Evidence of meeting #107 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was companies.
A video is available from Parliament.
Conservative
Director of Policy and Strategy, Canadian Association of Social Workers
We think they could.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
My experience of the CRA is that I don't want to put anybody else through the experience of working with them.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Mr. Cross, in April 2015 you wrote a report called “Giving and Taking Away: How Taxes and Transfers Address Inequality in Canada”. In the conclusion, you said, “The degree of progressivity has steepened since 1976, mostly as transfers have increased to low and middle income people.”
You went on to say, “A better approach is to adopt policies that encourage market incomes to grow, rather than focusing on the tax and transfer system to redistribute and possibly stunt income growth.” What else could the government do to get more income growth going?
Fellow, Macdonald-Laurier Institute
The debate we're having on tax reform is quite revealing. There's an obsessive interest in this country with the distribution of income, when we should be having that level of discussion about the production of income. It just seems to be assumed....
I wrote recently, in a column in The Post, that before anybody goes around talking about redistributing income in this country, I want them to tell me how income is created. If you can't tell me how income is created, I don't really want to hear your ideas about how it's distributed. If you think money just grows on trees, and you don't have any idea what is the impact of what you're proposing on the production of income.... That comes first, and then the distribution comes second. If you can't tell me about how the first is affected, I don't really want to hear your opinion about the second.
September 26th, 2017 / 4:30 p.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
I take it you think the proposals the Liberal government has put forward right now are just going about it the wrong way. They should be focusing on growing incomes as opposed to trying to redistribute incomes from one group of Canadians to another.
Fellow, Macdonald-Laurier Institute
It's not so much the proposals as the debate that has kicked off. As I say, there just seems to be an obsession in our society with the distribution of income. What bothers me the most in all of this is the attitude it reveals about how in this country we are much more obsessed than, say, Americans with the distribution of income.
Liberal
The Chair Liberal Wayne Easter
Thank you both.
We have Mr. Fergus, then Mr. Poilievre, and then Mr. McLeod, and we'll close it off.
Mr. Fergus.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
Thank you, Mr. Chair.
I would like to thank the witnesses very much. Their testimony today on the prebudget consultations has been very good. Each of their proposals is very interesting.
My question is for you, Mr. Rothschild, and it pertains to Israel and the innovation sector. You mentioned that innovation in Israel is now the responsibility of the Israel Innovation Authority.
In the near future, our government will be announcing who will be our chief science advisor. If you were to offer us any advice, how would you suggest we structure this position in view of all the subsidies we provide to research agencies in Canada?
President, Canada-Israel Industrial Research and Development Foundation
Thank you for your question, Mr. Fergus.
As I understand the government's intention in appointing a chief science advisor, it is not to create a position comparable to the one in Israel. As I understand the government's intention in creating this position in Canada, it wants someone at Innovation Canada to oversee all the science carried out by the government itself. That is the science carried out by the government itself and by various federal departments and agencies.
The title of “chief scientist” in Israel is a misnomer in a sense. Moreover, the last chief scientist was not even a scientist. That is in part why they have changed the position title. In Israel, this position is nearly always held by someone with a great deal of experience in high tech and in industry. Nearly all of them acquired experience in the United States, Asia and Europe. These are individuals from the venture capital industry. They are typically not researchers or scientists as Canadians understand those terms.
I hope I have answered your question.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
You have answered very well, thank you. For my part, I wanted that to be included in the record of our meeting.
In your testimony, you mentioned the appetite for risk in Israel when the government or the innovation office wants to subsidize start-ups or company expansions.
As a close observer of the situation in Canada, could you elaborate on how we should change our culture in order to accept a higher level of risk?
President, Canada-Israel Industrial Research and Development Foundation
It is not enough to accept the concept of risk, you must also change your definition of what constitutes a good risk, what is a failure, and what is a disappointing investment of public funds.
As I explained, in Israel, the fact that less than 10% of companies are publicly subsidized by the Israeli industrial innovation agency is not considered a program failure, because even those that do not succeed gain experience and become entrepreneurs who try again with other companies. That is a philosophy that is important to adopt, and it is in this committee's interest to do so. In the Canadian government's superclusters initiative, a position should be adopted in advance in order to know which grid will be used in two, three or four years to assess whether the project has achieved its objectives. You must determine what the objectives are and what is expected of the superclusters. In my opinion, the definitions of what constitutes failure and success are much too limited.
