1 EVIDENCE Standing Committee on Finance NUMBER 004 1st SESSION 42nd PARLIAMENT Wednesday, February 17, 2016 Le mercredi février Standing Committee on Finance CANADA [Recorded by Electronic Apparatus] EVIDENCE February 17, 2016 Committee Edited Evidence * Table of Contents * Number 004 (Official Version) Official Report * Table of Contents * Number 004 (Official Version) Témoignages * Table des matières * Numéro 004 (Version officielle) 04 17 02 2016 2016/02/17 15:30:00 House of Commons Comité permanent des finances Standing Committee on Finance FINA Chair The Honourable Wayne Easter 42 1 (1535) [ English ] The Chair (Hon.

Wayne Easter (Malpeque, Lib.)) : We'll call the meeting to order and welcome our witnesses. Pursuant to Standing Order 108(2), these are the pre-budget consultations for the budget. I welcome the witnesses here this afternoon. Thank you for coming on relatively short notice. As you're well aware, it's a pretty tight time frame, and we're doing our best to hear a number of witnesses. We'll start with Andrew Jackson from the Broadbent Institute. You have the floor. Mr. Andrew Jackson (Senior Policy Advisor, National Office, Broadbent Institute) : Thank you, Chair.

The Broadbent Institute is an independent, non-partisan organization that promotes progressive change based upon social democratic values and ideas. We've advocated for strong action by the federal government to counter growing economic and social inequality, and for a planned transition to a more innovative economy and sustainable environment.

The government plans to introduce some progressive social spending measures that we support, including the proposed Canada child benefit, which will deliver high benefits to all but the most affluent families with children, and increases to the guaranteed income supplement to deal with rising rates of seniors poverty. However, these proposed changes to the GIS exclude couples, and would leave 634,000 seniors living in poverty. A recent study released yesterday underlines the importance of both expanding the CPP and increasing the GIS.

We think that the government's agenda is inadequate or insufficiently ambitious when it comes to such important areas as child care, EI reform, and funding for first nations communities. In our view, there's a contradiction between furthering a progressive social agenda and the new government's promised fiscal plan to continue to reduce public debt as a share of GDP. This will significantly constrain new spending, especially at a time of very sluggish economic growth.

While welcoming the new tax rate for the top 1% and the elimination of family income splitting, the key problem is that the government does not propose to increase overall federal fiscal capacity. Indeed, the so-called middle-class tax cut will cost $3 billion per year, while primarily benefiting higher income earners and providing only very limited economic stimulus. Sustainable increases to social spending and public services require new sources of revenue.

We urge the government to consider modest increases to the corporate income tax and to close tax loopholes for the top 1%, such as excessively favourable treatment of stock options. The government should modify or reverse the ill-advised tax cut for the so-called middle class. Targeted programs are much more effective than tax breaks for the wealthy in building a more innovative and productive economy.

Influential economist Mariana Mazzucato argues that strategic government leadership, public investments and research well in advance of immediate commercial opportunities, and direct support for strategic corporate investments are critical to building innovative economies. We believe that there's also a vital federal government leadership role in building a more environmentally sustainable economy. A recent joint report with the Mowat Centre called for a green Bank of Canada and concrete measures to promote greater energy efficiency and greater use of renewable energy.

We support the government's proposal to increase investments in physical and environmental infrastructure, such as public transit and basic transportation. This will give a badly needed short-term boost to growth and job creation, and it will help to raise long-term business investment and productivity. An independent study commissioned by the Broadbent Institute last year by the well-respected Centre For Spatial Economics shows that there are overall benefits to Canadians from investments in basic infrastructure in the order of $2.46 to $3.83 per dollar spent.

The study further found that the long-term impact on government finances would be, at worst, marginally negative, or even positive, due to increased revenues from a larger and more productive economy. The economic outlook for is dismal, with growth expected to fall well below 2%, and unemployment expected to remain above 7%, but growth and job creation could be significantly boosted by a well-designed public investment stimulus twinned with major increases in income transfers to lower income Canadians, such as through enhanced unemployment benefits.

We hope that the government will consider more progressive tax changes to fund a larger and more sustainable increase to social programs. Thank you. The Chair : Thank you very much. We have your full brief here, Mr. Jackson. Turning to the Canadian Federation of Agriculture, we have Scott Ross. Mr. Bonnett must be tied up in a snowbank. Mr. Scott Ross (Director of Business Risk Management and Farm Policy, Canadian Federation of Agriculture) : He is. I want to extend his regrets. He tried to get in from the Soo today and was caught up due to the weather.

I'd first like to introduce the Canadian Federation of Agriculture. We're an umbrella organization comprising provincial farm organizations and national commodity organizations representing over 200,000 farmers from coast to coast to coast. As an industry, Canadian agriculture is at the heart of an agriculture and agrifood sector that contributes over 6.7% to Canada's GDP, one in eight Canadian jobs, and well over $50 billion in wages and salaries across over 200,000 businesses. I'd like to speak to four key areas today, which we've laid out in the brief which we provided you with in advance.

These four areas are key to creating a policy environment conducive to continued success and growth in Canadian agriculture. The first item I'd like to speak to is the issue of industry succession. With the average age of farmers now over 54 years and many looking to retire in the next decade, we're looking at approximately $70 billion in farm assets changing hands over the next 10 years. Estimates suggest that 75% of Canadian farmers look to retire over this period. This poses a significant potential for disruption to the industry.

At CFA over the past few years, what we have done is to work in collaboration with accounting firms across the country that have agricultural interests on developing a suite of low-cost and cost-neutral proposals that would focus on facilitating the intergenerational transfer of family farms while creating opportunities for new entrants to the industry. Family farms still represent 98% of all Canadian farms, and there are a number of positive aspects to this operating model that we would like to see continued in the agriculture industry.

Our requests can be broadly categorized under two main pillars, the first being broadening the definition of family “member” within the Income Tax Act, recognizing that farm families are comprised of a broad set of relations, more so than just parent and child. The second point to note is the issue of “anti-avoidance” legislation, which we continue to see causing unintended consequences for agricultural operations due to structural changes in the industry.

We have seen an increase in farming corporations—larger farms, due to consolidation and economies of scale, that now support multiple families—and because of this, we continue to see new barriers in place preventing flexible transfers from one generation to the next for family farms. In particular, subsection 55(2) and

section 84.1 of the Income Tax Act pose problems for joint sibling ownership as well as the use of holding companies when farm families look to transfer from one generation to the next. We were encouraged last year to see a private member's bill, Bill C-691 , introduced by Emmanuel Dubourg , now the parliamentary secretary for the national treasury. It was looking at this issue of

section 84.1 and addressing the use of holding companies for small and medium-sized enterprises. We encourage the reintroduction of that draft legislation. These measures aren't meant to introduce new benefits or new provisions to the Income Tax Act, but rather to recognize that structural changes in the industry have left existing provisions with reduced utility for farm families looking to transfer from one generation to the next. Farm family children are no longer necessarily expected to stay on the farm.

With multiple families supported by larger operations, we continue to see the broader subset of family relations looked at as the potential next best manager for the farm operation in the next generation. The second issue I'd like to speak to are the chronic labour shortages that continue to plague the agriculture industry. The agriculture industry is full of high-quality job opportunities and career options with competitive wages and benefits. The industry also offers many lifestyle benefits and a flexibility not available in other industries.

Agricultural employers expend extensive efforts to recruit and retain Canadian workers; however, the industry continues to identify pervasive and critical labour shortages as a major constraint and one of the biggest risks facing farm businesses. To address this issue, we've identified three key requests, the first being increased funding for the collection of regional agricultural labour supply and demand information, both through the labour wage survey as well as the Canadian Agricultural Human Resource Council's ongoing work to develop labour market information forecast models for supply and demand.

(1540) The third point is that we would like to see a partnership between industry and government struck to implement CAHRC's agriculture and agrifood workforce action plan by creating a dedicated agriculture and agrifood international worker program and promoting channels to permanent residency for agriculture and agrifood workers. The Chair : Scott, could you sum up in seconds or so. I said I'd give you a warning at five minutes. Mr. Scott Ross : Thank you. The last two items I'd briefly like to speak to involve agricultural investments.

This is speaking to the continued increase of requirements placed on producers because of climate change and trends in retail food markets that have posed increased investment requirements on farm operations without an associated premium in the market. On this note we'd like to see changes to the AgriInvest program, which are laid out in your brief, that would facilitate more on-farm investment, as well as an increased emphasis on rural infrastructure spending in the new government's commitments. The final piece I'd like to briefly touch on is the duty relief program.

The duty relief and drawbacks program administered by CBSA was not designed for agricultural goods and does not provide adequate safeguards to address the potential diversion into the domestic market when dairy, poultry, and egg products are imported into Canada for further processing and subsequent re-exportation. What we would like to ask is that dairy, poultry, and egg products be excluded from the duty relief and drawbacks program by making an exception similar to the one that exists for fuel and plant equipment. This exclusion should be included in the budget to ensure its timely implementation.

It would solve inconsistencies where participants evicted from Global Affairs Canada's import to re-export program for not respecting the rules are allowed to apply under the duty relief and drawbacks program. Thank you. The Chair : Thank you, Mr. Ross. We'll turn to the Canadian Federation of Students. Ms. Arte, welcome. The floor is yours. Please see whether you can keep to five minutes. Ms. Bilan Arte (National Chairperson, Canadian Federation of Students) : Good evening. My name is Bilan Arte, and I am the national chairperson for the Canadian Federation of Students.

The Canadian Federation of Students is Canada's largest and oldest national student organization, representing more than 650,000 students across the country. Our organization advocates for an accessible, affordable, high-quality, and public system of post-secondary education for our country. Our budget recommendations focus on how to make education more affordable for students and address mounting student debt in Canada. Ensuring that all people in this country are able to pursue higher education and training must be part of any significant, stable, long-term recovery for our economy.

The OECD has highlighted that participation rates will have to grow significantly, if Canada is going to address our changing labour market demands and an aging workforce. In its most recent Global Economic Competitiveness Report, the World Economic Forum ranked Canada 13th in ability to compete economically with other countries around the world, a decline from 10th place in 2009. In its explanation, the forum noted that Canada's disjointed and inefficient post-secondary education system was one of the main reasons for the slide.

Over that same period, Canada's ranking for higher education and training had dropped from 9th to 19th. Unfortunately, the cost of post-secondary education continues to be downloaded to students and their families, despite the significant public rate of return on investments in post-secondary education. In economist Hugh Mackenzie found that real return on current public investments in education ranged from an annual rate of 3.6% in Saskatchewan to 6.2% in Ontario. As a result of high tuition fees, student debt has increased substantially.

Average public student debt is now estimated to be over $29,000 after an undergraduate degree alone. When that debt is paired with rising tuition fees, it's easy to understand how we've arrived at a situation in which young people in Canada today collectively owe $19 billion to the federal government alone, not including the billions more that they owe for provincial and private loans. In fact, the amount owed to the Canada student loans program is increasing by nearly $1 million every day.

The long-term impacts of carrying such debt include delayed participation in the economy, inability to invest or save for retirement, starting a family later in life, and aversion to taking on further financial risks, such as starting a business. Credit agencies and major banks are now warning that student debt has reached unstable levels. As of September more than 200,000 Canadians were unable to make any payments on their government student loans.

