Finance Committee on Nov. 26th, 2014

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

The $10 million is obviously not a hard number. It can be that amount.

One last question, Chair, is there an appeal process that's contemplated under these changes to the act that would allow a telecom company to appeal any decision made by the CRTC?

[Pamela Miller]

Yes, there could be an appeal to the CRTC and also representation to the courts.

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

Through the courts. Thank you.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Cullen.

(Clauses 193 to 210 inclusive agreed to)

Thank you.

I want to thank our two officials for being here this evening.

We will now go to division 12, Business Development Bank of Canada. This deals with clauses 211 to 223.

(Clauses 211 to 223 inclusive agreed to on division)

We've dealt with division 12.

We want to thank those officials for coming out.

Now we have division 13, the Northwest Territories Act. We have clause 224.

(Clause 224 agreed to)

Thank you.

Let us move on.

Colleagues, I do not have an amendment until clause 231, so I have two more divisions—14 and 15. Is there any discussion?

Which one is it on, Mr. Hsu?

[Ted Hsu, Liberal, Kingston and the Islands, ON]

It's on division 14, please.

(On clauses 225 and 226)

[The Chair, Conservative, James Rajotte]

Okay, we'll deal with division 14, on the Employment Insurance Act. We have two clauses there, 225 and 226, and we'll allow our officials to come to the table for these.

Welcome back to the committee.

Mr. Hsu, go ahead, please.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Thank you, Mr. Chair.

My remarks will be brief, but we want to say that the minister admitted to this committee that his department did no economic analysis of this measure before committing more than half a billion dollars of taxpayers' money. We've heard from experts who point out that this tax credit has a design flaw. There is a very strange marginal tax rate near the limit at which this credit comes in, so there is a perverse incentive for employers who are near this limit to fire workers or reduce their hours or to not extend hours or to not give raises in order to qualify for the tax credit.

We've heard from the Parliamentary Budget Officer, who says that this so-called job credit will create only 800 jobs over two years at a cost of almost $700,000 per job. I can give you lots of examples of where we could create jobs for much less, so clearly this is not a very good job-creation measure.

There are better ways to spend more than half a billion dollars of taxpayers' money. There are other tax measures or investments that can do more to strengthen the economy, to create jobs, and to provide taxpayers with a better bang for their buck.

[The Chair, Conservative, James Rajotte]

Thank you.

I have Mr. Cullen on the list.

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

Thank you, Chair.

Just to follow up on Mr. Hsu's comments and maybe make some minor corrections to the statements, it has been stated by Conservative colleagues around the table that this isn't taxpayer money. The money in the EI fund belongs to those who put it there, and those who put it there are the employers and the employees who contribute to what we call employment insurance, with the idea being, as the name would tell us, to provide insurance when people lose jobs.

Now, the government was certainly unable to bring forward any evidence that supported the claims and was unable to refute the evidence that was transparently provided by the Parliamentary Budget Officer and other economists who came forward in terms of the efficacy, and more importantly lack of efficacy, of spending $550 million—it's hard to sort of put that out—raided out of the employment insurance fund.

I remind my friends across the way that when the Liberals did this, the Conservatives used to decry the raid on the EI fund. Now that the Conservatives are doing it, I guess it's okay from their perspective.

The only other correction I want to make has to do with the estimate of 800 jobs and $550 million, which came out of the Parliamentary Budget Officer's report. It's a little bit lower per job. The government is getting a deal at $550,000 to create one single job, according to the PBO. Again, if the government had evidence to refute the claim, we didn't hear it from the minister or from the deputy or assistant deputy ministers who are involved in the design of this fund.

To be fair to the government, they didn't come up with this scheme. They didn't write the policy. They outsourced. According to the minister, they outsourced to a business lobby group. Maybe the Conservatives are comfortable with running a country by outsourcing important financial programs. The tragedy of this is that so few jobs will be created for so much money and there are so much better initiatives that would have a better impact on the economy in terms of productivity and the like.

We've been strongly opposed to this. We think if you're going to respect the employers and the employees who pay into the EI fund then perhaps you should actually engage with them in it and use analysis that is proper for a G-7 country like Canada, which doesn't outsource programs to lobby groups but instead comes with facts and figures to back up such an expensive expenditure.

The greater shame for this of course is that with the economy in recovery, according to Governor Poloz when he was here, but maybe seeing zero or low growth in terms of job creation, this is the time when we most need proper expenditures, when we need the government to be working with Canadians and not against their best interests on expenditures for such schemes as this. So we will be opposing with prejudice—I suppose that's a term you could use in Parliamentary language—because this is such an offensive way for the government to conduct itself.