Conservative
Pierre Poilievre Conservative Carleton, ON
Thank you.
My question is for Madam Guy with regard to universal income.
First of all, congratulations to your organization for focusing on the poverty trap and the welfare wall, which is a very serious problem for many people across this country, where we have marginal effects of the tax rates for the poor in excess of 100% in some jurisdictions and circumstances.
My concern with the proposal for a universal income is that when we try to achieve money without work, we end up creating work without money. The cost of providing people with money, irrespective of whether they work, is to tax at very high levels those people who are working, and then you end up with the same poverty trap that you're trying to escape.
You mentioned that a potential allocation could be a thousand dollars per month per person. In Canada we have 26 million adult citizens, so $12,000 times 26 million is about $300 billion, which would be 100% of the budget of the Government of Canada. Are you able to tell us where we could get $300 billion without massively increasing income taxes, and therefore, creating the disincentives to work from which we're trying to escape?
Director of Policy and Strategy, Canadian Association of Social Workers
That's a great question. We thought it was sort of interesting that this tax fairness conversation is taking place right now, with dialogue around that. We think the best way, as I said, to grow Canada from the inside is by looking at the lost revenue of poverty.
Now, is that going to be to the tune of $300 billion? Probably not. Like I said, we don't necessarily have all the economic answers. We're looking for government leadership and for you to use the amazing minds you have at your disposal to design a program that's going to work perfectly for Canada and be tailored to our needs. What we do know is that when people are lifted above the poverty line, that money goes right back into the local economy, so I would argue that it would then stimulate the local economies and small businesses and grow from the inside there.
Director of Policy and Strategy, Canadian Association of Social Workers
Not to get too philosophical, but also, I think that in the future we may need to have a really hard, scary conversations about the future of work and the definition of productivity in our country, and about the fact that we are on a finite planet and we can't grow forever. It is our view that a basic income would be good in terms of the fact that it actually would contain productivity—not limit, but contain—at a desirable level. That's quite philosophical, and that's down the line, but as I said, we're looking for a tailored response for Canada.
Conservative
Pierre Poilievre Conservative Carleton, ON
I have no doubt that if we poured $300 billion into the economy it would create activity, but remember that we would have had to take that $300 billion out of the economy in the first place. The government cannot giveth without taking away. That is a concern we face.
As an interim solution, what would your organization think of adding a new condition to the Canada social transfer that in every province, for every circumstance, it must always pay more to work than not to work and that someone must always be made better off if they take a job, earn a raise, or work more hours?
Director of Policy and Strategy, Canadian Association of Social Workers
That is sort of in keeping, actually, with a portion of the social care act we're proposing. I'm sure you know that right now money from the Canada social transfer just goes into general revenue. No one knows where it actually goes in the provinces, which we think is an issue. Why spend more before you know how it's being spent?
Director of Policy and Strategy, Canadian Association of Social Workers
I think that would be acceptable to us if there were caveats and mechanisms to protect people who are never going to work. It would have to not incentivize work so strongly that those people who are never going to be part of the workforce, who are still valuable, dignified citizens, aren't protected as well. But yes, we think people should be rewarded for work.
Conservative
Pierre Poilievre Conservative Carleton, ON
We could have the parliamentary budget officer tasked with the role of calculating the marginal effective tax rates for disabled people in Alberta, for example, or single mothers in New Brunswick, to ensure that when you combine the clawbacks and taxes they endure for taking a job, it's never in excess of 100% and in fact someone is always better off when they work. It's a pan-Canadian principle that we should consider enforcing through the fiscal power of the Canada social transfer.
Do you think that would be a reasonable condition to impose in exchange for the billions of dollars the federal government transfers to the provinces?
Director of Policy and Strategy, Canadian Association of Social Workers
Yes. I mean, we are looking for more accountability on the Canada social transfers overall, and that would certainly be something we would want to see in an act that would impose principles on the Canada social transfer. As I said, as long as it wasn't going to be penalizing those who weren't able to enter the workforce, it would certainly be something we would be interested in, in the sense that we do not agree with clawbacks. We don't think clawbacks are effective at all.