Finance Committee on Oct. 3rd, 2016

[Kathy Conway, President and Chief Executive Officer, Interior Savings Credit Union]

Mr. Chair and members of the Standing Committee on Finance, I'm Kathy Conway and I'm the president and CEO of Interior Savings Credit Union based here in Kelowna. Thank you for the opportunity to speak this morning as part of the government's pre-budget consultation meeting.

Interior Savings is a member-owned, democratically controlled credit union dedicated to creating local money through the provision of a full range of financial services by helping to build vibrant communities. We serve more than 70,000 members across 14 communities in the southern interior of B.C. Since 2002 Interior Savings has returned $53.8 million to its members, through its member rewards, patronage, and dividend program; and invested nearly $8 million in support of community programs.

Today, I'm here to put forward our views on the committee's second question about the federal actions that would assist Canada's businesses to meet their expansion, innovation, and prosperity goals and contribute to economic growth in the country.

Our first item is the principle of fair taxation across different kinds of businesses. Business structures vary. Our co-operative, member-owned structure allows us to understand our local communities. Our members own us, live in the communities we operate in, and also do business with us. We are key supporters of small business, and when the financial crisis of 2008 hit, Interior Savings was one of the few financial institutions that did not penalize our small business owners through adverse adjustments to prime-base lending.

While in the past there has been recognition of the different co-operative structures of credit unions, this difference, from a taxation perspective, is narrowing. We don't have access to capital markets and certain taxation benefits given to corporate shareholders to attract the capital. We ask that the federal task review on tax expenditures give full weight to fair taxation across all business structures, including credit unions, so that we can continue to lend and invest in our local communities.

Item two builds on the first item and the role of differing business structures. The review of the financial services legislation in 2019 needs to consider the transformation that the financial industry is currently undergoing. We are seeing many new entrants to the industry, and it's clear to us that in the provision of financial services a one-size-fits-all approach doesn't work. Competition is healthy and the banking services should be available to all Canadians. The financial services legislative review must be modernized and recognize the role of all organizations operating in the banking sector so that there is a balance between stability and competition.

Item three relates to the OECD's common reporting standard, known as CRS, that the federal government will be implementing in July 2017. It is an example of the aforementioned concern about a one-size-fits-all in financial services legislation. Size-based exemptions, similar to those in the FATCA intergovernmental agreement, were omitted from the legislative proposal. The CRS would require all Canadian financial institutions to report on accounts held by non-residents of Canada or the U.S. to the Canada Revenue Agency. We ask that a test, similar to the 98% test under FATCA, which exempts those institutions that have 2% or less of their assets held by non-residents, be implemented with the CRS legislation.

Interior Savings Credit Union has 68,000 retail members, of which only 259, or 0.38% of our membership, have non-Canadian addresses, including the U.S. We believe there is a low risk of cross-border tax evasion due to the handful of accounts held by non-residents.

The final item of consideration has to do with innovation. We truly believe that innovation will be a core competency for businesses to survive in the future. This is about more than research and development. It is about taking new ideas to commercialization, which often requires significant investment. Interior Savings has itself invested in two funds to promote start-up and early stage businesses that will add to the economic prosperity of our communities.

We believe that the government can help in this support of a stronger innovative business community funded by private investment. This is possible through, one, the promotion of the co-operative business model and providing tax incentives for co-operative ownership; and two, the adoption of flow-through shares as a means to bring innovative companies to commercial viability, as noted in the Financial Executives International Canada submission.

Thank you once again for this opportunity to share our perspective to help Canadian business be innovative contributors to economic growth.

[The Chair, Liberal, Wayne Easter]

Thank you.

From the West Coast Aquatic Stewardship Association, we have Ms. Falconer, executive director.

[Sheena Falconer, Executive Director, West Coast Aquatic Stewardship Association]

Good morning, chair, and committee members. I'd like to acknowledge that we're on the traditional territory of the Syilx First Nation.

Something amazing is happening in the Barkley Sound on the west coast of Vancouver Island. People from different fisheries' sectors, first nations governments, sports gillnet recreational seine fishermen, and environmental stewards have put aside their historic differences and come together to work collaboratively on fisheries management plans and habitat restoration.

