Finance Committee on Sept. 27th, 2017

[Karl Littler]

I think the challenge for smaller retailers is that they are everything from head chef to bottle washer, in a sense. They have so many hats to wear, and there is a great deal of regulation—federal, provincial, municipal, and so on. Compliance is more of a challenge if you are investing, marketing, being the HR person, and so on; even when you grow a little bigger than that, it's a much greater challenge. Larger entities—we have a lot of large public companies as members—also face compliance challenges, but they tend to be able to have in-house expertise or at least retain expertise to deal with it.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Yesterday we had the Macdonald-Laurier Institute, and a gentleman, Mr. Cross mentioned that it seems that there is a growing change in the climate. When you add up federal, provincial, and local government requirements on the business community, it's getting tougher and tougher.

Let me ask you this question. Is it also a great environment right now for large retail operations like Target?

[Karl Littler]

Sure—

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Oh wait. Target left. Okay then, Sears. I guess Sears is having problems, so even for the big retailers to be able to handle these kinds of regulations right now, it's probably not sending the right signal. Is that correct?

[Karl Littler]

That's right. I want to be clear. The reports of retail's death are much exaggerated. Retail grew in this country last year. Our retail employment is actually holding steady. In fact, full-time retail employment has increased in this country, but it is a very disruptive period.

Obviously the difficulties with managing shrinking exchange rates are part of that. There is a significant challenge operating domestically because of shipments of inbound parcels, so there are quite a number....

Certainly, retail feels the effects of a lot of regulation. We are involved in huge stewardship programs that cost billions of dollars for life cycle management of product. I'm not saying that they are not virtuous, but there are a great many cumulatively.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you.

In regard to this, have you met with CRA on the folio? Have you heard anything from either the commissioner or his staff? Have you heard anything from the Minister of National Revenue or her staff?

[Karl Littler]

We have had conversations with an assistant commissioner. This was originally brought up in a relatively low-bridge way, should I say. We put in a submission initially to say, “Hey, you have a dissonance between your employers' guide and your folio.” Frankly, that received a pro forma response. More recently, we, and also Canadian human resources professionals who would have to think about this as a trackable benefit, have made some overtures. The response has frankly been slow and indefinite.

We've also approached the Department of Finance, because ultimately, it is the purview of the Minister of Finance to propose legislation pertaining to the Income Tax Act, even though the interpretation lies with the CRA.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you very much.

I would like to go to the National Airlines Council.

Sir, do you know that the current privatization...? Again, technically, most of these airports are already privatized. It's just that they've gone to a governance shift where their governance is being done by a not-for-profit level. Is that correct?

[Massimo Bergamini]

Correct.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Have you heard of any people who have stopped investing in airports or perhaps in expansion program projects right now because they're not sure of what the future holds?

[Massimo Bergamini]

We haven't heard that that kind of uncertainty has caused a chill in terms of the development of airports. What we do know is that it has brought to a stop meaningful discussion on fixes to the current governance system , which frankly is broken. It's more of a public policy chill that has been caused within the Government of Canada as a result of this. One of the victims of this initiative is progress in moving towards a more progressive governance system for our airports.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you very much.

[The Chair, Liberal, Wayne Easter]

We'll have to go to Mr. Dusseault.

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

Thank you, Mr. Chair.

I would also like to thank all our witnesses for being here today.

I will start off with Mr. Littler, from the Retail Council of Canada.

I would like to hear your opinion in anticipation of the next budget, the 2018 budget, about the challenges facing retailers such as the ones we know, the most traditional ones, established in our streets, at home in Sherbrooke or elsewhere in Canada. In fact, merchants tell me about the competition from e-commerce, not only because the tax rules differ—not to mention taxes because they are foreign companies engaging in e-commerce—but also in terms of parcel delivery. One of my constituents, who is president of the Sherbrooke Chamber of Commerce, often gives the example of a product from China delivered to his neighbour. It would cost him more to send the same parcel to his neighbour, at the same address, from his house.

Do you think there is a serious problem with retail? Do you think we should be interested in this situation? How should we address this situation in the next budget?

[Karl Littler]

Thank you.

We are very concerned about unlevel playing fields developing in the online space relative to domestic sales. By that I'm not trying to create it as a bricks and mortar versus online thing. There are a great many companies that are operating “.ca” sites in Canada that are also very big contributors and current investors in the Canadian economy. We have spoken before about the de minimis rate and urge this committee and the government not to create an incentive for Canadians to show up literally anywhere else but Canada. Obviously, that is a stance we've taken in the current round of NAFTA renegotiations.

There are a multitude of other challenges. Frankly, there are postal rates that were set back when China was a developing country. That's still obtained with respect to Canada Post. There are difficulties with the CBSA's enforcement of duty and tax collection rules on packages that are valued above the de minimis rate, but still in the $100 to $200 range and it's an extremely porous system that creates an advantage, and certain shippers and certain recipients know that the likelihood that tax or duties will be collected is relatively low. That is a problem in itself. The Province of Quebec has been really at the forefront of pushing back on this. I noticed that Peter Simons recently had something to say about that and I noticed that Mr. Péladeau of Quebecor had a fair bit to say about it in a broader context, so we think it's timely that this issue be discussed.

