Evidence of meeting #48 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was federal.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Mark Laroche  Director, President and Chief Executive Officer, Ottawa International Airport Authority, Canadian Airports Council
Ron Gentle  Chief Security Officer, Hydro One Inc., Canadian Electricity Association
Francis Bradley  Vice-President, Policy Development, Canadian Electricity Association
Bard Golightly  President, Canadian Home Builders' Association
Brad Woodside  President, Federation of Canadian Municipalities
Jeff Lehman  Chair, Mayor, City of Barrie, Large Urban Mayors' Caucus of Ontario
Mark Romoff  President and Chief Executive Officer, Canadian Council for Public-Private Partnerships
Frank Swedlove  President, Canadian Life and Health Insurance Association Inc.
Stephen Beatty  Partner, KPMG
Robert Coulombe  Board Member, Mayor of Maniwaki, Union of Quebec Municipalities
Michael Shapcott  Director, Housing and Innovation, Wellesley Institute

3:30 p.m.

Conservative

The Chair Conservative James Rajotte

I call to order meeting number 48 of the Standing Committee on Finance.

According to our orders of the day, pursuant to Standing Order 83.1, we are continuing our pre-budget consultations 2014.

I want to thank all of our guests for being here for this first panel discussion.

Colleagues, we have two panels today and also votes, so we'll be a little compressed in our second panel.

We have with us today from the Canadian Airports Council, Mr. Mark Laroche. From the Canadian Electricity Association, we have Mr. Ron Gentle. From the Canadian Home Builders' Association, we have the president, Bard Golightly. From the Federation of Canadian Municipalities we have the president, Mr. Brad Woodside, who is also the Mayor of Fredericton—in Mike Allen's province. From the Large Urban Mayors' Caucus of Ontario we have the chair, Mr. Jeff Lehman, who is the Mayor of the City of Barrie.

Welcome and thank you so much for being with us. You each have five minutes for your opening presentation, and then we'll have questions from all of our members.

We'll start with Mr. Laroche, please.

3:30 p.m.

Mark Laroche Director, President and Chief Executive Officer, Ottawa International Airport Authority, Canadian Airports Council

Mr. Chairman and members of the committee, I'm here today as a director representing the Canadian Airports Council, the membership of which includes 45 airport operators. We are a key component of safe and secure travel for more than 90% of the commercial passenger traffic in the country.

In my day job, I am president and CEO of the Ottawa Airport.

I am grateful for this opportunity to present our pre-budget submission. In light of the time I have, I am going to focus on the general theme of this submission, which is the impact of government funding provided to airports on our capacity to meet the expectations of passengers, and on our competitiveness.

Some countries are struggling with how to properly fund their aviation infrastructure. We are in a good position in Canada. We are 20 years into a model that has seen a transfer of the cost burden from government to the traveller, who now broadly funds the industry.

Responsibility for security screening remains partly in the government's hands. To fund the screening activity, the government charges air travellers a fee, despite the fact that the aviation industry is truly a national issue and the cost of this security should not be born by a single sector.

The air travellers security charge paid by passengers is designed to fund CATSA, the crown corporation that is charged with security screening. It's our understanding that the fees collected amount to $1.8 billion between 2010 and 2013. These revenues go into the government's general fund and it's somewhat difficult for CAC to confirm what portion of ATSC goes to CATSA, and if it has been receiving its full amount for its mission.

According to the National Airlines Council of Canada, from 2010 to 2013, $136 million in accumulated surplus was not directed to CATSA. In simple terms, it is CAC's view that CATSA has not been properly funded for growth, at the expense of travellers who continue to experience longer delays and wait times.

The CAC would also like to see adequate resources for another critical airport partner, the Canada Border Services Agency. From CBSA, we are seeking increased value for travellers from innovative programs like automated border clearance kiosks. These kiosks have been introduced at our largest airports with millions of dollars invested by airports to improve the passenger experience.

Similarly, around the world, countries are co-operating on trusted traveller programs that allow governments to provide better security with fewer resources by concentrating on travellers who represent the greatest risk. Our government partners mentioned above in Transport Canada need this work to be supported.

