:
I call this meeting to order.
This is meeting no. 58 of the Standing Committee on Finance. I want to welcome all of our guests here this morning.
Pursuant to the order of reference of Monday, November 3, 2014, we are continuing with our study of Bill , a second act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures.
We're very pleased to have with us here this morning seven witnesses: the Association of Canadian Port Authorities, President Wendy Zatylny; Canada Without Poverty, Ms. Michèle Biss; the Canadian Cancer Society, Ms. Janice Gray; the Canadian Centre for Policy Alternatives, Mr. David Macdonald; the Canadian Payments Association, Mr. Gerry Gaetz; the Heart and Stroke Foundation of Canada, Mr. Tom McAllister; and from the Library of Parliament, Mr. Mostafa Askari.
Welcome to everyone and thank you all for being with us here this morning. You each have five minutes maximum for your opening statement and then we'll have questions from members.
We'll begin with the Association of Canadian Port Authorities.
:
Thank you, Mr. Chair. Good morning, committee members.
Thank you for the opportunity to speak with you today. As you noted, sir, my name is Wendy Zatylny and I'm the president of the Association of Canadian Port Authorities, representing the 18 port authorities that make up Canada's national ports system.
In the next five minutes of time that I have, I'd like to speak to the valuable role that ports play in facilitating trade and creating jobs in communities across Canada. I'll also speak to changes to the Canada Marine Act, as proposed in division 16 in Bill . Finally, I'd like to take a few minutes to highlight the prebudget recommendations that we submitted to committee members.
First, let me begin by setting some context. Expanded trade agreements between Canada and international partners are making our world smaller. Traditional trade patterns are changing and competition to carry and receive cargo is intensifying. Navigating this new environment effectively is crucial to Canada's economy and our standard of living. Canada's ports are critically important to moving imports and exports around the world while creating jobs across Canada.
With 90% of everything that we buy and sell travelling by ship at some point in its life, maritime trade underpins the global economy. These are the goods that we depend on every day—cars, tools, resources, food, and medicines, to name just a few.
In total a combined 162 billion dollars' worth of goods are shipped or received through Canadian port authorities every year. Our ports handle nearly two-thirds of the country's waterborne cargo, contributing to job creation and economic growth and creating over 250,000 direct and indirect jobs that pay higher than average wages.
The expansion of port-based trade presents a remarkable opportunity for the Canadian economy. Trade agreements with Korea, the European Union, and other ongoing negotiations are creating new opportunities for Canadian businesses in key economic sectors.
However, we'll only be able to capitalize on this expanding global market through strengthened port facilities and improved supply chain efficiencies. It is for these reasons that we welcome the proposed changes to the Canada Marine Act.
The first amendment, respecting the treatment of federal real property, will provide administrative clarification that will enable Canadian port authorities to more effectively manage the potential acquisition of lands that support and fuel continued port growth.
The second amendment will help ensure greater regulatory oversight of port development projects by giving the federal government the ability to enact regulations that will provide additional safety and environmental protection measures. This can be done by referencing existing provincial regulations in areas where the federal government currently does not have jurisdiction.
Taken together, these amendments will further strengthen our ability to respond to current and projected trade needs as well as to create jobs and new economic development opportunities. But more still needs to be done. Canada is currently ranked 14th out of 155 countries when it comes to the quality and efficiency of our logistics infrastructure. In our view, 14th is simply not good enough for a G-7 country.
Our goal should be to break into the World Bank's top 10 in terms of supply chain efficiency and our prebudget submission calls for an intensified partnership with the Government of Canada to do just that. We have proposed working closer with Canada's trade commissioner service to develop a training program to better understand and utilize the value-add that is the national ports system. In a highly competitive and dynamic environment, speed and efficiency of cargo handling is key.
Our port authorities have invested intellectual and financial capital in working with supply chain partners to smooth out inefficiencies and speed cargo to its intended customers. This is an important facet of our global competitive advantage and should be reflected as such. It would also be beneficial to establish an interdepartmental working group to examine and resolve seemingly contradictory regulatory issues and barriers on a continuing basis, and finally we want to narrow the infrastructure gap that is preventing us from fully leveraging the benefits of Canada's trade agenda.
In a study conducted with Transport Canada we determined a $5.3 billion funding gap exists in the amount of funds required to address both current and prospective port infrastructure needs. While port authorities are adept at creating multi-partner funding models, federal funding is nonetheless a critical component in ensuring many projects of strategic and national importance are able to proceed. While the Building Canada fund was helpful, a gap still exists. The time is now to pair Canada's 21st century trade agenda with 21st century transportation efficiencies. Our proposals will help position Canada as the world leader in transportation logistics.
