Finance Committee on Nov. 19th, 2013

[Murray Rankin, NDP, Victoria, BC]

Thank you, Chair.

Thank you to all of our witnesses today. We much appreciate your attendance.

In the short time available I would like to ask questions of Professor Hulchanski and Mr. Goldstein.

My first question is for you, Professor Hulchanski. Thank you for your excellent and thoughtful report. You mentioned a number of recommendations, and my colleague, Ms. Nash, asked you about the housing debacle and the lack of spending of the federal money that's available. I won't take you back there, but I want to focus on your other recommendations, if I may.

Your first recommendation talked among other things about income splitting, saying that we should avoid income splitting and avoid the doubling of the TFSA.

Could you spend a little more time explaining why you recommend that?

[Dr. David Hulchanski]

Well, it's quite obvious those cost money. They transfer money to people who do those things. I've maxed out, because I can, on the tax-free income savings plan, but the majority of Canadians can't do that. Why do that? That's just one of many, many small and some very large tax expenditures that we pass on to all Canadians in theory, but benefit a minority of Canadians.

[Murray Rankin, NDP, Victoria, BC]

Does the same analysis apply to income splitting?

[Dr. David Hulchanski]

Yes. That's more complicated to understand. Just because something was done in the past for some groups doesn't mean we continue to go down that road, in that direction. We can go in another direction of a fairer tax system, looking at that whole category.

[Murray Rankin, NDP, Victoria, BC]

I was taken by how you said that these decisions are really deliberate decisions government is making, with the impact on poverty and the erosion of the middle class that you've commented on.

[Dr. David Hulchanski]

We, Canadians, and you on our behalf, make these decisions. Humans made those decisions.

[Murray Rankin, NDP, Victoria, BC]

I want to come back to you, if time permits, but I also would like to spend my time with Mr. Goldstein.

We talked before the hearing about the impact of tourism on my riding of Victoria. It's quite astounding. You point out that we're in the top 15 ridings in the entire country in terms of having over 9,200 people employed, with 933 tourist businesses. Therefore, I don't need any persuasion as to how critical it is. But I am concerned about the American market. The anchor tenant analogy is an excellent one.

I've seen on TV, and I'm sure many others have, just extraordinarily good advertisement campaigns by the Americans, by the State of California, which I saw recently. Why can't we do better? Why can't the Government of Canada, rather than spending money on the economic action plan during hockey games, spend money on this?

[David Goldstein]

First of all, I think we are doing a very good job internationally. The Canadian Tourism Commission is actually doing an extremely good job with the funds they have in some of these international markets. Effectively, what we're doing as an industry is responding to that very campaign you're talking about with this co-investment model.

Perhaps I could just take it one step further. I know we're short on time, but yours, in fact, is a unique situation, where it's not just of great attraction to the Americans, but it's a global attraction. As I said earlier, we were just on a mission to China. We had one of your local businesses, a company called the Prince of Whales, an award-winning whale-watching company.... The environmental piece makes us a global destination. It's one of those unique things that you're not going to see in other parts of the world.

So part of this is a promotion issue. What we have done traditionally as an industry is to come forward and ask for money for the Canadian Tourism Commission. This is a co-investment plan that we're prepared to back up.

[Murray Rankin, NDP, Victoria, BC]

In your co-investment plan, you talk about city-pairs—I thought that was interesting—to increase visitation by the regions across the United States and to take them directly into every Canadian airport. Talk a bit more about what you mean by city-pairs.

[The Chair, Conservative, James Rajotte]

You have one minute.

[David Goldstein]

Effectively, the distribution issue is the same that the oil industry has with the pipeline. My pipeline has wings. Why try to create new routes where routes already exist? There's actually a fair amount of unused or underused air access with the U.S. Too much of that traffic is leaving Canada to go to the U.S. and onward. We're trying to recapture that on the way back. Some of this will be dedicated to routes that exist or routes that airlines and airports want to invest in, co-invest in, to actually develop those routes.

[The Chair, Conservative, James Rajotte]

Thirty seconds.

[Murray Rankin, NDP, Victoria, BC]

Thank you very much.

Professor Hulchanski, you talked intriguingly about enhancing the Canada Pension Plan to reduce poverty. I wonder, in the time available, whether you could explain what you meant by that.

[Dr. David Hulchanski]

That is another category like unemployment insurance where over time it has not kept up with inflation. We know who those people are and what kind of need they're in, and it's pretty easy to address—not all at once, but year by year doing something a bit more in all of those categories. For about 15 or 20 years we've done the opposite, taken something away, say, from unemployment insurance.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

Thank you, Mr. Rankin.

Mr. Hoback, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

It's great to see you out this afternoon and this morning.

Mr. Goldstein, I do a lot of travel into Central and South America with parliamentarians down there. We talk about how great Canada is. We have great national parks, great hunting and fishing. In fact, if you go to the airport in Saskatoon this time of year it's full of camouflage. It's the people coming out of the U.S., coming up here to do hunting, either goose hunting or deer hunting, or sportsmanship like that.

One of the complaints I have, and I guess one of the things I'd like you to maybe help address, is this. What are the barriers facing tourists who are coming from countries that require a visa? How does that impact this and what would happen if we made that process simplier or easier? What could we do to make it easier or simpler for them to come here?

[David Goldstein]

Thanks for the question because it is one of our prime concerns, and I'd like to say there's actually been a fair amount of progress on that in the last three years. Three years ago, we didn't have a 10-year multi-entry visa to Canada. We've extended the number of visa application centres. We as the tourism industry have a seat at the round table of the deputy minister of immigration. I think there's a changing sense at Immigration that these aren't just temporary residents, as they're categorized now, but these are like export permits and we're an export sector.

So we'll continue to work on those issues. Minister Alexander has been extremely active with us already in a very short period of time. We've just released a visa white paper, which we'll give to the clerk of the committee, addressing some of these things specifically. We'd be happy to follow up with you or other members of the committee on very specific issues of eliminating the red tape and creating more access for visitors.

[Randy Hoback, Conservative, Prince Albert, SK]

I look forward to that white paper because, again, in talking to colleagues across the Western hemisphere, even talking to the business sector, we're starting to see board meetings being held outside of Canada because of visa issues.

[David Goldstein]

I can't avoid the plug, but now that we have eliminated the Czech visa requirements because of the free trade agreement, I think it's time to eliminate or re-create a visa waiver for Mexico as well.

[Randy Hoback, Conservative, Prince Albert, SK]

One of the things that was talked about in Saskatchewan at some pre-budget meetings was the need or requirement for rental properties and for existing rental properties to be refurbished and brought into new state. Has the real estate association talked about what process we could look at there, as far as encouraging the creation of more rental spaces is concerned? I use Saskatchewan, and Saskatoon or Regina for example. We have an unemployment rate of 3.6%. We're trying to attract people from across Canada. One of the things we're facing is that they don't want to spend $250,000 to $350,000 on a bungalow in Regina. So they're looking for rental space. Are there any ideas on what we could do there?

[Gary Simonsen]

Certainly the whole capital cost allowance deferral program that we've suggested is going to assist in both improving and expanding opportunities for rental properties. It's certainly not the whole solution but it would certainly be of assistance in that direction.

[Randy Hoback, Conservative, Prince Albert, SK]

So the capital cost allowance....

Do you think any other incentives need to be in place for investors to invest in that type of real estate?

[Gary Simonsen]

Certainly our research demonstrates that would be the case, that it would certainly provide a kind of stimulus and enable smaller investors to do what larger developers are presently able to do.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Hoback.

We'll go to Mr. Jean please for the final round.