STANDING COMMITTEE ON FINANCE
COMITÉ PERMANENT DES FINANCES
[Recorded by Electronic Apparatus]
Tuesday, November 30, 1999
The Chair (Mr. Maurizio Bevilacqua
(Vaughan—King—Aurora, Lib.)): I would like to call
the meeting to order and welcome everyone this
The finance committee has been travelling across the
country seeking input as to what the priorities should
be for budget 2000. What is interesting about this
process is that we have been asking Canadians not only
to tell us about budget 2000, but since we are looking
at a five-year plan, according to the Minister of
Finance's economic and fiscal update, which he
delivered in London to kick off the prebudget
consultation hearings, we also get a sense of what type
of fiscal room we have and also what the priorities are
within not just one but five years. Therefore, the
debate becomes quite challenging.
I must say that throughout the country we have heard
people defend their positions quite eloquently, and I am
sure this afternoon will be no different.
We have the pleasure to have with us
representatives from the following organizations: the
Canadian Institute of Chartered Accountants, the Retail
Council of Canada, the Canadian Automobile Dealers
Association, the Canadian Association of Railway
Suppliers, the City Centre Coalition, the Pension
Investment Association of Canada, and the City of
We will begin with Mr. Peter F. Wilkinson and Elaine
Sibson, representing the Canadian Institute of
Ms. Elaine Sibson (Member, Government Affairs
Committee, Canadian Institute of Chartered
Accountants): Mr. Chairman and members of the
committee, on behalf of the Canadian Institute of
Chartered Accountants, we would like to thank you for
allowing us to appear and provide input into this
year's prebudget hearings.
My name is Elaine Sibson. I am a member of the CICA,
the Canadian Institute of Chartered Accountants, and I
am on the CICA's government affairs committee. Joining
me is Peter Wilkinson, director of government affairs
of the CICA.
As you have already seen, earlier this fall we
submitted a brief that responded to a series of
questions put forth by your committee. In putting
forward that submission, we have assumed that there will
be a $10 billion surplus for the year 2000-2001,
including the $3 billion contingency reserve.
Against this backdrop, the CICA believes the
government should put forward a budget next spring that
allocates $5 billion of this amount to debt reduction,
$3.5 billion to personal income tax reduction, and the
remainder to increased program spending. Should the
anticipated surplus be more than $10 billion next year,
we would advocate that the additional revenues be
directed to further debt and tax reduction.
Today we would like to draw your attention to two
specific themes contained in our prebudget submission,
those being debt reduction and tax cuts. We believe
a stable fiscal framework must include clear plans
for debt and tax reduction in order to create a solid
foundation for enhanced productivity.
Although some progress has been made in reducing the
debt, federal debt charges still consume more than a
quarter of all federal revenues. It is essential that
a portion of the revenues dedicated to servicing the
debt be reduced in order to free up more funding for
sustainable tax reduction and future program spending
in priority areas.
By the end of fiscal 1998-99, the net public debt
stood at $577 billion, or 64.4% of GDP. Next year debt
servicing charges will amount to just over $43 billion.
Although the debt-to-GDP ratio has begun to decline
over the last few years, the government's debt
reduction plan provides only for an annual payment to
be made against debt each year by way of a contingency
A November 1998 economic survey of Canada carried out
by the Organization for Economic Co-operation and
Development, the OECD, noted that at the current pace
of debt reduction, it will likely take another five
years to bring Canada's debt-to-GDP ratio in line with
the OECD average.
We believe the government should place a greater
emphasis on debt reduction. Accordingly, we would like
to see the following targets for debt reduction
contained in the year 2000 budget: by April 2001 a
ratio of 58.2% of GDP and a further reduction by April
2002 to a ratio of no greater than 55.4% of GDP.
The estimated cost of reaching the initial target
would be $5 billion, or half of the anticipated surplus
for 2000-01. A greater focus on debt reduction would
provide the fiscal room needed to build the foundation
for continued sustainable reductions in Canada's level
We believe it is equally important to focus on
the area of taxation as the key element in the
productivity debate. Productivity is affected, in
part, by investment. The higher the rate of investment
as a percentage of GDP, the higher the rate of
productivity growth. Investment is strongly affected
by the government's tax policies, which can encourage
investment through tax reduction.
With respect to tax reduction, our prebudget
submission called on the government to implement $3.5
billion in personal income tax cuts in the year
2000-01. The submission noted that the CICA was
conducting a study that would make specific
recommendations to the government on how to implement
this cut. This study has now been completed and we
released the results of it yesterday.
The study concludes that the time has come for the
federal government to introduce personal income tax
cuts for middle- and high-income Canadians that are
sustainable and fair. A $3.5 billion tax cut would
create significant and positive economic results.
Economic modelling carried out for the study indicates
that the macroeconomic impact of such a tax cut would
increase GDP annually by an additional half percentage
point beyond what the current projections are for the
next five years. It would also increase consumption
expenditures and business investment. It would boost
personal savings rates, reduce unemployment, and improve
corporate pre-tax profits.
The study examined seven typical personal income tax
cuts and recommends three cuts for implementation. We
bring forward these recommendations on the
understanding that tax cuts have already begun for
low-income individuals and it is time now to introduce
tax cuts for middle- and high-income Canadians. We
think it is time to recognize the contribution
these taxpayers have made over the past several years
to help eliminate the deficit.
Specifically, the study recommends the following
permanent tax cuts to be instituted by the government:
first, reducing the middle marginal tax bracket by 2
percentage points, from 26% to 24%; second, restoring
full indexation to the Canadian tax system to get rid
of bracket creep; and third, eliminating the 5% surtax.
I will elaborate on each of these in a little more
We recommend the 2% reduction in the middle marginal
tax rate from 26% to 24% because it would provide
broad-based tax relief to 7.6 million middle- and
Canadians who have not yet seen any significant
fiscal dividend from the elimination of the deficit.
While the study originally examined a 1% reduction in
the middle marginal rate, its analysis demonstrates
that this tax cut could be increased to 2% without
jeopardizing the sustainability of the overall target
of $3.5 billion in tax cuts. The average benefit of
this tax measure would be an increase of about $480 in
the disposable income of middle-income Canadians.
Secondly, we recommend restoring indexation because it
addresses the serious problem affecting almost every
Canadian: bracket creep. Between 1986 and 1988, the
consumer price index increased by 39%. However,
partial indexation resulted in the tax system being
adjusted for only 9% of that increase.
Since 1986 bracket creep has pushed 2.5 million
Canadians into a higher income tax bracket than they
would have otherwise been in. As a result of this
bracket creep, by 1998 low-income earners paid $400
more per year in taxes, middle-income earners $1,373
more per year, and upper-income earners $2,086 more per
year in taxes than they would have under full
Simply put, if unaddressed, bracket creep will increase
the tax burden on Canadians by $3.4 billion over the
next four years. Full indexation would restore
fairness to the tax system and would benefit all 21
million tax filers across all regions and income
levels. It would also strengthen the tax system for
Finally, we recommend eliminating the 5% surtax,
because like the 3% surtax, it was brought in to help
eliminate the deficit. Now that the deficit has been
eliminated, these surtaxes should be discontinued. The
government has eliminated the 3% surtax and we believe
it is time to get rid of the 5% surtax. One million
Canadians would benefit from this tax cut.
Our model shows that a middle-income family of four
with two adults in the workforce would see disposable
income rise by $600 a year as a result of the tax cuts
we have recommended in our study. We believe an
overall personal income tax cut of $3.5 billion is
sustainable and that it would not unduly restrict the
ability to reduce debt. It goes without saying that
the faster the debts are reduced, the more revenues are
made available to implement further tax cuts and to
deal with some of the other spending issues.
We also believe that the specific personal income tax
cuts we are recommending today will provide broad-based
relief and will restore some fairness to our system.
The time has come to continue the trend started by the
government in the last two budgets of providing tax
relief to low-income Canadians. The time has come to
provide relief to middle- and upper-income Canadians
who, after years of deficit reduction, have yet to see
the fiscal dividends that have resulted.
Further details of the tax cuts examined together with
the three cuts we are recommending can be found in our
study, and we would be more than happy to answer any
questions you may have.
The Chair: Thank you very much, Ms. Sibson.
We will now hear from the Retail Council of Canada, Mr.
Peter Woolford and Brian Rudderham.
Mr. Peter Woolford (Senior Vice-President, Policy,
Retail Council of Canada): Thank you, Mr. Chairman. I
must say that it is an unusual feeling for the Retail
Council to find itself on the extreme left wing of the
business community, but we will try to carry out our
responsibilities in proper form.
The Chair: How does it feel?
Mr. Peter Woolford: It feels fine so far.
Mr. Gary Pillitteri (Niagara Falls, Lib.): You are
sitting on the right side.
Mr. Peter Woolford: It depends where you look
I am here this afternoon with Brian Rudderham, who is
the comptroller for Wal-Mart Canada and the chair of our
I would like to take a few moments to give the
committee a bit of an overview of our submission. It
was provided to the committee a little over a month
ago. I will give you an outlook on where we see retail
sales for this year and next, then I will give you our
general fiscal position, and then I will talk about some
specific tax policy issues.
Our outlook for this holiday season is fairly
positive. Our members expect that the holiday season
for 1999 will be another positive period of growth for
retail. We are expecting sales to rise by around 5%.
Looking forward to 2000, our members are also
positive. They expect that sales will track roughly in
line with the economy, producing growth that will
probably be a little softer than it was this year.
What that means is that with the increase in
productivity in the retail trade there will be in fact
little or no growth in retail employment in 2000. That
was the case this year. We saw very little or no
growth in employment this year.
