Thank you, Mr. Chairman. As you mentioned, I represent the Canadian Fertilizer Institute, which is my employer. The Business Tax Reform Coalition, on behalf of which I am speaking today, includes the Canadian Chemical Producers' Association, the Canadian Plastics Industry Association, the Canadian Steel Producers Association, le Conseil du patronat du Québec, the Forest Products Association of Canada, the Information Technology Association of Canada, the Propane Gas Association of Canada, the Railway Association of Canada, the Rubber Association of Canada, the Mining Association of Canada, and the Canadian Petroleum Products Institute.
These industries represent over $266 billion of manufacturing production and over $206 billion of exports, as well as the direct employment of 1.6 million Canadians.
As industry associations, we are pleased to come before the finance committee to advocate a number of fiscal measures that we believe will help improve our broad competitiveness and our ability to employ Canadians into the 21st century to sustain our standard of living.
I'd first like to recognize--and I think applaud--something that we picked up on the website this morning. That was the first report of the Standing Committee on Finance. It endorses the tax measures and fiscal measures proposed by the industry committee last year.
Our priority was to talk to you today about a couple of those fiscal measures. Given the continued economic challenges faced by Canadian manufacturing and exporting sectors, we believe the committee's focus on taxation to ensure productivity and prosperity is very timely.
When we spoke to you last year, the industry committee was just starting their study on the manufacturing sector, and it identified three key challenges: the high Canadian dollar, sustained higher energy prices relative to the rest of the world, and intense competition from emerging economies in China and India.
As you know, these challenges persist, and not a day goes by without the mention of the deepening crisis in the manufacturing sector. While these factors are largely external, they challenge industry and government to focus internally on measures to adjust to these forces and allow Canadians to compete in the global marketplace.
Capital is mobile, and the production chains are global. Canada needs to compete for new investment to improve productivity and environmental performance.
When we submitted our brief this August, we identified two key priorities: extend by at least a further five years the new accelerated capital cost allowance for machinery and equipment, and, as a longer-term priority, schedule the federal corporate tax rate down to 15% to open up a clearer Canadian advantage.
The Government of Canada has already acted on the second item, so much has been done.
Federally, corporate taxation is becoming more competitive, and there is greater harmonization with provinces as they match or respond to the federal initiatives on capital tax and income taxes.
The federal government has delivered in the economic statement that was just released to the public. Looking back on the last budget, the federal leadership on capital tax limitation promoted the Ontario and Quebec governments to respond similarly.
The accelerated capital cost allowance measure is extremely important as it dramatically improves cashflow at the front end of a project. We commend the industry committee and the government for taking such a positive step last year to implement it on an interim two-year basis. It demonstrates that the importance of the manufacturing sector is recognized.
However, the point we need to make today is that the current timeframe is too limited to be of use. My colleague Fiona Cook with the Chemical Producers' Association has an example about the significance of the investment timeline to Canadian industry. She would be pleased to come and talk to the committee about it today, if questions permit. She is sitting behind me.
To be effective, this measure needs to be extended so that it aligns with the timeframe of large-scale projects, which can take up to five years from regulatory approval to actually putting machinery in place. I'm not just talking about mega-projects like the oil sands. I'm talking about plans that would take place in my industry and other manufacturing industries. The fact that many investments being contemplated today fall outside the current two-year timeframe means that many in the Canadian industry cannot take advantage of this.
In conclusion, the coalition firmly believes that an accelerated CCA, with a reasonable timeframe, will encourage new investment in the best available technologies, thereby improving productivity, global competitiveness, and environmental performance.
Federal leadership here will deliver additional benefits, as the provinces are likely to match any federal changes.
Thank you, Mr. Chairman.
First of all, I would like to thank the finance committee members for inviting our association to appear today. I understand you received over 100 requests for appearances. We are pleased to be here to share our recommendations for fiscal measures that can improve Canada's productivity.
As you know, Rx & D is the national organization representing more than 50 research-based pharmaceutical companies in Canada and the 20,000 men and women who work for them. Averaging more than $1 billion a year in R & D investments, we are one of the most R & D-intensive industries in Canada, second only to the telecommunications sector.
As identified in Budget 2007 and in Advantage Canada documents, it is important to highlight that we were encouraged that the current government, following in the steps of the previous governments, recognizes the vital importance of science and technology research and innovation to the long-term growth and prosperity of our country's economy.
In this spirit, Rx&D would like to present two recommendations to the finance committee today. The first would be improvements related to the scientific research and experimental design tax credit.
First, we believe that it is very important to modernize and improve the Scientific Research and Experimental Development (SRED) Tax Incentive Program.
This SR and ED tax credit is a vital component of the overall investment climate for business in Canada. With targeted modifications, it could enrich this climate and provide valuable advantages in the crucial effort to stay ahead of current and future international competitors.
To this end, we recommend that the government broaden the definition of eligible SR and ED tax credits to include “research in the social sciences” so that it is better harmonized with the OECD definition. The current definition fails to recognize the integral role played by social sciences research in the application of health research carried out in Canada.
In a practical sense, if you have something that is happening in the lab and you're not sure it's going to work at the community level, I think that's a problem. We would like to see the definition in Canada expanded so we can make sure that what we're doing in a clinical setting will have greater application at the community level.
We'd also like to make the full amount of the SR and ED tax credit refundable for all biopharmaceutical start-ups, whether they're Canadian-controlled private corporations or not.
I trust that the committee will also hear from other stakeholders who provide recommendations that follow in the same line.
We know that research and development, particularly in the life sciences, is a global enterprise and that a number of multinational companies located in Canada are spending the billion dollars they spend every year on health research and development.
So that we can encourage a greater amount of foreign direct investment to this country, we suggest that by expanding the eligibility of the SR and ED tax credit to both Canadian-controlled private corporations and non-Canadian-controlled private corporations we would actually see an increase in the level of R and D conducted in this country and therefore an increase in productivity in the economy.
We also want to increase the annual expenditure limit to $10 million, from the current limit of $2 million that was established over 20 years ago.
The incentive that gave Canada a global edge on the SR and ED program has become dated. We strongly believe that Canada can make immediate changes to the credit that will benefit all industries and make a major contribution to the goal of fostering a more innovative and productive economy.
Our second recommendation supports the recommendations made by the Auditor General in 2006 regarding Health Canada. We recommend that funding to Health Canada remain stable and predictable considering the ever-increasing pressures the department is experiencing and in the North American smart regulations context.
It should be noted that Health Canada has made improvements regarding drug approvals and it has helped the department move closer to internationally competitive performance targets. Without a sustainable, long-term funding model, however, Health Canada's ability to maintain high-quality, timely reviews will be compromised.