My name is Sheena Falconer. I'm the executive director of West Coast Aquatic. I've come to ask for your consideration in the budget process.

[The Chair, Liberal, Wayne Easter]

I would ask you to slowdown a bit, please.

[Sheena Falconer]

Our recommendations address economic benefit by asking for directed restoration dollars that will create local jobs, increasing fishing results that will increase tourism to the community. A sport fish report showed that a 50% decline in chinook fishing results in lower GDP by millions of dollars, wages lost in millions of dollars, up to 200 person-years of employment lost, and a reduction in federal taxes of $6 million. That's based on the 2007 Gislason report commissioned by the Department of Fisheries and Oceans. We think this is a critical sector to support.

As you may know, in the past, there was a significant lack of trust in the Department of Fisheries and Oceans. There have been protest fisheries with high social and economic costs, and high enforcement and litigation costs for the federal government. There was a lack of understanding, tolerance, and respect between sectors.

Poor management performance was exhibited in the form of overfishing. There were no strategic management plans in place. Moving from conflict to collaboration creates economic stability and benefit. Today, inclusive and collaborative round tables work together on fisheries management plans and habitat restoration goals.

Our region has been severely degraded due to decades of industrial business and urban activity. Little remediation has been done except for small-scale localized stream restoration projects. I want to mention that they have done a lot of good work, but there is more required to be done. In order to better assess the system, the Somass integrated habitat restoration overview report was commissioned. In order to restore optimal function to these systems, it's necessary to spend in the order of $15 million. This restoration is critical as the fisheries in the sound are particularly susceptible to climate change. We face the potential loss of one of the largest sockeye runs in the province as well as reduced chinook, coho, and chum runs.

The Barkley Sound region encompasses some of the most productive fisheries in British Columbia with an average annual sockeye return of 750,000. In the last two years sockeye returns have been between one and two million.

In order to demonstrate the fisheries economic benefit, I would like to comment on a couple of fisheries that happened this year. First nations communities rely upon a stable fishery for food, social, and ceremonial use as well as economic opportunity. Last year, local first nations in the Barkley Sound caught almost 200,000 sockeye resulting in a direct economic benefit of $4 million. This doesn't include any multiplier effects such as fishing equipment, food, clothing, transportation, housing, and other consumables. Much of the benefit is local.

[The Chair, Liberal, Wayne Easter]

Could you please slow down a bit, please?

[Sheena Falconer]

The commercial sector consists of gillnet and seine fleets. These fleets caught over 550,000 sockeye this year, translating into $11 million. Most of the benefit from this fishery is not local; however, there is a significant benefit to B.C. and Canada. Recreational fisheries, according to the 2002 report on the economic benefit of sports fisheries, add $39 million to the economy of the region. Fisheries tourism is a burgeoning industry, generating campsite visits, hotel and motel stops, and restaurant utilization.

Habitat restoration projects not only improve the local ecosystem but also provide employment in a depressed region. This is often forgotten, but it can produce several hundreds of thousands of dollars for local contractors, enabling them to provide longer-term employment for their staff.

West Coast Aquatic is located on the west coast of Vancouver Island. For over two decades, we've worked to offer innovative solutions to coastal concerns, seeking to strengthen the understanding and relationships between parties that share a common interest in the health and wealth of aquatic resources. Our hallmark is well-run projects. Our round table processes are unique, innovative, and scalable from coast to coast.

Our society has increased its activity in the last four years and has gone from a modest $30,000 a year to over $500,000 a year. We've received over $1.7 million in direct funds, which we've leveraged to over $4.4 million. Of this, 80% has gone to habitat restoration, 15% to education, and 5% to enhancement. Our society is audited in order to maintain some of our funding, so we're very well known in our region.

Our requests today include, first, annual funding in the amount of $150,000 to support collaborative management in fishing areas 20 to 26 for the next five years. This approach has proven successful. It has reduced costs and conflict. In order to bring this service to other regions, we require support for facilitation time, meeting space, and supplies.

Second, we are asking for annual funding in the amount of $3 million over five years to support much-needed habitat restoration in the Somass Basin watershed. This small investment in one of the largest and most diverse fisheries on the west coast is critical to restore severely degraded habitat, ensure sustainability of runs, and bring economic benefit to the region.

