FINA Committee Report

RECOMMENDATION 1

The federal government institute a permanent mechanism by which federal tax and program expenditures are reviewed annually. This mechanism should require consultations with Canadians about their priorities within the context of public interest, role of government, federalism, partnership, value for money, efficiency and affordability tests.

RECOMMENDATION 2

The federal government ensure that annual rates of increase in federal program spending do not exceed the rate of growth in the nominal Gross Domestic Product, except in extraordinary circumstances.

RECOMMENDATION 3

The federal government continue to include, in its budget planning, an allocation of at least $3 billion as a contingency reserve.

Moreover, the government should also continue to include an appropriate amount for economic prudence, bearing in mind that forecasting becomes less reliable the farther into the future the period for which the forecast is made.

RECOMMENDATION 4

The federal government continue the rate at which a federal debt-to-GDP ratio of 25% is realized.

RECOMMENDATION 5

The federal government continue to pursue a balanced federal budget in order to avoid federal budgetary deficits.

RECOMMENDATION 6

The federal government engage in ongoing discussions with provincial/territorial governments about the correct magnitude of, and accountability mechanisms for, spending on health, education, social assistance and other social services, bearing in mind the relative size of the federal and provincial/territorial debt.

RECOMMENDATION 7

The federal government take a leadership role with respect to protecting the environment by: purchasing fuel-efficient vehicles for government use; ensuring that government buildings are energy-efficient; encouraging the use of public transit by public service employees; and maintaining the commitment to its Green Procurement Policy.

RECOMMENDATION 8

The federal government — in order to encourage more environmental production, practices and purchases by businesses and
individuals — develop and implement appropriate incentives and supportive policies in the following areas:

•	the production, purchase and use of fuel efficient vehicles;

•	housing retrofits and other measures that would result in enhanced energy efficiency;

•	public transit, including measures related to the tax treatment of employer-financed transit passes;

•	renewable and alternative energy development and commercialization, including measures related to wind energy and fuel cells, as well as ethanol and methanol;

•	within the context of Recommendation 14 regarding revision of Canada’s capital cost allowance rates, the treatment of Class 43.1 regarding renewable and alternative energies;

•	the commercialization of new environmental technologies;

•	brownfield redevelopment; and

•	green space.

Moreover, the government should develop and implement measures designed to enhance air, water and soil quality, bearing in mind the need for transborder cooperation in areas where ecosystems are shared.

RECOMMENDATION 9

The federal government develop and implement a long-term, adequately funded infrastructure plan consistent with its responsibilities. The development and implementation of the plan should occur only after consultations with relevant non-governmental stakeholders. In determining how infrastructure funds should be allocated, an allocation mechanism that is not limited to population but that recognizes the strategic and development needs of communities should be considered.

Moreover, the government should allocate the equivalent of 5¢ of the federal tax on gasoline to a program delivered through the provinces/territories for cities and communities. These funds should be used for sustainable infrastructure investments.

Finally, the government should, in conjunction with stakeholders, undertake a comprehensive review of the Canada Strategic Infrastructure Fund, the Municipal Rural Infrastructure Fund, the Border Infrastructure Fund and the Strategic Highway Infrastructure Program. This review should focus on funding levels and allocation mechanisms, and should be completed no later than 30 June 2005.

RECOMMENDATION 10

The federal government, bearing in mind Recommendation 16 regarding a review of capital gains, take the following two actions:

•	reduce the capital gains inclusion rate for donations of publicly traded securities and ecologically sensitive lands to public charities; and

•	subject to proper valuation, extend the asset classes to which this reduced capital gains inclusion rate applies to include real estate and land.

RECOMMENDATION 11

The federal government provide stable, long-term funding to the following elements of federal support for arts and culture: the Tomorrow Starts Today program; the Canada Council for the Arts; Telefilm Canada; the Museums Assistance Program; the Community Access Program; the Canadian Television Fund and initiatives designed to promote Canadian culture internationally.

Moreover, the government should increase funding for the Canadian Broadcasting Corporation and Radio-Canada.

