Finance Committee on Sept. 20th, 2017

[Shifrah Gadamsetti]

Absolutely.

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. McLeod.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair.

Thank you to all the presenters here today. These are very interesting discussions.

My first question is to Mr. Wilson. I'm looking at the presentation you made and the rather significant investment that is going to be required as per your organization's calculations. There is probably a lot more that could be added to this.

I represent the Northwest Territories, and I also work with the other regions. The aboriginal people in the Yukon are probably about 35% to 40%. In Northwest Territories, half of my constituents are indigenous. In Nunavut we're probably 80%. The AFN does not represent.... In these numbers, you're only talking on-reserve, right? Are you talking about all the indigenous peoples across the country or just the on-reserve?

[Daniel Wilson]

Our calculations are based on nations, including those in the Yukon and the Northwest Territories. As the organization represents the views of the chiefs of all 634 first nations across the country, our calculations are based to include those in your riding as well.

[Michael McLeod, Liberal, Northwest Territories, NT]

Okay, so you're looking at new programs that will allow for off-reserve access to these dollars, because right now you can't get most of the programs in the north. The $8 billion that was announced does not apply to the Northwest Territories or any northern jurisdictions.

[Daniel Wilson]

The on- and off-reserve distinction I quite well understand in the Northwest Territories does not apply, but we have first nations governments in the Northwest Territories. Our estimates are based on what the governments tell us is necessary and what's actually transferred to them for their people, regardless of where they reside.

[Michael McLeod, Liberal, Northwest Territories, NT]

That's really good to hear.

I want to focus a little bit more on the housing issue because housing is probably the number one issue in my riding at every meeting. Regardless of what the focus is on in the discussion, housing will come to the surface. Fifty per cent of my population is indigenous, and a lot of what we have in terms of social issues can be attributed to the housing conditions. Studies have shown that if we could fix the housing problem, 50% of our social issues would go away. I was really glad to see what you had captured in your presentation the need for a national housing strategy. I think that's a good move. We're really trying to engage.

I find that we really have to do a lot more to try to focus on affordable housing. I think that's an issue right across Canada. We have many communities situated close to major projects. For us, the best program for aboriginal people is a good job, but we still have systems that are clogged because our public communities, our aboriginal communities, are designed for a social system and the social system doesn't work well for people who have jobs. For example, in one of the communities I just visited, which is almost all aboriginal, there are 200 people working at the mine and they're still all in social housing, and it's clogging up the system.

I'm hoping that we're going to try to find a mechanism in the national housing strategy that will work for us in the north and work for the aboriginal communities.

I'm curious at to why—and maybe it's because you don't have the members—you don't have an indigenous plank or focus, not a mention at all. I think there's going to be a need for a strategy for indigenous housing throughout all organizations that deal with aboriginal people, but including yours as a national organization.

[Kevin Lee]

Yes, and I think that especially when it comes to the north there are huge opportunities, particularly on the modular housing side of things. We just created a new council focusing on modular housing and panelized construction, which would be particularly applicable for moving into remote communities with short construction seasons and that sort of thing, and making sure that technologies are appropriate.

As you also mentioned, there's a huge need for affordable solutions. By that I don't mean social housing at all, but things that are cheaper to build and construct and get up there. I think as part of the national housing strategy, as part of the federal approach, we really need to focus on this. We have housing affordability issues in every part of Canada. Nowhere is it more extreme than in the north, so we really need to focus on research and innovation putting Canada back to being a leader in this area, as it was, frankly, through the eighties and nineties, when Canada led the world in cold climate building science for residential construction. We've fallen behind. We've underinvested at a time when now we have affordability crunches. We know the challenges of the first nations people. It is an opportunity to take a federal leadership role, reinvest, and help find the solutions. Industry has always had a great relationship with the federal government in all of these R and D programs, and we look forward to continuing that.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

We've time for two more questioners.

Before we get there, Ms. Gadamsetti, you had mentioned a pilot grant to develop the open educational resources. I will admit I don't know what open educational resources are. How would you see that being done, and how would you see the federal government involved?

[Shifrah Gadamsetti]

Maybe I'll take a quick 30 seconds to explain open education resources a little better.

Traditionally, we look at learning materials as textbooks. Textbooks come from publishers. They have authors. Those authors are compensated for their work. In an academic setting, whether it's a college, a polytechnic, or a university, wherever those materials are used, they often become outdated in five to seven years. Even if there are minor changes in materials, students are forced to buy a newer edition because of a variety of competing interests: the publisher, the professor, and the university itself. We are now seeing a trend whereby students are choosing whether or not to purchase educational materials, and that is completely dependent on how successful they are in the course.

When we talk about the piloting grant and the reason we're asking for a federal strategy, larger provinces, with perhaps a higher density of post-secondary educational institutions—Alberta, B.C., and Ontario—have an appetite, but also the manpower and the resources to dedicate small operating grants to begin projects like this: we have eCampusOntario and BCcampus, and eCampus Alberta existed for a time. This allows a sort of seed funding for professors to be incentivized, to be compensated for their work, and to put it out under open copyright. This work then doesn't have to exist under copyright laws; it's not legislated in the same way. Professors are able to take it and adapt it specifically to a course if they need to do that. Some professors will undertake an updating of resources and then republish them to the main campus website, where other peers review them.

