Finance Committee on Feb. 19th, 2016

[Ken Kobly]

Again, going back, we published a paper about eight years ago calling on the provincial government to dramatically upgrade a portion of the royalty revenues that are received, put them aside, and basically take them out of the spending stream and allocate them into savings before you have folks knocking on your door asking you to spend it.

When you take a look at it, you see there certainly were substantial periods of high royalty revenue, but there were also high periods of expenditures that went along with the fact that we were into a huge boom in our economy.

Former Premier Stelmach often referred to the fact that when people move to Alberta, they don't bring their hospitals and schools. We had a province that had to cope with that high growth during that period. With 20/20 hindsight, if we had taken that money and basically squirrelled it away, there may have been higher taxes in the province of Alberta. I guess the lessons that we learned in the past will hopefully inform our decision-making ability in the future and improve it. The reality is that at this point in time, we have a critical issue.

It's not about royalties in the province of Alberta. It's the reality that we have a low oil commodity price, which is dragging down our economy. The effect on the provincial treasury is an important part of that, but certainly it's not what is causing the unemployment in the province of Alberta.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you both. We will have to cut it there.

I have one quick question, and maybe Mr. Liepert might even have the answer to this.

It's been mentioned several times by several witnesses that the discount to the price of oil in Canada is a result of not having access to tidewater or not being able to get product to market.

How much is that discount? What's the cost to the Canadian economy as a result? Does anybody have those figures?

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

The discount varies, but on average it's in the range of 10 to 15 bucks a barrel.

[A Voice]

It's $9.60.

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

It was $9.60, but it has gone a lot higher. There is a number out there. I can't recall it off the top of my head, but it's in the tens of billions of dollars.

[The Chair, Liberal, Wayne Easter]

Mr. Kobly.

[Ken Kobly]

One of the other facts is the difference in the price of the oil and gas we sell and the price that eastern Canada pays on importing oil and natural gas. They're paying more than what Alberta sells it for in the United States.

Ontario imports 67% of its natural gas from the United States, which is a ridiculously high amount, given the fact that we have tons of the stuff in Alberta.

[The Chair, Liberal, Wayne Easter]

I wish we had more time, but we are going to the next witnesses.

I wish to thank everyone for their presentations. It's always interesting when we have a few lively discussions when witnesses are here as well, so thank you all.

I would ask the next witnesses to come forward.

[The Chair, Liberal, Wayne Easter]

Could we come to order, members and witnesses? I'm running a wee bit behind.

First, I'll ask witnesses not to go too fast in their statements. The interpreters are having a job keeping up. People are trying to get through their remarks in the tight five minutes, and I recognize that.

With that, we'll start this round of hearings.

We will start with Mr. Gupta, from the Information Technology Association of Canada. He comes to us by video conference from Toronto.

[Karna Gupta, President and Chief Executive Officer, Information Technology Association of Canada]

Thank you, Mr. Chair.

Good morning to everyone in Ottawa. My name is Karna Gupta. I'm the president and CEO of ITAC, the Information Technology Association of Canada.

We represent the ICT sector in the country, which has about $160 billion in annual revenue. We invest about $4.8 billion annually in private sector R and D, which is more than any other sector in the industry. We create about 1.1 million jobs across the country. The average salary in this sector is running over $70,000. While most other sectors are declining, we're continuing to grow. Currently we have an unemployment rate of probably around 3%, which means we can't find people.

In terms of the presentation I'll walk you through today, I have sent my pre-budget submission to all of you. You probably have it. I'll discuss where I'd like to see government have active engagement in investment. The second area will cover some policy areas where we believe, as the ICT sector, we could continue to collaborate with the government to develop the right policies.

Let me start with the areas where we think the government needs to invest more. They come in three topical areas. We talk a lot about infrastructure. Digital infrastructure is absolutely critical. Second is talent. Most knowledge economies require talent. That is the ultimate resource. Finally, there's the intellectual property. More and more we're dealing with the trading of ideas rather than the trading of physical goods.

