Finance Committee on May 14th, 2019

[Michèle Biss, Policy Director and Human Rights Lawyer, Canada Without Poverty]

Thank you.

Good morning and thank you for the opportunity to address this committee. My name is Michèle Biss and I am the Policy Director and Human Rights Lawyer at Canada Without Poverty.

For those who are not aware of our organization, CWP is a non-partisan, not-for-profit and charitable organization dedicated to ending poverty in Canada. For nearly 50 years, CWP has been championing the human rights of individuals experiencing poverty, and for our entire existence, our board of directors has been composed entirely of people with a lived experience of poverty.

I will begin at the outset by stating that CWP has read the comments of my colleague Leilani Farha, the UN special rapporteur on the right to housing, and we wholeheartedly support her comments. The national housing strategy act, if inclusive of amendments proposed by civil society last week, presents a historic opportunity to make an incredible impact on some of the most marginalized in this country.

However, this afternoon I will focus my comments on the poverty reduction act, within division 20 of part 4 of the budget implementation act. This legislation comes at a critical moment in Canada's history. It is the legislation that will guide all laws, policies and programs for millions of people in this country who make daily decisions about whether to pay their hydro bill or put food on the table. We must get this right.

While CWP supports that Canada's first poverty reduction strategy will in fact be secured in legislation, we have serious concerns about whether this section truly adheres to and implements Canada's international human rights obligations.

As this committee is no doubt aware, after decades of advocacy, the poverty reduction act was tabled originally in November 2018 by the Honourable Minister Jean-Yves Duclos. ln response to the legislation, along with our partners at Citizens for Public Justice and Campaign 2000, we organized an open letter with recommendations for the legislation. I believe it is important for this committee to know that despite the fact that this open letter was signed by over 500 organizations and individuals—including the Canadian Council of Churches, ACORN Canada, Oxfam Canada and the Canadian Women's Foundation—none of these recommendations were reflected when the bill was lifted word for word into the budget implementation act.

I urge members of this committee to consider recommendations brought forward on this critical legislation by CWP and hundreds of other stakeholders. In particular, we recommend that the legislation be amended to place Canada as a leading country in the implementation of the sustainable development goals by committing to the spirit of SDG 1, which is to end poverty. ln its current form, the goal of the legislation is to reduce poverty by 50% by 2030. The reality is that when we commit to only reducing poverty, we create opportunity for some, but not all, especially those who are the most marginalized.

Two, the legislation and accompanying regulations must recognize the limitations of the methodology behind Canada's new official poverty line, the market basket measure. This poverty line will be used to establish eligibility for programs, meaning that it carries significant weight. Statistics Canada must be mandated to understand that it too has a role in implementing our human rights obligations to ensure that we have an accurate methodology that truly leaves no one behind.

Three, the legislation and accompanying regulations must ensure that the national advisory council on poverty can adequately implement the progressive realization of economic and social rights. Concretely, the council must be mandated as independent, given authority to make recommendations and to require remedial action for compliance with the rights of people living in poverty, and a sufficient budget to fulfill its mandate.

Four, we recommend that the committee recommend to amend proposed section 11, which arbitrarily authorizes the dissolution of the council once poverty has been reduced by 50% of 2015 levels. As has been noted many times by civil society, this is highly problematic and it, in fact, demonstrates a complete disregard for the other 50% of people living in poverty. It is, in fact, an excellent example of why Canada cannot merely strive to reduce poverty. We must endeavour within our goals to end it.

Last, the government must commit to working in partnership with indigenous governments to co-develop initiatives to ensure accountability and implementation of remedies for the distinctive barriers that are faced by first nations, Métis and Inuit persons living in poverty.

I look forward to answering questions in this regard.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Biss.

We have four individuals in the next stream of witnesses.

We'll start with Mr. Corak, Professor of Economics at the University of Ottawa.

[Dr. Miles Corak, Professor of Economics, University of Ottawa, As an Individual]

Thank you, Chair.

Hello, members.

I was both honoured and humbled to be part of the deputy minister's staff during 2017, supporting Minister Duclos' consultations and efforts in developing the poverty reduction strategy. This is a historic piece of legislation because it establishes an official poverty line, because it articulates a vision for lowering poverty by setting ambitious yet attainable targets, and because it offers a set of meaningful and measurable indicators that can be used to monitor progress through a national advisory council.

The decision to adopt what Statistics Canada calls the market basket measure as the official income poverty indicator came about through extensive discussion with provinces and municipalities and reviews of their many poverty reduction strategies, through consultations with stakeholders and social policy experts but, most important, through a series of round tables and in-depth interviews with people who have a lived experience of poverty in communities spanning the country.