Let me turn very quickly to our broad fiscal policy
position. In principle, our members believe it is
preferable to leave funds in the hands of the taxpayers
and citizens so that they may decide how to allocate
those moneys rather than to hand that power over to the
With that in mind, we are suggesting that the
government commit itself to maintaining federal
revenues at some fixed portion of the GDP over the
business cycle so that the government simply retains
its position in the overall mix of economic activity
and does not gradually increase it, as has been the
We believe that the domestic economy still needs some
boost, and given the constraint on personal incomes,
the only place this can come from is a reduction in
Like virtually every other group that has appeared
before this committee, we are recommending a minimum $3
billion personal income tax cut this year. The numbers
may have changed up or down from group to group, but I
believe virtually everybody you have heard from has
been calling for a reduction in personal income taxes,
and we would certainly join that chorus.
We believe it should be aimed at low- and middle-income
Canadians, essentially the segments of the Canadian
population that are in the greatest need of a boost in
income and spending power. These Canadians also, quite
frankly, are those most likely to spend the dollars
inside Canada and thereby boost the domestic economy.
We believe the program of income tax changes
should be a multi-year program so that Canadians have
some clear sense over the medium term of what their
prospects will be. Certainly we would echo the
comments of the CICA. We believe a return to full
indexation should be accomplished within that period of
I have a passing remark on payroll taxes. We were
disappointed with the decision of the government with
respect to employment insurance rates for 2000. The
effect of this decision is that at a time when the
government is talking about reducing the tax burden on
Canadians, Canadians will wake up on January 1 paying
more tax and finding their take-home pay is less.
We would remind the committee that payroll taxes are a
very efficient job killer, and they will continue to do
that as long as they are too high.
Mr. Chairman, absolutely no presentation by the Retail
Council would be complete without some reference to GST
harmonization. We have been beating that drum for some
years, and I would like to remind the committee again
that the retail trade is a strong supporter of
harmonization of the goods and services tax with
provincial sales taxes.
One thing we want to be very clear about is the nature
of that support. There has been considerable
discussion around how harmonization would take place,
and particularly the question of whether it would be
tax-in pricing or tax-out pricing.
We want to go on the record once again as being very
clearly and adamantly opposed to a tax-in harmonized
system in which tax rates were allowed to vary province
by province. The reason is that it simply blows apart
the domestic market for retailers and would undo all
the efficiencies we have been building for the
last 20 years.
The other area is one that is familiar to this
committee, and that is the jewellery excise tax. This
committee has recommended before that the jewellery
excise tax be abolished. Once again we would ask you
to make that request of the minister. The reasons for
this are well known. This is simply a costly
anachronism that should be put to rest once and for
all, and we would ask that the committee again this
year make that recommendation to the Minister of
In conclusion, we believe that everyone in Canada can
be proud of the society we have built. International
observers from around the world have identified Canada
as one of the best places to live, if not the best. We
believe that reflects the balance that Canadians have
achieved among the roles played by the various parts of
our society and our economy.
The budget for 2000-01 gives us an opportunity to
reassert the genius of that balance by committing the
government not to take more resources than it currently
does. We believe it is time Canadians were given
back some of their money so that they can enjoy living in
the best country in the world.
The Chair: Thank you very much, Mr. Woolford.
We will now hear from the Canadian Automobile Dealers
Association, Ms. Jennifer Thomas, a technician with the
Turpin Group, Ottawa, Ontario, and Martin Smith, a
technician with Park Pontiac, Winnipeg, Manitoba.
Mr. Martin Smith (Technician, Park Pontiac,
Winnipeg, Manitoba, Canadian Automobile Dealers
Association): Good afternoon, Mr. Chairman, honourable
members of Parliament, ladies and gentlemen.
I am very pleased to make a presentation to
the committee as a technician. Last night I was
standing in front of the Peace Tower in awe. This
is my first trip east of Kenora and it is something
I will never forget.
The technicians' history and stories are basically the
same across Canada.
We all start in this business in the same manner. We
are all cut from the same cloth. If you will indulge
me, I will give you the background of my story as it
pertains to the tool tax issue and how it affects us.
Just over 18 years ago I was looking for a way to get
into the mechanical field in the automotive trade. At
that time, unemployment insurance was sponsoring a
cooperative course through a community college. I
applied for it and I got it, which means I was
sponsored by Unemployment. It was 50% theory and 50%
At the end of that course I was
offered a job at the GM dealership I worked at, but as
a condition of that employment I had to purchase tools
to fulfil my job requirements.
I purchased approximately $3,500 worth of tools, which
does not seem like much, but at that time the expected
salary was only about $21,000. For a young family just
starting out, it was quite a burden. We had no choice
but to do it. I could not keep a job or maintain a job
Over the next four years I purchased about $3,000
worth of tools every year. To this day I have
approximately $30,000 invested, and every year I
purchase about $1,000 worth of tools to maintain a
level of efficiency and to keep up with the changing
technologies in vehicles. The tools are always
changing and being updated.
To me it seems very unfair that we are not able to
deduct any of these purchases from our income tax. I
have recently learned of the case of musicians and
chainsaw operators. I know for a fact that
electricians and plumbers are able to deduct things
from their income tax because they need them to operate
We are average Canadians earning a
middle income and we feel we deserve a tax break
in this area.
If something is not done in the near future, we are
going to lose our field. The automotive trade is very
highly technical, very highly advanced, and we need
young, bright people to get into the field to keep up
with the technologies. Training is vast and ongoing.
Enrolment in schools has dropped off. People coming
out of school looking for an occupation want to go into
an occupation where they do not have to incur any
costs. Electricians can write off their tools, a
musician can write off his instrument, and an artist his
brushes. But in the automotive trade you have to
purchase approximately, in today's society,
$5,000 worth of tools to start. With that, we are
seeing that there is not much interest in getting into
the automotive trade. The rate is dropping. People
are going for the easy road, where they can make more
money and do not have to dish out in order to make the
At this time I would like to turn it over to Jennifer
Thomas. She is a young technician, just in the
business. She can add to this presentation with her
Ms. Jennifer Thomas (Technician, Turpin Group,
Ottawa, Ontario, Canadian Automobile Dealers
Association): Mr. Chairman, I started in the trade
five and a half years ago as a lube technician. I was
being paid $8 an hour. I was told in the job interview
that I needed to have my own tools, but having worked
on my own car for years I thought I had plenty. I
walked into work that first day carrying my tool box.
I quickly learned that working on my own vehicle in the
driveway and working for a garage are two very
different things. I needed all kinds of special tools
that I had never used before, including air tools. I
had no money, I had two children to support, and I
badly needed the job.
Other mechanics helped me out initially by loaning me
their tools, but made it clear that if I lost or broke
a tool I would have to replace it. The price of the
tools I needed was a definite deterrent to staying
in the trade.
Slowly I began buying essential tools. By the end of
that first year I had purchased roughly $1,400 worth of
tools. Today I have approximately $15,000 invested.
Most of them are from Canadian Tire, Sears, Wal-Mart,
and Princess Auto, although I do own some Snap-On and
I buy these more expensive tools only when I have to.
Mack and Snap-On are the tool suppliers that make
specialty tools. They work closely with our industry
to develop tools as vehicles are redesigned, creating a
demand for redesigned tools but at a premium price.
During the course of the day I am in and out of my
tool cabinet hundreds of times, choosing the right
tools for what I am working on. If I do not have the
proper tools, I can't do my job. Because I am paid on a
flat rate system, the more time I spend searching for a
tool the less I earn.
It is essential that I stay current in my trade, not
only by constantly learning new designs of vehicles,
but also by purchasing the tools I need to work on
these new designs.
A large percentage of my tools are designed for use in
a shop where compressed air is the source of power.
These tools are two to three times as expensive as the
hand tools commonly used by other trades, such as
electricians, plumbers, or millwrights.
While our dealership provides each technician with a
workbench and a hoist, it is up to the individual to
supply their own tools. Dealerships are able to use
their equipment purchases as a business deduction, but
technicians are not.
In the 20 or so compartments of my tool cabinet, each
tool has a specific use. When I pull open a drawer I
am looking for a specific tool. Even with $15,000
invested, there are several tools I still need and none
that I can manage without. When I lock my cabinet at
night, I know if one pair of pliers is not accounted for
or if even one of my more than 300 sockets is missing.
I am in and out of several vehicles every day and
occasionally I lose a tool. Many of my sockets cost
between $5 and $20 each. A set of pliers is easily
worth more than $25. I can't continue working without
the lost tool, so I have to replace it immediately. It
does not matter what it costs.
As long as I work in this trade I will need to invest
in tools. We need tax fairness.
The Chair: Thank you.
We will now hear from the Canadian Association of
Railway Suppliers, Mr. Peter McGuire, executive
Mr. Peter McGuire (Executive Director, Canadian
Association of Railway Suppliers): Thank you, Mr.
Chairman, committee members, ladies and gentlemen. I
am the executive director of the Canadian Association
of Railway Suppliers.
I am here today as a last-minute pinch hitter for John
Marinucci, the president of National Steel Car Limited
and one of our directors, who was to be our
spokesperson today. John's mother is undergoing open
heart surgery today, so we trust you will be
understanding of the circumstances that prevented him
from being in Ottawa for this session.
On behalf of the association, may I say how pleased we
are to be able to participate in the prebudget
consultation process. The Canadian Association of
Railway Suppliers, which was incorporated in 1991,
brings together companies that supply goods and
services to the Canadian railways and the export
The association membership currently stands at 103,
with member companies located from coast to coast in
Canada, representing a wide variety of manufacturers of
rolling stock, components, and other goods and services
needed by the railways. Our member firms employ some
50,000 workers in communities across Canada.
As an advocacy group, the association promotes the
economic viability of the rail mode within Canada,
often working in close collaboration with our customers
and colleagues in the Railway Association of Canada.
