Finance Committee on Feb. 19th, 2016

[The Chair, Liberal, Wayne Easter]

Thank you, your concern is noted. I saw the sign. I didn't think it said “Stop Harper”, but if you have the evidence that it does, then that shouldn't happen and we'll correct it in terms of any more video conferencing that is done. That is an appropriate concern.

[Lisa Raitt, Conservative, Milton, ON]

I appreciate it. You were very open to hearing about the point yesterday and we agreed that we should ensure that's exactly what it said and that's what we did overnight. Thank you for your time on that.

With respect to our witnesses, thank you very much for your presentations. I'm going to have one question for Dr. Meslin and then I'm going to talk to Dr. Manion, because I have a passion for mental health. Very quickly and just out of curiosity, I have your brief and your pre-budget consultations and I certainly understand your role. Is your academy or your society doing anything to encourage more women to be involved in the traditional STEM areas?

[Prof. Eric Meslin]

Thank you very much for the question.

Indeed, we have focused on all aspects of the science-technology-innovation pipeline. I'm pleased to note, in fact, that one of our really important areas of research in science was a study that we felt inspired pay issues and salary issues to be taken up quite seriously. Our work on women in university research in fact inspired McMaster to conduct its own study on a gender pay gap, resulting in a salary raise for full-time female faculty.

Your question about STEM is itself quite relevant to my answer. The STEM, science, technology, engineering, and math, report, “Some Assembly Required”, speaks to a very important issue, which I think you've heard about in responses already.

One point is that the shortage of STEM skills is a problem, but it is by no means the most important or the only problem. In fact, creating the demand for these kinds of skills might be equally important.

I can say in passing as well that I have two adult daughters who have gone through university systems, one of whom will go through in the humanities and one of whom will go through in the sciences because they've been given that opportunity to excel.

I think we have the opportunity in Canada to do this. The three academies that make up the Council of Canadian Academies, I think it's fair to say, are very committed to that proposition.

[Lisa Raitt, Conservative, Milton, ON]

For Partners for Mental Health, I obviously have a great passion. I worked in the field for a long time. You know that.

Here's what I'm interested in: In preparation for today, I read your submission from last year. The $100-million fund was pitched last year as well to the finance committee. You call it the Nuremberg model. Can you give me an idea of whether or not the model was scaled up from the localized pilot?

I'll tell you where I'm going. I'm going to be very clear on it. You're moving as an organization from public policy and awareness to a very different model of getting into giving out money and supporting. It is a large step. My concern is, do you start smaller, like Nuremberg, and then scale it up around the country? I would be grateful for your comments on that.

[Dr. Ian Manion]

Thank you for the question, but more importantly, thank you for the stance you've taken very publicly on mental health.

[Lisa Raitt, Conservative, Milton, ON]

Thank you.

[Dr. Ian Manion]

I've had the opportunity to hear you speak. It's very impressive, but it's very bold on your part to do that.

In terms of the Nuremberg model, it did start small but now has stretched across Europe. The European Alliance Against Depression has actually taken the initial pilot work and adapted it, and now it's in hundreds of communities. The step has been taken from a scientific perspective. The evidence is there. What's happening now is that people are taking that evidence and applying it in context.

That's what's being proposed now. Take what we have in terms of what is not just a fledgling piece of evidence but is now an applied, scaled piece of evidence on a different continent and apply it within the Canadian context.

The timing is also critical from a policy perspective. I say that because I've had partners who have had many conversations with the Public Health Agency of Canada, and I have as well, which is poised to talk about its own strategy around suicide prevention with no implementation plan and no operationalization. Too often we come across strategies with no implementation. The public is very tired of the rhetoric part of that and is really poised for some action.

If you look at a very small pilot in Canada, you don't necessarily have the power to demonstrate some of the heterogeneity required to demonstrate how it can be scalable to the different types of communities that exist across Canada. What we've proposed is to have enough communities to have that variability so that we have the evidence available to then scale beyond that across the country. We think that's the way to go.

