Finance Committee on Nov. 19th, 2014

[The Chair, Conservative, James Rajotte]

Okay, thank you, Mr. Rankin.

I'm going to go to Mr. Adler, but Minister, I did cut you off in terms of the Arctic research question. If you want to return to that you can.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Sure, I can make a few more points.

[The Chair, Conservative, James Rajotte]

Do you want to do that briefly and then we'll go to Mr. Adler?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

The station I referred to, the Canadian High Arctic station, will be built in Cambridge Bay, Nunavut, and is scheduled to open its doors on July 1, 2017.

Scientific work, however, is already under way at the station location in Cambridge Bay. As a key pillar of Canada's northern strategy, this station will provide Canada and the world with cutting-edge Arctic science and technology to support and inform decision-making in the north while contributing to the economic prosperity of Canadians.

There are a number of objectives for this station: promoting and disseminating knowledge in respect to polar regions; developing and diversifying the economy in Canada's Arctic; providing effective stewardship of the Arctic lands, waters, and resources; creating a hub for scientific activity in Canada's vast and diverse Arctic; promoting self-sufficient, vibrant, and healthy northern communities; inspiring and building capacity through training, education, and outreach; and enhancing Canada's visible presence in the Arctic and strengthening our leadership on Arctic issues.

[The Chair, Conservative, James Rajotte]

Thank you, Minister.

Mr. Adler, go ahead, please.

[Mark Adler, Conservative, York Centre, ON]

Thank you very much, Chair.

Thank you, Minister, for being here, and thank you to the officials also.

I want to follow up on something you mentioned during your opening remarks regarding the federal tax burden being the lowest on Canadians in over 50 years. Our government, as you know, has lowered taxes 160 different times since 2006, most notably the GST from 7% to 6% to 5%. With the tax relief the government has provided since 2006, personal income taxes are now 10% lower. For an average family of four, taxes have been cut by close to $3,400.

Recently the Prime Minister announced the doubling of the children's fitness tax credit to $1,000 and made it refundable.

Can you tell us what kind of reaction you have been getting from Canadians, and how this will help provide tax relief to Canadian families?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

The reaction has been, of course, very positive. The children's fitness tax credit was introduced in budget 2006, and in 2011 our government committed to doubling the maximum amount that could be claimed under this credit and making the credit refundable. We're now in the fiscal position to fulfill that commitment.

Our government is enhancing the credit by increasing the maximum amount that may be claimed to $1,000 from $500 and by making the credit refundable. The doubling of the maximum amount will be effective for this tax year and subsequent tax years, and the credit will be refundable effective next year and subsequent years.

These proposed amendments, which, as I said, fulfill our commitment, will provide tax relief for Canadian families of about $25 million in fiscal 2014-15 and $35 million annually thereafter.

The fitness tax credit currently provides tax relief to 1.4 million Canadian families who enrol their children in eligible fitness activities. When fully implemented, these enhancements will deliver additional tax relief to about 850,000 families.

[Mark Adler, Conservative, York Centre, ON]

Thank you very much.

Minister, you also mentioned during your opening remarks that the government has taken many actions, in fact 80 different measures, to increase fairness and the integrity of our tax system.

How does Bill C-43 build on the tax fairness measures the government has already introduced?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

There are a number of ways in which we have addressed the issue of fairness. I mentioned how the fishing industry benefits.

Bill C-43 reflects our government's ongoing commitment to improving fairness and integrity in the system and to ensuring that everyone pays their fair share. This includes a package of actions to address aggressive tax avoidance by multinational enterprises.

A well-functioning tax system is essential to keeping Canada positioned as an attractive place to work, invest, and do business, so efforts to ensure the integrity of the system also benefit provincial governments by protecting provincial revenues on our shared tax basis.

Specifically the bill will eliminate a graduated-rate taxation for trusts and certain estates. It will better target income tax rules relating to non-resident trusts. It will protect the tax base by preventing the shifting of certain Canadian source income to no- or low-tax jurisdictions. It will adjust the policy that encourages the exchange of tax information, and it will add new conditions for qualifying under the regulated foreign financial institution tax rules.