[The Chair, Conservative, James Rajotte]

Thank you.

I have Monsieur Caron, and then Mr. Saxton.

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

My comment is more about clause 226. Once again, we cannot vote for this clause. It will make it impossible to appeal certain decisions of the Canada Employment Insurance Commission.

The Social Security Tribunal of Canada process is already very inadequate. We will actually be discussing other clauses that will correct some of the problems associated with its creation. Our opinion is that the government should clean house in the Social Security Tribunal of Canada and take care of the disaster that creating it has caused. It should do this before bringing in measures to amend, substantially once more, the mechanism surrounding Canada Employment Insurance Commission decisions.

So we are going to vote not only against clause 225, but also against clause 226.

[The Chair, Conservative, James Rajotte]

Merci.

We'll go to Mr. Saxton, please.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you, Chair.

There was only one thing that I could hear from Mr. Cullen that was actually accurate, and that was that the funds in the EI fund actually were paid in by employees and employers. Only the NDP would say that giving money back to employers, back to job creators, would actually encourage them to lay people off. Where is the logic in that? That's complete bunk.

This money was paid into the fund. This is a tax refund to job creators so that they can continue to create jobs and spend the money on their priorities as they wish. It's an incentive for growth, and the CFIB expects 25,000 person-years of jobs to be created as a result of this. Small businesses are big job creators in our economy, and what's good for small business is good for Canadians and good for employers and employees.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Saxton.

We could probably have an election campaign on this issue, so....

Mr. Cullen.

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

Mr. Saxton obviously wasn't listening to what I was saying, but he needed to defend the idea that small businesses might be firing employees to achieve this tax credit. That wasn't actually one of my criticisms here. I think that was something that Mr. Hsu may have commented on, but the fact that Mr. Saxton seeks to defend it begs that he doth protest too much.

“He doth protest too much” is when someone defends something that they're worried about being true. It's an old expression.

But in terms of the effectiveness of the program, our concern is that the government has chosen to outsource their policy-making to a lobby group. The question then begs itself that if the CFIB, which is engaged with small business, is who the government wants writing policy for them, then I assume that student groups would be the next ones to write educational policy for them, and certainly the labour community, which is familiar with workers.... They could also outsource that.

The challenge that the Conservatives have is that they have again here decision-based evidence-making. They've decided to make a decision based on some politics. That's fine. They brought no evidence to support it.

The PBO sat at this committee and presented his estimate of 800 jobs created over two years at a cost of $550,000 per job. None of my Conservative colleagues across the way could actually poke any holes in that estimation, none at all, and neither could the finance minister when he appeared.

All this is to say that the Conservatives can certainly, and they will continue to, pretend that this program is going to do something that it doesn't. That's for them to defend. We try to rely on the facts that come before us. We relied on the Parliamentary Budget Officer because there was no better estimate done on the lack of effectiveness of this program before this committee, and my friends across the way know that.

So on we go with more Conservative ideology into the economy.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll carry on the debate with Mr. Hsu, and then Mr. Allen.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Thank you.

I think that the—

[Voices]

Oh, oh!

[The Chair, Conservative, James Rajotte]

Order.

Mr. Hsu has the floor.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Thank you, Mr. Chair.

I just wanted to say that what happens in the finance committee and what goes on the record is very important. I want to say just for the record—and I think some day this will appear in an economics 101 textbook—that economic decisions are made on the margin. The marginal tax rate in what the Conservative Party is trying to do here does something very strange at the $15,000 limit for the small business hiring credit. It's my belief that students of economics in the future will read this in their textbooks and be amazed at the arguments that were made about this.

Economic decisions are made at the margin. That's a principle that I think students learn at the very beginning of their economics studies, and it's something that this government is not paying attention to.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Hsu.

We'll go to Mr. Allen, please.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much, Mr. Chair.

To Mr. Cullen's point, I'll be happy to take this out and defend it. As in New Brunswick, where 80% of our businesses have fewer than 10 employees, I'm really happy to give back to small businesses, which represent such a strong part of our economy, $550 million because I know it'll be effective in supporting their ability to continue to do business, so I'm happy to support it.

[An hon. member]

I couldn't have said it better myself.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Allen.

Do you want me to group the votes, then? Shall clauses 225 and 226 carry? Shall we group those two?

[An hon. member]

[Inaudible--Editor]