Let me start with digital infrastructure. On capital cost allowances, we recommend that they be increased as in any other sector. We recommend that CCA rates go up to 50% of the capital investment in most areas, and 100% in those areas identified by the Department of Innovation, Science and Economic Development as underserved in its Connecting Canadians broadband initiative. This change will support the business case for ICT companies to provide more service to Canadians.

There are direct economic benefits. These small and medium-sized enterprises will have a greater adoption of technology. It will create jobs.

There is also a significant amount of social benefit. It will serve telehealth, e-learning, and engagement in both social and political discourse online, which is particularly beneficial for remote communities, including first nations.

Under digital infrastructure, we also recommend that the government join the provinces and private sector in investing in the next-generation 5G network. Canada lags behind other industrial nations in that 5G will build our capacity for innovation and commerce. It will also serve such critical areas as the Internet of Things, or IoT, and cybersecurity. As well, 5G will allow Canadians to develop valuable intellectual property to further our knowledge economy.

The second area I'll focus on is talent. While most other sectors are shrinking their workforce and laying off people, the ICT sector is growing. Currently we have 54,000 jobs available across the country. Recent research from the ICTC declares that over the next four years, 100,000 jobs will need to be filled. If we focus on Canadians learning the skills, it will not only lower Canada's national unemployment rate but also help our unemployment in the youth sector, which is very critical.

There are two specific programs I'll mention that government could put some funds behind. The first is called CareerMash, where we promote to high schools that kids can go into technology as a career choice. The second is business technology management, which delivers curriculum to universities and colleges that creates hybrid knowledge of technology and business. Business technology management now runs across 20 universities around the country. It has enrolled 3,500 students. It is growing 25% year over year. It graduates about a thousand students a year. This next variable is very important: the placement rate is 90%, higher than in any other faculty.

Industry has supported this program in cash and kind for over $1 million during the last several years. Business technology management, or BTM, is currently funded by the Department of Employment, Workforce Development and Labour , and it is critical that these programs be continued under the current budget for about $5 million per year for the next several years. This way it can be refreshed and expanded beyond the 50 universities that have been targeted.

This will ensure that Canadians, particularly young Canadians, can fill the existing job vacancies and join the high-paying, skilled workforce in the ICT sector.

Let me now move to intellectual property. This is the backbone of a knowledge economy. We are not trading in physical goods; we're trading in ideas.

Canada's IP regime must—

[The Chair, Liberal, Wayne Easter]

Mr. Gupta, I'll have to get you to sum up as quickly as you can. We're considerably over.

[Karna Gupta]

Okay, thank you.

Canada's IP regime is not comparable with that of the other OECD nations. We need to create an IP regime that is consistent with others. I think the government should think about lower tax rates for revenue generated from intellectual property, relative to any other revenue.

There are two more areas where we need to engage with government. One is the SR and ED tax credit. It was reduced under the previous government. The government needs to revisit this decision and restore the tax credit.

Second is stock options. There is a tax consideration here. It is the only way we can attract, retain, and reward the top talent.

Finally, there is the Canada Health Infoway, which is critical for digital health. I think this needs to be looked at from a recapitalization point of view.

Mr. Chair, these actions will allow Canadians to access the prosperity and opportunity of the digital economy, which will fuel growth through Canada's innovation agenda.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

We turn now to Mr. Dussault, as an individual. He is former chief actuary of Canada.

Go ahead. The floor is yours. Welcome.

[Bernard Dussault, Former Chief Actuary of Canada, As an Individual]

Thank you, Mr Chair.

Thank you for giving me the opportunity to present a major plan to you this morning. The intent is to alleviate rates of poverty, not only among seniors, but also among all Canadians. The plan could be carried out completely within the context of pensions in Canada. It has three distinct components.

Allow me to specify that Statistics Canada data indicate that the poverty rate among seniors is in the order of 5%. This is not bad, and compares well with the rest of the world. However, despite the low rate, at least one third of all seniors receive guaranteed income supplement benefits. That basically means that, although their actual poverty is alleviated, they cannot be said to be living with dignity.

