Finance Committee on Sept. 18th, 2018

[Guy Legault]

Significantly, our members are telling us that their clients are basically affected by the uncertainty created not only by those rules but also by the economic climate, the trade negotiations, and so on and so forth, and the changes to the taxation system in the U.S. Basically when people are looking at the future, right now there is so much uncertainty that not a lot of investments are being made in Canada, and some of them, who have the luxury of looking at making investments, are looking elsewhere, in the U.S. or Mexico for that matter.

It's just creating a very difficult climate currently. Inasmuch as some people are affected, as you said, they are either considering retirement or making investments elsewhere.

[Kelly McCauley, Conservative, Edmonton West, AB]

We're suffering through a time of uncompetitiveness against our American neighbours and other countries. We're seeing massive disinvestment in Canada, obviously from the oil business, but also throughout the country we're seeing investment fleeing the country. Is it fair to say these tax changes are going to add to that disinvestment in Canada?

[Kevin Wark]

Well, I don't know if—

[Kelly McCauley, Conservative, Edmonton West, AB]

I realize I'm putting words in your mouth. Feel free to discuss that, but I want to hear from you.

[Kevin Wark]

—we can go that far, but clearly there is uncertainty and it's affecting.... We're hearing from our members who are consulting with small businesses that they are looking at a variety of options going forward. Canada continues to be a good place to do business, but they may reinvest some of their dollars elsewhere.

[Kelly McCauley, Conservative, Edmonton West, AB]

If it were up to you, if you were sitting on this side and you were making the changes, what would CALU do with this tax situation?

[Guy Legault]

In our brief we've identified six areas in which there really need to be some adjustments. Again, Kevin could go into some of the details in terms of the TOSI rules, tax on split income. We think that it could be up to age 25 but not include the spouse. You've heard that already this morning from some of the other witnesses.

With regard to the intergenerational transfer, you're talking about retirement. Basically it costs more money to try to leave it within your family than it does if you try to sell it to a stranger. It's unacceptable. At a $2-million level it costs $500,000 more in taxes. We're pleased that the government is doing consultation right now. They said last year they would do it within 12 months, so we hope it's coming.

[Kelly McCauley, Conservative, Edmonton West, AB]

I'm out of time. Thank you very much.

[The Chair, Liberal, Wayne Easter]

Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

I would like to thank all the witnesses here today. I may not have time to ask everyone a question.

I would like to delve further into the topic of intergenerational transfers. I would like to know where things stand. You said the government conducted a consultation. It announced that it wanted to make changes or study the issue. Unfortunately, this is another example of an issue that the government studies, but never makes a decision on. It did have the opportunity to do something, however. You may not know this, but one of our colleagues introduced a bill on the topic. We debated it, but it was defeated by the government.

I would like to know where things stand with intergenerational transfers.

[Guy Legault]

It might be better to ask the government that question.

I would simply say that we submitted a brief on the matter last year, when Minister Morneau's recommendations regarding private companies were tabled. We were consulted again on more specific issues.

We know there was a consultation this summer. We are waiting to see what happens. I think the signs are positive and that something should happen very soon.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I have another question about taxation before I move on to another topic.

When you compare Canada and the United States on tax competitiveness, do you also consider that in Canada we have a public, universal health care system and better infrastructures? There is a whole range of other factors that afford Canadians a better quality of life, and sometimes make it less expensive, if not for businesses, then certainly for individuals. Does that enter into your comparative analysis?

[Guy Legault]

The important point is that you have to look at the whole context. You raised some of the factors.

For our part, drawing on our expertise, we raised certain concepts that should be reviewed, such as the concept of integration. My colleague could elaborate on this if you are interested. We think it is important to evaluate taxes rules and taxation not only for private companies, but also for individuals. The whole system has to be reviewed, along with the whole issue of quality of life, I agree. I do believe in integration, however; it is important overall.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

With respect to inequalities, I want to thank Ms. Sarosi for what she presented and for reminding us that our committee is sometimes in a bubble. She talked about specific cases of individuals facing growing inequalities across Canada. They may be people working for multinational hotel chains, for instance, whose bosses earn millions if not billions of dollars, whereas down at the bottom of the ladder, where the real work is done, these workers cannot even make ends meet and have trouble seeing their kids.

I was wondering whether, at Oxfam Canada, you have any ideas on how to reduce the inequalities. What should the committee focus on primarily to address them and perhaps even go in the opposite direction to the one Canada is headed in?

[Diana Sarosi]

Thank you so much. That's an important question.

Of course, as with many complex issues, there isn't a silver bullet that we can go for there. Our research shows, however, that there basically needs to be action in three areas. One is taxation, making taxation more progressive, meaning those who can pay more taxes pay more. The second area is investing in public services that help the poor access certain services—for example, child care, transportation and so on. The third area is labour rights. I think that area is really important for us. We've seen a real decline in that area as corporate interests are put as a priority over workers' rights.

In all three areas, there's a lot that the government can do. For example, Canada's taxation system is very complex. Lots of things have just been added, but there hasn't really been a good review of the system to see where, overall, there can be changes made to make it more progressive but also to get rid of incentives or tax credits or deductions that really hurt women, for example. With pension splitting, for instance, husbands can basically just split their pension by saying so, without actually having to do it, and then go with the lower tax rate.

The second area is public services, focusing on the kinds of services that really help these women and making it more accessible for them to access employment insurance. It's still based on earnings rather than need, which makes it very difficult for women to access the system, especially the ones I gave as examples.

