Finance Committee on Oct. 26th, 2016

[The Chair, Liberal, Wayne Easter]

Let us come to order. As witnesses know, this meeting is, pursuant to Standing Order 83.1, on the pre-budget consultations for the 2017 budget.

I offer my apologies to the witnesses before we even start. We found out yesterday that we have votes tonight at six o'clock. I think the clerk has informed people that we're under a really tight time frame for both presentations and questions. We felt it was probably wiser to tighten up a little bit rather than have witnesses on the next panel sit around waiting for however long it might take us to do the votes. That's why we tightened it up.

We will hold presenters to five minutes with their presentations so that we can get through and then have at least two questioners from the government, two from the official opposition, and one from the third party.

We'll start with the Canadian Convenience Stores Association, Mr. Chera, president, and Mr. Scholten, past-president.

[Satinder Chera, President, Canadian Convenience Stores Association]

Thank you, Mr. Chair.

Good afternoon, everyone.

My name is Satinder Chera, and I'm the incoming president of the Canadian Convenience Stores Association. I'm joined today by my colleague the outgoing president, Alex Scholten.

This year's pre-budget process asked respondents to discuss their ideas for improving the lives of Canadians, communities, and businesses. I wanted to briefly highlight how Canada's convenience stores contribute in all three areas.

Our stores help Canadians by providing employment opportunities to more than 225,000 individuals across the country. We support communities by providing essential consumer products in urban, rural, and remote locations. Our sector is the face of small businesses, with over 26,000 retail locations serving more than 10 million Canadians every day. In 2015 alone, Canadians purchased more than $56 billion in goods and services from our stores, resulting in over $21 billion in tax revenue for governments.

Our pre-budget recommendations for 2017 are focused around three challenges facing our industry.

I will start with credit card swipe fees, which remain for Canada's small businesses among the highest in the world. Credit card fees for our retailer members range from 1.5% to 4% on individual purchases. In other countries, such as Australia and the European Union, there are specific hard caps in place to support small business. We believe that lower credit card fees not only have a positive impact on businesses, in that they allow them to free up additional revenue to support their businesses, but also help consumers, who presently bear the costs as businesses are forced to increase their product prices.

That's why we're calling on the Government of Canada to reduce these excessive swipe fees by introducing caps that are in line with what other countries have done. To that end, we would like to thank the Minister of Finance and MP Linda Lapointe for their recent efforts and commitment to review this issue and land on a fair and equitable solution.

Another challenge facing our stores is what we believe to be unnecessary and costly regulations, specifically the proposed plain packaging requirements for tobacco products. At present there is a plethora of tobacco control requirements that our retail members are tasked with implementing—stringent age-testing requirements, restrictions on advertising and promotion, display bans, and graphic warning labels.

All of these regulations together have had a positive impact in reducing youth tobacco consumption rates, which recently Health Canada through its surveys found were at an all-time low. Make no mistake, our association and our retail members strongly support efforts to prevent young people from accessing tobacco products, and we will continue to work diligently with our members and with our partners in government in this regard.

That being said, we do not believe that the proposed plain packaging requirements will have an impact on youth consumption rates. If you were to review the impact of such regulations in the only country in the world that has implemented similar requirements, Australia, what you'd find is that youth tobacco rates have not changed since the requirement was introduced. What has changed, however, is the negative impact on retail operations. Retailers are struggling with inventory control, staff training, and customer transactions, all of which have increased costs for retailers without any of the accompanying consumption reduction benefits.

Lastly, our association supports the government's commitment to reduce Canada's small business tax rate to 9%. We believe the lower rate will free up additional revenue for businesses to invest in their business, to train their employees, and to provide the best possible service to their customers. In this regard, we would like to see the reduction implemented as soon as possible.

To support the government's desire to promote healthier product choices for Canadians, we are also recommending tax incentives designed to help Canada's convenience store operators purchase, store, and sell fresh fruits and vegetables in a more effective manner. We would be more than happy to support the government on this going forward.

