Finance Committee on May 17th, 2016

[Lori MacKay]

I'm not as up on the temporary foreign workers situation as I probably should be. However, we are concerned that there will be an influx of workers who'll take the seasonal jobs and, therefore, that we'll have more displaced workers living in our region. That's for certain a major concern for our area.

I want to make this next point really clear: when Prince Edward Island is in full throttle, as I call it, when all of our seasonal industries are going, we have the second-highest rate of employment in the country. Islanders want to work. Atlantic Canadians want to work. The attitude around the fact that we just want to work 15 weeks and then draw EI is a barbaric, old idea, and it needs to be go away. The policies in 2012 were actually based on that idea, that seasonal workers just want EI.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Mr. Ouellette

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

My first question is for Mrs. Smith from the Canadian Teachers' Federation. It's related to investment in first nations education. This is a major part of our budget. We're investing around $2.6 billion in first nations education and in schools. I would just like to have your opinion how this could be used to really improve the education system. It's easy just to throw money at a problem, but I think we really need to use that money to great effect and to understand how we can actually make a better education system—perhaps not just the stand-alone schools, but what we could actually do to ensure that parents feel that the education system represents them, that it represents schools, and that it's beneficial for the long term for Canada, especially for the children and their long-term future.

[Heather Smith]

All right. I'll start, and maybe Mr. McGahey, if permitted, will finish.

I do want to say that the Canadian Teachers' Federation, for the most part, does not represent teachers in first nations schools on reserve. However, we do represent teachers who teach the many first nations students across this country who are in public schools. That's not your question, but I just wanted to make that clear.

We know that first nations schools are severely underfunded. Yes, we don't want to just throw money at this, but certainly the money is desperately needed. I think we need to have the conversation. Those teachers and those education people on first nations reserves across this country know best what is needed. There are some examples of schools on reserve that are working in collaboration with provincial governments and with provincial teachers' associations. I think that certainly is a place to start.

I know that in B.C. there is a loose federation of on-reserve schools, some of which do work in coordination, so that it's not just those 300-and-however-many stand-alone schools across the country.

Those are things I suggest, and I think we need to work in concert. That said, I certainly don't have the answers. There could be some expertise you could into from those who are presently working in the education system, and we'd certainly be willing to do that collaboration.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

My final question is for the Conference Board, and Mr. Hodgson. It's related to productivity. I was reading a quick report here by the Library of Parliament for the House of Commons of the United Kingdom. They're talking about productivity. How can we improve productivity through the use of our investments in infrastructure to best effect?

[Glen Hodgson]

Infrastructure investment by the public sector builds a foundation for your entire economy. We're arguably in catch-up mode now. We've probably gone 25 years in this country of chronic under-investment in infrastructure, and that's one of the many contributing factors to a weak productivity growth. As a foundational piece, whether it's our road system, bridges, or ports, all the way across the economy, it really provides a foundation for stronger productivity growth.

[The Chair, Liberal, Wayne Easter]

Mr. McColeman.

[Phil McColeman, Conservative, Brantford—Brant, ON]

I'll yield the first minute or so to Mr. Caron.

[The Chair, Liberal, Wayne Easter]

Go ahead.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

That's greatly appreciated.

Thank you very much.

Mr. Hodgson, there is a big bail-in provision in this bill for bank recapitalization. Did the Conference Board study the bail-in provisions? Knowing that this comes from an international attempt to protect the taxpayer, to protect the banks, to ensure more stability, there are still some worries that eventually, through regulation, deposits could actually be redefined as long-term debt, so that they could be used to come back and save the banks. Could you talk about your perception of this provision and about its advantages and risks for the small-time depositor?

[Glen Hodgson]

Monsieur Caron, I'd love to be able to give you a material answer. Unfortunately, it's not a topic that we've studied in detail.

I've learned that there are certain topics where angels should fear to tread, and so I think that on that one I'd just as soon take a pass. We can either have a conversation bilaterally, or we can identify it as an area that needs deeper research. There clearly are risks in how you build in backstops for your banking system, but it's not something we've examined in detail.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much.

Thank you, Mr. McColeman.

[Phil McColeman, Conservative, Brantford—Brant, ON]

Mr. Hodgson, I want to ask you about a couple of comments you made. You alluded to balanced budgets. The federal budget has no specific commitment to return to a balanced budget and no plan whatsoever, over the short or long term, to balance the budget. Is this the right direction for Canada?

[Glen Hodgson]

First off, I think we probably put too much weight on a balanced budget per se. That's an easy communication tool with the broader public. For an economist, the really important thing is your debt-to-GDP ratio. You're right that the ratio at the end of the budget planning period is pretty much the same as it is at the beginning of the period. We have said this publicly as well. I would have preferred a clear commitment to have a falling debt-to-GDP ratio over time to ensure that we don't have a repeat of the 1970s, 1980s and the early part of the 1990s in this country, when we learned very painful lessons about not having a long-term plan for a fiscal policy. It's a bit of a shortcoming in the budget, which of course could be addressed in future budgets.