We also recognize that the realities of skyrocketing tuition fees and crushing student debt disproportionately affect communities that are already significantly marginalized because of their socio-economic background in today's society, including indigenous and racialized communities. These are communities that feel the pressure of financial barriers most acutely and are often so debt averse that they may choose to not even attend post-secondary. In conditions such as these, how could we possibly expect students and graduates to participate fully in the economy?

Students are putting forward a vision that would work to address the root cause of student debt. First, the government should implement a federal post-secondary education act modelled on the Canada Health Act and create a dedicated cash transfer of $3.3 billion for post-secondary education, primarily by redirecting existing government funding for inefficient post-secondary education-related tax credits and savings schemes.

The lack of a national vision has resulted in a significant disparity in tuition fee levels and per student funding across the country, with students in Ontario paying almost three times more than students in Newfoundland and Labrador. Canada's students are calling on the government to ensure that merit and not geography determines whether someone can go to college or university.

This act would be accompanied by a fifty-fifty cost-sharing model to eliminate undergraduate tuition fees, making sure that provincial governments are also held to account, not only to ensure that the transfers they receive from the federal government for post-secondary education are spent on just that, but also to reward provinces that come to the table with adequate funding to support universal access to post-secondary education.

We're also recommending that in order to stop the federal student loan debt from increasing, government should act immediately to increase the accessibility of post-secondary education by redirecting the $750 million currently allocated in ineffective education-related tax credits and savings schemes into the Canada student grants program. This simple solution would double the already limited funds for the Canada student grants program.

Such a change would have a significant impact on students' ability to both get an education in the short term and contribute meaningfully to Canada's economy and society in the long term. We believe access to post-secondary education is the greatest social equalizer at this government's disposal, helping to address cycles of poverty in already impoverished communities that don't have the funds today to start saving for the next generation of Canadians.

(1545) Furthermore, for indigenous communities in Canada, access to post-secondary education must be recognized as a treaty right. Funding for the post-secondary student support program must be immediately increased and matched with enrolment. By implementing these recommendations, this government can increase the ability of young Canadians to obtain financial security and reach life milestones. Allowing more people of all ages to obtain additional training or retrain in emerging fields will allow Canadians to drive our economy forward. Public education is a public good and needs to be funded as such.

I certainly have appreciated the opportunity to address this committee today. I'm more than happy to answer any questions on any of the items that I've mentioned or any of the items that are included in the full submission before you. Thank you.

(1550) The Chair : Thank you. Turning to the Institute for Research on Public Policy, Mr. Tapp, the floor is yours. Mr. Stephen Tapp (Research Director, Institute for Research on Public Policy) : Thank you very much, Mr. Chair. Thanks as well to the committee for extending the invitation to be here today. I would like to focus my remarks on three key messages. These are that the new government's first budget should first, establish its fiscal credibility; second, provide short-term support for the economy; and third, build Canada's longer-term economic potential in a way that's fiscally sustainable.

But first, let's back up for some context. In the slow recovery from the financial crisis, growth in Canada and abroad has been disappointing. The falling commodity prices since mid-2014 have been the latest setback. This is a major shock for Canada. It's primarily felt through weaker terms of trade, a lower Canadian dollar, reduced domestic income, and less resource sector activity. Canada's economy already had some excess capacity before this shock, and this is going to delay its return to its full potential.

In other words, without new policy measures over the next few years, the Canadian economy will not perform as well as it could. As this painful and slow adjustment unfolds, policy-makers are looking for the right response to support the economy. This is going to require carefully weighing the benefits and risks of additional actions against the status quo. Accommodative monetary policy has already helped out, but lowering interest rates further will provide little economic stimulus and risks overheating housing markets, excessive household borrowing, and broader financial stability concerns.

Instead of cutting rates again or expecting the economy to quickly self-correct, well-crafted fiscal measures are a better option for several reasons. First, the federal government has fiscal room available. Second, it seems that monetary policy would accommodate new fiscal measures. Third, the opportunity cost of long-term government borrowing is near historic lows. Finally, the ongoing restraint on spending at the federal level over the past five years means that there are likely spending needs built up in some areas.

While these fiscal actions admittedly carry several risks, which include the fact that programs and budget deficits are easier to start than to end, the evidence of robust short-term fiscal multipliers is mixed, and larger deficits will inevitably raise debt charges, I think these risks can be managed. But this involves managing expectations. Canada's economy and economic performance depend on global developments that we don't fully control. Therefore, budget should be upfront about what fiscal policy can deliver in the near term, particularly on cost-shared infrastructure spending.

The last round of fiscal stimulus showed that we shouldn't overestimate how quickly these projects can get going. New announcements will mostly hit the ground after the construction season, and that's okay. In this regard, shovel-worthy should take precedence over shovel-ready. After all, the main rationale for infrastructure is not short-term economic stimulus, but improving Canada's longer-term economic potential, and that takes time. Six of the last seven budgets have revised down the consensus GDP forecast. This budget in would be prudent to explore these prevailing downside risks in detail.

For example, consider a scenario where oil prices stay flat at about $30 a barrel over the government's mandate. What would that look like for the government's finances and for the economy? Reporting such a scenario could illustrate the challenges that we face, how oil prices impact the federal finances, and alternative policy scenarios. It's also important to be transparent in this first budget. Including more internal analysis and technical details will help build fiscal credibility.

Finance Canada's analytical capacity could be augmented by publishing staff working papers and encouraging researchers to present their findings externally. The government has stated two fiscal policy targets. An important one is to reduce the federal debt-to-GDP ratio each year. This rightly shifts the focus away from the annual nominal budget balance. However, rather than requiring yearly reductions, it may be more manageable to establish a medium-term target range for the debt ratio—similar to how we do inflation targeting, try to stay within a band over the next five years.

Whichever medium-term target is used, it should be complemented with a longer-term fiscal target that would rely on sustainability analysis and look ahead several decades. Looking beyond budget 2016, there are many complex issues that will require attention. Allow me to highlight just one. Eventually the Canadian federation will probably need to raise revenue as a share of GDP. If so, this will need to be done carefully to avoid unduly restraining growth. The government has already expressed interest in intending to review tax expenditures.

This is a worthwhile exercise, but I think the scope should be broadened to review the entire tax system to make it more efficient and more equitable. To conclude, after several disappointments, Canada's economy is adjusting to a major shock. The outlook is weak and highly uncertain. Downside risks prevail, and the economy will probably operate below its productive capacity over the next few years. To manage these risks, expectations should be tempered, and the macro policy approach should be adjusted in Canada.

Fiscal policy needs to be more active, with well-designed fiscal measures that would help cushion the adjustment and ease the burden on monetary policy. In the short term, timely and targeted automatic stabilizers, which would include unemployment benefits and federal stabilization transfers to resource-rich provinces, should be allowed to work, and some should be temporarily strengthened.

(1555) Any new discretionary measures should aim to improve Canada's economic potential over the medium term. They should be funded as part of a longer-term plan that preserves fiscal sustainability. Thank you very much, Mr. Chair. The Chair : Thank you, Mr. Tapp. “Shovel-worthy” is a word I never heard until yesterday, but now I've heard it half a dozen times, and it makes sense. We'll now turn to Mr. Wright from the RBC Financial Group. Welcome. Mr. Craig Wright (Senior Vice-President and Chief Economist, RBC Financial Group) : Thank you. Thank you, everyone, for your time today and for your time generally.

I appreciate the work you do. In the context of pre-budget discussions, we were involved in pre-budget meetings with the minister last Friday—Chatham House Rule, so I can tell you what I said but not what anybody else said—and in fairness and for consistency, I thought I'd repeat the message I delivered to the minister on Friday of last week. Our view on the Canadian economic outlook is a theme we've been on for some time and it looks like it will be with us for a while: an uncertain, uneven, and underwhelming recovery. The uncertainty we're reminded of on a daily basis.

We're seeing movements in markets, that used to be big moves for a month or a quarter, taking place almost on a daily basis. I do think fear is overtaking fundamentals. We think the fundamentals will eventually carry the day, but obviously there are risks that fear will eventually become a fundamental that contains growth prospects. We are looking at some of the bigger worries like China, like oil prices, and the U.S. recovery, a little less worrisome than what we're seeing priced in for market. We do think China will manage to contain the crisis. Global growth will be in that 3% to 3.5% range.

It should support global trade and should also support global commodity prices. The U.S. we see as a decent growth story. We have 2.5% growth in the U.S. Importantly for Canada, we don't export to U.S. GDP; we export to sectors of the U.S. economy, and those sectors are the ones that are performing well: autos, housing, and equipment and software. We're seeing the strength in our major trading partner, and that's taking place in the context of a more competitive Canadian dollar.

We think we're past the lows in the Canadian dollar, but we do see it still remaining in that 70¢ to 75¢ range as we move through the year. That will provide ongoing support for exports. When you look at the shock to the economy, the shock is obviously in the energy sector. The energy-dependent provinces are moving down the growth rankings, and in those that are export dependent, U.S. and currency helping the way, we do see that transition taking place. Exports are nearly 10% up on a year-over-year basis. That transition is taking hold. The consumer will grow, we think, in line with income.

We'll get the added lift from debt, because the debt-to-income ratio is at elevated levels, and we do have a placeholder. When you look at our growth forecast for Canada this year, we're at 1.8% and the Bank of Canada is at 1.4%. I think consensus is probably a bit below that, but we have put in a placeholder for fiscal stimulus now. Not all deficits are created equally. We are aware, and we're holding a spot. We'll reassess the growth outlook when we get the budget details later, probably in March, I guess. When we look at the fiscal stimulus, as Stephen has suggested, monetary policy has done a lot of the work.

Monetary policy is aimed at smoothing out the cycles. It won't reverse the cycles. We're at the point where we need more economic policy, fiscal policy more generally, and that will raise the speed limit for the economy over the long term, which is growing the economic pie we all share. In terms of focus, everything we see should be looked at through the lens of productivity-enhancing investment. Infrastructure fills the gap short term, but also bodes well long term for productivity. It does tend to have a higher multiplier, so the more bang for your buck than you get from some other programs.

Shovel-worthy is obviously an issue. When do you get it into the economy? We'd rather see a good decision rather than a rushed decision. We will see, we think, fiscal stimulus. We do hope it's focused on the infrastructure side. With respect to the fiscal plan, we've become accustomed to a medium-term plan of fiscal consolidation with a zero out there at some point. It sounds like that zero is looking less likely, but the hope is that it's still part of the plan. Targeting a debt-to-GDP ratio is less than ideal. You have some control over debt; you have no control over GDP.

It isn't ideal, but it does seem to be what we're hearing as the new commitment or the new anchor for fiscal policy. When you have a debt-to-GDP ratio at 31%, and to keep it moving lower, if you have 4% nominal growth, that suggests you can run deficits in the $25-billion to $30-billion range and still manage to keep that debt-to-GDP ratio drifting lower. We would push for something less than that. As Stephen suggested, successful fiscal policy is timely, targeted, and temporary. I'd focus on the temporary component. Thank you.

