Finance Committee on May 30th, 2016

[Bill Morneau, Liberal, Toronto Centre, ON]

Thank you.

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

Oh, oh!

He said the following:

The lack of clarity involves how long a sustained amount of time is. The second criteria is that you can’t show significant signs of recovery. How we interpret sustain or significant, that is what is up for grabs.

This refers to the conditions that were—

[Bill Morneau, Liberal, Toronto Centre, ON]

It was a trick; the English was a trick.

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

Oh, oh!

I was saying, therefore, that this makes reference, in fact, to the conditions that have been imposed in order to be eligible for this extension. It refers to an unemployment rate that has increased by 2% in a three-month period without any significant signs of recovery in the region. According to him, the definition is arbitrary. Indeed, how would you describe recovery or significant signs of recovery?

Do you not think that a bill should contain clearer, less ambiguous wording?

[Bill Morneau, Liberal, Toronto Centre, ON]

Since part of it was in English, I'll take the liberty of answering in English.

We think the measures were appropriate. We have parts of the country that are experiencing sharp and sustained changes in their situations. The regions we've chosen are the ones that have had the most significant changes in unemployment. At the same time, we recognize that employment insurance is helpful for many other parts of the country, and that's why we've made some changes to allow people to get into the system more rapidly.

I think, as you know, we've also made some changes in the amount of money we're putting in for training so that people, once they get into the system, can also get more access to training dollars.

We think these are the right measures to take at a time when we're experiencing regional differences in our economic situations, with some regions experiencing positive situations; and some regions, as a result of, largely, but not exclusively, changes in the price of oil, experiencing difficult situations. Our view is that we've made significant differences by taking these approaches.

There are other things we're doing that I would encourage you to consider. Lowering taxes for Canadians and adding the Canada child benefit will make a very big increase, especially for those who are the least well off in our society, and it will have a measurable impact on their ability to cope at this time.

Finally, and not least, we hope and expect the investments we're making will allow us to have a more effective long-term growth rate, which will help people in the future.

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

I have another question about employment insurance.

I come from eastern Quebec. Like Atlantic Canada, our economy is largely based on seasonal work. Before, a program allowed for five additional weeks of benefits. This was what was known as the pilot project. It was designed to bridge the gap, that is to say, the period between the end of benefits and the beginning of work, which can be up to 13, 14 or 15 weeks.

This program was eliminated in 2011-12 by the Conservatives. Now, a program is being implemented that is practically the same, except with entirely different criteria. Seasonal workers are being left in the lurch.

In terms of employment insurance, do you have any measures for regions that still rely heavily on seasonal work? I, for one, haven't seen any. Correct me if I'm wrong.

If, in fact, there are none, why has this situation not been addressed?

[Bill Morneau, Liberal, Toronto Centre, ON]

As I mentioned in the previous answer, the change from two-week eligibility to one-week eligibility applies to people going into the employment insurance system across the country, irrespective of what region they're in. In the regions you're referring to, in Quebec and Atlantic Canada, that change applies to them as well. We think that's an important measure because it will allow them to get into the system more rapidly and it will allow them, to the extent they want to do retraining or training for another job, to start doing that training more rapidly.

One of the things we're concerned with is to not have people unemployed for long periods of time, because they lose their skills, and that's why training and retraining are so critically important.

That said, I'll come back to the other measures in our budget, especially for those people who are seasonal workers on low incomes who might be trying to raise a family. The Canada child benefit will have a material impact and a positive impact for their families. The reduction in taxes is likely to apply to a significant percentage of those families. In total, we think we've provided a situation whereby they will be able not only to deal with the challenges of being seasonal workers but they'll also be able to have more income so they can raise their families in this challenging situation.

[The Chair, Liberal, Wayne Easter]

Thank you, Minister.

We will move to Mr. Sorbara for five minutes.

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

Thank you, Mr. Chair. Welcome, Minister, and thank you for your comments and your continuing leadership.

I have to admit that I found your comments on the innovation and infrastructure side refreshing. The ability to move people, goods, services, and information from both rural and urban Canada to where they need to be is crucial for our long-term prosperity. On the innovation front, we need to be part of those ecosystems that exist and form every day. That's where the high-quality, high-paying jobs are, so we are going in the right direction. I'm glad to be part of a government that recognizes that.

What I would like to ask is more of a broad-based question. I've called Bill C-15 “the blueprint after the budget“. What I would like to know is how this begins a major step forward to enhance Canada's long-term growth profile and to strengthen our middle class, while doing so in a fiscally prudent manner.

[Bill Morneau, Liberal, Toronto Centre, ON]

Thank you very much.

Maybe I can spend a minute focusing on our innovation agenda, because as we think about what we need to do in the long term in order to be more effective, it will be about creating a more productive and effective economy.

