Proceedings of the Standing Senate Committee on
National Finance
Issue 11 - Evidence - May 6, 2014
OTTAWA, Tuesday, May 6, 2014
The Standing Senate Committee on National Finance met this day, at 2:34 p.m., to study the subject-matter of Bill C-31, An Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures.
Part 1, clauses 33, 38, 39 — Remittance thresholds for employer source deductions
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this afternoon, we will continue our study on the subject-matter of Bill C-31, An Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures.
[English]
We have two witnesses today on two different parts of Bill C-31. We are working hard to get through Bill C-31 and understand the impact that it may have on various groups and organizations before we actually receive the bill itself. We will also be spending some time dealing with the reports of other committees that have looked into different parts of this bill. So far we're still dealing with our portions of the bill, and we're pleased to welcome, from the Canadian Federation of Independent Business, Monique Moreau, Director of National Affairs.
Ms. Moreau will be speaking on Part 1, which we dealt with last week from the government officials' point of view, clauses 33, 38 and 39, which deals with remittance thresholds for employer-sourced deductions. Clause 33 can be found at page 25 of the bill, honourable senators.
We also welcome Mr. Ian Lee, Associate Professor with the Sprott School of Business at Carleton University. Professor Lee will be speaking to Division 21, ``Public Service Labour Relations,'' clauses 308 to 310, at page 201 of the bill.
We began our technical briefing on clause 21 this morning with officials from Treasury Board. Mr. Lee, you may have to bear with us a bit and help us with some of the understanding because we didn't finish all of our preliminary work on that particular division.
Shall we begin with Ms. Moreau?
Monique Moreau, Director, National Affairs, Canadian Federation of Independent Business: Thank you, Mr. Chair.
As many of you know, CFIB is a not-for-profit, non-partisan organization representing more than 109,000 small business owners across Canada who collectively employ more than 1.25 million Canadians and account for $75 billion or nearly half of Canada's GDP. Our members represent all sectors of the economy and are found in every region of the country.
Addressing issues of importance to them can have a wide-spread impact on job creation and the economy. You should have a slide presentation in front of you that I would like to walk you through in the next five minutes.
The CFIB business barometer is a tool that shows how the non-stock market economy is doing. The April barometer on slide 3 shows that small business confidence warmed noticeably last month. The index is a point and a half higher this month, rising to 65.7, its best result since November. We normally see an index level of between 65 and 70 when the economy is growing at its potential. So far business operating conditions in 2014 have been stable, but not overly robust. We are seeing improvements in the Prairie provinces, but only 37 per cent of business owners see their business as being in good shape, one of the lowest readings we have had since mid-2010, so the economy is still showing some sluggishness.
To help us get through this sluggish economy, we believe governments need to address the issues of greatest concern to small businesses so that they can focus their attention on hiring staff and growing business, thereby growing the economy. As you can see on slide 4, high priority issues for small business owners include the total tax burden and impact of government regulations and paper burden on their business.
Paying and filing payroll taxes is a significant barrier to the growth of small business. In fact, just to begin to understand the amount of red tape involved in remitting payroll taxes — that is, CPP and EI — a small business owner must first parse through this 61-page document produced by CRA.
I note for honourable senators that this is the English version only. This document outlines, among other obligations, how often a small business owner must remit their payroll taxes to the CRA. This frequency is dependent upon the size of the payroll. The bigger the payroll, the more frequently you have to remit.
Further complicating this issue is when a business grows and changes thresholds, often without notice to the business owner.
We know that government regulations, such as payroll remittance thresholds, are a concern for small business owners, but they also have a broader impact, an expensive one. Every year, as part of our annual Red Tape Awareness Week, CFIB sheds light on the red tape produced by all levels of government, which topped out at nearly $31 billion in 2012, as demonstrated on slide 5. How much is $31 billion? It's the annual food bill for 4.1 million households. It would more than cover the GST revenues for one year. It would pay for total EI premiums for one and a half years. Senators, red tape is expensive.
