Finance Committee on Oct. 2nd, 2018

[The Chair, Liberal, Wayne Easter]

Okay. Thank you. Could you please send that information to the clerk and to Mr. Mullin?

On the overall complete tax review of the system, how would you propose to do that? Would it be through a royal commission, with a white paper that would eventually go to a committee, with tax experts to do the initial commission or white paper? How would you do it?

[Dean Mullin]

Given the complexity and the magnitude of it, I would suggest a royal commission so that it's all-encompassing. It would have to have a robust enough mandate and timeline that it could peel apart the Income Tax Act incompleteness. It could not be partisan, and it would have to combine everybody's view and make something that's good for the 21st century, because it hasn't been updated.

[The Chair, Liberal, Wayne Easter]

Okay. Thank you.

Mr. Kelly, could you go to one question, please? Then it will be Mr. Julian.

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

I'm going to ask Mr. Mullin to return to part of his first point in his presentation, just so we can get to some really specific recommendations that will help our analysts draft the report.

You talked about the changes to the taxation of private corporations that were announced last year. You recommended, if I recall correctly, that what's left of it be repealed, partly in the name of compliance costs and general unfairness. I'll let you return to that and talk about what the members of your organization have said to you about those changes and about the cost of compliance and issues of tax fairness to those members.

[Dean Mullin]

Are you referring specifically to the TOSI, the tax on split income?

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

Yes.

[Dean Mullin]

Many of our members are impacted, and the real issue is they don't know how they're impacted. That is due to the complexity and the lack of description or scenarios they can rely on. When you're working with income tax, you can read the Income Tax Act and you can read the explanatory notes, but you really decide on how to structure something once you see how the Department of Finance or the CRA has interpreted that legislation. Sometimes we don't understand the context behind it.

The issue is we don't really know what the compliance cost is yet, because once our members have changed the way they are being compensated.... For example, our members who had children who were in university had to change how they funded that university education. They had to take more money out of the business in order to fund the education. Once the dust settles and we go a few years in, and CRA comes in to audit somebody's interpretation of the legislation, it's hard to say what the costs will be.

That's the other issue with many changes. CRA is not set up for success. The majority of the CRA auditors I've dealt with want to and try to do a good job, but they are hit with so many changes—every year there are hundreds of changes they try to understand—that there comes a point where it's going to go to court and it's going to be another three or four years before it's settled. Again, it's the inconsistency and not knowing what's going to happen.

[The Chair, Liberal, Wayne Easter]

Mr. Julian is next.

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

Mr. Campbell and Mr. Emerson, you pointed out the innovation gap, which is a real challenge for Canada. Currently, in terms of our chief competitors, we have the lowest level of public investment in research and development, we produce the second-lowest number of Ph.D.s, and we are the lowest among our competitors in terms of the number of patents that are approved in Canada.

How important is it for Canada and the Canadian federal government to substantially increase the investments in research and development that you speak to in your presentation?

[Dr. H.E.A. (Eddy) Campbell]

Well, of course, I would argue that it's very important. The dynamic that I see among universities and colleges across the country is....

We really have focused since the mid-nineties on helping our industries become more competitive.

The context for me is that Canada has this SME economy and is therefore not particularly able to invest in research and development on the business side. The firms are too small. They don't have the scale. Moreover, we don't have enough head offices. Typically, head offices are the ones that lead our research and development efforts.

Around the mid-nineties, we recognized that in fact we have world-class research going on at our universities and colleges. One of the ways we can really address the productivity and innovation gap that our industries have is by building these industry-facing programs between universities, colleges and the industries, to enable us to work with them on research and development that matters to the industry. This is why I feel these cluster ideas that my university is investing in are extremely important.

We can make Canada more innovative, and therefore more productive, by staying the course on this. It's important to recognize that this has been happening with governments of different colours since 1995 or thereabouts. We are getting increasingly good at these activities at our universities and colleges across the country, but it's not on a political time frame; it's on a longer time frame.

We are doing a whole bunch of the right things now. We have the right programs in place. What I am suggesting is that further investment in them would really help. I think we're doing the right things now. It's a problem of scale; we need to scale up.

[The Chair, Liberal, Wayne Easter]

Okay, we will have to end it there.

Again, thank you to all the witnesses for your presentations today and your submissions earlier—those who made them—and for answering our questions.

With that, we will suspend until 10:45 and bring up the next panel.

