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

4:30 p.m.

Conservative

Ziad Aboultaif Conservative Edmonton Manning, AB

Thank you very much.

I'm a small business owner, by the way. I owned three restaurants in the industry. Regrettably, I never made any money out of it.

I'm looking at the CFIB charts, at those numbers. I see of the policies that you were suggesting, none of them were introduced in the 2016 budget, and we don't know how the 2017.... Hopefully, 2017 will regard some of these things, which are very logical for any business...freezing CPP. Right now we're facing a huge increase on the CPP.

There is the EI premium, which is another big factor. Again, I'm a business owner and I know what impact these can have. There is the promise to at least balance the budget. All of these things that you've addressed here would help small businesses to prosper.

If we have healthy small businesses in the country, then we can start talking about job creation, which in reality the 2016 budget did not touch on in any logical way...even proven formulas that can tell us where we're going from this point.

I would like to affirm with you on that, and could you elaborate on the CPP effect on the growth of small businesses?

4:30 p.m.

Director, National Affairs, Canadian Federation of Independent Business

Monique Moreau

We've been polling our members on this issue for quite some time. This notion of increasing CPP premiums has come up again and again. It's the biggest payroll tax that our members pay. We understand that for the employees it's deferred income, but business owners feel as though they don't get this money back. It's not deferred income for them. They have no choice but to pay it. They have to pay it even if they don't make any money that year, as long as they have employees. For them, that makes it a tax.

We know that 80% of our members will see an impact on their business, whether it's having to reduce hiring plans, or freezing or cutting wages. We know that the impact of this increase will be significant for them. That's why we're asking for alternate support from the government, whether it's through EI, reducing the corporate income tax rate, special considerations on carbon tax. These are all coming down the track.

4:30 p.m.

Conservative

Ziad Aboultaif Conservative Edmonton Manning, AB

Thank you. That's great.

Again, we're talking about job creation, and the policies will cost us through job reductions, which is not something that we are able to afford at any time.

I would like to hear from you, Ms. Ritchie. You mentioned an independent EI account. Can you elaborate on that, please?

4:35 p.m.

Co-chair, Inter-Provincial EI Working Group

Laurell Ritchie

Quite simply, this has been a long-standing demand on the part of many players here. I think all the stakeholders have had an interest in it. We had a brief semi-experiment with that for a few years, and it was ditched. I think we need to get back to that.

4:35 p.m.

Conservative

Ziad Aboultaif Conservative Edmonton Manning, AB

If we run into a deficit in the EI account, how do we pay back that money? You're suggesting that we need an independent EI account, so if the independent EI account runs into a deficit, where do you get the money to pay those deficits? How do you manage?

4:35 p.m.

Co-chair, Inter-Provincial EI Working Group

Laurell Ritchie

I think the assumption here is that we're going to have to work with the premiums that are available. Again, we have advocated that there should be a government contribution as a tripartite contributory fund. In the past, that is exactly what happened, up until about 1990. When there was higher unemployment, the government contributed. One could use different triggers for government contributions, but one of them is the incidence of high unemployment.

We're really talking about the management of the system and the decision-making about the system. The financing of it could be set aside as a separate issue, but in terms of the ability of governments over time to borrow those funds and not to put them back in, I think everybody's quite familiar with the numbers. Something in the order of $57 billion plus went out of the system since the mid-nineties. Arguably, we would like to see that money put back into the system.

4:35 p.m.

Conservative

Ziad Aboultaif Conservative Edmonton Manning, AB

Technically speaking, do you see that the EI account would be managed by the Ministry of Finance?

4:35 p.m.

Co-chair, Inter-Provincial EI Working Group

4:35 p.m.

Conservative

Ziad Aboultaif Conservative Edmonton Manning, AB

Who's going to manage it?

4:35 p.m.

Co-chair, Inter-Provincial EI Working Group

Laurell Ritchie

An independent financial body responsible for administering—

4:35 p.m.

Conservative

Ziad Aboultaif Conservative Edmonton Manning, AB

So like a private sector...?

4:35 p.m.

Co-chair, Inter-Provincial EI Working Group

Laurell Ritchie

As for the stakeholders, the government should participate in it, but business and labour, which contribute, would be the other stakeholders.

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much.

Mr. MacKinnon.

September 29th, 2016 / 4:35 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

Thank you, Mr. Chair.

I would like to thank the witnesses for being with us today.

We are beginning a long and very robust process of pre-budget consultations. As my colleague Mr. Sorbara said, we are facing headwinds in the global economy. The central banks have done practically everything to help us and there are very few tools left to use when it comes to monetary policy.

Some of you have said that investing in infrastructure was beneficial for the economy, but what we are looking for here is growth. We are looking for ways of stimulating it. Growth is going to come not just through government investment, but also by investment on the part of businesses.

Mr. Kingston and Ms. Moreau, what do you think would be the best way to stimulate investment by businesses?

4:35 p.m.

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

Brian Kingston

Thank you. That's an excellent question. It's something that we've looked at quite extensively.

The number one thing that will increase business investment is growth. I know that's the problem, but businesses will invest when they see growth. Because we've been in this situation where we've been growing at 1.7%, which is far lower than what we've seen over the past decades, it's difficult to spur investment in that environment. Once the economy picks up and there's some certainty that there's growth going forward, I'm positive that you'll see a surge in business investment.

4:40 p.m.

Director, National Affairs, Canadian Federation of Independent Business

Monique Moreau

Our members have talked about lightening the tax load and the regulatory load. In our view and the view of SMEs in Canada, cutting tax rates and employment insurance or Canada Pension Plan premiums would help for hiring people, giving wage increases and continuing employment and also training, both formal and informal. On that point, our entrepreneurs told us that the training they offered employees represented $16 billion per year, which is very substantial. In addition, we are talking here about an economy in which the tax rate is fairly high.