Thank you again for the opportunity to speak with you today, and I look forward to your questions.
:
Good morning. Thank you for this opportunity and for inviting Canada Without Poverty to appear at these very important hearings.
I would like to provide some context as to why I am speaking on behalf of Canada Without Poverty today. CWP is a federally incorporated charitable organization dedicated to the elimination of poverty in Canada. Since our inception in 1971 as the National Anti-Poverty Organization we have been governed and guided by people with a direct, lived experience of poverty, whether in childhood or as adults.
Our constituents, our directors, and our supporters have all informed us that clauses 172 and 173 of Bill are of grave concern to them.
Our first concern is with respect to the role of the provinces. Clauses 172 and 173 of Bill erode a key national standard. They open the door for provinces to impose a minimum residency requirement before refugees can apply for social assistance, without any penalty on that province's CST payment.
The government has suggested that this is being done at the behest of the provinces, but quite frankly we know this to be false. For example, an Ontario government spokesperson told a reporter that they did not want the provisions in clauses 172 and 173 and were concerned that “a waiting period could impact people with legitimate refugee claims who are truly in need” and that these concerns had been communicated to the federal government.
The government has also suggested that this arrangement would allow the provinces more flexibility in the administration of social assistance. The erosion of a national standard that protects the basic needs of a vulnerable group is unnecessary to grant the provinces flexibility. Provincial governments currently have the ability to administer social assistance in whatever way they see fit, as long as it remains available to vulnerable groups. It is our view that the government is hiding behind the provinces. What is in fact going on here is that the federal government is offering a financial incentive to provinces as a means of having provinces implement the government's ideologically driven policies towards refugees.
Our second concern is with the impact these clauses will have on a particularly vulnerable group. I encourage the members of this committee to stand in the shoes of a refugee.
Imagine you are a woman who has left her home in Africa—say, for example, in Sudan—after enduring persecution in the form of physical violence because of a perceived political affiliation. Imagine that you arrive in Canada, a baby in tow, your friends and family thousands of kilometres away. You make your refugee claim, and then what? You're suffering trauma. You're afraid. You're alone. You know little about Canadian society. You have no means to access basic necessities: food, housing, personal necessities. How are you expected to survive?
Women, children, and men who have sought the safety of a stable democracy will be forced to rely on already overburdened social services, such as emergency shelters, food banks, and churches, and will be forced to live on the street, all of which is equally if not more costly to provinces and municipalities. The provisions in this bill are overreaching and do not distinguish between non-legitimate refugee claims and refugees who are fleeing real persecution, like the woman I just mentioned.
Lastly and most importantly, if adopted, these provisions will contravene Canada's international human rights obligation to refrain from taking retrogressive measures. In other words, it is a violation of international human rights law for Canada to undermine the social protections that guarantee human rights. In this case, access for refugees is currently protected. By passing these provisions and taking away that standard, the federal government is permitting provinces to undermine that standard and deny social assistance on a discriminatory basis.
For these reasons we ask the committee to recommend that clauses 172 and 173 be struck from Bill .
Canada Without Poverty is not alone in this call. I have with me an open letter signed by a coalition of 160 organizations that also assert that these provisions are a violation of human rights and must not be passed. I have attached this letter to my written comments.
I encourage members to reflect on how history will see this moment. Canadians pride themselves on our international reputation as a safe haven for refugees who are fleeing persecution, a community of compassionate individuals.
Let's not change that.
Thank you.
:
Thank you, Mr. Chair and honourable members.
I'm pleased to be here on behalf of the Canadian Cancer Society to support Bill as it relates to the amendment that would allow us the use of computers to conduct and manage our lotteries.
Prior to joining the Canadian Cancer Society four years ago, I managed provincial lotteries for over 20 years at both the Ontario Lottery and Gaming Corporation and British Columbia Lottery Corporation. As I learned about the charitable lottery sector, I was shocked by the restrictions that disallowed the use of computers, based on a clause written in 1984. No one at that time could have predicted the pervasive use of computers in our everyday life and the extent to which we would rely on the efficiency and speed of doing business via the Internet.
Allowing charitable organizations to use computers and other modern technologies in their lottery sales, operations and draws, would increase our overall revenue dedicated to our mission work and improve customer service to the level our supporters expect. Every dollar saved on administrative costs is a dollar that goes to our life-saving work. We take very seriously our responsibility to keep our administrative costs at a minimum and manage our operations as efficiently as possible, so that we can distribute the maximum revenue to our various missions.
