Finance Committee on Oct. 1st, 2018

[The Chair, Liberal, Wayne Easter]

I call the meeting to order.

Welcome, everyone.

For those who are witnesses for the panel at 9:00, in most of the locations outside Ottawa we have an open mike session, which gives people the opportunity to come to the floor mike and make a one-minute statement on their issue of the day. A minute isn't a lot, but it does go into the record and it is considered by the committee in terms of the pre-budget consultations. There are no questions from members on those points.

As we have only three people for the open mike, I'll quickly go around the room so that members can introduce themselves and indicate where they're from so that the witnesses know that we basically cover the country from Vancouver to P.E.I.

I think almost everyone here knows me, anyway. I am Wayne Easter, from the riding of Malpeque.

Peter Fragiskatos, go ahead.

[Peter Fragiskatos, London North Centre, Lib.]

Good morning, everyone.

I am Peter Fragiskatos, from London, Ontario. I have had the chance to meet some of you already, but to those I haven't met, thank you very much for being here. I am very much looking forward to your presentations.

[The Chair, Liberal, Wayne Easter]

Francesco, go ahead.

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

Good morning, everyone.

We usually say welcome to our speakers, but it's vice versa this morning. Thank you for having us. It's great to be here.

I am the member of Parliament for Vaughan—Woodbridge, located right on top of the city of Toronto. I look forward to hearing your briefs.

[The Chair, Liberal, Wayne Easter]

Greg, go ahead.

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

Hello, my name is Greg Fergus.

I am the member for Hull—Aylmer, a Quebec riding close to Ottawa. We had a tornado last week.

I have been a member of the Standing Committee on Finance for two years, nearly three years. I have visited Prince Edward Island a number of times and I love it. I am happy to be here.

I am looking forward to hearing from you.

[The Chair, Liberal, Wayne Easter]

Thank you.

Pat, go ahead.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

I am Pat Kelly, from Calgary Rocky Ridge.

[The Chair, Liberal, Wayne Easter]

Leona, go ahead.

[Leona Alleslev, Aurora—Oak Ridges—Richmond Hill, CPC]

I am Leona Alleslev. I am from just north of Toronto, beside Francesco, in Aurora—Oak Ridges—Richmond Hill.

[The Chair, Liberal, Wayne Easter]

Peter, go ahead.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Hello, I am very happy to be here.

My name is Peter Julian, and I represent the riding of New Westminster—Burnaby, on the west coast of the country. Currently it's 4:30 in the morning my time. I came in last night and was able to wander around the beautiful architecture in downtown Charlottetown. This is a gorgeous part of the country, so I'm glad to be here.

[The Chair, Liberal, Wayne Easter]

Thank you, all, and welcome.

We'll start on the open mike with Karen Clare. Karen, the floor is yours.

[Karen Clare, Volunteer, PEI Home and School Federation]

Honourable Wayne Easter and committee members, thank you for having me here.

I am here on behalf of the Prince Edward Island Home and School Federation, one of more than 40 members of the Coalition for Healthy School Food, which is coordinated by Food Secure Canada.

Approximately 20% of students in Canada receive a meal or a snack at school. We have a patchwork of school food programs across Canada, including here on P.E.I. Evidence shows that a national universal healthy school food program would increase children's consumption of healthy foods, reduce their risk of chronic diseases, improve mental health, improve educational outcomes, and increase graduation rates.

Also, a national school food program has the potential to create jobs and to grow national economies by investing in local agriculture and food businesses.

Today we are asking your government to invest $360 million in your next budget to partner with provinces, territories, municipalities, community groups, parents and other key stakeholders in funding a cost-shared program, estimated at $1.8 billion.

Your support will make a positive difference in the lives of our schoolchildren.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, Karen.

Shirley Pierce, go ahead.

[Shirley Pierce, Advocacy Officer, Prince Edward Island, National Association of Federal Retirees]

Good morning.

I'm happy to be here on National Seniors Day. I represent the National Association of Federal Retirees. It has about 180,000 members, who are retirees of the public service, the Canadian Armed Forces, and the Royal Canadian Mounted Police, as well as retired federal judges. Our association has advocated for improvements to the financial security, health and well-being of our members and all Canadians for more than 50 years. I have some recommendations.

The first one is that, along with our provinces and territories, the federal government lead the implementation of a comprehensive national seniors strategy that addresses the social determinants of health, including access to affordable and appropriate housing, retirement income security, and robust and sustainable social services. This must include taking action on improving senior-focused home and community care, developing and promoting age-friendly community principles, increasing support for caregivers, and combatting isolation and ageism.