Slide 6 gets into some of the most burdensome federal regulations that contribute to this $31 billion cost of red tape. The top three most burdensome regulations are those that require remittance to the Canada Revenue Agency. Sixty-six per cent of our small business owners indicated to us that the most burdensome regulation is GST/HST. Following closely behind, 63 per cent of respondents indicated that the remittance of payroll taxes — that is, EI and CPP — is the next most burdensome tax to remit. This was followed by 59 per cent of respondents who indicated that income taxes, both personal and corporate, are the most burdensome taxes to remit.
As you can see on the chart, many other federal regulations follow, including the record of employment and surveys from Statistics Canada, although our research show that the burden presented by these regulations has diminished over time since 2005 and 2008.
It is based on this research and the impact of red tape on our economy that the CFIB strongly supports initiatives that reduce red tape, in a tangible way, for Canadian small business owners, including increasing the payroll remittance thresholds for small businesses. Remitting less frequently to the CRA means they can get on with the running of their business.
So the data speaks for itself. Reducing the red tape burden on small businesses in Canada will not only save business owners time and money, but also, ultimately, it will save the government money. CFIB fully supports increasing the payroll tax remittance thresholds for small business owners, allowing them to remit less frequently.
We also encourage the government to continue to consider other ways to reduce red tape and paper burden, including: using legislation; implementing the one-for-one rule, which means that, for every regulation the government introduces, it must remove one of equal administrative burden; and using the small business lens to ensure that when government is developing new regulations, it keeps the impact on small business in mind.
Thank you very much, Mr. Chair, and I look forward to your questions.
The Chair: Thank you. Just before we go to Mr. Lee, Ms. Moreau, you used the terms ``burdensome'' and ``red tape.'' Under ``burdensome'' were taxes, actual employee taxes, EI, et cetera.
Ms. Moreau: Yes.
The Chair: You don't consider that red tape. The red tape is how frequently they have to be remitted and all of the paperwork that has to be done. The tax itself you're not including in red tape?
Ms. Moreau: We are not including it in red tape, although our members will tell you that they do find increasing payroll taxes to have an impact on their business. I'm speaking to the red tape involved in filing the remittance to CRA.
The Chair: I just wanted to clarify your submission in that regard.
Ms. Moreau: Certainly.
The Chair: The remittance, of course, is the most important aspect we're dealing with this in this legislation.
Ms. Moreau: In this part, correct.
The Chair: Do you support the legislation as it appears?
Ms. Moreau: Yes, we do. The legislation is increasing the threshold significantly. These thresholds have not been updated to keep pace with inflation, which is what this part of the bill is doing. We support any effort to reduce the amount of times that a business owner has to produce the paperwork required to file their taxes.
The Chair: Was this government initiative a result of consultation with your organization?
Ms. Moreau: Yes, it was. It formed a significant part of our pre-lobbying and pre-budget efforts from the last budget.
The Chair: This is exactly what you asked for?
Ms. Moreau: We didn't ask for specific numbers. We tend to leave that up to the regulator, who knows best. For us, it was an important point that they consider updating the thresholds, which they have done.
The Chair: Thank you.
Senator Callbeck: You represent 109,000 small- and medium-sized businesses across Canada. Has that figure gone up or down very much in the last five years?
Ms. Moreau: The last five years I can't speak to precisely, but we have grown by about 1,000 members a year for the last few years.
Senator Callbeck: You're continually going up?
Ms. Moreau: We're trying.
Senator Callbeck: On slide 5, the cost of regulation to Canadian businesses has gone down and the number of businesses has gone up. In other words, is it the changes or the reduction of red tape that has done that?
Ms. Moreau: It has, yes. We think some of this is probably related to government's effort to go electronic in certain areas, asking business owners to undertake fewer incidents of dealing with government; but, as you can see, $31 billion is still a significant number. We're working on decreasing that number every year. As you see, it took quite some time, from 2005 to 2012, for it to come down not a significant amount, so we're encouraging government to continue looking at these issues.
Senator Callbeck: You're happy with this legislation?
Ms. Moreau: With the part we're speaking to, yes, very much.
Senator Neufeld: Can you tell me how you arrived at the $30.9 billion in 2012 in your chart? How did you arrive at that number?