As I mentioned, we put $800 million in the budget over four years to focus on innovation. As you know, I appointed an economic advisory council to look at how we can focus on growth. That will be an important cornerstone of what we hope to achieve for the future of our country.

We started in the budget with a focus on research and universities. We know that putting $2 billion against universities and specifically around innovation and research at universities will help them to tool up and build the capacity to help with research and innovation.

We also recognize that the only way we're going to be effective as a more innovative economy is if we have quality students coming out of our universities. We recognize that for many families, especially low-income and middle-income families, university tuition is a challenge, so we changed the university grants system so they would have a much improved situation. It was moved from $2,000 to $3,000 for the lowest-income Canadians, which will help a quarter of a million low-income Canadians.

Along with building blocks, helping students, and supporting universities in research, we are now looking at what we can do around our innovation agenda in terms of the enablers for networks and clusters. We are considering whether there are measures we can take that will enable us to be more effective, and we are also specifically considering whether we should be targeting how we create the opportunities in regions and in sectors to make a difference. That's what I'm working on with our advisory council. We are looking forward to making a good, long-term difference for the country.

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

I'll deal with something more specific and maybe a little more obtuse.

Bill C-15 deals with bank recapitalization. I was wondering if you can offer a few comments on how the specific measures in the bill continue to strengthen our banking system while ensuring that depositors remain protected.

[Bill Morneau, Liberal, Toronto Centre, ON]

I can. One of the great exports we have in this country is the Bank of England governor, Mark Carney, who's also the chair of the Financial Stability Board. Internationally it has recommended bail-in procedures for systemically important banks around the world. Other countries have moved forward in this regard. The United States and the United Kingdom have moved forward; I believe most of the EU has moved forward as well, and we've moved forward now on the bail-in regime.

In the very unlikely situation that a Canadian bank is finding itself on uncertain footing, we want to ensure that depositors are not in jeopardy. It protects depositors by allowing for long-term debt to be turned into equity so they can be protected in a difficult situation.

[The Chair, Liberal, Wayne Easter]

Thank you both.

What's your time frame, Mr. Minister? I want to know how much time we have left. Then we can divide it by the numbers and get everybody's question in.

[Bill Morneau, Liberal, Toronto Centre, ON]

I was planning on being here for an hour, and I know I was a little late. If other people are able to stay for the whole hour, I am.

[The Chair, Liberal, Wayne Easter]

All right. We'll cut each person back to about four minutes.

Phil, you've got less. Go ahead.

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

Mr. Chair, we're on the second round. He just got five and I'm getting four.

[The Chair, Liberal, Wayne Easter]

No, no, he was in the first round, and he should have had seven.

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

Thank you for being here, Minister.

I'm concerned for small business in a lot of ways. It's my heritage, what I did before this place. It's on the record that your government promised during the campaign to go ahead with small business tax reductions. Is it fair to have broken that promise to small businesses?

[Bill Morneau, Liberal, Toronto Centre, ON]

Thanks for the question.

We absolutely recognize that small business is a very important part of our economy, that we have a very large number of small businesses across the country, that we have a large number of people employed by small businesses, and we see the critical importance of encouraging small businesses to start and maintain their success.

We looked at the measures that we thought were most likely to be effective both in ensuring tax fairness in our country and ensuring that small businesses could be successful. In our estimation, having a healthy and strong customer class is critically important for small businesses. Small businesses, in order to be successful, need to have the ability to sell their services or products to Canadians, in most cases. For that, we know that reducing taxes on Canadians, providing more money for Canadians through the Canada child benefit, will put them in a better family situation so they will be better able to buy the products and the services provided by small business. In our estimation, that will be positive not only for the economy through the stronger growth rate, which will support small businesses, but will also be specifically better for each family so they can be better prepared.

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

I can debate that, but I don't have the time to debate it with you.

As a previous small business owner, I had an incentive for hiring an extra employee. We might have had 10 employees, and we could get that eleventh employee to grow our business, pay more taxes, and bring people off other programs that were a drain on the government. That has gone as well.

We had the Canadian Convenience Stores Association appear earlier this month, and they said they were told by someone in the finance department that the small business tax cut would be implemented in 2017. Did anyone in your department tell them that?

[Bill Morneau, Liberal, Toronto Centre, ON]

No.

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

Okay. So is the reduction from 10.5% to 9% deferred, or is it cancelled indefinitely?

[Bill Morneau, Liberal, Toronto Centre, ON]

As we said in our budget, we moved forward on the change from 11% down to 10.5%, and at this stage we have deferred any further change in the small business tax rate.

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

So it's “deferred” versus “cancelled indefinitely”. If it's deferred, what year is it deferred to?

[Bill Morneau, Liberal, Toronto Centre, ON]

I have no further information at this time to answer that question. We've decided that at this stage it's deferred, and if there's future information to be provided, we will certainly provide it to you.