Finance Committee on Oct. 3rd, 2018

[The Chair, Liberal, Wayne Easter]

Yes, it's Dominic Barton, the Barton committee.

[François Bélanger]

All of these proposals converge. We recommend many specific elements that are more effective in reviving and supporting the Canadian economy, including, of course, the provision of public health and education services since we are in a mixed, private and public, economy.

Those were our comments on that.

[The Chair, Liberal, Wayne Easter]

We'll have to end it there. We're well over on our first round. It's all over the place.

Before I turn to Peter, I want to come back to this question between Mr. Julian and the UPA on supply management and the new NAFTA. Three witnesses here have mentioned the impact on the farming sector: the chamber, the CSN and the UPA.

Ms. Bouffard, you talked fairly extensively about the compensation needed for the dairy industry. Let's keep in mind that it's not just dairy. It's dairy, poultry, eggs, hatching eggs, and turkey. There have been concessions on all five.

In my personal point of view, compensation would ease the pain of the concessions that were made for the country as a whole, but how do we establish a secure foundation under the supply management system going forward so it's there for future generations? I think that's the critical question. The Prime Minister and others have said there will be compensation, and I support that 100%. But how do we secure the supply management industry—which, in my view, is a model for rural development that the world should look at—going forward into the future?

Greg came over to chat for a minute. I recognize there's a cumulative effect of CETA, TPP-11, and this. With TPP-11, the 3.5% might not be all taken up because it was a concession to the United States in that discussion and then Trump withdrew from the arrangement. It may or may not be all taken up.

Do you have any suggestions on how to secure the system going forward, beyond the compensation? I drove through Quebec this summer, coming from a national rural caucus meeting we had outside of Montreal. If there's any place in the country where you go through a community with farm after farm after farm, it's in the province of Quebec. I, for one, don't want to see that kind of industry undermined.

Do you have any suggestions on how we can secure that system going forward?

[Isabelle Bouffard]

I'm an agro-economist, and I am convinced of the value of supply management. I have worked at the Union des producteurs agricoles for several years, and I consider it a great system. Some economists claim that consumers pay more, but we have seen that, in countries where such systems have fallen, consumers never benefited from the price reduction for agricultural producers. The supply management system is not that expensive. That's not a large proportion of the cost of the product, but we have quality milk, poultry and eggs. And they are produced by family businesses. The fact that we have family farms is a societal choice. I believe in this choice.

You're asking me what to do, and I'm telling you that we must stop granting market openings. This happens with each negotiation, and some are ongoing, such as those of the Association of Southeast Asian Nations, or ASEAN. There are other negotiations where this happens because Canada is an exporting country. We understand that, but everyone has sensitive products. The United States and Japan have them, but they never put them on the table for negotiation. We have asked that this be stopped on several occasions. You're asking me what to do, and I'm telling you that we need to stop putting these sensitive products on the table. They must no longer be the subject of negotiations. They must be considered non-negotiable.

You are talking about the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP. If the United States ever participates again, it will have access to it, given that it is a proximity agreement, as well as to the U.S.-Mexico-Canada Agreement. They will therefore have broad access to the Canadian market. I'm simply telling you that we must stop putting this on the table. It must be non-negotiable from the get-go.

[The Chair, Liberal, Wayne Easter]

There is one point I'd make on the U.S. coming back into TPP-11 or CPTPP, whatever you want to call it, which is that every country has to agree how it signs in; it doesn't come in with a new negotiation. My position would be—and I don't know if it will be the position of the Government of Canada—that there be no more concessions to the U.S. in terms of access. We gave them 3.59% now. They were offered 3.25% under CPTPP and we don't need to regive that up. That would be my decision.

Anyway, I'm getting into the debate.

Mr. Fragiskatos, go ahead.

[Peter Fragiskatos]

Thank you, Mr. Chair.

I would like to thank all the witnesses for their work and their presentations.

I would like to begin with Mr. Patry and follow up on what we just heard on pharmacare. Your brief does indeed redefine competitiveness and what competitiveness ultimately means. It's not just about tax cuts. It's not just about doing away with red tape. It's about moving forward with progressive policies.

You pointed to pharmacare. Our government has indeed launched an effort to better understand how pharmacare can be introduced in this country. That's no surprise. We were the party that put on the table and introduced public health care in Canada. I really think there's great promise here with pharmacare. I indeed do think that it would make us more competitive. I think it's something that not just the Canadian population is looking for, but Canadian businesses also, because of all the consequences that come from pharmacare. There are the cost savings. Also, when you have a healthy population, you have a productive population.

