Proceedings of the Standing Senate Committee on
National Finance
Issue 10 - Evidence - December 7, 2011
OTTAWA, Wednesday, December 7, 2011
The Standing Senate Committee on National Finance met this day at 1:45 p.m. to study Bill C-13, An Act to implement certain provisions of the 2011 budget as updated on June 6, 2011 and other measures.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this afternoon we are going to continue our study of Bill C-13, An Act to implement certain provisions of the 2011 budget as updated on June 6, 2011 and other measures.
[English]
This is our second day of hearings from citizens and organizations who have been impacted by the budget implementation bill measures. The first two days, we heard from the government about what they are hoping to achieve. I am pleased, colleagues, to welcome this afternoon one panel of four different groups, beginning with Roxanne Dubois, Chairperson; and David Molenhuis, Past Chairperson of the Canadian Federation of Students. Welcome and thank you for being here.
We also welcome Gregory Thomas, Federal Director of the Canadian Taxpayers Federation; Brock Carlton, Chief Executive Officer, and Gabriel Miller, Director of Government and Media relations for the Federation of Canadian Municipalities; and Peter Shawn Taylor, Senior Fellow with the Frontier Centre for Public Policy.
What we would propose, if you agree, is to let each of you who wish make introductory remarks. Hopefully you can keep your remarks within about five minutes because I am sure there will be senators who wish to engage in some discussion with you following your remarks.
Roxanne Dubois, Chairperson, Canadian Federation of Students: Dear members of the committee, thank you for inviting me to speak here today. My name is Roxanne Dubois, and I am National Chairperson of the Canadian Federation of Students, representing over 600,000 post-secondary students across Canada. I am here with my colleague David Molenhuis, former chairperson of the federation.
We are here today to voice students' concerns with Bill C-13, specifically with regard to Part 7. This part amends the Canada Student Financial Assistance Act to remove the $15 billion cap on federally administered student loans.
Let me explain why we think this is the wrong way to address the student debt crisis in Canada.
The proposed amendment to the Canada Student Financial Assistance Act comes at a time when the existing $15 billion debt ceiling is about to be reached. It was in August 2010, right before the beginning of the academic year, that the government was at risk of going over the $15 billion legislated ceiling.
At that time, rather than addressing the issue, the government decided to change the definition of a portion of the loaned amounts to give itself some more time. However, here we are again, on the verge of reaching the ceiling. Instead of taking this opportunity to start a national conversation on how the government provides student financial assistance, as well as how it funds post-secondary education, the government has proposed a simple budget bill amendment.
This amendment proposes getting rid of the legislative cap and does it while avoiding public debate and a full costing evaluation. Not only is this bad policy, but it is also bad for the economy.
Today, students are graduating with a mortgage-sized debt even before they enter the labour market. Student debt is shown to limit the ability of individuals to purchase long-term assets such as homes and vehicles, to delay the starting of a family and to navigate a precarious labour market.
Canada already ranks poorly in terms of the OECD debt-to-income ratio. This means that additional individual debt that is needed simply to go to school could begin to jeopardize Canada's future economic health.
In addition, as far as we know, there has not been any analysis carried out on the impact of the elimination of the ceiling on our student financial assistance program costs. This includes the Repayment Assistance Program, which provides a subsidy to students repaying their loans. As the national student debt increases, the number of individuals that qualify for this support is likely to increase, resulting in unexpected program costs. Further, the costs of federal interest subsidy for student loans will continue to grow as overall student debt increases.
Finally, the amendment in Bill C-13 will essentially hand over decisions on funding student financial assistance to the backrooms of two ministers' offices. This is unacceptable. Student debt is a major issue in Canada and federal funding for students is at least worthy enough to be debated in public.
At a time when over 70 per cent of new jobs in Canada require post-secondary education, we must find ways to ensure that access to education is a right. We must not burden Canada's youth with unsustainable debt loads before they even get their first job interview.
There is a solution to this debt issue other than removing the $15 billion debt ceiling, and that would not require any additional funding from the federal government. Students have three recommendations. First, we recommend that the debt ceiling be maintained. Second, we recommend that the federal government redirect existing funding budgeted for education-related tax credits and savings schemes to upfront, needs-based grants. Finally, we recommend that these grants be delivered through the existing Canada Grants Program.
Currently, the government budgets over $2.5 billion on ineffective tax credits and savings schemes. Redirecting these funds to upfront grants is more than enough to turn the $2.3 billion the government hands out in student loans into grants. This would, over time, actually reduce the total debt owed to the government. In addition, this would ensure that the money allocated goes to students who need it the most and when they need it the most.
The government provides financial assistance to students because it recognizes that it has a role to play in helping students surpass the increasing financial barriers they face to pursue their post-secondary education. Part 7 of this bill will do nothing but put no limit as to how much the government will be burdening an entire generation with debt.
I would like to thank the committee for the opportunity to present and look forward to any questions you may have.
The Chair: Thank you very much, Ms. Dubois.
Mr. Molenhuis, do you have anything you would like to add?
David Molenhuis, Past Chairperson, Canadian Federation of Students: I think she said it perfectly.
The Chair: We will go on to Mr. Gregory Thomas, Federal Director of the Canadian Taxpayers Federation.
Gregory Thomas, Federal Director, Canadian Taxpayers Federation: Thank you, Mr. Chair and senators, for inviting us to appear before you today. We appreciate the short notice relating to today's presentation and we appreciate your contacting us yesterday to appear and to discuss Part 18 of the bill, which relates to the subsidy for political parties and phasing it out over the next several years.
I represent the Canadian Taxpayers Federation. Our organization has approximately 70,000 supporters. We are a federally registered, not-for-profit organization and we have advocated for taxpayers for less waste, more accountability and smaller government, for the past 20 years or so.
Our views on this are quite simple. We do not believe that taxpayer dollars should be spent funding political parties. We see the elimination of these subsidies as a good first step. We note that Canada's political parties still enjoy a tax credit regime that is more generous than that given to the Salvation Army or the Heart Fund or the Canadian Cancer Society. We do not see the sense in that. We do not understand why donating to a political party would attract more tax support than donating to any of these worthy charities.
We also note that at election time, individual candidates for Parliament benefit from the same kind of regime where, on the first $100, taxpayers pony up $75 in the form of a tax credit and the donors only have to give $25 of their own money. Further, if a certain threshold of electoral success is passed, there is a further refund to the campaign, which generally goes back into the coffers of the political party's electoral district association after the election. We believe that taxpayer support for political activity in Canada is far too generous. We also believe that by involving taxpayers and political agencies, regulating free speech in election campaigns and having an elaborate set of rules, you victimize public-spirited Canadians who work in politics. You force them to adhere to a bizarre set of regulations and you actually put up barriers to being involved in politics and being involved in campaigning. We believe that many innocent Canadians have been caught up in this kind of bureaucratic nonsense, and it is time that it ended.
Thank you so much for inviting us here today.
The Chair: Thank you very much, Mr. Thomas. You will appreciate that we have not had this legislation for a long period of time. This is only our second week of dealing with the bill. We apologize if the notice to you was short, but we appreciate you taking the time to tell us about your position and the position of the Canadian Taxpayers Federation.
Next up are Brock Carlton and Gabriel Miller from the Federation of Canadian Municipalities. You have the floor.
Brock Carlton, Chief Executive Officer, Federation of Canadian Municipalities: Thank you very much, Mr. Chair, for inviting us today. We are pleased to be here representing FCM and its nearly 2,000 members from across the country, which captures about 90 per cent of the Canadian population.
It is fair to say that we live in challenging times. The global economy is on shaky ground; governments have big deficits to pay off. Canadians want to know how we are going to keep our economy strong, balance our books and protect both taxpayers and the most essential public services.
We think that Budget 2011 is a good place to start in this regard. It builds on two important lessons that we have learned from the past. First, to keep our economy strong, all governments must work together to plan and pay for long-term investments in our roads, bridges, water systems and public transit systems. This infrastructure is essential to our economic growth.
The second lesson is that our governments work best when they work together. We cannot afford in this country the confusion, duplication and delay that is created when governments are cut off from each other by jurisdictional walls. Common-sense cooperation is the key to delivering greater value for taxpayers' dollars.
Let us talk a little about the budget and the question of infrastructure in that budget.
[Translation]
As Minister Lebel said last week, the government understands that high-quality infrastructure is essential to keep our economy strong.
[English]
Minister Lebel said this as he was launching the new long-term infrastructure planning process that the federal government has put in place. Minister Lebel is not alone in thinking infrastructure is critical in this country. There is a long list of people who agree with him, including the Federal Competition Review Panel, Toronto Dominion Bank, the Toronto Board of Trade, Canada's large urban chambers of commerce, the Canada-West Foundation, the Government of Canada, as expressed by Minister Lebel; and all parties in the House of Commons.
They all say that infrastructure is a national economic issue. They all agree that municipalities do not have the tools to fix infrastructure on its own.
Canadians agree with this as well. In a recent national survey by Global News, Canadians said building and repairing infrastructure was their top priority for their community, higher even than jobs and better health care. In other polls, Canadians have stated plainly they want all governments working together to meet their infrastructure needs.
It is just like a home. Public infrastructure needs to be planned, paid for and maintained over decades. Until recently, federal infrastructure programs only lasted two or three years. They helped communities build new roads or bridges, but such short-term programs do not enable the long-term planning that we need to resolve the infrastructure issues in this country.
