Finance Committee on Oct. 20th, 2016

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

Thank you for your answer.

Ms. Roy, I have a question for you.

On the access to labour market information, I wholeheartedly agree with you that across the country we need better information for all user groups to make sure we're making wise decisions.

Have you quantified how much you would like to see put into the system for the labour market information programs that you advocate for?

[Valérie Roy]

No, we haven't.

You want to know how much money would be needed?

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

Yes. How much money in additional government funds would be required?

[Valérie Roy]

No, we have not arrived at a specific amount of money.

In our brief, we point out that there is a great deal of information about the labour market. We should invest in ways of providing this information effectively. For instance, we should invest a lot in the platforms to make them more appealing, because the information they contain is still very dry. It is not presented in an interesting way and does not appeal to people. Many people are not familiar with it. We should invest in a promotion and visibility campaign to show people how to use these unappealing Internet platforms. Work is needed to make the public and especially young people aware of the sectors of activity where there are employment opportunities, and to help them properly understand the information on these platforms in order to match training to job opportunities.

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

I agree.

[The Chair, Liberal, Wayne Easter]

You can have one more quick one.

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

Quickly, Ms. Ravon, as a father of two young daughters I listened very intently in terms of what you mentioned about what we can call women's inequality, the situation that exists. One of your recommendations was on the CRA and funding. I'm happy to comment that our government did put a lot of monies into CRA. Some $441 million is going into that entity. We've brought in the Canada child benefit plan, which will lift 300,000 children out of poverty in the next 12 to 18 months. I think these are great first steps, but there is much work to be done.

Out of everything you've listed, could you give us your top two priorities or your two top asks, please?

[Lauren Ravon]

Thank you for your interest in the women's rights work that we do. Obviously, I represent an international development organization, and our number one priority is to see Canada reinvest in international aid. We've seen, relative to other international donors, a moving backwards. We've had aid cuts and stagnation for about a decade.

Also, there's something very exciting at this time. I've seen Canadian leadership on the global stage and a government that's committed to women's rights internationally and that's in spaces talking about the importance of protecting women's rights. We would like to see that go alongside increased funding.

The second part would be around gender-based analysis. I think it's crucial in every sector of society in terms of the way we make decisions, and in particular for this committee, although I see that it's an all-male panel today. We're hoping that gender-based analysis can inform the decision-making of the committee.

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

Just to be clear, there are two women, although not today.

[The Chair, Liberal, Wayne Easter]

There were two. Lisa Raitt has stepped aside for some reason. I know not what.

Mr. Albas.

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

I don't know either, Mr. Chair, but I do appreciate that you looked to me.

Thank you, Mr. Chair. I will ask Mr. Brun my questions.

With regard to the mortgage qualification changes, I've had a number of people in Summerland and West Kelowna comment that they feel let down because it feels as though the goal has been pushed further back. They think the reason for that, for why they don't qualify and they have to save money, is that the government sought to make changes to the whole country really based on what it felt were two very hot markets: Toronto and Vancouver.

We all want to help people. We all want to manage the economy well. I appreciate your comment that you support that, but I also get the sense that you want these changes to be digested before the government considers more actions, particularly after British Columbia introduced a new tax that seemed to actually alleviate a lot of the concerns.

This change really tamps down demand, but it also has a negative consequence in that it tamps down demand right across the country. Is that correct?

[Bernard Brun]

Absolutely.

Yes, we feel the demand. The tightening of the rules will have an impact in Quebec as in the other provinces. Those are the predictions of the Canada Mortgage and Housing Corporation as well.

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

Rather than trying to increase affordability and to stimulate economic growth, would you suggest perhaps the government look at maybe raising the HST/GST rebate on new housing construction? That's a measure that would probably increase the supply of housing while stimulating the economy.

[Bernard Brun]

It is a specific measure. I know the government is working on alternatives in order to promote access to housing and ownership.

The increase in property values does of course have an impact on taxes, whether land transfer taxes or municipal and school taxes. Some will increase proportionally.

Measures to promote ownership for first-time buyers could be implemented, such as a discount or reduction in taxes, especially during the initial steps in the purchase process, either in the first years or at the time of purchase. Such measures should be linked with other problems we have seen, such as houses sitting empty, and so forth.

The government should implement measures that effectively target first-time buyers and young buyers in particular. Moreover, these measures should apply to housing that the buyer will live in rather than housing purchased for rental or speculative purposes.

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

I appreciate that.

With regard to certainty, because it also sounds as though this particular policy was quite rushed, and there wasn't time for a consultation—that's what we heard from the minister's office—I would like to talk about

the paperwork that the caisses populaires are talking about.