Ms. Moreau: Senator, that chart comes from our last red tape report, Canada's Red Tape Report, which I can make available to the committee if there's interest. It's a calculation based on our own survey research combined with Statistics Canada data, based on the number of times an hour spent interacting with government. It's government at all levels and then the cost to a business owner in spending those hours. It's a complex formula available to you in the report I can certainly provide. That's how we arrived at that number.
Senator Neufeld: I just want to relate that, for my own province, when I participated in government there, Premier Campbell appointed a minister responsible for removing needless regulation. Each ministry had to count, by number, every piece of legislation, not just the whole legislation but every section, every part of it. The same with regulations. Within three years, we had reduced it by 35 per cent. When I left there, they wanted one for one. That meant, if you were a minister and wanted to bring in a new regulation or piece of legislation, you had to find some place where you would take something out.
Have you experienced that in any other province other than British Columbia?
Ms. Moreau: British Columbia is certainly a leader. In fact, to our delight, the minister was called the minister of deregulation, which we took as more than a symbolic gesture. As the senator has described, there was a very concrete count involved. It is an initiative we are encouraging the federal government to consider as well.
Nova Scotia also undertook a similar attempt to understand the burden on business owners. In their case, I believe, they had individuals filling out the forms. They counted the number of hours required to fill out every government form that exists and took that total number of hours, and that's the count they were using.
British Columbia has certainly been a leader on this issue.
Senator Neufeld: It certainly has helped the small businesses in British Columbia. In fact, the tax burden is almost zero, too.
Ms. Moreau: I can't speak to the particular tax burden in that province, but we know that simply counting and establishing a benchmark for red tape is a critical way to look at reducing it. That's why we're asking the government to do that with legislation and also to use things like the one-for-one rule, piloted in British Columbia, to actually reduce the number of regulations that impact small business owners. We know that small business owners are their own accountants, lawyers and CEOs, in many cases, so any attempt that we can make to facilitate the burden that they're encountering when they play all those roles in their small business is one that we support.
Senator Neufeld: I just wanted to bring to the attention of the committee that these things are possible if there is the political will to actually do it.
The Chair: Thank you; it's very helpful that we had that.
Senator Neufeld: It's something that we should all keep in mind; plus, I don't mind bragging about my province.
The Chair: Several senators enjoy bragging about their provinces, but I don't see them coming forward on this initiative, at least not yet. That's very helpful.
In fact, one regulation off for each new one imposed is something that you mentioned, Ms. Moreau, in your submission.
Ms. Moreau: Correct, and it's one that we support. It's one way to remove the regulatory burden, not just an equal one-for-one but a regulation of equal administrative burden. If the one you're taking off is only one regulation but you're going to replace it with another single regulation that has many requirements in it, then that doesn't count.
Senator Neufeld: It takes a huge amount of work and a serious look at things to be able to accomplish that. It's not an easy thing: ``We've got this thing on Friday and on Monday we've got it done.''
The Chair: One of the comparisons that Ms. Moreau made is that the $31 billion is more than the GST; that's a significant number.
Ms. Moreau: Yes, it is. It would cover GST revenues for one year, the annual food bill for 4.1 million households in Canada, and the total EI premiums for a year and a half. That puts it in perspective.
The Chair: There's the incentive, even if it is difficult.
Senator Neufeld: I'll go to your slide 6, the most burdensome federal regulations. I see ``Selling to government (procurement)'' at 9 per cent. That's not usually what I hear from small business. In fact, lots of small businesses say they won't even bid on some federal or even some provincial contracts just because they're so burdensome. They're such a burden to do. Is that what you find? Why would I find that at just 9 per cent? Is it because they just slough it off?
Ms. Moreau: It is precisely for the reasons you mentioned in that very few businesses sell to government. On the broad scope of the 8,000 businesses that responded to this survey, the top three or four tax-related remittances I mentioned were more significant to them than the process of selling to government precisely because so few of them undertake it. It is an issue we hear about from our membership. A small proportion of our membership attempt to and are successful at selling to government. It's extraordinarily complicated and takes a long time to get paid. It's a very bureaucratic process. We have research that we could provide to the committee if there is interest.