Without the funding to maintain what we build, minor repairs turn into major repairs, and major repairs lead to all- out replacement. Short-term thinking weakens our infrastructure and costs taxpayers money in the long run.
However, in the last few years, the Government of Canada, with support from all parties, has started moving away from the short-term, ad hoc investments of the past. The idea of moving to a long-term infrastructure plan is evidence of that change, and we certainly applaud that thinking.
In Budget 2011, we had another breakthrough in the move to more sustainable investments. The budget promised legislation to make the federal gas tax permanent. This will give communities a guarantee that they can count on those dollars to pay for critical investments over the next 20 to 30 years.
The long-term infrastructure planning process, as promised in the budget and launched by Minister Lebel last week, will bring the federal government together with FCM, provinces, territories and the private sector to plan for the future. This is a once-in-a-generation chance to take stock of our needs, identify priorities and design fast, efficient programs that deliver results for Canadians.
My second point is with regard to intergovernmental cooperation. Equally important in this budget is that it clearly recognizes the value of common-sense cooperation. Working together, federal, provincial, territorial and municipal governments fought the recession and created hundreds of thousands of jobs in record time. Together we cleared a two- year backlog in funding applications and cut a 40-page funding application down to one page. That means less paperwork, less bureaucracy, and more resources to directly serve Canadians.
We are seeing the power of partnership in other areas as well. Since Environment Canada proposed new federal waste water regulations last year, FCM has worked with the government to substantially reduce the costs of compliance of those regulations without compromising the standards themselves. Moving forward, we must build on these gains and the models that we have created in these discussions.
In conclusion, the long-term infrastructure plan is a necessary first step and it must protect the long-term value of the federal gas tax transfer against inflation and keep pace with the costs of population and economic growth.
[Translation]
Second, we must look for more opportunities to bring down the walls between governments so we can meet our economic, social and environmental challenges while delivering the very best value for Canadians.
Mr. Chair, this brings me to the end of my remarks. We will be pleased to answer your questions.
The Chair: Thank you very much, Mr. Carlton.
[English]
Next, then, is Peter Shawn Taylor, with the Frontier Centre for Public Policy.
Peter Shawn Taylor, Senior Fellow, Frontier Centre for Public Policy: Thanks very much for the introduction. I am here as a senior fellow with the Frontier Centre for Public Policy, which is a public policy think tank based in Winnipeg. It also has a research office in Calgary.
I was invited here, I take it, because of a short paper I wrote with my co-author, looking at the issue of tax expenditures. Prior to the 2011 budget, it was called Harper's Tax Boutique: Rethinking tax expenditures in a time of deficit. I should note that my co-author, Ben Sand, is an economics professor at York. He is currently in Denmark, and I am sure he would be as pleased to be here as I am.
I will talk about the issue of tax expenditures today, since that was the point of our paper. Tax expenditures, credits or deductions built into the tax system are an important issue for several reasons. First, they are a large and growing component of the particular Canadian tax system. Just in personal income tax alone, there is about $100 billion of tax expenditures, a wide variety of them.
We have seen an increase since 2006 in the use of tax expenditures as a policy tool, and just a quick look through Bill C-13 will show you that the 2011 budget is certainly no exception. We have seen new innovations, such as a children's tax credit, Volunteer Firefighters Tax Credit, as well as some changes to existing tax credits.
It is an ongoing issue. In a time of deficit such as this, it seems reasonable that if government is taking a close look at direct expenditures, direct outlays, salaries, et cetera, it makes sense to subject tax expenditures, which are expenditures done through the tax system, to as much rigour and scrutiny as one would expect direct government outlays would be given.
Bringing this level of scrutiny to tax expenditures, which was the purpose of our paper, we picked two existing tax expenditures, both non-refundable tax credits, which is significant. We looked at the Children's Fitness Tax Credit and the Public Transit Tax Credit. To the extent that these have public policy objectives and are part of the tax system, it is hard to see how they meet the test of either efficiency or equity.
To look at the Children's Fitness Tax Credit quickly, if there is a public policy desire to see children involved in physical activity to a greater degree, one would expect that the money would be directed to low-income families lacking the wherewithal to enrol their children in sports or Kung Fu or whatever.
I will not go through the results of our paper right now, unless anyone has questions. Suffice it to say that the vast majority of the claimants for this tax credit reported income of above $50,000, so it is certainly not directed at low- income families.
An interesting survey done by the University of Alberta found that the existence of the tax credit had almost no impact on whether or not they chose to enrol their children in physical activity. That held for low-, middle- and upper- income families. It does not seem to be delivering either the result of more children signing up or easing the burden for low-income families.
Further, the presence of a vast array of tax expenditures, small, non-refundable tax credits, adds to the complication of the tax system, and in some ways it could be argued that it leads to even more complication. The Children's Fitness Tax Credit has been followed now by a Children's Arts Tax Credit. Who knows what will follow on the Volunteer Firefighters Tax Credit. If one group is provided with a benefit through the tax system, then another group can reasonably argue why they have been ignored.
Part of the purpose of our paper was to tote up the value of all these things. It can be complicated because different credits and tax brackets interrelate. Ben Sand, my co-author, did the calculations on that. Just eliminating these two, the fitness and the public transit credit, frees up $164 million a year. If you add in something larger, like the Canada employment amount, you start talking in the billions, which could easily fund a reduction in the lower tax bracket or raise the personal deduction.
Both those measures — lowering bracket rates or raising the deduction — are perfectly defensible on efficiency grounds. They would make a more streamlined, less complicated tax system, and I would argue they are more desirable than these small, incremental confusions.
That is a summary of our paper. If senators have any further questions, I would be happy to answer them.
The Chair: Thank you very much. You were just speaking at the end about the deduction. With respect to volunteer firefighters there is a $1,000 tax deduction, as I understand it. Are you familiar with that?
Mr. Taylor: I thought it was a $3,000 deduction, but it is then multiplied by the lowest tax bracket, so it has a value of $450 cash.
The Chair: That is the initiative in the bill that we have under consideration. If you make a taxable income up to $3,000, in effect, the tax that you are avoiding is up to $450 maximum.
Mr. Taylor: Yes.
The Chair: There is another program in existence now of a $1,000 tax. I want you to compare, from a tax policy point of view, a $1,000 tax exemption versus this non-refundable tax credit. That is what you were doing.
Mr. Taylor: The problem with non-refundable tax credits, the issue might not be as stark with the volunteer firefighters as it is with, say, the children's fitness. It applies to both because they are both non-refundable tax credits. However, the issue with a non-refundable tax credit is if you do not have enough taxable income, you do not get the value of it. A low-income family that wants to put their child into soccer cannot because they cannot afford it. A non- refundable tax credit will not do them any good if they are not paying any tax currently. Non-refundable tax credits will always benefit middle or upper income brackets more significantly than they will a lower income bracket. You could make the same argument with the volunteer firefighters. The disadvantage with a non-refundable tax credit is that lower income groups will not get the full benefit of it. Approximately one third of all people eligible for certain tax credits are unable to claim them because their taxable incomes are too low.
The Chair: Thank you.
A number of senators have indicated an interest in participating in a discussion with you. I will begin with Senator Finley.
Senator Finley: I appreciate your presentations today. I guess what I am hearing is although the current legislation gives something to a lot of people, it is either not enough or it is misguided or misdirected or something or another.
I would particularly like to address a question to the Canadian Federation of Students. Does your congregation include the Canadian Alliance of Student Associations, or are you a competing organization?
Ms. Dubois: We are the Canadian Federation of Students. We have 600 members across the country who have democratically decided to belong to the organization and who will decide the policies and the recommendations that we make here today. The Canadian Alliance of Student Associations is another organization.
Senator Finley: They seemed well pleased by this legislation and addressed the fact that this particular legislation satisfied a lot of issues that it had. I quote from the Canadian Alliance of Student Associations. They are:
. . . pleased to see positive reforms to the Canada Student Loan Program (CSLP), such as an increase to in-study work income exemption, improved access for part-time students, and tax relief for trades and professional certification. These measures will help attract and retain students . . . .
Do you disagree with the Canadian Alliance of Student Associations?
Ms. Dubois: The main point that we are raising here is the change to the cap on the amount of loans that can be given out by the federal government, which is currently capped at $15 billion. The change that we see in this piece of legislation is that that cap would be lifted. We are saying that it is not necessarily the best way to address the fact that students in Canada are indebted almost over $15 billion in the country. That is a huge weight on today's youth and our young generation. Students, on average, graduate from their post-secondary education with about $25,000 of debt, if not more. I think that is what we are looking at. We are looking at the cost and the impact that has on the generation of youth that have to pay that back.
Senator Finley: You have already said that. Thank you.
Quite simply, students, since time immemorial, and their parents have had to pay for education and have had to rack up debts which either the student pays or the parents pay.
I thought it would have been, perhaps, more helpful to us if you had also commented on the positive aspects.
Are you saying that this bill should not pass, therefore taking away the changes, the productive forward-looking changes we have made toward Canadian students? Are you saying we should not do that? We should hold back and pack the cap issue.
Ms. Dubois: We are bringing an issue with this specific part of the bill that has a huge impact on students. I think that is what we were interested in raising here today.
Senator Nancy Ruth: Ms. Dubois, you said that the government was burdening students with debt. Following on from Senator Finley, it makes me wonder whether you would rather the government not give any student loans so you did not have debt, and you would have to incur debt from service organizations, parents, aunts, uncles? It is not the government that is burdening you with debt; it is debt that the students have chosen to take and the government is providing money.
