1 EVIDENCE Standing Committee on Finance NUMBER 003 1st SESSION 42nd PARLIAMENT Tuesday, February 16, 2016 Le mardi février Standing Committee on Finance CANADA [Recorded by Electronic Apparatus] EVIDENCE February 16, 2016 Committee Edited Evidence * Table of Contents * Number 003 (Official Version) Official Report * Table of Contents * Number 003 (Official Version) Témoignages * Table des matières * Numéro 003 (Version officielle) 03 16 02 2016 2016/02/16 15:40:00 House of Commons Comité permanent des finances Standing Committee on Finance FINA Chair The Honourable Wayne Easter 42 PUBLIC PART ONLY -

PARTIE PUBLIQUE SEULEMENT (1545) [ English ] The Chair (Hon. Wayne Easter (Malpeque, Lib.)) : I call this meeting to order. Pursuant to Standing Order 83(1), this is a meeting on pre-budget consultations for the budget. I welcome the witnesses here. I know you had fairly short notice for getting your submissions together, so we really appreciate the fact that you did it on short notice. I will say, given time constraints, our first round of questioning will go to six minutes instead of the regular seven.

I'm going to hold the witnesses to five minutes, and we'll have to cut you off at that stage, just so you know ahead of time. I believe that was in the clerk's letter. Welcome, and I believe the first one up is Mr. Queenan with the Canadian Alliance of Student Associations. Mr. Erik Queenan (Board Chair, Canadian Alliance of Student Associations) : Good afternoon, Mr. Chair, committee members, fellow witnesses, and members of the gallery. My name is Erik Queenan, and I'm the chair of the Canadian Alliance of Student Associations and the president of the Students' Association of Mount Royal University in Calgary.

I'm pleased to have the opportunity to speak before this committee on behalf of CASA and our member associations representing over 250,000 students across Canada. CASA has worked closely with this committee in the past by presenting on issues pertaining to post-secondary education. Recent examples include unpaid internships and youth employment. We look forward to continuing this collaborative relationship. I want to begin by broadly discussing CASA's approach to advocacy, which is rooted in evidence-based research and is driven by the work of our student members.

Our organization works on the principle of creating a post-secondary education system that is accessible, affordable, innovative, and of the highest quality. We believe we have a significant role to play in addressing the inequities that exist in our post-secondary system, primarily by ensuring that groups that have been traditionally under-represented are able to gain access to an education. We strongly believe that progressive public policy addresses these imbalances by recognizing that different students have different needs.

CASA is also cognizant of the financial realities of this country and the budgetary constraints that all governments face. Investment in higher education is necessary, but we must prioritize those areas that will have the greatest impact. That is why we strive to provide policy options that are cost effective and deliver the greatest impact upon investment. Moving into our budget priorities for the year, CASA recommends the government increase the value of the Canada student grant program by 50% and expand eligibility to graduate and doctoral students.

This would build on the past success of the CSGP in ensuring that Canadians from more backgrounds can access post-secondary education. Through the CSGP the federal government provided over 320,000 college and undergraduate students with non-repayable, upfront grants. The CSGP, introduced in 2009, offers $250 per month to students from low-income households and $100 per month to students from middle-income households. Grants continue to be extremely effective in promoting accessibility and reducing debt levels.

This program is effective and deserves further support through increased funding and expansion to the one group of students that are still excluded, those studying at the graduate level. Furthermore, CASA calls on the government to deliver on its promises to indigenous students by promoting the post-secondary student support program, or PSSSP. This means removing the 2% annual cap that has constrained the program from reaching the number of indigenous students who'd otherwise be attending post-secondary education.

Closing the education gap for indigenous populations is an important step in reconciliation and must be a national priority for this government. As a country we not only have a legal obligation in addressing these issues, but a moral one as well. Lastly CASA is calling on the government to increase the Canada student loans program's weekly limit from $210 to $245. Student loans assist more than 470,000 students every year, but this limit has not been updated since 2004, which has left students struggling to afford their education.

At the moment it is estimated that nearly 41% of Canadian student loan borrowers have financial needs that exceed the funding available, and that figure is going to continue to grow every year that low limits are not increased. Faced with this funding shortfall, students must deal with troubling alternatives. Some students turn to private loans where they face high interest rates and little repayment flexibility. Others turn toward their families who must often sacrifice their own financial stability.

In a poll conducted by Abacas Data, CASA found that one-third of Canadian PSE families reported taking funds out of their retirement savings in order to afford their children's education, while another 14% went as far as remortgaging their homes. The cost of education is no longer just a student issue, but an issue for Canada's middle-class families as well. Our brief, which has been submitted, captures the rest of our priorities, including a reinvestment in research, a call for investment in experiential learning, and an increase to the repayment assistance plan income threshold.

These asks have been fully costed, and we believe they can be met within the current fiscal environment. CASA appreciates the opportunity to work alongside this committee in a positive and collaborative manner. We've provided this committee with a broad spectrum of sensible and transformative policy recommendations that will positively impact students across this country and Canada's economy, now and into the future. Thank you very much and I look forward to your questions. The Chair : Thank you very much, Mr. Queenan. We'll turn to Ms. Gray, Canadian Association of Retired Persons. Ms.

Janet Gray (Chapter President, Ottawa Chapter, Canadian Association of Retired Persons) : Good afternoon. Thank you, Mr. Chair, and thank you for the opportunity to present CARP's pre-budget recommendations. My name is Janet Gray. I am the chair of Ottawa's CARP chapter, one of the chapters across Canada. CARP, for those of you who aren't aware, is a national, non-profit, non-partisan organization with 300,000 members. Retirement security and health care are the top priorities for our members.

However, retirement income insecurity, even poverty, is a reality for many older Canadians, despite working hard and contributing to the country throughout their working lives. In the past 20 years, the poverty rate among seniors has tripled from 4% to 12%—between and 2012. This is worse for single seniors, especially single older women. Eighteen percent of single women over live in poverty with incomes under $20,000 per year, and a critical mass lives well below the cut-off. Over 30% of single women between and are also low income, and 70% of them are part-time workers and 66% are minimum wage earners.

The combination of OAS and GIS is a determining factor in keeping older Canadians out of poverty, especially for single seniors, but it does not close the poverty gap entirely. There is a significant gap that needs to be bridged between the low-income measure and the current OAS and GIS benefits, a gap that is unlikely to be filled by savings and private pensions. Therefore, CARP recommends the government restore the OAS eligibility back to age 65, increase the GIS especially for single, low-income seniors, increase the OAS and GIS to bridge the poverty gap, and introduce the seniors index tied to wage rates.

Together these measures will help to prevent poverty in old age for all Canadians. The retirement landscape has changed. Canadians are faced with financial challenges, disappearing workplace pensions, and uncertain economic times. Two-thirds of working Canadians, 12 million people, do not have workplace pension plans, and Canadians are increasingly unable to save sufficiently for their own retirement. The CPP currently provides Canadians, on average, only $7,000 in benefits annually. It replaces 25% of earnings up to $51,100, but falls short of the 70% of pre-retirement income needed for retirement.

The government has an opportunity to help Canadians save better for their retirement. CARP recommends the government fulfill its promise to work with the provinces to enhance the CPP, but a modest increase to CPP alone will not cover the 70% replacement income needed for retirement. Therefore, CARP also recommends a supplementary universal pension plan that would work like the CPP with mandatory enrolment, independent of government or single employers, using the existing payroll deduction mechanism, employing professional management, and focusing entirely on optimal performance.

Canadians expect the health care system to deliver appropriate care that is comprehensive and responsive to their needs across the full health care spectrum, from acute care to chronic care to end-of-life care. However, the health care system falls short of Canadians' expectations and needs. One in four Canadians, just over eight million, provide care to a chronically ill or disabled loved one. They face various challenges including loss of income, caregiving and medical expenses, mental and emotional distress, and health decline. Three-quarters of caregivers provide care to a person aged or older.

As the population ages, more Canadians will become caregivers. Home care is fragmented across the country. Often the programs are unavailable and national standards of care and access do not exist, creating wide variances in the amount, quality, and access to care between provinces and sometimes even within a province. On average, a person aged or older uses six prescription drugs that can cost, out of pocket, thousands of dollars annually. Prescription drugs are necessary treatments to prevent deterioration, even death, but at present, they are an insurmountable financial burden for many Canadians.

CARP calls for a system-wide transformation of the health care system in which patient needs are prioritized, national standards of quality care exist, and timely access is available regardless of postal code. As a first step, we recommend the government make the federal caregiver tax credit refundable to benefit those with modest or no taxable income, invest the promised $3 billion in home care, create national standards of care and access, and establish a national pharmacare plan that ensures accessible and affordable drugs.

The federal government identified retirement security and health care as priorities during the recent election. The budget is an opportunity for the government to fulfill its promises to Canadians, create a clear pathway to retirement income security, and transform health care for all Canadians. Thank you.

(1550) The Chair : Thank you very much. Turning to the Canadian Association of Social Workers, we have Fred Phelps, a Saskatchewan boy at heart. Mr. Fred Phelps (Executive Director, Canadian Association of Social Workers) : Good afternoon. On behalf of the board of the Canadian Association of Social Workers and our provincial and territorial federation partners, I would like to thank this committee for choosing to hear the perspective and budget priorities of the social worker profession.

First, CASW is tremendously pleased that this new government has demonstrated a commitment to bringing co-operative federalism back to health and social care in Canada. To this end, CASW was pleased that the federal minister responsible for families, children, and social development has chosen to already meet with his provincial and territorial counterparts, a meeting CASW has called for but which has not taken place since 2006. Finally, we are deeply encouraged by the commitment of this new government to develop a new health accord, and we sincerely hope we will also address “social” in this health accord.

This tectonic shift in leadership comes not a moment too soon if we are going to address the growing inequality gap in Canada. We have three main recommendations. First, implement a new social care act for Canada. Currently, we cannot determine how federal dollars for social services are being spent, as there is no accountability or measured ties to the Canada social transfer or other social investments. We should not invest more without knowing how we already spend.

A new social care act for Canada proposes principles similar to that of the Canada Health Act to guide the social transfer and other social investments, making possible a national strategy with shared performance indicators and outcomes. The proposed act would help guide the provinces and territories in developing priorities and policies that best fit their unique needs, while helping the federal government understand where dollars are being spent, receive recognition for those investments, and in turn, know where more target investments might be needed. We can't develop good policy without good information.

Our second recommendation is to consider the potential of basic income. CASW welcomes the recent comments by Minister Duclos in noting the merits of basic income. To this end, CASW recommends that the federal government consider developing a targeted basic income. CASW believes it should be targeted initially to provide support to those who are the most economically vulnerable because of age, labour market status, or differing levels of ability, and could build upon existing negative income tax mechanisms. When you make comprehensive upfront investments, you benefit down the line.

CASW cautions that not all basic income models are created equal. The implementation of a basic income should not be cause to eliminate all other social assistance programs and strategies. A basic income would be foundational to a national poverty reduction strategy when simultaneously paired with policies such as a national affordable housing strategy and child care strategy. Compassionate policy is also cost-effective. Our third recommendation is to support Canada's evolving needs with targeted strategies.

