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I call this meeting to order.
Welcome to meeting number 144 of the House of Commons Standing Committee on Finance.
Pursuant to the House of Commons order of reference adopted on Wednesday, May 22, 2024 and Standing Order 108(2), the committee is meeting to discuss Bill , an act to implement certain provisions of the budget tabled in Parliament on April 16, 2024.
Before we begin, I'd like to ask all members and other persons participating to consult the cards on the table for guidelines to prevent audio feedback incidents. Please take note of the following preventative measures in place to protect the health and safety of all participants, including the interpreters.
Only use a black, approved earpiece. The former grey earpieces must no longer be used. Keep your earpiece away from all microphones at all times. When you're not using your earpiece, place it face down on the sticker placed on the table for this purpose.
Thank you all for your co-operation.
Today's meeting is taking place in a hybrid format, pursuant to Standing Order 15.1. In accordance with the committee's routine motion concerning connection tests for witnesses, I'm informed that all witnesses have completed the tests required for the connection tests in advance.
I'd like to make a few comments for the benefit of the members and witnesses.
Please wait until I recognize you by name before speaking. For members in the room, please raise your hand if you wish to speak. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can. We appreciate your understanding in this regard.
As a reminder, all comments should be addressed through the chair.
I would now like to welcome our witnesses from the department on parts 1 to 4 of Bill .
Members, before we get to our officials, you received an email from our clerk at 12:16 p.m. yesterday. It was regarding approval of the budget to study the FES bill, Bill , and the ATIP request. I'm just looking around for approval.
Some hon. members: Agreed.
The Chair: That's terrific.
We are now going to get to our officials.
We do have many here. I understand that approximately 75 officials are with us from all of the different departments to address questions on parts 1 to 4 of Bill .
If you are called upon and you do come to the table, I ask that you let everybody know the department that you represent and who you are before answering the members' questions.
I understand there are no opening statements for the first panel, which is the officials in the first hour.
As you know, each party will have up to six minutes to ask questions.
We're starting with MP Chambers for the first six minutes.
Go ahead, please.
:
The intent of the amendments to the Telecommunications Act is to further support consumers in the telecom marketplace.
We have seen over the past year a marked improvement in terms of competition and pricing, notably for mobile pricing. Plans that were available for $70 or $80 a month a couple of years ago are now available in the $30 to $40 range.
People say, “Well, my bill hasn't changed. What's happening here?” The situation there is that they're on an older, legacy plan rather than one of the new plans that are in the marketplace. The provisions are designed to help consumers switch and find the best plan for them. There are three mechanisms that we've identified that can support consumers.
First is having an automatic self-service portal online. This does exist in some contexts, but could be stronger. This will help people find the best plan without necessarily having to be on hold with a customer service agent.
The second is a notification requirement whereby service providers need to provide notifications to their customers of current plans in the marketplace, so they can see what is currently available.
The third item is a prohibition on fees that can be associated with switching, which can then be an impediment or a barrier. Fees associated with switching are not particularly common in the marketplace, but they do exist, hence the goal of that provision.
Each of these three requirements has high-level objectives in the legislation, but we're talking about a technologically driven marketplace. Hence, the CRTC, as the independent regulator, is charged with translating these into the detailed rules that the service providers would need to follow.
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That's very helpful. Thank you.
I hear about the issue of cellphone bills from my constituents all the time. I know we've done a lot of work, and you just spoke about some of it in this legislation, that tries to address that and get the cost of cellphone bills down or at least to level out those costs.
What I hear you saying is that for a lot of Canadians out there, there are potentially cheaper plans available than the ones they are currently on. In other words, they could go to their cellphone provider, like Rogers or Bell or whatever, and contact them. If they do it in the appropriate way, potentially there are a lot of folks who could be signing on to a different plan that would serve their needs but cost them a lot less.
Is that what you're saying?
My staff tease me sometimes. I was on an older plan, and I was paying $50 a month for 10 gigabytes of data last year. This plan is still available—it's still on websites—but I switched to a 20-gigabyte plan for $29 a month. That's 40% cheaper, with twice the data.
I can tell you that Bay Street analysts who advise on investing in the telecom companies are a little nervous about this, because it cuts into the financial profitability and that type of thing, but there really has been a marked improvement. The amendments are designed to help support this.
There are other tools on ISED's website, for instance, that help people compare and shop for plans, so we do encourage consumers to engage in the marketplace.
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The framework is optional, but if credit co‑operatives want to compete with the banks and participate in the open banking system, they will have to comply with the framework, which is under federal jurisdiction.
That means that rather than simply ensuring that a common technical standard is adopted for all financial institutions, the framework will duplicate what already exists in the provinces, in terms of the protections and regulation of relationships between consumers and financial services providers.
During testimony at the Senate committee, we understood that the laws of Quebec and the provinces could continue to apply. However, there then would be duplication. Rather than have a harmonized common standard, as was done in the case of securities, an institution under provincial jurisdiction will have to comply with the province's standards, such as consumer protection standards, and also the federal standards.
For provincial financial institutions, this will double their responsibilities, and that will undermine their competitiveness vis-à-vis the federal financial institutions. Do you agree with that reading?
:
Thank you so much, Mr. Chair.
I want to thank everyone for being here today. It's nice to see all of you. Thank you so much for your hard work.
I'm going to ask questions about the homebuyers' plan, as well as the small business carbon rebate and, if I can get to it, investment tax credits.
There are many in my riding who, like many Canadians, would love to buy their first home, and I think they're very excited to see a number of measures in our budget, in the , to help facilitate that.
Could you respond to how the increase in the RRSP withdrawal limit and the temporary repayment relief—extending when you actually have to start repaying back whatever you withdraw from your RRSP—and some of the other measures will help first-time homebuyers in these challenging times?
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Thank you very much for the question. I am Celia Lourenco, with the health products and food branch of Health Canada.
We're aiming to introduce three new authorities at the level of the act, starting with what we call the “supplementary rules of authority”, which will allow us to have a ministerial order put in place to address situations in which products are being intentionally misused. An example would be the nicotine replacement therapies—the nicotine pouches—that are being used by youth. We want to be able to put in place rules around place of sale and around labelling, packaging, flavours and other aspects that would be appealing to youth. That's one objective.
That particular authority does not at all intend to limit or restrict off-label users or the use of health products in the context of the health care system. It's really for situations in which there's intentional misuse or diversion of a product for use completely outside of health.
The second rule is around exemption: being able to exempt products from the Food and Drugs Act and regulations. A particular example there is that over the last two years we've unfortunately had a shortage of infant formula. Currently, we don't have in our framework the ability to exempt foreign products and foreign formulas that are nutritious but may not completely meet our regulatory requirements around labelling, for example.
We want to be able to bring in those products in order to meet that unmet need but to do that quickly through a ministerial order that would have rules in place around those products.
:
This is our second panel, members.
We have before us today, from Fresh Roots Urban Farm Society, executive director Sherry Stevenson.
Welcome.
From OneClose, we have the chief executive officer, Kevin Murphy.
From the Convenience Industry Council of Canada, we have the president and CEO, Anne Kothawala.
Ms. Kothawala does not have the proper headset and will not be able to participate in our discussion today.
With that, I'm going to ask Sherry Stevenson, from Fresh Roots Urban Farm Society, to please start with her opening statement.
On behalf of Fresh Roots Urban Farm Society, and as a member of the Coalition for Healthy School Food, I want to thank you, Mr. Chair and the committee, for inviting me to speak on the budget implementation act.
