We believe we are on track, and that would mean we would have it at the end of business on Friday. Yes, there will be lots of reading.
Before I turn to the witnesses who are here, I want to mention that Michael Veall from the department of economics, McMaster University, wasn't able to come. He had intended to come. His presentation, for members' benefit, is on your iPads.
We'll start, then, with the first witnesses. We ask witnesses to hold their remarks to about five minutes, and then we will go to a series of questions.
We'll start with the Public Interest Advocacy Centre, Mr. Lawford and Mr. St-Amant.
Honourable members, my name is John Lawford, and I am executive director and general counsel at the Public Interest Advocacy Centre, on behalf of which I am appearing today. With me is Jacques St-Amant, who teaches consumer law at the Université du Québec à Montréal and acts as a consultant to PIAC regarding financial services.
We're focusing today exclusively on division 5, part 4 of the bill. Our main message is that the bill's financial consumer protection framework will not improve the protection of banks' customers and may, in fact, make things worse.
In his 2013 budget, the then Minister of Finance announced the government's intention “to develop a comprehensive financial consumer code to better protect consumers of financial products”. This was followed by further announcements on this topic in every single budget, including the 2016 budget, which promised “a comprehensive, consolidated framework and include targeted and more flexible consumer protection rules to better respond to Canadians’ changing needs.”
We were cautiously hopeful that needed change was coming.
The current rules are deeply unsatisfactory. The FCAC—or Financial Consumer Agency of Canada—website lists over 50 provisions of the Bank Act, 28 regulations under the act, six voluntary codes of conduct, and over a half a dozen public commitments claiming to protect consumers. Very few consumers know these rules or understand what they mean. Many of them are not strong enough and they are not legally enforceable by a consumer. Often there is no rule, beyond a general legal principle to protect the consumer.
What Bill does is moves around the existing rules between the act and regulations, making the framework more rigid at a time when swift market evolution would require a more flexible set of rules. It does add five new principles, the legal impact of which is unclear, and some small changes regarding other issues, but it adds provisions that are clearly also unhelpful to consumers.
Bill does not address the real problems, such as banks unilaterally changing provisions in their terms and conditions, or disclaiming in their terms and conditions any liability for mistakes or negligence. As an example, we provide in the annex to these remarks a provision from CIBC's current terms and conditions. There is nothing in the Bank Act, or in Bill , that prohibits such provisions. Contrast that with the consumer protection code established by the Central Bank of Ireland, which requires banks to act with skill, care, and diligence in the best interests of their consumers, and which prohibits, in principle, exclusionary clauses, such as I referred to.
Complaint resolution is not addressed by Bill, even though the current regime allows a bank to choose its external ombudsman—an obvious conflict of interest. FCAC remains the watchdog under Bill . However, it was given very limited powers in 2001, which have not been significantly increased over time, simply compared with the U.S.'s Consumer Financial Protection Bureau.
This is a weak framework. It is full of gaps. We are therefore worried by Bill 's apparent attempt to confine the protection of banks' consumers to this regime, as we understand that the intent behind proposed new section 627.03 is to thwart the application of provincial consumer protection legislation in banking. This is not a good idea.
First, consumers of banks would then be less well protected in some provinces than if they did business with, say, a local credit union, which would be subject to provincial rules. In effect, Parliament would be creating a disincentive for consumers to do business with banks.
Second, consumers of all provinces may not be treated equally. It is settled law that federal legislation is not paramount to common law, so the absence of any provision regarding unfair transactions in the Bank Act may have no impact on, say, the application of common law unconscionability rules in nine provinces. In Quebec, where similar rules are legislated in the provincial civil code and the Consumer Protection Act, those provincial laws could be found to be inoperative under this constitutional theory propounded in the bill. More simply stated, Bill invites constitutional wrangling instead of promoting legal certainty, which will harm consumers and banks.
However, we have an even more fundamental issue with what the minister proposes. In effect, he is inviting Parliament to declare that in Canada the convenience of bankers is more important than the protection of consumers. We believe that is mistaken and will not be popular.
Financial service consumers would gain by the implementation of a strong, coherent, and comprehensive set of legally enforceable rules that would be consistent with the Canadian constitutional framework established through an open consultative process. This set of federal rules could act as a floor, and if the floor were built high enough, provinces likely would not feel the need to offer additional protection to their residents, which would further the goal of consistency. This is not, however, what Bill currently does.
In conclusion, we suggest that this committee recommend to the minister that he take stock of these issues, withdraw the division from the bill, and consult again in order to implement, in the context of the upcoming global review of the Bank Act, a truly effective financial consumer protection regime.
Thank you, Mr. Chair. Good afternoon, ladies and gentlemen.
We would like to thank the committee for inviting the Canadian Bankers Association to participate in the committees review of Bill .
The CBA works on behalf of 59 domestic banks, foreign bank subsidiaries and foreign bank branches operating in Canada and their 280,000 employees.
Our opening remarks will address the provisions contained in division 5 of part 4 of the bill. These amendments to the Bank Act consolidate and streamline the consumer protection provisions that apply to banks under a federal financial consumer protection framework. My introductory comments are going to focus on the broader aspects of the amendments that will affect the banking industry and our customers.
Building and maintaining a strong client relationship is of fundamental importance to Canada's banks. Banks are an active and essential part of the daily lives of Canadians. Ninety-nine per cent of Canadians have an account with a financial institution, so many millions of Canadians turn to banks every day for products, services, and financial advice. We help Canadians safeguard their money, finance a home, manage their savings, plan their investments, and prepare for retirement.
Banks in Canada take very seriously their role in the lives of individual Canadians, and Canadians trust their banks and value the products and services they provide. In fact, Canada's banks have been recognized internationally for their commitment to providing a good consumer experience. Our banks have been ranked first out of 32 countries in the Capgemini “World Retail Banking Report” every year since 2012.
Bill consolidates the consumer protection provisions that exist in federal legislation as they have evolved over many years, including new measures, into a single financial consumer protection framework within the Bank Act. By creating a clear federal framework, Bill ensures that Canadian customers continue to benefit from consistent, safe, and high-quality banking products and services across the country.
Consolidating consumer protection and establishing a uniform set of standards under a single framework will improve the efficiency of financial services regulation, ensure consistent policy across the country, prevent consumer confusion, maximize product availability, and ensure the capacity of the Financial Consumer Agency of Canada to fulfill its regulatory mandate to inform and protect consumers.
We support the placing of the consumer protection framework under the oversight of a single regulator. The FCAC was created in 2001 to strengthen oversight of consumer regulation and expand consumer education. The industry has a long-standing and strong working relationship with the FCAC in many areas, particularly in the area of financial literacy.
We also support a framework of consumer protection principles that are not prescriptive and that can be adapted to change. Allowing and encouraging further innovation in the financial sector is essential, so that banks can continue to serve the needs of consumers by developing and enhancing financial products and services and the way they are delivered to our customers.
As leaders in financial technology, banks in Canada are constantly innovating, developing new products and services to meet the demands of their customers for greater convenience. Canadians can now bank at any time, from virtually anywhere, through online and/or mobile banking. Every year, more and more Canadians are adopting online and mobile as their preferred means of banking. Despite this trend, however, banks have maintained an extensive branch network across the country, because that is where relationships with their clients are often established and maintained.
More clarity about the implementation of the framework is going to be provided through the development of subsequent regulations, and we look forward to engaging in that process. Our aim would be to achieve a workable, efficient, and flexible approach for the benefit of Canadian consumers.
With the start of the global financial crisis now nearly a decade behind us, it's important to keep in mind that Canada's prudently managed banks, combined with an effective financial services regulatory and supervisory framework, were key reasons for the strength and the resilience of Canada's banking system. A key lesson of that crisis was the importance of a streamlined, coherent, and unified regulatory system, which we have in Canada, with a single regulator responsible for safety and soundness—the Office of the Superintendent of Financial Institutions—and a single regulator for consumer protection, the FCAC.