Ms. Dubois: Students are dependent on student financial assistance because of the rising cost of tuition fees and because the cost of pursuing their post-secondary education has become more and more expensive. Obviously, students have a need to have access to some student financial assistance to allow them to pursue their education.
We raise an issue with the fact that lifting the cap on student debt and not allowing for this conversation to happen again in the public sphere will cause many more problems down the road and will harm the economy if we are not able to address it now.
Senator Nancy Ruth: Educate me about these problems that are coming down the road. You have to know that this committee has been through a hearing where we know how much student debt is being forgiven. Tell me about the problems that you see.
Ms. Dubois: When students graduate with their post-secondary education degree, we are expecting them to participate in the Canadian economy, whether it is by purchasing houses, homes, cars and that kind of thing, but that is hard to do when many of them are burdened by debt and have to pay that back before they can contribute to the Canadian economy.
The idea here is that we cannot necessarily let this go without limit. The cap was actually a way for us to be able to talk about it and say, "How do we find post-secondary education and ensure that students are not the ones paying this high cost for post-secondary education?" By slipping this into the bill, it actually does not allow us to do that, and it is the wrong way to address the issue that we are talking about.
Senator Nancy Ruth: Well, students have changed from my day. They always had an opportunity to talk to politicians everywhere they went.
Mr. Thomas, would you be happy if the tax credit for charities was the same as the political tax credit?
Mr. Thomas: We will have to take a pass on that because the tax credit for charities obviously involves so many charities and results in $2 billion of deductions for 5.5 million Canadian taxpayers.
I hope you appreciate we were asked to talk about part 18.
Senator Nancy Ruth: Are you saying there should be no tax advantage for any political donation, or would you be all right with the same as what citizens get when they give to charity? That is the question.
Mr. Thomas: I think having political parties on the same playing field as charities is a defensible first step. We do not believe that political parties should be accorded better tax treatment than charities, which is what they have now.
Senator Nancy Ruth: Mr. Taylor, to clarify for myself, you went through a series of small tax credits that mainly middle or upper class families get and are not necessarily available to lower income people because they do not have the income to write them off against. You give a figure, which I have forgotten. However, if these tax credits were removed and the cash were there and was paid into a central pot, what would you do with the money?
Mr. Taylor: Putting on my economist hat, the most sensible thing would just be to raise the personal exemption. Some of these things are quite small.
Senator Nancy Ruth: How would that affect the poor if they are not paying tax anyway?
Mr. Taylor: That is a good point.
The point is that we want the tax system to be as fair as possible, I think. If the government feels that certain people must have the ability to do something, then hand that money out directly, I guess. However, creating a Swiss cheese sort of thing where everyone has what we call a boutique benefit where there is one for you and one for you creates such complications that you need an accountant to do your taxes. We want the simplest possible system.
Senator Nancy Ruth: I was not aware that it creates such a lot of complications. I was aware that there was a need to encourage physical exercise among young people and those who did dance and the arts, say, not sports, thought this was an unfair tax advantage given to the so-called soccer moms and that this should be available to children who choose other forms of physical activity, and so the government was trying to be even handed. Would you not agree?
Mr. Taylor: When we started off, there was a public policy problem identified with overweight children. Whether you agree with it or not, they created a policy tool to try to solve that, which is the Children's Fitness Tax Credit. To me, it does not seem very efficient or effective. There was some sort of problem identified, and you had a response as a policy.
I am not a complainer, but my older son plays hockey and baseball, and my younger son does piano and takes art lessons. I could sit there and say, "Why do I get a benefit for Daniel and not one for Patrick." We have now moved off and, in response to the fitness program, we now have an arts program. I never was aware of a policy problem identified that there was some sort of problem where our kids were not singing or drawing or dancing enough. All we have done is created a new tax credit.
Senator Nancy Ruth: I absolutely disagree with you. I think those that do dance or become concert pianists burn a great many calories in doing their exercises.
The Chair: Did you wish an opportunity to rebut that, or will you let that one go?
Senator Nancy Ruth: Ever played a trumpet? See the sweat come down their faces?
The Chair: Senator Nancy Ruth, it is Mr. Taylor's turn now.
Mr. Taylor: Regardless of the calories expended singing or dancing, I have never seen the Children's Arts Tax Credit sold as a way of improving children's fitness or in solving any identified problem in the country that our kids are not being artistic enough. All we have done is someone says these kids are getting a benefit, someone else's kids, so we now have music and sports. What about an X-Box credit for kids who like to sit at home and watch television all day? Where does it end? I suspect that the Volunteer Firefighters Tax Credit will be followed subsequently with some other tax credit for another worthy group of volunteers. I am not taking anything away from volunteer firefighters, but are they really volunteer firefighters now that the government is paying them? That is another question. It becomes an issue of politics and not an issue of an efficient tax system.
Senator Eggleton: There have been some interesting comments on the study from Mr. Taylor. I think it goes to prove that these non-refundable boutique tax credits are little more than vote buying gimmicks by the government. They do not benefit the poor people who really need this kind of assistance to provide for these recreational and other kinds of programs.
My question is to Mr. Carlton and the FCM with respect to infrastructure and the proposal here, which is a good one in terms of putting the $2 billion into a permanent basis. However, it has been around for a number of years, and $2 billion is worth less today than it was when it first started, even as a temporary measure. What about inflation? Do you not believe there should be some inflationary account in here? I do not see any in the bill.
Mr. Carlton: No, you are right. There is nothing in the bill. We do believe that, over time, there needs to be an index to this gas tax transfer that keeps up with the growth in the economy, wherever indicator that is. Whether it is inflation, economic growth or government revenues, that is a separate question.
Our position on the gas tax at this stage is that it needs to be in legislation. We applaud the government for putting it in legislation. We are now into a discussion with the government about a long-term infrastructure plan. In the context of that planning process, we expect there to be discussions about the long-term financing questions. In that context, we think that is the place and time for the discussion about the gas tax escalator as opposed to or in addition to other mechanisms, Building Canada Fund, et cetera. Your fundamental point is right. The gas tax over 20 years will lose 60 per cent of its value. We just feel that the discussion about the escalator clause or the indexing of the gas tax fits within the long-term infrastructure planning and financing process and discussions.
Senator Eggleton: Yes. On the infrastructure deficit, when I was a member of the FCM board over 20 years ago, I think we were talking about a number of $24 billion or $25 billion at that point in time as being the infrastructure deficit. What is it today?
Mr. Carlton: The latest calculation, which was done in 2007, is that it was $123 billion as an estimated infrastructure deficit vis-à-vis municipal infrastructure particularly. We have not done a recalculation of that. We have gone to an exercise that is developing a report card on the quality of infrastructure in the country so that we can quantity in real terms the quality of the infrastructure in the country in the different sectors and, therefore, identifying the areas where infrastructure investments are most necessary. Then it is through the long-term infrastructure planning process that we will bring that data to light and bring it forward in the discussions about how we as a country move forward and address the critical infrastructure issues at the municipal level.
Senator Eggleton: Notwithstanding the efforts of this government and previous governments on infrastructure, we are actually pedaling backwards here. We have a higher deficit figure in terms of dealing with infrastructure needs. How would you account for that?
Mr. Carlton: As I said, the figure of $123 billion was calculated in 2007. We have not done an update. The economic action plan had a significant investment in infrastructure, but we have not taken the time to upgrade the number because our focus is more on the quality of the different kinds of structure at the municipal level.
Senator Eggleton: There was a lot of infrastructure construction in the post-war period. Perhaps a lot of that is maturing and requiring replacement. Is a lot of it in that category, would you say?
Mr. Carlton: Yes, there is no doubt there has been a significant lack over the years of investment in maintenance of infrastructure. As I said in my comments, if you do not maintain it, you end up having to renew it. If you look at a long period of time, there was a lack of attention to this issue.
The other problem has been that there has been significant downloading of other responsibilities to municipal governments, so the stretching of the property tax dollar has just been made bigger. It has been stretched further and further. Therefore, the ability of municipal governments to maintain investments in infrastructure has been compromised because there have been so many other demands on the property tax base because the infrastructure question itself was not being looked after in the long-term, planned and strategic way with a national perspective.
Senator Eggleton: Infrastructure will be vital in terms of the economy of this country moving forward.
Do you have any indications from the government in discussions about a replacement to the Canada Build Program? We all know that the stimulus program relevant to the recession is coming to an end, but the Canada Build Program, I believe, which started before that, is also coming to an end.
Mr. Carlton: Yes.
Senator Eggleton: Is there any indication about a new infrastructure program? Are you getting some encouraging signs, or is there still a lot of uncertainty?
Mr. Carlton: The Building Canada Fund ends in 2014, as do other funds accessible to municipal governments, such as the P3 Canada Fund. Indications from the government are certainly that the long-term infrastructure planning process is the start of a discussion about what the longer-term infrastructure financing question will be. There is no backpedaling on the intention — that we hear — that by 2014 the Building Canada Fund or some iteration of that program will be replenished in some way. Obvious caveats around the economy and the resources available to the federal government at the time, but we are certainly feeling that the discussions are constructive. Once we have figured out and get the planning process well enough long in its path, we will then get to the question of financing and the real questions of building Canada, gas tax, indexing, et cetera.
Senator Eggleton: Let me ask you about transit infrastructure because it would have a logical connection with the gas tax. Should we not be adding on an amount that would be relevant? We have to move people around. In my city of Toronto, it is costing millions and billions — according to the board of trade — just standing still as we are on the movement of traffic, which is becoming slower and slower all the time. It is one of the worst anywhere. Should we not be pressing for more money for urban transit and would the gas tax not be a logical place to do that?
