Finance Committee on Oct. 20th, 2016

[The Chair, Liberal, Wayne Easter]

We'll have to cut it there. You're a little over, Pierre.

We have heard the problem you outlined on succession, Mr. Lemieux, in the CFA in Ottawa, which you're a part of, and in the farm organizations in New Brunswick and in Prince Edward Island, as well. We're hearing it in numerous locales.

Before I turn to Mr. Sorbara, I do have one question on something you didn't mention in your presentation, and that is on farm safety nets. AgriStability has been cut fairly substantially over the last number of years. Is it adequate to do the job of a farm safety net going forward? What needs to happen there?

[Pierre Lemieux]

If the “Agri” programs were adjusted properly, they could be an interesting option. We agree that the AgriStability program, whose coverage has been reduced to 70%, is not adequate. If the coverage stayed at 85%, we think it would still be a good program.

In some cases, some years when farmers are paid more than their production costs because of the market conditions, there may be some negative consequences. However, it is best to have a good coverage at 85% and to include a corrective measure to prevent abuses due to market conditions.

To that end, we could learn from what Quebec has done. Following cuts to the AgriStability program at the federal level, the Financière agricole du Québec developed the Agri-Québec Plus program, which, however, has not delivered the expected results.

At least, the Government of Quebec, which supports agriculture through the Financière agricole, has recognized that the AgriStability program, with a coverage at 70%, was not working and was not providing the support needed by farms.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Welcome, everyone.

For the last couple of days we've heard a lot of colour on the issue of succession and intergenerational transfer of assets on farms. It seems to be, obviously, a sticking point, and something which, on first glance, in my humble opinion, needs to be addressed. Perhaps somebody could provide the devil's advocate's view on the other side. Why are the rules the way they are right now? Is there any reason they should be that way? I'm obviously going to take a look at Bill C-274, Mr. Caron's bill. I'm very curious. Tax policy is very important. It's part of innovation. It's part of making sure our economy runs smoothly.

I would like to hear from Mr. Lemieux, and any of you on the issue of why the rules may be the way they are, please. This is more for my benefit.

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Leblanc.

[Michel Leblanc]

We did a report a few years ago that was published—I think perhaps even the projet de loi was influenced by the report we published—on the transfer of businesses, not only in the farm industry, but in all our industries. We noticed at the time that if you were transferring to your own family, you had this advantage with the fiscal system. We asked that question—why so—of the Quebec government. The answer we got was this. In the past there was this perception that if you transfer, and while you transfer you don't take the taxes, you will perpetuate the wealth from generation to generation in a family, and that would be unfair. That was the idea. Every time you transfer within a family, you have to take this, let's say, wealth tax. Eventually, the system made it so that if you sell it to someone else, you have fiscal treatments that are preferential to selling it to your own kin. That was fundamentally the argument.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

On the farm side, for example, Germany allows the transfer of businesses from one generation to the next without invoking capital gains. It's not until you sell your business to, what I would call an arm's-length institution, individual, entity, however it's defined in the tax code, do you trigger that capital gain.

I've run into the situation in my area where families will spend a lot of money on tax planning, which I believe should be spent in another area, trying to allow the business to continue to operate, but then some have to make the ultimate decision to sell.

If anybody else could add some colour on it, that would be great.

[Pierre Lemieux]

I'm not a tax expert, but we can send you a note from our tax expert on the issue.

[The Chair, Liberal, Wayne Easter]

Mr. Lemieux, if you could do that and send it to the clerk, that would be good.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

On interchange fees, I understand a voluntary agreement is in place that was reached with Visa, MasterCard, and the Canadian government to reduce fees to 150 basis points. I also understand that some entities are not happy or not seeing the results they should have.

Intervening in any sort of marketplace should be done in a very diligent and measured manner. I've read about the Australian situation where they had to re-regulate after they intervened. I understand what they've done in Europe.

I'm looking at this issue. I've ordered a study from the Library of Parliament. My former career was working for a financial institution for a very long time, and I'm trying to get up to speed again on the issue.

Yves, have the small businesses—not the larger entities, like Couche-Tard, or Rona, which I believe is now part of Lowe's—in Quebec seen a reduction in what they are incurring on interchange fees?

[Yves Servais]

There was a drop of 10% in the rates as a result of the pressure from the Conservative government of the day for Visa and MasterCard to reduce them. The change did not have a significant impact for us and did not result in additional funding being released to enable merchants to reinvest in their businesses and to hire new employees.