The CBA and its members have long supported a strong federal regulatory framework for the benefit of consumers. Although Canadians already benefit from a strong protection system, we think the federal framework proposed in Bill is an important step in the direction of further improving that regime, with a clear, streamlined, and consistent set of regulations that are applied across the country.
Thank you again for inviting us to be here today, and we look forward to your questions.
Good afternoon, and happy financial literacy month.
My name is Brigitte Goulard. I am the deputy commissioner of the Financial Consumer Agency of Canada, and my colleague Richard Bilodeau is the director of our supervision and promotion branch.
Thank you for the invitation. I look forward to providing you with our comments on Bill .
The Financial Consumer Agency of Canada, or FCAC, is a federal government agency responsible for protecting consumers of financial products and services. The agency supervises the practices of banks, federal credit unions, and trust and loan companies. It also develops resources and organizes activities to strengthen the financial literacy of Canadian consumers. Lastly, the agency is mandated to monitor and evaluate trends and emerging issues that may have an impact on consumers of financial products and services.
We monitor external complaints bodies, or ombudsmen, if you will. Every bank and federal credit union must be a member of one of the two approved external complaints bodies.
Consumers who feel that their financial institutions haven't adequately handled a complaint about some banking activities can contact one of these bodies. The representative of one of the two approved bodies, namely, ADR Chambers—Banking Ombuds Office, also appeared before you today.
We also ensure that credit and debit card networks comply with certain business practice requirements to protect merchants. These networks include VISA, MasterCard, American Express and Interac.
FCAC welcomes the new financial consumer protection framework included in Bill . If adopted, it will better protect financial consumers.
We are particularly pleased with the introduction of guiding principles that set out expectations to guide banks' conduct, and will help FCAC interpret and then enforce the legislation. Other enhanced consumer protection measures include improving access to basic banking services by allowing the use of a broader range of personal identification documents to open an account or to cash government cheques.
It also includes strengthening business practices' oversight by introducing a new prohibition on applying undue pressure and by adding cancellation periods to a wider range of products and services. It enhances disclosure of key information by expanding the use of summary boxes of information to all banking products and services. It also enhances transparency by requiring banks and external complaint bodies to report on the nature of complaints received. Finally, it will improve accountability by requiring the banks to report on how they are addressing the principles of the consumer framework and the challenges faced by vulnerable Canadians.
In anticipation of this new consumer framework, FCAC has spent the last year revising its own supervisory framework. I am pleased to announce that our new supervisory framework will be launched in spring 2017.
Three pillars underpin our new supervisory approach. The first pillar focuses on promotion, as FCAC believes that compliance is facilitated when obligations are clearly identified and accessible to regulated entities. Second, FCAC proactively monitors regulated entities to determine whether they are complying with their obligations. FCAC also gathers information on current and emerging issues that impact financial consumers. Finally, FCAC enforces the financial institutions' market conduct obligations. When a potential breach of a compliance obligation is identified, we investigate and take the appropriate action to respond to non-compliance and to deter any further non-compliance.
With this new supervisory framework, we will proactively identify issues in the marketplace and take a more risk-based approach in our supervision and enforcement activities. We believe this approach will better position us to implement the legislative changes proposed in Bill .
To ensure the adoption of the new framework for consumers, FCAC will work closely with stakeholders, including consumers, federally regulated financial institutions and regulators in the provinces and territories. This collaborative approach is at the heart of FCAC's activities and guides all of its activities.
Thank you again for allowing me to meet with you. My colleague and I will be happy to answer your questions.
Honourable members, thank you for the opportunity to appear today. The Association of Canadian Financial Officers represents the operational core of the federal government's financial workforce.
We understand how important public revenue is to delivering vital public services to Canadians and that fiscal responsibility requires both prudent spending and fair tax collection. We believe the best way to serve Canadians is through responsibly funded public services delivered by a professional and modern public service.
We believe that our leaders must first ensure that all Canadians contribute their fair share before resorting to austerity measures and the sale of valuable public assets. We recognize that progress in this regard is being made by this Parliament. You are delivering and engaged in a mission to modernize the tax regime. Millions have been invested in efforts against tax havens, and there has been a corresponding increase in recovered revenue, investigations, and audits.
We are encouraged by the government's ongoing review of tax expenditures with the purpose of further simplifying and rendering fair taxation in Canada. ACFO supports these efforts and we support Bill , which includes provisions that contribute to this work.
Today we offer suggestions only on what further provisions could be implemented to maximize the effectiveness of this new regime. I'll start with the OECD BEPS initiative. In budget 2016, the government committed to working with the OECD and its action plan on tax avoidance. The OECD BEPS initiative represents an unprecedented international effort to modernize international tax and to ensure fair and stable government funding globally.
Bill helps establish the cornerstones of OECD BEPS by implementing both the country-by-country reporting standards and the common reporting standard for the automatic exchange of information between tax authorities. These are crucial steps towards a comprehensive global strategy against tax evasion. The country-by-country reporting framework, however, will require further improvements if it is to function optimally. Specifically, many developing countries, including many tax havens, lack the capacity to participate in the OECD BEPS framework, and the vast majority of multinational entities will not be required to report under the current thresholds.
Canada should seize the opportunity to lead on tax globally by spearheading the following: supporting developing nations' efforts to build capacity in order to participate in the OECD BEPS framework; calling for the establishment of a UN international tax body to complement the efforts of the G20 and the OECD and broaden the base of participation; calling for the lowering of the country-by-country reporting thresholds, which currently would not apply to 90% of the multinational entities; and finally, calling for most information in the country-by-country reports to be publicly available.
The details and full rationale of these recommendations can be found in ACFO's recent white paper, “Tax fairness: An opportunity to lead”, copies of which have been provided through the clerk today.
In addition to leading on OECD BEPS, Parliament could continue to focus on complementary domestic measures, including implementing this committee's October 2016 report, “The Canada Revenue Agency, Tax Avoidance and Tax Evasion: Recommended Actions”. The recommendations therein serve as a practical and reasoned road map for building on the progress made thus far. As someone who appeared at that committee, I thank the members for the good work on that report. We fully support it.
Other complementary domestic measures that Parliament could focus on include establishing a national public beneficial ownership registry, and finally, continuing in efforts to eliminate tax expenditures, which in our opinion should include the stock option deduction, which costs $100 billion annually, encourages speculative behaviours, and overwhelmingly benefits the top one per cent with largely no discernible economic benefit, save and except for a reasonable exception for the high-risk innovative tech sector, for which there could be a reasonable cap.
In conclusion, as proud, hard-working public servants, ACFO's members help deliver on this government's agenda of infrastructure investment, reconciliation with our indigenous people, pay equity, growing the middle class, and supporting sustainable economic growth. Bill helps establish a stronger and fairer tax regime that we can build on for securing the revenue needed to achieve these goals for Canadians without resorting to further austerity measures and privatization.
Thank you, Mr. Chair, and ladies and gentlemen. Thank you for the opportunity to present to this committee.
My name is Fabiano Taucer. I'm here with Ray Foley, the executive director of the OAR. I've been a practising physician in Ontario for 37 years, and for the past 28 years here in Ottawa at the Montfort Hospital as a radiologist and nuclear medicine physician.
In a nutshell, there are three issues I want to touch on regarding the small business deduction as it pertains to physician groups. The first is how medical practice has evolved, requiring the creation of group practices to the benefit of patient care; two, how the proposed legislation would lead to a dissolution of these group practices resulting in significant, unintended consequences negatively impacting patient care; and three, how and why physician groups should be exempted from the proposed legislation.
