The Chair (Mr. James Rajotte (Edmonton—Leduc, CPC)):
I call this meeting to order. This is the 66th meeting of the Standing Committee on Finance.
The orders of the day, pursuant to the order of reference of Monday, May 14, 2012, are continuing our study of Bill C-38, an act to implement certain provisions of the budget tabled in Parliament on March 29, 2012, and other measures.
Colleagues, we have with us two panels here this morning.
In the first panel, we have six presenters.
We have Mr. Patrick Grady, an economist with Global Economics; we have Mr. Richard Kurland, who is a policy analyst and attorney; we have Mr. Ian Lee, professor at the Sprott School of Business, at Carleton University; we have Mr. Lorne Waldman with us as well; representing the Canadian Federation of Students, we have Madame Roxanne Dubois, national chairperson; and from Oxfam Canada, we have Mark Fried, the policy coordinator.
Welcome to all of you. Thank you for being with us. You each have up to five minutes maximum for an opening statement.
We will start with Mr. Grady and work our way down the line.
Mr. Patrick Grady (Economist, Global Economics Ltd., As an Individual):
Thank you, Mr. Chairman.
I'm pleased to have received your invitation to testify on the immigration measures in Bill C-38, part 4, although it's a very small part of a rather large pie.
For background, I'm an economist who has studied immigration issues. I collaborated with Professor Herbert Grubel to do a study for the Fraser Institute, which estimated that since 1987, immigration has been costing the Canadian government $16 billion to $23 billion per year.
I'm also on the advisory board of the Centre for Immigration Policy Reform. This is a new organization that was established to advocate for immigration policies that are more in Canada's economic interest. We believe it makes no sense to continue to bring in so many immigrants every year when there are so many Canadians unemployed and immigrants are performing so poorly in the labour market. Our view is that immigration should be used only to complement the existing workforce in Canada and not to provide a quick source of cheap labour for employers that discourages Canadians from entering the labour market.
We also believe we should rely on our own education and training infrastructure, which is among the best in the world, to meet our labour needs, and we believe it's capable of doing so. We also think we should only rely on temporary foreign workers in exceptional circumstances. It shouldn't have been blown up the way it has in recent years, as almost a first supply of labour for many employers.
For more than 20 years, the performance of immigrants has been deteriorating from what it was in the past. Immigrants were able to come, and after a period of adjustment they were able to gradually adapt and earn as much as other Canadians. It's been only since the Conservative government came in during 2006 that serious efforts have been made to address this problem.
You're all aware of Bill C-51, in 2008, to deal with the huge backlog that had built up following the Immigration and Refugee Protection Act back in 2001. There were three sets of ministerial instructions.
Important measures have been introduced by the government that we think are very good. There is the Canada experience class, particularly recent attempts to put more emphasis on arranged employment and job and language skills in immigrant selection. Also, there are the Bill C-31 reforms to help fight human smuggling and protect Canada's immigration system, and of course the other measures to combat fraud, including marriage and refugee fraud. It's important that people have confidence in the function of our immigration system if it's going to continue to have political support.
Turning now to the immigration policy changes in Bill C-38, part 4, in spite of the steps taken, the backlog problem has persisted. There was no real evidence that the performance of recent immigrants was improving in general, except for maybe those with arranged employment or some of the federal skilled worker groups.
The backlog has threatened to undermine the efforts made in improving immigrant selection. You have a group of people you've committed to bring in who were selected under old rules, and they're getting older every year. You have a waiting time of up to 11 years, so by the time they get here, not only are they unsuitable, but they're much older than optimum immigrants would be.
As I pointed out when I appeared before the committee on immigration and citizenship last October, the only choice the government really had to prevent a further deterioration in immigrant performance and growing claims on the fisc was to legislate away the skilled worker backlog, which is what they're doing in this bill.
The government also needs the authority to deal with the issue of refunding the application fees. The minister of CIC requires the authority to issue the ministerial instructions needed to implement his proposed new immigrant selection procedures, since the old ones weren't working.
Mr. Patrick Grady:
Thus we support the immigration policy measures in part 4 of Bill C-38.
Having said that, I would like to go on and say that more definitely needs to be done to limit the numbers of immigrants, since the large number is what's causing the deterioration in performance. It's not only a selection problem; it's very difficult to select from such large numbers. The government still proposes to bring in 250,000 new immigrants a year and a couple of hundred thousand temporary workers, and it's actually increasing the number of parents and grandparents allowed in at a great fiscal cost.
I estimate it would cost around $6 billion per year if you took the parents and grandparents brought in since 1987. If you took in the 165,000 in the backlog and the ones expected to apply by the year 2020, that would add another $6 billion, making the annual cost about $12 billion.
It doesn't look as though much is being done to resolve that problem.
Mr. Richard Kurland (Policy Analyst and Attorney, As an Individual):
Thank you, Mr. Chairman. I know what five minutes means.
The first thing is, who does the business risk of applying to immigrate to Canada belong to? That's the pivotal question. The way our system works, the applicant takes the business risk of applying to come here. Our system allows for immigration law to change with retroactive effect without notice, giving an adverse consequence to an applicant. It is now part of ethical practice at Canada's immigration bar to advise applicants of the business risk of applying. That's the fundamental point.
So when rules change in the interest of Canada, as they have done here, then yes, the individual interest of certain applicants will fall to the wayside, because the interest of Canada will prevail. That's the fundamental point of the changes we're seeing here in the proposed law. Is it right? Is it fair? Others will decide, and that's why there's Parliament to make that balancing choice. Is it legal? You bet.
I would look carefully at how it could come to pass that certain applicants were not aware that they were taking the business risk of applying to come to Canada. What happened?
Shifting gears, because I have under five minutes, there should be some basic consumer protection. We can do better. We can do better by formally putting on the website of Immigration Canada a clear notice that applicants take this business risk. We can also do better by severing or having another look at taking the User Fees Act off the table. The User Fees Act is a fundamental touchstone today for monitoring government service performance and applying to the consumers of government services the right to know how long it will take to get a visa. Members of Parliament are all aware of the strains and stresses.
Those are the two areas I'll illuminate later on today.
Professor Ian Lee (Professor, Sprott School of Business, University Carleton, As an Individual):
Thank you for the opportunity to appear. I want to disclose before I present that I have no consulting contracts of any kind anywhere in the world with any corporation or union or NGO or government, and 100% of my income is from Carleton University. I come before this committee prepared, if you will, to speak truth to power.
I was under the understanding...and I could be wrong, but I'm going to be speaking more about CMHC, because I was under the impression it was in other issues in the budget. I apologize if I misunderstood.
My background was as a banker for 10 years in the seventies, as a mortgage manager in the BMO building on Wellington Street, opposite the West Block, which I believe the finance committee is going to be going into soon. Now I'm a professor of business and public policy dealing with fiscal policy, economic growth, deregulation, and issues such as that.
I want to go very macro before I get into the budget. For the first time in 2,000 years, world leadership is shifting from the west to the east. From the time of ancient Greece and the Roman Empire, all the way through to the British Empire and then the American Empire, westerners or occidentals have understood that the west has ruled the world. This is no more. This is coming to an end. This is going to change everything.
That leads to the second transformation, that we in the west, as Governor Carney in his excellent speeches and others have noted, have been living beyond our means for the past 40 years in all the western countries. The bills are now coming due.
The third transformative event is the aging of the boomers, my generation, who, in my view, and that of others, caused the second problem of living beyond our means. Unfortunately, there are countries in southern Europe, and the U.S., that do not understand. They do not know that they do not know that these changes are happening and we must change our policies in every sector. Policies that in the past were used to protect and restrict, grounded in fear, must be transformed to policies that open and expand our economy to make our economy more competitive, more dynamic, and able to address these systemic changes. Budget 2012 is profoundly important for it represents the beginning, I believe, of the undoing and the redoing of many policies in sector after sector.
I want to now deal very quickly with CMHC. It was established in 1946 to help with housing for returning soldiers. Those were laudable objectives, but since then, it's like Topsy; it's just growing, growing, and growing. It's in at least five lines of business: commercial mortgage insurance for high ratio; social housing; economic and statistical analysis, where they have an army of excellent economists and statisticians who analyse market trends across Canada; the green and energy conservation initiatives; and, finally, a market maker as bundler and reseller of mortgage-backed securities.
There are problems. In my judgment, CMHC has a profound governance problem. It's the only insurance company that is not regulated in Canada, even though we believe in OSFI and regulation of financial institutions. Its third problem is that it doesn't really understand it's own business. I say that because in 2006 it attempted to introduce 40-year, zero down payment mortgages. It was only the intervention by then Governor Dodge that stopped this irresponsible decision by CMHC.
Yes, I support in the budget that CMHC must be supervised by OSFI; that is long overdue. Yes, it is a good idea to place ministers on the board. I also agree that banks should not be allowed to ensure conventional mortgages through CMHC and offload risk onto the taxpayer. But my criticism of the CMHC reforms is that they do not go far enough. The government should be the referee of the hockey game, but it should not own one of the hockey teams, for that is a conflict of interest. On a practical level, citizens are at risk for almost $600 billion, or one-third of Canadian GDP. Moreover, CMHC has a competitive advantage over private firms because 100% of its liabilities are insured by the government but only 90% of that of private mortgage insurance companies.
