FINA Committee Report

NDP Supplementary Report to the House of Commons Standing Committee on Finance Pre-Budget 2020 Consultations

The pre-budget consultations held by the Standing Committee on Finance at the House of Commons provided an opportunity to hear from many witnesses and review the submissions regarding concerns that are central to the lives of Canadians. The recommendations made in this report reflect the desire expressed by voters during the last federal election calling on parliamentarians from all parties to work together and cooperate to move our country in a better direction.

Time and again, during the pre-budget consultations, we heard people express many concerns about the economic situation in this country. While we know that almost one in two persons are $200 away from insolvency, New Democrats know that it is essential to focus on social policies that will directly help Canadians make ends meet. 

Many stakeholders maintain that there is an urgent need for immediate action, particularly to protect the environment, to initiate a true reconciliation with Indigenous Peoples, to address the affordable housing crisis, to put in place a fairer and more equitable tax system, to make major investments in public and electric transportation, and for social policies that will help Canadian families.

Environment 

The most important challenge facing our communities is undoubtedly the issue of climate change. In recent years, Canadians have been mobilizing and calling on the government to take concrete actions that meet our international commitments, while allowing us to make a bold shift towards a clean and renewable energy economy.

Many witnesses before the Committee implored the Liberal government to put an end to government subsidies for the fossil fuel industry. Stephen Harper's Conservative government had made a commitment to that effect at the G20 Summit in 2009, just like the Liberal Party of Canada committed to do by 2025 in its 2015 election platform.  Équiterre and Climate Action Network - Réseau action climat (CAN-Rac) Canada are calling on the government to respond to this international commitment by "completing the inventory of subsidies for fossil fuel production and consumption by the end of 2020, and to establish a timetable for phasing out this public support by 2022.”

Équiterre also highlighted the fact that Canada had announced with Argentina in 2018 "that they would jointly lead a peer review to ensure the phase-out of their inefficient fossil fuel subsidies".  The outcome of this review is still pending, while the government continues to provide more than $1 billion per year in subsidies to the fossil fuel industry.

For many, it makes no sense to continue to subsidize this industry, when Canada has committed on many fronts to fighting global warming and reducing its greenhouse gas emissions (GHGs).

For the CAN-Rac, Canada continues to invest in the problem. In fact, according to this network, "from 2012 to 2017, Canada contributed 12 times more investment in oil and gas projects than in projects it classifies as clean technologies. That is $62 billion invested in oil and gas projects, as opposed to $5 billion in clean energy technologies". The CAN-Rac was clear on this point, "Canada must stop financing fossil fuel development abroad through Export Development Canada (EDC)," including for the Trans Mountain oil pipeline extension project.

Coherence in budget choices is fundamental to achieving a sustainable ecological and environmental transition. By spending $4.5 billion to purchase the Trans Mountain Pipeline, and promising funding for its expansion, the government is moving away from its environmental commitments. The Green Budget Coalition stated that "there remains a lack of transparency surrounding the financial aspects of the Trans Mountain extension" and that the government "should not spend any additional funds on this pipeline project.

Considering the numerous testimonies, Canadians expect the federal government to provide leadership and coherence in order to meet its environmental commitments.

Reconciliation with Indigenous Peoples

Reconciliation with Indigenous Peoples is certainly one of the most important issues that all parliamentarians must consider in this 43rd Parliament. The organizations that presented their briefs to the finance committee all stressed the importance of reconciliation as a starting point in addressing the many challenges facing their communities.

In particular, the Assembly of First Nations (AFN) emphasized the urgency of taking action to address the housing crisis in their communities. The AFN recommended that the government "invest $4 billion over five years in First Nations housing.”  The Assembly of First Nations Quebec-Labrador (AFNQL) also made the same point, mentioning the need to develop "a long-term plan, with predictable and stable funding, to build new housing units, to renovate and decontaminate existing units, as well as to develop land servicing in order to address the current backlog and to respond to the growth of households and families in the communities".

With regards to housing, in Quebec alone, there are more than 7000 new units that would have to be added to reach the occupancy rates that we are aware of elsewhere in the province and even in the rest of the country.