Senator Neufeld: On the GST and HST, in your experience, do small businesses find it difficult, such as in British Columbia, to remit both provincial sales tax and federal sales tax as compared to just doing the one harmonized sales tax? What do they tell you?
Ms. Moreau: We have heard from our members that the HST presents its own bucket of problems, on implementation especially. In British Columbia there was a reversal, which brought further complications.
From the straight red tape perspective, remitting to one government is often the easiest. However, some provinces have arrangements where you pay everything to the CRA and they send it over, but that's not the case across the country. Certainly, paying once is easier.
Senator Neufeld: Thank you.
The Chair: Let's go to Professor Lee to learn about the proposed amendments to the Public Service Labour Relations Act.
Ian Lee, Associate Professor, Sprott School of Business, Carleton University, as an individual: Thank you, honourable senators of the distinguished Standing Senate Committee on National Finance. I want to disclose that I come here as a friend of the Senate. I'm one of the rare people who support the Senate. I have published op-eds on this publicly, although I should note that I'm also tenured, so I can say that and not really care if people don't like me for doing it. That's the beauty of being tenured.
Before discussing the changes in the budget bill, I want to provide some disclosures because I think they're important. I don't consult any corporation or government or industry association or union or NGO or political party or person directly or indirectly. I don't belong to any political party or donate monies to a political party. I am a paid up member of the Carleton Faculty Association, which is a legally certified union under Ontario law. I wrote my 850- page PhD thesis on the origins, growth and decline of state postal functions 1765 to 1981, with the final third of the thesis analyzing the origins, introduction and evolution of collective bargaining in the public service when it was introduced by then Prime Minister Pearson in 1967.
I've published several articles in the Carleton University annual publication, McGill-Queens University Press: How Ottawa Spends, which included the Liberal government downsizing in the public service in the mid- to-late 1990s; a separate article on the Conservative government downsizing in the public service two years ago; and an article will come out this year about the first five years of the PBO. I am finishing a monograph for the Macdonald-Laurier Institute think-tank imminently on the policy options facing the Government of Canada concerning Canada Post.
I have published over 20 op-eds in The Globe & Mail, the National Post, the Financial Post and the Ottawa Citizen on various public policy issues. I believe Canadians have the right to unionize, and that decision has been supported by the Supreme Court of Canada. In other words, I do not believe in right-to-work laws.
Finally, I should disclose that my late father was a very distinguished, I thought, public servant, first as an RCAF fighter pilot and later as a member of the Department of National Defence, serving 40 years in the public service of Canada.
I want to give a preamble before I go into the issues, a broad statement before I get into the specifics.
During the past 40 years, unionization in the private sector in Canada has declined to about 16 per cent and 7 per cent in the U.S., as an aside. By contrast, unionization in the public sector has increased dramatically to approximately 75 per cent. That's across Canada, federal, provincial and municipal.
In the private sector, checks and balances for unions can impose economic pains on companies and management; and the company can impose economic pain on the workers. In short, the power balance is approximately symmetrical, to use the technical phrase in the labour relations literature. Much more importantly, no private firm has a monopoly of goods or services. In other words, if General Motors is on strike and stops producing cars, I can purchase a car from Honda or Ford or any other automotive manufacturer. They do not have a monopoly.
In the public sector, the situation is reversed. For power, I argue, although I'm sure the unions may disagree with me and that's their choice, the situation is reversed for power is asymmetrical, with unions being able to impose — as I have argued and am arguing in an op-ed I am writing, soon to be published — higher political costs on political masters, called cabinet ministers, in the court of public opinion. Even more importantly, government possesses what the very famous scholar Max Weber called 100 years ago the legitimate monopoly of coercion. In plain English, there is only one DFAIT and only one CRA, which is probably a good thing as I can't imagine having to deal with three of them. In other words, we don't have alternatives. Every government department is a monopoly in its domain.
Consequently, I argue that while public servants were treated much less well than private employees from 1867 until collective bargaining in 1967, over the following 40 years up to the present it tipped the other way so that now today the empirical data is very clear, in my judgment. I have reviewed the various studies on this, including the PBO study. Public servants at the federal level in Canada today are paid more on average and have better benefits and better pensions than private counterparts.
