Finance Committee on Sept. 27th, 2018

[Bill Karsten]

Mr. Chair, if I may interject, to remain optimistic, there is an opportunity for the federal government to institute a change, because the excise tax will be reviewed one year after the legislation is in place, so there is an opportunity moving forward.

[The Chair, Liberal, Wayne Easter]

Okay, thank you all.

Before I come across to Mr. Fergus, to Ms. Lee I want to say that the thrust of our pre-budget consultations is how we become more competitive and strengthen our economy, and you mentioned PMRA and CFIA. Both Phil and I have substantial experience with those groups, and you said that they're hindered by lack of resources. My point of view is that we can't continue to spend more and more money. If we give these agencies more resources, they'll hire more managers, which is not what we need. What's the solution without extending more funds to these agencies? I can tell you some horror stories with PMRA, as you know, and CFIA, and I agree fully with your full-picture analysis: They look at their own narrow focus.

I can give you an example. CFIA is trying to close down an operation in Newfoundland where ACOA has just spent $2 million improving the port, and they'll export $200 million worth of seafood out there, but their closest CFIA office now would be 200 miles away. I've never heard tell of anything so stupid in my life.

In any event, how do we do it without spending more money?

[Dr. Rebecca Lee]

Well, that's a very good question.

I found out yesterday that PMRA is undergoing an evaluation of their re-evaluation process, on which we're very much looking forward to providing input.

The main concern we have from the PMRA perspective, only for the purpose of this discussion, is that there are over 350 pesticides that are up for re-evaluation, and they're not able to keep up with what they have right now. They are lacking data to be able to provide the sufficient scientific basis for decision-making. That has ended up in decisions, from our point of view, that are perhaps made too hastily and not based on science. In part, we think it's because it's a lack of resources. Maybe there are misplaced resources, but it's a lack of resources for the research.

On the other hand, we do know of the Pest Management Centre that has the ability, the know-how, to do a lot of this research that is needed and could feed into the process. They are efficient in their use of resources. They have the data processes in place. If they were provided with additional resources themselves, they would be able to feed into PMRA. Because of their efficiencies in PMC, maybe it would help out PMRA without increasing PMRA's problems.

There is a lack of resources at some point. It might be an efficient way to feed into PMC, which could then feed into PMRA.

To go beyond your question there, for CFIA, I think they are trying to take a broader look, through the creation of the Canadian Plant Health Council. I am on that council and hopefully will be able to provide some direction from the industry perspective on that. Hopefully, that will also help in having more of an integrated approach to plant health in Canada and bringing the different parts together to avoid the problems like you've mentioned in Newfoundland.

[The Chair, Liberal, Wayne Easter]

Okay. Thank you.

Mr. Fergus, I'm sorry to take some time. Go ahead.

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

No problem, Mr. Chair.

I would like to ask Ms. Lee a question about her recommendation. I would have liked to know what she would have done to ensure that the money went to the right place, if she were minister. I think she did a good job answering the questions about the Pest Management Regulatory Agency.

My question is for the people from the Federation of Canadian Municipalities.

Mr. Karsten, you indicated in your comments that it is important to find a new tool… How exactly did you put it? I will quote your comments in English because I have the English version.

It's “empower municipalities to better serve Canadians through modernized commitments....”

Apart from the excise tax on gasoline, which is transferred and is very flexible for municipalities, what other tools do you think should be developed? I would like your answer to be very specific.

[Bill Karsten]

Thank you.

Currently, as an example, the transit fund that's in place is predictable, direct. It's another model that has worked. It's sustainable funding that flows directly.

However, I want to be very clear that in looking at what our message is today, it's not coming in at all with a defined “This is how it should work and this is the model.”

What we're asking for is to have a very mature, frank, candid discussion between the two levels of government—and this isn't done overnight—through regular meetings, even including the provinces, but specifically through the municipalities with the federal government to have that conversation. What are municipalities going to look like in the future? We have done that work. We're pretty confident that we know what our needs are going to be.

How do we find a new fiscal framework that can be advantageous, not only to municipalities but to help the federal government? That has been our model as well. We try to be partners to deliver what Canadians need at the local level.

It's the conversation that we're looking for a commitment on through this budget process.

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

Thank you very much for your answer.

I'm an MP from Quebec. We know that the municipalities are creatures of the provinces. It is sometimes a little complicated to have these kinds of discussions with them because of that. In Ontario, the premier has just unilaterally changed the number of representatives on Toronto city council.

Is it still realistic to think that a discussion could be held directly with municipalities, which must respect provincial jurisdiction?

[Bill Karsten]

Thank you very much.

Number one, we firmly do believe—and again, let me be crystal clear that we're not looking to open up the charter to have that discussion—

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

Mr. Karsten, could you please move your device away from the microphones because it is causing noise for the interpreters.

