Finance Committee on Oct. 22nd, 2024

[The Chair, Liberal, Peter Fonseca]

I call this meeting to order.

Welcome to meeting number 159 of the Standing Committee on Finance.

Today's meeting is taking place in a hybrid format. All witnesses have completed the required connection tests in advance of the meeting.

I would now like to remind participants of the following points. Please wait until I recognize you by name before speaking. All comments should be addressed through the chair. Members, please raise your hand if you wish to speak, whether participating in person or via Zoom. The clerk and I will manage the speaking order as best we can.

Pursuant to Standing Order 83.1 and the motion adopted by the committee on Thursday, September 26, 2024, the committee is resuming its study on the pre-budget consultations in advance of the 2025 budget.

I would now like to welcome our witnesses.

With us today, from the University of Calgary's school of public policy, is president's fellow Dr. Jack Mintz. Welcome.

From Butler Mortgage Inc., we have Ron Butler, mortgage broker, who is no stranger here. Ron, welcome.

From Community Food Centres Canada, we have senior policy adviser Anthony Musiwa, who is with us via video conference.

From the Extended Healthcare Professionals Coalition, we have the chair, François Couillard. Welcome.

From the Front d’action populaire en réaménagement urbain, we have spokesperson Véronique Laflamme.

From the Toronto Biennial of Art, executive director Patrizia Libralato is with us. Welcome.

Each of the witnesses will have up to five minutes to provide their opening remarks before we move on to members' questions.

We are starting with Dr. Jack Mintz, please.

[Dr. Jack Mintz, President's Fellow, School of Public Policy, University of Calgary, As an Individual]

Thank you very much, Mr. Chair.

It's a pleasure to be here in person. It's been a very long time since I've had that opportunity. Usually it's been by Zooming, but it's very nice to see everybody in person today. Thank you for the opportunity to address the finance committee on the April budget.

I've decided to focus my comments specifically on capital gains taxation, which is one of the most complex areas of tax policy. Starting on June 24, 2024, the government increased the tax rate on realized capital gains from the disposal of assets by including two-thirds instead of one-half of gains as part of taxable income. For individuals, this increase applies to realized capital gains net of losses in excess of $250,000. For corporations, the higher rate applies to all of their net capital gains.

The budget estimates that only 40,000 individual taxpayers—0.3% of all filers—and 307,000 corporations—12.7% of all corporate tax filers—will be impacted by the increased capital gains tax. The lower number of personal filers hinges on the design of the tax change, including a $250,000 capital gains threshold for individuals, which the budget claims limits its economic costs and its incidence on the wealthiest.

However, capital gains are often lumpy, because assets are sold regularly. Many taxpayers may realize more than $250,000 in capital gains in a single year, but not in others. Significant asset disposal, such as selling real estate, farmland, business assets, secondary homes, or during events like death or immigration, may occur only once or twice in a person's lifetime. Longitudinal data from 2011 to 2021 shows an average of 40,664 tax filers per year reporting capital gains exceeding $250,000, aligning with the budget's forecast. If these were the same individuals each year, the affected group would be small. However, further analysis reveals that nearly two-thirds of taxpayers who reported over $250,000 in capital gains in 2011 did so only once in the subsequent 11 years, and only about 3.5% reported such gains in seven years or more. Importantly, many of these taxpayers have middle-class or modest incomes aside from their capital gains. In 2018, 50% of those with $250,000 in capital gains had non-capital gain taxable income below $117,592, with 10% only having $18,131. This demonstrates that significant capital gains can occur for individuals who are not consistently high earners.

Far more Canadians will be affected by the tax change than the government seemed to anticipate. I estimated that 22,088 unique Canadian taxpayers per year, or 1.26 million Canadians on a lifetime basis—4.3% of taxpayers—will be affected by the increase in the capital gains tax on individuals, half of whom earn less than $117,000 per year.

