Evidence of meeting #38 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was airports.
A video is available from Parliament.
Liberal
The Chair Liberal Wayne Easter
The hearing this afternoon is what's commonly known as pre-budget consultations, pursuant to Standing Order 83.1, in advance of the 2017 budget.
I welcome the six witnesses with us in the first session this afternoon. As you've been informed, you have about five minutes. If you can hold it to five minutes, then we have plenty of time for questions. We have an hour and a half.
Starting, then, with the Business Council of Canada.
Mr. Kingston, welcome. The floor is yours.
Brian Kingston Vice-President, International and Fiscal Issues, Business Council of Canada
The Business Council of Canada represents chief executives and entrepreneurs of 150 leading Canadian companies in all sectors and regions of the country. Our member companies employ 1.4 million citizens, account for more than half the value of the TSX, and contribute a larger share of federal corporate taxes, exports, corporate philanthropy, and private sector investments in R and D.
The Canadian economy is stuck in low gear. From 1960 to 2000, GDP growth averaged 3.7%. Since the start of the century, this pace has slowed markedly to 1.7%. Governor Poloz recently noted that Canada's growth of potential output is expected to be around 1.5% for the next number of years. In this environment, the federal government must do everything possible to increase Canadian competitiveness and grow the economy. With budget 2017, the government has an important opportunity to build on our country's economic strengths. We recommend taking the following four actions.
First, grow the economy through trade. Trade has long been a powerful engine for Canadian growth. The best way to spur the economy is to position Canada as one of the world's most open and global markets. The timely implementation of trade agreements with the European Union and the members of the TPP would give Canada preferential access to more than 60% of the global economy, nearly 90% of our country's existing export markets, and three of the world's four largest economies.
At the same time, Canada must continue to strengthen the North American marketplace. North American prosperity can be enhanced by modernizing borders through the adoption of data-driven traceability of goods, enhanced information-sharing in exchange for more substantial benefits for trusted traders, and investments in much needed border infrastructure.
Canada should develop a comprehensive China strategy. Efforts to eliminate trade and investment barriers will give Canadian companies a competitive advantage in China, which is our second largest two-way trading partner.
According to a study that we recently produced by economists Laura Dawson and Dan Ciuriak, a Canada-China free trade deal would generate $7.8 billion in additional economic activity within 15 years and support approximately 25,000 jobs.
Second, leverage infrastructure investments. A competitive economy requires world-class infrastructure to connect businesses to customers around the globe. We recommend the government prioritize projects that have a direct and measurable impact on the Canadian economy. This includes productivity and trade-enhancing projects, such as investments in ports, rail, roads, and airports. Given the important role the energy industry plays in the Canadian economy as a source of jobs and tax revenue, infrastructure that delivers resources to tidewater must be a top priority.
Given the government's vision for robust regulatory and consultative processes for seed approvals of major infrastructure projects, it is important that funding is adequate to the task and conditional upon these processes being completed in a timely fashion
Third, we need to foster innovation. A more innovative economy is critical to Canada's prosperity. There are a number of programs that should be aligned and coordinated under the government's innovation agenda. This includes programs to support the development of talent, policies that help businesses grow in Canada, and simplification of federal supports for business R and D.
Importantly, in some cases, the best thing the government can do is stay out of the way, allowing business owners to decide for themselves where and how to invest in new products and processes.
Fourth, we need comprehensive tax reform. A competitive tax system will strengthen Canada's ability to attract jobs and investment. After a decade of progress in reducing the tax burden on business investment, Canada has recently fallen behind in terms of tax competitiveness. In 2012, according to the global tax competitiveness report, our country had the 19th highest tax burden on new business investments among 34 OECD countries. By 2014, Canada had ranked in 14th place, in large measure because other countries had instituted significant reforms.
By simplifying and modernizing the tax code, Canada could spur new investments, promote job creation, and significantly reduce the cost to government of administering the tax system. We believe that the overarching objective of tax reform should be to reduce preferences, broaden the tax base, and lower rates to position Canada as a global investment destination.
Let me conclude by underlining that in this uncertain economic environment, prudent fiscal management can set Canada apart from other advanced economies and create a stable environment for business investment and job creation. While running deficits in the short term can stimulate growth, we recommend that the federal government set a goal of achieving a 25% debt-to-GDP ratio by 2021. Among other benefits, this will bolster the government's capacity to respond in the event of another serious downturn, while addressing long-term challenges such as Canada's aging population.