I'm joining you today from Vancouver, which is on the ancestral and unceded homelands of the Musqueam, Squamish and Tsleil-Waututh Coast Salish peoples, where Fresh Roots has the privilege to work.
Here at Fresh Roots, we cultivate educational schoolyard farms and leadership programs where youth develop healthy relationships with food, the land and community through growing and sharing food that nourishes them, their communities and the planet.
Fresh Roots practises not only sustainable, community-centred farming but place-based experiential learning and youth empowerment. We provide youth with the space to explore what they are capable of while building deep relationships with food, the land and each other. Through our award-winning leadership pathways program, we provide meaningful mentorship and employment experiences for the young adults we hire as farmers and food educators, as well as prepare youth in our programs to step up into leadership positions.
In collaboration with our partners at Growing Chefs, we developed LunchLAB, an innovative school meal program that serves students barrier-free, nourishing and culturally relevant lunches prepared by students with the mentorship of a team of chefs-in-residence. LunchLAB empowers youth to cook food for themselves and their peers, and it provides opportunities for children to find dignity and belonging in their interactions with food.
Not only are children being provided with a healthy meal, but they are also delving deeper to connect to the land and to learn about where their food comes from and how it's grown, and about cooking, nutrition and trying different foods from around the world. School food programming has been shown to improve academic performance, support positive health outcomes and health equity, and foster connections with culture and traditional food systems, all of which have positive, lifelong impacts.
Working to create a sustainable food system, Fresh Roots is also part of an interconnected network of food growers, educators and community members, including the Coalition for Healthy School Food. The coalition is made up of more than 300 non-profit member organizations from all the provinces and territories.
The coalition has been advocating for federal funding for a cost-shared national school food program, and we are very pleased with its inclusion in the budget. This federal funding will make a huge difference to the programs across the country and is needed as soon as possible. It will help existing programs improve the quality and quantity of the food they serve, as well as allowing new programs and infrastructure to be developed for many more students to participate in school food programs.
The Coalition for Healthy School Food has also been advocating for federal funding to be transferred to the provinces and territories, because each one already has an existing system in place to flow funding to school food providers, along with a mechanism for public accountability. All provinces and territories also have food and nutrition policies that strive to ensure that the food served is as healthy as possible.
Therefore, for the health and well-being of children, youth and families across the country, I urge you to support the budget implementation act so that the national school food program will have the resources it needs to be successful, and initiate these important partnerships between the federal, provincial and territorial governments as soon as possible. Your support will enable the to sign bilateral agreements with and transfer funding to the provinces and territories to support national school food programming, starting in the 2024-25 school year.
This investment will help school food programs stabilize, expand and implement best practices while allowing us to work together to increase access to school meals for many more children. It will support youth to be well-nourished and ready to learn and to have an equal opportunity to succeed. It will help families by reducing grocery bills and by supporting farmers, food systems, jobs and economic growth. This is a generational investment in the future of our children and communities.
Here at Fresh Roots, we look forward to working in collaboration with all levels of government on the national school food program. We look forward to continuing to grow our schoolyard farms, increasing the availability of fresh, local produce and creating inclusive spaces in which children can learn about the food systems we all depend on.
Imagine how wonderful it will be when all children, from coast to coast to coast, can see and taste the food grown on the land outside their classroom window included in their healthy school lunch program. Investing in the national school food program is investing in healthy and resilient students, families, farmers and communities across the country.
Thank you.
:
Thank you, Chair, and good morning, everyone.
Thank you for the invitation to join you today. My name is Kevin Murphy, and I'll be representing OneClose, a pioneering organization committed to making home ownership more accessible and less costly for Canadians.
For context, prior to founding OneClose over five years ago, I was with RBC for 23 years, where I was head of the real estate financing group, supporting all things real estate, including financing for land development, home building and high-rise condominium and apartment construction.
Today, I want to talk to you about a significant issue affecting homebuyers across the country: the interim occupancy challenge and how we can address it to unlock home ownership for many Canadians.
Unlike many of the measures announced in the most recent budget, which have longer-term runways to get implemented and become impactful, what I'm going to talk to you about today does not cost the fiscal framework a single penny and will have a material and immediate impact on housing affordability and supply. Our solution especially benefits those eager to enter the market, including the younger cohort and new Canadians representing first-time homebuyers.
As every committee member knows, the surging cost of housing is a top concern for Canadians. Recent public opinion polls show that nine out of 10 people are worried about overall affordability. Higher home prices and interest rates have made mortgages and rents more expensive, straining the financing of many families.
The core of the problem lies in the fact that Canada simply does not have enough homes. Despite a rapidly growing population, we are not building new homes quickly enough to meet demand. In her fall economic statement, emphasized that building the homes Canada needs will require a great national effort.
While the federal government has made considerable strides, such as removing HST from new rental housing, much more needs to be done. One of the principal impediments to achieving the housing supply challenges before us is access to capital.
One significant but often overlooked issue is the legal hurdle known as the “interim occupancy” period. In Ontario, for instance, homebuyers often find that their condominium unit is ready for occupancy before the entire building is fully completed. During the interim period, buyers are required to move into their units but cannot obtain title, meaning that they cannot secure a mortgage. Instead, they must pay occupancy fees—including interim occupancy interest—on the residual balance owing to the builder, all of which does not contribute toward their mortgage.
Interim occupancy interest is based upon the prevailing Bank of Canada's one-year benchmark mortgage rate, which currently stands around 8%. Consider this for an example. A buyer places a 20% deposit on a $700,000 condominium unit, amounting to $140,000. They then will face $45,000 a year in interim occupancy interest payments to the builder, which they will never recover.
Over the next 24 months in Ontario alone, nearly 60,000 units, representing more than $60 billion in capital, will be stuck in this interim state. For builders, this period means they cannot complete the sale of the condo building or receive full payment for the units, leading to additional interest charges on their construction financing. It's a bottleneck that prevents them from moving on to new projects, further stalling the creation of much-needed new housing supply.
To address this, we propose a straightforward and cost-neutral solution: a minor amendment to the Protection of Residential Mortgages or Hypothecary Insurance Act. By changing the definition of “eligible mortgage loan”, we can allow mortgage financing during the interim occupancy period, backed by title insurance and deposit protection insurance covering 100% of the unit's purchase price. Our proposal enables buyers to obtain mortgage financing during the interim period, allowing them to start building equity immediately.
The risk is entirely mitigated through a title insurance and deposit protection insurance policy underwritten by reputable investment-grade insurers, providing coverage against potential losses incurred by the lender and/or purchaser.
This amendment would benefit not only buyers but also builders, banks and the government. It would free up capital for developers, allowing them to reinvest it in new projects, and materially increase the housing supply. Importantly, it would also do so without any cost to the federal fiscal framework and could potentially save individual home builders an estimated $6.5 billion over the next four years.
This proposal aligns perfectly with the Government of Canada's commitment to implement housing solutions that make more housing available to Canadians, especially young and first-time homebuyers.
As David Wilkes, President and CEO of the Building Industry and Land Development Association, aptly said, “Such a step would represent a significant advancement in our shared goal of making housing more affordable and accessible for Canadians.”
As housing affordability hits its worst levels in four decades, it is time for smart, practical solutions to our most pressing problems. As agreed to by all, these critical concerns require a rethinking of our collective approach. Creating a way out of interim occupancy limbo for tens of thousands of new, young condo owners is a creative and necessary start. By addressing this critical issue, we can take a significant step towards alleviating the housing crisis in Canada.
I thank you, and I'd be pleased to answer any questions that you may have.