(1600) The Chair : Thank you very much, Mr. Wright. Via video conference, we'll turn now to Mr. Slomp from the National Farmers Union. Welcome. Mr. Jan Slomp (President, National Farmers Union) : Thank you. The National Farmers Union would like to thank you for the opportunity for this pre-budget consultation. The NFU is a voluntary, direct membership, non-partisan national farm organization made up of thousands of farm families from across Canada who produce a wide variety of commodities.

The NFU works toward the development of economic and social policies that will maintain small and medium-sized family farms as the primary food producers in Canada. Based on the situation left by our previous government, we want to echo the Prime Minister words that it is time for real change. For budget 2016, we would like to present the following recommendations. We should set the stage for growing forward 3.

We recommend a real change from past policy, particularly by aligning the vision of agriculture with the principles of food sovereignty and supporting agriculture's efforts to mitigate and adapt to climate change. The budget should support the next generation of family farmers by establishing universal pharmacare. The budget should redirect all agriculture research funding toward public and independent third party research in the public interest and reinstate funding to the public agricultural research institutions to allow them to recover and rebuild their capacity with a new generation of scientists.

Funds should be allocated to public plant breeding to develop varieties that are adapted to Canadian regional climates. We need to help Canadian farmers adapt to climate change in order to do well under low-input, organic, and ecological production practices. The budget should support participatory breeding initiatives and enable new varieties to be released without royalties. The budget should also fund research and assessment of pesticides, including field crop trials on yields, monitoring of soil quality and surface water contamination, and impacts on pollinator populations.

Funds should go toward assessment and implementation of farming practices to increase biodiversity and integrated pest management to benefit farmers, and both natural and agricultural ecosystems. Budget should take concrete steps to correct the damage caused by the previous government of ending the Canadian Wheat Board single desk. It should establish and fund mechanisms to regulate the grain system to ensure all farmers have an equal opportunity to ship grain, to counteract the power of major grain companies, and to give priority in shipping to small grain companies, producer railcars, and short-line railways.

We ask that the upcoming budget establish a mechanism to develop additional producer car loading sites when requested by farmers, and ensure that the Canadian Transportation Agency has the funding and the resources it needs to enforce the statutory common carrier obligations of Canadian railways under the Canada Transportation Act.

The NFU recommends that the upcoming budget provide support for new and young farmers by lowering the cap on the government's support programs; making effective, affordable financing programs available to new farmers, including micro loans and small grants; providing funding for farm apprenticeship programs and training; and using tax penalties to effectively prohibit foreign investor and absentee farmland ownership. Supply management provides Canadian farmers with a stable income based on cost of production.

Therefore, the government should reject both CETA's and TPP's allocation of parts of Canada's supply-managed commodities' markets to imports and should address the loopholes to stop the dumping of dairy protein products into Canadian markets.

(1605) The focus on globalization and trade means that more of the food Canadians eat every day is imported, thus subject to currency exchange rate fluctuations, external political events, and transportation issues. Today we see food price inflation because grocers must buy imported products using expensive U.S. dollars. Canadian farmers, farm workers, food processors, companies, and consumers would all benefit from reinvestment in Canadian fruit, vegetables, livestock and meat production, and processing capacity that is distributed all across the country.

If you would like the upcoming budget to include measures to safeguard the space for domestic food production for the long term, the budget should— The Chair : Jan, I'm going to have to get you to sum up in to seconds, if you can. Mr. Jan Slomp : The budget should help Canadian agriculture to contribute to future success of the Paris agreement on climate change. Your budget should provide funding and support to farmers for adapting to climate change, and to contribute to the reduction of greenhouse gases through climate-friendly technology and practices.

The budget should reinstate federal funding for community pastures, and for the prairie farm rehabilitation administration. It should restore funding to the Prairie Shelterbelt Program tree nursery, and re-establish the prison farms. It is very important that we help the farmers weather the financial risks that come with unpredictable weather due to climate change. I thank you very much. The Chair : Thank you, Mr. Slomp, and thank you, all. Turning to questions, in the first round of seven minutes, Mr. MacKinnon. [ Translation ] Mr. Steven MacKinnon (Gatineau, Lib.) : Thank you, Mr. Chair.

I want to welcome all the witnesses and thank them for their presentations. They have sparked a great deal of thought, both by colleagues from my party and those from the opposition. I was very happy to see how much they supported the idea of stimulating the economy and establishing key stimulus policies, especially when it comes to post-secondary and agricultural education. My question is for Mr. Tapp and Mr. Wright. You alluded to some projects considered to be shovel-ready. How would you define those projects? How do you distinguish them from others? You were talking about temporary or one-time investments.

Could you tell us what you mean by that? [ English ] Mr. Craig Wright : I can start. Thank you. I had mentioned that to me shovel-ready has taken on a negative connotation. When we think of infrastructure, as I suggested at the outset, we want to think in a context of long-term productivity enhancement. The challenge of fiscal policy stimulus on the infrastructure side is getting it in place when the economy needs it rather than later when the recovery takes hold. I think that given our growth outlook we're not terribly worried about that sort of longer-term pressure on the private sector.

I don't think there'll be a challenge with shovel-ready. We've had such an infrastructure deficit built up over decades that I think there are a lot of projects in waiting that are shovel-right, rather than shovel-ready. These are good projects that are ready to go. They'll still take some time to get in place. I worry about shovel-ready because ready-to-go may not be what's right for the economy and that's the negative connotation of shovel-ready. But I do think we probably have some good projects ready and willing to be funded and put the work in. I'm sure the minister is getting more advice than he needs.

(1610) The Chair : He's getting a lot of requests for money, that's for sure. Go ahead, Mr. Tapp. Mr. Stephen Tapp : To pick up on Craig's point on shovel-worthy versus shovel-ready, one of the things I would caution you guys about in general as a committee would be that when we got infrastructure bundled up with fiscal stimulus, I think that was generally a mistake. There are two types of infrastructure projects that can take place. There are things that can happen in the construction season. Those are things like routine maintenance projects.

But there are also things that need to be done over the longer term, say, in or 2018, over the mandate of the government. We can call those shovel-worthy. The point I would make is that because a project is ready does not make it a top-of-the-list priority. I think we should be looking at building growth, and I think we should be setting expectations such that people are not thinking.... For example, when I look back at the economic action plan, I see that the initial allocation in budget was that half the spending would be in year one and half in year two.

That's in the expectation that in the first construction season there's going to be a lot of activity. I'm just looking at the cost-shared projects, the projects that include municipal, territorial, and federal governments, and in fact, 17% of the stimulus spending came out in year one, 69% in year two, and then it was 14%, because we extended it into year three. My point would be that we learned something from that episode. I'm not saying that the stimulus program that happened was not done well, but it was not done as quickly as people had expected. Expectations were such that it was going to be boom-boom.

I think that as long as expectations are set with the public that some projects need to be done quickly—and they can be, and those will support the economy—most of the focus should be on supporting economic growth. I think that's the safe way to play it. The Chair : Mr. MacKinnon. [ Translation ] Mr. Steven MacKinnon : Thank you, Mr. Chair. Mr. Tapp, you talked about an increase in government revenues as a share of the gross domestic product. Mr. Jackson talked about a possible increase in government revenues. You, and especially Mr.

Jackson, even discussed measures that were taken in past years, but that did not have the desired effect. Could you both share your thoughts on increasing government revenues for the sake of fiscal stimulus, strategic economy and the growth of our economy? Mr. Jackson, you can go first. [ English ] Mr. Andrew Jackson : I should say that I agree with my two colleagues about the importance of public infrastructure investments. The study that was done for us by the Centre for Spatial Economics was interesting.

What it showed over the medium term was that the increase in business productivity that results from a well-designed program does generate GDP growth, and thus higher revenues down the road. At least in an optimistic scenario, even if you are deficit financing that to begin with, you would be taking care of that deficit you were building up through revenues down the road. I think that's a really important point.

I guess the argument I'm trying to make, and my concern, is that concerns about deficits are going to derail some of the social spending commitments that the government has made, or put them under pressure. I think that if we're going to have sustained spending on social programs, ultimately that has to be financed out of the federal fiscal tax base. Growth alone won't take care of a significant improvement on a social program such as child benefits. I think the government has said that there would be a review of tax expenditures. I would certainly encourage that.

I guess I'd go on the record as being sceptical about the middle-class tax cut. I suspect that's not going to be quickly reversed. The problem with those permanent tax cuts is that they become very difficult to ratchet back once they're in place. I still think there's a case for a corporate tax increase, with the proviso, I would say, that I think there are more effective ways of stimulating business investment than just cutting the corporate tax rate. I would use that to finance other business assistance procedures. I hope I've answered your question. I missed a bit of it in translation.

(1615) The Chair : Thank you both. We'll turn to Ms. Raitt. Hon. Lisa Raitt (Milton, CPC) : Thank you very much, Mr. Chair. Mr. Wright, I guess you'll be getting a lot of my questions today since you talked about some of the matters that I'm very interested in. One of the things you talked about was the debt-to-GDP ratio, and my colleague on the other side of the table mentioned it as well. I think the part that causes me a bit of concern on using this as a fiscal anchor is that part of the equation is missing, and that's the provincial debt.

We don't tend to talk about that, but the reality is that provincial debt is an important piece of the overall economic sustainability of the country. I'll give you an example. If Ontario right now is spending $5 billion a year to service interest payments, that's $5 billion they don't have for the social services and it's $5 billion that goes into the equalization framework and category. I guess my question is along the lines of how much do the provinces matter, do you think, in terms of the debt-to-GDP ratio. I mentioned some of these numbers yesterday; you may not have them.

The reality is, these are a little dated but they're still in the same framework. I don't think they've got particularly better. That's what I'm trying to say from the numbers I'm going to give you. Alberta has a debt-to-GDP ratio of about 35%. Saskatchewan is 42%; B.C. is 54%; Ontario is 76%; and Quebec is 87%. These are significant numbers that impact what happens on the federal side. I guess I'd like to get your thoughts about fiscal policy—you're talking about that—the anchor debt-to-GDP, and what role the provinces have.

I would submit that the provinces actually do matter when you're talking about debt-to-GDP ratio, and it's something missing from the conversation so far. Mr. Craig Wright : Thank you. The Alberta debt-to-GDP numbers don't square with what I've looked at, and given that they're starting from— Hon. Lisa Raitt : And if you had it more updated, that would be great. If it's higher, you can let me know. Mr. Craig Wright : It's gross debt, maybe, not net debt. Just in clarity, I was speaking net debt to GDP.

I mentioned that my preference for a fiscal anchor is the balanced budget; over the fiscal plan or slightly beyond the fiscal plan would be the ideal. I think the reality of what we're hearing more recently is that fiscal anchor has been altered and that now the preference is debt-to-GDP, which I suggested is not my preference, but that seems to be where we're headed. Then when you look at the debt-to-GDP ratio, there are some who would suggest not to even bother and let it run higher rather than let it run lower.

My preference would be to continue to see it move lower for some of the reasons you've mentioned, that we do look just at federal government debt-to-GDP at 31% and hopefully declining. The federal government with their debt situation is in a better position on a net debt basis than most of the provinces, and the ability to stimulate the economy at a time when we need it.... Alberta, given their relative net asset position, is well positioned, and they seem to be going down that path as well, but most provinces Ontario and east have fiscal constraints upon them.

