Finance Committee on Oct. 17th, 2017

[Raj Grewal, Liberal, Brampton East, ON]

Thank you so much.

My next question is for the chamber of commerce.

I haven't been to Halifax many times in my life, but it's a lovely place. I was doing some research before I got here, and, surprisingly, you had a pretty decent year in 2017 in terms of the economy. There were a lot of articles on how it's become its own little tech hub out here on the east coast. A lot of people from Toronto are moving here and have great things to say.

How have you been able to create such an innovative atmosphere in this province, and what can the other Atlantic provinces learn from you?

[Patrick Sullivan]

I think we have some—I don't know if I'd call them natural advantages—advantages. We have the education facilities. We have a large number of post-secondary institutions. I actually think it's close to.... Well, it's a lot. There a lot of universities in Halifax and across Nova Scotia. We have a disproportionate number of universities. I think that certainly helps.

We have the advantage of lower costs than markets like Toronto, Vancouver, or Montreal that have an enthusiastic start-up culture but are recognizing that the costs of operating a start-up in a major metropolitan are difficult.

We do have support, I will say, given the announcement of the supercluster. We have enthusiasm from the federal and provincial governments on these kinds of initiatives. I think all of these things combined are creating Halifax. It's a seaport. It's a fairly dynamic city, as well.

[Raj Grewal, Liberal, Brampton East, ON]

In terms of population growth, a lot of, I guess, your cousin provinces out here are having issues maintaining an increasing population, which is stunting their economic growth. You have been able to increase your population, actually outpace most of the major cities on a per capita growth basis this year.

Are there any secrets behind that success?

[Patrick Sullivan]

We were a beneficiary of the Syrian refugees, and that certainly helped to bump us up.

We did have the largest increase in population growth in Halifax since World War II, so it was significant growth. Halifax is a bubble in Nova Scotia. In Nova Scotia, we are experiencing population declines overall. Nova Scotia did have growth last year, but Halifax had greater growth. We are a major metropolitan centre in this area, and we are attracting growth from the rural areas in Nova Scotia. That is not such great news, to be perfectly honest.

We're also attracting people back to Nova Scotia, as Marco said, with the cost of living in Toronto or Vancouver at a point where people can cash out on a house and purchase a significant dwelling here for certainly less cost. For young people now, the chances of actually building or getting a house in some of those markets is becoming unaffordable. I think that is attracting the youth as well. Last year, I believe, we had less university students leave than we've had in the last 10 or 15 years, which is a wonderful accomplishment.

[Raj Grewal, Liberal, Brampton East, ON]

Absolutely.

You spoke about tax reforms. I get it—

[Patrick Sullivan]

You've heard it.

[Raj Grewal, Liberal, Brampton East, ON]

I understand that it has to be clear, predictable, and concise, but at the same time, if you say that government policies are best developed by engaging with the citizens and with stakeholders, I guess it's particularly difficult when it comes to tax policy, because it's hard to put out a proposal to get feedback. This was a proposal, and there was a lot of feedback, and that created uncertainty.

In your professional opinion, how could a government, whether ours or a future government, engage in...because in essence, you're saying that any time a government puts out tax proposals, it's going to create uncertainty.

[Patrick Sullivan]

To be fair, when government puts out tax proposals that are legislation, that creates a level at which discussion is a little more difficult. I don't disagree with you. I think it's difficult to have consultation.

That being said, there are many people, us included, who would say the tax policies need to be redone. I don't think anybody would disagree about that. There are many changes that could be made to tax policy, but 75 days of consultation is probably not enough consultation. I think involving experts in the field could create some great discussions. It takes a long time to build tax policy. It's taken us a long time to get to whatever it is—2,000 pages in the tax code. It'll take a long time to get it down to a couple hundred pages, but I think involving experts in the community and having one year or whatever it happens to be of conversation could result in a better tax code for Canada and help us build for the future.

[Raj Grewal, Liberal, Brampton East, ON]

I don't disagree that the tax code has to be reformed. I think everybody on this committee probably agrees that there should be tax reform.

