I invite the witnesses to step to the plate, as it were, and we welcome you.
The finance committee is mandated by the House of Commons on an annual basis to consider and make reports on proposals regarding the budgetary policies of the government. This year our theme is Canada's place in a competitive world.
As you know, because you've presented your briefs to us already, we are appreciative of those, but we also ask that you hold your presentation today to five minutes so that we can get into the exchange with committee members.
Again, thank you for taking the time to be here.
Let's get under way. Who are we starting with today?
It is Ducks Unlimited. Cynthia Edwards, welcome. You have five minutes. Please proceed.
On behalf of Ducks Unlimited Canada, thank you to the standing committee for the opportunity to provide input into these important consultations.
As a private, non-profit organization dedicated to the conservation of Canada's wetlands and uplands for the benefit of waterfowl, wildlife, and people, we appreciate being able to share some of our experiences in conserving Canada's natural capital.
Our written submission focuses on how natural capital conservation and restoration can help improve Canada's competitive advantage. As indicated, Ducks Unlimited Canada has a long history of working in this country and has committed our own resources to helping determine the true value of natural areas through pilot projects, research with Agriculture and Agri-Food Canada, and commissioned works such as Dr. Olewiler's report on the value of natural capital in the settled areas of Canada.
In the interests of brevity, I am only going to discuss two of the ten recommendations we submitted.
First, the health of Canada's citizens depends in part on the health of our surroundings. DUC recommends that the federal government establish financial disincentives, potentially through tax reform, to discourage the further destruction or degradation of our natural capital. This country was built in part through the use of government incentives to encourage breaking, clearing, and developing land for cities, agriculture, and industry. But it's not 1905 any more, and our country has reached a maturity level that requires a new approach to maintaining that competitive advantage. We've lost or degraded the majority of our natural assets in the settled areas of this country, yet we still see government incentives to encourage further loss of areas such as wetlands. The time has come to recognize the true value of what remains and invest in it accordingly, such as enhancing the next generation of the agricultural policy framework and Greencover Canada.
Secondly, no one in our organization is naive enough to believe that development and expansion of our cities, industry, and infrastructure will stop, nor should it. However, we can grow our economy while increasing the value of the natural areas and their contribution to Canada's wealth. To start, federal taxation and spending programs related to infrastructure should require mitigation for the loss of natural capital on all projects that receive federal funding or are conducted on crown lands. It is only through the application of a mitigation sequence that includes avoidance, minimization, and compensation that Canada will be able to balance its growing economy with the conservation of the very assets that our country was built upon and that improve our quality of life.
Natural capital is important to Canadians. Society needs to invest in and encourage the conservation, restoration, and stewardship of that capital. There are numerous instruments that are available to do so, to facilitate this important investment in our future, several of which are expanded upon in our written submission and all of which deserve more attention from a sustained competitiveness point of view.
Thank you for your time, and I welcome any questions.
Mr. Chair, members of the Standing Committee on Finance, thank you very much for allowing us to speak today on the importance of investing in vaccines for our children.
I'm the medical officer of health for the Kingston area. I'd like to acknowledge my colleague from the coalition, Mary Appleton, who is the director of the program. I'm the co-chair of the coalition.
We've given you a written submission, and we have three points we'd like to make today orally: that vaccines are a good investment; that the national immunization strategy needs to be continued; and that there must be equal access to vaccines for our children across Canada.
Immunization is one of the most cost-effective medical interventions because it prevents disease. It's the safest and most effective way to protect Canadians, especially our children, from the preventable complications of communicable diseases.
In the past, vaccines have prevented millions of cases of illnesses and many disabilities and deaths. They have a proven track record of improving the health of our population.
Can you imagine the immense burden on our health system if there were still mass outbreaks of polio, measles, meningitis, or diphtheria? The large outbreaks of these diseases are now mercifully a distant memory, because vaccines work and governments have invested in them. That investment needs to be maintained and expanded to ensure continued protection with the current vaccines and access to the new vaccines that are becoming available to reduce illness in Canadians.
The investment in vaccines is far less costly than the potential cost of treatment, rehabilitation, and long-term care and the disruption to individuals, families, and communities. The federal government and the Parliament of Canada can play a critical leadership role to ensure that vaccines are equitably available to Canadians, regardless of where they live.
The national immunization strategy forms an essential support for vaccine programs in Canada. It paves the way for more coordination across this country, but it needs continued financial support. We are strongly urging that the national immunization strategy be supported and made permanent, as it is in other advanced countries.
The other two recommendations we're making refer to the need for federal government leadership to ensure equitable access to vaccines for all Canadians. The current provincial and territorial decision-making process for determining publicly funded vaccine programs results in inequitable access.
Here's a local example. Just two years ago, families in Ottawa had to pay for a new meningococcal vaccine--a meningitis vaccine--while across the river in Quebec it was publicly funded. The phenomenon happened right across the country as jurisdictions considered these vaccines, but with very little coordination.
There are many other examples. It took 10 years for us to implement hepatitis B vaccine for all Canadian children. It took seven years for the new pertussis vaccine for adolescents to be publicly funded in all provinces. While the provinces took their time to decide whether their children would enjoy the benefit of these preventive measures, thousands of individuals and families suffered unnecessarily from preventable disease, and the diagnostic and treatment costs accumulated. This scenario was repeated with the chicken pox, meningococcal, and pneumococcal vaccines. It will happen again with future vaccines that are coming down for use in our country.
Only in March 2004, when the federal government created a specific fund of $300 million for provinces and territories to buy vaccines, did all jurisdictions implement these publicly funded programs for all Canadian children. Before that fund was created, Canadian children in the wealthier provinces had access to vaccines, while children in poorer provinces did not.
This fund ends on March 31, 2007. If federal funds intended for vaccines are included in the Canada health transfer, they may be lost to other programs, and again we will see inequitable access.
Clearly not all vaccines approved for use in this country should be publicly funded. We have our national advisory committee on immunization that recommends how a vaccine should be used and for which groups. If it does recommend the universal use of a vaccine for children, governments should consider public funding. But implementation and health priorities are variable across the country, and that's where our system is fractured, leaving Canadians with a patchwork of access.
Without leadership and funding for vaccines at the national level to ensure accessibility for all children, some children will benefit from vaccine programs and others will not. Immunization is an opportunity for the federal government, together with provinces and territories, to show leadership in the prevention of disease.
There is a precedent. Four decades ago, the Parliament of Canada began contributing to the treatment sector of the Canadian health system. It is time that it also contributes significantly and consistently to the preventive side of the system. Ensuring that all Canadian children have equal access to the preventive benefits of safe and effective vaccines is a good place to start. And it is consistent with one of the undisputed principles of our publicly funded health system: equal access to service.
This funding cannot wait. There are new vaccines already approved for use in Canada, and there are more new vaccines on the horizon, leaving funding decisions entirely to discretion. Again the fiscal priorities of provinces and territories will lead us inevitably to a patchwork.
Ladies and gentlemen, a separate, permanent fund to be used for vaccines for our children must be established in this country.
Thank you very much.
Thank you for allowing the Canadian Association of Mutual Insurance Companies to appear before this committee.
CAMIC represents 92 property and casualty mutual insurers in Canada, and as most Canadian-owned insurers are mutuals, CAMIC represents the majority of Canadian-owned insurers in Canada. In 2005 our member companies had approximately four million policyholders, employed in excess of 10,000 managers, employees, and agents, and underwrote 12% of the Canadian market.
We are owned by our policyholders. Each member is allowed to exercise one vote, even if the member has more than one insurance policy with the insurance company. The companies have a strong balance sheet and are involved in the development of their communities. As most of these companies were established by farmers, today they are still located in rural and semi-rural areas.
Over the long term, mutual insurance companies act as non-profit organizations. Profits are returned to members in many forms.
The federal government is also owned by the people it serves. It is elected under the one-person, one-vote principle and it provides its services at cost. Surpluses, if any, should be returned to the people it serves.
In your invitation to appear before this committee, you asked that a number of issues related to Canada's place in a competitive world be addressed. As made evident in your invitation's backgrounder, most government services impacting on the competitiveness of our nation fall under provincial responsibility.
CAMIC supports the notion that there is currently a vertical fiscal imbalance between the federal, provincial and municipal governments and that this imbalance does not serve the taxpayer well. The federal government currently raises money for which it has no use under the responsibilities provided for in the Canadian Constitution, while most provincial and municipal governments have too few resources to meet their own responsibilities.
