[Recorded by Electronic Apparatus]

Thursday, November 7, 1996

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[English]

The Vice-Chair (Ms Whelan): I want to welcome everyone here to our hearings in Winnipeg. We're really pleased with the weather you all brought for us. We've enjoyed it so much so far that I'm sure it's just going to keep snowing until we leave.

The finance committee, as you know, is travelling across Canada, holding pre-budget consultations. Half of the committee has come west and the other half of the committee has gone east. We started in Vancouver on Monday, we were in Edmonton on Tuesday, on Wednesday we were in Regina and today we're in Winnipeg.

I am Susan Whelan. I'm the member of Parliament from Essex - Windsor in the province of Ontario. I'm vice-chair of the committee and I'm chairing the sessions in western Canada.

With us we have Mr. Rocheleau, the member from Trois-Rivières in the province of Quebec; Monte Solberg, the member from Medicine Hat in the province of Alberta; Gary Pillitteri, the member from Niagara Falls in the province of Ontario; and Ron Fewchuk, the member from Selkirk - Red River in the province of Manitoba. Joining us today is Glen McKinnon from Manitoba, and we have Ron Duhamel from the riding of St. Boniface in the province of Manitoba as well.

Today the format is a round table discussion. It should have been explained to you that what we're going to do is have from the witnesses opening statements of approximately three minutes in length, if you can do that. I encourage you not to read your briefs. However, if you choose to read any part of it or all of it, I ask that you read it slowly, because of translation. There's a tendency to read a little more quickly, and it's difficult for our translators to keep up if you do that.

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Don't feel you have to get every word in. We will have discussions and lots of questions and the opportunity to say more. As well, your entire presentation will be reviewed by the members of the committee and the researchers and will be part of our report.

With that, I'm going to start with Mr. Jim Finlay from Community Action on Poverty.

Mr. Jim Finlay (Chairperson, Community Action on Poverty): We have to go from a complete social service system to a standard equalization guaranteed income. You can see it's getting worse and is wasting taxpayers' money on medical costs.

Dr. Rey Pagtakhan and I have prepared a petition on a standard equalization guaranteed income, and he's been trying to put this through since 1992, before the federal election. Already I have 246 signatures on this petition.

A major issue is that when the federal government made the GST effective, they did not see that provinces added it onto social allowance cheques at all. Social allowance did not add the 7% onto the social allowance cheques, so people on assistance have to use 7% of the untaxable part of their cheques to make up this 7%. I know it's a total of $764 they owe each recipient.

They haven't followed the inflation in cost of living since 1982. On special diets it hasn't been increased at all. I have all the inflation rates from Statistics Canada on the food. On one special diet, called the planned diet, assistance only allows $1.04 per meal, but according to Statistics Canada, it's $2.38 per meal. That's why people are starving quite a bit.

The workfare that they're trying to force on people is complete discrimination. I can prove it. The government gave me a special grant for business training and supplies of material, which was a lure to welfare to touch. Once welfare heard about it, they went and deducted it steadily for four years.

We have to put a stop to them penalizing people on earnings. Even if they earn $20,000 a year, nothing should be deducted. Otherwise you're not going to get people off assistance and living properly at all.

Another major thing is they don't count transportation and phone as basic needs, which are the most extreme basic necessities of life. They should be counted. Otherwise there's no safety at all and they can't expect people to look for work. In the latest index release of the second quarter, the average retail cost of food is $281.18, and people are only getting $153.80, which is 45% or so less.

If any of you want information on this, I have a lot of details. I have the index all worked out and can show you proof of it too.

There's the major reason we have to scrap the standard. The Federal Court of Appeal declared they can't bleed people at the poverty line or lower, which means the standard poverty line would be the standard equalization guaranteed income level. I have the statement right with me where the Federal Court declares this.

What Dr. Rey Pagtakhan has been trying to get through is he can see where this would save a lot of money and cut down on crimes and medical costs if we changed the system to standard equalization guaranteed income - this would be the most proper way to do it - and follow the inflation each year by adjusting to the cost of the standard of living. Otherwise people will never get a decent life at all.

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The part about equalization.... Suppose a person is working. If they don't earn the standard level, they will be supplemented the difference. If a person earning the standard level is allowed25% over the standard.... Anyone who earns the standard level, or more, such as family allowance, as Dr. Rey Pagtakhan asked me about.... He asked me if they should get that. But anyone earning more than the standard level won't need the family allowance. The ones earning just the standard level, or lower, will be provided it too.

For example, for anyone getting a disability pension and 55-plus or any other income, if the two together.... If with what the person earns the level is 25% over the standard level - the two added together are more than that - that's where you could deduct something. But if it's less than the total of the standard level, not one cent can be deducted.

The Vice-Chair (Ms Whelan): Thank you very much, Mr. Finlay, for the opening comments.

Again, I'll encourage everyone to be as succinct as they can in their opening statements, because we would like to get to questions. You're all welcome to participate in oral questions.

I'm going to turn now to Laurie Beachell, from the Council of Canadians with Disabilities.

Mr. Laurie Beachell (National Coordinator, Council of Canadians with Disabilities): Thank you. I'm pleased to have an opportunity to speak to the committee today.

Our organization is a national organization. It's an advocacy organization of persons with disabilities. It has membership across the country from every province. As well, six other national associations are members.

At this point I would like to bring two items to the committee's attention. First, in the last budget speech the Minister of Finance made a commitment to a review of the tax system in Canada and fair treatment for persons with disabilities. That review, we believe, has been undertaken by a task force on disability, whose report was made public October 28. It's a Liberal task force, chaired by Andy Scott. I have a copy of the task force report here, and I'll leave one with the clerk of the committee.

In our brief I've summarized some of the items of interest to us within the task force report. My understanding is that this report has gone to four ministers, Pierre Pettigrew, Paul Martin, Jane Stewart, and Allan Rock, and they will be responding. I would encourage the Standing Committee on Finance to look at the report too, in that there are a number of implications, particularly in the tax area, affecting cost of disability and mechanisms for offsetting additional costs of disability through the tax system.

I would also encourage the committee to look at the labour market recommendations within the report, in that they address new initiatives to do two things: first, to offset costs that employers encounter in hiring people with disabilities, and second, to offset costs the people with disabilities have as they go back to work; incentives to assist people to move from social assistance into full or part-time employment.

I would also encourage the committee to look specifically at the issue of labour market training and federal allocation of dollars for labour market training. The legislation that has been passed,Bill C-12, the employment insurance legislation, virtually excludes anyone in this country from labour market training who is not employment insurance eligible. That means for those who have not been in the labour market, such as persons with disabilities or people on social assistance, you cannot get training in this country through federally supported programs. Unless there is an initiative under part II of the legislation, which is possible through third-party delivery of labour market training, we will not see people with disabilities captured in the labour force.

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Although this is a very broad mandate, I would also encourage this committee to keep its eye on the federal-provincial discussions in that there is an interprovincial working group looking at establishing a federally delivered income support program for persons with disabilities. There has been no consultation with the community on this process. It does not appear to be an open process at this point. It will report to Mr. Pettigrew in the near future and will be part of the discussions around defining the new social union.

I would just say to the committee that these discussions, which are bilateral in nature, do not allow for community input. So we continue to appear before parliamentary committees and write to our members of Parliament, but it appears that social policy is now being defined in a new mechanism or structure that is not transparent and open for public discussion. I would ask the committee to look at its issues around interprovincial negotiations, both in labour-market training and in areas of offsetting additional costs of disability.

I will leave a copy of the report. It is called Equal Citizenship for Canadians with Disabilities: The Will to Act. It is a Liberal task force report that was made public October 28, and we hope to see action from the four ministers in the very near future.

I would hope that a portion of the recommendations in here will appear in the federal budget when it comes down next year.

Thank you.

The Vice-Chair (Ms Whelan): Thank you very much, Mr. Beachell.

I'll now call on Mr. Norman Fiske from the Thomas Sill Foundation.

Mr. Norman Fiske (President, Thomas Sill Foundation Inc.): Thank you, Madam Chair.

A year ago, we made a request to appear before this committee and were granted the opportunity to give a proposal. This year we were invited back. We're not sure if that's because our proposal wasn't clear last year or what the reason was, but it is gratifying to have another opportunity.

Our proposal last year was given two thumbs up by this committee. However, there was no change in the legislation as we had requested last year. We have a major concern in that there may have been a misunderstanding between the Department of Finance and Revenue Canada. Revenue Canada has suggested that our objective can be achieved by filing a form called T-2094.

Madam Chair, it could not be further from the truth. That particular form does not serve the purpose of the change in legislation we requested. Of course, the purpose of our change in legislation is to encourage the growth of community foundations across Canada by allowing private foundations to transfer funds from their capital to the capital of the community foundation.

There is about $750 million invested in community foundations in this country, which is a very small amount relatively. Over half of those funds of $750 million is represented in two foundations, being Vancouver and Winnipeg.

The minister, in his budget speech earlier this year, pledged to examine ways of further encouraging charitable giving and charitable activities. We hope that our proposal is one of the matters he's examining carefully.

