Finance Committee on Oct. 17th, 2017

[Marco Navarro-Génie]

Yes, Mr. Fergus.

Thank you for your question.

I was not referring to a historical dynamic, but rather to a calculation we just did, a few days ago, concerning only three factors: personal income, fuel revenue and consumer product tax rates. When we put all that together and take into account regions across the country, we note that the Atlantic provinces are the most taxed provinces in the country. The outrageous thing is that the province with the lowest taxes in that region, New Brunswick, is taxed 30% more than the least taxed province in another region.

So we are not really comparing Newfoundland and Labrador—the most taxed province of the region—and Alberta. The disparities are so wide that comparing them is impossible, or nearly. I tried to show that, if we compare very conservatively the least taxed province of the Maritimes and the least taxed provinces elsewhere, there is a great disparity.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

I don't want to get into a debate with you, but I recommend that you choose your words more carefully because earlier, you said, “reached murderous rates”. That implies that tax rates are increasing. That said, I understand you when it comes to comparing the most taxed provinces with the least taxed ones.

We can say that taxes are nearly at the lowest level in Canadian history, especially when we compare them with those of 50 years ago, when tax rates for the highest incomes were much higher than today.

[Marco Navarro-Génie]

I don't have the figures going back 50 years, but it seems to me that what you are saying is not right. Fifty years ago, people were not paying as much tax compared with....

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Mr. Navarro-Génie, I assure you that it is quite the opposite and that I am right. We won't argue over that. I think that a few of my colleagues can confirm that the tax rate for the highest incomes in Canada is much lower than it was for past generations. We could debate tax rates in Newfoundland and Labrador to determine whether they have dropped enough to be similar to those in Alberta, but we cannot deny the fact that income tax rates are much lower than they were for past generations.

Mr. Sullivan, I have a question for you. You mentioned the importance of providing young people with work experience, while they are studying, so that they would contribute to the economy, be it in the private sector or in a non-government sector. I know that, in Nova Scotia, you have a number of universities and colleges and that post-secondary institutions are amazing. Can you talk to us about the efforts made by institutions to establish partnerships with your organization or with businesses in order to provide young people with experience?

[Patrick Sullivan]

We are working closely with the post-secondary institutions, particularly the community colleges, at this point. Our strategic plan has experience, so experiential learning, as a key component for our building the skilled workforce and the new economy. We have a task force that is working closely with the community colleges and has representatives from a number of the local universities, and we're seeking ways to provide that experiential learning to our students.

Part of the problem we have is the number of available programs. Even if we just list the programs, it goes three, four, five pages. It's very difficult to narrow it down so that students find the relevant programs and opportunities available to them. We're working to provide greater information for our 1,600 employers and for the post-secondary institutions so that they can reduce the list to have only the most effective programs available to their students. Those are a couple of the things we're doing.

It's a fairly new initiative. We've been working on it for a couple of years, but there's a general agreement among the post-secondary institutions that experiential learning is a key component for the students. Just next week, for instance, there's a full day on co-operative education that many of the post-secondary institutions are putting on, which will be available for employers in the community as well.

Does that answer your question?

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Yes, somewhat.

Am I out of time?

[The Chair, Liberal, Wayne Easter]

You're out of time.

Dan.

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

Thank you, Mr. Chair.

Thank you to all the witnesses for your testimony here today. It's wonderful to see a variety of different views on how we can make things better for the economy particularly.

AIMS, every policy at any level of government ultimately has a trade-off. You're choosing one thing over another when you make a decision. Is that correct?

[Marco Navarro-Génie]

I suppose that's true.

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

Okay. You have talked about demographics, taxation levels. I'm going to start with demographics and work there.

Obviously, we've heard today from a number of different groups that demographics is causing more and more concern. Would you say that's correct?

[Marco Navarro-Génie]

In Atlantic Canada the problem is even more acute than in the rest of the country.

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

Yes, so you're on the thin edge of the wedge when it comes to our aging demographics.

[Marco Navarro-Génie]

Correct.

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

Where I'm going with that is that the government made a decision a few years ago that it would lower the eligibility for old age security. Now that ultimately means that government is going to be spending more at the federal level to deal with aging demographics. To pay for that, it has to be able to get the money from somewhere.

You have raised the question of taxation, that taxation levels are already prohibitively high and it's going to be less productive because of these proposals like the small business tax changes. Is that correct?

[Marco Navarro-Génie]

Yes, sir. I find the reference of 50 years quite telling, because 50 years ago more or less we had a federal minister who proposed more or less similar changes to the tax code, an MP from Cape Breton, Mr. MacEachen, and those were reversed.