The market basket measure is the most appropriate indicator to use as an official poverty line because it most accurately captures regional variations and affordability of clothing and footwear, of transportation, of nutritious food, of shelter and clothing, and of other goods and services essential to a basic standard of living. This is meaningful to Canadians in a way that the other available measures are not, and it is appropriate for the purposes at hand—for judging the progress a current government has made by the standards and values of the citizens it represents.

However, it is a statistic that nonetheless has shortcomings, and that is why it is particularly important that the legislation include proposed subsection 7(2), insisting that the official poverty line be regularly reviewed in a non-partisan way by Statistics Canada. This review should be understood to afford the opportunity not only to update the contents of the basket but also to address a host of other limitations building upon the precedent set in the last review of the MBM in 2010.

The official poverty line should be understood only as a headline indicator of monetary poverty and, therefore, an incomplete indicator of the many related concerns of Canadians, whether poor or not. This is why the bill puts forward three sets of four complementary indicators, each covering an important concern.

The first set, referred to as the dignity pillar, supports the official poverty line by putting a focus on the poorest of the poor. It includes an indicator of deep income poverty, of food insecurity, of core housing needs and homelessness, and of unmet health needs. These are most closely tied to the fundamental human rights we all hold. We can judge progress in the official poverty rate only when the lot of the least advantaged, those prone to experiencing long-term poverty, also progresses.

The second suite, called the opportunity pillar, is a suite of indicators of social inclusion and upward movement out of poverty. Similarly, the resilience pillar is a set intended to measure the risk of falling into poverty. In my view, there is still currently some incoherence in some of the statistics proposed in this last pillar, but it is encouraging that the legislation offers the flexibility for revision in proposed subsection 7(2).

The bill proposes two targets: an intermediate target, with poverty being 20% lower in 2020 than it was in 2015, and a longer-term target with it being 50% lower in 2030. The bill states that progress in poverty reduction will contribute to Canada meeting the UN sustainable development goals. SDG 1 is no poverty, and the first two specific targets associated with this goal are to eradicate extreme poverty by 2030 and, by 2030, “reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions”.

If the electoral mandate of a government is roughly five years, then if each successive government committed to lowering the poverty rate prevailing at the onset of its mandate by 20% over the course of its term, the official poverty rate would fall from 12% in 2015 to 9.7% in 2020, 7.7% in 2025 and 6.1% by 2030, roughly half of the 2015 rate.

The successive repetition of this intermediate goal is the implicit contract this bill offers future governments. In proposing the set of targets in proposed section 6 of the bill, the government is making good on its international commitments, offering a national definition of poverty and seeking to cut it in half.

My regret is that the bill does not speak as clearly about extreme poverty. The indicator of deep poverty in the dignity pillar can be used as a national definition of what extreme poverty would mean in the Canadian context. Targeting it would ensure that progress in reducing the official poverty rate can only be celebrated if it is accompanied by progress in extreme poverty.

The deep poverty indicator is an important complement to the official targets because it prevents governments from seeking to lower poverty by simply supporting those households just below the poverty line. After all, the official poverty rate could be lowered by transferring resources from the very poor to the near poor, a perverse sense of progress.

Accordingly, impartial and independent advice on how to continually improve measurement, set priorities and monitor and interpret progress is an important part of this bill and generally this way of thinking about public policy.

The proposed national advisory council is an essential mechanism in promoting a transparent conversation with Canadians about the progress that is made and about the gaps that remain to be filled. It is necessary, but not sufficient. I hope that the council interprets its functions, particularly in proposed paragraph 10(b), as supporting citizen engagement, not simply advising a minister.

Ultimately, the staying power of this legislation will reflect an implicit contract between successive governments, one ultimately enforced through a transparent and ongoing conversation between Canadians, their representatives and their advocates in a way that makes poverty indicators as closely watched as the other social and economic goals this country has set for itself.

This bill is a historic step forward in Canadian social policy. As an academic who has spent the better part of three decades studying and writing about the measurement of poverty both in Canada and in other rich countries, as a former consultant with UNICEF who has reviewed and monitored progress towards achieving past UN poverty reduction targets, but most importantly, as an engaged citizen whose family has experienced the needless indignities of poverty, I give this legislation my unreserved support.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Corak.

We'll now turn to the United Nations Special Rapporteur on the Right to Housing, Ms. Farha.

[Leilani Farha, United Nations Special Rapporteur on the Right to Housing, As an Individual]

Good afternoon and thank you.

I am Leilani Farha, the United Nations Special Rapporteur on the Right to Housing. I was appointed to this position by the UN Human Rights Council in 2014. In this capacity, my role is to monitor and assess the enjoyment and implementation of the right to housing in countries around the world. I often provide technical assistance to governments with respect to the drafting and implementation of law and policy related to the right to housing. I have done so in Egypt, France, Chile, India, Spain and Ireland, among many other countries and cities.