My association commends the federal government for having initiated the process of rectifying the fiscal imbalance. CAMIC hopes that this review will lead to provincial and municipal governments raising most of their funds directly from their constituents and being accountable only to their constituents for the way they spend that money.
The Canadian population deserves and expects all levels of government to generate their revenue equitably and to spend responsibly. In this respect, CAMIC applauds the 2005 federal budget decision to hire additional Revenue Canada employees to monitor offshore investments by Canadian individuals and corporations in tax haven countries. According to a March 2005 report by Statistics Canada, offshore investments in tax haven countries, in particular those made by Canadian financial institutions, have grown substantially in the last decade.
The Canadian insurance industry has its own challenges. It needs to operate under a taxation regime that is conducive to fair competition. The federal financial services legislation is now in the process of being reviewed, and CAMIC commends the federal government for its recently announced intention not to change the insurance retailing powers afforded to the banking sector. Clearly, the additional insurance retailing powers sought by banks would create an unlevel playing field in which banks would be able to effectively eliminate the competition, just as they did in the mutual funds, securities, and trust industries.
The general insurance industry also needs tax changes to operate more efficiently and more fairly. Foreign-owned insurance companies doing business in Canada often benefit from taxation provisions in other countries that allow them to set aside, free from tax, reserves to meet their obligations in cases of large catastrophes.
The Canadian companies, on their side, in order to have the same treatment, set aside money or set up companies outside of Canada to benefit from tax haven countries. Mutual insurance companies do not do so. We hope the federal government will look at the possibility of setting up a tax-free reserve in Canada, similar to those in Europe and Japan, and similar to the U.S. system, the goal of which is provide compensation in the event of a catastrophe.
Good afternoon. My name is Les Lyall and I am the president of the Association of Labour Sponsored Investment Funds. I'm also a senior vice-president of GrowthWorks Capital, based in Toronto. Thank you for the opportunity to speak to the committee today.
Today's presentation is specifically about three key items. Number one, I want to let you know how successful the retail venture capital program has been for Canada. Secondly, I'd like to then give you a brief update on the current market conditions and other factors that are leading to a serious gap in venture capital funding. Finally, I'm going to go over our recommendations to the committee to enhance their retail venture capital program in Canada.
Given the complexity of today's topic, at a later date we will also provide your offices with more detailed information on retail venture capital funds.
I'll provide a brief explanation of the funds and how they operate. We generate 70% of our capital from private sources; 15% of the remaining 30% is raised from tax credits, both from the provincial and federal government levels. We raise money to help high-tech and life science companies undertake research and development, commercialize innovative products, and expand operations to global markets. There are about 30 funds in Ontario, and together we have about $2.7 billion in assets under management in Ontario.
Ontario retail venture capital funds have exceeded their original policy objectives under the program. Ontario labour-sponsored funds add about $2.6 billion annually to the Canadian economy. Again, Ontario labour-sponsored funds have added about 30,000 jobs for the period 1997-2002--those are the most recent numbers available. Again, the Ontario program provides a 13-month payback for the federal government portion of the program, and that, I think, is mirrored across Canada in all other jurisdictions.
Investing companies exceed the national norm benchmarks when compared to traditional companies. These companies have doubled the amount of expected exports from $612 million to $1.2 billion; tripled the employment, based on the national norm, from 32,000 jobs versus 10,000; and quadrupled their R and D spending from $178 million before the ALSIF investment to $703 million after investments from the program.
Since the late 1990s and 2000, extraordinary circumstances have begun to shape our industry. The technology bust that most of us are familiar with, which occurred in 2000, occurred on a global basis. The effect has been that we've seen reduced merger and acquisition opportunities, a very limited IPO window for our exits from our investments, and longer investment horizons for the funds as a consequence. Finally, in Ontario we have faced the Ontario government's 2005 decision to phase out the program in Ontario by 2011.
As a result, Ontario is now experiencing dramatically reduced fundraising. In 2005 fundraising sales were down 19% compared to 2004; in 2006 our fundraising dropped a further 30% from the previous year. This means that virtually no new deals are taking place in Ontario. We can't invest in new start-ups because we may not have the funds available to take the company through to a profitable exit. Money we generate is reserved for follow-on investments for our current portfolio.
Retail venture capital represents 50% of Ontario's venture capital technology investing and about 80% of life science or biotech investing in the province of Ontario. Venture capital investing in Ontario is declining. Ontario alone experienced a decline of 37% in the second quarter of 2006. We need to stabilize the venture capital sector in Canada and ensure the government's return on investment for the tax credits is realized.
We have one key recommendation to the committee, and that is to increase the size of the ticket from the current $5,000 for individual investors to equal the maximum RRSP contribution.
Thank you for your patience.
Thank you, Mr. Chairman and committee members. I applaud your committee's commitment to finding ways to keep Canada competitive and prosperous in a changing world, and it is exactly competitiveness that I am here to speak to you about today.
Many of you may know that the Canadian Automobile Dealers Association represents over 3,000 active small and medium-sized businesses. Our members employ over 145,000 Canadians in every province, city, and town in the country. Canadian automobile dealers are in touch with the pulse of the nation. We are among the first to know when the mood in the country is buoyant and confident or when there is uncertainty or concern about the state of the Canadian economy. In that regard, CAD is constantly canvassing members to determine the areas where improvements can be made. While trade and regulatory reforms are frequently mentioned, the number one area where dealers need reform is in Canada's taxation policies.
Our written submission makes it clear that our industry was pleased with the many measures contained in the May 2006 federal budget. I invite you to review these comments in detail--they were handed out at the outset.
While we appreciate that the budget was focused on the five priorities highlighted in the 2005-06 election campaign, we believe the next budget should focus on specific tax policies that are currently restraining productivity as well as addressing inherent issues of fairness in the system.
Allow me to outline these priorities for you: one, establish fairness in the access to the small business deduction for automobile dealers; two, further reduce corporate income tax rates; three, establish equitable tax treatment on the sale of used vehicles; four, reduce capital gains taxes on the sale or transfer of dealerships under specific circumstances; and five, we would offer to work with CRA to improve the professionalism and efficiency of audits.
While our written submission deals with these items in great detail, I will highlight only two of these priorities during today's presentation.
The first deals with establishing fairness in the access to the small business deduction for automobile dealers. Most automobile dealers are small businesses run by entrepreneurs and family members. The small business deduction, or SBD, is a vital component to a reinvestment strategy. The SBD helps to defer income tax until such time as an owner withdraws profits. Unfortunately, the level of the SBD is inadequate to meet the requirements of most auto dealers. Not only is the deduction inadequate, but access is frequently and unfairly denied to auto dealers.
Automobile dealers begin to lose access to the SBD once their accumulated taxable capital exceeds $10 million and is completely eliminated at the $15 million threshold. This is unfair to capital-intensive industries like automobile dealerships. Other less capital-intensive businesses of similar size and profits enjoy far greater access to the SBD. Two issues compound the problem in the manner that capital is computed. First, a corporation's capital is defined to include all forms of indebtedness, including the lien notes, which is the method by which automobile dealers finance inventory. Most retailers finance the acquisition of their inventory through trade accounts payable, which are not included in the definition of capital. This discrimination against auto dealers is an unwarranted and unjustified tax penalty.
Second, capital includes assets or investments of other corporations with whom the dealer is associated. In these circumstances, the capital of different businesses is aggregated, which, if certain thresholds are met, will result in the loss of the SBD.
To alleviate this situation, CAD proposes the following options: one, eliminate the “grind” on the SBD for private business; two, redefine taxable capital to exclude lien notes--this unintended imposition has already been remedied in some of the provinces that levy taxes based on business capital; three, allow more flexibility in the definition of associated corporations for purposes of allocating the SBD; and four, increase the SBD to $1 million.
In closing, Mr. Chairman, I would like to highlight the issue of equitable treatment on the sale of used vehicles. There is an inherent and illogical inequity in the tax system as it pertains to the private sale versus dealer sale of used vehicles. Currently, dealers are required to charge GST on all vehicles sold while private individuals can sell GST exempt. Dealers can partially reduce the inequity on the trade-in of a used vehicle by charging GST only on the net difference. However, if a dealer buys a used car from an individual for resale, the full amount applies. If the individual sells the car to another individual, no GST applies.
There are a number of different approaches that would achieve a more equitable treatment in the sale of used cars involving automobile dealers versus individuals. One would be to eliminate GST on the sale of all used vehicles, whether they are sold by an individual or a business. Second, require that GST be applied on the sale of all used vehicles. This would require an administrative arrangement with provincial authorities so that GST could be applied at the time of transfer. The tax could be applied on the basis of a predetermined book value or the system for notional input tax credit to dealers could be restored.
