Finance Committee on Sept. 18th, 2018

[Pierre Poilievre, Conservative, Carleton, ON]

Now, you say that the universe of cases reconsidered by the department was about 2,400?

[Kimberley Hanson]

Yes.

[Pierre Poilievre, Conservative, Carleton, ON]

Does that cover everyone, in your view, or are there others who were denied who ought to have been at least reviewed but weren't?

[Kimberley Hanson]

It's difficult to be certain of the numbers, because there are challenges in getting real numbers of applications from the CRA, etc. We know from a study that was done by the University of Calgary late last year that across the board, for people with all forms of disability, there are very low levels of application for the disability tax credit. It's even lower for the registered disability savings program.

It is plausible that only 2,300 applications were denied during the second half of last year, but one of the things Diabetes Canada is committed to doing is raising awareness among all people living with diabetes that they are potentially eligible for this program.

[Pierre Poilievre, Conservative, Carleton, ON]

You say that 42% of the reviewed cases were once again rejected.

[Kimberley Hanson]

Yes.

[Pierre Poilievre, Conservative, Carleton, ON]

That means just slightly over a thousand. I know you weren't provided with a list of who these people are, but to your knowledge, do any of those thousand who were rejected the second time require more than 14 hours of life-sustaining therapy and, therefore, otherwise qualify under the act?

[Kimberley Hanson]

From what they tell me, they certainly do. I think, based on how diabetes is normally treated, it is highly probable they do. I can't attest to whether their applications were filled out completely clearly or whether they avoided using terms the CRA objects to, some of which we're working to try to have allowed. For example, the CRA explicitly does not allow anybody to count the time they spend counting carbohydrates in order to calculate their dose of insulin against the 14 hours. That is an interpretation. It's not written into the Income Tax Act that you can't count that, but it's an interpretation of the CRA that you can't count that. Because it is actually impossible to calculate a dose of insulin without counting carbohydrates, some people, quite rightly, make mention of doing that in their application. That instantly gets them rejected.

It is possible that those thousand or so applications included the mention of things that may make them not eligible. It's also probable that some of those applications were rightly disallowed, but there's a real gap between the understanding of the eligibility criteria and the application of them that we're trying to fill.

[The Chair, Liberal, Wayne Easter]

I hate to end it there, but I have to.

Mr. Fragiskatos.

[Peter Fragiskatos]

Thank you, Chair.

Thank you to the witnesses.

My first question goes to you, Ms. Hanson. London, Ontario, is where I'm from. It's the city I represent in the House of Commons. As you know, Western University is a leading centre in terms of diabetes research as far as universities are concerned, so I'm prompted to ask about diabetes and the connection between individuals suffering diabetes and pharmacare.

Some estimates have put forward the idea that medication and diabetes supplies range between $1,000 and $15,000 per individual on an annual basis. When I think about low-income Canadians, when I think about middle-income Canadians, that's an enormous cost, an enormous burden to bear for individuals and families. I wonder if you could tell us your organization's view on pharmacare, given that context.

[Kimberley Hanson]

You're absolutely right that the economic burden to the individual living with diabetes can be really very significant, depending on their form of treatment. Diabetes Canada has statistics to suggest that more than 30% of those living with diabetes report having been unable to follow their doctor's prescribed treatment plan due to the cost of the devices, the supplies and the medications required.

Obviously, the consultations on an approach to national pharmacare are of great interest to us and to the people we represent. Diabetes Canada believes strongly that every Canadian needs access to the right medications at the right time. Access also needs to be provided at the minimum possible cost to the individual. I think there are significant gaps right now in access to medications, devices and supplies, all of which are currently getting in the way of the people who live with diabetes from achieving their best health longer term. I think those must be addressed. They represent a significant part of our recommendations under Diabetes 360°, in consequence.

[Peter Fragiskatos]

Thank you very much for that insight.

Mr. Patry, I have a question relating to one of your recommendations, which is for $140 million a year by 2023 to increase the number of master's and Ph.D. students. That's a lot of money. I sympathize, because prior to going into politics I was teaching at Western University, so I know how critical it is to have that support.

I'm also a bit concerned, because I know that in my own experience—and there is some research to bear this out as well—I've seen a lot of my former students, and a lot of friends, in fact, who have received scholarship support to pursue masters' degrees, and in particular Ph.D.s, and they end up not finding work. I wonder, as part of your recommendation, is it simply a matter of handing over money to universities on the part of the federal government? Or would there be a condition that there's a link between the scholarship support and connecting those students with employers?

I think there's a lot to be said in terms of what master's students and Ph.D. students indeed can offer the wider economy. We have a growing tech sector in London, for example, that has really tapped into the Ph.D. market at Western and has done very well.

I wonder if you could speak to that. My fear is that by simply providing scholarships with the hope that these students would appear to be more employable because they have advanced degrees, we're not going that one step further to ensure that they actually are connected with employers and have that pathway to employment.

[Gilles Patry]

That's an excellent question. It piggybacks on what Valerie was talking about earlier in terms of making sure that in the process we also connect students with the potential employers going forward.

