Finance Committee on Nov. 20th, 2012

[Dr. Anna Reid]

We know we are the only one of the G-7 countries that does not have a national dementia strategy. We see that we need a pan-Canadian strategy. As I said before, it is suggested that by the year 2047 we're going to have 800,000 people in long-term care beds. That is the dimension of the problem. Most of those people will suffer from dementia.

We would like to see a pan-Canadian strategy involving all levels of government that actually looks at everything from home-based care, long-term care, home support, a national pharmaceutical strategy, that would help address some of these issues, and also help for caregivers in the home with actually more tax relief for people who are creating--

[The Chair, Conservative, James Rajotte]

Thank you.

You're out of time, unfortunately, but I will come back to that topic.

Thank you, Mr. Brison.

Mr. Van Kesteren, please.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Chair.

Thank you all for being here.

Mr. Lavoie, that was a very clever bait and switch. In all seriousness, we're very pleased to see you here. We're pleased to see Tessa and Scott here as well. We're so very proud of what you've accomplished as an organization and what you've accomplished on the world scene. I think you've certainly done remarkable work, and Canadians thank you for that.

I want to ask you to elaborate on the funding you're seeking. First of all, how long would celebrations last, and what is the total predicted cost? Are you looking for more funding from other areas, such as the private sector? Will there be contributions from other levels of government and industry partners? What can we expect to see from the $10 million funding?

[Benoit Lavoie, President, Skate Canada]

One of the things I have to tell you is that we gave ourselves a mission statement, with the objective of making sure that every Canadian has an experience with skating, with fitness, fun, and achievement. You have to understand that we are totally a non-profit organization run solely by volunteers.

The reason we're here today is really because we need the help. We cannot ask our members, our clubs, because we do have more than 1,200 clubs that are now paying their fees to be able to participate in all of the activities. What we want to do is put everything around the national championships, the Canadian championships that will be held in 2014. There will be a full year of preparation and activities that are going to be held across the country—the cultural aspect of being involved, of being part of skating, and so on.

As far as partnerships, we already have many partners. For example, 40% of our budget income right now comes from the membership itself. We have 15%, approximately, from government funding and maybe 30% from the events we're trying to organize. We want to make it a huge celebration, where we reach out and make sure that everybody will have this experience, helping the younger ones, the kids, to bring them back to activities so that something like this can help make sure they have that experience.

As far as partners, it's very difficult for us right now. You probably know that from the Olympic Games we had in 2010. We had a lot of support from sponsors. Now it's really difficult, looking at the private sector. We're trying. We've had a lot of activities. We are well known internationally. We are leaders in our sport. When you look at all the other federations, we're trying our best, but that's the reason we're here.

We're looking to have some partners. We're talking about hockey. We want to make sure that's the foundation, that people can learn how to skate, have the younger kids go back outside, with activities, and making sure that all the people who are already involved, including our clubs and volunteers.... If we're asking for money, it is not to give it to other people so that they can organize a big show. We want to do it ourselves, with our own volunteers. When I talk about volunteers, if we do put an event together—for example, for the national Canadian championships, we have over 200 people who are giving their free time. We want to keep investing in this manpower. As you know, people are changing their priorities. Because it's such a passionate sport, we think we can achieve it somehow.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mr. Campbell, very quickly, we know that the housing crisis in the United States was brought on by the mortgage bubble. Our government has made some changes to the mortgage rules. Could you comment on that, what position that's put us in as far as banking is concerned in this country?

[Terry Campbell]

I'll be very quick.

You mentioned the United States. The housing situation, the residential mortgage market situation in Canada, is very different than in the United States, very structurally different. I think comparisons between the two have to be very careful.

We're all concerned that we achieve a soft landing, not a hard landing. I would say that the government's incremental steps over the last four years have been very targeted. They have been very precise, very surgical. I think they are having the desired effect of slowing the market down and helping us to a soft landing. That's part of it, but we are a very different market than the United States.

[The Chair, Conservative, James Rajotte]

Mr. Caron, the floor is yours.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much.

My thanks to the witnesses for being here today.

My first question goes to Ms. Reid.

As you probably know, the government has announced that it is going to unilaterally reduce the rate of growth in health transfers, dropping it from 6% to 3% in three years. In terms of the previous level of health funding transferred to the provinces and territories, that represents a reduction of about $31 billion. The government is now telling us that it is because the provinces and territories have reduced their costs by the same amount.

I have two questions for you. First, I would like to know if the provinces and territories have reduced their costs through efficiencies or because they are beginning to cut into bone—meaning reducing essential services by changing the services that provincial health care insurance programs cover. There may be other reasons too.

Then, I would like to know what you think about the fact that the government has made those changes to the transfers unilaterally.

[Dr. Anna Reid]

I believe the decrease in spending is due to the cuts rather than to efficiencies. Generally, when we find efficiencies in the health care system, there are so many other areas in need that we actually end up using the money there to improve services in another area. That is how I would respond to your first question.