In terms of labour rights, it's about really moving on pay equity here in Canada—the government here in Canada has committed to pay equity, but the women are still waiting—and making sure that collective bargaining and labour rights are respected.

[The Chair, Liberal, Wayne Easter]

We'll have to leave it there.

Ms. Rudd.

[Kim Rudd, Liberal, Northumberland—Peterborough South, ON]

Thank you, Mr. Chair.

Thanks to all of you for coming today.

I'll start with you, Ms. Walker. There were just a couple things in your comments that I'd like some clarification on. You talked about young people and you talked about the work placements. Everything has an acronym, so I won't pretend to remember all of them. As you know, our government invested about $221 million in Mitacs, which created about 10,000 paid internships. The other thing is cybersecurity and training in cybersecurity, with recently $8 million for about another thousand spots.

Mr. Patry talked about who had the job increases and who had the job decreases in terms of post-secondary education versus non. I guess what I see is a lot of transitioning of what I will call middle-aged workers into new careers. I wonder if your organization has identified that cohort and if indeed that is part of your process.

[Valerie Walker]

Thank you for the question.

Just to make sure I understand, have we also thought about how we can help support the current people in the workforce, as they likely need to transition the types of skills they have? Yes. It's a critical consideration for us as well.

I have been told many times by my members, “Focus on one thing. Do that well. Then think about how that fits with the broader picture.” Primarily, at the moment, our focus is around students. I don't have the numbers with me, so I won't make them up, but a good proportion of people in the PSE system aren't just young people. There are people who choose to go back to school and upskill or re-skill so that they can maintain a competitive edge in the workforce.

Specific to your question, though, there is one thing our employers who are committed to working with us are doing. As they build out the training programs that supplement the work placements for students themselves, they have committed to us to provide those training programs to their current employees as well as the students who might be there for just a few months. That's one specific thing they have committed to doing.

[Kim Rudd, Liberal, Northumberland—Peterborough South, ON]

Maybe I can get some clarification. You mentioned in your verbal report that you were focused on young people, and I guess what I'm asking is, what about transitioning adults who have gone back to school? Do they still have the opportunity to access your programs, similar to the young people?

[Valerie Walker]

Again, we have our coalition of 25. We don't presume to tell them how to operate those programs. The answer would be that, honestly, it depends on which group you're talking about specifically. Some are targeting youth, and one can define youth in different ways, depending on who you are, and there are others that are much broader in their approach.

[Kim Rudd, Liberal, Northumberland—Peterborough South, ON]

Okay. Thank you very much.

Ms. Hanson, I very much enjoyed your presentation. It was very personal and impassioned. I always think that a story is a way to tell us what the reality is.

You mentioned Diabetes 360°. I am familiar with that model. You also mentioned that nine provinces are part of that. Can you tell us what the other province and territories are and what you're doing to bring everyone in to support this program?

[Kimberley Hanson]

Thank you. That's an excellent question.

The province that was missing at the table in the first phase was New Brunswick, primarily due to their not having the human resources to dedicate someone to our working group.

Also, unfortunately, we weren't able to identify any individuals from the territories to participate in the first phase. That was largely a product of two things. One was that we were working under a pretty aggressive time frame in order to ensure that we had done the full consultation that we wanted to do in time to present a pre-budget submission to this committee. The other factor was a lack of funding. We did the first phase and the consultation with 120 individuals and 100 organizations almost exclusively with money from Diabetes Canada.

We're hoping that if the government elects to resource this strategy in budget 2019 one of the first things that the partnership we're recommending be created will do is engage directly with the health departments of each of the territories and provinces to create a plan forward, because it's critical that we're engaging with each of them.

[The Chair, Liberal, Wayne Easter]

We'll have to end it there.

Mr. Poilievre.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you.

My question is for you, Ms. Hanson. Thank you for being here today. You advocated for members of your organization and others who have diabetes who had inexplicably lost their access to the disability tax credit last year. You amassed an enormous file of anecdotes showing that this was a phenomenon right across the country.

The government appeared to back down about six months ago from that unstated decision. What is the status of the situation for Canadians with diabetes in accessing the disability tax credit today?

[Kimberley Hanson]

In December, Minister Lebouthillier announced that the CRA would revert to its May 2017 practices of assessing applications for the DTC from people with diabetes. They also announced that they would review all of the applications from people with diabetes that had been rejected between May and December. They have completed that review and have announced that they reviewed a little over 2,300 cases. They subsequently approved about 1,400 of those, or 58%. The remaining 42% of applications will remain disallowed.

We have been engaging with the bureaucrats at CRA to ensure that the folks who remain disallowed are notified of that status. They have indicated to us that it is their plan not to notify those 42% because, they say, that might be confusing for those applicants. Our contention is that this creates a lack of transparency and also impedes the ability of applicants whose cases have been denied to appeal, which is a time-limited ability. We are reaching out to them to indicate that it is our strong view that all of the applicants should be notified.

I know that the disability advisory committee, which was also reinstated late last year, continues to work on a number of issues, including challenges to accessing life-sustaining therapies by people such as those with diabetes. We're optimistic that this advisory committee will have some good recommendations, but it is necessarily and understandably a lengthy process that they are engaged in. They're volunteers and meet only a few times a year, so we're hoping that the bureaucracy can respond and make more time-sensitive changes as the disability advisory committee is doing its work.