I want to emphasize that I do not blame the public sector unions. I blame weak Treasury Board ministers over the past 40 years for granting benefits that should not have been granted. That's not the union's fault; that was a failure of political leadership.
The amendments in last year's budget implementation bill and this year's budget implementation bill as they pertain to this issue of the public service are going some way, albeit not far enough yet, toward rebalancing the imbalance in power between any elected government and the public sector unions.
However, more needs to be done. If one believes as I do that public servants provide very important essential services — and as a professor I include myself as a public servant, and we have the right to strike — then those public servants providing essential services, which is all of us at the federal, provincial and municipal levels, should be designated essential. If there are positions that are truly not essential, then the government should be examining eliminating those jobs. My vision of the public service is that those activities are important, valuable and essential, such as teaching or DFAIT or Industry Canada and so forth.
Turning finally to the specifics in this particular part of the bill, it's my judgment that these clauses are clarifying and tightening the changes introduced and adopted by Parliament in last year's budget bill. These remaining amendments really deal with transitional issues relating to the Government of Canada's introduction of the right to designate workers and remove that shared authority from the unions.
I will stop there because I want to remain within my five minutes. Thank you.
The Chair: Thank you very much.
There is another section here. Do you have any comment on clause 308, which relates to changes that were made last year to the human rights legislation, taking discrimination out of human rights and moving it into —
Mr. Lee: I'm sorry, I didn't read it. I apologize. I wasn't aware that you wanted me to speak on that.
The Chair: That's the other part of this.
Mr. Lee: I'm sorry. I missed that then. That's my fault.
The Chair: That's fine. The right being designated is certainly —
Mr. Lee: It is critical.
The Chair: — the second aspect of this Division 21.
Mr. Lee: Right.
The Chair: I appreciate your comment on this, but our general concern is that we're passing legislation and then a year later we're correcting that legislation again, and then a year later, all under budget implementation. You would think we would get this all right at one time. We understand what we're trying to achieve and write the correct legislation, but there seems to be a rush in some of this that results in us having to correct it in coming years.
Mr. Lee: I'm certainly not here to defend the government. They can speak for themselves. I can tell you, having studied public sector collective bargaining since my masters, so about the last 35 years, that it has become more and more complex. Decisions and precedents set by various tribunals have modified the laws over the years. There are different bargaining units.
It was a mess. It was a dog's breakfast. Perhaps it should have been slowed down and all the changes should have been done. That's for you to determine, I suppose.
As I said, my interpretation of these changes is that the government is trying to streamline the changes and create one set of rules applicable to everybody in the public service. At the same time — I think this is unstated, but this is my interpretation — they're trying to rebalance the imbalance in power that has emerged incrementally over the past 40 years because of what I characterize as the asymmetrical imbalance because unions can inflict a lot of pain on the minister of the day and government of the day, whether it be a Liberal or Conservative government, through strikes in the court of public opinion.
Very quickly, I did my very first television interview in 1990. I had just finished my thesis, and Canada Post went on strike. I was a brand-new, fresh professor, and CBC producers chased me. I didn't even know them. I had never been on television. They said, ``You have to be on tonight to speak to Barbara Frum on ``The Journal.'' That was the first time I ever was on television, talking to Barbara Frum about the post office strike of 1990. That was a very long and painful strike, followed immediately by the PSAC strike.
What I am getting at is that in one sense I do agree with the unions that this is going to diminish their power, I would say properly and appropriately so, because government is not like a private company; it represent all of us as citizens.
The Chair: Are you able to provide us with any comparisons between Canada and some of our other well-known friends, the U.K. or United States, in terms of this type of —
Mr. Lee: If you mean at this moment, no. I'm very able to do empirical research, and I could get that to the committee in a quite reasonable period of time. I undertake comparative research regularly between the U.S., Canada and U.K. I don't really look at other jurisdictions. They're of less interest to me, because those are English common- law countries.
The Chair: It is the ``reasonable period of time'' that we have difficulty with. We'll be asked to vote on this very soon, so we have to get as much information as we can from various sources
Mr. Lee: Sure. The two key things I would give to you are, first, it is transitional, transitioning from the old paradigm to the new one; and second, at the end of the day, it is going to remove power from the public sector unions, and government will be exclusively responsible for the designating of essential services, grounded in issues of public safety.
