Finance Committee on Nov. 19th, 2013

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

Thank you, Mr. Chairman.

Welcome to our witnesses.

Mr. Phillips, you talked about wanting complementarity with Farm Credit. I'm a credit union member. I live in a very small community in rural Nova Scotia. We have about 1,300 or 1,400 people, over 50 or 60 square kilometres.

I can tell you that my friends who are farmers need Farm Credit Canada because you can't match the rate and couldn't survive without it. You have to explain to me the business case for a farmer—and I'm saying this as a credit union member—in coming to you. It has to be dollars and cents and there has to be a business case made on it.

[David Phillips]

Well, that's the point.

Our position is sometimes characterized as if we want to do away with Farm Credit Canada. That couldn't be further from the truth. There is a role for Farm Credit Canada. There's no question about that—none whatsoever. Similarly, there's a role for the Business Development Bank of Canada. What we're saying, though, is that their manner of conduct should be that of a partner to credit unions, a partner to private sector institutions, not as a competitor with them.

I'm not going to tell you that we don't need Farm Credit Canada. We certainly need them. We talk to them frequently. We have a liaison committee with them. We're working with them, and there are many examples of partnership with them. They are a great organization. I don't deny that.

We're saying that we have a problem with their mandate. We think it should be clear that you should behave consistently in a complementary manner. That is our request. I don't question their experience, and I don't question the value of Farm Credit Canada in many circumstances.

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

Thank you for that, and thank you for that clarification.

Mr. Smith of the Calgary Chamber of Commerce, it's an interesting discussion here. We're talking about rural Canada, and at the same time you're talking about more urban Canada.

One of your recommendations was that there be a bandwidth approach to government spending, and that it be tied closely to population and real GDP growth and inflation. Our job, as government and as parliamentarians, is to try to find balance with legislation and balance within this budget. The difficulty with that, I believe, is that it would tend to benefit more populous urban centres than rural centres.

Do you want to comment on that?

[Justin Smith]

I believe the way bandwidth is designed or suggested in our recommendation seeks to tailor public sector spending to inflation and population growth regardless of area. That way, spending growth is never exceeding what is deemed necessary by those indicators. It's a way of tracking public sector spending in line with population growth. I don't think it favours a faster growing population over others, but certainly when it comes to capital spending or infrastructure investments, variances would have to be introduced naturally since they aren't necessarily dependent on population growth. It's a way of reflecting responsible spending in a simple bandwidth format.

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

What we've heard here today, and I think it deserves to be repeated, is that there's not one simple answer. In listening to you, I still go back to population growth and real GDP tied to inflation, and if you take that simple formula, every time, rural Canada is going to lose. Quite frankly, our urban centres require a strong rural Canada in order to supply them, not just with food and products, but with people because there are not enough jobs and opportunity in rural Canada for everyone to live there. It's a great challenge for governments, any government, to try to find that balance and I don't think that equation quite finds it.

I'm out of time but that needed to be said.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Keddy.

We'll go to Mr. Hsu, please for his round.

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

Thank you very much.

My question is for Mr. Woodside. A number of municipalities, including one of the two that I represent, have not been able to access the Building Canada fund for the 2014 building season and the infrastructure projects that are all ready to go. We spoke about equitable access. Can you just give me an update on what that situation is. Do municipalities know how to apply for federal funds from the Building Canada fund and has that issue been resolved?

[Brad Woodside]

Thank you for the question.

The new fund is being negotiated right now with the provinces and isn't really set up, so I don't think anybody really has gotten into the application process right now. We're just getting started.

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

So we'd probably be looking at 2015 building season for many projects.

[Brad Woodside]

We're hoping to get it as quickly as possible because there are construction seasons that we can miss if we don't get it, so that's important.

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

I have a question about affordable housing and I wanted to thank you for the graphic that you handed out to the committee about the funding crunch.

As you mentioned in the graphic, there's $1.7 billion in annual money from the federal government for supporting mortgages or operating agreements for social housing units. In the city of Kingston, for the next four years or so, that amounts to about $200,000 in lost funding from the federal government. At the same time, the city of Kingston is legislated to have 2,003 units of housing, so there's a legislative requirement for the city of Kingston to provide those housing units. There's also a moral responsibility because the queue for affordable housing is quite long in Kingston; the vacancy rate is something like half a percent.

Is it reasonable to ask the federal government to simply keep that funding steady by reinvesting funds from expiring mortgages or operating agreements, just keeping that funding level? That would mean that the taxpayers of Kingston would not have to make up the difference. This is the time of year that the city council goes through the budget and tells the taxpayers how much their taxes have to go up. This federal government policy is contributing to increased property taxes in Kingston.

[Brad Woodside]

I appreciate that. In Fredericton we are going through the same process. Bear in mind that municipalities are working with 8¢ out of every dollar; that's what we run our municipalities on, which is becoming increasingly difficult. With respect to housing, in many places it's not legislated, but it is indeed moral, and I would suggest almost a human right, Mr. Chairman, that people have housing. It's very predictable to us. As we see what is happening, without that federal funding where would it lie? It's a Canadian responsibility, not just a municipal responsibility, and with 8¢, I hardly think that we have enough left over for practically anything, despite what we're trying to do now.

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

Thank you.

