STANDING COMMITTEE ON FINANCE
COMITÉ PERMANENT DES FINANCES
[Recorded by Electronic Apparatus]
Wednesday, October 31, 2001
The Chair (Mr. Maurizio Bevilacqua
(Vaughan—King—Aurora, Lib.)): I'd like to call the
meeting to order and welcome everyone here this
afternoon. Pursuant to Standing Order 83.1, we are, of
course, partaking in pre-budget consultations.
For this session, we have the pleasure to have with us
the following organizations: the Canadian Life and
Health Insurance Association; the Canadian Dental
Association; the Canadian Abortion Rights Action
League; the Canadian Petroleum Products Institute; the
Canadian Printing Industries Association; and Celeris
Aerospace Canada Inc.
Many of you have previously appeared before the committee. You
know you have approximately five to seven minutes to
make your presentation. You also know the entire brief
is, of course, reviewed by committee members.
Thereafter, panellists, after you have all made your
presentations, we'll engage in a question-and-answer
We'll begin with the Canadian Life and Health
Insurance Association, and its president, Mark Daniels.
Mr. Mark R. Daniels (President, Canadian Life and
Health Insurance Association): Thank you very
much, Mr. Chairman.
I'd like to introduce my colleague Jim Witol, who is
CLHIA's vice-president of taxation and research. We
appreciate the opportunity to be here.
I guess all of us begin by noting how much the
world has changed since we responded to your letter of
invitation and submitted our pre-budget brief on August
10. The question that we're all struggling to answer
now is how those changes will impact us across all
aspects of our lives.
Strictly in a business context, Mr. Chairman, there
have been a number of direct impacts on the life and
health insurance industry in Canada. Overall, based on
early estimates by Canadian life and health insurers, I
can tell you the cost to the industry will be in the
neighbourhood of $250 million, directly related to the
events of September 11. This is a significant amount
of money, Mr. Chairman, but in no way does it threaten
the financial health of the industry. A group of
senior officers working at the CLHIA is continuing to
consider emerging issues and to identify areas in which
the industry can work together to deal with the
continuing repercussions of the events of September 11.
Despite the significant changes that the world has
undergone over the past few months, and, in particular,
the considerably altered outlook for the Canadian and
world economies, we feel the themes of our submission
remain relevant. I'd like to make a few summary
points by way of an overview.
The committee previously concluded that
the level of taxation of Canadian financial
institutions is damaging to their competitive position
and is increasing costs to Canadian
users of financial services.
It is urgent that the government introduce a
method of taxing financial institutions that is fair,
appropriate and reflects the real economic activity.
Pursuant to these conclusions, the Minister of
Finance's February 2000 budget reconfirmed the
government's commitment to review financial
institutions' capital taxes. Indeed, as part of this
review process, the government announced on December
21, 2000, that the temporary capital tax surcharge on
deposit-taking institutions would not be extended
beyond its scheduled expiry date of October 31, 2000.
However, Mr. Chairman, no similar announcement has yet
been made with respect to the temporary additional part
VI capital tax, which applies only to life and health
insurance companies, and which had been scheduled to
expire on December 31, 2000.
Another capital tax concern of ours is the way in
which the large corporations tax, or LCT, applies to
the industry. First of all, although the part I surtax
is creditable against the LCT, under normal
circumstances the surtax is not nearly high enough to
fully offset the LCT. The LCT in fact becomes a
permanent capital tax burden on life insurers.
Secondly, the LCT includes real estate in its base for
financial institutions. This means capital invested in
real estate gets taxed twice, thus providing a significant
disincentive to invest in real estate.
In this context, Mr. Chairman, to foster more
competition and to avoid penalizing solvency in the
financial services industry, we would encourage the
committee to again recommend that the government
promptly conclude its review of financial institution
capital taxes by making a commitment to eliminate all
capital taxes on financial institutions. As a first
step, the government should not extend the temporary,
special, additional part VI tax on life insurers past
December 31, 2000, and should take steps to address our
concerns on the LCT.
Switching gears to post-secondary education, Mr.
Chairman, clearly it is an essential component in
meeting the objective of providing Canadians with equal
opportunities to succeed. Indeed, post-secondary
education is an area in which this committee has made
important recommendations to enhance access, provide
tax support, and encourage education-related savings.
In line with the committee's recommendations, the
federal government has taken a number of steps in this
critically important area, including creating the
Canada Education Savings Grant, in connection with the
Registered Education Savings Plan, or RESP.
A step that would further improve access to
post-secondary education would be to broaden the range of
financial institutions permitted to offer RESPs
directly. The current trust structure precludes life
insurers from offering RESPs. The industry therefore
urges the committee to recommend that the legislation
relating to RESPs be amended by broadening it to permit
non-trusteed contracts, in a manner perfectly
consistent with other savings vehicles such as RRSPs
and RRIFs. It should be noted, Mr. Chairman, that this
proposal would not result in any new government tax
Finally, with respect to the committee's goal of
providing an environment in which all Canadians can
enjoy the best quality of life and standard of living,
the industry recommends two additional measures. The
first deals with the ability to fund an adequate level
of retirement income on a tax-effective basis. Here,
in order to better serve retirement goals of Canadians,
the industry urges the government to increase the RRSP
contribution limit to $17,000 immediately, and
ultimately to $27,000. The registered pension plan
defined benefit limit should be increased to $3,000 per
year of service over a five-year period—and by the
way, I think that has been frozen since 1976.
The second quality of life issue that I'd like to
address in conclusion is attendant care medical
expenses for the elderly and disabled. At present,
attendant care costs qualify for medical expense tax
credits, but only up to $10,000 annually. This limit
has not been adjusted for a number of years, and it is
now unrealistically low. We would recommend a
substantial increase in the limit, or preferably
the elimination of that limit.
Mr. Chairman, that concludes my prepared remarks. Once
again, let me thank you for the opportunity to appear
before you and your colleagues.
The Chair: Thank you very much, Mr. Daniels.
We will now hear from Dr. George Sweetnam,
president-elect of the Canadian Dental Association, and
Andrew Jones, director of corporate and government
Dr. George Sweetnam (President-Elect, Canadian
Dental Association): Mr. Chairman, thank you for
inviting me to speak to you today to highlight the
concerns of dentists across this country, as outlined
in the brief presented to you by the Canadian Dental
My name is Dr. George Sweetnam, and I'm the current
president-elect of the CDA. Also joining me today is
Andrew Jones, director of corporate and government
As many other presenters have undoubtedly noted, it's
a changed world, with changed priorities. The outcomes
of the tragedy of September 11 were brought home
personally to us at the CDA when members of our board
of governors were stranded at airports across the
country as they tried to travel to our board
meeting, which had been scheduled for the following
weekend. Of course, that meeting was cancelled.
However, despite the pain and sympathy that we feel for
our American neighbours, the CDA realized—as I'm sure all
of you have—that we must continue with our daily
lives and business. That's what brings us here today.
One of the priorities for Canadians that continues to
feature strongly in our minds is health care. In
talking to you today, I would like to focus briefly on
two key areas of oral health care in this country:
the provision of dental care services to first nations,
Inuit, and Innu peoples; and escalating tuition fees
that threaten the viability and diversity of
professional program enrolment and the ability of these
same programs to attract and retain top-quality
The federal government, through the First Nations and
Inuit Health Branch of Health Canada, administers a
program of non-insured health benefits that provide
health services to this population, largely through
direct reimbursement of private providers, including
dentists. The CDA acknowledges the need for this program,
and applauds the federal government for undertaking the
guardianship of the oral health of this community.
However, serious concerns with the administration and
structure of the program threaten to undermine its
goals of improving the health of its recipients.
Ironically, while the first nations, Inuit, and Innu
people receiving this benefit would, at first blush,
appear to have an advantage in access to care when
compared to other Canadians, the oral health of this
group lags sadly behind, mirroring that of many
In cooperation with Health Canada and the Assembly of
First Nations, the CDA has made significant efforts to
educate first nations communities about the importance
of prevention in oral health. While this message is
well received and encouraged in the regions where it is
delivered, more needs to be done to improve the oral
health status of the first nations people.