Thank you very much, Mr. Chairman, for your time.
Thank you, Mr. Chairman and members of the committee.
I'm a mayor in the municipality of Southwest Middlesex, a councillor with Middlesex County, and president of the Association of Municipalities of Ontario.
AMO believes that all three orders of government must work together to build a strong and competitive nation. It's a shared responsibility that no one level of government can accomplish alone. Now is the time to act, and it's essential that all governments be present and accounted for as we move ahead to address key issues that we face.
As the providers of service, municipalities are where many issues of national importance intersect. These services include public transit, immigration settlement, environmental protection, public health, affordable housing, income support, child care, and public safety. In many cases, it's the municipal government that provides other orders of government with local service delivery capacity.
Municipalities recognize the tremendous progress that has been made in recent years on the GST rebate, affordable housing, transit investment, and the federal gas tax transfer, to name a few examples. We recognize that competing demands and limited fiscal resources are a reality for each order of government.
While Ontario's municipal governments are proud of our contributions across Canada, we believe Ontario should be treated fairly by the federal government. The federal-provincial fiscal imbalance in Ontario has a direct impact on municipal governments. The property tax base in Ontario is simply insufficient to meet all the needs of our communities and a growing country.
In Ontario, we have the compounding problem of the province's reliance on property taxes to fund a range of provincial health and social services. Fixing the federal-provincial fiscal imbalance will allow the Ontario government to end its reliance on municipal property taxes--a reliance that costs Ontario municipal property taxpayers more than $3 billion each year.
Over the past few months, more than 100 municipal governments in Ontario have passed resolutions that this committee should consider as part of its deliberations. Those resolutions support Premier McGuinty's position on the federal-provincial fiscal imbalance and his position that federal funding programs should be allocated to provinces and territories on a per capita basis.
Municipal infrastructure is the foundation of our local, provincial, and national economies. But in Ontario we face a massive and growing municipal infrastructure deficit, estimated at about $5 billion a year--one that limits our ability to provide safe, clean water, to protect the environment, and to provide reliable transit and efficient transportation networks. Municipalities are grappling with the needs to replace aging transit infrastructure while expanding municipal systems and integrating municipal commuter, intercity transit, and high-speed rail systems. Investment in transit is one of the best strategies for limiting congestion, for improving environmental outcomes, and for keeping our economy strong.
The availability of affordable housing is also critical to our country's economic competitiveness. High housing costs affect labour markets, labour mobility, and the successful integration of new Canadians. Lack of affordable housing and increasing homelessness affect the competitiveness of local communities and compromise the quality of life for our citizens. A national and long-term strategy to provide affordable housing and sustained funding to support homeless initiatives, including programs such as the Supporting Communities Partnership initiative, make good economic sense.
A great deal needs to be done if Ontario communities are to be livable, sustainable, and competitive in the national and global marketplace. The municipal sector must play a further part in determining infrastructure investment priorities. It must see a demonstrable commitment for a national, long-term, sustainable funding approach that will help us plan and budget infrastructure capital and maintenance and eliminate the municipal infrastructure deficit over time.
In Ontario we have gained an important role in guiding provincial and federal investment in local infrastructure through our memorandum of understanding with the province and through our role in helping to develop federal gas tax revenue sharing, an important new source of funding that must be made permanent.
The upcoming budget is an opportunity to renew the federal interest in strong communities. Ontario's communities provide an important foundation for the national economy. Strengthening that foundation begins at the local level.
Thank you, Mr. Chairman.
The reason we're here today is to ensure that the routine immunizations that can protect all children are available to all children across Canada. When new vaccines become available, and there's been a flurry of them, and there will be more because the vaccine technology is exploding, there will be so many more preventive measures available to us.
What we observed was that there is a variable implementation and a variable uptake of these programs, especially for kids, and the two examples were hepatitis B, which took ten years to implement across the country--a very safe and effective vaccine that will reduce the long-term complications of that disease--and the seven years it took to get the new pertussis vaccine for adolescents.
There is a lot of investment in pandemic preparedness right now, at both the national level and also at the provincial level, at least in Ontario, where I live. So my comments are really directed much more towards the routine vaccines. We feel very strongly that this principle of equal access to services in our health system should be applied not only to treatment measures but also to prevention measures.
That's a good point, Mr. McCallum.
I don't recall questioning the professionalism. The point we are making is that we believe there should be coordination between the various departments so that we end up having audits conducted that are efficient and to the point, as opposed to having what we're seeing among our membership constituency: three, four, or five different audits going on at any time during the year and none of those departments speaking to each other.
There is certainly a level of education we would like to help with, if that is possible. We would certainly be more than happy to work with CCRA in order to provide some insight, some background, some education, with regard to the specific issues that relate to our business. But mostly the point we are making—and which is contained in the white paper we presented this afternoon—is that we would like to be able to see if we could find a way to coordinate those various departments and have one streamlined, efficient audit process.
Thank you, Mr. Chairman.
Firstly, I wish to thank all of our witnesses for their presentations. Many issues have been raised. Unfortunately, as my colleague said, we have little time.
My first question is for Mr. Lafrenière. In your presentation, which I found very interesting, you talked about the fiscal imbalance, which may have come as something of a surprise to my Liberal friends. They must be wondering why an association of mutual insurance companies would take a position on this issue.
Upon reading your presentation, I see that you have drawn a parallel between how mutual insurance companies return funds to their clients when they record a surplus, and how the federal government, when it has surpluses, should also return funds to the provinces concerned.
Would you please elaborate on this for the benefit of my Liberal and Conservative friends.
I believe that you have understood our submission very well. We fully respect the one-person, one-vote principle, along with all other Canadians who believe that this country should be governed according to this same principle.
Our goal is to turn a profit in the short term, not in the long term. Companies seeking to make a profit in the long term are non-profit companies. Therefore, the same applies to the federal government.
What the federal government must grasp is that taxes should not be levied for the sheer pleasure of it. Funds are raised for a specific objective, that is to provide a service. Our association's members tell us that this is what is needed to keep a company running. This is where we draw a comparison with the federal government.
The federal government seems to be posting a surplus year after year, at the same time that provinces and municipalities are lacking money to fully carry out the obligations set out for them in the Canadian Constitution. This position is not a biased one; we simply want the economy to work well. In fact, this lies at the heart of your questions: what can we do to make sure that the Canadian economy performs well?
In our opinion, one of the things that can be done would be to reduce duplication and put the money where it belongs. Our hope is to have municipalities and provinces raise their funds directly from their constituents and be directly accountable only to their constituents. The federal government would only be accountable for the actions it takes, as set out in the Canadian Constitution.
Within their respective jurisdictions.
Mr. Normand Lafrenière: Exactly.
: In fact, yesterday there was an announcement of a $14-billion surplus. This is a recurring problem.
You also raised the issue of the number of additional agents needed at Revenue Canada, and drew a link between this and the issue of tax avoidance in tax havens. In fact, there have been recent reports on the huge tax amounts that certain Canadians can avoid paying by benefiting from these tax havens.
Do you truly believe that hiring additional agents will reduce tax evasion, or shouldn't legislative measures be taken to fill in the gaps?
Thank you for the question. I think probably the last thing this committee wants to hear is that we're asking for an increase in expenditures related to an increase in the ticket size. By way of an explanation for some of the committee, the ticket size is the maximum contribution that an individual investor can make to the program in any one given year.
We need to find a basis of comparison, and I'll come to your question directly in a moment, but the fact of the matter is that the federal government tax credit on this program is 15%. When we compare it to other industries and the support that is given to other industries--and I'll pick the oil and gas industry as an example, where the federal government through taxation provides a 44% tax relief on flow-through shares--I think it's important that the industry be supported in equal measure to that industry and that the support be given to it.
What we're trying to accomplish is for the average investors to be able to increase their investment in the program. Right now, they're capped at $5,000 a year, and we think that amount is inefficient. It increases our costs. It doesn't allow a level of participation in keeping with the pace of the RRSP contributions over the years.
I recognize the fact that transfers to the provinces were cut post-1993. As a result, most of the provinces had to reduce transfers to municipalities and most municipalities had to raise property taxes. The deficit that caused the reduction in transfer programs post-1993 has been eliminated, but municipalities across the nation are concerned that the federal government and the provincial governments are talking about cutting taxes, having eliminated their deficits, while we're left still paying higher property taxes that originated from that post-1993 reduction.