We also want to make sure that everything is as easy as possible for our customers, while minimizing our costs. I manage the lottery day to day, and it's very difficult to explain to a customer why we are unable to send their ticket or tax receipt by email, even though they ask us to. The time-consuming, costly and paper-heavy processes we currently use make our organizations look outdated, not environmentally conscious, and inefficient overall. This does not instill confidence in our supporters and will make acquiring new, younger customers even more difficult in the future.
The changes proposed would impact our current process at numerous points in the transaction with the customer. Depending on the charity, the savings could be well over $100,000 for only one lottery on even simply one of these touch points. Add in the cost for postage, labour, paper, etc., and the impact is significant. If you extrapolate that over all of the lotteries in the country, the savings are in the millions each year. This is money that could be used to enhance the lives of Canadians, with no cost to government or the taxpayer.
The net revenue from Canadian Cancer Society's lottery program goes directly to fund life-saving research into over 200 types of cancer. Since 2001, we have raised over $65 million for cancer research from our lotteries. Today, we can only afford to fund about 25% of the approved research grants that are submitted. Every dollar saved through improved efficiencies means more funds for cancer research and moves us closer to a potential cure.
We would also like to express our thanks to the federal government for including this amendment in the budget, and ask that you please support the amendment and help us move into the next generation of charitable lotteries and the associated additional funds for the benefit of all Canadians.
Mr. Chair and honourable members, thank you for allowing me a platform to present on behalf of the Canadian charitable lottery sector. I'm happy to answer any questions you might have.
:
Thank you, Mr. Chair, and I thank the members for the invitation to speak before the finance committee today.
I would like to confine my remarks to the small business job credit as proposed in the omnibus bill under discussion. I'm concerned that the credit is not optimally structured for the desired result. If the desired result is incentivizing small business toward job creation, the credit could actually be much better designed, and I'd like to suggest some changes to that credit today that would make it much more targeted so that hopefully it would have a much greater impact.
As presently constructed, the cost per job of this credit is quite high. In 2016 the cost per job created will be $500,000 per job created. In 2015 it will be much higher, at $1.4 million per job created, as estimated using the multipliers from Finance Canada and the Parliamentary Budget Office.
The cost per job is high for three reasons. First, the incentives are too small. Second, the targeting is poor, and third, there is a harsh cut-off at $15,000 in EI contributions for businesses. These can be modified to better target the small business job credit such that it does create jobs.
First of all, the incentive for job creation is vanishingly small. Imagine a store, if you will, at your local mall that is running a winter promotion. If you spend $100 on a winter coat, they will give you 39¢ back. This is an incredibly small incentive. It is an incentive but an incredibly small one. The reason it is so small, despite the fact the program is expensive at $550 million over two years, is that the deadweight loss in the program is incredibly large. The credit is received by all small businesses, irrespective of action. Whether they hire employees, fire employees, or remain at the same employment levels, they still get the credit.
A better approach, I would suggest to members, is that businesses only receive this credit if their EI deductions and therefore their payroll is increased by some figure, say more than 2% from the previous year. That is to say businesses would explicitly have to take action to receive the credit. That is to say they would have to increase their payrolls, hire more people, or pay their present employees more. This could significantly increase the value of the benefit from 39¢ per $100 to probably in the neighbourhood of $20 to $30 per $100, creating a much greater incentive.
The program, as it's currently stated, is poorly targeted, because it is essentially targeted to microbusinesses. Three out of the four top categories of microbusinesses are small offices of professionals, that is to say consultants, other professionals, and doctors' offices, which have limited capacity for more hiring. These one-person firms would receive value under this credit that they would likely not use for new hiring.
My third concern is that there is a cliff created for this credit at $15,000 of EI premiums paid. This, I would argue, is going to have unintended consequences. For instance, if a business has EI deductions of $15,000 in 2015, they would get the maximum credit of $2,200. However, if their have EI deductions of $15,001 in 2015, they will get nothing. So one additional $1 completely eliminates the credit.
This creates unintended consequences. If a business is below the cap, there is an incentive to remain below the cap to retain the credit and not expand. If the business is slightly above the cap, there is a strong incentive to in fact reduce payroll, either by laying employees off, cutting their hours, or cutting their pay in order to get slightly below the cap in order to retain the benefits of the program. This effect is actually seen in the small business tax rate for small corporations in Canada, where you see a higher blip of companies declaring slightly under the line in order to maintain the tax benefits.