The other claim in the budget was that the capital gains tax increase would have no impact on business investment. I will argue that this is incorrect, for two reasons.

First, as in many other countries, Canadians have a bias to invest at home. Smaller companies don't have easy access to international markets. Companies that are Canadian-controlled need a significant share of Canadian ownership beyond 2.5%. Canadians have more information about domestic opportunities and risks than they have with respect to international assets. While Canada doesn't have capital controls, except for Investment Canada Act limitations on foreign direct investment, the dividend tax credit and certain other tax preferences apply only to Canadian resident companies, not foreign ones. If there was no home bias, Canadian household ownership of Canadian companies would obviously be much smaller and have little impact on the cost of investment for large companies. However, based on Statistics Canada data, I estimate that Canadian households own 35.5% of listed company shares in Canada. Under home bias, capital gains taxes have been shown to suppress equity values and raise the cost of equity finance investment of Canadian companies, based on studies looking at the capital gains tax reductions in 2000—and I will admit, I was an author with Kevin Milligan and Tom Wilson at that time.

Second, tax increases on corporate capital gains increase the cost of investment, not only for small and medium enterprises, but also for large corporations. Since the corporate tax applies to nominal capital gains, that capital gains tax increases the cost of investment even if there are no real capital gains. From 2011 to 2021, taxable corporate capital gains were roughly 7% of corporate taxable income of non-financial corporations. By the way, one should not look at financial ones, because financial traders are taxed on all their capital gains, and that should be recalled. Based on merger and acquisition data, and the market value of the stock market, I estimate that the annualized non-financial capital gains tax rate, the so-called accrual equivalent capital gains tax rate, rose from 6.4% to 8.5% due to the budget's capital gains tax hike.

Overall, the capital gains tax hike had a significant impact on the incentive to hold capital in Canada and on employment. Two-thirds of the impact is due to an increase in the corporate capital gains tax rate, and one-third is due to the increase in the personal capital gains tax rate. We estimate that the tax-inclusive cost of capital of Canadian companies rose by 5%. Based on a conservative assumption that an increase in the tax-inclusive cost of capital by 10% causes the capital stock to fall by 7%, I estimate that Canada's capital stock would fall by $127 billion.

[The Chair, Liberal, Peter Fonseca]

You're going to have to wrap it up.

[Dr. Jack Mintz]

Yes. I'm almost done.

Employment would permanently decline by 414,000. To put this in terms of its impact on unemployment, the capital gains tax hike would increase unemployment from 1.4 million to 1.8 million Canadian workers, based on the employment data for September 2024. GDP will fall by almost $90 billion, and real per capita GDP by 3%.

While the impact of the capital gains tax is not catastrophic, it is substantial. It is another hit on Canada's productivity and economic growth, on top of other tax increases and more important, regulatory obstacles to investment.

There are important policy objectives underlying the development of capital gains taxes in Canada, but I don't have time to discuss that in detail. However, I would be pleased to take these up during the discussion.

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, Dr. Mintz. There'll be a lot of opportunity for that.

We're going to Mr. Butler now.

[Ronald Butler, Mortgage Broker, Butler Mortgage Inc.]

Thank you, Mr. Chairman and honourable members.

Every time I come here, I feel compelled to say how impressed I am by the operation of Parliament. I'm an old guy who only came to this late in life. It's always a pleasure to see the members. We may argue about policy, but I've come to learn that everybody here works hard and wants to accomplish something good for Canadians, so thank you for that. Thank you, all.

We are faced with some major changes in the CMHC proposals that we saw come through. They will be enacted soon, in December 15 and January 15. We're going to see a $1.5-million cap. This is interesting, because in the United States, the maximum cap for their program that mimics CMHC is $766,000. Somehow we need double than a nation with New York, San Francisco and Los Angeles to manage our socialized housing perspective. It's really quite amazing that these numbers are necessary. My constant refrain is that the price of houses in Canada—certainly in British Columbia and Ontario—is just incredibly high. Measures that support a $1.5-million starter home reasonably have to be called into question. Sure, there's a need for it, but should there be a need for it? At this point, we have to really stop and think.