With that, I conclude, and am happy to answer any questions.
Thank you.
Liberal
The Chair Liberal Wayne Easter
Thanks very much, Mr. Kingston.
We're turning now to the Association of Canadian Financial Officers and Mr. Chamberlain.
Scott Chamberlain Director of Labour Relations, General Counsel, Association of Canadian Financial Officers
Thank you.
Honourable members, today ACFO has provided you with the just-published policy paper outlining actions parliamentarians can take as leaders against tax exploitation.
Our members represent the core of the federal government's finance workforce. We understand how important collecting taxes is to our ability to deliver vital public services, and that fiscal responsibility requires both prudent spending and revenue collection.
Polls show that Canadians believe there are two sets of rules when it comes to paying tax: one for the rich, and one for the rest of us. Canadians work hard. We do our part for the community, and we expect our fellow Canadians to do the same. The government has shown the courage to stand up for the real engines of our economy: Canadians and our small businesses who pay their taxes and choose not to cheat the system.
There is no justification to dodge taxes. Our corporate tax rates are highly competitive. Canada has the second-lowest combined corporate tax rate in the G7, according to the OECD. Canada ranks ninth out of 189 countries for ease of paying taxes, according to the World Bank and a PricewaterhouseCoopers study from 2016. A 2016 KPMG study ranks Canada as the most competitive country for business globally, based in part on our low corporate tax rates and moderate labour costs.
In the 2016 budget, Canada committed to working with the OECD and its action plan on tax avoidance. We applaud the millions invested in the CRA and the thousands of new investigations and audits recently announced. We support complementary measures to collect tax from digital service providers, to enhance country-by-country reporting, and to champion international tax reform at the UN as well as the OECD.
However, we cannot rely solely on enhancing the OECD process, relying on large-scale data leaks, audits, and litigation. We also need proactive methods that deter tax exploitation before it occurs, such as mandatory vetting of tax-planning products, required reporting of potential tax dodging, a beneficial ownership registry, and significant fines for non-compliance. Let me expand on these four examples.
The individuals and companies engaged in tax dodging have one thing in common: they all use professional facilitators to profit from and exploit legal grey areas. These lawyers, accountants, and financial professionals find ways to bend rules to gain advantages that Parliament never intended.
As a lawyer who represents thousands of chartered accountants, I find the role of these facilitators particularly concerning. Between what we commonly call tax avoidance and tax evasion lies a vast and layered wasteland of secrecy that we label tax exploitation.
You can place reasonable limits on this exploitation by requiring that all tax-planning products be registered and vetted before facilitators are authorized to market them to their clients, as is the case presently in the U.S.; and by legislating a positive duty on facilitators to confidentially report suspected tax abuse to law enforcement, as is the case in the U.K.
Canada must recognize and address our role in global tax dodging. Apparently, we are a great place to set up an anonymous shell company. Mossack Fonseca marketed Canada to its clients in precisely this way. A primary purpose of these shell companies is to obscure the truth of ownership and the truth of economic activity of these companies. They facilitate money laundering, terrorism, criminal corruption, and tax exploitation.
The federal government must work with the provinces to ensure that all companies in Canada are required to disclose beneficial ownership in a single unified national registry that's open to the public, as is the case in the U.K.
The current system clearly does not deter tax exploitation. In fact, it encourages facilitators profiteering while passing the entire risk and cost of non-compliance to their clients. Facilitators who fail to comply with these simple transparency measures should face fines equal to the tax avoided, as is currently being proposed in the U.K.
Our proposals provide a real deterrent to tax exploitation. They provide effective consumer protection to clients of the tax industry. They secure public revenue. And they significantly reduce the costs associated with the reactive litigation-based system we currently have in place.
The gaps in our tax law provide a large benefit to a small number of Canadians, which is both fiscally irresponsible and erosive to public services.
All Canadians need to pull their weight and play by the rules if we're going to deliver on this government's agenda of infrastructure investment, reconciliation with our indigenous people, pay equity, growing the middle class, and supporting sustainable economic growth.