We're all aware of the ever-increasing complexity of medicine and medical knowledge. Hardly a week goes by that we don't see an item in the newspaper or in the media about some new therapy, some new surgical procedure. Some of you may have seen on the CBC television news last night an item where a neurosurgeon in Winnipeg used a new therapy on a young woman with a brain tumour by inserting a probe into the brain while she was conscious and treating that tumour.
This increasing complexity has led to the development of not just specialists, but subspecialists and super-subspecialists. The delivery of this type of subspecialty care is fostered and supported within group practices. The provision of 24-7 care from family physicians to specialists and subspecialists is likewise supported within the framework of a group practice.
In my own field of diagnostic imaging, groups have evolved to provide a full gamut of care, not just the direct doctor-to-patient care but many other things that occur in the background that have a direct and indirect effect on patient care. We're able to provide these key services, many of which are not remunerated or poorly remunerated, within the setting of a group practice, such as teaching, research, administration, quality control, leadership, as well as certain clinical services; yet all of these services impact directly or indirectly on patient care.
Pooling of income within a group model allows the best teacher in each subspecialty area to teach, the best administrator to advise the hospital or institution, the best clinician in her field to practise in that area, the best researcher, and so on. This can take place without a financial penalty to the individuals involved. I'm sure you can see how all of this benefits patient care both in the short and in the long term.
The removal of the small business deduction would have the opposite effect and would be a disincentive to provide non-remunerative yet important work.
Physician partnerships are different from other professional partnerships with respect to this legislation in two important ways. First, they operate in a not-for-profit system with no control over the fees that are set by provincial governments. Secondly, there is no multiplication of the small business deduction in physician groups, such as may have occurred with other professional groups.
My premise is simple. The legislation, as proposed, would have serious short- and long-term negative effects on patient care in this country, and I'm sure that was not the intent of the legislation.
We have some recommendations in terms of that same goal. First, we're seeking that the legislation be amended to carve out publicly funded health care delivered by medical practitioners who deliver their services in professional medicine corporations, which are a readily identified activity by CRA.
Second, we seek amendment in the legislation to recognize that policy objectives aimed at for-profit partnerships, whether they be legal, accounting, or otherwise, are not applicable to not-for-profit delivery of health care services as we know them under the Canada Health Act, following the litmus test of medically necessary examinations.
The third would be that a decision on this matter be made quickly. We have a thousand radiologists in Ontario, 2,800 across Canada. In the case of the thousand physicians in Ontario, they service 13 million patients. The lack of a decision is causing people to make decisions, and when enjoined with some of the other turbulent activities happening in the public sector at a provincial level, this creates unnecessary and dangerous instability.
The concern is that physicians, not just radiologists but physicians generally, will do what happened in the 1980s, 1990s, and the early 2000s, and that is that they will move to other jurisdictions, principally the U.S., to provide services. That, obviously, is one of the unintended consequences that we see, which obviously tax planners or policy-makers did not have in mind when they set out to do this, in terms of what the implication is for both federal and provincial health policy across the country.
The fourth is that if there is a change in the tax legislation that it be communicated as effectively and as efficiently as possible, that it be done through bodies like our own or the Canadian Medical Association in order to address this significant undercurrent that remains in the minds of practising doctors across the country.
Thank you, Mr. Chair. Welcome, everyone.
I do wish to acknowledge two young folks from my riding who are here in the committee, paying attention. They are sitting in the back. Welcome, Stefano and Cassandra. It's great that you can spend the day with the MP.
Now I'll go on to the questions. I'll divide my time up and I'll group it into the Canadian Bankers Association, along with Mr. Lawford and Mr. St-Amant, and then I'll move over to the radiologists.
Mr. Campbell, with regard to your comments on the Canadian Bankers Association, I'm generally in line with your view of it. We've always maintained a strong regulatory framework and it has always been a balance between provincial jurisdiction and federal jurisdiction with regard to the banks in Canada, more so on the federal side.
One of the reasons we came out of the financial crisis so strong, I believe, is that we had a lot of good regulatory oversight from the federal side, be it OSFI or other regulatory institutions. I wonder if you can elaborate on the comment on the streamlined, clear, and consistent set of regulations that you mentioned.
Sure. Thank you very much. I appreciate those comments.
Again, I go back to the financial crisis. If we looked at many other jurisdictions in the world, certainly south of the border, we saw a multiplicity of regulators often working at cross-purposes. We didn't have that here.
I do agree with you that strong regulation and strong supervision through a unified regulator was part of the recipe of why Canada was able to get through the crisis with its head held high, and it served as a model. I see the bill, quite frankly, in front of us as carrying on that tradition.
Our sense is that what is important for the consumer is a consistent, clear, and coherent set of rules that is under a uniform system of supervision. It doesn't help consumers at all to have duplication or conflict or confusion as to whom to turn to in cases of concern.
Now, the devil is in the details and we haven't seen all the regulations yet, but what Bill does, from our perspective, is provide that clarity of intent, provide uniform consumer protection and uniform supervision. We think this is the strongest system. It already has a high-quality set of rules, which are higher, actually, in terms of some of the changes and enhancements and new provisions put in. We think this will be good for consumers.
Ladies and gentlemen, welcome to the House of Commons parliamentary committee on finance.
My initial questions will be for you Mr. Campbell, and they have to do with the banking system. I am very happy to welcome you to our committee.
Obviously, you know better than anyone that, in early October, the decided to tighten the standards for home ownership by using what we call a stress test, in which the mortgage rate is doubled, in a way. I'm cutting corners by saying that, but the mortgage rate is doubled to determine whether the person who wants to borrow can survive such a situation, should interest rates rise.
With the statement the day before yesterday by the president of the US Federal Reserve that interest rates could rise starting in December—December, that's in one week—we are obviously all a little surprised by this.
First, I would like to ask you about interest rates for first-time homebuyers. What reactions have you seen so far in your banks and with potential clients, so young families and people who want to buy their first home?
I'm sorry, but I will have to speak in English.
I'd say it is the question that is on everybody's mind these days. You can't open a newspaper without seeing something about housing.
What I would say is this. I'm going to answer your question in a bit of a roundabout way, but I'll come very specifically to the answer. The housing market, the mortgage market, in Canada is an extraordinarily complex one, as you know. There's no one mortgage market. There are a range of factors going into affordability. The key thing that we look for, and we looked for it when the previous government made a series of changes and we looked for it when the current government turned its mind to these issues, is the balance between the goal, if it is to maybe slow things down, take a bit of the heat off, and maybe spread out the risk a bit, on the one hand, and not damaging the vitality of the marketplace, on the other hand. Therefore, what we look for are targeted, incremental, step by step....
Now, every bank is going to have their own portfolio. Every bank will have their own relations with customers. From what we have seen so far, the reaction my bankers express to me is, “Let us see how this current set of changes”—the stress test that you mentioned, the portfolio test, the changes in down payments that were made last December—“work through the marketplace before we contemplate any further changes”.
I think where most people are focused is the impact on those first-time customers.
Anyway, to your point, let me say a couple of things.
First of all, the quality of the underwriting has not changed. It is as strict as it ever was, and our prudential regulator won't let it be anything other than what it is. In fact, Mr. Deltell, I think a very telling case is that one of the proofs of the quality and the strictness of the underwriting is the rates of mortgages in arrears, when people can't pay them back. It is at virtually a historic low. It is less than a half of 1%. It's currently sitting at 0.28%. It's been under a half a per cent in periods of high inflation, low inflation, high unemployment, low unemployment.
What that says to me is two things. It says that banks continue to be very strict lenders, just by culture, but also our regulators require it. But it also says that Canadians are very good borrowers. They're very careful in paying their loans back.
I will answer in English.