As Mr. Kingston pointed out, there is going to be growth if conditions are created to support these entrepreneurs who hire Canadians.

4:40 p.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

I think everyone agrees on the need to reduce the regulatory load. The main issue is dealing with the tax system; in other words, income taxes. This committee determined that simplifying taxes was the spearhead for economic recovery. The Minister of Finance seems to agree on that, given that he has also initiated a similar exercise.

Mr. Chamberlain, could you talk about the importance of simplifying income taxes and the consequences that could have for the regulatory burden in Canada?

4:40 p.m.

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

Scott Chamberlain

We agree that a review of tax expenditures and a reduction in those tax expenditures is warranted. In response to Mr. Kingston's suggestion that growth spurs investment, we believe that investment in our middle class is key to driving that growth. In order to drive that growth, to drive that investment, we need consumers who are compensated fairly.

One of the key things this government can do is to carry on with and follow through on the issue of pay equity.

I represent a group of employees who are predominantly female. In this country, we know—it's not debatable—that as a woman you make less than a man. We have a pay equity issue. If we address that pay equity issue, we'll get more money into the middle class to be spent at our businesses to spur on that growth.

4:40 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. MacKinnon, you're done.

Mr. Nater.

4:40 p.m.

Conservative

John Nater Conservative Perth—Wellington, ON

I want to begin by addressing the first two questions to Mr. Emmett and Mr. Cadieux.

I'm a big proponent of private members' bills. I think private members' bills have some of the most innovative policy ideas. I know that the current government thinks they are a backdoor way of legislating, but I think there is some great legislation brought forward through private members' bills.

I want to get Mr. Emmett's comments on Bill C-239, which was an act to amend the Income Tax Act and increase the value of donations to charitable organizations to be more in line with political donations, those 75% donations, in terms of tax receipts for charitable donations. How would that have affected the charitable sector and your organization?

Mr. Cadieux, we did have a private member's motion earlier in the spring. It would have “freed the beer”, in reference to the Gerard Comeau decision. I want to get your comments on how the loosening of interprovincial trade barriers would have benefited the restaurant industry.

Unfortunately, both those initiatives were voted down.

4:40 p.m.

Chief Economist, Canada's Charitable and Nonprofit Sector, Imagine Canada

Brian Emmett

I'd like to make a couple of points in responding. One is on the relationship between charities, non-profits, and growth. Here we have a sector that from 1996 to 2008 grew faster than the Canadian economy. That is the last date for which we have numbers, which comes back to another bugaboo of the charitable sector. The sector did that despite the fact that they don't pay taxes and they have difficulty accessing investment capital. They don't issue shares, they don't make profits, and they can't pay shareholders.

You have a sector there that has a lot of potential for growth. When it comes to looking at tax incentives to donate, I think there are very positive things that charities can benefit from, but one has to keep in mind that, for the sector as a whole, donations account for about 10% of revenue, and another 45% to 50% comes from government. Therefore, our fundamental concern, really, is with the number that has been the basis of discussion around this table, which is that we're heading into a long-term period of lower economic growth. To me, deficits are a symptom of that, as opposed to a cause.

What we're looking at on the charitable side is one thing that hasn't been mentioned. Along with the economic fundamentals, there are the demographic fundamentals. We see this looming divergence between demands on charities and demands on governments. Growth is falling and demands are accelerating. The aging of the population is accelerating. Cultural change is accelerating.

We think that charities and non-profits are basically in the same vise that governments are. What we're looking for is a joint solution, a reform of our relationship with the government, in a broad sense. Tax incentives may well be part of that, but there's no single-bullet solution out there.

4:45 p.m.

Vice President, Federal and Quebec Governmental Relations, Restaurants Canada

Pierre Cadieux

A couple of years ago, we instigated what we called Raise the Bar, a report card on the various provincial jurisdictions in the area of alcohol and spirits. This is a perfect example of interprovincial non-tariff barriers.

As a client, we are a big client, right? We buy a lot of alcohol and spirits, but we and our members, especially the bigger players, are confronted with having to deal with these 10 separate jurisdictions that impose their ways of selling alcohol and spirits. It's not the liberalized environment that we would like to see.

Again, I'll take the example of Quebec, because I'm responsible for that province. What you have in Quebec is a monopoly, where even though you're the biggest client, you have no say in the negotiation of the prices. It took a long time to get certain concessions from the SAQ, but still we're not in an equal partnership or business relationship. It is a very skewed kind of relationship.

I'll conclude by saying that in terms of the case now before the courts—it has been appealed—of the New Brunswick chap who went to Quebec and bought beer, we're obviously following that with a lot of interest.

4:45 p.m.

Liberal

The Chair Liberal Wayne Easter

Very quickly, Mr. Nater.

4:45 p.m.

Conservative

John Nater Conservative Perth—Wellington, ON

I'd like to ask Madam Moreau to talk a bit about passive income versus active income. Would you expand on that very briefly and on how that's affecting the small businesses?

4:45 p.m.

Director, National Affairs, Canadian Federation of Independent Business

Monique Moreau

Briefly, the largest sector that's impacted right now, in our membership at any rate, is the self-storage facilities. They weren't contemplated in the legislation when it was designed years ago. As well, there are the motels and hotels, and now we've had some clarification on campgrounds.

Essentially, if you are a small business and you run a storage facility, you don't get access to the small business tax rate. It was designed so that if you have an apartment and a full-time job and you rent out an apartment, you would pay tax on that. That's an appropriate relationship. These individuals are mom-and-pop family businesses that are not getting access to the small business tax rate. They are now being aggressively audited by the CRA and, in some situations, having to pay tens of thousands of dollars, which will put them out of business. We think there is an opportunity for reform and an update.