The CDA has also made considerable efforts to work with
Health Canada to improve the overall quality and
functioning of the program in order to deliver much
needed services to the patients. Unfortunately, the
resources of the program are too often wasted on
bureaucratic red tape that increases the administrative
burden of dentists while steering the focus away from
the oral health needs of the people.
In its election platform, this government recognized
the need to improve the
quality of life of aboriginal peoples, and particularly
aboriginal children. You now have
the opportunity to deliver on your promises by
dedicating resources to a recognized problem and, in
turn, fostering the healthy growth of children within
this segment of Canada's population.
The second set of issues that I would like to bring to
your attention is escalating tuitions fees and emerging
human resources problems that will affect future
generations. The Canadian Dental Association is a
member of the National Professional Association
Coalition on Tuition, or NPACT, which has already
presented to this committee. I'd like to reinforce the
message brought to you by Dr. William Easton, who
For a moment, I'll ask you to put yourselves in the
shoes of a high school student contemplating an
education in dentistry. If you'd like to attend
the University of Western Ontario, for example, your
tuition and related fees—putting aside the cost of
housing and other living expenses—would average over
$23,000 per year. That's on top of the debt
you would likely incur while earning a three- or
four-year undergraduate degree, which is what most
students entering a dental program now have.
You could easily be looking at total education debt
load of well over $150,000. Unless you come from a
very wealthy family, that kind of money is not easily
within reach. You may decide to mortgage your
education against the earnings that you expect to
achieve upon graduation. But when you look at the high
monthly fees for repayment of loans, on top of the
escalating costs of establishing a professional
practice, you may well feel defeated.
Those of us who are dentists today would like to see a
future in which students may choose to join our ranks
based on their personal aptitude, ambition, and
inclination, not on their socio-economic ranking. We
recommend that this committee look for ways to contain
tuition fees, and offset the cost that students face
by increasing bursaries and scholarships available to
professional program candidates.
A related issue of growing concern to the profession
is the availability of top-quality dentists interested
in pursuing a career in education. Because of the
financial constraints faced by universities that have
forced them to drive up tuition, funding available for
the hiring of professors is limited. The
disparity between the income of private-practice
dentists and those teaching at our
universities is increasing.
Our universities are also having trouble attracting
world-class researchers. Regrettably, the Canadian
Institutes of Health Research have shortchanged oral
health initiatives both in profile—through the naming
of the institutes—and when allocating research
dollars. Less than 2% of funding in 1999-2000 was
awarded to dental researchers. As we have become
increasingly aware of the connections between oral
health status and systemic health problems such as
diabetes, heart disease, and pregnancy outcomes, we
recognize that a vital ounce of preventive medicine is
The so-called U.S. brain drain exacerbates these
problems by wooing away quality dental educators and
researchers, while at the same time offering to pay off
high debt loads incurred by students during
In the interest of brevity, without going into great
detail, I will mention that the brief we are presenting
to you today also addresses the requirement for greater
emphasis on tobacco control and prevention
initiatives—particularly aimed at Canadian youth—as
well as the need to eliminate the disparities in
savings opportunities for those planning
for their retirement through RRSPs.
Thank you again for the opportunity to address you
here today, and for giving your full attention to these
issues as you go about the important task of weighing
the priorities of this budget. I welcome any questions
The Chair: Thank you very much, Dr. Sweetnam.
We'll now hear from the Canadian Abortion Rights
Action League, and Ms. Marilyn Wilson. Welcome.
Ms. Marilyn M. Wilson (Executive Director, Canadian
Abortion Rights Action League): The Canadian Abortion
Rights Action League wishes to thank the committee for
the opportunity to present its concerns regarding the
inequitable funding of abortion care under the Canada
CARAL was responsible for transforming
abortion from a criminal act to a safe, legal,
medically necessary procedure. It is the only national
volunteer organization working full-time to ensure that
women of Canada are able to exercise reproductive
choice through access to abortion care, in accordance
with the five principles of the Canada Health Act:
public administration, comprehensiveness, universality,
portability, and accessibility.
Under the Canada Health Act, medical services that are rendered
by physicians and are deemed to be medically required,
such as abortion, are to be covered under medicare
whether they are performed in a hospital or in a clinic setting.
The act established this condition as a way of
eliminating direct charges to patients in the form of
extra billing and user charges. Four
provinces—Manitoba, Quebec, Nova Scotia, and New
Brunswick—are presently contravening this act by
refusing to pay for clinic abortions. Also, many
provinces have placed abortion on their excluded lists
for reciprocal billing, along with non-medically
required procedures such as cosmetic surgery. This
means a woman who receives abortion care outside her
province is forced to pay out of her pocket, without
reimbursement by her own province.
The lack of universal access to medicare-funded
abortion has become a serious financial problem for
women and their families. According to Statistics
Canada, therapeutic abortions are most common among
women in their twenties. These women accounted for
half of all women who obtained an abortion in 1998. The
major reason for terminating an unintended pregnancy
through abortion in this age group is because of failed
Women who make the decision to abort a child at a
certain point in their lives do so for socio-economic
reasons. Sometimes, it is a desire to complete their
education and become financially independent. In many
cases, couples with children wish to restrict their
family size in order to provide them with adequate
financial support. More often than not, choosing to
have an abortion is a conscious decision not to become
a burden on society.
I'd like now to address some of the financial barriers
to abortion care.
Two-thirds of all abortions in Canada are carried out
in hospitals and are paid for by medicare, but hospital
abortion services are disappearing at an alarming rate.
A recent CARAL survey of hospitals found that only
1.5% of 68 hospitals in Saskatchewan provide care.
In New Brunswick, it is 6.7%, while it's 4% in Alberta.
Of course, it is 0% in P.E.I.
One of the factors contributing to the decline in
services is the sharp decrease in the number of
abortion providers. Physicians who were actively
pro-choice because they remember the horror of criminal
abortions prior to 1988 are reaching retirement, and
medical students are not being trained to take their
place. Hospitals merged with Catholic institutions
adopt policies that refuse all family planning
services. Last, but not least, physicians are afraid,
because of the current climate of anti-abortion
terrorism that continues to threaten their lives, the
lives of their colleagues, and the women they serve.
Lack of clinic services is dangerous to the health and
life of women, as every week of delay for a hospital
abortion after eight weeks of pregnancy increases the
risk of complications. When faced with a six-week
wait, women must seek clinic abortions in order to
receive timely care. Clinics are based in cities, and
women in non-urban areas have to travel long distances
from their communities, at their own expense. In the
four provinces where hospital waiting lists are long
and the provincial government refuses to cover the
costs of clinic abortions, women have to pay an average of
$500 for the procedure. In P.E.I., women have to
travel to another province and personally pay for care
of any kind.
At the present time, no medically required service
other than abortion is so inaccessible, has to be
individually negotiated by a woman, and is open to
state interference. It is a blatant injustice that
women in some provinces have access to clinic abortion
care under medicare, while those in some other
provinces do not. Affordable
abortions in Canada now depend on a woman's residence
and on the size of her pocketbook.
CARAL feels the need for government accountability is
The delivery of abortion care in the current
socio-economic environment discriminates against women
in their efforts to access this medically required
procedure under the Canada Health Act. Although the
provinces and territories are constitutionally
responsible for the administration and delivery of
health care services, the Canada Health Act establishes
the criteria and conditions related to insured health
care services, as well as the national standards that the
provinces and territories must meet in order to
receive the full federal cash transfer contribution
under the Canada Health and Social Transfer mechanism.
Health care is a matter of provincial jurisdiction,
but it is still subject to federal budgetary guidelines
as expressed in the Canada Health Act. Currently, New
Brunswick, Quebec, Manitoba, and Nova Scotia receive
federal grants yet continue to violate the principles
of the CHA by refusing to pay clinics for a medically
required service that is covered universally when
performed in a hospital. To date, the federal
government has refused to withhold transfer payments
from three of these provinces; with Nova Scotia, the
amount of funds withheld is insignificant. The federal
government also has failed to use its powers to resolve
the matter of reciprocal billing agreements. These are
two blatant examples of gender discrimination against
women in health care.