As well, the government should allocate funds to build capacity and assist archives with respect to archival content.

Finally, the government should increase the Canadian Film or Video Production Tax Credit to 30%.

RECOMMENDATION 12

The federal government ensure that the effective tax rate for Canadian corporations is competitive with that in the United States and elsewhere. Within that context, the government should:

•	review the timetable for elimination of the federal large corporations tax;

•	review the timetable for the tax changes for the resource sector;

•	consider immediate elimination of the corporate surtax; and

•	review the corporate income tax rates and other taxes paid by corporations.

RECOMMENDATION 13

The federal government, bearing in mind Recommendation 16 regarding a review of capital gains, review the current federal tax treatment of dividend income and non-resident withholding taxes with a view to ensuring that the tax treatment in Canada remains competitive with the rest of the world, particularly the United States, and that the tax treatment does not distort investment decisions.

RECOMMENDATION 14

The federal government revise Canada’s capital cost allowance rates by 31 March 2005 such that they meet three criteria:

•	similar asset classes are treated similarly;

•	Canadian rates are similar to the rates for comparable asset classes in the United States and other countries; and

•	Canadian rates reflect the useful life of the assets.

Moreover, the government should review these rates annually to ensure that they continue to meet the three criteria identified.

RECOMMENDATION 15

The federal government work with venture capitalists to identify new sources of financing. As well, the government should increase its funding to the Business Development Bank of Canada and to Farm Credit Canada in order that they can increase their venture capital activities. Finally, changes should be made to the federal Small Business Loan Program to allow this funding source to be accessed for a range of other uses, including operating capital.

RECOMMENDATION 16

The federal government review the tax treatment of capital gains in order to ensure that start-up technology and other small companies are able to access private equity capital at the lowest possible cost, and that the tax treatment of capital gains in Canada remains competitive with that of the rest of the world, particularly the United States. 

RECOMMENDATION 17

The federal government work with business to simplify the process by which firms access the Scientific Research and Experimental Development investment tax credit.

RECOMMENDATION 18

The federal government review access to flow-through shares for specific expenses related to research and development with a view to expanding access for other sectors. This review should, in particular, consider early expansion of access for the fuel cell and hydrogen as well as the biotechnology industries.

RECOMMENDATION 19

The federal government review and implement, on an expeditious basis, the recommendations made by the External Advisory Committee on Smart Regulation.

RECOMMENDATION 20

The federal government take a leadership role and meet with provincial/territorial governments no later than 28 February 2005 with a view to adoption of a national securities regulator scheme no later than 30 June 2005.

RECOMMENDATION 21

The federal government continue to work toward the conclusion of international trade agreement negotiations, including through the World Trade Organization, the Free Trade Area of the Americas and other bilateral initiatives, to enhance international market access for Canadian products. Labour and environmental standards should be part of all trade negotiations.

Moreover, the government should vigorously defend Canadian interests against unfair trade actions initiated by our trading partners. Where Canadian producers are harmed by unfair trade actions taken by trading partners, including high levels of subsidies by those countries, the government should consider appropriate support for affected sectors.

RECOMMENDATION 22

The federal government take a leadership role and meet with provincial/territorial governments with a view to eliminating the barriers to interprovincial/interterritorial trade.

RECOMMENDATION 23

The federal government ensure that the funds current allocated for Canada’s defence, emergency response and security needs are being properly allocated and used effectively and efficiently. Following this review, the government should ensure that adequate funds are allocated to meet the country’s defence, emergency response and security needs, including port security.

Moreover, the government should ensure that sufficient resources are committed to meet the needs at the shared border with the United States, including any funds required to implement the Smart Border Declaration between Canada and the United States.

Finally, the government should provide the funds immediately needed to re-capitalize the Canadian Coast Guard, as well as annual, secure, stable funding for future Coast Guard operations.

RECOMMENDATION 24

The federal government undertake a comprehensive review of the personal taxation system in Canada, including:

•	the value of the basic personal amount;

•	the value of the spousal/equivalent-to-spouse amount;

•	the thresholds of the income tax brackets;

•	the income tax rates; and

•	differential treatment of dual- and single-income households.