:
Thank you, Chair, and thank you to the witnesses for their testimony.
Before I get to my questions today for this panel, I want to highlight a couple of points on our economy. There is some good news, which I think needs to be highlighted.
All of us have journeys here. I was blessed to grow up in northern British Columbia in a great little city called Prince Rupert. I'm very happy to see, with regard to investment in Canada—in British Columbia, in this instance—that AltaGas and Royal Vopak have approved a $1.35-billion terminal that will export energy products such as propane to Asia from British Columbia. Everyone knows that, in the supply chain in Canada, Prince Rupert's port has two to three days of quicker shipping time over to Asia. It's better than Vancouver, Long Beach and Seattle.
I just received the announcement of a huge expansion to the port of Prince Rupert. It includes the Canada Infrastructure Bank providing a $150-million investment, literally, for this city and for the hard-working, middle-class Canadians in Prince Rupert. This is about $2 billion in investments going into the town I was born and raised in. I still have family there and a lot of friends. These are good, middle-class jobs with great benefits and great futures.
It's great to see investments taking place in all parts of Canada. Here in Ontario, there are investments with regard to the auto sector, the nuclear sector and so forth. There's AI in other parts of the country.
In this case, in northern British Columbia, we've seen literally $2 billion in investments announced within the last two weeks. It's in a very crucial part of our country with regard to the supply chain—the CN Rail facility in Prince Rupert, the port and so forth. It's very good news. I was very excited to read it this morning. Again, it demonstrates what I think is the right track that we are on in terms of building a strong economy—not only for today but also for the future and our children. I know many of us here are parents, and that's what's important.
I would like to go to the individual who spoke about the food program they run. This is for the Fresh Roots Urban Farm Society.
I hope I understood your comments correctly, etc. I want to ask about establishing a national food program for folks.
Just how important is it for us to put forward a national school food program for children across the country?
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Thank you for providing that colour.
I believe you're in downtown Toronto, in the wonderful and beautiful riding of Davenport, up in the York region. I have spoken to the officials at York Region who are in charge of the school food program. They are very excited. I don't mean to quote them verbatim, but they are very excited. They have also put in recommendations for the design of the school food program, because they know full well we can't allow kids to go to school hungry. That's just not acceptable in a country like Canada.
This measure really builds upon.... I was just so happy to see this week that the Canada child benefit, which is a tax-free, monthly benefit going to families across the country in every riding, will now increase up to a maximum of $7,800. This is for kids under six, I believe. It will increase to $7,800. Again, this is just part and parcel of the continued building of a foundation to have support for families. It's just wonderful to see.
Obviously, this also builds upon the national early learning and child care program. In the province of Ontario, by September 2025, the aim is to have an average of $10-per-day day care. My family is very blessed. We're benefiting from the 52% reduction in fees. It's literally over $8,000 a year that the residents in my riding and in the day care centre my daughter goes to are benefiting from. Those are real savings for families.
These are real programs making a difference for families, not only in my riding of Vaughan—Woodbridge, but across the country.
Peter, you can let me know when I'm out of time.
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Thank you for your question.
[English]
Yes, this support will help organizations like Fresh Roots Urban Farm Society continue our programming and potentially improve our quality and expand our reach. It will also support other programs to start from scratch and provide that infrastructure that is needed to ensure we have kitchens available and resources available in the schools to provide the school food programs.
Because it goes through the provincial governments, which already have relationships and partnerships with the school boards in their provinces and territories, we really support this method on behalf of the Coalition for Healthy School Food. We think this is an efficient way to start implementing this right away. This is needed as soon as possible to make sure our programs can continue to run and expand to support even more children having access to healthy food, as well as learning.
I talked a bit about the need for food security and to feed children, but here at Fresh Roots, a big part of our mandate is around education. The more the children learn to connect with food and the land their food comes from, the more they appreciate that, are really engaged and develop those life skills around cooking and sharing food.
All of these things are really important. We definitely appreciate your support for this movement.
Thanks, Mr. Murphy, for coming in to speak with us today.
I want to build on some of the questions that have been asked by other members. In a nutshell, a purchaser who's buying a condominium can't take ownership in Ontario until, basically, full completion of a condo building. As a result, they can't get a mortgage until they take title, which doesn't happen until a later point in time. They move into the unit; they pay a “rent”—I use that word in quotations—but they're not paying a mortgage and they're not paying down the principal. They're paying a rent, which costs them more.
Therefore, the purchaser is paying more than they would otherwise, if they had actually owned the unit and had taken title, and the developer is not able...because they haven't been paid by the purchaser for the condo unit. Their money is tied up. Their capital is tied up in that development and not being deployed to build more housing, so it's not allowing more housing to be built during that period. Is that a quick summary of the problem?
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I call the meeting back to order.
This is panel three. We thank you for coming before the finance committee.
We have with us today Professor Vivek Dehejia, associate professor of economics and philosophy at Carleton University. Welcome back to our committee.
Also with us today, from the BC Diabetes Foundation, we have Dr. Tom Elliott joining us, as well as Ms. Ramya Hosak.
From Dow Canada—welcome back—we have the senior adviser for government affairs, W. Scott Thurlow. Welcome.
On that, we're going to have opening statements from the witnesses.
Professor Dehejia, please go ahead for the first five minutes.
:
Thank you, Mr. Chair. It's a real privilege to be back before this committee again.
When I last testified before you, last month, I reiterated my warning that Canada stood at a crossroads in terms of a macroeconomic situation. That is still very much the case now. I won't repeat all of the data points from my last testimony, which are in your records, but I'll summarize them briefly and make a few quick new observations.
First, as I pointed out, both GDP growth per capita and its underlying driver, productivity growth, are languishing in Canada compared to in the U.S. That imperils the well-being of average Canadians now and into the future.
Recall that in 1960, our average income per person in Canada was basically the same as in the U.S. Now we have less than three-quarters the income per person compared to our friends south of the border. That's really quite extraordinary. Unemployment, likewise, is higher in Canada than in the U.S. due to structural factors.
The reason for this divergence, in my judgment, is the outsized role of the government in the economy of Canada, which very much relates to the budget. As I noted, increased government spending is crowding out private investment. The government now accounts for about a quarter of Canada's GDP—again, in a so-called market economy, that is an extraordinary number—while total business and investment are only about 8%. It's no wonder that our economy is so unproductive, given how socialized we've become.
The recent increase in the burden of the capital gains tax—and the carbon tax, for that matter—can only make this worse.
I believe the said recently that the budget paves the way for the Bank of Canada to make interest rate cuts. I must confess that I find this logic hard to understand. We've had an expansionary fiscal deficit, which creates its own inflation pressures. In other words, fiscal policy is inflationary, while the Bank of Canada is trying to contract. It's not a good balance, as Governor Macklem himself has acknowledged, very tactfully saying the government and the bank are rowing in opposite directions. I think it's clear what he means.
This budget, if anything, is going to stay the hand of the Bank of Canada's governing council. I think, rather than having a rate cut next month to provide some relief to many of us labouring under mortgages and debt, they may hold off until July, or perhaps even until the fall, because of the extra inflationary pressure the fiscal deficit is creating.
What should we do? I'll be very brief. As I testified last fall and again earlier this spring, it's really about going back to basics. It's a basic message. The three pillars of good economic policy—fiscal, monetary and good, sound regulation—are all badly in need of repair. We've had a fiscal binge in Canada.
Monetary policy, likewise, has been on a bender. The economy is over-regulated. It's stifling innovation, new business creation and private sector investment, and it's creating high-entry barriers for new entrants.