Since we have been in government, we have introduced over 85 measures to improve the integrity of the tax system.

[The Chair, Conservative, James Rajotte]

Thank you very much.

Thank you, Mr. Adler.

Minister, I want to you thank you on behalf of the committee for being with us this afternoon, and thanks to your officials. We appreciate your time.

Colleagues, we have about eight minutes to get to the House for a vote, so we'll suspend and come back immediately after the vote.

Thank you.

[The Chair, Conservative, James Rajotte]

I call this meeting back to order. It is meeting number 59 of the Standing Committee on Finance.

We're very pleased to have with us here today, four witnesses from four different organizations.

First of all we have the Canadian Labour Congress, president Hassan Yussuff. Welcome back to the committee.

Secondly, we have the Public Health Agency of Canada. We have our chief public health officer, Mr. Gregory Taylor. Welcome to the committee.

From the Credit Union Central of Canada, we have the president and CEO, Ms. Martha Durdin; and we have Vancouver City Savings Credit Union's chief economist, Mr. Chris Dobrzanski. Welcome.

I want to welcome you all to the committee on behalf of all the members. Thank you for appearing on the budget implementation act. You will each have five minutes for your opening statements, and then we'll have questions from members.

We'll begin with the Canadian Labour Congress, please.

[Hassan Yussuff, President, Canadian Labour Congress]

First, James, let me thank you on behalf of the Canadian Labour Congress for inviting us to come to present our views today on Bill C-43.

The Canadian Labour Congress, as you know, is the national voice on behalf of 3.3 million workers across Canada.

I will focus my comments on the issues of employment before turning to the temporary foreign workers program.

We continue to face a very serious unemployment challenge in this country. Unemployment, especially youth unemployment, remains stubbornly high. The overall labour force participation rate and the employment rate have still not recovered to their pre-recession days of 2008. On the contrary, the participation rate continues to fall, and the employment rate has been stagnating since 2010. We still have a crisis on our hands with respect to jobs for young people, and especially good jobs for young people.

Bill C-43's response to this crisis is inadequate, to say the least.

Bill C-43 implements a small business job credit. According to the Parliamentary Budget Office, this will create 800 new jobs in 2015 and 2016. Instead of doling out a $550-million El premium cut to employers, the federal government needs to make this program work for the unemployed workers.

There are nearly 270,000 unemployed workers in Toronto, and only 17% of them are receiving unemployment insurance benefits. It's fundamentally unfair that workers are paying into this program and are unable to access benefits when they lose their jobs. Imagine paying premiums for house insurance only to be denied compensation when your house burns to the ground. We need action to improve the employment insurance program, not to erode it. The CLC has long been calling on the government to allow more workers to access El benefits.

We also need a major public investment, economic growth, and a lift to private sector productivity in this country. High-quality and accessible child care for all Canadians would create jobs and increase the labour force participation for parents with young children. The federal government could also be doing much more to encourage skills training and expand the apprenticeship programs. We need a skills training and workforce development strategy if we are ever going to end employer dependence on the temporary foreign worker program.

I want to speak next to the temporary foreign worker program. Bill C-43 gives the government great powers to beef up the inspection and compliance verification of the temporary foreign worker program.

In our view, the efforts to protect migrant workers' rights will continue to be undermined by the fact that workers in the low-wage stream are unfree, dependent on employers, and of course vulnerable to exploitation and abuse as a consequence. Temporary migrant workers must be given access to permanent residency and given the legal means and support to escape abuses from employers. Otherwise, no amount of compliance efforts will suffice to safeguard migrant workers' rights.

The government has not moved to address the temporary migrant workers entering Canada under the international mobility program. Employers who hire these workers are not bound by any of the rules that are set out under the labour market impact assessment process. The requirements that employers pay prevailing wages and first advertise for permanent residents and Canadians don't apply.

The federal government's decision to change the live-in caregiver program rules add further to the problem. They will almost certainly restrict the ability of caregivers to gain access to permanent residency.

