Finance Committee on Sept. 20th, 2018

[The Chair, Liberal, Wayne Easter]

We'll call the meeting to order.

Today will be another set of hearings under Standing Order 83.1, pre-budget consultations in advance of the 2019 budget.

I want to thank all of the witnesses for coming and also thank those who have submitted submissions. Members have them on their iPads and they may be referring to their iPads. They're not playing games on their iPads; they're looking at those submissions—we assume.

Anyway, welcome.

We'll start with Canada Without Poverty and Ms. McLachlan and Ms. Biss.

[Harriett McLachlan, Deputy Director, Canada Without Poverty]

Good morning and thank you for the opportunity to address this committee.

My name is Harriett McLachlan and I am the deputy director of Canada Without Poverty. As you just said, I am joined today by Canada Without Poverty's legal education and outreach coordinator, Michèle Biss.

For those of you who are not aware of our organization, Canada Without Poverty is a non-partisan, not-for-profit and charitable organization dedicated to ending poverty in Canada. For nearly 50 years, Canada Without Poverty has been championing the human rights of individuals experiencing poverty, and for our entire existence, our board of directors has been comprised entirely of people with a lived experience of poverty.

As this committee knows, to relieve poverty in Canada we must identify and address systemic discrimination against people in poverty. The best way to do so is by hearing directly from those with a lived experience.

We approach poverty from the perspective that as a signatory to the sustainable development goals, the International Covenant on Economic, Social and Cultural Rights and other human rights treaties, Canada is obliged under international human rights law to meet the rights to housing, food, work, health and an adequate standard of living.

It will come as no surprise to those on this committee that poverty is a significant problem in Canada. Consider the numbers. According to the low-income measure, 4.8 million people live in poverty, including 1.2 million children. Poverty, homelessness and food insecurity disproportionally impact marginalized groups across the country, particularly persons with disabilities, single parents, women, racialized persons, indigenous peoples, and LGBTQ2S youth.

You are also no doubt aware that high levels of poverty, food insecurity and inadequate housing significantly impede Canada's economic growth. Socio-economic disparities account for 20% of total annual health cost spending and poverty has been consistently linked with poorer health, higher health care costs, greater demand on social and community services, reduced productivity and diminished educational and economic activity and output.

[Michèle Biss, Coordinator, Legal Education and Outreach, Canada Without Poverty]

Eradicating poverty is key to strengthening the Canadian economy and increasing competitiveness. It is also crucial to advancing gender equality and women's empowerment, central pillars of Canada's G7 presidency.

As the government considers a senior engagement strategy between civil society and indigenous groups to ensure that we adhere to our obligations under international covenants, we urge this committee to take very seriously the need for a robust democracy. We recommend three immediate steps the government can take to embrace inclusion and innovation in budget 2019.

First, in keeping with the United Nations sustainable development goals as well as recommendations from many United Nations treaty bodies and the universal periodic review, we recommend that Canada prioritize its first poverty strategy, “Opportunity for All”, at all levels of decision-making. Building on the government's announcement in August 2018, we recommend that this strategy be backed by investment in budget 2019. Additionally, this strategy should be supported by human rights-based legislation to be tabled this autumn, and develop claiming mechanisms for systemic discrimination for people living in poverty.

Second, we recommend that budget 2019 develop a national affordable child care framework to establish human rights standards for all levels of government, which would include an increase of federal spending on child care, with the ultimate goal of achieving the international benchmark of spending at least 1% of gross domestic product on early childhood education and care by 2020.

Third, while this government has at times lauded the value of Canada's civil society organizations at events like the W7, the on-the-ground reality is that organizations led by women, particularly those from marginalized communities who do essential work for underserved groups, face significant funding and resource challenges. Therefore, we recommend that Canada invest in women's grassroots organizations to ensure inclusivity and a more robust civil society.

We further suggest that the government track core funding for organizations composed of and led by women from diverse and marginalized communities to ensure it continues to grow in line with gross domestic product.

We look forward to answering your questions in this regard.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

Next we will hear from the Canadian Centre for Policy Alternatives, Mr. Bleyer.

Welcome, Peter.

[Peter Bleyer, Executive Director, Canadian Centre for Policy Alternatives]

Thank you, Mr. Chair, and thank you for the opportunity to present our recommendations today.