I thank the committee for providing me with an opportunity to appear before you. My comments today will be brief and will focus on the proposed national housing strategy act. I have been in conversation with Minister Duclos' office, with Parliamentary Secretary Adam Vaughan, as well as with CMHC to some degree as this legislation has taken shape.

Let me tell you a little about my history with this legislation.

In May 2017, I issued a formal communication, called an “allegation letter”, to the Government of Canada expressing my concerns regarding the alarming rates of homelessness in this country, which I note persist today, as well as the lack of a national housing strategy based in human rights. Subsequently, in November 2017, the government responded by introducing its rights-based national housing strategy.

In July 2018, I was compelled to write a follow-up letter to the Government of Canada expressing my concern regarding two matters: first, that while a rights-based national housing strategy had been adopted, the government appeared to be reluctant to recognize the right to housing in legislation; and second, the government appeared to be reluctant to ensure access to effective remedies through which rights holders could hold the government accountable to the obligation to progressively realize the right to housing. I indicated at that time that this would put the Government of Canada at odds with its international human rights obligations.

In April of this year, the government wrote to assure me that my concerns were being addressed through Bill C-97.

Unfortunately, in its current form, Bill C-97 does not fully address my concerns. In my opinion, amendments are required.

The proposed national housing strategy act would make a policy commitment to the progressive realization of the right to housing consistent with the International Covenant on Economic, Social and Cultural Rights. It would create an independent housing advocate supported by the Canadian Human Rights Commission. It would establish a national housing council with the explicit inclusion of people with lived experience of homelessness and inadequate housing, and it would commit to ensuring participation of affected communities. These developments are very positive and I commend their inclusion in the NHSA, but more needs to be done if Canada wants to comply with its international human rights obligations and become a model for other governments.

I understand that last week representatives from civil society provided you with an overview of amendments to the act that would be required to bring Canada in compliance with its international human rights obligations. I concur with those submissions and I reiterate them as follows.

First, the NHSA must include a clear articulation that housing is a fundamental human right.

Second, the government's implementation of the progressive realization of the right to housing must be monitored. The housing council could play a role in that regard.

Third, the housing advocate must be able to receive and investigate petitions that identify systemic housing rights issues and make specific recommendations to which the minister, Minister Duclos in this instance, and the future minister, must respond.

Fourth, the legislation must establish a procedure for the housing advocate to refer important systemic housing rights issues to public hearings before a panel, ensuring affected groups have a voice. The panel's recommendations must be considered by the minister.

These proposed amendments are by no means the high-water mark of the right to housing. Other jurisdictions offer more protections and accountability. However, these amendments are creative and responsive to the Canadian context and consistent with Canada's human rights obligations.

There is no reason to be fearful of legislation that embraces Canada's human rights obligations. It is now well understood internationally that alongside climate change, housing is the key issue of our times. The world is experiencing a housing crisis, and Canada is in the thick of it. One need only walk down the streets of Toronto, Vancouver or even Ottawa to know it. It is now well-established that only an approach based in human rights will achieve the housing outcomes I know this government is keen to reach.

I hope that amendments such as those proposed in my submissions and those of others last week will be tabled and adopted by this committee and that I might be able to share Canada's achievement on the world stage.

Thank you, and I'm happy to take any questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Farha.

No stranger to this committee or to Ottawa, is Jack Mintz, President's Fellow, School of Public Policy, University of Calgary.

Welcome, Mr. Mintz.

[Dr. Jack Mintz, President's Fellow, School of Public Policy, University of Calgary, As an Individual]

Thank you very much, Mr. Chairman. This is a real smorgasbord of different topics, but I guess that's what you'd expect with an omnibus bill like Bill C-97.

Thank you very much for your invitation to speak about Bill C-97, an act to implement certain provisions related to the budget. I will specifically comment on the tax provisions.

To begin, a number of measures introduced in the budget are appropriate from the point of view of addressing some specific problem areas of the tax structure, and I won't go into those. Some are initiatives that I want to applaud, particularly the tax credit to assist Canadians with training costs.

In this day and age, with rapidly evolving technologies, some of them disruptive to specific sectors of the labour market, a focus on training is helpful to address. The good thing about a tax credit such as this, or at least some help in some form, which could be a grant instead of a tax credit, is that it nudges people to think about saving for training costs. Of course, it's going to have to be carefully monitored and carefully put into place because there could be a lot of wastage involved with that if one's not careful.