Finally, I want to say that it is irresponsible that Bill C-43 allows provinces to set minimum residency requirements for social assistance. This will restrict social assistance benefits for refugee claimants who are awaiting a determination of their claims. This serves no policy purpose, and only serves to demonize refugee claimants.

With that, I want to thank the committee and welcome any questions that you may have.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

Dr. Taylor.

[Dr. Gregory Taylor, Chief Public Health Officer, Public Health Agency of Canada]

Mr. Chair and members of the committee, thank you for giving me an opportunity to discuss with you the amendment to the Public Health Agency of Canada Act—which is presented in Bill C-43—and my role as Chief Public Health Officer of the Public Health Agency of Canada.

As you know, that amendment aims to redefine the role of the chief public health officer so that it would focus exclusively on the public health needs of Canadians. This amendment also aims to create a position of president of the Public Health Agency of Canada, who would be in charge of managing the agency.

I strongly support this amendment. My unique journey has allowed me to gain a lot of experience and come to this conclusion.

I started my medical career as an M.D. in a private small city practice. As a family physician I experienced the challenges of holding two jobs much like the position of chief public health officer. On one hand I was helping patients improve their health and essentially managing a business on the other, often causing tension between the two.

In the 20 years since, I've held progressive leadership positions in the federal government, specializing in public health, and I've watched the agency grow from a branch of Health Canada to a global leader in public health. Today with an ebola epidemic in the public spotlight, we're reminded why the country needs its leading public health professional to focus exclusively on one major task: public health.

Since the agency's inception, the competencies and experiences to lead national public health issues have grown, as have the skills needed to manage a growing public sector organization. The Public Health Agency of Canada now has over 2,000 employees across the country. It's annual operating budget is over $600 million.

For years now it's been clear to me and my colleagues that the CPHO role must evolve and complement that growth in a way that makes sense. Division 20 of this bill will allow my position to focus on moving Canada forward in public health issues, providing advice directly to the Minister of Health and to Canadians, collaborating with all partners and interacting with multiple key players including the Canadian public. At the same time, a dedicated agency president will provide focused strategic management and corporate leadership for a world-leading, vibrant and strong organization.

The president, as deputy head of the agency, will assume some of the management responsibilities currently assigned to the CPHO including accountabilities for finance, audit, evaluation, staffing, official languages, and access to information and privacy. These are all important functions requiring the attention of a senior leader.

The changes proposed do not diminish the role of the chief public health officer, they enhance it. In essence, they associate internal management and capacity issues with a dedicated agency head and direction on public health issues with the CPHO. It makes good management sense and good public health sense to make these changes.

It's a structure that works well for many provinces and territories, and for countries, including the United Kingdom and Australia. In fact, we've been moving this way as an agency for some time now and have, in fact, adopted this type of management structure since 2012. At that time we began to separate out the roles and responsibilities of the CPHO on an interim basis. My appointment as CPHO on September 24th of this year—the date of the agency's 10th anniversary—reflected the first step needed to move public health forward in Canada.

The next step will ensure we have the right people in the right positions focused on the right tasks for Canadians. I'm very proud of the agency's maturation. The agency has become a world leader in public health, and just as its profile of importance has grown, so have public expectations of our work. We need to enhance our public health connections globally.

After 10 years and many high-profile public health success stories, the agency and the position of chief public health officer are no longer young. We now need to adapt and advance in a way that makes good management and public health sense.

Mr. Chair, committee members, for these reasons I strongly support division 20 of Bill C-43 before you today that will amend the Public Health Agency of Canada Act.

The associate deputy minister and I believe these changes are the right thing to do for the health of Canadians. I thank you for inviting me today.

[The Chair, Conservative, James Rajotte]

Thank you, Dr. Taylor, for your presentation. Speaking on behalf of all of us, I thank you for your work dealing with the ebola epidemic.

We'll now hear from the Credit Union Central of Canada.

[Martha Durdin, President and Chief Executive Officer, Credit Union Central of Canada]

Good afternoon.