Canada's railways play a vitally important role in
getting Canada's goods to market. This is increasingly
true since the signing of the North American Free Trade
Agreement five years ago. In that time period, Canada's
merchandise trade with the United States has increased
80%, reaching $475 billion in 1998. Our merchandise
trade with Mexico has doubled to $9 billion over the
Some 40% of Canada's trade moves by rail. Clearly, if
Canada wishes to increase its share of global trade, a
competitive and productive railway transportation
system must be maintained.
In addition to getting Canada's goods to market in a
timely and cost-effective manner, the rail mode is the
friendliest toward our environment. Trains account
for far fewer emissions into the air than other forms
of transport. Railways are, on average, three times
more fuel efficient than big trucks. Each freight
train can take 275 trucks off already congested roads.
With the proper public policy regime in place to
encourage conversion to the newer, more efficient
locomotives, which have even lower emission levels, our
railways are well placed to make a major contribution
toward helping Canada meets its Kyoto environmental
Your committee has wisely been focusing on
productivity. In the railway context, productivity is
the relationship between the output, being freight and
passenger transportation, and the input, such as the
equipment and services provided to the railways by
members of this association.
The Canada-U.S. productivity gap remains significant.
In recent years studies have pointed out that the
Canadian railway industry has been unable to invest
enough in the advanced technologies and new generation
locomotives and freight cars that generate significant
gains in productivity. Canadian railways can't compete
with their U.S. counterparts with older, less efficient
With respect to railway productivity issues, I would
refer your committee to an excellent publication by the
Railway Association of Canada entitled “Perspectives
on Productivity and the Canadian Railway Industry”.
The private sector can only make the changes that are
within its control. However, government policies
impact directly on the ability of the railways to
improve productivity. Where necessary changes are
within the purview of government, it is government at
all levels that must act to ensure that necessary
improvements become possible.
One important area in which government action at both
the federal and provincial levels could be taken to
provide more equitable treatment among the various
modes of transport concerns fuel taxes. Railways pay
the same fuel taxes as their competitors, the trucking
industry, but unlike trucking must pay the full costs
of maintaining the railway rights of way.
Another area in need of redress that impacts
significantly on many members of our association is the
current capital cost allowance regime. This will be
the main focus of our presentation today.
With respect to the Canadian capital cost allowance
for railway equipment, a recent study conducted for
Transport Canada by the IBI Group contained the
following key findings. First, the Canadian railway
industry is significantly disadvantaged with regard to
tax depreciation compared with U.S. railroads, for whom
the present value of tax depreciation is some 70%
higher than in Canada.
The Canadian railway industry is also disadvantaged
with respect to other Canadian transport sectors,
particularly those competing with the railways. All
have significantly higher CCA rates than the railways
and all receive tax depreciation benefits much more
closely aligned with their U.S. counterparts than do
Canadian railways are also disadvantaged with respect
to other Canadian capital intensive industries, which
benefit from a tax depreciation treatment that is more
generous than that for Canadian railways and much more
closely aligned to their U.S. competitors than is the
case for Canadian railways.
Another finding of the IBI study was that the
disparity between tax depreciation regimes and Canada
is significant. Identical rail investment projects
require a 23% higher level of earnings in Canada than
in the United States to yield the same rate of return.
This can only retard capital spending for modernization
and growth by Canadian railways as compared with U.S.
The study also found that the use of the U.S. tax
depreciation regime as a benchmark is appropriate
because the Canadian and U.S. tax depreciation systems
are closely aligned for all industries considered,
except for railways. There is intense and pervasive
competition between Canadian and American railways.
The tax depreciation disparity makes the competitive
position of Canadian railways more difficult in the
pricing and supply of modern equipment.
The same is true—that is, the competitive position is
more difficult—of all rail-dependent Canadian
industries competing with U.S. industries in an
increasingly integrated North American marketplace.
Another finding was that technical and market
obsolescence rather than physical longevity has
become increasingly important in the determination of
the useful life of rail assets.
For example, locomotives from the 1970s and 1980s are
still serviceable. They are, however, technologically
obsolete because today's high-output locomotives are up
to twice as powerful, use less fuel, need less
maintenance, and produce far fewer emissions.
Changing customer requirements are forcing freight
cars built only a short time ago out of service.
Today's 53-foot containers don't fit in intermodal
freight cars built for 45- and 48-foot containers. Many
automobile carriers can't handle the height of sport
utility vehicles and vans, which are such an important
part of today's automotive sales.
The overall conclusion of this Transport Canada study
is that an appropriate, defensible tax depreciation
regime for Canadian railways should yield tax benefits
comparable to those enjoyed by their U.S. counterparts,
and they concluded that a CCA rate of 30% would achieve
The Canadian Association of Railway Suppliers supports
the request of our customers, the Canadian railways,
for more equitable capital cost allowance and fuel tax
treatment in Canada. We feel the case has been
extremely well supported by numerous studies over the
years and that now is the time for government to do
what only government can do: make the necessary changes
in its public policies. Otherwise the productivity gap
will widen and the ability of Canadian exporters to
compete globally will degrade.
To a certain extent, I think I am preaching to the
converted here, because I think your committee has
already heard and made the same argument in a previous
study. But we urge your committee to recommend
equalization of the capital cost allowance for railway
The Chair: Thank you.
We will now hear from the chairperson of the City
Centre Coalition, Mr. Campbell Robertson.
Mr. Campbell Robertson (Chair, City Centre
Coalition): Mr. Chairman and members of the committee,
I represent the City Centre Coalition, which is a
grouping of nine community organizations in Ottawa.
Our mandate involves protecting and enhancing the
quality of life in our communities.
Our mandate is local, but I believe what we are
recommending can apply to cities across Canada.
Our coalition focuses on transportation issues in such
a way as to support the quality of life in our city and
a sensible, realistic, economical overall
transportation system in which public transit, as well
as walking and bicycling, is encouraged. We want to
prevent our communities from being overrun by cars.
Public transit is key to achieving this.
We agreed with the Federation of Canadian
Municipalities when it said in its proposal for a
quality-of-life infrastructure program that vibrant
downtown cores are essential to improving quality of
life and maintaining sustainable communities, and that
efforts should focus on investments that enhance
accessibility to work and shopping through options like
walking, cycling, and public transit.
We particularly agree with Mayor Don Cousins of
Markham, who told your committee that municipalities
lack enough money for investment in new public
transportation infrastructure. He made the point that
historically most of the capital cost of subway and
commuter rail systems in Canada and throughout North
America has been funded by senior levels of government.
He went on to describe the current funding gap, the
difference between what municipalities are able to
spend and what they need to spend to keep up with the
Public transit is a fiscally responsible and
neighbourhood and environmentally friendly way of
enabling people to move around urban areas. It reduces
the demands to build expensive networks of major
commuter roads through our cities. Building and
widening major roads through city centres works to
destroy the very hearts of our urban centres by
swamping communities with traffic and all that means in
terms of quality of life and indeed the safety of the
As for fiscal responsibility, I will refer to a study
done for the Region of Ottawa-Carleton that shows that
automobile travel in this region is subsidized much
more heavily than public transit. The report on total
cost of travel in Ottawa-Carleton shows that in the
peak urban period, automobile traffic was subsidized to
the tune of $276 million, whereas transit subsidies
amounted to about $38 million. That is a dramatic
difference—$276 million to $38 million. It takes a
much greater subsidy to provide for cars than for
public transit. Yes, it makes good fiscal sense to
invest in public transit.
National governments of other OECD countries invest
significantly in public transit. The United States has
a national policy backed by federal government
investment in public transit. We urge you to include
in your report a strong recommendation for federal
investment that is specifically dedicated to improving
public transit in our cities.
The Chair: Thank you very much, Mr. Robertson.
We will now hear from the Pension Investment
Association of Canada, Mr. Russell J. Hiscock and Mr.
Donald T. Walcot.
Mr. Russell J. Hiscock (Member, Government
Relations Committee, Pension Investment Association of
Canada): Good afternoon, Mr. Chairman, honourable members of
Parliament, ladies and gentlemen. Thank you for the
opportunity to discuss our submission.
My name is Russell Hiscock and I am the manager of
investments for CN Investment Division, which provides
pensions to CN's retired employees across Canada. With
me today is Donald Walcot, executive vice-president of
BIMCOR. He is similarly responsible for the management
of pension assets for Bell Canada's employees.
However, we are both here today representing the
Pension Investment Association of Canada, in which our
firms are members and we are both active volunteers.
The Pension Investment Association of Canada, PIAC, is
the representative association for public and private
pension funds in Canada in matters relating to pension
investment. Collectively, the 134-member pension funds
in the association manage approximately $0.5 trillion in
assets for over six million pension beneficiaries.
It is a pleasure for both of us to be here to discuss
an important issue to everybody: managing assets for
pension beneficiaries. The foreign property rule, as I
am certain you all know, restricts foreign investment
by tax-deferred pension plans and RRSPs to 20% of plan
The basis for our present position on the FPR is found
in the paper prepared for the association by Keith
Ambachtsheer in September 1995, a copy of which has
been provided to you.
While many members of the association and indeed
finance theory itself would argue for the complete
removal of the FPR, PIAC continues to believe that a
gradual relaxation of the limit to 30% is a more
achievable goal and would be acceptable to the broad
range of interest groups to which government must
Let me turn to economic factors. PIAC was
instrumental in having the FPR limit relaxed in 1990.
Immediately following the 1990-1994 incremental increases
in the limit from 10% to 20% and during the subsequent
five years, no adverse effect has been observed on any
of the following: the Canadian economy, the
Canadian-U.S. exchange rate, the ability of governments
or corporations to finance debt, balance of payments,
Canada's equity markets, and the availability of
corporate financing, including the small business
sector. In fact, many of these conditions have
flourished in the period following the last amendment
to the FPR limit.