R and D in Canada, as in Europe, has stagnated in recent years, while emerging economies account for an increasing share of global R and D activity. While Canada's knowledge-based economy has a number of strengths to draw upon, our ability to translate these strengths into investments that bring tangible benefits to Canadians depends greatly on an efficient regulatory system and the business climate in which we operate.
As you develop your recommendations, we ask you to consider how they can support the policy objectives in the federal Science and Technology Framework and in Health Canada's Blueprint for Renewal.
We strongly believe that political leaders have made important strides in unleashing R and D in Canada, and we would like to see this continued with targeted fiscal measures that will help Canada increase its ability to attract the over $100 billion in life sciences investment that takes place in the world today.
We feel that what we are proposing with regard to the SR and ED tax credit will help businesses, large and small, and not only businesses within the innovative pharmaceutical industry but businesses that conduct intensive R and D activities, and it will also help Canada and Canadians become more healthy and prosperous, from both an economic and a social point of view. These recommendations are just one component of creating a stable and predictable operating environment for business in Canada and will also help attract more business to Canada.
Thank you, Mr. Chairman.
We would like to thank honourable members for giving us an opportunity today to present the recommendations of the Conseil national des cycles supérieurs of the Fédération étudiante universitaire du Québec regarding the government's budget for 2008-2009.
First of all, the CNCS-FEUQ is a semi-autonomous component of the Fédération étudiante universitaire du Québec, which represents 30,000 graduate students in Quebec and defends and promotes their interests to government and universities.
We completely share the objective of the Standing Committee on Finance to guarantee and maintain Canada's prosperity and economic growth. That is why we have two main recommendations: first of all, we think the 2008-2009 budget should increase federal transfers for post-secondary education. We also think that funding for university research should be increased.
We would like to establish the fact that in our view the tax system is not a good way of guaranteeing Canadian growth and prosperity.
In our opinion, the current tax system is one of the most competitive in the world, and this is not where the Canadian government could take action to guarantee our future growth. For example, current surpluses show that we definitely have the resources required to invest in post-secondary education. And that is what we are recommending to you today.
Although efforts have been made in recent years in past budgets to correct the fiscal imbalance, which still exists, in our opinion, there is still a $3 billion shortfall required by the provinces to meet their post-secondary education needs. We think this investment should be made this year, as soon as possible, so that we do not lose our advantage compared to the other OECD countries.
We also recognize that some worthy efforts have been made in past budgets regarding our second priority—increasing funding for university research. However, there are still some less successful areas, such as funding for the overhead costs of research and funding for social sciences and humanities research.
Funding for social sciences and humanities research at the federal level is provided by the Social Sciences and Humanities Research Council. We think this council should get between 20% and 25% of the overall funding to the three federal granting councils.
The humanities and social sciences are traditionally underfunded in Canada and elsewhere. And, as my colleague mentioned earlier, this area is essential to the prosperity and well-being of Canadians.
As regards funding the overhead costs of research, all the stakeholders agree that 65% of funding is required in order to avoid a negative impact on the funding of research infrastructure. The Canadian Foundation for Innovation, among others, would be responsible for any negative impact of this type.
We think that our current growth level makes it possible to invest massively in education without increasing the tax burden borne by Canadians. And although this growth is a very good thing, it is based on factors that are quite fragile and unsustainable, including raw materials, in particular. We have everything to gain by investing more in post-secondary education, because it is the key to sustainable growth in Canada.
In fact, of the top ten countries on the world human development index—an index developed by the UN, I believe—half have opted to keep university education free. This provides maximum accessibility to universities. Of the ten countries, only Canada and the United States have done the opposite—have decided to keep tuition fees very high. We think that increasing federal transfers could be helpful in paving the way to greater accessibility to post-secondary education.
In conclusion, I would like to remind you of our recommendations. We would like the federal government to increase its transfers for post-secondary education by at least $3 billion in the 2008-2009 budget.
We would also like funding for 65% of the overhead costs, as are requesting all the people involved in research in Quebec. We would also like the federal government to increase the percentage of funding that goes to the Social Sciences and Humanities Research Council of Canada from 20% to 25% of the entire funding package received by the three granting councils.
Thank you. I look forward to your questions.
Mr. Chairman, honourable committee members, thank you very much for inviting us to speak to you today.
The Green Budget Coalition brings together 19 of Canada's leading and most respected environmental and conservationist organizations, including groups such as Ducks Unlimited, Nature Canada, Pollution Probe, and the Pembina Institute.
Our primary role is to develop and promote strategic budgetary recommendations on behalf of the environmental community and to advance the integration of environmental values into federal fiscal policy.
We were very pleased that the 2007 budget made progress in all five of our priority recommendations and also on five of our nine ongoing recommendations, so we do want to thank each of you and your committee for the role you've played in helping make that happen.
I want to make four key points today. First is to emphasize the importance of harnessing the power of Canada's tax system to support Canada's environmental objective, and beyond that, to outline the Green Budget Coalition's three priority recommendations for the 2008 budget. One is on carbon pricing, one is on conserving Canada's treasured oceans and lands, and one is on renewing the Great Lakes and St. Lawrence River region, which is so important to us.
All of these are detailed in the document we sent to each of you a couple of weeks ago.
To answer the committee's question, the Green Budget Coalition believes the guiding criteria for designing Canada's tax system, beyond funding government programs, should be to harness the power of the incentives and disincentives created by the tax system to serve the federal government's environmental and human health objectives.
We have long depended upon environmental policy to clean up the environmental damage created by our economy, but this damage is exacerbated because market prices do not reflect the full costs of pollution and of depletion of our non-renewable resources.
To make both our economy and our tax system truly work for Canada and for Canadians, fiscal policy, such as taxes and other levies, should be progressively amended to ensure that market prices of goods and services tell the environmental truth. This should be done in two key ways: through greater levies on the extraction and production of non-renewable resources to reflect their true value; and through levies on pollution to reflect the damage caused to human and ecosystem health.
The first step in this direction, and the coalition's first recommendation for Budget 2008, would be to institute a carbon pricing system with a substantive and increasing price level, as Amy Taylor will be describing later.
The Green Budget Coalition also recommends the 2008 budget make two further key investments: take action to conserve Canada's treasured oceans and lands by implementing three existing strategies--establishing Canada's national system of marine protected areas by 2012 and implementing integrated oceans management plans for Canada's oceans; completing Canada's systems in national parks, national wildlife areas, and migratory bird sanctuaries, and ensuring their long-term protection; and improving incentives under the federal agricultural policy framework for protecting ecological goods and services and agricultural lands.
