Finance Committee on Sept. 21st, 2017

[The Chair, Liberal, Wayne Easter]

Thank you.

I might remind other witnesses—because when there are six, sometimes you don't get a chance for questions—to raise their hands on any point they specifically want to engage in. Just get my attention and we'll let you in.

Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Thank you, Mr. Chair.

I'll start with the Canadian Psychiatric Association, which mentioned the proposed small business tax changes. I also want to ask about the effect that macro tax policy decisions have on psychiatry and the delivery of services.

What would be the impact upon those of your membership who choose to deliver the services in their communities of this proposal that has been put forward by Finance Canada, but also of other tax changes that might potentially come down? How much sensitivity is there, in the delivery of services, either in choosing to remain open or changing where they deliver psychiatric services?

[Dr. Nachiketa Sinha]

It is quite significant, to sum it up in a sentence.

I work on the front line, in the trenches. I am in constant touch with my colleagues in New Brunswick—that's where I come from—and this has become a major cause for concern.

We have to understand that at a psychiatry practice, our motto is centred around patient care. When we talk of patient care, it is about access. One of the biggest concerns we have is that things be put in place to improve the numbers of patients being seen on a timely basis to provide better access. If these tax changes are put in place, they would have an impact upon people being employed at these psychiatry practices who in turn deliver services to their patients.

Our friends here talked about appropriate care and appropriate access. This is a major issue. We believe that any tax changes should also be in accordance with the ground reality of health care that happens on the front lines. Members of the psychiatric association, both nationally and at the ground level of the New Brunswick Psychiatric Association, are very concerned about these changes.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Mr. Marcoux and Mr. Feeley, during your presentation you mentioned that the small business tax is a big issue, but I want to talk about medical student debt, specifically, because I know over the last few years there has been a lot of talk about reducing student debt, and the different means and changes. They got rid of the education tax credit and the textbook tax credit and moved toward trying to do other things for students. But medical students have a significant amount of debt when they graduate, and some of them choose to become general practitioners in their communities, and then, basically, they have to run a clinic, raise a family, and manage their debt loads.

With these small business tax changes being proposed, and other potential macro tax policy decisions the government might make, what will the impact be on newly graduated students? Are you hearing a lot of them say that they might choose a different jurisdiction for their practice? What would be the financial impact on them, for those who may be choosing to start a general practice?

[Dr. Laurent Marcoux]

Thank you for the question.

I'll let Mr. Feeley provide more details after I've made a few general comments.

You raised an important point among many others that are causing problems. That's why we're asking for more time to conduct a further review and to find better answers to all your questions.

We know there's a major concern among students, who end up in debt at the end of their studies. They must settle and start a family, while planning for their retirement. However, they don't have much time left to plan for retirement when they finish their studies at the age of 35, and they need to pay off their debts and get their family settled. It's a major concern among many other concerns shared by our members.

I represent 86,000 doctors who are members, and 60% of those doctors are incorporated. These doctors have reacted in a number of ways, and our association must take this into account. We're asking the government to give us more time to answer such important questions.

Given the way our country is set up, we had described small businesses as the backbone of our economy. By making such quick and drastic changes, how can we be sure there won't be any unexpected and negative consequences? It's a bit quick. As you know, it happened in the middle of the summer, and people didn't have time to react.

I'll ask Mr. Feeley to answer your question in more detail.

[John Feeley, Vice-President, Member Relevance, Canadian Medical Association]

It's hard to predict what the true implications would be with any change. I think there's a potential for changed behaviours or choices of where people will practice and how they'll practice. They may choose to look at different opportunities, maybe not independent practice. I know that about 65% of trainees would say they would look for a different mode of practice from independent community-based practice.

That would have an impact on how we deliver medical services today.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Do I have time for one more, Mr. Chair?

[The Chair, Liberal, Wayne Easter]

You have time for a very short one.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Mr. Alexander, you had said you thought Canada could afford to run a few years of deficits. How many more years of deficits do you think we can run?

[Craig Alexander]

The federal government fiscal situation is in good shape, but when you look at federal plus provincial finances, you can see that the country as a whole is running larger government deficits. I think the federal government can run deficits for a few years. I don't really care when we return to balance, whether it's three years from now, or four years from now, or five years from now, but ultimately, sound fiscal policy is to return to balance.

I don't like the discussion being weighted on keeping the debt-to-GDP ratio low, because I also know there will be economic cycles, and governments cannot smooth out the business cycle. We will at some point have another recession. When we have a recession, the debt-to-GDP ratio will jump because the denominator has contracted, and that is beyond the control of policy-makers. At the same time that we have the next downturn, there will be a lot of pressure to provide fiscal stimulus to help the economy get out of the recession, which would be a perfectly reasonable fiscal policy response to a downturn, but that again would make the debt-to-GDP ratio higher.

