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.

On the agenda

MPs speaking

Also speaking

Brian Kingston  Vice-President, International and Fiscal Issues, Business Council of Canada
Scott Chamberlain  Director of Labour Relations, General Counsel, Association of Canadian Financial Officers
Brian Emmett  Chief Economist, Canada's Charitable and Nonprofit Sector, Imagine Canada
Monique Moreau  Director, National Affairs, Canadian Federation of Independent Business
Laurell Ritchie  Co-chair, Inter-Provincial EI Working Group
Pierre Cadieux  Vice President, Federal and Quebec Governmental Relations, Restaurants Canada
Daniel-Robert Gooch  President, Canadian Airports Council
William Miller  President, Canadian Association of Radiologists
Carl Weatherell  Executive Director and Chief Executive Officer, Canada Mining Innovation Council
Sahir Khan  Executive Vice-President, Institute of Fiscal Studies and Democracy
Jean Robitaille  Senior Vice-President, Agnico Eagle Mines Limited, Canada Mining Innovation Council
Nicholas Neuheimer  Chief Executive Officer, Canadian Association of Radiologists

4:15 p.m.

Conservative

Phil McColeman Conservative Brantford—Brant, ON

Thank you, Chair.

Thank you, witnesses.

On slide 5, I think it's quite a telling survey result that you've got: 78% of small and medium-sized businesses aren't sure the federal government has a vision to support them or entrepreneurship. Over the course of the summer, my colleague and I did several small business round tables across the country, and this is the exact result, anecdotally, that you've put data towards. This is exactly the uncertainty of the environment that they're in right now.

Let's talk about specifics, reducing the corporate tax rate to the promised 9%—the election promise by the current government to reduce it to 9% and it having backed away from that. How important is that? It's CFIB's number one. It's also mentioned, I think, by Mr. Kingston in his remarks, and we heard it yesterday from a number of the witnesses.

More specifically, how much is this standing in the way of growing jobs in this country? Small-business people are the primary employers, on the largest scale of any other group, by far. How much hindrance is this to hiring? If you can, even anecdotally, tell us how many jobs you think might have been lost because the business tax rate has not been reduced.

4:15 p.m.

Director, National Affairs, Canadian Federation of Independent Business

Monique Moreau

As we mentioned in our presentation and our pre-budget submission, reducing taxes for business owners is their number one priority; that's what, as members of our organization, they identified through our surveys. Whether that's the corporate income tax rate or payroll taxes, they want to be able to hire and grow their businesses, and they've identified those as the top issues of concern for them.

The reduction to the small business tax rate was promised in an election platform, and we anticipated seeing the legislated reduction. That was, as we understand, put on pause for now. We're looking forward, now that the government has had a chance to have a year under its belt, to perhaps some of the other ways to support small-business owners.

With respect to your question about jobs, I couldn't wager a guess at this point. Unfortunately, our research comes from what our members tell us. We haven't gotten that econometric modelling capacity in place on that particular issue. However, if there are other sources, we'd be willing to look at those.

4:15 p.m.

Conservative

Phil McColeman Conservative Brantford—Brant, ON

Mr. Kingston, are there any comments from you on this one?

4:15 p.m.

Vice-President, International and Fiscal Issues, Business Council of Canada

Brian Kingston

We have a bit of a divergent view on tax and the small business deduction. We've been calling for the government to unify the general corporate tax rate and the small business rate—as has been done in the U.K.—as part of a broader tax reform package. We don't think it makes sense to have a two-tier tax rate for small businesses and large businesses, and that it's a hindrance to growth. We would like to see a comprehensive reform with a lower, more competitive general rate for all businesses.

4:15 p.m.

Conservative

Phil McColeman Conservative Brantford—Brant, ON

Okay, let's talk quickly about government debt and deficit. There were some decisions made in the last budget to triple the size of the debt versus what this government campaigned on and take it to, I think, over $100 billion over four years with no plan of bringing it back to balance. At least they said there was a plan at the start, and then they threw that out the window. That said, how important is it for business and for Canadians, in general, to know there is a plan to pay back the borrowed money that is happening right now through the federal government? How important is that to business confidence and the business investment environment?

Mr. Kingston, would you like to take a run at that?

4:15 p.m.