On municipal-rural infrastructure funding--COMRIF here in Ontario--it has certainly helped to meet the needs of municipalities in a number of communities. But of all the applications that have been submitted for funding through COMRIF, only one-third have been approved. So for every winner we've had through COMRIF in the first two phases, we've had two losers. We know there's a smaller allocation of funding to be made in the third round than was allocated in the first two, so I don't hold out any hope at all that the needs of municipalities, as expressed by those applications, are going to be met.
We have concerns about the kind of program COMRIF is. It's application-based and project-based. Many municipalities have to hire consulting engineers to prepare the applications for COMRIF, and that costs a lot of money. Those applications are submitted to the COMRIF bureaucracy, which costs both senior orders of government a lot of money.
So when we look at the way that program is structured, consider that it has more losers than winners and is very expensive to apply for and implement, and compare it to the federal gas tax program, which is basically an entitlement program administered directly by AMO for the federal government, we think entitlement programs are a much better way to go.
In my view, it has hurt competition. When you go into a financial institution for a loan, they use that occasion to say they'd like you to meet the person next door, who just happens to be selling insurance. Of course, you can always say no, but it's difficult to say no when you're sitting there asking for a loan or just having your loan approved. You want to keep a good relationship with the person who just approved a loan for you. It's very difficult to say you don't want to meet the person next door. So that's the kind of advantage they have.
Another advantage they have is that whenever you have a loan with the financial institution, they know exactly when that loan becomes renewable and which company you're doing business with at the moment, so they can approach you at the right time of the year with the right information about you and say, “Hey, when your insurance comes due, why don't you do business with us? We have to meet anyway about that loan you have.” So it gives them a tremendous advantage over the competition, and we don't want those financial institutions to have that advantage over us.
When you say it provides more competition, when we look at the banks and the profits they make, I doubt there is much competition among them. If there were that much competition you would see higher profits and lower profits in given years, but you don't see that; they're always very high. So in our view, the competition is not there.
An ounce of prevention is worth a pound of cure. We all believe that. So we should be investing in prevention. And it's worked. The data is unbelievable. In epidemic years, we had thousands of cases of measles and diphtheria, and now we have zero. It's remarkable.
We actually have a national immunization strategy. It is sunsetted--next year if I'm not mistaken. It's been helpful in trying to coordinate vaccine programs across the country. It involves such things as vaccine procurement for the provinces and vaccine safety. We strongly believe it has to be continued.
I don't really care how the vaccine is made accessible to kids, as long as it is. If the national government wanted to buy all the vaccine and give it to provinces, that would be just fine. If they wanted to do a trust fund like they've done before, that would be fine as well.
But you're right, it needs to be linked to a national immunization strategy and program. This would provide the underpinning. It would keep the discussions on track that are now going on among provinces' vaccine experts, so that we keep the coordination and no child in this country is lost through the cracks because of a bureaucratic set-up.
Thank you for the question.
I have to be straightforward and clear and declare that at the firm I work for, GrowthWorks, we're somewhat conflicted, because we're involved in a proposed transaction to take over the Crocus Fund. So if I may, I'll limit my remarks to things that would represent the industry and the industry's view.
The Crocus matter represented some failings in the nature of governance of that fund and the structure of that fund as a consequence. In Ontario, the structure is somewhat different, such that the manager and the fund are totally independent, the fund has a totally independent board that reports to the shareholders and the investors, and there's a contractual relationship with the manager. That, by and large, is the experience in Ontario.
While we heed the Auditor General's remarks—and indeed, it was my predecessor who wrote the report on behalf of the Auditor General making recommendations on how to correct the problem in the future—I think you'll find that in Ontario most, if not all, of those recommendations are a matter of practice in the industry, and we don't really encounter that issue.
Thank you, Chair, and thank you to our witnesses.
I'd like to talk to Mr. Lyall a little bit. Venture capital is always a tough business. It's particularly tough where I come from in Atlantic Canada. It's very hard to get. Small companies that go looking for VC from private investors often get asked where the government is on that file and what help they are getting.
Now, we have a magic bullet in the form of Tom Hayes in Atlantic Canada. He, as I'm sure you know, is with GrowthWorks in Atlantic Canada and has done a lot of work putting his team together.
The first question I have for you is this. New Brunswick has the New Brunswick Investment Management Corporation or something—and I realize you're Ontario, so you may not be able to answer this—where a certain percentage of publicly administered pension moneys go into venture capital; it seems to me it's a limit of 5% or something. The return has been pretty good. I don't know whether other provinces do that. I wonder whether you have a view about this being an effective way for government to seed new businesses.
Thank you for the question. I am familiar with Atlantic Canada because I was responsible for a period of time until we started a new fund out there and Tom took it over. So thank you for that.
Venture capital sources in Canada generally, and in Ontario, as I mentioned earlier, come from two sources. One is retail venture capital, where we raise money from the retail public primarily through the labour-sponsored investment program. The other source of capital is pension funds. You referred to New Brunswick Investment Management Corporation as one example, where public institutions' pension money is managed and they allocate a certain percentage to venture capital.
Until a few years ago, and up until the tax act was changed, those allocations stayed in Canada and were invested in Canada and were managed by Canadian venture fund managers for investment in Canadian early-stage technology companies and so on. With the change in the foreign tax credits, those pension funds are now able to invest their money worldwide.
Their view of the world—and I think it's the right view—is that they ought to seek the best returns possible, and if that means investing in venture capital funds in the United States or in Europe or in Canada, or wherever it may be, it's their job to pursue the best returns.
The frank fact is that Canadian venture capital is a very young industry. It has barely gone one cycle in the investment cycle we live in, and our investment cycle runs anywhere from eight to twelve years. In the United States it's a 50-year-old industry, with a much better, well-developed track record and much more experienced managers, and therefore their performance has been better. So you find that those pension fund moneys, by and large, are invested in the United States now.
Thirty seconds, okay, thank you.
It varies from vaccine to vaccine and from time in history to time in history. I'm glad you raised the papillomavirus vaccine, because there's the chance of wiping out--virtually wiping out--cervical cancer using this vaccine and screening. That's a women's health issue and it needs to be addressed.
I think we need to have a set amount of money that can be used and perhaps reserved from year to year so that as new vaccines come along, if we don't spend it one year, it will be available for the next year. For example, there's a rotavirus vaccine against diarrhea, a childhood diarrhea that keeps kids out of day care and keeps parents out of work, that I think is going to be an important one for us to consider implementing across the country as well.
Thank you very much, and thank you for appearing before us today.
My question is for Mr. Gauthier from the Canadian Automobile Dealers Association. I looked over your proposals on the GST as it is applied in used car sales. However, it is not charged when the seller is a retailer or an individual.
In one short paragraph, you say that the input tax credit system put in place in 1991 produced inequities when compared to the situation of unauthorized car sellers, and that the previous system is preferable to the one in place today.
I would like to hear a more detailed explanation of the input tax credit system, the inequities it produced, and who these unauthorized used car sellers are.
Thank you for your question, Mr. St-Cyr.
When the GST was first brought in around 1990-1991, the government acknowledged the anomaly I referred to. It was then that the government introduced the national input tax credit. From then on, when a car dealer purchased a used car, the dealership could claim a credit, which on paper reduced the total cost of the vehicle. This practice aimed to balance out the market value of the car when resold, and the sales made by individuals, who at the time were not obliged to charge GST on the sale of a car. By having the possibility of claiming input tax credits, dealers were able to balance out, to a certain degree but not completely, the market value of the vehicle, which allowed them to compete with private sellers.
When GST regulations were revised a few years later, the input tax credit was completely eliminated, which gave rise to the situation we now find ourselves in today. You are referring to the unfortunate situation in which people are taking advantage of businesses by claiming to be licensed dealers, when an actual fact, the sales are between individuals, and are private, GST exempt transactions. As such, they are able to benefit from a 6% advantage, as compared to legitimate car dealerships that charge the GST.
As I said earlier to Mr. DelMastro, we are talking about bootleggers. These are people who operate from street corners or basements. The consumer is not protected, because he or she may be purchasing a car that is in poor condition, that has not been inspected, etc.
Thank you for your question.
As I mentioned earlier, I think the top two concrete things are the financial disincentives that discourage the destruction of any further loss of our natural capital and the mitigation...if I had an option for a third, it would be to enhance some of the work that's already under way within the agricultural policy framework and incentive programs, such as Greencover Canada, and the beneficial management practices, which recognize some of the positive contributions land managers play in environmental issues. Those can be enhanced.