Thank you.

The Vice-Chair (Ms Whelan): Thank you very much, Mr. Fiske.

I now call on Mr. Jerry Kruk from the CAA of Manitoba.

Ms Ellen Kruger (Member, Manitoba Medicare Alert Coalition): Can you tell me when the Manitoba Medicare Alert will be heard? You've omitted our presentation.

The Vice-Chair (Ms Whelan): I didn't omit it, Ms Kruger. You weren't at the table when I began. I was just giving you time to catch on to what was taking place. Everyone has about three minutes to present.

Ms Kruger: Thank you.

Mr. Jerry Kruk (President, Canadian Automobile Association, Manitoba): Thank you, Madam Chairman.

Members of the committee, I represent the Canadian Automobile Association of Manitoba and we're part of the Canadian Automobile Association nationally. Our organization goes back some92 years in this province and almost 100 years in Canada, speaking on behalf of the motorists. It remains the sole collective voice, I would suggest, of motorists in Canada.

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I'm here today to talk specifically about better highways and better roads. One of the things we have seen in particular is that we're attempting to battle our fiscal debts, and we would suggest strongly that as our highway debt increases, that's going to become increasingly difficult. It comes back to the fact that roads that are rehabilitated in their twelfth year, for example, cost $80,000 per lane per kilometre, and that has increased to the tune of $250,000 per lane per kilometre at the fifteen-year mark.

From 1961 to 1993 we've seen that the roads and highways, in terms of infrastructure, have deteriorated to the point where the average age has gone from nine to fourteen years, and is now from eleven to twenty-three years. We're saying that collectively as an economy we can no longer afford to just close our minds to that.

Eight years ago in 1988 the national highway policy study for Canada showed that 38% of our national highway system was substandard, and here we are eight years later and nothing has been done with it.

Specifically, at that time the provincial ministers were all in favour of putting money into the system, and I think they've committed to that for the most part. The part that's missing is the federal government not funding its 50% of the cost to upgrade.

One of the things I want to specifically speak to is that it's being perceived in some way that if we take money to do that, we're somehow taking away from all the other initiatives people around this table believe to be further up on the priority list. I would suggest that nothing could be further from the truth, because unless we get our economy further up and running, a lot of the other initiatives we all want to undertake and are in the process of undertaking will wither as well.

Presently, federally, on an excise tax basis we collect 10¢ for every litre of gas we buy. Interestingly, less than 4% of that is going back to the roads. Somewhere along the way I think the initial intent of road tax through the gasoline system was to have been linked to road and highway spending, and that's gone astray.

Last year in our own public policy survey, 90% of respondents indicated they wanted to have gas tax revenue linked to road funding. We in Canada, unlike others in the western world, are woefully weak in putting our money back. The U.S., for example, invests 31% of its gas tax revenue in its highways. In Australia it's 50%, in Britain it's 100%, and we in Canada are at the bottom of the list at 4%.

We don't think this makes any sense whatsoever, from an economic point of view. Even though we believe all of the more than 10¢ that is being collected in the excise tax should go back to roads, we're not naive enough to believe that's possible, so we are recommending that 2¢ of it be put back into the roads so we can rebuild our highway structure over the next ten-year period.

If you take a look at a cost-benefit study on what that does, that same national highway policy in 1988 showed a cost benefit of 1.5. We certainly think that's a benefit to the entire economy.

It is, as well, most importantly a creator of jobs, a creator of an increase in the economy, and is certainly on that side of the equation as well. So we believe that whereas the most recent Angus Reid poll, which was represented in the Winnipeg Free Press just last Saturday, indicated that 23% of the population was on the side of the issue of deficit reduction - and we fully agree with that - a total of 36% was on the side of job creation. We think the national highway system upgrade fully fits on both sides of that equation.

We think it's time for the federal government to make the national highways program a priority issue. With that I'll leave it for any questions.

The Vice-Chair (Ms Whelan): Thank you very much, Mr. Kruk.

I'll now turn to Ms Ellen Kruger, from the Manitoba Medicare Alert Coalition, please.

Ms Kruger.

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Ms Kruger: Thank you, Madam Chair.

The Manitoba Medicare Alert Coalition is a coalition of twenty Manitoba organizations and hundreds of individual Manitobans. We were formed in 1990, when we became fully aware of the kinds of cuts that were happening from the federal government, and because of our severe concern over the erosion of medicare in Canada.

Today I want to call the committee's attention to the alternative federal budget that has been prepared by the Canadian Centre for Police Alternatives and the Manitoba organization Cho!ces, because it supports the kinds of policies the Manitoba Medicare Alert Coalition has been speaking about for the last six years. We want to point out to the finance committee again that spending on social programs is not what has created deficits and in fact there is a revenue surplus on this kind of spending at the federal level. We believe there must be not only an enhancing of the funding but a restoring of funding to the levels we saw in the 1980s.

We believe strongly that the federal government must maintain a strong and central role in the maintenance of social programs in Canada. Through the influence of the kinds of financial decisions that are being made, we're seeing a current decentralization trend across the country that is stripping the federal government of many of its important responsibilities.

We believe this kind of thinking has caused attacks on social programs and it's driving a stake into the very heart of those values and principles that Canadians hold dear. By abandoning its federal role in sustaining both nationhood and economic and social stability, the federal government is positioning itself to preside over Canadian Balkanization.

It's time social spending in Canada was brought up closer to the average OECD levels, and preferably to the average European Community levels. Our social spending has been falling steadily in recent years and is now 14% of GDP. The EC average is 23%. We have fallen badly behind. This is why we are seeing the kind of poverty, the kinds of health concerns, and the kinds of education concerns we have across the country today.

We know, and we're hearing in the news again today, there is a proven relationship between income, education, and health. The CHST and other social program cuts are placing an increased burden on the health care system and are causing a decline in the health status of a majority of Canadians. As the federal dollars continue to shrink, the federal government will have ever diminishing responsibility and authority to ensure the presence of a national system of health care.

We know the role of the federal government in enforcing the Canada Health Act is based on the financial support it gives to the provinces. The national standards embodied in the Canada Health Act are evaporating as the federal government withdraws support. Only three provinces - and we hope Manitoba soon.... Just recently this government has pledged to include the five basic principles in the provincial regional health authorities act, but only three provinces have supported the five principles under the Canada Health Act.

My colleague at the table Mr. Kruk has mentioned the Angus Reid poll that came up recently. It's important that the federal government take a look at the kind of thinking and polling going on across this country. It shows very clearly that this is a very different country from the United States. Our values are very different. This poll showed that 68% of Canadians favoured either job protection - 36% - or the protection of health care and social services - 32% - as their priorities. Both of these figures are far higher than deficit reduction or other goals the Minister of Finance has set for this country.

I hope through these hearings this finance committee will be able to be more in touch with the thinking of average Canadians.

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We know the cuts to health care have been causing problems in health care, such as job loss and de-skilling in the health care labour force. We know this is not causing a progressive improvement in the health care system. We're seeing de-insurance of services. We're seeing user fees, extra billing, delisting of insured drugs, fees for drugs needed while patients in hospitals are going without drugs they need.

We need to see public policy changes. With this erosion, privatization of health care is inevitable, and that's not what we want in this country. This two-tiered, U.S.-style health care system is developing, and it's developing very quickly.

Private health care spending in Canada is growing rapidly. In 1984 it was $9.2 billion. In 1993 it was $20.25 billion. These kinds of figures show the development of the country towards a two-tier health system. This is not the kind of health system Canadians value. We are a country that values and supports our neighbours, and the well-being of our country and the economy of our country are dependent on the health of its people.

The Vice-Chair (Ms Whelan): Thank you very much, Ms Kruger.

I'll now call on Mr. Kenneth Emberly, from the Crossroads Resource Group.

Mr. Kenneth Emberly (Member, Crossroads Resource Group): Good morning. It's very nice to be here this morning. I just wish this private, confidential meeting were being broadcast on cable television. To me the fact that it's censored so the public can't hear makes this meeting meaningless. This should be a public dialogue. No public dialogue is going on in Canada among equal participants participating in important, friendly, courteous dialogue with widely divergent views. This has been steadily declining for twenty years, and for the government to hold...exactly the same as our law amendments committee hearing in our Manitoba legislature, and eliminate the public.... There's no public audience in here, no public allowance, twenty years after cable television was invented.

The Vice-Chair (Ms Whelan): Mr. Emberly, just so you're aware, the public are welcome to come into these hearings. These are not closed hearings. We don't dictate what CPAC decides to view. Last year they videotaped and simultaneously showed the finance hearings in certain parts of Canada. We can't insist they follow us from place to place. But the hearings are open and the records are public.

I do understand your concerns. I would really appreciate it if you could bring forward the Crossroads Resource Group view, because I have -

Mr. Emberly: I'm trying to bring forth the Crossroads views, if you wouldn't interrupt me and correct me.

The Vice-Chair (Ms Whelan): Thank you, Mr. Emberly.