We know that Canada's population is aging rapidly, and senior women, in particular, are increasingly economically vulnerable. Health care costs are soaring and demands on the system have shifted from acute to long-term needs. CASW, in alliance with the Canadian Medical Association, is calling for a multi-year, multi-faceted national seniors strategy with the “Demand a Plan” initiative. Canada's needs are changing. Canada also needs to better address Canadians' mental health.

National public and private campaigns to end the stigma encourage Canadians to seek help, but this must also be accompanied by an equal increase in services to access care. The Mental Health Commission of Canada suggests that funding for mental health should be increased from 7% to 9% of total public health spending. Currently the federal share of provincial-territorial spending is approximately 22%. We recommend this be increased to 25% of total public health care spending. As well, CASW supports this government reaffirming the renewal mandate of the Mental Health Commission of Canada.

Canadians are making mental health a priority and we need to follow suit. Mental health infrastructure must also be bolstered to support the social determinants of health. Increasing and investing in the social determinants of health is prevention. CASW looks forward to working with this government to bring compassionate and cost-effective policies to Canada. Thank you again. I look forward to answering any questions you may have.

(1555) The Chair : Thank you very much, Fred. We now have Mr. Kelly, with the Canadian Federation of Independent Business. Mr. Daniel Kelly (President and Chief Executive Officer, Canadian Federation of Independent Business) : Good afternoon and congratulations to the new parliamentarians. For those who don't know us well, we represent 109,000 small and medium-sized businesses across Canada. All of them are independently owned and operated, and we are strictly a non-partisan organization. I did want to share with you a little bit of data. I've put a deck in front of you today.

As you can see on slide 3, our business barometer shows that small business optimism in the economy is dropping and dropping rather quickly. We really do need to see some messages of reassurance and some policies to reassure Canada's job creators. As you all know, it is small and medium-sized firms who do disproportionately the lion's share of the job creation in the country and are usually the slowest to fire in economic distress. They are under intense pressure right now and need your help.

The good news is that we actually saw a little bit of a change in the last month where there are more businesses now predicting to hire than to layoff. That is good news. It is a bit of a departure from the previous month's data. There is an opportunity here to continue to provide some positive messages for the economy in the months ahead. The total tax burden remains our number one priority as an organization. Certainly, our members, through our polls of them, share with us that this is top of their minds.

Just getting into the issues, we've put out seven key priorities for the federal government for the months and years ahead. One is to ensure continued access to the small business corporate tax rate. We congratulate all parties, in fact, all four main national political parties committed to reducing the small business corporate tax rate from 11% to 9%. We also extend our congratulations to the new government for following through on the first tranche of that with a reduction from 11% to 9.5% that went into effect as of January 1.

We are a little bit freaked out with the prospect for some clawing back of access to the small business corporate tax rate. There have been some messages from the new government that it may limit some of the businesses who currently do take advantage of the lower small business corporate tax rate. Some talk about perhaps professionals being disallowed from accessing that rate. That is a bit of a worry and we're hoping to get some messages of reassurance on that front in our meetings in the months ahead. Our biggest concern right now is the prospect for CPP expansion.

I'm often asked what the top thing is that governments can do to make the economy better. My top piece of advice is don't make it worse. I must tell you that Canada pension plan expansion would do that. It would have a huge and immediate negative impact on small firms. We are pleased to hear some messages today that the Ontario government has decided to put on hold at least the first year of its very disturbing plan to implement the Ontario retirement pension plan. That is good news that it is going to take a bit of a break from that to allow the CPP discussion to take place nationally.

We're pleased that the federal government may have had a role in convincing the Ontario government to perhaps put the brakes on that, so compliments there. I do want to share with you new data that is out today from the Ontario government. It shows that 59% of businesses are expected to freeze or cut wages in response to the ORPP. This isn't CFIB data. It parallels it almost exactly, but this is Ontario government data that shows that businesses will reduce wages in response to the ORPP. We also believe very strongly that there will be fewer jobs for Canadians should the ORPP or CPP expansion go into effect.

Skipping quickly to employment insurance, we're pleased to see that there will be an overall reduction planned for 2017. It is about half of what was promised in previous budgets. I do want to make note though that for small firms in Canada—and this is something very few people know—because of the small business job credit that's in place for and 2016, when that comes off next year in 2017, employment insurance rates for the smallest businesses in Canada will go up under the new proposal. That could be devastating when you're counting on those very same small firms to create jobs to give the economy a boost.

It won't be a reduction for them. It will actually be an increase for them unless something happens.

(1600) We're urging you to either continue the credit or to implement a permanent lower rate of employment insurance for small businesses, perhaps on, say, the first $500,000 in payroll. The Chair : I'd ask you to sum up in seconds, please. Mr. Daniel Kelly : Very good. I've also made some recommendations on red tape, on Canada Revenue Agency. We do want to give a special plug here for the Liberal Party's previous bill to allow succession planning, to make that easier for small firms. Emmanuel Dubourg put forward a private member's bill.

We're asking you to put that into practice as well as control of government public sector wages, benefits, and pensions. Thank you very much for your time. The Chair : Thank you very much, Mr. Kelly. Mr. Kevin Lee, with the Canadian Home Builders' Association. Mr. Kevin Lee (Chief Executive Officer, Canadian Home Builders' Association) : Thank you. The 8,500 member companies of our association across the country are in the business of building new homes and renovating existing ones, working hard to develop the communities we call home.

As you know, the residential construction industry has been a major source of stability in Canada's economy over the past decade, through good times and bad, and this needs to continue. By several measures, residential construction is Canada's top industry, employing over 900,000 workers, providing over $50 billion in wages, and accounting for over $125 billion in economic activity. Residential construction benefits all regions across the country, active in every single community, large and small. It accounts for $35 billion in exports.

For Canadian middle-class families, home ownership is a cornerstone of social and financial well-being. Some 70% of Canadians own their homes. While there has been much made of debt-to-income ratios, we need to look at other statistics as well. Thanks in large part to strong and sound housing markets and Canadians' wise investments in their homes, Canadians' net worth to income ratio is at a record high of 768%. Canadians own outright over $3 trillion in housing assets. It's clear then that home ownership is a source of financial strength for most Canadian families.

Housing market conditions across Canada are decidedly varied. While some parts of the country continue to see strong housing markets, others are weaker. Still, the issue of the housing affordability challenges facing young Canadians is a harsh reality in today's economy. Many factors have contributed to drive up the cost of housing, and there are new fundamentals at play. Many under-recognized factors are driving up demand, while many government policies are limiting supply, directly or indirectly, and driving up house prices in other ways. The result is affordability problems, especially for young Canadians.

Four in five millennials want to own their own home one day, but right now we're in danger of locking them out. Given that owning a home is a key to entering the middle class, Canada needs to take action, and there is plenty that we can do. CHBA therefore recommends that the federal government focus on three areas with respect to housing: affordability for first-time buyers, climate change, and finally, jobs and innovation. First, on affordability, the millennial generation faces a challenging job market, stagnant incomes, and high home prices, particularly in our urban centres.

Lack of access to home ownership by this group, who should form Canada's middle class in the future, will impair their financial success and have ongoing negative impacts for the economy as a whole. We therefore recommend the following. The federal government should adjust mortgage rules by allowing 30-year amortization periods on insured mortgages for well-qualified first-time homebuyers. This is a no-cost means to help prevent young families and new Canadians from being locked out of home ownership.

With respect to taxes, municipal development taxes have skyrocketed in recent years, and hence, so has the GST charged on top of them. We therefore recommend removing the GST portion applied on top of municipal taxes in new residential development. Related to those development taxes, federal infrastructure investment is critically important. It not only supports development but it can help avoid more local development taxes further deteriorating affordability.

Accordingly, the government should reduce the burden on municipalities by increasing the federal share and allowing municipalities to contribute less than the conventional one-third of funding to the projects. Finally, the government should reform federal tax regimes related to purpose-built rental properties, including infill projects, to encourage more affordable market-based rentals. On climate change, where housing is actually an underappreciated Canadian success story, despite having 38% more houses in Canada than in 1990, residential emissions overall are down 11%.

New houses are 47% more efficient than they were in and this improvement hasn't been through codes but through ongoing innovation and voluntary improvement—much of it thanks to government and industry collaboration in research and development. New housing is doing very well and will continue to improve. We therefore do not recommend more stringent codes unless they can be shown to have no impact on costs and affordability. New housing can and will continue to improve its energy performance, voluntarily, with excellent success. There's a huge opportunity in the energy retrofitting of the existing housing stock.

Every dollar invested in the average existing Canadian home will yield four to seven times more GHG reductions than the same dollar spent on a new home. CHBA therefore recommends a permanent refundable home renovation tax credit for energy efficient retrofits using the government's EnerGuide rating system. Improving the energy performance of existing homes offers the greatest and most cost-effective benefits to homeowners, utilities, governments, and society as a whole.

(1605) Tax credits that require receipts for the improvements made would also help address the underground cash economy, a key policy area for protecting Canadians, supporting honest businesses, and ensuring taxes collected support government programs. Finally on jobs and innovation, our sector, which employs 900,000, will see over 118,000 skilled workers retire over the next decade. Support for skilled jobs and research to support innovation and productivity will be key. Specifically we recommend that federal training support be expanded to all of those pursuing careers as skilled workers.

The government should encourage innovation by focusing federal research support, including that for codes and standards on better built houses that cost the same or less. Innovation and responsible regulation can continue to improve Canada's excellent housing, but we need to do this without continually increasing costs and damaging affordability. I'll leave it there. Thank you very much for your time. The Chair : Thank you very much, Mr. Lee. Mr. Marotte. [ Translation ] Mr. Hans Marotte (Lawyer, Mouvement Action-Chômage de Montréal) : Thank you very much for the invitation.

People often say that if you want to know where you are going, you have to remember where you've been. And so I would like to remind you of a commitment made by the House of Commons in 1989. It was a unanimous commitment made by all parties. They voted for the abolition of child poverty by the year 2000. The organization Campaign 2000, which tracks this situation, reports that in fact, child poverty has increased markedly since 1989. We are consequently forced to recognize that as a society and as a government, we have failed. We also have to ask ourselves why we failed. Campaign identified two major issues.

The organization pointed out that the Government of Canada stopped investing in social housing. That is one of the reasons why child poverty worsened. It also pointed out that there had been some deep cuts to employment insurance over the past 25 years. I don't want to put salt in the wound, but one has only to think of 1990, when the Conservative government stopped contributing to the employment insurance fund. In 1993, the Conservative government managed to completely exclude from employment insurance anyone who voluntary left a job or was dismissed for cause.

In 1996, the Liberal government doubled, if not tripled, the eligibility requirements for benefits. One has only to think of the Harper government EI reform in 2012. All of these measures impact families, children and workers. The Mouvement action-chômage de Montréal, which has been in existence for 45 years, defends and represents people who have problems with employment insurance. These are people who are simply between two jobs. That is what being unemployed is: it is being between jobs. Currently, if there were unemployed persons in this room, fewer than of them would be entitled to benefits.

We think that is a problem. In the context of this pre-budget consultation, we propose that you change things to make the employment insurance program truly accessible. The program should do the work it was created to do. In the final analysis, there will be repercussions at the budgetary level. When someone in Red Deer, Montreal or Gaspé loses his or her job, he loses an income. If we can give him employment insurance benefits, he will not use them to purchase luxury goods or put them in a tax shelter. He will spend the money in his community.