These plans together have been well developed and could collectively be implemented for about $1 billion over five years and $200 million a year after that.
We recommend building upon the government's efforts in the Great Lakes by investing in a comprehensive, long-term sustainability strategy to restore, protect, and enhance the Great Lakes and the St. Lawrence River region. This region includes one-quarter of Canada's population, creates one-third of Canada's economic output, and also releases 45% of Canada's air pollution.
Our priorities for investment include developing a shared basin-wide vision, upgrading water and waste water infrastructure, and cleaning up and delisting areas of concern and zone d'intervention prioritaire.
The federal funding for this could come substantially from the funding that has already been allocated to the Building Canada Fund and should be matched by provincial and municipal governments.
To conclude, I want to encourage you to focus your committee recommendations on shifting the tax system to provide further incentives to support Canada's environmental and human health objectives. And I urge you to recommend action on carbon pricing, on the conservation of oceans and lands, and in renewing the Great Lakes and St. Lawrence River region to build upon your actions in Budget 2007.
Thank you, Mr. Chair and honourable committee members. I work for AIM Trimark Investments, in the private sector, but I am here as a volunteer on behalf of the Investment Funds Institute of Canada, as chair of their tax working group. We represent approximately $700 billion of Canadians' investments, which they use for a variety of reasons, primarily retirement, and I am here today to spend a few minutes illustrating some of the issues that we feel should be a priority for the government when it comes to retirement planning. Given the enormous number of Canadians who will soon be reaching retirement age, we believe that retirement and planning for retirement is a huge priority for Canadians and should be for the government as well.
As you saw in our submission, we had a number of ideas. I really wanted to spend just a couple of minutes today highlighting four of those specific ideas and proposals that the government might wish to look at when preparing for its 2008 budget. I'll address very briefly the original promise by the Conservatives to eliminate the capital gains tax on a reinvestment within six months. I'll address the long-going discussion of the tax prepaid savings plans. I'll address the effect of GIS, guaranteed income supplement, clawbacks and a couple of ideas there, and finally, I'll just spend a moment on the recent pension splitting, which we are very happy to have, with a slight recommendation that we would make.
Very quickly, on the first one, as we all know, the government promised in January, in the run-up to the election, that if they were elected they would eliminate the capital gains tax on a reinvestment within six months. We've done a lot of work on that. We've worked with other groups like the C.D. Howe Institute on a number of ways that could be accomplished, minimizing tax costs to the government while still achieving the policy objective. There seems to be a myth that capital gains are only for the wealthy. We pulled some statistics, and they are sourced in our brief, that in fact over 55% of people claiming capital gains in Canada actually have income of under $50,000 a year. So this is not just for the wealthy; this is for widespread Canadians. What we're suggesting is, as opposed to putting in a specific program, maybe you'd like to revisit something like a lifetime gains exemption or an annual gains exemption that would achieve the objective of allowing Canadians to diversify their portfolios to achieve a better way of saving for retirement while minimizing the ultimate cost to the government.
The second area to touch on briefly is the GIS clawbacks. As you know, for low-income Canadians who receive the guaranteed income supplement, there is a disincentive to save, because when money is taken out of registered plans they are clawed back 50¢ on the dollar. There was a study a number of years ago that showed that low-income Canadians should not invest in RRSPs because they'd be better off collecting government benefits. The same problem is also escalated with the new dividend rules where you gross dividends up by 45%, enhancing a clawback. What we're recommending is that when it comes to dividends you only use actual dividends and that RRSP and RRIF withdrawals will not be included in the calculation of clawbacks, to encourage all Canadians to be able to save for retirement.
Finally, on the pension splitting, we're certainly very pleased with the legislation that was passed in June of this year to allow Canadians to income split, pension split, and that's a big move by the government in terms of policy. We would make one additional comment. Most Canadians do not have a registered pension plan. They save through RRSPs and RRIFs, and the problem is that of course with an RRSP or RRIF, the way the legislation is right now, to be able to split with a spouse or with a partner you've got to be at least 65 years old, whereas of course if you were part of a pension plan and you chose to take early retirement, let's say at age 55, you'd immediately be able to split that pension.
We've got a lot of concerns. People have written to us from all across Canada saying this is unfair and it is discriminatory, and it really favours people in defined benefit pension plans who could retire early and take advantage of the splitting and the pension credit. We would recommend that the government look into the possibility of perhaps lowering the age for all Canadians to age 55 to allow them to both pension split and get the pension credit, and not discriminate against people who don't have a defined benefit pension plan.
Those are just four of the ideas that are highlighted in our paper, ideas to consider for the upcoming 2008 federal budget. Thanks again.
Thank you, Mr. Chairman and members of the panel.
My name is Amy Taylor, and I'm a program director with the Pembina Institute. The Pembina Institute is pleased to have the opportunity to appear before you today, and I appreciate you accommodating my lack of presence in Ottawa in allowing me to join you via video conference.
I'm here to take the opportunity to recommend that the Government of Canada establish a price for greenhouse gas emissions of at least $30 per tonne of emissions in 2009 and at least $50 per tonne of emissions by the year 2020. This price should be applied broadly in the Canadian economy through either a tax or a cap and trade system, or some combination of the two.
The revenue raised from a tax or auctioning of permits at least initially should be directed mainly to achieve further reductions in greenhouse gas emissions. Some revenue should also be used to offset disproportionate impacts on low-income Canadians.
In early 2007, a report of the world's most authoritative climate science body, the Intergovernmental Panel on Climate Change, concluded that the warming of the climate system is unequivocal. It is mainly due to human activities. A second IPCC report projected catastrophic consequences if GHG emissions are allowed to continue unchecked, while a third report concluded that deep reductions in greenhouse gas emissions are technically feasible, affordable, and urgent.
As a developed country with one of the highest per capita greenhouse gas emission rates in the world, Canada must be a leader in reducing greenhouse gas emissions, both quickly and deeply. Pembina believes that to play a responsible part in the global effort to prevent dangerous climate change, the Government of Canada must put a price on carbon. Fiscal instruments and market-based mechanisms such as taxes and emissions trading help meet environmental objectives at the lowest overall cost to the economy. They provide flexibility and create economic incentives to change consumer and industry behaviour and choices.
The government could choose to put a price on carbon through either a cap and trade system, a carbon tax, or some combination of these two. From an environmental perspective, the most appealing feature of a cap and trade system is that it can provide certainty of the environmental outcome it will produce. The system starts by placing a limit on greenhouse gas emissions, and companies are forced to deliver those reductions, whether through improved performance on-site, by purchasing credits, or by purchasing credits in the market.