•	This review should be undertaken with a view to ensuring that Canada’s personal taxation system is both fair and as competitive with other countries, particularly the United States, as possible.

Moreover, in the review of the personal taxation system, particular attention should be paid to how the system might be modified to assist those with low income.

RECOMMENDATION 25

The federal government, while considering the forthcoming recommendations of the Subcommittee on the Employment Insurance Funds of the House of Commons Standing Committee on Human Resources, Skills Development, Social Development and the Status of Persons with Disabilities, amend the Employment Insurance Act so as to establish a transparent employment insurance rate-setting process.

RECOMMENDATION 26

The federal government meet with Aboriginal Canadians and ensure that programs are designed and delivered in a manner that addresses their health, education, housing, infrastructure, early childhood development and care, and other needs.

In particular, these programs should:

•	respect the rights and governance concerns of Aboriginal Canadians;

•	be delivered within the context of the Canadian constitution;

•	be sufficiently flexible to meet the diverse needs of Aboriginal Canadians; and

•	permit funding allocations that reflect the relatively small population base as well as the size and geographically large and remote nature of their communities.

RECOMMENDATION 27

The federal government, along with interested provincial/territorial governments, at the earliest opportunity announce initiatives to reduce child poverty. These initiatives should include a national, accessible, affordable, high-quality, publicly funded, publicly regulated, not-for-profit child care system.

Provincial/territorial governments that decide not to participate in these initiatives — but that instead institute their own
initiatives — should receive appropriate compensation.

RECOMMENDATION 28

The federal government meet with provincial/territorial governments and groups representing the disabled with a view to concluding a federal/provincial/territorial national disability strategy and a labour market agreement, as well as to identifying options for improved labour market supports for those who are disabled.

Moreover, the government should review and implement, on an expeditious basis, the recommendations of the Technical Advisory Committee on Tax Measures for Persons with Disabilities.

Finally, disability benefits available under the Canada Pension Plan should be discussed at the next meeting of ministers responsible for the Plan.

RECOMMENDATION 29

The federal government implement, on a priority basis, increased benefits payable under the Guaranteed Income Supplement program. As well, the government should make every effort to identify — and compensate — those Canadian seniors who are eligible for Guaranteed Income Supplement benefits but have not received them.

The government should also undertake a comprehensive review of incentives for saving and the Canadian retirement income system to ensure that the financial and other needs — both current and
future — of Canada’s current and future seniors are being met. This review should be completed by 30 June 2005.

RECOMMENDATION 30

The federal government — working with provincial/territorial governments, the Canadian Institutes of Health Research and health agencies — develop a public awareness program designed to educate Canadians about preventative measures, including those related to disease prevention and health promotion, to improve their health outcomes.

RECOMMENDATION 31

The federal government review — together with provincial/territorial governments, advocacy groups representing the homeless, and private and not-for-profit developers — the measures that exist with respect to housing and homelessness. This review should be undertaken with a view to ensuring that funds are adequate in size and properly allocated, and to identifying programs that should be changed or implemented.

Moreover, the government should, on a priority basis, extend and enhance the Affordable Housing Initiative, the Supporting Communities Partnership Initiative and the Residential Rehabilitation Assistance Program.

RECOMMENDATION 32

The federal government review — with provincial/territorial governments and groups representing universities, colleges and students — the financial assistance measures for post-secondary education.
Moreover, the government should, on a priority basis, split the Canada Social Transfer into a Canada education transfer and a Canadian social assistance and services transfer.

Finally, the government should ensure that adequate measures exist or are implemented to address literacy and lifeflong learning issues in Canada.

RECOMMENDATION 33

The federal government keep its commitment to contributing 0.7% of Canada’s Gross Domestic Product to foreign aid.

Moreover, the government should take a leadership role and work with the private sector and non-governmental organizations in order to identify means by which the citizens of developing countries might be assisted.

Finally, the government should ensure that the hemispheric trade negotiations to which Canada is a party do not adversely affect developing countries.