[Bill Karsten]

Let me repeat that we're not looking to open the charter of rights. We have discussed internally and with members of government ways that we can collectively find what a new fiscal framework could and should look like moving forward without doing that.

With regard to the situation in Toronto, which I will be very candid about and address, our board of directors, just two weeks ago at our board meeting, passed a unanimous motion on to discourage any provincial government from using the notwithstanding clause. In our view, that's not what it was intended for, so we've made our position very clear on that.

I hope I've answered that. I have nothing concrete.

Daniel, do you have something to add?

[Daniel Rubinstein]

I would just add to Bill's point that the gas tax fund and the bilateral agreements we have on public transit and other assets all flow through the provinces. These are all based on agreements. Obviously we want to see those kinds of agreements designed in a way that promotes the maximum amount of flexibility for our communities. The gas tax fund is very good at addressing core infrastructure. It doesn't address housing. It doesn't address cannabis or policing costs or other local priorities. There's a foundation there that's respectful of the federal-provincial dynamic you're talking about.

[The Chair, Liberal, Wayne Easter]

We'll have to end it there.

Mr. Deltell, welcome back to committee.

[Gérard Deltell, Louis-Saint-Laurent, CPC]

Thank you so much, Mr. Chair. I am very pleased to be here today and I'm very pleased to see you again. I can tell you, Mr. Chair, you can ask any question you want, because the quality of the questions is very remarkable.

My friends are very pleased for me to be here—gentlemen and madam—and to be welcomed to your House of Commons.

For sure I want to address one specific issue that is so important for our economy and for the finance department. It is housing. Mr. Bourque gave us some figures, some information that was unfortunately troubling.

A year ago, when the Minister of Finance was misguided in launching his wall-to-wall policy on the housing situation in Canada, we raised the flag of concern. Indeed, there was something to be done about big cities like Vancouver and Toronto; we all recognize that. However, just because a policy is applied in Toronto does not mean that it is good for Baie-Comeau.

What we have seen unfortunately with this government is that this stress test, which was quite important for Toronto, was not good for each and every area in Canada. Just because it's good in Toronto doesn't mean it will be good in Baie-Comeau, but unfortunately the government decided to do that. Mr. Bourque gave us some information that is unfortunately disturbing for each and every Canadian, and especially for millennials.

Speaking of that, Mr. Chair, I don't want to get too personal, but I am speaking to you about that today because right now my daughter and her spouse are in the process of buying their first home. I think I'm more excited than they are. For sure it's a great moment for each and every millennial and each and every Canadian to buy their first home, but unfortunately with the stress test imposed by the Liberal government

A hundred thousand Canadians had their dreams shattered. One in five Canadians has not been able to buy a home, according to the figures provided by Mr. Bourque.

This is terrible, Mr. Speaker.

My question will be to Mr. Karsten.

As you know, because you are a municipal guy, it's quite important to have new houses, new families, to have millenials buying their first house. What was the impact in each and every municipality in Canada with the stress test imposed by the Canadian government?

[Daniel Rubinstein]

This question has got punted over to me. I'm just happy to inform the committee that we, the board of directors for the FCM, have discussed this issue in broader terms. We haven't delved into any sort of community-by-community analysis, but we definitely are supportive of the government doing a robust study of measures that have been put in place for the housing market and to report publicly on impacts and look at that kind of thing.

[Gérard Deltell]

I'll put the question another way.

When a family moves to a new city or a young couple decides to buy a first home, what is the impact on a municipality of the arrival of this new couple or of this new ownership?

[Daniel Rubinstein]

I think our members are absolutely looking at ways that we can deal with the supply issue across the continuum of the housing market, and Mr. Bourque spoke to that need. A big focus for us in particular has been on the affordable and social housing side at FCM, so I can speak to that, and on the importance of having a rental market that is robust. When there's more room there, that's helpful for the sector as a whole, absolutely.

As well as the government, together we need to look at those issues holistically, make sure that all parts of that continuum are being addressed. The national housing strategy addresses one piece. Rental incentives that are in place address this.

Again, as I said, we think it's totally appropriate for the government to do a study and assess more carefully measures that are put in place specifically to target the market.

[Bill Karsten]

Thank you again very much.

The reason I hesitate is that some of these policies on a national basis are very hard to combine into a policy that would fit from coast to coast to coast because our municipalities are so unique in each province and territory. As a result, sometimes I hesitate, because at these committee hearings I'm often wearing two hats: one of the national FCM position, and the other of what I would think of as a response from my own local situation in Halifax.