I would argue that a better approach instead of a cliff at $15,000 is to have a phase-out, which is common in most benefit programs of this type.
I'd also encourage members to better target this program toward areas of higher unemployment, for instance, toward youth, who have higher unemployment, as well as to encourage businesses to hire employees not exclusively at minimum wage, which is likely what would happen in this case, but instead at those making more than minimum wage.
On a final point, I'd like to remind members that given the economic multipliers, as published by Finance Canada in 2009, support for the unemployed actually has three to four times more job creation impact than decreasing EI premium changes, which is what's proposed for this job credit. Only two in five unemployed Canadians today can access the EI system and retain its benefits, so I would argue that a better use of this money could well be to standardize and decrease the minimum number of hours worked to access the EI system.
Thank you very much, members, for your attention. I look forward to your questions.
I'm Gerry Gaetz, the president and CEO. I want to thank the committee for inviting the Canadian Payments Association to contribute to your study of Bill .
I have a very brief opening statement to situate the Canadian Payments Association and to explain the relevance and importance of division 26 contained in the bill.
The Canadian Payments Association is Canada's main financial market infrastructure. We design and operate Canada's national clearing and settlement systems for payments. Financial institutions rely on our systems to settle with finality their daily payment clearing balances on the books of the Bank of Canada. Canadians, businesses, governments, and financial institutions count on our systems to clear and settle payments, such as cheques, preauthorized debits, direct deposits, bill payments, payments made at point of sale, and wire payments. Last year, the CPA cleared and settled $44 trillion, or about $170 billion on average every business day.
We're guided by public policy objectives of safety and soundness, efficiency, and the interests of users, including Canadians. These objectives are enshrined in the Canadian Payments Act. Financial institutions that are engaged in the business of payments are required to be members of the Canadian Payments Association, and they completely fund our operations. Today our membership stands at 113 financial institutions.
Our focus at the CPA is ensuring that these financial claims between member institutions can be settled efficiently and without risk. In addition to technical infrastructure, we develop rules and standards that, together with the Canadian Payments Act, provide a strong legal framework for the payments of today and tomorrow.
Bill introduces important amendments to the Canadian Payments Act and the Payment Clearing and Settlement Act. Amendments to the Canadian Payments Act in particular bring about changes to the governance of the CPA. We believe that they will enhance the governance, overall functioning, and accountability of the CPA, thereby helping us to better fulfill our forward-looking strategy for the continued modernization of what is already a strong financial system and payment system in Canada.
The CPA has been fully engaged in the process leading up to the drafting and tabling of the amendments. Let me highlight a few of the key changes. A smaller, more independent board of directors will support a broader, more inclusive representation of the payments ecosystem. The Minister of Finance will retain the power to disapprove rules made by the CPA, but the bylaw approval process has been made more efficient with a new category of administrative bylaws that require only CPA board approval rather than the current practice of requiring ministerial approval. As well, the act will contain a new accountability framework, including a five-year corporate plan approved by the Minister of Finance, an annual report, and directive power for the minister.
Since the first reading of Bill in the House on October 23, we've had a chance to examine the provisions in more detail and discuss next steps with the Department of Finance, particularly around the drafting of the regulations. I'd like to highlight a couple of important areas with respect to those regulations.
One area is that we believe the regulations should specify a timely process for the minister's approval of the CPA's annual submission. This is because the CPA operates systems and infrastructure critical to the day-to-day functioning of the financial system.
Finally, under the Canadian Payments Act, the minister has oversight and directive power over the CPA. Under the Payment Clearing and Settlement Act, the governor of the Bank of Canada has oversight over the CPA's systems. Under Bill , this Bank of Canada oversight will be expanded to our second system's infrastructure, if the governor believes this to be in the public interest. It will be important to ensure that the potential duplication and oversight does not impede our ability to review rules and make changes required to respond to the interests of users.
CPA is working diligently to ensure a speedy and smooth transition to this new governance framework, which we believe will help the CPA be more effective overall in achieving its mandate.
Thank you very much.
Mr. Chair, and honourable members, I am pleased to be here on behalf of the Heart and Stroke Foundation to address the positive developments in Bill , particularly regarding the amendment to the Criminal Code that will now allow charities to use a computer to help run their lotteries. As you may be aware, the Heart and Stroke Foundation is a national volunteer-based charity supported by more than 140,000 volunteers and close to two million donors. The aim of the Heart and Stroke Foundation is to create healthy lives free of heart disease and stroke. We can do this through the advancement of research and the promotion of healthy living. Our lottery programs are a vital source of revenue to achieve our mission goals.