Maybe Manitoba is on that list as well, but not quite as much, though. I think the feds see that the debt-to-GDP ratio going down would be a preference. The first preference would be a balanced budget. But as for the debt-to-GDP, as I suggested, they have some control over the debt but no control over the GDP. Hon. Lisa Raitt : Or interest rates. Mr. Craig Wright : That's why a preference would be for a balanced budget, which you have more control over. If the commitments keep moving lower, if you have 4% nominal growth, you can run a deficit in the $25-billion to $30-billion range.

That doesn't leave much leeway for any slip in the GDP numbers, so I wouldn't want to see it push our luck or our limits with a new target. The other side of it is longer term I'd like to see these debt-to-GDP ratios move lower, because of the aging demographics, which means a slower speed for the economy and a slower revenue base at a time when health care costs are going higher. With the fiscal situation federally as well as in many of the provinces where health care spending is already at 40%, we will see that debt dynamic change.

So with an eye on the fiscal challenges in the provinces, if they do go debt-to-GDP as the new anchor, I think that they should target it lower, not higher. Hon. Lisa Raitt : Okay, I appreciate that. On economic growth, my point of view is that our problem with economic growth from the country—the commodities growth—just isn't there. We're getting hammered in oil, in gas, and in minerals. Do you think, though, that we're going to have a situation where we can outpace the status quo on commodities? I don't see it bouncing back right now. Are we going to be able to outpace that reduction with our other sectors?

I see B.C. and Ontario doing better, but is it enough to push us into positive growth? Mr. Craig Wright : Yes. The commodity shock—the known and now—is taking place in the investment side, and we're seeing a collapse in energy investment. Last year it was 35%, and this year most forecasters have it kind of pegged at another 25%. So it's a big hit. The hope is that the offset comes from the other side. When you get the negative commodity price shock, there are some offsets, and one is the currency.

The currency has weakened alongside the commodity and at the same time, it's an effective tax cut to any importing nation or importing province. Effectively, it should be net positive for global growth, and we should see that particularly in the U.S. They have seen some of that tax cut effective in lower gas prices. Their savings rates are up on a year-to-year basis about $100 billion. So they're saving it. I think that's the uncertainty, and it will eventually get spent. But the U. S. growth is, as I've suggested in my comments, at 2.5%. It's taking place in the sectors we export to with a competitive currency.

We're starting to see those export numbers turn around. They finished the year on a solid foundation. I think that will carry the support. You still need consumer spending. It's 60% of the economy, so you can't have growth without a consumer sector. I just think that consumer spending is more moderate than in the past because you're not getting the extra kick from data accumulation, we hope.

(1620) Hon. Lisa Raitt : Is business investment picking up in the country? Mr. Craig Wright : Well, no. The negative is showing up through the energy side and the rest— Hon. Lisa Raitt : And the rest as well? Mr. Craig Wright : —the business side is still weak and that's something we hope will.... The corporate balance sheets are in a fairly healthy position. We've seen that globally, and that money has to get to work some day. In fits and starts it shows up in M and A, and share buyback dividend payouts, but on a sustained basis we want investment.

Andrew, Stephen, and I all made comments about the multiplier, the bang for your fiscal buck. In infrastructure what you tend to see is that once public sector infrastructure picks up, with a lag private sector infrastructure picks up. If we can restructure this infrastructure build-out to get more of the public sector money, whether it's with corporates or pension plans, I think that would give a huge lift relative to the government's balance sheet. The Chair : A very quick one. Hon. Lisa Raitt : That's it, I'm good. The Chair : Mr. Caron. [ Translation ] Mr.

Guy Caron (Rimouski-Neigette—Témiscouata—Les Basques, NDP) : Thank you very much, Mr. Chair. I hope to have at least three minutes at the end because I have many questions to ask. I will first turn to the Canadian Federation of Agriculture representative. We have not yet discussed the Canadian Food Inspection Agency. We know that significant cuts have been made that have led to reductions in terms of inspections. During the election campaign, the Liberals promised an additional $80 million over four years. Do you think that amount is sufficient? Will it ensure greater food safety?

Should that absolutely be part of this budget, or could it perhaps be pushed to future years? [ English ] Mr. Scott Ross : Thank you. I'd like to put out there that this is not a subject matter that I'm an expert in. I know from speaking with my colleagues and our members that the role of the CFIA in food safety has gained prominence in recent years, largely because of an increased level of attention on where our food comes from for the Canadian consumer and from the expert side.

Our members have certainly seen impacts of cuts to the CFIA, and that has put constraints on the system's ability to continue to meet the increasing demands being placed on it from this increased interest from consumers. We haven't highlighted it as a priority for this budget, but we do wish to see continued investment placed into the Canadian Food Inspection Agency and the role they play in maintaining Canada's current position as a high-quality provider of food to the world and as a safe and effective system.

We do not believe there's any reason that the current decline in investments has posed any questions as to the capacity of our system as it stands, in terms of its ability to ensure safe food for Canadians and for export. At the same time, we believe that with the increased prominence of social licence and food safety issues in the consumers' attention there will be a need for increased investment moving forward. [ Translation ] Mr. Guy Caron : I would like to put the same question to Mr. Slomp.

Is the $80 million over four years sufficient to address the shortcomings we have noted within the Canadian Food Inspection Agency? [ English ] Mr. Jan Slomp : Well, I would like to answer that in general terms. I think our regulatory agencies are depending too much on the selective science that is submitted for approval of drugs and additives. I think we need to be partly re-funding the CFIA, as well as re-funding Health Canada, to obtain independent research around health and safety of products. I think we need to flag importation of food a bit more drastically than we have been doing.

Yes, I think we need to reinvest in food safety, partly by funding CFIA better and also asking Health Canada to step up and provide independent studies. (1625) [ Translation ] Mr. Guy Caron : Thank you very much. My next question is for you, Mr. Jackson. In your presentation, you briefly talked about pensions. The Liberals' platform during the election campaign contained two main elements: an immediate 10% increase to the guaranteed income supplement, as well as improvements to the Canada Pension Plan and, by extension, to the Quebec pension plan.

I am currently a bit concerned about not seeing any firm commitment in that respect in the next budget. We will see what the situation is in the budget. It seems that they are refusing to answer the question on whether those measures will be included in the next budget. As for the Canada Pension Plan, the conference of finance ministers was held, which ultimately postponed the decision again for a year in order to carry out more research, even though the issue has been under consideration for or 12 years. What do you think is the urgency of taking action when it comes to pensions? [ English ] Mr.

Andrew Jackson : On the Canada pension plan, I'm optimistic. We may be able to move forward here, but there clearly needs to be a concrete proposal put on the table by the federal government, perhaps in co-operation with Ontario. I do note there was an announcement yesterday that the matter will be discussed at the June meeting of finance ministers. I would have thought it possible, given the work that was done by the federal government and the provinces earlier, for a concrete proposal to come out of that meeting in June, rather than punting it off until next December.

The study we released yesterday really underlines the fact that the RRSP retirement savings of Canadians who don't have pension plans are, for many, grossly inadequate. There's an increased risk of poverty as a result of that. I think the government's commitment to increase the OAS is welcome, and it should be in this budget. The big flaw in that proposal, the way I understand it, is that the way it is set out it applies only to single seniors. At least one in three seniors living at a low income is actually in a couple. There's always a question of whether a 10% increase is adequate.

It still leaves a lot of seniors living in poverty, but it's certainly a step in the right direction. I think you start running into problems just in terms of technical design on the GIS. It's expensive to increase it for everybody, but the risk of targeting it too narrowly is that you end up with a super GIS and not-so-super, plain-old GIS at the end. There are some real design issues there that are a problem. [ Translation ] Mr. Guy Caron : Thank you. [ English ] The Chair : Keep it tight. [ Translation ] Mr. Guy Caron : As I have very little time left, Ms.

Arte, I would like to talk to you quickly about something you did not cover in your brief—in particular, university research and development. We have seen a drop in the importance of basic research compared with applied research. Do you have any recommendations for the committee in that respect? [ English ] Ms. Bilan Arte : Yes, absolutely. We know that in previous governments there were significant investments in what is called the SR and ED tax credit system.

It is our recommendation that monies from that tax credit be redirected into the tri-council system for research, particularly targeting graduate research that would be done in the public interest. I think that's been highlighted. There has been a sharp decline in public funds available for publicly directed research, so it would be our position that existing funds that are currently directed toward the SR and ED tax credit system be redirected toward tri-council funding to provide more opportunities for graduate research to be targeted toward public research. The Chair : Mr. Sorbara. Mr.

Francesco Sorbara (Vaughan—Woodbridge, Lib.) : Thank you, Mr. Chair. Thanks to the panellists for your kind and thoughtful comments. I'll try to make my questions as direct as possible so that I can ask as many as possible. This question is for Mr. Ross. Yesterday I asked one of the presenters from the Cattlemen's Association about labour shortages in their sector on a scale of zero to ten. The individual gave me a score of eight. Even though we have excess slack in the economy, we see certain sectors facing labour shortages. What would you put your number at? Mr.

Scott Ross : I think it's hard to put one definitive number on it. As a group that represents so many diverse commodity groups and different structures of farms, that number probably varies from commodity to commodity. We did a study about two years ago looking at some of the major residual risks facing Canadian agriculture, and labour came out at the very top of that list in terms of an upcoming constraint that is going to limit our ability to capitalize on some of the emerging trade opportunities that we're seeing.

At the same time, I think it places constraints on our ability to identify succession and really move forward as an industry. For certain sectors, I think that an eight is very much warranted. In others, across the board, I think it's very much a concern for our entire membership.

(1630) Mr. Francesco Sorbara : Thank you. You identified a bill that had been proposed in the past. What was that bill number again? Mr. Scott Ross : It was Bill C-691 . Mr. Francesco Sorbara : Thank you. It was nice to see three economists, and a fourth here, in a room all agreeing that we need strategic investment in infrastructure to get our economy growing again. Mr.

Jackson, I think we need to point out that in our platform we've proposed the Canada child tax benefit that will provide higher or increased benefits to nine out of ten families in Canada, tax free, means tested, or income tested, and according to the Caledon Institute, will lift 300,000 children out of poverty. I think we need to point that out. It's a major step forward on the equality issue and generally helping middle-income and low-income families.

On the guaranteed income supplement issue and how the clawbacks work and the levels, in our platform we've put in a major billion-dollar proposal of roughly $920 for single seniors on the guaranteed income supplement, a 10% increase that will benefit 1.3 million retired Canadians, one million of whom are female, and lift 85,000 to 100,000 out of poverty. I think we need to identify those two major steps that our government is undertaking to improve the lot of many Canadians. I think that's a great first step. I see you've identified some other arguments in the tax cuts that you may or may not like.

What would you review on the tax expenditure side with regard to the $100 billion of tax expenditures that are out there? Mr. Andrew Jackson : I'd draw your attention to a study that was just put out by Michael Wolfson, former assistant chief statistician, noting that the government had promised to review tax expenditures benefiting those at the very high end of the income spectrum. The two that would leap out would be the special treatment of stock options and the amount of capital gains that is not subject to tax.

