I am joined this evening by officials from various departments that are responsible for various aspects of the bill. As you know it's been referred to 10 different committees with respect to various areas of expertise.
I will begin with a few opening remarks in order to leave as much time as possible for the committee members' questions.
However, before I begin, I want to thank the chair and the members of the Standing Committee on Finance for the work they have done recently and all their work, in general.
I would like to thank the committee for its work on the annual pre-budget consultations that began earlier this fall. I know it's a great deal of work and some travel, although I understand you used conference methods more this year than before, which is laudable. I thank you for that and the savings that go with it.
Alongside my own consultations as , your committee's pre-budget outreach is a vital tool that helps ensure Canadians from coast to coast to coast that they have the opportunity to make their voices heard. Rest assured, as in previous years, that the recommendations from the finance committee's report will play a key role in informing and shaping the next federal budget.
Many of the measures included in the bill you are considering, Bill , were indeed recommendations from last year's finance committee report; for example, reforms to public sector pensions, new tax incentives for renewable energy, revamping the Navigable Waters Protection Act, removing internal barriers to internal trade, and more. I encourage the committee's continued pre-budget consultation work, especially your eventual report and recommendations.
I would also like to congratulate the committee for its comprehensive work over the past year examining potential ways to increase charitable giving in Canada with new or improved tax incentives and other targeted action. I'm looking forward to receiving the committee's report and recommendations, which I understand are likely to be forthcoming in the near future. But first I urge the committee to consider and support Bill , which is the bill before you, the jobs and growth act 2012, which proposes to enact many of the key measures from the budget, economic action plan 2012.
As we all know and are all too often reminded, the global recovery is fragile and global economic turbulence remains. Our largest trading partners, the United States and Europe, continue to wrestle with significant challenges and are struggling to find lasting effective solutions to their fiscal problems. While there are signs of recent progress, the problems they face have no painless solutions, no quick fixes, and as a result the global economic environment remains highly uncertain.
Not only is the global economy uncertain, it is also increasingly competitive, as Canada faces increasing competition as well as opportunities from emerging economies.
That is the reality of global economy today and the reason why our government is still completely focused on its number one priority—support and growth of the economy here, across the country.
Economic Action Plan 2012 is at the heart of that approach. This comprehensive and ambitious plan developed by our government will help Canada maintain a fairly strong position compared with the other G7 countries in the industrialized world. That strong position will enable Canada to capitalize on the current economic challenges and turn them into economic opportunities that will contribute to our long-term prosperity.
I submit to the committee that our plan is on the right track to grow our economy, something which the facts clearly demonstrate. They are facts like Canada's having the strongest record of employment growth in the entire G-7 since July 2009, with over 820,000 net new jobs created, over 90% of which are full-time and nearly 75% of which are in the private sector. They are facts like Canada's having the best fiscal position in the G-7, with the lowest debt-to-GDP ratio by far. They are facts like Canada's having the safest and soundest financial system in the world, as ranked by the World Economic Forum, for five years running. They are facts like Canada's being forecasted to be among the leaders of the industrialized world in economic growth by the OECD and the IMF in the years ahead. The list goes on and on.
Canada's economic policy stands out for all the right reasons, and the world is paying attention. As the president of the U.S. Chamber of Commerce, Tom Donohue, wrote:
We’ve got a strong example of the positive effects of good policies even closer to home—Canada. Why has our northern neighbor recovered faster and more robustly from the global recession than nearly all other major economies? Due to a series of smart policy decisions.
—Canada has transformed its economy while other nations continue to struggle.
Christine Lagarde, the head of the IMF, said recently that Canada is a bit of an anomaly, that Canada is doing a lot better than other advanced economies and has a path of its own.
Of course, here in Canada we cannot be complacent. We can't allow political gridlock and instability, which all too often threaten and delay vital economic and fiscal reforms in the United States and Europe, to throw Canada off course for long-term economic growth. Post the U.S. election, I'm hopeful that further political stability in the United States will enable the administration and Congress to take the required steps needed to deal with their fiscal and economic challenges swiftly.