Mr. Emberly: I understand what the system is. I've been involved in it for 25 years.

I beg and respectfully request.... I've been a student for 65 years of my life, and I'm trying to be a bit of an educator, to share some of the little I've learned about the caring, loving people in my society, with whom I've worked for so long, including people such as Charles Caccia, Mr. Duhamel, and John Harvard.

Almost all our top leaders in Canada and the United States have been gradually switching to a United States religion of privatization, deregulation, and individualization, against the concept humans have had for two million years, that we are a community of people oriented during almost all our lifespan to nurturing small family groups. Everything is being tried to develop the philosophy of having individualism, corporate structure, and individual rights, and destroying the sense of multiculturalism and community. I ask you to examine carefully the religious concept that is arising.

In the United States medical care coverage is extended through insurance private programs to 76% of the white people, 12% of the black people, and 9% of Hispanic people. We are replacing our medical care coverage system, which covers everybody at much less cost than that of the United States, with the United States system. That has been the ten-year emphasis of the changes in our medical care system.

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In Canada, corporate income taxes since 1950 have steadily declined, from half of the federal income tax revenue then to 2% to 4% of the income tax revenue of the Government of Canada now. In 1950, corporations were paying $980 million and individuals $960 million, almost equal. Corporations paid more. In the last six to eight years, individuals have paid $57 billion to $63 billion in taxes. Corporations have paid approximately $10 billion to cover the costs of their tax grants, concessions and tax loopholes, and have contributed between $1 billion and $4 billion to the operations of the Government of Canada.

This cut in taxes is illustrated very clearly in this graph I am showing you. It's public knowledge. It was presented to the Senate of Canada by Mel Hurtig at the time of the free trade hearings. The graph for the United States is identical. The two countries are governed identically as far as taxes from business organizations are concerned. That dropped from 30% of taxes to 6% of taxes. That is 90% of the reason for our deficit and debt - nothing else - and until that is corrected and addressed, nothing will improve.

I urge you and beg of you to consider the philosophy of democracy. It used to be a popular idea. But until persons making less than $40,000 a year can join a union and be empowered within that union, with the union powers to do advertising and promotion of the union's philosophy, and until their rights are equal to the right of a middle-class person to join the chamber of commerce, then we do not have a democracy.

Democracy has been decreasing for twenty years, since assaults on trade unions began in 1975. I have the book by Donald Swartz on Pierre Trudeau's assault on trade unions in 1975 - by reducing their rights - which has been going steadily onward. We have 75 bills in our Manitoba legislature that are being pushed through to reduce union rights and working people's rights throughout the sector. I beg of you to recognize a new concept of democracy. The people should have a right to join the union that is equal to the right of the middle class to join the chamber of commerce. Does that seem so horribly unfair?

The other thing I ask you to do is to define human rights between classes. It should be illegal to advertise and to act so that.... It is popular in Canada to lower the wages of the lower class, and it is equally popular to promote the raising of the wages of the upper class.

I have mixed with some of the wealthiest millionaires and multimillionaires in Winnipeg in my personal dealings and in my business dealings, but to have the people who make over $100,000 on average double their incomes in the last fifteen years and to have the wealthiest millionaires making $100 million doubling their incomes to $200 million a year when the minimum wage and the social welfare benefits have been cut in half by fierce lobbying and hate propaganda campaigns in the news media everywhere...that is class warfare.

We should consider why hatred of working people and hatred of the lower classes is not wrong. It's wrong to promote hatred of Jews and it's wrong to promote hatred of certain kinds of religious groups, but it isn't wrong to promote hatred of the lower classes. It pours out of the news media endlessly. I try not to be racist myself, but there's a ``Black'' in Toronto who I don't like. Conrad Black controls most of the newspapers in Canada. We should consider whether newspapers are an institution of democracy that should not be overly concentrated in the hands of a few wealthy individuals.

Thank you very much.

The Vice-Chair (Ms Whelan): Thank you, Mr. Emberly, for your opening comments. If you have a brief, we would welcome its submission. If you don't have a brief with you, we would appreciate it if you forward it to the committee within ten days.

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Mr. Emberly: I have documents I'm going to give you at the end of the meeting.

The Vice-Chair (Ms Whelan): Okay, great. Thank you very much, Mr. Emberly.

Ms Evelyn Jacks from the Jacks Institute, please.

Ms Evelyn Jacks (President, Jacks Institute): Good morning, and thank you very much for the opportunity of visiting with you today.

I'm the president of the Jacks Institute. Our mandate is to train personal income tax preparers across the country. Several thousand professionals take courses with us every year.

Our comments today are going to be specific to changes to the income tax system as a whole and are meant to be suggestions - and nothing but suggestions. Hopefully they'll be helpful.

The Canadian tax system has long held the important functions of not only the collection of tax in this country but also the implementation of social and economic policy objectives. I'd like to make three general comments about those three main functions and then some specific comments about what I believe is a very bright future for Canada. We have a window of opportunity in Canada today due to low inflation rates and low interest rates.

Under social policy objectives, it's in our best interests to maximize the potential of every single individual in our country. It therefore makes sense to follow in the vein of your previous federal budget, in which tax relief was provided to those who lift the burden of care for themselves and their family members onto their own shoulders. This includes self-sufficient care-providers and seniors, some of whom in future will no longer be able to collect benefits from the public purse in view of the seniors benefit that was introduced last year.

On the economic side, job creation would reap substantial rewards, not only for individuals themselves but also for our economy and for government, which would in turn receive back somewhere between 27% and 50% from each individual, depending on tax brackets, by way of increased tax revenues. Medium- and large-sized businesses that have the resources to employ more people should be encouraged to do so, particularly with regard to disadvantaged people, those who have been unemployed for a long time and those people who are disabled. In general our impression is we have a very well-educated human resource out there that's being underutilized at this time.

With regard to tax collection, by strengthening our self-assessment system and integrity in the tax system, there can be rewards for individual taxpayers and governments alike. We particularly applaud the initiatives for curtailing the underground economy, but at the same time caution governments that are increasing audit activities to make sure taxpayers clearly understand their obligations under the law.

We hope future budgets will contain specific provisions for employment, for self-employment and for family and community support so Canadians can take better care of each other. Some specific ideas might include a small business employment tax credit, similar to the credit that was granted to the film industry last year, for firms that employ people in certain sectors - perhaps R and D, as was mentioned this morning - and for people working not just on a full-time but also on a part-time basis.

One of the most lucrative opportunities for a well-educated workforce today, and particularly for home-based businesses, is on the Internet. This is a wonderful way to reach global economies. The government might consider something like a cyber-tax credit to enable people to upgrade computerization and communication hardware.

We also believe it's time, particularly for low-income people and the disadvantaged, to move the tax-free zone up from $6,456, which is currently the basic personal amount and has been the basic personal amount since 1988, to somewhere between $8,000 and $10,000. This would be particularly helpful to families who are supporting students, small children or disabled people. It would be one way to put a little bit more money into their hands.

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In addition, there has been no indexing of tax rates since 1992. This has been particularly stunning as evinced through a study by the accounting firm KPMG, which recently revealed that if we had indexing even within the first 3% of inflation rates, Canadians could earn up to about $35,000 before they hit the middle-income bracket and about $69,000 before they hit the top-income bracket. We suggest perhaps the government should consider indexing from dollar one of inflation.

About the medical system, if in fact a two-tier system is developing - I don't know that for sure - and if that is our future, possibly a registered medical savings account would be a way for people to save for future medical costs, particularly in light of the fact that we have an aging population. For example, 5% of employment or business income could go into a registered medical savings account. Withdrawals that are paid for medical payments would be tax free. Other withdrawals would be fully taxable.

We also applaud the government for changes made to charitable donations last year and urge the government to move even further in that direction, for example by removing the first tier of the medical donations credit and allowing all people who give whatever amount of money to take advantage of approximately 50% tax breaks there.

Also, we would like to say the move towards supporting families who support disabled people was very good in the past. Again, raising the minimum income threshold from $6,456 to $8,000 would put more money in the hands of those families who care for disabled people.

Finally, on the seniors benefit, because the current old age security as we know it will be completely wiped out for couples with combined net incomes of $78,000 or more, which is a significant difference from the clawback we have currently, there must be a way for middle- and upper-middle-income people to replace the $5,000 and more per year they will be losing out on. I'm not suggesting for one moment that these people should have extra consideration later, but I am suggesting they should be given the opportunity to save more aggressively for their future retirement, given the fact that they will not be drawing from the public purse. One way to do this might be to reinstate indexing under the RRSP provisions sooner than was suggested in last year's budget.

Finally, we wish to say that debt reduction, although it seems to be hovering over us forever, is still an important part of our future economic plans, because we do have this window of low interest rates to remove not only deficits but debt for future generations.

The Vice Chair (Ms Whelan): Thank you very much, Ms Jacks.

I would like to turn now to the Western Canadian Wheat Growers Association. We haveMr. Larry Maguire and Mr. Paul Earl with us.