The Chair: Your comment earlier was that you don't think the government has gone quite far enough on this.
Mr. Lee: I mentioned in my preamble that I'm writing an op-ed right now. I haven't quite finished it, but I'm going to argue that no public servant should have the right to strike, whether a teacher or professor or college instructor, federal, provincial or municipal. We are in a very different situation from the private sector. I fully support the right of the private sector unions to be able to go on strike, and this is coming out of the literature on collective bargaining, because of that idea of symmetrical power. The unions can inflict pain in the private sector on the company. They could, in theory, bankrupt it, if you shut it down long enough. The management can inflict pain on the workers. That symmetry of power does not exist. We know this from the past 40 years in Canada, and that's why I argue they have been able to incrementally ratchet up and obtain ultimately pay, pensions and benefits greater than the average in the private sector.
The Chair: Ms. Moreau talked about red tape and overhead. You would get rid of a lot of red tape and overhead by saying no civil servants have the right to strike and we don't have to go through this designation of essential service.
Mr. Lee: I have discussed this with colleagues in the academy and also with people in the public sector unions who say it is unprecedented and horrible. There are lots of precedents already. Police persons cannot strike. Ambulance emergency services cannot strike. At NAVCAN, air traffic controllers are designated. We have a model to deal with people who are designated that works very well, and there is a model for police and firemen and RCMP and so forth. The idea that we cannot come up with an alternative model to deal with dispute resolution is simply and empirically inaccurate. We have one already.
The Chair: Ms. Munroe, do you have any comments on this particular legislation that we're dealing with?
Ms. Moreau: I know that our members have told us that they typically do find that they're losing employees to public sector workers because, as Professor Lee has mentioned, our research has shown us that they're paid, when you include their salary, wages and benefits, 40 per cent more than in the private sector. Apples to apples comparison of salary alone, they're paid 17 per cent more. I believe those numbers are the federal level only.
For small business owners, the concern especially comes to pension liabilities, which is a separate issue from what Professor Lee has talked about. That's where small business owners tend to have a difficulty, having no pensions themselves and watching their neighbours who are federal public sector servants retire at very young ages with gold- plated pensions. It is difficult for them.
The Chair: Do you have any figures you can give us as to of the number of employees that will be impacted by the initiative that you have talked to us about of less frequent deductions? How many employees would be impacted by that?
Ms. Moreau: It could be easily every employee of a small business owner in Canada, because all the small business owners that fall under the threshold set out by the legislation will be able to remit less frequently, and for them that will be nothing but a boon. It will be one less time they have to deal with the paperwork involved in remittance.
The Chair: You wouldn't be concerned that the company would continue to deduct frequently from its employees but just remit to the government what is owed to the government less frequently?
Ms. Moreau: A business owner will make their own arrangements. It depends on how often you pay your employees and what kind of arrangements you have with them. Those will differ from business to business. We tend not to get involved in that particular segment of how the business owner is running their business. We're focusing on the employers and the red tape involved with remitting to CRA.
The Chair: Yes.
Ms. Moreau: I haven't done books recently, but I would assume that there are payroll systems in place to pay your employees and the deductions that go with that. It is the business owner's ultimate responsibility to remit the money to CRA. If he has a bookkeeper or accountant do it and there's an error, he or she is still ultimately responsible. Ultimately, the burden is on them.
The Chair: If an employee is paid twice a month but the remittance is only once a month, then the amount that's deducted from the employee can become a financing means for the company for a month?
Ms. Moreau: That may be an issue for some business owners who choose to arrange their books in that way, and we do have some concern from the government. We understand the government, for the short period of time in which this transition will take place, will be losing some tax revenue as a result of that. For most of our business owners, speaking to the costs involved with red tape, that's not a concern that we share at this time.
[Translation]
Senator Rivard: I would like to come back to Ms. Moreau's presentation. You have 109,000 members from small and medium-sized businesses.
I am not sure, but I think that Canada has no criteria on what constitutes an SME.