The meeting is suspended.

[The Chair, Liberal, Wayne Easter]

We're ready to reconvene.

Welcome to the witnesses continuing our pre-budget consultations in New Brunswick for budget 2019. Thank you to those who have presented earlier submissions and for coming today. Just to give you a taste of where we come from, I'll go around and ask our members to make quick introductions.

I'm Wayne Easter, the member of Parliament from the riding of Malpeque, Prince Edward Island.

We'll start with you, Peter.

[Peter Fragiskatos]

I'm Peter Fragiskatos, the member of Parliament for London North Centre, Ontario.

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

My name is Greg Fergus and I am the member for Hull—Aylmer, Quebec.

Thank you all for being here today.

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

I'm Pat Kelly, from the riding of Calgary Rocky Ridge.

[Leona Alleslev]

I'm Leona Alleslev, from Aurora—Oak Ridges—Richmond Hill, just north of Toronto.

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

I'm Peter Julian, from New Westminster—Burnaby, on the other side of the country.

[The Chair, Liberal, Wayne Easter]

It's just over the hills there in B.C.

Thank you all for coming. We'll start with the Atlantic Canada Airports Association.

Mr. Hierlihy, go ahead.

[Greg Hierlihy, Director, Finance and Administration, Saint John Airport, Atlantic Canada Airports Association]

Good morning. Thank you for the invitation to appear before you as part of the pre-budget consultations.

My name is Greg Hierlihy. I am the director of finance and administration here at the Saint John Airport. I bring remarks on behalf of the Atlantic Canada Airports Association.

Over the past few decades, aviation has played a critical role in creating a much more global and connected world. With that, our airport runways have quickly become the most important main streets in many of our towns and cities throughout Canada. Airports and air travel are so important to trade and economic growth here in our region. I'd like to touch on that, as well as discuss some of the challenges our airports face.

First, let me start by saying thank you for your support of our 2018 budget submission. A number of our region's airports have received infrastructure funding support for safety-related projects, including our airport here in Saint John, which has begun preliminary work on a $20-million runway rehabilitation program. This support was made possible through the Government of Canada's new national trade and transportation corridors initiative. Through a special stream of safety-related funding for the north and small NAS airports, four airports in Atlantic Canada were successful in receiving much-needed infrastructure support to ensure that they can support growing traffic in a safe and secure manner for decades to come.

[The Chair, Liberal, Wayne Easter]

Could you slow down just a bit to assist the people in the booth?

[Greg Hierlihy]

Thank you. Sorry about that.

Our Atlantic Canada airports move nearly eight million passengers per year. We're not only moving a substantial number of passengers and important cargo in and out of Atlantic Canada; we are moving the fly-in, fly-out workforce and enabling the growth of the regional economy. Atlantic airports generate over $4 billion in economic activity every year, supporting 46,000 person-years of employment.

While air transportation and airports have come a long way, some challenges remain. The creation of the national airports policy back in 1994 resulted in the transfer of the financial responsibility for airports from the Government of Canada to the community. This financial model has resulted in a net transfer of funds from aviation to the Government of Canada, which, for example, in 2017 was $368 million in the form of airport rent.

However, only a small fraction of those funds that are contributed to government go back into the aviation system. In fact, in 2017, approximately 10% or $38 million was invested through the airports capital assistance program, ACAP.

Since 2000, the funding in this program has not changed, while the cost of doing business over this time has risen considerably. The airports capital assistance program needs a dramatic increase in funding to support small airports across the country, many of which have runway refurbishments coming due.

As I mentioned, Canada's airports pay $368 million a year to the federal government in airport rent. Canadian airports are recommending eliminating rents for all airports with fewer than three million passengers, which would amount to approximately $10 million of the $368 million paid to the federal government last year. In addition, we would like to see a cap on rent for other airports, so that it no longer continues its upward climb.

Airports are closed-loop systems. Any reduction in rent would be passed on through lower airport charges and debt requirements.

To put airport rent in context, in Atlantic Canada in 2017, Halifax Stanfield International Airport paid over $7 million, and St. John's International Airport paid over $2.6 million. As well, five additional airports began paying rent in 2016, creating an additional financial burden, which will continue to grow over time for these smaller airports. For example, Greater Moncton International Airport paid $450,000 in federal rent in 2017, and that is expected to rise to $540,000 in 2018.

