Human Resources Committee on Dec. 3rd, 2009

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

So if I have a child one to six, I would get the $100 a month and I wouldn't pay tax on it?

[John Kolkman]

That's correct.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

I have a little trouble with that. I'm going to see if there's general agreement on it. Everything else you said, I agree with. That's the one thing that makes me scratch my head a bit.

[John Kolkman]

I'm trying to come up with a solution that will gain all-party support. We have to recognize that high-income young people with children under the age of six are going to be a small percentage of the population. Perhaps some people with inherited wealth will be in that category, but I suspect it's going to be very few. Since the federal Conservatives have come to power, they've extended two of their tweakings. They introduced a $300-per-family non-refundable tax credit that's available to anyone who pays taxes. That's why I said this was a very non-progressive benefit. You have to pay tax to get up to $300, and to get your full $300, you have to pay a significant amount of federal income tax. So that's a very regressive tax. We're suggesting that the up-to-$300 non-refundable credit be eliminated and the $1.5 billion in savings applied to the basic benefit, where there is a phase-out for higher-income Canadians.

The universal child care benefit has very little to do with child care and nothing to do with building a child care system. It is simply another way to support families with children. You have to ask yourself, is it really that bad a benefit? Parents of very young children tend to be younger parents, just getting started in careers, and they incur more costs for child care than parents of school-aged children do, simply because their kids aren't in school yet. If you recall, there was a supplement for children under seven that was abolished when the UCCB was brought in. Is it so bad to retain it? If you're going to have anything that's universal, it should be benefits that go to younger parents of preschool children. The odd young family that has inherited wealth maybe doesn't need it, but that's such a small percentage of parents that we don't think it's worth removing the universality from the benefit.

I talked about the poverty wall dimension. There's nothing wrong with certain benefits being universal. If we weight things too heavily to phasing things out as income rises, we can create high marginal tax rates for low-income families. This actually discourages them from earning additional income, because they're going to lose benefits, including child tax benefits, as their income goes up. So, yes, this is our proposal. I'm looking forward to the committee's assessment of it when it becomes available in both official languages. We've put a specific proposal forward, and we'd be glad to continue the dialogue on it.

[The Chair, Conservative, Dean Allison]

That's all the time you have.

Bill, did you have a quick response?

[Bill Moore-Kilgannon]

I just think we need to be very prudent with the dollars we have. The existing child tax benefit program I think is probably a lot less costly to administer. Adding to that, as John has suggested, clearly reduces poverty and supports families. And the child tax benefit program actually extends quite high into mid-range family incomes, so getting broad public middle-class support for this I think is quite feasible to do.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

It's graduated--

[Bill Moore-Kilgannon]

It's graduated, yes.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

--unlike the new CCP, if it was $100 untaxed.

[Bill Moore-Kilgannon]

Exactly. And I agree with John and others that if the true intention is to build quality child care in this province, then it's misnamed, shall we say. I'd rather see that money used more effectively, without the additional administrative costs the federal government is obviously paying to administer a completely separate cheque.

[The Chair, Conservative, Dean Allison]

Thank you.

I'm going to turn it over to Mr. Lessard now for five minutes.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

One of the measures that has been proven, based on Quebec's experience, is the universal child care program. Progress has also been made with respect to housing and employability, especially among women and people with disabilities. Quebec's day care system has been around for 30 years now. In its first five years, we saw family poverty drop by 4%, which is huge. The proportion of people below the poverty line went from around 17% to approximately 14%. So these measures have been proven.

And there is somewhat of a similar expectation elsewhere. In order to be successful, Quebec had to take charge of its own day care system. Since then, we have seen that provinces, especially groups like yours, expect the federal government to be forthcoming with measures, which is not at all the case. My questions are perhaps very naive.

Would it not be better to ask for that power to be transferred to the province and for you to make every effort to compel the Alberta government to implement that system? You would have just one door to knock on, instead of two.

[Bill Moore-Kilgannon]

To my mind, it is important for us to have the federal government involved in day care, especially when we see that the provincial government is receiving federal money to create new day care spots and is not investing it. Instead, it is putting that money towards other budgets. So it is important to work with the federal government, to ask it to reach an agreement with the provinces to really invest in a day care system and to check every year that the money was invested properly.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

I will play the devil's advocate a bit here. As we speak, neither of them is taking any action. The one who takes action transfers the money, since it is an area under provincial jurisdiction. Do you want the responsibility for a day care system to fall solely on the federal government?

[Bill Moore-Kilgannon]

No.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

If that is not what you want—and I am still being devil's advocate here—you are going to end up in the same situation. I am not telling you to ask the federal government to completely take over this responsibility. But would it not be more appropriate to ask the federal government to transfer the amounts, and the provincial government to invest them where they should go?

[Bill Moore-Kilgannon]

Yes, but it is important for both to work together. We live in a society where the levels of government each have their responsibilities. There are other social programs where two levels of government have a partnership. In Alberta, however, the money from the federal government is not being invested properly, and that creates political problems.

I understand perfectly what is happening in Quebec. You made the decision to invest properly in a universal day care system. In Alberta, we invest a lot of money in a private system. It is very obvious that companies' profits are increasing, rather than the number of day care spots or the quality of the system.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

You may find my comments frustrating, but sometimes, things can be seen in a different light.

The same goes for the employability of persons with disabilities. An organization named SPHERE-Québec helps the government with its decisions to ensure accessibility and job retention. When they were able to obtain those amounts, it led to more—and it is not perfect—people with disabilities in the workforce.

