Finance committee  The problem, as I see it, is that the current environment is probably exacerbating the difficulty of raising capital for small and mid-sized companies, although we've argued that there has been relative difficulty over the last few years. In this current climate, it has been very difficult.

Finance committee  Thank you, Mr. Chairman. It's a pleasure to be here this morning in Saskatoon. I represent the Investment Industry Association of Canada, which is the trade association for the Canadian securities industry. We represent 200 investment dealer firms coast to coast across the country.

Finance committee  I thought it was a good question that you asked. I was thinking about the budget change during Mr. Hayes' remarks, and I would agree with Mr. Hayes that it's probably a bit too early to assess the impact that change has had.

Finance committee  I'd say a similar thing: the larger companies have come to the markets in the last two years and have tended to accumulate fair amounts of cash. Part of it is because of uncertainty, but I also think part of it is looking for opportunity as well. Particularly when you're looking south of the border for acquisitions, you're waiting patiently, perhaps, for a better opportunity to make that acquisition, so in some cases the delay is strategic.

Finance committee  I guess my comment on that would be the slogan that was used at the Carter commission, which goes back 40 years now: “A buck is a buck is a buck”. What we're trying to indicate here is that there are certain investments and certain income flows, certain capital gains, and particularly capital gains that carry risk, and to the extent they carry risk, there's a disincentive for someone to invest in those instruments, whether it be a corporate bond versus a government bond or a—

Finance committee  I don't know. What I'm saying now is that the effect of capital gains tax is 25%, whether it's 20% capital gains tax or 22%. I'm just saying that to make it lower would provide an additional incentive to—

Finance committee  I guess it depends on whether you—

Finance committee  If the ultimate result were the same, you could change the inclusion rate and lower the tax rate. You're right, you could get to the same result.

Finance committee  You're right, and it's for two reasons. One is that the statistics look at the average usage across different income groups. Lower-income Canadians tend not to use them. In fact, Malcolm Hamilton, who has a high reputation with Mercer as an actuary, has indicated that in retirement, lower-income Canadians do better with the two pillars they have.

Finance committee  I can tell you C.D. Howe has done a study of this, looking at the comparison between the two, and I'm not convinced that's the case.

Finance committee  I will make a couple of comments, since you made reference to our brief. The first point to make, which reinforces what you've said, is that our third pillar works quite effectively: tax-assisted savings plans. I think that flexibility would be helpful. I think the Senate banking committee recommendations suggest that some additional flexibility would be helpful to Canadians.

Finance committee  No.

Finance committee  In other words, you're saying that their salaries more than compensate.

Finance committee  Yes, we did estimate the cost. I don't have that figure here right now, but I would be pleased to send it to you. We gave that estimate to members of this committee a year ago, I believe.

Finance committee  I think it's about $1 billion, something in that order, yes.