The Canadian Centre for Policy Alternatives is Canada's leading progressive policy research institute. We produce the research and analysis necessary for policy-makers, activists and everyday Canadians to work towards a more equitable, sustainable and just future.

According to the big business lobby, the most pressing threats to Canada going into 2019 come from uncertainty in our trade relationship and our relative tax competitiveness with the United States, and the effects of burdensome regulations on lagging productivity. Are these really the biggest challenges facing Canada today?

The reality is this: Canadian economic competitiveness is threatened far less by corporate tax and regulatory changes south of the border than it is by climate change, persistent inequality, and dramatically underfunded public services and social programs. Canada stays a desirable place to do business to the extent that we have a healthy, well-educated population, a skilled workforce, a cohesive society and liveable communities. We can improve our competitiveness by continuing to invest in our people and our communities.

Let me highlight a few key recommendations from the alternative federal budget we released yesterday.

First, given the changing nature of work in a fast-evolving economy, this budget needs to make lifelong investments in Canadians to set them up for success. Employment insurance needs a fundamental rethink to address a changing labour market and income inequality. Setting a universal EI entrance requirement of 360 hours makes sense, given the prevalence of part-time and precarious work, as does a minimum benefits floor and doubling the length of EI sick leave.

We need a new policy framework for post-secondary education that expands access to higher education and training by eliminating tuition fees.

And we need to correct Canada's relative underinvestment in skilled trades apprenticeships and adult education.

Second, competitiveness depends on the resilience of Canadian communities and workers in the face of climate change and stronger action to lower emissions. Canada needs a national decarbonization strategy to meet our Paris Agreement commitments and to future-proof our economy. A strategic investment of a billion dollars in training could ensure a supply of skilled workers for new jobs in the clean economy, and a sustainable infrastructure transformation fund would inject $6 billion into high-speed rail, clean electricity and other key infrastructure.

Third, the budget needs to invest in public services that support a high quality of life and a well-functioning economy. For example, the last budget's commitment to pharmacare is a historic opportunity. Canada's current multi-payer drug coverage is among the most expensive in the world. Implementing a national universal single-payer pharmacare plan could create annual savings of up to $11.5 billion across the entire economy.

Most countries spend at least 1% of GDP on childcare, but Canada trails at 0.3%. No government serious about gender equality or economic growth can stall on this priority.

These are just some examples of how Canada can become more competitive and a healthier, more equitable society. But they can't be achieved without revenue.

Decades of tax cuts have compromised the fiscal health of government. Federal revenues are now at 14.4% of GDP, much lower than the 50-year average of 16.4%. That 2% gap represents a loss of $46 billion in 2019 alone. Canada does not have a spending problem. It has a revenue problem. The crackdown on corporate tax evasion and tax dodging must continue. It is well past time to close expensive tax loopholes that benefit mainly the wealthiest income earners, including the stock option deduction and preferential taxation of capital gains.

There are options for Canada, and we can afford to act on them. The choices we make today to tackle inequality, implement universal pharmacare and act on catastrophic climate change will determine the sustainability of our society and economy for years to come.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, Peter.

From the Canadian Museums Association, we have Mr. McAvity, executive director, and Mr. Laidler, Museums Foundation of Canada. Welcome.

[John McAvity, Executive Director, Canadian Museums Association]

Hello, Mr. Chair.

My name is John McAvity and I am the executive director of the Canadian Museums Association.

I am joined this morning by Mr. Bob Laidler. He is a volunteer, one of 115,000 volunteers who work in the museum sector.

Museums are one of the most important valuable assets that unite Canadians. They support Canada on the world stage and build a better nation at home. However, this sector has suffered from numerous funding cuts over the years.

Canada is home to approximately 2,600 not-for-profit museums, galleries, science centres and related institutions. They attract over 75 million attendants each year, and that attendance is going up by some 10%.

The tragic fire at the National Museum in Brazil caught the world's attention. Neglected and underfunded for years, this tragedy forced the government to move quickly due to the public's outcry. That outcry was loud and fierce over the neglect of this precious institution.

[Bob Laidler, Director, Museums Foundation of Canada, Canadian Museums Association]

Could this happen in Canada? Yes, it certainly could and has happened in the recent past.