A carbon tax cannot offer certainty about the volume of reductions it will achieve, but unlike a cap and trade system, a carbon price or a carbon tax does provide price certainty. A carbon tax of $30 per tonne, for example, would create a strong economic incentive for companies to undertake emission reductions that cost less than $30 per tonne, because by doing so, they avoid paying the tax. If a carbon tax is stringent enough, it can in fact deliver greenhouse gas reductions just as effectively as a cap and trade system.
Whatever the policy mechanism, there is growing support for carbon pricing in Canada. The Province of Quebec recently introduced a carbon tax on energy producers, distributors, and refiners. As of July 2007, heavy industry in Alberta is subject to a greenhouse gas regulation that allows companies to meet their targets by paying a $15-per-tonne fee. The federal government has also announced plans for a regulation on heavy industry nationwide that would take effect in 2010, again with a $15-per-tonne compliance option.
A well-designed carbon pricing scheme would offer a number of benefits to Canadians. These benefits include producing significant, sustained greenhouse gas emission reductions to help protect Canadians from dangerous climate change and to fulfill Canada's international treaty obligations; creating a competitive advantage for clean industrial production, with associated job and export potential; raising substantial revenue that could be used to fund further emission reductions, protect vulnerable Canadians, and potentially reduce existing taxes; and finally, improving our air quality and reducing risk to human health.
Thank you very much for your time and consideration.
Thank you, Mr. Chairman.
I might as well ask the question of the last presenter. I want to thank all the presenters for coming forward. It's tough for us to ask questions of everybody.
Ms. Taylor, this carbon tax, again, is something that was suggested years ago, and recently the Liberal Party came out with something new, which is a carbon investment type of an idea. This carbon tax just doesn't flow. It's an idea of two or three years ago. Basically, what's happening is we're not necessarily penalizing people who are polluting, but we're actually encouraging them, saying, “Go ahead, keep polluting and just pay your taxes”, or pay a fee, or pay, in this case, the carbon tax. How is this going to solve our problem with the people or industries that are polluting?
I thank you all for being here with us today.
My first question is for Mr. Lalande. I am pleased to see that, in your statement, you point out that the fiscal imbalance has not yet been settled, which is preventing provinces from adequately funding education.
From the outset, the Bloc Québécois does not think that the federal government should deal with education. We agree with you when you say that our universities are underfunded and that there needs to be a massive transfer of funds to the provinces for post-secondary education. At the least, transfers have to be brought back up to levels seen in 1995, when the Liberal government made its drastic cuts.
In our view, it is up to Quebeckers and their government to determine where they will invest that money.
Despite that, could you tell us how our universities will be affected by the underfunding and what the consequences will be on tuition fees, given that there are many people in Quebec who want to end the tuition freeze? What is the impact on all the related costs charged by universities?
With regard to the quantitative measures taken as a result of the underfunding of our universities, I can tell you that the number of professors has remained unchanged since 1994, whereas the student population has increased by about one-third. For about the same number of professors, there are 33% more students.
There is also the issue of accumulated deferred maintenance. Universities are not adequately maintaining their buildings and are covering that up in their budgets, year after year. Accumulated deferred maintenance is estimated at approximately $400 million, an amount that is not included in the Government of Quebec's reporting environment. That shortfall or deficit is an added liability.
Because of those pressures, universities are increasingly inclined to overtax or overcharge their students and make them pay, in addition to tuition fees, what are called incidental fees, i.e., fees related to university campus life. In some institutions, incidental fees exceed even tuition fees. All those factors have a negative effect, especially because some institutions charge higher fees than others, which creates an imbalance among universities.
Excuse my poor French. I'll try to answer you in English.
Absolutely. In fact, I think we can show that, like deferred income tax, it's only on new investment, so you're not losing any tax. It's a deferral from one year to another.
If it encourages investment, which is what we are strongly saying it will do, then you actually are growing the pool of taxpayers who will pay tax in the future, which will result in improved productivity in the economy, growth in the economy, more jobs in the economy, and more tax revenue in the economy.
I just want to follow up with Mr. Larson on the discussion around broad-based tax cuts versus trying to be too specific in certain areas and not having an overall impact on the economy.
I noted when you came last year that we certainly appreciated the presentation that was made, and really, I guess, took it to heart, and not only to heart, but took it to the finance minister, and he did move forward. Actually, I think you recommended a schedule to reduce the federal corporate tax rate to 17%, and we actually outdid you by a bit and brought it down to 15% by 2012. So never let it be said we can't do more.
I know we talked a bit beforehand about the whole component of research and how important that is and whether that research, certainly from a science and technology perspective, plays itself out in our country because of the opportunities it presents for growth and enhancement, certainly from a manufacturing and from a research perspective, from an industry perspective.
I wonder if you could comment a bit on it. It does sit within the context of the industry report.
Never let it be said that I would complain about you exceeding our request on corporate tax rates. We recognize very strongly the efforts you have made to improve our global competitiveness.
The challenge with broad versus specific tax measures, a broad CCA acceleration versus something more targeted, always runs into the problem of how you define the classes. It's also something that biases potential investment one way or the other. The government's long-stated intention has been to be neutral in terms of favouring one form of investment over another. I am not a tax expert, and I would certainly refer to experts in the field in terms of discussing how you define that.
The challenge with research is how to foster research that encourages investment, because while the research is very useful and very beneficial to academic knowledge and the growth of knowledge, in terms of looking at it as a tax expenditure that the economy is making, if all it does is generate research, then it's not necessarily giving you as big a payback as research that fosters investment. Again, I am not an expert in research investment, and we can refer that to others in our industries.
We didn't put that back in this year, but the previous year we recommended 73. You met us halfway at 71. The reception was very appreciated by the industry, certainly.
We would continue, obviously, to request a further delay to 73. The real reason for that is because, as you know, Canadians are living longer. They are working longer and they need the money to last longer. The opposition from a lot of our constituents and investors was that they were forced to take the money out and pay tax on it before they actually had to spend the money. We found that by moving the age from 69 to 71, they were able to delay the withdrawals.
Someone who is 71 could easily live another 15 years or so. Therefore, instead of forcing them to take the money out and pay tax prematurely, before they spend it, we would again be in favour of increasing that even further. I think 71 is only restoring us to where we were a decade ago, and 73, of course, would be even more helpful.
My question is for Mr. Larson.
At the start of your presentation, you thanked the Standing Committee on Industry, Science and Technology and the Standing Committee on Finance for having adopted the motions calling on the government to implement the tax measures set out in the unanimous report by the Standing Committee on Industry, Science and Technology. It is always nice to receive thanks.
