Finance Committee on Feb. 19th, 2016

[Dr. Robin Boadway]

It depends on what you mean by tax increases. You can get a tax increase out of top income people by raising the rate, or you can get a tax increase by broadening the base. I have stronger views about broadening the base than I do about increasing the rates. There's plenty of room for broadening the base at the top income level.

That was my proposal for reducing the preferential treatment of capital gains. It was essentially to broaden the base and get more revenue from people who are converting other forms of income into capital gains simply in order to get a tax break.

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

Whatever term you put on it, it's an increase in taxes paid by those at the upper income level. As a follow-up to that, again, work that the C.D. Howe Institute did seemed to indicate that if we push this much further, we run the risk of having a brain drain from the country because there are other countries in the world that have more generous tax structures for higher income.

If we start to lose these folks who are paying a significant amount of tax, all of a sudden we don't have them paying. They're not here anymore and they're paying zero tax. How does that impact positively the federal bottom line? I have trouble understanding that.

[Dr. Robin Boadway]

It's certainly a constraint on raising taxes when you reduce the base; you get people who leave the country, or go from one province to the other. There's not a whole lot of evidence about the responsiveness of raising the rate in terms of international migration. There are many other things that influence international migration besides the top marginal tax rate.

After all, the top marginal tax rate only applies to a small part of the income that the person is earning. But I accept your point. One has to weigh the possible erosion of the base as a result of people fleeing the country when you raise the top rate versus the fact that a lot of income that people get at the top is a result of luck rather than hard work. I think capital gains partly fits into that category, for example, capital gains on housing.

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

I'd like to ask one other question.

You mentioned the TFSA. Obviously, we disagree on whether an increase in the TFSA was the right thing to do or the wrong thing to do. I want to prod a little more on your example.

Would you say it is possible over a five-year period that if someone invested their lifesavings into a home and through no fault of their own—they made all the right decisions—five years later that house could actually be worth less money than what they paid for it?

If you have a TFSA and you went for a guaranteed income certificate in that TFSA, is there any chance that five years later it could be worth less money than what you put into it?

[Dr. Robin Boadway]

Yes.

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

How?

[Dr. Robin Boadway]

You take a capital loss on the assets that you put in.

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

No, I said that you put it into a guaranteed income certificate, a GIC.

[Dr. Robin Boadway]

No.

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

I think your comparison between.... Your justification on a TFSA, saying that an investment in a home is comparable to an investment in a TFSA, I don't think holds.

I have one more question for the Retail Council of Canada.

Do you have a position on carbon tax?

[Karl Littler]

No, we don't have a developed one. We do a fair bit of work in the area of environmental responsibility. It's some distance from us, although obviously, it affects us. We tended to look to views from large final emitters and from environmental specialists. We don't have much to say on it.

[The Chair, Liberal, Wayne Easter]

Mr. Ouellette, for five minutes.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Thank you very much, Mr. Chair.

I'd like to go back to the idea that I really like from Dr. Ian Manion of Partners for Mental Health. It was not just that academics come in and save the day but it was the community. I believe that any durable solution must often come from the community. I really like what you said.

My questions are going to be directed to the Retail Council and Karl Littler.

Have you given thought to any different types of solutions? Is regulation the only way versus credit cards and the rates that are charged? For me, the main problem in any market is the eventual centralization which leads to monopoly and more monopoly, and in the case of Visa and MasterCard, perhaps a duopoly, where there's very little competition and retailers don't have a choice.

Why not challenge the structure, use new technology, and innovative collective solutions? We've heard over the course of the week from multiple groups, small business owners, small business federations, about the same issues related to credit cards. Why not innovate a solution, a collective solution, to your own problem?

[Karl Littler]

We are strong believers that this industry needs to be regulated, and part of that is that the ultimate beneficiaries of interchange are the banks and to some limited degree, cardholders, although the banks are the primary beneficiaries. But they don't negotiate on their own behalf. They are basically cutouts, which are the networks that set the rate for what the banks receive. There are only two to deal with, and one of them has almost 70% of the market. You can read into that what you will.