The first of the three components of my plan is to put back on the table a plan that the federal government introduced in 1996 called the seniors benefit program. This program would merge the pension benefits from the old age security program and the guaranteed income supplement, in a way that would provide benefits only to those who need them.

Old age security benefits, unlike the guaranteed income supplement, are not based on need. They are provided to every Canadian who has lived in the country for a minimum number of years. This program is not really necessary. However, if a program like the one considered by the federal government in 1996 had been in place for 20 years, poverty would be alleviated a little more than the guaranteed income supplement does at the moment. We could improve it a little more and, quite surprisingly, we could save $10 billion annually. We would not save $10 billion from the beginning, however, it would be progressive.

The second component of my plan is an initiative that has been talked about for a long time and will likely be implemented either this year or next. This is to expand the Canada Pension Plan. This will certainly alleviate poverty. I want to point out here that, according to Liberal party resolutions, the expansion would be done in a way that would exclude workers earning less than $30,000 per year. This is based on the fact that they do not really need it because the guaranteed income supplement begins to be paid at age 65.

First, we must realize that the people earning less than $30,000 in any given year will not automatically be the same in subsequent years. Therefore, excluding people below a certain income level is not a good way to go.

Second, we are better off using the guaranteed income supplement, what I like to call the “Robin Hood” approach, as little as possible. We will always need it, as there will always be those who are poor. However, the more we can use other ways, such as helping people to save, for example—or rather, compelling them to save because they will not do it if they are not compelled to—the better things will be.

In that sense, expanding the Canada Pension Plan will help to reduce the number of people receiving the guaranteed income supplement. The percentage at the moment is between 33% and 35%, but it could be reduced to 25%. Of course, the people earning less than $30,000 in a year do not have the flexibility they need to put money aside and to pay additional Canada Pension Plan contributions. This problem of the working poor mostly goes back to the minimum wage, which is only $10. I understand that, for employers, paying people more than $10 per hour involves operating costs and that disturbs the economy. But the fact remains that paying a person $10 per hour, whatever kind of work they do, does not allow them to live with dignity.

The third component is about employer-sponsored defined benefit plans. This area is facing major financial problems. At both federal and provincial levels, this is principally because contributions holidays are still permitted. In other words, the sponsor of these programs is allowed to withdraw surpluses and pocket them, so to speak. That is a sure recipe for financial disaster, as the world of pensions amply proves. Defined benefits plans are in serious difficulty.

So these contributions holidays should be prevented, and the surplusses should instead be amortized, as is done with deficits by decreasing or increasing the contribution rate.

One last, more broader point concerns these three systems, and that is the age of entitlement to benefits—

[The Chair, Liberal, Wayne Easter]

I don't want to interrupt, but can you make it fairly quick? We are on time.

[Bernard Dussault]

Instead of being changed drastically at one point of time, the age of entitlement should be based on the year of birth. The later people are born, the longer they will live. So the age of entitlement should be based on the year of birth, for example 65 years for people born in 1950, by increasing it by two or three months depending on the year of birth.

Thank you for your attention.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

I just want to say to committee members that you have a presentation as well that the members will be receiving.

We'll turn to Ms. Zatylny, from the Association of Canadian Port Authorities

[Wendy Zatylny, President, Association of Canadian Port Authorities]

Thank you, Mr. Chair.

Good morning, ladies, gentlemen, and Mr. Chair. Thank you very much for the opportunity to speak with you today.

As you can tell by our name, the Association of Canadian Port Authorities represents the 18 port authorities across Canada that make up the national port system. We're grateful for the opportunity today to provide our input to this committee as you continue your pre-budget consultations.

In our pre-budget submission, which you have received, we specifically request that the government work with Canada's port authorities to remove the existing barriers to financial flexibility to help us improve and continue to improve our port infrastructure and to maintain the existing high level of port security. We believe that these investments would see Canada become one of the World Bank's top 10 countries in the world for transportation logistics and supply chain efficiency. In short, we have an opportunity before us that we believe we can leverage through some additional investments.

