Finance Committee on Oct. 22nd, 2012

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

I wanted you to know I was here.

[Guillaum Dubreuil]

As I was saying, I think it's a simple question; I'm not entirely sure it's a simple answer. I think some of what you're mentioning will certainly hurt a certain type of business and might help some other types. It's very hard to say.

The situation we are faced with and what we're looking at right now is problems with entrepreneurship. The fact is that there is a very high unemployment rate, people cannot find jobs, and businesses are going under because their owners are either shutting them down or selling them. There are many consequences to that type of thing, and that's the question that we really want to have addressed.

[Shelly Glover, Conservative, Saint Boniface, MB]

Big Brothers was here just the other day. They also made a suggestion about a mentorship program, putting students into positions with businesses to try to teach them different things. I would suggest that you might want to speak with them, because it sounds as though you have a common interest in that.

Mr. Blanchet, I would like to thank you for your presentation.

On page 3 of your document, you discuss the federal government's contribution to mass transit, stating that:

Barely ten years ago, the federal government was not even contributing to public transportation. Today, its contribution reaches almost $1 billion a year through various infrastructure programs.

This clearly shows that, since forming the government, the Conservatives have invested significant amounts in this sector. However, there is no mention that this is really a provincial issue. It should be pointed out that, since forming the government, the Conservatives have allocated, on average, amounts representing 43% to all the provinces.

What would you say about that?

[Bernard Blanchet]

As you know, the way in which Canada works with the provinces can vary enormously. For our part, we recognize that substantial efforts have been made. What has been done is significant, and it must be maintained. You are in the process of preparing for the 2014 infrastructure projects. We want the investments in the budget to be recurrent and indexed. That is important to us.

Of course, there is also work to be done collectively, with our provinces. That is basically what I was saying earlier on. Nationally, everyone has to make adjustments with their province. On the other hand, I can tell you that things went very well for us. I am thinking particularly of Quebec's green plan. There was an objective to be met—

[The Chair, Conservative, James Rajotte]

Thank you—

[Shelly Glover, Conservative, Saint Boniface, MB]

Quebec got 70% more from the federal government.

[The Chair, Conservative, James Rajotte]

We're well over time here.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Glover.

I want to thank all of our witnesses for being here responding to our questions. We appreciate very much your interesting discussion.

Colleagues, we will suspend for two minutes to bring the next panel forward.

Thank you.

[The Chair, Conservative, James Rajotte]

I call this meeting back to order.

I ask all witnesses to take their seats, and important people like Richard Dunn to take their seats as well.

We are going to resume our 80th meeting of the Standing Committee on Finance for our second panel today on pre-budget consultations. We have another six organizations presenting on this panel, whose names I will read in order of presentation.

We have the Alberta Chambers of Commerce, the Canadian Convenience Stores Association, the Canadian Federation of Nurses Unions, the Canadian Steel Producers Association, the Canadian Union of Public Employees, and McGill University.

You each have five minutes, maximum, for your opening statement, and then we'll have questions from members of the committee.

We'll start with Mr. Severin, please.

[Brad Severin, Chair Elect, Alberta Chambers of Commerce]

Thank you, Mr. Chair, and committee members. Thank you for inviting us to present our recommendations for budget 2013.

My name is Brad Severin, and I am the chair-elect of the Alberta Chambers of Commerce.

Our organization represents 126 chambers of commerce, representing 23,000 businesses. We are Alberta's largest business organization.

In submitting information for your July budget survey, we touched on numerous topics. For the purposes of this presentation, I will highlight three priorities, all of which relate to Canada's changing demographics and business realities. These topics involve enhancing foreign worker programs, encouraging older workers to remain in the labour force, and reinstituting severance transfers to RRSPs.