The material is quality and it is scholarly, and students do get quality for the access to this resource. For provinces that don't necessarily have the ability to invest, we hope that with a federal strategy students in those provinces are able to access these resources as well.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

Mr. Richards, we could go to about four minutes.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Thanks, Mr. Chair. Maybe I'll return to where I left off at my last opportunity.

Mr. Lee, you mentioned some of your concerns about the small business tax changes. I wonder if you could elaborate a bit for me on that, particularly in terms of the smaller builders, the family-run builders where you have several or at least a couple of generations involved in the business.

Maybe you could describe for me the kinds of impacts that you would think they would see in terms of the jobs that might be lost and the impacts that might be created for many of your members, who are the smaller builders. Could you describe that a bit better for me?

[Kevin Lee]

It's pretty typical for members of our organization—builders and renovators—to have family-operated businesses with different members of the family participating, such as husband and wife. It's very common for one spouse to be the on-site person and the other person to be doing the books.

Family members are participating in different ways in trying to grow the business and also, in terms of the future, looking at protecting against downturns, since we know housing is very cyclical. They're looking at the ability to put away investment for a rainy day. They tend to be not eligible for unemployment insurance or anything like that in those instances, and most entrepreneurs, even if they set up their business to magically be in that position, don't want to be. They're not that kind of people. They want to be self-sufficient. They're also looking at their retirement savings and the different vehicles they can use for that. Again, they're not on pensions, and RRSPs only go so far. All of this is part of it.

Also, then, you're typically building a family business that you want to get your children involved in—if they actually want to work with you—and then pass on to them at one point. Any changes in taxation that are going to make that less desirable or even less feasible all run into this, which really begs the question: are we still going to be encouraging people to get into this type of entrepreneurial position of running the family business? Or maybe they're going to say, “You know what, forget it, I'll just get a regular job.” Then do we lose the entrepreneurial spirit?

[Blake Richards, Conservative, Banff—Airdrie, AB]

Would it be fair to say that you see these changes as potentially harming the ability of someone to pass their business down to the next generation of their family? As you're saying, these changes could result in discouraging the attraction of actually starting a business and employing people. Would that be something that we would be discouraging with those kinds of changes? Is that what you're saying?

[Kevin Lee]

Yes. From what we're seeing, this has the potential to do all of that, so an ongoing consultation, a way.... If we want to look at the tax system, let's look at it in its entirety and make sure we address the right issues and don't have unintended consequences, if you will, for small businesses in Canada.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Thank you.

[The Chair, Liberal, Wayne Easter]

Mr. Picard.

[Michel Picard, Liberal, Montarville, QC]

Thank you.

Mr. Lee, since you are going through it, previous experiences or a previous life brought me to meet the darker side of the construction business. Since you mentioned the magic words “underground economy”, which is income not declared or declared incorrectly, do you think if we had a change of culture or behaviour what we would gain by cleaning up the market would more than sufficiently compensate for what you are looking for in terms of new money?

[Kevin Lee]

The simple answer is yes, in many ways.

[Michel Picard, Liberal, Montarville, QC]

Thank you.

[Kevin Lee]

For example, we've been big proponents of coming back with some form of home renovation tax credit targeted around key policy objectives. It could be energy efficiency. It could be aging in place as was put in. It could be to help first-time homebuyers with their renovation jobs when they buy a fixer-upper because that's all they could afford and they want to fix it up.

We've done assessments based on the transition and change of culture. When you do a tax credit program, you are forcing people to get a receipt so that they can then get their tax credit. Just based on that, you would bring enough on board in terms of additional tax revenue so that if you got that cultural change, it would almost be a tax-neutral program.

We do a lot of work with the Canada Revenue Agency on the “Get it in Writing!” program to really combat the underground economy. The biggest thing that we see driving the underground economy is a sense from Canadians that they're being unfairly taxed. In places where we see increases even in the HST, we automatically see increases in the underground economy. I think it's really important—

[Michel Picard, Liberal, Montarville, QC]

I'm cutting you off. I apologize. Are you saying that people are tempted to go to the underground economy because they feel they are being overtaxed?

[Kevin Lee]

Absolutely.

[Michel Picard, Liberal, Montarville, QC]

And that's because they have the usual tax that everyone is paying, the GST or whatever, and income tax, and at all of the rates we know. Even though the income tax is not that high in Canada, they still feel that they pay too much tax and therefore they have to go to the underground economy?

[Kevin Lee]

Yes, our experience with Canadians is that when they feel they're being overly taxed, they look to do cash jobs. One of the biggest problems we have in terms of the underground economy is that people are willing to pay cash. It's not just the people who are accepting cash; it's Canadians who are willing to pay cash because they think they're getting a deal. The typical deal is that a contractor, in lots of businesses and not just residential construction, will say, “I'll give you 15% off” or whatever the combined federal and provincial tax is. Meanwhile, they're probably saving about 40% on all their taxes, and homeowners are happy to pay that because they think they pay too much tax.