Similarly, Canada must move ahead and stay focused on the economy. The jobs and growth act, 2012 does exactly that. It moves ahead with important steps to build a strong economy and create jobs, steps such as extending the job-creating hiring credit for small business, promoting interprovincial trade, improving oversight of Canada's financial system, removing barriers to cross-border trade, supporting Canada's commercial aviation sector, expanding tax relief for investment in clean energy generation, and much more.
The act also introduces important measures to support families and communities by improving the registered disability savings plans, by helping Canadians save for retirement, by implementing the tax framework for pooled registered pension plans, and more.
The jobs and growth act, 2012 also builds on our government's already strong record of better respecting taxpayers' dollars by closing tax loopholes, by taking landmark action to ensure that the pension plans for federal public sector employees are sustainable, financially responsible, and fair compared to those offered in the private sector, and much more.
With that, I want to take a moment to highlight our landmark action to reform federal public sector pension plans, and as a result, to better respect Canadian taxpayers while helping to ensure that Canada's fiscal position remains sustainable in the long term. As we all know, public sector pension plans represent a significant element of the federal government's total compensation expenses, expenses which, as recent international events have shown, can weigh heavily on the long-term fiscal sustainability of a government if affordability is not the guiding principle.
As I mentioned earlier, this committee recognized that very fact in last year's pre-budget consultation report, which urged the government to take action to ensure the sustainability of public sector pensions. Unlike previous governments, which were content to ignore questions of long-term affordability for the sake of political expediency, we are taking the fiscally responsible position and putting the long-term state of Canada's finances first, even introducing landmark reforms for members of Parliament and senators pensions. Indeed, that's why the jobs and growth act, 2012 is taking necessary steps to make public sector pension plans sustainable, responsible, and fair.
We're doing this in two important ways. First, we are moving the public service pension plan to a 50-50 contribution arrangement, finally making public sector employee contributions equal to what the government contributes. Second, for employees who join the federal public service starting next year, the normal age of retirement will be raised from age 60 to age 65. These two important changes will go a long way to promoting the long-term sustainability of public sector pension plans while ensuring they are fair to Canadian taxpayers. Long overdue, these reforms to public sector pensions were necessary and part of our Conservative government's commitment to responsible financial management.
In the words of TD chief economist Craig Alexander:
The government is taking action to pursue fiscally sound policies for the long run. The increase in the qualifying age for Old Age Security, the new normal age for retirement among public sector workers and reforms to public pensions are good examples of this.
Because of such long-term responsible reforms, I urge the committee to support Bill , the jobs and growth act, 2012, to help create a long-term stronger future for Canada.
With that, Mr. Chair, I invite questions from the committee.
That's right, and thank you for the question.
It follows on the direction of Mr. Jenkins' report. As I mentioned, $400 million as part of that pool of money is going to be used in a more direct way to assist in the creation of innovation venture capital in Canada, for which there is quite a serious need in our country, particularly for young innovative people who need a hand up, really, so they can get their innovation to market.
We have some fabulously innovative people in Canada. We have tremendous examples. We have MaRS in Toronto. We have NAIT in Alberta. There are great examples all across the country. A lot of them either sell out early, usually to Americans, or they give up because they don't have the financial wherewithal.
This isn't going to be a big government program, I can assure you, in which the government picks winners and losers. It's not going to be that, but there's going to be a sizeable amount of money, which we hope to leverage in order to assist these young entrepreneurs.
I know that some of the large manufacturers would prefer that we leave things as they are, but the government's view is that this is a better use of this pool of money.
I want to thank you, Minister, for being here today. I know how busy you are, so thank you for your time today.
In my riding of York Centre, we regularly convene a number of businesses, mostly small businesses. About twice a month we sit around a table, and we talk about issues and different concerns and challenges they may have.
I have to tell you that, to a business, and these are all small businesses, they all say to convey thanks to the Minister of Finance, particularly for the small business hiring tax credit. They are hiring people as a result of this. A number of them wanted me to pass on a thank you for that.
I want to talk a bit about the IMF's comment on the governance reform provisions which are contained within Bill and how they relate to what we saw in Bill , the first budget bill. These are designed, of course, to strengthen the financial architecture around the world and all of that.