Liberal
The Chair Liberal Wayne Easter
Scott, you're going to have to try and sum up in about a minute if you can.
Director of Labour Relations, General Counsel, Association of Canadian Financial Officers
Joseph Pulitzer once said:
There is not a crime, there is not a dodge, there is not a trick, there is not a swindle, there is not a vice which does not live by secrecy.
The same could equally be said about tax exploitation. It's time to inject some transparency and honesty into the tax planning industry. Before we start talking about raising taxes, let's collect the ones that are owed.
Liberal
The Chair Liberal Wayne Easter
Thank you very much, Mr. Chamberlain.
Turning to Imagine Canada, Mr. Emmett. The floor is yours.
Brian Emmett Chief Economist, Canada's Charitable and Nonprofit Sector, Imagine Canada
Thank you, Mr. Chairman. I would also like to thank the members of the committee for inviting Imagine Canada to testify today on behalf of the charitable and non-profit sector.
In its invitation, the committee was careful to stress the importance of an equitable, inclusive and sustainable economy that better serves traditionally disadvantaged people and communities.
Charitable and not-for-profit organizations are in the best position to encourage and advance this kind of intelligent growth agenda.
Charities and non-profits make an enormous economic and social contribution to Canada. We employ more than two million people in every community across the country, and we account for about 8% of GDP.
By their nature as mission-oriented organizations, they are specialists in equity, inclusion, and respect for the natural environment. Despite our social missions, charities are not immune to the fundamental economic, societal, and demographic shifts that are now posing new challenges to all sectors. Indeed, these will probably have a disproportionate effect on our sector.
The aging population, the imminent retirement of the baby boomer generation, the emphasis on immigration to meet labour market needs, and forecasts of lower long-term economic growth all present unique challenges to charities and non-profits. Demand for the services we provide will continue to rise, we believe, while current financing models mean static or declining resources.
Charities and non-profits have always been creative and nimble in finding ways to generate impact from scarcity, but without a fundamental rethinking of the environment in which we operate, our long-term ability to meet coming demands is in question.
In the brief we submitted to the committee, we explained some of the components that should be part of this review, components that are the foundation of a renewed relationship with the federal government.
First of all, we are encountering more and more conflicts between the desire by charities and non-profits to explore innovative financial models and generate new opportunities, and a regulatory regime dating back to the reign of Queen Elizabeth I.
We are encouraged that the government in its ministerial mandate letters committed to examining and reforming the legal and regulatory framework under which we operate, but if we are going to contemplate root and branch reform of the system that despite its flaws is familiar to us, we need to ensure that we get this process right.
For the most part, charities and non-profits have not had the capacity to give a great deal of thought or analysis to potential reforms on this broad scale. Getting things right will require federal investment, so that issues and options can be thoroughly identified and examined. This means not just consultations, but building the capacity of those organizations whose future is at stake.
There are shorter-term steps that can be taken to strengthen relationships and promote the smart use of resources. We are encouraged by the emphasis the government has put on good data, collecting it, and seeing it used in decision-making. Our current understanding of the scope and contributions of charities and non-profits is limited by out-of-date data. Statistics Canada no longer produces data about the sector, and decisions are being made based on information that's almost two decades old. This would be unthinkable in any other sector, and we believe restoring data collection should be a priority.
We also want to work with government to identify ways to improve the ability of organizations to use data, to innovate, and to have a greater impact. We need to make sure they have the tools to do so.
Finally, as much as charities and non-profits are working to diversify their incomes, they remain important partners in the delivery of government services. Numerous reports have recommended reforms to the grant and contribution process, and the Department of Canadian Heritage recently announced a series of reforms that we applaud. We would like to see these reforms adopted by all federal departments and agencies.
In conclusion, the committee's call for recommendations recognizes that quality of life depends not just on growth, but the quality of growth, on more than the dollars measured by GDP. The reasons Canada ranks highly in measures of quality of life, published by the UN or the ranking of cities published by The Economist, and more highly than countries that have higher levels of gross domestic product, are that the indices used include measures of equity, inclusion, and environmental quality. Canada has a vibrant and growing charitable and non-profit sector increasingly contributing in all these areas. The challenge in the future will be to create a framework that allows charities and non-profits to contribute to a high and increasing quality of life for all Canadians. That is the smart growth.