As a result, I don't feel that it is a fiscal anchor. I think the prudent fiscal policy is a commitment to ultimately return to balance, but it really isn't a matter of one year, two years, or three years. It's a matter of setting a course and then navigating along it.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

I also want to thank the witnesses for being here.

My first question is for Ms. Hollihan. It concerns her recommendation regarding the GST that applies to psychotherapy services. According to the Excise Tax Act, the GST doesn't apply to psychology services, among other things. A number of other health care services are also exempt.

Can you discuss this recommendation and briefly explain the difference between psychology and psychotherapy? Why should psychotherapy also be a GST-exempt health care service?

[Kim Hollihan]

Thank you for the opportunity to speak about our recommendation that mental health counselling services be classed as zero-rated for HST and GST.

There are two issues here. One is around access to care. The second has to do with fairness in the labour market. I'll speak to the access to care issue first.

Typically an individual has to pay out of pocket to see a counsellor or psychotherapist. This is because counselling and psychotherapy are not publicly funded. Very rarely are they covered by third-party insurance programs. As a result, when an individual goes to a counsellor or psychotherapist, they have to pay out of pocket, which is a significant financial burden. On top of that, they have to pay the relevant taxes. In our opinion, that creates a significant barrier to accessing counselling and psychotherapy.

The second issue is around fairness. As you mentioned, in terms of mental health professions, all regulated professions are exempt from HST/GST. As a result, counsellors and psychotherapists, even though they are providing a very similar service—there are overlapping scopes of practices—are subjected to this tax that their colleagues, who are providing very comparable services but in different professions, are not having to pay.

From that perspective, our challenge is that counselling and psychotherapy are regulated in only four provinces in Canada—Nova Scotia, New Brunswick, Ontario, and Quebec. Our understanding is that we must have five provinces in order to be eligible for the HST/GST exemption. Most provinces are working towards regulation right now. We have a couple that are getting quite close, so we're optimistic that we'll reach that five mark in the very near future, but it does take a lot of time to get a profession regulated.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you.

I'll now turn to Mr. Mueller.

Yesterday, I asked a question about the eco-energy program, and it was well received by the home builders. I asked the Canadian Home Builders' Association representative whether he thought we should bring back a program such as the eco-energy program, which once existed at the federal level.

Since I didn't hear anything from you on the matter, I was wondering whether it's something you would recommend. Should the committee recommend to the Minister of Finance that an eco-energy program be brought back, so that homeowners can renovate their homes to make them more ecological?

[Thomas Mueller]

Thank you for that question. It's a really important one.

The previous government had the ecoENERGY program, which wasn't shown to be particularly effective in getting homeowners to reduce energy use on a large scale. I think there is an opportunity for this government to look at what mechanisms exist to finance retrofit in the home sector, because it's very consumer-driven. In order to do that, you need both the utilities that have a direct relation with the consumer on site as well as the cities and provinces. The cities and the utilities are critically important in making some of that happen.

A number of different programs on the housing side have been shown to bear some results. Some have come out of the United States. One is called the PACE program, which is basically loans to homeowners to make improvements. First of all, it has to be measured. I think there's no doubt about it. It has to be measured so that what you invest shows real savings in energy and carbon. The homeowner, through own-build financing and those types of things, pays back that loan, that investment, over time through the energy savings. That creates a cycle of rigour, I think, that's very important to make the right changes that provide results, and the homeowner who currently lives in the house, and the one who lives in the house five or 10 years from now, can pay back the investment that was made in energy efficiency improvements.

Just financing something, a certain behaviour, does not necessarily yield the results you're looking for.

[The Chair, Liberal, Wayne Easter]

We let everybody else go over, so you get a short one, Pierre.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I must turn immediately to the Association des collèges et universités de la francophonie canadienne representatives.

You're suggesting that a more bilingual population represents economic potential. Can you support this assertion? Since our committee is discussing competitiveness and productivity, I want to know how a more bilingual population could help achieve these two objectives.

[Lise Bourgeois]

I emphasized a bit earlier the number of programs we're currently providing and the fact that we could provide more programs if we had additional funding. Each year, over 10,000 bilingual graduates join the job market. I think this contributes to our country's competitiveness and economic development. The additional funding is necessary, in particular when it comes to the five-year action plan. This would help us increase the number of graduates of our college or university programs. It would also help us provide services in French in urban, rural or remote environments, but also bilingual services.

[Pierre-Yves Mocquais]

Regarding health care services, I want to add that there are currently 100 health care training programs in French, and 70 of those programs were created in the past 13 years. We received a request concerning health care training. If we had additional programs, we could respond to the request.

Other participants in this discussion spoke earlier about the aging population. It's important to be able to meet the demand, in particular in sectors where many people are concerned.