The interesting move to re-enter the refinance business.... CMHC is re-entering the refinance business, which it left 14 or 15 years ago, to provide extra units in up to $2-million homes. You can get a mortgage up to $1.8 million if you add extra units to an existing residence. Again, it's extremely high, and it's very interesting that we're back in the refinance business at CMHC.

It's a good purpose. Sure, we'd all like more mile density in our cities. It just makes a lot of sense. However, that is an extraordinary number that Canadian taxpayers will eventually have to backstop. I know, and it's been a constant refrain that I tell everyone, that CMHC has delivered returns to the taxpayers for the last number of decades. It's not the other way around. However, the level of risk has been radically increased.

This brings me back to my favourite discussion, which is lending mortgage document fraud in Canada. It was announced in the budget in April that steps would be taken, studies would be made and the implementation would be on its way. In spite of the best efforts of the Department of Finance, it is becoming clear that CRA provides a certain level of resistance.

My eternal ask is that we simply duplicate what's been going on in the United States through direct digital linkage to the IRS. In the United States, the IRS confirms tax documents that have been provided by the borrower. It has done so for over two decades. This is an effortless, low-impact, privacy-guaranteed relationship between CRA and only large financial institutions. Nobody like me, a mortgage broker, is ever going to have access to this. It's only going to be through big financial institutions under great security and total privacy. Yet, there is nothing yet and nothing until possibly next year.

It is my fondest hope that we can finally end this problem of mortgage fraud through false income documents in Canada because, even though it's not rampant, even 1,000 is too many, and believe me, there are more than 1,000. With increased levels of taxpayer-backstopped CMHC mortgages with a $1.5-million cap, I would think that these issues are vital, extremely important and should be managed as quickly as humanly possible. That's a lot of risk: $1.5 million of backstopped mortgage amounts is a lot of money. There's no question we should do a great job of making sure those documents are all factual. It's easy. It is not even hard.

Finally, I have to talk about the idea that CMHC was founded on the concept of a first-time homebuyer. That's the foundation of CMHC. If you go back all of those decades, that's where it came from. Is it possible, in two of Canada's largest provinces, Ontario and British Columbia, for the average family with a combined income in Canada of about $105,000—it's a little higher in Ontario and British Columbia, where it's maybe up around $114,000—to have a chance to buy a home when the average prices in those provinces are upwards of a million dollars?

Sure, people could start with a tiny condo, but the reality of life is that any access to low-rise residential properties cruises at around $900,000 to a million dollars, and that is eight times their income. I'm an old, semi-retired mortgage broker, and for my generation, when I was in the house-buying business, it was about 2.5 to 3.5 times our income. My great ask—which is difficult, because it has a lot of provincial and municipal problems associated with it—is to find a way to adequately help young people get a home in Canada.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Butler. That's something we all want.

Now we're going to hear from François Couillard with the Extended Healthcare Professionals Coalition.

Please go ahead.

[François Couillard, Chair, Extended Healthcare Professionals Coalition]

Thank you, Mr. Chair. Thanks, everyone, for the invitation to speak to this committee.

I represent the Extended Healthcare Professionals Coalition as the chair.

I'll be making my opening remarks in English, but afterwards, I would be happy to answer your questions in French or English.

The Extended Health Professionals Coalition comprises over 100,000 of Canada's regulated health care professionals. Our coalition includes audiologists, chiropractors, dental hygienists, dentists, denturists, dietitians, occupational therapists, optometrists, pharmacists, physiotherapists, psychologists, speech-language pathologists, and registered social workers. The breadth of our services can help reduce unnecessary hospitalization, dependency on pain medication and premature entry into long-term care facilities, and improve health outcomes across the lifespan.