However, what I wish to discuss is the plethora of new credits, accelerated cost reductions and other forms of targeted assistance in this and previous budgets. I have seen that more harm than good is done with a tax system increasingly looking like Swiss cheese. In particular, tax preferences for investments in manufacturing, clean technologies, mineral exploration and the purchase of housing and electric vehicles in this budget, added to past preferences, raise several well-known issues about the effectiveness of these various policies.

First, governments trying to pick winners often end up supporting losers. By favouring some activities over others, the allocation of resources in the economy is distorted, resulting in lower incomes and productivity.

Second, targeted incentives might generate some additional activity, but they also reward activities that were already planned. This undermines the cost effectiveness of the incentive, and in many cases leads to little new activity.

Third, incentives can only be used if the household or business is paying taxes. If taxpayers cannot use the credit, it is often of little value unless the credit is made refundable, enabling the taxpayer to effectively receive a grant. An important question, though, is whether it is better to provide subsidies as grants or refundable tax credits. There's a long discussion about the advantages and disadvantages of grants versus credits.

Fourth, tax credits, accelerated depreciation and other tax preferences push some companies and higher-income individuals into positions whereby they are no longer paying taxes. Taxpayers look to shift their deductions or credits to others through complicated planning procedures. Governments then try to stop so-called loopholes that are caused by their own policies. The tax systems become increasingly unstable with new limitations and minimum taxes introduced to claw back the incentives.

Fifth, targeted incentives to producers also cause great demand for tax-assisted goods and services, blunting the incentives as prices or input costs rise. In other words, the tax incentives might look politically good but basically make the suppliers of the products richer without encouraging the activity they were intended to support.

My favourite example of that was the Quebec tax holiday for a few buildings in Montreal that effectively just led to higher rents in the buildings as opposed to really helping startup businesses. In fact, it led to a lot of angry landlords in other buildings that didn't get the same incentive.

Sixth, someone has to pay for the tax incentives, today's taxpayers or future taxpayers, as a result of higher deficits.

In my careers, I participated in two business tax reforms—the Honourable Michael Wilson's budget in May 1985 and the Right Honourable Paul Martin's business tax reform panel in 1996 and 1997. Both reforms had to deal with a non-competitive tax system in which tax rates became too high, discouraging successful activities. Past policies that led to the introduction of numerous tax incentives undermined the tax system, which eventually led to the only sensible reform of reducing tax rates and removing incentives.

Did the reforms help the economy? I would suggest that has been the case based on various economic studies.

Many of you might have read my critical comments on the adoption of accelerated depreciation in November 2018 and contained in Bill C-97. I believe it was a policy error for the reasons given above. As Philip and I have shown in a recent Canadian Tax Journal article—which I sent to you for members to look at if they wish—the introduction of temporary accelerated depreciation was biased toward machinery investments in certain industries, thereby almost tripling economic distortions.

Bonus depreciation in the U.S., or accelerated depreciation of machinery, has been placed in the United States since 2001 without significant consequence to Canada. A recent study has shown that the policy undermined U.S. growth and, interestingly, increased economic inequality by favouring skilled workers, who benefited most. The same will be true with this budget policy.

Even worse, the accelerated depreciation provisions fail to address the effect of U.S. tax reform that will erode certain business activities and public revenues in Canada. The business tax reform with competitive corporate income tax rates in the United States will attract not just more tangible investment to the United States from Canada but also intangible income and profits. Canada needs a corporate tax reform to protect our tax base and encourage companies to keep profits in Canada. A reduction in corporate income tax rates would also help counter the competitiveness effects of U.S. reform without mucking up our own tax system.

In other words, we should have approached this with a mini-type of corporate tax reform, which by the way, is being pursued by 12 other countries in the world at this point. In fact, Canada sticks out as the only country that responded to U.S. reform with accelerated depreciation. Congratulations, you are unique, at least.

The key point is that we need to get back to the basics of running a good tax system that is efficient, simple and fair. We are straying away from these principles in recent years, which we will regret in the future.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Mintz.

Mr. Waldman, lawyer, welcome.

[Lorne Waldman, Lawyer, As an Individual]

Thank you very much. It's an honour to be asked to appear before the House of Commons committee to speak on the amendments to the Immigration and Refugee Protection Act, which, strangely, are contained in this budget bill.

As I have been asked to speak before the finance committee, I will not comment at length on the serious problems I have from a human rights perspective with the amendments. I will only reiterate that these amendments will replace a fair hearing and appeal before an independent tribunal, the refugee protection division of the Immigration and Refugee Board, with something that is much less fair: a right to apply to an officer, who is not independent, for a risk assessment.