There are numerous cases where museums were damaged by fire, floods and high winds, and we can inform you of these during the question period. Perhaps the most dramatic one was the collapse of the roof of the Art Gallery of Grande Prairie in 2006. Thanks to the fast thinking of the director and the staff, the visitors and schoolchildren were evacuated minutes before the roof collapsed, destroying the building and much of its collection. This was a designated heritage site.

We cannot avoid all tragedies, but we can be better prepared to ensure our cultural buildings and repositories are not neglected.

[John McAvity]

On Tuesday of this week, your colleagues on the Standing Committee on Canadian Heritage released a long-awaited report on the state of Canadian museums. It took two years to complete, and contains 15 significant recommendations to move forward and address the issues of the museum sector. We urge you to take these recommendations into consideration for budget 2019. Their recommendations are, in fact, parallel to the ones that we have made to you in our brief.

According to the Department of Canadian Heritage, some 38% of museums are in poor or out-of-date buildings. Leaky roofs, improper or out-of-date fire systems, and inadequate environmental controls abound. In addition, lack of federal leadership in this sector has resulted in many other issues, including a serious decline in scholarship, care of collections, conservation and other back-of-house responsibilities.

Museums are not just about the collections of valuable artifacts, works of art and specimens. They are about far more than that. They are about building a better society and nation. In short, these institutions bring out the best in people. Museums are at the heart of Canada and at the heart of their communities. They welcome everyone and address contemporary issues through a historical lens, and vice versa. They bring people together and build awareness, appreciation and understanding.

[Bob Laidler]

Museums contribute to the economy and the tourism industry. Over 60% of all our international visitors attend museums. Museums are catalysts for creative hubs, a collaborative community building upon its ability to stimulate creativity, innovation and business development and to build a culture of success and prosperity.

The CMA is named in the TRC call to action number 67, which calls for the complete review of museum practices and policies. We have established a special reconciliation council composed of 15 respected individuals—with a majority of indigenous descent—to address this review.

In addition, before the House is Bill C-391, which calls for a national strategy on repatriation. We have supplied a comprehensive brief to you, based on extensive consultations. These are based on several main pillars of support: reconciliation, digitization, social inclusion, diversity and financial stability.

[John McAvity]

Federal funding for museums has declined significantly over the years. The main funding mechanism, the museum assistance program, was started in 1972 with a budget of $7 million per year. Today, 46 years later, that budget is about $6 million—less than in 1972. If it had kept pace with inflation, it would be at approximately $40 million today. That program is underfunded, out of date, difficult to access, and is unable to meet the needs of the sector.

There is a serious decline in research, conservation and travelling exhibitions at our museums. In addition, valuable support agencies such as the Canadian Conservation Institute and the Canadian Heritage Information Network have suffered major losses in funding.

Meanwhile, the federal government has done an impressive job with many of the needs in the arts sector, such as the CBC/Radio-Canada, the Canada Council for the Arts, the National Arts Centre and the film industry, among others. Museums have not been addressed for many years, and it's time to do so now.

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you both.

Turning to MNP LLP, we have Ms. Lidder, senior vice-president, and Ms. Drever.

Welcome.

[Amanjit Lidder, Senior Vice-President, Taxation Services, MNP LLP]

Good morning, Chairman and members of the finance committee. Thank you for inviting us here today.

Let there be no doubt, our economy and our businesses are facing significant headwinds. Canada's competitive landscape has dramatically changed. Canadian capital and skilled labour are leaving. Foreign investment is on a dangerous downward trend. This is not ideological. This is not partisan. This is our reality.

The mandate of this committee is a significant one. It will require meaningful consultation and bold, decisive leadership. We truly appreciate being part of this process.

Kim and I are partners with MNP. For the last 60 years, MNP has been dedicated to our clients' success. Today, we proudly serve and respond to the needs of more then 150,000 private enterprises and small businesses and 16,000 farms throughout this country. We are the third-largest tax filer in Canada.

We are here to present MNP's 10-point, made-in-Canada action plan for competitiveness and growth. These tax proposals are pragmatic, targeted and actionable today. Like all of you, MNP believes that the Canadian economy is at its strongest when middle-class families, entrepreneurs, small businesses and farmers thrive. It's important to remember that small businesses, those with fewer than 50 employees, contribute one-third of our national GDP.