The second is that this government help Canadians build better retirement security, honour the promises made to retirees when pension plans are changed, and continue to improve CPP and OAS. A good first step in achieving this would be the immediate withdrawal of Bill C-27.

Third is that the federal government follow through on the budget 2018 commitment to consult on retirement security. To ensure that our current retirement savings regimes are effective and that Canadian retirement security needs are met, hold public, transparent consultations by spring 2019 with retirees and pensioner organizations, veterans, academics, policy experts, labour and business leaders, and others to map Canada's path to retirement security.

Last is that this government ensure that retirees and employees are properly compensated and invest appropriate funds and continue to work with labour and retiree partners to resolve the Phoenix pay system issues.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, Shirley.

Next is Deb Calviello.

[Deborah Calviello, As an Individual]

Hello.

Thank you for having me today. I am here as the newly minted executive director for the CBDC in Summerside. The CBDC is part of the national community futures program, and I'm here to raise awareness of our need for more resources to better serve the needs of businesses in rural Canada.

There are 267 active CFOs in Canada. This represents a total annual CED funding request of $13.35 million, and $66.75 million over five years. We feel that these funds should be allocated on a regional basis as follows: western Canada, $4.5 million; Ontario, $3 million; Quebec, $3.35 million; Atlantic Canada, $2 million; and the north, $400,000.

The funding we get here impacts businesses in rural Canada tremendously. We have enjoyed many successes. Some of them are Twin Shores, which used our money and services to expand accommodations; Myers Welding in Tignish; and the Community Inclusions folks, who fund social enterprise that supports people with intellectual difficulties.

These funds and resources result in increased revenue and employment opportunities, and they're just good business. We broaden the tax base, and we give people jobs and encourage them to pursue things that they maybe never thought they would do.

Thank you so much for your time.

[The Chair, Liberal, Wayne Easter]

Thank you, Deb.

We will now turn to our formal session. If people can hold it relatively close to five minutes, we'll have more time for questions.

Just so you know, sometimes we get asked afterwards why people are on their iPads while we're doing the meetings. All the submissions, 524 of them, to be exact, are on the iPads. Members will be looking back at the original submissions.

First, we have Mike Durant, as an individual.

Welcome, Mike.

[Mike Durant, As an Individual]

Thank you, Mr. Chair.

Good morning, committee members and everyone. Hello, presenters.

My name is Mike Durant. I'm here to highlight the effectiveness of the Atlantic Salmon Conservation Foundation's model in supporting the theme of economic growth and ensuring Canada's competitiveness. I've been involved in watershed restoration activities for many years in several capacities. I currently serve on the provincial advisory committee for ASCF. I'm the president of Central Queens Wildlife Federation, where we do work on two rivers in Prince Edward Island. I also serve currently as the chair for the Prince Edward Island Watershed Alliance. It's an umbrella group that serves and supports all 24 watershed groups on P.E.I.

ASCF was established in 2007 and initially awarded a conditional grant of $30 million. This grant was placed into a trust fund, and the proceeds of that trust fund are used to invest in project work across five provinces. The ASCF trust fund currently provides approximately $1 million in funding annually, and as I said, that is invested in five different provinces—the four Atlantic Canada provinces and Quebec. On average, P.E.I. receives about $100,000 for project proposals.

ASCF directly contributes to economic growth in several ways. It creates jobs through its funding program, particularly in rural areas. It also encourages volunteer participation. We have many different groups that have lots of volunteers on staff. That makes a big difference in these local communities. In terms of ecotourism, the recreational fishery for wild Atlantic salmon has been assessed by ASF as contributing approximately $255 million annually. ASCF projects directly enhance the salmon habitat, ensuring that the value of this fishery will continue to grow. ASCF-funded projects leverage other sources at a four-to-one ratio. It stimulates economic growth and enables groups to pursue projects they would be unable to complete on their own.

The ASCF governance model allows for each province, through its provincial advisory committees, to focus on local priorities, which is something very important. It's effective and efficient. The grant process is very timely. It's quick. The money that is given to groups is usually available very early in the year. It's really critically important. Our field season, for most crews, runs from about April through September. When the dollars get into the hands of groups in the March-April time frame, that's great. Sometimes, with the federal programs, I've seen monies arrive for groups two days before the end of the fiscal year. That's very damaging. It's hard to do work in that situation.

