Finance Committee on Nov. 9th, 2017

[The Chair, Liberal, Wayne Easter]

We'll have to cut it there.

On that point, Mr. Davis, you mention in your brief making income tax legislation and regulations consistent and improving the parameters around the definition of “disability”.

Do you want to expand on that a little bit? What has to be done to do that? I get your point about having to prove it every year, which is a little ridiculous.

[Benjamin Davis]

Thank you.

In regard to the definitions, we are really pleased with the accessibility legislation consultations. Our recommendation there is very clear: include episodic illness in the definition of disability. By simply doing that, the program opportunities are open by virtue of more people being able to access those programs.

[The Chair, Liberal, Wayne Easter]

Thank you.

To the Portfolio Management Association, what would be the specific amendment from your point of view that would deal with the problem of certain pooled funds? I'll take your answer, but you can always send us a note to that effect.

[Katie Walmsley]

We have sent a note directly to the Department of Finance on this matter, but there's a specific section in the Income Tax Act that covered the merger of segregated insurance product funds and mutual funds. We're just asking that it cover pooled funds also.

[The Chair, Liberal, Wayne Easter]

Could you pull up that note and send it to the clerk of the committee, please, Katie?

[Katie Walmsley]

Sure. I'm happy to do that. Thank you.

[The Chair, Liberal, Wayne Easter]

With that, thank you to all the witnesses for answering our questions.

We'll suspend for a moment and bring up panel two.

The meeting is suspended.

[The Chair, Liberal, Wayne Easter]

We'll reconvene to panel two for further discussions on the budget implementation act, Bill C-63. Welcome to all the panellists.

We will have to suspend this discussion at 6:15 because we have a motion to deal with.

On this panel, we'll start with Michael McDonald, executive director of the Canadian Alliance of Student Associations.

The floor is yours, Michael. We'll try to keep it to about five minutes if we can.

[Michael McDonald, Executive Director, Canadian Alliance of Student Associations]

Thank you.

Good evening, Mr. Chair, esteemed committee members, fellow witnesses, and members of the gallery.

My name is Michael McDonald, and I am executive director of the Canadian Alliance of Student Associations, otherwise known as CASA. Thank you for your invitation to speak about Bill C-63.

Broadly speaking, CASA was pleased see the continued investments in students in budget 2017. We were especially encouraged by new supports for first nations and Inuit learners, expanded access to grants for students with dependents and for part-time students, and new rules on unpaid internships.

For the remainder of my time, I am going to be focusing on the proposed amendments on unpaid internships, which are part of this bill. This move fits with the broader efforts to make Canadian workplaces more modern, inclusive, and effective. We applaud, for example, the framework announced a few days ago to fight harassment and sexual violence in the public service and in federally regulated workplaces.

Tens of thousands of students work in federal government jobs and in federally regulated sectors each year. Alongside all their colleagues, they deserve a safe and respectful workplace that allows them to thrive. For the same reason, we support Bill C-63's proposed changes to ban uncompensated internships.

At CASA we are firm supporters of quality work experience for students. Recent research links participation in co-op programs with higher pay and better jobs after graduation. Surveyed students who did co-ops as part of their studies give their overall post-secondary education experience better reviews than those who did not, and employers also speak highly of the skills and job readiness of co-op graduates.

While we know that the quality of work experience pays off for students and employers, uncompensated experiences do not. An American study found that far more graduates who did unpaid internships did not land jobs as compared to those who did do paid internships. Indeed, an unpaid experience did virtually nothing to improve job prospects, according to a recent study by the Canadian Internship Association.

The likely explanation is simple: when an employer is invested in the experience, they give the student more attention, more responsibilities, and more opportunities.

Ultimately, we would like all internship experiences to be paid. However, we do recognize that compensation in the form of credit is better than no compensation at all, and Bill C-63 proposes to end unpaid internships in federally regulated sectors except when those internships are part of formal education programs. We support this move, as it is an important measure to promote high-quality work experiences and safety and to fairly compensate young workers.

We recognize that like paid internships, quality is generally also higher for work experiences that are built into formal post-secondary education programs, and we support the budget 2017 promises to ensure that all interns, including those working for credit in formal programs, receive labour standard protections. Moreover, we think it's important to highlight that unpaid interns tend to be far more prevalent in fields that are dominated by women. We think this is particularly problematic and we hope it is something that this bill addresses.

Another important consideration is for students from low-income backgrounds who have less flexibility when it comes to choosing between experience that might help them now and paying their bills.