Yesterday, we had a debate on the issue, and the Conservatives abstained from voting—they did not vote against the motion—for a single reason: the English version contained the word “promptly”, whereas the French version stated le plus rapidement possible.
I would like you to tell us why it is urgent to announce such measures in order to help the manufacturing industry, in all sectors including your own, keep up with the competition.
My question is for Mr. Lalande.
I'm actually quite shocked to see that your last recommendation would be to cease investing in the Canada Foundation for Innovation and instead invest those sums in its funding agencies. With this government, which seems to use research as a swear word, and particularly social science research, I don't quite understand why you would be stealing from your biomedical colleagues, instead of just asking for more money for social science research.
I guess as I go across the country and see the number of scientists who have come back to Canada because of the equipment and laboratories, and whatever they've been able to be obtain, through CFI, I wonder why you would sabotage a research colleague in a report to the finance committee. It makes no sense to me at all.
Are you doing this in consultation with the people who receive money from CIHR and NSERC? Just because it doesn't tend to work for social science research, why would you then be destroying this thing that has actually been a renaissance for scientific research in this country?
Mr. Van Iterson, I appreciate your presentation. I actually had some of your members in my office a week and a half ago, and we had a very good conversation. There are three sections to it, if I recall correctly, and one of them is the Great Lakes. I have been actively working on getting funding for Randall Reef, which is a hot spot in the Great Lakes. Fortunately, the Minister of the Environment came out, and we put federal money of $30 million on the table to clean it up. I'm quite happy with that, and I'm happy to work on those particular issues.
I wouldn't mind some comments from your organization's perspective on the recent announcements we've had in terms of creating new parkland in this country. We've done some in the Great Lakes, for example, and we've done some in northern Canada recently. I didn't hear anything back from your organization at all on it, and I would like to know, from any press release or anything you or your organization has done, how you feel about the work we've done in this area.
I am the vice-president of the Canadian School Boards Association and past-president of the Ontario Public School Boards' Association.
The Canadian School Boards Association represents school boards across the country. Our members are the provincial school associations that provide direct support to boards that in turn govern the range and quality of educational services to Canada's public schools. Elected trustees represent Canadian communities and Canadian taxpayers, including the 70% of the population who do not have children in school.
The Canadian School Boards Association is non-partisan. Our interest is, first and foremost, the excellence of our education system. We believe you share that goal. However, we are not asking you to intervene in the education system. Rather, there are areas of federal jurisdiction that do have an impact on school boards across Canada. Given that you have asked people coming before the committee to focus on the tax system, we shall make recommendations that ensure school boards can maximize revenues that provincial taxpayers provide to support education.
There are three areas that I would like to address today: the clawback inherent in the GST on school board purchases; a recommendation to encourage green spending; and a general proposal to encourage aboriginal students to complete high school and post-secondary education.
We were disappointed that the federal government did not adopt the recommendation of the finance committee last year to fully rebate the GST to school boards. The GST is a federal government tax on moneys that school boards receive as a consequence of taxation—namely, provincial government grants. It also imposes a complicated administrative system that forces school boards to engage consultant experts to help them comply with regulations. Clawbacks on publicly funded schools do not make sense.
Our second recommendation is to encourage green spending. School boards nationally spend just under $3 billion annually on capital expenditures. It's fair to say that capital expenditures are fairly consistent over time. If those expenditures were subject to tax incentives based on their environmental impact, the federal government could be a powerful influence.
We refer you to the “Leadership in Energy and Environmental Design”, or LEED, green building system, a benchmark for the design, construction, and operation of high-performance, environmentally responsible buildings. LEED Canada tailors the systems for our environment. As yet, there is no LEED for schools like there is in the U.S.
Given that the suppliers of LEED products and designs in the U.S. are also operating in Canada, it would be fairly easy to implement in Canadian schools. We could even improve on it by adding health-promotion design. We believe that the annual amount of school board expenditures would be a powerful demand-based instigator for a green economy and would spill over into other sectors.
We would also like the federal government to explore an incentive for aboriginal graduates, similar to what Saskatchewan offers students in the province. Saskatchewan has introduced a program offering elimination of income tax for a set period of time for aboriginal graduates. While it is intended to encourage recently graduated young people to remain in the province, we believe it can be adapted to encourage aboriginal students across Canada to complete their schooling.
I believe these recommendations are doable and sensible, and ask that you consider them in your deliberations.
I thank you on behalf of the thousands of elected trustees who are entrusted by their communities with the job of educating Canada's most valuable natural resource: our children.
Thank you very much, Mr. Chair, and good afternoon to the committee members. Thank you very much for this opportunity to present today and to participate.
Our association represents a full range of organizations that make up the financial services sector, from banks and insurance companies to investment firms and mutual funds, as well as the professional organizations that support them, such as accounting and law firms. We also have representation from the post-secondary education sector. In short, we seek to present one voice that speaks on behalf of the whole financial sector in the Toronto region.
Our goals are to work with our partners to support growth in financial services jobs; to grow to be one of the two pre-eminent such centres in North America--we're currently the third-largest and the fastest growing; and to be in the top ten internationally--we're currently ranked 13 out of 50 such centres.
Our purpose today is to encourage the committee to make recommendations to the government that will support further sector growth, but not to the exclusion of other sectors--quite the contrary, as some of the tax initiatives we have raised benefit other sectors as well. This sector is the single-largest contributor to our nation's GNP; it's one of the largest employers; and its activities underpin the financial security of the rest of the economy, whether you are a consumer, an investor, a pensioner, an entrepreneur, or an employer.
The key is to ensure that our financial sector remains internationally competitive. Today we are the 13th most important financial centre in the world, not far behind Tokyo and Geneva. This ranking was prepared through the cooperation of the City of London, arguably the top financial services centre in the world, closely followed by New York.
We invited the authors of this survey, which is the Global Financial Centres Index, to Toronto to help us understand ways to help us rank even higher and make us more competitive. What would move Toronto up the scale into the top ten?
They focused on five key factors: people factors, or the quality of our workforce; the business environment; market access; infrastructure; and general competitiveness. Of the five, Toronto was the strongest on the people factors; however, on some of the others we are lagging, particularly in the business environment, which reflects where we stand on tax rates and regulation.
Notwithstanding government efforts to reduce taxes, Canada remains a highly taxed nation. It's not enough to look at just one tax; one has to look at all forms of taxation and the overall level of taxation by all levels of government. When looked at in this fashion, Canada remains a country where government continues to take too big a share of our country's income. On a national accounts basis, general government tax and non-tax revenue can account for over 40% of our GDP.