I would like to take this opportunity to first share a personal story on the importance of access to care that our members provide. Last year, in Ottawa, I suffered a small stroke, and as a result I lost a quarter of my sight. Thankfully, I'm okay. You don't need to worry about me; I'm good. I was able to identify the signs early and receive immediate intervention. It was health care systems, doctors, nurses and hospitals that managed the emergency. However, it was access to EHPC health professionals that brought back my quality of life and allowed me to return to work and regain my sight.

As you now understand the importance of our services, let me provide you with an overview of the EHPC pre-budget submission. That's my focus today.

It is, first, that the Government of Canada continue its expansion of the Canada student loan forgiveness program to include audiologists, dietitians, chiropractors, denturists, occupational therapists, optometrists and speech-language pathologists to help strengthen rural and remote care for Canadians.

We are thankful for the inclusion of some of our members in the government’s announcement that more health care professionals in underserved rural and remote communities will benefit from loan forgiveness, including social workers, dentists, dental hygienists, physiotherapists, psychologists and pharmacists. We look forward to an update on the progress towards its implementation. Canadians living in rural and remote communities deserve access to all of our members and the necessary services they provide.

According to a report from ESDC and input from our members, we know that loan forgiveness would be an attractive recruitment option to attract health care providers to underserved areas. Our essential preventative, diagnostic and treatment care options are particularly important in rural and remote areas where the population has a higher concentration of indigenous and elderly populations.

Our second ask is that the Government of Canada ensure the ongoing collection of pan-Canadian health sector workforce data across the public and private sectors. Currently, the data collected at the federal level does not encompass all of the necessary health professions. The information also collects only the number of professionals per 100,000. It does not capture essential information for health human resources planning, such as where someone is practising, whether they are located in remote or rural areas, if they are practising in a public or private setting, or their demographics.

Our third ask is that the Government of Canada introduce a tax credit for eligible small and medium-sized employers to help them expand their coverage for extended health care benefits for their employees. We know from our members that health coverage has remained stagnant for many years. At the same time, the cost of doing business has risen with inflation. For example, vision care coverage today is the same as it was in the 1970s. Despite improvements to vision care diagnostics and imaging, coverage for our other member services is quite limited. An average coverage per employee is, say, $500 per year for services such as speech-language pathology, mental health, physiotherapy, occupational therapy, etc., which only pays for two treatments. The cost of providing these plans is the most expensive for small employers.

Our final ask is that the federal government establish a primary health care transition fund to improve access to interdisciplinary community team-based primary care that integrates services provided by extended health care professionals. With increased federal investments in primary care settings, early intervention and timely access to care, Canada has an opportunity to transform the current overwhelmed and expensive health system to a community-centric, health and wellness-based model of care, with an emphasis on health promotion and injury and disease prevention. This fund would help support and expand existing models such as Ontario’s family health teams, Alberta’s primary care networks and Quebec’s local community centres to include more extended health care professionals.

We appreciate the time you have given us today, and we look forward to answering your questions.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Couillard, and we're glad to hear about your recovery.

Now we'll go to Front d'action populaire en réaménagement urbain and its spokesperson, Véronique Laflamme, please.

[Véronique Laflamme, Spokesperson, Front d'action populaire en réaménagement urbain]

Thank you, Mr. Chair.

Good morning, everyone.

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

The Front d'action populaire en réaménagement urbain is a Quebec-wide group of more than 140 organizations advocating for the right to housing. We advocate mainly on behalf of tenants in inadequate housing and all social housing applicants.

Quebec and all the provinces are experiencing an unprecedented rental housing shortage, the most extreme Quebec has ever seen. The housing crisis is no longer defined only by scarcity, but also, and mainly, by housing unaffordability. It is fuelled by speculation, inadequate measures to control rent increases and evictions, the discrimination experienced by some households and, more than anything, the lack of alternatives to private housing. While about 90% of the rental stock is private, it is now inaccessible to a significant portion of renter households.

