Thank you, Mr. Chair, members of the committee. I would like to thank you for giving us this opportunity to meet with your committee today.
We believe that you can help to improve public understanding of the role of the service sector in the Canadian economy, and most importantly help to determine what options are available to policy makers to ensure the continued prosperity of that sector.
CGA-Canada is pleased to participate in your discussions. I would like to take the next few minutes to suggest some strategies that would make it possible for businesses and consumers in Canada to continue to enjoy the benefits of a dynamic, competitive market that will provide them with professional accounting services that meet the standards recognized at the international level.
We are aware of the limits on the time allowed for this discussion. My presentation will deal with three essential recommendations. First, we recommend that the government establish principles for internal trade and create an internal trade tribunal. Second, the government must recognize that each professional body has the right and the duty to establish its own standards. Third, it must incorporate consultation mechanisms and transparency provisions in international trade agreements.
And let me explain why. But first allow me to remind the committee that CGA continues to be the fastest-growing accounting designation in Canada.
We are proud of the fact that CGAs have been providing valuable services to the public since 1908. This year we celebrate our 100th anniversary of the founding of the CGA designation.
Accounting, as you are acutely aware, is the backbone of the business/financial world. Accounting is the key to measuring the activity, growth, and success of businesses and the economy, and it gives us the financial snapshot needed to make sound decisions. Because of its central role, accounting is highly regulated. Professions, the committee has been told, account for one-fifth of Canada's service economy. Within that, there are almost 200,000 accountants in Canada working in every corner of the country, in the private and public sector, or as self-employed individuals.
The industry continues to grow at a brisk pace. From 2001 to 2006 the number of accountants increased by 14%. This strong growth can be partially attributed to changes in business regulatory requirements, which have led to increased demand for accounting services.
Let me turn to the issue of internal trade. In today's world, goods and services cross international borders and move with incredible ease and speed. Given this reality, it is difficult to comprehend why current economic activity in Canada is still seriously inhibited by interprovincial trade barriers. It is estimated that these barriers may cost anywhere from $3 billion to $14 billion each year.
Barriers to the free movement of trade and services have put a stranglehold on Canada's productivity and competitiveness. CGA Canada believes the time has come for the federal government to step up to the plate and exercise its power to regulate trade and commerce under the Constitution.
We have two proposals. One is that the federal government establish in legislation a set of open trade principles based on the premise of a free and open market. The second is that the federal government establish a standing internal trade tribunal.
That is our first recommendation.
Let me turn to competition and the accounting marketplace. We are proud of the fact that CGAs across Canada provide professional services: the same uniform high standard of education, ethics, and practice. This ensures the full mobility of our members. This also ensures, more importantly, the continuity of services across borders, contributing to reducing the cost of doing business. There might be different approaches to professional training and certification for accountants in Canada, but the competence and performance standards required and practised are common to all professional accountants.
Until recently our members were prevented from providing the full scope of public accounting to business and consumers in Ontario and Quebec. This prohibition was found to impair trade and cause injury by two successive panels convened under the Agreement on Internal Trade. Moreover, the Competition Bureau released a helpful report in December on the self-regulated professions in Canada. The bureau makes it crystal clear that laws and regulations have impeded access to certain professions and have unnecessarily stifled competition. This also must be recognized in federal legislation.
We urge the committee to ensure that federal legislation recognizes competition in the accounting marketplace and recognizes the rights and obligation of each professional body to set its standards of education, ethics, and practice.
Let me turn to the international dimension very briefly. Accounting services are well positioned. In fact, the services industry, as you well know, is well positioned to increase Canada's economic importance internationally. We are proud of our international presence, a presence that we intend to expand and that we've been extending very much over the last year or so. We are very interested in Canada's pursuit of trade agreements. However, we are concerned that these discussions sometimes don't take into account the multi-body nature of accounting in Canada. There are three professional accounting designations in Canada. In dealing with professional services, most trade agreements encourage professional organizations to enter into mutual recognition agreements. It has been our experience that foreign authorities or foreign professional bodies have little motivation to enter into mutual recognition agreements with another body in Canada once an agreement has been reached with another body.
I am sorry if it is confusing, and I welcome your questions.
We believe the federal government needs to take this into account when entering into trade discussions in order to provide more clarity and transparency through the conduct of negotiations, especially as we believe they might affect the rights and privileges of professionals.
We recommend that the federal government build into international trade agreements the requirement that professional bodies consult with those who might be affected by agreements before undertaking negotiations that could affect their rights. The purpose would be to investigate whether a third body wished to join the negotiation, or at least it could provide the opportunity for an early assessment of the impact of the proposed mutual recognition agreement on their professional rights.
Thank you, Mr. Chair.
We leave you with three recommendations. As I said, the federal government ought to, first, set internal trade principles and create an internal trade tribunal; second, recognize the rights and obligations of professional bodies to set their own standards in a heavily regulated industry such as accounting; and third, introduce consultation mechanisms and transparency provisions within international trade agreements.
We wish you well in your deliberations and welcome any questions you might have.