Mr. Larry Maguire (President, Western Canadian Wheat Growers Association): Thank you very much, Ms Whelan and members of the Standing Committee on Finance. I'm here this morning to take the opportunity you've provided - and we thank you for that opportunity - to make a few of the views of our association known about the more business-like approach to agriculture our association has taken, as opposed to the view of those who may feel agriculture is a way of life. It's a way of life I hold dearly, and our membership does as well.

Western Canadian Wheat Growers was founded in 1970. The membership is around 6,000, across the three prairie provinces. Our head office is located in Regina, but we also have offices in Edmonton and Winnipeg. As a lobby organization we use this opportunity to look at reforms of regulations in place today that impede our members from managing their own businesses in a more self-reliant manner, in an effort to reduce the risk to government in an area of food production that can sometimes be very volatile. The prime areas of concern in our association at this time are marketing and certainly handling and transportation of grain.

We have commended the government for its dismantling of the Crow benefit program, regardless of the buyout mechanisms, and we thank the government for taking action in relation to that. That opportunity is certainly providing and driving opportunities in value-added industries, value-added agriculture, particularly here in western Canada. I guess it's key that we're sitting in the province of Manitoba when you consider the high freight costs, as it is now equidistant between Vancouver and Montreal.

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As an example of showing you the impact on farms, the freight rates virtually doubled in Calgary and tripled here in Manitoba, going from $11 to $37 a tonne, as a result of the reduction of the Crow benefit. That has certainly provided some opportunities for people to look at other ways of processing those products.

Our key now in agriculture should be not to look at exporting as much raw material out of the country as we can, but certainly maintaining as many jobs as we can in western Canada and creating as much value-added opportunities as we can. Therefore, we have been very supportive of the changes in the legislation around the whole issue of the Western Grain Transportation Act.

However, we feel as well that there are many opportunities that could be created by further regulatory reduction. One of those prime areas is in relation to the marketing of our two major western Canadian grains, which are wheat and barley.

Particularly, I would refer to the process that the Minister of Agriculture and Agri-Food has undertaken. We were very supportive and participated in the whole process of the Western Grain Marketing Panel, which had hearings last March and brought out a unanimous report in July. It called for some freedom of marketing in the area of a dual market for feed wheats, feed barley, but with no changes to malt in those areas.

We were concerned that there were not enough changes to wheat, but we certainly understand the minister's decision to leave it at this time. We would encourage you to represent to him the fact that we do need to have more unrestricted trade in relation to feed barley given the fact that American corn and soybean meal can come unrestricted into our country on a daily basis. This certainly has helped to develop a very good value-added livestock industry in western Canada, particularly the livestock industry in Alberta.

We would commend you to look at providing opportunities as a government, particularly in Finance, to allow individual farm operations to collectively come together, if they will, in forming new cooperative ventures among themselves or as individuals in looking at opportunities for adding value within their own farming operations. We believe that the reduction of the monopoly of the Canadian Wheat Board would help us in that particular area. Many of our members are restricted from the processing of product on their own farm.

I'll give you an example. It has only been since January 1 that we were able to actually process wheat on our own farms into flour and export it outside of our home province. We are still restricted, I guess, by the point of view that we have to make the investment on our own property. We are restricted to processing our own grain on those operations now for sale in western Canada.

We are not belittling the operations of the Canadian Wheat Board. I don't want to lead you to believe that we are looking for an end to the Canadian Wheat Board. It has a valuable role to play in the export market of our grains in offshore markets. But we believe in opportunities here whereby farmers have the ability and technology today to manage some of their own affairs by further selling their own product rather than just producing it. We believe that with technology today, many of those opportunities are available to us.

We would encourage you to look at the two documents we put forward in the last six to eight months. One is the reformed vision of the Canadian Wheat Board. The other is a blueprint for transportation deregulation in the grains and oilseeds sector.

We'll close by taking the opportunity, as others have done, to encourage the government to continue to reduce the deficit and debt of our country. It's imperative that if we're going to look at having lower taxation and opportunities, we should continue with some of the major social programs we have in all of Canada. The concern of our membership in the three prairie provinces is that we reduce those deficits and debts, if you will, certainly to workable levels again.

We would close on those remarks. We look forward to any questions the committee may have.

The Vice-Chair (Ms Whelan): Thank you very much, Mr. Maguire.

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We're now going to turn to questions. We'll begin with Mr. Rocheleau.

[Translation]

Mr. Rocheleau (Trois-Rivières): Mr. Kruk, you have painted a fairly alarming picture of the prevailing situation regarding the Canadian road system. You have recommended short-term measures, including federal government investment of a few more cents per litre in the road system and possibly an infrastructure program, but, in light of our past experience, to what extent should we consider the decline of the railway system and the perhaps excessive use of the road system by heavy trucks?

Isn't that an important situation that should be corrected? Shouldn't we regulate? You seem to know your field.

[English]

Mr. Kruk: In no way am I suggesting that roads take precedence over railways. Nor am I suggesting that somehow or other in this new environment I'm advocating the shutdown of the railroads. That certainly is not where we're coming from. What we've seen is a continuous deterioration of the roads.

One of the comments I would like to add to this is that as far as the grain end of the country is concerned, there's no question we're going to add traffic to roads that are already in a crisis mode. I just add that it emphasizes that we had better invest in our roads, because quite frankly, if they are going to move any grain that previously was moving on railways that are now having sidings shut down, that will only exacerbate the situation.

I suggest to you that ideally we ought to put the 10¢ back into the picture. In the environment we're in, and with all the competing needs we see in this country, we're being pragmatic in saying let's take 2¢, put it into the system, and continually do this, so over the next ten years we can rebuild these roads.

About adding anything to that, sir, I don't think I can be any clearer than the recognition that the statistics today do show how badly off we are. Relative to our partners south of the line, we're getting traffic flowing from here to eastern Canada not down Canadian roads. They're moving down south, across the U.S. highways. It seems to me we're losing out on the economic activity that represents. We're certainly losing out on tourism, because tourists aren't flowing north. They're moving south, certainly in western Canada, one of the reasons being that the roads we have today aren't very conducive to having a tourist come north to take a look at our potholes.

You've given me the opportunity to expand. I don't know if I've answered your question or added to it.

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[Translation]

Mr. Rocheleau: Are we to understand that there is no reason to make adjustments with respect to the transportation of goods? We continue this increased use of the road system and accept the decline of the railway system, even though that increases the risk of accident and pollution and destroys our roads, as you so accurately pointed out.

[English]

Mr. Kruk: With respect, I don't think so. When we start suggesting that somehow it's roads versus railways.... I think in large part it's going to be a competitive environment - if competitive is the right word - that will eventually show us whether or not some of those sidings ought to be reopened or in fact continue to remain open versus the alternative of the roads. I think we're well past the ability to plan and replan and in some way suggest which is better, one or the other. We want to get ourselves to the point where there is a choice in transportation modes, and today we've taken away the large part of the major one, movement down a road.

I would suggest to you that the issue of pollution.... Certainly the entire automobile industry and the trucking industry are better off today on a per unit basis than they were fifteen years ago, and they're certainly working towards getting that to an even better state. I think all of that is a function of the economy.

[Translation]

Mr. Rocheleau: My second question is for Mr. Emberly. You painted a very accurate picture of the situation and of changes we have witnessed in the system over the last 30 or 40 years.

You told us that one of the main problems we are experiencing is that the well-off in our society, individuals and their corporations, are contributing less and less to the public treasury. I suppose, at the same time, you have considered the mechanisms favoured by the well-off and implemented by governments, that is family trusts, tax havens and organized and legal forms of tax avoidance.

If you have done any thinking on this, I would like to hear or read what you have to say. I strongly encourage you to file a brief with us because that's a viewpoint we hear so infrequently that it's worth the trouble to read it and reread it. As to the other view, we hear it every day.

[English]

Mr. Emberly: It's very kind of you to appreciate what I mean to do. I am a citizen activist. For 25 years I have been educating myself intensively in 25 citizens' groups, possibly producing a university degree in sustainable development that I could not have obtained with three years at McGill and three years at Harvard. I've studied the needs of the people to nurture the people, to nurture the land, to nurture the financial strength of the national government and the strength of the provincial and city governments, to nurture the strengths of communities of people and to provide jobs for people. This is a radical interest that is not popular.

I have a paper here - I may not be able to find it instantly - that is very clear on the deficit and the debt. The deficit and debt are giant problems. I have a document from a book produced by Charles Bronson, which clearly illustrates that in the United States and Canada - which are almost identical except for the huge expense of the United States military. The United States had a debt in every single year since 1929, except for five years - four years in the Great Depression of the 1930s, and the year 1945. In those years they didn't have debt or a deficit, but in every other year since 1929 the United States has had a debt and a deficit. Starting in the early 1960s, for five years it averaged $65 billion a year. Then it went to $120 million a year for five years, to $165 billion, and to$190 billion every year for five years.

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Then, under Ronald Reagan, the great conservative emancipator of deregulation, it rose to $212 billion a year. After George Bush helped to increase the debt further, they're now saying this ``temporary'' aberration, which occurred over sixty years under twenty different governments and under all the most brilliant economists in the whole world, must be solved in five years. They say we must change this little temporary trend.