First, let me give a little context.

The reality is that with more than 90% of everything we buy travelling by ship at some point, maritime trade underpins the global economy, and Canada's world-class port authorities are very much at the heart of this economic opportunity.

Our port authorities handle nearly two-thirds of Canada's water-borne cargo and are pivotal in driving our country's economic growth. In fact, Canada's port authorities in total handle over $400 billion worth of goods every year, trading with more than 160 countries. This contributes to Canada's economic growth, and we create more than a quarter of a million direct and indirect jobs that pay higher-than-average wages, so ports are powerful drivers of job creation and economic growth in every region of the country.

We're very proud of the partnerships we've built in the private and public sectors, as well as the commitment we have made to the communities we operate in, but the shipping world really is changing dramatically. Expanded trade is making our world smaller, and traditional trade patterns are shifting. Remaining competitive in a rapidly changing world will require us to strengthen our port facilities and continue to find ways to improve our supply chain efficiencies.

How do we do that?

First, we propose removing barriers to give ports much-needed financial flexibility. This will allow our ports to react nimbly in a highly dynamic and very competitive environment. Amending the Competition Act would allow port authorities to collaborate, with an eye toward maximizing asset utilization to help ease the burden of uneven pressure and demands that are exerted on ports by shifting global trade patterns.

As well, challenges for ports include current caps on borrowing limits, which are set much lower than what port development projects actually require, as well as a long and opaque process to obtain supplementary letters patent amendments.

As I said, ports are and will continue to be powerful trade enablers for Canada, but to do this effectively, we need the flexibility to adapt to rapidly changing commercial market forces.

Second, financial support of strategic port infrastructure is needed to maximize Canada's economic output. It takes a wide range of partners to support such infrastructure projects, and the federal government is a crucial element of that patchwork quilt of financing.

A 2012 ACPA-Transport Canada study showed that there was a capital investment need of $5.8 billion just to cover the development projects of the ports. This is not $5.8 billion requested from the federal government; it's simply the sum total of the port development projects. Within that, one-third, or $1.9 billion, was needed simply for the rehabilitation of existing port assets, as opposed to developmental projects. These relate primarily to wharf substructures and berth-face structures, but the challenge for ports is finding the financing for these necessary rehabilitative projects, as opposed to development or growth projects for which it's easier to find financing partners.

The reality is that these rehabilitative projects are shovel ready now, and ultimately an investment in port infrastructure will have a multiplier effect. An initial injection would go into supporting not only the local economy through the initial construction and work, but there's a second bounce that comes from the ability of the port to grow its cargo.

There's a very compelling OECD study that has shown that every additional one million tonnes of new cargo going through a port can lead to the creation of up to 300 new jobs in the port hinterland, so truly it's a win-win scenario.

Lastly, we believe that as Canada continues to negotiate its free trade agreements with countries around the world, ports will be called upon to manage an ever-growing volume of cargo and passengers. It's essential that ports continue to be able to maintain a very high level of security. As technology evolves, we need to stay ahead of the curve to make sure that security stays optimal so that we can continue to ensure the safety of Canada's economy within what is a constantly evolving threat environment.

To do that, we are requesting the establishment of a suitable funding program. It would essentially be a return to an existing security funding program that had existed to support the port security regime, including adapting to such emerging threats as cybersecurity challenges.

As Canada's trade agenda continues to pick up steam, it's crucial we take the necessary steps to ascend that ladder and improve the position as a leading trading nation.

We believe we really do have the opportunity as a country to break into the World Bank's top ten trading nations in terms of supply chain efficiency. We are confident we can improve our position with the Government of Canada on board.

I'll end with that, Mr. Chair, and thank you again for the opportunity to speak today.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

Next, we have the Canadian Agri-Food Trade Alliance, Ms. Citeau.

[Claire Citeau, Executive Director, Canadian Agri-Food Trade Alliance]

Thank you for inviting me today to speak on behalf of CAFTA, the Canadian Agri-Food Trade Alliance.

