Government Operations Committee on April 21st, 2009

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Thank you.

[The Chair, Liberal, Derek Lee]

Merci.

Mr. Anders is next, for five minutes.

[Rob Anders, Conservative, Calgary West, AB]

Thank you, Mr. Chair.

I was intrigued by Mr. Rochon's comment earlier, when he talked about an economic model that could measure the stimulus of tax reductions. On that note, I wonder whether or not that model has an ability also to look at the opposite of stimulus, in the sense of tax hikes. I'd like to delve into that just a little bit.

On June 10, 1991, a certain federal politician said “Taxes have to rise; there is no other way”, in the Kingston Whig Standard. That politician went on to say on June 15, 2006, to the Globe and Mail: “We've also got to have popular, practical, believable policies that may involve some form of carbon tax.”

That federal politician then went on, on December 18, 2008, in a City TV news interview, to say “I'm not going to take a GST hike off the table.” He then went on to say on April 14, 2009, just a few days ago, to the Kitchener-Waterloo Record, “We will have to raise taxes.”

Just to give you one last indication, this individual also, on November 20, 2004, to the Toronto Star, described himself as “a tax-and-spend Pearsonian Trudeau Liberal”.

That individual is none other than the scheming Liberal, Dr. Michael Ignatieff. What I'm wondering is what your thought is about when he will raise taxes, which taxes he will raise, how much he will raise them by, and if not those questions, then what Liberal hidden agenda to birth some foreign tax monster that has never been seen before in Canada will be unleashed on us.

Sir?

[The Chair, Liberal, Derek Lee]

That's an interesting question, Mr. Anders. It's quite rhetorical. I regard it as rather stupid. Witnesses are excused from answering that unless they really want to.

Witnesses?

[Rob Anders, Conservative, Calgary West, AB]

Mr. Chair, I'd like to follow up on that--

[The Chair, Liberal, Derek Lee]

Are there any takers in answering the question?

Go ahead, Mr. Rochon.

[Paul Rochon]

On the very first question as to the estimates in the budget, they apply for tax reductions and spending increases. Roughly speaking, they would apply both for increases and decreases in the same proportion.

[Rob Anders, Conservative, Calgary West, AB]

Mr. Chair, I understand there are some people around this table who may like tax hikes. Frankly, Mr. Chairman, I think it's stupid to propose tax hikes at a time when the Canadian economy is going through the difficulties it is, and I'm going to highlight that as well as I can, Mr. Chair.

Now, I'm going to pass on my time to some of my other colleagues, who I think would like to talk about those crazy tax hike ideas and how stupid they are for the Canadian economy.

[The Chair, Liberal, Derek Lee]

Someone has a minute and a half.

[Patrick Brown, Conservative, Barrie, ON]

I'll use that last minute and a half.

One thing I was interested in, which I don't think has had a lot of attention but will be tremendously helpful to municipalities, is the availability of $2 billion in municipal loans. I know it was talked about at the Federation of Canadian Municipalities as being something that would be a huge boost to the economy, enabling municipalities to do projects they couldn't otherwise do.

Can you explain how this is going to work and how quickly these loans could potentially flow to municipalities? I understand that a previous question mentioned that the application came online on Sunday. I'd love municipalities to hear a bit more about this.

[Alister Smith]

Perhaps I can start, and my colleague Mr. Rochon could add more information.

As I understand it, it provides low-cost repayable loans to municipalities to reduce the cost of borrowing and help them build housing-related infrastructure. It's intended to help accelerate infrastructure projects in municipalities. They can also use the money towards their contribution for cost-shared federal infrastructure programs, which is another benefit. As you mentioned, the application process has already opened.

[Paul Rochon]

I think that covers it. I suppose it's particularly appropriate in the current circumstances, as borrowing costs for municipalities have gone up quite considerably.

[Patrick Brown, Conservative, Barrie, ON]

Is there any sense on timelines?

[Alister Smith]

Well, it's a two-year program. It's just started and it will continue through the next two years.

[Tim Sargent]

If I may just add to that, CMHC is in a position to process the applications now, and we will be providing an update on the volume of applications in the June report.

[Patrick Brown, Conservative, Barrie, ON]

Also, I know the gas tax funds were accelerated this year. They were normally to be received in July and they were received in April. Could you explain the rationale in that? Was it to help get some of these projects out the door a lot more quickly?

[Alister Smith]

Yes, I think that's correct. There are a number of them. It is not just the gas tax fund; some of the base funding for municipalities has also benefited from some acceleration.

The gas tax fund, as you know, is an ongoing fund worth about $2 billion a year. Over the next seven years, something like $12 billion will be provided to municipalities through this mechanism. Municipalities can actually have greater flexibility, in that they can pool, bank, and borrow against this funding, providing significant additional financial flexibility.

As you mentioned, the funding was indeed accelerated for municipalities. In addition, the same type of flexibility has been built into the base funding program for provinces and territories. This program was worth $25 million annually for each province and territory, for a total of $175 million for each jurisdiction. Now federal funding can be provided up front on a regular basis and will not have to be utilized in the year for which that $25 million allocation would have been provided, so there's additional flexibility there as well.

[The Chair, Liberal, Derek Lee]

That's time.

Go ahead, Mr. Regan, for five minutes.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much, Mr. Chairman.

Mr. Smith, earlier you mentioned an announcement of a project in Saskatchewan, an announcement that you said was made fairly recently. Of course, as my colleague Ms. Findlay has been saying, an announcement is not the same thing as spending money, but there was this announcement recently.

Of course, there have been projects announced over the past three years under the Building Canada Fund for which we still haven't seen the money. However, in relation to this project in Saskatchewan that was just announced, is the funding for this project from the 2009-10 budget, or is this in some fashion a reprofiling of the Building Canada Fund moneys that lapsed at the end of the fiscal year that just ended on March 31?

[Alister Smith]

What I was referring to was the Building Canada Fund for Saskatchewan and the announcement under the framework agreement that more funds were available for projects, but I was not specifically identifying projects. There's a joint application process for Saskatchewan. That's just to clarify this point.

With respect to reprofiling of the infrastructure funds, Infrastructure Canada already has in its fiscal year 2009-10 reference level sufficient room to make commitments for some of these initiatives; it doesn't require reprofiling from lapsing funds from the previous fiscal year 2008-09. In fact, that reprofiling normally takes place in supplementary estimates (B) in the fall, and it requires approval by the Department of Finance. While it is routine for us to reprofile these funds, they're not reprofiled automatically or immediately. They have to go through a due diligence process, and they're voted on by parliamentarians in supplementary estimates (B) typically.

So under the community component or major infrastructure component of the Building Canada Fund, Infrastructure Canada probably already has the commitment authority to make these....

[Geoff Regan, Liberal, Halifax West, NS]

Perhaps I'm failing to understand this, but my main question was, were the funds for this project from the 2009-10 budget?

[Alister Smith]

These funds would be ongoing, I think, under the Building Canada Fund, because it is a $33 billion fund. Actually, it's a $9 billion fund for the Building Canada Fund per se, but the Building Canada suite of funds is $33 billion over seven years. So there's a fair amount of money in place.

[Geoff Regan, Liberal, Halifax West, NS]

So this is not a result of the 2009-10 budget just passed?

[Alister Smith]

I'm not sure about the communities component of it here, but I don't think so; I don't think this is existing funding.

[Geoff Regan, Liberal, Halifax West, NS]

When can we expect the shovels to hit the ground for that project?