We acknowledge tax competitiveness as only one factor that a business will consider when making investment decisions. However, it is a significant one that drives individual behaviour. All too often we consider the tax rate in a vacuum. Taxes paid are a result of two components. The tax rate must be considered in tandem with the computation of income, and our plan looks at both.

To address global competitiveness, reduce the combined corporate tax rate from 27% to 20%, one point lower than the U.S., and reduce the combined personal tax rate to below 50%.

Increase the top personal tax bracket. The U.S. top rate starts at $500,000, a $300,000 advantage compared with Canada. Increase taxable capital limits to account for inflation. We believe that there is a better way to encourage and support entrepreneurship and balance the risks and rewards of starting a business. The cumulative effect of the tax changes over the last five years has left private companies with less incentive to grow their businesses, or even to remain open.

To address tax barriers, simplify tax compliance for entrepreneurs and small businesses so that it is fair, predictable and certain—the tenets of sound tax policy. To increase capital investment, allow for a 100% writeoff of capital cost allowance and capital asset purchases. To foster entrepreneurship, increase the threshold for passive investments held inside small businesses. Make education more affordable for all families. Allow full tuition credit transfers to parents with children in universities, colleges and technical schools. Many families need this to send their kids to school.

Let's talk about family succession. Currently, family businesses face a bias to sell their business to a third party. This is because there is an inherent double tax on succession within a family. This double tax goes away when the business is sold outside of the family. To foster entrepreneurship, allow small business rollovers to keep private businesses within the family. Allow families to use their lifetime capital gains exemption in a bonafide succession, without harm to the next generation. There have been calls for a death tax, or an inheritance tax, by some. The fact is, Canada already has one. This tax causes hardship for many families, as taxes are levied without cash proceeds. We see many families forced to sell.

MNP's 10-point action plan is a starting point to achieve tax competitiveness. We urge this committee to recommend a made-in-Canada approach to restore our ability to compete worldwide.

Thank you for your leadership and your time.

Kim and I look forward to your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

Next we have, from Mortgage Professionals Canada, Mr. Taylor, who is president and CEO, and Mr. Kerzner, past chair, board of directors. Welcome.

[Mark Kerzner, Past Chair, Board of Directors, Mortgage Professionals Canada]

Thank you, Mr. Chair.

Good morning, ladies and gentlemen.

My name is Mark Kerzner. I am the immediate past chair of the board of Mortgage Professionals Canada. Along with me is Paul Taylor, who is the president and CEO of Mortgage Professionals Canada.

Mortgage Professionals Canada is the national mortgage industry association representing 11,500 individuals and 1,000 companies, including mortgage brokerages, lenders, insurers and industry service providers. Our members make up the largest and most respected network of mortgage professionals in the country, whose interests we represent to government, regulators, media and consumers. Together we are dedicated to maintaining a high standard of industry ethics, consumer protection and best practices.

The mortgage broker channel originates more than 35% of all mortgages in Canada and 55% of mortgages for first-time home buyers. That equates to approximately $80 billion in annual economic activity.

With this diverse and strong membership we are uniquely positioned to speak to the issues impacting all aspects of the mortgage origination process. We are pleased to lend our collective membership's recommendations for how the 2019 federal budget can ensure Canada's competitiveness and help grow the middle class. We have previously provided a written submission outlining nine recommendations that, if implemented, would strengthen the middle class, the Canadian economy, and increase competition within the Canadian mortgage market.

This morning we will outline just some of those recommendations.

First, the government should implement an exemption to the guideline B-20 stress test for mortgage holders who have completed and met their obligations of their original mortgage term and who wish to switch to a different lender upon renewal. Additionally, individuals who need to port their mortgage to a different property should also be exempted if no additional funds are required. We propose that a technical adjustment be made for consumers who have a proven history of credit worthiness evidenced by paying all obligations as agreed through their original mortgage term period, exempting them from stress test qualifications when they port their mortgage or when they renew their mortgage to a different lender.