The issue I have is that over the last few weeks we've heard from chambers of commerce and so-called expert groups. If you're a small business, your number one objective is to pay less tax. That's the nature of being an entrepreneur or businessman. I am an MP, and my number one objective is to provide accessible service to my constituents.

When we hear that people take these—I would hate to use that word, so I won't use it—hypothetical scenarios and proposals.... You mentioned that somebody did not go forward with a transaction on the sale of a business, but these proposals were going to be going forward and there's nothing in the proposals that would have impacted somebody selling their business.

[Patrick Sullivan]

It wouldn't impact the sale of a business but it would impact their expected return on the business in the future. Given the tax proposals that were on the table, they would have expected less income.

I hold a private corporation with my wife. Before I joined the chamber of commerce just a year and a half ago, I earned income and I used the tax laws as they exist to minimize my income. As you say, a private business would do that. An individual would try to minimize their tax, I suppose, as well. I certainly tried to do that. Knowing my specific example and the measly amount of money that I earned, I know that I would have.... I took dividend income. Taking dividend income and sharing it with my wife, who invested in my business, allowed me to pay less tax, which I then reinvested in the business.

At that point, I was a part of the middle class and I was getting a little bit more income by utilizing the tax codes as they existed. That would have changed, given the change.

[The Chair, Liberal, Wayne Easter]

We'll have to end it there. We're well over time, but it is nice that we're having a calmer discussion than we had a week ago on this issue.

Dan and Greg have questions.

I have one for you, Mr. Sullivan. You talked about the training and skills development, etc., and you mentioned rationalizing the number of programs available, which is an interesting idea. Even in our offices—and I expect other MPs are the same as I am—when we get requests for money available either under EI or skills development or something else, we don't know which program to turn to, and we have to do research to find them. You're not alone in that.

There is a multitude of monies going out there in terms of training. Under the labour market development agreement there's $3 billion that the federal government transfers now to the provinces. Rationalizing may be one way, but are we getting the best bang for the buck? How do we get the best bang for the buck in getting people the skills they need to match up with the jobs that are available where we have shortages? What's the best way to do it? Are we just spending money and not knowing where it's going or what's the story from your point of view? How do we fix that?

[Patrick Sullivan]

That is a difficult question, I will say. I think part of it is the rationalization. Part of it is directing that towards jobs that will provide future longer-term benefits.

To use your example, I know that in my previous role the federal government provided funding for visitor information centres and for folks to work in visitor information centres. It's a wonderful job, and it's a wonderful summer job; however, I wouldn't say that it provides most university students with work in line with their skills training or the programs they're taking at university. It might be better to have that program reallocated to provide funding for something that is directionally more in line with their programs, or that will meet the future needs of Canada rather than the immediate needs of Canada.

[The Chair, Liberal, Wayne Easter]

Okay.

We have time for another couple of questions from Mr. Albas and then Mr. Fergus.

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

This is just a side comment about my experience. I ran my own small business for 15 years and was a chamber director at the B.C. Chamber of Commerce. The perspective of almost every entrepreneur I know who has done well is that they've never looked at taxation as the purpose for their business. The purpose of their business is to execute their dream, right? It's a vehicle. Anyone who says that it's all about lower taxes.... As long as you have money coming in the door, most entrepreneurs don't care about lower taxes. They care about doing what they do best. I want to leave that there, because I don't want to create a perception that entrepreneurs are only about paying less tax. That's just false. I think people need to talk to more entrepreneurs. They'll find the same thing.

In regard to co-ops, I sincerely believe that co-ops should play a larger role. Again, they're a different kind of structure, but it seems that past governments—and I'm including this government here, but I'm not making any predictions—have not added significant tools to make Canadian co-ops more usable. For example, foreigners can't be a part of a co-op in Canada, or at least a Canadian one; that's my understanding. What kinds of things can co-ops do to help deal with succession planning and to offer more choices of ownership for Canadians?