TFSA has been recommending to governments, provincially and federally, that taxes, particularly corporate, need to be lowered. Tax rates that allow program spending to increase by 8% a year are clearly too high. We're pleased that Minister Flaherty, in his economic update last month, announced that corporate tax rates would be lowered. We've also been encouraged that the Leader of the Opposition has indicated that he too believes cutting corporate tax rates makes good sense.
We encourage the members of Parliament to provide relatively quick tax relief, and obviously there has to be a balance. Mr. Flaherty suggested that our corporate tax rate will eventually be the lowest among industrialized countries, which is a good thing. But we need to remind ourselves that other countries are moving in the same direction, and some of them are moving faster than we are. We continue to encourage Ontario to do what it can to bring down their corporate rate as well.
I won't go into some of the points and principles we made in the submission we sent to the committee earlier in the summer. Let me simply mention that not all taxes are created equal. The greatest increase in economic well-being comes from reducing taxes on capital by either increasing capital cost allowances or reducing capital tax rates. We have argued for both.
We also recommend you strive for tax neutrality and tax efficiency. Decisions made by businesses or individuals should be based on economic conditions, not preferential tax treatment. In pursuing tax reform, you should focus on those taxes that impose the greatest economic penalty on the economy, such as capital taxes. We also encourage efforts to work with the provinces to harmonize the GST and the PST.
The second major influence on the business environment, of course, is the regulatory environment, and we're very supportive of the government's efforts to reduce the regulatory burden, most importantly pushing for a common securities regulator.
Finally, Mr. Chairman, I'd like to suggest that the committee could play a leadership role by spearheading an effort to benchmark Canada's performance on tax policy. As I mentioned, it's not about absolute levels of tax but about relative levels of tax, not just about tax rates but also about tax mix. We believe that Canada should set goals against competing jurisdictions and measure our progress towards attaining those goals, and we think this committee could certainly play a role.
Finally, Toronto has much to offer as a financial services location, but international competition is growing, as many other regions and countries try to build global financial centres. When London and New York, the top two centres in the world, invest time and resources to defend their positions against that competition, Canada needs to ensure our sector is ideally positioned to withstand that pressure too. The factors that drive such success are clear.
Thank you very much for this opportunity, and I look forward to discussing it further with you.
My name is Elly Vandenberg, and I'm the director of World Vision Canada's Ottawa office. World Vision is one of the largest international relief, development, and advocacy organizations in Canada. More than half a million Canadians give regularly to support our child-focused community-based work to end poverty.
The pre-budget consultation period is an important time to remind you that Canadians support spending on international development. This morning, World Vision released new evidence that showed that Canadians are more compassionate than citizens in any other G-7 country towards issues related to poverty, especially HIV and AIDS. Eighty-four percent of Canadians think that the Canadian government should do more to help children who are orphaned by AIDS and AIDS-related illnesses around the world. Ninety percent of Canadians agree that even if we can't prevent more people from getting infected by HIV, we have a moral obligation to try.
On the eve of World AIDS Day, these compelling findings send a strong message to you that Canadians are supportive of spending our tax dollars to improve the lives of children around the world.
Last year alone, Canadians gave $300 million to support World Vision's work with the poor. One specific thing many Canadians can do to help people around the world is to give to charities. Changes in tax rules for charitable giving make a difference in encouraging Canadians to give. We've seen a 800% increase in the dollar value of publicly traded securities donated due to the recent elimination of personal gains tax. World Vision supporters appreciate these types of initiatives.
Our brief outlines specific changes to encourage giving. Our monthly donors number as many as all Canadian political party supporters combined. Surely their gifts should be eligible for the same kind of tax credit as political party contributions are.
Charitable donations are an important part of ensuring that Canada's tax system is structured to help eliminate poverty, but charitable donations alone are not enough. The reach of private charities must be complemented by the much larger reach of a healthy and effective aid budget.
Canada has made a longstanding commitment to dedicating 0.7% of our gross national income to international development. Although today's World Vision poll suggests that Canada should be a leader in dedicating resources to the elimination of poverty, as a country we have fallen far behind. Canada is not even halfway to meeting the 0.7% target.
Dedicating more resources to aid will be helpful only if they're spent effectively. Effective aid is assistance that recognizes that both governments and non-governmental organizations have an important role to play. We ask you to ensure that Canada's approach to international aid be informed by clear guidelines that uphold the importance of transparency and accountability, and most importantly that it deliver meaningful change to the lives of people to have their needs met, their rights realized and protected.
There's a bill in the Senate now that will provide and improve aid effectiveness. I ask you to encourage your colleagues to support it.
In conclusion, last month in many elementary schools, children practised giving speeches. I asked my 12-year-old son to time me for this presentation. We talked about 0.7% and what it actually means. I told him about its 36-year history. Two years ago all Canadian parties supported the idea of achieving 0.7%. Prime Minister Harper gave an election commitment to do better than previous governments on growing Canada's aid spending.
I said to my son, “It's like this. Our gross national income can be represented by seven boxes of timbits. Each box has 20 of those little donuts. If we take one of these Timbits out of one of these boxes, the one Timbit represents 0.7%. If you take just one small bite out of the Timbit, that bite represents what we now give to overseas development assistance.”
I said to him, “Your mom thinks we should give more. World Vision supporters think we should give more. An international poll released this morning demonstrates that Canadians are generous and compassionate and want their government to give more.”
We have the resources to end world poverty. All we lack is the political will. It's up to you, our parliamentary representatives, to do the right thing. As you weigh the value of the different Timbits of the gross national income, structure Canada's tax system to enable our government to meet the needs of the most vulnerable.
I'd like to speak to the committee about tax fairness and its impact in the north. Residents of the three territories and the northern parts of the provinces face several challenges relative to those living in southern, more populated regions of Canada.
In addition to a difficult climate and restricted access to goods and services, they usually face higher living costs because long distances from major markets add to the cost of basic goods and services. Because of these challenges employers often find it difficult to recruit and retain employees--skilled workers in general, and people in the medical profession in particular.
In 1987 the federal government introduced the northern residents tax deduction as a measure to offset the high cost of living in the territories and remote parts of the provinces. The northern residents tax deduction consists of two parts: a residency deduction and a travel deduction.
Many Canadians are aware that it costs more to live in the north; however, few realize just how much more it does cost. The single most debilitating factor facing workers who wish to live in the north is the increased cost associated with running a household.
The Northwest Territories Bureau of Statistics did a study that indicated that NWT households spend nearly $3,000 more on food, $5,000 more on shelter, and they pay $7,000 more in personal income tax than the average Canadian household. The NWT has the highest average household expenditures. Nunavut and the Yukon are tied for fifth.