Thank you. We would be happy to take any questions you might have.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Chera. I might mention that members have all your presentations on their mobile units as well.

From the Canadian Medical Association we have Mr. Avery, president, and Mr. Adams, chief policy adviser.

Go ahead, Mr. Avery.

[Dr. Granger Avery, President, Canadian Medical Association]

Thank you, Mr. Chair.

On behalf of the Canadian Medical Association and our 83,000 members, thank you for the opportunity to appear as part of your pre-budget consultations. The CMA strongly supports the federal government's commitment to work with provinces and territories toward a new health accord with defined objectives and long-term funding agreements.

To help deliver on this commitment, we've outlined six recommendations for prompt federal action to ensure Canada is prepared to meet the health care needs of its growing and aging population.

First is additional funding to the provinces and territories targeted to support seniors' care by means of a demographic top-up to the Canada health and social transfer. Second is a targeted fund for home and palliative care innovation. Third is infrastructure investments to improve and provide for more long-term care. Fourth is coverage for highly expensive prescription medications. Fifth is more financial support for family caregivers. Sixth is an exemption for group medical structures from the federal proposal to alter access to the small business deduction, which threatens research, teaching, and specialized services.

I would like to briefly expand upon three of these.

First, we know that jurisdictions are struggling to meet the health care needs of our aging population. That is why the CMA is recommending new seniors' care funding be provided to the provinces and territories by means of a demographic top-up to the Canada health and social transfer. This needs-based funding would be delivered in addition to the Canada health and social transfer, which currently disadvantages jurisdictions with older populations. This fair method of distribution ensures there will be no losers, avoids opening up the funding formula, and may be delivered immediately.

Second, the CMA was pleased to hear the federal government commit to providing more and better home and palliative care services. To deliver on this commitment, the CMA is recommending a targeted home and palliative care innovation fund. This fund would encourage innovation in home care and help scale up best practices, the silos of excellence such as the Bruyère Foundation, and address critical shortages. This fund would also support development of a much-needed national strategy for palliative and end-of-life care.

Finally, I would like to take a few moments to discuss the federal proposal to alter access to the small business deduction. The CMA welcomed the finance committee's acknowledgement of the economics of medicine as a small business and your recommendation to maintain the incorporation framework for professionals. Despite the committee's recommendation, however, budget 2016 introduced a proposal to alter access to the small deduction.

The CMA estimates that this change will affect nearly 15,000 physicians incorporated in group medical structures, mostly in teaching hospitals and universities. In doing so, this proposal will hinder medical research, training for the next generation of physicians, and patient access to specialized care.

If the proposed changes are enacted, these partnerships will likely wither and die as the federal government will be incentivizing solo practice over group practice. This concern was reaffirmed by a recent survey of physicians that found that over 60% would dissolve their group structure should this proposal go through, even though most of these group structures are within academic health sciences centres and were not formed for commercial or taxation purposes but rather mandated by provincial negotiations.

To avoid these unintended negative consequences, the CMA is strongly urging the federal government to exempt group medical structures from the application of this proposal. In summary, the CMA is offering six clear and actionable recommendations for the federal government to deliver on its commitment to invest in Canadians and support economic growth.

I welcome any questions you may have. Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Avery.

Turning to the Chicken Farmers of Canada, we have Mr. Janzen, chair, and Mr. Dungate, executive director.

The floor is yours; welcome.

[Dave Janzen, Chair, Chicken Farmers of Canada]

Mr. Chairman, thank you for inviting us before you today to share our perspectives on the 2017 federal budget. Specific policy changes can help Canadian chicken farmers and the Canadian chicken industry grow our economic contribution and create more jobs to support Canada's middle class across the country from coast to coast.