I know that, in France, among other countries, the criteria are based on the number of employees or the sales figures. I think that Canada has no such system. You sort of decide whether your members are SMEs. Canada has no criteria for determining the threshold for small or medium-sized businesses. Am I wrong?
Ms. Moreau: It all depends on the government department.
Senator Rivard: Statistics Canada.
Ms. Moreau: Exactly.
Senator Rivard: But there are no specific criteria. In France, for instance, a company with 500 employees and up is considered an SME, or that designation is based on its sales figures. Here, Statistics Canada decides whether a company is an SME or not.
Ms. Moreau: It could be argued that the tax rates for small businesses and tax credits for small businesses determine the characteristics of an SME, provided that the company uses this tax system.
Senator Rivard: The regulations generally hurt small businesses the most.
Ms. Moreau: Yes.
Senator Rivard: How many times a year do you meet with or are consulted by Minister Maxime Bernier, who is in responsible for small businesses? Do you feel that you have sufficient contact with the minister?
Ms. Moreau: We have had several meetings with Minister Bernier. He is very aware of the problems faced by SMEs and related issues.
Senator Rivard: I know that he is really focused on the famous one-for-one rule.
Ms. Moreau: Yes.
Senator Rivard: I did not understand what the small business lens is. Can you elaborate on that?
Ms. Moreau: The lens is a tool that is already being used in the United States, under the name Small Business Checklist. Any government policy must refer to the lens, which tracks the impact of regulations on small and medium- sized businesses. The form may be too complicated for people who are not accountants. Larger companies have accountants in most cases, so the issue does not arise. We may be talking about a number of regulations involved or several forms to be completed. The creators of those regulatory policies consider the impact on anyone who must fill out those forms or fulfil their obligations to the government.
Senator Rivard: I see that the priority issues are regulations, paperwork, the tax burden and, especially, the deficit.
Ms. Moreau: Yes.
Senator Rivard: Your members should be very pleased to see that zero deficit will soon be achieved. So they will be less worried. It is likely that the 52 per cent rate will dip below 50 per cent.
Ms. Moreau: We will see.
Senator Chaput: Ms. Moreau, I would like to know a bit more about your federation. In your presentation, you said that the federation's membership was increasing by about 1,000 a year. Has that increase been ongoing for a number of years?
Ms. Moreau: I think this increase has occurred over the past three years. We have been growing since our creation in 1971. Over the past 40 years, our membership has reached 109,000.
Senator Chaput: You have members in each Canadian province and territory.
Ms. Moreau: Yes.
Senator Chaput: In what province or territory do you have the most members?
Ms. Moreau: I think that would be Quebec, where we have 24,000 members.
Senator Chaput: How do you promote your federation?
Ms. Moreau: Our federation has three parts. We have district managers, who sell memberships. Each year, small and medium-sized businesses have to renew their membership or agree to become members of the CFIB. We do not accept any funding from the government or from other large companies. We are funded solely through our membership fees.
Those district managers have an opportunity to understand the important issues for companies. We make about 4,000 visits a week across the country. The district managers knock on companies' doors across the country and make some 4,000 visits a week.
Senator Chaput: Are you saying you make 4,000 visits a week across Canada?
Ms. Moreau: Yes. That really gives us an opportunity to meet face to face. This is an old way to run an organization. For us, it is important to hear in person what currently matters to Canadian SMEs.
Senator Chaput: That is why you can say that your members support some provisions of the bill you mentioned?
Ms. Moreau: Yes.
Senator Chaput: That helps them by reducing paperwork and so on.
Ms. Moreau: Exactly. Our organization is based on surveys. Our members respond to at least four surveys a year. In the statistics, you can see the supporting figures and the number of SMEs that have answered our questions.
For our report on paperwork, we know that about 8,000 members answered our questions. That provides us with a realistic look at the data. For instance, we can break the data down by company size, by region and by sales figures. We are able to do that, and we are proud of our research.
Senator Chaput: Does every company contribute based on certain criteria? Is the contribution the same for small and medium-sized companies or does it depend on their budget?
Ms. Moreau: There is a scale, and the members can decide, with the district managers, what they can contribute every year.