We are pleased with the steps taken by the budget to protect interns; therefore, we will continue to be advocating for federal investment in new paid work opportunities for students. This is why we're a big supporter of some of the work-integrated learning opportunities that have been presented most recently.

We'll continue to support high-quality compensated student work experiences. We are pleased to see the changes presented in the bill and we think it's moving in the right direction.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Michael.

We will turn now to the Canadian Centre for Policy Alternatives and Ms. McInturff, who is a senior researcher at the national office of the CCPA.

Please go ahead.

[Dr. Kate McInturff, Senior Researcher, National Office, Canadian Centre for Policy Alternatives]

Good evening. My name is Kate McInturff, and I am a senior researcher at the Canadian Centre for Policy Alternatives. I would like to thank the committee for inviting me to speak today.

The government's decision to include gender-based analysis in the federal budget is an important step forward for gender equality and, as I argued in my pre-budget submission, for our economy. Budget implementation bills are an important moment for the government to act on that analysis.

To date, the analysis presented in both budget 2017 and the fall economic update identifies how men and women are affected differently by, for example, tax policy. I was very pleased to see the fall update take note of the negative impact on women of income splitting and income sprinkling. It is important, however, to ensure that the analysis actually forms the basis for action and better policy. That is to say, our government policies need to be designed with the analysis in mind.

The scope of Bill C-63 is understandably narrow. However, I would like to take this opportunity to demonstrate how gender-based analysis can make the government's policies more effective and go further in setting us down the path to gender equality. I am going to speak specifically to the issue of leave for victims of domestic violence.

In the 2017 budget's gender statement, the government recognized that “[w]omen and girls are more likely than men to experience poverty, violence and harassment”, noting that “[w]omen are more likely than men to experience the most severe forms of self-reported spousal victimization”.

The government's decision to implement leave for victims of domestic violence is a very welcome step in addressing the relationship between economic insecurity and susceptibility to domestic violence. However, a deeper analysis suggests that there are two further steps that need to be taken to ensure that this policy achieves its goal. Bill C-63 provides an excellent opportunity to take those steps.

First, leave for victims of domestic violence needs to be paid. The evidence is clear that when women remain in violent settings and return to those settings, it is because they cannot afford to leave. A study from the University of British Columbia found that survivors of intimate partner violence experienced financial hardship as a result of that violence, regardless of their income status prior to leaving their abusive partner. That is to say, this has an impact on women from all economic groups. That financial hardship continued for years after they had left the violent setting.

In the short term, when a woman leaves a violent setting, she faces immediate financial challenges. One of the primary reasons given by women in shelters for returning to a violent household is that they cannot afford housing. Additionally, women with young children fear that if they are unable to financially support themselves and their children, those children may be apprehended by child and family services. This not only means the tragedy of a victim of violence being separated from her children, but in small communities this can also result in the children being placed with, for example, a relative of the violent partner, potentially putting them at further risk.

The costs of lost work, lost wages, and lost productivity are significant. Justice Canada estimates the cost of lost wages due to domestic violence at $33.7 million annually. The cost of lost productivity to employers is an estimated $68.5 million annually.

What does this look like in the life of a survivor of domestic violence? When you leave an abusive spouse, you leave with almost nothing—your children and a few suitcases at most, not a fork, not a pot, not a chair, not a bed. When it's time to find housing, a survivor of domestic violence is starting from scratch. If she has children, she has the additional pressure of having to demonstrate to child and family services that she can provide the basic necessities of life for her children.

Three days of wages, three days of paid leave, for a woman making $25 an hour amounts to $600. That is enough to buy a mattress, a few plates, and a fork. That can make a world of difference in the life of a woman trying to build a new, safer life for herself and her family.

The second recommendation I would make to ensure that domestic violence leave is effective is to eliminate the exclusion of those facing police charges. While I understand the desire not to extend this leave to someone who is charged with a violent crime, the exclusion of those who have been charged with domestic violence has the potential to exclude victims of abuse as well. This is because in some jurisdictions in Canada the police practise the policy of automatic or dual charging. Automatic charging means that when police respond to a domestic violence call, they are required to charge those involved. This may result—and does in fact result on occasion—in both the abuser and the victim of the abuse being charged.

Automatic charging is intended to ensure that charging occurs and that the police response to domestic violence is robust. However, the result is that in some cases victims are charged. Under the current proposal, under the legislation proposed here, those victims would be excluded from eligibility.

The government is leading the way by recognizing the role of financial hardship and lost work in the lives of those who experience domestic violence. With these additional changes, the policy will set a new standard in supporting survivors of that violence. Further, it is precisely in implementing its policies that the government has the opportunity to put gender-based analysis to work and to ensure that this analysis leads to action.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Kate.