Mr. Carlton: There is no question that urban transit is a critical issue in this country for people's quality of life, the environment and the economy. As you said, the OECD estimates that there is an economic drag of $5 billion a year because of congestion related to lack of transit in the GTA alone. People in Toronto spend as much as 75 minutes a day in transit.
The issue for us is that there is a need for a national perspective on transit. It needs to be part of the infrastructure planning process and part of the long-term financing for infrastructure in this country that all three orders of government need to contribute to. It is certainly a critical issue economically in our big cities.
Senator Wallin: Those of us who live places where there is no public transit need highways, too.
I am interested as to whether you would be doing some assessment. We have literally seen billions poured into infrastructure, both from the federal government and the provinces. In the province that I represent, the entire highway system is being rebuilt, for example. Were you waiting for some particular deadline to do an update?
Mr. Carlton: No, we are not in the process of updating the specific figure. We figure there is more value to do an objective assessment of the different kinds of infrastructure in the country and identify where the critical infrastructure needs are, whether waste water on the East Coast or roads in the Prairies. It is an objective analysis that will lead to the ability to target areas that are strategically important for the country as we go from planning to action. Whether it is $123 billion or $160 billion or $100 billion, it is a huge figure and a huge challenge for our country. Our concern now is less the figure itself than what is underneath it.
Senator Wallin: Given what has happened and the change in the issues, the 2007 figure is not really relevant.
Mr. Carlton: We do not really know what has happened to it.
The Chair: Senator Wallin is from Saskatchewan.
Senator Runciman: Ms. Dubois, Senator Nancy Ruth referenced before this committee a few weeks ago the significant write-off of bad student debt. I think it was over a billion dollars, if my memory serves me. Is that an issue that your federation has taken a look at, and how could the government address that? If you look at it in terms of wanting to enhance loan programs, it seems to me that if you are looking at the total envelope, this is a way you can work with the government to perhaps address a number of problems. Is it something you have looked at?
Mr. Molenhuis: Our biggest concern is largely to do with students who fall into default — are suffering hardships on a day-to-day basis — being able to pull the money together post-graduation as they attempt to navigate the labour market. Our concern lies more with the mechanisms in place to assist those people — rather than the writing off of bad debts — where things have gotten so bad that money is now no longer recoverable or there is a statute of limitations reached. Debts are uncollectible under those provisions.
The issues we wanted to raise here speak to the broader situation facing students and the fact that we arrived at this point where we have a cap in place on student debt of $15 billion. The change that is being proposed through Bill C-13 is to simply try to do away with ever having to address that problem out in the open and allow for an order-in-council to amend the debt ceiling.
We are looking at the broader context as well as the individual cases, but with respect to writing off of bad debt — where things get so bad that they are no longer collectible — I think we should be addressing things before they get to that point. That is where we would like to work more with government.
Senator Runciman: That is what I was suggesting. Perhaps it is something you should consider in more depth.
This is a bit of a curve ball with respect to Mr. Thomas. You may not be prepared to respond to this, but has the Canadian Taxpayers Federation taken a look at this whole issue of student loans and the federal involvement? Have you commented on that? Has your organization commented on the programs in the past?
Mr. Thomas: It has not been at the forefront of the issues we have been working on, but we are vitally concerned by the federal involvement; that destabilizing impact of the federal guarantee. It is not unlike the American housing situation. As soon as the federal government steps in and guarantees debt, all of the thoughtful underwriting that goes into lending goes out the window. You then have a Fannie Mae or Freddie Mac situation where ultimately it is the taxpayer holding the bag.
Senator Ringuette: Ford and Chrysler.
Mr. Thomas: Yes, for $15 billion worth of borrowing. In the U.S., National Public Radio, the NPR, did a series where they interviewed people who had, for example, borrowed $100,000 to finance a fine arts degree and then found themselves unemployed at the end of four years of study. They interviewed people living in Montana who had borrowed $60,000 to go to film school and were back at the Home Depot, having had their hours cut back, unable to make any films in Montana.
I realize this is a long-winded answer, so I will go over to the expenditure side. What all this debt and tuition is financing is a post-secondary education that is bloated. The University of Toronto has a $1 billion deficit in its pension plan because they are allowing professors to retire in their fifties. People will live into their nineties and will collect more pension revenue than they collected in employment earnings in their lifetimes.
At the end of the game, just as with infrastructure, when you have big Mr. Federal Government holding the bag at $15 billion, a lot of sensible planning goes out the window. Sensible course selection, studying part time versus full time, the whole idea of paying as you go, and easy credit, lures people into untenable situations. I apologize for the long-winded answer.
Senator Runciman: That was a curve ball and you answered it very well.
I have a final question for Mr. Carlton. In your submission, which was very much appreciated, you referenced breaking down jurisdictional walls. Could you elaborate on that? Are you talking about more direct funding from the federal government to municipalities to fund programs? Is that a breach of the Constitution? I am wondering where you were going with that.
Mr. Carlton: No, I was not referring to direct funding. In that stage in the comments I was referring to the need for the different orders of government to cooperate, to work together. Instead of saying that is a provincial issue so let's leave it alone, the reality of the country is that we work in such an integrated way that the three orders of government need to cooperate so that we can find efficiencies and effectiveness so that Canadians receive the services that they deserve. That is what I was referring to.
Senator Runciman: No one disagrees with that.
The Chair: Senator Runciman, you alluded to the amount to be written off, as did Senator Nancy Ruth. Our Library of Parliament researchers have found the figure in Supplementary Estimates (B), which is not cumulative but just the latest tranche. We are being asked to vote to write off $150 million.
As a supplementary to the question that was being asked, Ms. Dubois, are you aware of the initiative in this bill that allows parts of loans to students studying to be doctors, nurse practitioners and nurses, in certain areas, to be written off by the minister over a period of time? Are you supportive of that initiative?
Ms. Dubois: Yes. That initiative has specific implications for nurses and doctors who will serve in certain regions. It is a positive measure, but it has little to do with post-secondary education policy and the funding that goes to it or to making education accessible.
The Chair: I suppose Mr. Taylor's concern would be that if you have a policy decision for a certain segment of those going to universities, why not for engineers and political scientists? We need more lobbyists and that kind of thing.
Senator Ringuette: I am concerned about the youth aspect. Youth have the highest unemployment rate of any segment of the Canadian population. We now have measures that remove the obligation to retire at a certain age and not as many baby boomers who were supposed to be retiring and creating job openings for youth will be doing so. Youth unemployment is bound to increase because these jobs will not be open to them. Can you tell me how many Canadian youth are currently enrolled in post-secondary education programs?
Mr. Molenhuis: I could not tell you that off the top of my head. I believe it is calculated using full-time equivalent. To calculate the number of full-time and part-time students is a difficult exercise. Even less is known about the number of students studying at the private career colleges that are springing up. We could not possibly arrive at an exact number.
Senator Ringuette: Mr. Thomas just gave some information to his colleague witnesses.
Mr. Molenhuis: This is from Canada Revenue Agency numbers. It is the total claimants for education-related tax credits. It shows that approximately 1.54 million T2202As are issued in Canada. I do not think that gives you the full breadth of the number of students studying. There are international students who I do not believe are fully captured in that number. I cannot attest to the validity of that number.
Senator Ringuette: As the Canadian Federation of Students, you have no idea of the number of young Canadians enrolled in a post-secondary degree, be it full time or part time?
Mr. Molenhuis: I could not give you an accurate number, no, nor could we give you sufficient demographic information about the number of Aboriginal students enrolled in Canadian institutions. That data is in a pretty woeful state. In fact, the OECD publishes 96 indicators on post-secondary education, including demographic data. Of those 96, we report in the neighbourhood of 57. Data on our post-secondary education system is pretty thin.
Senator Ringuette: That begs the question with regard to where our federal bureaucracy gets the information to put these programs together and provide us with estimates.
Senator Finley: You were not asking the federal bureaucracy; you were asking the students.
Senator Ringuette: I know, but they get the information from the OECD. Are you telling me, Senator Finley, that the department will be providing information?
Senator Finley: I am not saying anything —
The Chair: Let us try to direct our questions to these witnesses who have given up their valuable time to be here to help us. They can watch the debates at any time.
Senator Ringuette: What is the average interest rate that a student pays on a student loan?
Mr. Molenhuis: I could not tell you. There are a couple of options available on loans issued through the Canada Student Loans Program. Students can select floating or fixed rates. I believe that those rates are disclosed on canlearn.ca. I could not tell you off the top of my head, but all of that information is readily available.
Senator Ringuette: Mr. Taylor, with two examples about non-refundable tax credits you indicated that the system of non-refundable tax credit is not a policy issue.
Mr. Taylor: I said that there was not a lot of evidence that you got the result that you wanted. Parents signed their kids up for sports camps for eons prior to the existence of the Children's Fitness Tax Credit. The University of Alberta's physical education department did a survey. They asked the parents who were accessing it whether the existence of this tax credit influenced their decision one way or the other. There was a very low response rate, particularly, as you would expect, at the higher levels. The higher income people said that it had no impact at all. Even at the lower levels, the majority of parents said that it did not affect their decision to enrol their children.
I would argue that the same is true with the public transit tax credit. These are small amounts and they are probably not changing someone's decision one way or the other. It is more like a reward. You are doing something the government approves of and you get a little treat, but these are probably not significant enough to alter people's behaviour. People who drive to work every day will probably not decide, as a result of the public transit tax credit, to take the bus or the train.
