Finance Committee on May 17th, 2016

[The Chair, Liberal, Wayne Easter]

Do you have a quick response?

[Angella MacEwen]

Absolutely.

I think taxes are the price we pay for a fair and healthy society. If we have progressive, fair, transparent taxes, we all benefit. We can always borrow. Borrowing costs are really low right now.

[The Chair, Liberal, Wayne Easter]

Mr. Grewal.

[Raj Grewal, Liberal, Brampton East, ON]

Ms. MacEwen, you spoke about infrastructure funding, so you'll be happy to know that we have repealed the public-private partnership screening on the Building Canada fund. That's a little good news to start.

In your press release on budget 2016, you mentioned the national framework on early learning and child care, for which the budget sets aside $400 million. I want to know if your organization has a framework for how we're going to spend this money or has done research in this area.

[Angella MacEwen]

Yes, we have worked with a coalition of child care workers and providers about where we think it would be best spent and how we would like to do that. That coalition has a framework.

[Raj Grewal, Liberal, Brampton East, ON]

Could you send that document to the clerk so we could have it for review?

[Angella MacEwen]

Absolutely.

[Raj Grewal, Liberal, Brampton East, ON]

The court challenges program was highlighted by your organization as an important service that was cut by the previous government. Could you explain how often or by how many Canadians this program was used on average prior to being cut?

[Angella MacEwen]

That's not my area of expertise. I'm sorry, I don't know.

I do know that it's valuable. and I can send the committee a copy of our research on that.

[Raj Grewal, Liberal, Brampton East, ON]

That's perfect. Thank you.

My next question is moot, based on that point, because I was going to see the correlation between increasing the funding and the extent to which the program was overadopted. Nonetheless, if you could send us those statistics that would be great.

Mr. Chair, I will be giving Mr. Champagne some of my time. If there's time left over I'll come back.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chair.

Thank you all for your time here today.

I'll start with some questions for the Fonds de solidarité des travailleurs du Québec representatives.

I know that my colleague, Mr. Caron, also studied the impact of the credit. How many workers benefit from your investment program? If I am not mistaken, I believe it is around 600,000. I would like to understand the impact that the fund has on investors as well as on the companies it invests in. Many of our discussions here in committee are about support for small and medium-sized businesses. This issue is of interest to all members because we know that Canada's economy relies heavily on SMEs.

I would like to understand your role. First, how many contributors do you have, and what do you do for them? Second, what is your role in the investment world and in supporting SMEs in this country?

[Gaétan Morin]

We play an important role in enabling members of the middle class to save money. As I said earlier, our shareholders are not rich and famous. They really are middle-class people. A big part of what we do is educating people and helping them invest for the long term, for retirement.

Many of our 630,000 shareholders made their first RRSP contributions through the Fonds de solidarité. Our Quebec-wide network of volunteers helps us raise Quebeckers' awareness. We really focus on making sure that our volunteers, who are in workplaces, are near potential shareholders. Raising awareness is important, but what counts in the end is the proximity of those who encourage others to save.

As I also said earlier, the people who contributed to RRSPs for the first time—I believe it's more than 60% of them—continued to do so in other financial institutions. The tax credit was certainly advantageous for labour-sponsored funds, but it also prompted Canadians to invest with other financial institutions for retirement.

With respect to the effect of that, if the tax credit had not been there to encourage those individuals to save the $2,000 or $2,500, I'm not sure that money would have been invested. It would definitely not have been invested in venture capital. According to one study, people would be less likely to save for retirement. That money would probably be spent instead. That's not bad for the Canadian economy, but I think we need to recognize the importance of saving too.

If we were not there to enable people to save with the help of the tax credit, that money would not have flowed to Canadian companies, and certainly not to venture capital. Of the 2,500 companies that have received a Fonds de solidarité investment, 80% are SMEs with fewer than 100 employees.

Our primary mission, our work, is to invest in SMEs, which, may I remind you, have created a lot of jobs in Canada over the past decade.

[The Chair, Liberal, Wayne Easter]

Mr. McColeman, the floor is yours.

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

Mr. Galimberti, I just want to go down the road a little more of your comment on overproduction and surplus, but first let me frame the question.

About a week and a half ago, on a weekend, I met with an owner of a local steel company in my riding in southwestern Ontario. They employ just over 400 individuals and have very good wage structures, as you had mentioned. He was expressing to me the fact, first, anecdotally, that they dealt with four other companies in the Cambridge area. I'm from Brantford, and so this company's in Brantford. He said all those companies were gone.

