Finance Committee on May 30th, 2016

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

Okay, I will take that as the other one: that it is cancelled indefinitely.

Canadians deserve to know what they're getting for the massive borrowing and debt that your government's moving forward with. There was a refusal to release the detailed five-year cost estimates initially, and then they were released based on the PBO coming forward. I'd like to read you a quote of what the PBO said to this committee when they were here, and it's about releasing the models, which is critical for the proper oversight of the budget. It says—

[Bill Morneau, Liberal, Toronto Centre, ON]

Sorry, can I ask you to start that quote again? I apologize.

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

Sure.

I wasn't at the quote yet, but here's what he said. I'll go right to the quote. It says, “I would like to say that the use of models and multipliers is more a question of judgment than details.”

How can we evaluate your judgment if you refuse to tell us how you came up with your economic and job projections in the budget?

This is about job projections, and they would like to know the models and multipliers you used, which they are not able to get from your department.

[Bill Morneau, Liberal, Toronto Centre, ON]

Let me start by saying that you know we're pleased to work together with the parliamentary budget officer, and when they asked us for more information, we provided it within a week. In my estimation, that's appropriate and that's what we did.

In our budget we were able to show that in our estimation the measures that we put in for this fiscal year would increase jobs by 43,000, in the next fiscal year they would increase jobs by 100,000, would grow the economy by 0.5% this year, and would grow it by an additional 1% next year.

What I do know is that the PBO came out and acknowledged that our budget efforts would grow the economy and increase employment in this year and next year. The fact that there are some differences between those economic estimates is to be expected because people will come up with their estimates differently, but the consensus between those two estimates is that they will help us to grow the economy.

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

Are you prepared to share your models with them?

[The Chair, Liberal, Wayne Easter]

You are well over time, Phil.

Ms. O'Connell is next.

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

Thank you, Mr. Chair.

Thank you, Minister.

I want to actually go back to the question that my colleague raised in regard to CPP, understanding that you do have a meeting coming up with your provincial counterparts.

Specifically we heard testimony from one witness in particular that there isn't a dire situation for seniors and retirees in this country. In my riding we're predominantly middle class, quite comfortable, and very lucky, I would say, but when people in my community retire, they tend to then struggle and have to make choices between medication or food because pensions have not increased but costs of everyday things like hydro, water, and property taxes all tend to go up.

In terms of CPP and moving forward with the provinces, what is your take, or what is the department's take, in terms of the conditions and situations that seniors are facing in this country?

[Bill Morneau, Liberal, Toronto Centre, ON]

It's important to not be too dramatic on this subject. We've had a good situation in helping seniors over the last generation in retirement in Canada. If we go back to the 1960s, the situation for seniors in this country was very difficult. We had very high levels of poverty for women, over 60%, and for men it was over 50% levels of poverty, so it was a very difficult situation.

The actions taken at that time around the guaranteed income supplement, old age security, and the Canada pension plan made a difference. They made a real difference so that Canada now has a much lower level of senior poverty. The actions worked. Taking action in advance by putting those programs in place had a long-term impact that made a real difference.

That's where we find ourselves today. We're looking at the situation that we're in, with a continuing level of senior poverty that's not nearly as high—it's more like in the 6% or 7% zone—but it's one that could get more troubling in the future, for two reasons. First of all, there's lower pension plan coverage; second, people are living longer, so they actually have to make the amount that they have stretch out longer. In that situation we want to make sure that we take actions today that are going to help people over the long term.

We're very focused not only on the current situation but also on the future situation. The decisions we make today, I think, will leave a legacy for our children and our grandchildren and ensure that they find themselves in a better situation when they retire than they might be in otherwise. It's for that reason that I'm personally committed, and our government's committed, to enhancing the Canada pension plan in a fully funded way that will enable people to have a more secure retirement in the long term.

That, I think, is the responsible thing for us to do. It will mean that the people who are doing well today can feel that the next generation will be in as good a situation as they are in today. These measures will allow us to continue to work on reducing seniors' poverty over the next few years and also in the long term.

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

Thank you.

Moving a little bit, I recently attended the Council of Europe as a member of a Canadian delegation. One of the urgent debates or current topic debates was on the Panama papers, in particular about international trade agreements with other countries and how the European parliaments and governments need to look at countries that are doing more to deal with tax avoidance and tax evasion. Given the investment in budget 2016 for just that, what are you hearing in the international community in terms of Canada leading the way as a good global partner in dealing with countries that are benefiting from nationals avoiding taxes in their own countries?

[Bill Morneau, Liberal, Toronto Centre, ON]

Thanks.

I think maybe the way to think about this might be in two separate buckets. In our budget we allocated $444 million for the Canada Revenue Agency. Those funds are really intended to allow the Canada Revenue Agency to do better at collecting payments that are due from Canadians and ensuring that people are paying their fair share in our country.

At the G20 there are a number of initiatives that people are working on, and we are an active and a full participant in those discussions on ensuring that globally people are paying taxes where they should be paying taxes. There's an OECD initiative called base erosion and profit shifting that is trying to ensure that companies in particular don't gain revenue and profits in one jurisdiction and shift them to another place that has a lower taxation jurisdiction. We're working as a participant in that initiative.

There's another initiative around common reporting standards, trying to ensure that we know where people are actually moving their money from and that we report that in an efficient way. We will also be working on ensuring that we know who actually owns things in countries, beneficial ownership, so that we have a better sense of who owns entities in order to ensure that the actual owners pay the taxes that are due.