These individuals are responsible borrowers who have a proven track record, have not accumulated additional mortgage debt and have prudently managed their financial obligations. They are not the high-risk borrowers the government is concerned with. Restricting these individuals from accessing competitive mortgage rates from other lenders at renewal time only serves to ensure more Canadians are paying higher interest carrying costs than they otherwise could be.

The next recommendation is to adjust the November 30, 2016, change to allow for refinances to be included in portfolio insurance up to a 75% loan to value. This adjustment would alleviate some of the competitive disadvantages the recent changes place on many non-bank lenders. With this amendment, which could be made with a simple technical clarification document rather than an official announcement, non-bank lenders would be better positioned to adjust to the other required changes while remaining adequately capitalized. This adjustment would also ensure greater marketplace competition by assisting smaller lenders to fund their mortgages and would positively benefit competition within the mortgage market.

This would only account for a small portion of the recently seen 76% reduction in government-supported portfolio insurance, and would keep intact the integrity of the vast majority of mortgage insurance changes.

The next recommendation is for both insured and uninsured mortgages. It is to decouple the stress test from the posted Bank of Canada rate and instead set it at 75 basis points, or 0.75% above the contract rate. According to calculations conducted by our chief economist, Will Dunning, a 75 basis points stress test achieves an appropriate protection to consumers in the event that rates rise, while not unduly pricing too many consumers out of the marketplace.

It's important that a market-based rate be used to calculate the stress test to ensure the appropriate balance between stability and affordability is found for Canadians. According to our analysis, reducing the stress test to 75 basis points would allow an additional 37,500 Canadian families to qualify for a mortgage each year in today's interest rate environment. Noting that as interest rates rise, as we suspect they may continue to, fewer and fewer people will qualify. Making this minor adjustment to the stress test ensures that the policy intent of the stress test is maintained while improving the competitiveness required to sustain a healthy and robust housing market.

[Paul Taylor, President and Chief Executive Officer, Mortgage Professionals Canada]

In our recommendation four, we would recommend implementing an indexation to inflation for the mortgage insurance cap, and also to consider setting regional limits to better reflect localized housing market conditions rather than setting a national standard.

Adjusting the valuation eligibility cap for mortgage insurance would actually help mitigate against the shifting portfolios of mortgage insurers. The new cap removes eligibility for mortgage insurance for a large number of homes in Toronto and Vancouver, which are very liquid markets with high-income and high-credit borrowers. This is resulting in a higher percentage of insured mortgages in illiquid markets that have higher loss rates and weaker income and credit scores. This, therefore, is creating a riskier aggregate portfolio and geographic footprint for mortgage insurers, and it ultimately increases the risk for the guaranteeing taxpayers.

Regionalizing valuation caps and indexing the caps to inflation would allow for a slow, safe increase in the caps for mortgage insurance, while still maintaining the desired policy objective. Regionalizing will ensure mortgage insurers are able to continue to service high-value areas, which, perhaps counterintuitively, are often less risky due largely to the liquidity of those markets, and it ensures overall safer, more balanced portfolios for the insured properties. Without an indexation for inflation, the cap is actually decreasing, in real dollars, the number of properties that can be insured, regardless of what loan-to-value is in place.

Recommendation five, similarly, is to implement an indexation to inflation for the RRSP home buyers' plan limit.

Many young Canadians need to save in order to obtain a down payment—many more, actually, as a result of the recent mortgage insurance changes. In a recent survey we conducted, 48% of soon-to-be Canadian homeowners said they had less than a 20% down payment, and of those, 31% said they would need to withdraw from their RRSP in order to afford their purchase. In addition, 63% of Canadian homeowners said they would have been unable to afford their home without some form of down payment assistance. Indexing the RRSP home buyers' plan to inflation would be a positive way to help many young Canadians use more of their savings to purchase a home, thereby assisting them to reach the middle class.

On the last recommendation today, we would support implementing interest-free loans to municipalities to help develop land to create more supply in the housing market.

Affordability and livability are important to help grow Canada's competitive advantage for human and financial capital. Two of Canada's global cities, Toronto and Vancouver, have experienced rapid price growth over the last number of years, which has created competitiveness challenges in those markets.