As well, it develops the capacity of local groups. ASCF encourages and supports collaboration among community groups, NGOs, aboriginal organizations, and research institutions, which in turn builds further capacity in the sharing of best practices. It's a fully sustainable and permanent investment that's available. The proceeds of the trust fund are what's used, so the trust fund remains in perpetuity.

Again, the difference between ASCF's model and a government program similar to, say, the coastal restoration fund, which is a program that exists only for five years, is that ASCF is a permanent model, so that money is available.

In terms of my recommendation, I would like to see the government consider an investment of $50 million into the Atlantic salmon endowment fund. This would enable ASCF to approximately double its capacity to fund project work.

In summary, I'd like to highlight that ASCF directly contributes to economic growth and ensuring Canada's competitiveness. It does so through its permanent and sustainable business model; its effective and efficient management of the program; its direct support to preserve and support Atlantic salmon habitat, and the resulting increase in value of the ecotourism and the salmon recreational fishery; and its support for local community groups to develop capacity and increase community engagement.

Thank you, Mr. Chair.

That concludes my statement.

[The Chair, Liberal, Wayne Easter]

Thank you, Mike.

Next we have Blair Corkum, from Blair Corkum Financial Planning Inc.

Welcome, Blair.

[Blair Corkum, President, Blair Corkum Financial Planning Inc.]

Thank you, Mr. Chair, and thank you to the committee for giving me this opportunity.

I am obviously not from a big organization, so I will give you a little background. I am a self-employed CPA, chartered accountant, with 40 years of tax experience working with individuals and small businesses. I am also a registered financial planner and a chartered financial divorce specialist with 20 years of experience working with separated couples.

I have two recommendations for the committee to consider.

Although not related to the budget theme, fairness is an important principle to any economy. One recommendation is to correct the tax credit legislation for claiming children in shared custody. The other is asking for Canadians contributing to the Canada pension plan to be guaranteed at least a return of their premiums if they die too young to receive a reasonable pension.

On the first issue, the Income Tax Act provides a tax credit called the eligible dependant amount for single parents who support a child. Years ago, this was called the equivalent to married exemption. When a single parent has sole custody of a child, they can save about $2,500 in taxes, using P.E.I. rates.

Subsection 118(5.1) of the Income Tax Act says that couples who have shared custody of the same children on a more or less equal basis can also claim this credit. However, to qualify in this case they must each be legally obligated to pay child support to each other. In a shared custody situation, support must be calculated for each parent based on their individual income, meaning that the higher-income parent will pay more than the other parent. Net cash flows to the lower-income parent.

According to current tax law, if the parents are legally obligated to write a cheque to each other, each parent can claim the credit for one of the shared children. In this scenario, they will have a combined total of about $5,000 in tax savings, the same as if they had sole custody of one child each. However, if instead of writing two cheques they agree that for convenience the higher-income parent will pay only a set-off amount to the other parent, then only the receiving parent can claim the credit. The other parent can claim nothing. The net result of the child support is the same, but $2,500 of the tax savings are lost.

Two families may be in identical situations, but one family saves $2,500 more than the other solely because their separation agreement requires two cheques to be written instead of one. Is this not unfair, and perhaps even silly?

You might ask why parents do not just simply agree to write each other separate cheques to avoid this problem. The answer is set out in detail in my submission, but it primarily relates to enforcement issues when one parent's cheque bounces.

Parents sharing custody of the children should each be able to claim the eligible dependant amount when there is more than one child, regardless of how the payment is made. When there is only one child, changing the legislation to allow for sharing of that one credit clearly makes sense in the same way that the Canada child benefit must be shared. Children should come first, and this law should be fixed.

My other recommendation relates to the Canada pension plan and a little-known feature. If a person dies before they have collected the CPP and the surviving spouse already receives their own CPP retirement benefit, which is at the maximum amount, they are not entitled to a survivor benefit.

Over a 40-year work history, premiums paid by an employee in today's dollars would amount to about $100,000 to receive the maximum pension. It's double that for business owners. Is it reasonable for Canadians to invest in a pension plan if we know that our estate or our family will receive nothing if we die early? This will happen if we do not have a living spouse or where our surviving spouse already has a full CPP pension on their own account. We should be entitled to at least a premium refund plus interest on the same terms as the public service pension plan and all other pension plans that I have seen.

Thank you for your time and consideration.