I have two other quick points and then I'll wrap up. On the Investment Canada reforms, if this does come up, moving it a much higher level is a very important step. I support the blue ribbon panel, and we should be implementing those reforms in the blue ribbon panel of 2008.
Mr. Lorne Waldman (As an Individual):
Thank you for the opportunity to be here today. It's a privilege to appear before the committee.
Like two of the other speakers, I'm here to talk briefly about the immigration measures, but one thing I want to make clear is that I'm not here to enter into a debate about immigration policy with people like Mr. Grady. I'm here to address what I believe is a simple moral issue, and it's simply this: I think the government has a duty to keep its promises and has a duty to speak in a clear way to all the people it deals with, and to be transparent in its dealings with those it deals with. I'm sure this is a principle that people on both sides of the House would agree with. I believe it should apply to all people Canada deals with, including those who are outside of Canada.
If we talk about the backlog, these people were encouraged to apply and were told they would be processed. Many of the people have received numerous communications since that time and were continuously led to believe that they would be processed.
I understand the government's dilemma. They believe they have a better selection process. As a passing remark, I should say that I've heard that one before. In my 30 years, I think this must be about the seventh or eighth different selection process the government has invented, and it's always the best one, but eventually, a few years later, it's scrapped for something else. But that's not the issue here.
The issue here is that, in my view, the government.... This is where, with all due respect, I disagree with my dear friend Mr. Kurland, in that I believe that the government has a duty to be transparent and clear, and they failed to do so in this case. Because of that, what they're doing is wrong.
I thought the best way to illustrate this would be to tell the story of one of my clients. She sent me an e-mail and gave me permission to read it. This will take me a minute or two to read. I thought it would just illustrate this. She says as follows:
||Until today, I can still remember vividly that date of November 17, 2007, even though it was almost four and a half years ago. It was on that date that our family of three—at that time, my son was still in primary school—went to the post office and sent out our application forms, together with the payment, with a great hope for the future. On the way back, we discussed excitedly the new adventure we were going to have in Canada, the new school life, the animals playing around the house, possibly the new member of the family.
I remember that she was from China. Under their one-child policy, she couldn't have a second child in China, so she was hoping to come to Canada so she could have that second child. She had other choices, but she chose Canada. She says:
||On November 26, 2007, we got the acknowledgement from the visa office confirming receipt, informing us of the next step, and telling us to start our preparation for moving to Canada. So we were excited and thought that our new life was about to emerge.
||We started the preparation. We got to know other applicants through the Internet, we improved our language capacity, and we invested in getting certificates that we knew would help us in our job opportunities in Canada.
||Two years from that time, another milestone was reached. On December 4, 2009, we got the request letter from the visa office in Beijing asking us to submit our full package of documents. To us, this is one step closer to the dream come true. We spent enormous time and effort—
—for which they will of course not be compensated, I note.
||—in preparing the needed documents. We had to schedule the exams for an English test, travel to different cities to get documents, and we had to ask relatives and friends for support in hard places to reach due to the time constraints.
That's because they're only given a short period of time to get the documents. She continues:
||Different from the past two years, where we had kept the application confidential, we had to tell our supervisors and the human resources teams about the move so that they could help us to improve our work experience, and of course that impacted negatively on our career development because companies were no longer willing to invest in our future knowing that we were going to be leaving soon.
||Again, we, the family of three, went to the post office and mailed off this package full of joy and full of expectation that soon we would be in Canada. At this time my son was in middle school. We waited and waited and waited, confident in our result, not only because of the waves of affirmation and correspondence we received from the visa office, but also because of the justice and fairness we valued—because that's why we chose Canada as our destination.
||I have always trusted that Canada would eventually welcome us, like what the visa office shared with us. It was just a matter of time. Because of that trust, we gave up opportunities to go to other countries, and we could have applied under new streams, but we saw no reason to do so. No one suggested to us that we should. We waited our time in the queue—
Ms. Roxanne Dubois (National Chairperson, Canadian Federation of Students):
Thanks to the committee for the opportunity to make the voice of students in Canada heard here today.
The Canadian Federation of Students represents more than half a million students from colleges and universities across Canada. It is Canada's largest and oldest national students union.
The right to education at all levels is enshrined in international law and is prescribed by existing moral and social imperatives of Canadian society. Our public post-secondary education system was built with public dollars and, implicitly, must be accessible to all citizens of Canada, just like health care is. However, Canada's college and university system continues to operate without a national framework and is increasingly cost-prohibitive. The federal budget bill, despite its size and scope, fails to implement a strategy to address rising tuition fees, skyrocketing student debt, and youth unemployment. However, Bill C-38 does many other things, such as threaten our generation's prospects for job and retirement security and seek to reduce environmental regulations.
Due to its size and scope, Bill C-38 overreaches and will contribute to public cynicism. Five minutes is insufficient to review 425 pages and the nearly 70 acts being amended, repealed, or introduced. I cannot but conclude that the government's objective must be to limit the Canadian public from fully assessing the omnibus bill.
I would be doing a complete disservice to my organization's members and the Canadian public if I did not use this time to implore each of you on the government side to abandon this hypocritical tactic of forcing through legislation en masse.
To use the Prime Minister's own words during his time in opposition:
||...in the interest of democracy I ask: How can members represent their constituents on these various areas when they are forced to vote in a block of such legislation
Students today are facing a very precarious labour market. With rising student debt, caused mainly by tuition fee increases, job opportunities are even scarcer because of the government's decision to eliminate Service Canada centres for youth and student positions in the public service. In addition, government investment to improve access to education has slowed significantly. At a time when over 70% of new jobs require some form of post-secondary education, the government has to substantially increase its investment in the Canada Student Grants Program to reduce student debt and help graduates in the labour market.
Making matters worse for students and youth, Bill C-38 proposes changes to Canada's old age security program, the temporary foreign worker program, and employment insurance, all at once. Raising the benefits eligibility age of OAS from 65 to 67, reducing the wages of workers, and eroding the retirement prospects of future generations is itself a solution without a problem and requires at least further study by committee.
If the government is concerned about the well-being of young people and truly wants to protect our future, then cuts to OAS should be taken off the table. Young people in Canada have all of our working years ahead of us. If anything, giving young people a chance to make a decent living requires increased access to education and training and a more robust OAS program.
The federal government's lack of vision with respect to tuition fees comes at a significant cost to our economy in the form of lost economic opportunities. For every Canadian who is denied access to post-secondary education, the costs of health care, employment insurance, social assistance and public safety all grow, and the tax base shrinks.
The OECD estimates that the economic benefit of any investment in post-secondary education comes to $1.63 for every dollar spent by government. If the government is serious and genuinely wants the economy to grow, it should give serious consideration to rejecting this bill and investing in post-secondary education.
Last, when it comes to environmental regulations, Bill C-38 erodes the government's ability to hold companies accountable for their practices. The next generation will inherit the environmental issues to come. We will be saddled with the effects of climate change, unchecked resource development, and potentially irreversible damage to Canada's wildlife. Environmental sustainability is top of mind for today's youth but appears to be a governmental afterthought. The callous disregard for the environment in Bill C-38 is completely irresponsible.
We believe in the strongest of terms that the alterations to OAS, GIS, and EI ought to be removed from Bill C-38, studied by their relevant committees, and voted on separately from the budget bill. We hold the same sentiments with respect to the Fisheries Act, the Navigable Waters Protection Act, the National Energy Board Act, the Species at Risk Act, the Parks Canada Agency Act, the Canadian Oil and Gas Operations Act, the Nuclear Safety and Control Act, the Seeds Act, the Fair Wages and Hours of Labour Act, the National Round Table on the Environment and the Economy Act, the Kyoto Protocol Implementation Act, the Immigration and Refugee Protection Act, etc.
Again, I thank you for the opportunity to make this presentation.
I look forward to your questions.
Mr. Mark Fried (Policy Coordinator, Oxfam Canada):
Good morning, everyone.
Thank you for the opportunity to share our thoughts on the latest federal budget. Oxfam pays close attention to the operations of government, both our own and those in the 95 countries where we work, because government policies can have a huge impact on people's efforts to work their way out of poverty.
We have been at this since 1963, and we've learned a few things along the way about effective government and citizen participation that I hope may be relevant to the bill before you.
The first lesson we draw from our experience is that governments don't function well in isolation. They do better when they consciously create mechanisms for tapping into the knowledge and wisdom of public-minded citizens. The portion of this bill being considered elsewhere would limit citizen participation in environmental assessments. The portion that's before you would close two key mechanisms for citizen input, the National Council of Welfare and the National Round Table on the Environment and the Economy.
These two provide a crucial function, not just independent expert advice but a focusing of public thinking on issues of import. These are functions that cannot be replicated by privately funded bodies, be they Oxfam or the Fraser Institute. We urge you to retain these valuable advisory bodies.
Another key lesson that we have learned is that inequalities undermine healthy societies. At worst, inequalities can lead to violence and open conflict. At best, they limit economic growth and deprive individuals of the life chances they deserve.
It seems prudent to examine two elements of this budget in light of the fact that income inequality in Canada is rising fast. The changes to old age security and to employment insurance could well contribute to further widening the gap between men and women, between young and old, and between rich and poor.