Despite an impressive 75% reduction in the death rate from heart disease and stroke over the last 60 years since our inception, every seven minutes, someone in Canada dies from one of these diseases. This is unacceptable, given that it amounts to 66,000 deaths each year. Heart disease and stroke are the leading cause of hospitalization and the second leading cause of death in Canada.
Major charities—we ourselves, the Canadian Cancer Society whom you've just heard from, and others such as SickKids Foundation, the Children's Hospital of Eastern Ontario, and the London Health Sciences—had requested that Budget 2014 include an amendment to paragraph 207(4)(c) of the Criminal Code of Canada. Through our collective efforts and discussions with parliamentarians and officials, this change was included in the budget and announced in February 2014.
We are extremely pleased to see this inclusion in the BIA because of the positive benefits it brings to our ability to raise needed funds to advance our mission. We are very pleased that the amendment will now allow charitable organizations to use computers and other modern technologies in their lottery sales and operations as well as in draws.
The provincial gaming organizations have always been able to use computers and online technologies to run their lotteries. Conversely, because of an outdated Criminal Code restriction, until now charities had to rely on costly, labour-intensive, manual processes. This has come at the cost of our ability to efficiently and effectively reach the consumer, whose expectations, which understandably have been established by other industries and the growth of e-commerce, make the charitable sector processes and practices appear to be quite antiquated.
We are confident that the proposed changes will enable the sector to better demonstrate that we operate in the most effective and efficient way possible. The amendment will result, in our estimation, in savings of millions of dollars each year across all Canadian charities that run lotteries, through the ability to transact online and minimize our dependency on printing, mailing, and the associated risks of human error. This is money that can be redirected to the collective mission activities, to the benefit of all Canadians. In our case, it will afford us the potential to invest further in life-saving research and health promotion.
As you know, Canada's charitable sector plays an important role in enhancing Canadians' lives by conducting life-saving research, providing crucial social and community services, and undertaking important initiatives in such areas as health promotion, sports and recreation, and arts and culture. These organizations help Canadians address the numerous health, social, and economic challenges they face on a daily basis. Allowing charitable organizations to make better, more efficient use of their funds is in the best interest of all Canadians.
To this end, it is our hope that the provinces will move to allow this pending federal amendment to be adopted expeditiously. The federal government wants charities to find innovative solutions that will make them more efficient and sustainable. The federal government is also committed to removing any unnecessary red tape or regulations that impede these solutions. Making this amendment provides just such a solution.
By implementing this change, the federal government would significantly enhance Canada's research capacity, make charities more efficient, and encourage and support Canadians in their efforts to become and stay healthy. It will allow charities to conduct business in a manner increasingly expected by consumers; that is, online and in real time.
Mr. Chair, members of this committee, thank you for your time. I look forward to your questions and to the discussion with you in a few minutes.
Thank you.
Good morning, Chair, Vice-Chair, and members of the committee.
[Translation]
Thank you for the invitation to appear before the committee today.
I will make a few brief remarks to set the context for the questions that you may have regarding the small business job credit.
[English]
While PBO shares parliamentarians' concerns with the cost-effectiveness of the small business job credit in improving employment outcomes, I would like to stress the importance of the bigger picture.
This proposal and any proposal that would affect the premium rate paid by employers or employees acts against the legislation that has been established over recent years for the purpose of detaching the EI program from discretionary policy decisions and ensuring that the contributions from workers are used only for expenses of the EI program.
[Translation]
Following a number of interventions in the premium-rate setting process, in 2012, Bill provided for the premium rate to move to a 7-year break-even rate after the account came into balance. The Economic Action Plan Act, No. 2, 2013, Bill , amended the Employment Insurance Act to freeze the EI premium rate at $1.88 in 2014, 2015 and 2016. The policy announcement was accompanied by a report from the chief actuary updating the status of the EI operating account.
[English]
With the data in this report, PBO was able to show that barring a significant unexpected economic decline, a rate of 1.88 in 2015 and 2016 would be a premium rate increase compared to the rates that would have been set prior to Bill , and that it would contribute considerable extra revenue to the budget outlook over the period of 2015-16 to 2016-17.
The PBO reported this in its fall economic and fiscal outlook update on October 25, 2013, and updated it in its October 2014 economic and fiscal update.