Our economy is highly concentrated, with a handful of dominant, politically powerful and entrenched incumbent firms in all major sectors. They're in everything from cellphone services to groceries, legacy media, banking and airlines—you name it. It’s no wonder that we pay higher prices and get poorer service than our friends in the U.S. for just about everything, and that we are so unproductive.
Lastly, as I reminded members the last time I was here, it’s worth remembering that at the beginning of the 20th century, Argentina had about the same per capita income as the U.S. and Canada, but after 120 years of economic mismanagement, its income is only about one-third of that of the U.S. Ours, as I said, is now only three-quarters. Unless we mend our ways, we risk going the way of Argentina.
Thank you, Mr. Chair.
:
Good afternoon, committee members. I'm Dr. Tom Elliott, Vancouver-based diabetes specialist, UBC associate professor, and, today, chair of the BC Diabetes Foundation.
Four million Canadians live with diabetes and the dread of death or of disability from heart attack, stroke, blindness or amputation or of passing out with low sugar at meetings like this. Together, we have the means to change those four million lives. Doctors and diabetes educators have the knowledge but lack the tools.
Committee members, give us the tools, and we'll finish the job.
National pharmacare as it stands will cover most diabetes medicines, and this will be a big win, but there is one omission and two “might be” covered items that I'd like to bring to your attention today.
The Ozempic class of diabetic weight-loss drugs has been omitted. Two-thirds of the 7% of Canadians who live with type 2 diabetes are overweight. Overweight is not the cause of diabetes, but it is a contributor. Lifestyle therapy always comes first. Indeed, all overweight type 2 people living with diabetes try to lose weight and keep it off, but most fail.
Ozempic is a difference maker. My clients think of Ozempic as a miraculous therapy, and so do I, yet it has been specifically blacklisted from national pharmacare. I consider this to be driven by a fat-shaming lobby and to be discriminatory and un-Canadian. My obese clients do not choose to be obese. They deserve access to Ozempic, but fewer than half of them can afford it.
Drug costs are a major consideration. In March 2023, the canada.ca website had the following post: “[Canadian] drug prices are now the third highest among the Organisation for Economic Co-operation and Development (OECD) countries—that is about 25% above the OECD median.” Yesterday, I calculated the cost for a month's supply of Ozempic: In Canada, it's $218, while in Germany it is only $82, or almost one-third.
Now let's talk about type 1 diabetes. Three hundred thousand Canadians live with it. Onset is at ages less than 30, and there's no cure yet. It carries a colossal burden, demanding four to five shots of insulin and 10 finger pokes per day, as well as tight regulation of food and exercise.
This brings me to the two devices that might be covered by national pharmacare. These are CGMs, or continuous glucose meters, $8 a day, and an insulin pump, $10 a day. When these two are combined with a smart phone app, they provide for automated insulin delivery, or AID. Both of these devices need pharmacare inclusion. AID is a technological cure for type 1 diabetes. Put simply, AID keeps the sugar steady, just like cruise control keeps the speed steady while driving a car.
I'd now like to invite Ramya Hosak, who lives with type 1 diabetes and sits on the foundation's board with me, to relate her first-hand experience.
Ramya, over to you.
I've lived with type 1 diabetes for 17 years, and, as the founder of Young and T1, I also represent a group of 750 young people living with type 1 diabetes in B.C.
Despite this network, I've struggled physically over the years. In 2016, my husband came home from work to find me unconscious and non-responsive after a night of extreme illness, vomiting, dehydration and progressively increasing blood sugars. I was shocked to wake up in the hospital the next morning and learn that I had almost died.
Before automated insulin delivery, or AID, diabetes was my 24-7 second job. The mental health impact and burden of balancing high and low blood sugars was consuming. I'd become afraid to sleep when I was sick for fear of a repeat incident of 2016.
When my husband started a job with an extended health care plan covering an AID system last year, I got one right away. I couldn't believe the instantaneous difference in my quality of life. For the first time in 17 years I was able to sleep through the night, and I woke up each day with my blood sugar in range. With an A1C now deemed perfect by my endocrinologist, I've stopped worrying about diabetes complications.
My family physician, amazed at my blood work and overall physical health, gave me the go-ahead recently to start trying for my own children. I'm now able to live almost like someone has found a cure for diabetes. To think of having to go off this system should our employment status change is terrifying, and to know that there are others out there who could benefit from this but can't afford it is heartbreaking.
Thank you for your time.
:
Thank you very much, Mr. Chair, and good afternoon.
Through you, I extend my warmest regards to the committee members.
I'm proud to speak to the committee today about Dow Canada. Dow operates two manufacturing facilities, in Fort Saskatchewan and Lacombe County, Alberta. The Alberta sites convert natural gas feedstock into ethane, ethylene and, finally, polyethylene. Our main product in Alberta, polyethylene, is sold to customers across Canada and worldwide to make durable industrial goods, as well as packaging and consumer products. We also supply industry in the region with other petrochemical derivatives.
In Ontario, we have two manufacturing sites—one in Scarborough at West Hill and the other near Sarnia. These facilities produce emulsions and specialty plastic resins, respectively.
On November 29, 2023, Dow's board of directors approved a final investment decision for the world's first net-zero scope 1 and scope 2 emissions ethylene and derivatives complex in Fort Saskatchewan, Alberta. Economically speaking, this brownfield investment enables Dow to deliver two million metric tons per annum of product growth in attractive, high-end markets, effectively tripling our domestic production. At its peak, we expect approximately 7,000 construction jobs to be created. When completed, our site will produce and supply approximately 3.2 metric tons of certified low- to zero-carbon-emissions polyethylene and ethylene derivatives for customers and joint venture partners around the globe. Environmentally speaking, this investment will eliminate a million tonnes of CO2, even with the added growth. We'll do this by converting hydrogen from cracker off-gas as a clean fuel, while capturing and storing the remaining CO2.
To expand on this a bit, the by-product of the cracking process to produce ethylene is a methane-rich off-gas. In the circular hydrogen process, this methane-rich off-gas will be decarbonized and returned to furnaces as clean hydrogen fuel. Associated CO2 is captured, transported and sequestered in deep saline caverns. This investment paves the way for the growth of Dow's entire packaging and specialty plastics portfolio.
The first-mover advantage gives us the ability to lead in capturing the growing demand for low-carbon solutions and puts Dow out front in delivering the first world-scale, fully integrated site with net-zero scope 1 and scope 2 carbon emissions.
The Fort Saskatchewan site is strategically advantaged, because we have access to low-cost ethane; there is existing rail and export infrastructure that will be expanded to support our global sales; we have direct government support from Alberta and Canada, as well as tax credits that are offsetting a portion of our cost of investment; and it is one of the few places in the world where existing infrastructure for carbon transportation and storage exists. This is a key reason that we have a first-mover advantage in low-carbon solutions.
Certainty in the investment environment we are operating in is also a key advantage. As such, I am here today to offer Dow Canada's support for Bill and the clean hydrogen tax credits it creates. The tax credit will go specifically to underwriting the costs of the hydrogen-fuelled ethylene cracker. These tax credits were first announced in a previous budget. Natural Resources Canada released its thoughtful study on the potential of this sector in 2020. It is high time we have this adopted. Similar measures were introduced, debated, adopted, implemented and deployed under the United States Inflation Reduction Act in less than two months.
We urge parliamentarians to pass this bill expeditiously, so the certainty required to rely on these investment tax credits can be built directly into our investment models. These tax credits help support the decarbonization of our operations in Fort Saskatchewan and our return to operation by 2030.