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

Indeed.

Since I don't have much time left, I will turn to the representatives from the Association of Canadian Financial Officers.

In your brief, you put a lot of emphasis on the fight against tax evasion, and you recommend a few ways to get everyone to pay their fair share of taxes. So far, are you satisfied with the only response from the government, which suggests allocating more resources to the Canada Revenue Agency? This isn't bad news in itself, but there are several other legislative responses.

Several flaws in the Income Tax Act should be corrected. Is this an approach you are considering? Would you recommend that the committee review the Income Tax Act from scratch? It is fine to allocate new resources to the Canada Revenue Agency, but when the problem is legal, there is nothing to be done.

[Dany Richard]

Yes, there are several flaws in the Income Tax Act, and there are many ways to correct them.

We are working with accountants, and they often come up against suspicious things. They find that this makes no sense, and they want us to do something about it.

Changing the act is one possible approach. We think investing in the resources and methods we already have is an excellent way to tackle the problem of tax evasion. It's something that comes up every year, and the amounts involved only keep increasing.

There are many ways to go about it but we think investing in the resources we already have is an important way to do that.

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

Thank you.

For the time I have left, I would like to turn to the representative from the Canadian Child Care Federation.

We are familiar with the Canada child benefit. Would you recommend a national daycare program instead?

The Canada child benefit helps to pay for daycare. However, in Quebec, the costs are rather low compared to those in other provinces, like Ontario. Do you think the Canada child benefit is satisfactory? Would you prefer to see a more ambitious program that would provide subsidized daycare spots across Canada?

[Don Giesbrecht]

It's not so much a national program as it is continuing down the path that I think the federal government has already started, to execute bilateral, but starting with a multilateral framework, which outlines the principles and policies of federal investment, then work on provincial and territorial and with indigenous communities to create bilateral agreements. I think it is very hard in a country as vast as Canada, given the fact that child care is a provincial and territorial responsibility, to enact something that everybody will agree to across this country. At the same time, a strong policy framework and more enhanced investment than what is happening right now certainly would be two ways to keep going forward.

[The Chair, Liberal, Wayne Easter]

Thank you all.

We'll be turning to Mr. McLeod.

[Michael McLeod, Liberal, Northwest Territories, NT]

My question is also for the Canadian Child Care Federation.

I really appreciated your presentation. I totally agree with the title of your presentation, “Accessible, Affordable Child Care: The Key to Helping Canadians and Canadian Businesses Be More Productive and Competitive”. I represent a riding with a large aboriginal population. I think that really applies well there.

In our aboriginal communities, we have many times the social problems that other Canadians are facing in the cities and their communities. We really need to recognize that, to deal with these issues, we have to be able to do more with aboriginal young families and young children.

We've had an aboriginal head start program that has been in the system for quite a few years now. It has not expanded, has not had new mandates, and really hasn't been resourced well over the years, yet there is a real need in our communities for early intervention with young pregnant mothers while the child is still in the womb. We need to make sure the babies are born healthy. We need to have parent outreach. We need to have people visiting the homes. We need to have a good health promotion campaign. We need to ensure that we focus on culture and language.

There are so many things that are out there that the aboriginal head start program doesn't have under its responsibilities yet. It should. I would like to see it expanded to an aboriginal head start and family resource centre, so that we can help to give the proper head start to our young children and families in all our aboriginal communities.

I'd like to know what you think about that whole concept. I've heard a lot of people bring it up, and I think it's a good one.

[Don Giesbrecht]

It's about holistic policy and family policy in this country, which we really don't have a lot of. We certainly have the Canada child benefit. Prior to that, we had the universal child care benefit. Now we have the federal government back at the table with dollars and policy with regard to children and families, but it's just a start. We need a lot more.

As the evidence shows, if you're going to invest in children and families, it's not something that's going to cost: it actually returns money back into the public coffers. It is good for children and good for families. I absolutely agree with what you said in terms of an approach, which is, very specifically, that indigenous communities have the opportunity to create programs and services that work for their citizens.

[Michael McLeod, Liberal, Northwest Territories, NT]

In your presentation, you mentioned that for 2018-19, $1 billion is being targeted for investment, yet in 2005 the Liberal government put in $5 billion.

There is a bit of a difference when it comes to different pockets of money being invested for aboriginal head start, say, which is situated in the Department of Health in an office where.... I'm not sure if they know it's still there, but it doesn't get a whole lot of attention. I really have to reach when I want to talk about aboriginal issues and aboriginal children under the aboriginal head start program.

We know we're being underfunded, with even less than we had in 2005. What would be the number to cover child care for indigenous and non-indigenous people, for everybody in the system, for the whole program and that responsibility...?

[Don Giesbrecht]

Ultimately, as we say in our brief, the federal government right now is committed to a 10-year funding plan of $7 billion in total funding by the end of the 10th year, and I believe that at that time around $800 million is going to go into the system.

The benchmark in the OECD is 1% of GDP. Our recommendation is that by the end of year 10, we should be at 1% of GDP, which will allow you to have a wide range of services and a well-funded system across this country.

[The Chair, Liberal, Wayne Easter]

Mr. Kmiec.