Evidence of meeting #40 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was alberta.
11:45 a.m.
Liberal
Steven MacKinnon Liberal Gatineau, QC
I want to use my remaining time with you, Mr. Kershaw.
I was very intrigued by your interesting observations on the intergenerational implications of public policy.
You've been following the CPP discussions, I assume.
11:45 a.m.
Professor, Human Early Learning Partnership, University of British Columbia
We've actually worked hard on it.
11:45 a.m.
Professor, Human Early Learning Partnership, University of British Columbia
I would say first and foremost it's interesting that we talk about the CPP in terms of intergenerational fairness and are concerned about it, because, really, of all the things, that's one of the most intergenerationally sound programs we have in Canada.
I think the adaptations that were made recently were targeted at some risks that are emerging for younger Canadians, and I think all levels of government should be applauded for making that adaptation.
What we need to do is take that momentum and look more generally across our public policy areas to talk about some other, much larger intergenerational risks and tension that are emerging. Because we don't report at the federal or provincial level on how spending breaks down by age, we are hampered in having that kind of conversation. That's why we're coming here today for generation squeeze.
Our first ask—we have many others—is a really inexpensive one. Let's start reporting on how our spending breaks down at government levels by age, so that we can have this more complicated conversation about whether we're working fairly for all generations.
11:45 a.m.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
I want to follow up on that.
I was interested in some of your comments and agree with some of them. I don't necessarily agree with all of them, but that's why we're here.
The one thing you did not mention, which I think is the balance here, is the fact—I think it's fairly common knowledge or belief—that this generation, your generation, is going to be in line for the largest inheritance of any generation in history. I know I'm not a wealthy guy, but I know my kids are going to inherit a hundred times what I inherited from my parents.
Is that not some of the balance?
11:50 a.m.
Professor, Human Early Learning Partnership, University of British Columbia
It's a brilliant question. If only I had a dollar for every time I was asked that question, I would be wealthy.
Here is the answer.
First off, the data are unclear about just how much people are going to inherit. However, let's imagine that every younger person is going to inherit every dollar that their parents have accrued through the increase in housing prices. The typical Canadian is going to live to 82 to 84. Their kids will then inherit when they're 50. Their grandchildren will be in their twenties and thirties.
Here's the rub. We know that, as a species, we are especially sensitive to our environment before we get to grade school. Yet, you look at how Canadians put our money into our public investments and see we're really slow to invest in younger Canadians until their kids get to grade school.
We need public policy to now adapt for the fact that a younger demographic is not due to inherit in the moments that they're raising their young kids. They're going to inherit when their kids are already graduated and into the labour market. We need public policy to adapt because of the progress of our life expectancy.
11:50 a.m.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
There are things...like my kids have TFSAs that I put money into. In order to have that discussion, you need to have all of those balances.
I have one quick comment.
If I'm hearing what you're saying, then you're saying that the government's decision to roll back the previous decision of the Conservative government for old age retirement from 67 to 65 was a bad move.
11:50 a.m.
Professor, Human Early Learning Partnership, University of British Columbia
That's a very complicated question to have me go on record about here.
11:50 a.m.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Well, there are going to be more funds going to old people.
11:50 a.m.
Professor, Human Early Learning Partnership, University of British Columbia
It was interesting to see that was not at all an evidence-based conversation—that decision—and it does reflect the fact that many other decisions are not evidence-based.
One of the things that happens is that results in not investing enough in a younger demographic where the evidence is increasingly pointing. That's who is especially vulnerable in Canada.
11:50 a.m.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Thank you.
I want to ask Brent a couple quick questions on forestry.
Brent, I know that you're here representing Al-Pac, which is primarily pulp and paper, but you are part of the Alberta forest products industry.
I'd like to get your sense of what it's going to mean if we fail with the U.S. in getting a softwood lumber agreement.
11:50 a.m.
Unit Leader, Business Development And Government Affairs, Alberta-Pacific Forest Industries Inc.
I was expecting that question.