The Ministry of Health has established a $4-million
fund to monitor provincial compliance with the CHA.
CARAL asks that moneys from this fund be used to
rectify the inequitable coverage of abortion services
under medicare. We also call upon the Standing
Committee on Finance, in striking the next federal
budget, to use whatever means possible to ensure
that in matters of health and reproductive choice,
women have opportunities equal to those of men under the Canada
Health Act, to enjoy the best possible quality of life
and standard of living.
I would just like to add one more note to the brief
that we submitted prior to the events of September 11,
and that is to make sure there are sufficient
funds, when fighting terrorism, to take care of the
need to fight domestic terrorism that has been wreaked
against our doctors, their colleagues, and women of
this country for the past twenty years.
Thank you very much.
The Chair: We next hear from the Canadian
Petroleum Products Institute, and vice-president Bill
Mr. William (Bill) Simpkins (Vice-President,
Canadian Petroleum Products Institute): Thank you, Mr.
Chairman, for the opportunity to address the
committee and to share our views. I apologize that
Alain Perez couldn't make it today.
I would like to focus on three themes today: first,
that we provide quality, reliable products to consumers
at competitive prices that clearly benefit Canadians;
second, that we support smart regulations; and third,
that our industry is here for the long term.
Just as a little bit of background on CPPI, we
represent the refiners and marketers of petroleum
products in Canada. Our members are major companies,
regional companies, and others, such as Canadian Tire.
We generate over $30 billion in revenues annually; on
behalf of governments, we collect more than $10 billion
in fuel taxes. The industry also exports about $3
billion worth of products, mainly to the U.S., and our
members collectively employ some 130,000 Canadians
across the country.
The events of September 11 have caused industries and
governments around the globe to re-examine their
priorities, and it is critical that Canada takes
whatever steps are necessary to ensure the free flow of
goods and services within our country and across our
borders. Our industry requires reliable access to U.S.
markets to function effectively.
Another issue that has gained added importance is the
issue of secure energy supplies. I want to assure you
our members are taking all necessary precautions, and
they have reviewed their contingency plans that will
ensure a safe supply of fuels to Canadians.
Economic issues and concerns that were present before
September 11 remain, and we recognize that government
must now examine options and solutions to these issues.
We believe this must be done within the framework of a
balanced budget, and it's even more important today to
ensure that government's resources are allocated to the
The marketing segment of our downstream business is
one of the most studied industries in Canada, and we
are pleased by the Conference Board of Canada report
that concluded that Canadians are well served by our
retail industry. The report also confirmed that
Canadians pay significantly less for gasoline than U.S.
consumers do. In fact, since the crude oil increase of
1999, the Canadian advantage has grown from 1¢ to 2¢
litre to 2¢ to 4¢ per litre at the pump, net of
Our industry, due to its competitive nature, has been
one of the most innovative industries in Canada over
the past decade. The structure of the industry is also
now evolving. Retailers such as Canadian Tire and
Costco are very successful, and even grocery stores
such as Safeway and Loblaws are now entering or are
expanding their interests in the market in order to
compete in the gasoline business. This is a new
phenomenon here, but it started in Europe and took the
oil industry by surprise. This new reality in Canada
is certain to result in even more competition in the
marketplace, and will continue to benefit consumers
with improved offerings.
Our refineries compete in a continental market. The
typical Canadian refiner must be a more efficient,
lower-cost operator than the import alternative in
order to maintain market share in Canada. Similarly,
if refiners want to continue to supply other parts of
North America, they have to continue to deliver quality
While part of our drive to remain competitive involves
securing and retaining corporate skills and resources,
governments have a direct impact on our
competitiveness. Federally, the government's
intervention influences the marketplace in two main
areas. One is the Competition Act and how it is
enforced, and the other is environmental
regulations for our products and facilities.
The Competition Act is currently being reviewed by
your colleagues on the industry committee. We said to
that committee last week that we support Bill C-23, and
we could support a tabled amendment on private access
if it contained the necessary safeguards.
The second area of involvement for the federal
government is environmental regulations. I can say
without equivocation that today the government policy
of aligning product specifications with those of our major
trading partners is a good policy, and it assures that
Canadians will continue to benefit.
This new policy means that commodity prices like
gasoline and home heating oil will continue to be
priced as such, and that North America will be one
single market for our products. The alternative, a
path chosen fifteen years ago by the State of
California, would have meant much higher consumer
When it comes to regulating emissions from refineries,
I'd like to share with you a current example of what we
mean by smart regulation. At our request, the
provinces, even though it is their jurisdiction to
regulate, are going to work with the federal government
and our industry to define principles and a national
framework to regulate refining emissions. These
principles, such as defining the performance to be
attained, but still allowing the refiner to decide how
to achieve the performance, can provide our refiners
with a strategic advantage over their U.S.
counterparts, who are subject to cumbersome,
multi-jurisdictional regulations that are costly to
While many view our industry as the old economy, we
are actually a high-tech industry. We have
outperformed many segments of the so-called new economy
in innovation, improved technology, and productivity
gains. From 1989 to 1999, our combined downstream
operating costs were cut by an average of 30%. Most of
this gain in productivity was achieved through
investments in new technology and software. Our
industry productivity levels are well ahead of other
Canadian manufacturing sectors.
As we look to the future, hybrid cars will be fully
commercialized and fuel cell vehicles will appear on
our roads. They are powered by hydrogen that is easy
to extract from hydrocarbons, which are our product.
While our retail network could be adapted to other
fuels, we firmly believe hydrocarbons will remain the
fuel of choice for future engine technologies. A key
part of making the future work better is for
governments to ensure that the regulatory framework in
which our industry operates is efficient, competitive,
and free of subsidies that often only serve a narrow
segment of the economy and end up costing more to all
To conclude, Canada has an abundant strategic resource
that is the cornerstone of our economy and our
lifestyle. Canadian consumers are well served by the
industry. We are well positioned for the future.
Hydrocarbon-based fuels will continue to support future
transportation technologies. To maintain our strategic
advantage in this vital industry, we must continue to
evolve and to innovate both in our refining and
marketing businesses. Governments can best support our
industry and serve Canadians not by providing subsidies—and
thereby picking winners and loser—but by ensuring
that we have a smart, responsive regulatory and taxation
framework. That way all Canadians can win.
The Chair: Thank you very much, Mr. Simpkins.
We'll now move to the Canadian Printing Industry
Association. Mr. Pierre Boucher is president, and Jeff
Ekstein is chairman of CPIA's government affairs
Mr. Pierre Boucher (President, Canadian Printing
Industries Association): Thank you, Mr. Chairman. At
the outset, I'd like to offer the regrets of CPIA's
chairman, Steve Cropper, of Quebecor World Calgary,
who had other commitments today and could not be with
us in this session.
My name is Pierre Boucher, and I'm president of the
Canadian Printing Industries Association. With me is
Jeff Ekstein, the chairman of our government affairs
committee. His full-time job is that of president of
the Willow Printing Group, a mid-sized printing company
located in Concord, Ontario.
Mr. Chairman, CPIA welcomes this opportunity to appear
before the House finance committee. We commend the
committee for establishing a fiscal blueprint, and
concur with the stated objectives of the current
budgetary process. In order to achieve these
objectives, difficult decisions must be made with
respect to the allocation of the country's surpluses,
its tax system, the accumulated debt, health care
needs, education, and technological infrastructure.
Given the recent tragedy in the United States that
affects the world in its entirety, new fiscal elements
come into play. They also need to be addressed
Before we begin our presentation, I'd like to give you
a brief overview of the industry.
CPIA is the national voice of the pre-press, press and
allied printing industries. Since 1939, the Association has
served as the collective body to represent the interests of its
member firms for policy formation, regulation and legislation.
CPIA has about 800 members in Canada. We are proud to say
that Canada's printing firms are primarily Canadian-owned. More
than 76,000 Canadians work in printing industries.
About $10 billions worth of printed products are produced
each year by the industry. With a gross output multiplier of 1.9,
an additional $9 billions will be generated in other sectors of
Canada's printing industry represents close to 10% of all
manufacturing establishments in Canada. Canada exports close to
$1.3 billions worth of commercial printed and related matter each
Small firms dominate Canada's commercial printing industry
with 75% of companies in the industry employing fewer than 20
employees and less than 3% employing more than 100 employees.