Meanwhile, with the introduction of new regulations expected this year, each airport with more than 325,000 passengers will be required to add 150-metre runway end safety areas, or RESAs. To complete this, Greater Moncton International Airport will need to borrow over $4 million to meet this new regulatory requirement.

While our airports fully support initiatives designed to improve safety, the regulatory cost burden is becoming exorbitant for smaller airports. For airports with under three million passengers, rent paid to the federal government could be better invested into airport safety infrastructure requirements like RESAs.

In regard to improving trade and export at airports, many airports across the country and here in Atlantic Canada have applied to the national trade corridors fund, proposing projects that reduce bottlenecks and address capacity issues for national trade. However, the NTCF is heavily subscribed. With a budget of $2 billion over 11 years, the government received $27 billion in applications with the first call for submissions, and only 37 projects across the country were approved in this first phase. The funding envelope in the program should be increased to assist with worthwhile projects that improve trade in Canada.

Again, thank you for your support for airports in budget 2018. We look forward to working together to further the economic prosperity of our region and this country.

[The Chair, Liberal, Wayne Easter]

Thank you, Greg.

Turning to The Atlantic Salmon Conservation Foundation, we have Mr. Bishop and Mr. Chase. Welcome.

[Robert Bishop, Vice-Chair, Atlantic Salmon Conservation Foundation]

Thank you Mr. Chair, committee members, and fellow presenters. Thank you for inviting the Atlantic Salmon Conservation Foundation to present to you today on your pre-budget theme, “Economic Growth: Ensuring Canada's Competitiveness”.

I'm Robert Bishop, vice-chairman of the foundation. With me is Stephen Chase, our executive director. We are pleased to outline why our foundation is a prudent and cost-effective government investment that successfully and permanently helps improve the environment.

We're a non-profit, volunteer-run organization at arm's length from government. We operate under a very solid business model to provide a permanent source of funding for salmon conservation projects in Quebec and Atlantic Canada. We do this from income earned on a $30-million trust fund created by the Government of Canada in 2007.

Since 2007, our foundation has granted $7 million to 475 separate river conservation projects. Our funds have also leveraged other sources of funding, for an overall project value of $36 million, giving an impressive leverage ratio of 4:1. Millions of square metres have been improved, and several thousand people have been engaged across the five provinces. Projects we have funded have sustained nearly 2,000 full-time-equivalent jobs. Full-time and seasonal workers have found employment, and hundreds of students have gained valuable work experience.

While Atlantic salmon may be our focus, from our 12 years of experience we know that it's not just wild salmon that benefits from our program. The work done by the community and indigenous groups we supported has improved the environment. Clean rivers are important to Canadians and visitors to Canada. Habitat is restored, and salmon and other wildlife species are sustained, which strengthens the ecotourism industry, a key economic driver in rural areas.

Earlier this year, we assessed the value of ecotourism associated with salmon rivers across the five provinces. We learned that several hundred million dollars are contributed annually to regional economies by ecotourism on rivers. Much of this economic activity is generated by, or associated with, the work of our recipient groups.

The foundation provides a permanent and well-managed source of funding for communities and volunteers engaged in environmental improvement. Our fiscally prudent process is bound by a detailed funding agreement approved by Treasury Board. We are annually accountable to the Minister of Fisheries and Oceans. We are required to maintain the inflation-adjusted book value of our trust fund. We cannot erode the capital, and rents and operations are funded only from investment income. The trust fund must be returned to the government if the foundation ceases operating.

We work with our recipients to agree on project outcomes, performance measures, and dates. The process is rigorous. Funding is granted quickly, and projects are subject to foundation oversight. It's an effective business model that works very well.

Our trust fund has its limits. Each year, we receive almost 200 high-quality funding proposals. Based on available funds, however, we can offer grants only to approximately half of these excellent proposals. This is regrettable, as it leaves many good projects unfunded, and others underfunded. We do encourage groups we can't fund in any particular year to stick with us, as we can't afford to lose good applicants.

Let me stress how critical the volunteer element is to the environmental improvement Canadians need for fish and wildlife, and also to sustain and grow ecotourism. This work cannot be done without the volunteer community. We work closely with the mainly volunteer recipient groups to help them succeed. We enjoy helping our recipients do good work. We want them to be successful, and we have a reputation for assisting them in this regard.

We have three recommendations we'd like to present to the committee.