This money will have a direct impact on his life and on the life of his community. We feel that making the program accessible is really very important. There is another very important thing. I invite you to read the “Employment and Insurance Monitoring and Assessment Report”, a guide the department publishes each year, in which it assesses the effectiveness of the employment insurance program and the means by which the program manages to pay benefits to the men and women who are entitled to them. Each year, there is a decrease in that effectiveness.

Currently, the program is not managing to pay the benefits within the prescribed time. The employment insurance program, that administrative machine, is supposed to pay benefits within 28 days. Unfortunately, that objective is attained in only about 7% of cases. This has repercussions on communities and on individuals. Year after year, the “Employment Insurance Monitoring and Assessment Report” informs us that there are fewer resources in the machine. Accessing the program has become more complex, and people receive their benefits later. I hope you will also look at the Social Security Tribunal of Canada.

When people apply for benefits and their claim is denied, they have the right to appeal the decision. In my opinion, in and in the years previous to that, the Canadian program was one of the best justice systems in the country. You could obtain an appeal hearing in 30 days or less, and a decision was handed down two or three days later. It was a model of efficiency, it did not cost much, and people had access to justice. I plead before the Social Security Tribunal of Canada. Currently, hearings take place within three, four, five or six months.

I don't know about you, but personally, I could not live without a salary for four, five, six or seven months. In light of this, we implore you to improve the functioning of the Social Security Tribunal of Canada. The current situation impacts people and communities, but it also has budgetary consequences. And yet, it would not cost much to improve it. In fact, the previous system did not cost any more and it was extremely effective. I can answer your questions in more detail, if you need any clarifications. Thank you very much. (1610) [ English ] The Chair : Thank you very much, Mr. Marotte.

I think some of us around here have had the same experience before the tribunal. I know I have. In any event, going to questions, we are doing six minutes instead of seven, and we will start with Ms. Dzerowicz.

(1615) Ms. Julie Dzerowicz (Davenport, Lib.) : Thank you, Mr. Chair. With your permission I'm going to ask two separate groups two questions and then have people respond. First, I want to say thanks to all the panellists. You did an absolutely wonderful job. I've learned a lot, and thank you so much for making the time to come here today. My first question is for the Canadian Association of Retired Persons, Ms. Gray. I live in a downtown west riding. I represent Davenport. We have a lot of seniors there.

They are desperate to try to continue to afford to live in an area in which they spent most of their adult lives. They deal with a lot of issues around affordability and around senior isolation, so a lot of what you spoke to resonates with me. I'd love for you to respond to two things, and I have two quick questions. One is about how our government has committed to lowering the retirement age from to 65. How will that benefit seniors and the overall Canadian economy? That's the first part of my question for you. The second

part is, as was mentioned today in one of the presentations, the Ontario government has introduced a new pension plan and the federal government is committed to working not only with Ontario but indeed at the national level on an enhanced CPP. Can you talk to us about how an enhanced national CPP will benefit your members? Those are my questions for you. If I can, I'd also like to direct a question to Mr. Kelly of the Canadian Federation of Independent Business. In my riding I also have an extraordinarily vibrant and innovative class of businesses. They are small businesses. They're wonderful. They're energetic.

They're breathing huge amounts of life and innovation into the Davenport community. One of the things that has surprised me—and I will confess it's what you list on page 5—is the shortage of qualified labour. I find it interesting that at a time when we have a lot of youth looking for jobs, we have unemployment, we have a lot of programs in place from apprenticeships to trades, I find it remarkable that is one of the top five issues. What federal actions can be taken in this area? I'd love to hear from you, and that's it, Mr. Chair. The Chair : Okay, thank you. Who wants to start on the age to 65? Ms. Gray. Ms.

Janet Gray : What the difference is between ages and is essentially a two-year gap in income. People who want to retire at age 65, if they have little work experience—and a lot of the older generation may have because they've been stay-at-home parents—find that all of a sudden they are at age 65, they have no CPP, and they have to wait until to be eligible for OAS and GIS. There is that two-year gap. If they are able to get anything at all from CPP, two years later they can supplement that with the OAS and GIS. That was a critical two-year period for a lot of people.

For the ORPP and the CPP, our preference certainly would be for a CPP enhancement. In light of that not happening, we've reached out to the provinces to ask what they can do to overcome this obstacle. Some of them are willing to take that on and some are willing to look at it, but our overall preference is to have a CPP enhancement. The Chair : On the skills meeting the jobs question...? Mr. Daniel Kelly : It's a very interesting question. There is a lot that can be done, and one of the things we liked best about your party's platform was the EI holiday that was proposed for youth hiring.

That is a terrific incentive. It's something that has been done in the past. Previous Liberal governments have implemented that. We've been strong champions of it as well. Your government promised to put in place a three-year holiday for 2016, 2017, and for youth between and 24 years old. They would still pay premiums themselves but employers would have a holiday to incentivize them to create more jobs oriented towards young people. You are quite right; there are challenges with youth employment.

I have to admit we were fairly strong critics of the previous government with respect to the actions it took on the temporary foreign worker program because there is an ongoing need for workers for jobs that Canadians themselves are not lining up for. I have to say that I sympathize with the young person who has gone to school for four years or eight years and now has $50,000 in student debt. The job that might be available to him or her is at a quick-service restaurant or cleaning rooms in a hotel.

I can understand why he or she might choose to sit on the sidelines of the labour market for a bit in that environment, but we have to recognize that all work is noble. If we're not prepared to do the jobs ourselves, if we're not prepared to encourage our kids to take those jobs, we're going to need to bring in somebody who is prepared to do some of those jobs. We can do a much better job as employers though, by reaching out to some of the underemployed pockets of the labour force. The aboriginal population and seniors have some potential.

The youth piece is a difficult nut to crack and I have to confess there are a lot of employers, a lot of our members, who have lamented that the work ethic in Canada is generally declining. That is one of the challenges that they face as well.

Very quickly, on the CPP front, I did want to say that even the strongest proponents of CPP admit that the benefits don't actually kick in fully for forty years, so no seniors today would get a nickel more in Canada Pension Plan contributions and even those five or 10 years out would get almost nothing from CPP expansion, so this really would benefit perhaps kids like my seven-year-old son, but not any time soon.

(1620) The Chair : Thank you, Julie. Turning to Mr. McColeman— Mr. Phil McColeman (Brantford—Brant, CPC) : Thank you, Chair, and thank you to the witnesses for coming. First of all, Madam Gray, I just want to clarify the comments you made about retirement being at age 67. What is your understanding of the current OAS program and the changes the previous government made to it? When do they come into effect? Ms. Janet Gray : That is 2023, I believe. Mr. Phil McColeman : It's 2023, and they are ultimately graduated until 2030. Ms. Janet Gray : Yes, they are phased in after a certain year of birth. Mr.

Phil McColeman : The representation I was listening to was not very clear on that point, and I wanted to be sure I understood. Ms. Janet Gray : I'm sorry. Mr. Phil McColeman : I also want to clarify your organization's position regarding tax-free savings accounts. The current government came in and reduced it from what we had moved it to, which was $10,000. What is CARP's position on that? Ms. Janet Gray : We preferred the higher amount, quite frankly. Any amount in a tax-free savings account is a good idea. We would like to see it higher, as it was. Mr.

Phil McColeman : Have you any idea of how many seniors took advantage of saving that way? Ms. Janet Gray : I don't have that answer right now, sorry. Mr. Phil McColeman : I just thought you might have that number. Now I'll move over to Mr. Kelly. Mr. Kelly, small business, as we all know, generates the bulk of employment. This past week, I was in my community at a Polish delicatessen. The owner of the business came out from behind; I hadn't met him before. I was doing some shopping. He pulled me aside and said to me that he has four jobs available, basically making sausage in the back of the facility.

He had a Polish butcher who had to go back because his work visa was done. He has since had five individuals, youth. He mentioned they were generally in their early twenties. Of those five, none of them lasted more than two days on the job. This is not a made-up story. This is the story he told me, and he wanted me, as his MP, to come to Ottawa and advocate in the largest way possible to get that Polish butcher back into Canada to work in the back shop. There is some disconnect here, as I've mentioned.

In small business, which is my background, the kind of popularized thinking is that you're making all kinds of money, that you're a rich guy and you can afford to pay more taxes and more indirect taxes, but I think your members would agree that the margins are often so small between staying in business and going out of business that one small addition can make the difference. Am I correct in saying that? Mr. Daniel Kelly : You are. I have to tell you that I'm really worried about what I'm seeing right now and the economic signs that we're looking at.

I know that you, as parliamentarians across all parties, are as well. I am quite concerned. Even small actions with good intentions could be that straw that breaks the camel's back. Right now I have a bunch of members in Ontario who are apoplectic about the ORPP, the Ontario retirement pension plan. It is good news that it's delayed, but CPP expansion could be just as bad. I really do worry. This is a different environment than the one we were in when CPP enhancement happened the last time.

When Paul Martin fixed the Canada pension plan, CFIB members supported a small, gradual increase in CPP contributions in order to save the CPP. It is a myth that we are always opposed to any new form of taxation. This is different now. The signs that the economy is showing us right now suggest this is not the time to increase the largest payroll tax in the country. At the very least, even if there's sympathy toward doing it, I would suggest that you shouldn't. On this specific—

(1625) Mr. Phil McColeman : Can I just stop you there? I'm sorry, I only have a few minutes and I want to get to Mr. Lee for one quick question. Mr. Lee, you know that I know the home building industry intimately. On a new door, from the time you take the raw piece of land to the time you hand the keys over to the new homeowner, how much of the cost of that home is taxation, on average? Mr. Kevin Lee : It varies from municipality to municipality. We're seeing numbers from 20% to 25% of government imposed taxes from all three levels. Mr. Phil McColeman : I have one last point.

I met with a builder during the holidays. I meet with builders all over the place. I met with one last week, and he said that the price of lumber has come down on a house this year to the lowest it's been in 20 years. It's because of the price of commodities and where they've gone. I asked him how much of the price of the house is the lumber, the materials to build the house? He said less than 10%. Will it be reflected in the final price of the house?

Not likely, because every jurisdiction in this country, mainly municipalities, is taking up that space with development charges that in my community exceed $25,000 a door on any new dwelling. That's for apartments, condominiums, and single-family houses. Is that what your members are experiencing? Mr. Kevin Lee : Yes. We're seeing that similar kind of decline where the construction costs are becoming a fraction. One example we've seen is, in the GTA, the same house built a decade ago versus today.

It used to be that the construction cost of the house was 40%, and then you had land, taxes, and everything else on top of it. For that same house today, the construction cost is down to 20%, so it reflects your numbers of half— Mr. Phil McColeman : I might make the last point if you'll allow me, Mr. Chair. Affordability in many cases, as we've watched trend lines over the last 20 years, has to do with making sure we hold the line on taxation for new home buyers. Mr. Kevin Lee : That's a huge part of it. The Chair : Mr. Caron. [ Translation ] Mr.