A third lesson is that successful governments take the long view and take sustainability to heart. The costs of environmental degradation and climate change are borne disproportionately by people living in poverty. Canada's outsized greenhouse gas emissions, in particular, are wreaking havoc among some of the world's poorest communities.
Rather than repealing the Kyoto Protocol Implementation Act, this budget ought to include incentives to guide private investment away from carbon-intensive industries and toward clean energy. Instead, it leaves in place nearly $1 billion in subsidies and tax breaks for the oil and gas industries. Canada agreed in 2009 at the G-20 to phase out fossil fuel subsidies. Please consider making that pledge effective.
A final lesson is about the importance of aid. Providing development assistance to poor countries is a long-term investment in a stable and prosperous world. It is a way to rebalance, however minimally, the grotesquely skewed distribution of income in the world. But most of all, aid is a sensible and generous gesture of solidarity. It's a helping hand to those struggling because of poverty, conflict, and war.
Trying to balance our books on the backs of the world's most vulnerable people is wrong. What's more, because aid is only a tiny fraction of government expenditures, even the severe cuts in this budget will contribute little to reducing the deficit. As a friend of mine put it, it's like trying to lose weight by cutting your hair.
But for poor people, the consequences are serious. News reports state that CIDA is completely eliminating eight country programs and reducing aid to five of its 20 countries of focus. Ten of the 13 countries affected are among the poorest in the world; eight of them are in Africa.
Between now and 2015, when the world is to have achieved the millennium development goals we set in 2000, Canada will have cut $1.2 billion from our aid budget. That would have helped a lot of hungry people to feed themselves, and it would have put a lot of girls through school. We urge you to reverse the cuts to the aid budget.
Let me conclude by noting that Oxfam's website will be blacked out on Monday. We will join many other organizations to protest elements of this budget bill that limit public debate on vital issues.
Canada's charities have much to contribute. When some charities are accused by high officials, we all feel threatened, and all Canadians lose out.
Thank you again for the opportunity to speak with you. Je serais heureux de répondre à vos questions. I look forward to your questions.
Mr. Wayne Marston (Hamilton East—Stoney Creek, NDP):
Thank you, Mr. Chair.
Once again we're looking at a variety of issues: international aid, the environment, immigration, housing, financing, and citizen input. When you have five minutes, you ask yourself where you should start. So I'm going to stick to immigration.
Mr. Waldman, have you seen any evidence that the government really, truly understands the damage it has done to Canada's reputation by cancelling the applicant list?
Mr. Lorne Waldman:
No. I mean, I'm shocked; there's going to be another big demonstration in Hong Kong within the next few days.
I was a class counsel the last time they tried to eliminate the backlog, so people found my e-mail and e-mailed me. I've seen literally hundreds of e-mails from people around the world just outraged about how the government is treating them so unfairly. As I said, something has to be done about the backlog, but just completely eliminating it in such a callous fashion....
It's ironic, because we've been told for years, or the government's been telling people for years—this is respective governments, not just this one—that there's a queue, and that the way to come to Canada is to apply, go into this queue, and wait.
All these people did what the government told them to do. They applied and they waited. They were led to believe, through repeated communications, that their applications would be processed. They followed what the government said. They waited in the queue. And now, after waiting, some of them for as long as eight years, they've been told, “Sorry, this queue no longer exists. Your applications are being terminated.”
That's not just. That's not the Canadian way. This really tarnishes Canada's image.
Mrs. Cathy McLeod:
It was 880 pages.
In 2009, it was 552.
These were also comprehensive bills that dealt with a number of different issues. So this is not extraordinary in terms of a budget bill. I think the opposition are just.... I believe this Parliament is very capable, like other parliaments, in terms of looking at 450 pages in a very comprehensive way.
I have three children. My youngest is graduating this year. With their work and with our help, of course, they are graduating without debt, and of course they're truly fortunate. I would have real trouble.... I believe that if support needs to go to universities...I would hate that support to have lowered the tuition for my children whom we would help. I would much rather see any support to universities going to those who can least afford it.
Would you agree with that?
Mrs. Cathy McLeod:
Can I quickly intercede? The government has given 3% more per year in the social service transfer, and we've also readjusted the student grant program for medium and low incomes. My basic point is I have to look at what Mr. Lee said in terms of what we're doing and where we're going, but rather than helping my children, I would say if we need to put more in, we need to be focused in terms of ensuring everyone has opportunity.
I need to move on.
Mr. Waldman, I think what your case elucidated was the need for a just-in-time system. Why should someone be waiting five or six years to come to Canada? The other thing I frequently hear, and you didn't mention, was the background of this particular applicant. If teachers come to Canada, they're going to be unemployed. In the meantime, in my riding I have calls probably once a week saying they need a doctor. Our rural community is desperate for this doctor.
The minister himself said he knew it was a very difficult decision. But to move toward a much fairer system for all and match the skills.... I have to perhaps agree with Mr. Kurland and Mr. Grady on this one. Again, I think your case elucidates it all. I'll leave it to both of you, Mr. Kurland and Mr. Waldman, to comment.
Hon. Scott Brison (Kings—Hants, Lib.):
Thank you very much to all of you for joining us this morning.
I want to start with the whole issue of immigration. I'll start with temporary foreign workers.
Recently I met with a number of industries, organizations, and businesses, ranging from manufacturers to seasonal work and farm organizations. The use of temporary foreign workers, I'm told, particularly in agriculture, is a global phenomenon. They are part of the production chain. I'm told by large operators in agriculture that any limitation on their access to temporary foreign workers will cost jobs for Canadians, because every temporary foreign worker, often in lower-end labour, creates, according to these business people, jobs further up the value chain for Canadian workers. If somebody is picking apples, later on there's a Canadian who's packing apples or making products with the apples or driving the truck.
What I'm hearing from the actual people in the business community is that temporary foreign workers are actually good for the Canadian economy and actually help create Canadian jobs.
I'd appreciate your views. Mr. Grady, I believe that your views are different from that. How do you respond to those business people?
Hon. Scott Brison:
Even on the hospitality side, I've heard from large-scale operators, and they are actually quantifying that they are paying more for the foreign workers. So it is a fallacy to say that they are trying to save money. They're actually paying more for these temporary foreign workers, who in some cases have significant skills.
On the whole issue of immigration, I'm fascinated by the Manitoba model and the success of the Manitoba model. It is something federal governments of both stripes and provincial governments of different stripes have been involved in. I'm told that the Manitoba immigration model and the success and dynamism it has brought to the Manitoba economy helped Manitoba get through the downturn better than other provinces.
Manitoba's population is getting younger. I'm a little bit jealous of that, coming from Nova Scotia, where we not only are teetering on decline but are getting a lot older. I met with Jim Carr, of the Business Council of Manitoba, last week. They are incredibly supportive of the program. I've spoken to the Indo-Canadian business community and the Chinese community.
How can you counter the success story of this Manitoba miracle of immigration and the immigration of these new Canadians who represent natural bridges to the fastest growing economies in the world? You bring some pessimism about this.
Mr. Dave Van Kesteren:
But to understand correctly, those countries that do offer free education do that.
Mr. Fried, we've met a few times. You're a little bit critical—and I understand that—of the government's position and how it has handled aid in the past. But you do know, of course, that I believe our aid has doubled in the last five years.
We're undergoing a study right now in the foreign affairs committee about the role of the private sector. We've recognized, for instance, in Africa, that after 40 years of aid it's still wretchedly poor, possibly even in worse shape than when we first started to help a lot of these countries.
We had an interesting guest with us from USAID yesterday, and she gave us a quote from President Obama who said that unless we develop economies, we're going to be ineffective in aid.
We partner with organizations like yours, and you've done wonderful work, as have many other NGOs. Do you agree with the government's position of starting to look at new ways to help economies grow, and that would be to partner with the private sector that is working in these countries?
Mr. Dave Van Kesteren:
How much time do I have, Chair?
The Chair: About a minute and a half.
Mr. Dave Van Kesteren: When I was first elected, and I guess I was a little green, I had somebody come into my office who had immigrated to this country about three years ago—don't quote me on the three years. She was very frustrated that she didn't have gainful employment at that point. She was actually coming in to talk to me about wanting a job. She felt she should work in the government.
Coming from an immigrant family, that was completely foreign to me. My response was, “You know, it's tough. As immigrants we have to accept that we're in a new country. But our kids are getting a great education, and there's a great future for them.” I don't think she heard a word I said. When I was done, she said, no, I want that job.
Am I getting something wrong, or are we giving the impression, at the other end possibly, of something that might not materialize?
I leave that open to anybody.
Mr. Guy Caron:
I'll take 2009 as an example.
In fact, if you're looking at the BIA of 2009,
I think you will agree with me that the problem is not the number of pages, it is what is inside.
When we're looking at it, we're looking at amendments to the Income Tax Act, the income tax regulations, sales and excise taxes, customs tariffs, and so on. There is no mention of immigration. There is no mention of a complete reform of environmental evaluations. There's no reform of CSIS. There's no mention of the creation of an act about the interoperability of police forces in navigable waters.
I think you will agree with me that the difference with this bill, compared to previous bills, is
its scope, the number of areas it affects. I see you agree.