We're hooped. We've been through this dance before. I think we have a good idea of what to expect. We had one year of no action, and that expires next week, I believe. They're going to countervail us. They're going to do everything they can to sink the Canadian industry again.
That's a huge impact on a big chunk of our industry. It directly impacts the sawmills, and indirectly impacts the rest of us. We, as a pulp producer, with no real ties to a sawmill, buy product chips and things like that from sawmills. We'll feel it that way. It's bad.
Again, where the industry recognizes that it needs to transform is that we can't be that dependent on that neighbour.
11:50 a.m.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
We had in Ottawa, a couple of weeks ago, all of the various regional government agencies, or whatever they're called, Western Economic Diversification, out of Edmonton, present to us. The presenter actually stated that his view of the Alberta economy for 2017 was going to be “somewhat brighter”, I think those were the words he used, definitely better than 2016. I bet him an Alberta steak dinner that he's going to be wrong.
We all know about the oil and gas sector. We heard this morning from the beef sector that—you used the word “hooped” for forestry—the beef sector is close to being hooped right now. Now we have the forestry sector which could be on its knees.
With the three largest industries in Alberta, do you have any thoughts on where we're headed in 2017 for the Alberta economy?
11:50 a.m.
Unit Leader, Business Development And Government Affairs, Alberta-Pacific Forest Industries Inc.
Hunker down.
11:50 a.m.
A voice
Yes, I agree with you.
11:55 a.m.
Unit Leader, Business Development And Government Affairs, Alberta-Pacific Forest Industries Inc.
Again, we in the industry—by nature I'm a forester—plan on a 100-year planning horizon, so I'd like to think that this is one of those bad spots, not a 100-year plan, but the 100-year still looks good.
The industry has made a lot of changes. The great thing about our industry is that at times we're slow to react, but we've seen this coming for a long time. The change in electronic media alone is so evident and so obvious in our business that we have to change, and we are taking a lot of those steps. We're in it for the long haul. I'd like to think that this is a rough period that we'll get through like we have in the past. We're going to come out damaged. Without a doubt there will be some casualties. What can I say? We've been there before, and it gets harder every time. There's less flexibility, and it's like a bully; they just get smarter every time they try to pick a fight with us. We have good arguments, yet they come back and change their legislation or change whatever it is to get around the arguments that we won the last time.
11:55 a.m.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Thank you very much.
I want to start with Mr. Gorman.
With the solar industry, as my colleague mentioned, we heard from the regional development agencies. It's a race it seems to diversify economies and get to clean energy. Something that I haven't heard anyone talk about—and I would think your industry, in particular, would need—is storage. We really can't do anything with wind and solar if it's not sustainable and if there isn't a storage element for it because you really can't turn off some of these other energy producers without having that reliable energy.
What partnerships is your industry forming, whether it's with our government or as an industry-wide...to be the leader in storage? Frankly, I think whichever country or place answers this problem will be the leader in clean energy.
What are you and your industry doing to make sure that it's Canada?
11:55 a.m.
President and Chief Executive Officer, Canadian Solar Industries Association
Storage really is the Holy Grail for these variable electricity sources, energy sources like solar and wind. There are many technologies on the storage front, which are going through development right now that serve different scales of electricity production. You can use lithium ion, like they use in electric vehicles, for your home. In fact, I'm installing one right now with my solar panels in our home. Then they've got many other technologies, like big turbines that circulate underground, pumped hydro storage, etc. Some very high-tech stuff is being developed that could be the silver bullet.
That being said, it's a race. Most of the storage technologies, not all of them, are still uneconomic at this point, although the costs are coming down quickly. We see jurisdictions around the world integrating renewable electricity and renewable energy into their markets, bringing them there, integrating them, as I said, with some conventional sources that help balance out the variability. Then when storage does come online, it greatly augments the renewable energies and the other electricity sources that are there, so that they can transform their systems over time.
I want to say very clearly, wind and solar electricity by themselves, even as variable electricity sources, add a great deal of flexibility, electricity, and energy to the grid. They work well by themselves, but we are all striving for storage solutions to couple with that and give everyone the maximum flexibility.
