Finance Committee on May 26th, 2015

[Jean-Denis Fréchette]

That's right and that's sort of what the discussion has been about since the beginning. The maximum contribution amount is being raised from $5,500 to $10,000. Not everyone can make a maximum contribution of $10,000 from one year to another to reach $600,000 after 60 years.

The inequality you are referring to is regressive. We are talking about the wealthy. It is not just a question of income, but also of wealth. That is the major aspect that needs to be considered. We talk about income a great deal, but we need to look at wealth. As you mentioned, there is a significant gap there.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

With respect to the TFSA, the gap is one to ten. In income splitting, there is an impact in terms of the increase of wealth.

In the TFSA analysis document, you said the following. If we divide the incomes of the population into strata of 20%, the lower 20% will not benefit at all, whereas the higher 20% will benefit by 27%. Once again, we have a measure that promotes the concentration of wealth. At the same time, that will have an impact on the economy in general. Based on the OECD study, when wealth is concentrated, the economy does not do so well.

[Jean-Denis Fréchette]

The OECD study looks at inequalities, not just at the level of savings. It looks at the gap in incomes. The Gini index does not look at income only. It is a question of wealth—

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

We agree that it is more difficult for low-income people to save. It is more difficult for someone who makes $400 a week to set money aside than it is for someone who makes $4,000.

[Jean-Denis Fréchette]

That's probably what a number of you will be hearing during the summer. You will meet families with two parents and two children whose annual income is $100,000. They will tell you that they need to pay their mortgage and their car and that they cannot contribute to a TFSA, at least not for the time being. As I said, it is not just a question of income. It is also a question of wealth. Those people have more difficulty contributing to a TFSA.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

That is certainly the case.

I would like to come back to the impact of this measure on the provinces.

You said that, in 2080, there would be a loss of tax revenue of $77 billion at the federal level and of $39 billion at the provincial level. I'm not sure whether that is before or after doubling the TFSA. Perhaps you can clarify that. For Quebec, my province of residence, this means several billion dollars that it will not be able to invest in education and health.

Would it not have been a good idea to bring the provinces together to reflect on this measure? I know that it is a political question, but before initiating a measure that takes $39 billion from the revenue of the provinces, it seems to me that they should have been consulted.

Thank you, Mr. Fréchette.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Dionne Labelle.

Mr. Cannan, please, for your round.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thanks to our witnesses. I'll just go around the horn here. I thank you for being here for this first meeting as we talk about economic action plan 2015.

Ms. Donnelly, perhaps you could elaborate on your academic terminology of “squirrelling” money away. I have three adult daughters, and I'm encouraging them to save for their future—for their families, for their homes, and for their retirement. Do you think it's a good idea that people do the best they can to squirrel their money away and save for their future or for whatever they want to buy, whether it be a home or a car or for their future retirement, in a tax-free manner, such as the tax-free savings account?

[Maureen Donnelly]

Well, the first part I couldn't disagree with; it's when you said that it would be in a tax-free savings account that I would begin to disagree. The point is the inequity of the plan across the Canadian population.

As well, in terms of saying that it would give people a chance to save, the people who have the chance to save are the people who have the money with which to save. If the average Canadian, or the average low-income Canadian, needs help with life's key aspects, such as raising their family, buying a home, or educating their children, then I think the government plan to help them with that should take a much different form.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Are you aware that 60% of Canadians earning approximately $60,000 or less have used a tax-free savings account?

[Maureen Donnelly]

I'm well aware of that, yes.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I think that's a pretty high number.

Another thing, do you think it's important that government work within a fiscal framework to have a balanced budget?

[Maureen Donnelly]

Perhaps not as important as you think it is. I—

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

We all have to live within our fiscal means. You don't think it's important to model that as a government?

[Maureen Donnelly]

I think there are lots of ways of doing that, if that's your goal. I don't think the TFSA measure does that at all.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

No, I'm talking overall as a balanced budget, just as our economic action plan—

[Maureen Donnelly]

I would say it's not a priority of mine for the government, no.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

How do budgets, or how do you work or continue to operate...? For instance, can a university continue to operate by spending more money than they have coming in?

[Maureen Donnelly]

I think the university that employs me sometimes does that and sometimes does not.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Okay, thanks.

I'll move on to Mr. Bonnett.

Agriculture is a big component of my riding of Kelowna—Lake Country, and I appreciate the work that you do as far as your representative is concerned.

On page 202 of the budget, with Minister Ritz under the lead, we're expanding the agri-marketing program. I'm just wondering if you wanted to comment from your perspective in the industry on the proposal to provide $12 million over two years starting in 2016-17 to the agri-marketing program to promote Canadian agriculture and agrifood products around the world.

Is that something your association supports?

[Ron Bonnett]

Yes, we support that initiative. As I mentioned, in the brief we highlighted the top four things that we support.

On the agricultural marketing initiative, I think it's becoming even more critically important now with all of the discussions on opening up new markets around the world that getting a trade agreement in place is just the first step.

If you really want access to markets you have to go out and fight for those markets and be competitive. I think putting some emphasis on market development is critical.

The other thing I think that's not widely recognized is the economic impact that agriculture has on the overall economy. If you talk to people in western Canada, they're now starting to recognize that there are two pillars to the economy out there. There is the oil sector, but the agricultural sector is also getting more and more recognition and it's core to keeping the economic activity of Canada going, and this marketing will enhance that.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Absolutely. I was at the farmer's market on Saturday. It was hug your farmer day. They're very important. That's one of the reasons I've been on the trade committee for nine years. We're expanding the 38 new markets as well to provide and enhance the trade commissioner service.

I have a quick question for Ms. MacEwen on the importance of our trades.

The budget has proposed $1 million over five years to promote the adoption of the Blue Seal certification program across Canada. Do you support that initiative?

[Angella MacEwen]

Yes.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Also, it's expanding the eligibility for working with our provinces to support the facilitation of harmonizing apprenticeship training and certification requirements in targeted Red Seal trades. Do you also support that?

[Angella MacEwen]

Absolutely.