Finance Committee on Nov. 6th, 2013

[Jonathan Bouchard, Vice-President Sociopolitical Affairs, Fédération étudiante universitaire du Québec]

Good afternoon. Thank you very much for this opportunity to speak to you.

I want to begin by apologizing, as we were unable to have the most comprehensive document we wanted to submit to you translated on time. So I will try to be as specific as possible in laying out our recommendations. I could answer your questions in detail afterwards.

I represent the Fédération étudiante universitaire du Québec, which represents 125,000 university students at all levels in Quebec. For 25 years, we have been defending the rights and interests of university students with the government and all education and higher education stakeholders. Today, we will talk about three recommendations pertaining to students, student researchers and new graduates with a view to the country's economic growth.

The first recommendation is part of a very specific demographic and socio-economic context—that of population aging and baby boomers' rapidly approaching retirement. Canada, as a whole, is headed toward a demographic wall that will mainly affect its manufacturing and resource regions. We are already experiencing a negative replacement rate in a number of professions, including managers, health care professionals, public service professionals, and so on.

Canada's economic action plan provides a lot of support to companies, but very little support to workers in unstable regions. Following a number of interviews, we found that this approach was a disincentive for entrepreneurs and investors who wanted to continue investing in those regions.

Our first recommendation is to establish a tax credit for new graduates employed in regions with a struggling economy. Similar measures are in place in Quebec and several other provinces, such as Manitoba and Saskatchewan. I think you have detailed information on tax credit as such.

A relevant bill was introduced in 2009. It passed third reading in the House of Commons, and was at the third reading stage in the Senate. However, the election was held, and the government had a new agenda. That measure had strong support, but it never obtained its final approval.

The second recommendation has to do with tax credit for tuition fees and course material. We studied that specific tax credit in one of our research projects. We concluded that it had two major shortcomings.

The first shortcoming was that the tax credit was non-refundable. This meant that the low-income students, who needed that credit the most, benefited from it the least in reality.

The second shortcoming was that this policy was highly dependent on the tuition fee policies of different provinces. Consequently, students from different provinces were treated differently based on where they lived, instead of based on their annual income. So a province's overall funding for students directly depended on the tuition fee policy. It could vary unexpectedly. Therefore, control by the federal government was more difficult.

We suggest that funds for that tax credit be freed up and moved to the Canada Social Transfer, or CST, which includes the post-secondary envelope for provinces. That money could be allocated more specifically for students' real needs to ensure greater accessibility and the quality of higher education.

The third recommendation has to do specifically with indirect research fees, which include administration, libraries and building maintenance. That represents somewhere from 50% to 65% of all direct grants for research. That is funded by the government's Indirect Costs Program, which is currently covering only 21.5% of those indirect research costs, even though it was initially intended to cover 40% of those costs. That directly affects research, innovation and what is produced by student researchers.

Universities have to make up for the fact that they have to maintain their infrastructure instead of investing in research and innovation—including grants for student researchers.

We suggest reinvestment in that area, and we have concrete recommendations to help make that a no-cost measure.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

Next we will go to Dr. Gauthier, please.

[Dr. Michelle Gauthier, Vice-President, Public Policy and Community Engagement, Imagine Canada]

Thank you, Mr. Chairman, and thank you to the committee for inviting us to appear today.

Imagine Canada is the national umbrella organization for Canadian charities. We often speak to you about the significant contributions made by charities here at home and around the world. This week a new report commissioned by the Muttart Foundation called "Talking About Charities" confirms that Canadians, too, recognize these contributions: 93% of Canadians consider charities important and 88% believe they improve our quality of life.

The survey also shows that while there is always room for improvement, charity leaders are nonetheless among the most trusted professionals in the country. Charities as a whole are trusted by almost four-fifths of Canadians, just slightly less than small business, which leads me to our first recommendation.

Earned income, the sale of products, goods and services, is for many charities a significant source of revenue and one which is supported by an overwhelming majority of Canadians. "Talking About Charities" found that almost 90% of Canadians agree that running a business is a good way for charities to raise money they aren't able to get through donations and grants, and four-fifths believe charities should be able to run any kind of business they want as long as the proceeds go to their cause. At the same time though, two-thirds are worried about charities losing money through these activities, hence the need to equip charities with the capacity to succeed.