In Canada our debt was a giant problem in the 1960s and it rose steadily. I still have in my files a letter I wrote to Pierre Trudeau in 1976, bitterly complaining, because for four years in a row he spent 25% more than his income. Pierre Trudeau did that, and we've been increasing our debt. The Conservatives, the ultra-Conservatives of Brian Mulroney, increased the debt more than anybody else and then they passed on the idea, which is the new religion, that the only way you can solve the debt is to cancel all of the social programs.

I have in here Dr. Raveendra Batra's story on the Great Depression of 1990, the sixth depression in 240 years, exactly on the thirty-year cycle. He wrote the book in 1987. Nobody read it. The depression was caused by deregulation, which was the reduction in taxes, the invention of the junk bond corruption concept, the identical robbing and looting of our two countries in levered buyouts, and things like that.

When Ronnie Reagan came to power there were 800,000 millionaires in the U.S. In eight years he created 700,000 more, almost as many as were created in the 200 years previously, by robbing the savings and loan companies and the banks. And all of this has created a trillion-dollar debt, just to pay off the savings and loans.... We have transferred the public assets and given them to rich people at one-quarter of their cost so they make three-quarters profit. You create that debt, hand it to the government and then say to the government, ``You dirty rats went into debt.'' And the millionaires, the billionaires and the CEOs of corporations are the greatest complainers.

Now this little tiny thing is simply caused by the steady reduction in taxes since 1970. I have the graphs here. They show the figures that have been presented in the Senate of Canada. Nobody can dispute them because they come from Statistics Canada.

So I humbly suggest a radical innovation that not one economist has thought of. We need a payroll tax. You've heard of the payroll tax in Ontario and in Manitoba. We need a payroll tax of5% on every computer and robot. The payroll tax will go into a government fund that will be made available through credit unions to local communities for job creation, because the hundred biggest companies in Canada haven't created one new job in ten years. They only hire computers and robots.

The Vice-Chair (Ms Whelan): Could you wrap up your response to Mr. Rocheleau's question, please?

Mr. Emberly: Yes. My suggestion is that John Ralston Saul and the Massey lectures, which are now destroyed with the CBC cuts...John Ralston Saul explained the whole concept and the collapse of our social and economic systems. We need to go down and consult....

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There's a local committee of tax experts and job employment experts. It's called Cho!ces. Go down and see Jean Altemeyer, John Loxley, Jim Silver, and Shirley Lord and get their advice on how to create a hued society. Do you want a country like Waco, Texas? Do you want a country that goes out to Oklahoma and bombs the CIA because the United States CIA for fifteen years has been working inside the United States against the labouring classes? Do you want to bring that to Canada completely? That's what we're doing.

I humbly suggest -

The Vice-Chair (Ms Whelan): Mr. Emberly, I assure you none of us want that.

Mr. Emberly: I just suggest you look at my documents here, sir, for the information that will confirm my radical, wild, evil ideas. I don't mean to be evil. I want to save my country.

The Vice-Chair (Ms Whelan): Thank you, Mr. Emberly. We appreciate that, and we look forward to your tabling the document with us.

Mr. Solberg, please.

Mr. Solberg (Medicine Hat): Thank you very much, Madam Chair.

I want to start by complimenting Ms Jacks on her presentation. I think it's excellent. There are some very good ideas in here. I also want to ask Mr. Maguire a couple of questions and talk a little about the Wheat Board issue. But first I want to ask a question of Ms Kruger.

Ms Kruger, I don't want to put words in your mouth, but I think essentially what you've said is that the government has two options. We can either return the health care system to the five principles on which it was based and fund it in the way it was originally set out to be funded or we can allow it eventually to become Americanized. Is that roughly what you're saying?

Ms Kruger: Roughly, yes.

Mr. Solberg: I don't want to put words in your mouth, so stop me. You can comment further after I get to my question.

My question is this. Isn't that a bit of a false dilemma? There are so many other health care systems out there that work extremely well and that don't chew up a huge amount of money, a huge amount of GDP, the way the American system does; for instance, many of the systems in Europe and some of the systems elsewhere. My concern is that given the huge budget constraints we have in this country, if we went back and funded health care to the tune of 50-50, the federal government kicking in 50%, and maintained the constraints, which simply aren't being enforced today anyway, as I think you would agree in many cases, we're going to end up putting a tremendous amount of money into health care and we're going to have to find all kinds of other areas where we're going to have to cut spending.

Ms Kruger: I disagree with your comment that health care is bleeding the system. Sorry, that's my word. You're suggesting if we fund health care adequately we won't be able to afford it.

Mr. Solberg: I didn't say ``adequately''. I said if we return to the 50-50 proposal.

Ms Kruger: If we return to the 1980s funding principle of 50-50. What we do know - and the comments are in the notes I gave to you - is that Canada is spending only 14% of GDP on health care. The European Community countries are spending 23% on average. We are underfunding our health care services in this country.

We're not suggesting the way health care is delivered is perfect. We would like to see reform of health care. We would like to see health care delivered at the community level by salaried doctors who function in multi-disciplinary teams. We would like to see controls on drugs. We would like to see that all people receive the medical services that are necessary to maintain their health, and in fact to promote health. This can be done only with a whole shift in the way we deliver services. It does not necessarily have to impoverish the nation to create a nation of healthy individuals.

Mr. Solberg: You said 23% of GDP is what European nations are spending?

Ms Kruger: That's the figure I have, yes.

Mr. Solberg: I've never heard those numbers. I've heard of 9% and 10%. I've never heard of 23%.

Ms Kruger: In the past 9% and 10% have been the Canadian figures. We're no longer there. But 23% is the average figure.

Mr. Solberg: I can't dispute those figures, because I don't have other figures in front of me, but they sound really high to me and I would be surprised if they indeed were that high.

Ms Kruger: That's why they have such good health care systems in Europe.

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Mr. Solberg: Well, at any rate, I can't continue to have this debate because I don't have the numbers.

I want to turn to Mr. Maguire. Mr. Maguire, the Wheat Board issue is a hot issue, as you know. There doesn't seem to be a consensus on the prairies amongst farmers themselves on some of these issues. I'm wondering whether or not the most prudent approach to dealing with this issue is to go ahead and elect the board and allow the farmers themselves to sort this out. Once you have an elected board, you could go to farmers themselves and raise the pertinent issues in a referendum. I say the pertinent issues because I'm not convinced the question the minister wants to ask in his upcoming plebiscite is necessarily the one people are talking about on the prairies.

Mr. Maguire: So your question is in relation to what approach to take.

Mr. Solberg: Yes.

Mr. Maguire: I spoke with the minister some time in early September. He had a golden opportunity here to diffuse a lot of the contentiousness of this issue on the prairies, as you're very aware, by implementing the unanimous report of his own panel. It was unanimous and it was from a cross-section of those in the industry. It certainly didn't meet our needs. It didn't meet the needs of those who wanted to maintain the monopoly or actually put more crops into a monopoly-selling agency. But it was certainly a compromise and a very good one. We believe it should have been implemented.

Yes, there are changes to the Canadian Wheat Board that will come about. An elected board is a step in the right direction. Some of the pricing issues and options the government is going to make recommendations on will be very good.

When I sat on the Canadian Wheat Board Advisory Committee for eight years from 1987 to 1994, one of the studies that was done was the Steers report of 1990. The issues of governance and pricing mechanisms were included in that report. Now, six years later, we're implementing some of them when the key issue of contention in the prairies is whether farmers should have the right to sell their own grain.

We believe the clear referendum should be on giving farmers the opportunity to sell their own wheat and barley, as they have with all other products. We're only talking about milling and malt here, because on the feed side, domestically at least, we have that opportunity now, or we're aware of that.

I've spoken in the last few days with representatives of the Australian Wheat Board. Australia has good examples of how a dual market works in its dairy industry and in its wool industry. Voluntary cooperatives have formed that function quite well alongside the Australian Wheat Board in that country. It has undergone a great deal of change in its system and still has a very good Wheat Board. That's what we're promoting.

Mr. Solberg: This may seem odd, but now I want to go back to Ms Kruger. Something occurred to me.

I'm wondering, Ms Kruger, whether your numbers include the private spending on health care as well in Europe. I think a great majority of the systems there have a private component. I'm wondering if that would be one of the reasons why those numbers are as high as they are.

Ms Kruger: I believe I said those numbers were for health spending. In fact, in our document the 14% of GDP is on social spending, not just health spending. The 23% average is on social spending. I'm sorry, I can't tell you if that includes private spending or not.

Mr. Solberg: Okay. That helps me. Unfortunately, I don't have your document.

Ms Kruger: I gave it to the person at the door as I came in.

The Vice-Chair (Ms Whelan): There is a document, Mr. Solberg.

Yes, Mr. Kruk, you wanted to make a comment?