As mentioned in the brief, with respect to global competitiveness, Canada is the steward of about 25% of the world's remaining wetlands. That's an asset we enjoy that many other countries don't have the opportunity to enjoy. As we move into richer nations and more tourism opportunities, as water becomes an issue, we need to be good stewards of those assets to maintain some of that competitiveness. Especially on the water issue, where we get into agricultural issues or industries that require a large amount of water, we have those resources and we need to look after them.
Sure, and thank you for the question.
How will increasing the ticket size stabilize venture capital in Canada generally and in Ontario specifically? First, it will make the product more appealing to mid- and high-income investors. Right now, 50% of our shareholders have incomes of less than $60,000 a year. People with more money to invest simply aren't interested in a $5,000 investment. For them it's so-called “small potatoes”.
Second, more financial advisers and brokers will be interested in selling the product because their commission will increase, along with the ticket size. Right now, they can't be bothered to become licensed to sell the product because the small commission is not worthwhile. What we have witnessed over the last dozen years or so, since the inception of the program, is that commission structures have moved away from selling small-ticket items. In most cases, the investment advisers receive very little, if any, commission when selling those products. So we've lost their interest, and it greatly inhibits our ability to sell the product to the retail public.
Third, being able to move to a larger ticket size, we can attract larger investors, who have a larger appetite for high-risk investments such as these, and be able to find a place in their portfolio. When it's a $5,000 item, it's just not a large enough item to consider for their personal investment portfolio.
As opposed to the others, yes.
To the Canadian Association of Mutual Insurance Companies, as I understand mutual funds, the company is owned by its policyholders, and one of the ways in which it becomes a very attractive product is that there are sometimes profit distributions to the policyholders on a certain profit level. So I'm a little puzzled by your argument with the banks, who (a) want into retail insurance distribution and (b) are complaining that they have to set up offshore vehicles.
In your case, you don't have to set up an offshore vehicle for “tax purposes” because you're making your distribution directly to your policyholders. If you will, it's akin to an income trust. The revenues, the profits, are distributed directly to the policyholders; in income trust it's directly to the unitholders. So doesn't that give you, effectively, an enormous competitive advantage over other entities trying to sell insurance, whether it's demutualized insurance companies or banks?
We're back in session here. I invite whoever wishes to testify to get to their seat and we'll recommence.
The House of Commons Standing Committee on Finance is mandated by the House on an annual basis to consider and make reports upon proposals regarding the budgetary policies of the government. Our theme this year is Canada's place in a competitive world. As part of our hearings, we'll be travelling across the country, but of course we're here today in Ottawa to hear your presentations.
I know that each of you received communication that let you prepare for this with the knowledge that you will have five minutes to present. I will indicate—or my replacement in the chair, if there is one, will indicate—one minute or less remaining, and we encourage you to conclude your presentations at that point to allow time for our committee to exchange questions and comments with you.
We thank you in advance for the time that you put into preparations and your briefs.
We'll begin today with five minutes for Mr. Stokes from the Canadian Activists for Pension Splitting.
Welcome, and the time is yours.
Thank you, Mr. Chairman.
We request the income tax option to allow senior couples to split pension benefits in general, not only CPP benefits, as is currently the case. By “splitting” we mean attributing the collective income of a couple in equal parts to the spouses for income tax purposes and “pension” in a general sense of retirement income. We consider CPP and spousal RRSPs precedence for this, though we do not necessarily consider the CPP as a model for splitting. Also, the CPP and spousal RRSPs themselves create a tax inequity between those unequal-income couples who are able to use them to lower their income tax in retirement and those who are not able to do so. This is a fairness issue.
Also respecting fairness, the current generation of seniors qualifies for special consideration in this regard. Many of them formed their marriage style and their career plans when single-income families were the norm. The work world discriminated against married women. Moreover, in 1988, changes to the income tax formula caused the now well-known tax penalty against unequal-income couples to increase significantly for many and caught many of them out with too little time to adapt their employment and investment patterns to minimize their tax penalty in retirement. For many current seniors, the splitting instruments, CPP and spousal RRSPs, came too late to make much difference in their post-retirement tax situation.
The former government, at least, by their own admission, justified allowing the tax penalty to remain to avoid discouraging married women from joining higher-paid husbands in the workforce. This policy is certainly not applicable to retirees, so they should not have to continue paying the tax penalty on that account.
As for cost, it is much cheaper and should certainly be feasible for the revenue department to allow splitting for seniors than for the general taxpaying population. This would not be exclusionary because every income earner can expect to eventually be a retiree. We know organizations who have been lobbying for general income splitting for decades, and they actively support us in the quest for pension splitting. A recent study by the Library of Parliament shows the cost of pension splitting to be $300 million per annum, one-tenth of the cost of general income splitting.
This tax reform is urgent because those who are already in their senior years are missing out if they are subject to this unfair tax situation, and they have limited time to wait for the reform.
In our full written brief we have answered as best we can all the questions posed by the committee in connection with the theme, Canada's place in a competitive world. Given the nature of our request--fairness in personal taxation--and the target segment of the population--retired persons rather than workers--the following is a summary of our answers.
The prospect of much greater fairness in the taxation of seniors, which pension splitting would create, would help the morale of workers who foresee their retirement years. Pension splitting would leave many seniors with more disposable income to remain independent and thus not be a burden on the economy.
Development and utilization of marketable skill can sometimes be maximized by married individuals if they can concentrate on that while their partner takes on household and child-raising duties. However, those people are all the less inclined to do that if they know the tax system is going to penalize them, even through all their senior years.
By their increasing numbers, seniors will become increasingly important as consumers to provide an economy of scale necessary for production, including new technology and perhaps especially medical technology. Their consumption of goods will foster business growth within Canada. But this consumption depends on disposable income not being significantly reduced by unfair taxation in retirement.
Saving by workers would be encouraged in the knowledge that they will be able to split pension income with their spouse, if necessary, to avoid high taxes due to unequal pension incomes.
We need to keep skilled Canadians from emigrating, as well as attract others to Canada. This would be aided by a personal tax system that does not punish them to their dying day for a family lifestyle. It is significant that there is no tax penalty in the U.S. for having unequal spousal incomes.
We refer the committee to our full written brief for more detail and more points of argument.
Mr. Chairman and committee members, I am very pleased to have the opportunity to share with you my ideas on how the government can most effectively help young Canadians as they face the challenge of paying for their post-secondary education.
The rising cost of such education is a given in our society, and too many bright young Canadians with limited financial resources are either increasingly deterred from embarking on university or college studies in the first place or, having graduated, find themselves weighed down by the large student loans they are having to repay.
Caps on tuition fees, increased grants, and scholarship programs such as the millennium fund have not solved, and will not solve, this problem. As a result, these bright young Canadians are prevented from making full productive use of their skills and talents, and Canada loses much of the contribution they would have made to the country.
My approach provides a social safety net for those undertaking post-secondary programs. At the same time, it ends the heavy government costs inherent in traditional student aid programs.
The plan uses a group life insurance framework called the student insurance trust, or the SIT. It provides a platform enabling the government to do three important things: eliminate the losses it currently sustains as a result of irretrievably defaulted loans; extend a fair and cost-effective form of relief to defaulting ex-students with no prospects of repaying their loans; and generate substantial revenues over the long term for recovery of costs of the Canada student loans program and potentially investment in other government initiatives. In addition, the SIT can be easily structured to recover the costs of other programs and activities deemed strategic to Canada's well-being now and in the future.
As Canadian citizens reach the age of 24 to 27, they will be allowed, if they want, to participate in an insurance trust, the purpose of which is to throw a generational lifeline to debtors who cannot pay their bills, or to spur economic development in areas that sorely need developing. There are no fees or premiums to pay by Canadian citizens who decide to participate, and the insurance is placed in a random way, based on geographical, actuarial, and insurable interests. In return, these participating citizens will have a say in solving the economic and social problems that are a threat to the quality of life of not just Canadians but also the rest of the world.
This plan is about people helping other people, and the student insurance trust will allow the government to act as a facilitator of good deeds between generations, from municipal pollution problems tied up in endless litigation to third-world debt restructuring on the multilateral level, so that these poor countries can free up more money to spend on education and health care; to help provide clean water to all Canadians and to begin tackling the environmental problems in the world's oceans; to help solve poverty and hunger within our own borders and to help provide similar relief to those who need it around the world; to help solve the shortage of family doctors and other medical services so that Canadians can receive medical help in a timely way; to help spur the development of alternative energy that pollutes less; or to protect Canadian cultural and historical treasures using the cost-recovery provision.