Finally, Canadians know that the federal government must do more and take swifter action to address the problems related to the supply of safe and clean drinking water in Indigenous Peoples’ communities. This kind of inequality is unacceptable, this problem requires immediate action. The Green Budget Coalition recommended that the government begin by "investing $361 million per year in ongoing funding for the operation and maintenance of First Nations water infrastructure.”

The Chief of the AFNQL illustrated the extent of this problem in some communities by pointing out that "it is a four-hour drive from here to Northern Quebec. There is a small village of 450 inhabitants. There are sanitary facilities that must be shared by all members of the community because there is no electricity or running water. It's only 45 minutes from Val-d'Or, the nearest town, and six kilometres from the main road."

For the AFNQL it is clear that the federal government must target its efforts and investments in key areas that will directly help these communities. Otherwise, the Chief of the AFNQL believes that the government will find itself "paying more for health care, education and other sectors. In my opinion, it is crucial that housing be considered among the main determinants".

Affordable Housing 

The housing crisis is more topical and urgent than ever and requires vital fiscal measures to address it. This report makes some recommendations to address the critical issue of housing affordability, but it missed important suggestions from many people to help Canadians deal with this problem. The Co-operative housing federation of Canada has issued a call to action: “To solve these housing problems, it is no longer just a matter of discussion; action must be taken.”

The 2016 national census found that Canada has 1.2 million families living in housing that is too expensive, too small, unhealthy or does not meet their needs. Like many stakeholders, the NDP remains concerned about the state of affordable housing in Canada. New Democrats have already proposed multiple solutions to improve housing accessibility and affordability in Canada, including the creation of 500,000 new housing units over the next 10 years.

It is also in the same voice that we encourage the government to support the proposals of organizations such as the Association des groupes de ressources techniques du Québec (AGRTQ), which is calling on the government, among other things, to allocate "$1.7 billion to maintain the existing housing stock in the country and to provide an additional $2 billion per year to build new housing.”

We also understand how co-operative housing is an important pillar for responding to the current crisis in social and community housing. As stated in its brief, the Co-operative Housing Federation of Canada is calling on the government to commit "to the transfer of $50 million in surplus federal land to the co-operative housing sector for the construction of new housing.”

Fair and equitable tax system

In June 2019, the Parliamentary Budget Officer (PBO) conducted a study to identify how much Canada loses in taxes because of loopholes in our tax laws and international taxation. According to these estimates, the Canadian government loses nearly $25 billion a year to certain questionable tax structures.

While this is a concern widely documented by the PBO and the finance committee, government action is slow in coming. Several witnesses told the committee that the government should undertake a comprehensive public review of its tax system, including the elimination of legislative provisions that allow the wealthiest to avoid paying their fair share. The NDP is proud to see that this recommendation was accepted by committee members and we will be watching this review closely.

However, there are a couple of recommendations that have been highlighted during the witness testimonies that require the attention of the Minister of Finance. Many witnesses from all walks of life were keen to hammer home the importance of a fair and equitable tax system, with tax rules that apply fairly to everyone. In particular, witnesses argued in committee that the government should "impose a 3% tax on the Canadian revenues of large international short-term rental platform operators as a corporate tax", as promised by the Liberal Party of Canada in its 2019 election platform, while ensuring that Canadian tax rules apply to all Canadian activities of foreign digital companies as suggested by stakeholders, including the Hotel Association of Canada before the committee.

To make our system fairer and more equitable, the government should also follow the recommendation of Canadians for Tax Fairness to "conduct a comprehensive review and evaluation of Canada's tax information exchange agreements and tax treaties" to ensure that companies or individuals do not take advantage of the inherent benefits of our tax agreements at the expense of the fairness of our tax system.

Several witnesses also stressed to the committee the importance of rigorously and concretely tackling tax havens that undermine the credibility and fairness of our tax system. In particular, we heard from the Confédération des syndicats nationaux who called on the government to "put an end to the possibility for companies to repatriate dividends tax free from tax havens". This recommendation was also supported by a number of witnesses, including Canadians for Tax Fairness, who wanted the government to stop "allowing corporations to transfer profits to their foreign subsidiaries by requiring them to prove the real economic activity of their subsidiaries", in addition to "imposing limits on the interest payments that companies can deduct from their profits, particularly foreign subsidies".

Finally, several organizations told us that the government needs to toughen its approach with regards to fraudsters and accounting firms that develop aggressive tax avoidance strategies.