I have another question. Since 1995, the Liberal government and the Conservatives both increased the budget for health and social assistance transfers by 3%. You are probably familiar with the major reductions that resulted from the reform of social programs in 1995.
Can you draw a comparison between the transfers today, in real terms, and the ones from before 1995?
Mr. Guy Caron:
My question related to CMHC's financial health, and you confirm that it is in good financial health.
Canadians are familiar with two particular components of CMHC. The first is social housing; the second is the guarantee program for people who cannot put at least 20% down on a home purchase. In general, the proposal to make the Office of the Superintendent of Financial Institutions responsible for CMHC's assets and securitization activities is not bad in itself. It will eliminate taxpayers' liability for a major organization.
Where I see a problem in the direction you are going is when you talk about privatizing the activities. There are two factors. The first is that the private sector has never considered social housing to be a priority. There are no particular incentives for it to invest in social housing. The other factor relates to guarantees. CMHC occupies that niche because of imperfections in the market. This is somewhat the same as for the student loan program, where the private sector does not guarantee loans to borrowers who might present more of a risk.
That is why I think CMHC meets needs that the private sector could not meet. So how can you think that CMHC is in competition with the private sector?
Prof. Ian Lee:
I never advocated the privatization of social housing. I argued that it should never be done by the federal government. Provincial governments are much closer to the people and they should be responsible. Those programs and resources should be transferred.
Very quickly on mortgage insurance, there's a huge difference between mortgage insurance, which is a commercially profitable project, and student loans, which are seen as something that's not so profitable.
Mortgage insurance can be done by the private sector very well. We don't have a government-owned London Life or a Great-West Life or those kinds of companies.
The private sector could do it if it weren't at a competitive disadvantage because the government guarantees 100% of CMHC but only 90% of the private sector. They have an unfair competitive advantage.
Mr. Mark Adler (York Centre, CPC):
Thank you, Mr. Chair.
Thank you all for being here today. This is a very interesting discussion.
I feel like a hungry dog and you've all kind of thrown this nice juicy bone out there. But since I only have five minutes, I really do have to allocate my scarce resources.
I want to start with Professor Lee.
You spoke a bit about moving the OAS eligibility age from 65 to 67. I feel like we're looking down a tunnel and that light at the end is not the end of the tunnel but a locomotive racing towards us. All informed opinion can, and have, empirically demonstrate that our population is aging and that OAS is a social program for which, in order to maintain sustainability, we need to make adjustments to.
Could you speak to those adjustments that we, as a government, are making and whether they are responsible adjustments and in the interests of the sustainability of this very important social program?
Prof. Ian Lee:
No disrespect. I only use official data from those official international organizations, such as the OECD, for example. The OECD has studied this in Pensions at a Glance
, which they publish every two years, and it is non-partisan. It is funded by Canada and all the other OECD countries.
They have said very simply that public pensions are unsustainable in the western world, and there are very serious people who have said that, including Governor Carney. I've looked at it.
We're living a lot longer. I want to put this on very quickly, because people quote the life expectancy figure based on mortality over an entire lifetime. When you achieve the age of 65—so all the people who died before you are not part of your statistic any longer—you have a life expectancy of 84, for a female, and 82 for a male. So we cannot, as Greece is demonstrating brilliantly, and Spain and France, continue with policies where we are living 15 and 20 years longer than only 30 or 40 years ago.
The second point, to address your question, is that we are facing looming labour shortages. It is irresponsible to pay people to be unemployed in one part of the country when there are desperate shortages in another part, or just push them out the door into retirement when we need them in the economy to be able to fund people like me, when I retire.
Prof. Ian Lee:
I'll start with free trade. I'm much more familiar with that. I've been teaching and researching free trade for, literally, 25 years.
I'm absolutely mystified by people who don't, after this time, understand the importance of trade to well-being and standard of living. This has been known for 300 years, theoretically, from Adam Smith, Ricardo, to the present, and we know it from 300 of years of practice. And I say that because I've had the great fortune of travelling around the world and teaching in a whole bunch of really poor countries, like rural Ukraine and Russia and China and Cuba and Iran. I have seen the impact of countries that are more autarchic, that is to say they're more closed.
I tell my students it's really simple. You want to be poor? Close your economy. And if you want to be wealthy, open it up. I'm speaking colloquially to get my point across quickly. Trade is correlated to a higher standard of living: the more we trade, the better off we're going to do.
So it is absolutely essential that we sign more free trade agreements. I hope we sign free trade agreements with every country in the world.
Mr. Fried, I was a little taken aback by your comments that we need to do more in terms of international aid. As you know, we are currently drawing down in Afghanistan, but we've committed to building civil society there. We lost 158 of our soldiers in Afghanistan.
I'm really offended that you have come forward and said that Canada should be doing more in the international scene to help other countries. I think we've done quite a bit. We've doubled our international aid budgets over the last number of years, but we've also lost 158 soldiers in Afghanistan, helping that country to build a civil society.
I really take offence to what you said.
Ms. Peggy Nash (Parkdale—High Park, NDP):
Thank you to the witnesses for being here today.
I want to echo what my colleague said and support Ms. Dubois in terms of its not being the number of pages in a budget implementation act, but the diversity of subject matter. When you have a bill like this that contains so many substantive changes that are rushed through with very little debate by this Parliament, it certainly doesn't have the proper public examination that one would expect in a clear, transparent democracy.
Ms. Dubois, you are a young leader; you are the head of the CFS. You are probably a future leader in some other capacity in the future of this country.
One of the challenges we face is democratic engagement. We've seen a declining participation rate in elections, and certainly young people are disproportionately less likely to vote, yet some of the challenges they face in terms of youth unemployment, student debt, and environmental degradation will disproportionately affect young people.
I wonder if you could try to describe what you take away as a message from this omnibus bill that will make so many substantive changes in so many domains of our country, many of which we won't really fully understand until they are rolled out for some years to come.
Can you comment on that, please?
Mr. Mark Fried:
I'm not an expert on it, but certainly that sounds right to me.
The World Bank has been very clear that inequality limits economic growth and can actually be quite damaging to the economy and quite costly to society, particularly when you have large numbers of people who are not doing well.
On the particular measures in the bill, we're not experts on that, but I would point out that if the employment insurance requirements are going to require people to accept a job that is an hour's drive away, that would have a different impact on men than on women who are responsible for caring for the family, are unable to find day care in the place, and therefore make it very difficult to accept that job. So I would encourage you to take into account these differential impacts on men and women, rich and poor, young and old, when contemplating these measures.
Mr. Brian Jean:
Some people would argue with your comment in relation to the United Nations saving the world, especially as of late, with some of the recent appointments.
Has anybody lined up for an hour at Tim Hortons to get a coffee? Have any of the witnesses here? I have in Fort McMurray, in northern Alberta. I have lined up there, because I can't get employees. I closed down a Quiznos—the busiest Quiznos on the planet—because I couldn't get enough employees. I closed it down.
This is the problem with the immigration system. We do not have enough people to work.
I had other things to comment about, but you can tell I feel pretty strongly about these particular issues.
How appropriate is it for Canada and western governments to adjust their old age pension? I want to just deal with that very briefly. How appropriate is it? The OECD has identified that as being an issue.
Mr. Hoang Mai:
You also said that you believed in what the OECD said. The OECD has concluded that “Canada does not face major challenges of financial sustainability with its public pension schemes”, and that there's “no pressing financial or fiscal need to increase pension ages in the foreseeable future”. That's what the OECD has said.
To go back to what Ms. McLeod said regarding the previous budget, I find it a bit ironic that we're looking at what was done before, which I don't think we agree with, in terms of having an omnibus bill. I would also remind the party that they were a minority government then. Right now you are a majority government, so you don't have to look at what was done before in terms of having an omnibus bill.
One of the problems we have now is that we have a bill that deals with 60 or 70 other laws, and we have so many issues in this bill.
Ms. Dubois, I would like to ask you a question about young people. We know the youth unemployment rate is nearly double. How is this bill going to make it more difficult for young people to access jobs?
Mrs. Shelly Glover:
Thank you, Mr. Chair.
I want to welcome the witnesses again. I find the conversation fascinating.
I'm going to actually concentrate a little bit of effort on clearing up, again, the record.
Ms. Dubois, I'm a bit concerned. Here's why. I'm a mom of five kids. I tell my kids all the time, only speak to what you know. It's been concerning for me, because I believe you have a bright future ahead of you, but you've come here today saying that the bill is too long, that it's not enough time to study it appropriately, and yet when we ask you questions about what you compare it to, we don't seem to get an answer. When you say it's too long, what did you compare it to in the past?
Mrs. Shelly Glover:
Hold on a second. I want you to show people that you actually know what you're saying is true, because as Mr. Caron prompts you, you again agree with what he says, which doesn't take into....
I'll give you an example. On the 2009 budget, for example, when he prompted you about it, saying there are only these little things in it, well, there were a whole lot more things in it, but you quickly agreed with his statement, which was incorrect. The proof is in the pudding. That bill is 552 pages, so longer than this one. That bill was studied for 11.5 hours. This one will be studied for 60 hours, the longest period of time in 20 years that a BIA has been studied. The 2010 bill included things similar to today's: the Canada Labour Code, EI, the National Energy Board, the Bank Act, environmental assessments. In 2009, it included EI, small business changes, wage earner....