My name is Martha Durdin, and I am President and CEO of Credit Union Central of Canada. Thank you for the opportunity to appear before you to speak to Bill C-43.

Credit Union Central of Canada is the national trade association for the 317 credit unions operating in Canada outside of Quebec. These credit unions hold over $166 billion in assets and operate out of 1,740 locations across the country. They provide over 27,000 jobs and banking services to 5.3 million Canadians.

Credit unions are provincially regulated financial co-operatives owned by their members. These member-owners play an important role in guiding the evolution of their credit unions and exercise control over their institutions on a “one member, one vote” basis.

Credit union innovation goes beyond our unique ownership structure. Credit unions have a rich history of Canadian financial sector firsts. Credit unions were the first Canadian financial institutions to lend to women in their own names. They were the first to offer daily interest savings accounts, the first to offer full-service ATMs, and the first to offer fully functional online banking.

Credit unions have strong relationships with the communities they serve.

We do not seek short-term profits and we stay invested in our communities when competitors chase profits elsewhere. ln fact, the credit union system today operates in 380 branches in communities where there is no other physical banking presence.

Credit unions also have a special affinity for small businesses.

I hesitate to raise them after the exchange a little while ago, but the Canadian Federation of lndependent Business data shows that credit unions, including Desjardins, have the second highest share of small business lending in Canada at 18.6%, just behind the Royal Bank of Canada, which of course is a much larger institution. According to the CFIB, credit unions have achieved this success because they dominate the banks in providing exceptional service to small business.

Credit unions are also a force for stability in the Canadian financial sector. Our loan growth is steady. Our average credit union loan losses have been significantly lower than those of the chartered banks.

In short, credit unions are a Canadian success story.

They are innovative, community-focused, a key support for small business, and a force for stability in volatile times. They are key elements in a competitive financial sector ecosystem. The success is a product of efforts at individual credit unions but it is also the result of collaboration between credit unions. Over time this collaboration has built provincial centrals, and more recently, regional centrals like Central 1 in B.C. and Ontario, and Atlantic central that provide back-office services to credit unions across provincial boundaries.

Collaboration helps the credit union system build scale and find common approaches to technology, branding, liquidity management, compliance, and market strategy. ln many instances, this collaboration has been aided by a federal legislative framework that has facilitated cooperation across the credit union system. That brings me to Bill C-43.

Bill C-43 proposes significant changes to the federal framework that has governed aspects of the credit union system for decades. These proposed legislative changes were initiated by the federal government in the budget in 2014, as you know, and were not made at the request of the credit union system.

ln basic terms, Bill C-43 will reorder the federal government's relations with the credit union system. This is particularly true with regard to the relationship with the provincial credit union centrals, and regional credit union centrals.

[The Chair, Conservative, James Rajotte]

You have one minute.

[Martha Durdin]

Currently five provincial centrals in Canada are dually regulated by OSFI and the federal institutions of the centrals. The implications of adjusting to such a significant departure from past practice will take some time to understand and to respond to.

I think I'll just go straight to my conclusion, seeing as I'm over the time.

Bill C-43 is proposing changes to the system framework that governs parts of the system and we're looking for time to prepare for and implement the transition envisioned by the federal government. To that end we request that this committee when it reports on Bill C-43 include a recommendation that the federal government ensures that credit union stakeholders have the time to prepare for the transition to an exclusively provincial regulatory regime, and that the transition timetable be dictated by the requirements of the smooth transition.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now hear from Vancity, please.

[Chris Dobrzanski, Chief Economist, President and Chief Executive Officer, Citizens Bank of Canada, Vancouver City Savings Credit Union]

I want to thank the chair and the committee members for inviting Vancouver City Savings, or Vancity, to be part of today's discussion on Bill C-43.

My name is Chris Dobrzanski, and I am the Chief Economist at Vancity Credit Union, based in Vancouver, British Columbia. I am also the CEO of Citizens Bank of Canada, which is fully owned by Vancity and provides a national financial framework to our credit union.

