Finance Committee on June 9th, 2016

[Jean-Denis Fréchette]

According to the routine motion, which I had mentioned in my presentation, we must look at all private member’s bills that are significant in material, fiscal and financial terms. We prepare a report and you regularly receive a letter when the order of preference is published. Sometimes, some measures and private member's bills are not part of the list of measures that will be studied. When that happens, we choose them and subsequently prepare a report, as in the case of the two reports submitted last week.

In terms of the question about the resources we have, you know that we have promised to make our office truly independent and to increase our resources to be able to calculate the cost of the measures included in the electoral platform. We are waiting to see where this will take us.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

Mr. Fréchette, I have a question on infrastructure.

What seems to be a perpetual problem with infrastructure programs, whether it is due to federal, provincial, or municipal government, is the late start for infrastructure start-up. The fact of the matter is we are in June. You don't think you have anything done on this, but maybe you could consider it when you are doing your infrastructure study. What is the impact on the overall investment, and the costs actually, when tenders are not released in March for infrastructure programs that are coming in the summer?

I am told by the municipalities that if they don't get started until July, their costs go up because there is less labour availability, etc. Therefore, the taxpayer doesn't get the benefit of the full infrastructure program.

I am just suggesting that maybe you could look at that, as you think you are going to do some infrastructure work later. Is that right?

[Jean-Denis Fréchette]

Thank you. Yes, we will.

[The Chair, Liberal, Wayne Easter]

That is a factor for the—if I could put it this way—bang for the buck on infrastructure dollars being expended by various levels of government.

We are turning to Mr. MacKinnon, for seven minutes.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you, Mr. Chair.

Mr. Fréchette, thank you and your entire staff. I think your presence and your hard work serve all parliamentarians.

I would first like to ask you about your study on the impact of the budget measures on families and the various scenarios described.

You have clearly indicated in the report that this was not necessarily a picture representative of taxpayers and Canadian families. Is that true?

[Jean-Denis Fréchette]

That is absolutely true.

[Steven MacKinnon, Liberal, Gatineau, QC]

If a study on a typical family or on all families were conducted, as my colleague Mr. Sorbara has indicated, we would find that nine in ten families are benefiting from the new Canada child benefit.

[Jean-Denis Fréchette]

Our findings are based on eight types of families. As I said, that's the scenario we had to follow. We studied the case of lower income families with two young children, that of low income families with older children and other types of families with higher incomes and fairly older children. We have noticed that the families with more modest incomes and young children will benefit the most if the child tax credit is established.

[Steven MacKinnon, Liberal, Gatineau, QC]

Of course, you will agree that this is the goal of the new Canada child benefit.

[Jean-Denis Fréchette]

There is a two-fold objective and that's one of them. We know that the tax credit is reduced according to the income level. Actually, by lowering the second tax bracket, those families will benefit from it more. That is one of the findings of the report.

That said, you are absolutely right. Among the eight families, we have not considered what a typical family is. We should ask again what a typical Canadian family is, by specifying the number of children, their age, and so on. We have not done so because we basically followed the scenarios that were presented to us.

[Steven MacKinnon, Liberal, Gatineau, QC]

So we could conclude that the scenarios you were asked to evaluate were cherry-picked, that is, selected specifically. Is that how the scenarios were developed?

[Jean-Denis Fréchette]

I don't think so. As I said, they were families with lower income and two older children. That may well be a very typical family in the sense that those types of families exist. It may not be representative of all families. It is not a significant sample, but there are low income families with two children under 10 years of age, and so on.

[Steven MacKinnon, Liberal, Gatineau, QC]

I have an observation, not a question. I am not asking you to comment on it.

In my view, this is a fine example of how the current government addresses these issues compared to the previous government. The previous government studied small groups, whereas we are looking at the benefits for society as a whole in order to better support low income families, the families that need some help.

I would like to continue along the same lines as Ms. Rait with respect to family debt. Based on what you know about the issue, whether in light of the Canada child benefit or other tax incentives, what is the impact of an unexpected government tax credit on household debt repayment? Do families spend that money or do they use it to reduce their debt? Do you have any information for us on that?

[Chris Matier]

It's a very good question. Unfortunately, we haven't looked at debt repayment or the capacity to repay at an individual or family kind of specific level.

[Steven MacKinnon, Liberal, Gatineau, QC]

Stimulating the economy through the tax system may be useful for families. They could repay their debts or buy consumer goods that would be useful in the long run.

[Chris Matier]

Typically, most of the macro models we look at would generate the result whereby, if lower income families received an increase in government transfers, it would more likely be spent rather than saved. It wouldn't be paying down debt but would be spent on consumer goods and services.

[Steven MacKinnon, Liberal, Gatineau, QC]

In terms of the tax rate for SMEs—

How much time do I have left?

[The Chair, Liberal, Wayne Easter]

You have a minute and a half.

[Steven MacKinnon, Liberal, Gatineau, QC]

In terms of the tax rate for SMEs, I'm reading between the lines. Could you confirm the impact of a tax cut on jobs and the GDP.

How would you describe such a drop, if we consider only the impact of this tax rate on jobs and the GDP? I agree that there would be a salutary effect, as with many things the government does. If you evaluate it based on the GDP and job growth, would you say that this cut would have a negligible impact?

[Jean-Denis Fréchette]

If you read the lines, not between the lines, of our report, you can see that we did not describe it. We indicated the results for 2020. We talked about the impact of this measure if it is maintained. There would be 1,240 fewer jobs in Canada. In terms of the impact on the GDP as such, the actual GDP would be reduced by $300 million. That is basically the conclusion we reached.

We generally don't qualify things. We don't say that something is good or bad, but we provide information so that parliamentarians and legislators draw their own conclusions.

[Steven MacKinnon, Liberal, Gatineau, QC]

However, you agree that there may be other ways to create more than 1,200 jobs and that there may be a greater impact than the actual cost of a drop—

[Jean-Denis Fréchette]

It means $300 million less for the GDP, which is 0.015%. That's relatively minimal. You can find it in our report.

[Steven MacKinnon, Liberal, Gatineau, QC]

Okay.

[The Chair, Liberal, Wayne Easter]

Thank you both.

Mr. McColeman, you have five minutes.