Currently, our throughput statistics at peak times for screening and processing passengers are simply not competitive with throughputs being achieved in the U.S. and Europe.

We have other files in our submission. Briefly, a request to review federal infrastructure funding rules that exclude the national airport system airport projects from benefits under the Airports Capital Assistance Program for small airports. NAS airports, the smaller ones, should be eligible to apply for funds in the same way that any other entity could.

We also have a long-standing request to support arrivals duty-free, similar to growing numbers of airports around the world. This would not only enhance passenger convenience but it would also repatriate sales, grow employment, reduce airline operating weights carried, and result in faster turnaround times. Really, there's no downside to this initiative but rather many positive outcomes.

I'll finish by touching on the topic of cost competitiveness. The decision earlier this year by the province of Ontario to raise its fuel tax is symptomatic of a bigger challenge in Canada. When it comes to cost, it gets passed on to air travellers. An in-depth assessment of the negative impact that these numerous taxes and fees have on the higher cost of flying in Canada, compared to flying in the U.S., is badly needed.

Sunwing, a Canadian airline, has announced that it will be flying from Buffalo, a border airport, instead of a Canadian airport, to take Canadians to at least two southern sunshine destinations. If this doesn't set off alarm bells, then what will. It's time to address the high burden of government fees and taxes that are specifically aimed at air travel. Again, at the federal level, we also have airport rent, and we would certainly support efforts to review or revise the current $290 million burden that gets passed on to travellers.

Final thoughts. Aviation is an important enabler of economic activity in Canada. This is an industry that pays for itself and then some. The bottom line is that aviation enables Canada to participate more fully in the global economy. We need to acknowledge the role the industry plays. We need to stop the leakage to airports located south of the border. We need to reduce the amount of taxes and fees layered on air travel, so that we can remain competitive.

We need to have an aviation industry that encourages Canadians to fly from Canadian airports. We need a competitive industry that facilitates growth, and international inbound tourism and travel, which will result in significant economic benefits for Canada and for the government.

Thank you.

3:35 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you for your presentation.

We will now go to Mr. Gentle, please

3:35 p.m.

Ron Gentle Chief Security Officer, Hydro One Inc., Canadian Electricity Association

Thank you, Mr. Chair, and thank you, committee members for the opportunity to speak with you today about the Canadian Electricity Association's recommendations for Budget 2015, specifically how they will ensure prosperous and secure communities and support and protect critical infrastructure.

I'm the chief security officer for Hydro One. Prior to being at Hydro One I served for 31 years as a member of the Ontario Provincial Police in various roles, my last being the commander of the investigation and support bureau. So I'm very familiar with the challenges in securing our communities and critical infrastructure.

I'll address recommendation 6 in CEA's pre-budget submission. Francis Bradley, CEA's vice-president, policy development, who's joining me here today, will replace me at the mike to address the others.

Electricity, as part of the energy and utilities sector, is one of Canada's 10 critical infrastructure sectors as identified by Public Safety Canada. In recommendation 6 the CEA is proposing two measures to enhance the protection of electricity critical infrastructure.

On the cyber front, CEA is recommending that Budget 2015 increase funding for Public Safety Canada's cyber incident response centre, or CCIRC, a national coordination centre that facilitates information sharing, support, and advice relating to the prevention and mitigation of, preparedness for, response to, and recovery from cyber events. Increasing CCIRC's capacity and capability would enhance its ability to support the protection of critical infrastructure facilities from growing and increasingly complex cyber threats.

The other recommendation relates to the growing problem of copper theft from electricity facilities. Recently thieves broke into a live, fully-energized transformer station to steal copper grounds and components. A flashover occurred and severely damaged the facility. Had any person been on site, serious personal injury could have resulted.

The cost to repair the station as the result of a theft of a few thousand dollars worth of copper is in the tens of millions of dollars. The most common charge for this type of incident is theft under $5,000, basically the market value of the copper components stolen—the same charge as for stealing a bicycle.