I am going to ask you a question that may be a bit provocative. Is it not a cop-out to ask the federal government to continue? You can continue to blame the provincial government for putting money in the Treasury instead of fighting to make sure it goes to the right place.

That is the sort of discussion we will have amongst ourselves. So it is important to hear your point of view.

[The Chair, Conservative, Dean Allison]

That's all the time we have, but Bev, I want you to answer the question, and then we'll move on.

[Bev Matthiessen]

If I get the gist of it, what we're talking about is money that's transferred federally to the province. The province doesn't always spend it the way the federal government would like to see it spent or with the intention of the federal government in placing that money here in Alberta. That's why Bill keeps saying that the province and the federal government need to keep working together to come up with some kind of plan so that the money is spent where the federal government would prefer it to be spent. I think if the federal government is going to give money to the province, it should have strings attached to it so that the money is spent where the money should be spent.

Years ago we used to have that. In fact, when I first started working in this field we could deal directly with the federal government. We had programs that came directly from the federal government. I know that one time, money was given federally to the province for health care, and that actually went into lowering taxes.

What more can I say?

[The Chair, Conservative, Dean Allison]

I'm not sure Mr. Lessard would like the answer about strings being attached, but that's a good answer anyway.

I'm going to pass it along to Mr. Martin for the last round of five minutes.

[Tony Martin, NDP, Sault Ste. Marie, ON]

I just want to get back to the issue I was speaking about a few minutes ago, about the funding and how we get to a debate or a discussion on taxation. Certainly, there are those out there who will tell you—and I'm one who believes it—that Canada has the money. It's not a lack of money. It's there; we just distribute it in different ways.

For example, in the last federal election--if you were listening, as I was, to the leaders' debate--the Prime Minister said the government was rolling out a $250 billion tax relief package. That's money going back to mostly big corporations in this country who make the claim that if they don't get the tax relief, the investment won't happen. We've seen how effective that was with the recession that happened, right? That's my view, anyway.

The CCPA suggests that the problem is ideological. It's political. It's this sense that there are some in the country who believe that if we just leave it to the private sector and the economy gets better, all the boats will get lifted. We've seen in the last few years what has happened. The studies that have been done are showing greater inequality in the country.

We've turned over investment in housing. We used to have a very aggressive affordable housing strategy in the 1980s and the early 1990s. I saw in my own community several wonderful not-for-profit co-op and other housing units built for people, and they're still doing the job. We believed that if we got the government out there, the private sector would move in and build those houses anyway. That hasn't happened either, and that's obvious now. We certainly heard that in spades up in the northern part of the country yesterday and the day before.

Again, my question to you is that Alberta is often looked at as the epicentre of right-wing thinking, where the ideology is “leave it to the private sector and everything will be well and good and we will prosper”.

I just want some thoughts from you. We're in Alberta today, and I want to hear what you think about that.

[John Kolkman]

Thanks for the question.

Certainly, economic recovery will help. There's no question that, whether it's provincial or federal, a stronger economy generates more tax revenues. I think that as we get through the worst of the recession, federal revenues will begin to recover.

I think what's a bit unfortunate, however—and you've been alluding to it—is that we've been involved, certainly in North America, in a little bit of a race to the bottom in terms of who can cut taxes the most. I do think we need to look seriously at that. I think we have a much better potential in Canada to get out of our deficit problem more readily than south of the border. I already mentioned the marginal tax rates on very wealthy families and individuals being significantly higher in the U.S. than they are in Canada. Similarly, if you look at corporate tax rates, for example, we've been cutting those rates in Canada a bit below what they are currently in the U.S.

In my view, we shouldn't be looking to cut taxes more. If anything, those who can afford to pay more should perhaps be called upon to do so, including very wealthy Canadians and perhaps larger, profitable corporations, as corporate tax. Or at least let's not cut corporate taxes any further. That by itself is going to give the federal government additional resources it can really use on priority programs.

I don't think there should be a greater priority than trying to reduce and eventually eliminate poverty. If that's where the dollars are applied, I personally think Canadians would be supportive of that. That's my view.

[Bill Moore-Kilgannon]

To use the example of child care again, in relation to the role of business and all of this, it's important to look at other jurisdictions around the world that are investing in child care. They've seen that a lot of the dollars actually end up going to increased profits for the business sector. They've certainly seen that in Australia, where ABC Learning Centres started in 1990 and grew to have 25% of all child care spaces in the country. When that corporation collapsed last year—they were operating in 11 countries around the world, including here in Alberta, where they had established 11 centres—the Australian government had to step in with millions of dollars just to keep those child care centres open for the next couple of months. They were wrapped up in increasing their real estate profits—where the real money is in child care; it's not so much in the care of children but in the increased value of the buildings they own.

I think Canadians want to see their tax dollars spent very well and efficiently, but you need to put in place mechanisms to make sure what you're investing in is not increased profits for certain corporations but delivery of quality services. Any poverty elimination strategy and plan needs to have the mechanisms in place to make sure those dollars are actually going to what they're said to be going to, whether that money is transferred via the province or invested directly in certain programs. There need to be accountability mechanisms to track year over year if it's achieving the goals and if the money is actually being spent on what it's said to be spent on.

[The Chair, Conservative, Dean Allison]

I'm going to try to give you the last word again, Bev. We'll try one more time. The last word goes to you.