I note, as have my colleagues who appeared before the immigration committee, that the provisions in the legislation as currently drafted do not require an oral hearing, and notwithstanding the assurances by the minister that such a hearing will be provided for by regulations, we have not seen the regulations that will shape the so-called enhanced PRRA.

As this bill is a budget bill, it's important to consider the fiscal implications of the proposal. I for one will certainly admit that the Immigration and Refugee Board has in the past not been the most efficient tribunal. However, with the arrival of the new chairperson, Richard Wex, we have seen a remarkable improvement in productivity at the IRB in its processing of refugee claims.

During fiscal year 2018-19, the IRB finalized 35,000 claims, 10% above its performance target. The board also eliminated the 35,000 so-called legacy claims, those claims that were left hanging when the previous Conservative government did not provide the Immigration and Refugee Board funding to deal with the backlog when it amended the legislation in 2012. More importantly, a new task force has begun triaging less complex cases so that 5,000 cases will have been decided without a hearing before the end of May 2019. These are significant achievements that demonstrate that the Immigration and Refugee Board has the ability to deal with the claims in an efficient manner provided it has the funding to do so.

This budget bill is indeed providing $200 million to the Immigration and Refugee Board to process cases. If this is the case, why is the same budget removing 5% of the claims from the Immigration and Refugee Board to be processed through a separate, parallel process?

We are told that the new PRRA will be an enhanced PRRA, one that will be as fair as the Immigration and Refugee Board hearings and guarantee an oral hearing. We are told that the government plans to hire 80 to 100 new PRRA officers.

It should be noted that, up and until now, PRRA officers have, for the most part, been rendering paper decisions. Oral hearings have been extremely rare. If PRRA officers are going to hold oral hearings in almost every case, they'll have to hold thousands of hearings. New facilities will have to be organized. PRRA interviews, which had not been recorded, will now have to be recorded. There is no registry to schedule hearings. PRRA officers do not have the sophisticated support and infrastructure that exists at the Immigration and Refugee Board.

We know that the new PRRA will have to comply with the principles of fundamental justice if it's going to be the main decision-making process for refugees, so there will be a right to counsel, a right to disclosure and a right to know and meet the case. This will all result in new needs for new infrastructure for a new process. As a result, we have to ask: Why is the government creating a parallel hearing process just when the Immigration and Refugee Board has finally proven its ability to operate efficiently and when it has finally been provided the funding to ensure that it can handle the projected caseload?

I should also warn members of the committee that having dealt with hundreds of PRRA applications over many years, I can recall that prior to 2013 when all persons were entitled to a PRRA prior to deportation, the PRRA process became extremely backlogged so that there were often cases that were delayed for years as a result of people waiting for a pre-removal risk assessment.

There is no doubt that replacing the refugee protection division with the PRRA will be a significant waste of taxpayers' money. If PRRA officers are going to become a parallel tribunal, replacing the refugee protection division in a large number of cases, the government is going to have to spend a great deal of money to create a new infrastructure, with a new registry and new hearing rooms.

I want to comment briefly on something that was mentioned in the previous session about the support of the UNHCR. I had a lengthy conversation with the esteemed representative of the UNHCR in Canada about his support. All I can suggest to you is that, unfortunately, it's my view that the esteemed delegate really doesn't fully appreciate how the PRRA works. I can say that having represented through my office, where we have 10 lawyers, hundreds of PRRA applicants and having judicially reviewed dozens of PRRA decisions, I'm pretty well aware of how the PRRA operates and I can assure you that it is not as fair a process as the refugee protection division. My assumption is that the esteemed delegate of the UNHCR, unfortunately, really doesn't fully appreciate how the PRRA process has worked in the past.

Obviously, the promises that have been made in terms of what will be in the regulations are not promises that we can hold anyone to, because we haven't yet seen the regulations.

In terms of the suggestion that the U.S. is a country that respects the rule of law, I can only say that having seen the evidence of how refugee claimants are treated in the U.S., how they are subject to arbitrary detention over lengthy periods of time, and having seen some of the reforms brought in by the Trump administration that undermine the rights of many people to claim refugee status, I really sincerely doubt that the U.S. is a safe place for refugees at the present time. Even if it's true that ultimately the rule of law will be respected, people will end up spending months or years in detention while their cases go through the courts.

In conclusion, members of the committee, this ill-conceived amendment will deprive refugees of rights without any practical benefit. I predict the PRRA process will prove less efficient than the Immigration and Refugee Board and will cost millions of dollars of taxpayers' money to implement. As members of the finance committee, you should ask the minister why he's proposing to spend taxpayers' dollars so recklessly in the budget bill to proceed with an amendment that will deprive refugees of all the rights that they get at the Immigration and Refugee Board and replace them with a less-fair alternative that will cost millions of dollars to implement.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

We'll go to five-minute rounds. Mr. McLeod is first up. Then we'll go over to Mr. Richards.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you.