CAFTA is a coalition of organizations seeking a more open and fair international trading environment for agriculture and agrifood. Our members represent farmers, processors, and exporters from the major trade dependent sectors, including beef, pork, grains, oilseeds, sugar, pulse, soy, and malt. Together we account for 80% of Canada's agriculture and agrifood exports, about $50 billion in exports, and an economic activity that supports hundreds of thousands jobs across the country.

What I would like to imprint on the committee today is the importance of competitive access to global markets for the export-oriented sector.

As you know, the Canadian agriculture sector depends on trade for the large part. Over half of everything we produce is exported. That's 50% of our beef, 70% of our pork, 75% of our wheat, 90% of our canola, and 40% of our processed food products. Being competitive in international markets is not a choice, it's a requirement.

In the current environment of trade liberalization, the competitiveness of our sector depends on the timely negotiation and implementation of trade access to the markets that our competitors are also after. What we lived through with Korea cannot happen again, as this billion-dollar market was cut in half virtually overnight, and our competitors, namely the U.S. and Australia, had access and tariffs eliminated, when we did not.

It is critical that Canada ratifies the Trans-Pacific Partnership agreement quickly. CAFTA strongly supports the TPP and believes it is integral to the future viability of our export-based agriculture sector.

The TPP region absorbs 65% of our exports. It includes some of our largest traditional markets, such as the U.S., Mexico, and Japan, but also some of our largest competitors—the U.S., Mexico and Australia—and some of these countries already do have free trade agreements with one another. The more TPP drags, the more we fall behind. Ultimately, if we're not part of the TPP, Canada will fall behind.

We strongly encourage the completion of the respective legal and political processes related to the Canada-Europe free trade agreement, CETA, while simultaneously completing technical discussions, so that the stated benefits of the agreement can be realized in the form of commercially viable access for all exporters.

CAFTA strongly supported CETA, as it's expected to result in significant benefits for exporters, this assuming that negotiated outcomes will provide commercially viable access for our members. Outstanding technical issues to allow real access to the EU remain and we are confident that the Canadian government is working hard to resolve these issues before CETA is implemented. Our support for the implementation of CETA will be based upon the extent to which the negotiated outcomes will result in commercially viable market access for Canadian agriculture and agrifood exporters.

Our recommendations for the Government of Canada to contribute to a globally competitive agriculture and agrifood sector in Canada are as follows.

The Government of Canada should allocate proper resources to the functions in charge of negotiating free trade agreements, specifically the team of negotiators working on the TPP, CETA, WTO, and the next generation of future agreements for Canada.

The Government of Canada should allocate proper resources to the functions in charge of implementing free trade agreements, and maintaining and restoring market access. Typically, once free trade agreements are implemented, we see multiple non-tariff barriers arise. It's essential that adequate funding be allocated to the market access secretariat, MAS, so it can continue its critical work of minimizing technical barriers to trade and restoring real access for exporters. It must be noted that MAS depends on the Canadian Food Inspection Agency, CFIA, to deliver the technical support. Proper CFIA resources would be a component of that.

The Government of Canada should allocate proper resources to the network of Canadian representatives abroad, particularly the embassies and agriculture trade commissioners. Canada's ability to build a competitive industry depends in large part on how well the country will open doors abroad and leverage relationships with relevant government and industry influences.

The Government of Canada should also continue to support relevant ministers and senior-level officials in their activities to build and cultivate relationships at a high level in foreign markets. This is critical to enhance trade and market development efforts for Canadian exporters, particularly in Asian countries.

In closing, our sector encourages financial policies that expand our ability to competitively market our products to the world.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Citeau.

Mr. Laurin from the C.D. Howe Institute, the floor is yours.

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

Mr. Chair and members of the committee, thank you for inviting me to appear before you today.

You will see my submission once it's translated, so I will go through it very quickly, highlight the main recommendations, and boil it down for you. A lot of the concepts are in the submission or in other literature. You're always invited to read what I wrote on these topics.

First of all, let me talk about the personal income tax system. You'll all agree that reforms should be conducive to economic growth, especially in this tough environment. Here we have both good news and bad news stories.