The data from the last census are clear on the number of renter households in Canada that, in 2021, were already spending more than the standard 30% of their income on housing. The number is more than 1.6 million renter households across the country. Rents for the few available rental apartments are much higher, the stock of affordable housing is rapidly dwindling, and housing insecurity is now impacting more and more renter households that were previously unaffected.

Rental housing built in recent years, often by real estate giants, has unfortunately contributed to the growing unaffordability. This is proof that we cannot rely on them to solve the crisis. I'll come back to that.

The high cost of rents and the disparity between those rents and the incomes of a large number of tenants are at the root of a crisis that undermines their ability to pay. That ability is an important component of the right to decent housing, which Canada recognizes.

However, since the private sector owns 90% of the rental stock, as I said, there are very few alternatives to units that are too expensive for the very many households that are no longer able to find decent housing at a price that matches their ability to pay.

In this context, the lack of social housing contributes to the crisis and has clearly contributed to the increase in the number of people experiencing homelessness in recent years, all over Quebec and across Canada. In anticipation of the next budget, the Government of Canada must focus its efforts on the social housing sector as a long-term solution to the crisis.

Whether in the form of public social housing, co-operatives or non-profit housing organizations, social and community housing provides shelter that meets the diverse needs of tenants at a price that matches their ability to pay. These tenants include seniors, families, urban indigenous people, women fleeing domestic violence and people with low incomes. This is the most comprehensive and permanent form of housing assistance, as long as it is adequately subsidized through sustainable programs with clear guidelines. It is particularly important that the guidelines take into account affordability and democratic governance. This approach serves as a bulwark against not just the current crisis, but also real estate speculation for generations to come.

However, as I was saying, there is a bitter lack of housing. For three decades, the Canadian government's response to housing issues focused on non-profit and community-owned social housing. In the past, federal investments have made it possible to significantly grow our collective heritage. In the space of 20 years, these investments increased the share of social housing from 0.5% to about 9.5% of Quebec's rental stock, and the same is more or less true in the rest of Canada.

Since then, unfortunately, the federal government's chronic underfunding and disengagement have meant that the proportion has practically stagnated for the past 20 years across Canada. I won't be telling you anything new when I say that the national housing strategy, which was introduced in 2017, has clearly not helped to fund a large number of housing units actually intended for low and modest-income individuals and families with the most urgent needs, as data from the last Statistics Canada census show. There is a reason for that. Despite the objectives of the strategy, the initiatives were poorly targeted and the funds earmarked for housing are overwhelmingly used to build apartments at far too high a cost.

As you know, the Parliamentary Budget Officer and the Auditor General have tabled reports on the issue, as have the federal housing advocate and the National Housing Council.

There is no longer any doubt that the strategy has unfortunately missed the mark so far. However, billions of dollars are slated for housing over the next few years.

Fortunately, the last budget and Canada's housing plan reallocated some funds to provide more funding for social and community housing, as we have been calling for since the strategy was launched.

Unfortunately, most federal investments are still focused on the private sector, and those focused on non-profit housing are insufficient. Right now, out of tens of billions of dollars, only a few billion are earmarked for social housing.

We are therefore counting on the members of the committee to ensure that the next economic update and budget help a necessary shift come about. Public funds should first be used to strengthen our social safety net and provide decent housing to households with the most urgent needs. I'm talking about renter households and people who, unfortunately, are already experiencing homelessness. These people have been left behind by public policy for more than 25 years.

The share allocated to social housing should be greater to provide a real alternative to tenants in inadequate housing and counter the erosion of the still affordable rental stock that I mentioned. If we want to help the thousands of renter households in Canada, from coast to coast, to find adequate housing, that's the objective we need—

[The Chair, Liberal, Peter Fonseca]

Madame Laflamme, you're going to have to wrap up very quickly. Thank you.

[Véronique Laflamme]

I'm almost done.