That leads me to what I want to ask you, what are the prospects in the future? They burn somewhere in the neighbourhood of $80,000 a month worth of natural gas processing the steel. He said that with the cost of electricity; with a projected carbon tax that they're looking at costing, when they break it down by employee, of about $9,000 more overhead a year per employee; and the prospect of additional payroll taxes because of what was mentioned, I think, by another witnesses, including the Ontario pension plan that is being put in place—

[The Chair, Liberal, Wayne Easter]

Mr. McColeman, this is on the federal budget. I'm assuming that you're getting to it.

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

I'm framing the question around a manufacturer who has to deal with these implications—

[The Chair, Liberal, Wayne Easter]

It seems to be about Ontario politics, but let's get to the budget implementation act.

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

I want to ask you in general terms, on the issue of overproduction and surplus that you brought up, and the issues that companies such as this face in your industry, and the impact of these additional costs on businesses, what are you hearing from the people you represent in the industry? What are you hearing, even if it's anecdotal, about the process? Frankly, I walked away feeling rather depressed about the prospect of this company staying in Canada.

[Joseph Galimberti]

I don't want to minimize the challenges facing the domestic industry. A couple of our larger members are currently in CCAA processes. They're doing restructuring for sale. We are optimistic, or they have expressed optimism, that there are viable assets there; that these will be successful sale processes going forward; and that they'll attract investment.

I also don't want to minimize the challenges associated with things like the cap-and-trade program in Ontario. Although there are—and I know this is a federal thing—allowances until the first compliance period in 2020, we don't have clarity beyond the first compliance period or as to the capacity of electricity. These are business uncertainties, and business does not like uncertainty for the purpose of investment.

You talk about the importance of maintaining manufacturing in Canada. If we're going to achieve goals like GHG reduction, Canadians feel it's much more environmentally responsible when you're building something in Canada to use Canadian steel. We benefit from Ontario's green power grid in the province of Ontario specifically. These are all things we need to preserve if we're going to help with global warming.

Also, this goes to what I was saying about the federal infrastructure program. We hope Canadian companies have an opportunity to participate in this. It cannot be lowest-common-denominator sourcing. If governments, writ large, are going to consider costs of carbon or commodities for the purposes of cap and trade or carbon tax, then when they are sourcing green infrastructure projects, they cannot simply go to a lowest-common-denominator procurement strategy.

We hope our producers are going to be able to participate. The amount of money is meaningful, and when you're looking at making an investment in this country, I believe that kind of a program colours it.

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

I'd like to go to Madam Reynolds. You mentioned early in your comments that the tax system is overly complex. Of course, with the implementation bill, we're adding more and more complexity to the system, because we're changing things and adding new requirements for restaurateurs and such in terms of payroll taxes.

In terms of the cost to the average restaurateur, as far as red tape and the things they have to do to run their businesses and comply with government regulations go, do you have any statistics regarding what that cost is as a percentage of their overhead costs?

[Joyce Reynolds]

No. It's cumulative. You have a lot at the municipal level or the local level, and then you have the provincial level and the federal level. Also, what's required provincially could contradict what's required federally. It varies from region to region, so it's really difficult to sort out.

If there is any way it can be simplified...and if there's help to operators in terms of interpreting what the requirements are, that's important, as well.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. McColeman.

Ms. O'Connell, we have about four minutes.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Mr. Parent, I wanted to ask a question with regard to some of the changes you spoke about in your testimony. I looked for the transcripts from our meeting when we had officials testify, but I couldn't find them. They're not prepared yet.

I'm going to be paraphrasing a little bit. I'm just wondering if you watched the testimony by our officials. If you didn't, that's okay.

When we're talking about some of the changes like diminished earning capacity and things along this line, I know you mentioned in your testimony here today that it's a step in the right direction but that you're not quite sure how some of the implementation will be; and I get that.

However, from the officials there was some discussion with regard to things like case assessments and, with this new language, the opportunity to assess individual cases. Again, I'm paraphrasing, because I couldn't find the exact wording. Is moving towards that type of case-by-case assessment, now with the new language, what you and your organization are hearing about from veterans?

[Guy Parent]

Yes, that's a good point. I think that changing the language will facilitate access, assessment, determination. In fact, the allowance was called the permanent impairment allowance before, and it's now called the career impact allowance; yet, when Bill C-55 introduced this particular benefit, it did say that it was to compensate for the loss of capacity to earn for retirement and to progress in the armed forces through the different rank structures. It has nothing to do really with the impairment per se, but with the ability to earn. I think it's probably a lot easier, too, to interpret a situation in a case management context based on someone's capacity to earn rather than the physical deficiencies of that individual.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

When the testimony, the transcripts, come out, I would encourage you to take a look to see if it is going in the direction your organization hopes.