Finance Committee on Feb. 18th, 2016

[Christopher Smillie]

Thank you for the question.

I'll answer the last one first. To get more first nations and women into the trades, employers have to want to do it, so we have to work together with them to change the culture and the hiring practices in the economy. We have programs that we work on with employers.

On your first question, getting more young people involved in apprenticeships is key to what we do. Across Ontario and the country, we have a system where we try to bring in as much capacity as we can in terms of attracting new people, but we're limited by facility size and we're limited by capacity to place those apprentices with employers. We're always pushing them to put more out in the field so that we can take them in.

One of the best things we do with employers is we have joint training committees across the country where we forecast and plan to try to maximize the number of apprentices that we put to the field each year.

[The Chair, Liberal, Wayne Easter]

Thank you both.

Mr. Liepert.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Mr. Smillie, as a Calgary MP, I assume that you would guess that I'm interested in exploring a lot more your mobility assistance proposals. As a Conservative MP, I'm especially interested to hear proposals that say if you give us a tax cut, the return is significantly larger, rather than simply coming in and asking for money. So I appreciate that.

I would like you to explain a little bit more about your mobility assistance measures. If I understand it, let's take a hypothetical situation as we move into 2016 where you have a demand in Toronto and you have an excess in Alberta. You have a union hall in Toronto that needs 100 electricians, and you have the source in Alberta, but the problem is they can't get there.

Expand a little bit on that.

[Christopher Smillie]

Yes, sir.

The problem is not that they can't get there—

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

No, they can't afford to get there.

[Christopher Smillie]

The problem is that it's on the person to cover their travel expenses before they become employees in Toronto. Sometimes employers cover travel costs, or a portion of travel costs. In my two proposals, you can do it one of two ways.

Say someone spends $2,000 in travel, you could have a portion of that money returned to them at the end of the year on their tax return. Instead of getting six weeks of EI, you're only eligible for three, but you get your last two weeks first, so that that person can get on a WestJet flight and fly to Toronto.

Once they're there and working, obviously they're contributing back to the working world and paying taxes. It's a stop-gap measure. It's a hiccup. We just need to fix the hiccup and get them there.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

I think the difference.... What used to happen in Alberta, and many of the MPs are aware because they had constituents on a fly-in-fly-out basis, is that the $100 a barrel oil paid for that. The problem in this particular case is that if there is no tax break, it's just going to be built onto the cost of the infrastructure project, which is going to come out of the federal government anyway, so it might as well come from the tax system, and I think return significant value.

It's something you should push hard on. I would encourage my colleagues across the way, who have a lot more input into the budget than we do on this side. I'd like to see that kind of tax break, which has great returns, looked at significantly.

I'd like to ask a quick question of Ms. Durdin from the credit union. Along the same lines, I'd like a little more of an explanation on your point three because I don't quite understand the current situation.

What's going to happen if this expires? Could you elaborate on that a little more? Give me an on-the-ground example of a benefit that you're proposing.

[Martha Durdin]

For the—

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

What is it you called it? The capital growth tax credit.

[Martha Durdin]

Unlike banks, credit unions lend out capital. They raise their capital through retained earnings. Banks raise capital through the public markets. When they need money, they go to the markets; they raise capital.

There are two things at play here. The credit unions, as with all financial institutions regulated in Canada, need to raise more capital in order to meet a higher regulatory standard. We need to maintain larger amounts of capital and we're trying to lend it out.

Credit unions often run up against their capital requirements and are unable to lend out as much as they would like to members or customers because they hit their capital levels.

A credit on 5% of their growth would allow them to both retain more capital, get a tax credit for it, and meet the regulatory requirements, and incent them to grow more capital, credit for it, lend out more. Our research shows that, on average, for every $1 of capital credit unions retain, they lend $12. The multiplier effect is times 12.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Just so I understand, then, the net benefit of that is simply more dollars to lend, not necessarily a benefit to the consumer.

[Martha Durdin]

Well, if they're not able to lend because they're running up against their capital requirements, then it's the consumers who are not—

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

There's no money to lend.

[Martha Durdin]

There's no money to lend to them.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

This would be especially important in rural areas.

[Martha Durdin]

In some areas like Manitoba and Saskatchewan, half of the lending to small business is from credit unions. They're very important lenders to the mid-market, the smaller market across Canada, but particularly where they're stronger is in the western provinces.

It would make more money available to be lent for mortgages, for small businesses, for families, that kind of thing, which is the market in which credit unions primarily operate.

