Finance Committee on Feb. 4th, 2020

[Huw Williams, Director, Public Affairs, Canadian Automobile Dealers Association]

It's no accident, and I congratulate Mr. Cooper on having the documents in front of him that are so relevant to the Scotiabank report. We'll share those with the rest of the committee members.

In the finance industry, luxury vehicles are financed, and they're quite concerned in those sales. Clearly it's going to have an economic impact. Again, the U.S. example of the Clinton administration repealing it was a live-world experience of how these things really have unintended consequences and don't work.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you.

[The Chair, Liberal, Wayne Easter]

Mr. Fragiskatos.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Chair.

Thank you to the witnesses.

Unfortunately, having only five minutes leaves us with not a lot of opportunity to really get into the details, but there have been a number of interesting things raised here today.

I'll go to President Shepard from Western University first.

In your presentation, you talked about the way climate change can be addressed by government working with universities. Is there an optimal way you would advise? Obviously, we've made a lot of investment in research over the past four years, much of which has focused on climate change and the need to address it. Across campuses, at Western University but also right across the U15, is there a view as to how we can work together in a better way—government, universities, and even the private sector—to really advance this issue?

[Alan Shepard]

First, I would say that across Canada the students were actually on this before the faculty and staff were, and they have often been the leaders in this work.

Second, basic fundamental research on climate change has been going on for a long time. It is funded federally, as well as in other fashions such as private sector companies and whatnot. We ought to be looking for ways to ensure that the technology we're developing, whether it's solar or whatever it may be in terms of what's happening in the labs, can get out the door as quickly as possible so that we can transmit the materials we're developing out into the marketplace.

In terms of making a more optimal model, we still need help getting our products to market, and that's the focus of both the U15 and the Universities Canada briefs this time.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Is there a particular change or a particular challenge right now that holds us back, that acts as an impediment to getting things out the door? Whether it's along the lines of commercialization and challenges that exist, are there things that we could help with there? Do you have any thoughts on that?

[Alan Shepard]

It's more about the ways, the strategies and incentives we have to get things out the door. We need incentives to move people from the research they're doing in their labs to the marketplace. That has always been a gulf that needs to be closed.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

Alan, I know we'll certainly follow up. I'll be seeing you over the next few years in London, so we'll follow up and have more of a discussion.

[Alan Shepard]

Thank you.

[Peter Fragiskatos, Liberal, London North Centre, ON]

I'm going to turn my attention to Mr. Wright from Fanshawe College.

Jeff, you talked about the need here, too, for government to collaborate with colleges and make businesses aware of the fact that there are opportunities that exist in colleges that would add to their bottom line. You gave the example of Innovation Village.

Of course, there's the CCPV test centre at Fanshawe College, which secured a federal investment a few years back, which has really helped our local and regional economy, and in fact, beyond.

Could you talk about Innovation Village and how it could possibly act to galvanize even more of a partnership among government, colleges and businesses, particularly as we try to address issues around climate change and build an innovation economy?

[Jeff Wright]

Sure. Innovation Village is something that we're very excited about at the college. With it, we've introduced a new embedding into our curriculum of skills of the future, which was very thoroughly researched in terms of what skills, alongside the technical training you provide students, every student ought to have in order to get that additional leg up in terms of post-graduate employment.

In our curriculum, we've gone through the trouble of embedding skills of the future alongside the typical learning outcomes. We are also looking to invest in Innovation Village, which allows students to actually operationalize those new skills and to develop confidence and mastery of those new skills through all sorts of different media and methods. The Innovation Village envisions different sorts of experiential labs, virtual reality experiences, makerspaces, and so on, where industry can literally come through the front door and be engaged with students in collaborative opportunities to generate new and exciting processes and products, and to commercialize and introduce better tech adoption in business planning, and so forth.

For us, it's really the new, contemporary way of bringing industry and students together in a very meaningful and explosive way to do precisely those sorts of things, and as I say, for our students to be able to operationalize those additional skills that students in other colleges otherwise might not be getting.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

If witnesses have a point to add on a question that a member asks, even though the question wasn't directed at you, raise your hand and I'll catch you, because it's important that we get your input at this committee.

We'll turn to Mr. Ste-Marie for five minutes, and then to Mr. Masse for five minutes.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I would like to welcome all the witnesses and to thank them for joining us.

My questions are for you, Ms. Ray.

You mentioned the importance of family caregivers. People can lose some independence as they get older. In that respect, family caregivers play an essential role. They even reduce the state's social costs by taking on the care they willingly provide.

Could you tell us again about the caregivers' role and what the government can do to support them? As has been mentioned, there is a tax credit, but, in many cases, those providing the care do not pay taxes, because of their low income. If I understand correctly, you are asking for the tax credit to be refundable. Could you tell us more about that?

[Jana Ray]

Could you repeat the first part? I do understand French, but—

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Okay.

What can the government do to support caregivers? As I understand it, you are asking for the tax credit to be refundable. Is that correct?

[Jana Ray]

This was in the case of the caregiver tax credit. This was in the case, for example, of adults who would be in their working years and unable to work. That sort of thing.

In the case of my spouse, someone has to be at home and caring for this older adult. The challenge is that we have an older adult who has very high needs and who would otherwise be in long-term care and a burden to the system in other ways, and we have an individual who is able to care for that individual. We're just looking at modest ways, so there could be a different perspective on income splitting, or there could be a number of different ways that we could be looking at this.