We look forward to working in partnership with the federal government to achieve this goal.
Thanks very much, Mr. Chairman.
Liberal
The Chair Liberal Wayne Easter
Thank you.
We will turn to the Canadian Federation of Independent Business, Ms. Moreau.
Monique Moreau Director, National Affairs, Canadian Federation of Independent Business
Thank you for the opportunity to be here today to share CFIB's perspective on these pre-budget consultations.
You should have a slide presentation in front of you, which I'd like to walk you through in the next few minutes.
CFIB is a not-for-profit, non-partisan organization, representing more than 109,000 small-business owners across Canada, who collectively employ more than 1.25 million Canadians and account for $75 billion or nearly half of Canada's GDP. Our members represent all sectors of the economy and are found in every region of the country.
As you may be aware, CFIB takes its direction solely from our members through a variety of surveys. Today I'll be sharing with you some results from our pre-budget survey. I note that these are preliminary results as the survey is still in the field, but we'll be publishing our more detailed pre-budget submission once the survey is closed.
One of the surveys we do is called the business barometer. Every month we ask our members how they think their business is going to be doing in a year from now: better, worse or staying the same. The results of this survey give us an index. On slide 3, hot off the presses as of this morning, is our September business barometer, which shows small business optimism drifted slightly lower this month, to 59. The latest findings suggest economic conditions are stable, but weak. The index has been sitting between 58 and 60 for the last six months, but we'd like to see it between 65 and 70 when the economy is growing at its full potential.
We also survey our members to get a sense of what their high-priority issues are. They've identified the total tax burden, followed by government debt and deficit, and government regulation and paper burden, also known as red tape, as their top three priority issues.
So we have a sense of how confident business owners are about their own business and what their priorities are. We also asked our members how confident they are that the federal government has a vision to support them in this period of relative economic instability. Confidence levels are not that high, with 78% of business owners saying they're not confident the federal government has a vision that includes them. We have some ideas as to how the government can help build small business confidence by creating an environment where they can innovate, create jobs, and help grow the economy.
The first of these ideas to help SMEs strengthen their business performances is on slide 6. As you can see, for 86% of our members, the measure that would be the most effective would be to reduce the federal small business corporate income tax rate from 10.5% to 9%. This is our number one ask of your budget for 2017.
Our members know that today's deficits are often tomorrow's taxes, and two-thirds of our members feel that balancing the budget in the next few years would also be helpful.
On the same chart you'll see that 85% of our members feel strongly that a lower EI premium rate for small business would help their business performance. If you look at slide 7, you'll see why.
Payroll taxes are one of the biggest disincentives to hiring and growing a business because they are profit insensitive. You have to pay them whether you make any money that year or not. We were pleased to see that EI rates announced earlier this month are coming down, but unfortunately, due to the fact that the small business job credit, which many SMEs had access to, has not been renewed for 2017, many small-business owners' rates are actually going to go up by 4¢. This is why we suggest the government introduce a permanent lower EI rate for SMEs. There are good reasons for having a lower EI rate for small business: they are more labour-intensive than larger business and, as such, they feel labour changes that much more acutely.
Our members are also very supportive of having a form of rebate for hiring youth. In our recent EI report, 80% of our members were in favour of this credit. Small businesses are often the first employers of youth in this country and they spend a lot of time training them, both formally and informally. This explains the significant support for this credit.
We know the government is looking to increase CPP premiums in the coming months. In order to offset the biggest payroll tax that small businesses pay, we encourage you to consider other alternatives to ease the burden to the SME community.
We know that innovation is a priority for this government, and we'll be publishing in the coming weeks a report that challenges the notion that SMEs don't innovate. Our research shows good news: 80% of SMEs report they've been innovative in their business in the last five years. One of the key challenges they face when creating or improving their products, services, or processes is not accessing government grants, but rather it is the shortage of skilled labour. This was identified by nearly half of business owners as a barrier to innovation, followed by government red tape. We encourage the government to consider ways to increase access to skilled labour for business owners and, for those who need it, smooth out access to the temporary foreign worker program.
