THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, October 28, 2025
The Standing Senate Committee on National Finance met this day at 9:02 a.m. [ET] to examine and report on federal programs and initiatives to support the creation of housing, and to study and report on matters relating to federal estimates generally and other financial matters.
Senator Claude Carignan (Chair) in the chair.
[Translation]
The Chair: I wish to welcome all senators as well as the viewers across the country who are watching us on sencanada.ca. My name is Claude Carignan, senator from Quebec and chair of the Standing Senate Committee on National Finance. Now I would like to ask my colleagues to introduce themselves.
Senator Forest: Good morning. Éric Forest from the Gulf region of Quebec.
Senator Gignac: Good morning. Clément Gignac from Quebec.
Senator Galvez: Rosa Galvez from Quebec.
Senator Miville-Dechêne: Julie Miville-Dechêne from Quebec.
Senator Dalphond: Pierre J. Dalphond from the De Lorimier division of Quebec.
[English]
Senator Kingston: Joan Kingston, New Brunswick.
Senator MacAdam: Jane MacAdam, Prince Edward Island.
Senator Marshall: Senator Elizabeth Marshall, Newfoundland and Labrador.
[Translation]
Senator Hébert: Martine Hébert from Quebec.
The Chair: Honourable senators, today we are continuing our study on federal programs and initiatives to support the creation of housing for our first panel. Then, for our second panel, we will continue on our series of meetings on an economic update.
For our first panel today, we are pleased to welcome, from the Office of the Parliamentary Budget Officer, Jason Jacques, Interim Parliamentary Budget Officer, and Mark Mahabir, Director General, Costing and Budgetary Analysis. Welcome, gentlemen, and thank you for accepting our invitation to appear today. We will now hear opening remarks from Mr. Jacques.
Jason Jacques, Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer: Honourable senators, thank you for the invitation to appear before you today.
I am pleased to be here to support your study of federal programs and initiatives that support the creation of housing. We’ve published nine reports in this area over the last year, so I’m only going to touch on some highlights.
[English]
In June, we published a report on the new GST rebates for first-time homebuyers. We estimated that policy would apply to about 5% of home purchases and cost about $1.9 billion over the next five years. In July, we published a report on the Housing Accelerator Fund. Under that fund, the Canada Mortgage and Housing Corporation, or CMHC, has committed $4.37 billion to incentivize reforms intended to create 112,000 incremental housing units. We found that participating jurisdictions have issued more permits and seen more starts; however, that increase seems to be driven by rezoning initiatives that predated the Housing Accelerator Fund.
In August, we updated our estimate of the housing gap, highlighting that about 690,000 additional units would need to be created by 2035 to return the total vacancy rate to its long-term historical average.
Next month, we plan to publish a report on Build Canada Homes. The government has provided us with confidential data that we are currently analyzing. We also wait for the budget to be published next week, and we will incorporate any new information presented in that document.
[Translation]
We would be pleased to respond to any questions you may have regarding our analysis. Thank you.
[English]
Senator Marshall: Thank you very much to the Parliamentary Budget Officer for being here today with his staff. You mentioned a couple of the housing programs. As you know, there are numerous housing programs, and they all have different target dates, timelines and costs. We’re always looking at things like the housing starts. We’re always looking forward or halfway there, but there is nothing that I have seen that shows how many housing units have been completed by program on an annual basis. I really don’t have a good feel — and I don’t even know if the government does — as to how they are progressing toward their target.
If we are looking at building 3 million homes or 1.5 million homes over five years, they should have some sort of program that shows how many units have been built each year. There always seems to be an emphasis as to how many homes are going to be built or how many housing starts there are, but I would like to know how many units have been completed each year. There are lots of units being started, but do they actually get completed? Is that information available? I tried to compile it myself because I couldn’t find it, but is that available somewhere that is not easily found, or is that something that your office compiles?
Mr. Jacques: Thank you for the question. The government does produce annual reporting or regular reporting with respect to the housing programs. It has improved over time, so the government has made progress, because there are a lot of programs and a lot of new programs that have been implemented over the last five to six years.
On our end, it is something that we track as well. For us, one of the key questions where I think, potentially, there ends up being a difference of opinion between ourselves and the government is on incrementalism: Based upon what the government is announcing in terms of spending and impact, should the government actually be taking full credit for all of that impact? That’s a bit of a difference of opinion between ourselves and the government overall.
Certainly, senator, you have experience in this regard. If there are recommendations you have for the government with respect to reporting or things that you would like to see, I think they are all ears. I have never seen a government official show up at this end of the table and provide testimony and say, “No, we’re not going to provide it to you.” Certainly, the data exist.
Senator Marshall: Based on what you are saying, is the data on the number of units completed? I keep seeing the number of units started, or “This program should result in so many units being built.” Is the data actually on the units completed? That is what I can’t find — units completed.
Mr. Jacques: They do have some data on that. Following this meeting, I would be happy to go back to the office and find the information that we have collated and send it to the committee and provide it to you.
Senator Marshall: That would be very helpful.
One quick question, and if you can’t finish the answer, I will ask for a supplementary question later or ask for a second round. This isn’t really about housing, but it is about the deficit and the number that you provided, and I know the C.D. Howe Institute provided a different number. One of the areas we have always talked about is the contingent liabilities, and I feel that a lot of people don’t have an appreciation of the impact that a contingent liability can have on the government’s deficit. I notice that both in your projections and in C.D. Howe’s nobody is talking about contingent liabilities. I would like to raise the issue and hear what you have to say about the contingent liabilities.
Mr. Jacques: Certainly. We would absolutely agree with you that what is going on in the government’s balance sheet and specifically around contingent liabilities — so those potential risk exposures of the government where the government would need to come to the table and pay out additional money — is something that we pay attention to. Within our fiscal forecast, we have about $10 billion set aside each year for the next five years around contingent liabilities. It is a substantially higher number than we have had in the past. That, of course, is being driven by the actual results we see in the public accounts. Since 2015, there has been growth in the overall expense that the government has needed to book around contingent liabilities, and our new booking of $10 billion a year certainly reflects that.
Whether it is enough, based upon the trend and the direction things are going in, I guess we will see what the next public accounts have to say.
[Translation]
Senator Forest: I’d like to follow up on the comments of our illustrious colleague. We’re very happy to see her again. Her contributions are just as relevant as ever.
Over the past five years, the government has made significant additional efforts to address the housing crisis. I’m thinking, for example, of the GST credit, the GST rebate to CMHC, and so on. Are we able to measure the leverage effect of these measures and assess the contribution of other levels of government? I’m thinking, among other things, of municipalities that often contribute financially to projects such as CMHC.
Mr. Jacques: Yes. It would be possible to assess that. I’m not personally aware of any current comprehensive assessment that includes all the details concerning spending by provinces, municipalities, the government and the private sector. However, I would be willing to take the time to read this report. If your committee requests this analysis, we would be happy to prepare such a report.
Senator Forest: If the government introduces incentive measures to try to resolve a crisis through GST credits and rebates, it’s important to know whether or not this has an impact and to what degree. Often, a measure is put in place, but the objectives aren’t defined, and the results aren’t specified in order to assess the effectiveness of what is being implemented.
Mr. Jacques: That’s a good point. The Auditor General would probably be better placed to answer that, but I can try. It’s always important because there are a number of initiatives by the Government of Canada, the provinces and the municipalities to fight these challenges and crises. It is sometimes difficult to identify the results of each initiative. Sometimes, for one outcome, there may be several factors from multiple initiatives on a single measure.
Senator Forest: For example, the steady pace of new housing construction can be compared to its impact. Has the pace increased? And there are results, because building permits are verified in each municipality, and that is quite specific.
Mr. Jacques: Absolutely. The last time we were here, I mentioned that we generally carry out modernization on a national scale for Canada, but the reality is that there isn’t just one housing market in Canada, but several across Canada and in every municipality. I agree with you.