I would like to repeat a key point. These credits will lead to absolute emissions reductions. In order for Canada to succeed in reducing our emissions and meeting our emissions reduction goals, we need to see transformative investments like the one being made by our company. It is through advances in the chemistry sector that these deep emissions reductions will occur.
I welcome any questions the committee members may have.
:
Thank you very much, and thanks to all the panellists for being here.
My question will be for the professor.
You know, the has had a pretty rough ride. He has faced an incredibly bad economy, mostly because of bad decisions he made. However, when someone says the right thing, I think it's important we call it out.
I would like to get your comments, Professor. He recently said this:
One of the fundamental challenges around affordability is they would love to say, well, you know what, we just need more money. Can you send us more benefits or send us an extra thousand dollars a month? As soon as you do that, inflation goes up by exactly that amount.
Clearly, what he's saying there is that the more you spend, the more inflation you get, which undermines the exact policy objectives the governments are trying to achieve.
Would you agree with the here, or do you think he's all wet?
I'll be sharing my time with my honourable colleague.
Thank you to the witnesses for their testimony.
First I'll go to Dow and its representative.
I've had a long-standing relationship with the Chemistry Industry Association of Canada and have advocated for many measures to ensure that we in Canada track the investment that other jurisdictions in the world, be it Argentina, the Caribbean area, the United States or other areas, have been making. It's great to see the announcement by Dow. I've had the pleasure to go to the Alberta industrial heartland and tour some of the facilities there in the last several years. I understand well the Alberta advantage when it comes to feedstock and so forth.
Scott, the ITCs for hydrogen—I think there are five or six ITCs we've introduced—will definitely drive investment and grow our economy and help us decarbonize. How important was that in the investment decision and in the thinking behind Dow's mission of walking towards a net-zero world in 2050, which we are gradually, incrementally doing?
:
Thank you very much for the question. It is an important one.
The long and the short of it is that these investment tax credits are absolutely essential to securing these types of long-term investments.
The last time that I was here, when MP Thompson asked me about that, I said these investments were akin to fishing, in that you use really good bait. It's also akin to farming, in that you have to reap what you sow. You have to put a seed into the ground if you expect to have a long-term investment.
I've found many people have been looking at this debate a bit in the wrong way. They don't see it as a capital expense at time x. You have to look at it as an investment in the future tax base of the country. Quite frankly, this is a generational investment. By making these immediate investments in the short term, you're going to have a 60- to 70-year return.
:
In your opening remarks, you talked about the circular economy. To the Chemistry Industry Association of Canada, that's very important.
You just referenced the generational investments. You can extend that not only to Dow's over $10-billion investment in Alberta, but also to what's happening within the auto sector. It's those generational investments. That's why it's so important to have your eye on the ball and provide leadership. That's what I believe our government is offering.
I want to move to Vivek. Welcome to the panel and our committee. I understand where you're coming from. I'm an economist by training as well. I love economics. I purport myself to be from the Hayek school, if I can say that.
I'm optimistic on Canada. I believe our country is one of the best, if not the best, for many reasons. However, there's always work to do. We don't inhabit this world alone. It's important to recognize that. I think there are millions if not hundreds of millions of people who would come here tomorrow morning if they could because we live in such a blessed country.
When I look at some of the economic metrics, I share your concern about productivity and ensuring that we have a good standard of living—that is, that my kids have a future just as bright as I had growing up. I believe they do. I can look at some of the quantitative metrics. Our deficit-to-GDP is at around 1% versus 7% in the United States, like some of the European countries. There's our debt-to-GDP, looking at that metric on the public side. There are our CPP assets and the way our pension system is funded versus how it's done in the United States. We could have a conversation on that.
There's always work to do. As I referenced earlier, $2 billion of investments were just announced on the west coast in B.C., with a $1.35-billion energy facility, plus the port of Prince Rupert expansion. Some really good things are happening here for the economy, and we can't just gloss over them, because they are great things. Canada is definitely not broken. We're definitely a work in progress, like any other country and any other person would be.
If you could substantively say, “Francesco, these are two or three things that I think you need to take a look at”, I'd love to hear from you on that. I read all the economists on the street. Many of them are my friends in academia and non-academia. I debate with some of them. I agree with some of them. I don't consider myself an ideologue, but I would love to hear what constructively you would have to say.
:
I would say two things. One is that, yes, some of our macroeconomic statistics look good, like debt-to-GDP, relative to those of our peers. The U.S., of course, can run much larger deficits because the U.S. dollar is the de facto global currency. It has what's sometimes called this exorbitant privilege. That's what Charles De Gaulle called it.
Having said that, I would point out that at the beginning of the 20th century, we had the same per capita income as the United States. Now we're at three-quarters. I have to check the exact date, but in the early nineties or mid-eighties, we were at around 90%, and we've been going down. I would ask a question in return. If we're doing so well, why are we falling so far behind the Americans?
Again, I'm not a fan of QE. I think we were storing up major trouble. I said this in the fall of 2021, when most of the commentators were saying, “Hooray. The Bank of Canada is doing the right thing.” I said that if you monetize massive fiscal deficits through QE and have forward guidance and all of the rest of the unconventional policies, you're going to store up an inflation crisis when things get back to normal, and that crisis occurred.
Now we're in another crisis because interest rates are so high and they're going to stay high. My sense is that the bank woke up too late. That's my opinion. That's not the government's fault; I think the bank should have begun tightening policy sooner than it did.
Tell someone who has to refinance their mortgage and maybe sell their home that we're doing well. I'm not saying Canada is broken, but certainly if we compare ourselves to the U.S.—throughout history, our comparison has been to the U.S.—why are we faring so poorly compared to our friends to the south? By the way, this is even when they haven't had the best policy, in my opinion, but productivity growth in the U.S. has been strong.
As you said, you're a follower of Hayek. In the end, it comes down to the supply side. Tinkering with monetary and fiscal policy, regulation and targeted subsidies and picking winners are, in the long run, the wrong way to go. Have sensible, tight and sound money, bring down the deficit, run surpluses to build a stock for the future and pare down excessive regulation. This is standard, textbook Milton Friedman and Hayek stuff.
:
In the absence of having Dr. Elliott confirm this, I just want to point out that the formulary negotiated for pharmacare includes pretty much every insulin required for type 1 diabetes. In fact, it mirrors one hundred per cent of the coverage offered in British Columbia so that every person living with type 1 diabetes will be able to get the insulin they need.
In terms of type 2 diabetes, it covers all of the metformins, including the combination metformins, which you generally have to try and then fail before you go to semaglutide, which is Ozempic. The reason Ozempic is not covered is that it's only available in brand name in this country right now and is extremely expensive. About a third of B.C.'s expenditures on type 2 diabetes are on Ozempic, and there is also a problem right now with off-label use, but it could be covered in the future. We're well aware of the importance of semaglutide. SGLT2 inhibitors and secretagogues are also covered for type 2 diabetes as well as all the devices.
I just want to put on the record that there's a full complement of all of the medications and devices that people with diabetes type 1 and type 2 need in Canada, save for and except Ozempic, which we hope will be covered in the future, as Dr. Elliott pointed out. I just wanted to state that for the record.
:
This is part of the record of the committee. One hundred well-known economists, including some of my own colleagues at Carleton, have signed this letter. That doesn't mean it's correct.
In the world of the textbook, you can shift curves around and get the optimal outcome, but in the real world, it doesn't work that way. There's a whole political economy of taxation, so if you get things wrong, you can add the risk of regulatory capture. There's a large amount of literature on this. I'm not sanguine that just going by textbook economics can fix the problem.