The good news is that the reform of federal child benefits, as promised in the new government's election platform, will actually do something good for the economy, good for work incentives. The money reinvested from the UCCB and the family tax cut will serve to lower the clawback rates, or the benefit reduction rates, that are reduced with income. The clawback rates will be reduced significantly. Those clawback rates act like hidden tax rates. When you take all contributions, all tax, and those hidden tax rates that are benefit clawback rates, and sum them up, at their very low end, at between $25,000 and $45,000 in family income, the effective tax rates can be as high as 70% for some families.

This is really high. It hinders work incentives. The reform, as proposed in the election platform, mentions a reduction in clawback rates in the range of 5% to 17%. This is significant. It would have a positive impact on work incentives, so a positive impact on the economy. It would be important to see that the reform effectively does reduce clawback rates and does not only make the system more generous.

That's the good news. The bad news is that overtaxing top incomes is economically inefficient. I have written a lot about this. Tax rate hikes at the top, when the rates are already approaching 50%, are economically damaging. Using a measure of behavioural response that is consistent with the economic literature, I estimate that the four percentage-point increase in the top tax rate will yield about $1 billion in new federal revenues but will cost provincial governments $1.4 billion. That's a net loss, a consolidated government net loss, of $400 million. That means we have reached the top. We cannot go higher. We're pretty much at the point where we extract as much as we can from top earners.

Ironically, it also means that reducing the top tax rate, or even reversing the latest increase, would be a cost-effective way to provide fiscal stimulus at this point in time. I know it's ironic, but it would be a cost-effective tax reform.

Now that we're talking about deficits, there's definitely a need for the government to tightly manage its internal operation costs. You will agree with me that when times are difficult, you need to manage your own house very effectively. One of the things we've been repeating at the C.D. Howe Institute for many years is that the total compensation package for federal employees results in average compensation per hour much higher than what is found in the private sector. For federal government services jobs, the average compensation per hour is $64. That comes from Statistics Canada. For professional, scientific, and technical services jobs, it's $40 per hour. In the finance and insurance industry, it's $45 per hour.

There is a significant difference, but that difference is not attributable to wages and salaries. It's mostly attributable to the cost of pensions and the cost of other future benefits. That's the important thing here. Those costs represent about 43% of wages and salaries for federal employees.

It's very high, and if there is something to do, it is to work on this aspect of the compensation package. Ottawa should continue its reform of the sick leave management system, the reforms that are currently under way. They should continue because they lead to major savings, and pension plan contributions as an employer should be capped at 50% of what is available for people saving in RRSPs and people in DC pension plans, which is 9% of pensionable earnings, along with a move to a shared employee-employer governance, as is found elsewhere in the public sector.

Finally, let me talk a little bit about infrastructure spending because there is a lot of talk about it. Infrastructure spending is good. It would provide economic benefits that are greater than the costs of the investment. It can improve productivity in the long term, and that's a good thing. It can also increase demand in the short term, so it's a good stimulus, but the scope for such action is limited if the investments are in big capital investment projects in partnership with provinces and municipalities when these projects are not shovel-ready, so we need to be careful of that. We need to focus on federal infrastructure when we know that the implementation times will be quick, and that's when we will get the bigger bang for our buck.

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Laurin.

We'll turn to the mayor of the City of Barrie, on behalf of the Large Urban Mayors' Caucus of Ontario.

Mr. Lehman, the floor is yours.

[Jeff Lehman, Mayor, City of Barrie, and Chair, Large Urban Mayors' Caucus of Ontario]

Thank you very much, Mr. Chair, and members of the committee.

That's a nice segue from Mr. Laurin's testimony on infrastructure.

I want to recognize and thank MP John Brassard, the member for Barrie-Innisfil, for being here today as well.

Thank you for allowing me to speak to you.

On behalf of Ontario's big city mayors, we are the mayors of the cities in Ontario with 100,000 or more population, which represents two-thirds of Ontario’s population. As you all know, our cities in Canada are being asked and called upon to meet new challenges. The issues that affect us as mayors are the issues that affect everyday Canadians: affordable housing, jobs, and infrastructure. I will say a little bit about each today.