[Translation]
The government has never provided an explanation for why the premium rate is set well above the level required to eliminate the surplus in the EI operating account in 2015 and 2016 or why the break-even rate is not set immediately after the account goes into surplus in 2015. This is contrary to the government's stated objective of having a transparent premium-rate setting process.
[English]
It is important to underline that, given the requirement that the premium rate is set to balance the operating account over a seven-year period, any changes to the premium rate now must be offset by a change in the opposite direction later, and any impact that the rate change has on job creation today will be offset in the future. This applies to the small business job credit.
According to the PBO's estimate, this measure has a small temporary impact on the level of employment of 800 jobs in 2016, but this increase will be offset by a slightly higher than required EI premium rate for all employers and employees when the government sets the seven-year break-even rate in 2017 or earlier.
[Translation]
I am pleased to answer any questions you may have on this topic.
Thank you.
Thank you to all of the witnesses for appearing this morning, bright and early. I appreciate your being here.
I'd like to ask, if I could, Mr. Macdonald, first, from the Canadian Centre for Policy Alternatives.... There was a lot of commonality between your presentation and that of Mr. Askari, the assistant parliamentary budget officer, but in a sense he went further. Your point, if I may summarize it, is that the small business job tax credit is inadequate. Its incentives are too small.
You had an alternative, which was to get people to use payroll numbers to administer the program, if we're going to go there, but you said in conclusion that we would have done a lot better in attaining the objective if we used greater support for employment insurance itself. I think you didn't complete that last thought. You didn't have time. Could you elaborate on why you think you'd have more impact with that recommendation than by using the small business job tax credit?
:
Sure. Thank you very much for the question.
The argument to be made for support for unemployed people as opposed to support for decreases in EI premium changes comes from the economic multiplier numbers published by Finance Canada in the 2009 budget. Those Finance Canada numbers were used to estimate the stimulus impact of the measures in 2009-10.
If you compare the impact of spending $1, for instance, on support for low-income individuals versus spending $1 on EI premium changes—or reduction in EI premiums—you'll find that, depending on whether it's year one or year three, or how far out you go, in all cases the impact on spending that dollar on low-income Canadians is much greater than spending it on EI premium decreases. The ratio is about three to four times, depending on which timeframe you're looking at. That's the basis of those comments.
If members are interested in an EI premium change per se, and are not interested necessarily in expanding benefits for unemployed Canadians, the argument that I would make is that the program could be much better designed if instead of providing the incentive to all businesses, it only provided the incentive to businesses that increased their EI contributions from last year. That is to say, they expanded the amount that they paid into EI, which, by implication, means they're expanding their payroll either by hiring people or paying their employees more.
:
Thank you for the question.
I assume that the numbers that Mr. Askari has received from Finance Canada are the accurate ones of businesses that are around the cap. Included is a strong disincentive to go over the cap if you were near the cap. If you're far enough away from the cap, it's probably neither here nor there.
I would encourage the member to take a look at the report that was attached to the tax expenditures and evaluation report that came out this spring that examined small business rates across Canada, both provincially and federally. I think what's quite clear is that the small business rate, which is unrelated to this EI small business job credit.... However, what it does show is that businesses are very willing to change the profits that they declare to get just under the small business line in federal and provincial taxation.
So there's a clear incentive there, and you see a reaction to that incentive for small businesses to declare under $500,000 in profits. I think you'd almost certainly see the same type of reaction to this cliff that would be implemented through the small business job credit, where you would see a bunching of companies that are declaring EI contributions of just under $15,000, and you would see a disproportionate fall on the other side of that cliff that would probably correct itself after another $1,000 or $2,000 in EI contributions.
:
Thank you for the question, sir.
In fact, the intention of that particular amendment is to close the gap. In the current division of power, shipping is a federal responsibility but natural resource extraction, safety and health are provincial responsibilities.
As ports develop certain projects, particularly around natural resource extraction, there is the potential for health and safety and environmental protection requirements that are provincial responsibilities that currently would not apply to a federal entity such as the port authority.
So the intention of the amendment is, in fact, to allow the federal government to create the regulations that would reference provincial regulations and provincial standards, to close that gap. In fact, it's ensuring there is no overlap, but it's, in fact, closing the—
:
The amount is really small.
At the firm level, the maximum that a business can get from this is $2,200. This is a company that would have a payroll of about $600,000 a year. An amount of $2,200 for a firm that has a $600,000 payroll is not really the kind of money that would affect their decision-making process, or hiring or firing decisions.
