Industry committee  Then if you have any questions, like why did you put that chart in there, what are you trying to show.... You'll see that those charts buttress some of the points I was making, but please feel free to ask whatever you'd like.

Industry committee  Thanks. I certainly recognize how difficult it is for the individuals, the workers, the families, the communities. There's no underplaying that. But I think the other side of this is there are a lot of difficulties if you don't do that. In my view, while the dollar may not stay at par for the next five years, I don't think it's going to spend a lot of the next five years below 90¢, so they're in for a pretty tough time if they don't move from some communities--a very tough time.

Industry committee  Thank you.

Industry committee  Well, thank you very much for inviting me back. It was about a year and a half ago that I was last here, but I think I've appeared before this committee, off and on, probably for the last decade. So thank you for the invitation. I've provided a handout that updates some of the charts from May 2006.

Finance committee  Sure. The main reason job creation has been so strong is the strength in the energy sector. A lot of that job creation has been in Alberta--in vast disproportion. Also, there are the interest rates. Even though they were moving up, they're still relatively low by historic standards and they are helping the construction industry.

Finance committee  Not very much, because we don't have a lot of debt in foreign currencies. As a matter of fact, the impact of a fall in the interest rate on the debt charges is not that great. The rollover is about a third of that, so a lot of the debt is not impacted by a change in interest rates.

Finance committee  No, they're not, and the forecast of the debt over the next four or five years by all forecasters is $34 billion to $35 billion.

Finance committee  Our forecast for interest rates is that in terms of the bank's policy rate, the bank will keep on hold that 4.25%, where they are, for well into next year. There's a little bit of debate. Will their next move be up or down? I would say it's probably more likely to be down than up, but it's also probably at least six months away.

Finance committee  Yes. Can I just piggyback on what Don said?

Finance committee  We've done a lot of work on the impact of various tax cuts. As for personal income tax, yes, the federal government might get about 20% of its money back over time, because of the expansion. For corporate income tax, yes, there have been a lot of studies; it really does stimulate investment.

Finance committee  There are some unusual situations for corporate income tax where corporations may, if you're right on the margin with the U.S., start reporting more profit in Canada versus the U.S. There is really no shift in real economic activity. In that corner solution, they can virtually get their money back from a corporate income tax cut because of changes in accounting procedures, but generally they might get one-third of their money back.

Finance committee  The last forecast on revenues that we did for the finance committee was for 2005-06. The revenues were pretty much bang-on in that forecast. Of course, in between, we've had budget 2006. We had a lot of changes on the tax side in budget 2006, and a lot of them took effect July 1.

Finance committee  Yes, that's right, but has the October 31 change eliminated any artificial drifting from the corporate form into the income trust form for tax purposes? That's what he wants. Has that been enough?

Finance committee  I'll make two comments. First, I agree with Don, and I think the overwhelming issue here is the concept that the family--the household--is the spending unit, and the taxes should be based on that. That's why I and a lot of other economists are in favour of income splitting. This notion that there could be some side impact on labour force participation makes me very frustrated.

Finance committee  It's really hard to answer that. As I say, it depends on exactly what fiscal actions you include and exclude. Obviously the surpluses have been eroded because of what was in budget 2006. Previously we did a fairly thorough piece for the finance committee to answer exactly that question.