Although the FPR was originally introduced in 1972 by
then Finance Minister Benson, no positive impact of the
rule on any of the foregoing conditions has been
The Government of Canada and each of the provincial
governments had been net borrowers from domestic and
international sources for much of the three decades
prior to 1997. Subsequently, Canada and the provinces
have been net redeemers of debt, resulting in the
decline of the stock of outstanding debt in Canada.
Most forecasts are for further declines. Clearly, any
reason that may have existed to keep capital captive,
at least to finance government debt, no longer exists.
Similarly, equity financing in Canada thrives. In
fact, there is no shortage of capital available to
competitive Canadian companies.
PIAC is aware of a great many studies on the impact of
the FPR. The majority of these studies confirm that
Canada has suffered no adverse effect from the
relaxation of the FPR limit in 1990. Conversely, these
studies demonstrate that Canadians have experienced the
detrimental impact of lower returns and increased risk
through limited diversification in the investment of
their retirement savings.
Obviously, registered pension plans and registered
retirement savings plans, RRSPs, are the cornerstones
of independent retirement income, and measures ought to
be in place to encourage, not discourage, the growth of
retirement assets. Not only is this important for the
railway workers, bus drivers, teachers, bank employees,
auto workers, and many, many others who are
beneficiaries of pension plans and anticipate an
independent retirement, but it is also important to the
Government of Canada, which provides support to retired
Canadians and also derives tax revenues from the
taxable income of retirees not requiring support.
PIAC assumes that the original intent of the FPR was
to ensure an adequate supply of capital for domestic
companies; however, in today's global environment,
capital markets have demonstrated that capitalization
of domestic firms has little to do with the
availability of domestic capital. Rather, factors such
as the Canadian corporate tax structure and the
productivity and competitiveness of Canadian
corporations in a global context are far more important
factors in attracting domestic and foreign capital.
There are ways to artificially exceed the FPR limit
that are acceptable to government. For a number of
years it has been common for some pension funds to use
synthetic instruments, such as derivative swaps on
non-Canadian indices, to exceed the 20% limit. While
the mutual fund industry held concerns that their
investors would be wary of derivative products in their
mutual fund investments, its participants have finally
developed products using the synthetic approach to
replicate their foreign investment objectives. They
now offer them as funds eligible for RRSPs, despite
their 100% exposure to foreign property. This
aggressive response to the lack of progress in the
further relaxation of the FRP limit and the public
perception of the need for flexibility to seek the best
returns, whether generated in Canada or elsewhere, has
now rendered futile the continuation of the FPR at the
But this strategy is not without its costs. Risk
exposure is greater, management costs are substantially
higher, and many foreign markets are not sufficiently
developed to attract derivative trading. Our
experience shows that in a number of countries stock
indices simply do not reflect the successes of many
attractive companies, while direct investment would be
a much more suitable and effective strategy. Many
investors using synthetic products are not aware of the
risk management processes required for derivative
Despite the foregoing, many pension funds in Canada
still adhere to the spirit of the FPR and do not exceed
the 20% limit.
Beneficiaries in such pension funds are clearly at a
disadvantage because the limitation on diversification
imposed by the FPR increases risk for such
beneficiaries since their retirement assets cannot be
allocated to markets where performance may be superior.
Clearly the environment for investment has changed
remarkably over the past two decades. Investment
professionals seek opportunities worldwide, and Canada
represents less than 3% of the capitalization of world
equity markets. Requiring ordinary Canadians to
maintain 80% of their retirement savings in Canada
forces them to accept less exposure to 97% of
accessible markets than might otherwise be warranted
and to increase their risk. Consequently, they must
accept a lower standard of living in retirement.
Surely these cannot be the express objectives of a
government such as Canada's.
Some principles in PIAC's position on the FPR have
been criticized in the past, and we would like to
address that criticism.
Some individuals and organizations have argued for the
continuation of the FPR, and in some cases have
suggested that rather than increasing it the limit
might possibly be reduced. Such arguments largely
maintain that foreign investment by Canadians results
in less investment available for Canadian enterprise.
In fact, modern global capital markets allocate capital
to any deserving company, regardless of domicile. At
the same time, the amount of investment capital in
Canada is growing, and there is no evidence whatsoever
that deserving Canadian investment opportunities are
denied capital, whether they are in large corporations,
small business, or infrastructure projects. While there
might be other impediments that prevent some companies
or projects from acquiring capital, they are completely
unrelated to the availability of capital.
Some commentators believe that the abolition of the
FPR will mean jobs lost in Canada, the premise being
that money invested abroad means jobs created abroad.
This argument is specious. Business activity creates
jobs. Employment gains in Canada result from the
impact of increased productivity and the relative
competitiveness of Canadian firms. Successful
companies grow, increase their workforces, and attract
capital for expansion. Investment capital alone does
not create jobs but supports the expansion of
competitive and profitable enterprises. The economic
truism that capital is invested only where it is
economically warranted will never be altered by the FPR
or any similar intervention.
Canada does not need the protection of captive
capital, and that is why we think the
FPR should be amended now.
We are impressed with the economic gains made in
Canada, which clearly come from responsible policies
and strong fiscal management. At the same time, we are
greatly concerned that an intervention such as the FPR
has been allowed to outlive any usefulness it may have
had in the past.
The fact is that Canada is only a small part of the
global economy and Canadians are increasingly citizens
of the world, but because we maintain the rule, others
in the world continue to receive a message that
Canada's economy and people require the protection of
the FPR. They are increasingly concerned that Canada's
confidence in its own capital markets is weak, and
consequently their enthusiasm for Canada's investment
opportunities is lessened.
If Canada is to retain its trained professionals, if
to attract foreign investment, and if it is to be seen as a
global partner, in our view, its policies must foster
productivity, competitiveness, favourable tax
and free flow of capital. Only in this way will other
countries believe that Canada and its business
enterprises are desirable places to invest. Removal of
the FPR in the manner we have suggested would be a
simple demonstration to both Canadian and foreign
investors that Canada is moving in that direction.
We strongly believe that the FPR is accomplishing no
recognizable goal and is frustrating the retirement
objectives of millions of Canadians. Canada is still
sending the wrong message to the global community by
maintaining the FPR. It puts us in company with
countries like Mexico, Argentina, and Brazil, not the
United Kingdom, the United States, Japan, or Belgium.
This committee, in its report to Parliament last year,
recommended that the FPR be relaxed. We sincerely hope
the arguments we have presented today, together
with those of others from whom you may have heard, are
sufficient to permit you to make the same
recommendation again this year.
The Chair: Thank you very much.
We will now hear from the mayor of the City of
Moncton, Mr. Brian Murphy.
Mr. Brian F.P. Murphy (Mayor of Moncton):
Thank you, Mr. Chairman. My name is Brian Murphy and I
am the mayor of Moncton. I have with me in the
audience Councillor Doug Pond, who is also from
I want to thank you for fitting us into your schedule.
Generally, I want to echo Mr. Smith's comment of how in
awe we are of our capital, what a wonderful place it
is, and what wonderful hospitality we have received here on
the Hill from your colleagues in the House.
We actually went to see Question Period, which was an
The City of Moncton appreciates the opportunity to
comment on the 2000 federal budget. New Brunswick is
the home of the 15% harmonized sales tax. Moncton is a
former railway town.
There is some discussion, as
politicians, to weave all of the conversations together
about tax cuts.
At the civic level you must realize, Mr. Chairman,
that municipalities across Canada are in the habit, by
law, at least on the east coast, of having balanced
budgets. In fact, Moncton can boast that this will be
the second year it will decrease its property tax
rate. It is the only municipality in New Brunswick to
do so. We are mindful, therefore, as administrators of
public money, of the need to be careful with the public
Moncton is the centre of the Maritimes. It is the
natural hub of railroad and air services for Atlantic
Canada. It has a population of 115,000 people. It was
originally an Acadian settlement, and it is one-third
francophone, two-thirds anglophone.
We come here neither seeking a handout nor a hand up.
Southeastern New Brunswick is a vibrant economic
region. Greater Moncton has an unemployment rate of
5.3%. If I read the Globe and Mail correctly
this morning, a figure of 12% becomes quite relevant
when awarding certain programs. We are not even close
to that 12% barrier. We have a healthy economy. We
had a population growth in the last census period of
This is not the typical request for big government at
the federal level to give us more money. We are just
trying to give you some advice with respect to how to
split the surplus.
We are following the dictum of the Federation of
Canadian Municipalities with respect to its quality-of-life
This is a way of encouraging all three levels of
government to cooperate as we listen to the voices of
our constituents. When the federal government cuts a
program, closes a base or a railway, it has an
effect. Conversely, when the federal government wisely
invests in a community, it also has an effect, and a
positive one. As a city member of FCM, we believe
the proposal provides a coherent game plan for the
federal, provincial, and local governments to improve
the quality of life for our citizens.
The goals of the proposal, which we support, are clear.
Investment must be made in environmental transportation
and social infrastructure. We must improve the quality
of life of our citizens, increase environmental and
health protection, reduce levels of homelessness,
address the issues of the working poor, and improve
The production of water that meets Canadian drinking
water standards is something that has been in the
forefront of the news locally for us. We recently
brought on line a $42 million water treatment plant
through Canada's first full-scale public-private
partnership. The plant will, however, add $100 to a
typical family's water bill at a time when no one wants
more taxes. This is not a popular move—it would not
be anywhere in Canada—but we have the best drinking
water in Canada.
It is flowing through a distribution system with
components that are, however, up to 100 years old.