Due to its size and structure, Canadian printing industry
is affected by several government policies having a direct
bearing not only on the industry's viability but also on its
capacity to create and maintain employment for thousands of
It is in this context, Mr. Chairman, that we present our
views this afternoon.
I would like now to give the floor to Mr. Ekstein.
Mr. Jeff Ekstein (Chairman, Government Affairs
Committee, Canadian Printing Industries Association):
Thank you, Pierre.
Mr. Chairman, the first issue I would like to address
is that of tax treatment for computer-based equipment. One
stated objective of this committee is to give Canadians
an equal opportunity to succeed. To achieve this goal,
one has no choice but to look south of the border, to
what is by far our largest trading partner and our
largest competitor. Last year, the Canadian printing
industry exported shipments of printed material in an
amount equal to about $1.3 billion. Close to 90% of
that volume was exported to the United States alone. In
total, exports represent 10% of all our production. In
order to remain competitive and to give Canadians equal
opportunity to succeed, we need to establish a level
playing field with the United States in some specific
areas. One specific area in which we are at a clear
disadvantage is the way our technology is treated in
terms of taxation.
The use of computer-based technologies in the printing
industry has expanded significantly in recent years.
The explosion of digital technology, desktop
publishing, and alternative media has forced firms of
all sizes to constantly upgrade equipment just to
maintain market share. In a manufacturing sector
already impacted by fierce competition, this
technological revolution has severely impacted the very
survival of hundreds of printing firms in Canada.
Unfortunately, manufacturing industries such as
printing, which now rely heavily on high-tech equipment
for production, are unable to depreciate that
on its actual useful life. In fact, Canada's tax
policy respecting the depreciation of computer-based
equipment is totally outdated. Currently, it can take
in excess of seven years before a piece of computer
equipment has substantially depreciated for tax
purposes, or even longer for expensive technology
devices. This is an unreasonable amount of time, given
the rapid obsolescence of this technological equipment.
According to a recent survey, printers are disposing
of computers and peripheral equipment within 14 to 36
months. Customers are demanding new and better
products and services at an ever increasing rate. As a
result, printers must continue to purchase new
high-tech equipment to remain competitive. At the same
time, no reliable market exists for used computer-based
products, since technologically outdated equipment has
virtually no value.
Chairman Bevilacqua, I know you visited one of our
members, Quebecor Aurora Ltd., within the past year, and
saw a lot of the equipment that is used in this
high-tech capacity. In speaking with that member, I
was informed that in the next six months, they'll be
investing $2 million in further high-tech upgrades in
order to keep up with competitive forces.
In the United States, Republican Mac Collins and
Democrat Benjamin Cardin have introduced legislation
that would change the depreciation period for computers
and peripheral equipment from five years to two. These
two congressmen of opposing parties have undertaken to
introduce new legislation “to ensure that computers used
in manufacturing processes can be depreciated within
their actual useful life.” When enacted, this U.S.
government measure is going to have
serious implications for Canada.
We have included several charts in our submission to
illustrate the effects of tax schedules on our
industry. We will not discuss them in detail today,
but we urge the committee members to look at them so
that they have a true appreciation of our competitive
In order to be competitive with the current U.S. tax
rate, the Canadian Printing Industries Association has
recommended the adoption of a special high-technology
depreciation schedule, which would recognize
technological obsolescence by granting an accelerated
depreciation of 75% by the end of two years, when most
computer equipment has served its actual useful life.
For the record, we'd like to point out that the
Canadian Federation of Independent Business has
recently endorsed our position on this matter.
We believe our proposal would serve Canada well, and
that the federal government would not see any revenue
shortfall, as this is only a timing issue.
It is interesting to note that prior to 1988, most
manufacturing and processing machinery and equipment,
along with supporting computer equipment, was subject to a
class 29 depreciation schedule, which carried a
three-year, 25%-50%-25% straight-line write-off. We
would hate to think our government had more foresight
for these kinds of issues more than a decade ago.
We would also ask that you read all of the
testimonials attached as appendix A. They illustrate
very well our situation in Canada with respect to your
objective to give Canadians an equal opportunity to
As appendix B, we have also included examples of
computer-related equipment used in the printing
industry. We invite members of this committee to visit
a printing facility in their region to get first-hand
exposure to this challenge. CPIA can assist in
arranging these visits.
Now I'll turn to everybody's favourite subject, Mr.
Chairman, and that's payroll taxes. CPIA's members
truly believe employment insurance premiums are too
high in Canada. Actually, this view is shared by all
industry sectors. As such, it is very frustrating to
note that the common call is repeatedly being ignored
by the federal government.
The government has
consistently claimed the EI fund doesn't really exist,
but the premiums employers and employees pay are real
and need to be reduced. We strongly oppose the
government's practice of amassing moderate surpluses
in this account. It has become abundantly clear to all
Canadians that EI premiums have become nothing more
than a tax grab by the government. This is an
unethical and unfair practice that needs to stop.
Employers and employees are paying more in payroll
taxes today than they were in 1993. Excessive payroll
taxes cost jobs in Canada and limit growth. CPIA would
support an introduction of a yearly basic exemption
program, as recommended by the Standing Committee on
Human Resources and the Status of Persons with
Mr. Chairman, one major irritant that we have within
the EI system is the fact that there is no cap on the
premiums paid by employers when applied to employees
who change employers. Employees are entitled to a
reimbursement when they exceed their yearly maximum,
but the same does not apply to employers. We ask that
employers be treated equally.
With respect to RRSPs, Mr. Chairman, we propose that
the government increase RRSP contribution limits to
afford Canadians the opportunity to plan their own
retirement so that they're not dependent on the solvency of
government plans. CPIA recently received a letter from
one of its members in Ontario, urging us to call for
justice and equity in this area. Specifically, he
speaks about the maximum defined benefit pension of his
company, which, like others, can only be funded to a
set maximum amount of $1,722 per year of service.
Pension adjustments also further decrease the
ability of individuals to maximize their benefits.
Some changes in this area are therefore recommended.
We have two other issues that we'd like to touch on
today. They are training and the national debt, and I'd
ask Pierre to address those on behalf of CPIA.
Mr. Pierre Boucher: Mr. Chairman, Canada can only remain a
major player in the new economy if it undertakes major programs in
areas where significant gains can be made globally.
Research and development and education are key areas and the
government should demonstrate leadership by establishing effective
programs that will ensure we have the appropriate skills, products
and knowledge base to meet the challenges of the future.
CPIA recommends the introduction of tax incentives from the
federal government to encourage skills upgrading, and leaving
training to each employer. This government action would go a long
way in addressing our training needs. This would greatly contribute
to our ability to remain a major player in the new economy. Many
sectors would benefit and it would make Canada more productive,
more competitive and certainly more apt to export successfully his
know-how, products and services.
Next, Mr. Chairman, CPIA applauds the federal
government for the substantive efforts it has made in
reducing our national debt, now estimated at $550
billion. We strongly suggest that we stay the course
and that we continue to pay down this huge burden now
shared by all Canadians. In fact, CPIA recommends that
rolling debt targets be set for a minimum of three
years, and that at least $3 billion be allocated
annually to retire the debt.
Finally, Mr. Chairman, we understand that the
government now has to address our needs in terms of
national security and military preparedness. We accept
that money needs to be spent in those areas. We
believe, however, that the debt reduction targets need
to be maintained. One funding mechanism is perhaps to
cut all subsidies that the government is handing out to
corporations and to reallocate them for this federal
Again, we thank you for the opportunity to appear
before this committee.
The Chair: Thank you very much, Mr. Ekstein and
We will now proceed to Celeris Aerospace Canada
president Stephen Hall.
Mr. Stephen Hall (President, Celeris Aerospace Canada Inc.):
Thank you very much, Mr. Chairman.
Honourable committee members, ladies and gentlemen,
I'd like to address the challenges facing Canadian
aerospace small businesses following the tragic events
of September 11. To place my comments in context, I'll
provide you with a brief summary of the experience of
my own firm.