The overall fisheries, including sockeye, chum, coho, and chinook, bring in excess of $50 million to the region each year. While we have undertaken projects to address some of the most pressing issues, it is necessary to have a sustainable source of funding that will allow for proper planning and assessment and ensure the highest-priority projects get the attention they require. We feel this is particularly important with climate change showing us that sockeye are at risk in our system.

We are also making a small request that we be included in consultation processes and perhaps receive some sort of financial help to attend.

In conclusion, our organization has come up with solid solutions to manage harvest, restore habitat, and provide protection of valuable ecosystems. The fisheries in the Barkley Sound are complex and require careful management to ensure that the children of tomorrow are able to enjoy the thrill of watching salmon leap Stamp Falls and continue to benefit from the economic bounty of the region.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Falconer.

We now have the Vancouver Community College Faculty Association, with Ms. Shortt.

[Karen Shortt, President, Vancouver Community College Faculty Association]

Thank you, Mr. Chair.

Good morning. My name is Karen Shortt. I'm president of the faculty association at Vancouver Community College. I represent the 650-plus faculty who teach at the college.

I'm here today to request adequate funding for English-language training. At this moment, there are 921 students on our English-language wait-list. That's 921 students who are stalled and not able to proceed with their economic and social ability to integrate into Canadian life. That number of 921 will likely increase to well over 1,000 by Christmastime, and 45 of the 921 students on our wait-list have priority status. This indicates that they are refugees. Many are from Syria.

Mr. Chair, the invitation letter I received to speak to this committee stated that you would welcome views on what federal measures would help the country's economic growth for both Canadians generally and Canadian businesses. As an educator for over 30 years, I cannot imagine anything more fundamental to the success and inclusion of new Canadians than the ability to communicate. The need for ESL funding is tremendous, as evidenced by our long wait-list.

Vancouver Community College has the resources in place to meet this need. VCC has proven curriculum, and can offer classes from basic literacy to the highest levels of Canadian language benchmarks. We can offer classes in the morning, the afternoon, the evening, and on weekends. We can meet any need. We have experienced faculty who have a deep understanding of immigrants' needs. We have empty classrooms, and campuses that are centrally located on the SkyTrain routes. We can provide occupation-specific language training, credential recognition, and Canadian work experience. We have in the past offered combined skills programs, such as ESL for engineers, English for health sciences, and communications for accountants.

We lack the funding to offer enough of these programs to meet the need. Cuts to LINC, the language instruction for newcomers to Canada program, in the 2016-17 budget resulted in 220 students not being able to return to class in April. Those 220 students are still sitting on the wait-list. They can't get on with their lives, and many can't work up to their level.

Minister McCallum has stated that there's very little in terms of welcoming newcomers that is more important than language. I ask this committee to recommend that funding for English-language programs be increased to meet the need so that we can help immigrants become fluent and they can contribute to this country's economic growth.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, Ms. Shortt.

Thank you to everyone.

Mr. Grewal.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair.

Thank you to all of our witnesses for coming today.

I want to start with the Coast Guard. Recently our government was given an independent report on the inept...basically the fact that our assets are worthless in the Coast Guard. They also said that it was successive failures of Liberal and Conservative governments in not addressing the problems with the Coast Guard. They put a little bit of blame on the Coast Guard itself—for not doing a good enough job asking...for getting rid of inefficient programs.

Do you have any comments on the report that was released just a few weeks ago?

[Allan Hughes]

I haven't seen that report. I haven't been privy to it.

I can say, being involved with the Canadian Coast Guard for approximately 23 years, that your comments are well taken with regard to the cuts. Our union approached government in the nineties to help assist integration of two services that operated within the Coast Guard to save that $15 million a year. Unfortunately, last time around it didn't happen. Some decisions were made that ultimately placed at risk the sustainability of the program in the coming five years or so with regard to staffing.

As far as the shipbuilding program goes, those aren't our officers, but the focus has always been on the building of ships in the national shipbuilding program. However, it's the operational nature, the long-term sustainable funding, to have those ships obviously at sea. For our officers, it's being able to continue to build capacity within the system at our national headquarters in Ottawa to be able to carry out effective project management and look at technologies. We're so short-staffed in our national headquarters that they're bringing back two retired managers to look at the new technologies. That's how desperate things have become.