The best way to address affordability challenges in Toronto and Vancouver is really through the addition of supply. The federal government is probably best positioned to assist, by providing financing options to the provinces and municipalities to incent development. We believe this can be best done through interest-free loans, potentially through CMHC. This can certainly help with the costly development process and help municipalities ensure that the primary infrastructure is in place in the ground before construction of these residences actually begins.

Thank you very much, indeed, for the opportunity to present the recommendations this morning. We very much look forward to any questions you may have.

[The Chair, Liberal, Wayne Easter]

Thank you both.

I'll turn to Mr. Bergamini, from the National Airlines Council of Canada.

Welcome again.

[Massimo Bergamini, President and Chief Executive Officer, National Airlines Council of Canada]

Good morning, Mr. Chair and members of the committee

My name is Massimo Bergamini and I am the president and chief executive officer of the National Airlines Council of Canada.

I would like to thank you for this opportunity to appear before the committee during your pre-budget consultations.

As you have our detailed submission, I will focus my remarks on the issues at the heart of the problem. Let me begin by sharing four snapshots of Canada's commercial aviation industry. Each tells a piece of the story that is relevant to your deliberations.

Here's the first snapshot. Our members alone employ over 50,000 Canadians directly and contribute more than 400,000 jobs in related sectors, such as aerospace and tourism.

Here's the second snapshot. Every day, some 300,000 passengers board one of our members' flights to travel for work, visit family or explore our country and the world. To put that in some context, that's almost the equivalent of the population of Toronto—every woman, man and child—boarding those flights every week.

Here's the third snapshot. Over the last decade, the cost of air transportation in Canada has grown more slowly than the rate of inflation. Again, for a bit of context, that's slower than many basic household goods such as coffee, fresh fruit and vegetables, public transit and electricity.

Whether you look at those snapshots individually or as a montage, you see a thriving industry aligned with the realities of modern Canada, moving Canadians efficiently and economically, and creating jobs and opportunities. However, something is not right with that picture. Indeed, for the first time in a decade there are signs of turbulence. Domestic capacity is being reduced. Why is that?

The fourth snapshot completes the picture and brings it into focus. Over the last 10 years, Canadian taxpayers have subsidized marine transportation by over $12 billion and rail transport by some $4 billion. Over the same period, the federal government generated a $2.9-billion windfall from commercial aviation. It would be disingenuous to suggest that federal policies alone are behind the loss of lift that we're seeing for the first time in a decade, but remember how the cost of air travel grew more slowly than the rate of inflation? The cost of a base domestic fare actually decreased.

Simply put, while governments fly first class on the gravy plane, Canadians have been paying the ticket. In general, user pay is a way for governments to allocate scarce public resources more efficiently, or to put a price on negative externalities.

In a country as sparsely populated and as vast as Canada, it would be hard for any government to make a public case that the supply of air transport should be limited. However, when it comes to aviation, what we have in Canada is not user pay but the imposition of sin taxes. Successive governments have literally banked on two myths to normalize this policy: air travel as the preserve of jet-setting elites, and an abundance of transportation options for all Canadians. We're beginning to see the results.

In our detailed submission, we identify some of the more egregious symptoms of this broken policy, whether it's CATSA funding, airport rents or fuel taxes. There's more, though. From the federal carbon tax backstop to passenger rights regulations, federal policies are being developed in silos with no consideration to their cascading impact on our industry, or on the people and communities who rely on air transportation.

Canadian carriers are recognized as among the best in the world. Their success should be recognized as Canada's success. Given the impact of Canada's aviation sin tax policy on individual Canadians, on families, on communities and on the industry that serves them, it is time to replace drag with lift. It's time to stop taxing air travel like a luxury. To put a fine point on it, it's time to stop the gravy plane.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you all for your presentations.

We will have time for seven-minute rounds, starting with Mr. Sorbara.

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

Thank you, Mr. Chair, and welcome everyone.

I'll start with the Canada Without Poverty folks, and then I have a question for the Centre for Policy Alternatives.

In our fight to eliminate and reduce inequality and to ensure that no Canadians and no Canadian children live in poverty, our government came out several weeks ago with a national poverty strategy, setting hard targets for the first time. This should be known and always viewed holistically. We have the Canada workers benefit, the Canada child benefit and the 10% increase to the guaranteed income supplement for the most vulnerable seniors and most of our single seniors who live in poverty. We have also made a middle-class tax cut that benefited nine million Canadians, among other things.