SMEs are often faced with the difficult choice of complying with government red tape or being able to have the time and money to undertake innovative work. We recommend that the government consider the creation of an innovation lens when implementing new regulations, policies, and taxes to ensure that they do not negatively impact a firm's ability to innovate. This lens would ensure that SMEs won't have to choose between being compliant and being innovative.
To sum up, on slide 9, you'll see our list of recommendations for budget 2017. We look forward to collaborating with the federal government to continue the good work that small businesses do to innovate, create jobs, and invest in the economy.
I look forward to answering your questions.
Please note that I can also answer your questions in French.
Thank you.
Liberal
The Chair Liberal Wayne Easter
Thank you very much, Ms. Moreau.
Turning to the Inter-provincial EI Working Group, Ms. Ritchie.
Welcome.
Laurell Ritchie Co-chair, Inter-Provincial EI Working Group
Thank you for the welcome and for the invitation.
The Inter-Provincial EI Working Group was formed in 2013, initially with coalitions in New Brunswick and P.E.I., Quebec common front groups, and the Good Jobs for All coalition in Toronto.
We developed a joint statement on principles and EI reforms, and now more than 100 organizations from coast to coast have signed that statement. Earlier this year, we also wrote to the Prime Minister and others in government with respect to EI reforms and the need for stimulus spending in that budget.
We believe we need to rebuild our EI social insurance system. The health of EI and that insurance system is vital to the larger economy and not individuals alone. As an earlier federal study found, EI is the “single most powerful automatic stabilizer”, reducing both GDP and job losses by up to 14% during recessions.
Much of that earlier capacity, though, has been lost, with only about four in 10 of the unemployed now receiving EI benefits after years of repeated cutbacks. The most recent StatsCan figures for July show an EI recipiency rate of 42.9%, or 43% roughly, among the unemployed in Canada. That's pretty much where it's been for a long time. In Canada's three largest urban centres, it's much less: Montreal 31.6%, Vancouver 20.5%, Toronto 20.3%. The lowest in each of those last cases has only one in five of the unemployed getting EI.
We know that there are a number of reasons for that: the growth in long-term unemployment; precarious part-time, temporary, and non-full-year jobs; self-employment issues with the issuing of records of employment; and the failure to apply. In any event, the fact remains that there were much higher recipiency rates, 70% to 80%, before the last big overhaul of EI in 1996. We need to get a grip on the modern labour market so that EI can properly respond to it.
We appreciate that the government has made some significant improvements, including the elimination of the 910 rule and the forthcoming one-week waiting period. On some other changes, the jury is still out because the implementation has not yet been specified. In general, we view these as the down payment on the changes that are really needed.
It perhaps goes without saying that we support a new emphasis on full employment policies in the federal arena. That includes a lot more attention to the issue of underemployment. This will also serve as part of an equity agenda given the preponderance of women, racialized workers, aboriginal workers, those with disabilities, new immigrants, and young workers in the precarious job market.
Specifically with respect to EI, we have five key recommendations. I won't go into them at length right now. Number one, we want to see the government fast-track the review of EI in a changing labour market, the one that was promised in last year's election. We need to repair one of the most obvious problems with EI, and that is the issue of access. We think that is going to have to necessarily involve reforms with both the EI variable entrance requirements and the EI hours system.
We recommend a 360-hour standard requirement for a basic entry-level claim. There's no legitimate reason for a different number being required, whether you're in Laval or Saskatoon. We hope, come the end of the year, that the government will start to move in that direction by restoring a single EI economic region in P.E.I. and the three territories. As for the EI hours system, it is currently based on a 35-hour work week. It's been a long time since paid employees had an average 35-hour work week. It is now hovering around 30 hours, even less in the service sector, which is where most people work. In the retail sector, the largest sector of all, it is 27.5 hours. We need to revamp that hours system.
Second, we need to see benefit rates at 55% of normal earnings increased. It not only creates hardships for families, but it undermines the role of social insurance to act as an automatic stabilizer.
Third, we want to see EI better help workers to develop their skills and retrain. That goes, of course, to say that we need money put into labour market development agreements, but it also means that we need to get ahead of emerging industry and labour market transformations that are happening due to climate change, tech change, and Canada's further commitment to a low-carbon economy. Sometimes this is called just transitions. We—
Co-chair, Inter-Provincial EI Working Group
Okay. In this respect, we recommend an EI training benefit. We used to have that. In the eighties, you could get maintenance benefits for up to two years if you were in approved training.