Celeris Aerospace Canada is an Ottawa-based, high-tech
aerospace firm that has been in business for over nine
years. We make extensive use of the Internet, both to
provide services to our clients and to access the
specialists needed to complete our contracts. The last
ten months have proved to be very challenging. In
addition to having to weather the downturn in the
high-tech sector, we are now dealing with the aftermath
of September 11. In our own case, within four weeks of
the tragic events in the United States, we had one
ongoing contract cancelled, one follow-on contract that
was due to start in September postponed indefinitely,
and a U.S. contract slowed down.
The economic hardships currently faced by Celeris
Aerospace are also being faced by many other small
businesses in the aerospace sector. Recent information
published by the Air Industries Association of Canada
estimates that as many as 30% of Canada's small
aerospace firms could go out of business within the
next six to twelve months as a direct result of the
terrorist attacks. This data, based in part on a
limited survey of their members, indicates that
respondents anticipate anywhere from a 15% to a 50%
immediate reduction in revenues in the coming months.
Furthermore, the majority of the respondents consider
that they will need to secure some form of loan guarantees
if they are in fact to survive.
Following the terrorist attacks, many leaders,
including Prime Minister Chrétien, stated that the
best way to combat terrorism is to go about business as
usual. While many small business owners have attempted
to do this, they are faced with the challenge of trying
to conduct business as usual in a business environment
that is far from usual.
uncertainty about the war on terrorism and the
possibility of further terrorist acts have resulted in
larger aerospace organizations conserving their cash
and adopting a wait-and-see attitude. This approach is
optimistically anticipated to last at least six months,
and realistically will probably last from twelve to
eighteen months. Consequently, many smaller aerospace
firms are faced with the prospect of trying to survive
with little to no additional collateral, and with a
minimal chance of securing any sizeable contracts
within the next six to nine months. In this
environment, traditional financial institutions are
extremely reluctant to extend existing lines of credit
or to provide new loans.
The owners of small aerospace firms are fiercely
independent and are able to manage the ebb and flow of
the normal business cycle. However, the tidal wave of
September 11 means that if they are to survive, they
need some immediate, focused assistance. For this
reason, I would note that while the initiative of the
Honourable Minister of Finance to tender a budget on
December 11 is a positive step, many small firms are
concerned that any assistance provided by the
traditional budgetary process may arrive too late.
I believe federal and provincial authorities could
help to ensure the survival, competitiveness, and
future growth of many small Canadian aerospace firms by
implementing actions such as the provision of loan
guarantees for small aerospace firms—and in attachment
B, you will see a small business act in the States that
we're competing against, under which this has
already been done in the U.S.; allowing employment insurance
recipients to work for small aerospace companies while
continuing to receive EI payments; increasing the
sole-source limits for government contracts to $100,000
Canadian; shortening the government payment cycle to
ten days net, with no early payment penalty; bringing
forward the awarding of contracts the federal
government had scheduled for release within the next
two years, to within the next three to six months; and
providing a six-month to one-year moratorium on source
deduction GST and PST payments.
I realize implementing these suggestions will have
short-term economic implications for the Government of
Canada. However, I believe the circumstances in which
we find ourselves require greater emphasis to be placed
on the long-term economic implications of sustained
damage to Canada's small business aerospace
I will conclude by proposing that a small business
state-of-emergency conference be convened within the
next two weeks, aimed at addressing the issues I have
presented. The conference would involve key members of
federal, provincial, financial, and business
organizations. It would be comprised of working groups
that have a three-day mandate to develop practical
solutions that can be implemented by mid-December 2001.
Delegates attending the conference must either attend
as resources able to guide the deliberations or as
representatives able to commit their organizations to
the allocation of resources and the passing of
legislation within appropriate timeframes. The focus
of the conference would be on creating a solid action
I admit that prior to September 11, such a proposal
would have been considered impossible, but we live in
times when radical action is urgently required to
address the impossible. I believe we can fight
terrorism and the fear and anxiety it imposes by
utilizing the creativeness and ingenuity for which
Canadians have gained worldwide renown. However, as
one small business, or even as a member of a group of
small businesses, this is a battle that cannot be
fought alone. Canadian aerospace small businesses are
ready and willing to contribute to this fight.
However, we need your assistance to access the tools
that will ensure that we succeed.
I thank you for your time, and particularly for also
including me on the agenda at fairly short notice.
The Chair: Thank you very much, Mr. Hall.
We will now proceed to the question and answer
session. It will be a five-minute round, beginning
with Mr. Kenney, who will be followed by Mr. Epp.
Mr. Jason Kenney (Calgary Southeast, Canadian
Alliance): Is that five each, Mr. Chair?
The Chair: Five in total.
Mr. Jason Kenney: Thank you, Mr. Chairman.
I would just like to thank the panellists.
I have a question about employment insurance first.
A couple of the panellists, including the CPIA, have
discussed the large employment insurance surplus and
the burden that the premiums impose on employers in
terms of job creation. I was interested to hear that
the CPIA in particular endorses the service industry's
call for a yearly basic exemption at the bottom end of the EI
premiums. I'm wondering, though, if that really solves
the problem fundamentally in terms of this payroll tax
Has your industry association considered, or
would you support in principle, looking at more
fundamental reforms of the EI program that would reduce
its costs, similar to reforms that were recently
repealed in legislation last year? Would you, for
instance, be willing to consider—and other panellists
could briefly comment on this if they're interested—an
experience-rated system that is strictly an employment
insurance program? Right now, only about 40% of the
payouts actually go to employment benefits. The rest
of the money goes to training and so on.
Mr. Pierre Boucher: Mr. Chairman, the
experience-rated system has been discussed many times
before. Many groups have commented on it, and it needs
to be addressed carefully.
The current rate is an impediment to employment, and
it is our understanding that some consultations were to
take place this fall to address the EI system, how we
could perhaps reform it, and how it should be restructured.
We certainly would welcome this opportunity, because
we see it as a problem. Again, our main concern is the
great amount of money sitting in that account. It
should be used for retraining or training purposes
or to facilitate the entry of new persons into the
Mr. Jason Kenney: My next question is for Ms.
Frankly, I was confused by your submission, Ms.
Wilson. Throughout it, you refer to abortion as a
medically necessary service for the purposes of the
Canada Health Act. Quoting from your submission,
though, you say in the seventh paragraph that women who
do so for socio-economic reasons. Sometimes it is a
desire to complete their education and become
financially independent. In many cases, couples with
children, wish to restrict their family size in order to
provide them with adequate financial support.
You indicate that they are often choosing
abortion as a conscious decision not to become a
socio-economic burden on society.
How can a service that is sought and obtained for
social and economic reasons be medically necessary?
Ms. Marilyn Wilson: Under the Canada Health Act,
“medically necessary” is determined to be covered by
medicare when it's decided upon by the college of
physicians and surgeons in each province. That has
happened. The policy was also set by Health Canada,
under the former Minister of Health Diane Marleau. She
stated that this policy was to be applied whether
abortions were performed in a clinic or in a hospital,
because once a procedure is deemed medically necessary,
it has to be covered under medicare under both the
hospital and clinic services.
I don't see how this has to do with the decision
a woman makes. My point in that particular
statement was that making the decision to have an
abortion is a highly moral decision on the part of
women and their families. More often than not, it is
made because these women and their families do not want
to bring children into the world when they cannot
adequately support or care for—
Mr. Jason Kenney: Again, you're reasserting that
it's done principally for economic reasons, not medical
Ms. Marilyn Wilson: I think that is part of their
consideration, but the term “medically necessary” is
Mr. Jason Kenney: “Medically necessary” doesn't
mean it's medically necessary, is that what you're
Ms. Marilyn Wilson: “Medically necessary” or
“medically required” are medical terms, because this
is the only procedure that can terminate an unintended
pregnancy. It's a medical term.
Mr. Jason Kenney: It doesn't sound like a medical
My next question is if—
An hon. member: It's medically necessary.
Mr. Jason Kenney: She just said it's for social
and economic reasons. I don't know how you can have a
medical procedure that is medically necessary but is done for
reasons other than medical reasons.