I want to shift away from pharmacare and look at immigration.

Mr. Bélanger, at the end of your remarks you spoke about immigration, but I wonder if you can tell us a bit more, from your perspective and from your organization's perspective, about the tie between competitiveness and immigration. For example, you talked about how, if we're going to grow our labour force, we have to look to immigration. Our government has indeed increased the number of immigrants who are coming to Canada, specifically economic immigrants, but I wonder if you could go into that discussion a little more on the tie between competitiveness and immigration and tell us any further thoughts you might have.

[François Bélanger]

This isn't an area I deal with regularly.

In fact, the government has increased its immigration thresholds. At the CSN, we consider immigration to be one of the avenues for addressing labour shortages in certain economic sectors.

We mustn't simply increase the thresholds. We also need to ensure that newcomers can integrate properly. This requires training programs that are adequately funded. In the case of Quebec, workers must be able to work anywhere in the province, and not just in the areas of Montreal where people work more in English. French-language programs need to be funded. Of course, that is more a matter for the Government of Quebec. We have to do our part too. It hasn't always been perfect in Quebec in this regard, as we understand it.

Immigration should not be seen as the only solution to the problem of the labour shortage. There are existing labour pools in Canada and Quebec that must be mobilized. I am talking about people who have moved away from the labour market, such as women with children, indigenous people and older workers who have been unemployed for a long time. Many groups can be mobilized to meet labour force needs. Immigration is part of the solution and a source of wealth.

[Pierre Patry]

If I may, I would like to say something about pharmacare, since you mentioned it.

The CSN wrote a brief, and there was a consultation recently on the topic.

We agree on establishing a universal drug plan. In fact, Quebec has already taken the lead by introducing a mixed system. The limits are respected. Under the Quebec system, people who have access to an insurance policy must be reimbursed by their insurance company, and those who don't have access to an insurance policy come under the public system. It's kind of a two-tier system.

We have a universal drug plan. That being said, it will be necessary to ensure respect for provincial jurisdiction, because health is a provincial responsibility. A right of withdrawal with full compensation must be obtained if a program can be set up that achieves the same objectives as those defined by the federal government.

[Peter Fragiskatos]

Thank you, Mr. Patry.

In the interest of bringing people together, Mr. Paradis, in your presentation you pointed to immigration as very important for Canada's economic success, and specifically for our competitiveness. I wonder if you have any further thoughts on what we have heard.

[Michel Paradis]

Thank you for your question.

I'll speak to the situation in the National Capital Region. We are currently experiencing a fairly significant, if not very significant, labour shortage. An unemployment rate of 3.8% is excessively low. The problem isn't creating jobs, but filling available positions.

Working together is necessary to ensure that there are more incentives to distribute immigrants who come to settle in Quebec more equitably. As I said earlier, the population of the National Capital Region represents about 10% of Quebec's population. In 2017, 6.7% to 7% of these same immigrants settled in our territory.

I think incentives should be put in place, if only to respect the demographic representativeness of the different regions, to facilitate the retention of these immigrants and to optimize the attractiveness of our region. In recent weeks, community leaders here have advocated francophone immigration.

What particularities could we look into? Are there any collaborative or modulating initiatives that could be put in place? From a perspective of collaboration between the different levels of government, we believe that this would be strongly considered.

In answer to your question, I would say that immigration to the National Capital Region could greatly assist in addressing competitiveness issues.

As mentioned earlier, it may be appropriate to consider measures to allow seniors who wish to remain in the labour market to do so, without being penalized for tax purposes. Such measures would be very interesting. I just want to say that people aged 60 today, in 2018, do not necessarily look like people who were 60 in 1950. Unfortunately, we may be depriving ourselves of extraordinary talents and skills that would be beneficial to our companies.

Immigration is good, but other alternatives could be considered.

[The Chair, Liberal, Wayne Easter]

We'll have to cut it there and go to Mr. Kelly.

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

Thank you.

Madam Bouffard, in your opening statement you mentioned tax evasion and avoidance as a concern, if I recall. In one of your recommendations, you talked about offshore evasion. Perhaps it was a different panellist, but I'll put it out there as an issue. It's a competitiveness issue. It's a vexing one, in that everybody agrees that avoidance and evasion are unfair, and we all in Canada believe that everyone should comply with the law on taxation. Yet it seems to be a very difficult one to tackle. The present government made a number of promises and some very bold statements early in this Parliament about its desire to crack down on offshore evasion and avoidance, but there really hasn't been any evidence of significant progress in that area.

Monsieur Paradis, I'll let you take the question, then.

