Finance Committee on Nov. 5th, 2013

[The Chair, Conservative, James Rajotte]

You have about one minute and 30 seconds.

[Mark Adler, Conservative, York Centre, ON]

Thank you very much.

Ms. Campbell, we know that the industrial policy is very important, and we know where the NDP stands on industrial policy: they stand for a lower dollar, higher taxes, and higher tariffs, whereas we stand for lower taxes, lower tariffs, and free trade.

For the Liberals, on the other hand, their economic policy seems to be legalization of marijuana. Could you please comment on how disastrous for the Canadian economy the legalization of marijuana would be?

[Ailish Campbell]

I have no particular expertise in marijuana growth or consumption and therefore cannot comment—with respect.

[Voices]

Oh, oh!

[Scott Brison, Liberal, Kings—Hants, NS]

Just take a deep breath and think about it.

[Ailish Campbell]

I'm not aware that any of our members are producers or consumers.

[Mark Adler, Conservative, York Centre, ON]

I didn't intimate that any of them were, nor yourself, but I'm—

[Ailish Campbell]

I'll leave it to you, Mr. Brison.

[Mark Adler, Conservative, York Centre, ON]

—just curious to know how your members would respond. I mean, you're here before the finance committee, so you have opinions on economic policy. How would that would serve us as an economic policy?

[Ailish Campbell]

I think what I would say very clearly is that the right partners and the right products are very important. So I commend this House for the strong bipartisan support we've seen for improving the NAFTA relationship and for, I believe, the almost violent agreement, I might say, in welcoming the EU, which has a strong social safety net, respect for workers, and also an incredibly diverse market for our products.

I would commend anything that looks sensibly at those. I think the next challenge before you is to grow that bipartisan support for agreements such as the Pacific Alliance and, I would argue, our agenda in Asia. That's really our future challenge.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Adler.

Mr. Côté, you have five minutes.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

My first comments will be addressed to you, Mr. Hamel. Thank you for your presentation.

I'm quite privileged because in my riding of Beauport—Limoilou there are the Quebec carnival workshops, as well as the ExpoCité site with its future multifunction amphitheatre and perhaps a professional hockey team. We shall see what develops; man lives by hope.

I thank you very much for your presentation, because it in fact touched on concerns I have had for a long time. During my first year as a member of Parliament, I had the privilege of being my party's tourism critic. I was appalled by the massacre that took place at the Canadian Tourism Commission. There were some deep cuts. If the 2013 budget had simply not included an increase, there would only have been the inflation-related shortfall to deal with. But they clipped the wings and cut off one of the legs of the poor CCT bird. All that is left to do now is cut off its other leg and probably slit its throat.

All that to say that your approach is very interesting. A lot of your reflection is focused on the United States, which seems the obvious choice since it is a huge market just next door to us, basically.

Could you talk to us about the decline in tourism from the United States in connection with the American economic performance over the past two years? Has tourism declined more than expected given the performance of the American economy?

[Yan Hamel]

In fact, since September 11, 2011, there has been a sharp drop in the number of tourists from the United States. Given that fact, why reinvest in the United States? The answer is quite simple: 63% of our clientele from outside Canada comes from the United States. It constitutes a reliable market. Last year it allowed us to register a 4.3% increase in revenues as compared to the previous year.

Despite its economic situation, the United States still spends more tourist dollars here. This constitutes an interesting potential for Canada. As you said, they are right next door. So it is a very profitable choice, with immediate results.

We are also seeing good results with China. As we said earlier, China generates very good results, but we are mostly looking to the long term. It represents a vast potential at our doorstep. We can improve our inroads, but they are still quite simple. We really believe that investing in the United States will provide excellent, short term results.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Let's face it. On the global tourism scene, one of Canada's hallmarks is its very strong brand. Going back to hockey, people might say that Canada is sort of the Sydney Crosby of tourism when it comes to potential, but we really aren't making the most of it.

On the global markets—because there too there have been shutdowns and a decrease in our efforts—are there tourist areas other than China and the United States that we should be investing in?

[Yan Hamel]

Definitely. As mentioned earlier, Mexico has also experienced significant growth. It is a very good-sized market that should be developed. Europe has also had very good results, despite its economic situation. As you said, we have major potential. However, while everyone on around the world has experienced a 4% increase in revenues, we have only seen about half that, about 2%.