To the second question, with respect to the cuts, the one-way unilateral cuts, we would actually have preferred that the health care transfers be connected to some sort of accountability measures that are federally driven. We would like perhaps to see an organization like CIHI, the Canadian Institute for Health Information, be an organization that's able to look at metrics, measurements, and accountability measures so that we can match the spending with actual health outcomes. We think this is something that could be driven a little bit more federally. That's what we would like to have seen happen with that money, although we are aware of the fiscal reality of the actual amount of money given.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you. I would like to ask you another question.

Next week will be the tenth anniversary of the tabling of the Romanow Commission's report, a historic report for its evaluation of the status of our health care. If I recall correctly, the report attached a lot of significance to the social determinants of health.

In your view, what course have we charted in that respect over the last 10 years? Given that this is an area of provincial jurisdiction, could you talk to us about the roles that the federal government could play in incorporating the social determinants into the way we look at health?

[Dr. Anna Reid]

As I talked about earlier, I think one of the best things we can do is to use our health impact assessment tool, which we've suggested. Actually, Canada is a leader in having developed this tool, and the Public Health Agency of Canada would actually be very well placed to be the holder of such a health impact assessment tool. I think if we actually use such a tool, we would go a long way towards addressing the social determinants of health. I think we've had a lost opportunity to do that in many aspects. It has been done to some degree provincially. Quebec, actually, as you probably know, uses that tool, and certain provinces use it in more specific areas of their policy, but not in a mandated way such as Quebec.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you.

My last question goes to Mr. Campbell.

In terms of household debt, we hear a lot about the mortgage component. The government has introduced changes to tighten access to mortgages, changes that were not opposed. But the consumer debt problem is still a problem. But we do not hear it mentioned as often. I am talking about credit cards, lines of credit, consumer loans, car loans and so on.

How can we tackle that component? We always hear about mortgages, but the government is going to have to deal with consumer debt. Do you have any recommendations to make on the matter?

[Terry Campbell]

It's important to remember that....

I am sorry, but I am going to have to answer in English.

It's important to remember, when you look at household debt, that the majority of that debt is mortgages. Credit cards are really only about 5% or 6%. Auto loans are growing, but I think that was probably a function of the demand for auto being suppressed over the recession, and we're probably seeing people just trying to fulfill that demand.

It's important to recognize, for instance, that the industry itself has been taking steps for greater disclosure, for clarity. The government has put in additional rules for clarity, for instance, on credit cards, making sure people know exactly what they're getting into. I think all of these are very, very useful steps.

Financial literacy, quite frankly, is an important part too. We play a large role in financial literacy. We know that the government and other parts of the community are emphasizing the importance of having well-informed consumers.

There's no one magic solution, but I perceive a lot of focus on this across the board these days.

[The Chair, Conservative, James Rajotte]

Thank you very much. Merci, Monsieur Caron.

We'll go to Mr. Adler, please.

[Mark Adler, Conservative, York Centre, ON]

Thank you very much, Mr. Chair. I want to thank all of the participants for being with us here today.

I want to begin my questioning with Mr. Campbell, from the Canadian Bankers Association. I want to talk a bit about Basel II and Basel III and OSFI and where we are in terms of that.

Under Basel II, the banks were required to maintain a 4% Tier 1 ratio and a total capital ratio of 8%. Basel III boosted it up to, I think, 7% and 10%. OSFI exceeds that standard.

You mentioned during the course of your remarks that the World Economic Forum has said that Canada has had the strongest financial institutions for five years in a row now. That's how we were largely able to withstand the economic storm that engulfed the world and why we were one of only two countries, I think, that didn't have any bank failures.

Could you speak a bit about how the banks feel about the more stringent OSFI standards vis-à-vis the Basel III standards? The banks are so competitive with each other globally now, not just within Canada but around the world. How do the banks view the more stringent standards they have to abide by under OSFI as opposed to Basel III, where their competitors are?

[Terry Campbell]

That's a very big topic, and it's a really good question. I thank you for that.

First of all, it's important to remember what capital is there for. Banks have to have capital, because capital supports lending, but capital also allows you to manage your risk. It acts as a shock absorber. Mr. Adler is absolutely right. Going into the financial crisis, we were capitalized well in advance of what international standards required. That was partly the role of OSFI, but it was partly a role investors and the street required of us.

One of the most important things about putting Basel III in place is the importance of international consistency. It is important that we have around the world a strong commitment to putting the rules in place, and to putting them in place in a consistent manner. We know that this is what Governor Carney is focused on in the FSB.

We see, unfortunately, some slippage. In the United States of America, many of the banks have not even put in Basel II yet, let alone Basel III. We notice that. We see, I think, probably some slippage in Europe. We think consistency of application is very, very important. We call for that.

I think the big thing with Basel III is that we all recognize the importance of prudential standards. It's one of the things we live by. Nobody should underestimate, however, what an enormous exercise this is for the industry in this country.