It is not fashionable for any level of political system to
invest in what is beneath the ground, what cannot be
seen, but believe me, the $42 million invested in our
water treatment plant, without assistance from other
levels of government, will be nugatory if we have a
distribution system that fails it. It is important to
remember that when spending money on infrastructure, it
is not always ribbon cutting, it is not always
something that will create numerous jobs, but it is the
right thing to do in many cases.
We have similar situations with respect to our waste
water system moving from primary to secondary
treatments. I provide these as only two examples of
what are hidden in our ground, underneath our pavement,
which need to be addressed.
You are probably aware that the National Research
Council estimates a shortfall in investment for
municipal and regional roads of up to $9 billion and
in urban transport a shortfall of $8 billion. Funds
are needed to bring these services up to snuff.
In addition to the need for asphalt, curbs, gutters,
sidewalks, and catch basins, Moncton also feels the
financial pressure of supporting our local airport.
The Moncton airport, a key piece of the local
infrastructure, is a major catalyst in our economic
development efforts. Traffic figures indicate that
Moncton is the second busiest airport, by far, in the
A complete list of social infrastructure needs is well
articulated in the FCM's brief on the quality-of-life
infrastructure program. However,
if there is a rush to have municipalities foisted
into the public housing sector, it should be noted that
particularly in New Brunswick, since 1967, the equal
opportunity program of Liberal Premier Louis
Robichaud made it clear that municipalities are not
responsible for soft or human services, including
housing. That distinction has been made since that
time. Many provinces are now just dealing with the
disentanglement issues and clarification of who does
what, but it has been the plan in New Brunswick for
some time that we don't do housing.
While affordable housing is a laudable goal, and while
my own minister in my own riding is the minister
charged with the issue of homelessness, I must say that
the rush to endorse, which I hope is a rush to endorse
the FCM's principles, should not be foisted on Atlantic
Canada, which has a different division of powers. Care
must be taken with respect to housing initiatives.
In conclusion, we feel we need federal help and
we need it in a tangible way by endorsing the FCM's
quality-of-life infrastructure program. We need to be
sure that disentanglement issues are taken care of. In
short, what we would like to say is that the last
infrastructure program, while laudable, had with it
some issues of implementation that led us to privately
build our water treatment plant. It was not a priority
in our municipality for the federal representatives.
Again, I urge you to recognize, as members of the
finance committee, that the cities in which we live
have some form of local government. When you hurt or
help an unrepresented area or an unorganized area, if
you hurt the village, town or city, you hurt many of
the people who vote for you, as members of the
finance committee. I don't want to get too much like
Hillary Clinton in saying that we all need a village to
grow up in, but the fact is that this is the base
political organization. We have banded together
through the FCM and have asked you to endorse an
infrastructure program. We certainly need it to work
for municipalities. We don't need to waste money on
politically popular projects; we need infrastructure
improvement all across this country, and in particular
the older parts of the country, not forgetting that the
maritime provinces constitute an older part of the
country. We have services under the ground that need
improvement, and the infrastructure program is the way
to do it.
I thank you for your time. I hope you will see your
way to dividing the surplus toward that very valuable
The Chair: Thank you very much, Your Worship.
We will now proceed to the question and answer
session. We will have a five-minute round starting
with Mr. Epp.
Mr. Ken Epp (Elk Island, Ref.): Thank you, Mr.
Chairman. Thank you all for coming and making your
presentations today. With your permission, Mr.
Chairman, I first want to have a bit of fun.
I bought my wife a car. It has a light on the dash
that says “check engine”. The car is running
perfectly. It starts well. It gives me good gas
mileage. There are no symptoms except “check
engine”. I told my wife that the interpretation of
that is “bring money”. Bring money to Waterloo.
Do you guys have a way that you set it in your shop so
it will come on after five days?
No, I don't want an answer.
Mr. Martin Smith: I can answer that.
Mr. Ken Epp: Can you?
Mr. Martin Smith: Based on government EPA
standards, there are several things that are connected
with cars. The light comes on because your gas cap is
loose, or the light comes on because the air filter is
dirty. Those things are regulated by government.
Mr. Ken Epp: That's good.
The Chair: I am glad to see the light goes on in
Mr. Ken Epp: We will keep bringing money, I know.
Mr. Martin Smith: If it is under warranty, sir, it
wouldn't be like that.
Mr. Ken Epp: No, it isn't. This is an old used
car. I can't afford a new one.
Mr. Martin Smith: If you bring it to Manitoba, I
will fix it for you.
Mr. Ken Epp: I want to say to you, though, and I
have to hurry because my time will soon be up, that
there is some hope for you. In the last Parliament one
of the Reform members had a private member's bill. It
was drawn and debated in the House. I think most
members spoke in favour of the bill. Unfortunately it
was not a votable item. In this session one of the
Bloc members has the bill. This time it was deemed
votable. We will actually be voting on it.
Members of Parliament will have a chance to stand and
decide whether or not to support making tools for
mechanics and other people tax deductible, which
we strongly support.
I thank you for coming today and reminding this
committee of that priority. I think it has been in
front of the committee for a number of years. You
could maybe start heading your stuff “It's about time.
Let's get this show on the road.”
I have no questions for you because I agree with you.
Thank you for coming.
I want to talk a bit with the chartered accountants
institute. You people must only do income taxes for
rich people. You say “Target the middle- and the
high-income people for tax breaks”. I hope I have this
right. You said that low-income Canadians have already
had their tax cuts. I can't believe you are saying
that. Did I hear you right?
Ms. Elaine Sibson: Yes, you did hear us right.
The feeling is that Canada is vastly overtaxed right
now. Our tax rates are the highest of all of the OECD
countries. High tax rates are prohibitive to
investment; they are prohibitive to business growth.
By making tax cuts and directing them at the middle and
upper classes, it allows increased spending, it allows
better growth in the economy, and in effect it rejuvenates
Mr. Peter F. Wilkinson (Director, Government
Affairs, Canadian Institute of Chartered Accountants):
I think it would be fair to say, Mr. Epp, that what we
said was that it was started in the last two budgets
when there were some income tax cuts directed to lower-income
Canadians. All we are saying this time is that
after two years of surpluses and a projection of
surpluses to come, there should be some recognition of
the effort put forward by those in the middle- and
high-income levels, that they should also see some fiscal
dividend, and they have yet to see that.
That is not to say that there shouldn't be further tax
reductions in future years for all Canadians in all
Mr. Ken Epp: I have a quick question for you on
EI. I didn't write down that you mentioned it and I
don't know if you did. Do your clients not say, if you
are making a presentation to the finance committee of
the Government of Canada, to start bringing EI into
line with reality instead of using it as a way of
increasing federal revenue from a fund from which the
government is not warranted to take it? I am sort of
leading the question, and I know that good lawyers
wouldn't do that; they wouldn't lead the witness.
What is your response to the overpayment of EI
Ms. Elaine Sibson: We are looking at the tax
system from a very high level. We are looking at what
is the best move for Canada to promote growth in the
economy and to address the unfairness of the tax
Although we looked at a number of different options
for reducing taxes, we really directed our observations
at the tax system, not at all of the individual
components within the tax system or any particular
interest group, such as RRSP contributions or anything
of that nature.
Mr. Ken Epp: I am surprised because this is a
direct payroll tax, and, as another witness mentioned—I
think it was the Retail Council—payroll taxes kill
jobs. I think that is a given. I am surprised,
representing the group of people that you do, that you
wouldn't come up with that particular one. But that's
okay, you are entitled to bring whatever you see.
I would like to ask a question of the Retail Council
of Canada. Mr. Woolford, you said something to the
effect that you would like to bring EI rates down 30¢.
They are now set at $2.40. That would bring them down
to $2.10. The actuary says $2.05. Why are you so
timid? Why don't you say that they should be set where
they are supposed to be to maintain the level that the
actuary says and that all decent mathematicians,
including myself, have concluded?
Mr. Peter Woolford: We went for the art of the
possible, Mr. Epp. Being a politician, you will
recognize that. Our preference would be to see them
come down to the point where they actually balance the
outflow. That would be, I think, around $1.80 per
hundred, so it is even lower than $2.05.
We opted for a level this year that would balance the
tax increase that is coming on the CPP. That is why we
simply chose the level we did. We felt that, at the
very least, this year the government could afford to
counterbalance the loss in income that Canadians will
experience through the increase in Canada Pension Plan
contributions by means of reducing employment insurance
But we would agree with you fully. We think they are
Mr. Ken Epp: Thank you.
Mr. McGuire, you indicated that depreciation rates for
the railway are too low. What should the depreciation
Mr. Peter McGuire: The figure that was quoted in
the IBI study, which would equate with what the U.S.
receives and what essentially the trucking industry
receives in Canada, would be a 30% rate.
Mr. Ken Epp: Please educate me. I am not certain
about this. Do they have a flat rate depreciation in
the States, whereas ours is on the decreasing balance?
That makes a considerable difference. Am I right?
Mr. Peter McGuire: Let me point out, as I mentioned,
that I am pinch hitting, so I am a little reluctant to
get into very technical stuff, especially with the
chartered accountants here, because it is not my field.
The Canadian CCA rate is a 10% declining balance and
the U.S. has a seven-year property thing, so it is gone
by eight years.
Mr. Ken Epp: All right. We got your message: try
to increase those rates.
Mr. Chairman, my time is up, so I am going to pass it
to other members.
The Chair: Mr. Brison.
Mr. Scott Brison (Kings—Hants, PC): Mr. Chairman,
I would like to thank all of the witnesses for their
I agree with Mr. Epp that the tax deductibility of
mechanics' or technicians' tools is an idea whose time
has come, again, and hopefully this time the
groundswell will be successful.