There's a larger problem here. I'll make this very brief. Global warming—climate change, which is real—is a global problem. If Canada, which is not one of the world's major contributors, says we're going to tax ourselves and pollute less, well, guess what. China and India will rub their hands and say, “Super. We can spew more carbon since Canada is doing the work for us.” It makes no sense.
:
There are two things I would add to the record that I think are of value.
The first one is that investments in the decarbonization space are incredibly expensive. On paper, it's very difficult to make them pencil. I believe the allegory Mr. Dehejia used was the textbook: The textbook doesn't always work so perfectly.
These tax credits allow for the chasm between the cost and recovery of those investments to be shrunk considerably, so yes, we are pledging to get to a zero-emissions future by 2050. This is the first example of that in our fleet of facilities. We expect that many of the learnings we will have in Fort Saskatchewan will be replicated in other places around the world, and those tax credits are incredibly important to attracting investment.
It was only when we saw that the tax credits were going to be put in place that our board of directors was able to look at the total value of the investment and say that it was something we were willing to do. I would like to point out that Canada was in deep competition with several other geographies around the world. When you're in competition with those geographies, you won't be able to replicate perfectly what they produce, but you assign a value to all of the different variables, and those variables will help the board of directors make a final decision.
Ms. Hosak, B.C. has had its own pharmacare program since 1974. It was brought in by Dave Barrett's NDP government. I know there still is an income-based deductible for that program.
The national pharmacare program contained in this budget, with $1.5 billion to get it started, will eliminate these costs not only for British Columbians, but for every resident of any province or territory whose provincial government signs up because it will provide first-dollar coverage. That means people will no longer have to pay a deductible, copayment or any other out-of-pocket costs. In other words, you walk into the pharmacy, you hand over your prescription and you walk out and have your diabetes medication or device.
In your view, what impact would such a program have on you and the people you associate with in the group that you represent?
Let's thank our excellent witnesses.
Thank you, Ms. Hosak, for sharing your personal story and for advocating for so many diabetics.
Thank you, Dr. Elliott, for your words and answers to the many questions.
Of course, Professor Dehejia and Mr. Thurlow, welcome back to our committee. Thank you for coming before us and answering the many questions from members.
With that, we are going to suspend.
:
Welcome back, everybody.
This is our fourth panel of witnesses today.
Joining us, from Momentum, we have the executive director, Jeff Loomis. He's online. Welcome.
We have, from the Public Health Agency of Canada, Wendy V. Norman, co-director of the CART contraception research lab and professor at the University of British Columbia. Welcome, Dr. Norman.
From the Union québécoise des microdistilleries, we have Vincent Lambert, general secretary.
Finally, joining us from Wealthsimple, we have the head of government and regulatory relations, Jessica Oliver. Welcome.
Witnesses, you'll have up to five minutes for an opening statement and remarks. Then we'll get to members' questions.
We will start with Momentum and Mr. Jeff Loomis.
:
Thank you, Mr. Chair, for the opportunity to speak with you and the committee today.
Momentum was grateful to see important steps to improve the financial inclusion of Canadians in the budget. Momentum is a community organization in Calgary that connects people living on low incomes to economic opportunity. Our big goal is to create a local economy that works better for everyone. One of our key approaches to working with people living on lower incomes is to help them learn about and save money, or what we call becoming financially empowered.
We worked with a newcomer named Timothy several years ago whose experiences highlight the important changes proposed in the budget. Timothy moved to Canada from Nigeria. After arriving, he struggled in survival jobs and ended up couch surfing. When his mother got sick in Nigeria, he took out a $400 payday loan to cover her medical expenses. By the time he paid off the payday loan, it cost him $2,400. While struggling to pay off his loan, he was connected to Momentum. He participated in a savings program where people earn a match to their savings while they learn about money. Timothy also managed to open an RESP and access the Canada learning bond for his child. Despite the challenges, Timothy became financially empowered. Several policy announcements in the federal budget will create opportunities for more Canadians like Timothy to become financially empowered.
We have specific proposed changes we would like to highlight today. These include the following.
The first key change is automatic enrolment for the Canada learning bond. We know education is a direct gateway for people to earn more money. We also know that children with an education savings account are much more likely to attend some form of post-secondary education. Momentum and community partners in Calgary worked for many years to promote the Canada learning bond to families living on low incomes, which contributed to increased uptake of the CLB from 20% to over 50%. That is one of the highest uptake rates currently for any municipality in Canada.
To reach the other 50% of children who still weren't getting the CLB to access education savings, we completed education savings policy research that recommended greater auto-enrolment. As a result of the change proposed for auto-enrolment, approximately 130,000 children born after 2024 could receive the Canada learning bond every year. At a lifetime value of $2,000 per child, an additional $260 million in annual education savings may go directly to families living on low incomes. However, including the auto-creation of a social insurance number for Canadian children living on lower incomes would make this policy change more effective. Auto-enrolment in the Canada learning bond is an important step towards intergenerational poverty reduction and a huge boost to Canada's future skilled workforce.
The second key change we'd like to highlight is automatic tax filing. Canadians living on lower incomes are the most likely to not file taxes. The expansion towards greater automatic tax filing will support up to two million Canadians in accessing benefits that can help them make ends meet. Since the average low-income tax filer receives an additional $3,500 in annual income from filing their taxes, this change is a key step to reducing poverty in communities across our country.
The third key thing we want to highlight is lowering the criminal rate of interest. We are very pleased to see the government reiterate the commitment made in budget 2023 to lower the criminal rate of interest to a 35% annual rate. The proposal to improve enforcement of the criminal rate of interest in this budget is also a promising step to ensure Canadians are adequately protected from high-cost credit. Based on Timothy's experience with a payday loan, we encourage the government to consider no longer exempting payday loans from the criminal rate of interest.
The fourth key highlight, and the last one we want to feature today, is investment in community financial empowerment supports. Prosper Canada is proposed to receive $60 million over five years to expand community-delivered financial help services to approximately one million lower-income Canadians. This is much-needed financial support, as many community-based, not-for-profit organizations like Momentum that deliver financial empowerment services receive very little government funding for this work. With the rising cost of doing business for non-profits like us, this funding can stabilize existing programs and enable important expansion.
Many Canadians are struggling to make ends meet, especially with the rising cost of living. Those challenges are even more significant for Canadians living on low incomes. At Momentum, we recognize the wisdom that people without an adequate income can't get by and that people without assets can't get ahead. The proposed changes in the budget can help more people get by through better access to benefits via automatic tax filing, and will support Canadian children in getting ahead by improving access to critical education savings.
Thank you so much for the opportunity to share with the committee today.
:
Thank you very much, Mr. Chair and members of the committee, for the opportunity to speak here today.
By way of introduction, I'm a family physician and a professor at the University of British Columbia, and I hold the Public Health Agency of Canada's chair in family planning research. I serve as the external chair for Statistics Canada's sexual and reproductive health advisory committee, and I lead the largest Health Canada sexual and reproductive health fund project to advance equitable access to family planning nationally. I also advise the World Health Organization on sexual and reproductive health and preconception health.
There are two issues I wish to highlight for you here today. First, universal single-payer, first-dollar contraception coverage has been demonstrated around the world and in Canada to be the most cost-effective government investment to lower health system costs and improve health equity and health outcomes. Second, universal access to free contraception to prevent unintended pregnancies will support positive, immediate, lifelong and intergenerational impacts on individuals, their families and society that improve health and equity.