Also, if you want to hire an employee, with the assumption of a $50,000 salary, that would save the business only about $195, based on this credit. It's not big enough to create any kind of incentive.
:
Thank you very much, Mr. Adler.
I'm going to take the next round as the chair.
I wanted to start off with the Heart and Stroke Foundation and the Canadian Cancer Society. This is more of a comment from me, but you're free to comment in response.
As you know, this committee has done an awful lot of work on charity work, your sector's work, with colleagues like , and former finance minister Jim Flaherty on this issue, so I'm very pleased with what is happening in this budget implementation act. I do have to say, though—and Mr. McAllister, I like your example as well—that your sector is one of the best in terms of adopting ICT. It is. As someone who donates to charities, it is one of the best sectors I can find in terms of the adoption of ICT. I just want to commend your sector for that. I don't know if you have a short comment on that, either one of you, but I just want to commend you for that.
:
Second, I'll address the Canadian Payments Association.
Mr. Gaetz, you said it and you have to actually repeat it. Last year the CPA cleared and settled $44 trillion or $170 billion on average every business day, and you almost said it modestly. That is an astonishing achievement for your model and obviously for your organization.
One clarification in follow-up to the other questions you've had is you pointed out that, at a minimum, two of the member directors should represent member institutions designated as domestic systemically important banks, a category of institution that collectively accounts for over 80% of payment transactions in CPA funding.
So in terms of the voting, just to clarify, the large institution carries the same vote as a smaller institution, but in order to address the systemic issue, two of the directors will be from the larger institutions.
Can you address that issue?
:
With pleasure, Mr. Chair.
As I've said, the port authorities are operating in a very dynamic and changing environment. There are a lot of factors that are affecting the demand on ports, certainly in terms of the trade agreements that are being signed but also with just the changes in global trade flows, with larger ships that will potentially be going through the Panama Canal, for example. As well, simply much larger ships are being put on the lines. The largest ship in the world right now is 18,000 TEUs. It's 33 metres wide and it draws 32 feet.
The ports have to be responding to these changes both in terms of volume and simply in terms of the size of the vessel that is coming in.
Currently, while we are able to meet the demand, ports are nearing capacity. So we start to see issues that occur and bottlenecks that occur if there are any kinds of surges. We saw that during the wintertime but we're also seeing that currently with labour disruptions on the west coast that are rerouting containers to Port Metro Vancouver and Prince Rupert. By virtue of those ports already nearing capacity, they are starting to have difficulty handling the extra load.
Because of these issues there is a tremendous need for additional investment in simple port infrastructure. The $5.3 billion that we identified with Transport Canada was a scan of port needs. That breaks down to about two-thirds for developmental needs and one-third for rehabilitation of existing port infrastructure.
The port of Halifax has some berth facings there that predate the Halifax explosion. It's probably time to change them.
Those are more difficult to develop a business case for. So, again, while the Building Canada fund has been enormously helpful, and we're grateful for it, there are a couple of issues with it. First, the $100-million threshold is extraordinarily high for most ports to achieve, and second, the ratio of funding still creates a big gap that the ports are forced to fill, and they're having difficulty in filling it.
:
Okay, I appreciate that.
I don't have much time left, unfortunately, and I have a lot of questions.
I know this is going to be an ongoing political debate over employment insurance rates, and the politicians are going to say various things. The most reputable organization for a small business in Canada is CFIB, by far. Every political party quotes them with respect to the EI rates, and with respect to credit card rates.
This is what they say. The small business job credit “will result in a 15% net reduction in [EI] premiums paid by small businesses over the next two years”.
“This is a big one”, said Dan Kelly.
This will make it easier to hire new workers or invest in additional training to help entrepreneurs grow their businesses. In fact, CFIB estimates that this credit will create 25,000 person years of employment over the next few years.
I know there are two witnesses on this. But in 30 seconds or a little more, why is CFIB incorrect on this? They've clearly stated their position in support of this policy change.
Mr. Askari or Mr. Macdonald, does anyone want to address this?
Just to follow up on that, I can understand why CFIB would advocate for this. They would advocate for the lowering of EI premiums whatever the reason.
The question I would put is this. The analysis that's been done by CFIB...we asked the federal officials what analysis had been done by the finance department. To be more specific, they said they didn't do analysis on the impact on jobs. I agree with the chair in terms of how CFIB will criticize government policy. They like lower EI rates as a policy. Our question is about the effectiveness. They're targeted, and I think that was to Mr. Macdonald's point that it's poorly targeted and isn't going to get the results that are claimed unless someone can show analysis—proper analysis, not back-of-a-napkin stuff—that it'll actually do what the government claims. The government hasn't bothered to analyze a half-billion-dollar EI program, which causes one concern.