My question is for the Canadian Institute of Chartered
Accountants. You haven't talked about capital gains
taxes. First, it is great to see a plan that has a mix
of substantive tax reforms and reductions, but capital
gains tax reductions I didn't see as being part of the
Just for your information, to reduce our capital gains
tax rates in Canada to roughly the same rates as those
in the U.S., on the personal side we would be looking
at about $247 million per year. That would be the cost
to the treasury. It is more of a perception of issues
as opposed to reality. I would like your feedback on
Secondly, on the corporate tax side, many countries
are using corporate tax reform as a vehicle to create
economic growth. The Mintz report had some
recommendations that in a very general sense addressed
the distortionary nature of the Canadian corporate tax
code. As well, the report made recommendations
relative to things like the taxation of capital and
profit and sensitive taxes.
Last year, Germany, a social democratic country,
reduced its corporate tax rate. Last year, Germany was
the second highest in the OECD in terms of corporate
tax rates. We were third. This year we are second,
because again, Germany, a social democratic country,
is ahead of us on corporate tax reform.
appreciate your feedback on those issues.
Ms. Elaine Sibson: I will start and then Peter can
finish, because he is more in tune with the work that
On the capital gains tax side, the Canadian Institute
of Chartered Accountants recognizes that there are a
lot of tax reform items that need to be addressed.
Capital gains clearly is one of those items. The
capital gains tax rate in Canada is considerably higher
than in the U.S., our neighbour to the south. It is
partially addressed through our recommendations, in
that at least by reducing the tax rate on middle-income
earners there is some relief associated with capital
gains. But again, it was not an item we
addressed in the overall recommendations that we are
giving to the committee.
On the corporate side, again recognizing that there
needs to be corporate tax reform, the comparative
balance of Canada with other countries on the corporate
side is not as off the scale as it is on the personal
side. We thought personal tax reform had to come
first, together with debt reduction, which would free
up more dollars to make the next set of tax reform
We really look at the recommendations we are
giving as being fairness recommendations that also have
the spinoff of providing benefits to the economy.
Mr. Peter Wilkinson: Mr. Brison, as Elaine said,
we took a look at it and said “Where should we go
first?” Obviously there are lot of places where the
reform of taxes—corporate, personal, excise, and tax on
property—needs to be looked at.
When we look at the comparisons of where we are with
the OECD countries with tax revenues as a percentage of
GDP, our biggest gap is with our biggest trading
partner, the U.S., and that is at the personal income
level. We are saying you should start there
If you look at our recommendations, they say that of
the $10 billion, the majority of the surplus should go
to debt reduction. The reason we say that is because
we are going to spend $43 billion next year on interest
payments and debt servicing. If we were to start to
get a big whack of that paid down, then there would be
money to take a look at a lot of other matters that
need to be addressed inside the tax system, as well as
other priority spending issues that will come up in the
future for the government.
Mr. Scott Brison: Thank you very much.
I have a question for Mayor Murphy. Welcome, Mayor
Murphy. I represent the riding of Kings—Hants, in the
Annapolis Valley of Nova Scotia, so we are not that far
My question relates to the infrastructure program.
Infrastructure programs appear periodically. I have
compared them in the past to candy tosses. There seems
to be a level of uncertainty until the program appears,
and then there is a mad rush to develop programs to fit
the criteria of the infrastructure program. Wouldn't
we be better served by a stable, ongoing funding
program that was not tied to four-year electoral
cycles but instead was related to the real, ongoing
needs of Canadian municipalities, provinces, and
Mr. Brian Murphy: Yes. Infrastructure is
something you have to monitor. You know that
after 20 years or so you have to replace a sidewalk or
a road or a pipe underground. It is not sexy and it is
not politically beneficial sometimes. As I say, there
are no underground ribbon cuttings for the new storm
sewer system. It is not as politically flashy as doing
A more steady replacement of infrastructure would be
better suited to the country.
The Chair: You could always put a ribbon around a
Mr. Brian Murphy: We will do any ribbon cutting
possible to get our share of the surplus.
The Chair: And ribbon is not that expensive.
Mr. Scott Brison: My last question is directed to
the Pension Investment Association of Canada and it
concerns the foreign content rule. With the infusion
of capital into the Canadian equities markets from the
Canada Pension Plan fund and the superannuants pension
plan fund, which is coming, there will be significant
chunks of capital going into the Canadian equities
markets. Shouldn't we be utilizing these infusions as
perfect opportunities to dramatically increase foreign
content levels? Really, they will offset and
ameliorate any negative impacts that could occur.
Mr. Russell Hiscock: Yes. The growth in pension
assets looking forward over the next 15 to 20 years
will be very substantial, and certainly a significant
portion of that growth will be represented by the
Canada Pension Plan. In the current regulatory
environment, that will put enormous stress on all of the
capital markets because it is growing much faster than
the economy in general. On that basis, more
diversification is needed, not only for the Canada
Pension Plan but all trustee assets.
Mr. Scott Brison: Since the Minister of Finance's
decision on bank mergers about a year ago, Canadian
banks have lost about $8 billion of market
capitalization. During the same period, American banks
have appreciated by about 9%. I think if we continue
to make these types of decisions relative to the
Canadian financial services sector, which is a
cornerstone of our equities market...the sooner we can
increase the foreign content limit to enable Canadians
to escape this tyranny the better.
I would support your position to increase the foreign
Mr. Russell Hiscock: We gave a brief on our
rationale with regard to the foreign content limits.
All I can say is I think Canadian banks are a
tremendous bargain today. I think that is all I will
Mr. Scott Brison: Thank you.
The Chair: Mr. Szabo.
Mr. Paul Szabo (Mississauga South, Lib.): The
Canadian Institute of Chartered Accountants, of which I
am a member, represents 65,000 chartered accountants in
Canada. Can you confirm, Elaine or Peter, because this
report isn't dated, who did the work and who approved
this presentation on behalf of the CICA?
Mr. Peter Wilkinson: The author of the report is
Tessa Hebb, a principal in the firm of Hebb, Knight &
Associates. We also worked with Informetrica
here in Ottawa.
The study has been approved by a committee of the
Canadian Institute of Chartered Accountants and was
approved by our governance system generally. The
report was released yesterday morning at 11 a.m. at a
press conference in Ottawa.
Mr. Paul Szabo: The membership at large has not
opined on this or had an opportunity to comment on the
general position, like the Canadian Federation of
Independent Business would do a survey of its members?
Mr. Peter Wilkinson: The Canadian Institute of
Chartered Accountants does not take public policy
positions based on surveys of its membership, Mr.
Szabo. It is consistent with positions we have taken
for the last number of years in Ottawa on prebudget
Mr. Paul Szabo: So if I disagree with any part of
it, I am not going against something I already
Mr. Peter Wilkinson: We won't ask for the
Mr. Paul Szabo: Thank you. I am off the hook.
In 1997 statistics from Revenue Canada showed that 52%
of Canadians made $30,000 a year or less, basically at
the lowest marginal rates. If I take that, then
reducing the middle marginal rate has no impact on
those people. Restoring full indexation might
prospectively have some impact. For instance, the 2%
inflation rate might put another $16 in their pockets
per year. However, the fact that the government
changed the basic personal amount by some $675 more
than offsets the impact of bracket creep since
indexation was taken away. In fact, they are held
As well, the 5% surtax has no impact on small income
That says to me, taken together, that there are 52% of
Canadians making less than $30,000 a year who will not
benefit in any way from the recommendations. I put
that forward because in the report, and in Mr. Ashton's
comments before the press conference yesterday, I think
it was said very clearly.
He said that low-income Canadians got their tax breaks
in the last two budgets and now it is time for upper-income
earners to get theirs in proportion to the tax
burden they pay. That was really important. It is not
in the supplementary report here.
I find there to be somewhat of a contradiction, in the
sense that, first of all, low-income earners just
didn't get it in the last two budgets. There was a
$575 increase in the basic personal amount, plus an
additional $100 in the second budget, which then
extended the whole package to everybody. Therefore,
every Canadian taxpayer in the last two budgets got
something. High-income earners also got the
elimination of the 3% surtax, which was very
substantial and much larger than the adjustments to the
basic personal amounts.
So your assertion that this is fair to the average
Canadian, which is in your press release, doesn't
square. It doesn't square with the true facts.
Let me put it to you in this sense, which I think
Elaine touched on. It has to do with spending in the
economy. Tax breaks really mean that people spend. If
half of Canadians are going to get no benefit from your
recommendations, and they are the lowest income
earners, and half are going to get some benefit, up to
about $600 a year or more based on your figures, who is
really going to spend more and who is going to save
more in terms of tax breaks?
I submit to you that lower-income Canadians are more
likely to spend their tax savings, like Jennifer on her
tools and things like that, than higher-income
Canadians who have retirement plans to top up, etc.
I ask you whether the real intent is to have
tax breaks so that we can stimulate spending, generate
the economy, and grow the pie. Is that not what we
should do? Therefore, the argument would be to better
balance the amount of benefit to all Canadians to get
more Canadians in a position where they can spend.
Secondly, in terms of fairness, is your problem really
with progressivity? You have not really commented on
that. I think it is progressivity, not in terms of the
absolute tax burden.
Ms. Elaine Sibson: Your points are well taken and
you are right. You are bang on. Part of the
recommendation is to revive the economy, to have
dollars go back into the economy. But a big part of
the recommendation and a big part of the $3.5 billion is going
to that 2% tax reduction for middle-income earners.
That represents 7.6 million Canadians. Those are
people who earn between $30,000 and $60,000, which is
not an overly high-income level when they have
families. There are only one million taxpayers who
exceed that $60,000 level. We are directing most of
the benefits from the tax cuts to the middle-income
level to drive the economy and to return to them
something that has been taken from them in the past
through bracket creep.