I think on the stock options we all know it's a little tricky in how you limit it without completely obliterating it for tech start-ups and so on. A massive amount of the stock options deduction benefits senior corporate executives who are compensated through options as opposed to regular salary. I think there's a significant amount of money to be made there. Mr. Francesco Sorbara : Mr. Tapp and Mr. Wright, I think we get involved in using terms like “GDP ratio” and “strategic investment in infrastructure”, but I think it comes down to getting Canadians working again and getting our economy growing again.

We're growing at a real rate of 1% and change. Mr. Wright, I think the nominal rate you've pegged is around 4%. Mr. Craig Wright : On a long-run basis. Mr. Francesco Sorbara : If there was not a time to undertake public investment with the fiscal capacity of the Canadian government where interest rates are—I think the 10-year yield is at 1% and the long bond is maybe at 2%—I don't know when you would do it, because now is the time: the multiplier, every $1 of infrastructure investment gets you about $1.50 back. Should we limit the length of time we undertake such an investment to three years?

Should we go further out? You've identified a $25-billion deficit, not on that topic but just to the degree to which we should invest in public infrastructure. Because we all know the Bank of Canada governor has noted that investments in infrastructure enable long-term economic growth. Mr. Stephen Tapp : Is the question then to encourage infrastructure over which horizon?

(1635) Mr. Francesco Sorbara : Yes. Mr. Stephen Tapp : Something I've noted is a bit of a disconnect between....You say there's excess capacity in the economy; that's certainly true. We're getting different signals through the labour market and through product markets, so it seems as if the unemployment rate is around 7% and that there may be room to get more Canadians back to work, as you say, and then on the product market, we might be 1% below potential, that type of thing.

Certainly at the aggregate level, it doesn't seem as if there's lots of room in the labour market, although certainly we could be doing better things there. It depends on whether the unemployment rate in Canada could be 6% rather than 7%. In that case, there's certainly a lot of excess capacity there that could be used. In terms of the planning horizon that should be used for infrastructure projects, as I said earlier in my remarks, there's the short term and the long term. I think it would be a mistake to look at most of these infrastructure projects on a short-term horizon.

I think we had done infrastructure over two years in the economic action plan, which provided a lot of stimulus, a lot of good jobs, but I think there's a difference between filling potholes and building roads and bridges. If you're looking across what can be done in two years, I think people have to see that it takes a while to work with multiple levels of government, and the horizon of five years may not be long enough; a horizon of 20 years may not be long enough for some projects that need to get done.

I think it just depends on which project it is and looking to get the most important ones first on the priority list and pushing them out the door when they're ready. The Chair : Thank you, Mr. Sorbara. Mr. McColeman. Mr. Phil McColeman (Brantford—Brant, CPC) : Thank you, Chair, and thank you to the witnesses for being here. I'd like to ask each of the organizations here that have presented requests for this budget to include things you'd like to see—I think there are four, as I don't believe these other gentlemen had fiscal money asks—have you quantified what they are? Can you give me an estimation?

Has your organization asked for specific amounts of money in this budget? May we start with Mr. Jackson? Mr. Andrew Jackson : Our brief is really addressing, I think, the priorities that the government set out in being elected. We see those as very much guiding. We really try to allocate priorities to their priorities, rather than come with a whole new set of issues. Mr. Phil McColeman : Okay. So you have no specific fiscal ask. Mr. Ross. Mr. Scott Ross : I think on each ask it varies. A number of the tax provisions we speak to are cost neutral.

They're more about addressing red tape that exists in the system and some of the unintended accounting difficulties that arise. For example, the changes on labour policy are more about changing the policy environment and some of the incentives, I guess, that are being sent to producers currently, or rather, the amount of information available to them. There's not really a dollar ask associated with those. Mr. Phil McColeman : Thank you. Madam Arte. Ms. Bilan Arte : If you look through pages onward in the submission that we provided, there are costings for each of our recommendations. Mr. Phil McColeman : Okay.

Ms. Bilan Arte : Many of them are actually cost neutral. It's about reinvestment of existing funds that the federal government is spending in and around post-secondary education into policies and programs that we find would be more efficient actually increasing accessibility. Mr. Phil McColeman : Okay; that's very good. Mr. Slomp. Mr.

Jan Slomp : We have nothing specific, but in general, following the dismissal of the elected board members of the Canadian Wheat Board and the Wheat Board's being privatized, we now have an increased part of the total revenue of the exports of grain going to multinational corporations, and farmers will get a reduced amount. We basically have taxes going offshore and eliminating taxable incomes in Canada. That should all be part of an accounting of net fiscal capacity— Mr. Phil McColeman : Okay, thank you— Mr. Jan Slomp : —and those decisions are negative. Mr. Phil McColeman : Thank you.

I don't mean to cut you off, but the chair has given me only five minutes, so let me just continue. Mr. Tapp, your organization is one, I believe, that along with the C.D. Howe Institute did some fiscal tests on the middle-class tax cut that the government enacted at the start of this year, on the claim, when they were elected, that it was going to be revenue neutral. Your organization came out saying that it was far from revenue neutral.

I think your organization said, and correct me if I'm wrong, that there would be around a billion-dollar shortfall from the revenue received from the upper-income level to the middle class. Is that correct?

(1640) Mr. Stephen Tapp : I should clarify there. At IRPP, the Institute for Research on Public Policy, we have a policy options blog. People have been commenting on the website about the cost of various measures, but the institute has not undertaken a thorough review of these. Mr. Phil McColeman : No. Mr. Stephen Tapp : But I think it was Kevin Milligan and Michael Smart who had a paper that looked at the elasticity, if you increase tax on the top 1%. In the context of that discussion, it was suggested that the revenue estimates of the government might be optimistic, unless enforcement were stronger. Mr.

Phil McColeman : Right. And the C.D. Howe Institute ended up saying that it was about $1.4 billion short of what it was supposed to be, revenue neutral. I just bring that up in the context of your comment about fiscal credibility. Another term has not been mentioned here that I'd like to get your views on, and perhaps, if we have time, Mr. Wright's. I don't think anybody disagrees that well-targeted infrastructure spending is a positive thing, and especially if you have room and interest rates are low. We get that; we understand it. But structural deficits are our concern.

So when there are shortfalls in taxation levels for benefits that the government decided to proceed on, even though they broke the promise they had made to Canadians, when do structural deficits come into play in your mind, when the government goes down that road? We've had organizations here for the last number of panels that have put in requests for $3.3 billion, $4 billion, $7 billion, on regular spending programs, not infrastructure programs. When does it become a concern in your mind? Mr. Stephen Tapp : Mr. Chair, I think the question, as always in fiscal policy, is about setting priorities.

People are coming with asks with specific costing estimates associated with them, and some not. When the parliamentary budget officer did a longer-term, 75-year look ahead, which I think Ms. Raitt was talking about, the provincial part of the equation mattered. Federally, in general you could argue we're doing pretty well and are quite fine; fiscally, the structure that was left in place by the previous government is sustainable. However, the challenges are equal in size for the provincial level.

What you need to do is look at the entire Canadian government as a whole, including the pension plans, including municipalities. You could have a structural deficit at one level and a surplus at another. The issue is really the fiscal balance there and whether the math makes sense. The Chair : Thank you. Okay, Mr. Wright, respond quickly. He stretched his five minutes to seven quite easily. Mr. Craig Wright : I'll keep my answer very short. The challenge on the structural side is the reason that fiscal policy, as I suggested, needs to be timely, targeted, and temporary.

You don't want to get off on the fiscal trajectory whereby a debt-to-GDP ratio is turning higher forever. That's the temporary component to successful fiscal policy. The Chair : Thank you. Mr. Grewal. Mr. Raj Grewal (Brampton East, Lib.) : Thank you, Mr. Chair. Thank you to the panellists for your excellent submissions. I thoroughly enjoyed them and I learned a lot. I'm going to start off with Madam Arte. Yours is an excellent submission. I have a quick question. You're saying that it's going to be revenue neutral. Somebody who recently graduated from school carries student loans.

I empathize with your organization and understand the importance of ensuring that all young Canadians have access to education. You said that tax cuts, which a lot of us still benefit from going forward, once we are employed—you get to use your tuition tax credits.... Are you saying that these aren't used a great deal and that we should scrap that program and invest in the Canada student grants program? Ms.

Bilan Arte : What we're saying is that current tax credits and various savings schemes—for example, tax credits that exist around tuition programs, textbook programs, or in addition to that the RESP program, as one that many might be familiar with as well—are oftentimes programs that benefit middle-income to especially high-income Canadian families. What we're looking for is government spending ensuring accessibility for all Canadians.

I think it is incredibly important for us, when we're speaking of a $3.3-billion dedicated transfer coupled with the national act, that it is going to include a vision that provides for an accessible system of post-secondary education for all Canadian families, not only those who can afford to pay up front today or who can afford to save today in order to have access to that education tomorrow. Mr. Raj Grewal : To follow up, let's say hypothetically that we get $3.3 billion and that post-secondary education becomes free across our country.

Don't you think the cost is actually unpredictable, because there would be such a higher adoption if it were free?

(1645) Ms. Bilan Arte : I think we would see more and more Canadians being able to access post-secondary education. As a result, we would also see more and more young people being able to gain access to the skills and training they need in order to be successful in today's workforce. It's no secret that about 70% of new jobs today require some form of post-secondary education.

I think that largely speaking, if we have a more educated population, we'll have more young Canadians in this upcoming generation who have access to the skills they need to find gainful employment and as a result be able to contribute to our progressive tax system. Those are the returns we were speaking of during my presentation. When we look at a 6.2% return in Ontario on post-secondary education, this isn't a cost any more; it's an investment in the future of this country. Mr. Raj Grewal : Excellent. Thank you. Mr.

Wright, you spoke about infrastructure spending being basically a short-term solution to stimulate the economy. Our government has made a commitment to finance public infrastructure projects across the country, to ensure that we have investments in infrastructure. The requirements in the first year have been outlined as retrofit projects, such as repairing affordable housing, stuff that hasn't happened for the last 10 years, and working with the provinces and the municipalities to identify these projects and get them going. My question goes a step further. Won't there be an impact at the provincial level?

We've been speaking a lot about the debt-to-GDP ratio federally and then the debt-to-GDP ratio provincially. With the federal government being able to stimulate the economy through these infrastructure projects, won't we see an improvement in that debt-to-GDP ratio at the provincial level? Mr. Craig Wright : Sure. I suggested that the infrastructure spending is short-term positive, because it fills the gap in the economy that we need. As everybody has suggested, with low interest rates and not competing for labour and capital, it's the right time to do it to increase the odds of return on investment and the like.

But I suggested that it's also long-term gains in productivity that grow the living standards we all share; it's accelerating the speed limit for the Canadian economy. So I think there is long-term benefit. In terms of what it does for the provinces, we have to keep in mind that if we just look at the federal government infrastructure, if it gets $20 billion, that's 1% of GDP, and there's going to be some leakage in that. You're not going to get a full lift of 1%. Will it help some of the provinces? Probably it will, as long as they don't do anything different with their deficit situation.