On your broader point, we agree. The trouble is on the technology side. It's a kind of Tower of Babel. There are a lot of different solutions out there, and a number of entities are looking to say they can cut out some of those price-takers along the way. Of course, some of them are the same entities because the investors in them may be financial services firms.

I think there is some possibility down the line, particularly if you have decent digital identification and authorization, to do many more direct transfers without a lot of intermediaries, but people aren't there yet.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

I think you have this opportunity because you support a large group of individuals and companies that you represent. You can innovate and push innovation in a different direction and challenge a lot of the structures in society and use technology to challenge those structures.

I have one final thing, Chair, and it's for Nobina Robinson from Polytechnic.

The way we collect data seems rather pell-mell for the needs of jobs, the requirements, and the training that goes on in universities and colleges, and even though I was a university academic, I sometimes failed to understand where we're getting market data. When I was in the military, we knew exactly what we needed; we knew that this trade was redlined, that this trade was yellow, that this trade was green, and we knew how many people we needed and how we'd get them trained, and how we would recruit people.

I don't feel there is much coordination going on. I don't think enough information is collected, perhaps, by Statistics Canada.

[Nobina Robinson]

Sir, you're absolutely right.

I want to clarify. You would know Red River College. Red River College is our member. We're not publicly funded universities; we're the colleges and polytechnics, just to clarify that.

I totally agree with you. Every one of these higher education institutions is servicing so much data. You can't get the provincial operating grant at Red River College unless you have data on enrolment: how many students you accepted, how many you turned away. You had this data. It's publicly available. It's not available nationally. I believe that the federal government can ask and work in this new atmosphere of jurisdictional harmony with the provinces through the forum of labour market ministers, through the newly created labour market information council, to ask why in addition to good Statistics Canada data, we don't have everybody using what's already there. We don't need to invent it. We just need to be able to get at it. I'd go to the 80-20 rule. If you try to get 100% perfect data, you'll never get there. But let's get publicly funded higher education institutions—and in this I include the universities—to get their data out in public. The federal government can do that. It is trying through Employment and Social Development Canada. I encourage you to keep pushing.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Robinson and Mr. Ouellette.

Before we adjourn this session, I have a point for you, Mr. Bonnell.

I don't believe people understand the urgency of the crisis over labour shortages facing the fish processing industry, especially lobster, and the difficulties caused by the temporary foreign worker program. I'm told by several fish processors that if they cannot access foreign labour within the next six weeks, some of them will start to bring the fish in, quick freeze them, put them in containers, ship them to a low-wage labour market, and bring the processed product back. That will not do anything for our economy or our job market. Is the crisis that serious?

[Carey Bonnell]

Certainly in the case of the lobster sector, I would say absolutely yes. It's a missed opportunity. It's a tremendously valuable industry worth well over a billion dollars. Productivity is at an all-time high in the industry right now. Prices for lobster going both into the U.S. and into Asia are tremendous, but the labour issue is a real issue. It's a massive issue, and it's not going to get better in terms of sourcing locally available labour. You have two or three key solutions. Technology and automation are part of the solution, but that's a medium-term to long-term strategy. The immediate solution, in my view, without a doubt relates to the availability of temporary foreign workers. A tremendous opportunity would be lost without them.

[The Chair, Liberal, Wayne Easter]

Thank you.

With that, on behalf of the committee, I thank all the witnesses for the valuable information that was provided..

We'll switch to the next series of witnesses and start within a couple of minutes.

[The Chair, Liberal, Wayne Easter]

We'll come to order.

As I explained before, pursuant to Standing Order 108(2), this is the second segment of our eighth meeting for pre-budget consultations 2016.