[The Chair, Liberal, Wayne Easter]

Thank you, everyone.

Ms. O'Connell.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you, Mr. Chair.

I have several questions. Let me start with Mr. Mueller and Mr. Alexander. You both somewhat touched on a point we heard from witnesses previously in terms of how the U.S. does a really good job of using its procurement, in particular the military, for setting the stage and creating industry, so to speak.

Mr. Mueller, your point was about government, in the sense that if we have to retrofit a building or do something within our purview, we should make it green and create an economy that would allow local businesses to become the experts.

Mr. Alexander, if I heard you correctly, you were talking essentially about the same thing in terms of procurement.

Do either of you want to elaborate on that, or correct me if I've misunderstood? You're saying we're not going to create the overall economy, but we're going to lay the foundation to allow the investments and that new green industry to take hold.

[Thomas Mueller]

Currently, we are having several meetings with the Treasury Board Secretariat, Public Works and Procurement Canada, as well as with DND. I can speak only on the building side, but I think you can also extend it to transportation and other areas. I think the federal government has tremendous opportunities through procurement to drive innovation in the Canadian marketplace. You see pockets of it on building sites, as I mentioned in my remarks. I think there is way more opportunity to use that tool. I think Public Works, with their real property, is already doing really well and is very progressive in its thinking on what new and existing buildings can look like, and it has projects under way.

I think that DND, which is also a large owner—granted, their focus is on defence—also has an opportunity. The American army and navy have been investing in green building technology and renewable energy technology for at least a decade. They are leaders in that space and many projects have been done, obviously for security and for military reasons. These are cross-benefits that can be utilized.

Again, 60% of the federal buildings are owned and operated by the Department of National Defence, and this is an opportunity to look at—it's really critical—the assessment of where these opportunities exist for retrofit and for new buildings. Where do you get the biggest savings for DND and overall, also for the custodial departments? You really need a federal strategy that covers the entire federal building stock, and to use procurement to really drive innovation in the Canadian marketplace.

We have seen in the past that it's very effective. Very briefly, initially, about 10 years ago, the federal government and the governments across the country were leading to de-risk this kind of green building construction and retrofit, but over the last five years it was actually the private sector that took very big leaps forward in investing in buildings through pension funds and so on, to have very high-performing buildings, so the government played a very important role in making that happen.

Thank you.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Mr. Alexander, you can certainly add to that but I'm also going to ask another question because I have limited time.

You spoke about having more women in the workforce, and the opportunities through co-ops and apprenticeships, which are certainly something the government can partner with. You also talked about education.

I went to a high school where I took metal shop. We also had woodworking and various trades we could take, though I probably wouldn't have signed up for it as a co-op, to be quite honest. I wonder if you've also advocated for or given much thought about the provincial level starting even earlier to supply non-traditional employment routes. Do you see other opportunities where we could partner, as a federal government, to really open up opportunities for women or other underutilized populations in different sectors?

[Craig Alexander]

Sure. On the procurement side, very quickly, if we think about the government as a consumer of goods and services, it's an enormous potential client base. Obviously, the government needs to purchase the right goods from the firms that can provide the products and services that it needs. In terms of leveraging procurement, however, that can be used strategically where it makes sense.

When we think about small and medium-sized businesses, we have a lot of evidence to show that in terms of gazelles—these are small businesses that are rapidly growing—when we compare Canada with the United States, we actually have, proportionally, about the same number of gazelles. Canada isn't behind. But when you get to around the five-year mark in terms of the lifespan of a business, all of a sudden the number of gazelles in Canada collapses. Basically, this is a signal that says that it's pretty good to open a business in Canada, and we rank very well in the ease of opening, but the challenge is scaling up.

Using a small portion of government procurement towards small and medium-sized businesses could actually have an enormous leveraging effect to help those businesses. Moreover, you could even use the procurement narrowly. For example, if you want to promote fast-growing small and medium-sized businesses that are led by women, you could target procurement towards firms that have those characteristics. There's an opportunity. It can't be used for 100% of the procurement. It has to be done sensibly, but even a small portion of government procurement, used strategically, can actually serve goals.

In terms of women in the labour force, the outcomes women are having have improved enormously over the years, but clearly there are still barriers. One of the barriers is lack of willingness to go into some of the non-traditional areas that can have very gainful employment with good income. Some of it has to do with overcoming stereotypes.

Some of the push-back you often get on issues related to gender economics that involve women being promoted onto boards is the view that a particular industry just doesn't have as many women who reach the executive levels. That means you actually need more women in those industries who can rise through the ranks, so that you help to address some of that issue.

There are a lot of barriers that can be used, and I think that the focus on improving gender outcomes actually has enormous merit.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Kelly.