The CEA is calling for an amendment to the Criminal Code to create new sentencing options more proportional to the full range of impacts of these crimes. We've circulated copies of a CEA policy paper that was released earlier this year to provide you with additional information on the issue.

Francis.

3:35 p.m.

Francis Bradley Vice-President, Policy Development, Canadian Electricity Association

Thank you, Ron.

I will now give you an overview of our other recommendations.

First, there must be a sustained and long-term commitment to energy efficiency in Budget 2015. Aside from having a positive effect on household budgets, energy efficiency increases business and industry competitivity, aside from being a profitable way of reducing emissions.

The CEA recommends that Budget 2015 renew the funding of the Office of Energy Efficiency, so that it may continue to exercise leadership in that area.

Recommendation 2 is that Budget 2015 renew funding to continue R and D in areas that support the capabilities of modern grid infrastructure.

NRCan's office of energy research and development, the clean energy fund, and the ecoENERGY innovation initiative have been valuable tools for funding and advancing energy technology innovation, R and D, and demonstration projects in key areas. We would like this important work to continue.

The next recommendation is renewal of funding beyond 2015 for NRCan's climate change adaptation platform. The adaptation platform is a forum for collaboration on climate change adaptation priorities, and it equips decision-makers and key industries with tools and information.

3:40 p.m.

Conservative

The Chair Conservative James Rajotte

You have one minute left.

3:40 p.m.

Vice-President, Policy Development, Canadian Electricity Association

Francis Bradley

Recommendation 4 is that we must continue support for regulatory alignment with the United States, to enhance the integrated North-American electricity system.

Our final recommendation relates to the integration of electric vehicles. We're calling on the federal government to establish targets for the integration of electric vehicles into the federal vehicle fleet, and to renew funding for Industry Canada’s automotive partnerships Canada program.

The CEA recommendations for Budget 2015 are consistent both with the committee's key consultation themes, as well as with the seminal report of our association published earlier this year entitled Vision 2050: The Future of Canada's Electricity System. This report sheds light on the urgent need to take the necessary steps if Canada is to maintain a reliable, affordable and sustainable electricity system.

We've circulated copies of the summary of “Vision 2050” for your review, and we look forward to your questions.

Thank you, Mr. Chairman.

3:40 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you for your presentation.

We'll now hear from the Canadian Home Builders' Association.

3:40 p.m.

Bard Golightly President, Canadian Home Builders' Association

Thank you, Mr. Chair.

I'm Bard Golightly, chief operating officer of the Christenson Group in Edmonton, Alberta. We're a residential development company. I'm speaking today on behalf of all my colleagues across the country in the Canadian Home Builders' Association.

Canadian Home Builders' represents more than 8,500 member companies from coast to coast in new home building, home renovation, and residential development. Our industry generates more than $120 billion in economic activity each year and supports over 900,000 jobs for Canadians, directly contributing to the economic health of families and communities across the country.

First, I'd like to touch on the importance of federal infrastructure investment in relation to the affordability of new homes. The new Building Canada plan is important to home builders, to our customers, and to the communities of which we are a part. It is particularly important because federal investment in infrastructure acts to reduce the cost being levied on new home buyers through municipal development taxes, which are a major factor in driving up new home prices and the unfortunate part of the new market fundamentals.

CHBA applauds the government's robust investment in core municipal infrastructure: roads, transit, water, and wastewater systems, and encourages ongoing investments focused on these core areas.

Second, prosperous communities require new households, particularly young working families and new Canadians, to be able to enter the housing market and become homeowners. Unfortunately, it is these younger Canadians and families, those hardest hit by the economic downturn, who face increasing challenges when it comes to home ownership.

Young buyers who are at the start of their working lives are the best able to responsibly take on a long-term debt in the form of a housing investment, yet this is the very group most adversely affected by tighter mortgage rules. These rules, coupled with the inherent challenge of saving for a down payment as house prices rise much faster than incomes, mean an increasing number of young working people and families are being locked out of home ownership.