[English]
Senator Callbeck: I'm wondering about the fee. Is that based on the number of employees the business has?
Ms. Moreau: In part. As I told Senator Chaput, they have a discussion with their district manager or sales force and they establish on a scale what they're available to pay that year. It is a renewable fee, so we have to visit the member every year and remind them why their valuable membership to CFIB is important to us and ask them for their renewal.
Senator Callbeck: Would those fees be the same in every province?
Ms. Moreau: They're the same across the country. Every individual member pays a different fee, depending on what they can afford to pay that year.
Senator Callbeck: Has your budget gone up a lot?
Ms. Moreau: To be frank, I'm not as familiar with our finances. I leave that responsibility to our CEO, Dan Kelly, and to our VP Finance, but I understand our budget to be in good condition.
Senator Callbeck: That's wonderful. Thank you.
The Chair: Professor Lee, do you have the bill in front of you?
Mr. Lee: Yes, I do.
The Chair: I'm at page 204.
Mr. Lee: Yes, I think I do. I have so many directories in my computer it isn't funny.
The Chair: I can read it to you, in any event. There are only three clauses under Division 21. It is the coming-into- force aspect that I wonder if you could help us out with.
Basically, this legislation intends to rectify, to clarify some things that were not done last year in the second budget implementation that we did last fall. I don't understand clause 309, which is what you have given your comments in relation to, which is deemed to have come into force on December 12, 2013. That's quite different when sub (1) talks about last year's budget implementation bill, and when that comes in these clarifications and amendments will come in. Can you help us with this date of December 12, 2013?
Mr. Lee: It is retroactive, as you can tell. I spoke to some people in the department and my understanding is that it deals with the timing coming up to collective bargaining.
I didn't go further into that, but it was put in there in order to deal with the round of collective bargaining that is coming up. There's a lot of collective bargaining coming up. Different collective bargaining groups have a different framework. My understanding is that, by making it retroactive, it will create a common set of rules for all the bargaining units.
The Chair: Could it be that the government was enforcing the legislation as if it were clear and everybody understood for the last year, year and a half?
Mr. Lee: I don't know. I couldn't speculate on that.
The Chair: That's interesting.
[Translation]
Senator Rivard: I forgot a small question earlier.
I see that, when you vote on policies and carry out surveys, you go by the principle, one member, one vote. When you developed that system, was it easily accepted?
I am trying to draw a parallel with some associations I am familiar with, such is the Association de la construction du Québec. I understand that this may be related to wage negotiations, but the situation is different for large companies with 1,000 employees whose contribution is the same as that of a small business where the boss often works with two or three employees.
When you decided to use the one member, one vote system, was it accepted easily or was any controversy involved?
Ms. Moreau: To my knowledge, the system was never questioned. As I explained earlier, all the members know that, when they join the CFIB, they mostly express their opinion by voting and responding to surveys.
Senator Rivard: I understand. That consulting process enables you to pressure the government into reducing red tape. Your job is not to make any decisions. I am once again using the example of the Association de la construction du Québec, which may not agree with a provision in the renewal of a collective agreement. I understand better why this one member, one vote system was adopted. Thank you.
[English]
The Chair: I am just checking to see if December 12 might be the date that the budget implementation bill last year received Royal Assent. It looks like it received Royal Assent on December 12. The position that the government seems to be adopting is that the legislation was passed, everybody knew, and we'd just have to do a little bit of cleaning up with it this year. The policy has been implemented since December 12 of last year, and that's probably why it is retroactive in this legislation.
We will try to confirm that, but does that make sense to you, Professor Lee?
Mr. Lee: Yes.
I will be frank; I wasn't drilling down that deeply into the weeds. I wasn't looking at timing. I was looking more at the policy in the amendments rather than the timing, whether it was retroactive or not and what the reason was.
The Chair: Thank you.
Colleagues, those are all of the names I have on my list of senators. Everybody understands this fully.
We thank you, Madam Moreau, and you, Professor Lee, for being here to help us with those two sections of this huge bill. Thank you very much for being here and helping us out.
Unless you have other requests, colleagues, this is the end of our study of those particular divisions. That concludes our meeting.
(The committee adjourned.)