Chicken Farmers of Canada represents 2,800 farmers, and we work with our value chain partners, who include 244 hatching egg farms, 40 hatcheries, 76 feed mills, and 191 processing plants. We take pride in the valuable contribution we make to Canada's rural and urban communities while contributing $5.9 billion to Canada's GDP, sustaining 78,000 jobs, and paying $2 billion in taxes. Our industry generates employment in farming, processing, veterinary work, transportation, retail, restaurants, and more.

The chicken industry in Canada relies on the stability and predictability provided by supply management in order to maximize our contribution to the Canadian economy. This stability and predictability has been compromised by the persistent circumvention of Canada's importing rules.

On October 5, 2015, the previous government announced its commitment to implement changes in order to address the losses that have been caused in our industry by increasing fraudulent imports over the past several years. Chicken Farmers of Canada requests that the federal government fulfill this commitment by implementing our three recommendations for re-establishing the integrity of the import control pillar. Our recommendations come at no cost to government; in fact, they will create more jobs, increase our contribution to GDP, and generate more taxes.

Our first recommendation is to implement a mandatory certification for imports classified as spent fowl and to use the DNA test to guarantee proper classification. Spent fowl are laying hens at the end of their production cycle, while broiler chickens are raised specifically for meat consumption. Broiler chicken is subject to import controls and spent fowl is not, meaning an unlimited amount can be imported; yet a substantial volume of chicken broiler meat continues to be illegally imported into Canada labelled as spent fowl. These illegal imports became noticeable in 2012, and so far in 2016 Canada has imported 114% of the United States' entire spent fowl breast meat production. This is impossible, of course, and points directly to import fraud.

There is no means of visually distinguishing between broiler meat and spent fowl meat at the time of importation. With our support, Trent University developed a forensic DNA test that verifies whether a given product contains chicken, spent fowl, or a combination of the two. We recommend that this test serve as part of the mandatory spent fowl import certification verification process. Based on conservative estimates, 37 million kilograms of chicken was illegally imported as spent fowl in 2015, which is equivalent to 3.4% of our domestic chicken production.

Our second recommendation is to exclude chicken from the duty relief and drawback programs. These programs were never designed for such perishable agricultural goods as chicken, meaning companies can take advantage of the program in order to circumvent import controls.

Firstly, the programs provide a four-year timeline to import, process, and re-export chicken, greatly exceeding the shelf life of frozen chicken products. In addition, product substitution is permitted whereby high-value cuts can be imported but the re-exported product can contain less valuable domestic cuts. Finally, unreported or misreported marinating, glazing, sizing, and yields result in less chicken being re-exported than was imported, with the difference being diverted into the domestic market. Imports through the duties relief program have increased exponentially over the past few years, reaching 96 million kilograms in 2015, representing more than 9% of our production.

Chicken Farmers of Canada would like the government to make chicken ineligible under the duties relief program. Companies can use the Global Affairs Canada pre-existing import for re-export program, a program specifically designed for goods such as chicken.

Our third recommendation is to reinstate into the customs tariff definition the sauce and cooking requirements of the specially defined mixtures as contained in Canada's WTO commitments. Chicken combined with as little as 13% of other ingredients is labelled as a specially defined mixture and is not considered chicken for import control purposes.

Some companies have identified this as an opportunity to circumvent trade rules by adding sauce to a box of chicken wings or by creatively packaging two distinct products together. Chicken Farmers of Canada recommends that the Government of Canada reinstate the sauce and cooking requirements of the definition in the customs tariff. This reinstatement is fully consistent with our WTO and NAFTA obligations.

[The Chair, Liberal, Wayne Easter]

Dave, I'll have cut you off there. I think you're through all your recommendations according to my reading. Do you want to add one more point?

[Dave Janzen]

I'd like one paragraph to summarize, please.

Implementing our three recommendations to stop illegal imports of chicken as spent fowl, to exclude chicken from the duties relief program, and to reinstate the sauce and cooking requirements into the customs tariff will create 4,500 new jobs, add an additional $335 million to Canada's GDP, and generate $112 million in additional taxes.

Thank you, Mr. Chairman.