I have a couple of questions, first of all to the United Nations rapporteur.

I really appreciated hearing that you have identified that one of the key issues facing our times is climate change. I represent the Northwest Territories. The north is seeing the changes happen in that part of the world like nowhere else. Normally, we would see 20 forest fires a year. Two weeks since the snow melted, we're at seven already. We expect a very strong season for fires.

Housing is a big issue for us. It's probably higher there than anywhere else. We have the second-highest core need in housing in the country. It leads to other social issues. We have a growing suicide rate, the second highest in the country. We have the highest murder rate in the country. We know the studies show that, if we can solve our housing issues, we would solve at least 50% of our social issues. It's something that we really need to address.

I had to smile when you said that, in order to comply, you had to include monitoring. That's what we say as indigenous people on the issue of reconciliation: We need agencies, organizations, independent watchdogs to monitor. I guess some of us don't trust governments to do what they claim they are going to do. Oversight is something we certainly advocate for.

I didn't hear you say anything about the need in our strategies to have a special focus on indigenous housing. Do you think it's important that we have an indigenous housing strategy attached as part of what we're doing here on the issue of housing and the right to housing?

[Leilani Farha]

Thanks for your comments and your question.

I'm deeply concerned about the state of housing and homelessness for indigenous peoples in this country. It's completely unacceptable, so yes, of course, there should be both: a separate strategy for indigenous peoples and housing, both urban and non-urban, but also an integrated strategy. The existing strategy should have integrated pieces into it.

My next report to the UN General Assembly, which I'm in the midst of crafting now, in fact, is on indigenous peoples and the right to housing. There is actually scant literature and research, especially from a human rights place, on this topic at a global level. I hope to be able to contribute to that. I hope that my report will help contribute to what happens here on the ground in Canada.

Thanks.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you for that.

I look forward to your report. I think it's an issue that we really have to get our minds wrapped around. We have to certainly have indigenous governments be in charge of programs such as indigenous housing, and not have other governments doing it for them.

My next question is to Michèle Biss on the poverty issue, the poverty reduction act.

As I said, I'm from the north. We have a very high cost of living and the issue of poverty is huge for us. It's really amazing that we, in the north, live in a land that's so rich in resources yet we're facing such extreme poverty.

There are certainly a lot of things that I could point to, but I find the act doesn't talk about the economic side of it. For us, in the north, especially in our small aboriginal communities, we talk about the ability to have a good education and get a good job as our way forward. In our indigenous communities we need economic reconciliation. We can't move forward unless we have that.

Would it be fair to say that there should be a specific focus, I wanted to say for the north, but maybe towards indigenous people? Why do we have 150,000 unemployed indigenous people in western Canada and the north, while there are opportunities, especially for us in the north, for mines and things of that nature? You said it's a distinctive barrier. I think that's the term you used.

Would you maybe just respond to that question? Should there be a focus on certain parts of the country, or on populations even?

[Michèle Biss]

That's a really important point. I have done some travelling in the territories and visited with a number of folks living in poverty. Seeing first-hand the housing insecurity and the food insecurity in northern Canada, in the Northwest Territories, is shocking. It is shocking.

There is no question the poverty strategy needs to have a focus on indigenous communities, and specifically on the north. What's interesting about the poverty reduction legislation...and I will give the market basket measure some credit in this respect. The market basket measure does allow us to create a line of measurement across different regions of the country. That is with the caveat that we don't yet have a measurement for northern Canada. Statistics Canada is still in the process of developing the methodology for those numbers. In fact, when we saw the announcement from the government a couple of month ago that poverty has dropped so dramatically, we don't have a methodology for the market basket measure yet in northern Canada so it's not taking those groups into account.

One of the points I want to make here, to make very clear, is that this is why this human rights approach and this accountability with measurement tools are so critical. It's so that we can make sure that indigenous persons in the north are made a focus of the strategy moving forward and there's some independence in the way we measure our progress.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

We'll go to Mr. Richards, and then over to Mr. Dusseault.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Thanks.

Mr. Mintz, I wanted to ask you a couple of questions.

In response to the budget when it was introduced in March, you wrote an article in the Financial Post entitled “A budget of massive spending and not one dollar helping competitiveness.” The comment you made in that article was “What is more interesting is what is not in the budget.”

I wondered if you wanted to elaborate on that for us here at the committee.

[Dr. Jack Mintz]

I think the biggest issue facing Canada when talking about competitiveness—and I don't want to overplay it too much—is that we have a number of disadvantages as a country that are natural. Our relatively small population base is spread over a big geography along the U.S. border, so we don't have depth of markets, except for maybe the GTA being the most deep. We have a cold climate. Historically, cold climates don't attract a lot of people and that's still true today.