In your submission, you say clinic abortions in some
provinces aren't financed. I don't think that's
completely accurate. My understanding is that several
provinces finance the physician's fee portion of
abortions performed in freestanding clinics, but not
the facility fee, which is an extra billing on top of
the physician's service.
The federal government has threatened to—and in some
cases actually has—penalize provinces by withholding
cash transfers for allowing extra billing to occur in
private clinics. If you were consistent in your
advocacy of the Canada Health Act and opposed to
privatization of medical services, wouldn't you in fact
think the federal government should withhold transfers
to provinces that allow the operation of freestanding
clinics that permit extra billing for facility fees?
Ms. Marilyn Wilson: I have to return to the point
of a procedure that is deemed to be medically required.
It then has to be covered under medicare if it is
performed in a hospital or in a clinic. There's no
differentiation to be made in that.
Mr. Jason Kenney: The physician's fee does, but
not the facility fee. That's quite clear.
Ms. Marilyn Wilson: Both should be covered,
because they're both covered under the hospital
Mr. Jason Kenney: I see. So do you think the
federal government would be consistent in its
application of this rule if it were to tell the
Gimbel Eye Centre in Alberta, for instance, through the
Alberta government, that it can't charge facility fees
for necessary services, while it allowed the abortion
clinics to do so? Do you think that's a consistent
application of the law?
Ms. Marilyn Wilson: I keep coming back to the same
point about a procedure that is deemed to be medically
necessary—and it is medically necessary to end an
unintended pregnancy. For that procedure, if it is
decided that it is medically necessary and it is
covered under medicare in a hospital, there is no
reason why it should not be covered in a clinic as
Mr. Jason Kenney: All right, you're using a
circular argument to determine that it's a medically
necessary procedure. You're saying it's medically
necessary if they say it's medically necessary, so it's
medically necessary. In your submission, though, you
tell us that the provinces have in fact excluded
abortion from the list of the reciprocal billing
agreements, which I believe are actually agreements
maintained by Health Canada as a service to the
provincial health departments.
Let me put it to you this way: If the provinces have
in fact excluded it as a medically necessary service
for reciprocal billing purposes, does that not
reasonably indicate that it's not considered a
medically necessary procedure by the provinces? It's a
reasonable question, I think. You've raised it.
Ms. Marilyn Wilson: It has already been confirmed
that it is a medically necessary procedure. It has
been agreed upon by the physicians, who have the right
to establish it as such under medicare in each
Mr. Jason Kenney: Then why has it be excluded from
the reciprocal billing agreements?
Ms. Marilyn Wilson: That is our question. It
should not be excluded. It is not an optional
procedure, such as cosmetic surgery.
Mr. Jason Kenney: Would you agree that the federal
government's failure, from your perspective, to
penalize provinces for excluding this procedure from
the reciprocal billing agreements constitutes a tacit
admission on the part of the federal government that it
does not regard this as a necessary medical procedure?
Ms. Marilyn Wilson: The federal government has a
role to play on the committee that rules on reciprocal
agreements. Each province has its own representatives
on that committee, but the federal government does have
a role to play if a consensus cannot be reached. All
we're asking is that the federal government play that
role and have them reach consensus on this reciprocal
Mr. Jason Kenney: I just have one last question,
then I will cede the balance to my colleague.
In the last bullet in your submission, you say that to
not finance the facility fee at freestanding private
clinics constitutes a form of discrimination—I'm
looking for the precise wording—against women. Is it
not also true that some procedures are only applicable
to men—such as vasectomies—and that they are not
covered under medical insurance as medically necessary
procedures? Would that constitute discrimination
against men, or would that just be a determination of
what is medically necessary?
Ms. Marilyn Wilson: In the determination of what's
medically necessary, it really has to do with health
and welfare of the woman. I think it's based on
pre-1988 decisions, when it was a criminal act to have
an abortion and women were dying as a result of that.
That's the thinking and the feeling behind this
submission. We do not want to return to those days of
The Chair: Thank you very much. We'll allow for
fifteen minutes to be shared between the following
members: Murphy, Leung, Cullen, and Bennett.
Mr. Shawn Murphy (Hillsborough, Lib.): Thank you
very much, Mr. Chairman. I just have a few questions.
The first question I have is to Dr. Sweetnam, of the
Canadian Dental Association. Presently, consumers of
dental services are exempt from paying GST. Do you
think this exemption should continue? If so, why?
Dr. George Sweetnam: I believe the current
regulations were set up with the $30,000 limit, and the
appliances that are provided and would be
applicable would not exceed that amount in most
Mr. Shawn Murphy: My question is about the people
who purchase dental services. They are now exempt from
paying GST. Should the exemption change? A lot of
people argue that they shouldn't be exempted, that when
they go in and pay their hundred-dollar dental fee,
they should pay GST.
Dr. George Sweetnam: The obvious answer to that
particular question is that those costs would be added
directly to that person's health care. As soon as
the goods and services tax is imposed upon the patient,
that would be a cost against their personal health
care. I do not feel they should have to cover that.
Mr. Shawn Murphy: I just have one other question.
It's to either Mr. Boucher or Mr. Ekstein, from the
Canadian Printing Industries Association, and it goes
back to the entire discussion on EI. I understand the
argument that your organization, like many other
business organizations, wants premiums reduced. We all
understand the figures on how much was taken from the
fund, and the so-called surplus that really isn't a
If these rates were to come down dramatically, the
Canadian government, especially in these very tight
times, would have to either raise taxes or cut expenses
dramatically. I don't see that there are always areas
in which expenses can be cut. Where would you see the
federal government going if it did in fact decide to
lower premiums dramatically?
Mr. Pierre Boucher: Mr. Chairman, we're
quite clear on the fact that it is perceived as a tax
on Canadians, but that should not be the case. It's an
impediment on our ability to employ and be productive
in Canada. If a shortfall is going to be created for the
Canadian government in terms of revenues, then the
have to address how additional revenues can be
created. However, we believe that by reducing the
premiums, you will have a positive effect that will
stimulate the economy and therefore have a positive
effect on the overall economy.
The Chair: Thank you, Mr. Murphy.
Ms. Sophia Leung (Vancouver Kingsway, Lib.): Thank
you, Mr. Chair.
Thank you for your presentations. They have been
My first question is for the CDA's Dr. Sweetnam.
It's commendable that the CDA recognizes the needs of
the people of the first nation and the Inuit.
I have a two-part question. First, the isolated areas
usually have a shortage of professionals, such as MDs
and dentists. How would you resolve that? Secondly,
what is your payment coverage for people like that?
Dr. George Sweetnam: We're working very hard to
get people to go to more remote areas. Getting the
care out to those people is a difficult problem. It's
hard to get people set up in those communities.
One of the problems with basic dental care is, of
course, that a person cannot walk in with a doctor's
bag and examine patients on a table. We have to have
all the equipment necessary to perform dental care. In
some cases, it's therefore more reasonable to bring
people out to the dental care.
One of the things that pops into my mind is an
anecdote that I heard just the other day. We're
encouraging people to go to outlying areas. Our
current president and CEO were up in Yellowknife very
recently, and what they found was that the
practitioners are all trying to encourage other people
to come in. They've had two young people come in and
set up practice. These people enjoyed the area and
really liked living there, but given their frustrations
with the non-insured health benefits, they had simply
gave after a while and left. That's one of the
complications in getting people to remote areas.
It's simply a matter of encouraging people to travel
to these areas and making it economically viable to do
Ms. Sophia Leung: For CPIA, I know your industry's
product is of a very high quality in Canada. In the
meantime, I understand that in terms of competition in
the world, the Canadian industry is becoming less and
less competitive. The market is really not moving.
Can you tell me how you would combat that?
Also, you mentioned special training. I'm just
wondering if you have a special course, maybe in
technical schools, to help you to keep up with your
Mr. Pierre Boucher: Mr. Chairman, on the issue of
our competitiveness, we'd like to bring that back to
the depreciation of computer-based equipment. In our
industry, we can only remain competitive if we can
adopt the latest equipment and latest technologies. We
can print more quickly, we can print better, and we can
deliver more quickly. These are now demands by the
market that need to be met, particularly as we embark
into the export market. We have increased our share in
that area—which is very positive—and we need to
continue to do that.