For the interest of committee members, the minister's office has now notified us that the minister and the deputy minister will appear before committee on Tuesday between 11:30 and 12:30 in Room 237, which is across the hall. The officials will be with us from 12:30 to 1:30.

Committee members, we talked earlier this morning about accessing information on your iPad, such as briefs and so on, with the paperless technology. If anybody wants to get up to speed on how to do that, we'll be doing that from 11 to 11:30, because in any event, we have the space booked. It's up to you whether you want to come or not.

With that, we'll turn to the witnesses.

Thank you for coming. I know that Jerry Dias just got off a plane and barely got here.

We'll start with the Canadian Association of Oilwell Drilling Contractors.

Mr. Scholz.

[Mark Scholz, President, Canadian Association of Oilwell Drilling Contractors]

Good afternoon. Thank you for the opportunity to appear before the House of Commons finance committee.

Your job is to recommend to the government measures that will strengthen the economy. I can do that for you in two sentences. We want a government that will defend and promote Canada's oil and gas industry, an environmental leader compared with any other major producer in the world. Second, we expect government to champion pipelines.

Earlier this week, our association launched Oil Respect, a campaign to provide regular Canadians with an opportunity to stand up and demand respect for Canada's oil and gas industry. We launched this campaign because we were tired of the misinformation and half-truths spread by foreign celebrities, radical environmentalists, and grandstanding politicians who twist the facts about our industry.

Oil Respect is about respect for facts, respect for workers and their families, respect for the environment, and respect for an industry that has contributed greatly to giving Canada some of the highest living standards in the world.

What are the facts?

Canada's oil and gas industry meets what are now the highest and toughest environmental standards among the large producing nations in the world. It employs 500,000 Canadians. It is the largest private sector investor in Canada and contributes $17 billion per year to support Canadian social programs.

In 2015 the industry lost $60 billion in revenue, which is equivalent to losing the entire auto sector from the Canadian economy in just one year.

The industry is accustomed to the ups and downs of commodity prices. We know that occasionally we will go through periods of low prices, job losses, and consolidation. In this latest downturn, according to Statistics Canada, we have lost 100,000 oil and gas jobs. It's the worst downturn since the 1980s.

It isn't just oil workers losing their jobs; families are losing their homes and businesses are going bankrupt. However, understand that in spite of this hardship, our industry is not looking for a government handout. We are asking for an honest discussion by our political leadership.

Oil Respect is about federal leadership that stands up and fights for oil workers, and we will call out politicians who take revenues while denying the industry that produces them.

According to the International Energy Agency, global demand for energy is expected to increase by 37% by 2040, and fossil fuels will make up 75% of the energy mix.

The world does not need Canadian oil and gas; the world just needs oil and gas. We need the federal government to advocate for Canadian oil and gas workers, companies, and pipelines already meeting much higher environmental standards than those imposed anywhere in the world. Otherwise, they will allow the critics to crush our industry, opening the door to the United States, Russia, Iran, and Saudi Arabia to supply the world's energy demands—countries with much lower environmental, labour, safety, and human rights standards. That makes absolutely no sense.

Without pipelines for export, Canadian products receive far less than the world price, resulting in fewer jobs, lower profits, and diminished government revenues to support Canadians. That means Canadians continue to subsidize American consumers.

We need federal leadership to champion national pipeline projects, because they are in the national interest of all Canadians. If we care about the facts, jobs, and our economy, we need our elected representatives to fight for pipelines, something we see consistently from Premiers Wall and Gallant.

We also believe that oil and gas families and businesses need respect. They are hurting right now, and they rightly believe their federal government should stand up for them. We expect our government to have an honest discussion about the great benefits of Canada's oil and gas industry, especially when it's only too happy to receive the revenues it produces.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Scholz.

I'll turn to Ms. Gamblin with the Siloam Mission.

Go ahead.

[Vanessa Gamblin, Manager of Drop In and Shelter, Siloam Mission]

Thank you.

