Finance Committee on May 28th, 2015

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Saxton.

Mr. Brison, go ahead please, for your round.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Cross, your statement that the number one issue is people dying with too much money doesn't necessarily reflect the reality in Cheverie, Hants County, where I live.

You say the issue is that people are being scared by the banks into saving too much. Are you suggesting that Canadians ought to perhaps save less than what the banks are recommending?

[Philip Cross]

I think it's obviously in the self-interest of banks to scare people into saving more. Who benefits from that? Banks do. They want people to park large quantities of money with them at low interest so they can lend it out.

I should make it clear that, when I say “too much money”, it's not as if these people are living in palaces or anything; the point is that people are dying with positive savings. People in this country are not running out of money, for the most part, before they die. The idea that we're not saving enough and we have to increase savings because people are going to run out of money in their retirement, which is behind a lot of these plans to expand savings—

[Scott Brison, Liberal, Kings—Hants, NS]

So why would you support expanding the TFSAs from the current level?

[Philip Cross]

If people on their own want to be scared by financial institutions into saving more, fine. People are always responsible for their own actions. But, for people to tell government—

[Scott Brison, Liberal, Kings—Hants, NS]

Well, why would government facilitate them doing what you say would be the wrong thing, by expanding the TFSAs?

[Philip Cross]

Some people are always going to do the wrong thing. I don't think it's government's role to prevent people from doing anything in our society.

[Scott Brison, Liberal, Kings—Hants, NS]

Your analysis is fascinating, Mr. Cross.

I want to ask a question of Mr. Wudrick of the Canadian Taxpayers Federation.

Gregory Thomas, your previous president, wrote an op-ed in The Globe and Mail on September 26, 2014, titled “Drop income splitting and hike the deduction for childcare”, that income splitting “fails the fairness test in many ways”.

He wrote that on behalf of your organization, saying it reflected the views of your members. So you agree with that analysis, that—

[Aaron Wudrick]

No, I think he was taking a position that it is not the preferred option of the Canadian Taxpayers Federation. I've been consistent in saying that income splitting is not our first choice. It is not. We would prefer a broad-based tax cut.

But if the specific question you're asking us is whether we would take a tax cut like income splitting over no tax cut, we would take income splitting.

[Scott Brison, Liberal, Kings—Hants, NS]

But you agree with the analysis that income splitting “fails the fairness test in many ways”. That's a direct quote.

[Aaron Wudrick]

It's entirely reasonable to say, in isolation, looking at income splitting without any measures addressing any other inequities in the rest of the tax regime, you could make that argument.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you.

Ms. Decter, thank you very much for joining us today.

You've referred to the Campaign 2000 analysis of the importance of investing in helping families with children and lower-income families, and you took a $5,900 figure. Our plan, the Liberal plan for a new Canada child benefit, would actually provide $6,400 per child and it would be income tested. It would continue to be received up to $200,000 per year of family income, but it would be more generous to those in the lower income brackets.

Do you believe that addresses what Campaign 2000 has been calling for, progressive support for families with children?

[Ann Decter]

I believe it does. In the announcements it produced in its pre-budget consultations—I can't remember the exact figure—it had a specific number of children who would be moved out of poverty by getting to the $5,900 limit, so certainly $6,400 would do the same thing.

[Scott Brison, Liberal, Kings—Hants, NS]

It would help establish a baseline, sort of like a guaranteed annual income for children.

[Ann Decter]

Right, well, it's for families really. Children don't live on their own.

[Scott Brison, Liberal, Kings—Hants, NS]

No, certainly.

Thank you very much.

Mr. Heath, I appreciate your comments on families, that those who need help the most are those who actually have children under the age of.... We have twins who are 15 months old, and so I understand the cost of child care.

Would you also agree that families in a lower income ought to benefit more, that we should have progressive supports for families based on income level?

[Jason Heath]

I would agree with that wholeheartedly, because I think those are the people for whom it would actually make a difference, whereas for higher-income earners it's just a handout that doesn't really have an impact in their day-to-day lives.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Brison.

Ms. Bateman, please, for your round.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Thank you to all of our witnesses this morning. It's wonderful.

I want to start my questions with Mr. Cross. I have to say I enjoyed your op-ed in the National Post on April 22 about compressing the size of government. I particularly appreciate your comments in your presentation today about the tax and transfer system and how progressive Canada's tax and transfer system truly is. Perhaps we will study further your recent report on how taxes and transfers work in Canada. I'll certainly be reading that one.

I'd like to ask you specifically in this context, and feel free to expand within...you have a few reports you've written on this. I'm very interested in hearing, within the context of our progressive tax and transfer system, the importance of voluntary saving mechanisms and whether that would be a voluntary saving mechanism where I could choose to use a tax-free savings account, or I could now choose to voluntarily augment my CPP.

Could you expand on that briefly, sir?

[Philip Cross]

The distinction between voluntary and mandatory sometimes is overdrawn. We've seen in the past, for example, in the late 1990s, a lot of Canadians didn't believe CPP was on a sound footing. As a result, you could see one reason the savings rate was high in the 1990s was people didn't think CPP would be there. When CPP was put on a sound footing with the reforms in 1997 or 1998—I forget—you could see almost immediately voluntary savings came down. People had confidence, all of a sudden that those mandatory savings would be there for their pension. Sometimes the distinction between the two is overdrawn. It's not necessarily that...sometimes one is done in anticipation of what the other is going to do.

In the case of CPP, I've written extensively that I've been against the idea of mandatory contributions because I'm not convinced—certainly it is not a problem now—there's going to be a problem in 20 or 30 years. If people on their own want to take out an insurance policy against what's going to happen in 20 or 30 years, God bless them. Am I so confident there's going to be a problem in 20 or 30 years from now that I want to impose and make that mandatory today? No.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Thank you. Obviously that's the conclusion of our caucus. If somebody feels so passionately about it, they would choose to do that with their own resources, great, but not to make it mandatory given the lack of need, as you have indicated.

What are your thoughts on the balanced budget legislation? I'd be very interested if you could expand on that.

[Philip Cross]

I'm rather cynical about it and my cynicism is bred in particular by.... I actually burst out laughing recently when I read that Ontario had balanced budget legislation, and you think, “Ontario today lives under balanced budget legislation?”

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Ontario?

[Philip Cross]

That goes to show with all these pieces of legislation, the holes that are available in them are large enough to drive huge convoys through. I wonder, what's the point?