The tightening of mortgage rules was implemented to stabilize the housing market. With that now achieved, CHBA believes that first-time buyers need and deserve special consideration when it comes to mortgage rules. This would support their home ownership dreams and contribute to prosperous communities.

Reflecting this view, CHBA recommends that well-qualified first-time homebuyers should have access to insured 30-year amortized mortgages. Current rules requiring qualification for the five-year mortgage commitment are quite sufficient to safeguard against debt overextension. We estimate that approximately 85,000 households would be added to the pool of potential homebuyers by such a measure, at no additional cost and little additional risk to the federal government.

Related to this issue is the issue of ever-increasing government-imposed costs on housing. While most such costs are linked to other levels of government, the federal government could improve affordability from coast to coast by ensuring that taxes levied by provincial and municipal governments on new homes are GST exempt. Currently, federal GST applies to new home taxes, levies, charges, and fees imposed by other levels of government, amounting to a tax on tax, amplifying the excessive level of taxation on new homes.

Such an action would demonstrate the federal government's commitment to fair taxation of Canadians, and also signal its concern about how rising new home taxes are reducing affordability, particularly for younger people and families seeking to achieve new home ownership.

I'll end with one final recommendation in the key area of home renovation, a $60 billion-a-year industry that's undermined by cash operators who evade taxes.

3:45 p.m.

Conservative

The Chair Conservative James Rajotte

You have one minute left.

3:45 p.m.

President, Canadian Home Builders' Association

Bard Golightly

Cash operators undermine legitimate business and harm consumers, and reduce government tax revenue.

CHBA therefore recommends a modest targeted home renovation tax credit to tackle the underground cash economy. An ongoing federal tax measure requiring receipts would undermine cash operators, as past federal programs have shown that even modest incentives can dramatically suppress the underground economy. Careful structuring of incentives could ensure that all or most costs would be offset by increased tax revenues. The purpose of this is not stimulus; it would be a modest measure to address the underground economy with minimal fiscal impact. Such a measure could address key socio-economic policy priorities by focusing on first-time buyers, aging-in-place seniors, and/or those undertaking energy efficiency renovations.

Thank you very much.

3:45 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you very much for your presentation.

We'll go to Mr. Woodside, please.

3:45 p.m.

Brad Woodside President, Federation of Canadian Municipalities

Thank you very much, Mr. Chairman.

Ladies and gentlemen, it is a pleasure to be here today.

It's my pleasure to be here today. I appreciate the opportunity to convey our thoughts on Budget 2015.

The Federation of Canadian Municipalities is the national voice of municipal governments across Canada. We represent the elected leaders of 2,000 municipalities who serve more than 90% of Canadians living in big cities, small urban centres, and rural and remote communities. Our goals are simple. We want to strengthen the services that families rely on; keep our communities safe and vibrant; and build the foundations to a stronger, modern economy.

Our cities, our communities, drive Canada's economy. They are the hubs for environmental and social innovation. Time and again we've shown that when a stable, consistent, and long-term framework is in place, investing in our hometowns creates jobs and improves the quality of life of Canadians. We've seen it in fighting the recession and rebuilding our infrastructure through a permanent and indexed gas tax fund and in major cost-shared investments in roads, bridges, transit, and other core infrastructure.

The 2015 federal budget represents a real opportunity to move beyond one-off agreements and provide a sustainable framework for strengthening Canada's hometowns and moving this country forward.

Investing in local infrastructure provides a clear and measurable return on investment while addressing the biggest gaps hindering our economic competitiveness. According to the Conference Board of Canada, improving our roads, bridges, and water systems generates up to $1.20 in real GDP growth for every dollar invested.

FCM will be providing a submission to the committee focused on partnering on infrastructure, but in my limited time today I want to focus on a very specific infrastructure issue, protecting Canadian water.

New federal wastewater regulations will require upgrades to one in four wastewater treatment systems in Canada. Municipal leaders have supported the goal of protecting Canada's water resources and the improvement to the environment that will result. The costs associated with the implementation of the regulations, however, are beyond the reach of municipalities alone.