Senator Forest: No pun intended, but I would encourage you to build new ways of assessing the major impact on construction sites.
Furthermore, CMHC has developed considerable expertise over many years. From your perspective, do you see a division of responsibilities that will be effective and address this major issue? Finally, why has CMHC not been maintained, when another organization is being created again with no staff or expertise?
Mr. Jacques: It isn’t our place to judge the Canadian government’s approach to governance. I’m here as Interim Parliamentary Budget Officer.
[English]
Senator Cardozo: Thank you for being here. My apologies for being late. I apologize if you have covered this, and you can just tell me to read the transcript if you have. I want to take a step back and ask you about the economy at large and what the factors are that have brought us to this point of this extreme shortage of housing. What needs to change at the macro level? I’m not asking so much about the current policies but about what is happening overall and to what extent this is a global issue, because it seems like there are housing shortages in many countries. What is happening globally, and what do we need to see happen at a macro level?
Mr. Jacques: Thank you for the question. At a macro level and looking at some of the reports we published over the course of the summer, there is a supply issue across the country, and it is a long-standing supply issue that has been growing over time, and that’s why both we and the government believe that there needs to be a substantial increase in housing starts across the country. The supply issue did not emerge overnight, and it is not exclusively the responsibility or a problem that has been created by the federal government. It is something that all orders of government have a role to play in.
On the demand side, keeping things at the macro level and reflecting on some of the work we have done with respect to income distribution across the country, wealth distribution across the country, we have seen over the past 10 to 15 years — and this has happened in a lot of Western economies — a flow of greater amounts of wealth and greater amounts of income to the wealthiest people in society. So that definitely makes it potentially more challenging for middle-income people to have enough income to buy the homes that they want to and save, potentially, for a downpayment. So I think the combination of the two has resulted in the situation that you see today.
Senator Cardozo: And from your perspective, to what extent has immigration, both permanent and temporary — temporary foreign workers, international students — contributed to our situation at the present?
Mr. Jacques: Yes, it has definitely contributed. To the extent that it has contributed at a national level, it ends up being relatively small in comparison to the other challenges. Again, I go back to my earlier point that this is not a problem that suddenly emerged in 2023 or 2024. This is a long-standing issue that has been emerging over the past decade. The increase in immigration, primarily coming out of the pandemic for several years, definitely aggravated the housing crisis across the country, but the housing crisis was already happening at that point.
Senator Cardozo: In terms of the housing that we do build from now on, what is the best way of keeping track of that? It is more than just building homes; it is creating different kinds of living arrangements. How do we keep track of how much more housing there is? I use the word “housing” in a generic sense as opposed to particular buildings.
Mr. Jacques: It is a good question. Senator Marshall was poking at it as well. Again, the government does have some regular reporting with respect to its National Housing Strategy. The National Housing Strategy officially comes to an end in the next couple of years, so having something that goes out over a longer period of time — recognizing that the next target for closing the housing gap is by 2035, for the government, so having something that actually presents that strategy over a longer period and identifies all the programs — would certainly be helpful.
As well, it would be worth taking a long, hard look at, on the federal side, which interventions are actually creating additional housing. Again, a lot of the government announcements are the money and the total number of homes being created. In some situations, there is a lack of clarity or lack of precision around incremental change, so how many homes were actually created with the federal dollars versus how many would have been created anyway as a result of provincial governments and municipalities having a program in place.
You saw it with the Housing Accelerator Fund. For the municipalities that received funding from the Housing Accelerator Fund, there is an improvement in housing starts, and, at the same time, when you look back at their plans that were in place around changes in their regulation around housing and housing approvals, there were already plans in place by those municipalities to actually make changes that would have already resulted in an increase in housing starts. So trying to tease out what the impact of the federal government actually is, if you have Housing, Infrastructure and Communities Canada, or HICC, in here or if you have the government return to the table, asking them to start to present that stuff on a regular basis to committee would certainly be worthwhile.
Senator Cardozo: Thank you.
Senator Galvez: Senator Marshall, welcome back.
I think it is the first time I’m speaking with you, Mr. Jacques. Congratulations on your interim post. My question is about the definition of “affordability.” When I am here in Ottawa, all the people I talk to say what they need is rents below $3,000. When I go to Quebec, when I talk to people, they say affordability is below $2,500. Now, there are a lot of condominiums being built with private money, and the rent is $5,000 if not more. That’s not affordable. When we talk about the indicators, yes, I think at the end, the indicators are how much is available for affordable housing.
I’m hearing a lot of discussions in different committees, and I know that the private sector doesn’t want the new grants for construction of modular, smaller housing. They don’t want this.
The other issue is that they are building with the usual building code, which is not ready for the new climate situation we are experiencing now. Can you tell me how you look at this affordability and better construction of housing paid for with tax money from Canadians?
Mr. Jacques: We certainly look at affordability because it is one of the targets that the government has identified, so the 30% of median household income within a specific community. Having reviewed the testimony of government officials and the new head of Build Canada Homes at this committee, they are primarily focused on building additional housing that is affordable for Canadians.
It is a very interesting and pertinent point with respect to the construction style of homes and infrastructure writ large across the country in reflecting the changing climate. We published a report last week around the substantial increase over the past 10 years in federal spending around Disaster Financial Assistance across the country. We now estimate that it is going to be, on average, about $1.8 billion a year just with the pre‑existing federal program, and part of that is driven by climate change. A good part of it is also driven by, as you pointed out, building codes, so where you can build and what you are building with, so the resilience of communities and homes against floods and wildfires. I believe the government is cognizant of it, and it is a very real cost for the government, as well, in addition to being something that ordinary Canadians would expect.
Senator Galvez: The other issue is insurability. So because you are building in a way that is not good for the climate situation, the premiums and the costs of insurance are getting very high. You have to add that to the rent that you pay. Can you tell me about that?
Mr. Jacques: Certainly. We looked at this issue with respect to insurability and, potentially, federal contingent liabilities associated with Disaster Financial Assistance back in 2016. At that point, one of the key findings of the report was, in many situations, an absence of homeowners’ ability to actually obtain insurance. There wasn’t an effective insurance market for flooding in particular.
When we circled back this time, we found there are some improvements. Regarding the climate situation, obviously, the frequency and severity of extreme weather events are increasing. Even if there ends up being a private market to provide insurance, the cost of providing private insurance potentially might be prohibitive. You do end up in situations where people have lived in a place for a long time, and the climate is changing, and potentially they are in a position where they can’t find insurance.
We didn’t go into that specific issue in the report. How to solve it is a policy question. For us, the starting point — or what we want to put on the table for parliamentarians — is even though the federal government is spending quite a bit more money on climate mitigation and increasing the resilience to extreme weather events of infrastructure across the country, the cost is still going up in terms of the compensation under the Disaster Financial Assistance by the federal government, and we expect it to continue to do so.
[Translation]
Senator Miville-Dechêne: Welcome, Mr. Jacques.
You told us that you reviewed the testimony of the CEO of Build Canada Homes, so you’re familiar with the program and what she has to say about it. Do you think that this program will succeed in making up for the shortfall, which you have estimated at 690,000 homes?
Mr. Jacques: We are currently evaluating the data we’ve received from the government. At the same time, it’s a little too early to say anything definitive. Obviously, there will be a contribution, but I think I would prefer to wait a week or two to have an official report on our website.
Senator Miville-Dechêne: You’ve already said that some of the housing in question had already been planned. Would that mean that these housing units would be counted twice?
Mr. Jacques: That’s always the risk with every program of the Government of Canada. It may be easy to identify a problem, but it is much more difficult to identify an effective and precise intervention that would enable us to say that we would have a specific impact for every public dollar spent.
