonald-Laurier Institute

Jason Clemens

I think, Mr. Chair, that one of the key things we didn't talk about was the deferral program for OAS. I know Jack Mintz at the University of Calgary is a champion of this. I think he's on the right track, because it does give the individual or the household a great degree of flexibility for that period of time when they can defer OAS, then work without risk of losing an OAS benefit, and then get a higher benefit over a shorter time period.

I think those types of mechanisms allowing for more flexibility in decision-making by individuals and households are critical, particularly as some of the discussion today has, I think in an implicit way, assumed that the changes are being made today. The changes are a decade and a half to two decades down the road. To assume that our economy will look the same as it does today in two decades' time, I think is challenging, to say the least.

6:25 p.m.

Conservative

The Chair Conservative James Rajotte

Okay.

I did want to finish up.

I think it is a fair question to ask what is the rationale for the government acting with respect to OAS. I'll just read a quote here:

The major demographic transition that is underway in Canada will strain governments’ finances over the next several decades. During this time, population ageing will move an increasing share of the population out of their prime working-age years and into their retirement years. This will put downward pressure on revenues, as growth in economic activity, and therefore the tax base, slows. At the same time, ageing will put upward pressure on programs whose benefits are entirely or disproportionately realized by Canadians in older age groups, such as elderly benefits and health care.

That's from the “Fiscal Sustainability Report 2011” of the Parliamentary Budget Officer.

I don't have much time left, Mr. Jackson, and Mr. Clemens, but that, it seems to me, is a very strong rationale for why the federal government needed to act with respect to health care transfers and the OAS.

I don't know whether you have any comment on that.

6:30 p.m.

Director of Research, Macdonald-Laurier Institute

Jason Clemens

Again, if we're talking about health care reform, I think the model is the 1995-96 reforms of the Liberal government. I think the current government has taken steps in that direction. I think the key, though, now is on the regulation, through the Canada Health Act, on what the provinces can actually do.

On OAS, as I've said, by the actuary's own data, it's going to go from one in five dollars of federal spending to one in four. As a simple mathematical identity, it means that other spending has to be cut to accommodate that spending in the current revenue envelope, or additional revenues have to be raised. So that to me is the question of sustainability.

Again, I do think taking a forward step this far in advance of the problem is an excellent first step. I just think there are additional steps that the government should consider.

6:30 p.m.

Conservative

The Chair Conservative James Rajotte

I appreciate that.

I want to thank you and I want to thank all our witnesses for their time today. If they have anything further to submit to the committee, I'm asking them to do so, and we'll ensure that all members get it.

Colleagues, we have another panel, but I will suspend for a couple of minutes to allow them to come forward.

Thank you.

6:35 p.m.

Conservative

The Chair Conservative James Rajotte

I call this meeting back to order.

I want to thank our guests for coming in this evening.

We have Mr. Paul Kennedy and Ms. Jane Londerville. We also have two officials from the Department of Justice, Mr. Michael Zigayer and Ms. Sophie Beecher. From Public Safety, we have Stephen Bolton. From the RCMP, we have Mr. Joe Oliver. And from the Windsor Police Service, we have Mr. Jerome Brannagan.

You will each have up to five minutes for an opening statement, and then we'll have questions from all the members.

We'll begin with Mr. Kennedy.

6:35 p.m.

Paul Kennedy As an Individual

Thank you very much, Mr. Chair.

I'm going to be speaking to the issue of the elimination of the Office of the Inspector General.

The protection of the national security against threats is of the highest priority, and the men and women who dedicate their professional lives to this task deserve our sincere thanks. At the same time, we must acknowledge that the presence of a domestic intelligence agency that covertly investigates persons within Canada, including Canadian citizens, for activities that are not necessarily unlawful but are suspected of being threats to Canada, is on its face inconsistent with democratic values.

Because of their covert nature, security intelligence activities do not lend themselves to a traditional accountability model. While all government institutions are subject to the Access to Information Act and the Privacy Act, which acts allow individuals to access personal information that individual departments or agencies may have collected, any such request to CSIS would elicit a "neither confirm or deny" response.

This normally unacceptable situation is currently accepted in Canada because we recognize that Canada faces security threats that must be investigated if we are to preserve our democracy; that traditional accountability models would compromise the intelligence agency's ability to protect us against threats; and that following the FLQ crises, the Royal Commission of Inquiry headed by Justice MacDonald and in-depth deliberations by a joint committee of the House and the Senate headed by Senator Pitfield resulted in the crafting of a thoughtful oversight/review regime that forged an acceptable balance between the realities of intelligence work and the imperatives of a democracy.

That regime, in addition to the creation of SIRC, placed the Minister of Public Safety in a direct line of accountability for the investigative actions of CSIS. The minister's personal approval is required for every court application to intercept communications and to conduct searches. That isn't just a general authority. He has to look at it and approve it. The minister may direct whom the service may or may not investigate. By way of contrast, the minister's resignation would be demanded were the minister to seek to exercise such a role in regard to the activities of the RCMP. Inappropriate behaviour by CSIS falls at the feet of the minister. He cannot distance himself from their actions as he would with the RCMP.

The Minister of Public Safety presides over a vast portfolio that engages some 40,000 public servants. It is impossible for him to know whether each individual is conducting his or her responsibilities in accordance with the law, operational policies, and ministerial directives, and whether powers are being exercised in a reasonable manner. It is for this very reason that we have the Office of the Inspector General. That office audits the investigative activity of CSIS at the case-file level to ensure that it is complying. The Inspector General reports directly to the minister and provides assurances that matters are on course or provides a heads-up as to potential problems.

When one considers the personal accountability assigned to the minister by Parliament, one can understand the need to provide the minister with a set of independent and professional eyes and ears that will permit him to fulfill his role properly. Without such an office, the minister would be blind and entirely at the mercy of the intelligence service. This is not a reasonable or desirable outcome.

Both the RCMP Security Service and CSIS have had more than their fair share of troubles. Edmund Burke once said that those who don't know history are destined to repeat it. The financial cost of past missteps in the area of national security, measured simply in terms of Commissions of Inquiries, runs to the many tens of millions of dollars, and that's not counting the loss of public support. There can be no acceptable excuse for failure to detect mistakes.

I know that you are worried about costs. As a cost exercise, the cost associated with the Office of the Inspector General is a small price to pay if one wants to maintain a covert intelligence agency in Canada. If you choose to eliminate this office, I'd recommend that you accompany it with the following common recommendation that future missteps by the intelligence service will be accompanied by the resignation of the Minister of Public Safety. Wilful blindness as to potential problems at CSIS must carry a price. After all, all responsibility ultimately rests with the minister.

6:40 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you very much, Mr. Kennedy.

We'll now hear from Ms. Londerville, please.