I say this because I would encourage you not to be coached. When we ask you a question and you try to change direction without having studied what you're actually speaking to, it doesn't appear neutral. That's all I'm saying. I believe you have the best intentions, but it's clear you did not look at the past budgets, you didn't look at their length, you didn't look at the number of hours they've been studied. In fact, the proof is that you're actually wrong.
I do want to answer a couple of questions about Manitoba.
Mr. Grady, we were talking about the Manitoba example. I'm from the city of Winnipeg, and from the province of Manitoba, so immigration has been invaluable in my part of the world. In fact, Art DeFehr from Palliser depends greatly on immigration to make sure that his business runs. Not only Art, but there are a number of other organizations. Graham Starmer from the Manitoba Chambers of Commerce also says it's been truly valuable. In Manitoba, we do have some problems provincially with the fact that we have more public servant jobs per capita than anywhere else. That's not a way to provide jobs. I have people coming into my office crying who are immigrants and can't find jobs. The 14% unemployment rate of immigrants is really a bother.
So I would ask, do you not believe the government is on the right track if we believe in bringing immigrants here because we need to fill jobs, etc., and we actually focus and target our efforts on those who are at least skilled, to lower that unemployment rate, to fill those jobs that Art in Palliser has that he can't fill otherwise, because he's tried with Canadians? Don't you believe this is the right way to go?
I just want to ask one final question, as the chair. I'm speaking as a member of Parliament who has been elected since 2000. If I look at the case files in my constituency office, over 80% every year have dealt with immigration.
I'm going to pose a question, and I'll allow Mr. Waldman and Mr. Kurland to answer. I think Mr. Kurland said it well. We can blame governments, but it's a series of policies that led to a system that simply did not work.
We've assisted hundreds of people and dealt with thousands of cases. I think we've done some good things at the margin, as a constituency office, and I'm sure other members of Parliament have done so as well. But the system was completely broken—for families, for entrepreneurs, for business people, for people coming in on visas. I mean, the system was broken and something fundamental had to be done.
Mr. Waldman, you're saying that what we're doing is not appropriate, but what would you do to deal with a system and a backlog that we've encountered as a government?
Mr. Lorne Waldman:
Well, I think Mr. Kurland gave you the kernel of an idea. I think there are things that can be done. When the last backlog was mitigated, in the end there was a settlement that allowed the government to slowly process that backlog over a long period of time so that it didn't gum up the new system. I think Mr. Kurland's idea is one that has some merit.
To just completely eliminate the backlog is morally wrong. Let me just give you three things. One, you have to speak clearly and with transparency so that everyone knows the rules. If the rules are that we're going to retroactively change things, make that clear in the future so that people don't plan their lives around expectations that are then dashed.
For sure, reform the system. Some of these reforms may work; they may not. Mr. Kurland seems to think they will. I have more doubts, but let's give them a try.
You haven't really dealt with the problem, which is why most of the people come into your office, and it's the problem of family reunification. None of these reforms do anything to make family reunification easier.
Mr. Richard Kurland:
My goodness, don't discount Mr. Waldman's sage advice merely because he wants to sue you.
Voices: Oh, oh!
Mr. Richard Kurland: I was co-counsel, class counsel, in the first litigation against the then Government of Canada. I am not taking this matter to court at the present time. That's because I feel the government is doing the right thing. This is the right solution for a problem that has been plaguing this country for over 25 years. It is the first time it's being fixed.
You can come together and arrive at a compromise, hopefully without litigation; if not, I see it with litigation. Either way, this is the right plan for the right time.
If the consequences for 284,000 disappointed individuals are sad, they took the business risk of applying. They can seek temporary status as student foreign workers, knock on the provincial door, requalify for skilled workers, find family reunification through marriage or being sponsored by a relative.
The door is not shut; it's just that those are no longer the skills we need.
I call this 66th meeting of the Standing Committee on Finance back to order. We are continuing our discussion of Bill C-38.
We want to thank our guests for coming in today and for joining us by video conference. We have four witnesses in this panel.
First of all, from the Canadian Auto Workers Union, we have economist Jim Stanford; from the Retail Council of Canada, we have Madame Diane Brisebois, the president and CEO; and Karen Proud, as well, from that same organization; by video conference, we have Professor Marjorie Griffin Cohen—she joins us from Simon Fraser University—and via video conference from Toronto, we have from Campaign 2000, national coordinator, Laurel Rothman.
Thank you all for being with us. Each of you has up to five minutes for an opening statement, and then we'll have questions from members.
We'll start with Mr. Stanford and proceed in the order I outlined.
Mr. Stanford, please.
Mr. Jim Stanford (Economist, Canadian Auto Workers Union):
Thank you, Mr. Rajotte and members of the committee, for the opportunity to appear with you. I will focus my introductory remarks on the condition of Canada's overall labour market. In particular, I will argue that the labour market is characterized, and will continue to be characterized, by a condition of chronic excess supply. This contrasts with the oft-made claim that Canada is experiencing or is about to experience a major shortage of labour.
This issue is an important context for several of the measures that you are contemplating in Bill C-38, including the proposal to defer eligibility for old age security payments by two years and the plan to reduce and restructure employment insurance benefits, as well as measures to restructure immigration and migrant labour policies.
All of those are bundled, of course, into one piece of legislation. At the risk of repeating what just happened, I should add my organization's view to the record that we think it's inappropriate to consider measures that are very important, very long lasting, such as changes to OAS and EI programs, within the framework of an omnibus bill.
The issue of whether the labour market experiences excess supply or short supply is also very relevant to a wide range of economic policies. It's very common to use the official unemployment rate as an all-purpose indicator of the general supply/demand balance in the labour market. That official rate currently stands at 7.3%, which might not seem too bad, depending on your context. However, that rate is not an accurate indicator of true labour market balance, especially during a recession or in the period after a recession.
To qualify as officially unemployed for purposes of this measure, an individual must not only be working, but also actively seeking work. If you stop actively seeking work—according to the definition of that term by Statistics Canada—you disappear from the labour force, and hence from the unemployment statistics. This is an arbitrary hurdle that skews the resulting measure of supply/demand balance, especially when job searches may be inhibited by the view that there aren't positions to apply for. Perhaps I could mention that Albert Einstein defined insanity as doing the same thing over and over again, expecting a different result. In that case, if you've applied for 50 jobs and didn't even get a callback, applying for the 51st might be considered irrational.
It must be noted in this context that most unemployed Canadians do not receive EI benefits, so the idea that people are just going through the motions of looking for work in order to remain qualified for EI cannot explain this result.
I think that at this point in the business cycle, a better measure of labour market balance is the flip side of the unemployment rate, what we call the employment rate. It steps back from the issue of whether someone is actively seeking work and just asks if they are employed in any type of job.
A handout has gone around, and the graph at the top of that handout illustrates the trend in the employment rate in recent years. As you see, the employment rate fell dramatically during the recession by 2.5% of the working-age population. Since then, it has rebounded by only 0.6%. In other words, only one-fifth of the damage that was done to the labour market by the recession has been repaired. Indeed, in the labour market, it still feels like a recession, even though economists say technically we're in a recovery.
The last two months of labour market data were good. You'll see the last two points on that graph show a nice rebound, and that's very positive. Even with that, we're only back to where we were 16 months ago. In that regard, our employment recovery has stalled. I think it's worth noting that between one in four and one in three of the net new jobs created in Canada between the end of 2007 and the end of 2011 went to temporary foreign migrants. That program is playing a larger and larger role in meeting the new jobs being created.
How do we reconcile that graph with the claim that we have won back all the jobs that were lost in the recession?
This measure, as we should, takes into account ongoing population growth. Saying that we're back to the absolute number of jobs we had in the fall of 2008 is a bit irrelevant when we have to create hundreds of thousands of net new jobs each year to keep up with population growth in the four years since then.
We think a better measure of the actual mass of unemployment would take the non-participation of discouraged Canadians into account, and the table at the bottom of my handout does that. We add to the official unemployment tally, which is around 1.4 million as of April, about 300,000, representing the withdrawal from the labour market by many Canadians, as well as Canadians who are working involuntarily in part-time positions or who have a job but no hours or are waiting for the next shift.
By that measure, I estimate that true unemployment in Canada is about 2.3 million Canadians, or about 12% of the adjusted labour force.
Ms. Diane Brisebois (President and Chief Executive Officer, Retail Council of Canada):
Good morning. Mr. Chair, members of the Standing Committee on Finance, we would like to thank you for inviting us to talk about the retail sector's concerns and recommendations regarding Bill C-38.
You have in front of you today a copy of the brief that was recently presented to the Standing Senate Committee on National Finance relating to the study on the potential reasons for price discrepancies in respect of certain goods between Canada and the United States, given the value of the Canadian dollar and the effect of cross border shopping on the Canadian economy.
Because we only have five minutes to present our comments and recommendations, I will get to the point immediately. I hope you will have time to carefully review our submission, which includes more details.
Of course, we will be very pleased to answer all of your questions after our presentation.