Consumers don't necessarily want a uniform approach. There are some advantages to that, but what they really want is a good approach. The rules that are being offered here today in Bill basically sweep a bunch of current rules into the act and add not very much. In return, consumers are being asked in certain provinces, notably Quebec, to forgo protections that they have, but there will be other provinces where there are higher standards, which will potentially be cut off at the knees by this bill.
What consumers really want is good banking practice, good financial services practice. That's what they're looking for. The suggestion that they'll be confused by it is unnecessary. If this bill had had more consumer protection in it, there would have been less need to say there's going to be a problem in the future. However, because there's so little, I can guarantee you there will be problems in the future, because consumers will be dissatisfied. They will go to their governments, provincial or federal, and ask for more.
Yes, absolutely. The OECD is a good base as I explained, but only 10% of the multinational entities are going to be captured by it. The vast majority of countries will not be participating in the county-by-county reporting because they don't have the capacity to do so, and so we will not have that information.
It is a good base to improve on, but we'll find that it's very ineffectual initially until more countries are able to participate in country-by-country reporting. I do think it creates a false sense of security. There's much more work to be done, but we'll give credit where credit's due that at least this is a beginning, a baby step.
We feel Canada needs to take the lead in supporting those countries, many of which are tax havens, in being able to build up the capacity to report, because in the end, country-by-country reporting is about Canada knowing which corporation is paying tax here and what tax they are paying in other countries. That's the core of getting at tax evasion, and currently we're not getting that.
We did meet senior finance department officials who were actually responsible for crafting the legislation. Their concern was about tax policy and not about other consequences—namely, of course, in our area, health policy—or about how the rubber hit the road in terms of how this impacted on the delivery of patient care, or how physicians were organized in order to deliver patient care, or that the synergy of physician groups, whether they be radiologists or surgeons or others, would be affected.
In a sense, tax policy is colliding with both federal and provincial health policies. The federal health policy that governs all health administration across the country is the Canada Health Act. Physicians are in a purely publicly funded health care system, and that's what we're talking about.
The synergy of 20 physicians working together is more than 20 physicians working individually. For the past 30 years, accepted health policy in this country has been about getting physicians to work in teams with other teams of physicians in order to avoid having patients fall between these cracks and to provide a much higher level of care.
That level of care is an intricate combination of general practice, general skills, specialty skills, subspecialty skills, and in tertiary care centres like teaching hospitals, even super-specialized care, in which very unique skills are located that are vitally important for the delivery of the full landscape, the full waterfront, of what patients are expected to receive in our health care systems across the country.
I appreciate that, Ron, but I don't think you would ask the same questions as I would.
Thank you, Mr. Chair. Thank you, witnesses, for coming.
With regard to the consumer protection discussion, I want to get your comments, Terry, on the balance between protecting Canadian consumers and allowing the banks to operate. Have we achieved that balance, or in your professional opinion, where does that balance exist, and has any country, particularly in the G7, gotten it right?
That's a very big question, so here we go.
This is a moving target. Consumer protection regulations are not a static matter. We have the establishment of a framework here, but that can be built on, and I think Mr. Lawford mentioned that the Bank Act might be another platform in a few years' time.
Actually there's a section in the statute that addresses this. The purpose is to provide uniform protection to customers, to provide uniform supervision, but it's also intended to provide a uniform set of rules so that banks can operate efficiently.
Do we have that balance? I would say that the consumer regime since I've been at the CBA, certainly in the last 10 years, has simply gone up and up and up. I don't say that in any kind of negative way. It's a fact. Compliance budgets have gotten considerably larger, and our engagement with the FCAC has gotten considerably more intense. Are there any other jurisdictions around the world? I go back in history, and I think it's still true. I would not trade any regulatory or banking system regime of any other country for what we have right here and now in Canada. I'm proud of it, and I think that the different elements—bank culture, bank management, supervision, and regulation—work together very well.
Thank you to everyone for coming today and sharing their expertise on this particular piece of legislation. I'm going to be focusing my time particularly on the Ontario Association of Radiologists. I appreciate your being here.
Mr. Grewal has already talked about salary and whatnot. I'm concerned, Mr. Chair, when I go to many parts of rural British Columbia in my riding, often it's more difficult to attract physicians. Raising taxes on high-income earners as this government has done has made it more difficult to attract physicians, particularly when places like the United States are right across the border and not very far away.
I'm very alarmed that not only are we providing disincentives for people who are working solo, but now in a way that affects our provincial and territorial partners.
I was sent an email saying that many of these medical structures were formed to deliver provincial and territorial health priorities. You have mentioned a number of them, particularly teaching, research, clinical services. These changes will impact the service and cause many of these group partnerships, which have developed over 15 to 20 years. That jeopardizes not just what you called non- or badly remunerated services, but will compromise health care for patients.
Is that correct?
That's fine. I'll use the example of institutions that do research and teaching. These large groups that work in those types of hospitals function as a group, and the group supports the individual who is involved in teaching and research.
Money is short everywhere, but there's not a lot of money for research in this country, and research is vitally important. The reason I kept getting back to patient care and all the items I talked about, is that at the end of the day it funnels down to patient care. If you have good research, you're going to get a better result in the end, and everybody appreciates that.
Those individuals are financially supported by the groups. The provincial government in Ontario has established something called an AFP, an alternative funding plan, specifically to encourage groups to form so they can support teaching and research, which they recognize is underfunded.
I think the other thing to appreciate is that when we talk about groups, certainly in radiology, groups on average range from 10 radiologists to 100. Obviously, the 100 are in large urban tertiary centres, but these are major collections of individuals with a very broad range of skills, and it works accordingly down to the smaller.
To the earlier part of your question, and this is something we did not mention, the impact of this will be on small town Canada, rural Canada, under-serviced Canada, but it will also be in urban and suburban areas, as people decide that this model, which has been cultivated by the provincial governments across the country, by hospitals across the country, to work in teams, to create this coalition, to create greater critical masses of skills....
Radiologists, for example, work with emergency physicians, and everyone who walks into emergency is typically running through the hands of a radiologist. Oncologists for the treatment of cancer, stroke, you name it, surgeons, internal medicine physicians, are all acting in teams in combination. This puzzle that has been crafted over really 30 years is now being accidentally...and I don't think anyone's doing it deliberately. That's the name of our talk, “Unintended Consequences”.
To give you an example of another unintended consequence, of why we're, in a sense, the canary in the mine, these things happened before for tax reasons or for financial reasons, and led to long waiting lists, whether it was CT or MRI, where there were cancer wait lists, or hips and knees. It is not the intention, but this will have the effect of creating those kinds of things down the road. It will happen first in the hinterland of the country, and it will work to the centre. Again, it's through no fault of the federal government or the finance department, but there is a lot of turbulence going on in the country.
You're asking why are radiologists...? We're a very large group. We watched this. We became aware of it. People were asking questions. We're representing radiologists and other physician groups from across the country who are asking the same thing. The CMA will be here this afternoon talking about this.
I apologize to the other witnesses, but I'm going to jump in on this conversation, too, because I do have some questions. I can barely see you, but that's okay.
I have a few concerns in regard to when we're talking about...and I understand your response, but from the financial officials we are talking about tax policy. The concern I have is in regard to this idea of care as a result of tax policy. Physicians and doctors—and I know many—do a lot, go above and beyond, and they took an oath that is above and beyond just financial conversations. You brought up one point specifically about certain doctors, certain specialists, who are not actually compensated very well for some of the work they do. But should tax policy really be a substitute for compensation?
Shouldn't those performing duties be compensated in a way that is fair, and each province deals with that? Why should tax policy become the substitute for fair compensation?