We're asking the government to consider that the refundable caregiver tax credit is a very small amount, actually, when we've modelled it. We're looking at innovative ways to respect and appreciate that there are individuals who are giving up that time. We have to respect and understand that there's a loss of work hours. This is going to have long-term impacts on their Canada pension benefits at some point, and these kinds of things. We really need to look at this from that perspective.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

So it is about giving greater recognition to the role of these natural caregivers and doing what is required to achieve that.

I believe that you also asked the government to increase its health care spending. Let us not forget that, originally, half the funding came from the federal government. That amount has fallen rapidly to one quarter, and it continues to decrease, year after year.

Could you tell us about the role that the federal government should play in funding health, whether your organization feels that the government should account for the aging population when it makes its health transfers?

[Jana Ray]

We believe 100% that it should be taken into account.

The fact that we're living longer is no surprise to anyone. According to Statistics Canada, centenarians are actually the fastest-growing population, so that is really telling for all of us, and certainly what it looks like for future generations of Canadians. We need to look at this a little bit differently.

We believe the federal government can actually take a different approach. We know that traditionally this is left to the provinces, and we appreciate that. We are also very aware of the province's recent ask for increased funding across the board to fund more initiatives within the health care space. We're concerned that if we make comparisons to OECD countries, and we look directly at this, we know that Canada is in the top four in terms of spending, but in terms of outcomes, it is actually in the bottom four of the top 10. We're looking at other international models as well. It doesn't necessarily mean it has to always be increased spending.

We're really challenging the government to look at other ways we can improve innovation and look at modernization of systems. We could even grab a handful of international examples here today. Estonia has a seamless EMR for medical records and that sort of thing. We're a real laggard when it comes to having this continuity of information, and passing health information between doctors and hospitals and other ancillary services. We are looking at these kinds of things, and making sure that the necessary investments are made in order to prepare us for the future.

[The Chair, Liberal, Wayne Easter]

That will end that round.

We'll go to Mr. Masse and then to Mr. Cumming.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thanks to all the delegates for being here. There have been a lot of interesting topics discussed.

It won't be a surprise that I will go to auto. With regard to the dealers association, I thought it was interesting, and to your credit, that you're advocating for a special consideration for electric vehicles. What people forget is that electric vehicles don't require the same type of maintenance and service as other vehicles because they don't have a lot of liquids and other types of moving parts that are often repaired in your shops. I'm sure that you'd see a decline in business in some general direction for service fees and service maintenance because of these vehicles entering our market. That is an interesting point.

Also, an interesting point you had was about the unintended consequences. When the ecoAuto feebate came into play about 10 years ago, the Toyota Motor Corporation took the side airbags out of the Yaris to make it eligible to get the subsidy, which it got the lion's share of, and then dumped the cars into the market here with a reduction in safety.

Then most recently, we had to fight to get the Pacifica, my locally built Chrysler hybrid, an electric vehicle, onto the $5,000 list. It was left off because of the threshold. It was actually too expensive.

I would like to open the floor to you to expand upon what potential and unintended consequences there might be if we have a luxury tax.

[Tim Reuss]

One other example of an unintended consequence of the iZEV program was one manufacturer despecking the battery of the vehicle to bring it under the threshold and therefore make it eligible for the federal rebate.

Here you have a customer who then buys a vehicle and has a suboptimal electric vehicle experience, which is not what you want to achieve at the end of the day with a rebate. This is what we call unintended pricing consequences. They could happen, which is why we're specifically proposing that you align with the Canadian income tax bracket and assess it as a progressive tax. Tax the 10% on the amount above $100,000. With that, you get rid of some of those unintended consequences we were just discussing. It happens way too often.

By the way, you would also increase the chances of actually generating some revenue from this tax.

[Brian Masse, NDP, Windsor West, ON]

With vehicles changing so much, we're going to have some legacy costs and also disposable electrical batteries and so forth. If we get into a mug's game about what the components are, that would also include different types of environmental issues. Am I not correct on that, with regard to potentially where the supply could come from on these things?

[Tim Reuss]

That's correct, and you alluded to the fact that our dealer members will be dealing with reduced revenues on the service and parts side of their businesses, but they might also have an opportunity from electric vehicles, for example selling not just the charging station but also the installation of the charging station. Anybody who buys an electric vehicle is going to need a charging station.

While there are risks, there are also opportunities in that. Our members are entrepreneurs and they recognize there are also business opportunities in those things.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

I'm going to move over to the Chamber of Commerce. One of the things I've been able to get support from the Chamber of Commerce on, and even the Canadian Labour Congress, is my attempt to reform single-event sports betting in Canada. The Criminal Code needs basically one line added and one paragraph taken out.

We have about $10 billion in organized crime, in unaccounted-for revenues for overseas betting on our phones, and a series of things. We're trying to get that changed because a lot of the casino and other infrastructure across the country is at risk. With New York coming online already, and Michigan next, it's estimated that we're going to see a continued revenue slip.

One of the things I'd ask the chamber is this. What's also happening is that, in border communities, the de minimis is being changed under the new U.S.-Mexico-Canada agreement. Do you anticipate there might be additional stress there? The de minimis, for people who are unaware, is the exemption, and there's also a tax change collection of up to $150. It was one of the things that the U.S. demanded we increase.

Coupled with that, for example, I've been in Niagara Falls, where they're losing customers over to New York, and we also have other border communities and Woodbine in Toronto and so forth. Do you think a double whammy could take place in border communities here with retailers?