As far as training is concerned, the difficulty
in this industry is that there are some good
schools—Ryerson, in Toronto, for example—but once
you've entered the workforce, with all the new
technology and the new means of doing business that are
imposed on us, you need continuing education. That's
where the employers face the challenge, but
no follow-through mechanisms in Canada serve that
With your indulgence, Mr. Chairman, I'd like to
give one example. Some years ago, the Province of
Quebec instituted what they call a grant
and levy program. All employers are required to put
some money in, and when they do training, the government
matches that amount of money. That facilitates
training in the workforce.
We believe the Canadian government should take
leadership in that area by instituting a similar program,
except that there would not be any levy. We
believe the huge amount of money that you have in
the EI account right now should serve that purpose for the
The Chair: Thank you, Ms. Leung.
You have five minutes, Mr. Cullen.
Mr. Roy Cullen (Etobicoke North, Lib.): Thank
you, Mr. Chairman, and thank you to the presenters.
I'll go first to CPPI.
Mr. Simpkins, I believe your
industry has an interest in seeing our national highway
system renewed. You're probably also aware of the
government's resistance to dedicated fuel
taxes. In fact, if you look at the economy today, if
we had a lot of dedicated taxes, we'd be very much in a
jam, as my colleague pointed out at a meeting earlier.
One of my colleagues who has been working on this
particular initiative told me—and you can either
confirm it or reject it today—that CPPI
would be prepared to take, let's say, a cent per litre at
the pumps and put that money into some sort of
national highway authority or national highway fund
put together by the provinces, the federal
government, and the private sector. Basically, a cent
per litre at the pump, from your members, could go directly into
such a fund. Is that a story we can put in the
Mr. Bill Simpkins: I haven't heard that—and
it's really not up to us to collect taxes.
Mr. Roy Cullen: No, it wouldn't be called a tax.
It would be out of the goodness of your hearts
that you'd crank up... if everyone put up a cent per
litre, it would just go into this fund. You
haven't heard about that theory, right?
Mr. Bill Simpkins: I haven't heard about it.
Mr. Roy Cullen: I thought it was kind
of a stretch, but if you have any information on that,
it would be useful to pursue it.
To the printing industry's Mr. Boucher and Mr.
Ekstein, capital cost allowance is a fairly technical
issue, and an important issue, admittedly. I was
looking at your schedule and the U.S. advantage. It
balloons out, and then it comes back in. You
haven't looked at that in terms of the time value of
money, but presumably the advantage flattens out toward
the end. Given that money has value
over time, that probably makes your case a bit
The government, working with the
Department of Finance, is interested in
focusing on economic useful life, as opposed to a whole
pile of gimmicks. How are your discussions going with
the department? Are you getting closer to convincing
them that this is closer to economic useful life?
Mr. Jeff Ekstein: We have had meetings, and we've
made some positive progress toward an understanding with the
It's difficult, as you point out, with the situation
in the U.S. Looking at the numbers, they currently
have about a 5.5% advantage. If their two-year
write-off comes into effect, that's going to severely
As of September 6, we have had a meeting with the finance
department that we viewed to be positive. They were
asking for our cooperation in trying to determine what a
definition would be of this high-tech equipment. We have
since gone back to our sister association in the States
to try to get them to help us with a definition as
well. So we're hoping we are making progress in
the right direction.
Mr. Roy Cullen: Good. As my
colleague pointed out, you do a lot of great work, and
I hope we can make some progress on that issue.
I had a question for Dr. Sweetnam. I noticed in your
brief that you were talking about dental services for first
nations, but you're focusing on prevention programs. I
met with a group of your dentists, and we talked a lot
about this preapproval process with the Department of
Health federally. You know, they nickel
and dime every treatment to death, if I can use the
vernacular. Frankly, I was swayed by that argument, and I met with
some aboriginal groups.
I took this up with the
Minister of Health, and he encouraged me to write a
letter. I did that, and I got a nice letter back
in reply. I'd like to get into that just
momentarily, but I'm wondering if you are moving away from this
preapproval process because it's a problem, or if you are now
focusing on prevention programs. Or are you still
pursuing both issues?
Dr. George Sweetnam: Mr. Chairman, Mr. Cullen,
first of all, I'd like to thank you very much for the
letter that you wrote on our behalf. That certainly
has caused movement among the bureaucrats we
have been talking to, and we're making some progress on
that particular issue.
Prevention is always the key, foremost issue with
dentistry. It's the only 100% preventable epidemic in
the world. As a profession, we will always be focused
on that area, and we certainly are with the first
nations people. However, we are still having
problems on predetermination and things like that, and
we are working on those problems. Thanks to your
efforts, we at least have the attention of the department's ear at the
Mr. Roy Cullen: I'm glad to hear that. Maybe my
remarks will be more polite.
In the letter that the minister signed, he says:
In 1997, the NIHB Program introduced a national needs-based
dental predetermination program. This approach, with
emphasis on client need, was recommended by the
Canadian Dental Association... and
was developed with their participation and support.
Maybe that is the case, but I suppose the
world does change. Do you have any comment on that? In 1997,
was the world different, or were you involved in the
Dr. George Sweetnam: Again, that does go back
slightly before my time.
Our problem basically
is that in dealing with current dental insurance and
predetermination, the predetermination looks at the
service to be provided and decides whether or not it's
covered under a contractual agreement.
In the case of predetermination in this plan,
another dentist has a look at the treatment and
decides whether or not it is necessary.
Technically, then, two dentists are looking after
one patient. To us, that is duplication and it's not
Mr. Roy Cullen: Well, good luck in your efforts. I
hope the committee can support you on that as
well. Thank you.
The Chair: Thank you very much, Mr. Cullen.
We have a five-minute round for Mr. Nystrom and Mr.
Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP):
Thank you, Mr. Chair.
First of all, I want to ask a question of Ms. Wilson, if I
You're talking about abortions not being provided on
an equitable basis across the country. I agree that
there should be freedom of choice for women in this
country, and that we have to provide the service equally
across the country. There are great changes between the
provinces, Prince Edward Island being an example of where
there's zero access at hospitals, with other provinces
having reasonable access at hospitals.
You also say there's a $4-million fund, and you want
that fund to be used to monitor compliance with the
Canada Health Act, while it should also be used to rectify
some of the inequities.
Can you tell us a little bit more in terms of how you
envisage that this would happen? What kind of money would
be needed to make sure we have equality of access to
services for women, so that we treat everybody equally,
regardless of where they live?
In a country like ours, we should have equal access to
all the services provided by the public sector, whether
we're in Prince Edward Island, Regina, Montreal,
or Toronto. It's a service that's there for all
Canadians, and it should treat Canadians equally. I agree
it's a woman's right to choose, and if we make
that decision as a society, then the service should be
available on an equal basis.
Ms. Marilyn Wilson: Thank you.
I think the first step that can be taken is to deal
with the four provinces acting in defiance of
the Canada Health Act—New Brunswick, Manitoba, Quebec,
and Nova Scotia. Minister Rock has made some overtures
in that direction—to New Brunswick specifically, in
January of last year—but nothing has come from that.
These provinces should have their transfer payments
withheld until they cover clinic-based abortions.
That's the first step.
The other problem that I address in the brief is
diminishing hospital services, which are disappearing
at an alarming rate. This is because hospitals are
allowed to set their own policies in terms of whether or not
they will provide services having to do with abortion.
A situation also exists in New Brunswick. The
policy of the New Brunswick government is to still have two
physicians having to give approval to award an abortion
to a woman. That is strictly against the law, because
it goes back to the therapeutic abortion committees
These issues need to be addressed. The provinces
should not be able to set barriers to abortion care in
any province. They should have transfer payments
withheld until they comply with the CHA. That's a
Mr. Lorne Nystrom: Is the $4-million fund
adequate, or would you need more than $4 million?
Ms. Marilyn Wilson: I think it would
certainly be adequate to take care of our concerns in
terms of clinic funding.
Mr. Lorne Nystrom: My next question is to the
Canadian Petroleum Products Institute.