As to the second part of your question, we're working in close collaboration with the associations. Our associations are working with the storage associations. We're very active in certain markets across Canada. Ontario has launched several initiatives and pilot programs around storage that are combining various electricity sources and storage. There's great work being done in Germany and California. I think as we go through the coming months and years, we'll see that storage plays a very important part in making a much more robust and versatile electricity grid for everyone.
11:55 a.m.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
I guess I'm just surprised by all the budget asks. I would think that on clean energy and diversification, storage research and development would be key because, like I said and you said, it's the Holy Grail, and whoever develops it will be the leader in this technology. If we're waiting for that to be developed, it's a missed opportunity in my opinion.
I wanted to ask Ms. O'Brien-Moran about something in your brief. In addition to the things that my colleague talked about, you asked for clarification and in the second recommendation, you're actually asking that allocation of income be spread to members to the age of 10 instead of 18.
How do you come up with a number of a 10-year-old being included in the income eligibility or allocation?
Noon
Hutterite Tax Expert, MNP LLP
Section 143 of the act is the only section in the entire act that is so punitive that it disallows the deduction for any income that is paid to a child. Everywhere else across the act, it's based on reasonableness. The time they've spent, the knowledge of the person providing it, the services provided, and so on. It's based on a reasonableness test for everyone else. Hutterites are the only ones who actually are disallowed the allocation of any amounts to someone who is below the age of 18. It's very punitive.
If you fall into section 143 because of your religion, you are disallowed an opportunity that every other taxpayer gets to have. Why are we asking for the age of 10? If you spend any time on a Hutterite colony, you'll realize that even before 10, in fact at the age of six, they start having great responsibilities. You may agree or not agree with this. We hear the terms “child labour” and things like that.
Both of my parents grew up on family farms. I grew up having to help out on the farm at a very young age. I drove a tractor at age nine. Whether you agree with it or disagree with it, not just Hutterites but all family farms utilize people who are below the age of 18. In fact, a family farm would not survive if they had to go and hire people to do the work that the children do.
Even at the age of nine, a person can be completely responsible for the dairy. That person who is nine years old is responsible for determining which cow a bull should be bred with, and whether the cow has mastitis that needs to be treated. That person is awake and up to do all the milking, even doing milking at the end of the day.
I know it's hard for some people to step away from their personal beliefs, but the reality is on a family farm people below 18 have to contribute. Hutterite colonies are no different.
Noon
Liberal
The Chair Liberal Wayne Easter
I'll have to cut you off there.
We'll have time for one more question from each of the parties. While you are thinking about what those might be, I have a couple.
Ms. O'Brien-Moran, am I to understand, from your presentation, that what you are requesting was in place until 2013?
Noon
Hutterite Tax Expert, MNP LLP
Thank you. I can provide clarification of that, Mr. Chair.
No. Back in 1961—this has been going on for a long time—the CRA said that Hutterite colonies would report their income as farming income. Even though the income is determined at the colony level, it ends up being allocated out to the individuals and taxed on their personal tax returns as farming income. This has been required since 1961.
When the working income tax benefit came in, they reported it on their tax returns, from 2007 up until 2014, and the CRA assessed their returns as filed. However, what actually happened was that another accounting firm had been reporting their colonies' returns—they do only two colonies. They reported that income as other income instead of how the CRA had specified it, as being reported as farming income, so this triggered an inquiry by this accountant to ask why.
This led to the CRA providing an interpretation saying, no, just for purposes of the working income tax benefit, we are not going to consider it to be farming income. For every other purpose, whether it is for paying instalments, or back when NISA was involved, or the five-year block averaging, all historically and for everything else, it's considered farming income. Just for the working income tax benefit, we're going to say, no, it's not farming income. They had been filing it. There has been no change in the act. It's simply an interpretation by the CRA.
Noon
Liberal
The Chair Liberal Wayne Easter
What I'm trying to get to is, was it done previously the way you are requesting that it be done now?