[Raj Grewal, Liberal, Brampton East, ON]

How many people are members of your organization? How many employees do you represent?

[Allan Hughes]

When we're fully staffed it's around 294. Based on the last list I have, we're around 240, maybe a little fewer than that. There are some who are on long-term disability or leave without pay for such things as maternity leave, those types of things, or assignments, but we're short 50 officers and each of those officers is probably driving about $50,000-plus in overtime costs that we're missing. It is a significant amount of money.

We have a staffing factor of 5.5 for each operational position, so in a centre with three officers, the normal staffing complement would be 17.5. That's based on 1960s standards for entitlements.

Obviously we've made progress in the labour movement to have additional days of rest and also for maternity/paternity leave, and that wasn't taken into account. We'd like to see the staffing factor increased from the 5.5 so that when we have those long-term disability cases or parental leave—which is going to happen more and more because we're becoming a younger workforce—we don't have these gaps where we're having to demand high amounts of overtime from our officers as well as having the budget implications.

[Raj Grewal, Liberal, Brampton East, ON]

What's the financial ask?

[Allan Hughes]

The financial ask is to increase the staffing factor at the centres.

[Raj Grewal, Liberal, Brampton East, ON]

Do you have the monetary value on that?

[Allan Hughes]

Off the top of my head, I don't.

[Raj Grewal, Liberal, Brampton East, ON]

Okay, that's fine. You can submit it to the clerk later.

Thank you.

Mr. Friesen, 99% of my constituency work is immigration-related. I represent the second-most diverse riding in the country where 87% of my population is associated with visible minorities. Recently our government has just increased the numbers of immigration across all categories and 320,000 new immigrants came in, which was a substantial jump over the previous year, which was 240,000.

Your comments, in my humble opinion, are bang-on. We can't just increase the number without having supportive programs for them when they get here. English training is a big one. I've seen throughout my history, throughout my family's experience in this country, that immigrants who learn the language quicker are able to become more successful, which is a good thing for the Canadian economy.

In your perspective, how can we deliver those programs more efficiently? In my humble opinion, there is just too much red tape, bureaucracy, in getting the services to the people who need it the most.

[Chris Friesen]

There are a couple of things we have to look at. One is the use of technology, not for everyone, but online learning is an area that I think we have to look at and invest some additional resources in, especially for those who are going into smaller, rural communities that don't have the infrastructure already in place. There is also an opportunity, for example, for those refugees who are coming from abroad as part of the government-assisted refugee program to look at starting the basic language process overseas prior to coming to Canada. Right now a resettled refugee may wait up to a year prior to coming into the country as a permanent resident. There may be things we can do on that front as well.

One of the challenges with the Syrian refugee resettlement initiative for providers on the ground was the size of families. Some of the families we were seeing averaged six but went as high as 13 members, and 60% were under the age of 18 years old, 50% under 12 years old. This had a huge impact on women getting into the language programs because of the pre-existing wait-list for child care. It has to be looked at from a multi-pronged approach. That would be my initial comment.

[The Chair, Liberal, Wayne Easter]

Okay, I assume Karen's numbers are in your 5,012, right?

[Chris Friesen]

Right.

[The Chair, Liberal, Wayne Easter]

Mr. Liepert.

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

Thank you, all, for coming today.

My name is Ron Liepert. I am the Conservative member of Parliament for Calgary Signal Hill. As Conservatives, we believe in balanced budgets, so one of my personal goals over the next four days, when we meet here and in Edmonton, Regina, and Winnipeg, is to see whether, at the end of this process, the asks balance off with the savings to get us to a balanced budget. At the end of the day, we are the finance committee. We are not the immigration committee; we are not the infrastructure committee; we are not the health or any other committee. We are talking dollars and cents.

Mr. Mueller, you talked a lot about the potential savings. I don't think anyone disagrees with the fact that we need to do a better job on being smarter when we build. If we are going to encourage retrofits, primarily at the individual taxpayer level, I am assuming you are asking for government to put in place some sort of an incentive program or a subsidy program. How would we get individuals with existing buildings to voluntarily retrofit?

[Thomas Mueller]

First of all, I want to clarify that I am not talking about houses or individual homeowners, but buildings over 25,000 square feet.