To begin, evidence from health systems around the world has found that universal contraception coverage costs governments less than it costs to manage unintended pregnancies in universal health systems. The cost to provide universal free contraception is always less than the cost to manage pregnancies. In the U.S., after they implemented universal coverage through the Affordable Care Act, they found a savings of $7.09 for every dollar that they invested. Similarly, Public Health England saves nine pounds for every pound invested with universal first-dollar, single-payer coverage for all contraceptive methods. Our analyses in a CIHR-funded study working with the government of B.C. have modelled that within a few years, they will begin saving five dollars every year for every resident of B.C. in health costs because the cost of providing everybody with whatever contraceptive method they require is lower than the current cost to manage unintended pregnancies.
An important factor in contraception is the difference between universal first-dollar coverage and fill-the-gaps coverage. Contraception is a very stigmatized prescription, particularly among equity-deserving populations. Our studies have found that reproductive-age people, particularly women and pregnancy-capable people at the ages of highest fertility, are the least likely in our society to have prescription benefits. Among those few who do have coverage, the primary insurance holder is often a coercive partner or a parent. Many do not have confidential or private access to contraception coverage and would instead forego this opportunity.
Analyses under way by UBC's Dr. Laura Schummers, using the B.C. health administrative and pharmaceutical databases before and after B.C. introduced universal first-dollar, single-payer coverage for contraception last year, found that in addition to nearly 30,000 people who had unintended pregnancies before this policy—many of whom were unable to afford contraception at all—40% of those who obtained a contraceptive in B.C. paid 100% out-of-pocket for that method. Additionally, another 20% were paying copay for the cost.
After B.C. introduced their single-payer plan, we saw a massive shift with a big uptake in contraceptive methods overall, and a shift away from the less effective, less expensive methods towards those that are the most effective in preventing unintended pregnancy. Fewer than 10% of people paid any amount out-of-pocket for the very limited number of contraceptive methods that are not covered under the plan.
In Canada, 40% of pregnancies, or over 160,000 per year, are unintended, and the most common outcome is birth. These unplanned births can have devastating effects as they move forward. All outcomes for unintended pregnancy could have lifelong effects. These intergenerational consequences not only affect the pregnant person and the unplanned child, but also reduce the supports available for other children and extended relatives already in the home. More effective contraceptive methods offer families a better and safer start for planned and spaced children and allow family members to pursue advanced education and workforce opportunities. In contrast, people who are unable to afford contraception demonstrate lower education achievements, lower household income, higher exposure to intimate partner violence and suffer lower chances for their children to have food safety and adequate shelter during their development.
There are very few investments in health with the potential to offer health system savings, improved equity and a healthy quality of life for children and families across Canada. The investment the government is proposing to provide universal single-payer, first-dollar contraception has the potential for intergenerational and society-wide impacts on Canada and all Canadians.
Mr. Chair and distinguished committee members, my name is Vincent Lambert and I am the general secretary of the Union québécoise des microdistilleries, the UQMD.
With over 50 members, the UQMD represents the two permits that regulate distilleries in Quebec: industrial permits and small-scale production permits. UQMD members generate annual sales of spirits in excess of $100 million in the province.
I want to thank you very much for giving me your time and attention today to talk to you about excise duties on Canadian spirits.
I am therefore going to take the time I am allowed to present our proposal, which is based on the introduction of a progressive taxation model and is modelled on best international practices, and is intended to support the sustainable economic development of our local distilleries.
Small and medium enterprises are the essential drivers of our regional economies. They create local pride and play an important role in the economic fabric. However, they are at a disadvantage vis-à-vis the big international corporations because of their modest size and limited resources. Progressive excise duty rates, similar to those applied in the Canadian brewing industry and in several other industries in various countries, would strengthen our Canadian microdistilleries' ability to compete.
In Quebec, approximately 75% of the sale price of a bottle of spirits goes to taxes and markups. This means that when a bottle of spirits with 40% alcohol content sells for $40, less than $10 ends up in the distillery's pocket.
The United States, one of Canada's major competitors in sales of spirits, has reduced its excise duty for small and medium distilleries: excise duties are $0.71 U.S. per litre of absolute alcohol, or about $0.98 Canadian. In Canada, excise duties on spirits are $13.93 per litre of absolute alcohol. Excise duties on a bottle of spirits from Canada amount to about $4, while excise duties on an equivalent American bottle are about $0.29 Canadian. This additional taxation, over 1,300% more, makes our Canadian spirits much less competitive.
Note that the UQMD's proposal applies to distilleries that sell fewer than 100,000 litres of absolute alcohol a year, while the United States applies its excise duty relief to distilleries that sell up to 370,000 litres of absolute alcohol a year.
To summarize, the American government has waived a portion of initial excise revenue in order to reap much greater financial gains, and promote job creation in the long term, in return.
Reducing excise duties would not necessarily result in a net loss of tax revenue. On the contrary, this measure could stimulate economic growth and job creation and thereby increase tax revenue in the long term. Local distilleries will be able to invest in innovation, improvements to their facilities, and expanding their operations, and this would have a multiplier effect for the economy.
The spirits value chain encompasses a host of activities ranging from agriculture to distilling, retail sales, and the tourism associated with the products. Reducing excise duties could generate significant employment-related economic benefits and thereby contribute to strengthening our local communities and families and boosting the economy as a whole.
Numerous countries have successfully adopted tax-based approaches in order to develop their national industrial sectors, as Canada has done in the beer industry. Historic examples show that introducing these kinds of measures has enabled new industries to develop, create jobs and make a significant contribution to the economy, through SMEs. By adapting these strategies to the spirits industry, we could also encourage the emergence of innovative, sustainable local distilleries.
A progressive taxation model compatible with the principles of the World Trade Organization, the WTO, would be a solution. The WTO encourages member states to put in place trade policies that comply with their international commitments while taking into account their national economic and social development goals. The WTO also acknowledges the legitimacy of measures to promote domestic industries, as long as they do not create intentional discrimination or serious distortion of international trade.
In conclusion, this proposal is not simply a tax measure; it is a statement of intent that would reflect a firm commitment to a dynamic industry on the international scene. A reduction in excise duties would offer our enterprises concrete support and thereby create an environment in which smaller distilleries would be able to prosper and make a significant contribution to our economies.
I am therefore asking, distinguished committee members, that you consider this proposal seriously and call on the government to make the necessary changes for the good of our enterprises, our economy, and our local communities.
Thanks again for your attention and I will be pleased to answer your questions.
Thanks to the committee for this invitation.
[English]
My name is Jessica Oliver. I'm head of government and regulatory affairs at Wealthsimple, a financial services company trusted by over three million Canadians, including one in five adults under 40. I'm privileged to work with over 1,000 colleagues across the country.
Our mission is to help Canadians reach their financial goals. We started 10 years ago with a single product and a straightforward regulatory framework. We offered low-cost managed investing, which means clients describe their financial circumstances and goals, and our team manages their investments to achieve those goals.
Over time, we've added other products, including commission-free self-directed investment. We offer fee-optional tax filing that this year was used to “netfile” more than 1.7 million returns, the majority for free. We offer Canada's highest-interest chequing account with no monthly fees or minimum balances. In the last year, our clients have earned more than $100 million in interest in these accounts.
We saw incredible uptake when we launched the first home savings account. From August to December, more than 200,000 Canadians started saving for home ownership with a Wealthsimple FHSA, which is, to our knowledge, more than 30% of all FHSAs. Our total accounts are now over 250,000.