Just to give you an indication of the differences in prices, I have an example of some on-sale prices that were selected from an Iqaluit newspaper. They were compared to a grocery store in Ottawa; the date of comparison was July 16, 2007. For example, Cashmere bathroom tissue, a 24-roll pack, two ply, in Iqaluit is on sale for $23.99. Ottawa's regular price is $12.99. Another example would be Snuggle fabric softener, a 946-millilitre bottle. Ottawa's regular price is $4.99; in Iqaluit it's on sale for $10.89.
Increasing these costs even more is the impact of the goods and services tax. Since the GST is a percentage of the price of the goods, increased prices mean increased real GST payments. For example, a shopper buying toilet paper in Iqaluit will pay $1.44 in GST, while the Ottawa shopper pays only 78¢ in GST. The people in the north pay almost twice the GST per item compared with people in the south.
The northern residents tax deduction study paper was prepared by the parliamentary library in January 2004. The publication number is PRB 03-52E. It gives the rationale for the northern residents tax deduction.
The first reason is sovereignty. Nation-states the world over have historically acted to secure claims over sparsely populated and isolated areas by a variety of means. In some countries and in some historical periods these attempts to secure sovereignty have meant forcibly moving people into or out of northern and isolated areas. In more recent times governments have attempted to establish and/or maintain claims to these areas by generating economic activity and providing incentives for people to locate to these regions.
Another reason is economic development. Employment in northern and isolated areas tends to be concentrated in mines, energy development projects, administrative centres, military installations, and tourism. These sectors of the economy tend to be either seasonal or subject to cyclical fluctuations, leading to sporadic demand for workers. Special tax treatment, for example tax incentives like the northern residents tax deduction, can help employers in these areas recruit and retain workers.
Another reason is regional differences in wages and cost of living. The cost of living in northern Canada and in small isolated communities is higher than in large urban centres, primarily because of higher transportation costs. Shipping goods from distant major centres via ice roads, water, rail, or air adds to the cost of basic necessities such as food, clothing, and shelter.
To entice workers to these isolated areas and to compensate for higher living costs, some firms pay their workers isolation pay in the form of above average wages or benefits, such as housing or travel benefits, or both. Combined with a progressive tax system, for example a tax that is larger as a percentage of income for those with larger incomes, these higher salary benefits lead to unequal tax treatment. Consequently, some argue that special tax treatment is required to redress this inequity.
With respect to regional differences in the level of goods and services, residents of northern and isolated areas generally have less access to specialized goods and services, particularly with respect to health care, education, and recreation. The federal government has a long tradition of supporting regions through its equalization and territorial formula financing programs, which helps provinces and territories provide basic services comparable to those available elsewhere. Those in favour of special tax treatment for northern and isolated areas argue that the equalization and the territorial formula financing programs are insufficient and need to be augmented by tax measures such as the northern residents tax deduction.
Finally, with respect to environmental hardship, northern areas typically experience long, cold winters, and they have barren terrain. Distance from major population centres adds to the sense of isolation. As noted, some employers provide additional benefits to help employees alleviate the sense of isolation. Consequently the argument is made that special tax assistance is needed so that these types of benefits, which are typically not needed in southern or urban areas, are affordable, in particular for northern residents, again with a view to attracting and retaining workers.
According to Finance Canada's tax expenditures and evaluations, in 2006 the federal government lost $135 million of potential revenue due to the northern residents tax deduction. It is estimated that an increase of 50% to the residency portion would result in an additional loss of potential revenue of roughly $50 million. This would bring the total potential revenue to $185 million, or less than 1% of the total federal budget. However, for every $1,000 the deduction is increased, it has been estimated that $3 million would be returned to the residents of the Northwest Territories alone. Further, by taking action to reduce the high cost of living in the north, more workers would be enticed to remain in the north rather than flying in and out. Having these workers remain in the north would not only assist in the economic development of the north, it would also enhance Canada's Arctic sovereignty.
At an additional $50 million, this is significantly cheaper than the proposed military spending. We are requesting an increase to the northern residents tax deduction for the first time since it was introduced in 1987.
Thank you, and thank you for permitting us to speak with you today.
The focus of our written submission to the committee is that successive federal governments have failed to live up to the spirit and the intent of their statutory responsibilities under sections 4 and 5 of the Department of Indian Affairs and Northern Development Act since it became law some 40 years ago.
In the first instance, the federal responsibility is to manage northern resources for the benefit of the north and to support northern political and economic development. It has not happened. The federal government retains control of the most significant source of northerners' wealth, namely their non-renewable natural resources, and takes for itself all the public wealth derived from them. At the same time, it has downloaded responsibilities for costly services--including health, social services, and education--onto northern governments and then underfunded them.
This federally created structural dependency, with its resulting poverty, is not being addressed. Instead the size of the per capita grants to northern governments is offered as definitive evidence that the federal government is spending generously on the north, but the federal government does not identify the proportion of those grants that are used to cope with the effects of the long-term endemic poverty.
For example, last year the government in Nunavut spent $47 million, about $1,600 per capita, on air transportation to fly sick people to southern hospitals. Many were children with respiratory illnesses resulting from overcrowded, poorly ventilated, and sometimes mould-infested housing.
The everyday problems of people living in poverty in the cold climate with no affordable means of transportation do not come into the committee rooms of Parliament, nor do they come onto the floor of territorial legislatures, but they do confront local governments in their communities every day.
The once common practice of central governments taking the resource wealth and leaving the people and communities of resource-rich regions in perpetual poverty is slowly disappearing in such third world countries as Sudan and Nigeria, but it remains firmly entrenched in northern Canada.
The people in the communities of Nunavut cannot afford to have their economic future foreclosed by either the federal or territorial governments in this way. The wealth from such mines as Polaris and Nanisivik has been taken, leaving no lasting benefit for the local people. But mineral exploration is at an all-time high, and it is important that resource revenue sharing agreements be in place before significant production begins again.
Nunavut Association of Municipalities recommends, first, that as an interim measure, any resource revenue royalties be held in escrow pending completion of the resource revenue sharing agreements with the territories. Without such a measure, the federal government, as the recipient of the revenues, has a strong disincentive to negotiate a fair revenue sharing agreement.
Second, it recommends that a forum be struck in accordance with the O'Brien equalization and territorial formula financing report recommendation that the Government of Nunavut, the Government of Canada, Inuit leaders, and a wide range of organizations, groups, and agencies come together to address the interrelated critical deficits in Nunavut that, if not addressed, will prevent the majority of people in Nunavut from participating in their economy.