Guy Caron (Rimouski-Neigette—Témiscouata—Les Basques, NDP) : Thank you very much. Mr. Marotte, I would like to begin with you. You referred to your report. Could you table it officially with the committee? Mr. Hans Marotte : In fact, it was the Employment Insurance Monitoring and Assessment Report. I have some excerpts. Mr. Guy Caron : Could you table them officially so that the committee may consult them? Mr. Hans Marotte : Absolutely. No problem. Mr. Guy Caron : I appreciate that very much. You spoke of the Social Security Tribunal of Canada. I hear a lot about eligibility issues.

It generally takes 28 days to respond to an employment insurance claim, but these days, people sometimes have to wait three to four months before they even receive a decision about their eligibility. Is this something that is going on today? If so, how can we solve this problem? Mr. Hans Marotte : In fact, we see this more and more. I have been with the Mouvement action-chômage de Montréal since 1994. The objective to reply within 28 days has always existed. So the administrative machine feels it is reasonable to provide a reply within four weeks, apparently.

However, for some years now, these reports have stated that the objective is not being reached, and that the time it takes to reply is getting longer every year. The explanation is simple. There have been many cuts to the public service in the employment insurance sector. Public servants tell us that the resources are just not there anymore. There is also a new way of doing things. I am not an expert on processes, but I can say that in the past, when someone applied for benefits, an agent received the application and dealt with it to the end.

He knew the file, he knew the employer, he could process the application quickly. Now, the application is received and processed in cyberspace, according to what public servants tell us. When you apply for benefits, your application goes into the Web. After that, an officer in Rimouski begins to process it. He must go through two or three steps... Mr. Guy Caron : Not anymore, since the Rimouski centre was closed. Mr. Hans Marotte : Yes, that is correct. I spoke of Rimouski, but let's say it is processed elsewhere. At a certain point, this agent will work on another file, and someone in Shawinigan will take over.

However, when the citizen would like an answer, there is no one to contact. He cannot speak to Ms. Thibodeau, who is aware of what is happening with his file. It is a dog's breakfast. It is indeed quite complex. Resources have to be allocated and claims have to be processed quickly. They used to be before. I have been in contact with public servants for a very long time. The system worked and was efficient, because it was important and it was treated as a priority. Public servants now tell us that they are no longer certain that paying benefits is a priority.

(1630) Mr. Guy Caron : In the past, employment insurance claims were processed in main centres and secondary sectors in Quebec. Now the secondary centres have been eliminated and only the main centres remain. So, all of the claims are processed in these centres. Claims sent in by people in Rimouski or Gaspé may be processed in Gatineau or Shawinigan, as you said. I thank you for having provided these details. This morning I spoke about employment insurance as an economic stabilization factor, particularly in regions undergoing economic difficulties. The example you gave illustrated that situation well. Thank you.

Mr. Kelly, I would like to talk about credit card transaction fees. I often hear small business owners, in my riding or elsewhere, say that this is a major problem for them. You did not include this point in your priorities. The fees for basic cards are generally 1.5% to 2%, but this can reach 3.5%, if not almost 4%, for prestige cards. For many of these people, this is really a priority. If their profit margin is 5% or 6%, they can kiss their profits goodbye, as well as the possibility of reinvesting or hiring anyone.

I know that there is a voluntary code and that the issuing companies have voluntarily reduced the basic rate they charge businesses, but this remains a problem. In your opinion, is this one of the priorities the government should tackle? [ English ] Mr. Daniel Kelly : I do. You're quite right. Credit card processing fees have come down for the first time ever. They did drop. We were pleased to see that. Actions were taken by the previous government to help make that happen. Has it gone far enough? No, absolutely not. The code of conduct is working.

It put some new ground rules in place, so we're very pleased with the code and how it's being enforced. That seems to be very good. What seems to be missing, though, is that additional downward pressure on rates. With credit card processing fees, again, it's been about a basis-point reduction, a 10% reduction at most, but we had seen a 40% increase in credit card processing fees in the previous several years. We would encourage the new federal government to give this file another look.

I wouldn't say, right now, that it's the most burning issue among our members, but it is an important one and it does erode the amount that the business can hang onto to pay their staff, pay their bills, and grow their businesses. It remains an important issue. The Chair : Thank you, Mr. Caron. Mr. Marotte, leave your paper with the clerk and we'll get it translated. Thank you. Mr. Sorbara. Mr. Francesco Sorbara (Vaughan—Woodbridge, Lib.) : Thank you for your kind and thoughtful comments in your presentations. I'm trying to keep these questions direct so I can get feedback from a number of people.

Janet, for CARP, to put it on the record, our platform did contain a measure to improve the GIS, specifically a 10% increase, $920 a year, which will benefit 1.2 million single seniors in Canada, of which 900,000 are female. That is a large measure that we advocated for in our platform and hope to see in the coming months, so I'd like to put that out there. I have a question on the 70% replacement income. How is that number determined in looking at.... We understand that folks retire with a level of income.

There is some discussion and debate out there on different levels of income having an appropriate level of retirement savings, and other levels of income not having appropriate levels. I wanted to get your thoughts on the 70% and on the debate that's occurring. Ms. Janet Gray : I wouldn't say that it's an arbitrary number, but it is a number that is fairly well grounded in the financial industry. That's your pension amount if you have a full 35-year pension. If you have a pension, you're likely going to have 70% of your retirement income, so that's pretty much where it comes from.

Can people live on less than 70%? A lot of Canadians are doing that already. It's not a hard and fast rule; it's just a general guideline.

(1635) Mr. Francesco Sorbara : This is my second question. We know that statistically in Canada there are more 65-year-olds and older versus 15-year-olds and younger. Are there any changes that you think we can make to incentivize older individuals to remain in the labour force, any type of reform of OAS or GIS that your organization would look at or would advocate for? Ms. Janet Gray : First of all, they have their own incentive, which is strictly to keep paying their bills and to maintain their lifestyle. Is there something else you can do? Absolutely, and I think some of that is already in place.

If they delay CPP and OAS, they do have an incentive to get a little bit more. Could that be increased? Sure, that's a great start. Mr. Francesco Sorbara : Because there are clawbacks that kick in. Ms. Janet Gray : Yes, let's change those. Mr. Francesco Sorbara : For Mr. Lee and Mr. Kelly I have a joint question. The changes that went through on the temporary foreign worker program—looking at versus now—have disrupted that program significantly. I come from York Region, specifically in the Vaughan area. We probably have several of the largest home builders in all of Canada.

There is a shortage of skilled tradesmen. I hear it all the time. I actually met with individuals on Saturday morning to discuss the shortage again because they have it. We need some solutions and I think that has to come from government and the private sector. My question is about what you can see in terms of how we either fill the shortage organically or with the temporary foreign workers. Are there any suggestions on your part? Mr.

Kevin Lee : To the question earlier about why we have a mismatch of jobs as well, I think that for quite a while Canada has been pushing our young people into a university education, degree, and career that doesn't necessarily always lead to the jobs that are at hand. I think one of the important things, moving forward, is that as a country we.... In Europe they call it “parity of esteem” and it's something we have adopted here to encourage young people to get into some great careers that are skills based that apply to residential construction and others.

With respect to the temporary foreign worker situation, the GTA is experiencing an extreme shortage right now of framers. Connected to various things—it's sort of a perfect storm of an economy that's still doing really well—are some crackdowns that occurred in terms of foreign workers, legal and maybe not so legal, in recent times. How do we deal with that? The express entry system that is supposed to help people get back in—and not even necessarily on a part-time basis or a temporary basis, but leading quickly to long-term Canadian status to stay here and help build this country—is an important piece.

We think that, yes, the express entry system for temporary foreign workers.... The thing with temporary foreign workers is also that, in an emergency situation, there are often exceptions to how you can get them in. How do we define those situations so that we can bring the workers in or back into the country? Mr. Francesco Sorbara : I have just one more comment for Mr. Kelly. We do know that many workplaces aren't offering pension plans in Canada. There's a whole movement away from defined benefit plans to no pension plan, or potentially defined contribution plans, or hybrids of such.

The CPP is a world-renowned model, looked at from many jurisdictions—low fees, great asset managers, arm's-length—so there are many pluses on the CPP side. I think an enhancement to CPP is a prudent step to take because there is a gap in someone having a dignified retirement in Canada, so I want to put that out there. That's a measure we need to look at and I'd like to get some feedback from your side. Mr. Daniel Kelly : Sure.

One thing, to just chime in on that front, is that some at the political level feel that it will help equalize small firms against larger firms because everybody will have to start paying into a pension that they might not otherwise have. I will point you to the data that the Ontario government collected, which shows that only 10% of small businesses feel that this will help them in attracting workers; 90% don't. Entrepreneurs do not feel that this is going to help them. In fact, for those who are introducing a voluntary pension vehicle, that is what helps them become an employer of choice.

I certainly don't disagree with your point. More employers can and perhaps should get involved in the pension game. We do like the pooled registered pension plan. Even the Ontario government is looking to introduce it, which is good news. But mandatory payroll tax hikes right now, even dedicated to things as important as retirement, we feel would quite frankly be devastating for the Canadian economy.

(1640) The Chair : Thank you, Mr. Kelly. We'll turn to Mr. Liepert. Mr. Ron Liepert (Calgary Signal Hill, CPC) : I have a couple of questions for clarification. Kevin, did you indicate that you're finding a skilled worker shortage in parts of the country? Are there not excess skilled workers in those same trades in Alberta these days? Mr. Kevin Lee : Interestingly, not necessarily. There was a major shortage of skilled trades in Alberta as everything was going. Many of them have left Alberta and gone back to their home provinces.

In some instances that is providing and filling that gap, but in other instances we haven't see that. The example of the GTA is probably the most pressing right now. We have national builders who had workers in Alberta and they are unable to get the people they need. Mr. Ron Liepert : It seems to me that we have a disconnect, and we should be looking at this as part of the budget. How do we ensure that those skilled workers move from one part of the country to the other as they certainly did in the oil and gas sector? Dan—and Mr. Chairman, I've known Mr.

Kelly for a long time so I can call him Dan—in the last election campaign we heard some reference that many small businesses are simply a tax dodge. Could you respond to that? Mr. Daniel Kelly : The clip that aired on The National was an interview with Peter Mansbridge when the Prime Minister commented that a large percentage of small businesses were simply ways for wealthy Canadians to save on their taxes.

We immediately sought clarification because if the Prime Minister through those comments is channelling that his government will not tolerate anybody setting up a fake company to benefit from the small business corporate tax rate, we will applaud that and we will take no issue with that whatsoever. If, on the other hand, there is the sense that some small businesses are not deserving of the lower rate of taxation for small firms, and some provinces have been putting this forward, several of them have moved.

For example the Quebec government, which has made a lot of really good public policy choices, has decided to eliminate access to the small business rate for any business that has three or fewer employees, so the smallest of small companies in Quebec starting in 2017, next year, will no longer have access to the lower rate of taxation on small businesses. The depanneurs across the river will no longer be able to access that and will pay the big business rate. Our worry is that the federal government may be drawing some inspiration from that. We don't know the government's intention.

It does worry us though that this same theme is in the mandate letter for the new Minister of Small Business Bardish Chagger . We're going to be meeting with her next week, so we look forward to that. At the moment we're seeking clarification from the federal government as to what that means. Mr. Ron Liepert : A good percentage of your membership are not sausage companies; they're professional companies. Is that not correct? Mr. Daniel Kelly : Indeed we have about 5,000 doctors, lawyers, and dentists as members. Mr. Ron Liepert : Kevin and Mr. Kelly, I'd also like to ask you about the TFSA.