Although I'm trying to stay focused on the tax policy, which is what we're actually dealing with, I can't, because we're talking about a lot of other things. Mr. Albas raised the point that somebody sent to him that this has been a model for 15 or 20 years, which we're moving away from. I think there's some argument about whether we're moving to a better model or whether that has been a better model. Twenty years ago, if you went to your doctor, in a lot of cases there was a continuity of care. Going into group models, sometimes you can go in to see your doctor and you never see the same doctor, even though that's your family doctor.
In the past, the model used to be that if a physician went on vacation or was off sick themselves, they had family health groups or family health teams that would come in and substitute. People had this continuous care by doctors who knew who they were, doctors who understood their medical history, instead of having somebody new every single time.
We're not here to debate whether one model is better than the other, because, frankly, that's outside the purview of this, but it's been brought up that this will create a system of sole practitioners because there's a benefit. I'm trying to understand...and perhaps sole practitioners might not be such a bad thing in terms of care.
I'm going to quickly make a couple of comments to Mr. Foley and Mr. Taucer.
In a previous life I was a health minister in Alberta, and if there's one thing that drove me crazy, it was the fact that the medical profession didn't work as groups. I think the advancement that you've made in the last decade or so has been phenomenal in terms of providing that kind of care to the patient. We could get into a pretty good debate with my friends across the way here about these things.
Mr. Foley, you said a couple of times that these are accidental, unintended consequences. We had finance officials here last week, and I don't think it was accidental. In fact, in listening to some of the questions that are coming from the government side, I'm convinced it's not accidental. I'm convinced that this is the beginning of how this government is going to move into small business taxation. We have a budget, but first we had an election where the not only said that they were going to increase taxes a little bit higher on the high-income earners; he also said that small businesses in many cases were nothing more than a tax dodge.
Now in this budget, where we did not have, as promised in the election campaign, a reduction in the small business tax, we are now seeing a tax coming on for small businesses. For Mr. Grewal, who unfortunately isn't here, we're going to see with the Canadian Medical Association and their presentation in the next group that, as an example, in the province of Nova Scotia the tax rate goes from 13.5% to 31%. That's hardly hundreds of dollars.
I think, with all due respect, gentlemen, if this gets changed, it's going to be because of the work of people on this side of the table, and because of people like you. It is not an accident, and if it doesn't get changed that will prove me correct. I see Mr. Champagne sitting right next to you who can take that back to the .
Those are my comments regarding that. I'm not sure if you want to make any other comments, but I would suggest that this is this year, and next year it's going to be groups of general practitioners or other medical professionals. I think this is a trend that's going to happen.
Let me tell you, if Mr. Trump carries through with his reductions to personal income tax rates, in terms of that wee little bit extra that this government said they're going to squeeze out of the high-income earners, they're going to get nothing out of the high-income earners because they're all going to be crossing the border to work, including a whole bunch of health care professionals.
I'll leave it at that because I have a question over here.
Mr. Lawford, you represent the Public Interest Advocacy Centre, where you spoke on behalf of consumers. Then, Ms. Goulard, you represent the Financial Consumer Agency of Canada. When I heard the two presentations.... Who's representing consumers here? Because quite frankly they couldn't have been more opposite, unless my hearing is going.
I'd like each one of you to maybe give me, as a layman, an example or two of, in your particular case, Mr. Lawford, how this is going to make it worse, and in Ms. Goulard's case, how it's going to make it better.
We are the regulator for the financial institutions. We are not a consumer advocate. We look after consumer interests. I think that's the distinction between Mr. Lawford and ourselves.
We believe that this is going to be very good for consumers, and I'll give you just two examples. One is broad and the other one is very specific. One specific example is that one of the ways we disclose information to consumers is through information boxes. If you open your credit card application, you will find on the cover an information box that includes information such as the interest rate that's going to be applied, and other relevant information. One of the things that this government has done, that the bill has done, has to do with the information boxes. They will now be required for a much broader set of products and services so that consumers have an easier way to find the information when they are purchasing products from banks. That's very specific, and there are a number of very specific examples.
A much broader example of how this will be good for consumers involves the new principles. The legislation now includes five principles that will direct the banks in terms of how they need to conduct themselves with consumers. That means broader access to products, and the banks must treat consumers and the public fairly. A couple of times Mr. Lawford referred to Ireland and how well it treats its customers. Ireland is one of the countries that we will be looking at because they already have a principle-based approach, so perhaps the approach that Mr. Lawford is referring to is the approach that we will now be adopting in Canada, which is a principle-based approach.
We will be implementing these requirements, and we have spent quite a bit of time examining what's going to be required of us. I can say that it's much broader than what Mr. Lawford is perhaps referring to, because we see there are very small changes that have been made that will have a significant impact, we think, on consumers' interests. We are looking forward to implementing.
Thank you very much, Mr. Chair.
As you said, my name is Aaron Wudrick. I'm the federal director of the Canadian Taxpayers Federation. We're very pleased to appear this evening to comment on Bill , which, of course, contains various provisions to implement aspects of the 2016 federal budget.
At 244 pages, it's a rather voluminous bill. Rather than even attempting a micro-level analysis of it, I just want to touch on a few measures in particular that the CTF takes a view on, specifically the indexation of the child care benefits and anti-tax avoidance measures, and I have a comment on the government's overall attempts to simplify what is a very complex tax code.
The Canadian Taxpayers Federation supports the government's modification of the UCCB into the new means-tested Canada child benefit. Our only concern about this measure is the total cost of it, specifically that it was presented during the election campaign as part of a package of measures that were supposed to pay for themselves, but ultimately, it ended up costing more than advertised. In this sense, I'd actually suggest it's a miniature version of the government's overall fiscal situation.
That said, we do support indexation generally. I note that the Taxpayers Federation was one of the vocal groups that advocated for the elimination of bracket creep for income taxes, whereby individuals were pushed into higher income tax brackets just because of inflation. Paul Martin, when he was finance minister, implemented this in the 2000 federal budget.
While that measure was designed to protect taxpayers from higher tax brackets, the CCB indexation, by contrast, because it is an entitlement, will lock in a higher expenditure level. We think that this is ill-advised, given that the government is already spending more on this measure than it had planned to.
With respect to the anti-tax avoidance provisions, the Taxpayers Federation applauds these measures to clarify the law. We strongly oppose tax evasion and believe that those who break the law should face the full force of the law. But we should also be absolutely clear about the potential effect of eliminating so-called grey areas, these loopholes that have effectively functioned as safety valves to lower the overall tax burden, since the practical effect of eliminating those loopholes is to raise the overall effective tax burden. We should be honest about the potential impact there. I know that not everyone on this panel might agree, but we would argue that raising taxes is not a good way to boost economic growth, which, of course, we know is one of this government's central objectives.
The last thing I want to touch on is the simplification of the tax code. I think it's safe to say that concern about the excessive complexity of our tax code cuts across the political spectrum. As of this year's tax filing date, the Income Tax Act was over one million words long and would take the average person 59 hours non-stop to read. To give you an idea of how long this is, Leo Tolstoy's epic war novel War and Peace is only 587,000 words. By contrast, the Income Tax Act is about twice as long as War and Peace. I really think we need to look at ways of making the tax code simpler. We can always debate what the right level of taxation should be. Of course, our group will always be there arguing that lower is better, but whatever we settle on, I think we should be looking to try to find simpler, more effective ways to raise the same amount of revenue.
I'll leave it at that. Thank you.
I'm here on behalf of the 3.5 million members of the Canadian Labour Congress. I want to thank you for the opportunity to present our views on Bill .
The CLC brings together Canada's national and international unions along with the provincial and territorial federations of labour and 130 district labour councils whose members work in virtually all sectors of the Canadian economy, in all occupations in all parts of Canada.
As my colleague from the Canadian Taxpayers Federation did, I'm going to touch on just two parts of this bill because the bill is very long.