When I say “we”, I'm not referring to partners. I'm referring to the people that partners have brought together who have experience in youth suicide prevention, who have done a wealth of research, and who practise in their communities in their provinces to find out how we can best use existing evidence and apply it in the Canadian context.

[Lisa Raitt, Conservative, Milton, ON]

So it's a complete ask in the $100 million. It's not something that you think we could start smaller with and move across once you learn. You're confident in the model and you want to implement it widely—

[Dr. Ian Manion]

I think that to a certain extent there's some scalability. What I mean by that is, how many communities do you need to actually have that heterogeneity? I know that we've looked at different models. The minimum is probably 12 to 14 communities to be able to do that. It's less than what we're proposing.

To be honest, how do you choose those 12 to 14 communities when the need is so great across the county? I think there's a political imperative as well, in terms of how does the government do something that is very loud and clear in terms of “we want to do something significant in this area”. The magnitude of the ask, the process of the ask, will have an impact in and of itself. It will change the discourse I think nationally to have the impact we're talking about.

[The Chair, Liberal, Wayne Easter]

You didn't continue your point of order and you could have, so we'll give you another minute.

[Lisa Raitt, Conservative, Milton, ON]

Thank you very much. I'm just going to continue.

You came out of essentially the Mental Health Commission of Canada. You were part of it, and then you incorporated on your own. What's your relationship with the Mental Health Commission of Canada going forward?

[Dr. Ian Manion]

We've been working on this for a number of years. Several of us who live and breathe youth suicide and who want to make a difference have been working on this particular ask for several years and have shared everything with the Mental Health Commission of Canada. It's quite honestly going to take all of us to get it right.

It's so rewarding to see that the commission has now looked at the same model we're talking about, looking at it from a slightly different perspective, lifespan as opposed to youth.

We believe that if you are going to start with something and take that first bite of the elephant, it should be children and youth, because that's where the greatest impact can be.

I'm absolutely prepared to work with the commission. I've had several conversations with the commission. Some of their leads around suicide prevention have approached me on multiple occasions. Their leads have changed, unfortunately, several times, so it's hard to find out exactly who the main person is.

The group we've brought together is poised to work with whoever is ready to make a difference in this area.

[Lisa Raitt, Conservative, Milton, ON]

You had the 308 Conversations last year. I thought that was really helpful across Canada and that started the talk about suicide prevention, and I know a lot of us did that.

[The Chair, Liberal, Wayne Easter]

Mr. Caron, you have seven minutes.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much.

I'll start with Mr. Boadway. If I have the chance, I'll go back to Mr. Bonnell after.

I'm really glad to have you here Mr. Boadway. We have had you here in the past, and we always talk about people having written a textbook on something, but you have literally written textbooks on tax issues and taxes in Canada, so it's really interesting to have you here. One thing is that you have always submitted information elements and proposals suggesting thinking outside the box while still being credible. Those have forced us to think in a different way.

I can see your proposal is doing that as well.

If you don't mind, I will continue in French.

There is one particular factor I wish to mention. You support capping the TFSA at $5,500, as opposed to the $10,000 that had been proposed. You are aware of the Parliamentary Budget Officer's report on the tax implications of the TFSA. He stated at one point that the account was going to cost tens of billions of dollars if the limit was not reduced to $5,500. The fiscal impact could have reached 0.65% of the GDP, which does not seem like a large figure, but since we are talking about the GDP, it is a considerable amount.

Do you agree with the conclusions of the parliamentary budget officer in this regard?

[Dr. Robin Boadway]

Thank you very much for the question. I hope I got exactly what you were saying.

I was very much opposed to increasing the limit on TFSAs from $5,500 to $10,000, largely on the basis that it would benefit mainly people in the very high income groups. When we're facing a situation where inequality in income and wealth is growing very rapidly, to me that doesn't seem to be a very good use of tax dollars.

Moreover, as an economist, I think that TFSAs are not the only assets you can buy with returns that are exempt. I come back to the case of housing. To an economist, investing in housing is more or less the same as investing in a TFSA, and there's no restriction on investing in housing.