My name is Vanessa Gamblin. I'm a Cree woman of Cross Lake, Manitoba. I also am the manager of Siloam Mission's drop-in and emergency homeless shelter. With that, I thank the members of Parliament who welcomed us here and also, of course, Mr. Robert-Falcon Ouellette for bringing us here. We are very grateful to the honourable member.

We would like to identify that this past fall no less than 20 agencies embarked on the first-ever street census in the Winnipeg core area. The goal was to get a comprehensive view of homelessness in the city. The census found that there were 1,400 people who were experiencing homelessness in Winnipeg at that time. Keep in mind that those are just the people we were actually able to count. It did not take into account the number of people who may have been couch-surfing that evening, who may have been wandering the streets in other parts of town, or who were taking shelter in places that were not visible. It's safe to say that numbers could be close to 2,000.

Meanwhile, at Siloam Mission, where I work, there are other troubling numbers that we'd like to share with you.

Pretty much on any given day, we're serving anywhere from 1,500 to sometimes 1,700 meals, and we're providing at all times, pretty much every day, 110 emergency shelter beds. What happens, though—and the numbers are unfortunate for this too—is that I am also turning away anywhere from 50 to 60 people per day. When I have lines of gentlemen who are starving, or gentlemen who are coming out of businesses that went bankrupt, or families that are in crisis with the child welfare system, or people who are challenged by the mental health system or the justice system, and I am turning them back into the streets, it is a concern for us, because then they form other patterns of behaviour that could become negative.

What's happening is they do not have a safe place to sleep. There are other supporting agencies and shelters, but we're finding that they too are having to turn people away. In this situation, we're trying to figure out ways and create new techniques to ensure there is more access to programs and such.

Of the people we serve, there's evidence that it mirrors pretty much a good portion of what we see when it comes to strains on our health and justice systems. While we look after people from all walks of life—including different races, religions, and sexual orientations—close to 70% of the people we're serving are identifying themselves, first and foremost, as indigenous. That's a real concern for us. We're finding many of them are coming out of the child welfare system, as I noted before, and from remote communities, especially reserves.

Many of those people come to us experiencing physical, mental, and emotional health issues, including addictions and a lot of vicarious trauma. Daily, when they're within their own systems and in their own environments, we see that they are going from shelter to shelter or are in daily life experiences of addiction or mental health issues, and they are seeing other individuals' issues too, over and over again, so it's compacting, and there are more and more barriers. In this situation, we need more resources around mental health. When people enter our doors, we're seeing there's not enough mental health support. It's a very deficient system because of the systemic issues.

When homeless community members come in our doors and say, “I'm hungry”, we support them with food. Then they say they want clothing. We support that as well. Then they say to us, “My feet are frozen and my toes are going to fall off”, and they're scared to take off their socks. Our clinician goes and supports that and does what she can. She too has identified that about 80% of the individuals she's been communicating with are identifying that they too need mental health support.

Their emotional needs are not being met when they're coming through our doors, so we've created an interdependent system within our own organization, which is primarily funded by donors. We do get some support from the government, so thank you for that. Then also we have a lot of support through volunteer services. Our community in Winnipeg is beautiful, and we're so grateful for that. What they do is they bring that support in, although again there is a lack of programs.

Returning to our census, when we review some of this stuff, in terms of recommendations for some of principles for addressing homelessness, just having indigenous-led solutions would be wonderful. We had about 71.1% of the population who identified that night as being indigenous, and we also identified that it was a challenge to communicate with those who were not as educated or self-experienced. Some of those links are missing, so we're trying to review some of that.

[The Chair, Liberal, Wayne Easter]

Can you sum up fairly quickly?

[Vanessa Gamblin]

Yes.

We would like to look at how the government can support funding and support more access for more beneficial programs dedicated to more mental health workers.

That's pretty much it. Thank you very much.