You've talked a lot in your brief about how devastating an increase in CPP premiums would be. Give us your thoughts on the decision not to stay at the doubling of the TFSA. Mr. Kevin Lee : From our perspective, one of the things that the TFSA does is that it obviously encourages savings and provides a vehicle for people to save for down payments and the like for their houses. Currently given the way house prices are going, you know you can put money into your RRSP and you can pull it out if you're a first-time homebuyer and that sort of thing, but the ability to save outside of that is necessary in many markets.

We have been supporters of having a good and strong TFSA program in Canada. Mr. Daniel Kelly : On that front from our perspective, when we did a public opinion poll of Canadians asking them if they did have more money to save for their retirement where would they like to place it—I'm looking for the data. I don't have it in front of me. The top choice was that if Canadians had more money to save for their retirement they would put it into a TFSA first, RRSP second, and way down near the bottom of the list was CPP. Mr.

Ron Liepert : Erik, some of the things that we've just been talking about seem to me to be the kinds of things that I would hope organizations like yours would advocate for, not necessarily on behalf of your current membership but for future membership, things that Dan Kelly just mentioned.

(1645) Mr. Erik Queenan : Was that regarding skilled workers? Mr. Ron Liepert : More along the line of small businesses and potentially removing the taxation benefits of being a small business. Mr. Erik Queenan : That is a tough thing and I think it might be worth a conversation. Ultimately CASA has to advocate for the students and our members, some of which are polytechnic institutions.

What I was dying to say earlier, when you guys were talking about skilled workers, is that CASA is advocating on labour market information so people that are graduating high school know where jobs are and know what industries they are in. That's something that's lacking right now, and to have the labour market information would really benefit that. The other thing that would help is funding for experiential learning for paid co-ops and paid internships. One of our delegates is from SAIT, the Southern Alberta Institute of Technology. They don't have funding.

There are students who have completed all of their courses, but there's no funding available to get their hours. There's no funding in order for them to get their internship hours so they can become qualified electricians, carpenters, plumbers, you name it. Mr. Ron Liepert : Or chefs. Mr. Erik Queenan : Exactly. Absolutely. Those are two ways to help with some of the issues that were brought up earlier. The Chair : Thank you very much for that information. Mr. Grewal. Mr. Raj Grewal (Brampton East, Lib.) : Thank you, Mr. Chair, and thank you to all the panellists. Excellent presentations.

My first question is to Erik. You advocated for additional funding to be expanded to graduate and Ph.D. programs. As a recent graduate, and not too far removed from law school and carrying student debt myself, I couldn't agree with you more in terms of supporting our students and educating our youth. Don't you feel more funding should be given to the undergraduate level so all Canadians can have access to a level of post-secondary education as opposed to putting more money up at the graduate and Ph.D. levels? Mr. Erik Queenan : I think we absolutely agree.

Of course we want to see more funding go to the undergraduate level as well, which is why we are advocating for a 50% increase to the Canada student grant program as a whole. I mentioned expanding it to graduate and doctoral students because currently the Canada student grant program doesn't provide any funding for graduate students or for people looking for their Ph.D. That's the reason why. Absolutely we want to see more funding for students at the undergraduate level as well because student debt continues to rise. Mr. Raj Grewal : Thank you. Mr.

Kelly, you're passionate about the small business industry, as you should be. Explain the rationale behind why the professional element should be given the tax cut as well, because that also encompasses Bay Street lawyers—not that I have anything against Bay Street lawyers, having practised law at a big firm—and it also encompasses their partnership because their partnership structures are small businesses for lawyers. They would be benefiting from this 2% tax decrease. Mr. Daniel Kelly : Yes.

From a fairness perspective we don't feel there's any difference if somebody is a good mechanic and is earning several hundred thousand dollars, or if they are a good lawyer, doctor, or dentist and earning several hundred thousand dollars. It's the level of income you should be treating in the same way. The threshold is now at $500,000 where you can access the small business rate. We think the government should be agnostic as to the way in which that's done, as long as these are legitimate businesses.

Many professionals have told us they are graduating—as I think your previous question alluded to—with hundreds of thousands of dollars of debt to become a professional in Canada. While certainly there are some professionals that do very well, and we're happy for that, it is a bit of a myth that every doctor, lawyer, and dentist in the country is wealthy. That's why we think their incomes should be treated the same as any other Canadian business owner and not subjected to specific provisions.

At the very least we urge you not to go down the approach Quebec has taken, which is an across the board elimination of access to the rate for those that have three or fewer employees. In our view that is especially punitive. Mr. Raj Grewal : I think the status quo.... I was having this discussion with a professional last week.

He said, “You're raising my taxes”, and I said, “No, we're keeping them the same.” The economic rationale when you're walking around in your riding and you go to the mom and pop pizza shop, is that—as my honourable colleague mentioned—for many small businesses the margins between profit and going bankrupt are tight. I think they benefit from this 2% decrease proportionately higher than a professional would benefit. The economic rationale for me is that small businesses outside the professions deserve the reduction, and the professions remain as status quo. I appreciate your testimony on that. Mr.

Lee, you made a great point on the amortization and changing the mortgage rules for 30 years. Is there any data on the percentage of uptake in purchases that would incur? Would there be an amount, say under $500,000, to ensure those mortgage rules aren't being taken advantage of?

(1650) Mr. Kevin Lee : Certainly, given the most recent move on down payments, it would make sense under the current regime for it to be under $500,000. We think that would be just fine. We're really talking about entry-level people and getting them into home ownership. Our calculations suggest that by moving from 25 years to 30 years.... It was really that we went from 40 years all the way down to 25 years. It was that last piece that really bumped a lot of people out of the market.

By going from 25 years back to 30 years for well-qualified first-time buyers, about 80,000 new home buyers would be capable of affording to get into the housing market. How many of them actually would is a question of market dynamics. It really opens a big window for people who have a long time and are early in their lives and their families and careers to become homeowners and pay it off over a slightly longer period. Mr. Raj Grewal : Thank you very much. The Chair : Thank you. Mr. Aboultaif. Mr. Ziad Aboultaif (Edmonton Manning, CPC) : I have a couple of questions. One is for Ms. Gray.

By the way, thanks to the panel for all the wonderful information. We learned a lot today. You mentioned several social assistance plans. One is the national pharmacare plan for retirees and so forth. You mentioned the figure of $3 billion. Can you elaborate further on how this amount would be distributed among the different programs or different plans, and over what period of time? Ms. Janet Gray : The short answer is that I don't have that information in front of me, so I'll have to get back to you on that. Our interest in the pharmacare program is that there are different policies amongst the provinces.

There's no continuity province to province on what drugs are covered and what drugs are not. We'd look for some conciliation between all of that. We also want to ensure that there are some bulk purchasing priorities that can be done, so that if all the provinces are buying together, they're going to get a much better cost per unit of that drug. That's our concern. We want to be able to level the playing field so that people in British Columbia are not getting a drug that a person in New Brunswick cannot get. I can get those particulars back to you. Mr. Ziad Aboultaif : I have a small question for Mr. Marotte.

You've mentioned your organization being involved in creating or helping to create jobs. Would you be able to give us some data on how many of those jobs you've created or have assisted in creating? [ Translation ] Mr. Hans Marotte : We do not help people to find jobs, but to obtain employment insurance benefits. We are funded by the United Way, which provides funds to us so that we can help people who have lost their job to obtain employment insurance benefits while they look for another job. We are not in the business of creating jobs as such.

We are a small community organization with four employees, so unfortunately we do not have those resources. [ English ] The Chair : You do have time, if you have another question, Mr. Aboultaif. Mr. Ziad Aboultaif : That's fine. Thank you. The Chair : Mr. McColeman, we'll give you a minute. Go ahead. Mr. Phil McColeman : I just want to come back to the point of the added taxation, not to housing but to small business, and the comments that were made regarding treating certain categories or professions differently if you're running a small business.

Again, it's the popularized perception that if you own a business, you make a lot of money. I know some professionals who struggle at, let's say, their surveying business or their engineering business. This is the very group that's been targeted. There have been gestures—and there isn't anything we've been told is coming down the pipeline, but it's been indicated that these are the people who have small businesses to reduce their taxes and for no other reason. They might employ two people in the office, a receptionist and maybe an assistant.

I want to revisit that and come back to the thoughts on the panel regarding that point. From what you've seen, Mr. Kelly, and your members, are people in this category rampantly abusing the small business tax format? Should they not be treated the same as any other small-business person?

(1655) Mr. Daniel Kelly : We're trying to figure out if this is a solution in search of a problem, and we suspect that it is. Again, if the Prime Minister is talking about abuse, that businesses are not legitimate and they're setting this up, and it's basically an employment income that they're hiding in a certain fashion, we will be the first to support that. However, for legitimate business owners, whether they're in one profession or another, we feel that the treatment from the federal government should be the same. Again, I do want to compliment the new government.

It has endorsed the reduction from 11% to 9%. Our request is that it be made possible for all, and that there's no threat to it. Responding to Mr. Grewal's question, one of the things he was saying is that it wouldn't actually be keeping it at the current 11%; it would be taking the professionals and bringing them up to the big business tax rate of 15% right now. It would be a significant increase in taxation for professionals, not basically a wash. Mr. Phil McColeman : I have some analysis from the accounting associations— The Chair : I'll have to stop you there, Phil. Mr. Ouellette. Mr.

Robert-Falcon Ouellette (Winnipeg Centre, Lib.) : Thank you very much. For Mr. Fred Phelps, I was interested more in the basic income concept. We often talk about social workers in Winnipeg and indigenous communities, and how a lot of social workers are trying to do a good job but often they're taking indigenous children from their communities. In the province of Manitoba, 88.3% of all children who are taken into the care of the state are taken because of negligence, the inability of parents to provide good housing and food for their children. There are about 11% where allegations of abuse are put forward.

Of that 11%, only 11% of that are actually substantiated abuse. Those are telling statistics. If there's 11,000 kids in care in Manitoba, it would work out to around 140,000 in the province of Ontario, 90,000 in the province of Quebec, 350,000 to 360,000 across this country. People would be up in arms in revolution over this if it were their kids. Since we are looking at this level of poverty, I am wondering if you could elaborate on perhaps the impact it might have on keeping these families together so they can one day hopefully succeed in life. Mr. Fred Phelps : Thank you very much for that poignant question.

Being a past child protection worker and bringing children into care, many of the instances of neglect are on the basis of poverty, not on the basis of a family not wanting to provide for their children. It's an inability to provide for their children. A basic income, coupled with the ability for people to meet their basic needs with housing, would take a tremendous burden off of families themselves. They would be able to maintain...and reduce the harm, to keep their children with them, with their families. It would greatly benefit extended families, who are often exasperated trying to keep kids out of care.

Bringing those children back into extended families is breaking those families financially as well. It compounds the issues for children, and intergenerationally, from year to year. I think addressing the fundamentals, the housing, basic income, would allow families to be able to maintain children in the home, more so than any policy we have right now. Mr. Robert-Falcon Ouellette : Thank you very much. For Mr. Daniel Kelly, it's interesting that you talk about how the people feel in your organization, but I'm going to use the example of Singapore concerning pension plans.