Today l'm presenting a program development proposal. It is presented as a “learning by doing” opportunity for the government. l would be pleased to work with the Canadian government and the Canadian life insurance industry in order to take the SIT concept to the next level.
Canada's success in the world economy and our current prosperity owes much to hard-working and creative Canadians, but our future depends on forward-looking investments in education, infrastructure, and economic activity.
Mr. Chair, if possible, l would like to dedicate the remainder of my five minutes to addressing questions.
Thank you, Mr. Chair, and thank you to the finance committee for inviting the Canadian Museums Association to provide our views and recommendations for the 2007 budget. My name is Cal White and I'm president of the Canadian Museums Association, and I'm joined by executive director, John McAvity.
I had some speaking notes prepared for today, but I've thrown those out, given the results of yesterday's announced cuts. We were surprised by the federal cutback in the amount of $4.6 million to the museums assistance program, which was announced yesterday. We were surprised because this committee has consistently called for stable, long-term funding for Canadian museums in general and for the museums assistance program specifically. In the recent election campaign, all the political parties supported the development of a new museum policy, including the Conservative Party, which committed in writing to develop a new policy.
The Auditor General of Canada has called on the federal government to invest in its heritage programs. The provincial and territorial ministers of heritage have unanimously supported the development of a new policy. The CMA has been pleased to appear before this committee in years past, and we have been pleased that the committee has supported our recommendations, but we wonder what value comes from it when its recommendations are not taken seriously. The CMA has called consistently for a new museum policy to replace the outdated policy of the 1980s. Just last week, after studying museum issues in the spring, the House of Commons Standing Committee on Heritage released its report calling on the government to implement the new museums policy as soon as possible.
The reality facing Canadian museums is that public financial support, currently operating at 1972 funding levels, has not kept pace with rising costs. In recent years, museums have been diligent about decreasing the reliance on public funding; however, many still face critical shortfalls. When coupled with rising costs and a challenging operating environment, we're at a point today where many museums are unable to properly maintain facilities or preserve and display collections. One of the biggest challenges we face with the current outdated museum policy is the limited scope of one-year project funding. If we were to move to multi-year investments, it would enable museums to plan their development, research, and programming initiatives. This would result in better services, information, and programs for Canadians.
I'd like to make a couple of points about what museums contribute to the lives of Canadians and to our communities.
Culture plays an important role in the quality of Canada's community life. It is widely recognized that these quality-of-life factors directly affect decisions of businesses and individuals looking to relocate or invest. A creative and vibrant community attracts and retains talented people, and businesses want to go where talented people go, resulting in greater business investment. Museums are sources of inspiration, innovation, and knowledge creation. They create opportunities for lifelong learning for all of us: our children, our youth, new Canadians.
Museums contribute to building a strong national identity and secure for Canada a role of pride and influence in the world. We think of this international profile building in terms of our creative economy. Museums are a leading force in Canada's tourism promotion strategy, and, today, 60% of international tourists visit a Canadian museum during their stay. As a result, there is an economic spinoff from the cultural and museum sector, which helps to create employment in complementary sectors of regional economies, including tourism, hospitality, transportation, printing, and many more. Ensuring viable and strong cultural institutions is an investment that drives future investment.
So in conclusion, Mr. Chairman, our recommendations to the committee remain the same. One, it is now more critical than ever that the government make the new museum policy a priority and introduce it at the earliest opportunity. Second, we recommend that the committee support the need for more robust, predictable, long-term funding for national and community-based Canadian museums.
I'd like to thank the committee for the opportunity to present this evidence before you today. We have previously submitted our brief, which highlighted a variety of measures that we believe the committee could consider to address areas of early learning, justice, and housing. But with the brief time I have with you today, I'd like to highlight our core recommendation within that briefing, and that's funding provided to the aboriginal friendship centre program.
Of the questions you asked of us, the first one was, what specific federal tax or program spending measures should be implemented in the upcoming budget that will ensure that our citizens are healthy and have the right skills for their own benefit and for the benefit of their employers? I submit to this committee that enhanced funding for the aboriginal friendship centre program is one of those program spending areas you can look at. We know that the urban aboriginal population is rising, and the challenges are becoming more and more complex: 71% of all aboriginal people live off reserve; 50% of all aboriginal people live in urban areas; half of our people are under the age of 25; and half of our people do not graduate from high school.
Within Canada we have an emerging, growing racialized underclass: urban aboriginal youth. Friendship centres are on the front line of providing services to this population. There are currently 116 community agencies across Canada from coast to coast to coast, which are set up to provide services for this emerging population. These community agencies do so in a way we call status blind. We don't give consideration to whether an aboriginal person is a status Indian according to the Indian Act, a non-status Indian, a Métis person, or an Inuit person. You simply want to have and need services in the community for a friendship centre to be there for you.
Last year, through these 116 community agencies, we provided 1,260 programs across the country. We provided 1.1 million client contacts to people in communities requiring desperate services. The total friendship centre program revenue is $115 million. The Department of Canadian Heritage provides us with $16.1 million in core funding. That means for every dollar we receive in core funding, the friendship centre movement leverages $7 from other government and private-source areas to provide services for urban aboriginal people.
The aboriginal friendship centre program, the program I want to talk to you briefly about today, is the program that enables all of this work to happen in communities. If it wasn't for that core funding you provide for local friendship centres to hire their executive director, bookkeepers, and to keep their buildings open, none of these other activities would happen.
Like our museum brothers here, in 1993 we too were cut back after an expenditure review by 25%, and that funding hasn't been reinstated since. These community agencies today are spending 1993 dollars on 2006 problems.
The real question is, if it's an emerging population, the challenges are becoming more and more complex, and if we're able to serve an emerging population, it's time to reinvest in that capacity.
We recently went through an evaluation, which found the program to be effective, cost effective, relevant, with no other federal government overlaps or duplication in services. We are a unique program within the federal and provincial government jurisdictions, and we provide essential services.
More funds need to be reinvested. If we take into account the original 25% reduction in the early nineties, in real terms today that's a 40% reduction in spending power of these local community agencies. These are people in all of your ridings providing the most essential services. We would like the committee to consider recommending funding enhancements to this program.
On April 28 we met with Minister Oda, who is the minister responsible for our program, to discuss the current funding levels, and she has endorsed a joint review of our staff and the departmental staff to look at the appropriate funding levels for the program. We're pleased to say that we're about to bring a report back to the minister for her consideration.
We found a number of areas requiring reinvestment. The amount of money we provide local community agencies to provide their services needs to be increased. We need increased supports for training for local community members, for communication and policy supports, and for translation services of our documents and of our meetings.
We need to expand the friendship centre programs to new locations. There hasn't been a new friendship centre door open within the last decade anywhere across Canada, yet the need continues to grow.
So we believe additional funding of the program is merited. Additional investment will provide greater opportunity for aboriginal youth to access better and more diverse programming. It's going to improve the administration of existing centres and ensure continued federal stewardship of your investment. We're going to have improved service delivery standards with more training and better remuneration.
We're going to meet minimum federal government standards for official languages obligations, and we're going to service the growth of the urban aboriginal client base.
I'm just about done, sir.
The question is about the specific tax or spending program measures that should be contemplated. We believe the ASEP funding will ensure that urban aboriginal citizens have access to programs that will ensure they're healthy and that they have the skills and services they need.
Good afternoon. Thank you for this opportunity to appear today.
The Canadian Alliance of Student Associations represents approximately 300,000 students enrolled in Canadian universities and colleges.
One must not look too far to appreciate the importance of post-secondary education within Canadian society. It develops an active, engaged, and productive citizenry, and it provides important career and monetary benefits to those who can access it.
Higher learning also has a central role in developing a healthy and prosperous economy. The role of higher learning in the Canadian economy will become increasingly prominent when Canada faces the impending labour crisis. In twenty years, the government forecasts that retirees will outnumber new workers by four to three. Although you have heard a lot of groups comment on research funding today, in order for Canada to compete in the global knowledge economy, the emphasis must be placed on the need for more highly educated graduates and skilled workers.
CASA believes that the federal government can effectively deal with the coming labour crunch if it fulfils two important roles. Number one would be to demonstrate government leadership by increasing federal funding, with the emphasis on access. The federal government cannot solve Canada's post-secondary problems without the collaboration of the provinces. This is why CASA believes that the federal government should work with the provincial and territorial leaders to build a pan-Canadian accord on post-secondary education.
Now is the time to build such an accord, as provincial and territorial leaders appear keen to do so. At the completion of the Council of the Federation's stakeholders summit in Ottawa in February, premiers agreed that post-secondary education is a national issue that requires a national will to address it.