Let me address the question by also trying to clarify that among the various groups, as I tried to indicate, those with advanced degrees—graduate and master's degrees and Ph.D.s—have the lowest unemployment rate. It's at 4% or 4.1% currently, as of 2017. This is what we would call close to full employment for these individuals.

I should also clarify that there is a current scholarship program within the tri-council of NSERC, SSHRC and CIHR, which I think, if I look at NSERC and SSHRC, is probably in the $400-million range a year, but that program has been essentially flattened for the last 10 years. It has not seen an increase in the number of awards, nor in the value of the awards. What we're recommending here is essentially to recognize the financial burden that a student has to go through when they're doing a master's degree or a Ph.D., when for many years of their lives they're forgoing a potential salary, and to help the students directly. The money does not go to the university and does not go to the faculty member. It goes directly to the student, in support of that student, to complete his or her advanced degree—

[Peter Fragiskatos]

Very quickly, I'm sorry to interrupt you, but I know my time is limited. When you say that there's a very low—

[The Chair, Liberal, Wayne Easter]

I hate to tell you this, Peter, but you're out of time.

We have time for one question from Mr. Richards and one from Mr. Fergus.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Thank you.

I'd like to use a little of my time for Mr. Legault and Mr. Wark. In an earlier response to my colleague Mr. McCauley, you didn't have a lot of time to finish off where you were at. You mentioned that if you were given the opportunity to be the ones making the policy, you had six key points that you feel.... You mentioned that you had a bit more detail that you wanted to provide. There wasn't time to finish that. I want to give you the opportunity to do that.

[Kevin Wark]

We've already talked about the TOSI and passive investment rules. We think there are some improvements to make them simpler and easier to administer by the small business owners and to be fairer to them.

In the 2018 budget there are proposals to wind up what are called “health and welfare trusts” by 2020 and have them integrated into a new regime called “employee life and health trusts”. We estimate there are about 4,000 of those health and welfare trusts in existence that are primarily being employed by small business owners. We're concerned that the employee life and health trust rules do not accommodate the needs of small business owners, so we are asking the government, as part of that process, to take a closer look at how these rules apply to small business owners and to make sure the owner-manager or their employees do not lose protection through this process.

We talked about the intergenerational transfer rules. We believe there's a good middle ground, where the government is concerned, on the loss of tax revenues, but there is an opportunity to create an exception that will accommodate true transfers of businesses so that small business owners aren't in this funny situation where they have to sell their business to an arm's-length person to get a better tax result.

There's a lot of discussion about Canada-U.S. competitiveness. I don't think we've seen any significant analysis that would suggest that the U.S. has a significant advantage. However, if you look at all of the pieces of what the U.S. offers to business owners versus what Canada may offer, the dynamics have changed. We need to recognize that the dynamics have changed and react to those changes.

[The Chair, Liberal, Wayne Easter]

Thank you.

The last question goes to Mr. Fergus.

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

Thank you very much, Mr. Chair.

I have a number of questions for Mr. Patry, but first I would like to ask Ms. Walker for a clarification. I really like her idea for work-integrated learning. I would like to know whether she has connections with universities, colleges or CEGEPs in Quebec. She could provide this information to the committee clerk later on.

Mr. Patry, I know that U15 and all universities are very concerned about indirect research costs. Please tell us how investments in this area could improve the competitiveness of the Canadian economy.

[Gilles Patry]

Thank you so much for your question.

This is indeed a concern to universities, and not just to our group, U15. I mentioned that 30 universities receive less than their share of indirect costs, what we call the full costs of research. I do not want to get too technical, but you have to understand that, under the current formula, indirect costs are inversely proportional to research activities. The more research a university carries out, the lower the percentage of funding it receives for indirect costs.

Let me give you a few examples. We mentioned Western University earlier, one of the research-intensive universities. It receives a maximum of 20% or 21% of investments in indirect costs. This funding is put toward the cost of electricity, heating, maintenance contracts, university facilities technicians, and so forth. Other, smaller universities that do not conduct a lot of research can receive up to 80%. In other words, they receive 80¢ on the dollar, while others receive only 20¢. The University of Toronto, which conducts the most research, receives 19%.

Limiting investments in indirect costs essentially means taking money away from other services to fund research activities. If we want our internationally recognized universities that rank among the best in the world to be globally competitive, we have to make sure they all receive the appropriate indirect costs.

The average for the 15 member universities of U15 is 20%. Some research projects are carried out with the United States. That is the case for Western University, which works with the NIH. It receives about 52% for indirect costs. There is a huge gap between the real indirect costs, which are about 40% to 45%, and what the research-intensive universities get.

As a former rector, I tried on several occasions to get the formula changed. The formula should at least set a minimum, so that universities receive a minimum of 25%. We do not want to take anything away from the other universities, but we want to make sure a minimum is established. A minimum of about 25% is what we recommend to the government.

[The Chair, Liberal, Wayne Easter]

With that, thank you to all the witnesses.

Committee members, we meet tomorrow afternoon at 3:30 in room 330, Wellington.

The meeting is adjourned. Thank you very much.