[The Chair, Liberal, Wayne Easter]

I suspected you'd be saying that would be contributing to economic growth.

Thank you, gentlemen.

Turning to the Federation of Francophone and Acadian Communities, we have Ms. Lanthier, president.

[Sylviane Lanthier, President, President of the Table nationale de concertation communautaire en immigration francophone, Fédération des communautés francophones et acadienne du Canada]

Thank you, Mr. Chair. Good afternoon, everyone.

Mr. Chair, members of the committee, thank you for inviting the Fédération des communautés francophones et acadienne du Canada to outline the priorities of francophones in minority situations in nine provinces and three territories with respect to the upcoming federal budget.

Established in 1975, the FCFA is the main voice of the 2.6 million French-speaking Canadians who are living in a minority situation in the country. In the brief we submitted last August, we presented six very specific recommendations. Those recommendations are the following: include the funding for the next official languages plan in the 2017 budget; also include in the budget an increase in Canadian Heritage's funding envelope for francophone organizations and institutions; provide support for French-language skills development and training; implement measures to promote the employment of young francophones; establish a strategy for supporting francophone community media; and establish a real coordinated national strategy for high-speed Internet access.

We made those recommendations while recognizing the social, cultural and economic value of the francophone communities we represent. Building the capacities of organizations, infrastructure, services and resources in French in our communities is essential if we want those communities to continue being the champions of promoting French, as they currently are.

When our organizations don't have the resources to keep up with the growing demand for services in French, our communities become weakened. When kindergartens in French are unavailable, our children end up in English kindergartens, and they often attend English school after that. When our community radio stations and newspapers don't have the means to go digital, thousands of francophones must turn to English-language media for information about their community.

When the social infrastructure in our communities, such as our cultural or community centres, is inadequate, and when there's a lack of resources to offer French-language programming, it's a missed opportunity for Canadians who have gone through French immersion to practice and experience the language in everyday life. Thus, it's a missed opportunity for linguistic duality.

This may seem big, but the message I want to communicate today is that support for the vitality and development of minority francophone communities, as required by the Official Languages Act, can often be done through existing envelopes and investments.

More specifically, the Government of Canada announced, in its winter 2016 budget, significant investments for infrastructure, digitization, early childhood and youth employment. Those are meaningful actions and solid priorities. However, the one fact that a federal program is open to all Canadians, in both official languages, does not mean that minority francophone communities will benefit. An initiative designed for the majority may well not benefit the minority, unless the government includes special measures for that minority.

I will give you an example. When it invests in infrastructure, the Government of Canada generally deals with the provinces, territories or municipalities. But given their minority status, our communities all too often escape the attention of those levels of government. However, for us, infrastructure funding can mean community centres that have been renovated or have been better adapted to francophones' needs. It can also mean French-language kindergartens that, as the Commissioner of Official Languages was once again saying a few weeks ago, are a critical need in several parts of the country, or cellular coverage and high-speed Internet services, which currently don't exist in communities such as Port-au-Port, in Newfoundland and Labrador.

So the federal government could truly change things for our communities by reviewing investments in social infrastructure and by adding measures adapted to the realities of minority francophone communities. For example, a small percentage of those investments could be invested directly under agreements between the federal government and the communities. Similarly, the government could create mechanisms using the investments for the youth employment strategy, announced in the latest budget, so that young people from francophone and Acadian communities can benefit.

The most important thing is that the government use various levers through different federal institutions to support the vitality and development of minority francophone communities.

Thank you. I am ready to answer your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

Turning then to the Canadian Mental Health Association, we have Ms. Gerner and Mr. Smith.

[Patrick Smith, National Chief Executive Officer, Canadian Mental Health Association]

Merci, Mr. Chairman.

Thank you for inviting me here today. My name is Dr. Patrick Smith. I'm the national CEO of the Canadian Mental Health Association, Canada's most established mental health organization, on the cusp of our 100th year anniversary and with more than 10,000 staff and volunteers in over 100 communities across Canada. I'm here to talk today about investing in evidence-based services and supports for the broad range of mental health problems and mental illness. Mental illness, including substance use disorders, which we've often overlooked and separated out in Canada, affects 6.7 million Canadians, one in five.