First and foremost, a larger trust fund would increase the capacity of the foundation to fund more of the high-quality applications that we receive annually from Atlantic salmon grassroots organizations throughout Atlantic Canada and Quebec.

Second, instead of creating new mechanisms for delivery of wild Atlantic salmon conservation project funding, the government should work with established programs such as the Atlantic Salmon Conservation Foundation to avoid overlap and duplication. I can assure you that this does happen.

Finally, the Atlantic growth strategy should support river conservation projects contributing to the improvement of ecotourism opportunities by partnering with the Atlantic Salmon Conservation Foundation. By that I mean joining us in partnership on some of the projects we fund.

[The Chair, Liberal, Wayne Easter]

Thank you, Robert.

With the Canadian Drowning Prevention Coalition, we have Mr. Beerman and Mr. White. Welcome.

[Dr. Stephen Beerman, Co-Chair, Canadian Drowning Prevention Coalition]

Good morning. Thank you for the opportunity to present today.

I'm Dr. Steve Beerman, and I am co-chair of the Canadian Drowning Prevention Coalition. I am here with Mr. Bobby White, a member of our board of directors. We're here to ask the government to make a new strategic investment in the Canadian Drowning Prevention Coalition to reduce drowning risks and enhance drowning prevention.

The Canadian Drowning Prevention Coalition is respectfully requesting that the Government of Canada invest $25 million over five years to support drowning risk reduction in Canada. This investment would improve research and data collection, thus improving effective prevention, policy development, reporting and governance.

The Canadian Drowning Prevention Coalition is a new, non-governmental organization that brings together many multisectoral stakeholders with key focused targets, inclusion and shared leadership. The coalition was created to enhance the focus and impact of this effort after the World Health Organization's “Global Report on Drowning”. That report identified drowning as a multisectoral public health issue in all nations and recommended that each nation create a national strategy and plan for drowning mortality risk reduction and non-fatal drowning risk reduction.

Mortality data in Canada has been collected and analyzed by the Canadian Red Cross and the Lifesaving Society for more than 20 years. This has focused on drowning mortality.

Non-fatal drowning data and reporting are more challenging and most needed. This impacts Canadian rescue services, health services, social support systems and employment and economic capacity for families and communities. The assessment of the drowning burden is currently incomplete. We need to improve the data, the reporting and the learning. A full understanding of this burden will inform legislation, policy and community actions and behaviours.

We know that more than 400 Canadians are victims of fatal drownings each year. This accounts for more than 8,000 fatal drownings and more than 40,000 non-fatal drowning events in Canada over the past 20 years. This is not the full picture. There are exclusions from this data, including drownings from suicides and homicides, and drowning deaths involving complex circumstances. We need to understand this drowning burden more fully and with all its impacts, to speed the rate of decline and improve the inequities.

The drowning mortality burden disproportionately impacts indigenous Canadians—that is, first nations, Inuit and Métis—new Canadians, rural and northern residents, children and young males. These key targets align with many Government of Canada priority target areas.

The Government of Canada's investment would improve our understanding and the reduction of tragic, preventable drowning. That investment would be put to use to enhance data and research-gathering and support.

We would like you to implement survival swim training for all Canadians, and very specifically for new Canadians. This would reduce the drowning risk.

We would also like you to amend the small vessel regulations for vessels under nine metres to require PFDs or life jackets to be worn by each person on or in the small craft. This would make small craft vessel recreation and vocation safer.

We would like you to implement mandatory CPR training as a prerequisite to obtaining a motor vehicle driver's licence in Canada. This would empower Canadians to save lives.

We would also like the Government of Canada to assist in the creation and establishment of a drowning review board for drowning mortality in supervised settings and in single events involving more than five deaths. This would better inform and protect Canadians.

As well, we would like you to implement consistent, evidence-based pool-fencing legislation and compliance across Canada. This would make our homes, our residents, our schools and our institutions safer.

Multiple Government of Canada ministries and agencies have a mandated interest in this issue. Canada should be a leader in multisectoral drowning prevention, with collaborative shared leadership. This collaborative partnership would accelerate the impact of drowning risk reduction and burden reduction.

Canada can do a better job of reducing drowning risks, deaths and the burden felt by our health care system, our economy, our families and our communities. Government investments in research, data collection and proactive prevention are reasonable requests and would greatly assist in reducing drowning among Canadians who are at greatest risk.

Thank you. We look forward to answering questions when the time is appropriate.