I'm talking about the common reporting standards. I would like to go there.

First, I would like to take a step back. In the last few years, we have seen the American regime, FATCA, the Foreign Account Tax Compliance Act, which sets out quite a net for the Americans to deal with tax evasion. In complying with that, and the structure of credit unions or caisses populaires, there is quite a different approach.

With regard to submitting to the CRA your FATCA reports, how many reports did your organization have to produce?

[Bernard Brun]

The Mouvement Desjardins is an association of caisses, an association of small financial institutions. Unfortunately, the government considers each of the caisses as a separate entity for reporting purposes, which in most cases forces us to file more than 300 reports, whereas a bank files just one.

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

How many of those reports would some of your competitors, and again there are different types of competitors including the larger financial institutions like the Royal Bank, etc., have to produce?

[Bernard Brun]

It depends on the number of entities, but as for the bank, it would be one. I can't answer as to their overall structure, but for the activity of the bank itself, it would be one.

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

So again, it's the same reporting standard but a much different, administratively burdensome, system.

[Bernard Brun]

Absolutely, yes. The federal structure is not easily accepted. We are having ongoing discussions with the Department of Finance to really sell the concept of an integrated financial group, meaning a group that can fully abide by the rules on risk management and compliance. Clearly, the government intends to enforce all these rules but, as I mentioned in my introduction, it is important to take into account the distinctive features of a co-operative group.

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

There doesn't seem to be the same kind of recognition—

[The Chair, Liberal, Wayne Easter]

We'll have to stop it there, Dan.

Mr. Grewal.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you to the witnesses for coming here today and testifying on where you think budget 2017 should be going.

My first question is for Oxfam Canada.

You're advocating for an increase to corporate tax rates. I understand the issue in the Canadian landscape on tax evasion, that everybody should pay their fair share, whether it's corporate, whether it's personal, whether it's estate tax, and the government has invested $440 million in the CRA.

This committee has studied tax evasion and has drafted a report—I don't believe it has been tabled yet—with recommendations on how to counter tax evasion and tax avoidance. On increasing the corporate tax rate, could you add some colour on why you think that is a good thing for the Canadian economy? At the same time, I'd like to hear your comments on the fact that generally, economists say that if you increase corporate tax rates, you'll have an offsetting increase in unemployment.

[Lauren Ravon]

This is an issue that Oxfam works on internationally, and very interestingly, the work on CRA has been recognized within the confederation and I know other colleagues in other countries are now pointing to Canada's effort in countering tax evasion. That's an interesting piece of work and we're definitely very supportive of it.

In terms of increasing the corporate tax rate, it's interesting because I was in meetings at the Department of Finance this week with Mr. Morneau's team saying we recognize that significant cuts to the corporate tax rate over the past decade have not led to growth, have had no impact on growth, and actually have diminished our capacity as a government to pay for public services. We're saying that that's not a strategy that functions, and we're quite frank about wanting to see corporate tax rates increase, if it was politically feasible.

Oxfam will be coming out later this year with a study I'll share that ranks inequality-tackling measures across countries. It's looking at 90 countries across the board. We're already seeing where Canada ranks in this index, and we're very low on the scale because of our corporate tax rates. They're some of the lowest, definitely within OECD countries, and even compared to our American neighbours.

Our interest is not so much in how taxation functions. It's how much the government has to invest in pro-poor policy measures and to invest in foreign aid. We know these are one of the areas, and I'm sure all of you on the committee know it's not easy to get new money. It's easier to spend it than to raise it, and this is one of our recommendations.

[Raj Grewal, Liberal, Brampton East, ON]

I couldn't agree with you more on the fact that it's easier to spend the money than to get it. You also commented in your testimony that people who are wealthier should pay more. We have raised taxes on Canada's one per cent, and we've had a tax cut for Canada's middle class, which has been generally well-received.

On the corporate tax point, I must say that the corporate tax rate, in my humble opinion, should remain the same. As a former corporate lawyer and a former financial analyst, I believe that once you raise the corporate tax rate, what happens is that corporations have a duty to their shareholders, and they have to still deliver a bottom line. If you increase the corporate tax rates, that impacts their income statement. At the same time the biggest cost driver is usually employees.

In this market Coca-Cola's headquarters, its biggest plant, is in Brampton, the city where I come from. When I toured that plant, they said that if there was an adjustment to corporate tax rates or if there was an increase or an implementation of a soda tax, they would have no hesitation to pick up that plant and move it to Mexico. That's the reality of what we're dealing with.

I don't doubt the importance of social programs. Obviously, we have to do more in terms of foreign aid and stuff like that, but corporate tax rates, that's just not the mechanism to get that revenue.

You're more than welcome to comment.