Mr. Kruk: As someone who's involved and has been involved in the health scene on a board basis for going on 25 years, the percentage of spending is in the range of 10% to 12% to 14% - the numbers you indicated. When you compare the Canadian system to the American system, and my understanding of the European system, we're all within a percentage point.

I'm pleased to hear your comments with respect to the social part of it. I don't have a comment on that. Certainly on the health side, my understanding, as someone who's been involved to that degree, is that we're all within the 10% plus or minus mark.

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The Vice-Chair (Ms Whelan): Thank you, Mr. Kruk and Mr. Solberg.

Mr. Emberly, briefly, please.

Mr. Emberly: I would like to ask if anybody has any up-to-date figures on the percentage and range of health spending.

The figures I have from the Action Canada Network are the official figures from the Organization for Economic Cooperation and Development. They indicate that in social spending - and this is indicative of the country's mental philosophy on the well-being of the people in the country and the well-being of the nation - 33.9% is spent on education, health and social programs in Sweden. It's 28% of the budget in Germany, 23.1% of the budget in France, 20% of the budget in the United Kingdom, 18.8% of the budget in Canada - about half of what Sweden spends - and 14.5% of the budget in the United States.

Officially, by that standard, you can understand why there's class warfare and the most violent society of any industrial nation in the United States, where the lowest classes are starved for social programs for food, education and jobs. That's the price they pay. I don't want to pay that kind of price for tax cuts for the wealthy.

The Vice-Chair (Ms Whelan): Thank you, Mr. Emberly. I appreciate those remarks.

Mr. Emberly: I will leave with you copies of the brief I will be presenting to the board. I brought 20 copies with me and I want to share them with a few people who might be interested.

The Vice-Chair (Ms Whelan): Thank you. I can assure you that all of the members present here today are very interested in the brief, as is the rest of the finance committee.

I'd now like to turn to Mr. Duhamel, please.

Mr. Duhamel (St. Boniface): Thank you, Madam Chair.

I have two specific questions and two general ones. The first one is to Ms Jacks.

Do you have an idea of the lost revenues that would accrue to the Government of Canada if those proposals were to be initiated? I assume there would be; I don't know. What might the benefit be? Do you even have a feel for that? I'm not sure you've had time to work that out.

I'll ask all of my questions and then you can take them in that order, if you would.

Mr. Beachell, as I understand it - and correct me if I'm wrong - with regard to the main point of your presentation, Mr. Scott's committee's recommendations would go a long way towards responding to the needs of the community you represent. Is there an order of priority there that you might be able to share with us?

The third point, to whomever wants to address it, is this. In a number of other settings, some people have indicated that there needs to be a greater investment in research and development in the nation. That's not surfaced here this morning. I'm not trying to get you to say it is or it isn't; I just want to understand what your views are with regard to this.

My final point, to anyone who wishes to address it, is this. In the various communities we've visited, we've basically seen three positions on trying to reach deficit targets. The most common one to date has been, ``Stay the course, Mr. Martin and the government.'' Some people have said, ``It's not nearly quick enough. You must accelerate.'' And of course there have been others as well who have said, ``Slow it down. It's going too quickly and hurting too many people.'' Perhaps some individuals would like to address that particular point as well.

Thank you, Madam Chair.

The Vice-Chair (Ms Whelan): Thank you, Mr. Duhamel. I'll now turn to Ms Jacks to answer the first question.

Ms Jacks: Thank you.

Mr. Duhamel, the short answer is no, I haven't worked out the dollar figures that these things would cost, although in making up the presentation I did attempt to look at how you would achieve that balance, because that of course would be a problem of government.

It occurred to me that the combination of job creation through the various mechanisms and the strengthening of compliance through the curtailing of the underground economy would offset some of the credits I have suggested that would bring money back into the hands of average Canadians. I kept that in mind in terms of balance.

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I would just like to address your question on the speed at which the debt should be eliminated. I believe it is time in this country to show first of all acknowledgement of the overall suffering many people have gone through. The past five years particularly have been hard times for Canadians.

I think people are very aware of the fact that we have a deficit problem, and people are concerned about that, not just for today but also for our future generations, particularly in light of the fact that the generations coming up under us, i.e. the baby boom generation, are fewer, and therefore the broad tax base we see today is going to have to shift. There's no way the kids coming up under us can pay the amount of taxes we're going to need to service a debt of half a trillion dollars.

Having said that, I believe because of low interest rates we as Canadians have a wonderful window of opportunity today to make progress not only on the deficit but also on debt reduction. I mentioned this last year, and I would like to repeat it this year: to see a plan in place over twenty or thirty years in which the debt itself was addressed would be very helpful. I believe if we give people optimism that this wet blanket is not continuously hanging over us and some progress is being made...at the same time it may free governments up to have a bit of play room in order to increase social policy objectives.

The Vice-Chair (Ms Whelan): Mr. Beachell.

Mr. Beachell: Mr. Scott's task force report is an excellent report. It's a substantive piece of work. It moves progressively forward on addressing disability issues in a number of areas: in the labour market area with a legislative framework offsetting additional costs of disabilities, looking at an income support program and a structure for policy coordination within the federal government. We commend the task force for its work.

If there is a priority area in the role of the federal government, we would believe it is mechanisms to offset additional costs of disability through the tax system so we level the playing field for people to enter the labour market, to get education, and basically to participate in community life. If there were another area within the report that I would have to say we have concern about.... We believe the report goes as far as may be politically reasonable at this point. However, our organization is fundamentally concerned with diminishing standards across the country, with unequal social service delivery programs as a result of the establishment of block funding.

The report recommends the development of mutually agreed-upon pan-Canadian standards for social programs, health, education, etc. In light of current demands by provinces for greater autonomy, potential Quebec separation, etc., we understand that approach. However, I would encourage all of you to look seriously at what the role of the federal government is in ensuring the equalization of opportunity for all citizens in this country.

I believe a Globe article this week talked about how a stronger Ottawa is needed, according to a study. The article speaks about how power sharing with provinces weakens Canadians' sense of identity and unity, according to a survey. I recommend that report to the committee. It's our belief that there must be mechanisms to ensure those within the have-not provinces of Canada are equally served and have access to health, education, and social services equal to that of those who live within the provinces with greater wealth.

Just as an illustration, in the current negotiations on federal transfer of labour market training to the provinces, the active negotiations with Alberta, New Brunswick, and P.E.I., the position of the provinces has been that the federal government will have no role in determining objective standards or targets. Frankly, it is only in the negotiations and the discussions with the province of Quebec that there is any discussion around objectives, and there appears to be a greater social conscience coming from the province of Quebec than we are seeing from the rest of Canada.

Mr. Duhamel: Madam Chair, perhaps we should stop now. I'm a little worried my colleagues will not have an opportunity.

The Vice-Chair (Ms Whelan): We'll have one comment from Mr. Kruk.

Mr. Kruk: If I were to put a comment in on that, it would be that I think we have to stay the course with deficit reduction.

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At the same time, I think this is not at the exclusion of some of the things, for example, that I or others have talked of here. I want to make sure that we don't walk away with the difficulty of it being an either/or situation, because I think the deficit clearly has to be reduced. I think all of us who have children following us have seen some of the tragedy that this represents in terms of the next generation and job creation.

So I think you can't continue in a fool's paradise, notwithstanding what my colleague next to me may have said with respect to debt. I think clearly that somebody has to pay for it. I think our children are paying for it today.

The net result is that I think there are clearly some programs - I suggest the national highway system as one example - whereby we can put people back to work, get tax revenue out of it and get the economy rolling. Those things are not mutually exclusive; they are programs that do work well together.

The Vice-Chair (Ms Whelan): Thank you very much, Mr. Kruk. Thank you, Mr. Duhamel.

I'm now going to turn to Mr. McKinnon, please.

Mr. McKinnon (Brandon - Souris): Thank you, Madam Chair.

I'd like to thank all of you for your earnest opinions. I think it has been very enlightening. As I am from western Manitoba, I would particularly like to welcome Larry and his group here.

Here are a couple of things. The first one, Mr. Kruk, is in terms of the legislation involving highway construction and operations. As you're well aware, a lot of the tonnage allowances and what not are variables from province to province. It's almost getting to look like trains going down the highways now when it comes to trucks. I think there needs to be some agreement that there should be some limitations here if we're going to sustain a highway system. If we're going to throw more money at it and allow more tonnage, then it's going to be self-defeating. That would be an observation I would make, and I would ask for your comment.

There's another criticism we're getting as we change the Crow rate circumstances, and we're declining in the number of sidings, as you referred to them. We're getting more and more pressure on our municipalities, such as on the truck routes in the city when trucks got too big. They started to go down side streets, Collegiate and what not, to get around the regulations. That's what's happening out there in rural Manitoba right now.

We have elevators on sidings that were plugged up during the harvest. Now they have to be emptied by truck. The trucks are not allowed on PTH roads, so where are they going? Municipal roads. We're getting concerned that because of our legislative changes, this fall we're going to have a heck of a lot of municipal roads being seriously disintegrated.