From the Canadian Federation of Independent Business, we have Ms. Pohlmann, senior vice-president for national affairs and partnerships.

[Corinne Pohlmann, Senior Vice-President, National Affairs and Partnerships, Canadian Federation of Independent Business]

Thank you for the opportunity to be here today. You should have a slide presentation on your tablet that I was hoping to walk you through over the next few minutes.

CFIB is a not-for-profit, non-partisan organization that represents more than 109,000 small and medium-sized businesses across Canada. Our members represent every region of the country and are found in every sector of the economy.

Today I want to touch on three aspects of Bill C-63: introduction of flex-work arrangements, implications of the changes to the multiplication of small business deduction, and the Canadian free trade agreement.

Allowing employees the right to request flex-work arrangements is unprecedented in Canada. Though only a small number of small businesses are federally regulated, provincial governments often implement similar changes, which then affect many more.

We would argue that such legislation is actually not needed among small companies, because as you can see on slide 4, CFIB found that many small business owners offer some form of flexibility to help their employees balance work with other responsibilities. In fact, most do.

Also, an Ipsos poll that was conducted earlier this year of those working in firms with fewer than five employees showed they tend to be more satisfied with the flexibility given to address personal needs, as you can see on slide 5.

In addition, the same employees are more likely to be very satisfied with their job in general, compared to workers in larger firms.

[The Chair, Liberal, Wayne Easter]

I'm going to ask you to slow down a little, Corinne, if you could.

[Corinne Pohlmann]

Sure.

This is because most smaller employers already understand the importance of being flexible for retaining employees, attracting new workers, and maintaining good work morale.

We believe this new legislation could pose several challenges for the small businesses, as listed on slide 6.

First would be the added administrative burden, such as reorganization of responsibilities to deal with employee requests and complying with regulations related to applications. Also, small businesses have limited resources to address any potential complaints or appeals processes that may result.

Second, in some businesses it is difficult for employers to offer certain types of arrangements, such as working from home, which may also require specialized equipment, which can be quite costly for smaller firms.

Third, there can be significant costs in terms of temporary reductions of productivity due to disruptions of regular schedules. Moreover, many small-business owners may have concerns regarding the fair treatment of other employees, who may end up taking on extra work, causing resentment among co-workers.

Finally, such legislation could lead to undue pressure on those small employers who are unable to accommodate the requests due to the nature of the work they do, such as those in the transportation sector.

Each business faces its own unique challenges. That's why it's really best left with employers and employees to work out the most suitable arrangement between them. In our feedback to the government, we recommended that they not proceed with this legislation, and if they did, that they potentially exempt smaller businesses. If they still planned to move forward, we had put forward a series of reasons that an employer should be allowed to refuse such a request, and we were pleased to see that many of those were incorporated into this legislation. However, we would like to see more than 30 days allotted to the employer to respond to a request. We had suggested three months, which is the period that's allowed in the U.K., and there were a few details about the enforcement of this bill and whether there will be an appeals process. These are areas that we remain concerned about at this time.

Next I want to talk about the multiplication of the small-business deduction.

In Bill C-63 changes were made to the treatment of farmers and fishers selling to co-operatives so they can remain eligible for the small business deduction. This was welcome clarification of the changes to this multiplication of the small business deduction that was introduced earlier this year, but, really, more needs to be done with it. In budget 2016, the government announced changes that would seem to be targeted at those who had created certain structures that enabled access to the small business deduction more than once, but this now seems to be affecting more businesses than we were first led to believe. Under these new rules, active business income is not eligible for the small business deduction if a corporation earns that income from providing services or products to a direct or indirect interest; however, no guidance detailing what exactly “indirect interest” is has been given.

What does this mean? Well, it seems these new rules are having a broader impact on some small businesses, especially in rural areas. For example, we have one member from a small town in Alberta who owns a restaurant and purchases fresh produce from her father's farm. Our member has a very limited number of suppliers, as there are few other businesses in her area that provide fresh produce, so she purchases it from her father. However, under these new rules, any active business income generated from their arm's-length relationship may no longer be eligible for the small business deduction, even though they both run completely separate businesses.

The rules have also created additional administrative costs, as it requires increased effort to determine whether these rules apply to one's corporate earnings, and to what extent. If a business is affected by the rules, it has been recommended to them that they keep two sets of accounting records: one for income not eligible for the small business deduction and one for the part that is eligible. We believe more needs to be done to fully understand and address the impacts of these changes.