As a result, what we have to do is to try to have an uneven playing field, where we try to draw businesses here, and I think we have had a very successful set of strategies over the past several decades, including free trade agreements, even recent ones that have been completed. Especially now that we've established—or are trying to have—access to the U.S. market and are trying to maintain that access, we still need to do something to make it appealing for businesses to come to Canada to serve the North American market if we're going to be successful. This is a view that I've had for many years, and going back decades, actually.

What happened over the years since 2000...and I have to admit that the report we did for Paul Martin back in 1996-97 on business tax reform really led to a lot of the changes that happened after 2000. However, what happened after 2000, where we created this very significant business tax advantage for Canada, I think was very important, because it helped offset some of the negatives that Canada has. Of course, we have other negatives, such as regulation—it's well known that it's hard to get things built in this country—and a number of other things, so the business tax advantage was really important.

Along came U.S. tax reform. U.S. tax reform not only eliminated the business tax advantage we had for tangible investment, but it brought in a number of major changes to the U.S. tax system, which included tightening up on interest deductions and loss deductions, and brought in a new base erosion anti-avoidance tax that effectively hit foreign companies, such as Canadian companies investing in the U.S. They could only avoid this tax by making sure they had more taxable income in the United States. There were also a number of other provisions, including—most important—a concessionary rate for intangible income, which includes intellectual property, marketing, etc.

What's happening now is that Canadian businesses are restructuring. They are putting more intangible income activities into the United States, such as sales forces. At one time, because we had a 27% corporate income tax rate and the U.S. rate was 39%, it was much better to put the sales forces in Canada. Now, it's going the other way. That's just one example. There are a number of functions that are moving into the United States from Canada, and I can tell you this because of the connection I have with EY as a national policy adviser. I get to hear a lot of things that are happening in the private sector right now.

More a concern that I have is the potential base erosion in Canada. The IMF estimated that U.S. companies operating in Canada will probably shift general administrative expenses and interest expenses into Canada, resulting in about a 10% loss in the corporate tax base of those companies. Many of the Canadian companies that I have talked to are already looking to shift more income into the United States and putting expenses into Canada, so governments are going to be finding that their corporate tax base is going to be eroded. We want to pay for poverty reduction and a number of other important things, but we need the revenues to support that.

Other countries have been feeling that, too, and in fact, 12 countries.... There's a paper that I wrote with Phil Bazel in Australia, where we put together what's been happening around the world over just the past two years with corporate tax changes. Every one of these 12 countries has been lowering corporate rates and tightening up deductions.

I think that should be our response. It doesn't mean a loss in corporate revenues. In fact, it could mean the opposite. It could mean actually a gain in corporate revenues, but it's really a way of responding to this U.S. reform. We're the country closest to the U.S., heavily integrated with the U.S., and instead, we picked probably one of the worst items in the U.S. tax reform, which was expensing on a temporary basis.

We picked that as our way of responding to U.S. reform. It was a complete failure of policy on the part of Canada. I know that before an election it's tough to do mini tax reforms of this type, so maybe we can do it after an election, but whoever comes to power after the next election really needs to look at these issues because we're going to get side-swiped by this U.S. reform unless we respond.

[The Chair, Liberal, Wayne Easter]

We'll have to end it there.

It's Mr. Dusseault, and then over to Ms. Rudd.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

I want to thank all the witnesses for joining us today.

My first question is for Mr. Waldman.

First, thank you for being here and for your presentation.

According to the government's promises—which remain promises and lip service—it will be a better version of the pre-removal risk assessment. In short, it will be the same process that refugees already go through in the current system.

If that's the government's response, what's the purpose of the improved process? If the purpose is simply to copy the current system, why make a new one?

[Lorne Waldman]

That's precisely our concern. The current pre-removal risk assessment is usually used after someone has already been rejected, so they get a second possibility of a review a year later, if their case is over a year, before removal. It's a paper review done by an officer.

Now the government is telling us that they're going to provide for oral hearings in all cases. The difficulty with that is that the tribunal that is now doing the PRRAs has no experience in doing oral hearings because they're very rare. In our practice, we have 10 lawyers representing hundreds of PRRA applicants. In the last two years, I think we probably had one oral hearing, so it's extremely rare. The officers don't have the practice or the experience. There are no facilities, so they're going to have to create a whole new system, a whole new infrastructure, if they're going to do what they're saying, which is to have this so-called enhanced PRRA.