The 5% elimination is a fairness issue. It is totally
a fairness issue. If you put a tax in place and you
say it is there to get rid of the deficit, then you
should hold to your word and, unless you make a policy
change to change it, you should eliminate it when the
deficit is eliminated.
The adjustment in the personal exemption, the
indexation, affects all taxpayers.
That is really how we have come at it, the three
Mr. Peter Wilkinson: Mr. Szabo, under the latest
Revenue Canada statistics that we used to put this
study together, there are 21 million tax filers in
Canada and somewhere in the neighbourhood of 14 million
are actual taxpayers. If you take a look at what we
are suggesting, 7.6 million of those taxpayers,
something like 50% of the actual taxpayers in the
country, are going to get the 2% reduction in the
marginal rate. Then there are the million who are also
going to get the 5% surtax reduction.
I think on the issue of progressivity you are right,
and that is addressed by actually having to reduce the
rate from 26% to 24%, because it is of course at either
end of that. That is where the people are sort of
If you look at the latter part of our study, there is
a table showing the differences between the effective
and marginal rates and that as one makes the changes
we are suggesting, you don't get those spikes.
Therefore, we are going to bring back more
progressivity into the system.
The other thing I would say is that the modelling
certainly shows that the economic benefits derived from
a $3.5 billion tax cut to the economy are pretty much
the same, generally, no matter where you put them.
There are some differences in the leakage, so you could
assume that people in the lower income groups would
probably spend more of that money on consumption than
people at the higher end, but the economic benefit to
the country is the same for the $3.5 billion, no matter
how you put it, according to the modelling and the
information we have received from Hebb, Knight & Associates and
from Informetrica when doing this study.
I think that then takes you back to the issue of the
5% surtax, and what we are talking about is that there
should be some fairness. That tax was brought in a
number of years ago for a particular reason, but that
reason is gone now, so let's move it on.
On the issue of the people in the middle, earning
between $30,000 and $60,000, they are really paying a
lot of taxes. The bracket creep has really hit them
hard. As you can see from one of the charts in our
study, they are paying something like $1,400 or $1,500
more a year.
We are trying to bring fairness back to the whole
system. I think for those people who actually pay the
taxes in this country, we are hitting almost 50% of
Mr. Paul Szabo: Thank you.
The Chair: Mrs. Redman.
Mrs. Karen Redman (Kitchener Centre, Lib.): I
would like to ask a question of Mayor Murphy. You
reflect a sentiment and an attitude that we heard in
British Columbia and Saskatchewan. There was a lot of
support for the infrastructure program and the fact
that it was one-third, one-third, one-third of shared
dollars going into projects. Some mayors went so far
as to say that if they couldn't be represented at the
table as we hammer this out, we shouldn't go there.
I am hearing in your comments that maybe the projects
that got funded were not at the top of your list. I am
wondering if you would agree with that attitude.
Mr. Brian Murphy: Yes. I think, though, that if
the program starts out as pure infrastructure, with the
three areas, then there won't be any problem. However,
if it includes things like post-secondary education
institutions, things that aren't pipes under the
ground, the pure infrastructure, then there is going to
be some dissatisfaction at the municipal level across
Mrs. Karen Redman: It is interesting that you make
the distinction of pure infrastructure, because you
reference social infrastructure in your presentation.
Minister Bradshaw heard a lot about this issue when
she went across Canada, and you seem really adamant
about the role municipalities should or should not
play in social housing.
I represent a community in southern Ontario,
Kitchener. My municipality, like many across Canada,
has really stepped into the fray. One of the things
Minister Bradshaw shared with the rest of us is
the fact that communities are really putting their
finger on the needs and the solutions, and there isn't
a cookie-cutter solution for this problem across
My question to you is, what is the appropriate
role, if you see one, for your municipality in this
whole issue? I am assuming it is a huge issue in
your province as well.
Mr. Brian Murphy: Very much so. I guess this
isn't the forum to argue about it, because we have some
problems, let's put it that way, with our provincial
government on what we might do with respect to
affordable housing. It is a problem, but housing is a
provincial and partly a federal responsibility in our
jurisdiction. All I said in my comments was that if we
are going to pay one-third for something, it should be
something within our responsibility.
My quick answer to you is that it is a problem. We
are not vested with the jurisdiction to deal with it,
but we are not oblivious to it either. I think the
solution is to do what they do in the United States. I
don't want to sound too much like Jack Layton, but we
should spend some public money on housing. Whether
that money would be federal or provincial, I don't
Mrs. Karen Redman: Government is all about making
choices and balancing needs. If it comes down to
investing in infrastructure or investing—and I am not
saying we are going to—the 1% solution that has been
touted by people who have been studying this issue,
that would mean a $2 billion investment, doubling what
the federal government now spends. What would your
opinion be on that?
Mr. Brian Murphy: There is only one taxpayer. You
have to balance things. I will sit with it and say
that I think you should split it and give us some
infrastructure money. Let's put it that way. You are
Solomon in this case. You have to figure it out. It
is Paul Martin's fault. He created the surplus.
Mrs. Karen Redman: Thank you.
The Chair: That is duly noted, by the way.
Mr. Gary Pillitteri: I will ask a question of Mr.
Walcot. You mentioned there is no need for money
in Canada for businesses and so on, and therefore you
need the opportunity to invest outside Canada.
I represent Niagara Falls, which has seen a building boom
in the last couple of years.
I understand there is quite a lot more to come.
These business people come to me and say “Gary, money
is still not that loose. Money is tight. We are
having a problem finding money.” I am wondering how
appropriate it would be, with such large pension funds
available, for you to want to look outside Canada to
invest when there is a lot of opportunity for
It costs us $42 billion to service the debt in Canada.
If you take a look at the liability within the total
debt and if you take away $130 billion of liability,
which is part of the pension funds, and it leaves
another $450 million, how much of that do the pension
funds own? How much of the Canadian debt do they
Mr. Russell Hiscock: I don't have that statistic
to give you in an absolute fashion, but I can tell you
that a very substantial portion of Canadian government,
federal, provincial, and corporate debt is held by
pension funds and mutual funds, but pension funds would
be the larger slice. Statistically, I don't have
the number at my fingertips.
Mr. Gary Pillitteri: I keep asking the chairman of
the Bank of Canada this question: how much is foreign
debt and how much is national debt? Foreign countries
own about 24% of our national debt. Before we raise
the foreign content rule up from 20%, I am wondering if
it would not be more appropriate to do a study as to
how much we should be holding within the pension funds.
Let's not forget that we are aging and that most of the
liability was incurred by us. Therefore we should be
taking the responsibility to own some of the debt
Besides being a question, it is also a comment. I
look forward to the next time you come before us. I
hope you have that answer for us, as soon as you can
get it, on the national debt, and of course on the
national and provincial debts combined.
Mr. Russell Hiscock: If I understand your
question, it is how much fixed income or debt Canadian
pension funds should hold. Each pension fund develops
an asset allocation mix that is designed to service the
liability structure behind the pension fund, and some
pension funds in Canada may have 60% fixed-income
instruments, some may have 20%, but the fact that
Canada has a certain amount of outstanding debt is an
independent matter. When you say it is held by
Mr. Gary Pillitteri: Foreign investment.
Mr. Russell Hiscock: —by investors outside Canada—
Mr. Gary Pillitteri: They own 24% of our national
Mr. Russell Hiscock: Many Canadian
institutions hold foreign debt as well. It is all part
of the whole asset management process.
Mr. Gary Pillitteri: I am referring to your
statement that there is no need for investment in
Canada and therefore there should be no change or no
Mr. Russell Hiscock: I don't think that was what
Mr. Gary Pillitteri: I just wonder, if we take
more responsibility or percentage of our national debt,
how much is owned by the pension fund. That's all.
Mr. Russell Hiscock: The statement was never made
that there is no need to invest more in Canada. The
statement was made that the investment opportunities
have adequate sources of capital and, looking at a
fixed-income instrument market, Canada now is a net
redeemer of debt. It has been for the last two years,
and that trend is not only at the federal level but at
most provincial levels.
If you move a number of years out in conjunction with
the capital accumulation of the Canada Pension Plan,
which was mentioned, the potential discussion of funding
the federal government pension plan, which is unfunded
at this point in time, and if on the one hand we have
an enormous capital accumulation and on the other hand
the available supply of government debt is going down,
it is clear that there have to be some places that this
money has to find a home.
The Chair: Thank you.
Mr. Gallaway has found a way to ask a question. He is
going to be asking Dr. Bennett's question.
Mr. Roger Gallaway (Sarnia—Lambton, Lib.): I have
Dr. Bennett's question right here. She has written it
out for me, so the delivery will be easy.
The question is for Mr. Smith and Ms. Thomas and it
relates to what she calls the tool tax. Now remember,
she is a doctor. She wants to know, having regard to
the fact that this committee has recommended this on at
least two occasions, why it hasn't happened. Is there,
behind all of this, the thought that some people will
cheat? In other words, will they buy tools for their
Doctors can deduct their tools, but they don't buy a
lot that their friends would need.
Taking into account that background, how would you
suggest that it be created so that it would be fair and
Mr. Martin Smith: With respect to whether you are
going to use it for personal use, I believe the income
tax system is based on the honour system. I believe
that chapter 5.2 deals with musicians. They are
allowed to claim their instruments. How do you know
they are not going home or out on the street corner
making money teaching kids how to play the piano or the
Technicians are basically honourable people.
Personally, I would not go out and buy tools for my
friends. I believe there is a form, T-2200, that is a
declaration. I would be expected to prove it by
providing bills and being honest. Despite what public
opinion is, technicians are honest people. It is not a
“bring money” policy.
