Finance committee  I think the success of the enterprise investment scheme speaks for itself. Since 1993, some 19,000 companies have raised $8.6 billion. These are all very small companies, start-ups and emerging companies. The program, which has gone on since 1993, was expanded in 2012 after an independent Treasury review of its effectiveness.

Finance committee  Good morning, ladies and gentlemen. My name is Ian Russell and I am the president of the Investment Industry Association of Canada in Toronto. I am happy to have this opportunity to submit our recommendations to the Standing Committee on Finance. In my remarks this morning I want to briefly sketch the background in the small business capital markets and describe in particular the capital-raising process in Canada and our policy recommendations.

Finance committee  On what this government has done right, you can't underestimate how far sound fiscal management and competitive tax rates have gone. The work being done by the red tape reduction commission is really important in the area of duplication more than anything else. The minister's crusade for a single securities regulator is really important in improving the efficiency of our markets.

Finance committee  Extending the capital cost allowance brought the effective corporate rate down for large companies. So it has benefited the large companies, the capital-intensive companies that are the backbone of the economy. That's been positive. But that in and of itself doesn't provide a large benefit to small companies in the biotech area, the general commercial area, or the resource area.

Finance committee  Well, that's fraud, and you're right, it has happened. But for any bona fide member of our industry, there are protections in--

Finance committee  No, but what I have said is that there are mechanisms for victims in our industry to seek redress, and as far as I can see from the evidence, it's working pretty satisfactorily. Now I know there has been some significant malfeasance in particular provinces. Those have happened outside the Canadian investment industry.

Finance committee  I see where you're coming from. First, we have the CPP, which is a mandatory program. It was overhauled 10 years ago. It's very efficient. That's the core of our pension system. The other aspects of it are voluntary. But at the same time, there are real incentives through the tax system--the RRSPs, the RRIFs, group RRSPs, and the PRPPs.

Finance committee  When I talk about my members, I'm talking about the investment dealers. They're large and small. Many of them are small, almost 200 of them. A rise in corporate taxes at a time when they are under the gun would hurt. Profitability, particularly for small firms, is very weak. As to the broader question, an increase in the corporate rate for corporate Canada would be a bad move.

Finance committee  What we have in the securities industry right now is a national fund, the Canadian Investor Protection Fund, that protects investors in the event of defaults of member firms.

Finance committee  Well, it is limited, but it's comparable, certainly, to the CDIC. It's $1 million for each account within CIPF in those circumstances.

Finance committee  What we have in the industry, in addition to the protections in the event of bankruptcy.... Where you're going is consumer redress for victims. Again, there is a national program, the ombudsman for the banking and securities industries. In those circumstances, there is an opportunity for aggrieved clients to seek redress through that mechanism.

Finance committee  My response would be that the current architecture of the pension funds probably provides enough flexibility and scope for small business to have pension funds without expanding the CPP. I agree with you, I think the CPP is well-managed; it's a well-run fund, it's fully funded—far better than social security in the U.S.

Finance committee  That's understood.

Finance committee  I just wanted to say that group RRSPs, for example, which are a pretty effective plan for very small companies, whereby they use an administrator and offer group RRSPs, offer one vehicle that we think we could improve upon.

Finance committee  Yes, it probably makes sense to stand back and take a look at the system as a whole. A particular area that might merit from further examination is the sales tax side, especially in the context of the harmonization of sales taxes that is taking place across the country. A lot of issues come up in terms of the treatment of different types of commodities and services within a sales tax.