Fourth, with the new report coming out any day now on the quality of services in Service Canada, we recommend that when those recommendations come, you expedite their implementation.
Finally, as to financing, we still seek an independent EI account and recommend that the government start contributing again to EI, as it once did, as part of tripartite contributions. After a decade and a half of siphoning off billions by successive governments, it's time to put back in.
Pierre Cadieux Vice President, Federal and Quebec Governmental Relations, Restaurants Canada
Good morning, Mr. Chair and members of the committee.
My name is Pierre Cadieux. I am the Vice President of Restaurants Canada for federal and Quebec government relations.
As part of this 2017 pre-budget consultation, it is my pleasure to speak on behalf of my association and answer your questions.
In doing this, I was to have been accompanied by my colleague Joyce Reynolds, Executive Vice President, Government Affairs. However, her flight from Toronto was cancelled.
In these brief introductory remarks, I would like to remind the honourable members about the importance of the restaurant and food service industry to Canada's economy.
Here are some key facts and figures I wish to bring to your attention.
As an industry, we are an integral part of every community, with 94,000 restaurants, bars, and caterers across the country. We account for $75 billion in annual sales, which represents 4% of our country's gross domestic product. We employ 1.2 million Canadians, which is 6.9% of the country's workforce. An additional 283,000 indirect jobs are supported by us in related industries. We purchase $25 billion in food and beverage products every year. There are 18 million visits to restaurants every day by Canadians.
Our industry is the source of first jobs for many Canadians. In fact, one in five young people between the ages of 15 and 24 is employed in our industry, and 22% of Canadians found their first job in our industry, which is the highest of any industry.
We also give back to communities, and we support many fundraising drives. In 2011, our industry contributed $277 million to various charities.
These few figures underline the importance of our industry having good relations and a solid partnership with the government of Canada, so that we can continue to create even more jobs.
In our pre-budget submission, we explained our issues and the opportunities for collaboration. We also presented an overview of our expectations and our concerns. Because we are a major employer, workforce issues are in the forefront.
We also want to tell the government that we support it, particularly in initiatives like thePrime Minister's initiatives relating to youth and the renewal of the federal tourism strategy, of which the unique and diverse culinary experience is an integral part.
Another area in which we intend to collaborate further, particularly with the Department of Finance, is in the area of credit card fees that our industry is unfairly burdened with. Since we submitted our brief, the Minister of Finance has announced a review of the voluntary fee reduction commitments by Visa and MasterCard. Although the government acknowledged the independent audit findings, and both companies met their voluntary commitments, the government has agreed to undertake a further review and assessment of the marketplace.
Restaurants Canada is particularly pleased that this assessment will include approaches in other jurisdictions, since Canada's interchange fees are up to five times higher than the fees in countries that have interchange fee caps in place. Restaurants Canada will be there to provide the industry's perspective and support in those consultations.
In our brief, we've identified opportunities for job creation in our industry by removing obstacles to growth. Let us remind the honourable members, in closing our opening remarks, of three such examples.
With interprovincial non-tariff barriers on alcohol, federal and provincial governments must consider the food service industry as much as individual consumers or customers when studying the commerce of alcohol. Freer interprovincial trade will lead to more competitively priced products, which would be a win for our customers and operators across the country.
For the reduction of the small and medium-sized business corporate tax rate, we asked the federal government to lower the tax rate from the existing 10.5% to 9%. This would have an immediate beneficial investment impact to maintain and grow employment as members invest in the future growth of their operations.
Finally, we asked that the government fulfill its campaign promise, as part of its youth strategy, for an employment insurance youth job credit or other payroll tax relief targeted to youth employment. As you know, we're a major source of first jobs for youth. By collaborating more closely with our industry to hire more youth by having fiscal incentives and tax credits, we can generate immediate impacts in youth job creation across the country.
This concludes our opening remarks. I look forward to your questions.
Liberal
The Chair Liberal Wayne Easter
Thank you very much, Mr. Cadieux. I run into Liam Dolan a lot, so he is on your case.
Turning to questions, five-minute rounds, Mr. Grewal.
Liberal
Raj Grewal Liberal Brampton East, ON
Thank you, Mr. Chair.