In 1955, there was the introduction of a central provident compulsory savings scheme. It was expanded in 1968. In 1984, it was expanded again. In 1987, there was a minimum retirement sum scheme, again conceived as a fifty-fifty split between the employer and the employee. People didn't want it, but today Singapore is an economy that I think a lot of us can look up to. It came from the developing world into the developed, if not one of the top-tier countries of the world. It's great that we feel things, but sometimes we have to look to concrete examples based on data.

My real question, though, is that looking at the professionals, I fail to understand how it perhaps works. I've never seen a homeless practising doctor. I believe that in our society everyone should pay their fair share. We are citizens first and foremost, and last we are taxpayers. That means that as taxpayers we are citizens. I fail to understand. Does that mean a doctor has his small business—he pays 9% or 10% or 11%, or whatever the rate might be—and then on his income that he earns as a doctor, he will pay income tax on top of that?

(1700) Mr. Daniel Kelly : Yes. Mr. Robert-Falcon Ouellette : That's just what I wanted to ensure, because it sounded like there are people who are trying to hide money from the state, and I believe that shouldn't be the case. Thank you. That cleared it up for me. I really appreciate that. The final one is for Hans Marotte. I don't have a lot of time left, but on the EI plan, it sounds to me like the government in the past has been trying to reduce the number of people who have access to employment insurance, reducing the numbers.

With computer technology today, by using the Internet, by people having to fill out those forms themselves for employment insurance, I fail to understand why it would take more than a simple couple of days to process these applications. When you're on unemployment insurance, you have to make big decisions for your family. You have to pay that mortgage. You have to pay those car payments. You have to pay your children's hockey registration, and all these things you're doing in trying to support your family. If you can't do it, what are you going to do? I have two seconds. The Chair : Mr.

Ouellette, you'd better get to it. Mr. Robert-Falcon Ouellette : Do you believe the government should actually be making this a more efficient process with our computer systems, and more productive? [ Translation ] Mr. Hans Marotte : The means are there, clearly. Where there is a will, there is a way. I was in a car accident a month ago. A week later, my car was fixed and running again; and it is just metal. But when someone loses their job, that person can no longer pay the rent, or feed their children, or purchase a bus ticket to go to an employment centre where he can look for work.

Where there's a will, there's a way. I have been with the Mouvement action-chômage de Montréal for 25 years. I know that over all of those years, this has never been a priority. If a government really wants to see to it that people receive their benefit cheque within a reasonable period, that can be done very quickly. [ English ] The Chair : Mr. MacGregor, we'll go a little over time, but we'll give you three minutes. Go ahead. Mr. Alistair MacGregor (Cowichan—Malahat—Langford, NDP) : Thank you, Mr. Chair. I appreciate the opportunity to speak today. My question is for Ms. Gray. I'm Alistair MacGregor.

I am pleased to sit as the NDP's critic for seniors' issues. I certainly hope I can continue a relationship with your organization. The Broadbent Institute just released a report that shows the planned increase in guaranteed income supplement should remove about 85,000 seniors from the poverty rolls. While that is a commendable action, it's still going to leave about 634,000 in poverty. It also has a statistic that shows that the overall median value of retirement assets is about $3,000 for those aged to 64. I know that very much reflects the constituents in my riding. I'm from Vancouver Island.

We have a lot of people earning in the neighbourhood of $30,000 to $50,000. Once all the bills are paid, it does not leave a lot left over to save. With the population of seniors set to increase dramatically over the next 20 years, I think this problem is only going to exacerbate itself if we don't take some corrective action. I heard that a big issue for seniors is health care. I'm a big subscriber to the social determinants of health. I believe that if we don't take actions to address poverty.... We know those who live with lower incomes have poorer health overall. I certainly saw that a lot.

I used to work as a constituency assistant to Jean Crowder. I met lots of low-income seniors who had to supplement their diet with a box of crackers just to make it through the month. It really makes you quite emotional when you see it up close and personal. It makes you realize that the stuff we do here in Ottawa has real effects out there. I was just wondering. Has CARP as an organization done any studies or talked to its members about the social determinants of health? Could you offer some feedback to me on the best way forward on that?

(1705) Ms. Janet Gray : Sure. It's a big question. We know that health care issues are changing as the demographic is aging, so it is foremost on our list as well. There are gaps people are falling through. That goes to the national pharmacare program we're talking about. It goes to making sure that the Canada Health Act is indeed country-wide and accessible to everyone. One current thing that's popped up on our radar has been dental care. Dental care is not covered in the national health care act. It's often an emergency situation that takes them into the hospital setting.

There's a lot of interest around that, on an advocacy role also. We know there are certain age gaps where they fall between the cracks. In Ontario, specifically, after the age of 65, their drugs are paid for and there's a copayment. Their drugs are cheaper on the other side of than they are on this side of 65. Yes, there are absolutely a lot of issues and I'd love to talk to you more about them. The Chair : We'll have to thank you both. On behalf of the committee, I'd like to thank all of the witnesses. There's been a lot of good information and interesting exchanges.

The committee will suspend for about five minutes. We have to get the video conferences geared up and there are some technical things to deal with. Thank you one and all. The meeting is suspended for five minutes. (1705)

(1715) The Chair : Could we come to order, please? We will have a PowerPoint during this panel at some point. We also have two mayors by video conference. We'll start with Mr. Macdonald, from the Canadian Centre for Policy Alternatives. You have five minutes. At five minutes I'll cut you off. Mr. David Macdonald (Senior Economist, National Office, Canadian Centre for Policy Alternatives) : Yes, sir. Thanks so much to the committee for the invitation today. I'd like to focus my remarks today on some important macroeconomic phenomena instead of specific policy questions.

I think that we're living through a transformative moment in Canada. We're witnessing the end of monetary policy and the rise of fiscal policy. Historically, to manage recessions, the Bank of Canada would lower interest rates, thus encouraging households to take out a loan or a mortgage to build, buy, or renovate their house, also encouraging businesses to take out a loan to improve their operations. For instance, during the great recession the Bank dropped interest rates and households ran a $176-billion deficit in alone.

By comparison, the federal government ran only a $55-billion deficit, and the provinces, a $26-billion deficit. While federal government cutbacks have since led to balanced books, households continued running annual deficits of $60 billion to $80 billion a year between and today. In fact, households were the heroes of post-crash growth in Canada. The cost, of course, was historically high household debt, but the payoff was much higher GDP growth. As the federal government cut back, the provinces also continued their deficits.

Their major programs, such as health care and education, can't be cut back in the same way. This actually led to a historic crossing in 2015, with provinces now holding more debt than the federal government for the first time in Canadian history. At the end of and the financial crisis, the Bank of Canada's overnight rate approached zero, effectively ending their ability to spur growth by encouraging more debt. Going forward, Canada is therefore limited in where we can see growth come from. Slow growth didn't start in 2015. We have been experiencing slow growth since 2010.

All estimates are that this will continue, likely mixed with technical recessions, for the foreseeable future. We continue to import more than we export, a trend started following the crisis, thereby reducing our GDP growth every year. The corporate sector actually has strong balance sheets and continues to hoard record amounts of cash, which now exceeds the value of our national debt. But corporate contributions to GDP, through new capital spending in particular, have been devastated by the oil price rout. This leaves the federal government as a key engine for future growth.

Without more involvement, specifically deficit-financed involvement, slow growth and technical recessions are the prediction for the future of Canada for the coming years. But there is significant room to grow. The federal government is presently at its lowest share of total expenditures to GDP of any time since prior to the Second World War. Put another way, the federal government spends less as a share of the economy than it did prior to the implementation of the Canada pension plan and modern old age security, prior to employment insurance, and prior to universal health care.

The federal debt-to-GDP ratio, Canada's relative debt ratio, is at its lowest point since 1980. We have the lowest federal debt-to-GDP ratio by a long shot in the G8, and it has been falling. While Canada is lowering its debt-to-GDP ratio, bond markets are desperate for more debt, not less debt. They can't get enough Canadian debt. They are, in fact, so desperate that they are willing to lose money on our bonds after inflation, with our five-to-ten-year bond yield now under 1%. They are desperate for the federal government to run larger deficits to create more low-risk Canadian government debt.

To provide some scale, if we were to take, let's say, a $25-billion deficit—I think that is at the high end of expectations this year—one might say that this may seem large. It certainly is large for an individual or a company, but we need to consider this in relative comparison to the Canadian economy, which is worth $2 trillion today, and in comparison it's actually quite a small amount. In fact, a $25-billion deficit would be smaller than any deficit on a relative basis run between and 1995.

In fact, we could run a deficit of $25 billion forever and the debt-to-GDP ratio would remain constant as the economy grows. In fact, the larger the federal deficit, the larger our corporate profits and the larger the household surplus, that is to say, households paying down their debts. It's not just deficit size that's important; it's also what it finances. Deficit financing tax cuts for rich Canadians, for instance, would be much less effective at job creation and GDP growth. Deficit financing of social programs and infrastructure, on the other hand, would be much more effective for GDP, jobs, and growth.

There may be delays, clearly, in infrastructure spending and social program set-up, but slow growth isn't going anywhere. We have plenty of time to implement those programs and reap the benefits in terms of increased GDP. For more details, I hope you'll read our alternative federal budget, which will come out in early March.

(1720) Let me thank you and I'll wrap up there. I look forward to your questions. The Chair : Thank you very much, Mr. Macdonald. You're right on the money, right on the time. We now have Mr. Everson, with the Canadian Chamber of Commerce. By the way, thank you all for coming in on short notice. We appreciate it. I didn't mention that at the beginning. Mr. Everson. Mr. Warren Everson (Senior Vice-President, Policy, Canadian Chamber of Commerce) : Thank you very much, Mr. Chairman and honourable members. Thank you for inviting us here today.

We submitted a written submission to the committee, and it had at least significant issues in it. I don't propose going through all of them, certainly not in five minutes. Let me speak about two that we think are of pre-eminent importance. Regarding the first, you'll have heard a lot from witnesses about a skilled workforce. I can't say how often this issue comes up in our normal work. Employers of all kinds are constantly speaking to us about the problems in finding skilled workers. No matter what sector you're in—high tech, natural resources, the services sector—the human resource problem is very much with us.

To the credit of the current government, in its election campaign and since, it's had ambitious ideas and laid out some plans and initiatives that we're very interested in. We congratulate you for taking them on and we'll pledge the support of the membership of the Chamber of Commerce to all of the heterodox ideas that are being talked about with regard to internships and various other mechanisms to transition people from education into employment.

It's a maddening thing that Canada has one of the highest-educated populations in the world, but we have an extremely long lag time for young people before they enter the job market, even if they have a very good degree. All of the tools for work-enabled learning are worth exploring. As I said, it's to the government's credit that you're taking that on. On a less positive tone, the election came along in the middle of a huge reform in Canada's immigration system. It was really the largest reform that had been undertaken in decades, with the creation of something called the express entry system.

I can sum it up by simply saying that whereas in the past, our governmental bureaucracy reviewed the job needs of the economy and then calibrated the immigration system accordingly, under the express entry system the government sought to ask the economy itself, asking employers what they would like, what they need, and then introduced those factors to the immigration stream.