Today, I will share our perspective, which is rooted in community and provincial incorporation. As Ms. Durdin was saying, credit unions and caisses populaires continue to attract a growing number of members and talented financial services employees who serve many sectors in the real economy. Constituents benefit from the national network of provincially incorporated deposit-taking financial cooperatives. The Canadian credit union sector, excluding Desjardins caisses populaires, represents 5.3 million members, or 20% of the population.

Since 1946, Vancity has known that members make us who we are. We were founded by providing banking services to those in our community who weren't served by existing financial institutions. As a cooperative, Vancity is driven by the needs of its members, which has resulted in the provision of many firsts extending the reach of financial inclusion.

This ability to work with the needs of the community serves us well today and has allowed Vancity to be an innovator in providing real-time solutions to community challenges in areas of affordable housing, local food systems, social enterprises, renewable energy and environment, and financial literacy, to name a few. This local innovation, in part, relies on direct access to payment settlements. Specifically Vancity, via its membership in Central 1, has Canadian Payments Association, or CPA, protocol, reliability, and stability. Vancity is grateful for the existing framework that allows regional central credit unions to be equal partners in the CPA. Today, with over 501,000 members and assets of nearly $18 billion, Vancity is Canada's largest community credit union.

Vancity understands the big picture for financial regulations emerging, especially for the implementation of Basel III internationally by 2018. We agree that some financial reform will inconvenience regulated deposit-taking financial institutions to provide more stable credit pipes that support the real economy, which is aided greatly by harmonizing and tightening regulation. Vancity favours regulation that provides for a stable supply of banking services to Main Street, where our credit union members work.

Nationally, Vancity cooperates with credit unions across the country to create a large-scale secure network. In our case, this is done through Central 1. We are grateful for the current framework that today allows our regional central credit unions to be equal partners in the CPA, and be subject to the same rules of the Office of the Superintendent of Financial Institutions. These uniform standards support Vancity members, as they create greater financial stability for all deposit-taking financial institutions, and not just credit unions and their member centrals.

As a cooperative, Vancity is democratically governed by its members. Together with other British Columbia credit unions, we are members of our regional central credit union. Through our member-elected board of directors, we consult with each other on matters of financial reform, financial scale and sound financial practices. Our consultation process reaches a deeper consensus, perhaps, than our competition. It does take time to consult within our peer groups and to coordinate across our credit union regions.

We note that the important changes envisioned in Bill C-43 with respect to credit unions would also benefit from a deeper consultation. Our experience is that when we devote adequate resources and time to policy changes, like those in the bill, we are able to ensure a smooth transition to a new state with clear benefits for all those involved. We ask the committee, therefore, to understand that we would welcome sufficient time to allow for our system of cooperative collaboration to develop a coordinated response to the regulatory changes envisioned.

In closing, Mr. Chair, on behalf of the members of Vancity, I wish to emphasize our agreement that it is only prudent to start planning for the topics we covered today.

I thank you very much for the opportunity to present to you today. You can always come by Vancouver to see the positive effects we have on the communities we serve and the importance of our values as the basis for our financial activities. We hope you will visit Vancity next time you are in Vancouver.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

Colleagues, we should do five-minute rounds. I want to indicate that we won't get to every member, so if we can share some rounds that would certainly be helpful for all of you.

We'll start with Mr. Cullen, please, for five minutes.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair, and thank you to all of our guests. I'd like to first echo the comments of our Chair to Mr. Taylor that the work that your organization has been doing on behalf of all Canadians is the reason why you're there and why public health care matters and should be supported.

Quickly to Ms. Durdin and Mr. Dobrzanski, the question is around consultation before these changes. In the last budget there was a change made to the way credit unions were taxed by the federal government that had some impact broadly across credit unions. I'm not sure, Ms. Durdin, if you were involved at that time.

[Martha Durdin]

I was not involved at that time.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

The change in tax policy cost credit unions across Canada somewhere in the order of $130 million. Mr. Dobrzanski, I'm not sure if you were involved with Vancity or other credit unions at that time as well.

[Chris Dobrzanski]

I was at Vancity during the time these changes were proposed.