Before joining CMHA, as a clinical psychologist I worked in the hospital sector and the community-based sector in mental health. I worked with the B.C. government as the project principal for the development of their 10-year mental health and addiction plan and co-chaired the development of Canada's national addiction treatment strategy. We started both of these plans and the investments of various other jurisdictions to better understand the patient outcomes, system outcomes, and population outcomes that resulted from various investments from a health, social, and economic perspective.

Of all the G8 countries, Canada spends a lower percentage of its total health spending than any other on mental health, 7%. The next lowest is 9%. The Mental Health Commission of Canada and various other stakeholders as well have called for Canada to increase to 9%. We wouldn't be leading the pack; we would just be tied for the lowest.

This historic lack of funding, the 2% gap, isn't just about a number. The result has been that there are significant foundational gaps in our mental health response. Basic evidence-based services and supports that are foundational building blocks in systems around the world in other developed countries are fundamentally missing in Canada. Imagine, if you will, if we learned that across Canada there was wide disparity in access to the educational continuum for kids, one town having fourth and fifth grade and nothing else and a town a hundred kilometres away having only first grade and eighth grade. We wouldn't research the problem. We wouldn't have a strategy or a task force to figure out the problem. We would simply invest in a full developmental continuum of educational offerings.

I graduated with my Ph.D. in clinical psychology in 1991 and had to demonstrate proficiency in CBT, cognitive behavioural therapy. It's an evidence-based treatment for many things, including depression, substance use disorder, and anxiety. It's universally accepted as a gold standard treatment. It's not new, but it's mostly not available in Canada unless you pay. It's just one example of the significant gap as the result of years of deferred maintenance on the mental health file.

Other countries and jurisdictions have very recently been in the same boat but quickly turned it around. The U.K. is a great example of that. The young royals—Prince William, Kate, Prince Harry—have recently launched the heads together campaign. Their initiative recognizes that unmet mental health needs lie at the heart of their country's greatest social challenges.

It's the same for Canada. We know what we need to do to dramatically and relatively quickly change the landscape on this, but the first step is to accept the reality that has resulted from this deferred maintenance and demonstrate the leadership to address the problem.

You have an electronic version of our brief. Our submission shows how mental health, including addictions, has a real impact on society. It shows that here in Canada we have some way to go. I'll gladly speak to the details in the question period; however, I'd like to focus on key areas that we believe would help ensure affordable, widely available, and effective mental health solutions for a greater number of Canadians.

While other countries have had the same problems, they have demonstrated a whole-of-government approach. This isn't a health care issue alone. Here in Canada we're seeing some encouraging signs that mental health deliverables are in nine of the ministers' mandate letters. Our hope is that the budget will provide the financial investment to support these deliverables through initiatives such as the Canadian Military and Veterans Mental Health Centre of Excellence for veterans and their families. We need to address the areas in which the gaps are most significant.

This calls on all of us to respond to the mental health needs in indigenous communities. We need to respond to the mental health aspects of truth and reconciliation.

Prime Minister Trudeau has also shown leadership by announcing the federal government's intention to work with the provinces and territories on a health accord to guide the future. The Honourable Jane Philpott, at a recent round table on the health accord, asked why 2017 couldn't be the year that we transform mental health funding in Canada.

I am happy to discuss the tiered model in the question and answer period.

[The Chair, Liberal, Wayne Easter]

I hate to interrupt, but there are a number of recommendations in your report that hopefully we can get to in the questions. My apologies.

We'll move to the Canadian Red Cross. Mr. Sauvé, go ahead.

[Conrad Sauvé, President and Chief Executive Officer, Canadian Red Cross]

Thank you, Mr. Chair.