I want to start by saying that it’s very encouraging to see the federal government’s focus on ensuring prosperous and secure communities. Investing in our cities strengthens our economy and ensures our long-term prosperity.

Municipal finance is very complex, but the major fiscal challenge affecting us, Ontario’s big cities, is straightforward. We're spending less than half of what is needed on existing infrastructure, which has led to an infrastructure deficit. With a renewed federal partnership, Ontario’s cities are ready to get shovels in the ground quickly on major infrastructure renewal. Mr. Laurin and I did not coordinate our testimony; that just happened.

The list of projects are long, and the urgent need for reinvestment in existing road and water networks, building new transportation links, and community infrastructure cannot be overstated. As Ontario's big city mayors, we're very encouraged by the Liberal Party's platform of infrastructure investment, which we believe is based on collaboration with municipalities and vows to address the critical issues facing our community, such as affordable housing.

However, what cities need is long-term, predictable, sustainable, and dedicated infrastructure funding mechanisms similar to the permanent and indexed gas tax fund. We also need streamlined and faster approval processes and greater coordination and consistency between federal and provincial infrastructure funding programs. We do not need a process of political-based decision-making nor do we need to create application processes and agreements that are so lengthy and complex that we lose the 2016 construction season.

I want to say to the committee that I also believe that it is really time we stopped treating our basic economic infrastructure in this country like it's something to only be invested in or maintained during periodic stimulus periods. The productivity gap that is holding Canada's economy back is partly a result of our under-investment in the fundamentals of a strong, modern economy. Chief among them is the ability to move goods, people, and information at the speeds demanded by modern businesses. A permanent increase in gas tax funding with criteria that tie this investment to economic infrastructure would allow all three levels of government to engage in building our economy and in making Canada more competitive.

In addition to urgently needed investments in infrastructure, Ontario’s big city mayors believe that, although all levels of government are working to create jobs and grow the economy, too often this is still done in isolation. We're in need of a diverse and robust jobs strategy for Ontario and Canada with clear actions to address labour market reform through skills training, apprenticeship reforms, immigration reform, and expansion of international trade and foreign direct investment through a new coordinated trade agenda shared by federal, provincial, and municipal governments.

While we need to invest in the roads and pipes that keep our cities working, we also need to consider the basic needs of the people who live there. Affordable housing is a critical issue affecting cities across Canada. With housing markets in overdrive, many Canadians are priced out of our major cities, and indeed, many of our smaller ones. Worse, low-income Canadians cannot find housing at all and face long wait times for social housing. Rents in Barrie, for example, are the seventh highest in Canada. Our wait-list for social housing is more than 1,500 households long in a city of 55,000 households. Low-income seniors face a wait of up to five years for a unit. This is not acceptable in a modern Canadian city.

Municipalities are ready to work with our provincial and federal partners to solve the housing crisis. According to FCM, public investments in housing are one of the best ways to grow our economy. For every dollar invested in housing, Canada earns $1.40 in GDP. In collaboration with FCM, we are calling for a comprehensive national housing strategy that provides for greater policy coordination, collaboration, and the necessary resources for actions and results.

In addition, there are innovative approaches to affordable home ownership that can be explored through federal tax policy that support lower-income families, give them pride of ownership, and build equity. Some examples include down payment assistance grants, renovation cost credits for adding secondary suites to existing housing, and removing the GST on certain housing-related costs such as construction materials for affordable housing. But it is only through a meaningful investment in capital projects in the affordable housing sector that we can address this crisis.

In closing, the Ontario big city mayors face the same issues that face Canadians across the country. To move forward, we believe we must put investment in infrastructure at the heart of our national economic strategy.

Overcoming Canada's biggest challenges requires close collaboration among all levels of government. Ontario's big cities look forward to true collaboration and partnership with the newly elected government in working together to move forward with this shared agenda.

I thank you, Mr. Chair.