[Mark Adler, Conservative, York Centre, ON]

As you know, last week, in Fredericton, the minister brought down the economic and fiscal outlook. As the minister and the Prime Minister have been saying all along, Canada is not an island. We are not isolated from possible contingencies that happen in other parts of the world.

I'd like you to comment a bit on the possibility that we get sideswiped on two fronts. One is the European sovereign debt crisis, although we seem to be seeing some indications that it is improving. The other is the fiscal cliff in the U.S., which we're hearing a lot about right now. Now that the election is over, we are seeing some movement on that front.

We're now about 40 days away from the deadline on the fiscal cliff. If, in fact, the President and Congress do not reach a deal, what would be the consequences for Canada?

[Terry Campbell]

Minister Flaherty is absolutely right; we are not an island. There's probably no other country in the world better placed to resist or deal with pressures we see elsewhere in the world, but we will not be immune.

You asked specifically about the fiscal cliff. I remain an optimist. I hope they will deal with that. I think it remains to be seen what the nature of the solution would be before we can assess what kind of impact it would have on GDP going forward. If the fiscal cliff is not addressed, and as I say, I hope it will be, then there will be an impact on GDP. There are varying degrees of estimates.

We are a trading nation. The United States is our biggest trading partner. I know we're trying to diversify, but we cannot escape if there is a slowdown or a lessening in economic growth in the U.S.

In Europe, I think the biggest transmission belt is if a slowdown has the effect of dragging the economy down. They are customers for Chinese products, and if they slow down, China slows down. It will just have that slowing effect. I remain an optimist, and I think the fiscal cliff will be solved.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Adler.

Mr. Marston, go ahead please.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Thank you, Mr. Chair.

I want to continue on just a little bit with Mr. Campbell.

Fiscal cliff or fiscal wall, it's still looming. As we say, it's early next year, very early. The EU continues to live with very serious economic problems. If we're honest with ourselves, there's no end in sight. This is something that's going to take years for adjustment.

China's GDP is half what it's been in the last few years. If we look at the ripple effect of these things around the world, we see that we certainly aren't an island, as the saying goes. It would be lovely if we had that dream reality. Our record has been comparatively good. It's hard to dispute that, but many witnesses coming before our committee have advised us of the volatility in this global economy and the potential risk to Canada's future economic growth. Beyond the safeguards in Basel III, what suggestions would you have for the government for further protection?

Remember, oh gosh it must be about 10 years ago, there was talk of liberalizing—no offence here—the banking rules. There was a time, too, when mergers of banks were considered, and all kinds of things. Liberalizing is a good word in my books, but it is not when it takes away the safeguards for Canadians. So I think we were fortunate at the time that decisions were made not to proceed with that.

As I said, beyond Basel III, what would you recommend that this government do for further safeguards?

[Terry Campbell]

First, let's put these things into a little bit of context. There are a lot of dangers out there, and of course, probably the poster child for real problems that will take a long time to solve is Europe; you're absolutely right. Remember, even if China is slower, it's still growing at about 7.5%. I think the United States will solve the fiscal cliff, and it is still growing. Canada is still growing. There is still growth out there. If you look at the emerging markets outside of China, there is growth.

Now, this is not to sort of turn a blind eye to issues, but I think it's important to put it into perspective. It's low growth. It's not the robust growth we might have seen 10 or 20 years ago, but it is growing. So I think this does give a trading nation like Canada some manoeuvrability.

My own recommendation is this. What makes for a strong country? You want to be attractive to investment, you want to be attractive to start-up jobs, and you want to have the most conducive trade environment. We already have a very strong banking system, well regulated. There's much glory to be shared around all parties for the regulation of the banks over the years, but the system is well regulated. I think it's a bedrock of the economy. We're in good shape there. I think we have good fiscal room.

I would say the government should just continue to focus on what makes Canada competitive, and that will help. But always be vigilant.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Dr. Reid, you were quite clear in your presentation when you talked about the government having a responsibility relative to the Canada Health Act. In the past, there have been debates as to whether or not the act had been enforced in a way that would have been helpful relative to investment and outcomes. We believe, and we said all along, that the government has to enforce the Canada Health Act and ensure the outcomes are there.

You talk about our system. How would you describe us relative to encroachment on the public system by the private system?

[The Chair, Conservative, James Rajotte]

You have one minute.

[Dr. Anna Reid]

Certainly, as you probably know, in Canada much of health care is actually privately delivered but publicly funded. In this way we're no different from most European countries, and the United States, for that matter. That's not anything different. This is something that the Canadian public actually is not aware of. Certainly, we feel it should be a very strong publicly administered and publicly funded universal health care system, so that your ability to access the system is not based on your ability to pay, but rather on your need.

There has been some encroachment of privately funded, privately delivered health care in this country. The reason that's happening is that our public system has not actually had the infrastructure available to be able to deliver what Canadians need, so the funding and the efficiencies and the accountability measures are not there, for example, to provide enough operating room space. We feel we can make improvements in the present system so that we don't have to look outside the system that way.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Marston, you are well over time. I'm sorry about that.

We'll go to Mr. Miller.