Canada is co-chair of the G-20 working group. Can you talk about why it's important that Canada take a lead on this to strengthen the international financial architecture and push the IMF to be more effective, particularly with respect to developing economies? How will that benefit Canada?
Thank you for the question.
As you know, that's one of the sections for another committee to look at, but I'll talk about it.
This is economic infrastructure. This is the kind of infrastructure we need so that we have more jobs, growth, and prosperity in Canada.
Personally, I've been working on this issue since 1995 when I was first elected to the provincial legislature. I was minister of economic development, minister of finance in Ontario. We worked very hard back then to accomplish this. Still we're sitting here in 2012 in Ottawa and it's not done yet. However, I'm thrilled with the result. I would not be candid with you if I didn't say that I'm thrilled with the result. We can go ahead with this now.
It's usually important to the auto sector. The auto sector, as you know, is reviving. It's doing very well. Sales are up significantly. We have an integrated auto sector in North America. Chrysler vehicles and so on go back and forth. I think the average is seven times to Detroit and back to Windsor during the course of their manufacture.
This is hugely important for southwestern Ontario, for the auto sector, for employment, good jobs, and a good future. It's good for the parts business as well in southwestern Ontario.
I'm thrilled that the voters of Michigan supported the proposal.
When Chancellor Merkel visited Canada this summer, she made it very clear that Canada is on the right track in controlling expenditures. Germany has done so and Germany has avoided a lot of the difficulties that other countries have experienced in Europe and has maintained quite a strong manufacturing base in their country.
I know you've run businesses. I know you're busy here in Ottawa now so you're not there all the time. However, you can't run a business, you can't run a household, you can't run a country by running into debt year after year and pulling out the credit card every time there's a problem and adding on to your debt load. It eventually catches up with you. It catches up especially when interest rates go up, and they inevitably will go up, which is why we've been saying that, and I've been saying, and the governor has been saying that about our housing residential mortgage situation.
We all have to make sure that we stay on track to balance budgets, that we keep the Toronto commitments. The showed a great deal of leadership on that in pushing that forward at Toronto and in the G-20. I think we all need to get on that course. Really, there's not a lot of push back that I hear at the meetings from some of the countries that are in difficulty, but there has to be the will to follow through and to implement, which is always challenging.
Ireland, for example, is following through and is going to be successful, in my view, in their austerity measures, at the same time as promoting economic growth in the country, and they will recover.
Thank you for the question.
This goes back to the smaller businesses and medium-sized businesses in Canada. Most big businesses, as we all know, have pension plans, but 60% of Canadian workers, including self-employed people, don't have even any access to a pension plan, which is why we brought forward the idea of pooled registered pension plans, so that smaller employers can pool their employee groups and get professional advice and better rates.
That's where we are. As you know, the bill passed previously. There are some technical changes that we've been asked to make by different participants, including broad-based eligibility, making sure that the costs of administering the pension plans will be spread over a larger group of people, and many of the employers find the costs a bit too high.
We're making some changes. We're shifting fiduciary responsibilities and reducing the administrative burden for the employer so that more employers will offer, we hope, pooled registered pension plans for their employees.
Savings at retirement, as this committee well knows, constitute a significant problem in Canada.
Welcome again, Minister. It's been a great pleasure for me to learn by working with you. Every time you appear, I learn something new, so thank you for enlightening us.
When the CFIB was here the other day, they distributed a pamphlet I know you haven't been able to see, but I do want to share some information from it with you. I'm particularly interested in the challenges of older workers. I know we've done a number of things to help older workers. You yourself have pushed for things like the targeted initiative for older workers, approved the ThirdQuarter project that was put forward by the Manitoba Chambers of Commerce in the last budget, which will help to link employers to older workers who still enjoy working, and want to continue.
The CFIB surveyed their members and they asked this very question: “At what age do you believe you will be able to retire comfortably?”. They had almost 10,000 responses. What shocked me was that the majority of responses said age 68 or later.
Having said that, I know that in Bill you've taken some more measures to try to help older workers. Obviously it's needed, according to surveys like the CFIB's.
Can you enlighten us as to what we're doing for older workers? For example, under CMHC, you've taken some measures with regard to retirement age. Can you tell us a little about that?