The federal government should also demonstrate leadership in working with provinces and territories to review Canada's student financial aid system. The current system is doing a poor job of making education more affordable and accessible. In order for Canada to have a highly educated and skilled workforce, we cannot simply rely on educating those who traditionally go on to post-secondary. Those from low-income families and aboriginal Canadians are significantly underrepresented in our colleges and universities. This must change.
CASA is calling on the government to develop a plan to improve the participation of underrepresented students, especially aboriginal peoples, in post-secondary education. We need a student financial aid system that helps those who need it most. The problem with our current system is that there's a serious lack of cohesion and vision. The biggest expenditure on student financial aid in Canada is not loans or grants but untargeted initiatives such as tax credits and savings programs that are available to anyone, regardless of income or need.
The second role the federal government must fulfil in order to improve Canada's post-secondary system is increasing its fiscal contributions to the system. Our post-secondary system has been suffering from underfunding for over a decade. The province has been forced to cut support to colleges and universities. In turn, institutions have had to raise tuition, increase class sizes, and hold off on urgent maintenance. Tuition is now at an average of nearly $5,000, and the average student debt is over $35,000 when accounting for interest.
The government should make good on its election promise to create a dedicated Canada education and training transfer. In order to restore funding to the levels they were before the major cuts in the mid-1990s, CASA believes that such a dedicated transfer should be set at a minimum of $4 billion.
The federal government must also invest in targeted assistance to students who are underrepresented in our universities and colleges. CASA is calling on the government to expand the Canada access grant for students from low-income families. The current grant should provide assistance for all years of study instead of only the first year, and it should cover the realistic cost of the total cost of education.
Finally, for the past eight years, the Canada Millennium Scholarship Foundation has played an important role in improving the accessibility and affordability of post-secondary education. As you will hear before the conclusion of these committee sessions, the diverging positions of the many groups testifying will make it clear that the foundation is not without some controversy. Rest assured that the over 90,000 bursaries and $350 million that the foundation provides to students in high need each year is desperately needed in the system. Students of Canada worry that this assistance will disappear when the mandate of the foundation expires in 2009. CASA is calling on the federal government to renew the mandate of the foundation.
Canadians expect and deserve a high-quality post-secondary education system that allows all to have the opportunity to realize their full potential.
The Canadian Alliance of Student Associations believes that our suggestions today for the federal budget are reasonable and will help make this a reality.
Thank you, Mr. Chair, and good evening. Thank you for the opportunity to present to the committee tonight.
The HCCC represents the major health charities in Canada, in key areas that include research, information, surveillance, community and patient support, and public policy.
At some point in their lives, Canadians will bear extraordinary costs to maintain their health and well-being, usually as a result of what is commonly categorized as acute illness, chronic illness, and/or disability. The Income Tax Act needs to be reviewed in terms of its language with regard to how it delivers tax relief, to determine whether it is inclusive enough of those suffering from acute or chronic disease or disability. We have a number of recommendations for your consideration.
We first recommend that the qualifying expenses list within the disability supports deduction be replaced with a general statement of principle--namely, that eligible medical expenses would include all reasonable amounts paid for goods and services that are certified as medically necessary by a qualified medical practitioner. The narrow definition of disability supports devices in section 64 should be expanded. The current list is outdated. It can't keep up with new technologies, and some equipment on the current list is no longer being used, while new and more modern equipment is not on the list. We'd also like the committee to consider treating the medical expense tax credit as a deduction as opposed to a credit, to create fairness for those suffering from chronic illnesses.
Our second recommendation is that a taxpayer should be able to pay his or her spouse, common-law partner, or some other party who is not necessarily in the business of supplying attendant care. If the spouse leaves a paid position to care for his or her spouse, he or she should be given equal treatment under the act in order to provide that care. This change would enable Canadians to obtain help and assist them in being able to work and lead productive lives while coping with their diseases. Ultimately this would reduce the burden to the health system.
Third, we need more fairness in the administration of the credit for mental or physical impairment--formerly known as the disability tax credit--since current fairness provisions are extended only to certain types of assessments. We're asking to extend it so that taxpayers can informally challenge a ruling by a CRA assessor on their disability or the requirement for special devices. This would help taxpayers, or the charities that often assist them, make their case with an advisory committee. It would extend the fairness process to the disabled, who can be subject to arbitrary rulings under the current system.
We would also like the federal government to include national health charities in the federal indirect costs of research program. The current exclusion creates an unlevel playing field for the charities that invest in research. The program unfairly penalizes national health charities and the millions of Canadians who donate to them every year. It impedes charities' ability to fund research effectively by drawing an unfair distinction between funding from government and funding from national health charities. The charities rely on the prominent research and researchers that they fund to raise the charitable dollars needed to make health discoveries and generate cures. Donors rightfully expect that their donations will be put directly towards life-saving research, not to university indirect costs. Should the charities have to pay indirect costs from donor dollars, Canadians would effectively be double-taxed, once through their tax dollars and a second time through their donations to charities.
We'd like the government to also consider investing in a publicly accessible clinical trials registry. Registration of clinical trials promotes greater accountability, transparency, and research excellence. The cost to create a Canadian clinical trials registry would be prohibitive, but international registries currently do exist. We're recommending that all clinical trials be registered through an international registry that meets the WHO requirements.
We would like to recommend that the government implement the recommendations of the Senate Standing Committee on Banking, Trade and Commerce in their special study on charitable giving, completed in the 38th Parliament. Four areas have not been implemented. First, the requirement for charities to issue charitable receipts for donations of less than $250 should be unlimited, unless specifically requested by the donor. Second, eliminate the requirement for taxpayers to file charitable receipts if the charitable donations they are claiming do not exceed $250. Third, allow donors to make charitable contributions for 60 days beyond the end of the calendar year for inclusion in that year's income tax return. And fourth, allow donors to carry back unused charitable receipts for three years and to carry forward unused charitable receipts indefinitely.
We'd also like to recommend that the government institute a fair and equitable grants and contributions program for the voluntary sector. We supported Imagine Canada's submission to the blue ribbon panel, entitled “Investing in Citizens and Communities”, and we'd like you to consider the recommendations outlined in that submission.
Thank you for your time. We've submitted a full brief for your review. If you have any questions, we'd be happy to answer them.
Thank you to all the witnesses.
I've got a few questions, so if it's at all possible to be brief, I would appreciate that.
Mr. White, I wasn't aware that the museum cuts were announced yesterday. Of course, there was quite a list of cuts, and I didn't get to all of them, I guess, but can you tell me how much notice you got of these cuts?
Okay, thank you. And good luck with that.
CASA gentlemen, it's nice to see you again. As usual, you've come well prepared, with some recommendations.
I recall meeting with you in my capacity as chair of our caucus on post-secondary education last year. I think the schedule was that CASA was meeting the week the economic update came down, and you came to see me with four recommendations. Two of them had really already been included in the economic update, and I think needs-based grants was one and a review of the student loans was another.
I want to go back, because the package that came in and was introduced in the fall, unfortunately, did not get adopted before the election. It was a pretty massive investment, specifically in students assisted in a needs-based system, for low-income Canadians, persons with disabilities, and aboriginal Canadians. It had followed on Bill , which was much ballyhooed, but which in fact had a much lower investment in access, though it was specifically designed for access, as I recall. What has happened to that?
I couldn't have said that better myself. That's well said.
Ms. Freiheit, the HCCC, which I think is a great organization, has done a lot to bring the health charities together so that they can speak with a common voice to our government. I've spent a lot of time in the last number of years with the Heart and Stroke Foundation.
On the issue of indirect costs, I agree with you. In fact, it's almost that we have invested so much in research at the university level, whereas years ago we couldn't get grants from the MRC; there wasn't enough money federally. Now, in fact, the Heart and Stroke Foundation and others are having challenging times getting research, because it's going to universities, which get the 22%, and maybe eventually 40%, in indirect costs. I'd look for anything else you want to say on that.
The other thing is that you espouse a policy that I absolutely support, which is making donations to charitable organizations equal to those of political organizations. I think that's great.
We are just as surprised as you are, Mr. McAvity and Mr. White, with the government decision to cut back Canadian museums' budgets. Before me, I have the Conservative Party of Canada's answers to a questionnaire that you sent them, a questionnaire that was probably sent to all other parties as well, last December during the electoral campaign.
The third question reads as follows:
|3. Do you, along with your party, support investing an additional $75 million per year as needed to implement these recommendations?