Unfortunately, in the frenzy of the politics around temporary foreign workers the government found itself actually cracking down a little bit, so that we now have the express entry system limping along, trying to come into being, but still having oversight and a lot of fairly heavy government restraint on the use of workers coming in as immigrants. Of course, we also have a lot of unfinished business with regard to temporary foreign workers.

I personally know of major investments, some of the largest investments in Canadian history, that are hesitating today because of uncertainty with regard to their ability to get workers and their ability to source workers from outside of Canada if they can't find the necessary skills in Canada in short order. We believe that Canada is bleeding from a wound that we've inflicted upon ourselves. Very quickly, because I know your time is short, I want to also talk about the other major preoccupation that we have, which is infrastructure. The government is talking about major programs in infrastructure.

We're very strongly supportive of that. Infrastructure is a highly virtuous investment in our opinion. Not only do you get an excellent multiplier for the investment—I think I used 1.7 or 1.75—but you also get a legacy of improved facilities that are usually environmentally beneficial, and there's certainly a quality-of-life benefit. The trick, however, is to make sure those investments are economically empowering. There's a great demand on you for various social investments.

I'm not for one minute going to say that many of them are not worth making; however, with the kind of money we're talking about, we should be capable of megaprojects. The kind of money that will be talked about in the budget, that was talked about in the campaign, is nation changing. It's new power from British Columbia into Alberta to get out of coal-fired plants. It's significant reduction in congestion in the two most congested cities in Canada. It's a whole series of efficiencies to allow exporters to get to the markets and make us all wealthy. So we're very strong supporters of that.

I would also say that infrastructure is extremely egalitarian. It is true that it benefits big business. It is also true that it benefits ordinary workers. If you're fixing furnaces and you cannot get around to various jobs around Toronto because you're spending your time in traffic, you're harmed. If you're a new arrival in Canada driving a taxi cab and you cannot get around to the jobs, you're harmed as much as the president of a major corporation. We strongly support that, but we do think it needs a considerable amount of rigour in the application of the monies to ensure that....

Even $60 billion can be frittered away.

(1725) The Chair : Thank you very much. Mr. Pedersen, with the Canadian Climate Forum, please go ahead. Mr. Thomas Pedersen (Chair, Canadian Climate Forum) : Thank you. [ Translation ] Good evening, everyone. [ English ] Thank you very much, honourable chair and members of the committee, for the opportunity to address you this evening. I will be making a PowerPoint presentation. This is what's at stake. This is our home. All that separates us from the inhospitable infinity of space is a very thin layer of atmosphere that surrounds the blue dot we call our home. We're changing the composition of that thin veneer.

We're changing it dramatically. The atmospheric carbon dioxide concentration is rising at a rate unparalleled in the history of the planet, to the very best of our knowledge. The impacts of that are extraordinary and severe. You can see that in the projected temperature change by the end of the century of many, many degrees across the planet. Associated with that, we're seeing increased droughts, increased deluges, rising sea levels, loss of our alpine glaciers, the retreating Greenland ice sheet, and so on. We all know all about these impacts.

In December, Canada and other countries made a commitment to the rest of the world to reduce our level of greenhouse gases to that thin veneer that separates us from space to 30% below levels by the year 2030. Minister McKenna has said that's just the beginning. That's a floor. That's not a firm target. It's a floor. We need to do even better than that. Our challenge is how we will get there. We have a big gap, a big gulf, in this country now.

In the previous government closed the Canadian Foundation for Climate and Atmospheric Sciences, which was contributing $11 million a year in direct support of climate research in this country. In the previous government closed the National Round Table on the Environment and the Economy, which was spending $5.5 million a year on largely economically oriented research in support of environmental stewardship in Canada. About that time, the board of directors of the climate foundation said we can't let this issue fade away.

We created the Canadian Climate Forum, dedicated toward promoting constructive dialogue on how Canada can face the climate challenge. We created that about three years ago. We're a very active organization based here in Ottawa. It's not enough. We need to go further now. The challenge for this country lies right in front of us. What we are proposing here tonight is that we create in this country the “Canadian climate council”.

This would be a multidisciplinary, very broad body that would draw on the talent pools across the nation to focus on policy, very firmly on policy development, and we would take into account science, engineering, entrepreneurship, health, and first nations—all of the things we need to be looking at in terms of the multidisciplinary matrix that is so important to us. As the Canadian Climate Forum, we've had meetings now with over senior bureaucrats in over ministries in the last several weeks. They have delivered to us a common message.

I'm going to read you one quotation from an assistant deputy minister, who shall remain nameless, who said, “While we should be able to convene across departments on the climate change file, we have not done a good job of it, nor are we likely to.” What we're proposing is a national council that would pull together all of the different threads, all of the different constituencies, take full advantage of our university sector and our government research labs, our provincial government research labs, NGOs, and others to sit around a common table and deal with a set of common questions, provided by the federal government, that would allow us as a nation to directly address the climate change challenge.

We have a model. This is not something new. The model is called the Pacific Institute for Climate Solutions. It's been in existence since in British Columbia. It was funded by a $90-million endowment from the Gordon Campbell government of the day. The institute lives off the interest from that endowment. It's policy focused. It's multidisciplinary.

It's working on five major topics of critical importance to British Columbia: transportation futures; energy efficiency in buildings; how we can make maximum societal value from our natural gas resources; how we can integrate the western Canadian electrical grid, which my colleague here mentioned earlier; and we are politically independent. Gordon Campbell looked me right in the eye and told me this two years ago. He said, “Tom, we gave you an endowment because you must be politically independent.”

(1730) What we are proposing tonight is essentially taking the Pacific Institute for Climate Solutions model and scaling it nationally. We have put in a submission to your committee, to the Minister of Finance , that would allow us to do that, and we ask for your support. Thank you very much for this opportunity. The Chair : Thank you very much, Mr. Pedersen. From the Cement Association of Canada, we have Mr. McSweeney. Mr. Michael McSweeney (President and Chief Executive Officer, Cement Association of Canada) : Thank you very much. Let me be direct.

Cement and concrete are a sustainable and critical component to rebuilding and developing Canada’s infrastructure. Durable, safe, energy efficient, and resilient in the face of diverse and changing climate, cement and concrete are a key building material used in virtually all above and below ground infrastructure and building projects. It is critically important for governments to make annual investments in our country’s infrastructure, and I'd like to applaud the new government for making significant commitments to long-term infrastructure investments.

True partnership and co-operation is required to address the infrastructure deficit, and Canada’s cement producers wish to be full partners with all levels of government in the renewal and modernization of Canada’s infrastructure. What’s different now from my previous appearances before this committee is that the Government of Canada—and governments globally—has committed to transition to low-carbon economies, which will both mitigate climate change and prepare our communities for the changes we are already experiencing.

Within a year, the vast majority of the Canadian economy will include a price on carbon and the federal government has committed to complementing these provincial initiatives with a national pricing strategy. Fighting climate change is not for the faint of heart, especially for you politicians. It will require step change. It will require massive regulation if we are to meet the goals adopted at COP21. As a northern climate, Canada’s infrastructure is particularly vulnerable to climate change. Canada needs and must continue to focus on resilient forms of construction.

We are also faced with significant maintenance backlogs. Governments have traditionally focused on short-term fixes to infrastructure deficiencies rather than true infrastructure renewal and modernization, thus leading to an increased tax burden, and ultimately, increased greenhouse gases. If we are committed to reducing greenhouse gases from the built environment and minimizing long-term maintenance costs, government needs to move beyond the initial cost decision and embrace a cradle-to-cradle perspective. Governments should consider a project’s total service life and total cost of ownership.

For example, the vast majority of a building’s energy consumption and contribution to greenhouse gases takes place after it is built, so infrastructure projects are long-lived assets and what we do or don’t do to minimize greenhouse gas emissions today is locking the potential for GHG reductions in the future. The optimum solution for any construction project, both from a cost and environmental point of view, can only be determined through a complete life cycle analysis. These impacts may not be apparent if the initial costs and environmental burdens are inappropriately weighed in the evaluation.

Life cycle studies demonstrate that the initial embodied energy of a typical building in Canada seldom exceeds 10% of the overall energy or CO2 emissions associated with the project's life. Most importantly from a greenhouse gas emissions perspective is the energy performance of the project over its total service life.

This factor has shown itself to be a major driver in the environmental performance of a project and of reducing total operational costs and total cost of ownership, so in light of these findings, it's obvious the focus promoted by some industries on only the initial carbon profile of building products themselves is therefore not a fully transparent position and overlooks the largest potential greenhouse gas reductions. That's why we are recommending that any infrastructure investment should mandate full life-cycle cost assessment screening. As my colleague talked about earlier, let's spend the money properly.

We need to ensure that all new projects contribute to achieving Canada’s CO2 reduction objectives. It's important that every decision government takes be seen through the climate change lens. We take sustainability seriously. We've reduced our CO2 emissions by 15% over the past 20 years and our new cement, called Contempra, will decrease CO2 emissions by a further 10%. This new cement is a direct result of the industry’s commitment to proactively improve its environmental footprint.

By replacing general-use cement and mandating—having the government mandate the use of Contempra cement on public infrastructure across Canada—governments can reduce CO2 emissions by almost one megatonne per year with this small change. This is the equivalent of taking 172,000 cars off the road each year, or planting million trees annually.

(1735) It's just one of the many ways our industry can help governments meet their climate change objectives. In conclusion, when it comes to investments in durable, safe, energy-efficient, and resilient infrastructure, we'd like the government to truly adopt the philosophy of build it once, build it right, build it to last, and if I can be self-serving, build it with concrete. Voices: Oh, oh! Mr. Michael McSweeney: Thank you very much. The Chair : That makes your point in your closing, doesn't it, Mr. McSweeney? From the First Nations Child and Family Caring Society of Canada, Ms. Blackstock, the floor is yours.

Dr. Cindy Blackstock (Executive Director, First Nations Child and Family Caring Society of Canada) : On January 26, 2016, the conscience of the nation was shaken. The Canadian Human Rights Tribunal issued a ruling saying that the federal government of Canada was racially discriminating against 163,000 innocent children in this country by providing them fewer child and family services and less access to all other public services enjoyed by other children because of who they are and where they live. Sadly this racial discrimination, this fiscal policy, has been with us since Confederation.

As the evidence filed by government officials at the tribunal showed, it's not restricted to first nations child and family services, nor is it restricted to access to health care. We saw admissions in those federal documents that were never meant to be seen by the public: that first nations children are denied equal opportunity to an education; they're denied an equal opportunity to drink a clean glass of water; they're denied an equal opportunity to live in a house that won't make them sick.

When we looked at one of the pieces of evidence that came forward, which admitted the underfunding in child and family services, it showed how the department was trying to make up for those shortfalls. One of the slides that will be in your report shows that the infrastructure budget for first nations communities, according to the department's only estimates, falls $8.2 billion short of what it should be, yet the federal government was transferring $0.5 billion, over six years.

Money that should have been spent on water and schools was being transferred to cover the shortfalls in this program, and it was not covering the shortfalls in child and family services. What does it mean for kids when racial discrimination is being used as a criterion for fiscal policy by government? Between the years and 2012, first nations children on reserve and in the Yukon spent million nights away from their families.