Why haven't we invested in promoting and highlighting to the world the advantages of travelling in Canada? Canada has some major assets. It is a very safe country that has a variety of attractions from east to west. This means that we must reinvest. As you said, the CTC website no longer has the funds it needs to market Canada abroad.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you very much, Mr. Hamel.

[The Chair, Conservative, James Rajotte]

You have 30 seconds left.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

In that case, I would simply like to thank Mr. Hodgson for speaking about the high speed rail project. It's really a priority for Mayor Lebeaume, who was re-elected last Sunday. I would like to thank you on his behalf for your support and congratulate him for his re-election. We will leave it at that.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Côté.

We'll go now to Mr. Van Kesteren, please.

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

Thank you, Mr. Chair.

Thank you all for coming here this morning.

Mr. Hodgson, I want to go to you first. I agree with your analysis that we need to invest in human capital. You talked about infrastructure, which I'll touch on in just a second, and tax reform. I guess I agree—I think we all agree—with much of your analysis of what has to be done, but you know, I come from private business, and when we used to have a spreadsheet, we would always talk about income but we'd focus our attention more on the expenses. You can get all this stuff coming in, but if the back door is open and everything is blowing out the back door, you're kind of defeating the purpose.

I'm surprised—it's not a criticism, I'm just surprised—that no one has mentioned what I think is probably the biggest gravy-train wreck that's approaching us, and that's what's happening in terms of pensions down the road.

Mr. Hodgson, you talked about infrastructure. I would submit to you—this is my own observation, but I think I could probably get a lot of support for this—that especially for municipalities, and the same thing is true with both levels of government, federal and provincial, they have costs coming down the road that are so astronomical that they don't have a problem with income so much as those problems.

Take a city like London. It's a good example. I think the top ten wage earners in London will cost the city $240 million in ten years' time.

I know this government has struggled with that. We've introduced measures to help correct that. Let's face it, in this country we have a two-tier pension system. We talk about health care, and we don't like the health care tiers, but we have the same thing there. We have those who are lucky enough to work for either the public sector or maybe a few corporations, and then the 65% who don't.

Do you think that is an issue? I'll start with Mr. Hodgson, and then maybe we'll go to Mr. Effer after that, and Ms. Campbell as well—not that I'm excluding the other two gentlemen, but I don't know if I'm going to have time—on the efforts that have been made by the government to begin to correct that. Are the efforts sufficient? And where do we need to go so that we don't run off the tracks?

Mr. Hodgson.

[Glen Hodgson]

I'll start by saying that the numbers I've seen show that about 70% of Canadians are going to be under-saved for their retirement. There's a huge public policy issue here. That's why finance ministers are talking about CPP reform—

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

Can I interrupt for just a second? I think it's probably 100% of Canadians, even those who have good pensions. But the difference is for those with good pensions, it's not a really big issue. Can we agree on that, too?

[Glen Hodgson]

I have to declare my interest here, because I was at Finance Canada for 10 years and EDC for another 10. So I'm one of those lucky beneficiaries of a very nice DB pension plan locked in with the federal government. It's one of the better career choices I've made.

But you're absolutely right. There are issues about adequacy across the economy, questions of fairness between the public and private sectors, and people in DB plans who are underfunded, which will probably not be sustained by their employers, as we saw with Nortel and many others. So pensions are a huge issue.

We are actually launching a series of research studies right now trying to examine questions of pension adequacy. There are different attitudes of young Canadians versus older Canadians. If I'm a young Canadian in a world where the DB plan no longer exists, I'm asking fundamental questions about social fairness. Your point about the ability of governments to afford the current pension plans is real. On the flip side, though, we're going to have a world where the labour market is going to be much tighter and employers are going to be competing for talent. So the pension issue becomes part of a whole compensation and benefits issue to attract and retain good employees.

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

We're running out of time.

You hit another interesting point. I think most economists agree with this too. We're seeing a 2% growth, and let's face it, we have relied on 7%, 8%, 10%, 15% growth when we put these pension plans into being. With that kind of projection, can we realistically still expect to see the results that we're going to need to be able to pay out these pensions?

[Glen Hodgson]

We're going to face really tough funding questions when it comes to lots of social benefits: pensions, the health care system as well. It's the same sort of issue. That's why Mr. Flaherty has talked about 4% nominal growth in transfers after 2017. That's the future that we see coming down the road. I think the pension debate is just beginning now nationally: private sector, public sector.