I am Conrad Sauvé, the CEO of the Canadian Red Cross. I'm going to talk to you today about emergency response in Canada.

I will speak in English, but it would be my pleasure to answer your questions in French, as well.

As just a reminder, when we talk about context, the Canadian Red Cross was created by an act of Parliament in 1909 as an auxiliary to the government for emergency measures. The Red Cross is not an NGO. Through the years, emergency response has become the pillar of our responses in Canada.

Although we are known for international responses, we respond every three hours to a disaster in Canada, from basic personal disaster assistance to evacuations in floods and fires, or a response like the one in Lac-Mégantic in terms of an explosion. We do that because we have a network of over 5,000 volunteers trained as responders throughout the country, with agreements with 800 municipalities and every one of the provinces. As the number of disasters and the size of the responses grow every year, our preoccupation remains on how prepared we are to respond to a major event in Canada.

In Fort McMurray, we've taken on the response on behalf of the provincial government to register and support 80,000 Canadians who were displaced from the city. As they left, many of them heading back to Atlantic provinces, we saw the complexity of emergency response, not only within the province but throughout the country. How do we respond and support these Canadians everywhere?

What we are looking at, as we go forward, is preparing a shared responsibility in the response to dealing with not just 80,000 but up to 200,000 Canadians in evacuation. We say “shared response”, because we are investing and responding thanks to the support of the Canadian public, with about $80 million a year for responses in Canada. What we are looking at is three recommendations.

One is to enhance our preparedness at the community level by increasing the number of community responders from 5,000 to 10,000. It's not just about a response at the community level. It's the ability to pool resources in one place and one event. In the Saskatchewan forest fires, we brought in over 1,000 responders from the outside to support that specific response. In the initial phases of Fort McMurray, it wasn't about Fort McMurray; it was about supporting the evacuees everywhere else.

More and more, technology is playing a key role in how we respond. As a reminder, in the first week of Fort McMurray we raised $50 million. We used direct cash transfers to support everybody. Since we had everybody's email, we dealt with their specific needs. Going forward, how do we use technology in supporting people?

The last part, of course, is our work with first nations across the country. We've put in a recommendation to increase our partnership with the training of 500 first nations responders.

Recent polls have shown that only 50% of Canadians are ready to deal with an emergency. These emergencies are growing. The amount the federal government, the provinces, and the municipalities are spending on responding is increasing every year. We are looking at this shared proposal going forward on behalf of supporting Canadians in these needs.

Thank you, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

Next is the Federation of Canadian Municipalities. Ms. Goneau and Ms. Lavoie, welcome.

[Sylvie Goneau, Second Vice-President, Federation of Canadian Municipalities]

Thank you, Mr. Chair. I want to thank the committee for agreeing to hear from us today.

As you mentioned, I am joined today by Alana Lavoie, who is the manager in charge of research and policies at the Federation of Canadian Municipalities. I am a City of Gatineau councillor and Second Vice-President of the Federation of Canadian Municipalities. Many of you already know that the FCM is the national voice of Canada's local communities. Our 2,000-odd municipalities account for 90% of Canada's population.

I am pleased to be here this afternoon to discuss phase two of the federal government's infrastructure plan. Phase two is a remarkable opportunity to transform this country, create jobs, grow our economy, and improve the lives of Canadians.

FCM understands that to address the challenges Canadians face in their daily lives, we need to invest in the places where Canadians live. Municipal leaders are natural partners in this work. Municipalities, after all, own roughly 60% of Canada's public infrastructure. We are effective partners, too.

Local communities have solid experience in the effective, fair, responsible and transparent delivery of infrastructure projects. We have the expertise needed to determine what structuring projects meet our communities' needs and provide the most return on investment.

The federal government has made bold commitments in transit, green, and social infrastructure. They're framing this as a project in nation building, and we agree. Community building is nation building. After all, it's in our communities where we tackle national challenges like climate change and job creation.