But it is 1% spread across the country. It's not going to change the direction for some of the more fiscally challenged provinces, but it's probably a step in the right direction. Mr. Raj Grewal : So the trickle-down effect is very minimal is what you're saying. The Chair : Mr. Liepert. Mr. Ron Liepert (Calgary Signal Hill, CPC) : I will ask a couple of quick questions. Mr. Ross, I was interested that 98% of farm families are still family owned. Do you have any numbers? I'm assuming that 98% is 98% of all farm operators.

I would assume that the percentage of land, in the case of grain farmers, farmed by non-family farms would be considerably less than that. Is that fair? Mr. Scott Ross : I can't say that we have accurate statistics on that, but from our measure a lot of what you'd characterize as larger grain operations in the west are still owned by farm families. The acreage that they manage is still managed by a farm family. I don't think it's a fair characterization to suggest that larger operations are necessarily no longer managed by family farms. Mr.

Ron Liepert : Certainly, Hutterite colonies have continued to buy up farmland. I was wondering if there was a number on that. There used to be a time when agriculture survived to a large degree on off-farm income, in other words, going to work on the oil rigs in the wintertime. We have, certainly in western Canada, a situation where it might be reversed now. What would the average farm wage rate be in western Canada these days? Mr. Scott Ross : Are you suggesting just from the farm, the income they would generate from the farm itself? Mr. Ron Liepert : Yes.

If you were employed on a farming operation full-time today, what would the average wage rate be? Mr. Scott Ross : It varies considerably depending on the region. You'd find some farmers, for example, in northern Alberta near the oil patch, would be making.... For a typical farm, not operator, but someone to work on the farm would be paid wage rates upward of $25 to $30 an hour. This is a wage paid just to find people to bring onto the farm. When you come out east, that number declines, depending on the region and the type of work involved.

(1650) Mr. Ron Liepert : When Dennis Laycraft from the Cattlemen's Association was here yesterday, and this goes to Mr. Sorbara's question, a lot of what he was referring to was not so much the inability to find workers on the farm, but it was an inability to find workers in places like packing plants and things like that, which are less desirable positions, even though the rate of pay might be pretty decent. Would that be fair? Mr. Scott Ross : Yes. We see the major drivers of many of the labour gaps in agriculture, the shortages, are the remote locations involved often for many of the operations.

There's not a local labour force available to really meet that need regardless of the wage rates offered. There are jobs that are less desired by Canadians for which you can spend months and months recruiting and bump up your wage rates. I know, for example, in packing plants they offer very competitive benefits packages and they're still struggling to find people to bring in. Mr. Ron Liepert : Mr. Wright, I was told the other day that one of the things that's starting to happen with the U.S. economy is....

Of course, the U.S. economy relies largely on a lot of corporate earnings that are outside the U.S. and because of the high U.S. dollar, companies are starting to report fourth quarter earnings and their outlook for going forward is much less optimistic. Therefore, there's an expectation that maybe other currencies, such as the Canadian dollar, will actually start to increase because the U.S. dollar will start to come down and therefore, the response here in our country would be an increased Canadian dollar. Do you have any comment on that? Mr.

Craig Wright : When you look at the U.S. dollar, it has turned the corner, but that's after a 10-year trend of depreciation. It has bounced back from very undervalued levels and that is translating on a quarterly basis into some foreign currency losses as they report back in U.S. dollar terms. That's one of the components in terms of a recent weakness in quarterly earnings results. For Canada, we saw the flip side of the U.S. dollar weakness when the Canadian dollar went up to parity and beyond. We're now seeing part of the weakness in the Canadian dollar reflecting U.S. dollar strength.

If the U.S. dollar were to turn lower, we'd probably see some upward pressure on the Canadian dollar. Our view is that the U.S. story is stronger growth relative to anywhere else in the major economies. It's the only central bank that's actually raising rates, while others are still cutting and some into negative territory. It's in a better fiscal position and better current account position. It suggests to us that the trend should be predominantly upward over the next couple of years. The Chair : Ms. O'Connell. Ms. Jennifer O'Connell (Pickering—Uxbridge, Lib.) : Thank you, Mr. Chair.

Thank you for your presentations. My first question is for you, Mr. Tapp. The issue of shovel-worthy versus shovel-ready has me somewhat concerned, given my municipal background. I did financing budgets for my region, which had an annual operating budget of about $1 billion. It's not the largest, but it's certainly not insignificant. For municipalities, the true meaning of shovel-ready is that it's ready to go to tender. I think we all agree that on infrastructure funding and building smart infrastructure, long-term investment is a great thing.

But if a municipality has to spend $200,000 to $1 million on environmental assessments, design, and engineering for a bridge only to then have that project sit on a shelf if they don't get the funding, what municipal councillor is going to make that investment for a project that never sees the light of day? Part of the problem with the former government's infrastructure investment was that you actually couldn't use any of that funding on making a project shovel-ready, so you were filling potholes or doing sidewalk repairs or a park repair because you could do the engineering and the studies in-house.

To your point about managing expectations in the first year, wouldn't it actually be opening up the investment for these big transit projects, rail projects, or whatever the case may be to get those engineering drawings and the environmental assessments and all of that and to actually make a project shovel-ready? Wouldn't that be a better investment in, say, year one? Mr. Stephen Tapp : Yes. I think the only caution I was offering to the committee was, as I said, based on the experience when I looked back at the package.

The argument that economists almost always make is that it should be timely, targeted, and temporary, and on this idea of temporary infrastructure, I think that's a problem. This is the reason people argue that we shouldn't use fiscal stimulus to micromanage the economy and the cycles, because it takes so long to get things going. Infrastructure is an area where I think that in general it takes things quite a while to get going. If your point is that the municipal, provincial, and territorial levels need to do some work before things go to tender and go out, I think that's certainly the case.

As I cited before in some of the data, when the government allocates money, that's conditional if it's going to be a third, a third, and a third. Not all that money is necessarily going to be spent because of cost considerations, timing, or that type of thing. It's possible, in terms of ratcheting down expectations—again, as I said—just to make sure that the money that's allocated is allocated not necessarily in a time-sensitive window, but in a flexible manner so that municipalities can access it. If it takes two or three years, so be it.

I think there are certainly detailed issues, and this is the reason it takes things a while to get going.

(1655) Ms. Jennifer O'Connell : Thank you. Certainly, municipalities would advocate for long-term stable funding anyway, not temporary infrastructure funding. In fact, you could probably go to any municipality.... I know that in mine we have a 15-year infrastructure plan, but you're not going to spend the money on studies if you're not actually going to spend the money in that fiscal year. Just quickly, because I don't have a lot of time, I'll move to Mr. Ross. I have an urban-rural riding outside of the GTA, the Toronto area, in Ontario.

One of the biggest issues with agriculture is the fact that land values are so high that most farmers, even when we protect the land, actually sell it to developers because they make so much more money that way, to the point where the province sometimes has to step in and create greenbelt legislation, for example. How do we actually make farming profitable so that families or farmers stay on the land? That's my first question. Second, for a lot of the land, through greenbelt legislation in Ontario, for example, they now lease the land to farmers so that they can't actually then sell it to developers.

What's the length of lease that actually makes it worthwhile for a farmer to invest in the property? Has your organization looked at length of lease? That's the biggest issue. When you have one-year or two-year leases, they're not willing to invest in the land, and it therefore becomes crop farms and does not really produce for food production. Mr. Scott Ross : Right, this is a topical subject for our organization.

We're currently getting started on a comprehensive study looking at land use policy, land use planning, and some of the provincial regulations around farmland ownership to try to understand exactly the kind of questions you're asking. In terms of the profitability of farming, I think it's a complex picture for what drives that. Certainly the amounts of money going through from development pressures are always going to be a concern for farming. Length of tenure, as you suggested, is an issue for farmers.

For ownership and leasing arrangements, having a mix is always optimal in terms of risk management in planning for farming operations. Certainly long lease tenures would be critical. We don't have a number to place on that, but I think it's an important aspect to the long-term viability of operations and the ability to invest. When it comes to profitability, we've done a lot of work looking at the structure of agricultural research and what can be done on that front. I would echo some of the sentiments of Mr.

Slomp in terms of investing in varietal research for Canadian products and also looking at bolstering the next agricultural policy framework to provide access to capital for new entrants. I think it is a critical piece of the picture to try to keep farms in operation and farming, not just for the profitability of the operation, but so the capital and the flexible intergenerational transfer policy context is there to make sure, where there is a desire to keep it in farming and a committed farm family, they can make that work. The Chair : I'll have to cut you off there. We'll come to you, Mr. Caron, in one second.

I do have a question for both farm organizations. It is not about budgetary expense. It's on the importation of milk proteins, the biofiltered milk issue, where products are coming in and companies have found a way to get around the border rules on milk ingredients. How much is that costing domestic producers? Do you have a handle on that? How would it benefit the economy if Canada Border Services Agency defined those ingredients as they're supposed to be? It's not a budgetary measure, but it is an important measure for domestic producers. I'll start with you, Mr. Slomp, and then Mr. Ross.

(1700) Mr. Jan Slomp : To my understanding there is still a border control for milk protein coming into the country. After the TPP is signed, over a number of years that border control on protein supplements will disappear. That is an open door for processors in Canada to use components elsewhere in the world and get higher yields from Canadian milk. That will mean they either have to grow the market to that level of higher yielding cultured products, or they will have to reduce the amount of milk received from Canadian farms. I think that is the dangerous part of the TPP.

In a few years we will have the door wide open for milk components to be imported without any tariffs. That's the danger there. The Chair : I'll stop you there. Mr. Jan Slomp : I think right now we have a good handle on the importation. The Chair : Mr. Ross. Mr. Scott Ross : Any compositional standards for dairy are certainly a major issue, and I know there are significant costs associated with that. An analog to that same issue is what I was speaking to earlier with the program on duty release and drawback. This is broader than just dairy.

It also affects the poultry industry and the egg industry, but I know the costs of the kind of loophole that's being exploited at the CBSA front is costing them. It went from two million kilograms in 2011, through this loophole, to upwards of million kilograms by 2015. It's about 10% of the market share of the poultry industry. The Chair : Mr. Caron, I'll give you two minutes. Mr. Guy Caron : It's a short question for both Mr. Tapp and Mr. Wright. I've been sitting on this committee for three years, and this question comes up often. I don't see much development. Mr.

Tapp, in your testimony you said that what's needed now is a more comprehensive examination of Canada's tax system to make it more efficient and equitable. You have about a minute each to explain why and how we go about it, if at all. Mr. Stephen Tapp : One minute for tax reform in Canada. I don't know how we could do much justice to that. I think the argument I was making to the committee was that simply looking at the tax expenditure review that's planned is not ambitious enough.

There are certain tax preferences that we have in the system, for example the children’s fitness tax credit, and then we have preferences ranging from pensions and stock options to these other issues. I think that's part of the tax system in looking more comprehensively at personal income taxation, and looking at whether the system is progressive enough, and whether it's taking enough revenue in. On the business side, the same question is there in terms of the rates and whether we get the system to have lower rates and broader bases. I think that is what most economists would argue for.

The pitch I would make would be to not limit ourselves to looking at particular tax preferences, but look at the system as a whole, look at how the federal and provincial levels of government work together, and try to make it more efficient and more equitable. The Chair : Mr. Wright, could you take seconds, and that's even. Mr. Craig Wright : I agree with much of what Stephen said. The only point I would add is while there may be no such thing as a good tax, at least a bad tax could launch a consumption tax, so I'd like to see more balancing toward consumption taxes at the expense of income taxes.