Senator Miville-Dechêne: I would like to ask you another question about the market in Montreal, where I live. I would like to hear your thoughts. It is said to be one of the markets where there is still a significant increase in the price of houses and apartments.
Historically, Montreal has been a market where rents and houses were cheaper than elsewhere, so there is a catch-up effect. Is the fact that this catch-up is happening quickly more difficult for those who want to buy homes than in another market that has grown more gradually? Because right now, we’re seeing a very rapid catch-up in Montreal.
Mr. Jacques: I think you’re an expert in this area.
Senator Miville-Dechêne: No.
Mr. Jacques: As you know, there are always changes. When there are rapid changes in the economy, it creates problems for people. They find themselves in a situation like the one we’re currently experiencing with housing.
Another challenge is that it takes time for someone to find another house or apartment and negotiate. There are a few challenges in our social context. With our modelling, it’s difficult to identify this precisely.
Senator Gignac: Welcome, Mr. Jacques.
The federal budget will be tabled next week. We would like to take advantage of your presence to ask you about the government’s new approach: presenting operating expenditures and capital expenditures in two categories. We understand the logic that infrastructure spending is capital spending, initiatives to increase potential GDP. Do you think that the investment the government wants to make in housing increases a country’s potential GDP?
Mr. Jacques: In the context of macroeconomics, that could be the case. I’m not an expert in this area. However, I am aware of some research in the United Kingdom concerning people’s ability to move, to find other jobs around the country. When there is a lot more flexibility in the housing market, it’s much easier for someone to move, find another job, and perhaps increase productivity. It is definitely a benefit.
I think the details are just as important. In housing, there are a few types of investments, including affordable investment, that can have more than one benefit for the economy and productivity than providing subsidies for a new kitchen, for example. But that is always the case. As you know, with a capital budget, this will be the case: There will be several types of investments with a variety of benefits and impacts.
Senator Gignac: Thank you.
You produced a very insightful study last August on the number of units that will be needed in the next 10 years to balance supply and demand. You mentioned 3.2 million additional units. A few months earlier, CMHC said that an additional 5.3 million units would need to be built. That caused some confusion. According to CMHC, it would be 425,000 new units per year over the next 10 years; for you, it would be 290,000. You seem to be closer to the current level. Can you explain the difference between these two approaches?
In the graphs at the end of your study, I noticed that the vacancy rate in the CMHC approach will jump to 12% after 2030. If the vacancy rate increases, house prices will start to fall. Can you explain the difference between the two studies? I think people are very confused.
Mr. Jacques: For our modelling, we have targeted a certain vacancy rate for housing. We identified that between 2000 and 2019, there was an average vacancy rate of 6%. For our estimate, we assumed a return to this level, which would allow us to achieve a balance in the housing market once again. The government wants to return housing affordability to 2019 levels.
As you said, with this assumption, I think it will create a vacancy rate more than double the historical rate. There would be many people across Canada with two or even several empty houses or apartments, which we haven’t seen in the past. As you know, when there is a result with innovative modelling, we sometimes need to re-evaluate the modelling.
Senator Dalphond: Hello again, Mr. Jacques.
I, too, noted this difficulty in understanding. The Canada Mortgage and Housing Corporation spoke of a shortfall of 2.6 million units. You say that by 2035, the housing gap would be 690,000 units. That’s four times less, which is a big difference. How do you explain the fact that your figures and those of CMHC, which is supposedly an expert in housing, are so different?
Mr. Jacques: The government has a lot of expertise in this area. It’s simply a matter of targeting another variable. We have identified what will increase the number of apartments and homes available for rental or purchase across Canada. The government has targeted the vacancy rate required to bring affordability back to 2019 levels. It’s no surprise that the government wants to focus on affordability. That is the overriding policy for them.
Senator Dalphond: You have figures that don’t tend to create a surplus in vacancy rates, while CMHC has a vacancy rate target that may be too high?
Mr. Jacques: That’s right. For us, when we look at the government’s modelling, we’re going to end up with a somewhat strange situation that we haven’t seen in the past.
[English]
Senator Dalphond: On August 20, the Royal Bank of Canada published a special housing report. The title was, “Canada isn’t in a housing starts slump—Ontario is.” The data they analyzed shows that the starts outside Ontario are very good and are going up. Residential construction is strong, except in Ontario.
So are we addressing an Ontario problem with a national program? Are we spending money somewhere where maybe the market doesn’t require that?
Mr. Jacques: Something we’ve said in the past and pointed out in various reports is there is no national housing market. We identify 11 regional housing markets in our reports. CMHC has an estimate of 16. From a macroeconomic perspective, we can come up with a national estimate. The national estimate isn’t particularly useful if you’re buying a house in Montreal or in Halifax. What you’re interested in, in that context, is what’s happening in the housing market where you’re looking to actually find housing or find lodging.
I did read that report, and I think the key take-away, certainly for us and for other members of the committee, is that the regional context and the local context very much matter. I think that’s why you’ve seen, in regard to the Housing Accelerator Fund, the government, over the past few years, pay more attention to and place more emphasis on the regulatory burden or the regulatory framework of municipalities around housing.
Senator Dalphond: The Ontario government has just tabled a bill which provides that development costs will go down significantly, because they will authorize municipalities to regroup and have special corporations to provide water and waste treatment systems, like in Quebec to some extent, financing long term through a special corporation. Will that have a significant impact on projections? Again, it’s provincial legislation that will make a big difference.
Mr. Jacques: I have not looked at that legislation, but when I go back to the office, I will take a look and I’ll get back to you on that. It’s a good question.
As everyone knows, and as the government has pointed out, the federal government certainly has a role to play in housing affordability and the housing market across the country. There are two other levels of government that also have a role to play.
Senator MacAdam: Thank you for being here today. Several of my questions have been asked and answered, so I’m going to build on the comments you made on regional housing and the needs in the various regions across the country. Do you feel there is enough comprehensive information and data available on rural housing in Canada? We always talk about the statistics from a national perspective, but what’s available?
Mr. Jacques: Thank you for the question. For our needs, looking at the narrow, parochial interests of the Parliamentary Budget Office, there is enough data for us to conduct an analysis. Were I in a situation where I had to design a policy to solve a national housing crisis from Ottawa, working with other levels of government, I would certainly want more data.
Something that comes to mind — and I think we mentioned it to the Senate Banking Committee — is simply having a detailed and comprehensive list of bylaws and regulation across all major municipalities across the country so you can make a really simple comparison. Because, again, there are good ideas across the country, and if the federal government is pushing on simplifying the approval process for housing using the Housing Accelerator Fund and other mechanisms, you want to know what changes you want to see. Certainly, from an analytical perspective, that would be helpful. Hopefully, that would take into account the regional diversity because there is urban-rural diversity, and there’s also diversity in the housing codes across the country and so on.
Senator MacAdam: I’m switching gears here. The Auditor General recently released a report on housing for Canadian Armed Forces members. Among the findings, the report indicated that the Canadian Forces Housing Agency did not provide enough units to meet the Canadian Armed Forces’ needs. National Defence last identified a need for an additional 5,200 to 7,200 residential housing units for members in 2019, but its plan to build new housing spaces still leaves a gap of at least 3,800 units.
Does any of your work or data incorporate these types of shortfalls with the Canadian Armed Forces? Would that be included in any of the national housing data?
Mark Mahabir, Director General, Costing and Budgetary Analysis, Office of the Parliamentary Budget Officer: Thank you for the question. In our analysis, we don’t really include Canadian Forces units in data, but we can in the future.
Senator MacAdam: Thank you.
Senator Kingston: I would like to talk about affordable and deeply affordable housing and the things that have been happening lately. Build Canada Homes was launched in September 2025, but your office prepared some reports prior to that which talked about the Canada Mortgage and Housing Corporation’s plans to spend $6.4 billion on federally administered social housing, $11.5 billion on provincially administered social housing and $14.7 billion on new social housing.