We hear a lot of talk now about trying to
find some alternatives to gas and oil, like fuel cells,
hydrogen, ethanol, wind energy, and so on.
What advice do you have to our committee in terms of
how much money we should be putting into research for
alternative sources of energy? There is a lot of concern about
greenhouse gas effects and the use of oil on
pollution, the environment, and the like.
You, of course, represent the petroleum industry, but
what are your thoughts and advice in terms of looking
I ask that not in an unfriendly way, because
I come from Saskatchewan, which has a gas and oil
industry. But is certainly a lot of pressure now
to put more and more into renewables. I think that's
the way our society is moving, so I just wondered what
your thoughts and advice might be on that.
Mr. Bill Simpkins: I think the market will really
determine that. When we look at alternative sources of
energy, we really do talk about engine technologies and
where they're going. That will really
determine the requirements for fuels. The
future of fuel cells is certainly something we're
looking at, and our industry believes we're
probably best positioned to provide the hydrogen,
through our hydrocarbon business, to supply the fuel
Mr. Lorne Nystrom: What about the federal
government in terms of R and D money? Should the
federal government be channelling more and more money
into this field? You say the market will decide.
The consumer will decide in the end, but
governments have to make choices sometimes in terms of
where research and development money goes.
A lot of people feel the priority placed
on this area has not been high enough.
Mr. Bill Simpkins: I think a huge
innovation agenda exists within the federal government now,
and it sees research in all areas as certainly being
important. There's also
an understanding in our industry as well that research
does occur. It's part of our business. The major
oil companies and the major car companies do work
together. Regardless of the new engine technologies
that are made available, and regardless of the ones
that prove to be acceptable to
consumers, our industry will continue to reliably
supply those new technologies.
Mr. Lorne Nystrom: The last question would be on
public transit. We have had a lot of people
making representations to us, and many have said we have to put a lot
more money into rapid rail transit, into maybe having
some federal funding of city buses, and things of that
sort. We have a lot of traffic congestion in places
like the metropolitan area of Toronto, on Highway 401, and so
on. What is your advice to us in terms of what we
should be doing in this area? Should we be putting a
lot more money into rapid rail? Should we be moving more cargo on
rail instead of by trucks, thus taking some of the vehicles
off the highways? If you look at Europe and other
parts of the world, rail is a much higher priority in
many of those countries.
Mr. Bill Simpkins: It may sound counterintuitive
coming from our industry, but we certainly believe
conservation and using fuels wisely are very important
not only to Canada, but to North America. We use a lot
more fuels per capita in Canada and North America than
they do in Europe. We firmly believe
there are opportunities to conserve fuels, and consumers
have a role to play in that in some way.
There should be more
programs. We're getting involved in one now, in order to
hopefully dialogue with consumers so that they can
understand that this is a precious resource that should
be consumed wisely.
The Chair: Thank you, Mr. Nystrom.
Mr. Scott Brison (Kings—Hants, PC/DR): Thank you,
I'd like to thank all of our witnesses today for their
My first question is to the life and health insurance
industry people. I support the notion of eliminating capital
taxes and increasing the RRSP contribution limits, but
what is your position on foreign content limits? Would
you support a dramatic increase in foreign content
limits, which would allow a greater ability to achieve
geographical diversification in investments? Also,
what's your position on capital gains taxes, which are
very different from capital taxes? Could you comment on your
position on those two issues?
Mr. Mark Daniels: I'll ask my colleague to comment
on the capital gains.
On the foreign content issue, we've never found occasion to
get heavily behind that issue, largely because prudent
investing seems to be falling somewhat short of the
limits right now. On the whole, though, we
would argue that those limits probably don't serve a
useful function and may be inhibiting freedom of
choice. But we've never found occasion to get heavily
behind raising those limits in a substantial way.
Again, though, that's because, by and large, the limits
aren't tested even under the present law.
With respect to capital gains...
Mr. James Witol (Vice-President, Taxation and
Research, Canadian Life and Health Insurance
Association): Mr. Chairman, the
life insurance industry unfortunately doesn't have much
experience with capital gains taxes at the current time,
because when a life insurance company sells a stock or
a bond, it pays tax at 100% on a capital gains rate.
If we sell real estate, that will get the capital gains
rate. Some years ago, the Minister of Finance
decided it would be a good thing if financial
institutions paid full tax on all gains.
Mr. Scott Brison: To the aerospace group, prior to
September 11, there had been a major downturn in the
airline industry globally. I have an article in front
of me from the July 7 edition of The Economist
magazine. At that point, The Economist
pointed out that after a period of growth of 5% per
year in terms of air traffic globally over a period of several
years, air traffic had been down this past
year in America, in Europe, and in Canada.
Have you people tried
to determine what losses are attributable to September
11 and the aftermath of September 11, and what losses
would have occurred anyway? Clearly, the industry was
in a tailspin globally prior to that. Would you
feel it would be
reasonable for the government to compensate and to
assist with those losses attributable to September 11
and its aftermath, as opposed to a more broadly based
Mr. Stephen Hall: In terms of the airline
industry, yes, airline traffic has been going
down. It's a little bit more difficult for me to
comment on that, because a lot of my business actually
doesn't come directly from the airline industry. In
our particular case, we do support maintenance that is
in fact trying to extend the life of aircraft, which
dovetails with the circumstances you have defined.
That has certainly gone down. Basically,
although there was some downturn in the airline
industry itself, the maintenance and ongoing use of
aircraft was certainly going fairly strongly. As of
September 11, that has been reduced.
I can give a personal example of the cascade
effect post-September 11, and that is that Bombardier
has not yet lost one order, but people are asking
the company to park aircraft. Subsequently, they've laid off
3,800 people and have tried to call work back in. That has
now cascaded. In fact, that was one of the reasons
why I lost one of my own contracts. So
for many of us who perhaps don't work very
directly for the airline industries, there is a
very direct impact, although, in fairness, we
were also involved in the high-tech industry, and there
has been a downturn in it.
In terms of whether or not we should subsidize, I'd refer you
to my attachment B, which contains the Economic
Industry Disaster Loans Program from the United States Small
Mr. Scott Brison: But in the U.S., was an
attempt made to try to separate what the losses were—
Mr. Stephen Hall: Yes, they are doing that.
From the literature in my brief, I believe that what
they're looking at is the idea of giving firms up to $1.5 million at
4% for up to 30 years. Again, that is something
Canadian firms will unfortunately have to compete with.
It's in place now, and as far as I'm aware, no
corresponding action is in place for Canadian firms.
Mr. Scott Brison: Thank you.
I have a question for the printing industry. I didn't see
the cost to the treasury in terms of providing identical tax
treatment and in terms of capital cost allowance to the
U.S. Have you calculated the cost of your proposal? I
think it's a good proposal, and I think it makes a lot of
sense, but have you calculated what you would
expect the cost of doing this to be on a per year
basis for the Government of Canada?
Mr. Pierre Boucher: Mr. Chairman, we have not done
so, but it is something we've talked about and would
certainly like to undertake. Again, we believe
the outcome would be a net benefit.
Mr. Scott Brison: Would
the lion's share of the equipment being purchased
by most of your members come from the U.S.? Would
that be a reasonable
assumption? Is a lot of the equipment being purchased
Mr. Pierre Boucher: It's from different places.
Heidelberg, Germany, is a big supplier as well.
Mr. Scott Brison: What I'm getting at is
that our Canadian dollar hit record lows today. I'd be
interested in your views and your members' views of
what the impact is on your industry in terms of costs
for the types of equipment you need to improve your
productivity and your competitiveness.
Mr. Pierre Boucher: This is something
we would certainly like to look into, given the dollar
value, but it's a matter of us meeting the
needs of our clients. We have no choice but to invest, so
we're looking for an accelerated depreciation of the
Mr. Scott Brison: Thank you.
The Chair: Thank you, Mr. Brison.
On behalf of the committee, I want to express to you
our gratitude for the input you have given to us. As you
know, we count on your input every year before we
produce a report for the Minister of Finance. As
always, your insight is always welcome.
We're going to adjourned the meeting to the call of the Chair.