Government Operations Committee on Feb. 10th, 2009

[Pat Martin, NDP, Winnipeg Centre, MB]

In all honesty, when my constituents phone my office I can only say there is no such thing as a home renovation tax credit at this point in time. I can't recommend to them that they act on this leap of faith that they will get something because it was alluded to in the budget speech.

[Stephen Richardson]

I would point out that it is mentioned in the notice of ways and means motion that has been tabled in Parliament.

[Pat Martin, NDP, Winnipeg Centre, MB]

This is of great concern to us.

Moving on to something else, we noticed the economic stimulus was assumed to be a 1.9% impact on the GDP, which would be roughly in keeping with what the international community is recommending. Does that calculation include the matched spending that is built into the requirements? In other words, is the 1.9% from the federal government, or is that the total accumulated spending?

[Paul Rochon]

Of the 1.9%, 1.5% is federal only and the remainder is a provincial top-up. So 1.5% is federal only, in the first year, and the remainder is an assumed matching from provinces.

I point out in that regard that Canada is fairly unique among major industrialized countries in that it's the only country where, effectively, the government sector at the federal level only accounts for half of the total government sector. Other countries tend to be either unitary in nature or have much smaller sub-national governments.

[Pat Martin, NDP, Winnipeg Centre, MB]

Was there consultation with the provinces and territories to determine if in fact they're able to avail themselves of this offer? It's all kind of moot if the provinces can't come up with their share; the money won't flow.

[Stephen Richardson]

As I mentioned earlier, there was quite a bit of discussion with representatives of provinces and territories. There was considerable positive reaction from them with respect to the possibility of them matching these funds.

[Pat Martin, NDP, Winnipeg Centre, MB]

I have a question regarding this relatively new obligation on the part of the government to present regular reports to Parliament as a condition of the Liberal Party support for the budget.

Will Finance Canada be preparing these reports? How is Finance Canada going to measure the implementation and the costs of this stimulus package? What is the yardstick you're going to use to live up to the commitment made by the government to the Liberal Party?

[Paul Rochon]

The Minister of Finance would be involved in a significant way, clearly, in those reports. The budget itself presents a preliminary estimate of the employment impacts based on a modelling approach.

We would expect, as the measures are implemented and put into effect, that we would in fact have what I might describe as hard estimates, in the sense of actual estimates of employment and output impacts by measure. That would involve input from all of the departments involved.

[The Chair, Liberal, Derek Lee]

Thank you.

That's over the eight. Thank you, Mr. Martin.

Now we'll go to Ms. Hall Findlay for five, followed by Monsieur Roy and Mr. Anders.

Ms. Hall Findlay.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you very much.

Thank you, everybody, for being here and giving us your time.

I have five minutes and several questions, so I'm going to go fairly quickly.

Mr. Richardson, you mentioned that the home renovation piece is in the ways and means motion, but I've just been told that it is not in fact included, although the press release says “Our government intends to act quickly to table further legislation that will include additional tax relief measures, such as the Home Renovation Tax Credit...”.

Can you confirm, in fact, that it is in the ways and means motion that's been tabled, or if it is to come further on?

[Stephen Richardson]

My understanding is that it is in the ways and means motion. It is not in Bill C-10, so--

[Martha Hall Findlay, Liberal, Willowdale, ON]

I know very well it's not in Bill C-10. I was asking about--

[Stephen Richardson]

--it would be in the subsequent legislation.

[Martha Hall Findlay, Liberal, Willowdale, ON]

--whether it was in the ways and means motion.

[Stephen Richardson]

Yes.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Okay.

Can I ask a similar question about the working income tax benefit? It's certainly not in Bill C-10.

[Stephen Richardson]

No, it is not in Bill C-10, because the working income tax benefit increase involves consultations with provinces with respect to the design as it applies in each province.

The main element of the working income tax benefit is to try to supplement income where there's a loss of benefits, usually provincial benefits, as a result of a lower-income person beginning to work or working more. To make that effective, both the existing working income tax benefit and any supplement to it have to be worked out in some detail with each of the provinces. We're in the process of doing that.

[Martha Hall Findlay, Liberal, Willowdale, ON]

I note that a national securities regulator will need cooperation with the provinces as well, but at least the funding for it is in Bill C-10.

On another point, in reference to the consultations in terms of infrastructure spending, I have heard several people refer to consultations with provinces and to the good news that provinces sound as though they're ready to match.

But my understanding of the Building Canada Fund process, under which most of the infrastructure promises have been made in the budget, in Bill C-10, is that it also requires municipal matching. I'd like to know if, in those consultations, you did include consultations with the municipalities, and were the municipalities similarly positive about their ability to match funds?

[Stephen Richardson]

I think the consultations did involve some discussions with representatives of municipalities, and I think with respect to municipalities there was some positive indication as well in a number of cases, although there were also indications from municipalities that they felt they had some challenges in terms of raising financing and funding because of the general situation for municipalities.

In this regard, I would point out that the budget provides for up to $2 billion of low-cost funding for municipalities through CMHC.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Yes, I understand that, but from where this is coming from, and certainly in our prebudget consultations with municipalities, the message was overwhelming that they would not in fact be able to match.

Therefore, my question relates to a larger question. This 1.9% of GDP, which is dependent on the leverage, of course, because we are not a unitary state, does depend on provincial and municipal contributions. If the municipalities overwhelmingly have been saying they can't match, how does that affect the 1.9% projection?

[Stephen Richardson]

The number you refer to does involve matching, but that is a reference to the incremental stimulus in the specific provisions that increase infrastructure funding. Those could be matched totally by the province. They don't have to be matched by the municipality, so that can be fifty-fifty.

[Martha Hall Findlay, Liberal, Willowdale, ON]

But isn't the Building Canada Fund approach that this is under require matching of a quarter or a third in many cases, which would require the municipalities to contribute a significant amount?

[Stephen Richardson]

You're referring to the existing Building Canada program, as it existed before the 2009 budget, and as it continues.

The new measures in the 2009 budget were expressly designed to be matched up to 50%, as opposed to a third, a third, and a third. Therefore, as long as a provincial government is willing to match the federal portion, those funds can go ahead without municipal matching and can be spent on municipal infrastructure.

[Martha Hall Findlay, Liberal, Willowdale, ON]

I would point out that the Building Canada Fund as it is now, prior to this budget, also provides for a significant amount, up to 50%, but our understanding is that barely 5% of the announcements have in fact been spent, in large measure because of the municipalities' inability.

So am I correct in saying that, of the infrastructure funding announcements we have now, the municipalities will not be required to match if the provinces can do the 50% match in their stead?

[Paul Rochon]

With respect to new spending in the 2009 budget, that is correct.