Third and lastly, it recommends that resource revenues be shared with local governments in accordance with the 's principles defined in the 2006 federal budget.
Thank you very much.
Thank you, Mr. Chairman.
Good evening, and thank you for the opportunity to make this presentation to you today.
For the purpose of these hearings, the NEF wishes to discuss the northern residents tax deduction, referred to in our submission and this presentation as the NRD.
In the past weeks and months northerners have heard more and more that our interests are at the forefront of national interest and that the north is a main concern for the federal government, which has developed four priorities under a northern strategy, recently referred to in a speech by the Minister of Indian Affairs and Northern Development to the northern development ministers forum. These points are: strengthening Arctic sovereignty; promoting social and economic development; protecting our environmental heritage; and improving and evolving northern governance. At the same time, we have heard messages and seen action from the federal government regarding tax reduction and tax fairness.
In our submission to the standing committee, the NEF makes five recommendations for improvement to the northern residents deduction that would fall in line with the government's tax fairness and tax reduction objectives while supporting the priorities of the northern strategy, in particular the promotion of social and economic development.
In the short term the implementation of these recommendations would help reduce the burden of the high cost of living, provide greater access to federal programs geared toward lower-ncome earners, and help achieve taxation parity for northerners when compared with southern Canadians.
In the longer term, an enhanced northern residents deduction will contribute to the building of human resource capacity by making working and living in the north a better financial option. This will assist in the attraction and retention of experienced skilled workers who will provide the services and training required to help develop a fully capable local labour force, ensuring increased participation and benefits for northerners.
According to the document prepared in 2004, previously referenced by Mr. Ryan, special tax treatment for northern and isolated areas has been a justifiable policy based on the following points: to maintain remote population to defend Canada's Arctic sovereignty claims; regional development; to facilitate the recruitment of workers; to offset regional differences in wages and the higher cost of living; equalize regional differences in the level of available goods and services; and to offset environmental hardship and isolation.
It is interesting to note the similarities between these five points, the priorities of the northern strategy and the recommendations included in the NEF submission. Each has a significant economic development component.
The NRD has been seen as a cost-effective way to help attract and retain the skills required for the labour force in northern Canada and to provide some compensation for the higher cost of living and lower levels of service compared to the south. However, the landscape in which this policy is functioning has changed dramatically in the 20 years since it was implemented. There is now intense nation-wide competition for a far too shallow pool of skilled labour in many sectors. With the challenges and opportunities of a young and rapidly growing population, a quickly emerging resource development sector, the need for improved education, health, and financial services, the north requires more human resource capacity than ever before.
However, we require a competitive edge. We deal with basic capacity challenges in both public and private sectors that impact on all aspects of our lives. There is urgent need to support human capital development objectives, building capacity that will be to improve governance, a thriving private sector, better education and health outcomes, which will lead to a higher living standard and greater self-reliance.
The ability to attract and retain the skilled labour required to meet current demand and to facilitate skills transfer to northerners is critical for our economic development.
The tax system provides a mechanism to raise funds for public purposes to provide for redistribution of wealth in order to reduce poverty and inequality for individual Canadians, specific segments of society, and for geographic regions with particular development needs.
The NRD is one component of the tax system intended to achieve a range of objectives for Canadians living in the north, in particular the far north, where the cost of living is much higher than the Canadian average.
An increase and enhancement of the NRD would be consistent with the government's tax relief and tax fairness objectives, and in order to achieve the objectives for economic development in the north the Government of Canada should carefully consider the objectives and effectiveness of the NRD in the context of the northern strategy and take appropriate steps to enhance the deduction to provide appropriate incentives and benefits for northern residents.
The need to support the development of the north has never been greater.
Thank you again for your time and your consideration today.
Thank you very much for the question, Mr. Menzies.
First of all, on the tax question you asked, we're not shy about expressing our views to all members of Parliament, or the provincial parliament in Ontario, or to city council. We do tend to do that quite persistently.
In terms of the WTO negotiations, our organization has not been involved in those discussions. They are the national organizations that represent financial services, and some, I know, that have been presenting to this committee are more involved in that.
It is unfortunate that there has been an impasse. I think when you look at some of the things that have contributed to, for example, London's financial centre, their success, and the access, the fewer the barriers and restrictions sometimes can be the best. Those organizations would encourage your government to do what you could do to break the impasse.
I thank all of the witnesses for being here.
Ms. Vandenberg, I greatly appreciated your Timbits-supported presentation that I was able to benefit from. Your demonstration clearly shows the kind of effort we all need to make and underscores the importance of investing, helping people throughout the world and contributing to international development. The objective of dedicating 0.7% of the GDP to overseas development assistance is one shared by many other countries, and is a goal of distinct altruism and solidarity.
Many people also say that this is a form of economic development. So long as there exist places that are extremely poor, there will be social and economic problems, and fewer markets to benefit our own economy.
Do you subscribe to the philosophy that overseas development assistance is not just an act of pure altruism, but is also a way of resolving conflicts in the world and developing our own economy?
Thank you for coming late this afternoon, and I appreciate the presentations.
I only have a few questions, and I'll start with Mr. Johnson. I heard you loud and clear on the GST, but I'd like to ask you questions on the two other issues you brought forward.
I'm familiar with LEED, and I know you mentioned earlier in response to a question that your school board in particular built a couple of schools.
With respect to meeting the LEED requirements, depending on how much new equipment and so on, do you have a sense of what the difference is between a regular school and a school that meets the LEED requirements, and what kinds of dollars we are talking about?
We have not advocated how you would do it, and again, we tend to take a lot of our lead on tax policy from the C.D. Howe Institute and some of the other groups that do a lot of work in that area.
But what is important about the high end--and you're right, it's not an easy argument to make--is that a lot of those individuals drive the innovation, drive competitive policies, drive the success not just in financial services, but in many other businesses and sectors.
If they don't want to come here, if they don't want to stay here, and if they have better financial opportunities elsewhere, we lose access to that talent and ability. Not only do we want the business environment for companies to be competitive, so that it is a good-value proposition, so they will be here with their jobs and investment, but at the same time we also need to be able to attract and retain the kind of highly skilled talent that we need to drive those companies.
The financial services sector does tend to be a sector that has very highly skilled and educated individuals. They are in great demand, especially when you look at the demographic challenges that are coming at us. We released a study earlier this year on the HR needs in financial services in the Toronto region. We are--not to put too fine a point on it--in a war for talent. They have a lot of options, those very talented individuals, and we want them here to drive economic prosperity, and therefore a better quality of life for Canada.
Tax rates are an important part of that.