I'll begin with foreign workers and their importance to sustaining Alberta's economy. The growing labour shortage is a constraint to our province's, and therefore our country's, economic growth. The Alberta government estimates that by 2019 Alberta will have 114,000 more jobs than workers. The shortfall takes into account interprovincial migration, immigration, and greater labour force participation by underutilized segments of our population.

The temporary foreign worker program was established to serve temporary labour needs for both skilled and unskilled employees. Many Alberta businesses rely on this program, especially for unskilled workers in the industrial, agricultural, and retail sectors, as they offer a stable, diligent workforce.

Because temporary foreign workers are vital to sustaining our economy, employers want to ensure the program continues to operate as efficiently as possible. The Alberta Chambers of Commerce appreciates the steps the Government of Canada has recently taken to improve the system, and today we are offering suggestions that will make it even more efficient and reflective of our businesses' labour needs.

We believe the temporary foreign worker program should be used to address immediate shortages while enabling foreign workers to use other immigration programs for permanent residency. Specific concerns Alberta employers express with the temporary foreign worker program relate to labour market opinion approvals declined without justification, the lack of an appeal mechanism for Service Canada decisions, changing application processes and vital information, national occupancy classification codes that do not adequately recognize and differentiate between skill levels, and barriers to transitioning temporary foreign workers to permanent residency.

Our recommendations in this area are highlighted in the pre-circulated brief, and we draw your attention to those.

Another pool of labour that greatly interests Alberta businesses is its older workers. As evidenced in a 2011 Statistics Canada study, Canadians are delaying their retirement. The Alberta Chambers of Commerce is keen to ensure the Government of Canada takes all measures within its powers to remove tax and other disincentives that discourage older workers from continuing to work past the age of 65, because many Canadians clearly want to do so.

Federal retirement programs and policies such as the Canada Pension Plan, tax-assisted private savings policies, and part-time pension policies do not reflect our country's current demographic retirement and life expectancy realities.

We are recommending policy changes that address each of these realities. We recognize that these recommendations will have fiscal implications; however, with increasing life expectancies, removing financial disincentives for older workers to participate in the labour force could increase the age at which people choose to retire, thereby increasing federal employment income tax revenues and reducing overall government retirement program liabilities.

We first recommend that the Government of Canada expand the current 60-70 age range at which people are eligible to access their CPP benefits to 60-75, and provide progressive deferral incentives for individuals who access the pensions during the newly expanded range.

Second, we recommend that the government amend RRSP policies to provide greater flexibility for Canadians to save for retirement after age 72.

Third, we recommend that the government develop harmonized and flexible part-time pension policies that provide incentives for Canadians to transition out of the labour force after age 65.

[The Chair, Conservative, James Rajotte]

One minute is remaining.

[Brad Severin]

The final issue we would like to raise with this committee is severance transfers to RRSPs.

Until the mid-1990s, provisions allowing for transfer of severance to RRSPs permitted employees faced with difficult career changes to plan for their future. In 1995, however, the Government of Canada changed the provisions related to the transferability of severance payments to an RRSP, citing the maturation of pension plans, the increase of RRSP limits for those not in pensions plans, and the ability to carry forward unused RRSP limits. Since then, employees who are faced with receiving severance pay as the result of job losses are also faced with large income tax bills, because severance payments are taxed in the year they are received. A mechanism to defer tax on severance by allowing transfers of amounts related to post-1996 employment to RRSPs can resolve this issue of undue tax burden.

The Alberta Chambers of Commerce recommends that the Government of Canada reinstate provisions allowing for the rollover of severance to an RRSP without impacting the employee's otherwise-earned RRSP room, thus ensuring that the amount of severance an employee is allowed to transfer to an RRSP is updated by reference to today's contribution limits.

Thank you, committee members, for inviting us to Ottawa to address these issues in person. I look forward to any questions you may have.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Severin.

Mr. Scholten is next.

[Alex Scholten, President, Canadian Convenience Stores Association]

Good evening. My name is Alex Scholten, and I serve as the president of the Canadian Convenience Stores Association.