The NDP also wants to echo the recommendation of Canadians for Tax Fairness by calling on the government to eliminate the stock option deduction. This is a tax measure that overwhelmingly benefits the most fortunate in our society, while the government tries to justify its opposition by citing support for emerging businesses. We believe, like many experts, that the government can help emerging businesses with a number of other tax measures that are much better suited to their reality, without unduly helping the most fortunate to avoid paying their fair share.

The government should also address the problem raised by the Canadian Association of Retired Persons (CARP) concerning the squandering of pension benefits when a company shelters itself from its creditors under the insolvency law. The NDP is calling on pensioners across Canada, and on CARI, to call on the government to protect the pensions of Canadians by amending "the insolvency law to extend the first priority to unfunded pension liabilities".

Public and electric transportation

Accessible, electric public transit remains the backbone of our transition to a clean and renewable energy low-carbon economy. Transportation accounts for almost a quarter of our GHG emissions. It is no surprising that the testimony we heard and the submissions received by the committee reflect the importance of making concrete investments in this area to protect the environment and reduce our carbon footprint.

The Federation of Canadian Municipalities has stressed the importance of federal government involvement in putting in place programs and grants to help municipalities electrify their public transit systems. In particular, the mayors of Canada's municipalities want the government to put in place "a new permanent funding mechanism to support the growth and modernization of public transit systems across Canada. »

Canadian municipalities know that to develop the full potential of their transit system, to electrify it and to maintain it, they need a set of predictable funding tools that allow them to strategically plan the allocation of funds. With this in mind, FCM is calling on the government to "ensure that the new mechanism provides predictable investments, maintain current funding commitments until 2027-2028, and commit now to provide $34 billion over the next decade in equal annual increments of $3.4 billion.

A fund providing predictable funding to municipalities exists already and it allows many communities to meet their regional needs. The Gas Tax Fund (GTF) provides direct, effective and predictable funding for local projects. Last year, when the gas tax transfer was doubled for a one-year period, approximately $2.1 billion was distributed to more than 3,600 communities. The NDP is calling on the government to take up the proposal of Canadian municipalities and "double the gas tax transfer to municipalities" to help municipalities better plan and fund their local projects. 

family support and social policies

Social and progressive policies are at the heart of NDP values and are shared by Canadians. Our social fabric is our strength, both in terms of the well-being of our communities and in adding value to the attractiveness and competitiveness of Canadian businesses.

One of the major needs of families in Canada is child care. According to the OECD, Canadian families spend almost a quarter of their income on child care, much more than comparable countries. In terms of funding, Canada ranks last among Organisation for Economic Co-operation and Development countries, while child care costs continue to rise at a steady pace.

To make affordable, accessible and safe child care a reality for Canadian families, the federal government should build on bilateral agreements with the provinces and territories to gradually increase funding for early child care to at least 1% of GDP.

The Child Care Advocacy Association of Canada and the Canadian Federation of Students recommend that the government "increase its spending on child care by $1 billion per year for 10 years to meet international benchmarks.”

The Canadian Federation of Students has also called for urgent action for mental health supports. The NDP calls on the Minister of Finance to consider this recommendation to "create a mental health component to ensure the ongoing promotion of mental health and the timely treatment of mental illness through a national program, consistent with the principles and criteria of the Canada Health Act".

With respect to the FADOQ Network, stakeholders pointed out to the committee the need for the government to become more financially involved in order to fulfill its duty with respect to health. The NDP recommends that the government take up the FADOQ network's proposal "to index the Canada Health Transfer by $6 annually".

Finally, the Canadian Federation of Students (CFS) maintains that the federal government has an important role to play in the accessibility of post-secondary education. The CFS proposed to the Finance Committee, "to establish permanent transfers to the provinces and territories to eliminate tuition fees", which the NDP fully supports.

Conclusion

In short, although the recommendations contained in the report of the Standing Committee on Finance reflect some of the concerns of Canadians, we believe that many of the proposals and testimony are not reflected in this report. That is why we encourage the government to incorporate the recommendations of the witnesses in the NDP's supplementary report when preparing the 2020 federal budget. These additional recommendations will certainly make it possible to respond better to the concerns expressed by Canadians.

The NDP recognizes that the committee's work was held on the unceded traditional territory of the Algonquin, Haudenosaunee and Anishinabek Peoples.