Finally, I want to mention the importance of the Canadian free trade agreement and how pleased we are that this budget bill confirms the federal government's commitment to this important and historic agreement. It's clearly important to small businesses, but now the really hard work begins. We need the federal government to continue to play a key role in making sure that progress is made on the agreement, and this starts with making sure the regulatory reconciliation and co-operation table is active in addressing key issues for small business.

On slide 11 you can see the list of regulatory areas that require greater alignment across Canada and that should be tackled quickly by the RCT. They include corporate registration and reporting, agricultural and transportation regulations, professionals and trade licensing, and workers' compensation and health and safety rules. We would encourage the federal government to use its influence in keeping discussions going and finding solutions.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you.

From the MaRS Discovery District, we have Mr. Mulvihill.

[Dr. Cory Mulvihill, Lead Executive, Policy and Public Affairs, MaRS Discovery District]

Thank you, Mr. Chair, for the invitation to come to speak to Bill C-63.

My name is Cory Mulvihill, and I'm the lead executive for policy and public affairs at the MaRS Discovery District. MaRS is North America's largest innovation hub and is located in the heart of Canada's largest research cluster. We bring together entrepreneurs, educators, researchers, social scientists, investors, and corporate business experts under one roof, giving innovators what they need most—a home with connections to networks of talent, customers, and capital to grow and scale.

MaRS provides advisory and programming support to over 1,100 start-up ventures, with our reach extending to partners in start-ups across Canada. Since 2008, MaRS-supported ventures have raised $3.5 billion in capital and generated $1.8 billion in revenues. Today they employ more than 6,100 people in knowledge economy jobs.

Today I'd like to speak specifically to the importance of nurturing a strong ecosystem of smart capital for Canada's emerging companies, particularly in our four focus areas: health, energy and environment, finance and commerce, and work and learning. A critical element to the success of these companies is their ability to access the right amounts and types of capital for their stage of growth, along with the effective advice that comes along with it.

Budget 2017 will commit a further $400 million to stimulate growth in the Canadian venture capital ecosystem, following on the success of the previous government's venture capital action plan. As Canada's foundation of high-growth companies is accelerating, this investment through the Business Development Bank of Canada will play a critical role in ensuring that the momentum built through VCAP to strengthen the VC ecosystem will continue and that these companies will be able to access capital during their critical stages of growth.

While this year's deal flow, according to the Canadian Venture Capital Association, is said to outpace that of last year, the Canadian economy continues to face a systemic challenge in scaling firms to compete globally due to their undercapitalization. At MaRS, we have used our role as a centre of convergence in the innovation ecosystem to nurture the growth of capital in areas where we've seen gaps. This includes the management of the investment accelerator fund, Ontario's most active seed fund, which has invested $52 million through 115 investments, and ArcTern, which was launched to address a gap in funding for clean tech-focused companies.

We look forward to the launch of the venture capital catalyst initiative, which will be a critical component in maintaining the momentum of Canada's venture capital ecosystem.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

From the Nurse Practitioners' Association of Ontario, we have Ms. Agnew and Ms. Tymianski.

[Theresa Agnew, Chief Executive Officer, Nurse Practitioners’ Association of Ontario]

Thank you so much.

Hello, everyone. My name is Theresa Agnew, and I am the chief executive officer of the Nurse Practitioners' Association of Ontario. With me here today is my colleague, Dr. Dawn Tymianski, a director on the board of NPAO. Dawn will shortly become the interim CEO of the NPAO as I step down from this role after five years.

We thank the Standing Committee on Finance for giving NPAO the opportunity today to provide feedback on Bill C-63. I will start by providing the committee with a short background on the role of NPs and NPAO.

The Nurse Practitioners' Association of Ontario is the professional association representing more than 3,100 nurse practitioners and NP students in Ontario. The NPAO formed in 1973 as an independent association representing NPs. NPAO has the largest percentage of voluntary members of any professional nursing association in Ontario.

Nurse practitioners are registered nurses with advanced university education and experience who provide a full range of health care services to millions of patients across the province and across Canada. In Ontario, NPs can order and interpret all laboratory tests and most diagnostic imaging tests. NPs are also able to refer to specialists and admit, treat, and discharge hospital patients. Nurse practitioners can also do minor surgical procedures.

Nurse practitioners are authorized to prescribe controlled drugs and substances, and this long-anticipated change to scope of practice now enables nurse practitioners, as primary care providers, to deliver all aspects of palliative and end-of-life care to their patients across the province, including medical assistance in dying for those eligible patients who request it. You will be interested to know that in Ontario more than half of the practitioners on the ministry's MAID registry are nurse practitioners.