On behalf of the 23,000 Canadian convenience stores in Canada and the 183,000 people they employ, I want to thank you for taking time to listen to our concerns.

It may surprise some of you to know that convenience stores contribute more than $39 billion to the Canadian economy each year. We buy more than $26 billion in goods and services, and we serve over 10 million Canadians on a daily basis. We're an important small business stakeholder, with unique challenges facing our owners and operators.

I'll outline three main issues facing our industry, followed by our recommendations for this committee.

The first issue is the persistence of contraband tobacco in our communities, owing to the continued trafficking and sale of contraband tobacco. There are three main impacts.

Number one is lost revenue for government. There are millions of dollars lost by federal and provincial governments as a result of tax avoidance in this illegal industry. The Department of National Revenue has estimated this to be as high as $2.5 billion per year.

Number two is that tobacco becomes more accessible to youth through contraband sales. Convenience stores must follow strict tobacco control measures designed to prevent tobacco sales to minors. Responsible retailers train their staff and ensure that they perform complete age verification checks. Contraband traffickers will sell to anyone who is willing to buy their products, and they often do so in schoolyards. Furthermore, because contraband tobacco is sold without collective federal and provincial taxes, the price is more attractive and the product is more accessible to youth.

Impact number three is that contraband tobacco supports organized crime, putting communities at risk. As some committee members may know, the RCMP have identified over 175 criminal organizations that participate in this illegal activity. With seizures of contraband, police forces have confiscated large quantities of drugs and illegal weapons. The Canadian Convenience Store Association is pleased to see the Government of Canada take the contraband problem seriously; however, we need to ensure that previous commitments, particularly with regard to enforcement, are followed through swiftly.

We're also very concerned with the proposal to move the Cornwall border crossing. This will significantly affect contraband tobacco activity. We're not alone in this concern, and we have spoken extensively with provincial governments and the RCMP. If this move is made, increased enforcement around the Cornwall area will be absolutely critical in order to prevent what we believe to be a significant increase in contraband availability in Canada.

The second issue we would raise is credit card fees, which negatively affect convenience store income. Canada's retailers currently pay some of the highest credit card swipe fees in the world. This has resulted from the anti-competitive practices of the credit card companies. Convenience stores and convenience stores with gas stations net over $39 billion in national sales. This has led to approximately $825 million in net debit and credit card fees, which is almost as much as Canadian retailers make in pre-tax profits on an annual basis. The Canadian Convenience Store Association estimates that average annual costs in net credit card charges and commissions are in excess of $36,000 per year per site. This not only results in low profitability and higher operating costs, but also contributes to slower economic growth and low employment rates within the industry.

The third issue we would raise is overregulation within the convenience store industry.

[The Chair, Conservative, James Rajotte]

You have less than a minute left.

[Alex Scholten]

Okay.

Regulation within Canada continues to expand annually, and this has resulted in declining growth and prosperity for small business owners. We've identified over 517 federal and provincial laws that impact the convenience story industry.

Despite government’s strong dedication to reducing regulation through the federal red tape reduction commission, our industry continues to face many new provincial and federal regulations that will have an impact on our operations. While we're not discounting the need for certain regulation, we certainly believe there's a need to also consult with industry when regulation comes in.

In conclusion, we have three recommendations: first, that the Government of Canada follow through on commitments made in 2010 to establish a new RCMP anti-contraband task force by the end of 2013 and to implement mandatory jail time for repeat offenders by the same date; second, that the Government of Canada re-evaluate present regulations on credit card fees—

[The Chair, Conservative, James Rajotte]

Thank you. Let's wrap it up very quickly.

[Alex Scholten]

The third is that the government follow through on their one-for-one rule announced in the red tape reduction strategy, ensuring that equally onerous laws are removed for every new law introduced, and that the federal government take the lead on these initiatives with their provincial counterparts.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

Go ahead, Ms. Foster, please, with your five-minute opening statement.

