Flaherty's income trust tax was for Power Corp and Manulife, what this renovation tax credit is for Home Depot

Budget measures raise conflict questions over Flaherty's expert panel
By Joanne Chianello, Ottawa CitizenJanuary 28, 2009 8:01 PM

See also: Stephen Harper leveled the playing field......in Paul Desmarais Jr's/Power Financial's favour

OTTAWA — One of the most popular spending initiatives in this week's federal budget could benefit the company run by one of the members of Finance Minister Jim Flaherty's 11-member advisory panel.

The Home Renovation Tax Credit will provide a 15-per-cent tax credit to homeowners who undertake home improvement projects by Feb. 1, 2010. The government expects the program to cost $3 billion over the next two years, and 4.6 million families to take advantage of the measure.

But one of the members of Flaherty's 11-member panel is Annette Verschuren, the president of Home Depot Canada and Asia.

Under the HRTC, costs associated with a renovation are eligible for up to $1,350 in tax credits, including new carpeting or hardwood floors, paint, kitchen cabinets, cedar decking — even new sod for the lawn.

The plan is expected to accelerate spending on home renovation goods and services.

The budget also provides $50 million to build a new research facility for the Institute for Quantum Computing, a research centre based at the University of Waterloo. Mike Lazaridis, the president and co-CEO of Research in Motion, helped found the institute, sits on its board of directors and has donated his own money to it. Lazaridis is also on Flaherty's economic panel.

When asked about the appearance of a possible conflict of interest between these two panel members and measures in this week's budget, a spokesman for Flaherty said that "everything's above board."

Chisholm Pothier said that the finance minister consulted the ethics commissioner about the advisory panel and "there were no problems identified.

"The key thing is the minister asked them, they did not ask the minister. They did not lobby the minister."

The ethics commissioner, Verschuren, and Lazaridis could not be reached Wednesday for comment.

Last month, Flaherty announced the creation of an 11-member advisory panel — mostly prominent business leaders — who were to advise him on the federal budget and the economy on an ongoing basis. He said the members would be paid $1 a year each for their insight.

The panel is chaired by Carole Taylor, former finance minister for British Columbia, and members include Paul Desmarais Jr., the co-CEO of Power Corp., James Irving of J.D. Irving Ltd. and Jack Mintz, former CEO of the C.D. Howe Institute.

The panel met four times — three times in person and once by conference call.

Mintz said Wednesday that although some panel members had very specific ideas for the minister, "the actual discussion around the table was much more on broad strategies."

He also acknowledged that some members of the panel may have talked to the finance minister "by themselves on specific ideas." Mintz said he himself had a one-on-one chat with Flaherty at the minister's request.

Of the short-term stimulus announced in this week's budget, the HRTC is "one of the bigger tax cuts."

The February 2010 deadline for the program is intended to prod those who might have been putting off home improvements to act quickly, in order to take advantage of the tax credits.

Projects totalling between $1,000 to a maximum of $10,000 qualify for the credits.

On Monday, Home Depot — which bills itself as the world's largest home renovation retailer — announced it is eliminating 7,000 jobs and closing specialty stores.

While acknowledging that Canadian retailers face serious challenges this year, Verschuren told reporters earlier this week that the cuts would not affect operations in Canada, where the retailer employs 35,000 people in 176 stores.
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