Last, in terms of health care, the numbers that our Prime Minister indicated at our convention last week were that we were still a little higher than Europe in terms of actual health numbers. If I might be so bold, I think it was 13% in Canada, as compared to 9% or 10% in Europe, just for health only.

Now we'll get into the circumstances of social spending. I don't have a number on that one, I'm sorry.

So Madam Chair, I'll allow any person to comment on my question.

The Vice-Chair (Ms Whelan): Mr. Kruk.

Mr. Kruk: As for roads generally and where I'm coming from, I think you're agreeing with what I've said. At the same time that some of these sidings are being shut down....

The question was asked by your colleague, but there's no question about it. We can't sit here forever and say someone's at fault. The difficulty we're running into in this country is that the province points at the feds, the feds point at the municipalities, and we're doing a very nice round table with respect to nobody taking responsibility.

I think we're saying it's enough. Let the feds put their 50¢ in. We'll go chase the provinces, most of which, at this point, at least appear to be committed. Ultimately, they collectively are going to have to deal with the municipal problem.

We have ``pothole city'' here in this city. I don't even want to get into that.

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Mr. Maguire: I would respond to that as well, Mr. McKinnon.

It's very clear in the rural communities today that grain is being trucked further, and it is in larger units. We were encouraged by the changes your government made in the CTA legislation as well, which allows and encourages more short-line development. It also gives us an opportunity to keep more trucks off our main highways in Canada, as long as we move as much rail traffic, particularly in relation to the 30 million tonnes of grain we export per year on the main lines.

We need a feeder system, so whether trucks or short lines bring grain to the main lines, farmers are paying those costs. But we need to continue to streamline it so our costs for the system don't go any higher. As taxpaying farmers, we have to upgrade our own roads, so some adjustments may be needed at municipal levels to try to maintain what we have in those areas. But we were encouraged by the legislative changes you made in the CTA, as a follow-up to the changes in the WGTA in the Crow.

Mr. Emberly: Mr. McKinnon, thank you for your kind comments.

This business of the roads, the railways and the highways is terribly important. It's crucial. In North America we've neglected our infrastructure, and one of the key elements in our idea of sustainable communities was to nurture the nation and nurture the nation's infrastructure.

I have two different reports ten years apart on the United States interstate highway system. Every single year, two or three bridges collapse and kill passengers in trucks and cars on the bridges because the country is twenty years behind in replacing major bridges on the interstate highway system. It will never be able to replace the freeways. It has built a system to promote General Motors' sales. There has been no examination of the efficiency of moving one thousand tonnes of grain in trucks with the energy consumed and the gas that's produced, when the energy cost is about one-third less to move one thousand tonnes by train.

The railways are facing bankruptcy. It is the saddest thing in the world to think that the CPR, out of the railways, produced 50 profitable companies for the CPR. When it separated the rail freight business it said, this unprofitable business is putting us out of business. Don't talk about the profits from the 50 other companies it got from the railway; that's different. A 1% subsidy from each one of the companies the CPR got out of the railway would have kept the railway infrastructures maintained ten years ahead of schedule, but our government never had the brains to think of that. So we must pay for these things.

Tax cuts for the wealthy people who already have too much money have been emphasized as being the solution to everything, but the twenty years of tax cuts is the only reason we have all of these problems. These people do not care about the country, the government, the communities and the land that feeds them. We must reverse that trend - I see it as the religion of privatization, the religion of individualization. We must think about and examine that. It's all intertwined.

If the trucks want to use the roads there's a simple solution. Just increase the taxes on each truck using the roads by 10% per year until you get enough money to maintain the roads. A large semi-trailer does 2,000 times as much damage as a passenger car every time it drives over the road. In the United States they invented the system of taxing passenger cars to help pay for the trucking. Now, let's try a level playing field and ask the rich to pay their fair share of taxes, as much as the low or middle classes pay.

The Vice-Chair (Ms Whelan): Thank you, Mr. Emberly. We appreciate those comments.

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Ms Kruger, did you want to make a comment?

Ms Kruger: I would just like to make a closing comment. Mr. McKinnon, I'd ask that you question the Prime Minister's figures if he believes we're spending more money on health care than European countries. I think this is an error.

Mr. Emberly does have this paper. He will be submitting it with his. It gives the OECD figures. I think we would have to go with OECD figures.

Mr. McKinnon: I'm like Mr. Solberg. I'm in no position to debate the issue, but I was wondering.

The Vice-Chair (Ms Whelan): Thanks, Ms Kruger.

There has been a lot about figures here this morning. There are separate health care figures available as well as social figures. So we have to be careful. We've talked a lot about social spending, which encompasses many different things in different countries.

Mr. Earl, did you have a brief comment?

Mr. Paul Earl (Policy Manager (Winnipeg Office), Western Canadian Wheat Growers Association): I have a brief comment, if I might, on this question of trucks versus rail. I've studied this matter in great depth. Mr. Rocheleau mentioned this issue as well.

It is certainly true that trains are more energy efficient when you have 100 cars going1,000 miles down a main line to Vancouver. If you have trains distributing one, two and three cars at a time to individual grain elevators, it is not fuel efficient. It is not fuel efficient to have a 3,000-horsepower engine pulling an amount of grain that could be pulled in a truck. This is number one.

Secondly, if you're going to get into the whole issue of truck grain traffic on highways, study the figures. It is vastly overrated.

Thirdly, what does more damage than anything else is an overloaded farm truck or a one-tonne truck. This is the kind of truck farmers tend to use when they're close to elevators. Elevator rationalization puts big loads in big trucks, which does less damage to the road than overloaded farm trucks.

Those are very important facts.

The Vice-Chair (Ms Whelan): Thank you very much, Mr. Earl. We appreciate that.

Thank you, Mr. McKinnon.

Mr. Fewchuk, do you have a brief question?

Mr. Fewchuk (Selkirk - Red River): Good morning, ladies and gentlemen.

I just want to follow up on Mr. Maguire. I want to know if he has any views on the Port of Churchill, and if he's in favour of expanding it for the farmers for exporting their grains.

Mr. Maguire: Mr. Fewchuk, our association has always said if we're going to use Churchill it shouldn't be paid for on the backs of farmers. Certainly it would be a national decision to continue to haul grain into this port under the old freight rate regime.

Of course, now we don't have this situation and farmers are paying all the freight on the prairies. So if there's an opportunity to move products through that port and a viable market that can receive the same value for the product as we can in Montreal, for example.... From Newfoundland, it's equidistant to Montreal and Churchill in relation to shipping to South America, and that's where most of this year's 300,000 tonnes of grain that have gone through this port have ended up. At least this is my understanding. Of course, we're still about 200,000 tonnes away from making this port viable as far as the terminal costs go.

There is a whole process there, as you are aware, with the CTA. I believe there are now four bids to take over the lines. The port leading to Churchill will be looked at. Is there an opportunity to bring ore and that sort of thing back down into Thompson to process it or into the southern areas to do this? These are all things our association looks at as being a commercial venture. If this port can compete with Montreal, Vancouver and New Orleans, then that's the way the grain should go.

Mr. Fewchuk: I have one more question. In 1978, when I was in Churchill on the board for the Churchill port, somehow at that time anything over 200,000 tonnes of use of the port was profitable. Since 1980 I have heard the figure 300 and now it's 500. I don't know where they keep getting these figures from. In your mind, what is the correct figure?

Mr. Maguire: I'm only going by what I've seen in the studies that have been done since the WGTA changed. Through the association that I had when I was on the executive of the Canada Grains Council, the numbers we looked at during this time were in the neighbourhood of 500,000 to 700,000 tonnes. Those were Ports Canada numbers.

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From a farmer's perspective, Mr. Fewchuk, it's interesting.... Where I live is the end of the Morris-to-Elgin subdivision of CN. Only 5% of the grain that goes through Churchill comes from Manitoba anyway. It's basically northeastern Saskatchewan. The grain that I ship, or that normally goes to that port, comes out of our area in southern Manitoba because the crop isn't off early enough further north to utilize it in some years; to get it through that port without its being held over till the next spring. So of course you have grain in southern Manitoba that goes 160 miles east on the rail line to get to Winnipeg, then it comes up from Morris, and then it goes back across to Hudson Bay, Saskatchewan, and on to Churchill. It crosses the province three times.

Mr. Fewchuk: I'm well aware of that. I'm just worried about all Canadians. When you're in Saskatchewan you're still a Canadian.

Now I know where you're coming from. Thank you.

The Vice-Chair (Ms Whelan): You have a very short question, Mr. Pillitteri?

Mr. Pillitteri (Niagara Falls): Yes, a very short one, to Ms Jacks.

It's quite nice to present percentages in submissions. Most of the time I'm used to a presentation where one sees the pluses and the minuses. I'm not an economist, and certainly I do not prepare taxes, but from the comments Mr. Solberg made - he probably would have more knowledge of this...what he means about tax cuts, I wonder if there's enough in there in tax cuts that the possibility....