This last point is crucial. Charities face many of the same challenges as small and medium-sized enterprises. They must prepare good business plans, have access to the right capital, exploit the right markets, and recruit and retain the right people to successfully sell their products and grow their revenues. SMEs have a wide range of federal services and supports to address these challenges.

Charities are challenged, however, in accessing many of these same federal services, whether through program design, lack of awareness on the part of charities, or lack of understanding of program administrators. We call on government to remove these barriers where they exist so charities can increase their impact and financial sustainability.

In our brief, we cite the example of Mitacs-Accelerate's internship program which matches highly skilled graduate and postgraduate students with businesses that can benefit from their skills. Mitacs receives its most significant funding from Industry Canada, whose current agreement limits the use of these funds to the private sector.

Mitacs has been able to use some of its other funding to do some work with charities. For example, a partnership with CancerCare Manitoba has resulted in improved techniques and equipment for breast cancer detection. Another partnership with the Vancity Community Foundation led to the design and development of an online purchasing portal for social enterprises.

Removing the restrictions in the Industry Canada agreement would enable Mitacs, which would like to support more initiatives with our sector, to do so. Other federal programs for SMEs should also be reviewed to remove similar restrictions and facilitate access. At a time of fiscal restraint, this measure can be undertaken at little or no cost and yet could have significant impact.

Charities also depend on the generosity of Canadians to carry out their mission. We want to sincerely thank the members of the committee for their in-depth study of tax incentives to promote charitable giving, and for their report emphasizing that issue.

The First-Time Donor's Super Credit announced in the 2013 budget, as well as the commitment to—and I quote—“[...] work with the charitable sector, including Imagine Canada, to encourage more donations by a greater number of Canadians [...]” are important steps in the right direction. Although the temporary super credit encourages new donors, the stretch tax credit for charitable donations, which we have often talked to you about, focuses on a long-term behaviour change. That objective was highlighted this week by the Governor General at the launch of his campaign, My Giving Moment.

The implementation of the stretch tax credit, which is supported by over 70% of the charities that have appeared before the committee, is the next logical step in the promotion of a sustainable donation culture. That measure will encourage those who gave for the first time thanks to the super credit to give again. In addition, since a much higher number of low and medium-income Canadian families would be eligible for the stretch tax credit, that measure would encourage more of them to give, while providing them with a welcome tax break.

We invite the government to set a firm date for the implementation of the stretch tax credit.

Too often those working in our sector are seen simply as nice people doing good things. We all need to think differently about the sector's contributions. We do mobilize 13 million volunteers, but we also employ two million Canadians and account for 7% of GDP.

Our sector creates jobs, generates economic growth, and as Canadians themselves have noted, is vital to our quality of life. Equipping charities to succeed is equipping Canada to succeed.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We will begin with Mr. Caron. You have five minutes.

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

Thank you very much, Mr. Chair.

As my colleague said earlier, these presentations were really interesting and varied.

I would like to ask all witnesses some questions, but since I have only five minutes, I will focus on health care. So I will address my questions to Mr. Adams and Ms. Bard.

I am happy you talked about health care for seniors because demographic pressures will make that issue increasingly important. Those demographic pressures have made the government unilaterally decide to increase the eligibility age for Old Age Security from 65 to 67. Owing to those demographic pressures, the government also unilaterally decided to reduce by half the growth of transfers to provinces—from 6% to 3% per year. For the provinces, that will result in a loss or revenue of $38 billion over the next 10 years.

What do you suggest should be done to deal with the crisis in health care that will arise from that transfer reduction and will impose a heavy burden on the administration?

[Rachel Bard]

The government should reconsider its position and formalize it by concluding an agreement with the provinces to maintain the growth of those transfers at 6%. In addition, the government should not take into account only the proportion of the population. It should also take into consideration demographics and the specifics of certain provinces, such as the Atlantic provinces and the territories.

Those concerns should be dealt with. If we really want to save money over the long term, we have to invest in health care so as to keep people healthy.

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

Mr. Adams, do you have anything to add on the topic?

[Owen Adams]

Clearly the implications are out there. The Canadian Institute of Actuaries has just done a study which shows that the proportion of provincial-territorial revenues devoted to health care will rise from 44% to 69% in 2037. That cannot happen. These are intended to be self-defeating prophecies. We need to do things differently. That is essentially why we are arguing that you need to be able to shift resources from acute care beds out to long-term care beds and increase home support and home care.

