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.