[Hazel Corcoran]

In terms of whether foreign individuals can be involved in co-ops, under most legislation that's possible, but because co-ops tend to be more locally focused, it's not necessarily a priority. We did a study at our federation on where in the world the worker co-op movement is growing fastest and best and is the most dynamic, because that is the part of the co-op sector that is growing the fastest. Those tools are generally not in place in Canada except in Quebec, which is why they have two-thirds of the movement.

We need to have support for technical assistance and around the capitalization challenges. The co-op movement has taken the initiative of starting this fund, this Canadian co-op investment fund, which I think is going to be very important. That's one thing the sector is doing, but for some of the other tools, we are looking to the federal and other governments to play a role.

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

What kinds of structural tools? Again, funding I set aside, because everyone oftentimes believes that more money will solve everything. Quite honestly, I think that for most co-ops historically, especially the ones that have been around 50 or 60 years, it's that people saw it as a local way to solve their own problems.

[Hazel Corcoran]

It is. It's just that you must have some tools that come from government. The places in the world that have the fastest-growing movement provide people with those tools. They have supports for co-op development, whether it's around capital or the right regulations, like in the RRSPs and the indivisible reserves, and sometimes it is funding. All of those things need to be in place for them to come together and for people to know, because people generally don't know about the model. They can't do it if they don't know about it. You have to promote it.

[The Chair, Liberal, Wayne Easter]

We'll have to go to Mr. Fergus for one question and then Mr. Boulerice.

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

That's a shame, because I wanted to ask two questions.

Ms. Corcoran, I have been involved in the co-operative movement for a long time, and I completely agree with you. I have no questions for you because you fully answered the previous questions and you gave a presentation.

My question is for Ms. Pasher instead.

Ms. Pasher, you gave Mr. Grewal an excellent answer about the Emerson report. The airport close to me is the Ottawa airport, on the other side of the river. According to the airport's CEO, the privatization of airports is raising concerns. The Toronto airport is a huge airport hub, just like in Halifax. Do the other members of your association, the airports in Moncton, Charlottetown or even St. John's, Newfoundland and Labrador, have the same fears or concerns about the possible privatization of the Halifax airport?

[Monette Pasher]

I think airports all worry about the privatization of Toronto, for example. Halifax is the hub for the airports in our region, but Toronto is also the major hub for Atlantic Canada, and even Halifax as well. I think there is concern about what privatization would look like and whether it would increase costs overall to the system. It's simply an unknown right now. I think until it's discussed and what it would mean is really looked at—you know, would they be paying as much to their capital corporation as they do right now in rent—we don't really know what that divestiture would look like in terms of privatization. It's a really complicated question and we just don't know the answer.

In terms of Halifax, we definitely don't want to see the Halifax airport privatized. We don't think it's big enough, and we don't want to see the cost of travel increase in our region.

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

Mr. Sullivan, thank you again for the work that you do to give work experience to young students in the post-secondary institutions in the region.

You said that next year is the first time fewer students will be leaving. What percentage of students with experience on the labour market will stay here for their first job once they graduate?

[Patrick Sullivan]

I don't know that I could give you specific statistics. However, what I would say is that we know there's a much greater likelihood for someone who has a co-op work term, an internship. If they begin to work for an employer in Halifax or Atlantic Canada they are much more likely to get a job offer from that individual, and then much more likely to stay. But I couldn't say that I know what the statistics are.

[The Chair, Liberal, Wayne Easter]

Mr. Boulerice.

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

Thanks, Chair.

Quickly, for the record, I want to say that we share the preoccupation of Madam Pasher about the risk of increased costs for travel if privatization happens.

I have a technical question. You are suggesting that the small airports with less than three million passengers would not pay rent to the federal government, but why three million? Why not two million, or 2.5 million, or 3.5 million? I don't know. I simply want to understand.

[Monette Pasher]

It's something that the Canadian Airports Council looked at closely to see at what point the airport can afford some form of additional rent. It was clear that around that three million mark it became—