I do not think these are significant enough impacts to actually change the world out there. In fact, they just become little rewards for people who are behaving properly.
Senator Ringuette: In the last two years, I have read quite a few reports, nationally and internationally, that seem to indicate, especially nationally, that there is a greater divide between the 0.1 per cent of Canadians who are on the very high income scale and the lower income people.
In the study you co-authored, have you looked into the issue of the effect of these non-refundable tax credits with regard to increasing the divide between the haves and the have-nots?
Mr. Taylor: This is a 13-page paper with appendices. It was a small piece that was trying to be illustrative rather than comprehensive.
No, I have not looked at the broader socio-economic implications, although I will make the obvious observation that given non-refundable tax credits do not tend to help low-income people very much, they are not going to be very impressed by them.
Senator Ringuette: The more we increase the numbers of these non-refundable tax credits, the more we increase that divide between the haves and the have-nots. Is that right?
Mr. Taylor: You can make that argument, certainly.
To Senator Nancy Ruth's point earlier about how you will help these lower income people through the tax system, the Working Income Tax Benefit is quite a good system. To the extent you think people need an extra $75 to put their kids in soccer camp or whatever, then increase it by $75 per year.
Senator Ringuette: It is a lot less costly than building an expensive prison system.
Mr. Taylor: I did not cover that in my paper.
The Chair: I understand, Mr. Carlton, you have another engagement at three o'clock. I still have two senators on round one and one senator on round two. If you have to excuse yourself, is Mr. Miller able to remain?
Gabriel Miller, Director, Government and Media Relations, Federation of Canadian Municipalities: Yes.
Mr. Carlton: Thank you for that. Mr. Miller is able and more than capable of responding to any questions that will come up.
The Chair: Senator Meredith has not had a chance to ask any questions. Could you give him a couple of minutes?
Mr. Carlton: Sure.
Senator Meredith: Thank you. Mr. Carlton, you mentioned the economic action plan and the fact that several thousand jobs were created. Have you perused your membership with respect to this piece of legislation and what their initial reaction has been to it?
Mr. Carlton: Are you talking about the memberships' perspective on the economic action plan or on this legislation?
Senator Meredith: This legislation.
Mr. Carlton: The membership is supportive of this legislation. The idea of a long-term infrastructure planning process is something members have seen as a key priority. Both the permanency of the gas tax and the legislation are very important to our members, as is the Volunteer Firefighters Tax Credit, which helps our rural communities.
Senator Meredith: You mentioned that this legislation addresses the economic, social and environmental challenges that are facing municipalities. Can you elaborate more on that in terms of how this piece of legislation addresses those issues? We talked about the gas tax and so on.
Mr. Carlton: The legislation addresses the issues in that, aside from the gas tax, which is an important piece of legislation, it introduces a very important first step towards resolution of the key issue facing our municipalities and a major deterrent to our economic competitiveness, and that is infrastructure deficit. We believe the legislation takes us down the road towards resolution of that issue. There are many other issues that are not in this legislation, so our interest today is the legislation itself. Given the fiscal context that we are in and the specific initiatives in this legislation that move key files in an appropriate direction, yes, we support it and our members support it.
The Chair: Thank you, Mr. Carlton. We appreciate that.
Senator Meredith: Ms. Dubois, you represent the Canadian Federation of Students. One of my colleagues asked you a question with respect to the number of students registered in Canadian universities. I would think that in terms of just a quick Google search of that statistic or having a perusal of the universities, it would be the number one priority for your leadership and that number would just roll off the top of your head. I can tell you that there are 72 organizations within the body of an organization that I run, and it is comprised of several hundred members. Therefore, I would recommend that possibly you look at ensuring that you are well prepared because this will probably not be the only time you will appear before us or other committees. It is important.
I am an entrepreneur and I have always believed that young people coming out of universities are talented and they have skills. Sometimes when the jobs are not there for them as they are coming out, there are opportunities created for them to be able to start their own enterprises. Is your organization doing anything along those lines to encourage entrepreneurship, such as with seminars, forums and so forth?
Ms. Dubois: To be clear, there are over a million students. What we were highlighting is that the data on this is not necessarily as clear as we would like it to be, certainly as actors in the post-secondary education field. There are many things that come into play when counting the number of students. Students face different challenges, such as one semester you may be a student but not the next semester. There are many challenges to counting that kind of thing, but of course we have numbers.
When it comes to the options that students are faced with when they graduate, absolutely, there are many things out there that should be open to students. What we are highlighting is that students should have the opportunity to have various options open to them. We have talked about youth and student unemployment, which is something that has a huge impact, and that causes further barriers for students and has an impact in terms of difficulty finding employment and that kind of thing.
We can talk about employment strategies and different ways we can ensure our youth have a fair chance at life. I think that is what we are talking about, our young generation that is graduating and having difficulty getting a fair shot at making a decent living because they graduate with debt and unemployment rates that are high and when they do not necessarily have the resources needed to be able to start their own business or go into the field they graduated from because of many factors.
Obviously, those are big challenges. The main thing we are highlighting here is that lifting the $15 billion loan ceiling for student debt is a major question of what we do with student debt in this country. Do we allow it to increase without limits, or do we take the opportunity to talk about it and see what is the best thing for the youth of our country?
Senator Meredith: Would you argue, then, that for those students who default on their loans, a high percentage of them actually enter the workforce and pay back their debt to the Canadian tax base? Would that not still be a way to continue to encourage students to apply to post-secondary education through the current system we have?
Ms. Dubois: The current system provides help for students to repay their student loans, which is obviously the goal. We do not want students' situations becoming so critical that people are defaulting and not able to pay their loans.
The Repayment Assistance Plan assists students in repaying their loans. With the amendment to Part 7, we are questioning the fact that we have not looked at how much it will cost to lift the ceiling on student loans in Canada. The RAP assists students in repaying their loan. If we lift the ceiling on student loans, how will we know how much that will cost us in the long run? We know that tuition fees can keep increasing and students will become more and more in debt, especially if we lift the ceiling. We do not know how much that will cost, and that is why we are bringing it forward here. We are wondering whether it is the best way to be responsible with the money being allocated to funding students.
The Chair: Ms. Dubois, you talked about $15 billion, which is the aggregate amount of loans that can be placed out under the Canada Student Loans Program. This proposed legislation basically takes that away and gives power to the minister to reduce it or to increase it through the regulations.
Have you been consulted on the regulations? We are not involved in the drafting of regulations or in determining whether it should go up or down. You have made that point several times. Is your association involved in that?
Ms. Dubois: As students, we have been trying to draw attention for several years to the fact that the ceiling of $15 billion will be crossed imminently. Last year, it was crossed, and a regulatory change made it so that the total amount of student loans that had been granted was lower than $15 billion.
The Chair: The way we achieve that is by writing off a few hundred million dollars.
Ms. Dubois: That is right, but we are still at the same place now with the issue of being at the $15 billion cap. That cap was first implemented because students will eventually get to the point where they owe the federal government the full $15 billion. We have to think about it and see what to do in terms of moving forward as Canadian society and how we access post-secondary education. Now that we are at that point, we have decided to deal with it by putting it in this bill — sort of tossing it aside — and taking the cap out of the public discussion and basically allowing it to be decided not in the public forum. We are calling attention to the elimination of the cap. Chances are that student debt will not be lower in the country. We can assume that it will go higher, but we will not have the chance to talk about it again.
The Chair: That clarifies the point.
Senator Dawson: On that same line of logic, Ms. Dubois, since you had difficulty answering the question on the number of students concerned, we do not know if the $15 billion is spread out over 15 or 25 or 30 years. I am afraid when we legislators are told that this issue will not be brought back to us because it will be dealt with internally. Whether it is your government or my government, I am always scared when there will not be transparency in the numbers. I already feel a bit ill at ease coming from Quebec because we have a different system. In Quebec, we have the numbers of students who owe money and how much is owed per capita, et cetera.
I totally agree with Senator Runciman. If I had a good answer to what $15 billion really is, I would be a bit scared that we are writing off the debt of some people, which has been debated here in many cases, who have a moral engagement toward society, except for hardship cases; and then other students suffer for it. We had proposed legislation before us a few years ago where we changed the Bankruptcy Act because an easy way to get out of student debt was to declare bankruptcy. This is not an opposition issue; it is about transparency in knowing how we are to go forward. I am preoccupied by the fact that we will not be able to get the numbers in the future. That always preoccupies me.
Mr. Miller, I will test you on the issue of infrastructure. Senator MacDonald sits on the Senate Transport Committee. As you know, airports are not eligible for infrastructure money, whether it goes forward for 5 years or 10 years, no matter the amount. Do you not think there might be an opportunity for the federal government, in cooperation with the provinces and municipalities, to look at the fact that maybe some of this infrastructure money could be used to upgrade some of our facilities, whether in Toronto or Montreal? Those cities have major highway problems and delays. Perhaps we could facilitate the growth of our transportation industry.
Senator Eggleton talked about urban transport. What about interurban transport? There has been a debate for many years about speed trains. Would it not be logical at this time to think about express trains for the Montreal- Toronto corridor to free up the airports? We might be able to facilitate the circulation in airports. I know this is not municipalities but since your membership has to live with these problems on a daily basis, do you not think that some of the money being spent in the future should apply to them?
Mr. Taylor, I agree with you on the question of cultural and sports spending. When we cut funding for exports of culture to other countries, we should not preoccupy ourselves with $100 or a high school student who is learning to dance. I would be more preoccupied with the fact that we are not supporting our international cultural responsibilities.