In terms of the next budget, our main request is that the government set a clear target for the delivery of various forms of social housing over multiple years. Our suggestion, which is shared by other groups across Canada, is to build 500,000 housing units over 10 years.

In the very short term, in anticipation of the economic update, we're saying that the affordable housing fund should be dedicated entirely to the non-profit sector. The government should also give priority to social and community non-profit housing under the plan to use public lands for housing.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Laflamme.

There will be a lot of opportunity during questions.

Now we're going to hear from Community Food Centres Canada and its senior policy adviser, Anthony Musiwa.

[Anthony Musiwa, Senior Policy Advisor, Community Food Centres Canada]

Thank you, Chair.

Good afternoon to the committee members. Thank you for the opportunity to present today.

My name is Anthony Musiwa, and I am the senior policy adviser in the poverty action unit at Community Food Centres Canada.

I am joined here by my colleague Jasmine Ramze Rezaee, who is the director of the poverty action unit at Community Food Centres Canada.

At Community Food Centres Canada, we support and strengthen the community food sector, collaborating with our six regional networks and more than 400 partners for progressive policy change. We envision a country where the right to food is realized for all, and where every community has a place for food that nurtures health, well-being, belonging and social justice.

Our head office is actually located in Ms. Dzerowicz's riding, and we really appreciate the support she has provided us over the years.

As we gather this afternoon, it is crucial to acknowledge that we are facing a grave food insecurity crisis. Nearly 8.7 million people in our country are experiencing food insecurity. That is one in every four people who is compromising on the quantity or quality of food they eat, with some even going for days without eating. This crisis has only worsened, with food insecurity rates increasing by 26% in 2023 compared to the previous year.

Our partners on the front lines share alarming insights into the stress faced by the millions of Canadians who cannot afford adequate, nourishing food. For example, in 2023, the Depot Community Food Centre in Montreal distributed approximately 20,000 food baskets, and that is double the number they had distributed the previous year. They have had to turn people away from their food access programs and reduce the number of program days for the very first time ever. This is a challenging situation that is playing out across the country.

We also know that indigenous and racialized people, people living with disabilities, single adults, female single-parent households, newcomers and trans people experience food insecurity rates that are two to three times higher than the national average. As food prices and the cost of living continue to rise while incomes remain stagnant, this crisis will only worsen. We need comprehensive, sustained and accountable government action.

Governments have been off-loading their responsibility to food banks, but food banks and emergency food programs are merely band-aid solutions to a much deeper problem. Food insecurity is fundamentally an income problem. In our recent pre-budget 2025 submission, we emphasized the need for urgent action that addresses the root cause of food insecurity, which is inadequate income, so that everyone can afford to meet their basic needs. We propose evidence-based policy options to increase household incomes and ensure all Canadians can afford adequate, nourishing food.

We recommend creating a dignified income support program for people aged 18 to 64 who are living in households facing food insecurity and poverty. This can be done in two complementary ways. First, we could transform the existing GST/HST credit into a groceries and essentials benefit that provides $150 per month per adult living on a low or modest income, and $50 per child, helping to offset the rising cost of groceries and necessities.

Another approach would be to transform the Canada workers benefit into an enhanced tax credit—a Canada working-age supplement. This could be achieved by removing the employment earnings requirement and increasing the benefit amount, ensuring that adults who are living on low and fixed incomes can afford their basic needs.

We also recommend creating a more equitable and fair Canada disability benefit. While the Canada disability benefit is a step in the right direction, the proposed regulations are inadequate to lift most people with disabilities out of poverty and food insecurity. We urge the government to raise the income threshold for eligibility above the poverty line, accounting for the additional cost of living with a disability. We also urge the government to increase the benefit amount, as a $200-per-month benefit is grossly insufficient. Lastly, we urge the government to broaden eligibility beyond the disability tax credit, which is already difficult for people with disabilities to access.

Finally, we call on you to set a target to reduce food insecurity by 50% and eradicate severe food insecurity by 2030. Establishing a clear target will drive focus, accountability and action. Success on this front will enable the development of an integrated approach across government, the private sector and civil society.