[Pamela Foster, Policy Advisor, Canadian Federation of Nurses Unions]

Thank you.

I am Pamela Foster and I am a policy adviser with the Canadian Federation of Nurses Unions. I apologize on behalf of Linda Silas, our president, who was hoping to be here tonight but wasn't able to come.

I'd like to thank the standing committee for the opportunity to share our views.

We represent 156,000 nurses and student nurses across the country and we work in hospitals and communities, in long-term care, and in homes.

I want to focus on three issues today. I want to talk about improving patient safety and outcomes by addressing nurse staffing standards, moving beyond the hospital walls to support changes not only in Canada's aging population but in Canada's population health, and the importance of investments in early childhood education and care.

Hospitals across this country are working at 100% capacity or more, yet the generally accepted standard of safe hospital occupancy is 85%. The results of overcrowding in our hospitals include compromised care, high rates of hospital-acquired infections, and unnecessary rates of hospital readmission. Another result is dangerous levels of nursing workload and the resulting vicious circle of nurses working short.

Two decades of national and international research have consistently demonstrated a clear relationship between inadequate nurse staffing and poor patient outcomes. Hospital-acquired pneumonia, urinary tract infections, sepsis, hospital-acquired infections, pressure ulcers, gastrointestinal bleeding, medication errors, falls, failure to rescue, and longer-than-expected length of hospital stays have all been measured as a result of overwork.

The link between nursing workloads and patient safety is as clear in long-term care as it is in the acute care sector. The more direct the care, the better the resident outcomes. This includes lower mortality rates, improved nutritional status, better physical and cognitive functioning, better lower urinary tract infection rates, fewer incidents of pressure sores, and fewer hospital transfers.

By now I'm thinking some of you may be asking yourselves what the federal government has to do with nursing workload and safe staffing standards.

We are requesting that you consider implementing the Senate committee recommendation from their review of the 10-year accord that asked that the federal government establish a Canadian health innovation fund to identify and implement innovative and best practice models. This would include safe staffing models in health care delivery and the dissemination of those examples across the health care system.

We'd also encourage the federal government to work with the provinces and territories on the development and deployment of data indicators to track nursing workforce and workload, including undertaking regularly the national survey of the work and health of nurses that was done by Canadian Institutes of Health Research, Health Canada, and Statistics Canada in 2005.

The innovation fund should also support workplace models that improve patient safety, support the kinds of innovations identified by the premiers' working group on health-care innovation, and support innovations that involve integrating care beyond the hospitals.

You've heard at this year's budget consultation, and in previous years, about the calls for a healthy aging strategy and a continuing care strategy. We echo that recommendation.

As part of the national strategy for continuing care, we would be remiss not to look once again at pharmacare and access to affordable, safe medicine. We were encouraged that the federal health minister expressed interest in joining the premiers on bulk pharmaceutical purchasing, following the FPT health ministers' meeting last month, and we hope to see some indication of federal leadership on bulk purchasing in this federal budget.

Last, we recommend funding for a national early childhood education and care program. The nurses first passed a resolution calling for a national child care program at their convention in 1991. Fast forward to 2012.

I have three children. I live here in Ottawa. I spend $29,000 a year on child care. I'm able to do this, and I work four days a week, so I'm not even full time. I'm spending over 50% of my take-home pay on child care.

Research shows that public investment in early childhood education and care pays off for governments and it pays off for families. Quebec has a child care program that serves about half of Quebec children under the age of five. Nationally, Canada is about 20%; Quebec is at 50%. The Quebec program has allowed an additional 70,000 women with young children to enter the labour force, which has led to a 3.8% increase in women's employment overall. The ripple effect of this is incredible, with $5.2 billion added to the provincial economy, increasing Quebec's GDP by close to 2%. Furthermore, the impact of working mothers increases purchasing power and taxes and means that Quebec recovers $1.05 for every $1 it invests in child care, and Ottawa another 44¢.