Vice-President, International and Fiscal Issues, Business Council of Canada

Brian Kingston

Thank you. It's very important. We've been calling for some time for the government to establish a fiscal anchor, whether it be balancing by a certain date or targeting a particular debt-to-GDP ratio by a certain time. We think it's critical to business certainty to have something that is keeping the discipline on federal spending. I don't know if you've had a chance to review the PBO “Fiscal Sustainability Report”, but Canada faces significant long-term fiscal challenges associated with an aging population and rising health care costs. We need to be careful about the amount of debt we take on because we will be faced with those significant expenses over the next 50 years.

4:20 p.m.

Conservative

Phil McColeman Conservative Brantford—Brant, ON

I'd like to make another comment, because I know I'm going to be running out of time. If deficit spending were to have been proven as the way to grow the economy, then Ontario should just be humming right now. Look at what's happening in Ontario with the amount of debt and spending that's gone on there.

Would any other of you like to agree or disagree with that?

4:20 p.m.

Liberal

The Chair Liberal Wayne Easter

A quick answer because he is out of time.

4:20 p.m.

Director, National Affairs, Canadian Federation of Independent Business

Monique Moreau

I think at this stage our members have not identified runaway spending as a priority for them for making sure spending is in place. Our preliminary results have shown that they appreciate infrastructure investment spending. Up to 40% of our members have identified that as something that might be stimulating to the economy, and they understand that. They want to see a plan to return to balance, and that's what they will be looking for in the short term over the next three to five years.

4:20 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Caron.

4:20 p.m.

NDP

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

Thank you, Mr. Chair.

I would like to start by speaking briefly to the issue of supply management.

Mr. Kingston, you said that the Australian and New Zealand examples were quite fantastic. If we look at the facts, however, we see that the situation for producers in Australia is so disastrous that the government of that country has had to promise $555 million in subsidies, more than a half billion Australian dollars, to enable the industry and producers to catch up.

Let us talk about prices. Since deregulation, the prices of dairy products and milk in New Zealand and the prices of eggs in Australia have been higher than in Canada. When we look at American prices, the ones we compare ourselves to most of the time, the reason they are lower is that the products are heavily subsidized, which is not the case here in Canada.

So we have to include some specifics in talking about this. People always cite a lot of things that are presented as revealed truth. The fact is that the supply management system has enabled us to retain a number of small producers and to improve their productivity and has prevented vertical regression, which is ultimately not to the benefit of producers because it concentrates production in too few hands.

I would like to put my first question to Ms. Moreau and Mr. Cadieux. In fact, I am going to play devil's advocate on the question of small business tax rates. This is a question that was addressed quickly.

You are aiming for a reduction of the current rate from 10.5% to 9%. It is regularly argued, and Mr. Kingston also mentioned this, that reducing income taxes for small businesses is a hindrance to their growth and innovation.

How do you reply to that argument, which is often made?

4:20 p.m.

Director, National Affairs, Canadian Federation of Independent Business

Monique Moreau

Thank you for the question.

I am going to send the committee the research that shows, using Statistics Canada data, that we are talking about zero to $500,000 in the case of most small and medium-sized businesses. In addition, the curve descends gradually. Very few businesses achieve $499,000. They decide not to opt for growth because of this tax rate.

For the vast majority of Canadian businesses, the amount is lower than $200,000. I can send the committee the statistics. It is our opinion that for entrepreneurs, it is not a hindrance to growth. If that were the case, we would instead see a curve that went up to $500,000 and then went back down.

4:20 p.m.

NDP

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

Mr. Cadieux, you have the floor.

4:20 p.m.

Vice President, Federal and Quebec Governmental Relations, Restaurants Canada

Pierre Cadieux

Thank you.

I agree with what Ms. Moreau just said. You also have to understand that our industry is largely composed of small and medium-sized businesses. We are talking about franchises and small businesses. The profit margins are extremely narrow, from 3 to 4%.

Some situations relating to prices affect us constantly. If the government allowed us to have predictable stability when it comes to taxes over the next four years, clearly that would help us. This is one of the factors in the Rubik's cube that we are trying to put together. What we are trying to do is lighten the tax load so we can improve revenue.

That being said, we want to be clear: what makes our economy grow is a set of factors and not just one, like this one. We are going through a period when the economy is growing extremely slowly and interest rates are very low. We think it has much more to do with families' disposable income. Disposable income is the deciding factor in whether or not people go to a restaurant.