Food is a basic human right. It is the government's profound responsibility to ensure that everyone can live with dignity. Canada is such an affluent nation. We can and must do better. The decisions you make in the 2025 budget will determine whether or not we move forward toward a future where everyone in Canada, regardless of their circumstances, can live with dignity and security.

Thank you once again for the opportunity to share our ideas before this committee. My colleague Jasmine and I welcome any questions and the chance to discuss these critical issues further.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Musiwa.

Members, Mr. Musiwa just mentioned Jasmine on the screen. Unfortunately, Jasmine's headset is not working very well, so the interpreters cannot do their job. She will assist Anthony Musiwa with some of the questions if she has answers to them.

We will go now to the Toronto Biennial of Art and its executive director, Patrizia Libralato, who is here with us today.

[Patrizia Libralato, Executive Director, Toronto Biennial of Art]

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

Good afternoon. It's really wonderful to be here. Thank you for inviting me to appear before you.

My name is Patrizia Libralato. I'm the proud founder and executive director of the Toronto Biennial of Art, which launched in 2019. Our biennial is a 10-week international event held every two years. We commission Canadian and international artists to create new works for a city-wide exhibition in dialogue with Toronto's diverse local contexts and communities.

Our third edition, titled “Precarious Joys”, launched on September 21 and runs until December 1. You and all parliamentarians are most welcome to join us this year.

Our biennial is unique in Canada. All of our art exhibitions, public programs, performances and learning experiences are completely free of charge for the 10 weeks that the biennial is on. Free programming is essential in making contemporary art accessible to everyone. Access to art enriches individuals, creates lasting learning opportunities and contributes to vibrant and healthy communities. Our artists reflect our city and country. In our current biennial, 90% of artists identify as Black, indigenous or people of colour, and 78% of our artists identify as women, trans or non-binary. These stories enable us to connect across cultures and differences, sparking dialogue, community connection and social cohesion.

Our festival is also a major economic driver. According to the Ontario Arts Council, Ontario's culture sector provided more jobs in 2022 than the real estate, auto manufacturing, forestry and mining industries combined. Each edition of our biennial drives over $30 million of direct economic impact and creates over 500 jobs. On average, for each dollar that is invested in the arts in Ontario, we see a return of $25 in economic impact. That's an impressive return on investment in any industry, let alone the arts, which also create innumerable positive social impacts. The arts are also a major driver of tourism. Stats show that cultural tourists spend three times more than other tourists and tend to stay longer in cities they visit.

Our biennial partners with organizations across our city and country. We take pride in serving as a collaborative sector-builder, demonstrated by collaborations with over 200 partners since our launch. This edition of our biennial also proudly takes place at 11 venues across the city of Toronto. Partners for this edition include a co-commission with the National Gallery of Canada and exhibitions with the Art Gallery of Ontario, The Power Plant, The Image Centre and many more.

Finally, the biennial is learning-focused and made possible thanks to strong partnerships with school boards across the greater Toronto area. Through our free programs, we aim to serve over 3,500 students from schools across the region each edition, prioritizing underserved students. Our tools for learning are also available online, reaching across the nation to more rural communities.

We are proud to be Canada's biennial and to share the cultural story of our city and country with the world. Our biennial has also launched and accelerated the careers of many contemporary Canadian artists, with their works acquired by national and international institutions such as the National Gallery of Canada, the Art Gallery of Ontario and the Tate Modern in the U.K. The biennial enables Canadian artists to take their rightful place on the global stage and reach their full potential.

The Government of Canada has been a partner to us throughout our development. We have been extremely grateful to receive one-off tourism grants from FedDev Ontario and project support from the Canada Council for the Arts. These grants are not just investments in our biennial, but investments in our people, our economic impact and our Canadian culture.

