FINA Committee Report

SUPPLEMENTARY REPORT OF THE LIBERAL PARTY OF CANADA

This year, the Standing Committee on Finance heard from a record number of individuals and organizations during its pre-budget consultations. We would like to thank the hundreds of people who took the time to share their thoughts with us either through written submissions or by appearing before the Committee.

While we support many of the recommendations contained in the report, we believe that the report does not go far enough in addressing the important challenges facing Canada.

Jobs and the Economy

We are concerned that the majority on the Committee have grown complacent about troubles in Canada’s economy. Job creation has failed to keep up with population growth. The proportion of Canadians in the labour force remains well below pre-recession levels; too many have given up and stopped looking for work. In 2012, Canada saw some of the highest youth unemployment numbers since Statistics Canada began to track the data in the 1970s; an entire generation of Canadians risks being scarred with high student debt and no meaningful  job experience. Therefore, to help improve job creation we recommend:

1.    That the government recognize the significant unemployment and underemployment of young Canadians, and implement a national youth jobs strategy that includes a hiring tax credit dedicated to young Canadians, a significant expansion of the Canada Summer jobs program, and the reopening the summer job centres that were closed by the government.

2.    That the government freeze Employment Insurance (E.I.) premium rates in order help Canadian employers create Canadian jobs.

If, however, the government chooses to proceed with another temporary “hiring” credit for small businesses instead of an across-the-board E.I. rate freeze, we recommend:

3.    That the government lift the freeze on the $10,000 threshold for the hiring credit so that, unlike in 2012, small businesses near the threshold will not be penalized for hiring new workers or giving their existing workers modest wage increases.

4.    That the government extend the accelerated Capital Cost Allowance (CCA) for a period of at least five years so that Canadian employers can make strategic investments to boost productivity and create Canadian jobs.

5.    That the government reverse its cuts to the Scientific Research and Experimental Development (SR&ED) tax credit in order to provide the necessary incentives for Canadian employers to invest in Canadian research and development and create Canadian jobs.

6.    That, in order to maintain a strong and vibrant tourism industry in Canada, the government recognize how essential international marketing is to attracting more foreign tourists to Canada and increase support for the Canada Tourism Commission.

The Committee also heard from the Bank of Canada that record high personal debt levels are the single biggest domestic threat to our economy. High personal debt is also a threat to Canadians’ retirement security. To help Canadians increase their savings and prepare for retirement, we recommend:

7.    That the government work with the provinces and territories to introduce a voluntary, supplemental program under the Canada Pension Plan so that Canadians and their employers have access to a retirement savings option with lower risks and lower administrative costs.

Childcare remains one of the most significant costs facing Canadian families. A recent TD report argues for greater public investment in early childhood education:

“There is a great deal of literature showing compelling evidence of the benefits of early learning. Not only do high-quality early childhood education programs benefit children, they also have positive impacts on parents and the economy as a whole. Several studies show that the benefits of early childhood education far outweigh the costs… More focus should be put on investing in, and improving, the system. Indeed, in most parts of Canada, there currently exists a gap between parental leave and the start of formal schooling, and the limited child care spaces that are available are often very costly for parents.”

To strengthen the economy and help Canadian families make ends meet, we recommend:

8.    That the government increase support for affordable early childhood education and care programs.

A Stronger Society

While the body of the report includes testimony from a wide range of witnesses calling attention to challenges faced by disadvantaged Canadians, the majority report is remarkably light on recommendations that address these challenges.

We reject the false dichotomy that others believe exists between a strong economy and a compassionate society. Instead, we believe that making the necessary investments so that Canadians from all backgrounds can more fully participate in the economy is both the right thing to do and makes good economic sense. Removing the barriers that prevent some Canadians from completing their education or contributing to the workforce leads to greater productivity and economic growth. Investing in education, health care, arts and culture not only contributes to a stronger society; it also helps us to attract and retain talent from around the world in today’s globally competitive market for skilled workers.

On the issue of removing economic barriers for Aboriginal Canadians, the Committee heard from a large number of witnesses about the need to significant improve funding and support for Aboriginal education. We heard from the University of Saskatchewan that:

“Investing in aboriginal education and employment is not only a moral imperative, it is a sound investment. Studies have shown that closing the education and labour market gap between aboriginals and non-aboriginals by 2026 would lead to cumulative benefits of $400.5 billion in additional output and $115 billion in avoided government expenditures over the period from 2001 to 2026.”

The Canadian Alliance of Student Associations also told the Committee that:

“Demographic projections illustrate that one of the most important investments the government can make is in the aboriginal population of Canada, which is forecast to grow to 1.4 million by 2017. However, the program currently structured to support first nations and Inuit students is under a 2% funding cap placed on Aboriginal Affairs and Northern Development Canada… Those who've received funding are accessing and completing their education, and this is a positive. We're recommending the government remove the 2% funding cap on the post-secondary student support program, fund the backlog of students who've been denied funding, and ensure that the program is adequately funded into the future…”

Therefore, we recommend:

9.    That the Government of Canada recognize the urgent need to improve socioeconomic outcomes of Aboriginal Peoples in Canada through significantly improved educational support, including the immediate removal of the 2 percent funding cap on the Post-Secondary Student Support Program for Aboriginal students.

The Committee also heard from witnesses about challenges associated with Canada’s rapidly aging population. Witnesses argued for a smarter use of resources to relieve pressure on our public healthcare sector, and greater support for Canadians who are taking care of their aging loved ones. The Canadian Medical Association told the Committee that:

“Our country needs to catch up with other nations and develop a pan-Canadian strategy for long-term care, home care, and palliative care. We badly need a dementia strategy, and we need a national pharmaceutical strategy. We should not accept that one in 10 Canadians cannot afford to buy the medicines they've been prescribed… We know we are the only one of the G-7 countries that does not have a national dementia strategy.”

Therefore, we recommend:

10. That the government introduce a national dementia strategy.

11. That the government recognize the need for a national pharmaceutical strategy so that Canadians can afford essential drugs.

Finally, the recommendations in the report were silent on one of the single most important concerns to Canadians: growing income inequality. We recommend:

12. That the government continue to increase the value of the Working Income Tax Benefit (WITB) and move toward widening eligibility for the WITB to include all households with earned income below the after-tax low income cut-off (LICO).

13. That the government reverse its recent decision to increase in the age of eligibility for Old Age Security (OAS) benefits.

14. That the government design and implement a federal poverty reduction plan.

15. That, in order to move toward a more fair and just society, the government consider making the Disability Tax Credit and the Family Caregiver Tax Credit fully refundable so that low-income Canadians are not deliberately excluded from these programs.

16.  That, in order to fight growing income inequality in Canada, the government refrain from introducing new personal income tax credits until existing personal income tax credits – in particular, the Disability Tax Credit, Family Caregiver Tax Credit, Volunteer Firefighters Tax Credit, Children’s Arts Tax Credit, Children’s Fitness Tax Credit, Public Transit Tax Credit, and the education tax credits – are made fully refundable so that low-income Canadians can also benefit from them.