When Build Canada Homes is capitalized for an initial $13 billion, how does that all fit together? We were told as well by CMHC that they are looking at programs, whereas Build Canada Homes has a different approach in terms of helping things to happen, not necessarily dependent on programs.
I know you’re bringing out something soon about Build Canada Homes specifically, but the $13 billion that Build Canada Homes is capitalized for, how does that interact with the amounts that were in your reports that are still being spent, or are they being spent by the Canada Mortgage and Housing Corporation going forward? How does that all work, or how do you expect it to work?
Mr. Jacques: The short answer to the question is we will see. One of the reasons that we’re waiting for the budget is that in reading through the most recent five-year corporate plan of CMHC, government funding for the housing program in particular is forecasted to decline significantly over the next few years. So the forecast decline in the corporate plan is potentially offset by the new announcement for Build Canada Homes. We’re still waiting to get the details with respect to what actually happens over the next five years on a net basis, so whether spending — whether it’s direct financial support or loans or other types of loan guarantees — is going to go down or whether that’s going to go up. Sadly, I would defer the question until the evening of November 4.
Senator Kingston: While you’re thinking about that, maybe you could also give some thought to — again, others have brought this up — the areas of greatest housing needs across jurisdictions and programs? Are you looking to Build Canada Homes to have those sorts of priorities, being able to identify whether there are more needs in rural areas or more needs in Ontario versus the rest of the country. Again, I’m looking at affordable and deeply affordable types of housing that will be able to impact the people in society who at this point are the most vulnerable in terms of their housing needs.
Mr. Jacques: Based upon the public information that has been provided by the government on Build Canada Homes, that’s certainly our expectation in where they are going to be playing in terms of affordable and deeply affordable housing. I believe, at the committee, the new CEO of Build Canada Homes indicated that for the housing that will be built, no one will be owning the housing; it will be primarily rental and potentially mixed communities.
As well, getting back to a point that was raised earlier, certainly looking at the broader macroeconomic or broader economic push across the country, arguably you could obtain a better productivity improvement in actually focusing on those segments of the population that are going to be helped out by the private sector on their own. If the private sector is not able to come to the table and solve these immediate needs, and there are people across the country who potentially could find jobs but not in the communities that they’re in, they might need to move. In order to move, they need to find a place to live that’s affordable so they can take that job. If that’s the direction the government is going in — and looking at the public statements, it certainly seems to be the case — ensuring affordable and deeply affordable homes would certainly provide you with that type of productivity improvement or economic benefits.
Senator Kingston: Do you believe this approach with Build Canada Homes is significantly different from the approach being taken in terms of the potential impact of the Canada Mortgage and Housing Corporation?
Mr. Jacques: That is well outside of the mandate of the Parliamentary Budget Office and Parliamentary Budget Officer, interim or otherwise.
[Translation]
Senator Kingston: Thank you.
Senator Hébert: Thank you for being with us today, Mr. Jacques.
My question follows on from the question that my colleague Senator Marshall asked at the beginning about the outcomes of programs in terms of actual units built. I think this is a very important question. My colleagues have mentioned it in their questions. There are many stakeholders, deadlines, regulations and several obstacles that can arise in a program such as Build Canada Homes, for example.
I am asking you this question. I know that your role isn’t to engage in public policy.
[English]
It’s not your role, but I know that your responsibility is in terms of budget accountability, so my question is in this sense. Did you study the success factors or optimization factors in other countries that have put in place these kinds of programs or similar programs, and what are these factors?
[Translation]
Mr. Jacques: No, not in detail. We focus on proposals from the Canadian government, the cost of interventions and the results. As you can imagine, when the government makes an announcement, it’s always an announcement of spending and outcomes. There is currently a housing crisis across Canada, so it’s important for us to be able to identify the impact of the funds allocated by the Canadian government. Do we compare ourselves with other countries? No.
Senator Hébert: I imagine that this isn’t the first issue that the Parliamentary Budget Officer has examined, given his experience. I assume that there have been analyses in the past looking at the factors that optimize programs when they were put in place. For example, will the next report to be published on Build Canada Homes contain factors for optimizing the public funds that will be invested in it? If we don’t have the best practices internationally, do we still have the optimization factors that you could point to in your report?
Mr. Jacques: We can add something like that. In the past, when we have prepared estimates in other reports, we identified effective practices in other jurisdictions. I know we can do exactly the same thing with housing.
Senator Hébert: If it wasn’t in your report, could you at least provide us with the information at a later date?
Mr. Jacques: Your recommendations are law to us. If you recommend including it, it will be published in our next report.
Senator Hébert: We would appreciate that because, in the past, we haven’t had much success in achieving our results with this kind of program.
The Chair: I have a question. The CEO of Build Canada Homes came to testify before this committee. I was left feeling a little unsatisfied with regard to the administrative aspect. We have an organization that exists on paper. When I asked what their budget was for the first year, I felt like I had just asked a highly scientific question. I got the impression that we had someone in a newly created position in a department that does public relations and announces spending for funds that come either from CMHC or from the department responsible for infrastructure.
That surprised me. In your discussions with this person, do you have good collaboration, or do you have a pro forma blank page on the future of Build Canada Homes?
Mr. Jacques: We have a good relationship with the government on this issue. They share a lot of data with us.
We are currently finalizing our analysis of a confidential database that the government has shared with us, which addresses the issues you have identified concerning operating costs, spending plans for the next five years and results. In my opinion, after 30 years of experience, I think the pace of work is incredibly fast. Sometimes in this type of situation, as you can imagine, civil servants are a little reluctant to provide or publish specific data and figures when they are likely to change in the coming days. I also think that after the budget is released on November 4, the government will have the necessary latitude to share more details.
The Chair: Is this due to a duty of discretion or improvisation, given that nothing has been decided yet? Since nothing has been decided, do people not want to give figures that will have to be lived with and that will be inaccurate?
Mr. Jacques: In my opinion, this is a plan that can be modified until it is published. When they decide to provide you with figures, it is more effective to say, “here are the figures”, rather than saying that there is a risk that these figures may change by 5% or 10% and then publishing different figures a few weeks later.
In the current context, as we have discussed in the past with the Government of Canada’s expenditure budget, when there is a Government of Canada initiative or program that has been in place for a long time, it is not within our purview. It is a poor justification for not sharing data, and in a context where there is something completely new that did not exist in the past, I think it is justifiable to allow more time.
[English]
Senator Marshall: This is about the budget coming down in November of each year. Do you think that a November budget is going to make it easier for us to follow the money? I’m thinking ahead. The budget is coming down in November. I think when we get Main Estimates, Interim Estimates, Supplementary Estimates (A), we’re going to be looking at those numbers and saying, “Where in the budget is that?” And we’re going to be looking at November’s budget and saying, “Where is that in the estimates or the supplementary estimates?” I don’t see it making it any easier to follow the money, although supporters of this change say that it will.
I would like your views on that. Is it going to be easier for us as members of National Finance Committee to follow the money?
Mr. Jacques: The timing could be an improvement and, looking back, one of the recommendations from the Organisation for Economic Co-operation and Development, or OECD, has always been ensuring that the official budget for the government comes down before the appropriation bill, at least three months before the beginning of the fiscal year. So that in itself is an improvement.
I would say in terms of the work of parliamentarians of crossing between what is in the budget, the appropriation bill and the Budget Implementation Act, there was nothing in the announcement the government made that would solve the problem you identified. While it does provide job security for us in the Parliamentary Budget Office, it’s a problem that should be solved for parliamentarians.
Senator Marshall: So you don’t think that it’s going to help that much, if it helps at all?
Mr. Jacques: I guess we’ll see. We’ll see next week. Also, I go back to the point that I’ve never seen a situation where a public servant has shown up at this table or any table — well, I should say any table in the Senate — and been asked to provide additional information, and they’ve said no.