The compounding effect of higher taxes is a problem for a receding demographic, and the demographics essentially have three negative points. One, in the last couple of years in all but one province in the region we have more people dying than are being born, so the natural replenishing factor is receding.

Two, we also have more and more young people leaving the region looking for opportunity elsewhere, and this by and large is policy driven. For example, this is a region that is wealthy in resources, yet we have all kinds of policies and regulations against the exploration and the commercialization of many resources.

Three, more to your point about age and the taxing of the system, more and more Atlantic Canadians are coming back to retire here after spending their better years paying taxes elsewhere. It's not that we don't want them back. It's that when they come back, they come at an age where they are taxing the health system more.

When we look at the fiscal panorama of the region, if we look at health and education alone, within variations they represent between 50% and 60% of the spending of most of the provinces. This is clearly unsustainable.

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

Again, if you have governments that are actually winding down activity, for example, moratoriums on fracking and whatnot, then ultimately there's not the taxation levels to provide those services that are wanted and needed. What happens?

[Marco Navarro-Génie]

I hate to make predictions. I'm not a demographer, but it seems to me that it's pretty clear that at some point we'll run out of young people to export.

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

Young people to export...but also, at some point you have to rationalize how you're going to pay for things. You're either going to add more deficits that create more debt, which inevitably is taxes, or on the flip side of that, you end up being where you have to make drastic cuts.

[Marco Navarro-Génie]

On that score, I think one point to keep in mind is that the regional governments in Atlantic Canada are being more or less fairly disciplined when it comes to their spending, unlike the federal government.

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

Okay, that's very good.

I'd like to quickly touch on the Internet issue, because you're absolutely right, Mr. Chair. I represent a rural area and I met with a councillor in Logan Lake. She runs a café, and she told me she actually had to give most of her clients who came in for a coffee.... She said they wanted to pay by Interac but she couldn't get it uploaded because the Internet wasn't at a high enough speed to be able to take it, for whatever reason. This is costing small business people in rural areas.

You suggested that the federal government could participate more. I see that more provincial governments are investing in urban areas, like in British Columbia. That's where the programs and money seem to be going. The federal government seems to be waiting for large corporations like Telus to come to the table to help on these kinds of matters. Should there not be some sort of alignment between provincial spending on Internet broadband access and the federal government's?

[Chris Edwards]

The short answer is absolutely. This is something we've said to the CRTC. We've said it to government as well.

When we look at this, first of all, it's a huge challenge to connect all Canadians. It's a vast geography with a really thinly spread out population. When you think about that, there's probably not enough money to do it all very quickly, so you have to use what you have very, very effectively. To us, that means you absolutely need to coordinate not only among the federal and provincial governments, but among the municipal authorities as well.

What we have is various levels of government funding different levels of projects, often with different speed and quality of service targets. To us, there appears to be some lack of coordination there. We think a national broadband strategy should involve bringing all the authorities together. It's a very difficult task to do, but at least we should be setting some standard speed targets, quality of service targets, things like that, and also some coordinated criteria, I guess, around where the priorities for funding are.

I absolutely agree with that comment.

[The Chair, Liberal, Wayne Easter]

I am sorry, Dan, you're out of time

Mr. Boulerice.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Chair.

Off the top of my head—we could look this up—the tax rate for large companies and large corporations in Canada was 38% in 1983, 28% in 2000 and 15% in 2012. So it has been trending downward. Provincial and municipal governments also have their say on the matter afterwards.

I would like to thank everyone for being here today.

My first question is for the representatives of the Canadian Worker Co-operative Federation. I also want to thank them very much for their presentation.

This is not only because I am from Quebec, but I am very committed to co-operatives, as is my political party. That commitment is not only the result of values, but, as you so aptly pointed out in your brief, it also has to do with effectiveness. The survival rate of co-operatives is practically double that of other companies, and staff turnover is much lower because people are engaged in a process that is their own.

In my riding, worker co-operatives are established every summer for students. They learn to provide quality customer service and to work, and they also learn about democracy, co-operative management, self-management and compromises to be made, if necessary. I think that is a very attractive model, as it is different from the public model and the private model.

You raised an interesting point when you talked about capitalization when a co-operative is being launched or created, as well as problems caused by the changes resulting from budget 2011. Those changes concerned the ability to use RRSPs and the caps. You are proposing that the cap be increased, from $25,000 a year to $37,000 a year, if I remember correctly.

[Hazel Corcoran]

We are proposing that it be increased to $37,500.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you for the clarification.

Have you assessed the consequences of that increase on the federal government's revenue? Is that measure inexpensive or very expensive for the government?