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

I take it the decision to cut the growth of transfers by half is actually backward-looking towards the trends we have seen, but definitely not forward-looking towards the challenges we will be facing.

Is that right? Okay.

Health care administration comes under provincial jurisdiction, but as members or citizens, we can follow what is happening in that area. According to my analysis, the lack of integration of various services is a major problem for all provinces. We have been talking about that for 10 or 15 years, and we are still talking about it today. Very few connections are made between the various health departments and regional administrations, palliative care, long-term care, home care, and so on.

How could the federal government play a leadership role in an area that comes under provincial jurisdiction? It is clear that the federal government will not impose anything—and if it does, it will meet with objections—but it should still make sure that the provinces are coordinating all the activities and using the best practices seen across the country. It is currently not doing that.

How could the federal government play a positive role, and encourage the provinces to exchange information and to adopt the best practices used by stakeholders across the country when it comes to health care administration?

[Rachel Bard]

On the one hand, the federal government should participate in the discussions and work with the provinces and territories. On the other hand, it must establish a national vision, as well as objectives and indicators that could have a positive impact. That way, it could help Canada become one the top five countries with a good track record in that area. We shouldn't forget that the federal government is the fifth largest health care provider. So it is very important for the government to be a leader in that area.

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

Thank you.

Mr. Adams, what do you think about that?

[Owen Adams]

Again, to go back specifically to the issue of seniors, every province has a seniors strategy. We've looked across all of them and compared them, and there's not really a whole lot of commonality.

I guess the federal government, through the information policy lever, could convene tables or something like that to try to promote a greater sharing.

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

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Caron.

Mr. Keddy, please, for your round.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chairman.

Welcome to our witnesses. It's great testimony here today.

We are jammed up for time, so we unfortunately don't have enough time for everyone. My first question will be for Morley Googoo.

Morley, you raised the point earlier that 106,000 aboriginal youth have left high school since 1996, I think you said, without a high school diploma. On the other side of that, I guess, I supported the...I forget what the title of the bill was, but it was a Mi'kmaw education bill for Nova Scotia, New Brunswick, and P.E.I. It was a valuable piece of legislation.

How many graduates have we seen since the instigation of Mi'kmaw on-reserve education controlled by your community, and how many of those graduates have jobs? Have you been able to track that?

[Chief Morley Googoo]

I can get that information and some more accurate numbers. That was part of the self-government agreement, the Mi'kmaw Kina'matnewey's first sectoral jurisdictional agreement. In place, it has seen national graduation rates for on-reserve populations of around 33% to 35% at this point. For the Mi'kmaw over a 10-year period—sometimes that's a better stage, as you gauge education improvements over 10-year cycles—we're now up to an 80% graduation rate.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

That's excellent. If you could follow up with some of those statistics, it would be important—

[Chief Morley Googoo]

Yes, absolutely.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

—because it absolutely helps your argument, and I think will sustain it, quite frankly.

My next question is for the Canadian Alliance of Student Associations. You talked about your students who are working and are actually losing money from the Canada student loans program.

In your submission, you recommend an increase as well. You recommend an increase in the RRSP exemption from $2,000 per year, from an individual's 18th birthday, to $2,790. Where did you come up with that number?

[Amanda Nielsen]

That number is the average amount that Canadians are spending per year on their RRSPs. We just want to update that number to be what Canadians are contributing on average. Our idea is that students shouldn't have to drain their bank accounts and drain their retirement savings in order to go back to school, especially given the need to get more productivity from each Canadian and the need to get the most out of our entire workforce. We're seeing more and more mature students, so it makes sense.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Okay, so in reality, that number could be a lot higher.

[Amanda Nielsen]

It could be.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Yes, absolutely.

Do I have more time?

[The Chair, Conservative, James Rajotte]

You have about a minute and a half.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

That's long enough for another question, and long enough for an answer, which is even more important.

Ms. Gauthier, you talked about the Mitacs-Accelerate internship program and your estimation of its impact on the NGOs, the charity sector. I think we're in agreement that we should pair our charities with bright minds and our universities, but in order to do that, you still need to have some criteria in place for that intern to be placed with that charity.

Do you have some recommendations? I don't think you can throw the charitable sector wide open and totally treat them like small business, but do you have some suggestions of what that criteria would be?