And, certainly, the fact the government has moved on this — nobody asked them; as far as I know, it was not in the government’s platform; it was not a recommendation from anyone to change the budgeting approach and the alignment between the budget and the estimates — if they are willing to move on that, I would presume they are willing to move on other aspects and incorporate other changes. Because, certainly, if it’s good for parliamentarians in the legislative branch — you are a former provincial minister — certainly, ministers around the cabinet table have the exact same questions.
Senator Cardozo: I would like to ask you about housing for Indigenous Peoples. Certainly, on-reserve housing is clearly a federal responsibility. What are you watching, and what should we be watching for in terms of Indigenous housing on-reserve and off-reserve?
Mr. Jacques: What we are looking at right now is — again, just with a biased financial accounting approach — are the public accounts. The public accounts should be coming down any day now. Within the public accounts, we’ll have a good sense of how much was spent on Indigenous housing in the previous year. With the Departmental Results Reports, with those documents, we’ll have a sense of what was accomplished in the previous year. On our end, we’ll be able to compare it to and look at actual spending that is happening over the course of the year. That’s one aspect.
The second aspect is in the budget itself, simply looking at additional announcements that the government is making with respect to Indigenous housing both on the funding side and in terms of other types of commitments. Something that has happened in the past is the government makes an announcement with a substantial amount of spending, and not all of it can be spent within a set period of time, so making a longer-term policy commitment and identifying a policy gap that they are going to close. In particular, I am thinking of the boil-water advisories. In that situation, the government did not lead with the money; they led with a commitment to lift all boil-water advisories on-reserve by 2021 and then worked backwards to figure out how much that was going to cost. A stronger commitment on that front, similar to the commitments they made — the policy commitments around housing affordability — in the budget is certainly something that we’ll be looking for.
[Translation]
The Chair: That concludes our session for the first panel. I will now hand over to Senator Forest, deputy chair of the committee, to chair the second part of the meeting.
Senator Éric Forest (Deputy Chair) takes the chair.
The Deputy Chair: Honourable senators, we are back in session.
[English]
We are pleased to welcome with us for our second panel today, from CPA Canada, Pamela Steer, President and Chief Executive Officer.
[Translation]
We are having communication issues with Ms. MacEwan. Unfortunately, she will not be able to join us at this time.
I would like to welcome you and thank you for accepting our invitation with such enthusiasm. We will now hear your statement. You have five minutes to share your thoughts with us. We will have questions to ask afterwards.
Pamela Steer, Chief Executive Officer, Chartered Professional Accountants of Canada: Good morning, everyone. Thank you for your warm welcome. It is a great pleasure to be here with you today.
[English]
I want to thank you for the opportunity to appear before you today. This is a great opportunity for us to participate in the process. My name is Pamela Steer; I am the President and CEO of CPA Canada. I’m very proud to be in this role.
Our organization acts in the public interest to support the accounting profession, representing Canadian chartered professional accountants, or CPAs, nationally as well as internationally to promote transparency in financial markets and contribute to standard setting and policy-making. This work is absolutely critical as Canada faces significant demographic challenges, declining productivity and growing fiscal demands.
[Translation]
A credible and transparent financial framework is essential for the confidence of citizens, markets and institutions.
[English]
I’m very pleased to share our organization’s perspectives on the priorities for the upcoming federal budget, drawing on the expertise of both our members and our staff as well as our understanding of Canada’s economic and financial landscape.
We would like to draw your attention to five specific areas of focus. The first is modernizing Canada’s taxation system.
[Translation]
The Canadian tax system has not been thoroughly reviewed for decades.
[English]
We urge the government to conduct a broad-based review that includes personal, corporate and commodity taxes while ensuring early and meaningful consultation with stakeholders.
[Translation]
A modernized tax system would reduce bureaucracy, simplify government operations and boost productivity, benefiting Canadians and businesses alike.
[English]
With decades of advisory experience and a broad network of tax professionals, CPA Canada is well placed to play a constructive role in the review, helping to shape a modern tax system that promotes fiscal sustainability as well as growth.
The second focus area is responsible artificial intelligence, or AI. AI is obviously a word of the day, transforming economies, but Canadians and Canada’s governance have not kept pace with this extremely rapid change.
[Translation]
Voluntary codes of conduct are no longer sufficient. We encourage the government to develop regulatory frameworks that ensure accountability, transparency and oversight.
[English]
CPAs with expertise and assurance and data integrity can help ensure responsible AI adoption and innovation as well as oversight. CPA Canada stands ready to support the AI Strategy Task Force as it nears the end of its 30-day sprint, offering the profession’s trusted perspective on the governance and ethical dimensions of AI as well as contributing to next steps and the outcomes that we need.
The third area is sustainability disclosure standards. The Canadian Sustainability Standards Board, or CSSB, where CPA Canada is a proud leading champion of the coalition, has released Canada’s inaugural sustainability disclosure standards.
[Translation]
Action must be taken at the federal level to promote uniform adoption and help organizations improve their information capabilities.
[English]
Reliable sustainability disclosure underpins capital market confidence, competitiveness and climate resilience through the effective assessment of climate-related risks and, let’s not forget, the opportunities as well.
The fourth area of focus is whistle-blower protections and anti-money laundering, or AML. While Canada has strengthened its anti-money laundering efforts, whistle-blowing remains underutilized. A national reporting and protection framework is needed, consistent with many parts of the rest of the world, to encourage disclosures and support law enforcement in the fight against financial crime.
[Translation]
People with knowledge of financial crimes must have clear channels for reporting them and be protected by law.
[English]
We are also encouraged that Budget 2025 will introduce Canada’s first-ever national anti-fraud strategy, a whole-of-government effort to tackle sophisticated financial crimes. This marks an important step forward as this new financial crimes agency unites the expertise needed to investigate complex financial crimes and recover illicit funds. As Canada prepares for its upcoming review by FATF, or the Financial Action Task Force — one of the first G7 countries in this cycle — CPA Canada is proud to be a private-sector Co-Chair of Canada’s Advisory Committee on Money Laundering and Terrorist Financing and to continue to strengthen AML practices across our profession.
The fifth focus area is productivity and trade. Canada’s GDP per capita has been declining.
[Translation]
Removing barriers to interprovincial trade and labour mobility is one of the most effective measures the government can take in the immediate term.
[English]
A government-wide productivity agenda, paired with a spending review to redirect resources toward responsible growth, will bolster resilience and prosperity. In this context, the federal government’s decision to separate operating and capital expenditures through its new capital budgeting framework raises important considerations. CPA Canada is prepared to support the federal government in refining its approach to separating these expenditures by helping to define clear criteria that are critical, ensuring consistent classification and exploring independent oversight mechanisms that reinforce public confidence.
We welcome the government’s commitment to full compliance with public sector accounting standards and recommend restating historical data for comparability. This will help citizens and markets clearly assess the government’s fiscal position over time.
[Translation]
The tabling of the budget in the autumn and the presentation of the economic update in the spring provide an opportunity to contribute to improved decision-making, efficiency and planning.
We would like to thank you once again for giving us the opportunity to take part in this important discussion today. Thank you very much.
[English]
Thank you. That concludes my opening remarks.
The Deputy Chair: Thank you for the opening remarks.
[Translation]
We will now move on to the question period.
[English]
Senator Marshall: Thank you, Ms. Steer, for being here today. In your opening remarks, you made a reference to the government’s new accounting policy separating operating and capital expenditures, and then you also mentioned the decision now that the budget will be tabled in the fall. When I looked at your pre-budget submission, you do make reference to it there, but I was wondering if there’s any detailed opinion on those changes that are being contemplated by the federal government. I notice that the C.D. Howe Institute had issued something on it, and I think there is more to come, and I know some members — or I think they are members — of CPA Canada have also had articles in some of the national media. Is there a detailed opinion by CPA Canada somewhere that we can refer to, or is this something that you are planning to do in the future, for example, after the budget is tabled?