[The Chair, Liberal, Wayne Easter]

Thank you, Minister, and thank you, Ms. O'Connell.

Mr. Liepert is next.

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

Thank you, Mr. Chairman.

First of all, Minister and staff, thank you for being here. It's going to be an awfully long evening for all of us, and I can tell you that it's longer there than it is going to be for each one of us individually.

I really only have one question, but I wanted to get a little clarity first about Mr. MacKinnon's first question around the change in age from 65 to 67 and then 67 to 65. Mr. MacKinnon seemed to indicate that we were talking about CPP, when I think we were in fact only talking about OAS. Is that right?

[Bill Morneau, Liberal, Toronto Centre, ON]

I can't put words in Mr. MacKinnon's mouth—

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

The reason I say that is he mentioned something about the stability of the fund. Really, we're only talking about stability of the fund being the federal treasury, because that's where OAS comes from. Is that correct?

[Bill Morneau, Liberal, Toronto Centre, ON]

That would be correct.

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

Okay, fine. I simply wanted to get that clear.

My question is from a constituent of mine, who is a former pension plan manager, who writes to me and says, “This government talks a lot about making decisions based on evidence and scientific data, yet the finance minister, before being elected, authored a book called The Real Retirement, which contained a compelling analysis of the adequacy and stability of the Canadian pension system and advocated for the retirement age increase from 65 to 67. If you ever get the opportunity to ask the finance minister why he is now doing something different than he advocated for before being elected—”

What should I tell him?

[Bill Morneau, Liberal, Toronto Centre, ON]

Maybe first I can ask you to tell your constituent that I'm happy he or she bought the book.

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

Maybe not. He might have got it from the library. I don't know.

[Bill Morneau, Liberal, Toronto Centre, ON]

In the book, which I co-wrote with a colleague, we identify the fact that with an aging population we will have demographic challenges. We identify the fact that some Canadians will be able to work longer and that some Canadians won't be able to work longer, which is a function of the different jobs Canadians have.

The approach taken to changing the old age security by the previous government, in my estimation, was arbitrary. It was a decision made without consultation to move the age of retirement from 65 up to 67 and it jeopardized the retirement possibilities for many Canadians who would have been relying on old age security. It did it in a way that did not have any sort of consultation or any sort of process that would have led them to conclude that this was about to happen.

We don't like that approach. We moved that back to 65 because we don't want to do something in that way.

We recognize that the old age security system, for lower-income Canadians in particular, is an important pillar of the retirement system. We are of the view that this is going to help a significant number of Canadians who can't work past 65 because they are in jobs that don't allow them to do that. Other Canadians will be able to work past that, and this is something we should consider.

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

Are you now prepared to consult on that and change your decision? I think there is compelling evidence—you don't necessarily have to consult—that shows that the cost to the Treasury is going to become very large as we move 10 years out into the system. Is that something you are prepared to consult on and change?

[Bill Morneau, Liberal, Toronto Centre, ON]

First, I will say that there is compelling evidence that Canadians in different lines of work and different economic situations have greater or lesser ability to retire later. By taking a draconian step that impacts everyone, you don't recognize that reality.

We will continue to work on retirement security for Canadians, recognizing the importance of considering demographic issues and the importance of helping Canadians to save in a way that will enable them to retire. That is something we will continue to do.

As you know, this coming month we are working on the Canada pension plan enhancement. You will see us continue to consider this issue, because we believe that it will be an ongoing issue of great concern for Canadians as they consider how they can retire when they will have to live ever longer on savings that, in many cases, are going to be inadequate for that task.

[The Chair, Liberal, Wayne Easter]

Thank you, Minister.

We have two members who haven't had the opportunity to ask questions yet. Mr. Grewal is first.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair.

Thank you, Minister, for being here.

As a recent grad—well, not so recent, but not so long out of school—I want to focus on what the budget does for young Canadians. The cost of education, especially post-secondary education, is going up every year.

We spoke about innovation and growth. At the heart of that is ensuring that we have the talent to build our innovation agenda and grow our economy. Education is the single most powerful tool to change your circumstance and contribute to society and the economy.

You mentioned earlier the grants that we are going to be doubling. Can you also please elaborate on how we are going to make it easier for students to manage their debt load, because the cost of education is increasing?

[Bill Morneau, Liberal, Toronto Centre, ON]

Thanks for the question.

This is an important issue. I would say that the very first way we are going to help students to manage the debt is by helping them not to have as much.

I do have to go back to the student grants. I think pretty well every student would rather have less debt, so by increasing the grants for low-income, middle-income, and part-time students, we will make a material impact on the actual amount of debt they have when they graduate from school. That is step number one.

Step number two is that we are creating a significantly larger number of summer jobs for students. First, you have a higher grant; second, you provide more jobs. Our summer job program will increase the number of jobs for students by 300,000. That will give them more opportunity to earn money during their summers so that they will be able to pay off a portion of their debt.

Those are step one and step two. Step three is to enable them not to have to pay their debt until they get to a reasonable amount of income. We have allowed for up to $25,000. Until students earn $25,000, they won't have to begin paying the debt. That allows them a time period until they get their first job or their first serious long-term employment when they are not burdened with that debt. That will help them to get going.

All of these things, I think, are important measures for students. Of course, investing in universities and innovation is going to enable them to gain the skills and find the kinds of jobs that will make a real difference for them in the long term, so that they will be able to afford to pay off their debt when they get into the workforce.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Minister.