You can do it revenue neutral or revenue positive, but I do think consumption tax is a better path to go down. Any regressivity you can correct. The Chair : Thank you very much to all our witnesses for your presentations, as I said earlier, on short notice. A lot of good information has been provided here, so thank you. The committee will suspend for five minutes while we bring other witnesses forward. (1700)

(1710) The Chair : Could members please come back to the table. The witnesses are here. When we get to the other end and there's no time for questions, members will be asking, “Why didn't we start on time?” Mr. Raj Grewal : I'd like to say it on the record. The Chair : We'll come back to order for the second round of hearings this afternoon. As I indicated at the beginning, pursuant to Standing Order 108(2) we're doing pre-budget consultations for budget 2016. I welcome the witnesses here, and thank you for coming on short notice.

I would also indicate that we hope you can limit your presentations to five minutes. If you go much beyond that, I will have to cut you off. Also, the translators have given us an indication that some people are talking too fast in order to get their words in within five minutes, so you'll have to talk at a pace that they can translate. Starting with the Canadian Association of Petroleum Producers, Mr. Ferguson, welcome, and thank you. Mr. Alex Ferguson (Vice-President, Policy and Performance, Canadian Association of Petroleum Producers) : Thank you for the opportunity to present today.

As a representative of the upstream oil and natural gas sector in Canada, I want to focus some of our comments today broadly on matters of the investment environment in Canada. Simply put, we believe that to create wealth for Canadians, significant and ongoing investment is required in the various sectors of our economy, ours included, of course. This includes investments in manufacturing production as well as technology development, people, and communities. We look at it broadly speaking as an investment, as a key criterion for creating wealth for Canadians across the economy.

There's no question that the current economic environment in our sector has been devastating to many individuals and families, not just in Alberta but across Canada. We're feeling the effects of the current commodities cycle across Canada, and we certainly appreciate governments'—plural—recognition of the devastating effects and the willingness to find solutions and ways of mitigating some of those negative effects. I will also point out a bit of doom and gloom. The situation is not going to be corrected any time soon. We see clearly that things will get worse before they get any better.

There's one thing I do want to talk about in terms of the investment environment for our sector in particular. It's a notable fact that for the last eight to ten years every dollar of cash flow that our industry, our sector, has realized in Canada has been reinvested in Canada. This is a pretty important record. Also, a really important point I will add onto that is that on top of that reinvestment, that cycle that's been pretty steady for the last eight to ten years, there's been a significant direct investment from outside Canada into the Canadian economy through our sector.

We'd like to continue that cycle and be ready to come back when the commodity prices come back so that we can be better prepared to function well in a different world. We believe that government should proceed with a strong sense of urgency on a variety of initiatives that will help create an environment that ensures continued investments in Canada. I'll give you some specific examples and then certainly I'm open to questions afterward. One area we're most interested in right now is addressing underemployed capital within Canada.

I'll give you a few examples that we are looking at and doing some research on, and look forward to engaging with government on this through the budget process. We believe there's an opportunity to modernize the large corporation tax rule to more effectively deploy what appears to be billions of dollars in capital across the economy. I would point out that this is important for our sector, but it's also very important for many other sectors in the economy. There's an opportunity here that we believe Canada should explore.

We also believe that it's time, given our current environment, or change in environment, to modernize the capital cost treatment for tax purposes for the unconventional oil and natural gas resource wealth that we have in this country. The current rules for capital treatment were devised and implemented many years before we thought of the new technologies and the unconventional nature of some of our resources. It is time to look again at that to see if we can't find better ways to allocate capital to make sure that we get the maximum benefit out of our resources.

I will point out to you another area within the broad bucket of underemployed capital. I think last week a CIBC report came out that identified in the order of $75 billion that we Canadians are holding onto in cash because of our fear of the volatility in the equity markets. The notable thing in that report is that they've indicated that through previous down cycles, Canadians were late getting back into the game and lost significant opportunities for investment returns. So we think, broadly speaking, that there's a pool of underutilized capital in Canada.

Within Canada, with our current foreign exchange environment, we believe there's a window of opportunity to strengthen the confidence of those investors and get that money working within Canada for Canadians. Certainly we'd be happy to look at increased investment in any areas of our business.

(1715) Certainly, we also believe—and maybe you're surprised I didn't lead with this—in increasing investment attraction for Canadian resource development. That's another way for me to highlight the need for market access, diversifying our access. I will say that this is an issue for the oil and gas business in Canada, but it's also, broadly speaking, about natural resources in Canada, getting them to as many diverse markets as we can so that we maximize the opportunities of that wealth. I do know from my past experience that the current forest sector is looking at market access issues as well.

That hasn't changed, hasn't gone away. We need to address that, broadly speaking, within Canada. We also believe in and are encouraged by the government's intent to invest directly in Canada. Certainly in areas related to indigenous peoples and community investments which are very important to our sector, those investments are critical for long-term growth in our businesses. We appreciate the economic infrastructure opportunities that are there for Canada, whether strengthening the marine infrastructure, or any of the safety or environmental agencies or issues in Canada.

We do believe strongly in the technology and innovation investment opportunities within our sector. We have some pretty stellar examples in our sector to share around Canada's Oil Sands Innovation Alliance and the partnership they recently created with the technology fund in Alberta, as well as the federal SDTC organization. The Chair : Alex, could you sum up. Mr. Alex Ferguson : I'm just closing right now. I will finish by saying that we certainly support investment in cleaner technology, and our sector has many examples of opportunities for developing cleaner technologies for our sector and others.

We look forward to the opportunity to continue to engage with governments, indigenous peoples, communities, and other sectors, to ensure Canada is prepared for a future that is a lot different from today. Thank you.

(1720) The Chair : Thank you very much. Turning to Dr. Forbes, the president of the Canadian Medical Association, the floor is yours. Dr. Cindy Forbes (President, Canadian Medical Association) : Thank you, Mr. Chair. On behalf of the Canadian Medical Association, I appreciate the opportunity to appear before the committee as part of its pre-budget consultations. As the national organization representing Canada's doctors, let me commence by highlighting the CMA's strong support for the federal government's commitments to health and health care.

The CMA's recommendations for the federal budget are based on tangible and meaningful actions that support the advancement of the government's commitments. I'll briefly outline our core recommendations. Taken together, these measures will go a long way to addressing the major challenges facing Canadians as well as the provinces and territories in meeting the needs of our aging population. As our first area of focus, the CMA recommends new funding to the provinces and territories to support seniors care by means of a demographic-based top-up to the Canada health transfer.

This needs-based funding would be delivered in addition to the CHT, which currently leaves provinces with older populations at a disadvantage. Rather than opening up the funding formula, the federal government can deliver this much needed funding immediately. Our second area of focus is on expanding the availability of home care and long-term care. The CMA recommends that the government establish a new targeted home care innovation fund. In addition to incenting innovations, this fund would support scaling up best practices.

To support access to long-term care, where wait times range up to hundreds of days across Canada, the CMA recommends including capital investment in the continuing care sector as part of the commitment to social infrastructure. Our third area of focus is on delivering support to Canada's informal caregivers. There are 8.1 million Canadians currently giving informal care to family and loved ones, and only a fraction are receiving any assistance.

As an initial step to expanding support to caregivers, the CMA recommends that the federal government amend the caregiver and family caregiver tax credits to make them refundable. Our fourth area of focus is on improving access to prescription medicine. The CMA was pleased to hear last month that Ottawa will be joining the pan-Canadian pharmaceutical alliance in negotiating savings for all publicly funded drug plans. In addition to this important step, the federal government can reduce costs further by establishing a new funding program for catastrophic coverage of prescription medication.

As we know, far too many Canadians simply cannot afford to buy their prescription medications, and this is unacceptable. We must and can do better. A final matter I'd like to raise as part of the pre-budget consultations is that while the CMA strongly supports the federal government's commitment to reducing the small business tax rate, we have been concerned by statements regarding Canadian-controlled private corporations. This may be unknown to some, given our public system, but the majority of Canada's doctors are self-employed small business owners.

Physicians are highly skilled contributors to the knowledge economy. They invest in our communities, and provide hundreds of thousands of jobs. For a significant portion of physicians, incorporation is a key component of the practice model. Changes to this framework could introduce unintended consequences for the health sector. In light of the critical role of this framework, the CMA is calling on the federal government to affirm its commitment to the existing framework governing Canadian-controlled private corporations. I would be pleased to provide more information on this issue. In

summary, the CMA's pre-budget recommendations offer tangible and practical means of implementing many of the federal government's health sector commitments. Each of these recommendations has been designed to deliver an immediate impact in areas where Canadians are struggling the most. Thank you. The Chair : Thank you very much, Dr. Forbes. With the Canadian Nurses Association, we have Ms. Sutherland Boal. Ms. Anne Sutherland Boal (Chief Executive Officer, Canadian Nurses Association) : Good afternoon.

I'd like to thank the House of Commons Standing Committee on Finance for this opportunity to bring to you recommendations from the Canadian Nurses Association, the national professional association for nurses and nurse practitioners, representing 139,000 individuals across the country. As nurses, we see first hand how Canadians can be better supported by more accessible, community-based care approaches and a shift from current policies and funding models that drive acute, episodic, and hospital-based care.

New models for more integrated community-based care would emphasize health promotion, chronic-disease prevention and management, client-centred accessible care, and the use of a range of technologies. Our official submission to the federal budget highlights three recommendations for your consideration. First, deliver federal health dollars through a needs-based top-up in addition to the CHT to each province and territory based on demographics and population health priorities.

This new formula would take into account the concerns that several provinces and territories have raised about the demographic differences and unique requirements of their respective populations, especially those living in rural and remote areas. Furthermore, to increase transparency for taxpayer dollars, we recommend that every bilateral agreement must include a robust accountability framework.

Such a framework would take into consideration the relationship between federal funding and the measurable outcomes that need to be achieved for the benefit of Canadians, include reporting on a comprehensive set of indicators and outcome measures derived from existing national data sources, and provide outcome measures calculated using publicly accessible data to report on federal heath funding and the associated measurable health and social outcomes that we seek to achieve for all Canadians.

Our second recommendation is to improve access to equitable, national, publicly funded home and community-based care that includes telehealth, mental health, and palliative care. We applaud the federal government's commitment of $3 billion over four years for home care. This funding will encourage a shift toward client-centred, cost-effective care that supports patients and caregivers and promotes the health and well-being of Canadians.

CNA will work with the federal government and stakeholders to support policy development, implementation, and scaling up of existing and new and promising models for community-based care. Our final recommendation is to invest in early, secondary, and post-secondary education for indigenous students and in professional development for health care providers who serve Canada's rural and remote communities.

We are ready to work with the federal government in acting to implement recommendations of the Truth and Reconciliation Commission and strongly support the government's commitment to make significant new investments in indigenous education, improve essential physical infrastructure for indigenous communities, and create jobs for indigenous peoples.