Ms. Steer: Thank you, Senator Marshall. Those are excellent questions. I think like many things in life, the devil will be in the details. We have not yet seen the clear criteria listed by the government, so I think we do need the opportunity to see that clarity and seek that clarity before rendering any kind of opinion.
We are cautiously optimistic that the government, should they clearly outline the criteria — that’s one thing. It needs to be consistently applied, as you would know very well in your former role. At that point, we would love to weigh in. Indeed, we are ready and available to offer our services to assist the government as they want to put this into place.
I also take further heart in that the government has stated quite clearly they aren’t abandoning their general reporting practices. This will be supplemental to that, and I think any supplemental information that helps the public and the markets more clearly understand where their funds are going and how they are being spent is very important.
However, it is very important that we see the details of those criteria that must be in place and very well defined. That’s where my cautionary tale comes in. They need to be well defined. CPA Canada would love to have the opportunity to assist in the implementation of that and/or come in after the fact. We will have something to say on that.
Senator Marshall: We’ll look to see what is released by CPA Canada next week after the budget comes down.
I also noticed in your pre-budget document that you spoke about tax reform. That has been on your agenda for quite a while, many years. As you know, the Canada Revenue Agency, or CRA, received a scathing report from the Auditor General last week or the week before. Could you give an opinion on this? Do you think that the complexity of the Income Tax Act is partially to blame for the problems that are being experienced by the Canada Revenue Agency?
Ms. Steer: In a word, yes. Because there hasn’t been a comprehensive review in our system in many years, that has allowed layers of different regimes, policy changes and choices to add up over time without sweeping out the old and bringing in new, more efficient means.
In my opinion, in the last few years, policy has been brought in that has not been fully thought out before being promulgated and not amenable to operationalization, which has added to complexity, so it has been very difficult and onerous for the CRA to properly oversee, implement and then answer questions, which I think is a big part of the government’s scathing report, and rightly so.
There has been so much added complexity and misunderstanding that it is very difficult for the CRA to do a proper job, and I really do feel for them. I think the criticism of the Auditor General, Ms. Hogan’s report, was absolutely on point. I really value it. We can do more, and we should do more and be better.
Senator Marshall: Thank you.
Senator Cardozo: Thank you for being here. I’ll put two questions at the same time if you don’t mind.
In terms of artificial intelligence, what are your concerns? Where would you like to see the regulation? My sense is that AI has been in your industry for a while, if you think of tax-filing software and stuff. What is the level of concern you have from here on out?
The other question is with regard to sustainability. Do you find corporations are moving away, eschewing or following the U.S. example of admonishing people who dare to be environmentalists?
Ms. Steer: Those are two very different questions, Senator Cardozo.
AI is an area that is moving very rapidly. We have seen in a very short period of time the movement from “What is it? How can we use it? What is a reasonable use case in an organizational perspective?” to very rapidly figuring out now — and you can see some of my colleagues, particularly in large professional firms, investing billions of dollars in the technology.
The regulation, as is typical, has not kept pace. It is very difficult in a rapidly moving environment, and because of due process, there are good reasons why regulation has not kept pace.
The concerns are to understand the data from which these engines are pulling to ensure it is free from bias, to ensure it is free from hallucinations, to ensure that the sources of the data being used are well understood and well defined so that you are getting an outcome that is true, reasonable, consistent and would render a consistent response every time you ask the same question, even if you have different nuances in the way in which you ask that question. That is where my concern lies.
I believe that our profession is actually very well placed — because of the discipline, the rigour and the foundation of our profession in terms of assurance — to assist in ensuring that those things are true and ensuring that our system can rely on these wonderful, technological tools that are very double-edged sword. They can be used for good and for ill. We are seeing both unfold very quickly.
There is an opportunity here for Canada to regain what we had in terms of the nascency and development of this technology and the tools in Canada. I believe we have lost ground, and I think there is still an opportunity for us to make it up in the new realm in terms of application, oversight and governance of these systems and these tools. They are ultimately tools to make our lives better, make productivity grow, make our economy grow. I think now is an opportunity to seize the moment. I hope Canada does not squander it.
If I may go to the second question very differently — and I know Senator Galvez is very interested in this topic as well — on sustainability, I think there is a tale of two directions. In talking to my colleagues internationally at the International Sustainability Standards Board, or ISSB, more than half of the world’s GDP has fully embraced ISSB sustainability standards upon which the CSSB standards, which were issued last year, are based. This is a very important development, notwithstanding our cousins to the south.
In Canada, we have what we call the Canadian Coalition of Champions, who worked together to create and have one of the two leading international offices based here in Canada, in Montreal. That is a very big deal that the ISSB offices are in Frankfurt and in Montreal, right here in Canada. Coming out of that and coming out of the Independent Review Committee on Standard Setting in Canada that CPA Canada initiated, we have also created the local jurisdiction version of that, the Canadian Sustainability Standards Board. That’s very important and indicates the importance with which Canadian corporations comprising both the federal —
The Deputy Chair: If you can conclude, please.
Ms. Steer: Yes, I am sorry. It is incredibly important that we move forward. We are influenced because we have many dual‑listed companies in the United States and Canada, but Canadian companies, pension plans and banks are still working forward, although maybe in a different way than they were previously. But others have moved away, which is unfortunate.
The Deputy Chair: Thank you.
Senator Ross: Thank you for being with us this morning, Ms. Steer. We have had a conversation in the past about business and tax reform. Given your advocacy for simplifying the Canadian tax system and shifting the tax mix toward more growth-friendly consumption taxes, how do you recommend balancing simplicity, equity and competitiveness when reducing top personal and top corporate taxes and broadening the tax base? What do you think will be the most challenging in doing so?
Ms. Steer: I believe there is a way to simplify what we have such that people don’t have to rely on — I’m not a tax accountant — people like me in order to get their taxes done, because they are so complex. Complexity implies there are exceptions for different groups, exceptions for different purposes. Some make sense, but we need to reduce the exceptions as much as possible.
Improve efficiency, streamline the CRA, streamline the filing process, make those processes accessible in the meaning that everybody can do their own taxes — that should be pretty straightforward — and remove a number of the exceptions to the rules. I think thereby you could massively increase the revenues that come into the government. You would have a smaller, more streamlined CRA, and you would have a population that doesn’t need to rely as much on hiring experts to figure out how to strategize in order to maximize the use of all of these exceptions that exist.
A lot of the rules that have been put in place, as I said earlier, have created layer upon layer, and it’s very difficult to wade through those layers in order to just file your simple tax return.
Senator Ross: Those types of simplification measures would certainly help the small- and medium-sized enterprise, or SME, community.
I wonder if you can speak to what reforms you think would most effectively support business investment and productivity, which you named as one of your top five priorities. We’re in a global economy. We don’t want to erode our tax base, but what do you think would most effectively support investment and productivity?
Ms. Steer: This will get out of my lane somewhat. The duplication of regulation that exists across provinces, within provinces and then at the federal level also compounds the problem and makes Canada much more difficult to invest in. So not only do you have a federal jurisdiction, but you have multiple capital markets overseers. So those are regulators. Then you have bodies that are regulatory in nature — the CPA bodies in each and every province — they are another layer. Then you have the securities commissions; they are another layer. And then you have a federal layer. There is too much red tape in Canada, and we need to make ourselves not just investable but attractive to invest in because wherever the friction is the least is where the money will flow, and Canada has too much friction and makes it too difficult to invest.
Senator Ross: Thank you for those very clear answers. I appreciate it.