We've just been through a process with the Immigration and Refugee Board. There is $200 million in the current budget to allow the board to process cases. The board is finally managing to process cases efficiently, yet now they're going to have to spend millions of dollars on a separate parallel process, which will still not be as fair as the current refugee protection division. The officers who are PRRA officers don't have the same level of training or experience, and they're not independent. This is a really ill-conceived measure from all sorts of points of views, but specifically, given that this is a budget, as an expenditure in our budget.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

We're trying to reassure the public by saying that we'll copy the existing process, when we could simply keep the status quo.

Ms. Biss, I have one question about poverty reduction and another about housing.

Two new pieces of legislation are expected, of course. However, unfortunately, they're totally unambitious. They're a mistake on the part of the minister, especially since, as you said, there was a substantial response to the first poverty reduction bill introduced. Over 500 organizations had written letters recommending improvements, but these letters were totally ignored by the parliamentary secretary. Bill C-97 proposes a copy and paste of the legislation, when we could have responded to the recommendations and improved it.

One recommendation provided by some groups, including the Collectif pour un Québec sans pauvreté last week, was to change the proposed poverty line measure, which is currently the market basket measure. Is that your position as well? If so, for what other measure would you change the market basket measure? If not, would the idea simply be to improve transparency with respect to Statistics Canada's publication of the poverty line, the market basket measure and its composition, and give the agency all the independence needed to establish this measure?

[Michèle Biss]

Thank you for that question.

I'll start with the market basket measure. I will say that we've been working with many of our colleagues in Quebec. We share some of those concerns about the market basket measure, in particular with the way that it's being proposed as a panacea to measure poverty. The reality is that any measurement you pick is going to be messy. It's not an easy process, but what's so important is that we have multiple different indicators and that we're aware that our narrative with those indicators is always that they need to complement one another.

I will say, having been part of many consultations around the market basket measure, that I have serious concerns that we have not yet seen a “what we heard” report on that market basket measure consultation. What I am hearing publicly is very different from the concerns that I heard raised in those rooms, concerns that this is in fact going to be misused, but used nonetheless, by a number of organizations that are providing direct services. If we don't include specific people, we're going to see those who might not follow a very particular form of poverty—for example, single mothers, other marginalized groups—not qualifying for programs.

This market basket measure might seem like some minutia, but the reality is that how we measure poverty is going to matter so much for the way that we are able to strive to reach these programs.

On your point about the ambitiousness of the target, to be honest, I think there's been some misunderstanding with this government about how to set targets for a poverty strategy. I heard a lot of discourse around the need to set forward realistic targets, but I would argue that if you look at this internationally that's not the way to do it from a human rights perspective. In fact, that's not the way that a number of successful countries have done it.

The way you build in your targets is that you build the human rights goal—to end poverty—in line with the sustainable development goals, and then you work in your short-term goals, your sub-targets. You work through progressive realization to meet your larger goals. That's why I have some concerns about this conversation about realistic targets, because we should be setting our sights on no poverty. There's no question there. It's “end poverty”.

I will just add in one quick point. I will say—

[The Chair, Liberal, Wayne Easter]

We're going to have to end it there, Ms. Biss, as we're actually about two minutes over.

We'll go to Ms. Rudd and then back to Mr. Poilievre.

[Kim Rudd, Liberal, Northumberland—Peterborough South, ON]

Thanks to all of you for coming. We are shortened down to four-minute rounds, so I'd appreciate as succinct a response as you can provide.

Mr. Corak, I found your testimony quite interesting. You were part of the consultations on the process that Minister Duclos undertook, which we're talking about here today. You talked about the market basket measure being able to address some of what I'll call the regional realities.

We've heard Ms. Biss counter some of those discussions, and certainly others have as well. Coming from a rural riding with a very unique set of circumstances—I think we'd all agree that we have unique sets of circumstances—I see it as one of the things that provides the most opportunity for recognizing those regional disparities, if you will. I wonder if you could talk a little more about it.

[Dr. Miles Corak]

The market basket measure was first developed in the late 1990s, in part having to do with a certain amount of frustration with the other existing measures. For example, the low-income cut-off, which is often called LICO, had very coarse regional divisions. For example, a city such as Quebec City, which had a population at that time of over 400,000, was lumped in with Toronto. Those measures also weren't meaningful in the sense that they were mathematical constructs that weren't very transparent and didn't speak in a meaningful way to Canadians.

At that time, what was then called HRSD was tasked to make a more meaningful basket, working with provincial and territorial social ministries to set the basket. Now, the number of regions is up to 50. We should note that only just recently has there been a push to the north, so it is ironic that the communities most in need are sort of out of scope for this StatsCan survey.

The ethic in this bill I think is one of continual data improvement. With 50 communities, each with their own poverty line, we cover rural and urban differences as best we can.