Our comments are timely considering that Bill C-38 will significantly change the personal exemption limits for Canadians bringing goods back into Canada, making it even harder for Canadian retailers to compete with their U.S. counterparts. We will focus on three significant areas that we believe need to be addressed by this committee. They include import duties on finished goods, supply management affecting prices of food products such as dairy and poultry, and regulatory harmonization. You'll also note that the submission before you speaks to vendor pricing, which is a matter we discussed at length with the Senate committee.
Let me quickly address import duties. One of the main areas where the federal government has a role to play in levelling the playing field for Canadian retailers and importers is in eliminating the outdated tariffs on finished goods entering into Canada. While Finance officials often note that these tariffs are only applied to 10% of all products entering Canada, they unfortunately are overly represented in the retail sector. For some retailers they represent close to 100% of the items they import into the country.
As an example, on page 9 of our submission, which we circulated
—it is on page 8 in the French—
we have listed the tariffs applied to sports equipment. For the most part, there are no duties applied in the United States for retailers importing those goods, yet the same products entering into Canada carry tariffs as high as 18%.
On page 10 of both the French and English versions of our brief, we provide another sample list of some of the tariffs we believe should be eliminated.
We thus urge the government to support the elimination of tariffs, as the minister had noted in the budget that he would be looking at this issue seriously.
The second matter relates to supply management, which we all agree is not always a very popular issue to discuss. One area that has not been discussed in full is the effect of the difference in pricing of dairy and poultry products between Canada and the United States. I draw your attention to page 12 of the report and the table that shows the difference in prices between both jurisdictions for supply managed food products. I think you will find it as shocking as we have.
While retailers fully respect and support Canada's agricultural community, we do know from our members that these products are the most popular products purchased by consumers during the great majority of the same-day cross-border shopping trips. In fact, dairy products, poultry, gas, alcohol, and cigarettes are the five top items that are brought in on same-day trips. There is a trend.
At the very least, should the current system continue to be sustained, the government must acknowledge its role in supporting marketing boards and higher prices in Canada for those popular grocery products. If the government wanted to provide retailers in Canada with a level playing field, it should have exempted or restricted these supply managed products from the personal exemption limits that have been increased by this bill, as it has done with tobacco and alcohol, and actively enforce those rules at the border.
The final point is regulatory harmonization. I would like to speak briefly about the need for better harmonization of regulations and policy.
Lack of harmonization and different standards and requirements contribute to increased prices of products in Canada and decreased productivity.
We applaud the government's creation of the Canada-U.S. Regulatory Cooperation Council. However, even after this was announced in February 2011, as our submission outlines, a new car seat testing regulation came into force, which was not at all harmonized with that of the United States.
Because of time, I will immediately conclude my remarks and thank the committee for its consideration of issues of concern to our sector.
Thank you, Mr. Chairman.
Ms. Marjorie Griffin Cohen (Professor, Simon Fraser University, As an Individual):
I would like to thank the committee for inviting me today. There are two issues I would like to discuss. One relates to part 4, division 42, in the bill, regarding amendments affecting the federal contractors program, and the other is EI changes and what those will mean for women in B.C.
Division 42 of part 4 amends the Employment Equity Act to remove the requirements for employment equity that are specific to the federal contractors program. I imagine the committee has seen this, but just to remind you, what this sentence does is to say that the minister is responsible only for the administration of the federal contractors' employment. What it cuts out from the Employment Equity Act is the following:
||and shall, in discharging that responsibility, ensure that the requirements of that Program with respect to the implementation of employment equity by contractors to whom the Program applies are equivalent to the requirements with respect to the implementation of employment equity by the employer under this Act.
This effectively does away with the requirements for contractors to meet employment equity standards when they work for the federal government.
The minister now has the latitude to establish any standard he or she would like, or none at all. This is really a huge blow to women in Canada and to other groups who are protected by human rights, including aboriginal people, visible minorities, and people with disabilities.
I had a complaint, along with six other women, about the unfairness of the Canadian research chairs in Canadian universities. It went to a human rights settlement, but it could do that only because of the contractors program. So it is incredibly important that this kind of program exist. Even what are usually good employers, like universities, will behave badly if they are not forced to meet employment equity standards.
The other issue I want to raise is employment insurance. This has received media attention primarily because of what it will mean for seasonal workers who are in largely male-dominated jobs. I want to point out what these changes will mean for women.
The structure of employment in Canada has changed considerably over the last 20 years, and full-time, full-year work is less common, particularly for women. Women predominate among the part-time, part-year workers, and these are the workers who are going to suffer from this.
According to the OECD, Canada has an absolutely dismal record of protecting workers, coming 29th out of 30 members, and now it will only get worse.
The issue is how women get to qualify for EI. Right now it's very difficult. In B.C. only 35% of the women who are unemployed qualify for employment insurance, and this is compared to a 38% average for women in Canada and a 42% average for men in B.C. Women in B.C. really do suffer because of the structure of their labour force participation.
I can give you an example from my own department in the university. It is part of a structure of employers to rely on part-time workers and temporary workers. These are people with PhDs. Sixty percent of the teaching in my department is done by people who are not full time and permanent.
These are the people we're going to be forcing to take lower incomes and to look for other kinds of jobs that will be unfair for them. There are all kinds of workers who do temporary and part-time work—hospital cleaners, home support workers, group home workers, legal secretaries, child and youth workers, and of course many who work in the tourism industries. Much of this work is skilled work, but the jobs are not necessarily high paying. Going from making $14 or $15 an hour to making $10.25, the minimum wage, makes a very huge difference for women.
We see that this legislation will contribute to a low-wage policy, and already the vast majority of low-wage workers are women, so these policies will affect them. I would like the committee to understand that.
Ms. Laurel Rothman (National Coordinator, Campaign 2000):
Hello. Thanks for the opportunity to appear before you.
You're probably aware that Campaign 2000 is a network of organizations representing low-income people, affordable housing, child care and health care providers, food banks, labour organizations, and women's groups. We've been tracking progress, or lack thereof, on child and family poverty for at least 20 years.
We were quite disappointed not to see measures addressing poverty or inequality in Bill C-38, and I guess we were jarred again by the recent report from UNICEF measuring child poverty in the world's richest countries, which reminds us that even among our peers, the economically advanced nations, Canada ranks 24th out of 25. UNICEF also emphasizes that poverty is one of the most costly mistakes a society can make—and it is indeed one that we can ameliorate.
The most recent statistics show that 639,000 children, or about one in 10, are still living in poverty. That doesn't well reflect the numbers in first nations communities, where it's closer to one in four. It's important to remember that about one in three of those children in poverty has a parent already working full time. So the issues we've been talking about with regard to labour market and labour replacement income under EI are relevant to poverty reduction.
UNICEF also confirmed that public policies in the form of taxes and transfers make a big difference, which is why we had wanted to see some progress on that. Of course, in Canada we have strong evidence in the progress we've made to date, both from our programs assisting seniors—OAS, GIS—as well as with children. I don't know if you have in front of you a copy of the report card that was sent, but we have a good chart where we show the impact of taxes and transfers, including employment insurance, the Canada child tax benefit, the national child benefit supplement, and the GST credit. Before those were taken into account, we would have had 25% of children, one in four, in poverty, and after those taxes and transfers, the rate went down to 14%, preventing about 770,000 children from living in poverty.
The other important point is that the CCTB and the NCB address both poverty and inequality. The maximum benefit goes to families with net incomes under $24,000, but the progressive nature of the benefit trails out so that almost 90% of children receive something. Obviously, in families with more income they receive less.
So what we are suggesting is that to both prevent and strengthen child and family poverty we need to retain, if not enhance, those existing taxes and transfer measures, including EI, the national child benefit. I think we need a more updated look at the GST credit—or now we'd call it the HST credit in many places—and we need to focus on creating better jobs. Specifically, the child benefit needs to be increased to a maximum of $5,400, and even at that, our lone-parent mother would need to earn at least $12 an hour for at least 34 hours a week, plus the child benefit, to bring herself and her child out of poverty.
We believe that poverty reduction and eventual eradication is a key part of a prosperity agenda. Remember, these funds in families on tight incomes are all spent in local communities. They're not sent abroad. Unfortunately, people aren't able to save, but they desperately need that money for food and rent. So this direction will address some critical needs of our most vulnerable Canadians and will reduce intractable social and economic problems for years immediately ahead and to come.
Mr. Wayne Marston:
Thank you, Mr. Chair.
Once again, we have a wealth of expertise here in a lot of very important areas. I think I'm going to spend most of my time with Mr. Stanford.
Regularly, sir, we hear the government members here and in the House talk about net jobs—700,000 net jobs—and on face value it sounds really good. The materials you brought before us today counter that argument. Very clearly, you're saying that the jobs that have been created, first of all, are not necessarily that good, and there's a certain discounting that's been done with the number of people who have lost their jobs.
Would you like to comment further on that?
Mr. Jim Stanford:
I wouldn't dispute the empirical accuracy of the claim that net new jobs have been created and net new jobs are an important variable to follow. The question is, how do you appropriately interpret that measure? In a country like Canada, whose population is growing relatively quickly...we have one of the fastest rates of population growth in the industrialized world. Our labour force, or working-age population, grows by between 1.3% and 1.5% per year.