Mr. Miller: To take your point on airports in a few steps, this is an opportunity in the long-term infrastructure plan to do two things. First, it is a chance for the federal government to work with municipalities and the provinces to see how its programs that support municipal infrastructure can achieve the best value in the future and provide sustainable cost-effective investments. Second, it is an opportunity for the federal government to ask how well we are connecting the investments in our urban public transportation systems to the national transportation system so that the pieces of the economic infrastructure that support the whole country are being integrated as well as possible.
The question on airports is interesting. You are quite right that the country's major urban airports are not under municipal jurisdiction. I would not be representing the interests of municipalities if I suggested that money currently used for municipal infrastructure be used for those airports; there are other revenue models in place for airports. Most of the country's airports belong to municipalities, I believe. There are hundreds of small municipalities in this country where they are only life-line for the community to the national and international economy. That is an exaggeration, but a key one.
Small airports have been eligible in recent years for federal infrastructure funding. There are also some smaller programs for smaller airports, but we need to bridge the gap in how we have approached air and ground transportation systems in Canada. We need to ask ourselves how these two things work together to keep communities tied into the economy most effectively to ensure that infrastructure dollars are being spent in the area that will deliver the biggest bang for in the economy for every dollar spent.
Mr. Molenhuis: To be clear, we have specific, exact information from the Office of the Superintendent of Financial Institutions on how many students are in the Canada Student Loans Program and the current amounts of debt, although the accounting was a bit off. This committee went to great lengths to investigate why that was at both rounds of discussions on Supplementary Estimates (C) this past fall and more recently other supplementary budget estimates.
The concern is absolutely that our research institutions do not do enough research with respect to knowing exactly how many people are in post-secondary education. Over and above that, what is the vision for the outcomes for the billions of dollars that we spend on post-secondary education in Canada, because of the structure of our federation and the lack of federal legislation on post-secondary education? We are one of the last remaining industrialized countries on the planet that does not have any federal legislation governing our post-secondary institutions.
I hope that addresses some of the comments from the senator.
The Chair: Does no one else wish to comment on Senator Dawson's points?
Senator Wallin had an earlier question that was a supplementary.
Senator Wallin: It was just that. I wanted the supplementary at that time.
Senator Finley: I have a comment or a question to Mr. Thomas. You talked about the federal government backstopping student loans, or the Canada Student Loans Program. You then waxed about the federal government being involved in any backstopping. How far would you take that? CMHC?
Mr. Thomas: Yes.
Senator Finley: You would take CMHC out of the picture completely?
Mr. Thomas: Yes. Underwriting real estate lending is a specialized business, and there are many people who do it very well. Generally speaking, it is done very well in the locale by professionals who know the people who are doing the borrowing, they know the real estate that is being loaned on and risks are properly accounted for. It is a hotly competitive market, because real estate is something that a lot of Canadians are interested in and is something that a lot of Canadians understand.
When you have the federal government going in and guaranteeing loans, at one time up to 100 per cent of the value of the property, for residential property, and giving people 35 years to pay it back, these were retrograde steps. They created lending-backed inflation in residential real estate that we are still living with.
When you look at the hot economies, the urban economies of Canada, and you are looking at real estate prices that no economist can explain, you trace it back to the hand of the Government of Canada and to these lending guarantees through the Canada Mortgage and Housing Corporation.
Senator Finley: You are saying the high price of housing in urban areas is the federal government's fault?
Mr. Thomas: Yes, that is what we are saying.
Senator Finley: Why are house prices so high in London, England, Paris, France, I have just been in Brazil, Rio de Janeiro, Sao Paulo? The house prices are horrific, without having CMHC and the federal government. I do not quite follow that line of reasoning.
We will not have time to go much further, but how would you then have the student loan program run without the federal government backstopping it?
Mr. Thomas: Having a taxpayer back-stop on someone's home loan or someone's student loan is a bad idea. In the United States they had far more permissive student loan and home loan arrangements, and it was destructive.
Senator Finley: What would you replace it with? That is what I am asking you.
Mr. Thomas: We believe that the Government of Canada in recent years has taken constructive steps in the housing field by reducing the period of loan amortizations and by increasing the amount of skin in the game that homeowners are asked to put in. For example, with larger down payments and shorter pay-back periods.
Senator Finley: Would you apply that to students? You would say you have to put a down payment down to get your loan and we will give you less time to pay it back. Would that be the program that you would introduce?
Mr. Thomas: Honestly, as I am sure you do, I know so many students who are carrying burdens of debt, and we do not believe that the government's involvement in student loan programs is constructive. How you put the genie back in the bottle is a complicated task for bigger brains with more resources than I represent here.
Speaking on behalf of our supporters, we talked about Canada not having legislation affecting post-secondary education. This is a great federal state with great provincial governments and some of the greatest universities and polytechnics in the world. They were created without the direct involvement of the federal government. This is another area where it is questionable whether the federal government needs to have jurisdiction or involvement at all.
Senator Finley: We will put it down to the provinces?
Mr. Thomas: I am not sure Quebec is demanding more federal involvement in the financing of student loans.
Senator Ringuette: Mr. Thomas, maybe you said this and I did not register it, but is your organization a non-profit or a charitable organization?
Mr. Thomas: Ours is a not-for-profit organization. We do not issue charitable tax receipts and we do not pretend to be a charity.
Senator Ringuette: I had not picked it up if you said that, but I wanted to have it clear in my mind.
Mr. Miller, Mr. Carlton said that the current $2 billion over the next 20 years will lose 60 per cent of its value. We also know that the federal income from gas and diesel taxes is quite a lot higher in Canada than in the U.S. However, it is based on a percentage, so the higher the retail value the higher the income.
Have you looked at what has been happening to that flow of tax dollars through the federal coffers with regard to gas and diesel and, if the refund to municipalities were directly related, how would it impact the fund?
Mr. Miller: The federal excise tax on gasoline is a bit funny in that it is actually a tax per litre. It does not vary according to the price of fuel.
Senator Ringuette: The GST does.
Mr. Miller: The GST does, yes. GST is also a bit tricky in this regard because, as the volume of purchases goes up and the price of purchases goes up, relatively you collect more GST but, of course, we have seen a reduction in the GST.
Overall, GST revenues for the federal government have not been tracking — you are not seeing the same kind of increase in what they are generating from sales tax on gasoline because they have reduced the sales tax on gasoline. I am sure there will be members on the committee who will be happy to defend that decision to you.
Senator Ringuette: Have you tracked that income flow?
Mr. Miller: No, we have never pulled that out, or at least I do not have the numbers at my fingertips, the amount of sales tax the federal government collects on gasoline sales. I am a bit hesitant to speculate, but I am thinking it is somewhere in the order of $1 billion or $2 billion a year. The government collects about $30 billion a year now through the GST and some percentage of that is obviously on the sale of gas and diesel.
Senator Ringuette: I am surprised that you would not have that data because of the statement of your colleague earlier that you have done the amortization on the current $2 billion, to say that in 20 years it will lose 60 per cent of its value. You must be doing some gathering of data to look at all these numbers and the overall current and future effect.
Mr. Miller: To be clear, the $2 billion is paid from the government's general revenues. It is a $2 billion guaranteed payment every year for municipal infrastructure. It was introduced as a concept to be a portion of what the federal government collects from its excise tax. It was never in any way a function of the sales tax that the government collects from gasoline.
In looking at the future value of the gas taxes, we have looked at a number of the scenarios on how to establish an appropriate index for protecting it. The scenarios vary from the low end, strictly inflationary, where it was simply a 2 per level or something like that where you would maintain the cost against the erosion by inflation, up to a combination of inflation and population growth so that the same amount of money can achieve the same results but for a larger population, and at the far end somehow connecting it to the overall growth in government revenues. If the federal government was seeing a 5 or 6 per cent increase in its revenues in the future, the gas tax transfer would grow at a similar rate.
Given the fiscal context, we will be looking at something that is certainly more modest than that in the next few years, with the goal of asking, "How much will the country's population grow in the next 20 years? How much do we expect the demands of economic growth to create new infrastructure demands? What will be the impact of inflation on the value of that investment?" Then we will find an index that is about the right level to keep the value of that fund at what it can achieve today.
Senator Ringuette: When you look at the $123 billion deficit and the future value of that, and we are looking at legislation that is providing a fixed amount not indexed, then again you are increasing the divide.
The Chair: Honourable senators, that concludes the time that we had allocated for this panel this afternoon. On your behalf, I would like to thank each of our panellists for being here.
Mr. Taylor, your report has been referred to. Do you want to do some advertising and tell us where we might find it? Would it be on the Frontier Centre for Public Policy website?
Mr. Taylor: Yes; that is fcpp.org, and it came out in March.
The Chair: Thank you all for being here. The information that you have given us will be helpful in our deliberations.
Honourable senators, you should have in front of you the report on Supplementary Estimates (B). It is the fifth report of this committee. This report has been reviewed at length by your steering committee. I want to thank the analysts from the Library of Parliament for the work they did in helping to draw the document together and getting it translated for us on short order.
The report was delivered to those who were home or had someone in his or her office yesterday afternoon. Apparently, we cannot send reports over the Internet or by fax due to their confidentiality. If there was no one there to sign for the report, it was not left. That is the explanation, Senator Marshall. We had a discussion on that.