Senator Gignac: Welcome, Ms. Steer. The new capital budgetary framework to be adopted next week in the budget introduces the concept of capital investment and operating spending. You mentioned that. But capital investment looks much larger than capital spending under the Public Sector Accounting Standards, because it’s particular capital spending, the capex.
Have you been consulted? Because I know the Finance Department has conducted private consultation with some Bay Street economists. So has CPA been consulted to know if those items should be in the bucket of capital investment or the bucket of operating spending, or have you not participated in such confidential or private consultation yet?
Ms. Steer: Mr. Gignac, we have not been consulted, and we would be delighted to be and would absolutely welcome that consultation.
Senator Gignac: Capital spending under the public sector container, what is the annual amount that we have? Because they have a rumour going around that capital investment under the new concept could be as much as $50 billion a year, but capital spending is much lower. Could you share with us what the annual capital spending under the Public Sector Accounting Standards is?
Ms. Steer: I don’t know.
[Translation]
I don’t know, because it hasn’t been enacted or published yet. In my opinion, and I don’t know if this is the case everywhere else, you first need to know the criteria to understand government policies. At the moment, we don’t know what those criteria are.
[English]
Senator Gignac: Do you believe that just targeting operating deficit to be eliminated in three years is enough as a fiscal anchor, or do we need much more than that?
Ms. Steer: Again, I would say we don’t have the criteria to understand how they have separated or how they intend to separate between the capital and operating spending. So I can’t make a comment on that. I would say, in general, Canada needs to get its spending house in order, although I understand we need to make significant investments.
Senator Gignac: I will be more precise because when we question the government if they will continue to adopt a debt-to-GDP ratio, they avoid to naturally answer the question. So in terms of the debt-to-GDP ratio or deficit-to-GDP ratio forecast or, let’s say, target — this is what they have done in the last 30 years, to be honest, except during the pandemic — do you believe that having only one fiscal anchor which would balance the operating budget in three years is enough as a fiscal anchor, or do we need more than that?
[Translation]
Ms. Steer: Absolutely not.
[English]
I think it’s very important to stick to debt-to-GDP and its total debt, not just separate the two. I think combining is a very important measure of fiscal health, and one measure never tells the full story.
Senator Gignac: Thank you.
Senator Dalphond: Thank you for being with us today. CPA Canada is not regulating members as such; it is more doing education, training, uniform exams for Canada and also promoting uniform accounting principles based on the international principles. So that’s the introduction. That’s what I understand of CPA Canada from past experience; I had to work with your organization.
To follow up a bit on the questions of Senator Gignac, as the government is embarking on the projects to separate capitalization or capital expenditures versus the operating budget, the Parliamentary Budget Officer, or PBO, in a recent publication, said that the proposed definition is too broad, goes astray compared to international practices, including those adopted in the U.K.
Is your organization going to work on that or have a special committee that could guide us — those of us who are not members of the accounting profession — to understand better what the international guidelines are, especially in the U.K., for example, and how we can adjust or decide or criticize what is being proposed by the government?
Ms. Steer: We have not as yet been asked to do so. I would say we absolutely will once the criteria have been announced. I saw the PBO’s announcement, I think, two weeks ago, and I don’t have details underlying that from a place in which we could assess the goodness or the not-so-goodness of what the government intends. It will be very important work that CPA Canada will proudly undertake with its professionals and volunteers to better understand, when it has been issued, what the best practices are that we see internationally to make a comparison and provide feedback.
Senator Dalphond: Could you please agree to do it and send us a copy, even if the government doesn’t ask for it? Thank you.
My next question is about the artificial intelligence. You said those kinds of voluntary codes or business codes by banks or by financial institutions and other institutions are not sufficient. You say it’s time for the government to step in. Could you elaborate a bit more on that? And aren’t you worried about the fact that we are going to set up maybe another bureau or another agency to supervise that and try to — isn’t that up to the businesses first, especially those that are publicly traded, to put in place robust policies that protect privacy and integrity of the systems and also ensure transparency and reporting to FINTRAC when they see things that are suspicious?
Ms. Steer: I agree, Senator Dalphond, that it is important for the private sector to do so, to have in place policies that identify issues, that provide transparency. However, coming from a professional accounting body, consistency, transparency and materiality are all concepts that are incredibly important, and without a formal framework and enforcement — and I’m not suggesting that you absolutely need to have a new agency. It might fit. I will leave that to the government’s expertise. But you absolutely need to have a level playing field, especially for publicly traded companies, and that’s what the commissions help to do, the regulators. It’s very important so that one can compare the efficacy and the consistency and the quality of the information that is being so presented. That is a government or a regulatory oversight role that is incredibly important.
Senator Dalphond: Thank you.
Senator MacAdam: Thank you for being here today. I’ve asked about the comprehensive tax review previously at this committee, and I’m wondering if you can speak to what you think are some of the major barriers, because this has been called for over a number of years. What are some of the barriers that prevent this comprehensive tax review from being undertaken, because it has been talked about for quite some time?
Ms. Steer: Thank you, Senator MacAdam. I think the barrier is the complexity of the act itself. It is a very large undertaking to open up something that is so complex, especially amidst all of the priorities that this government has and what’s happening beyond our borders in terms of geopolitical risk, what’s happening to our economies, AI and other things that, of course, are topical today. So that is a daunting challenge. But anything worth doing can be difficult.
It is also very challenging to take a white piece of paper, essentially, and start from scratch. That is not quite but, I think, essentially what this government needs to do because, as I referenced earlier, the layers upon layers of different regimes and policy changes over decades, at this point in time, have created a lot of — I’m going to use a technical term — muck that needs to be cleaned out. Keep the good. Take away the things that are old. That’s difficult to do over time, but it is more than necessary and more than needed. I would say, in my opinion, that is the number one barrier — that it is a very daunting challenge. However, many other jurisdictions throughout the world have absolutely done just that, and they have benefited thereby, both in terms of efficiency and in terms of public trust, as well as in terms of the revenues that have been generated by the jurisdictions that have undertaken that challenge.
Senator Kingston: I understand from a recent article in The Globe and Mail that your Vice-President of Taxation is the author of a forthcoming white paper, CPAs Renew Calls for a Tax Review: A Roadmap to Modernize Canada’s Tax System. I’m wondering if you know when this white paper is expected.
Ms. Steer: I will say imminently, so in the next several weeks, for sure. I can also tell you that this paper is actually yet the next evolution of a paper that we already created many years ago, and so we have taken it off the shelf. I am somewhat sad to say that many of the same recommendations we had in that paper are still valid today, so the exercise was probably, sadly, easier than it could have otherwise been. We are simply renewing and updating the calls that we made several years ago and continue to make every year with our pre-budget submission.
Senator Kingston: With regard to the Canadian Sustainability Disclosure Standards, in terms of leading a coordinated national effort to adopt these standards — and, as you said, they’re aligned with international standards — I’m wondering to what extent Canadian organizations need to build the internal capacity to follow these standards. What has to happen to move this along?
Ms. Steer: I will say that I was very disappointed publicly that our securities regulators have declined to move further on this. I think they should. Capacity building is incredibly important, not just in Canada, with our developed markets, but also in the developing nations, and we are helping with the capacity-building efforts.
There is quite a bit of work to do; however, many of the building blocks exist. When you think about accounting principles and the principle of materiality, that is the most important place to start, and it’s important to start. It is not going to be perfection out of the gate. We need to give our companies some grace in order to start down the path and not to forget that it’s all about risk, risk management and also the identification of opportunities that are arising in our economy because of the needs of climate change.
Senator Kingston: I’d like to talk about your second priority, responsible AI, with assurance and data integrity being part of that. I’d like you to comment if you can on health care. Health care spends a tremendous amount of public funds both at the federal and at the provincial level. As well, if health care were a country, it would be the fifth-largest emitter of carbon.