We have to be creating hundreds of thousands of net new jobs year after year just to keep up with that normal course of population growth. It's particularly important when you're making international comparisons. Think of a country like Germany, which has virtually no population growth. Canada has created net new jobs; Germany hasn't. But Canada has to create hundreds of thousands to keep up with population growth; Germany doesn't.
By a more appropriate measure, which is the number of jobs relative to the size of the working-age population, Germany's labour market has been much stronger than Canada's through the recession and the subsequent recovery. Their employment rate is actually higher than it was before the recession, whereas the graph I showed you shows that Canada's is still substantially lower than before the recession.
There is also an issue about the quality of jobs that is not captured either in the net new job measure or, frankly, in my graph. My graph just asks whether you're working or not. There has been some growth in part-time work and precarious work through that period. But I think the bigger issue is the context in which you interpret a statement like the number of net new jobs. Canada's labour market relative to our population is still far weaker, near the worst conditions at the bottom of the recession.
Mr. Jim Stanford:
You mentioned the issue of cash and other short-term financial assets not being mobilized within the business community. I do think that is an important problem. Think of the economy as having four major players in it, if you like, who have to be spending, and in general borrowing and spending, in order to propel the economy forward and create jobs: consumers, government, foreigners—in the sense of our net exports—and then the business community.
Consumers and governments have both gone deeply into debt during the recession, and are concerned about the debt and are looking at curtailing their expenses. Our net exports to the rest of the world have declined significantly, partly because of economic weakness in the rest of the world, partly because of our overvalued exchange rate.
That means we're very dependent right now on business opening the taps of capital spending in order to balance out our recovery. As yet that hasn't really happened. In fact, business investment spending is still the only source of domestic spending in our economy that is lower in real terms than it was before the recession.
So I'm in favour of measures to try to stimulate more investment spending, both by businesses and by the public sector, and there are very important investment infrastructure programs that the government can and should be taking on in part to address the downturn in employment that I documented.
Mrs. Cathy McLeod:
Thank you, Mr. Chair, and I'd also like to thank the witnesses for coming and appearing on this very important budget.
I'd like to start with Ms. Rothman. Certainly child poverty is a concern. I think it's got to be a concern to everyone. I know that in regard to affordable housing, for example, with the economic action plan we actually managed to double housing throughout my riding. I think we have made significant strides, but I would never feel that the job is done for sure.
Could you help me in terms of Canada's numbers, because I think Canada does have some unique challenges in terms of rural, remote, urban? Does the study actually break things down at all in terms of where those challenges are?
Ms. Laurel Rothman:
First of all, we should also remember that of course some groups are at much greater risk of poverty than others. One in two children in recent immigrant families lives in poverty. Unfortunately, children of all immigrants, including those who may have been here for a couple of decades, still have a higher rate of poverty than others, as do children in lone-parent families, children of aboriginal identity, and of course children with disabilities.
It is important to look at a finer grain, if you will, to drill down to the details. Most low-income families want to work. There often are lots of reasons why many are not able to work. Health, family separation, divorce, lack of child care—they are often the reasons why people are not working at the moment.
By the same token, those who are working find that transition to be a very difficult one. In rural areas, for example, or areas where manufacturing has left.... For example, in the greater Toronto area, we have a much higher rate of child and family poverty, including the suburban ring around Toronto.
Obviously local conditions make a big, big difference.
Having said that, so do public policies.
Mrs. Cathy McLeod:
Certainly in terms of immigrants and the successful integration of immigrants, this budget actually looks at some significant changes in terms of ensuring that immigrants who come to Canada have matching jobs.
Representing and having worked in some rural and remote communities, including some aboriginal communities, I've seen many examples of where the aboriginal communities have partnered with the resource sectors in a very positive way, whether it be forestry or whether it be mining opportunities. Not all have been successful, but certainly moving forward, I think, changes....
I did note that you said that having opportunities for positive employment is critical. I think as we move forward in our rural and remote communities...and again, I can look at a number of examples of really positive...moving forward together. Having the changes we have had to protect the environment but also to allow these projects to move forward I think will be very important for some of our aboriginal communities.
I'll quickly shift to you, Ms. Brisebois, in terms of the issue I think you identified with eggs, poultry, and gas. I would think that those typically would be under 24 hours, which has not changed. Is that accurate?
Hon. Scott Brison:
Thank you very much.
Thanks to each of you.
Mr. Stanford, it's good to see you again. I have a question on the temporary foreign workers.
There is a fear...and I've heard people say that there's a threat to taking jobs from Canadians. Yet when I speak with companies, businesses, and farmers who use temporary foreign workers, they've been able to quantify that reducing access to temporary foreign workers could actually threaten Canadian jobs, because the Canadian jobs created as a result of temporary foreign workers are further up the value chain. In fact, temporary foreign workers are part of the global production chain in certain industries, particularly in agriculture, but increasingly in other industries as well. We're actually hearing evidence from employers that these are not taking jobs from Canadians; they're actually leading to higher-value jobs at other levels of production.
Just briefly, I'd like your thoughts on that.
Hon. Scott Brison:
It's a complex issue, but I just wanted to present a....
Mr. Jim Stanford: Yes, right.
Hon. Scott Brison: You mentioned Germany. Germany, in terms of training, apprenticeships, and maintaining the honour of the trades, it seems to me.... I'd appreciate your views on whether or not we could learn quite a bit from Germany in terms of human resource development.
Even in terms of things like income inequality, Germany does not have as much of a gap in terms of incomes as we do in Canada, for instance. Could you briefly opine on that? But briefly, because I have some other questions as well
Mr. Jim Stanford:
I think we have a lot to learn from Germany in skills development, but also in a number of other areas.
Certainly, the integration between the college and skilled trades training programs, and the needs of employers and actual machinists and other very specialized trades, is more successful than it is here. That's also backed up with a very successful macro and industrial policy framework, which has first and more significantly enhanced global demand and the global success of German-made products, which is what created the jobs for those skilled workers in the first place.
So I think that across the board, both at the labour market level and at the macroeconomic and industrial strategy level, we could learn a lot from Germany.
Mr. Dave Van Kesteren:
Thank you, Chair.
Ms. Rothman, I'm going to continue with you, if you don't mind.
A discussion we had here with a former panel—it was either Mr. Kurland or Mr. Grady...no, Mr. Lee, I think. It was interesting to hear this as well, because they didn't use their own opinion, but they quoted the OECD and the IMF, and a third.... At any rate, the quote and suggestion were that in the western world the current level and direction we're going in pensions is unsustainable. They didn't say it was just Canada; they said it was throughout the western world. We have to make changes.
I'm curious. You said you've heard sources that say we should lower.... Where are your sources when you suggest that we should be lowering? What group is making those?
Ms. Peggy Nash:
Thank you. Welcome to the witnesses.
I want to start correcting the record, because the federal government had asked for a study on our pension system. Edward Whitehouse, who researches pension policy on behalf of the OECD and the World Bank, concluded that Canada does not face major challenges in financial sustainability with its public pension schemes, and there is no pressing financial need to increase pension ages in the foreseeable future. Just so we're clear, if we're looking at data, those are the facts, and they are based on the OECD.
Mr. Stanford, can you tell us what your background is? Are you an economist?
You talked about Canada having one of the fastest population growths among the OECD and that we're still in a fairly fragile situation—I don't know if that's putting words in your mouth—but we're not fully recovered from where we were before the recession. Certainly, there have been announcements of public sector job cuts, 19,000 in addition to 10,000 previously announced.
I'm wondering, with these public sector cuts and some of the other changes you've mentioned, such as with OAS, EI, and immigration, do you agree that this is a budget that will create jobs and prosperity for Canada? That is the short title of the budget implementation bill.
Mr. Jim Stanford:
Well, individual Canadians, and it's a significant number, whose jobs will be directly eliminated by the measures will obviously experience a loss in employment.
Then there's the indirect macroeconomic effect of the general retrenchment in government spending. Economists call that effect “fiscal drag”, which means to say, you have a major player in the economy, government, pulling back its expenditure, and then you have not just the jobs that depended directly on that, but the indirect jobs from the knock-on spending.
Fiscal drag depends on what's happening elsewhere in the economy. If the rest of the economy—consumer spending, housing, exports, business investment—was growing significantly or quickly or vibrantly, then you wouldn't notice the fiscal drag effect in the overall performance of the economy. If those other sectors of the economy were not growing or were stagnant, then the impact of the fiscal drag could be enough to actually throw the whole economy into a recession.
That's clearly what's happened in Europe. The scale of the fiscal austerity obviously has been worse than is contemplated here. However, the fiscal drag effects of any contraction in spending by government, other things being equal, is a net negative impact on overall employment and growth in the economy.
Mr. Mark Adler:
Thank you, Chair, and I want to thank all the witnesses for their contributions today.
I'd like to start with Madame Brisebois.
You will recall in the late 1980s, when the GST was brought in, there was a cross-border shopping boom in the years 1988, 1989, 1990, and 1991. From that boom to now, if you were to graph that out, has it decreased from that peak? Has it increased from that peak? Has it remained stable? Could you shed some light on that?
Ms. Diane Brisebois:
The brief gives you an in-depth explanation.