[Phil McColeman, Conservative, Brantford—Brant, ON]

You also mentioned the decreasing amounts of money in private investment. I come from a business background, and having owned my own business, I know it's the entrepreneurs, private business individuals, who pay the taxes for the social programs for all the benefits that we have in this country.

What is the long-term perspective if it continues to be the case that private investment continues to invest somewhere other than in Canada?

[Glen Hodgson]

If private investment doesn't grow, if we don't grow our capital base in the private sector, we can't become more competitive and productive down the road. We have clearly been affected by a loss of confidence in our economy. Since about 2010, in fact, we can track the data and see that, year after year, firms are sitting on cash rather than investing. So it is one of those sleeper issues but a really fundamental one for our economy over the coming generation.

[Phil McColeman, Conservative, Brantford—Brant, ON]

You mentioned that 9% of our revenue is going to an expenditure item called debt repayment. That's growing. It's growing not only federally but when we add the provincial debt onto the national debt, we find that the debt-to-GDP ratios are amazingly high compared to OECD countries.

What is your belief about when it's appropriate to reduce that number and not have it as large a percentage as it is today?

[Glen Hodgson]

This is actually a topic I raise at almost every talk I give. Because we are a federation, we have to take the federal debt and actually add the provincial debt, because there is only one taxpayer by province. I don't mean to pick on Quebec, but Quebec has the highest ratio, with a provincial debt burden of 50% of GDP, and our federal level, depending upon how you measure it, is 34%. Combined, that's the same level as the U.K. or France, which are seen as countries with too much debt.

There's a general consensus that at somewhere between 80% and 85% of GDP, capital markets start to pay far too much attention to debt burden, and you may start to lose access to capital. You're certainly going to pay a higher price for it. You have to develop a serious strategy to ensure your debt is under control.

The Americans are there now. As I mentioned, the U.K. and France are. As a federal government, we're a long way from that. We're clearly the best performer in the G-7, but as a federation, we have to be very mindful of what each province is doing with its own debt strategy.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. McColeman and Mr. Hodgson.

I have one point I'd like to raise with Ms. MacKay. It relates to the P.E.I. zones, just so that committee members are aware.

Prince Edward Island is about 250 kilometres long. We have 146,000 people. In my riding, the split between the zones is a place called the Riverdale Road, which is 20 kilometres from the edge of Charlottetown. I have one constituent who is on one side of the Riverdale Road, and the other is on the other side. They both work at the same place, in the seasonal eatery called New Glasgow Lobster Suppers. One barely qualifies for EI and gets a few weeks, and the other one qualifies substantially.

Do I have that summed up right, and would you have any dollar figures on what the difference would be between their access to safety net of the EI system?

[Lori MacKay]

I don't have the dollar amounts. That example is straight across the province.

One of the things I said when this started was that we have people living in Charlottetown who work in a federal government job in Summerside, and we have people living in Summerside working in a federal government job in Charlottetown, and they criss-cross each other on the road.

We have a unique situation in Prince Edward Island where there's no industry, as I said, that creates more work for folks, and there's one area in the province that says you have more access to jobs. Right across the province, we have people working in the same job who live side by side, as you have said. It's everywhere; it's in every industry.

For the seasonal workers in the city of Charlottetown, they got hit in 2012 with a loss of weeks, with a loss of benefits, and then in 2014 they got hit again simply because of where they lived. I would ask for some folks, certainly in the Liberal caucus, to really take a look at why that zone was put in place. It was political in nature, and it's really unfortunate, because it's....

One thing I would like to mention is that the new MP in the Egmont riding has fully supported repealing that zone change, even though every one of his constituents benefit, because he has constituents walking into his office who say, “It's unfair that my fellow Islander is being mistreated, and we want it changed.”

Now having said that, all of the 2012 changes have to be repealed in order for that to happen.

[The Chair, Liberal, Wayne Easter]

I'll have to cut you off there, Ms. MacKay.

I would thank the witnesses for their presentations. We have a little bit of committee business that we have to do. Thank you all for appearing.

We need a motion on the budget for working meals so we can continue to hear witnesses. That budget requested would be $11,500.

[Steven MacKinnon, Liberal, Gatineau, QC]

So moved.

[The Chair, Liberal, Wayne Easter]

Is there any discussion?

(Motion agreed to)

There's one thing I should mention for tomorrow. Tomorrow's meeting was scheduled from 3:30 until 6:30. There will be remarks in the House, an apology for the Komagata Maru incident. The whips have agreed to move committees back from 3:30 to 4. That will mean that our meeting tomorrow won't start until 4, instead of 3:30. I expect that all the leaders will speak. I'm not 100% sure of that, but I do know that the whips agreed.

Are we in agreement on that change?

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Are we still suspending at 6:30?