Based on FCM cost estimates, future capital expenditures of more than $18 billion will be required over the next 20 years as a result of this federal initiative. There will also be additional costs to municipalities for assessments, planning, and ongoing operations. Simply to give the committee members an idea of the challenge, for example, community residents in Mr. Saxton's riding face over $700 million in the next five years alone to upgrade wastewater treatment plants.

To Mr. Brison and Mr. Keddy as well, Nova Scotia municipalities are going to have to invest $218 million in the next five years. To Mr. Rankin and Mr. Cullen, B.C.'s total costs will be about $1.75 billion over the next five years. In Ms. Boutin-Sweet's home province of Quebec, 30 wastewater treatment plants will need to be replaced in the next five years, for a total estimated cost of $1.13 billion.

Obviously, you can see the severity of the issue.

I recognize that these numbers are significant, but I assure you that municipalities are ready to do their fair share, and the solution we are putting forward is responsible and still feasible in a balanced budget scenario.

FCM is recommending that the budget establish a dedicated fund for wastewater treatment projects required due to the new wastewater regulations, and that all orders of government contribute in a cost-shared plan. This partnership would see new federal investments of $300 million annually, and a commitment of 20 years to assist with the capital costs.

I'd like to spend some time with you as well discussing how we can continue working together to make Canada a welcoming and an affordable place to live. Together we can create vibrant and welcoming communities where people want to live and work, start business, build connections, and contribute.

3:50 p.m.

Conservative

The Chair Conservative James Rajotte

You have one minute left.

3:50 p.m.

President, Federation of Canadian Municipalities

Brad Woodside

Housing that is affordable for newcomers, young families, the middle class, and seniors lays the groundwork for a healthy community and makes good economic sense. The housing sector represents 20% of Canada's GDP. A stable and secure housing system is essential to community and economic growth, and for every dollar invested in housing we earn back $1.40 in GDP.

The federal government currently invests a much needed $2 billion a year in affordable housing and homelessness programs. However, funding agreements are expiring rapidly, while capital repair deficits continue to grow, affecting Canadian families living in 600,000 social housing units.

High home ownership costs and lack of rental housing are also putting the squeeze on Canadian families. Protecting federal investments in social housing and creating incentives to increase rental housing will help keep vulnerable seniors in their homes and out of the health care system. It will make housing more affordable for the one-third of Canadians who rent, and take the pressure off the housing market and household debt.

We are ready to work together to create a healthy and sustainable housing system. Budget 2015 provides a unique opportunity, Mr. Chair, for the Government of Canada to become champions of Canada's hometowns. We look forward to working together to seize this opportunity, and to manage the risks before us.

I want to take this opportunity to thank you for affording me the opportunity to make this presentation—I must say that it's good to see you outside of Edmonton, Chair—and I'm looking forward to the questions.

3:50 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you. It's always good too see you in Edmonton too, the city of champions.

3:50 p.m.

President, Federation of Canadian Municipalities

3:50 p.m.

Conservative

The Chair Conservative James Rajotte

So far this year, we're undefeated in the NHL.

We'll go to Mr. Lehman, please, mayor of the city of Barrie.

3:50 p.m.

Jeff Lehman Chair, Mayor, City of Barrie, Large Urban Mayors' Caucus of Ontario

Good afternoon, Mr. Chairman and members of the committee.

I am the mayor of the City of Barrie.

I'm also the chair of the Large Urban Mayors' Caucus, which comprises mayors of the 26 largest cities in Ontario, those with a population of over 100,000. We represent about 67% of Ontario's population.

I want to start today by saying that we're very encouraged by the federal government's focus on ensuring prosperous and secure communities and that investing in our cities is one of the surest ways we can strengthen our country's economy and ensure long-term prosperity.

Specifically, we'd like to speak to you today about the need for growth in job creation to grow and diversify that economy, investment in infrastructure to end gridlock and to adapt to the impacts of severe weather, and real commitment to affordable housing in Canada.

