Evidence of meeting #89 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was changes.
A video is available from Parliament.
Partner, National Leader, Global Research and Development, Government Incentives, Deloitte & Touche
I'm not sure what Deloitte's view on this is. Quite frankly, as I said, it's not my area of expertise. My own personal opinion, which would echo Mr. Thomas's, is that it needs to somehow reflect private industry—
Partner, National Leader, Global Research and Development, Government Incentives, Deloitte & Touche
—and all the measures that come with that, only because the resources that are being attracted are the same resources. Therefore, you need to have the same rules of engagement. That would be my view.
Chatham-Kent—Essex, CPC
Thank you. I think that's fair.
Mr. Thomas, I'm going to ask you the same question. You mentioned these funds were rated. We can have a discussion about that. It was a former government. It's really immaterial at this point. These moneys weren't suddenly disbursed throughout the world. They went to Canadians, for the most part. Wouldn't you agree that the government of the day that was confronted with a huge deficit situation found it necessary to take those moneys to pay down that debt? Wasn't it a spending problem we had in government at that time that caused this crisis?
Federal and Ontario Director, Canadian Taxpayers Federation
Yes, and it's a spending problem that persists. I won't start talking about pork-barrelling...oh sure, I'll talk about pork-barrelling. ACOA and FedNor, if you look at the long-term track record of your corporate welfare organizations, it's not a good one. ACOA wrote off something like $222 million in the last fiscal year on economic development funds that were given out and on corporate welfare to different companies in Atlantic Canada.
Chatham-Kent—Essex, CPC
Maybe Ms. Pohlmann can answer this point. In your organization, how many of those were able to say that yes, they received that funding and their members didn't all pay that back. How many of your members, the independent businesses?
Vice-President, National Affairs, Canadian Federation of Independent Business
Do you mean funding for economic development?
Vice-President, National Affairs, Canadian Federation of Independent Business
Our members don't necessarily ever benefit from any types of grants or programs from economic development agencies.
Chatham-Kent—Essex, CPC
The long and the short is that there is money coming into the government coffers and there is money going out. It's the sole responsibility of governments to handle and manage that prudently. This government is beginning to do that. Is it fair to say that we, as suggested on the other side, need to expand our CPP or pensions when we have an economy that is contracting?
Federal and Ontario Director, Canadian Taxpayers Federation
The dangers of expanding CPP is what you saw with the Caisse de dépôt in the financial meltdown. They lost a third of the wealth of retired Quebecers because it's a compelled government savings program with a single investor, essentially. Instead of having many investors investing their own retirement savings as prudently as they can, you have people taking big risks and everyone suffers.
Conservative
Hoang Mai NDP Brossard—La Prairie, QC
Thank you, Mr. Chair.
Mr. De Luca, a little earlier, a number of witnesses came to talk to us about the scientific research and experimental development tax credit. They said that the measures taken by the government were not beneficial for the manufacturing sector, among others, and that the sector was going to experience job losses because of the loss of investment.
We have also heard from the government side that one of the reasons behind the measures contained in Bill C-45 is to reduce red tape.
red tape reduction.
However, as someone said, this does not help to accomplish that.
Can you tell us what the impact is on the manufacturing sector? Why are the people you are representing opposed to the measures taken by the government in terms of the cuts?
Partner, National Leader, Global Research and Development, Government Incentives, Deloitte & Touche
The budget measures have absolutely no impact on simplifying things. Those are two completely separate issues. There is no connection between the two.
The manufacturing sector, instead of being encouraged to invest more in hiring engineers and PhDs, feels that its funding is being tightened. As a result, investment in research will suffer the consequences.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
I feel that we have to look at a budget and a vision. We see that productivity is going down in Canada, and that we have fewer and fewer PhDs compared to other countries. Now, if we really wanted to make sure that we had a viable future, I think that this type of tax credit would be appropriate as an investment. Do you agree?
Partner, National Leader, Global Research and Development, Government Incentives, Deloitte & Touche
Yes, absolutely. Productivity partly has to do with capital expenditures. Also, for example, eliminating capital expenditures for the sake of simplicity creates a disconnect, so to speak.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
Thank you very much.
My next question is for Ms. MacEwen.
One of the things we argue about with the other side is the increasing gap between the rich and the poor, the fact that there are more and more inequalities.
You've talked about income splitting. Can you tell us whether that will help or reduce the gap between the rich and the poor? What would be the influence?
Senior Economist, Social and Economic Policy, Canadian Labour Congress
Certainly. In general, what we see is that income splitting or pension income splitting, which has been implemented now, benefits higher income individuals more than lower income individuals. Part of this is because if seniors are unattached, they don't benefit. Thirty per cent of seniors are unattached. Seniors who are unattached are more likely to live in poverty. They're more vulnerable. The less tax you pay, the less you benefit from this type of tax incentive or tax expenditure.
The more income you make, the more you're going to benefit from this, particularly if there is a higher income spouse and a lower income spouse. They'll benefit more in that situation. What we say is if you look at this from a perspective of gender analysis or inequality analysis, you'll see that the tax expenditure would be far better spent improving GIS and keeping OAS at 65, for those who need to retire at 65. Not everybody can work past 65, and in fact, Canadians who can work are continuing to do so. With the financial crisis, their pensions have been decimated, so they're continuing to work.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
Very quickly, Mr. Thomas, in Bill C-45 there are provisions for transfer pricing. Do you believe the government should do more in terms of tackling tax havens and tax evasion?
Conservative
The Chair Conservative James Rajotte
Thank you very much for that.
Merci, Monsieur Mai.
We'll go to Ms. McLeod, please.
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
Thank you, Mr. Chair.
I want to ask three quick questions about SR and ED and then move on to the pension issue.
Mr. De Luca, would you agree there were problems with predictability? The changes we're making to SR and ED are a comprehensive response to the Jenkins report. Answer with a quick yes or no. For companies with the SR and ED program, were there issues with predictability?
Partner, National Leader, Global Research and Development, Government Incentives, Deloitte & Touche
The budget does not address predictability.