[Michel Paradis]

Thank you for your question.

What I talked about wasn't necessarily tax avoidance, but rather the idea of tax fairness. It was the particular case of e-commerce. We heard, in particular, about the comments of an economic leader in our community, Peter Simons. Mr. Simons said that in terms of online marketing, he was penalized compared to merchants in other countries, given that some foreign products sold online were not subject to GST and QST. In such a context, we are talking about an inequity that affects the competitiveness of our companies.

I'm not an expert in this field. Still, research has shown that some countries have adopted policies. If you like, we can discuss it and send you a list of what has been done. However, it must be admitted that, as part of the OECD recommendation, the OECD recommended that suppliers should be those that levy the tax in the country where the product is purchased. Economic leaders in our community have repeatedly said that there is absolutely no equity in this regard. This comment is addressed to both the federal and Quebec governments.

We therefore hope that the two levels of government will work together to find a solution to this dilemma, which will become more and more problematic. E-commerce is growing rapidly, to avoid using other adjectives. This is a very important issue. I reiterate that, for our part, we will pay particular attention to the initiatives that will be implemented in the next budget.

[The Chair, Liberal, Wayne Easter]

Okay.

Mr. Patry wants in for a second as well.

[Pierre Patry]

This is an issue that we also addressed in our brief. Mr. Paradis has just touched on what we might call new realities. For our part, we did not understand the government's position not to tax Netflix, while other Canadian companies have to pay these taxes. Netflix is not an SME. It is able to pay its taxes. Fundamentally, tax fairness is a democratic issue.

There is also the question of new realities and the fact that we are depriving ourselves of a huge amount of money that ends up in tax havens. We raised some points in our brief. We believe that the federal government is capable of taking action. Some measures, which are within reach, would mean that these considerable sums would go to public services and social programs. This would ensure the well-being of Canadians, but also economic development, as mentioned earlier.

We consider it essential to review the tax system to ensure that it is fair and that we can get the income where it is, but also to be able to face new realities, particularly that of e-commerce.

[The Chair, Liberal, Wayne Easter]

Okay.

Go ahead, Mr. Sorbara.

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

Thank you, Mr. Chair.

Thank you and welcome.

I will speak English, because the time is short.

I will start with the Quebec chamber of commerce.

Welcome.

In the area I represent, we need immigration.

We need immigration because we don't have enough workers. We have a low population growth rate in Canada, a low birth rate. Many people in Canada are above 65 and below 15.

From what I understand, Quebec is in the same situation, and also needs labour.

How important is immigration to filling Quebec's labour needs, specifically in the region of Quebec City?

[Michel Paradis]

I will reiterate some elements.

Quebec has one of the lowest, if not the lowest, unemployment rates in Canada. Our companies, unable to find an appropriate workforce, are wondering whether they should reduce shifts and are asking themselves these kinds of questions. We are hearing more and more about this issue.

To answer your question, I repeat that immigration is a very good way to remedy this situation. However, we believe that you should never put all your eggs in one basket, and find other solutions in your own community. The word “old” is very relative. There are people about to retire who are still full of energy and who still want to get involved in their community. Consideration should be given to adapting the tax system accordingly.

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

Thank you for your answer.

I will now address the representatives of the Union des producteurs agricoles.

Your brief on the budget contains several recommendations.

If I'm not mistaken, there are about 12 or so.

Pardon me?

There are 16, I'm told.

Oh, it's 16.

When we go through the recommendations, we sometimes don't draw 16 recommendations. Could you choose your top three? There is one specifically, I think it's number 13, with regard to the Income Tax Act.

Sorry, it's number 12. I think that relates to transitioning farms or businesses from one generation to another.

Is that right?

[Marc St-Roch]

Yes. Are you talking about farm transfers?

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

Yes.

[Marc St-Roch]

Right.

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

Would that be one of yours, out of these 16 recommendations?

[Marc St-Roch]

It would be one of the top ones, yes.

This is very important for us. The average age of farmers is increasing, and the transfer of farm businesses is becoming increasingly important, as it is in other sectors of the economy. The current tax rules limit access to certain deductions granted in transfers between unrelated people.

We consider these rules to be unfair when a person wants to do a transfer to a family member. The majority of farm business transfers are within the same family. We would like this rule to be abolished or amended, in order to allow agricultural businesses to benefit from or have access to the tax deductions that are granted in other situations, such as sales between foreigners.

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

I agree with you. We support family farms across Canada. This is very important to me and my caucus. An MP from Quebec, Emmanuel Dubourg presented—