Ontario's big city mayors believe that although all levels of government are working to create jobs and stimulate the economy, too often we're doing this in isolation. We're in need of a diverse and robust jobs strategy, both in Ontario and in Canada as a whole.

As mayors, we're calling on our partners in the provincial and federal governments to work with city leaders to develop a comprehensive jobs strategy. This would include actions to address labour market reform through skills training and apprenticeship programs as well as immigration reform; a coordinated international trade agenda, shared by federal, provincial, and municipal governments; and infrastructure investment that targets the problems that hold our economy back. Specifically, those are gridlock and transportation infrastructure in Ontario's largest cities.

We, as mayors, are united on the need for new investment in both roads and transit, in both our largest urban areas and in our medium-sized cities. Gridlock is costing us jobs; it's costing investment; and it's putting us at an economic disadvantage.

We're very encouraged by the federal government's announcements of infrastructure plans. However, what remains unclear is whether the funding announced represents a drop in federal support for this critical priority, as the allocation of the funding is as yet undetermined.

We're concerned that the purpose of these funds may be diluted by making many more types of infrastructure eligible, such as pipelines. We really encourage the government, in the budget and in subsequent rollouts, to focus on infrastructure investment that has the best return on investment in the economy.

Another growing threat to the security of our cities and their infrastructure is the increasing number of severe weather events. Adapting and hardening our infrastructure to respond to the impacts of climate change is no longer the stuff of long-term planning or disaster movies; these are impacting us today.

The floods in Toronto and Calgary last summer cost each city tens of millions of dollars, not to mention the human costs of destroyed homes and disrupted lives. With damage of over $5 billion, the Calgary flood is Canada's costliest natural disaster ever. The cost to our economy is extensive, and the threat to the safety of our residents is very real.

We need a forward-looking approach that ensures that adaptation to climate change is incorporated into infrastructure planning and decision-making at all levels of government.

While we need to invest in the roads and pipes that keep our cities working, we also need to consider the basic needs of the people who live there. We're finding middle-income families in our cities are priced out of reasonable housing. Worse, lower-income Canadians cannot find housing at all and face long wait times for social housing.

Municipalities need the support of CMHC and associated funding to both maintain the existing stock of affordable housing and to begin to address the backlog and wait lists present across Ontario.

In addition, I would note there are innovative approaches to affordable home ownership that can be explored through federal tax policy and that can support lower-income families, giving them pride of ownership and building equity. But it's only through meaningful investment in capital projects in the affordable housing sector that we can begin to address the crisis overall.

In conclusion, I want to say that the challenges facing Ontario's big cities are the same ones facing Canadians in cities across the country. To move forward, we must put investment in infrastructure at the heart of our national economic strategy.

Our country is changing. When municipalities were formed, one-quarter of the population lived in cities. Today that is reversed; now three-quarters of Canadians call cities home.

My own city delivers 60 different services to people, but we are still governed and funded by a 19th century legislative framework. We simply don't have the tools we need to deal with the challenges we're facing.

I'll give you a specific example in investment. Changes to Canada's tax regime may be effective in stimulating pension fund investment or private investment in infrastructure. This is a major opportunity that the federal government can assist cities with to help reduce the infrastructure deficit.

I'd urge you to consider these investments and innovations in economic policy to ensure prosperous and secure communities for the benefit of all Canadians.

I thank you very much for your time, Mr. Chair.

3:55 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you very much for your presentation.

Colleagues, we will do five-minute rounds, as our time is somewhat compressed.

We'll start with Mr. Cullen, please.

3:55 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

Thank you, Chair.

Thank you to all our witnesses.

Mr. Lehman, when I saw the name of your group I had a different expectation of who indeed was coming—

3:55 p.m.

A voice

The large mayors.

3:55 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

That's a bad joke.

3:55 p.m.

Voices

Oh, oh!

3:55 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

I think you may want to reconsider the naming, but....

Is there a specific ask with respect to adaptation for the cities? You mentioned a couple of the recent impacts on infrastructure due to climate change. I may have missed it in your presentation. Does this group of mayors in Ontario have a specific expectation or ask within this budget request?