Part 1, subclause 43(1) amends section 122.61 of the Income Tax Act, indexing the Canada child benefit to inflation, but only starting in July 2020. The Canada child benefit replaced the universal child care benefit, which was taxable and not indexed; the Canada child tax benefit, which was not taxable and indexed to inflation; and the national child benefit supplement, which was also not taxable and was indexed to inflation.
The Canada child benefit was introduced and came into effect as of July 2016. It is not taxable, like two of the previous three, and not indexed to inflation, like the UCCB. It simplified the other three programs and it better targeted this benefit to low-income families, so it was very popular and one of the things that the Canadian Labour Congress pointed to as a success that would lift children out of poverty.
The maximum benefit under the old system, if you had one child under six, would be $5,700 for this year. The new CCB gives those families an extra $650 a year for that child. This is a considerable amount of money if you have a low income, but since the CCTB and NCB were indexed to CPI, this advantage shrinks to only $190 in 2020. It is inexplicable that a benefit aimed at reducing child poverty would be allowed to erode by so much in such a short period. An alternative to keep costs down would be to phase the benefit out earlier. Right now, two-child families with incomes of up to $200,000 still receive some benefits. It's also inexplicable that we're allowing.... Because we're not indexing either the $30,000 or the $65,000 as peoples' incomes rise, they'll grow out of those groups...in order to keep benefits for fairly wealthy families.
Part 4, division 1 introduces a definition of “suitable employment” into the Employment Insurance Act. This definition was previously spelled out in EI regulations and in the “Digest of Benefit Entitlement Principles”. Most of the definitions from the EI regulations have been moved into legislation but some parts of them are specifically missing.
The health and physical capabilities that allow workers to commute and perform the work is no longer a factor in considering suitable employment nor is it necessary that the hours of work are not incompatible with family obligations or religious convictions. That's quite significant. If you are offered, say, a night shift but you have a child in school, do you have to take that night shift or can you say that's not suitable employment? Most of us have to be accommodated for our family situations, and it would be incongruent if EI did not also accommodate us for our family situations.
That the nature of work not be contrary to moral convictions or religious beliefs is no longer included in the definition of suitable employment. This was in EI regulation 9.002(1). The definition in Bill is otherwise the same as EI regulation 9.002(2) and (3). I'm wondering if this was an oversight, or if it was intentional, given that the Social Security Tribunal relied heavily on years of jurisprudence from the Board of Referees and the umpire. We're likely to get more consistent decisions if we can stick to the established definition and people will have more consistent outcomes.
Thank you very much.
I'm John Feeley, vice-president of member relevance at the Canadian Medical Association. I'm joined here today by Dr. Rick Davies, who is a professor in the division of cardiology at the University of Ottawa Heart Institute and managing partner of the Associates in Cardiology group medical structure.
Let me first thank the members of the committee for recognizing the risk to health delivery posed by the proposed changes in Bill affecting group medical structures, and for inviting the CMA to appear before you as part of your study of this important legislation.
The CMA watched your first meeting on this bill with great interest. As part of my remarks today, I'll address the questions posed by the committee during that meeting.
Since the release of this proposal in the 2016 budget, it has become increasingly clear to the CMA that Finance Canada is vastly underestimating the risk to medical group structures. I'm here today to clarify that the risks are real. If this proposal applies to group medical structures, there will be a negative impact on medical research, physician training, and the delivery of specialty care in Canada.
Group medical structures are prevalent within academic health science centres and among certain specialty groups as we heard earlier, notably among radiology, cardiology, anesthesiology, and medical oncology.
The CMA estimates that about 10,000 to 15,000 physicians are incorporated in these group medical structures. This team-based care is essential for educating and training medical students and residents in teaching hospitals and for conducting medical research. Unlike other professions, group medical structures have not been formed for taxation or commercial purposes. Also unlike other professions, physician compensation is set by negotiations with provinces and is based on the existing tax framework.
Group medical structures are formed to deliver on provincial and territorial health priorities primarily in the academic health setting, such as teaching, medical research, as well as optimizing the delivery of patient care.
Maintaining the current framework for the small business deduction is critical to the continued viability of these structures. It is critical that the committee understand that Finance Canada is significantly underestimating the impacts to group medical structures. Changing the eligibility to the small business deduction will have a significantly larger implication than simply the 4.5% difference in the small business versus general rate at the federal level, as suggested by the department.
With no practical way for the provinces to use a different definition, the combined tax rate increase would be as high as 17.5%. As a result, this federal tax change would establish a strong disincentive to practices in the impacted structures. While we recognize Finance Canada's validation of cost-sharing arrangements, this is unlikely to resolve the concerns we're raising today because we're talking about pooled income and reallocation of revenue amongst a group practice.
The CMA is also aware that the department developed financial impact scenarios that show the net impact will be in the hundreds of dollars. While unfortunately we were not afforded access to this analysis, it is our position that these results are not an accurate portrayal of the impact of this federal tax proposal.
To demonstrate this case, the CMA worked closely with MD Financial Management to develop real financial scenarios based on real financial information from two typical incorporated physicians in group medical structures. MD Financial Management is a subsidiary of the CMA providing financial management services to Canada's doctors.
This real financial calculation revealed annual net reduction of funds of $32,500 and $18,000 for each of these physicians respectively. Projecting forward when extended to all incorporated members of each physicians group structure, this would represent a negative impact of $39.4 million and $13.4 million based on a 20-year time frame and 4.8% rate of return.
In closing, I would like to underscore the importance this issue has to health care delivery. Since the release of the budget, the CMA has received an unprecedented level of correspondence from physicians expressing their grave concerns with the federal proposal.
To date, we've been copied on over 1,800 submissions to Finance Canada, the finance minister, and to members of this committee. In comparison, when we informed our members of the increase to the top personal taxation rate, we did not receive one message—not one single message.
When we surveyed physicians they confirmed the concerns we had heard regarding these specific proposals. Sixty-one per cent of respondents indicated that the group structure would dissolve. Three-quarters said that other partners would leave the group practice, almost 80% said the tax proposal would lead to reduced investments in medical research by their group, and over two-thirds said that the tax proposal would limit the ability to provide medical training spots.
I thank the committee again for inviting the CMA to appear during your study of Bill and I strongly encourage the committee to adopt CMA's recommendation to exempt group medical structures as the only means of avoiding this negative and unintended consequence.
Dr. Davies and I would be pleased to address any questions you may have.
Thank you for listening.
We are a national research and law reform institute. We focus exclusively on issues associated with law and aging. We are independent, non-partisan, and non-political, and we're very honoured to present to you today.
I wanted to lead off by saying that while we are not an advocacy-based organization, we have had the privilege of reviewing some of the submissions from the Public Interest Advocacy Centre and the Foundation for Advancements of Investor Rights, FAIR Canada, and we agree with many of those provisions.
I'm going to focus today on three things. First, I'm going to try to bring the voice of older people to the table when we review both the OAS and look at some of the code provisions with regard to financial services. Second, I'm going to bring to the table the voice of older women in particular, and how older women are disproportionately negatively affected. That information is not well reflected in the provisions available in the budget that the committee has looked at so far. Third and last, I'm going to focus very specifically on section 19 of the OAS with regard to the payment allowance for a pensioner's spouse or common-law partner.
To begin, I think it's important to reflect that financial services are not dealing with the overarching reality of Canada's aging population. We have the largest demographic shift in the history of humankind, and we have the largest intergenerational transfer of wealth in Canadian history. With great respect, many of the provisions reflected in the document before us for consideration do not adequately reflect the real needs of Canadians to make sure that financial services are responsive to both the aging population and the transfer of wealth, and that services are accessible, make sense, and deal with the realities of cognitive impairment that we see.