I'm pleased to join you as you consider the budget implementation act. I'd like to touch on the bill's action on consumer-driven banking, financial fees and the Canada learning bond.
The bill lays the legislative foundation for consumer-driven banking, also known as open banking, which will provide a secure and simple way for Canadians to share their financial data between providers, making it easier for them to access and integrate the financial products that suit them best. Here's what that really means. Consumer-driven banking can help a homeowner lower their mortgage rate by proving they have a pension. It can help renters build their credit score by proving they pay on time. It can help newcomers build credit by incorporating financial data from their countries of origin. In fact, the Financial Services Regulatory Authority of Ontario, FSRA, has identified consumer-driven banking as the biggest potential driver of innovation in mortgage brokering. According to StatsCan, Canadian households pay $694 per year for financial services. We believe they deserve lower costs, more convenience, less friction and ultimately more control over their own money.
Consumer-driven banking is one piece of a broader fundamental need to enable competition on a level playing field. Our financial infrastructure lags behind that of all of our G7 peers, and it has for decades. Wealthsimple has been a part of the consultation process and will continue to work with Finance Canada and the FCAC to inform the implementation of open banking and make sure our business is ready for our clients to benefit.
It's also important to acknowledge that open banking is not a silver bullet for the competition problem in Canadian financial services. Financial regulators, both federal and provincial, should be explicitly mandated to deliver competition in their respective industries, just as their counterparts in the U.S., U.K. and Australia are. Financial regulators point to the Competition Bureau, which for all of its good work, does not have the resources or the mandate to take on this role alone. Its advisory recommendations to financial sector regulators are only suggestions and are typically ignored.
With respect to fees, regulators should also take a closer look at where Canadians are being charged fees for financial services without a reasonable connection to the actual cost of the service. Right now, Canadians who move an investment account like a TFSA from one financial institution to another pay up to $250 for the privilege of moving their own money. The actual cost of that transfer, if processed through widely available automated systems, is less than a dollar. There is no justification for that, and it is a transparent attempt to prevent Canadians from making a free choice of their financial provider. The federal budget has committed to working with provinces to tackle junk fees in a range of areas, and in our view, this should be near the top of the list.
Finally, in addition to our products, we established the Wealthsimple Foundation, which increases awareness of and participation in RESPs and the Canada learning bond. We were pleased to see a commitment for the auto-enrolment of eligible children in the Canada learning bond. It's the right thing to do. It means the Wealthsimple Foundation will be in need of a new mission and mandate, and we're thrilled about that opportunity.
To conclude, the measures for consumer-driven banking are welcome, but they are a start, not the end. There is much more to do to create a truly competitive financial services sector, starting from the first principles of how it's regulated and what we want it to deliver for Canadians.
Thank you.
Welcome to all the witnesses.
I'm going to start with you, Dr. Norman. I have a quick follow-up on the previous series of questions.
Thank you for linking in that primary health care is accessed through many providers. Often in this committee I hear the reference that it is simply physician-led, but of course it's not. It's multidisciplinary. Thank you for that.
I want to touch on why it's so important for women to have access to a range of contraceptives.
Could you again, with a little more depth, go into the barriers that women often face in accessing contraception? Why is it so important in this program that we address that and why does it need to be universal?
:
That was very helpful, and I appreciate it.
Just because I know time is so limited, I want to direct the next question to Momentum.
Mr. Loomis, thank you for your opening comments. I appreciate the importance of financial literacy. I saw it repeatedly in my work life. Thank you for highlighting how important Bill is for the most vulnerable families, in many cases, in our communities.
I want to link into, first of all, the importance of automatic tax filing. I think that's incredibly important, and thank you for highlighting it. What an opportunity it is to allow people to access services without penalizing them when, for a variety of reasons, they aren't able to go through that process. It can be very difficult for some to file their income taxes, and of course, that keeps them out of the portal of being able to access much-needed supports.
I want to link the first question to Prosper Canada. How important is it for community groups to become part of supports to protect people from criminal rates of interest?
As you pointed out, the tax rate was established over a century ago, during the prohibition era, when the aim was to discourage alcohol consumption. However, we now have the emergence of local producers who use homegrown produce and have a wealth of know-how, but they are being held back, particularly in comparison with their American competitors from outside Canada.
It would be a good idea to revise the legislation to enable microdistilleries to emerge and to support them and contribute to their viability.
I hope my colleagues are listening to what the industry is requesting and that we will agree on making an amendment to this effect.
We will keep up the fight because we care about you. The contribution you make is significant in all regions and in our economy. Thank you very much.
:
It's a great question, Don.
The statement at UBC was based on about 10 years of research that we'd undertaken in partnership with the Government of B.C. and that was funded by the Canadian Institutes of Health Research. We did due diligence by collecting data from every sector of the province through sexual health surveys and putting them into a complex series of modelling that looked at all of the alternatives for how to support people to reduce the rates of unintended pregnancy.
What we found is that universal coverage of first-dollar for all methods was the most cost-effective way for the Government of B.C. to go about this. We spent two years looking at alternative models, including fill-in-the-gap models and supplementing in different areas, and every time we moved away from universal first-dollar coverage, the rate of unintended pregnancies went up and the government's costs went up.
You asked how that relates to the rest of Canada. We've been working with Statistics Canada and the federal government for about eight years to take what we've learned in B.C.... Looking at the sexual health survey and at all representative parts of the population is what governments need to do to get the data to understand and improve health and equity in sexual and reproductive health.
As you may know, in the 2021 budget, the government funded Statistics Canada to roll out a national sexual health survey that will first field this fall. We will be able to do academic analyses disaggregated by a wide range of equity sectors in the population to answer exactly your question. In the meantime, we can take B.C.'s data and make it analogous to the rest of Canada. It should be relatively reasonable to hold those assumptions.
The difficulty with contraception is that the less you can afford, the less likely you are to avoid an unintended pregnancy. You're more likely to get pregnant with condoms.
When you go to prescription contraception, the baseline is birth control pills. Six to nine people per year using birth control pills, and twice that many if you're a teenager, will become pregnant with an unintended pregnancy. People have a reproductive lifespan of 30 to 35 years, from about age 15 to 45 or 50, and they plan to be pregnant or have a child for maybe a year or two years out of that. For over 30 years, they are using methods with a 6% to 9% failure rate. This is where our unintended pregnancies are coming from.
It's more expensive to use the more effective methods. With a copper IUD, you have a 1% chance per year of getting pregnant. With a hormone-bearing IUD, you have a 0.1% chance—one person per 1,000—per year. These and the small little matchstick devices that can be inserted underneath the arm, a subdermal implant, are the most expensive up front at $300 or $400, but they last for three to five to seven years. Some of the IUDs now last up to 10 years. These methods are more effective than female sterilization, yet they're completely reversible. The month you take it out, you can become pregnant again.
Investing in these upfront methods means a person has to choose between rent and food for the children already in the home or has to put out $300 or $400 to get a five- to seven-year method that's going to be as effective as sterilization but is reversible. That's just not accessible for people, but it's most important.
If governments were providing only IUDs, implants and the most effective contraceptive methods, this would offer the best chance for people to avoid unintended pregnancy. People need a wide range of choices because the context is different in everybody's life. People are able to adjust to different methods as different things are working in their lives. This is why it's important to have the full range.
From a health economic and health system perspective, the better you are able to support somebody to achieve their goal for pregnancy and become pregnant only when they want to and are preparing for it, the better a child will be raised and the better our health system and economy will be. IUDs and implants are what give you that chance.