The Conservative Party answered the following:
|The Conservative Party of Canada supports stable and long term funding for Canadian museums. We believe that it is important to ensure continuity in programming and that stable and predictable funding is necessary to this effect.
Allow me to emphasize the words “stable and predictable”. Further along, it reads:
|Canadian museums [...] are increasingly crippled by underfunding [...] rest assured that a Conservative government would make generous funding of Canadian museums a priority.
When you compare the answers given here by the Conservative Party during the election with the announcement of budget cutbacks made yesterday, what is your reaction? I would like you to talk to us about the impact of these cutbacks. We are talking about a reduction of $4,630,000 over two years, which represents 25% this year and another 25% next year. Given that six months of this fiscal year have already lapsed, the effect of these cutbacks will be devastating.
Another reaction our community has had is that we seem to be grouped with a number of organizations that are now considered to be wasteful, inefficient, and not delivering appropriate services. That, to us, is a complete surprise.
The general public certainly thinks, and I think most people believe, that museums—like libraries, like universities, like other public institutions—are important and fundamental to a well-civilized society. The kind of damage that can be done this way can have a long-term systemic impact on our fundraising ability as well.
I sincerely hope that label does not apply; I do not think it applies. I know the museum community. I've worked in this community for close to 30 years; I know virtually all the institutions in Canada and the people who work in them. These are good, honest people who work hard for very low salaries because they're committed to preserving our history, to sharing our history and our values to people in the communities and people in the world.
Quite simply, what will be happening is instead of having exhibit openings, we're going to have exhibit closings. Museums are going to close. We've already seen that. In Quebec City, le Musée d’art Inuit Brousseau closed last year. It was a terrific museum dedicated to Inuit art. President Chirac visited it when he was in Quebec City. We've seen this with other small communities across Canada.
We're going to see staff dwindling. We believe further cuts are coming in such areas as student employment. There is an excellent summer student employment program through museums, art galleries, art archives and libraries. We believe cuts are coming to that.
I think the bigger, longer-term question is really our commitment to our culture and our heritage. I think Canadians, and you as parliamentarians, need to ask that question. Is our culture, our heritage, important to us? If it is, at what price, and how do we finance it?
We believe our recommendations were well founded, were arrived at through wide consultation with our community, were widely accepted, and were for the most part very reasonable. We were not expecting the federal government to do everything. We see that we have a responsibility to be efficient and practical in what we do to raise attendance and raise our own revenues. Over 59 million visitors attend our museums each year or over half a million people who are card-carrying members of our institutions. These are very tangible results of success and of popularity. In one public opinion poll after another, 85% of people support the museums and want to see increased funding, and 65% of our international visitors visit our museums.
We are not one of the five big national aboriginal organizations, which are kind of recognized....
Certainly under the previous government you saw that recognition through their inclusion in the first ministers process, in which we were not included.
There are five, and they purport to be representative bodies, representing certain segments of the aboriginal population.
Frankly, we try to steer clear of that debate entirely and serve people in communities where the needs are. We are not affiliated with any of the five political organizations in any structured and organized way. We are a service delivery body, and we do not purport to represent anyone.
That said, we're beginning to work on some relationship-building with the existing national aboriginal bodies. We've signed a memorandum of understanding with the Assembly of First Nations, the political voice for first nations citizens in this country. We're working on similar relationships with the Métis National Council, which is a representative body for Métis peoples, and the Inuit Tapiriit Kanatami, the Inuit organization.
But formally we are distinct organizations and don't purport to represent anyone. We're too busy serving people on the ground, sir.
Well, I think what has been hindering us is the relationship, frankly, we've had with the federal government and federal departments. Any time any aboriginal program or service delivery issue is contemplated, too often the response is, “Let's talk to the political people, to the exclusion of all others, about how we address the service needs of people in communities”.
For instance, the Kelowna accord on education talked about the need to increase standards to provincial levels, to have first nations school boards in urban areas, and to have Métis bursaries, all of which we naturally agree with. We would have argued the need for alternative schools in urban areas, for expanding the head start programs, and for finding a way to have young, single aboriginal women get back into school and to finish. They're just different approaches that we would have taken to the issue.
So have the representative bodies prevented us from actually accessing funding? Not formally, but I think the federal government's response to the aboriginal questions and its ignoring of the urban aboriginal challenge, broadly, has certainly been a huge barrier for us as an organization, sir.
Yes. It never provided operating support, much to our chagrin, but it did provide valuable project support.
I have a list here of grants that were made in the past year. I haven't actually calculated all of this, but on average, these are grants of $30,000, $40,000, to places such as the Nova Scotia Museum, various first nations groups in Nunavut, the Art Gallery of Hamilton, the Red Lake District Museum and Archives, Musée d'art de Joliette, and so on.
Thank you for the other recommendations. I think they're quite specific.
Let me go back to my friends at CASA for just a second.
I think we've covered a good discussion of the real need in Canada. This whole consultation that we're doing as a committee is really about competitiveness and taking advantage of the opportunities that Canada has in a rapidly changing world, and certainly maximizing our human potential has to be number one among that.
On the whole issue of post-secondary education--and I include community colleges, obviously--skills upgrading, training, and apprenticeships, there is a lot of work we need to do. I think the number one need is a needs-based system.
Beyond that, though, you mentioned the Canada millennium scholarship, and you indicated that not everybody would necessarily agree. I know there is another student organization in Canada that would basically say scrap it, but you have some reasoned points of view here and I appreciate that.
I'd like to talk about the whole area of student financing, over and above needs-based grants. We have student loans. We have an amalgam of programs across the country, provincial and federal. Do you have a sense of what we should do with student financing? Is there something innovative that you guys can recommend we do in handling student loans, and specifically the ever-increasing burden of student debt?
I want to get one other point in.
I think what you're advocating is an entire overhaul of student financing, to bring it together and make it make sense.
I suspect that we as MPs have all met people in our communities, young people who may have some kind of disability, who have gone to high school and graduated with a real sense of momentum and worked with their classmates, and all of a sudden it's like they fall off a cliff. As a nation, we do a lousy job, in my view, regardless of government, of taking those people and allowing them to reach their maximum capacity.
Have you any thoughts as to what we might do to help persons with disabilities take their rightful place in Canada?
I have kept my last question for Mr. Ouellette from the Canadian Alliance of Students Association. I was involved myself for a long time in some associations, not so long ago, as you can probably guess. I remember that at that time we were hearing about the Millennium Scholarships. Quebec had a good bursary system. So we asked for that money to be simply given to the Quebec government so that it could improve the existing system, rather than having another layer at the national level that would have different objectives.
If I understand your proposal correctly, you still want to see the federal government involved in improving scholarships and therefore involved in the education field.
Do you agree with the Quebec student movement, which is calling instead for a special status? If the rest of Canada wants to do things differently, it can choose to do so, but people are asking that the federal government not interfere with what is being done right now in Quebec, and that the money be given to the Quebec program.
One of the things that perhaps would help in terms of clarification, both to Mr. White and Mr. McAvity, is the point that the announcement that was made yesterday would not in fact affect smaller museums. It was more focused on the larger museums. In fact, smaller museums don't even fall under the funding program that was cut yesterday. I wanted to follow up on Mr. Turner's comments. In fact, there was a small announcement today of support for a museum in the north. I wanted to make you aware of that and perhaps do a little bit of follow-up over the next few days, if necessary.
I also want to follow up with both Mr. Ouellette and Mr. White. I have a university in my municipality. In fact, I think I'm developing a pretty good relationship with the student union there, which may not have occurred in the past, and I want to continue to do that.
I'm not sure if you guys have thought about this, but one of the questions that comes up--I know this is a broader point--is, where does our responsibility for students, or all of us who are going to attend university, start and where does the government's responsibility end?
There are two ways here. One is to simply extend what CPP is already doing, where the government simply allows other pension administrators.... In my case, for example, when I originally asked the Ontario Teachers’ Pension Plan Board whether they could split my pension--I was sort of a guinea pig for the RTO--they told me exactly all the laws, provincial and federal, especially in the Income Tax Act, against attribution rules, mainly, that would prevent them from doing this.
So that is one way, that the pension administrator just simply sends separate cheques to spouses, as the CPP is doing now. That's not really favoured by a lot of advocates, because we would foresee a backlash from small pension administrators, small companies, because of the paperwork involved and so on.
The other way, which seems to be more favoured, is to simply put a few extra lines into the income tax return, allowing spouses to simply transfer, from one to the other, whatever income is necessary to equalize their incomes.