Most consumers are much more value-conscious now than they've ever been. They are price-conscious. A large portion of the population now lives within an hour of the border. We've seen urban growth. It has brought more and more people closer to our U.S. neighbour, so it makes it easier, in fact, to cross and to shop. There's been an effort, even with increased security, to ease the crossing and the returning of shoppers, especially same-day shoppers. It is all of those things.
Also, obviously, there's the difference in pricing between Canadian goods and U.S. goods. All of this has in fact created an increase in cross-border shopping.
Mr. Jeff Watson (Essex, CPC):
Thank you, Mr. Chair. Thank you to our witnesses for appearing.
Ms. Brisebois, I'll start with you. I come from a cross-border community right on the border with Detroit. I live a little south of Windsor, actually. The issue of harmonizing duty exemptions with the United States is somewhat talked about in the community. I think it depends on which side of the transaction you are as to whether you feel good about it or don't feel good about it.
I can tell you on the consumer side there's a lot of support for the idea of a harmonizing measure. Folks who go on a business trip for two or three days, or go on a family vacation to the United States, I think, appreciate having some ability to bring back a bit more with them than they could previously. Retailers may not necessarily like the fact that people shop while they're on vacation, but I think that's neither here nor there.
I want to ask about your industry's profiling of who cross-border shoppers are. I think global information is somewhat useless in the sense that there are 50 million trips, but surely not every man, woman, and child is taking one and one-half trips.
Do you know who these travellers are? Has your group made any effort in trying to win their business in terms of shopping in Canada? What efforts are you undertaking?
Mr. Jim Stanford:
Certainly, and I'd be prepared to provide additional empirical evidence for that, because I am not prepared with that right now.
The dimensions of the quality of work would include part-time work, especially for those who desire full-time work. The table I put out indicates there are hundreds of thousands of full-time equivalent positions of unutilized labour supply of people who want to work full time but are limited to part-time employment.
There is the issue of temporary contract positions and other precarious types of positions. That's harder to track in the data, but Statistics Canada has done a better job in recent years of trying to develop more information on that. That is another dimension that is increasing.
Another issue is self-employment. Some self-employment obviously reflects a positive choice by someone with an idea to start a business. Some of it reflects that a person hasn't been able to find a regular paying job so they have to do something. On average, both the pay and the security of self-employment tends to be lower than in paid jobs.
With regard to the temporary foreign workers you mentioned, the increase in the temporary foreign worker program between the end of 2007 and the end of 2011 was 100,000 positions, which represents something between a quarter and a third of all the net new positions created in the whole labour market.
Ms. Marjorie Griffin Cohen:
What we don't often understand or look at is how various portions of the budget will interact with each other. For example, when you change the OAS and you then change the employment insurance, you're going to see that older people who are over 65 are probably going to be doing part-time and temporary work; they're not going to be able to qualify for a pension, nor are they going to be able to qualify for EI, if they aren't employed. We may be pushing a lot of people in specific kinds of groups into positions of poverty and relying on social assistance, and the provinces, which probably will not be able to cope with that as well.
We're seeing a great many measures in this budget that have not been looked at beforehand; that is, the implications of what it will mean for people have not been looked at beforehand.
I was speaking specifically of employment insurance and what it will mean for women, because that hasn't been discussed very much. Obviously it has a big effect on seasonal work. A lot of the work that women do is seasonal, but even more significant is that a lot of it is temporary. A great deal of our labour force has been structured on the notion that people are available for temporary work.
Mr. Randy Hoback (Prince Albert, CPC):
Thank you, Chair, and thanks to all the witnesses for being here this afternoon and this morning. It has been very interesting to talk and listen to you.
Ms. Brisebois, you were on television last night, and I actually did watch some of your Senate hearing last night on television. CBC had a report on some of the things you talked about with regard to the price differentials, especially in hockey equipment, from across the border. I have started playing hockey again, so I watched that very closely.
I think it's very important to note, when we look at our budget and we actually look at what's going on in this budget, that it's got a single focus, which is jobs. That's getting an economy that creates jobs. When you create jobs, you actually get the spinoffs that actually impact what Mrs. Rothman talks about, and that's dealing with poverty and issues with poverty and with kids in poverty and that spectrum. Once you have a job, you start to build yourself a family, you start to build a house, you start to actually take away from the social network, and you're paying taxes, so you're putting back into the social network at the same time.
But if nobody is working, you end up with a situation like they have in Greece, where it's just unsustainable.
This is where I go in my questioning with you—the importance of trade. Free trade agreements are trade agreements. I don't like the words “free trade agreements”; I call them “balanced trade agreements”, because there are a lot of things in there between governments that make these trade agreements work for each country. They're not situations where we're exploiting them or they are exploiting us. It is actually creating partnerships with other countries to be more efficient—and this is probably a better word—partners together, or trading partners.
If you look through our government, and if you look at what's in this budget, we've got a very active trade agenda. What do you think the impact of that trade agenda will be as far as the creation of jobs and growth is concerned, and how will it affect your sector?
Mr. Randy Hoback:
I think you make a good point there. The point I would make back to you is there seems to be the mindset that you do the trade agreement and then you walk away and everything is happy-go-lucky. In reality, you do a trade agreement and then you work with the business sector and realize there are other hurdles that show up. You've got to keep dealing with those countries that you have trade agreements with to keep removing those hurdles.
I have to give Mr. Fast and Mr. Ritz credit, because they have been around the world doing that. I'll use the example in the beef sector. Two years ago our beef sector was horrible. They were selling bred cows for $200 to $300 a head.
Minister Ritz went out on a very massive agenda trying to open up all these little markets for different types of cattle product, stuff that we don't eat here in Canada, and he was very successful in doing that. Now, in just two years, these bred cows are going for record amounts of $1,800. It just shows you how important trade is to one part of the sector.
But there's that spinoff again. Those cattlemen are now buying new tractors, which are buying engines from different manufacturers. You can just see how it dominoes back into it through the whole sector.
Mr. Stanford, how do you see the importance of trade and trade agreements and job creation in Canada? If we didn't have these trade agreements, where would we be?
Mrs. Shelly Glover:
Thank you, Mr. Chairman.
I want to thank the professionals who are here today, including those who have joined us via video conference.
As you can see, we have three different parties in Parliament because we don't agree, and we have a number of witnesses who have appeared before us who don't agree, including other economists who would challenge Mr. Stanford's position on a number of things that have been said.
I did want to point out that the budget plan, on page 34, does have a chart of the jobs that have been created, the net new jobs that have been created, and it refers to 610,000. We actually are now at more than 750,000 net new jobs that have been created since the budget was written.
But the professionals who helped develop that chart talk about 90% of those 610,000 jobs being full time. So when Mr. Mai indicates that there are mostly part-time jobs, when you look at the jobs that have been created in particular, it's indisputable, from what we've been shown by other experts, that 90% of them have been full time.
Mr. Stanford, can you speak to the 90% of the 610,000 jobs, that chart on page 34? Would you care to dispute the fact that 90%, according to Stats Canada and other economists, are in the full-time areas?
Mrs. Shelly Glover:
I thought you would have looked at that page, because that is the page that talks about—
Mr. Jim Stanford: Most—
Mrs. Shelly Glover: —the jobs that you've commented about quite extensively, and 90% are full time. In fact, 80% of those jobs are in the private sector.
The other thing it says on that page that I think is very important to note, which is why I'm a little surprised that an economist who wanted to speak about the job creation didn't look at it, is that these are jobs in the “high-wage industries”. What does that mean? That means the average hourly wages are actually above the aggregate average.
Now, how many of those jobs that were created in the budget plan that we're actually studying were in the high-wage industries? This says, according to Stats Canada and other professionals, that 80% of them were in the high-wage industries. So again, I know there are differences of opinion, but the facts speak for themselves in the budget, and I was hoping you might have looked at that so you could dispute that precisely, rather than talking more generally about some broader issues.
But I do want to turn my attention to Madam Brisebois, and it's because the penny is created in Manitoba, in my riding of Winnipeg. We've made some changes to eliminate the penny, so I'm interested in knowing your reaction and the reaction of your members to that decision.
I hope members will allow me, as the chair, to ask a few questions. I wanted to follow up briefly with Mr. Stanford and Ms. Rothman.
Mr. Stanford, as you can see, we've had a lively debate in terms of job creation and how many full time, how many part time. But I have to say, when I review Statistics Canada, when I look at the OECD.... You referenced Germany. Germany has an excellent record. In fact, Germany, on the chart I have, the labour market statistics, has the best in terms of level employment rate. But Canada is very close to Germany. I'm looking at third quarter 2011. Germany is at 72.7%; Canada is at 72.1%. If Germany is the best, we're actually very close.
I think we have to look at this on a relative level. We also have to consider Germany, with the euro, and the Deutschmark would have been so strong...it is in fact benefiting from the common monetary policy in the European Union.
In the past we've worked together on issues such as accelerated capital cost allowance for the manufacturing sector. I certainly supported you and your organization for that. But just on the record, some of the initiatives, for instance, the work share program that was introduced by the government, the hiring credit, which was extended in this budget, the measures for disabilities in terms of improving access for people who are disabled in the workforce.... I suspect you and your organization would in fact say that these are positive measures for employment and for the economy.
I just wanted you to respond to that.