How do we get there in phase two? First, phase two should empower local governments to plan for the long term and leverage local expertise to move the most cost-effective projects forward. Phase one, set the right standards by choosing predictable, allocation-based investment, starting with transit. To ensure progress across Canada, phase two should continue to empower local governments to act.

Second, phase two needs to get cost sharing right.

In the past, levels of government would each provide one-third of project funding. Phase 1 recognized that, once the construction is completed, the burden of costs incurred throughout the life cycle of the new infrastructure falls to municipalities, which already have to deal with very tight budgets. Therefore, the federal government has increased its contribution to 50% for some projects. That formula should be maintained.

It's also important to ensure that other supports, like financing through a federal infrastructure bank, are in addition to phase two commitments.

Third, building a strong Canada means investing in communities of all sizes. Phase two must recognize that rural communities are central to Canada's economic, social, and environmental health. Building on the proven small communities fund, a new rural infrastructure fund can provide targeted funding to rural priorities not fully addressed anywhere else in phase two.

Fourth, in 2016, no serious nation building plan can shortchange housing. Last Friday, FCM published its comprehensive recommendations for the national housing strategy, which is a road map for ensuring that every Canadian can find a safe and affordable home.

Our analysis clearly shows that, in order to address the housing crisis, a total of $12.66 billion will have to come from the phase 2 social infrastructure fund and be earmarked specifically for housing.

Return on investment includes economic growth, lower costs for our health system and our social services, as well as citizens who are capable of contributing fully to their community.

In short, designing a successful phase two means building on phase one and really unlocking the potential that already exists in our cities and our communities.

I'm here to tell you on behalf of all the leaders across the 2,000 municipalities in Canada, we want to build tomorrow's Canada in partnership with you.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

Turning to the C.D. Howe Institute, Mr. Laurin. Go ahead.

[Alexandre Laurin, Director of Reseach, C.D. Howe Institute]

Thank you, Mr. Chair.

Members of the committee, it is my pleasure to appear before you today as part of your pre-budget consultations.

I'll start by mentioning our pretty shadow budget.

This is a document we publish every year around budget season here at the C.D. Howe Institute. It contains all of our pre-budget recommendations. There's a lot of detail in there. The policies I'll present today are from this shadow budget, but since I only have a few minutes I'll be presenting only a few of these ideas.

Basically, today, I'll be proposing three things: first, supporting labour mobility by eliminating regional differences in the employment insurance program; second, supporting fiscal sustainability by tightly managing government's compensation costs; and third, expanding workforce participation by raising the age limit for tax-deferred retirement savings and by reforming the tax recognition for child care costs.

Recent, very loud voices against free trade and immigration mean that Canada must continue to be a leading proponent for both free trade and immigration. But even here at home we can help our workforce face the competitive pressures of globalization by making sure that skills get to where they are most needed. In particular, regional differences in the EI program encourage dependency for many workers and discourage migration. Longer benefit durations in areas with higher unemployment hurt the economy by subsidizing industries in places where the prospects for long-term, stable jobs are relatively poor.

The next budget should phase out EI's region-based entrance requirements and benefit duration. We should adopt coast-to-coast, uniform requirements linked to the national unemployment rate, which would provide counter-cyclical income stabilization and encourage efficient migration of labour.

Turning to another topic, we are faced with a “low-for-long” situation of lower growth and lower interest rates. Therefore, the next budget should take a cautious approach to budget balance and debt accumulation to make sure that the government would be able to respond appropriately in the event of a downturn in the economy, thereby giving businesses the confidence they need to innovate and take risks. In particular, employee compensation per hour of work remains notably higher in the federal government than in most other industries in the economy, even higher than in industries requiring advanced qualifications, such as professional and scientific services or finance and insurance.

In the next budget, containing employee compensation growth, in particular by limiting exposure to pensions and other future benefits, such as sick leave, remains front and centre.

Finally, many people are concerned about the distribution of proceeds of foreign trade and innovation. The next budget must improve opportunities for all Canadians. In particular, raising the age limit for making contributions to RRSPs and other related plans would help those who are ready to remain in the labour market longer adapt to the increasing life expectancy.