[The Chair, Liberal, Wayne Easter]

Before I turn to Ms. Benson, on the point regarding labour mobility, just to give you an example of how important the oil and potash industries are to Atlantic Canada, when I would fly to Ottawa on a plane that had 48 seats, there would be at least 8 to 10 people on that plane heading to Saskatchewan or Alberta.

There were several direct flights, several times a week, out of Moncton, New Brunswick, to Fort McMurray and elsewhere in the west. They'd work many different patterns: two weeks in, one week out; three weeks in, one week out. That pattern now hasn't ceased completely. There are still some.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Chairman, all of the construction in the oil sands is going to more or less end in 2016.

[The Chair, Liberal, Wayne Easter]

Yes, but it tells you the extent of the labour mobility coming from other areas of the country, and you're right: the oil industry was paying for a lot of it.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

May I quickly add something on that, Mr. Chairman?

The one fact that was a bit misunderstood was that when we had labour mobility coming into Alberta from all parts of Canada, we weren't faced with the infrastructure needs because people were moving to Alberta; the families stayed in their hometowns and the kids went to the schools that they went to. The local municipalities weren't faced with building schools and all the other things.

It could work in the case of Toronto. They don't necessarily need to have that added infrastructure, but they'd have the workforce.

[The Chair, Liberal, Wayne Easter]

Thank you.

I think it's an interesting discussion.

We'll turn to Ms. Benson. Welcome to the finance committee. You have seven minutes.

[Sheri Benson, NDP, Saskatoon West, SK]

Thank you very much.

Raymond, I'd like you to talk a little about this. In previous consultations the mayors had talked about the need for funding different things like sporting, recreational, and cultural infrastructure, and needing to expand the list of eligible projects to be included.

I know you didn't get a chance to cover all the topics in your piece, so I'm going to give you a chance to say a bit more about how municipalities and, of course, ultimately, citizens gain from expanding the projects that are eligible. I think what you're talking about is having a local lens on what makes sense to the municipalities.

[Raymond Louie]

Yes. Thank you.

Through you, Mr. Chairman, perhaps you would like to follow along with the proposal you have before you. I think it is on page 5 where it outlines the addition, on the right-hand side of the page. “Rising to the Moment” is the top headline there, and what we're asking for is additional flexibility.

In certain circumstances our infrastructure is in dire need of investment, and it is an investment. It is not just raising taxes or pushing money out the door; it's an investment for needed infrastructure across Canada. In some instances, municipalities have done a better job than others, and we recognize that. They've done the proper investment, but they need other investments, in such things as sporting facilities, art centres, and cultural centres, and they should have that opportunity to attract some level of funding.

That's where, if it's an allocation model that we're advocating for, it provides for an opportunity to improve the quality of life of Canadians, because after all, that's what we were elected to do, to improve the quality of life of Canadians in whatever means possible. It's making sure it's efficient, of course, and making sure there's a foundation for us as a nation to be more effective and moving forward, having an economy that works for all of us as well—jobs, for instance.

What we're saying is an expansion of the framework is important to recognize that there is a diversity of need across the country. Up north the need will be significantly different from what it is in urban centres. Rural Canada has a whole host of issues that are different and just as important despite not being the same as what it would be in an urban centre.

[Sheri Benson, NDP, Saskatoon West, SK]

Thank you.

I want to add further to your comment about a model that has predictable funding with a formula so that municipalities can plan what they want to do when it makes sense and what their priorities are. That's something I think is very important so that smaller places can understand when and where they're going to get the money and how they can plan for it.

Chris, I have a quick question for you. You offered two different models that you're looking at and this is your opportunity to help us think about which one might be better or different, and in what way.

I'm interested, particularly in my province, in apprenticeship and whether one mobility piece might be more helpful to those who are still in apprenticeship as opposed to being journey persons already.

[Christopher Smillie]

In our submission, the system that revolves around employment insurance doesn't touch as many people as the other model that I suggest.

If we want to hit the maximum number of apprentices and the maximum number of folks, my submission would be to go the route of some sort of tweak to the Income Tax Act based on occupation. If we're solely using this as a way to move people off unemployment into the workforce, it might disadvantage some folks who are just switching jobs, let's say from a job in Saskatoon building a waterworks facility to a job in Toronto helping out with the Spadina line.

It depends what the public policy purpose is. If we're going to just help folks who are unemployed move to where the work is, perhaps the EI regs are the way to go. But if we want to do something with more purpose, with longer-lasting implications, we could do something around the ITA, the Income Tax Act, based on occupation.

But we could try it. We could have a pilot both ways or either way and see what happens. I wouldn't want apprentices to be excluded.