This issue has been on our radar. Certainly because of the conversations being had across the country, we are actually, through our mayor's leadership as well, looking at potentially dropping.... It's not carved in stone, but these are the things within the control of the municipal government. We're looking to at least revisiting whether or not we should charge the transfer tax. That would be a huge help to new homeowners. I know that's been advocated by several associations across the country. The problem with that, of course, is again the fiscal responsibility we have to our taxpayers. If we do that as a drop in revenue, it has to be substituted somewhere.

However, it is on our radar and we're looking at options.

[The Chair, Liberal, Wayne Easter]

Okay, we'll end it there.

We have Mr. McLeod, the last questioner in this panel.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair.

Thank you to all of you for presenting here today.

I want to ask a question to FCM. I have a long history with the organization. I entered politics quite young, as an aboriginal person with the tribal councils. Then, at 22 years old, I became mayor of our community and have been involved ever since. It was because I recognized there was a level of despair in our communities in the north that I took this route. I've been working towards achieving and meeting the Canadian quality of living standards in our communities, and it's an ongoing thing for sure.

The north is quite different from the south. We don't have any communities that are older than probably 60 years. When you come south, you have buildings that are over a hundred years old. You don't find that in the north. Our communities are young. The aboriginal people lived out on the land and only came into communities fairly recently.

When we talk about funding our communities, we really can't talk about one-size-fits-all, because the north is so different. The FCM has really done a lot of good work in that area. When we talked about funding our communities, we partnered with the east coast communities, the jurisdictions that are smaller. We had a lot of things in common. We recognized that per capita doesn't work for us. When the government invests in public transit, well, in all of the Northwest Territories, we may have two buses, so it doesn't really work. We need flexibility when it comes to that.

However, I think a lot of lessons have been learned over the years. Maybe I could get you to talk about some of the things that the north and other smaller jurisdictions need when the government looks at funding, such as base-plus funding. I think that's a good mechanism to use, a good formula to follow.

Could you maybe elaborate on some of the work you have been doing on this?

[Bill Karsten]

Sure, I'd love to take that question and give you some background. Daniel, I'm sure, can add to it.

I've been with the Federation of Canadian Municipalities for seven years as a board member, and as we discussed briefly before this committee convened, I am just ecstatic that the influence FCM has had as it relates to rural, remote and northern communities has been on the incline over the last number of years. Not a thing comes before our board that doesn't go under a rural and remote lens to look at policies concerning how it may affect the northern communities as well, so I think that's an important start in recognizing there's a need. Without recognizing that, you can't fulfill what needs to be done.

[Daniel Rubinstein]

To expand on your specific question on design elements that work, base-plus per capita funding for broad-based programs like the gas tax fund is 100% where we're at. The clean water and wastewater fund that was part of the phase one infrastructure program adopts that kind of model. That's absolutely critical. We also have northern carveouts and a transportation fund and the broadband fund that exists right now. That's critical.

I'll use the opportunity to underline our encouragement for a much more robust federal commitment on broadband to the tune of—

[Michael McLeod, Liberal, Northwest Territories, NT]

That's where I wanted to go with my next question.

The CRTC has set a target of 50 megabytes per second, I think it is, for the whole of Canada. In the north we're nowhere near that. In some areas we probably don't even have infrastructure that would allow us to do that. There was a budget of $500 million for remote and northern communities, and I think that gave us a really good jump on Internet service. I'm assuming that's coming to an end, and I'm not sure how much we've accomplished, but is it enough? How much more do we need? What do we need to do to enhance the broadband situation?

[Daniel Rubinstein]

This is the top issue that our rural and northern forums on our board talk about. It's really critical. If any of you have been to our conference you will have heard this on the floor from delegates. We see the need to move away from what's been an ad hoc approach, essentially, with very good programs, ones that we've been advocating for on the Hill here before, but essentially we need to move to this longer-term time frame as we've done on transit and housing, away from three- to five-year programs, where ISED and CRTC operate in different silos. The federal government needs to play a leadership role there.

You mentioned the 50/10 targets. They're not mandated standards. Moving to a model of achieving these by a certain date and having them enforced would be a major change. We also know that folks have an interest in fixed broadband, which is particularly applicable in the north, but in the south and rural areas it's about mobile access just as much as it is about your fixed connection. Those are design criteria.

About the dollars, yes, there's a need for more ambition, so we're calling for $400 million a year as a floor, a minimum, to lever monies from the private sector and provinces, and in some cases municipalities, over a long-term period. We think that would be the right starting point for levelled ambition compared to what we're doing right now.

[The Chair, Liberal, Wayne Easter]

Okay. We will have to stop it there.

On behalf of the committee, I want to thank all the witnesses for coming and, again, for your submissions and your direct answers to the questions.

For those committee members who are going on the road, we shall see you in Charlottetown early on Monday morning.

The meeting is adjourned.