In a 2016 study that we participated in, reviewing financial elder abuse in particular, we know that 2.6% of all Canadians are subject to financial elder abuse involving hundreds of millions of dollars. We know many people are becoming older and many people are becoming more cognitively impaired, and that financial services have not established training to deal with that.
The complaint mechanisms we've seen proposed are enormously confusing for older people and families. They don't know how to go to a variety of resources, how to manage internal services with their financial institutions. They perceive gaps in insurance services. We hear time and again that older people and family members simply are not being well served by financial institutions and that the dispute resolution mechanisms are inadequate in this regard.
I want to bring together the voice of older women. We just finished a three-year consultation with older women of diverse populations, including indigenous populations, and some said the government has to raise their pensions, it has to raise OAS, it's not enough, they cannot eat. If they're earning half as much as a man, then they're only able to contribute half as much to their pension. They save for an RRSP, but it's not meeting their needs when they're old. Aging is a man's world. Women are starving. When we reflect on how negatively women are served by OAS.... We appreciate the changes that are being made to the OAS, and appreciate that it has been raised, but there are significant impacts for older women, particularly because they are the poorest group in all of Canada.
Most people living in Canada contribute to CPP through paid employment. It provides a pension based on a lifetime of pensionable earnings. We age throughout life. When we see the dropouts for caregiving it means that older women in particular live in poverty.
The last piece I want to raise is a very narrow point of section 19 in the OAS. In particular, this section deals with people who may be forced to separate because of things like jail. We hear time and again that people are forced to separate because of care needs, particularly when they move into retirement homes and nursing homes. There is no presumption that this kind of separation would be included in this.
With great respect, there should be clarity that when people are forced to separate for health and care needs, it's not accidentally captured by this provision.
I'm happy to speak further on a number of aspects, but those are my initial comments.
Perhaps I can take that one. I'll speak to our group at the heart institute, and specifically academic groups.
First, we formed a legal partnership in 1976, and while it's a partnership, it wasn't to make money, really. What we did is we're supporting what we call the academic mission. Right now, we do a lot of research and we're actually becoming better and better recognized for that. We have the top-rated teaching program in the country. We get some of the best cardiology trainees in the country for that reason. We also do clinical care. Some of it is well paid; some of it is poorly paid.
For example, we recruited somebody who was described to me when we recruited her as the best cardiologist in Australia. She takes care of patients who are very sick. If you have a heart transplantation, she's the person who's going to be looking after you. That's very poorly remunerated. In order to be able to recruit excellent people like this, what we need to do is we need to be able to adjust. What we've done with our partnership is essentially we've been able to maintain excellence in all areas. There's research, which we fund almost all of. There's clinical care, and poorly funded things, which we essentially redistribute to so we can keep these excellent people, and there's teaching, which is completely unfunded. We spend our time doing this because we think it's important to have researchers and doctors for the future.
I will now move on to Ms. MacEwen.
With regard to employment insurance, the government seems to be reinstating the definition of unsuitable employment, which the Conservatives abolished in 2012. However, some definitions still seem arbitrary to me. For instance, the government can decide that an unsuitable employment becomes suitable after a period of time. In short, if a person refuses to take that job, his or her EI benefits will be lost. I asked some officials how much time had to elapse for an unsuitable employment to become suitable. I was told that it was two to three months, which was also the case before 2012.
How do you see the situation? How can it take so little time for a job that a person isn't qualified for, so an unsuitable one, to become a suitable employment that the person is qualified for?
Welcome, everybody, and thank you for your testimony.
I'm going to start with the Canadian Centre for Elder Law.
On the question of elder care or our greying population, obviously our government has done a number of things to help these individuals out. We increased the guaranteed income supplement by almost $1,000. We reversed the old age security and GIS eligibility after the Conservatives had put it to 67, and we reversed it to 65. We still have the seniors benefit index we're working on that was in our platform. We've done a number of things to help seniors out. I would love for you to comment on that one.
One of the things I would like to see maybe in the future—because we've also enhanced the CPP, which is going to be a great thing for future generations—is the potential for changing, in the next go-around on the CPP discussions, the 60% to 100% level, which would allow, if your spouse passes away, your benefits to go from 60% to 100% of the other spouse, but still maintain the cap. That has been talked a lot about as a very effective measure in the future to reduce poverty for seniors.
Can you comment on that?
Thank you. I'll take the last piece first.
The Canadian Centre for Elder Law is a research and law reform institute, so we don't do advocacy. Having said that, the last comment is certainly one that we've looked at. It would be a significant benefit to older people, and particularly older women, because older women do still outlive older men. The predominant number is that 26% of older women in Canada live exclusively on CPP and OAS, as opposed to about 17% of older men, so it's a significant increase.
Having said that, with great respect, this is the only government that's not appointed a federal minister responsible for seniors. It is a great concern to, I think, the Canadian population at large, as well as folks who work in the field responsible for aging, that there is no place to go for issues concerning seniors. I know that would be of great interest to the elderly community and their supports to ensure that there is a minister responsible for seniors, as past governments have done.
Thank you for your commentary.
This question is for the CMA. After hearing your presentation and the presentation before by the radiologists, I've been grappling with this issue, so I want to ask it in this context.
The current structure for group structures.... I belonged to the CICA's accounting standards board. I sat on it for a number of years, although, obviously, I don't do that now. I'm looking at this from a tax treatment perspective. It is advantageous for the group structure to be in place for specialists, like doctors, radiologists, and so forth. I get that.
If this structure is no longer allowed to be utilized, so the eligibility is no longer there, thereby having a detrimental impact on health care.... I want to hear your opinion on the tax consequences versus the health care. If you can tie it in, that's great. If you can't, I just want to hear some more colour around that, please.
In academic centres, in order to get, if you like, your top tier of health care, we encourage our doctors to specialize in often very narrow fields. I mentioned the doctor who takes care of patients who need cardiac assist devices and heart transplants. This is unlike what I'll call a community cardiologist, who tends to do a broader range of activities. If you have an individual practising in the community, he'll do some things that are highly remunerative, some that he loses money on, and on the average, things work out okay.
In order to deliver that absolutely top tier of health care, what we have to do is encourage people to spend all of their time doing activities that they become very excellent at. This is how you can get the truly top tier of care. Without academic groups and the ability to function in academic groups, we can't do that because, essentially, there are some activities in which nobody could ever be able to make a decent living, so we need to support them. If the truth be told, there are some people who are in very highly remunerative activities and they are willing to support their equally well-trained colleagues because they realize that essentially the provincial billing often got it wrong. If they got the billing right, or possibly not....
However, what we've done to function over the years, in order to make sure that we can maintain this level of excellence, is that we've maintained groups like this. You'll lose that level of excellence if we lose the ability to form these academic partnerships.
Ladies and gentlemen, welcome to your House of Commons.
I would like to begin with a few basic thoughts on the tax reductions that are currently being suggested in the budget. I'm talking about the so-called tax reductions.
Mr. Chair, as you know, these amounts that were given to Canadians had to be done at zero cost. Unfortunately, the figures do not match, since it is costing $3.4 billion more than had been expected with the measures adopted in another era. That had to affect a very large number of Canadians. However, it's important to understand that 65% of workers are not affected by the alleged tax cuts because it excludes those earning $45,000 or less.
The biggest beneficiaries of these tax cuts are people earning between $140,000 and $200,000. I immediately confess the conflict of interest in this regard. I am one of the people in that earning bracket, as are all my colleagues here with us. In short, if we say that the middle class benefits the most, I can tell you that, with an income of $145,000, we aren't really part of the middle class anymore.
Earlier, someone mentioned that it was supposed to be the richest people who would pay for it. You can laugh, but one of these days, the richest may get fed up with the situation and decide to leave.