4:25 p.m.

NDP

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

I am sorry, but I have only a very little time left, so I will now go to Ms. Ritchie.

You talked about accessibility. Other organizations, particularly business organizations, have said they want to see premiums reduced. Once again, I am playing devil's advocate, but the argument is that reducing premiums would allow for job creation, while increasing premiums and making employment insurance more accessible would increase dependence on the program among unemployed people.

What is your position on this subject?

September 29th, 2016 / 4:25 p.m.

Co-chair, Inter-Provincial EI Working Group

Laurell Ritchie

Our concern would be that there has already been a number or series over recent years of...in some cases premium holidays, and in some cases premium reductions. We too believe in evidence-based decision-making, and we don't think there has been any study, any solid data, that demonstrates these two things go hand in hand as stated.

4:25 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Sorbara.

4:25 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Thank you, and good afternoon everybody.

Mr. Kingston, welcome.

Welcome to everyone, but let me start with Mr. Kingston.

You laid out your four points on what the Business Council would like to see our government move forward on, and I can check off all four points.

You look at our infrastructure plan from our platform, and you see $120 billion over 10 years. You look at trade liberalization, and you see our work to complete the CETA. There was our recent agreement with the Chinese government on canola. I think we need to highlight that. You look at what we're doing on our innovation agenda. On comprehensive tax reform, there is the removal of inefficient tax credits and the working group on that. I say to myself, well, I think we're on the right track.

I definitely think we're on the right track. We're facing a lot of headwinds globally that are impacting the Canadian economy, but our platform and our policies are the right things. Even our investment infrastructure to run moderate deficits over a short- to medium-term period of three to five years and then to get back into balance is exactly what is being called for by the OECD, by Christine Lagarde, by Bank of Canada governors—past and present and future, whenever that happens—by former federal reserve chairpersons. I think we are definitely on the right track.

There's one thing you didn't mention, which I'd like to hear from you about, and also from the Restaurant Association and the CFIB. It is on the issue of labour, skilled labour and unskilled labour. We had StatsCan this week report that the Canadian population grew by the most...both on an absolute level and percentage basis in over a decade.

What are we missing in terms of the labour component to be sure that we have the labour force ready to take those jobs and move our economy forward?

4:25 p.m.

Vice-President, International and Fiscal Issues, Business Council of Canada

Brian Kingston

I didn't mention labour, but that does not mean it's not a priority. We actually have an initiative called the business/higher education roundtable, which was just launched. The purpose of it is to improve work-integrated learning to help more students transition from school into careers immediately.

Anything that the government can do to help support that would be critical, and it's very important for us. I'd be happy to provide you with more details on that.

4:25 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Mr. Cadieux, could you address the immigration issue, the labour issue, please?

4:25 p.m.

Vice President, Federal and Quebec Governmental Relations, Restaurants Canada

Pierre Cadieux

Thank you, Mr. Sorbara.

On the immigration side, we like the approach of the immigration minister that is focusing on higher-educated, entrepreneur-type individuals. At the same time, you need the service support when you have these high-income individuals. They generate a lot of services around them, amongst them are restaurants. When you have an immigration policy, you need to have at least 1.5, let's say, of a blue-collar-type workforce to support that white-collar workforce. We want the government to be cognizant of that.

On the temporary foreign worker side, when the economy overheats, we have issues getting skilled workers because we are a low-wage industry. We've made recommendations. We know that the TFW report is now being considered by government and it will react in due course along those lines.

Those are my initial comments.

4:30 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you.

Mr. Sorbara, you have time for a quick one.

4:30 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Mr. Chamberlain, in terms of issues with tax avoidance, tax evasion—a very important issue—there is a study going on right now that CRA has undertaken with regard to the methodologies used to estimate the tax gap and so forth. As my colleague mentioned, we just finished a comprehensive study on it.

Out of the recommendations that you've brought forward, can you list your top two that we can think about for the rest of the afternoon and as we move forward?

4:30 p.m.

Director of Labour Relations, General Counsel, Association of Canadian Financial Officers

Scott Chamberlain

If I had to list our top two, it would be a registry for tax planning products, quite clearly, and a registry for beneficial ownership, to pierce the veil of secrecy that allows these anonymous shell companies to obscure their economic activity and their true beneficial ownership.

4:30 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you.

Mr. Aboultaif.