In addition, an in-depth reform of tax provisions for child care costs to make the system more generous could encourage more parents to enter or re-enter the labour force.

This concludes my short presentation. Thank you for the opportunity to speak before you today. I would be happy to answer your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Laurin.

We will have the shadow budget paper sometime as well. I'm not sure if it's on my iPad or not.

Mr. MacKinnon, you have five minutes, if we can hold it pretty tight.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you very much, Mr. Chair.

I apologize, but we will have to proceed very quickly today for the reasons mentioned by our chair.

I will begin with the representatives of the Federation of Canadian Municipalities. I want to thank Councillor Goneau who, with her usual passion, has done a good job of representing her federation and her city today.

Tomorrow, we will hear from Mr. Barton. I am sure he will talk about his recommendation to the Minister of Finance with regard to an infrastructure bank. You briefly mentioned that in your presentation, but I am giving you an opportunity to clarify FCM's position or to say more about other infrastructure funding streams.

[Sylvie Goneau]

Thank you very much, Mr. MacKinnon.

From the perspective of Canadian municipalities, it is definitely very beneficial to be able to develop innovative tools that help us support infrastructure and meet communities' needs going forward. That said, the government should not set aside infrastructure funding as it is currently proposed, be it by allocation or by program, but rather consider the infrastructure bank as an addition, another element in the toolbox municipalities can use to provide their constituents and the population in general with better services and a better quality of life.

At the Federation of Canadian Municipalities, one of our responsibilities is to ensure that the government will enhance the offer, perhaps through a tool such as the infrastructure bank. However, the bank should not replace the current funding. The government should also not prevent municipalities, in their current programming, to carry out projects that are already planned. That is our biggest concern.

[Steven MacKinnon, Liberal, Gatineau, QC]

Okay. Thank you, Ms. Goneau.

Mr. Smith, I have a very quick question for you.

In the current debate on the health accord, there is some back and forth between the federal government and the provinces when it comes to jurisdictions. Do you suggest imposing conditions for funding, be it in the area of mental health, home care or other spending?

[Patrick Smith]

Yes, absolutely. Granger and I were both at a health round table that the minister held, and it was unanimous. Everyone around the table, including Canadian medical, Canadian nursing, Canadian home care, and Canadian mental health, all think there needs to be leadership and direction.

We are saying that there are two things we need. One is to transfer to the provinces the monies earmarked for mental health, and if it's not ring-fenced or earmarked, it won't happen. A psychologist would say the best predictor of future behaviour is past behaviour. It isn't because provinces don't want to invest in mental health. It's never getting to the front line. Most of the provinces we've talked to behind closed doors are not that opposed to directed funding for mental health.

Second, we're also asking the federal government to take a bold leadership approach, and that is to have a dedicated mental health transformation fund because, to close the gap, there needs to be systemic investment in some basic building blocks. Similar to the drug treatment funding program that Health Canada holds, this calls for direct funding, directly to specific things, and you'll be able to tell Canadians exactly what you invested in and exactly what outcomes we can expect.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you, Mr. Smith.

Mrs. Lanthier, why is it important for the next budget—that for 2017-2018—to advance the required funding for the next steps, for the roadmap expiring in 2018?

[Sylviane Lanthier]

It's a matter of equal access to federal funding and to federal programs that also help, in this case, develop services for francophones in terms of official languages. It is important to understand that, in order to ensure the vitality of both official languages, we also have to develop services intended for francophones across the country.

We also feel that it is not enough for our program to be considered accessible, including when it comes to federal investments in infrastructure. We also have to ensure that access measures are implemented to enable community organizations, in some areas, to submit a request, despite the fact that they may not have as much support from their province or their municipality. In fact, they are not really supported by all the new governments. There are still needs in terms of kindergartens, community services, digitalization, and so on.

In short, we want to ensure equal access to that funding.