[The Chair, Liberal, Wayne Easter]

Thank you, Blair.

We'll turn to Bulk Carriers PEI Limited, Mike Schut, vice-president, and Tyson Kelly, vice-president.

Mike, go ahead.

[Mike Schut, Vice-President, Administration and Human Resources, Bulk Carriers PEI Limited]

Thank you, Mr. Chair.

Thank you for giving us the opportunity to present to you here today. As mentioned, my name is Mike Schut. I'm the vice-president of administration and human resources with Bulk Carriers. With me is Tyson Kelly, the vice-president of operations and general manager.

Bulk Carriers is a family-owned and operated business located just outside of Charlottetown, in Clyde River, P.E.I. It started in 1973 and it has grown to be the largest island-owned long-haul transport company today.

We are in the middle of a crisis within this industry, and there needs to be action now. In 2013, a report funded by the Canadian Trucking Alliance indicated that, by the year 2020, the gap between supply and demand for truck drivers would soar as high as 33,000. I heard recently from the Atlantic Provinces Trucking Association, who said that the gap may actually be closer to 40,000. Folks, we're only two years away from that projection, and this is only a start.

Our growth at Bulk Carriers has gone from eight trucks and 12 staff in the year 2000 to 98 trucks and 142 staff in 2018. Trucking moves the Canadian economy. Without transport trucks moving the product, the economy would grind to a halt.

In 2012, statistics showed that 90% of all consumer products and foodstuff was shipped by truck throughout Canada. The trucking industry generated more than $67 billion in revenue. In 2018, Bulk Carriers is projecting annual sales to be in excess of $30 million, and our payroll is projected to be in excess of $9 million. Since the last quarter of 2017, we have increased our driver pay package two times. This is being done to combat our annualized driver turnover rates of 59% and in an effort to fill the 17 trucks that we currently have sitting empty in our yard with no drivers to put in them.

Since 2004, Bulk Carriers has been a user of the temporary foreign worker program. In fact, the second driver we brought over under that program is still with us today and just recently completed 13 years of service with our company. Today, our driver population consists of 46% temporary foreign workers. This has been an absolutely necessary program in order to deal with the driver shortage crisis.

I mentioned earlier that we currently have 17 trucks, or 17% of our fleet, empty. This comes at a huge cost. If these trucks were full, our potential year-to-date revenue in 2018 would be increased to approximately $35 million, with projected payroll costs of $10 million. In the first nine months of 2018, having 17 empty trucks has cost approximately $550,000. If they were filled, the costs would be higher with driver wages, fuel, repair and maintenance, but that would be offset by the revenue generated from their going up and down the road. Having these trucks empty has caused increases in freight rates. These increases in freight rates have been felt by everyone, from farmers and producers to shippers, receivers, and the consumer. It translates to increased costs for products on the shelves, and that is carried on the back of the Canadian consumer. This is the case not just for our transport company, but for almost all transport companies across Canada and North America.

There are several things that the Canadian federal government can do and needs to do in order to deal with this crisis. First and foremost, the federal government needs to recognize that a long-haul truck driver is not a low-skilled worker. According to the national occupational classification system, long-haul truck drivers are code 7511, which is NOC C. This is classified as a low-skill worker. In the paper that we have submitted to you, I have provided several compelling reasons why a long-haul truck driver should not be classified as low-skilled. Changing NOC code 7511 from C to B would greatly reduce the barriers to entry for foreign workers to fill the shortages we are experiencing.

Another way the federal government can act now is by making some changes to the Atlantic immigration pilot program. I have recommended these changes as well, which can be seen in the paper submitted to you.

Yet another way the federal government can respond to this crisis is to streamline the LMIA application process. The process is too long and has too many bottlenecks that can cause absolutely unnecessary delays, which costs money.

The final area referred to in the paper, where Bulk Carriers and probably many other trucking companies could see a huge improvement, is for the federal government to level the playing field. Changes to the program to allow the temporary foreign worker's spouse to obtain an open work permit when they land would greatly improve retention rates and greatly decrease driver turnover rates.

In conclusion, all of these options can be seen as easy solutions to a major crisis. The federal government needs to act now, before it's too late. However, we are already in this crisis. This action needs to be now, in order to divert the crisis from becoming national economic devastation.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mike.

We'll go to the Greater Charlottetown Area Chamber of Commerce, with Jennifer Evans, president, and Penny Walsh-McGuire, CEO.