There's ample opportunity for people to invest in assets the returns from which are not taxed, so it didn't seem to me to be the purpose.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

This is a point on which I would like more information.

In seven minutes, I cannot cover all of your recommendations. I will just put a question to you as a taxation expert. It is the same question I asked earlier during the hearings.

People often talk about the complexity of our system. Several points in your presentation highlighted the complexity of corporate and personal income tax. You referred in fact to all of the components of our tax system.

When I was elected in 2011, the Income Tax Act had 2,000 pages; now it is 3,000 pages long. When the Income War Tax Act was passed in 1917, it only had 10 pages, if I'm not mistaken. Our system has become extremely complex.

How important is it to simplify the system? Where do we begin? What could we do to at least begin the process?

[Dr. Robin Boadway]

Thank you very much for that question, which is a very challenging and difficult one. I agree completely.

The complexity of the tax system gives rise to opportunities for tax planning. At least some of my proposals are motivated by removing opportunities for tax planning—tax planning used in the pejorative sense, perhaps, of tax avoidance. For example, the suggestion that we might want to eliminate preferential taxation of capital gains is largely motivated by the fact that the capital gains exemption gives rise to a lot of tax planning, and not just stock options but tax planning more generally, where people try to convert earnings into capital gains.

So I think base broadening on the one hand does tend to reduce complexity and serves a basic purpose. On the other hand, complexity is in some sense hard to avoid.

Whenever you put a special measure into the tax system for a particular purpose.... For example, the small business deduction has good reasons for existing—to encourage small firms that are engaged in highly risky activities to take those risks, and not punish them for doing it by taxing them at higher rate in the event that their business is successful. So, I'm a strong believer in the small business tax rate.

But, at the same time, you have to worry about the fact that people who are not really engaged in risky enterprises can take advantage of the small business tax rate. I gave an example in my notes. I apologize to members of the committee who don't have a copy of my notes. I didn't get a chance to do them early enough to translate them. One of the things I was proposing in these notes was to reduce advantages that certain groups might have in taking advantage of the small business deduction, for example, professionals incorporating mainly for the reason of paying a low business tax rate and holding their earnings there to avoid personal taxes. There have been some recent studies that have suggested there is a large amount of tax leakage that occurs because of that.

I guess what I'm saying is that simplicity is one thing, but whenever you introduce measures that are designed to fulfill a particular purpose, they themselves give rise to complexities that you then have to turn around and try to close off.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much.

Do I have time for a quick question?

[The Chair, Liberal, Wayne Easter]

You have time for a very quick one.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you.

Very quickly, I'm new to this file. I'm actually the deputy critic for fisheries, oceans, and the Canadian Coast Guard.

I was looking at fish stocks around the world, and there are actually very detailed statistics, especially by species. It seems to be impossible to find in Canada. Am I wrong? Am I looking in the wrong place, or should we have more detailed statistics on the current state of fish stocks, not only having categories A, B and C, but really having a clearer picture?

[Carey Bonnell]

Are you referring more so around the sustainability of the stocks?

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Yes.

[Carey Bonnell]

There is information available, certainly through the Department of Fisheries and Oceans. I'm not sure if it's fully up to date, but it's kept reasonably well up to date.

I think the narrative around sustainable fisheries in Canada has changed a lot over the past generation, certainly going back to the days of the groundfish moratorium, and we were sort of iconically known—and not necessarily for positive reasons—at the time.

We are probably now recognized among global leaders in sustainability certification, as I mentioned earlier, things like Marine Stewardship Council certification, third party eco-labelling standards that are required for market access in places like the E.U., the U.S., and here in Canada in particular. The vast majority of our fisheries today actually meet and exceed those standards.

We've come a tremendously long way, and we've advanced the social licence quite well on that front. I think it's a positive story.

[The Chair, Liberal, Wayne Easter]

Mr. Sorbara, you have seven minutes.