This can be achieved by providing a four-year annual investment of $100 million to improve infrastructure in rural and remote communities, specifically in the form of construction of educational facilities and satellite learning centres and expanded broadband to promote distance education. We also encourage a four-year annual investment of $25 million for initiatives to create more locally accessible infrastructure and learning opportunities for students enrolled in health care training programs and health care professionals already serving in rural and remote communities.

Access to high-quality post-secondary health care education and professional development programs for health providers has been shown to lead to a more stable and skilled health care workforce to serve rural and remote communities. Thank you very much for your attention.

(1725) The Chair : Thank you very much. We'll now turn to Mr. Sanger of the Canadian Union of Public Employees. Mr. Toby Sanger (Senior Economist, Canadian Union of Public Employees) : Thank you very much. I'm the economist for the Canadian Union of Public Employees. Our new national president, Mark Hancock, is out of town and sends his regrets. CUPE is Canada's largest union, with 635,000 members. We deliver front-line services for municipalities, health care, social services, education, and many other sectors in communities across Canada.

Our members take pride in delivering quality public services, and with incomes close to the Canadian average of $40,000 to $50,000 a year, they depend crucially on quality public services to maintain their standard of living, as do all Canadians. As we all know, Ottawa experienced a record snowfall yesterday. I and many others spent hours shovelling snow for neighbours and pushing cars stuck on the road. I was happy to help, but I was also happy to see the snowplows arrive, operated by CUPE members. That's what we Canadians do. We shovel snow, but we also help each other.

We help each other in our communities and as a country. We help each other out because it's in our nature, and if there's a car stuck on the road, or someone in poverty, in sickness, or without decent education, it holds us all back as a nation. As a nation, our progress has been held back by inequality and an increasingly unbalanced economy. We need increased stimulus and infrastructure investment, but we also need more fundamental changes.

We won't achieve sustained economic growth unless we work together to diversify and grow our economy, improve public services, generate good quality jobs, reduce inequality, and make the transition to a more sustainable economy. To these ends, our recommendations for this budget are that the federal government increase infrastructure spending, particularly in public transit, green and social infrastructure, and particularly for those most in need, including through affordable housing, transition homes, child care centres, seniors facilities, and community and cultural facilities.

Federal infrastructure funding should support a long-term plan to reduce our emissions and generate good quality jobs. The federal government and other levels of government should demonstrate leadership by ensuring that all public buildings and facilities are constructed or retrofitted to high environmental standards. All federal infrastructure funding should be tied to environmental, climate change, and social requirements.

In the short term, we support the government providing more than a third share of the funding for these investments, tied to achieving environmental and broader social objectives, including decent wages, labour rights, pay equity, and opportunities for apprentices and equity-seeking groups. The federal government should establish a dedicated fund to support public waste-water infrastructure investments required to meet the new national waste-water regulations. It should also increase funding for first nations water and waste water.

We commend the government for removing requirements that recipients of federal funding use or consider P3s, but urge it to go further and eliminate PPP Canada, and redirect the P3 fund to public infrastructure projects. It should also introduce comprehensive P3 accountability and transparency legislation. The Canada infrastructure bank shouldn't be another vehicle to subsidize high cost private finance. With unemployment rising rapidly, we urge the government to accelerate planned changes to EI in this budget.

In training and labour force development, funding should be restored with an emphasis put on literacy and essential skills development. As a priority, we agree that the federal government should work with the provinces and territories to establish and fund a national, affordable, and public non-profit early childhood care and education system with a distinct system for indigenous communities. We also support reducing and ultimately eliminating undergraduate university and college tuition fees.

We welcome the commitment to enhance the Canada pension plan, and urge the federal government to demonstrate leadership in achieving a universal expansion of the CPP, instead of deferring to piecemeal and provincial measures. A new health accord should provide significant annual funding increases strictly tied to enforcement of the Canada Health Act, as well as improvements and expansion of the public health care system, including a national pharmacare plan.

We urge the federal government to commit to a 10-year timetable to increase our international development assistance budget and to dedicate at least half to the least developed countries. We're opposed to the ratification of the Trans-Pacific Partnership, CETA, and other deals that expand corporate power at the expense of jobs, wages, the environment, and our democratic sovereignty.

(1730) Finally, we need increased tax fairness. Priorities in this budget should be to broaden the base by eliminating regressive tax loopholes, such as the stock option deduction, to tackle tax evasion, and to move toward higher taxation of both corporate and capital income. After many lost years, we look forward to working with the new government and parliamentarians to rebuild a more prosperous, diversified, equitable, and sustainable Canada. Thank you. The Chair : Thank you very much, Mr. Sanger. We've heard a lot about yesterday's snow in Ottawa.

Those of us from Atlantic Canada think it was just a little flurry. Voices: Oh, oh! The Chair: It wasn't very much of a storm. We'll now turn to Ms. Decter from YWCA Canada. Ms. Ann Decter (Director, Advocacy and Public Policy, YWCA Canada) : Good afternoon. Thank you for the invitation to appear today on behalf of YWCA Canada. For almost 150 years, YWCA Canada has worked to improve the lives of the tens of thousands of women and girls who use our services annually. My remarks today respond directly to their life experiences.

YWCA Canada and our member associations across the country in nine provinces and two territories are committed to building a country that works for all women and girls. That includes first nation, Métis, and Inuit women, young women, and newcomer, refugee, and immigrant women. We welcome the quick initiation of the development of a national inquiry into missing and murdered indigenous women, and look forward to the government honouring its funding commitment to this in federal budgets and 2017.

Gender-based analysis is essential across government departments and should already be incorporated in the development of this federal budget. It is particularly important for allocation of infrastructure funds to affordable housing and early learning and child care to ensure that this spending responds equitably to the needs of women and girls. The Auditor General reported that in the 20 years since the government committed to applying gender-based analysis, it has been implemented in only some departments and agencies.

Correcting this will require ensuring that Status of Women Canada has sufficient staff capacity. YWCA Canada welcomes the government's support of the motion on pay equity earlier this month. Women working full-time year-round earn 20% less than men in comparable work, feeding poverty and inequality. We look forward to funding in federal budget to support recognition of pay equity as a right, implementation of the pay equity task force report, and restoration of the right to pay equity in the public service.

The new Canada child benefit, or CCB, is a potential life-changer for single mothers and all families living in poverty if the federal government can ensure that provincial and territorial governments refrain from deducting it from social assistance payments, or counting the CCB as income for access to means-tested benefits. If it is to lift 300,000 children out of poverty, women and children living on social assistance must retain the entire benefit. The Minister of Status of Women is responsible for ensuring that no one fleeing domestic violence is left without a place to turn.

Often violence survivors are unable to leave women's shelters because they can't afford housing. This leaves shelters full to capacity and turning away women in need. The CCB would provide a single mother with one child under six with $580 a month. With two children under six, she'd receive $1,160 a month. These payments could be enough for women to secure housing in the community and reduce the system bottleneck if they remain fully in women's hands.

As Canada's largest single provider of shelter for women and children fleeing violence, we work to end the interconnected issues of violence against women and women's homelessness. Federal budget needs to provide a minimum of $5 million to Status of Women Canada to support participation of the violence against women sector in the development of a national action plan on violence against women. Federal budget should restore the shelter enhancement program at $10 million per year to achieve the promise of no one turned away. The promised national housing strategy requires a gender lens and gender-based analysis.

Male bias pervades perceptions of who is homeless, despite women and girls comprising almost half of the estimated 235,000 homeless people in Canada. Homelessness is gender differentiated. Violence and poverty are the major drivers for women. Forty per cent of women leaving shelters don't know where they will live. Women and girls hide their homelessness because the streets aren't safe. For women, housing first is not a panacea. The shift of funding from the homelessness partnering secretariat to the housing first model was not accompanied by gender-based analysis. This is absolutely critical before expansion.

Transitional housing is an essential service for survivors of violence. It doesn't fit the federal government's current housing first model. Actual housing first for women and children living with violence would leave them in the home, remove the perpetrator, and secure their safety. The national housing strategy must address housing for women and families in the northern territories. Women with children trying to escape violence are profoundly impacted by the northern housing crisis and seriously disadvantaged by the lack of federal social housing funding that has continued for years.

(1735) YWCA Canada welcomes Minister Duclos' statements indicating quick progress by federal, provincial, and territorial governments under a framework for a national early learning and child care program. Federal budget should dedicate social infrastructure funds to a short-term emergency-style fund for transfer payments to provinces, territories, and indigenous communities for early learning and child care during funding negotiations.

(1740) The Chair : Could you sum up fairly quickly? Ms. Ann Decter : Yes. Federal budget should close the discriminatory funding gap for first nations child and family services determined in the January 26, 2016 ruling of the Canadian Human Rights Tribunal. We would also suggest that the development of a poverty reduction strategy needs a gender lens, a gender-based analysis, and grounding in the realities of women's poverty. Women account for 70% of part-time employees and two-thirds of Canadians working for minimum wage.

The median income of single-mother-led families is one-third lower than that of father-led single parent families. The strategy needs to include all women living in poverty. Some of the most vulnerable of women are homeless young women escaping sexual abuse and abused adult women coping with trauma, mental health issues, and addictions who have lost their children to the depths of the child welfare system. Thank you. The Chair : Thank you very much. We will turn by video conference to Calgary and to Mr. Bloomer, who is with the Canadian Energy Pipeline Association. Welcome, Mr. Bloomer. The floor is yours. Mr.

Chris Bloomer (President and Chief Executive Officer, Canadian Energy Pipeline Association) : Thank you very much, Mr. Chairman. I want to thank the standing committee for the opportunity to speak on behalf of the Canadian Energy Pipeline Association and to provide the submission and speak today with respect to the upcoming budget. I will summarize our submission comments with respect to Canada's investment climate for major pipeline development, the NEB processes, and NEB modernization.

CEPA represents Canada's major mainline transmission pipeline companies, which operate approximately 117,000 kilometres of pipeline in Canada, moving annually approximately 1.2 billion barrels of oil and almost three trillion cubic feet of gas. For more than 60 years, our pipelines have operated across the country, delivering energy safely, reliably, and efficiently. Over the past decade, CEPA members have had a 99.999%—almost 100%—safe delivery record. In there was a 100% safety record, with zero incidents along the mainline transmission system.

Our industry is undoubtedly a pillar of the Canadian economy, but recently we have seen difficult challenges. The collapse in the price of oil has resulted in delayed or cancelled energy projects and enormous job losses. In alone, over 100,000 direct and indirect jobs have been lost, and more are expected. The situation is made much worse by our dependence on the United States as our only major customer from an exporting perspective.

This forces us to sell our oil at a severely discounted price because of the lack of pipeline infrastructure to access global markets, and this results in billions of dollars of lost revenue for Canada. CEPA members have over $68 billion of proposed investments in pipeline projects forecast over the next five years, projects that will open new markets and provide greater access to existing markets. All of these projects will be built with private capital. To build these important projects, we need to have a competitive investment climate.

Companies will choose to invest their capital in other jurisdictions if they see the Canadian regulatory and fiscal system imposing process uncertainty, additional risks, costs, and delays that are not inherent to more competitive jurisdictions. We recognize that the responsibility to create investment confidence comes hand in hand with building public confidence. To build public trust and confidence, we believe that decisions on whether new pipelines will be built m