Normally, myself and the steering committee like to give senators adequate time to review the document so they have a chance to determine whether they want to make any changes. I will first ask you if senators feel they have had adequate time, so that we can go ahead and deal with the document at this time, and appreciating that there is some pressure to try to get this done. Our committee tries to be cooperative as much as we can in relation to the government agenda on items like this.
Hearing no objection, I would then propose that we do go ahead and consider the document. I will go page by page. I am assuming there is nothing on the Table of Contents. That is okay? Thank you.
The first page, the document starts "Report on the Supplementary Estimates." With respect to the first two paragraphs, one refers to Senator Day and the other refers to Senator Gerstein. Do you see those? You should also have a piece of paper that says "New Version — First Paragraph." That new version, first paragraph, in effect, should be substituted for Senator Day.
After it became clear that steering was not going to be able to reach a compromise, I tried one more time to make my paragraph as close to Senator Gerstein's as possible but still maintain that slight difference. In effect, the difference is the last line of my paragraph, "the Senate's practice," et cetera. I suggest that if we can all agree on this, rather than having two votes on this particular matter, we go around the table and ask for a recorded vote so we can say Senator Day or Senator Gerstein's version. You are voting for one or the other. Is that clear?
Senator Ringuette: It is clear, but I have a question for both of you, if I may.
The Chair: Yes, absolutely. Now is the time.
Senator Ringuette: I have looked at these two paragraphs. One of you is chair and the other one is deputy chair. It seems to me that there is only one sentence difference here, so could Senator Day and Senator Gerstein provide for us their explanation of why they have these two different paragraphs in the report?
The Chair: Senator Gerstein, do you wish to comment further?
Senator Gerstein: I would be happy to, Mr. Chair.
The issue is the tying together of this report with the passing of the supply bill. Reflecting back to the tradition of the Senate, I was interested to see, for example, that Senator Murray, when he was chair of this committee, indicated: "It must be clearly stated that it is not necessary for the committee to recommend concurrence in the estimates, and it is not necessary for the Senate to concur in the estimates."
That was followed by a comment from the deputy chair of the day, Senator Day, who said: "Honourable senators, I rise to go on the record to agree with the chair of the Standing Senate Committee on National Finance, Senator Murray."
Now, the clause as it is written in mine in fact is the exact wording that Senator Day, as chair of this committee, and the deputy chair being Anne Cools at the time, used for the reporting of the supplementary estimates. I am basically using Senator Day's statement.
The Chair: One change in wording is in the first line, where I say that the supplementary estimates were tabled in the Senate, as opposed to Parliament, because I wanted to make it specific to us, and then refer to a Senate committee. That is one change I have made.
The other is the final sentence, which reads:
It is the Senate's practice to not refer the Appropriations Bill to Committee, having received the report by the Committee on its study of the Supplementary Estimates "B".
That is my understanding of the practice. If I am wrong on that, then there are a lot of comments made by a lot of people along the way that are wrong as well. I believe it is prudent to put it in there. That is why I have asked that it be included.
Senator Ringuette: It is a practice.
The Chair: I hope so. Having served on the committee for 10 years, it is my understanding that that is the practice.
Senator Nancy Ruth: Senator Gerstein, could you explain why the sentence is difficult for you?
Senator Gerstein: I think there is a great principle here that, notwithstanding that it was the practice at times, it was not always the practice. As you know, we had to put through the supply bill without a report of Supplementary Estimates (A) on Sunday, July whatever it was this past summer. It does not always happen.
Going back to what Senator Murray so clearly stated, it does not require the report of this committee; it is for information. The two should not be tied together as being a condition for putting through the other supply bill.
Senator Nancy Ruth: Got it.
Senator Gerstein: I thank you for asking the question.
Senator Ringuette: Can I ask for a clarification on that? That being said, that would mean that we would then have to send the supply bill to this committee because supply cannot be approved without being sent to committee. It is like any other bill.
Senator Gerstein: No, it does not come to committee. Supply does not come to this committee, nor has it.
Senator Ringuette: Because of the practice of the supplementary estimates —
Senator Gerstein: It gets approved in the Senate.
Senator Ringuette: Just as we do with the pre-study issues, it enables the committee to provide a report mechanism before having the official bill on the issue. That is my understanding.
For example, at the end of June, if we do not do a pre-study of the budget bill — that is, if we, as a committee, do not have a report on the issue — then we have to study the bill when the bill comes in front of the Senate. It has to be referred to committee because we have not studied, technically, the issue.
Senator Gerstein: My understanding is that the supply bill has never come to the committee or the house.
The Chair: The house practice is quite different; you are right. You all understand the issue.
Senator Ringuette: We will have to study the supply bill.
Senator Nancy Ruth: No.
The Chair: That will come later. Right now, we have a report that we would like to conclude and file in the Senate. It will either be Senator Day's first paragraph or Senator Gerstein's.
I would suggest that we go around and you call out the names, madam clerk. You can say Senator Gerstein or Senator Day. Whichever one has the most votes at the end will be the paragraph that appears in the report.
Senator Eggleton: That is a recorded vote.
The Chair: Yes, a recorded vote. Thank you. Are we all okay on that?
Hon. Senators: Agreed.
Jodi Turner, Clerk of the Committee: The Honourable Senator Day.
Senator Day: Day.
Ms. Turner: The Honourable Senator Eggleton.
Senator Eggleton: The chair; Senator Day.
Ms. Turner: The Honourable Senator Finley.
Senator Finley: The Honourable Senator Gerstein.
Ms. Turner: The Honourable Senator Gerstein.
Senator Gerstein: Senator Gerstein.
Ms. Turner: The Honourable Senator Hubley.
Senator Hubley: Senator Day.
Ms. Turner: The Honourable Senator MacDonald.
Senator MacDonald: Senator Gerstein.
Ms. Turner: The Honourable Senator Marshall.
Senator Marshall: Senator Gerstein.
Ms. Turner: The Honourable Senator Munson.
Senator Munson: It is a great "Day."
Ms. Turner: The Honourable Senator Nancy Ruth.
Senator Nancy Ruth: Senator Gerstein.
Ms. Turner: The Honourable Senator Ringuette.
Senator Ringuette: Senator Day.
Ms. Turner: The Honourable Senator Runciman.
Senator Runciman: Senator Gerstein.
Ms. Turner: The Honourable Senator Wallin.
Senator Wallin: I, too, support Senator Gerstein's option.
Ms. Turner: We have seven for the Honourable Senator Gerstein and five for the Honourable Senator Day.
The Chair: I declare the paragraph of Senator Gerstein to be the introductory paragraph for this report. You can cross out and throw away the Senator Day document.
Is there anything else on page 1? Nothing further?
Senator Hubley: On line 58, we have accepted Senator Gerstein's paragraph. Does his name appear with that?
The Chair: No. Thank you for that. Nor will the quotation mark appear that follows that.
On page 2, are there any changes that need to be made, should be made or you would like to see made? If not, thank you. Carried.
Page 3? Seeing no comments, page 4 is next. Is everything okay there?
Next is page 5. Thank you.
Page 6? Carried.
Page 7?
Page 8? Thank you. Nothing there.
Page 9? Nothing.
Page 10? No changes are necessary.
Page 11? Seeing nothing, next is page 12.
Page 13, any changes there?
The final page, page 14?
Shall the document with Senator Gerstein's introductory paragraph carry as a whole, as I report on the Supplementary Estimates (B)?
Senator Ringuette: On division.
The Chair: On division. Thank you.
Shall I present this to the Senate at the earliest opportunity?
Hon. Senators: Agreed.
The Chair: Carried.
Thank you very much for your cooperation in that regard, honourable senators.
The other item of business we have agreed would take place at 4:30. I need your concurrence that we proceed, because we do not want to come back at 4:30 if there is not concurrence to do so. Again, what we are trying to do is satisfy the government's agenda to the best extent possible but also to continue to do the job that is expected of us in the Senate with respect to clause-by-clause consideration of Bill C-13.
The steering committee has tried to give you a good cross-section of those who are impacted by the legislation. We also heard from all the government departments that were involved in putting forward the legislation. Obviously, we could go on quite a bit longer if we wanted to hear witnesses on every one of the 22 parts of the bill, but I believe that what we have done — and steering believes this, too — is a good cross-section look at the supplementary estimates. I am hoping that you will agree that we go ahead with clause-by-clause consideration of the bill at 4:30. We have just had witnesses, so I do not want to proceed immediately with clause-by-clause. If someone is contemplating an amendment, he or she should have the opportunity to do so. It is quite unseemly to proceed immediately with clause-by-clause. You may feel that a one-hour delay is not very much time; usually it is the next day. We thought we would do it at 4:30 today, if you are all in agreement.
Senator Nancy Ruth: Could we explore if anyone has an amendment? If not, could we proceed now rather than at 4:30?
The Chair: We just finished the evidence 15 minutes ago.
Senator Nancy Ruth: Yes, I know that, but everyone takes notes.
The Chair: To contemplate an amendment might take one longer than 15 minutes.
Senator Gerstein: The understanding is that we come back at 4:30.
Senator Nancy Ruth: If that is the deal, then that is all right. Let's go.
The Chair: Are we all prepared to do clause-by-clause at 4:30?
Senator Eggleton: It is scheduled for 4:30.
The Chair: Yes, it is. The steering committee put the schedule out, but this committee is the master of its own fate. The reason I am pointing this out is that it is rather quick to proceed to clause-by-clause consideration after just hearing the evidence.
Senator Eggleton: I have no objection to you proceeding as planned, except the Social Affairs Committee, of which I am deputy chair, meets at 4:15, so I will not be here for that.