Thank you to the witnesses for coming today. We appreciate it. In all of your briefs, one of your recommendations was a synergistic recommendation from everybody: less government regulation. I think I couldn't agree with you more.
Anybody can jump in and answer this question.
If there's one piece of regulation you could change that would help your members out the most, what would it be, and could you give a real-life example of how that's helping to grow the business? I've been elected to this place for about one year and everybody says “less government regulation”, but few people provide me with concrete examples. For example, on the immigration side, the temporary foreign workers program is a concrete example of how a better program implemented by the government would help those businesses succeed. Can you please give a real-life example of how your member organizations would benefit from something like that? I would be interested to hear what Mrs. Moreau has to say.
Director, National Affairs, Canadian Federation of Independent Business
Thank you. I'll start, perhaps.
It's a twofold problem. Getting after the low-hanging fruit of these concrete one-offs is one way to get at solving red tape. We've heard about interprovincial trade issues. One of my favourite examples of the inanity of our country sometimes is the fact that those small creamers that you put in your coffee are different sizes across the country. One is 14 millilitres and another is 16 millilitres. If you're trying to produce those, then you have to produce different sizes if you want to produce them and send them interprovincially. It doesn't make any sense. There's no reason for that.
When reducing red tape and taking it from the 30,000-foot level, you have to be able to measure what you manage. That's why our suggestion is to start by counting the obligations that are on business owners right now to comply, which they want to do.
We're setting aside anything to do with health and safety. Those obviously are there for good reasons.
For other regulations and legislation that are in place right now, which have not been thought through as to what the impact is on the business owner, let's start by counting them so that we can reduce through things like the one-for-one rule. In B.C., they did the two-for-one rule to bring regulations down and ask officials in government to look at where we can eliminate. That's one aspect.
The second aspect is to report and be transparent about that behaviour and what government ideas they're putting forward to be able to reduce red tape.
We recommend you work with industry. We have lots of ideas that we could give you on the low-hanging fruit. We've done lots of research as an organization about the monetary impact on businesses in Canada, from both the consumer and the citizen perspective compared to the U.S. There's a lot of research I can provide the committee with after, if you're interested. We certainly are looking forward to being a partner in this with the government and trying to get out of the way, so to speak, in a collaborative manner.
Vice-President, International and Fiscal Issues, Business Council of Canada
I focused a lot of my presentation on trade. There is area of regulation that inhibits Canada's ability to take advantage of trade agreements, the supply management system in Canada's dairy sector. Canadian dairy producers are not able to export because of our supply management system. I think there are many examples of countries, for example, Australia and New Zealand, that have been exporting dairy products—particularly to China and other high-growth Asian markets—and they've been very successful in doing so. I think it's a shame that Canada produces such excellent dairy products—you just have to drive 10 minutes outside of Ottawa to find artisan cheeses and so on—yet we can't export them. It boggles the mind. On top of that, they also cost consumers significantly more. I think that's an area where you could reduce the regulation and Canada would succeed as a result.
Liberal
Raj Grewal Liberal Brampton East, ON
Mr. Chamberlain, my next question is for you.
I couldn't agree with you more, that it's all about tax fairness and that the discussion on increasing or decreasing taxes should take a back seat to collecting the taxes that are already owed. You'll be happy to know that this committee just completed its study of the CRA on tax evasion and tax avoidance, and the report will be published soon.
One of your recommendations was ensuring that tax products out there be registered. Can you elaborate a little bit on what you envision that being?
Director of Labour Relations, General Counsel, Association of Canadian Financial Officers
The way the system works now is that facilitators develop and market tax-planning products to prospective clients, implement them, and hope that they're compliant. As it turns out, as we've seen, what ends up happening in some of these cases is that years later these tax-planning products, which are otherwise secret, come to light through a leak or a whistleblower, and the system has to engage in a very costly process of, essentially, litigation. If a tax product is registered in advance and vetted to, say, see if it complied with the GAAR or something of that nature, then there would be no risk to that client. If it's approved in advance—it could even be done in a confidential way—the tax-planning products can be put in place, clients can optimize their tax, and the government isn't short tax that's owed. It's in place in the United States already. It's one of the recommendations that the OECD has made as part of the BEPS action plan.
Liberal