I won't try to get you to say what I would like to say, which is that I think we could simply not cut funding anymore and simply reinvest the expiring investments in affordable housing.

I'm not sure who wants to answer my next question, but on Wolfe Island, which is in a rural part of my riding—it's a bit isolated, and you have to take a ferry to get there—there is one gas station, and that gas station has to replace its tank for environmental reasons. But the operator is getting old, and it's quite a capital commitment to replace that tank. I'm wondering if that might be a situation in which a cooperative might take over.

Do we need to make it easier or give people more information to ask that question, that maybe the community should get together and make a cooperative out of something?

[The Chair, Conservative, James Rajotte]

Could we have one person respond briefly to that?

Mr. Phillips.

[Alex Scholten]

I could answer that in terms of what happens in our industry. What you've mentioned is usually the death sentence for that site, when their tanks come to expiration. The owner is getting up in years and doesn't want to reinvest.

What happened in Wallace, Nova Scotia is probably a good example of exactly that kind of situation. In that case the community did come together. The community made sure that the owner of the site and the suppliers knew that it was a very important part of their community and that they will work with those suppliers and that community to make sure that it is a viable business operation.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Hsu.

We'll go to Mr. Hoback, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Mr. Chair.

Thank you, gentlemen and ladies, for being here this afternoon. Five minutes is not enough time. I have quite a few questions for the credit union—I'd like to dive in there a little bit—and for the retail.... But Mr. Marit, I have to talk about stuff that's very important to Saskatchewan and that you have brought here today.

I want to start off with the northeast quadrant project. Could you explain what that project is and how it could impact right across Canada, if it's successful?

[David Marit]

What we did as an organization was sign on with the University of Saskatchewan to do a bridge design on what we call local roads, which really don't come under the criteria for major impact but still can sustain primary weight and can reduce costs wherever we need to build bridges rather than make them put pipe in.

The Alberta association has sent a letter of support, and we have taken this research on. We think we can cut bridge funding by as much as 40% per bridge. That could work right across this country.

What we're asking for is some funding under WD to assist us in this. The research project is about $1.1 million to $1.2 million, of which we have allocated $500,000 to that project already, in partnership with the university and also with the private sector, to do this bridge design.

It really would be a huge step forward for rural Canada, if we could bring the high cost of bridges—anywhere from $750,000 to $1 million per bridge—down to $400,000 or $500,000. In essence, it would save taxpayers of this country an awful lot of money.

Thanks.

[Randy Hoback, Conservative, Prince Albert, SK]

You also talked about the P3 program and how it could be used at the municipal level for RMs. Are you talking about taking, let's say, road rehabilitation and a whole pile of small bridges and clumping them together into one bigger P3 application? Or are you talking about two or maybe three RMs going together, putting projects together and then trying to clump that into a P3 application? What is your thought there?

[David Marit]

That's what we're trying to do on some of what we call “municipal corridors”. I think they're right across this country from county to county; they are major grid roads or municipal systems. We're looking at things like that or bridges.

But there's also a bigger player here, and that's the industry itself. Whether that is resource development or even to some degree agriculture, it has to be a partner in this to some degree. We have to find a way for P3s to work in rural Canada right now, because we don't have the opportunity to lever those dollars, and there is a substantial amount of money sitting in P3s.

[Randy Hoback, Conservative, Prince Albert, SK]

I noticed that you mentioned high-speed Internet broadband and the 7,000 series auction. How important is that broadband to rural Saskatchewan?

[David Marit]

It's very serious for rural service right across the country. I have colleagues in Ontario who say the same thing. If you get an hour or so outside of Ottawa, you don't have high-speed and have poor Internet service.

What this really means is that if we can get some allocation to rural areas, both for education and health, and require that the bandwidth be used.... Right now, the big telecoms can buy it, but they don't have to use it; they can set it on the shelf. That's our concern: it sits there not being used.

There are interested parties out there, in both resource development and in agriculture as a whole. If we want this industry to grow in this country.... We're an exporting nation and we have to have the technology available to rural residents, just as we do anywhere else. There have to be some rules put in place saying that the telecoms have to come to the table and use it to be rural providers.

Thank you.

[Randy Hoback, Conservative, Prince Albert, SK]

I think I'll stop there, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Hoback.

Monsieur Lapointe, vous avez cinq minutes.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you.

My questions are mainly for Mr. Scholten and Ms. Bolduc, but I would like to thank Mr. Phillips for pointing out that rural communities should not become underserviced communities. I think Canada's elected representatives should repeat that statement once a week. Thank you for that, Mr. Phillips.

That ties in with what Mr. Scholten was saying about keeping corner stores in certain small communities. Where I live, in Hauts Plateaux Montmagny-L'Islet, communities have to work miracles to build cooperatives so they don't have to drive 12 kilometres to buy a carton of milk and a bit of gas. I think that's a national problem.

What can we do at the federal level to help your members? In connection with that, the matter of excessive credit card fees is a discussion that isn't moving along quickly enough for my liking. During the last throne speech, we heard that a requirement may be introduced to disclose the fees associated with different payment methods. That is good news and a measure the government should implement.

Since the throne speech, have you been consulted? Have you received any information on the anticipated time frame for implementing this potential new measure? Do you think this change would lessen the excessive credit card fees imposed on your members?