Evidence before the tribunal showed little kids, four-year-old little kids, being denied equipment so that they could breathe because the federal government couldn't figure out a way to match the service that would have been provided to those little kids if they were non-aboriginal. A non-aboriginal child told me that discrimination is when the government doesn't think you're worth the money. What would it feel like if you weren't worth the money, and what would it feel like if you were the parent of a child who is not worth the money?

No amount of pulling yourself up by your bootstraps is going to give your child that breathing machine. You have to rely on the conscience of the nation, of the people who were elected, to understand that although governments have to make hard choices in hard economic times, there are some things that are sacred and should never be traded off, and one of them is the childhood of the nation's children. There are criteria this Parliament and this government should never use as sorting mechanisms to make those hard decisions, and one of those is racial discrimination.

An uncomfortable reality is that the government has been using racial discrimination against children. And it's not because you're broke. The KidsRights Index, a prestigious worldwide ranking system for how well governments are doing for their children proportionate to their wealth, found this last year—it was released on Canada Day incidentally—that we ranked 57th in the world. In a subindex that looks specifically at legislation and budgets, Canadian governments ranked 134th in the world, right next to Uzbekistan.

Our economy, as troubled as it is, is doing far better than Canadian children are and far better than first nations children are. You know, even if my plea doesn't survive the ethical or moral analysis that I'm asking you to do bearing in mind that racial discrimination against kids is not okay, it can never survive the economic analysis either, because the very best stimulus for any government is not other than investing in children. The World Health Organization says that for every dollar you spend here on children, you save $20 U.S. down the line, which means about bucks for us.

Fail to spend that money and not only do you corrupt the soul of the nation but you leave little kids like Kennedy out.

(1740) There's a little girl right now in Alberta who had an ocular tumour. That would scare most parents in this room. Thankfully the surgeon was able to save her sight, but she required some specialized eye drops so that it would heal properly. The federal government did not want to give her the eye drops she needed, which were prescribed by her pediatric surgeon. The federal government said to use Visine instead. This little girl requires orthodontic treatment too. Without it, two pediatric orthodontists have said that she may not be able to talk, she may not be able to eat, and she will be in chronic pain.

It costs $8,000 for the treatment, and if she doesn't get it, she's going to require 20,000 dollars' worth of surgery. Are we really at such hard economic times and such polluted moral times in the country that we're going to say to Kennedy, “No, you're not worth the money”? We have on our website solutions for addressing that child welfare complaint. The tribunal made it clear that the Canadian government knew about the inequality, knew about the harms to kids, and has the solutions to fix it.

You need to fix it in child welfare, but you need to fix it here in these committees too, and never allow race and discrimination against children to ever be permissible in your decision-making with this government, or any to follow. Thank you.

(1745) The Chair : Thank you very much, Ms. Blackstock. The document you referred to will be translated and distributed. Now, let's turn to the mayors and the video conference. Mayor Forest and Mayor Garon, go ahead. [ Translation ] Mr. Éric Forest (Mayor, City of Rimouski) : Thank you, Mr. Chair. We bring greetings from the Lower St. Lawrence. It is snowing where you are, and it is raining here. We want to intervene briefly by stating that the municipalities are important partners for the government, in the economic recovery.

The objective of our intervention today is that we would like to see the government take into account the priorities of municipalities, which are local governments. Since 2008, municipalities everywhere in Canada have contributed to the recovery, particularly through the Building Canada Fund. In Quebec alone, between and 2014, we contributed over $30 billion that enabled the creation of 220,000 jobs yearly. These people pay taxes and they are consumers. They contribute to Canada's prosperity. We mostly invested in aqueduct and sewer infrastructure programs.

Today, we are not asking for a budgetary envelope, but we are asking that our priorities be respected. We want to submit to you two examples of projects that would be ready to start tomorrow morning in the context of an agreement with the Building Canada Fund, particularly for small communities or large projects. In Rimouski, there is a project to build two Olympic-size skating rinks, one in keeping with North American standards and another with international standards, as well as two reservoirs, one of metres. This is a $35-million project that is greatly needed by the community.

The project was developed in partnership with the University of Quebec in Rimouski. That said, in the context of globalization, and faced with a demographic challenge, we have to offer quality services in order to attract new families to our area who will take over our organizations and businesses. We will provide a brief overview of the situation. May I introduce Gilles Garon, Mayor of Témiscouata-sur-le-Lac, who also has a project to present that is a key project for his community. Mr. Gilles Garon (Mayor, City of Témiscouata-sur-le-Lac) : Thank you. Good morning, members of the committee. I agree with Éric.

Municipalities as a whole share this vision. We elected representatives often inherit situations from the past, but we nevertheless have the responsibility of preparing the heritage of tomorrow. In our municipalities we sometimes experience situations that are quite difficult. I'll give you an example. Here in Témiscouata-sur-le-Lac, in 2002, a factory burned down which was not rebuilt; this caused the loss of jobs. We had to deal with that, as well as with municipal budget cuts of 18%. Despite all of that, we had to continue to invest in our aqueduct infrastructure, and that is what we did.

People in our milieu decided to act. We created a municipal association with our neighbour. People voted in favour of that initiative. We are continuing to develop. Today, we are building our regional arena, which has to be upgraded. This is an $8-million construction project. We want this project to generate leverage and to be a sort of regional event hub to attract private investment to the region. Our objective is to create a new economy, to create at least jobs, and, in terms of the regional economy, to help all of the businesses in the surrounding area.

We want this to be an energy-efficient and very innovative building. I would like to make one last point. You need to look at the whole issue of cellular telephony, connectivity and broadband technology in the regions. That is important because the service is clearly deficient in our area. Thank you. [ English ] The Chair : Thank you very much, gentlemen. You're a minute under time. We're making great progress. I'll start the round of questioning, and we'll reduce it to six minutes again. We'll start with Ms. O'Connell.

(1750) Ms. Jennifer O'Connell (Pickering—Uxbridge, Lib.) : Thank you, Mr. Chair. My first question is to Mr. Pedersen. Climate change is something that I'm very interested in. I have some questions in terms of your idea for a more national model of a climate change panel, as I think you referred to it. For the sake of background, I was a municipal councillor for about 10 years, an Ontario member of the Toronto and Region Conservation Authority, as well as Rouge Park before it became part of Parks Canada. I'm trying to understand your model based on my experience and whether there are any similarities or not.

If not, that's fine; it's just what's coming to mind. In regard to the national policy framework or panel, you mentioned you would create what is existing in B.C. and you would make it national. Are you talking about creating that model, or could you expand the existing panel that you have now? I would assume there are legalities, and this is where my background with TRC and Rouge Park comes in. Whomever endowed the money may not have allowed you to create the expansion, or did they? That's my first question. Mr. Thomas Pedersen : Thank you very much for the question.

The government of British Columbia endowed the Pacific Institute for Climate Solutions with $90 million in to provide the knowledge base and the policy development for the benefit of British Columbia exclusively. I've directed the Pacific Institute for Climate Solutions for most of the last seven years, and we've finessed that a little bit so that we can justify.... For example, we have a major study under way on the integration of the western Canadian electrical grid.

We are designing this project to explore how much the CO2 emissions from Alberta and Saskatchewan can be reduced by taking good advantage of British Columbia's and Manitoba's hydro power. So we justify that study even though it goes outside the boundaries of British Columbia on the basis that it is important to British Columbia. We're not saying that we would expand that particular institute nationally. Rather, we would have an Ottawa-based institute, possibly based at the University of Ottawa.

We've had preliminary discussions with Allan Rock, the president of the University of Ottawa's team, and they're quite willing to host it. The point would be that with the model we've established—which is a multidisciplinary model that draws upon all of the pools of talent that we have in our NGO, university, private industry, and entrepreneurship sectors and within our research labs in little pots across the country—we pull the best talent together, put it around one table like this, and put one question in the middle of that table.

For example, it might be transportation policy for Canada toward the middle of the century. What should it look like? How do we get there? Should we electrify our vehicle fleets nationally? Should we focus on hydrogen? Should we be supplanting our internal combustion diesel engines with methane from Canadian sources? British Columbia would like that; we have a lot of methane. All of these things need to be looked at, but not just through the lens of engineering. You have to have a full economic analysis and you have to have human behavioural psychology built in. I'm sure you saw that as a municipal councillor.

You have to find ways to get around Nimbyism, or the “I'm not going to change, because my dad used to drive a truck like this, and I'm going to drive a truck like this.” You have to find ways to deal with all of those challenges. The best approach is to have that multidisciplinary framework. That's what we did at the Pacific institute, and it's working. Ms. Jennifer O'Connell : Thank you. I completely agree in terms of the psychological aspect. The inventor of the recycle bin is actually from my riding, and a big component of it was the social pressure of putting it next to the garbage can.

Municipalities understand the cost of climate change. But in terms of...and this actually is an interesting question in the sense that, with Mr. McSweeney as well, in the cement industry.... How do you correlate some of the differences in legislation? For example, in my municipality, when I was a regional councillor we had a water pollution control plant redesigned to disperse sewage in Lake Ontario. When dealing with the province and the Ministry of Environment it actually scored less environmentally friendly to create a better dissolvent, because there was more concrete needed for the facility itself.

The quality of the water going into Lake Ontario would have been better, but how the cement was made ranked it at a worse environmental rating. How do you correlate the two priorities in terms of wanting cleaner water and taking the hit on having more cement in the building itself? It's an interesting question because you're both sitting next to each other right now, but it was a major frustration. How do we bring that together in terms of having these standards? It builds into my criticisms of LEED as well.

A bike rack is scored and ranked the same as geothermal, so what do you think a developer is going to install to get a point? How do we crack down on some of these legislative issues, and is that something, Mr. McSweeney, that your organization does as well?

(1755) Mr. Michael McSweeney : Why don't I take a crack at that? First off, cement is a powder. It's a finely ground powder, and cement only goes into concrete, which is sand, water, and gravel, at a 7% to 10% ratio. When we make cement, we produce approximately kilograms of greenhouse gases per tonne of cement, but with only 7% tp 10% going into concrete, we're down to about kilograms, which puts us very comparable to other building materials. I would always say that you first have to understand what we're talking about: the difference between cement and concrete.

There is no other market for cement other than concrete. You look at what it's going to be used for, and I would say that anything to do with having clean water would be worth the investment in concrete in order to treat that water. We shouldn't be having any sewage going into lakes and rivers that is untreated. I, like you, spent 10 years on city council so I have a very good understanding of that. The Chair : Thanks for that. We turn to Ms. Raitt for six minutes, please. Hon. Lisa Raitt (Milton, CPC) : Thank you very much, Mr. Chair. Ms. Blackstock, thank you very much for your powerful statement.

I've never heard you speak in person. I have to say it's very emotional and I can understand fully the journey you've been going through, and I hope what I take away today is a lot more understanding. I only have one question and I just want to understand from your perspective where we are from a legal point of view in the process associated with the tribunal ruling. Is the government seeking some kind of appeal on the ruling? Where does it stand? Are we still waiting to see what happens?

I ask it only in terms of trying to understand the recommendations that you made flowing from it and how long it would take for stuff like that to come into place. Dr. Cindy Blackstock : Thank you, Minister. I can advise you that the tribunal ordered the federal government to immediately cease the discrimination and immediately cease its narrow implementation of som