Visa and MasterCard told us that they were going to give us a small 10% reduction and that we should be happy with that. If England, the European countries and Australia were really able to force the hand of credit card companies, I think that we can also do something here.

Do we need to set the same rates as the ones imposed in Australia and England? Perhaps not. When we take a close look at the rates that Visa, MasterCard and financial institutions impose on small and medium-sized businesses, I don't see why 40% of the rate is used to reward consumers by giving them premiums and gifts. I don't think retailers need to cover those costs. If that percentage were subtracted from the average rate of 1.5%, the rate would automatically go down to less than 1%, which I think would be reasonable.

[The Chair, Liberal, Wayne Easter]

Thank you. I'll have to cut you off there.

Mr. Albas.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair.

We have learned that the Board of Trade of Metropolitan Montreal supports the trans-Pacific partnership. Does the Union des producteurs agricoles also support the agreement?

[Pierre Lemieux]

I have talked about this before. Yes, we support the agreement as long as there's consideration for the products in the supply management system.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you.

Does the Association des marchands dépanneurs et épiciers du Québec also support the agreement?

[Yves Servais]

Yes.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

That's fantastic since free trade policies are good for Canada.

Let's now talk about the affordable housing framework.

In British Columbia the provincial government, in partnership with the previous federal government, has put in place more housing, whether you calling it social housing or affordable housing, and rental subsidies for those on low income. There is a rental stock, or at least there is a stock of social housing greater than we have ever seen in British Columbia. A large part of that was because of the affordable housing framework that was set out, in which the federal government would give the monies to the provincial government which then worked with BC Housing. BC Housing handles all of the purchases, the contracts and whatnot. They are the closest to the people, and obviously we don't want to see a duplication of management and administration costs.

Do you think that those funds should be invested directly, working with groups like yours, or do you think that they should be going to the provinces first, which have jurisdiction in the area?

[Pierre Gaudreau]

We think it should be both. It has been both in the past.

Some of the social housing that was done before 1994, such as public housing, was done by the Société d'habitation du Québec, but co-op housing and non-profit housing was done by community groups, which is a model that still exists here.

I was saying that the Quebec government had funded social housing for more than 20 years now, so we think that in the next budget, the national housing strategy should put a lot of attention on developing social housing and giving the money to the provinces, as has been the case for B.C. Effectively, they are the nearest to the situation in the cities to develop...including community organizations. That's a model that works.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you for your comments on that.

Mr. Leblanc, in regard to small and medium-size businesses, one thing I've heard from my constituents is that they wonder why they can't get hold of new technologies as quickly.

For example, there is technology where you can swipe a MasterCard, a Visa card, or whatnot on your cellphone, but it's not available to be used with the Interac system. When I asked further about this in Ottawa, I found out that it's because the industry associations that govern Interac still have not cleared that technology.

Are those kinds of things helpful to entrepreneurs in your area?

[Michel Leblanc]

We have the same analysis that anything that blocks the acquisition of innovation is a problem in Canada. It could be regulatory. It could also be that we have systems that do not press for competition. We'll argue that the fees that are charged by financial organizations may be too high.

Before you get to a restricted market with a fixed price, just make sure that the competition is strong, and you're going to have new technology that will challenge the models that exist right now on all fronts.

I would say, give the regulatory agency the mandate to clear those technologies as quickly as possible. Make sure that the marketplace is at the forefront of new technologies, and competition will do its job.

The merchants will all switch very quickly to a new application that will save them money. It's really the marketplace that has to be fixed, and not the pricing itself.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I ran a business for 15 years and went to a similar business where someone ran everything on his iPad. I was very jealous because of the reduced costs and the ease of use.

You're basically saying that if there can be a change made, it should be made sooner rather than later.

[Michel Leblanc]

Yes, definitely.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Okay.

How much time do I have, Mr. Chair?

[The Chair, Liberal, Wayne Easter]

You have time for one more question.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Okay, one more question.

In regard to rural Internet, you have mentioned, sir, that satellite is broadly available. One of the things I hear from my constituents is that often they don't know about these resources.

How do we, as members of Parliament, let rural people know? We hear of the challenges oftentimes, but we often don't know what the alternatives are. Is there a site or a central place where we can go to communicate with our constituents on this matter?