Nurses join with others in recommending that the universal child care benefit be pooled across the population and that savings in terms of direct transfer then be used to assist provinces and territories to expand their accessible, affordable, and quality child care spaces.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Foster.

We'll hear from Mr. Watkins, please.

[Ron Watkins, President, Canadian Steel Producers Association]

Thank you, Mr. Chairman.

My name is Ron Watkins. I'm president of the Canadian Steel Producers Association, and we welcome this opportunity to present our recommendations for budget 2013.

The CSPA represents Canada's steel producing industry. The steel producing industry employs some 25,000 Canadians, with steel mills in five provinces. We generate over $13 billion in shipments, but our impact goes much further. We are integral to the major supply chains, such as automotive, energy, construction, and mining. That is why we call for pro-manufacturing policies that will strengthen all industrial sectors.

CSPA is a founding member of the Canadian Manufacturing Coalition, which last week released a five-part manufacturing action plan for Canada. The elements are to support manufacturing investment, productivity and innovation; to strengthen Canada's labour market; to strengthen Canada-U.S. economic integration; increase value-added exports and ensure a rules-based trade; and reduce regulatory burdens.

In my opening remarks I will highlight certain fiscal proposals that are in this plan and in CSPA's own submission to this committee.

First is to extend the accelerated capital cost allowance, or ACCA. We have strongly supported this measure since it was first introduced in 2007. It is a direct incentive to product and process improvements in manufacturing that will enhance our overall industrial competitiveness. The ACCA has been successively renewed at two-year intervals and is set to expire again in 2013. To provide the planning certainty necessary for large capital expenditures, it should be extended for at least five additional years. This will help Canada win new investment against other jurisdictions, because increasingly we are competing for that investment globally.

Secondly, in the area of innovation support I'll talk about the SR and ED tax credit. The SR and ED tax credit is a broadly based incentive to industrial innovation. Budget 2012 introduced many changes to the S and ED that, while designed to improve support for SMEs, can reduce the effective support for more capital-intense projects in larger manufacturing businesses. We are thus seeking measures that will restore support for such innovative projects, including the introduction of refundability provisions. Alternatively, the government could introduce R and D programs that would be applicable to such capital-intense large performers, thus helping to address the gap that has developed with the changes that were made.

The third area is skills training. The growing skill shortages in Canadian industry are broadly based and well documented, and I sense this committee has already spent a lot of time talking about those. It is an increasingly expensive challenge for industry not only to attract new workers but to retain and upgrade the skills of the current workforce as industrial processes become more complex and sophisticated. We therefore call for a new training tax credit, to be financed from EI premiums, that would help industry invest in further skill development of its existing workforce, thus preparing it for the competitive challenges of the 21st century.

Fourth is to maintain an effective trade remedy system. The government has embarked on an ambitious round of free trade agreements and other trade initiatives.

We actually support the direction of that policy when it will benefit, on a net basis, Canadian industry, but global trade is two-way, of course, and there is a corollary requirement, and that's to ensure that market-based trade will prevail in our own markets. We must, and do, compete at home under agreed trade rules, but exporters in many other countries, notably China, seek to achieve their goals by dumping products into our market. Left unchecked, such trade practices threaten Canadian jobs and jeopardize future investment.

[The Chair, Conservative, James Rajotte]

You have one minute.

[Ron Watkins]

Over 20,000 Canadian jobs and $7 billion in production are at stake.

Both the Canada Border Services Agency and the Canadian International Trade Tribunal play key roles in restoring market-based trade. It is vital to Canadian industry that these agencies be adequately resourced to investigate unfair trade, to determine the appropriate remedies, and to enforce those findings against customs circumvention.

That concludes my opening remarks, Mr. Chairman. I'd be pleased to respond to any questions.

Thank you.