A question to you, Ms. Biss....
First of all, I'm looking at the 160 organizations that have signed onto this, and to your letter opposing this. I have to say it's an impressive list across Canada: multi-faith groups, Christian, Jewish, Muslim, churches of just about every denomination I can think of, anti-poverty groups, health groups, doctors, nurses, front-line women's organizations, women's shelters, French and English, and ethnic groups right across the spectrum. It's unusual for this many groups of this diversity to agree on anything.
My specific question to you is this. A refugee applicant in, say, Ontario—I'm not sure which province you're most familiar with—what would they typically receive in social assistance in a given week? Are you familiar with those numbers? What's being stripped?
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Yes, I can expand a bit on that.
One thing I'd just like to add to your comment is that not only is it interesting the vast number of groups who have signed onto this, it has also been in a very short period of time. Because of the way that the bill has been created, as an omnibus budget bill, those names have been really compiled in, I think, about three or four weeks. That's just something else I'd like to add to that.
In terms of the amount of money that an individual might get from social assistance, including refugees, I will say it's not our area of expertise. We don't deal with individual claimants. But I could say other organizations that we've been working with have expanded on this. For example, for a single person in Ottawa, say, if you're receiving general welfare, I believe that you can receive anywhere between $600 and $650 per month. That includes your housing cost, your food cost, and your personal necessities. We're not talking big numbers here. We're talking enough money to scrap by and pay for your basic necessities.
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No, it can't. Clause 173 looks after that. That's the exception to the minimum residency requirements for Canadian citizens, permanent residents, protected persons who are not permanent residents, within the meaning of subsection 95(2) of the Immigration and Refugee Protection Act, and victims of human trafficking who hold a valid temporary resident permit.
It's more than a little disingenuous when you say that. I just want to correct the record.
Ms. Michèle Biss: Could I speak to that?
Mr. Gerald Keddy: Let me finish. Let's look at what this proposed legislative change does here.
It amends the federal-provincial fiscal arrangements to allow provinces and territories to introduce a minimum period of residency with the exceptions of those individuals whom I already listed. Currently they cannot do that because if they impose minimum residency that's clawed back from their transfer payments. So this gives them the jurisdiction that they already hold without losing any federal transfer payments. This is a correct and proper thing to do. This is not an improper thing to do.
Clauses 172 and 173 amend the legislation, allowing the provinces to put in whatever requirements they wish to put in and at the same time—and I want to say it again—with the exceptions of Canadian citizens, permanent residents, protected persons, refugees, and victims of human trafficking.
What is wrong with this system? You cannot lump them all together. Refugees, people who are victims of human trafficking, asylum claimants—that's not changed.
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One of the impediments to Canadian pension plans playing a bigger role in financing projects in Canada is the size of projects. One of the things your organization could consider is that potentially the federal government could work with municipal governments, and other groups who have infrastructure that needs to be modernized, to bundle projects in similar asset classes.
The point with bond yields being at historic lows, and real interest rates being negative, is that we have a historic opportunity to engage smart money in the long-term investments required to modernize our infrastructure. So I agree broadly, but I'd be interested in perhaps having a meeting sometime to discuss some of those opportunities.
Back to this. Further to Mr. Keddy's questions, and I think he used the term false asylum seekers, some of these people would have children, so even if you had somebody who was pursuing asylum dishonestly, and potentially as an individual abusing the system, would these include a significant number of parents and people with children?
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I dispute that, but anyway....
I'll go to the Canadian Cancer Society and the Heart and Stroke Foundation. It's interesting to look at some of the lotteries we see coming up in local areas. I see a lot of my volunteer firefighters now starting some of these lotteries. It's a tremendous amount of money that they're able to raise, and many people participate.
With respect to that, Mr. McAllister, your analogy of reaching into the drum was also a very good one, because we can imagine how long it would take—about 15 days—and how many people. The chair also talked about the adoption of ICT.
What do you anticipate with this legislative change over the coming years in terms of furthering the reach you're able to get in the ability to raise more money, and with that in mind, what do you anticipate would be some of the risks from controls, because you're going from one environment to another for doing this?
What kinds of control mechanisms do you have in place? Are you able to leverage other organizations for those controls?