That said, our current funding system has us twisting ourselves to fit a round peg in a square hole. While there are a handful of project-based, one-off grants, there is no sustainable funding available to support our organization. Programs within Canadian Heritage and the Canada Council for the Arts exist to support festivals and the visual arts, but because of our length, frequency and cost to attendees—which I repeat is zero cost—we are deemed ineligible. Members, this simply does not make sense. Programs at FedDev Ontario are extraordinarily helpful but represent limited, irregular investments rather than consistent, reliable funding to ensure the future of our organization and to enable Canadian artists to thrive internationally.

With this in mind, I've come to you today to ask this committee to make two recommendations for budget 2025.

The first is that the Government of Canada invest in permanent and stable funding for arts festivals, with particular emphasis on those like ours that provide free and accessible programming.

Second, as Canada's biennial, we respectfully request that the Government of Canada invest $1.5 million over two years in the Toronto Biennial of Art for the 2026 edition. With this contribution, the biennial would have predictable and stable funding to be able to deliver a world-class event that elevates Canadian artists on the global stage and that provides free access to contemporary art for all Canadians. This investment not only would be a meaningful contribution to our biennial, but also would send a strong message to private supporters of the national importance of our work.

I thank you all for listening to our presentation and for your time today, and I'm happy to answer any questions you might have.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Libralato, and thanks to all our witnesses for their opening remarks.

We're going to get right into questions now. In this first round, each of the parties is going to have six minutes to ask the witnesses questions.

We are starting with MP Morantz for the first six minutes.

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

Thank you, Mr. Chair.

I'm going to direct my questions to Dr. Mintz.

Dr. Mintz, it's a pleasure to have you back at committee.

It should be no surprise that I want to ask you about the capital gains tax. You paint a pretty stark picture of the effect of this tax. We had the finance minister come out, on the day she introduced it with the budget in the spring, basically saying that they are just asking the wealthiest to pay just a little bit more, and it's only 0.13% of Canadians. In your earlier testimony, you said that you calculated that it's far more than that, and it worked out to be about 5% of taxpayers over their lifetimes—just over 1.2 million people. Is that correct?

[Dr. Jack Mintz]

That's correct.

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

Does that include small business corporations that don't get the benefit of the $250,000 threshold allowance at 50% inclusion?

[Dr. Jack Mintz]

It's just based on the data that one gets working with Statistics Canada. It's called SPSD/M data, and there's longitudinal data available. Where the capital gains come from, there's no particular source.

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

There are some other things you talked about. I read your deep dive in September about the capital gains tax. Carbon tax is a whole other matter. You make some other claims. Even though the government said that this isn't going to have any significant effect on our economy, you opined that employment will decline by 414,000 people. Could you comment on that?

[Dr. Jack Mintz]

There's a bit of a history behind analysis of taxation on capital investment, which I've been part of, in terms of the work that was done over the years, going back to the work that I did with Robin Boadway and Neil Bruce in 1984. I came up to finance in 1984 to help them develop their analysis of corporate taxation and what's called the effective marginal tax rate modelling.

The reason I'm mentioning this is that, initially, when people did modelling, they included capital gains in the so-called years of cost of capital, although they normally did not think about corporate capital gains taxes at that time, and neither did we when we started working in finance. In fact, most people just left out capital gains. Recently, I've taken a lot of interest in this, and in fact I have someone working with me. Basically, it's just incorrect to assume that there's no impact of increasing the capital gains tax rate on investment. It's for the two reasons that I gave. One is that there's a home bias by individuals to own shares, and also there's the fact that when you increase the corporate capital gains tax rate, that will impact investment.

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

Just for the people watching, let's boil it down to the effect, as opposed to all the stuff that goes on under the point of the pyramid. All the great work that you do.... At the end of the day, people are interested in what the effect is going to be on their lives. You estimate that over 400,000 jobs will be sacrificed over this increase in the capital gains tax. Is that correct?

[Dr. Jack Mintz]

That's correct.