I take a look at one figure, for instance, $35,000 to $70,000 at 24%. I know what I pay in my personal income tax, and I surely pay a heck of a lot more than that. If I understand some of these brackets, possibly there would be enough tax cuts in there to wipe out all our social programs within the personal income tax. It really does not present the full picture of the percentages you prepared in order to.... Yes, you may have a budget, but I don't see one part of the expenditure. I see only the savings from the personal income tax here. Since today most of the income for the government is within personal income tax, that should have been.... For that not to be prepared I feel was not giving me a brief that would adequately allow me to make a judgment in saying what kind of a presentation it is. I'm surely going to check it out with some economists.

The Vice-Chair (Ms Whelan): Ms Jacks, do you wish to respond?

Ms Jacks: Yes, just a point of clarification. As I mentioned at the outset, these were just suggestions. I'm not an economist myself, but I do spend a lot of time speaking to Canadians right across the country about personal income tax preparation.

Just a point of clarification. These suggested rates are federal rates only. When you look at your own income tax return, you would see the combination of federal and provincial tax rates. For example, a 17% federal rate for income levels of currently $6,456 to $29,590 would mean a combined federal-provincial tax rate of approximately 27%. It varies from province to province. In the case today of $29,590 to $59,190, the middle-income bracket, when you combine both federal and provincial tax rates you see about a 42% rate. Anything over $59,190 -

Mr. Pillitteri: It adds up.

Ms Jacks: Yes. So when you add in the provincial portion, it would be more realistic than what you are seeing on your own pay cheque.

The Vice-Chair (Ms Whelan): Ms Jacks, I want to thank you for reminding especially Liberal members of this committee about indexing, something brought in by a Liberal government years ago.

About that, I have two brief questions, first for Mr. Fiske.

Mr. Fiske, about your proposal and the possibility of moving private foundation funds to community foundations - and I haven't had a chance to review your proposal in full, which I will do - have you an analysis on the tax effects or the revenue effects for the federal government? Is there any analysis in there that I can turn to?

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Mr. Fiske: We have no hard figures, Madam Chair.

Since the majority of assets going to a community foundation that would have any tax effect at all would be assets transferred from the state, perhaps, on the death of a resident in the community....if that person had good tax planning, the government is going to collect a lot of taxes anyway. I don't think our program would affect the tax base of the Canadian government at all.

The Vice-Chair (Ms Whelan): That's exactly what I wanted to know.

Mr. Finlay, briefly, I'm just trying to identify what your major concern is. Is your major concern with the federal government and something we've done? Could you briefly identify what cut you're talking about and whether it's a provincial cut or a federal cut?

Mr. Finlay: It's mainly both federal and provincial. I was suing before...when the Canada Assistance Plan was in effect, and where the federal child payment to the province has been misused. I have proof from court.

The Vice-Chair (Ms Whelan): That's what I wanted to understand. Thank you very much, Mr. Finlay.

I'm now going to turn to each of you for a brief closing comment.

I'll begin with Mr. Maguire. Could you identify, perhaps in sixty seconds or less - or maybe in thirty seconds or less since we're quickly running out of time - your main priority for and your main message to the Minister of Finance?

Thank you.

Mr. Maguire: We'd like to encourage the reduction of some of the regulations that discourage, if you will, economic activity in the prairies. We believe that with the low interest rates of today and the low inflation rates you have a golden opportunity here to continue to reduce the deficit and the debt. That's very much needed. In relation to Mr. Duhamel's question earlier, I encourage you to at least stay the course, and to accelerate it.

We believe that if farmers are given choices on how to market more of their own grain, they will provide much more economic stimulus in rural communities to maintain as many farmers as we can in western Canada, to provide a place for their families to work in the future, and to continue to increase our job levels in the prairie region, which of course provides more taxpayers and more economic activity.

We encourage you to continue to go ahead with the trade areas. The signing of GATT and the reduction of the Crow benefit have certainly given stimulus and encouragement to economic activity in those areas. We believe that giving farmers choices in relation to reducing the monopoly of the Canadian Wheat Board would be of benefit to western Canada.

The Vice-Chair (Ms Whelan): Thank you, Mr. Maguire.

Ms Jacks.

Ms Jacks: Thank you. Our general comments were presenting a message of optimism, given that we are in a time of unprecedentedly low interest rates and low inflation. That creates an opportunity for governments to reduce debt and deficit and for individuals to become self-sufficient again.

We would like to see the budget address four main thrusts: employment, self-employment, family and community support - under social policy and under economic policy - and tax collection.

The Vice-Chair (Ms Whelan): Thank you, Ms Jacks.

Mr. Emberly, please.

Mr. Emberly: Sustainable communities have been the emphasis of my studies for twenty years. I want to sustain the community of Canada, and we can't do it unless we persuade the corporations and the rich that they have a duty to pay taxes to the country of Canada.

No corporation should be allowed to operate in Canada if it doesn't pay a share of taxes. They should not be able to use the people of Canada and the resources of Canada unless they nurture their local community, their nation and their province. The people working in the Lubicon Indian Band's area have taken out $5 billion. Not $10,000 has been paid by the corporation to the Lubicon Indian Band. That's because of the Government of Canada and the Government of Alberta and the rich people and the corporations that control them. Until we develop the attitude that our nation is a community to be nourished and maintained, we will continue to fail. We'll become like the United States, with the hated and feared violence the United States has.

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Everything in the last ten years of government and business emphasis is to make us a copy of Waco, Texas; Los Angeles; Detroit; and Harlem. I don't like that. That's not acceptable to me. Is it acceptable to you?

The Vice-Chair (Ms Whelan): Thank you, Mr. Emberly.

Mr. Kruk.

Mr. Kruk: Madam Chairman, I think I answered the question earlier in a very simplistic way, but I will repeat my answer. Stay the course in terms of deficit reduction and let's get on with a continual and proper funding of our highway system, which will create the economic activity Canadians are looking for today. Those are not mutually exclusive.

Thank you.

The Vice-Chair (Ms Whelan): Thank you, Mr. Kruk.

Mr. Fiske.

Mr. Fiske: Thank you, Madam Chair.

Our proposal is that private foundations be allowed to offer seed funding to community foundations. As Canada and the provinces divert dollars to deficit reduction, one of the victims is social services. The creation of community foundations, we are convinced, is an intelligent, prudent and permanent way to partly offset this reduction in dollars to that sector.

From 1993 to 1995 the Thomas Sill Foundation helped ten major communities in rural Manitoba, from Altona in the south to Thompson in the north, to start their own foundations. We were able to do this because we had an excess in our disbursement quota. We had extra dollars to spend.

Those dollars are now gone, through this program. We can't rebuild those types of dollars. So we need the opportunity, through the Income Tax Act, to seed further community foundations by allowing those amounts to be included in our annual disbursement quota.

Thank you.

The Vice-Chair (Ms Whelan): Thank you, Mr. Fiske.

Mr. Beachell.

Mr. Beachell: Beyond the task force report, which we recommend to your committee for further study, I would add two comments.

One, the federal budget is the single most defining piece of creation of social policy in the country, and its impacts upon disadvantaged Canadians must be taken seriously. The federal government has appeared to feel that social service provision - health care, education, etc. - is a provincial responsibility. We do not believe that is so.

Also, there must be national standards in place to ensure some equalization of opportunity across this country. Barring that, we would urge the federal government to improve federal-provincial relations so we can have dialogue to find solutions that are appropriate.

A social audit mechanism, which Mr. Martin describes as a mechanism to hold provincial governments' feet to the fire, might also be a mechanism to determine how federal government dollars are being spent at the provincial level.

Thank you.

The Vice-Chair (Ms Whelan): Thank you, Mr. Beachell.

Ms Kruger.

Ms Kruger: Thank you.

I'd like to echo what Mr. Beachell had to say. It's very important that the federal government maintain a very active, involved and central role in setting national standards in health care and in supporting the Canada Health Act. In order to do that, the federal government must continue to play a strong fiscal role in sharing health care costs with the provinces.

We would encourage a revisiting of the funding formula and the CHST so the federal government resumes its important responsibility to the people of Canada to keep equality in health care services across this nation.

Thank you.

The Vice-Chair (Ms Whelan): Thank you, Ms Kruger.

Mr. Finlay.

Mr. Finlay: You took the wrong step of passing Bill C-76, which is completely life-threatening in the most emotional way of all to people, in that it promotes medical discrimination. You should keep the 50-50 share cost. You did wrong by giving more responsibility to each province; that took away the standard level. That way you're discriminating against people and causing more medical harm.

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Five provinces didn't follow the shared cost agreement of the Canada Assistance Plan. This is why I was suing. I've been keeping records on the system since 1964.

The Vice-Chair (Ms Whelan): Thank you, Mr. Finlay.

I want to thank all the witnesses for joining us this morning. I appreciate the efforts you made to get here. I understand the roads are not in the greatest condition yet, but will be by the time the snow stops later today.

Your briefs will be read in full and will be part of our report. We appreciate your comments here today. The discussion was very enlightening.

I see the time is about 11:04 a.m. We'll reconvene at 11:10 a.m. with our next session to give time for the witnesses to take their places.

Thank you. The meeting is adjourned.

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