When you think about how fast AI is growing and what applications it has, both helpful and not so helpful, in the health care system, where would you see that some of the overarching recommendations need to start in terms of the sustainable, good, with integrity, development of AI?
Ms. Steer: Thank you, Senator Kingston. I will disclose, first of all, I’m a very proud member of the board of directors of the Michael Garron Hospital in Toronto, a community hospital. So I am very passionate about this topic. You are correct it is a large emitter. However, the hospital sector more broadly has done a tremendous amount of work in improving their carbon footprint over time, as well as tracking, which gets into the AI perspective.
I do have and share in common with many of my colleagues in the hospital sector a concern with respect to cyber vulnerability, and I realize that wasn’t the nature of your question; however, it links very closely to artificial intelligence and the need to share data, both across the hospital system and across departments. It’s a conversation I’ve had with one of our colleagues in the federal government. There are currently many prohibitions on sharing data, and this is where we have a two-edged sword in terms of the vulnerability of ensuring public health data — which is among the most vulnerable, important data aspects that we have — is shared so that everybody benefits and ensuring that it’s protected at the same time.
I believe that AI can be an incredible force to help good. We already know, in terms of diagnostics, that it is better than the human eye in terms of capturing things on a consistent basis at a much higher accuracy rate than other human methods. We know that it can help prevent death in terms of recognizing signs from diagnostics that are indicating distress that the human eye does not see. Those are huge benefits that society needs and Canadian society needs. But there are also a lot of barriers, and there isn’t sufficient investment, in my lay person’s perspective, in terms of the technological infrastructure that underlies the health care sector at this point in time, or the capacity and the permission, frankly, to share data so that the benefits can be fully utilized and realized in an efficient, productive and effective way across the system in Canada.
Senator Kingston: You’re touching on the concept of “one patient, one record,” the electronic health record, which does exist to some degree. In New Brunswick, that has actually been formed, although not in every province. But being able to share information does improve patient outcomes. So could you talk a little bit more about that piece — what we can do to ensure that all of Canada has “one patient, one record” that can be shared?
Ms. Steer: Senator, that’s getting a little out of my lane, so I would suggest that it’s important that there are both guidelines and guideposts and guardrails to effectively secure that data. But I think it starts with the need to share that data freely, and that’s not just at the hospital level itself but also among federal departments. And then we can have all day — which we do not have — with respect to talking about jurisdictional issues interprovincially and then federal-to-provincial, as well as down to the municipal level.
[Translation]
The Deputy Chair: Thank you.
Senator Hébert: Welcome, Ms. Steer.
You mentioned modernizing the tax system. It’s true that we’ve been talking about this for a long time and we haven’t yet managed to do it. You are right: We know that the simpler a system is, the greater the compliance. You are also right to say that this would help us to facilitate compliance, especially in a self-assessment system like ours. We also have a problem of maintaining tax competitiveness with our neighbour to the south.
The issue of modernization is a broad one. As you mentioned, several layers of sedimentation have been added over the years. We have to ask ourselves what to remove and what to keep. What would be the main elements that would make it possible to say, in concrete terms, that we have succeeded in this tax reform?
Ms. Steer: Senator Hébert, these are quite broad issues: clarity, efficiency and fairness between individuals, institutions, organizations and income levels. Personally, I have been very fortunate in my life. I am quite happy to pay more tax.
We therefore need to understand the levels that will be assets in Canada in 2025-2026. We are sticking to the fundamental principles. We will succeed that way. We still need basic principles for the foundation.
[English]
Senator Hébert: You mentioned in your introduction that you’ve studied some examples around the world. Did you have any international examples of countries that have contemplated and did a fiscal reform and which have succeeded and should maybe inspire Canada in what’s coming up?
Ms. Steer: So I don’t want to get this wrong, but I am reasonably confident that a number of our colleagues in the Commonwealth countries have successfully gone through a regime review of this kind in quite an efficient way. This could be wrong, but New Zealand and Australia come to mind, and I believe the United Kingdom as well.
Senator Galvez: Thank you so much, Ms. Steer, for being here today to answer our questions. Thank you for your recommendations concerning the sustainability disclosure standards — thank you so much for that — and also for supporting the disclosure of climate-related risks. It’s so important.
I want to give you the opportunity to continue the answers you were giving to Senator Cardozo and Senator MacAdam with respect to transparency and materiality, which are definitely incredibly important concepts, but I don’t think common people understand this. Can you please elaborate on what the consequences of not adopting these standards are? You mentioned that you were very disappointed by the securities regulators. Yes, me too; I’m very disappointed. Why are they not measuring the consequences? What are the consequences of not joining all the rest of our peers in adopting these types of standards?
Ms. Steer: Very briefly, Senator Galvez, it is a question of attracting capital. We talk about wanting Canada to be an attractive place to do business, an attractive place where international capital will flow in, and, indeed, our own pension plans have been in the news, and they are extremely well respected throughout the world as well as being champions along with CPA Canada with respect to those standards.
It is very important, therefore, to have a consistent, reliable, understandable and comparable baseline globally to which investors can compare and understand what they are looking at to understand where the benefits are in order to invest. That is offered by the ISSB standards and now the Canadian Sustainability Disclosure Standards. Without that, there are a number of companies that are disclosing things in their own way, based on their own methods, and/or they are voluntarily adopting those standards. We are very fortunate in Canada that we do have a number of corporations which do that voluntarily.
Making it more consistent across more of their peers will help the rest of the world desire and look at Canada more easily, which is very important because that takes away friction, and friction is what prevents capital from flowing. We need that consistency across not just Canada, because Canada is only 2% of the world’s global GDP, but to get bigger and to grow we need to attract from the other 98% of the world’s global GDP. The investment world is not provincial; it is not federal or across Canada; it is global. We are part of a global ecosystem, and we need to take our proud place as a leader amid that system.
[Translation]
Senator Galvez: Thank you.
The Deputy Chair: Thank you very much.
Senator Miville-Dechêne: Essentially, on this environmental issue of disclosures, we are taking a step backwards. If I understand what you are saying correctly, it is because companies want to attract capital that they prefer not to have to disclose what they are required to disclose?
Ms. Steer: I believe that, for investors and pension schemes, disclosure is very important, as much as having answers to their questions. If they have questions to ask, but the information is not available, it creates friction and problems.
Senator Miville-Dechêne: Why do you think the Autorité des marchés financiers backed down?
Ms. Steer: It’s a political issue, in my opinion. You know, in Canada, we don’t have a single capital market; we have 12. There are differences of opinion among the provinces on this issue. For example, Quebec is quite advanced in terms of sustainability. Other provinces, such as Alberta, are a little more reluctant. So there are differences between provinces in their views on sustainability.
Also, there is the fact that the United States is a fairly important market for Canada. We have many organizations that are listed in both Canada and the United States. Currently, we know that there are issues related to sustainability, in the opinion of the president of the United States.
Senator Miville-Dechêne: On the issue of the new government accounting system coming in the budget, do you agree with the Parliamentary Budget Officer that Canada is moving away from international best practices?
Ms. Steer: We must first examine the criteria. These criteria are fundamental to forming an opinion on this subject.
[English]
First, we need the criteria to better understand. Second, I take heart and I think it is very important that the government has stated they will continue to report as they always have. The new criteria are supplemental, so they are an additional report, which is helpful. If we’re remaining true to the fundamentals and continuing to report in the same way, we will not be moving further away. I’m hopeful that this will be additional, helpful information for the public, for the markets and for all of you.
The Deputy Chair: Thank you. We have reached the end of our time for this panel.
[Translation]
That concludes our time for this panel. Thank you all for your very insightful testimonials.
Before adjourning the meeting, I would like to inform the senators that the next meeting will take place on Wednesday, October 29, at 6:45 p.m.
Thank you very much and have a good day.
(The committee adjourned.)