Nurse practitioners work across the health care system in a wide variety of settings, including hospitals, family health teams, community health centres, NP-led clinics, and long-term care centres. Nurse practitioners work with individuals and families, from newborn babies to the elderly, and serve many vulnerable and marginalized populations.

I'm going to jump now to our support of Bill C-63.

As you know, Bill C-63 is an omnibus budget bill. We have not read all 275 pages of the bill, nor have we examined the many pieces of corollary legislation that would be amended if the bill is passed, so we will keep our comments to a very high level.

First, NPAO is pleased to see proposed changes to the Canada Labour Code that would provide Canadians with greater flexibility to take vacation time, to add more bereavement days in the event of losing a loved one, and with time to attend traditional healing practices. In addition, we strongly support statutory time off work to recover after experiencing family violence. This is a compassionate approach, and we know that all of those affected by family violence can be traumatized and need time to begin to heal. NPAO would, however, recommend that the statutory time off be with pay, rather than an unpaid leave. This would help to ensure that families are not penalized financially when they have already been through so much.

Potentially, the bill could also go further in supporting families experiencing domestic violence. I speak in loving memory of Zahra Abdille, who was a nurse practitioner I had the honour of getting to know when she was an NP student. Zahra was passionate about the care of the elderly. Sadly, she kept the fact that she was a victim of domestic violence from her colleagues and friends.

In July of 2014, Zahra had left her husband and had taken the boys to a women's shelter. She then sought legal assistance to pursue leaving her abusive husband. She worked as a nurse practitioner and was the family's sole breadwinner, and because it was determined that she earned too much money, Zahra was denied access to free legal aid—this despite the fact her husband controlled the family's bank account. Feeling that her options were limited, she and the boys returned to her husband. On November 29, 2014, Zahra and her two children, Faris and Zain, were killed by her husband. He later killed himself.

On behalf of women like Zahra Abdille, NPAO implores the government to ensure that all women who are victims of domestic violence have access to free legal assistance. If this amendment cannot be made as part of Bill C-63, we urge the government to find a way to enshrine this access into legislation.

NPAO also supports measures within Bill C-63 that seek to make our tax system more transparent and fair. Canadians pay tax to support the programs we hold near and dear, such as medicare, affordable housing, and subsidized day care. Those who make more should pay more. We support any amendments that would close tax loopholes that unjustly benefit the top income earners. Revenues from fair and equitable taxation could then go to improving the social determinants of health, thereby improving health for all Canadians.

We also speak in favour of proposed amendments within Bill C-63 that provide enhanced incentives to use geothermal energy.

Finally, we'd like to thank the committee and thank the federal government for introducing changes in the omnibus bill that enable nurse practitioners to sign many federal forms. Despite the fact that nurse practitioners are independent assessors of patients, make diagnoses, and treat and manage health conditions, there are currently many federal forms that do not accept the signature of a nurse practitioner. This results in patients having to return to a clinic or health care setting to see a physician who may not know them. This causes additional expense for the client and the system.

We're thrilled with the omnibus changes in Bill C-63 that enable nurse practitioners across Canada to serve clients in a more expeditious and efficacious way. We'd like to take this opportunity to thank the Canadian Nurses Association and the Nurse Practitioner Association of Canada for their extensive work and advocacy to make these changes a reality.

Again, we thank you for the opportunity, and we look forward to your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Agnew.

After a quick scan of your environmental scan, I hope the Minister of Health has that. You should send a copy to the Minister of Health.

[Theresa Agnew]

We'll make sure that we do that. Thank you.

[The Chair, Liberal, Wayne Easter]

We'll now turn to questions.

Who do we have on our list?

Mr. Sorbara, we'll go to five-minute rounds.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair.

Welcome, everyone. Good evening.

I'll start off with Dr. Mulvihill.

Can I just call you Cory? Would that be all right?

[Dr. Cory Mulvihill]

That sounds good.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Cory, our government has announced the superclusters initiative, which has been applauded by many tech sectors. I've been down to the MaRS Discovery District in Toronto, and a lot of really exciting and great things are happening there.

In relation to the two initiatives we are undertaking within Bill C-63, the VCC and the second initiative whereby BDC and EDC are coming in to assist, how important is it for government to partner with—I call it the tech sector—the innovation sectors, or sectors in which innovation plays a crucial role? How important is that to drive innovation in Canada, and commercialization as well?