Thank you, Mr. Chair and members of the committee, for allowing me to take part in this year's pre-budget consultation in my home town of Vancouver. I greatly appreciate each of you travelling to B.C. for this meeting. This happens to be my second appearance before this committee and I do appreciate the work you do on behalf of the government and all Canadians.
I would like to touch upon the theme of this year's pre-budget consultations: productivity and competitiveness. The two issues I wish to raise today are the proposed changes to small business taxation and long-term care for our aging population.
The first comments are in respect to the proposed changes to small business taxation. I'm an advisor who deals with many small business owners and I want to share some of their perspectives on these proposed changes. Small business owners are typically very practical and look at these changes as just an increasing cost to running their business. Therefore, to maintain their current lifestyle, they will need to make some structural changes to their businesses.
I've had two clients say they are not hiring any new employees for a while to allow their businesses to hopefully absorb these additional costs. I've also had another small business owner suggest it might be easier to go back to being an employee rather than running his business. In his case, he would need to lay off five employees.
I would strongly suggest that the government spend some additional time on the unintended consequences of these changes. I know these examples are anecdotal in nature, but nowhere in the material released about the proposed changes is there any discussion on how they will affect the management of a small business. In fact, many small business owners do not disagree with many of the changes in the proposed legislation, but they are annoyed that they are being portrayed as individuals not paying their fair share and who are using loopholes in running their businesses.
The second topic I would like to discuss is long-term care. As the past chair of CALU, the Conference for Advanced life Underwriting, a national professional membership association of established financial advisors and actuarial professionals, I think it is critically important to think about the long term.
This is particularly critical given the opportunity and challenges various levels of government are beginning to face due to our aging population. According to Statistics Canada, it is estimated that approximately 11 million Canadians will have reached the age of 65 by the year 2036. That represents 23% of the population.
Given this reality, in order to be productive and competitive, we need to think critically about how this act will place additional strains on both our workforce and governments. In particular, I submit that providing quality long-term care support should be one of the country's top public policy priorities. As Canadians live longer, the more likely it is that they will be managing a chronic disease either for themselves, or for their loved ones, and will need some degree of long-term care support.
Unfortunately, many Canadians have the mistaken belief their long-term care needs will be met through programs and services funded by provincial governments. Long-term care, however, is not included under the Canada Health Act, and therefore is not available to Canadians on a universal basis. It is my view that broader ownership of long-term care insurance can help reduce these financial pressures on individuals, families, and governments.
Long-term care is designed to help cover the costs of care for individuals who have lost the ability to care for themselves. Despite the growing number of studies documenting the concerns of Canadians about their ability to afford long-term care needs, ownership of long-term care insurance is low due to a general lack of awareness relating to the extent of long-term care and an uncertainty regarding who is responsible for funding these costs.
To address these changes, I submit two proposals for consideration.
First is that the federal government work with provincial and territorial governments to develop a national approach to informing Canadians of the need to plan for long-term care funding expenses and developing a more unified approach to determining subsidized access to long-term care services.
Second is that the federal government permit RRSP annuitants to withdraw up to $2,000 per year from their RRSP or RRIF on a tax-free basis to fund the purchase of qualifying long-term care insurance. This program would be similar to the lifelong learning plan and the home buyers' plan that are currently part of the Income Tax Act. These two actions would reduce the burden of family support obligations for Canadian workers and would serve to help preserve government resources through reduced reliance on public programs and institutions for support. Crucially, as well, these actions would maintain a tax fairness inequity between younger and older generations of Canadians.
I thank you for your time today.