Senator Gerstein: Is there a feeling that we should proceed right now?
Senator Nancy Ruth: I would.
Senator Gerstein: We did have an understanding about 4:30, so I want to be clear.
The Chair: What we are doing is singling out someone, who may not want to be singled out, to consider the evidence that just took place and to consider amendments. By some of us saying let us go now, we are not being fair.
Senator Nancy Ruth: They can speak up.
The Chair: We have agreed to 4:30. I think it would be prudent for us to stick to 4:30. We will suspend until 4:30, which is in 40 minutes. I do not say how long it will take, but I do not anticipate that it will be a long time. If you want to come in your tuxedo, that is fine, too.
(The committee suspended.)
(The committee resumed.)
The Chair: As has been agreed by this committee, we will now proceed with clause-by-clause consideration of Bill C- 13, An Act to implement certain provisions of the 2011 budget as updated on June 6, 2011, and other measures.
What I propose, with your agreement, colleagues, is to deal with the bill by parts. Certain parts have several clauses; other parts have just one or two.
There are 22 different parts of the bill. It would be necessary to deal with certain clauses that we defer at the beginning. It should make our work clearer if we can agree that we go by parts.
If anyone has any difficulty with respect to where we are at in the process — I recognize there are some senators who have not been with us during the study on this particular matter — please interrupt at any time and ask for clarification. If anyone wishes to put forward amendments, please refer to the line and page so that we can quickly find those in the bill.
If there are any other points of clarification, honourable senators, the easiest way with respect to votes is that if it is clear that we are all on side or if it is on division, then I will proceed that way. However, if there is any necessity for clarification or if any of you would like a show of hands or a roll call, then we can do that at any time on any one of the issues.
Are there any questions with respect to those points? Seeing none, honourable senators, is it agreed that the committee proceed to clause-by-clause consideration of Bill C-13 at this time.
Hon. Senators: Agreed.
The Chair: Carried.
Is it agreed, with leave, that the clauses be grouped according to the 22 parts of the bill, as described in the table of provisions of Bill C-13?
Hon. Senators: Agreed.
The Chair: Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Shall clause 1, which contains the short title, stand postponed?
Hon. Senators: Agreed.
The Chair: Shall Part 1, which contains clauses 2 to 103, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Carried, on division.
The Chair: Carried, on division.
Shall Part 2, which contains clauses 104 to 110, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 3, which contains clauses 111 to 145, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 4, which contains clauses 146 and 147, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 5, which contains clauses 148 and 149, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 6, which contains clauses 150 and 151, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 7, which contains clauses 152 to 159, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 8, which contains clause 160, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 9, which contains clause 161, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 10, which contains clause 162, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 11, which contains clauses 163 and 164, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 12, which contains clauses 165 to 169, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 13, which contains clause 170, carry?
Some Hon. Senators: Agreed.
Some Hon. Senators: On division.
The Chair: Carried, on division.
Shall Part 14, which contains clause 171, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 15, which contains clauses 172 to 176 inclusive, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 16, which contains clauses 177 and 178, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 17, which contains clauses 179 and 180, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 18, which contains clauses 181 and 182, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 19, which contains clauses 183 and 184, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 20, which contains clauses 185 and 186, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 21, which contains clauses 187 and 188, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Part 22, which contains clause 189, carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall Schedule 1 carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall Schedule 2 carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall Schedule 3 carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clause 1, which contains the short title, carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the title carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the bill carry?
Some Hon. Senators: On division.
Some Hon. Senators: Agreed.
The Chair: Carried, on division.
Shall the bill, as a whole, carry? Are there any observations?
Senator Ringuette: Yes. For the "nth" time, this committee has been requesting the removal from the budget bill of technical issues that should be separate from the budget bill. Here, again, we have witnessed that this is happening. I do not know if it is because our voice is not loud enough or that they are not reading what we are saying, but I honestly believe that this has to stop. The budget bill should not be a bill to correct legislation. We have corrections here that date back to legislation of 20 years ago.
We have to highlight this practice again and we have to ask, again, that they stop it. Correcting legislation is one thing; a budget bill is another thing. I would like us to put that, once again, in our observations.
The Chair: Is there any comment? Can we agree to allow our steering committee to consider some comment along the lines that the honourable senator has made?
Senator Gerstein: I do not think so. I do not think the steering committee should meet again on this.
The Chair: Are there comments with regard to Senator Ringuette's point?
Senator Runciman: From my perspective, I do not really know enough about this at this stage to support that inclusion; maybe in the future, but at this stage of the game, no.
The Chair: This committee has made comments along those lines and very strong comments in the past with respect to non-budget-related items that appear in the budget implementation bill. The government has started putting in terminology such as "to implement certain provisions of the budget, and other measures." It is the "and other measures" that Senator Ringuette is referring to and finds difficult to deal with.
Senator Ringuette: Let me also be clear: This is not a partisan issue at all. This committee also said that to the Liberal government. This should be specifically addressed to the bureaucracy that puts together these omnibus bills. I think it is a form of disrespect to members of Parliament and to our committee in a certain way. I would like to see us reiterate that request one more time.
Senator Gerstein: I understand Senator Ringuette's position. I recall the speech I gave on Bill C-9 referring back to George III in 1776 and the price of bread act, which was basically an omnibus bill that included a number of things. There are obviously hundreds of years of tradition that other items are included in budget bills. You are right; it is not solely the Conservatives or the Liberals. It has been done for centuries.
The Chair: I think the point you are making is that it does not preclude anyone here from making this point when we debate this in the chamber. Senator Ringuette is asking if we can have an observation attached to the bill when we report it back to the chamber, not an amendment but an observation. Should we or should we not?
Senator Finley: Personally, I would rather if Senator Ringuette stood up and said what she had to say in the Senate and have it discussed. Her comments on this have been well recorded and documented. I do not see any reason to do it one more time.
Senator Tardif: I am not a member of the committee, but on the comments made by Senator Ringuette, obviously she can stand and present her position in the chamber, but it does not have the same force as if it is included as an observation that is attached when the bill is passed. If those comments have been made in the past, it is worth considering Senator Ringuette's suggestion that that observation be attached to it.
I do not think that the comment — and I could have misunderstood the senator — was necessarily due to the fact that other measures could be brought in, although that might be one part of it, but rather because of the technical nature of the terms used to express something and the fact that sometimes the language is obfuscated. That was my understanding. I guess I misunderstood. It was basically the inclusion of the words "and other measures."
If that has been put forward in the past, attaching an observation makes a stronger point.
The Chair: I am not sensing a consensus on this issue.
Senator Peterson: What does that mean? What is an observation? Is it just that and you do with it what you will?
Senator Finley: It obviously carries no strength whatsoever, or else it would have been brought up in other fora and not just this one. This is why I think it is an issue that Senator Ringuette can raise in the chamber, make her point and have it recorded in Hansard forever again; but I do not see, having done it a number of times before, that it is necessary to do it in this particular instance.
Senator Peterson: Further on that, if it has no effect, is it attached to the bill or is it a piece of paper that goes with it?
The Chair: It is a piece of paper attached at the back. It does not become legally part of the bill. The bill is a clean bill with no amendments, but it is hoped, I guess by the committee, that it is read by the government when it is sent back to them.
Senator Peterson: It has no power.
The Chair: No, it has no power.
Senator Andreychuk: Historically, we did not have in our rules anything about observations. There are Senate Speakers' rulings stating that they have no effect on the bill. It came into use when you wanted a compromise and you would pass a bill unanimously, but you would put in some observations that would pick up the tone of why some people were hesitant. In this case there was a clear "on division," so I think it would have even less weight than if there was all-party support for a bill. I think Senator Finley's comment is to speak to it, and maybe someone on our side, in their own presentations, would agree with the comment that that should be looked into rather than using the observation. I am hoping that the Rules Committee will clean that up.
The Chair: Thank you, Senator Andreychuk, for that background.
Senator Hubley: Including an observation with the bill may, in itself, have some positive reaction on future business, or if it does go to the Rules Committee, it will become something that this committee and finance committees will find important and that governments will finally take heed of.
The Chair: I will call on Senator Ringuette to close out the discussion on this and then we will decide what to do.
Senator Ringuette: I would like to remind my honourable colleagues of two things. First, in our previous meeting this afternoon, one of our colleagues used the words of Senator Murray to justify a certain paragraph in a report. I would like to reiterate that Senator Murray was certainly an advocate within this committee of a clear-cut budget bill, not an omnibus bill, in the first place.
Second, I believe in being consistent and persistent. In order to be consistent and persistent, the observation should be in our report because, again, we have the issue in a budget bill.
That concludes my arguments.
The Chair: Are you calling for a show of hands or a recorded vote on this issue?
Senator Ringuette: However you want to deal with it is fine.
The Chair: First, the motion is to attach to Bill C-13, when we report it back, an observation objecting to non- budget items appearing in the bill.
All those in favour of having that observation attached say "yea."
Some Hon. Senators: Yea.
The Chair: Contrary-minded, if any?
Some Hon. Senators: Nay.
The Chair: I think the "nays" have it.
Senator Peterson: They sure sounded louder!
The Chair: Thank you. We will not be attaching observations.
Shall I report the bill back without observation and without amendment at the earliest opportunity?
Some Hon. Senators: Agreed.
Some Hon. Senators: On division.
The Chair: Agreed, on division.
If there is nothing further, this meeting is concluded. Thank you all very much.
(The committee adjourned.)