For the first time in history, a government is coming out and setting hard targets for reducing poverty. Isn't this a good thing? Can you please comment very briefly on that?

[Harriett McLachlan]

For sure this is historic. Senator David Croll in 1971 presented a document saying that we have to address poverty, but there are elements of this that are not helpful and that could be improved. We welcome these improvements that have been put forth.

I'll let Michèle address this.

[Michèle Biss]

That's a great question. Thank you for bringing up the Canadian poverty reduction strategy. As Harriett mentioned, we're extremely excited about this. This is something that's been called for by civil society for many years. In fact, long before Prime Minister Trudeau issued the mandate letter to Minister Duclos, this is something that civil society was really hoping for. We absolutely celebrated that announcement in August.

You asked for a brief answer, and I will do that. I know there are many other witnesses. You mentioned the target question, and that's a good one. One thing I want to state about this is that there was an overall approach within the strategy, in invoking the sustainable development goals, to reduce poverty by at least 50% by 2030. What's interesting about this is that the goal within the sustainable development goals, goal number one, is to end poverty by 2030. We were actually very much hoping that the goal that would be articulated in the strategy would be that which we asked so many other countries to sign on to within the sustainable development goals. It is true that sub-goal 1.2 is to reduce poverty by at least 50%—that's absolutely right—but we were very much hoping that it would go a bit further.

There are some really excellent pieces within that Canadian poverty strategy. We are very much hoping that the government will continue to go further and in particular ensure, and it's so mindful considering we're talking about budget 2019, that adequate investment will accompany the strategy. Of course, in the announcement in August we didn't see any new policy or funding.

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

Thank you. I'll leave it at that because I do want to move on to the other witnesses. One thing I'd point out is that globally, poverty rates are at their lowest on record and they're falling. It's really important that we get the message out that the poverty rate is going down in Canada and globally. Worldwide, the global economy is actually doing quite well and people are benefiting.

Kim and Am, thank you for coming. It's great to see you. Regarding your 10-point action plan, our study is based on competitiveness. That's the theme we're going for. Yes, the U.S. came out with a number of fiscal measures earlier this year. I think the Bank of Montreal called it Christmastime for U.S. corporations and taxpayers. I think that was the name.

I looked at your list of recommendations. Perhaps I can zero in on a few of them: number two, the accelerated capital cost allowance; number five, full tuition credit transfers to parents of children in post-secondary; and number eight, small businesses. Looking at those three measures, how important or powerful would they be for competitiveness and getting firms to invest in our economy?

[Jennifer Kim Drever, Regional Tax Leader, MNP LLP]

For the accelerated CCA, we believe strongly that this would be an important consideration for government at this point in time. It would allow Canadian businesses to replace their property. It would allow them to increase their efficiencies. It would allow them to remain competitive with their counterparts in the U.S.A. We believe in a made-in-Canada approach, but when the U.S. does something as out of the box as accelerated CCA, I think we do have to react to that.

As far as the small business rollovers are concerned, we believe this is a very important aspect for Canadian business if we want to keep Canadian business within the families. Currently there is a bias against transitioning within a family. There is an inherent double tax. The parent will pay tax and the child will pay tax on the exact same value. We think one way to ensure that we can keep our businesses competitive and keep them within the family is to allow for a rollover.

The third one you brought up was the tuition credit. So many families in Canada rely on the tuition credits to help fund the cost of education. With that, currently a child can transfer only $5,000 to the parent. We believe that should be the maximum of the tuition that is being paid. We also believe that the education credit should be reintroduced. It got removed in a recent budget. That is a big part of helping fund the cost of education. It creates an educated workforce and helps with Canada's competitiveness.

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

Paul and Mark, it's great to see you again.

On the two comments you had about the stress test rate, the posted rate, housing affordability is a big thing. It's a big thing for millennials. It's rated as the number one issue for millennials and first-time homebuyers. Could you comment briefly on the current stress test?

Also, in terms of market dynamics, there is a technical issue. When you go to renew your mortgage—not refinance but renew your mortgage—how important for consumer choice and competition is the ability to go to another lender without having to incur the stress test?