Mr. Roger Gallaway: Thank you. I thought that was
an excellent answer, Mr. Smith. I should also say that
I am taking orders for stethoscopes.
The other question is to the Retail Council of Canada.
I think I am the designated questioner on this every
year. I ask it for my neighbour, who is a jeweller. I
wonder if you could describe to us the effect of the
so-called luxury tax on jewellery sales in Canada,
especially in border communities.
Mr. Peter Woolford: The tax collects for the
federal government around $55 million a year. The
effect of the tax is to boost the cost of jewellery to
Canadians by that amount.
What a lot of people forget is that the tax kicks in
at $3, so we are not talking about high-value items.
It kicks in for jewellery starting at $3 and for
watches starting, I believe, at $50. The great
majority of the tax is paid by Canadians buying very
The second piece the tax catches is, typically,
diamond engagement rings for young couples getting
engaged. The image the tax has, of course, is that it
is paid by high rollers who can afford to buy lavish
jewellery for themselves. In fact, a great majority is
covered off by ordinary purchases.
Mr. Brian Rudderham (Controller, Wal-Mart Inc.;
Retail Council of Canada): Mostly
by my daughter.
Mr. Peter Woolford: Mostly by Brian's daughter.
One of the reasons I had Brian come along today is
because he is the chair of our committee, but I believe
Wal-Mart is now the largest vendor of jewellery in
Canada. You will not find a lot of very high-end,
high-fashion, expensive jewellery at Wal-Mart stores,
but they are one of the principal places where Canadians
Did you want to add anything, Brian?
Mr. Brian Rudderham: I think you have covered it.
Again, jewellery tends to be perceived as a luxury
item. Yet in fact there is probably nobody in the
room who doesn't have a piece of jewellery that has
not been affected by the tax. Certainly, not all
jewellery sold is at the high end, as people perceive
it. Look at the higher-end items that are not subject
to luxury taxes: cottages, boats, high-end cars, high-end
sport utility vehicles. You can buy a BMW or a
Mercedes without that luxury tax, but you can't buy a
$24 gold chain for your daughter.
The Chair: Mr. Nystrom.
Hon. Lorne Nystrom (Regina—Qu'Appelle, NDP): I
have a couple of questions and then I have a procedural
question for you, Mr. Chair, at the end.
My first question also concerns the tool tax. I am
one of several members of Parliament with a private
member's bill to allow mechanics to deduct the tax on
their tools. I just wonder if anybody can elaborate a
bit more as to why this has not happened. This
committee, as Mr. Gallaway has said, has made the
recommendation. We have had several private members'
bills on the issue, including mine and others from
other parties, and still there has been no movement.
Is there anything you can tell us from what you picked
up in your lobbying on this issue as to why it hasn't
happened, why Mr. Martin is turning a deaf ear on this
particular idea, which has broad-based support from all
corners of the House?
Mr. Martin Smith: As far as lobbying is concerned,
I am not a lobbyist or a politician. I am strictly a
We don't have a large number of technicians in this
country. There are around 170,000 technicians. We
don't have a unified voice. We don't stand to
complain. The people who have fought on our behalf are
with the local dealers' associations. The Canadian
Automotive Dealers Association has acted on our behalf.
This is the first chance that an actual technician has
been able to come before the government to show a
normal face, the average Canadian face, on this issue.
Why is it being stalled? I can't say. Possibly it is
not a big issue with the government. I don't know. It
is a big issue with us. We just want to be treated
fairly, like other Canadians who can deduct tools or
equipment or anything they require for their jobs.
Mr. Lorne Nystrom: I certainly agree with you.
Do you have any idea how much this provision would
cost when it starts off and on an ongoing basis? Does
anybody have any idea as to what the cost of this would
be in terms of a tax expenditure?
Ms. Jennifer Thomas: I don't know how the
government in the end would decide to set things up,
but I certainly hope it does decide to set something
up. The technicians I have talked with have told
me that it is the number one concern within our trade.
It costs us so much to be able to go to work every day.
The technicians I have spoken to yesterday and
today are saying that any amount would be a help at
this point. We invest so much.
With respect to apprentices, in the first five years
that you are in the trade you are paid as an
apprentice. You are not making as much money and you
are laying out an enormous percentage of your income
just to equip yourself so that you can continue to go
to work every day. During those first five years, I
think we would be looking for a bigger tax break. Once
you are established and once you have a fairly sizeable
tool kit, you have to maintain that expenditure, but it
is a lot less on a yearly basis than what you do in
those first five.
Mr. Lorne Nystrom: I have a question for the
Pension Investment Association of Canada.
I am not sure if you are familiar with a report done
for the Canadian Labour and Market Productivity Centre
by a fellow named Kirk Falconer, entitled
“Awakening the Sleeping Giant”. It talks about the
size of pension funds in the country, that they are now
worth over $500 billion. It is the second largest pool
of capital in this country, after the banks. These
funds in 1998 were now some 75 times larger than they
were in the mid-1960s. I don't know whether you are
familiar with the study or whether you would endorse
the general direction of the study.
The other question would be, would you be in favour of
establishing a pension regime in the rest of the
country similar to that which Quebec has, which is la
Caisse de dépôt et de placement?
Mr. Russell Hiscock: With regard to the report, I
think you held up a newspaper clipping. Both Don and I
were interviewed as part of that report. It deals with
some of the issues related to pension fund investment
in the very small business sector. We discussed some
of the impediments that exist today.
You are asking if we are supportive of it. I don't
think any specific recommendations were made with
regard to legislation, but we certainly think it is a
very good report and there is a lot of very useful
information that policymakers should pay attention to.
We would certainly be supportive of the conclusions
that were drawn.
One of the themes that we as an association have been
working on in the last number of years is to try to
work with the federal Department of Finance to find out
how much investment is going into the small business
sector and how that can be increased. But prudency is
important as well.
The second question, I'm sorry, I have forgotten it.
Mr. Lorne Nystrom: The second question was about
la Caisse de dépôt et de placement in the province of
Quebec. Would you be in favour of a similar type of
organization for pension funds in the rest of the
country? Would that be a wise move?
Mr. Russell Hiscock: The caisse de dépôt is an
organization that was established to manage a number of
pension funds and indeed other asset pools within the
province of Quebec, but the largest single fund that is
managed by the caisse is the assets underlying the QPP,
the Quebec Pension Plan, which is very analogous to the
Canada Pension Plan and the CPP investment board, which
has recently been established. It seems to me that the
CPP is proceeding on that asset-based route, which the
QPP did from day one.
Mr. Lorne Nystrom: Yes, 30-odd years ago.
Mr. Russell Hiscock: Yes. Have I answered the
Mr. Lorne Nystrom: Yes, thank you.
The Chair: Is there anything else?
Mr. Lorne Nystrom: No. I have a procedural
question, but I will ask it after we finish.
The Chair: On behalf of the committee, I would
like to thank you very much. As you know, as we travel
across the country we benefit from input from Canadians
from coast to coast to coast, and today you certainly
added value once again to the debate.
The challenge we face is that most people who appear
before our committee make a very strong case for the
issue they represent, which makes our job a lot harder.
Essentially, we are driven by the ultimate goal of
improving the standard of living for Canadians.
Whether you talk about infrastructure, mechanics'
tools, or any other issue, we view those things through that
prism and we ensure that the views, expressed so
eloquently by all of you, find their way into our
report. Ultimately, as I said earlier, the
recommendations we make to the Minister of Finance
will speak to the reality that Canadians want a higher
standard of living. Quite frankly, this committee
feels that measures must be taken to ensure that
becomes a reality. Thank you very much.
Mr. Lorne Nystrom: My procedural point is, very
simply, the following. I was wondering if you could
give the committee some idea as to when we might get
the first draft of the report. I think it is very
important, Mr. Chair, that we have it several days in
advance so that we have a chance for input on all sides
of the committee, and maybe even block out some extra
time to discuss the report. The objective, of course,
would be to have a unanimous report of all committee
members, if that is possible, in terms of the clout
we can have as a committee after all of the
hearings we have held.
I just want from you, Mr. Chair, an idea of when we
could get a first draft of the report, and I want to
make sure have enough time to go over it and
have some discussion.
The Chair: Yes, we will have enough time. I
hope people will do what was stated earlier, that
you forward the recommendations you would like to
see in the report, as individual members, and do that
as soon as you feel comfortable. They will be given to
the researcher. He will provide us with areas where
there may be consensus, and then we will meet to discuss
the entire report.
Mr. Lorne Nystrom: Do you have any idea when the
first draft will be ready? Our deadline for tabling
the report in the House is December 10, which is only a
week Friday, and I think we would probably want to
The Chair: I will ask the researcher how many
people have actually submitted recommendations. Have
you submitted your recommendations?
Mr. Lorne Nystrom: Not yet, but I just wanted to
know what the process was.
The Chair: That is the process. That has been
Mr. Lorne Nystrom: I am just concerned that we have
enough time to look at the first draft and then make
changes to the draft.
The Chair: Sure. The idea would be for
everybody to submit their ideas and recommendations,
Mr. Scott Brison: Mr. Chair, while it is helpful
for people individually, committee members, to submit
their ideas to the researchers, I think it is also very
important that as a group we allot a significant amount
of time to study the report. We have been harping on
this from the beginning. We need more than two or
three hours; we need a couple of days, with no
witnesses, to sit down and talk about the draft report.
That is very important.
The Chair: I understand that, and we will have
two days to discuss it.
Mr. Scott Brison: All right. Once we have
received the draft report there will be time to review
it individually and then time for discussion.
The Chair: That's right.
Mr. Scott Brison: Thank you.
The Chair: The meeting is adjourned.