I just want to remind you that there are serious dangers attached to this situation, and I know what I'm talking about. About 40 years ago in Quebec, mass migrations occurred and led to tax increases for businesses and the more affluent. This led to many departures from the province. Perhaps one of the best examples of this is Toronto. Compare Toronto's situation 40 years ago to now, compared with that of Montreal at the same time and today. If you compare the evolution of these two cities, you'll see that one has benefited far more than the other from lower taxes.
It's also important to remember that some people may be strongly tempted to take advantage of taxes that may be better elsewhere than where they are, without necessarily engaging in tax evasion. For seven years, an MP who represented a Montreal riding preferred to pay his taxes in Ontario because he lived there. It was actually to save $6,000 a year in taxes.
In short, people sometimes move to avoid paying taxes they feel are too high. Similarly, supposed tax reductions do not necessarily benefit those who were considered primarily when they are put in place. In that regard, there is a substantial loss of $3.4 billion. We should also not forget that that the people who designed this program forgot one small detail: the indexing that was done five years ago after this model was put in place. Be careful when you laugh a little too quickly about it.
My question is now for the representative from—
Canadian Taxpayers Federation.
Mr. Wudrick, welcome again to your House of Commons. It's always a pleasure to see you.
As you know, there is a huge tax for small businesses with the new Liberal carbon tax, with the new Canada pension plan fees that will increase, and also with the fact that we still have a high tax rate, instead of lowering it as was proposed during the last electoral campaign. For sure, we're talking about business, but when business faces those new realities, it has an impact on working people.
Do you think it is a big issue for taxpayers to see those new taxes, the Canada pension plan with new fees, a Liberal carbon tax, and also the fact that businesses have a high rate to pay for taxation?
Thank you for the invitation to appear before the committee.
With the CPP and the OAS, I will put the two together, because they are so inextricably linked in how we do it. We would like to provide a few key issues.
The first piece is that it disproportionately costs people who are poor more than the actuarial amount that they get back from it. There's excellent actuarial science to indicate that for CPP and OAS payments being paid by people who are quite poor, it doesn't balance out on the other end. It is a structural concern of institutionalized poverty, and there are gender concerns around that, as well.
The second piece is that it can disproportionately negatively affect immigrant populations. As many of you would know, you need to have a number of different qualifications in order to get your CPP and OAS. That does have an effect in the long term. You need to pay in for 40 years, or for partial benefits 10 years, and be 59, while living in Canada.
What we know is that over the life course people who are in immigrant populations in Canada are significantly poorer as they age, as a result of that. It's not well indexed to support the fact that Canada is a population that is welcoming its diverse immigrants. We need to rethink that in the longer term. It does not currently reflect a positive outlook for finances for older people who come to Canada.
Thank you so much for the question.
When we look across the life course, there are a number of different pieces that we need to pull together. One of them does very much deal with the consumer financial protection aspect that we're talking about today, and one of them will also reflect the OAS and CPP piece. The first is that we can charge, and I say charge because that's what you're doing. They're paying into CPP and OAS. You're charging your clients who are the people paying in. You can index it to less. You can look at the actuarial science around the cost paid in and paid out. That hasn't been looked at for many years. There's an opportunity to bring a gender lens for the real cost in and the real cost out.
The second piece could be quite simple. Under certain qualifications, we could give women more money, particularly single women, who are the poorest population in Canada, as a broad group. You can also offset it by looking at caregiving dropout provisions, which are similar to what my colleague was talking about with the child tax benefit. There are tools to reflect the life course caregiving challenges, which are not yet used as revenue tools or concessions to revenue tools.
We certainly can look at ways across the life course, particularly because we know that older women are also caring for other older women, men, and other people across the life course. As they age, caregiving is not concluded. We can look at some of those analogous tools to the child tax benefit and look at those for caregiving provisions.
The last piece I will say—and I was reflecting on this with our colleague from ADR Chambers—is that in the conversations with the Ombudsman for Banking Services and Investments, they've indicated that 50% to 70% of their cases deal with older people. There's a gender piece in that, as well, because proportionately there are more women than men.
Interestingly enough, there are fewer women using the complaint provisions and bringing forward their complaints. I know that it speaks to other research that we have in this area to suggest that women don't necessarily have the same financial literacy opportunities and the same abilities to complain, or the same relationships with financial institutions. I see it as a multi-varied approach. There are really positive things that we can do about it.
Thank you. That was helpful.
I am going to move on to the Canadian Medical Association, because I have limited time.
First, I'll say that your approach is very balanced, and I appreciate it. It was well done. I just want to talk about one piece that I didn't get to previously, but you both mentioned it. In terms of the subspecialists—I think you described it as the highest degree of speciality—I'm just wondering if, in your research, you've looked at the costs, because you feel that this will really be impacted, the subspecialized doctors. Programs the provinces are doing....
For example, in Ontario there is something called eConsult, where you are actually delivering those specialties outside of just that business group, and rural communities, for example, can now access that type of subspecialist. Have you modelled in these calculations the fact that not only is there still financial incentive for these types of specialists, but, through technology, you can actually get that out to larger areas than just your business group?
Okay. There's an opening again for the government to take a look at this because we really think this needs a second look.
Again, this is a government bill. There has been a lot of criticism of the previous government for different things they put in a bill, but I don't believe we ever had something that would affect health care, research, and patient health as much as it sounds like this will.
I would urge the government to try to fix this, Mr. Chair, because it is their legislation. If not, then I guess the opposition can look at remedial amendments down the road, but I would encourage them to take a look at that because this does seem to be—
Again, as Mr. Liepert said earlier, the finance officials believe there is a disparity. I don't think they are taking into account the social costs that will come with this decision, so I appreciate your work here today.
How much time do I have, Mr. Chair?
I'm going to go to Mr. Wudrick quickly.
Mr. Wudrick, I support a lot of what your organization stands for. I think it's excellent that we have independent watchdogs besides opposition. The public needs many voices to look at these kinds of things, but I've heard time and time again we need a simpler tax code.
For the majority of Canadians, they are dealing with their own individual situation. They are not dealing with bond strips and international tax evasion schemes that are quite complicated, yet when we talk about simplifying the tax code, everyone says we need to make it simpler.
Technology has made things incredibly simple. In fact, most people can look at TurboTax and get their—
I think you have it generally correct.
Essentially, we don't get paid for the teaching that we do. This is, if you like, our legacy for the future. As I said, we have the top-rated teaching program for cardiology in the country. We spend a lot of time at it, we work at it, and we're very proud of it.
In general, clinical dollars that are redistributed fund 80% of the time that doctors spend doing research. There is some peer review, but compared to what we do with this voluntary redistribution of clinical funds, it's a drop in the bucket.
We have several areas of medicine that are dramatically underfunded by the different funding schemes. We realized that they were important. These are colleagues who can do things that I can't do, and I need their help. They are highly trained, and we make sure that they're adequately remunerated as well. So—
I want to comment on one thing. You're saying that this change, this proposed legislation in the bill, is going to impact recruiting doctors to Canada, residency programs, and the entire profession across the board. I have a tough time understanding that.
I will admit right from the beginning that I'm obviously not a doctor. I never went to med school, but I am a lawyer and I have a lot of cousins who are going through this process. A lot of them are extremely frustrated by the lack of residency spaces in Canada. They all want to practise medicine in Canada. I have cousins and family from the United States. One went to Berkeley med school, one of the best med schools in the world, and gave up probably millions in the U.S. because he wanted to raise his kids in Canada.
I think that people make a decision on where they live, more than on the tax. I'm sure the argument goes both ways, but there is an argument to be made that Canada is a better place to live, to raise your family, and that's where doctors want to stay as well.
However, I do want to hear your comments on how this is going to impact residency. We have many students who want to come to do their residency in Canada, and we don't have enough spaces. I have cousins who have gone to med school and couldn't get a residency.