FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, November 8, 1999

• 1908

[English]

The Chair (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I'd like to call the meeting to order and welcome everyone here this evening.

We have the pleasure to have with us representatives from the Association of Municipalities of Ontario, the Centre for Social Justice, Gennum Corporation, the University of Toronto, and the Ontario Public School Boards Association. We also have some individuals appearing.

We will begin with Mr. Michael Power, president of the Association of Municipalities of Ontario. As you know, you have between five and seven minutes to make your statement, and thereafter we'll engage in a question-and-answer session. Mr. Power, welcome.

Mr. Michael Power (President, Association of Municipalities of Ontario): Thank you very much, Mr. Chair and members of the committee. The Association of Municipalities of Ontario is pleased to be able to offer input to the Standing Committee on Finance in its consultations to support Canada's millennium budget.

You have a copy of our submission, and I won't attempt to read it to you. I'll simple synthesize some of the parts of it so that we can engage in some meaningful discussion. This submission focuses on the need for a federal commitment to a national infrastructure plan to build and maintain our physical infrastructure and a social infrastructure plan that supports affordable housing, homelessness, and families and children in need.

We believe there's an integral relationship between the strength of this country and its governments and communities, and the greatest successes occur when we pull together. We believe such a partnership can occur in terms of our growing social and physical infrastructure needs. As orders of government, we have the responsibility to deal with emerging issues before they become massive problems that are too complicated and too extreme to solve in an easy manner.

• 1910

Lately, municipalities have had to fill the void and pick up the slack where deficit management measures have resulted in reduced federal and provincial transfers. Yet we all know the property tax base is not the right place to do this. In fact, it's the last place it should occur, as it further exacerbates the problem. We know that being property rich does not necessarily mean that a taxpayer is income rich. Moreover, with an aging society and a smaller youth population, the capacity of the property assessment base becomes even more limited over time. The property tax base is not the appropriate funding source for income redistributive programs, nor can the property tax base finance the growing deficiency of our physical infrastructure. It's erroneous to assume that municipalities can finance their entire social and physical infrastructure needs without provincial or federal assistance, unless, of course, these orders of government are prepared to condone and encourage higher property taxes.

It's clear that quality, safe transportation systems and an adequate supply of affordable housing and safe drinking water are vital to the economic, social, and environmental health of communities in Canada. However, the current capital investment in infrastructure falls far short of the amount needed. There is an infrastructure investment deficit.

In Ontario this situation has come about because of many factors, but certainly cuts at one level have had an effect on other levels. Municipalities have operated with $1 billion less in provincial transfers since 1993. The result of this and competing demands has meant that municipalities cannot keep pace with the rebuilding and maintenance programs. Population growth, in-migration, an aging society, and new forms of economy, including just-in-time delivery and home businesses, will continue to put pressure on our social services and physical infrastructure.

We would like to acknowledge the federal government's commitment for the millennium budget to further reduce taxes for Canadians and to make strategic investments in other areas. We support tax relief, but we also encourage the Government of Canada to redirect some of these surplus benefits toward targeted investment in physical and social infrastructure. An immediate investment in a short-term plan will provide a direct benefit to Canadians, but a longer-term plan is also needed.

We'd like to highlight one or two examples of the magnitude of the problem. Capital investment in the greater Toronto area transportation and transit infrastructure should be in the order of about $1.37 billion per year, but right now municipalities have only been able to fund about $570 million, representing a gap of about $800 million between actual spending and the amount that would assure an effective and continued capital maintenance program. This is the circumstance of the strongest assessment and growth centre in Ontario.

Mr. Chairman, if you project this need to the level of other parts of Ontario that are not growing, the picture is just as dramatic. It costs over $400 million a year just to properly maintain all the municipal roads in the province of Ontario. When we add in having to maintain the aging water system and sewer collection systems, we're looking at another $50 billion in need.

The economic situation for tenants and the homeless has steadily worsened to the point where over 300,000 tenant households now stand on the brink of homelessness. According to a recent Ontario survey, over 100,000 are waiting for social housing units.

Increasingly, the municipal order of government is being asked to solve many problems, and yet the solutions involve more financially demanding social programs than the property assessment base can or should finance.

So what is AMO seeking? First, we're seeking a national infrastructure program to support physical infrastructure and, second, a renewed investment in our social infrastructure. In terms of physical infrastructure, we support a national tripartite infrastructure program involving the three orders of government.

AMO remains firm that if called on to help fund projects, municipal governments must be part of the design of a Canada-Ontario program. AMO expects that clear priorities for physical infrastructure investment will identify mainly roads, transit, water and waste water systems, and solid waste management and technology systems as eligible capital facilities.

We're very supportive of the proposed five-year national infrastructure program, but we'd like to see a sustained, dedicated funding approach to supporting our physical infrastructure base. This commitment could include the sharing of revenues raised from infrastructure-related sectors, such as the gas and fuel tax, on an annual basis. Mr. Chair and members of the committee, AMO has taken this exact same position with the provincial government.

• 1915

Economic growth is cyclical, but the need for infrastructure investment is continuous. Frankly, the constituents that we share believe fuel taxes are indeed dedicated to roads and bridges, and they are quite amazed when they find out that this is not the case.

Municipalities are of the view that the time has come for a reasonable portion of these taxes to be dedicated to building and maintaining roads and transit, because this is one sure way to see a sustainable commitment to our transportation systems—systems that are vitally important to the economic growth and job creation of which we are so proud in Canada.

In terms of social issues, on a regular basis municipalities are facing increasing child poverty, unaffordable housing and homelessness, growing need for disability services, and shelters and hostels for the elderly, abused, and developmentally handicapped. While there have been several recent housing initiatives from both levels of government, a stronger commitment is still needed. Our submission sets out several immediate steps that the federal government can take to improve the availability of shelter, Mr. Chairman. A renewed federal investment in housing will also improve the support for families and children and help to contribute to early childhood development.

There are several criteria that I'll just very quickly outline, and that we feel must be considered in building any infrastructure program.

The federal and provincial funding must be stable, committed, and predictable over the long term, in order to allow for long-range planning and phased expansions, upgrades and replacements. Identification of eligible projects for infrastructure spending must originate from the level of government responsible for the financing, timing, coordination, and construction of the project. Infrastructure spending must be approved by an entity that represents all partners. Infrastructure planning must consider both the maintenance and upkeep of current infrastructure components, as well as future expansion and/or replacement. Adequate revenue sources must follow the responsibilities. Revenues raised from a particular sector must be reinvested in that sector in order to ensure sustainability and long-term stability. And transportation and transit infrastructure funding must include a portion of fuel-related and vehicle-related taxes and revenues to support those transportation systems. A partnership of the three orders of government is necessary to meet the human needs and the physical infrastructure requirements.

We're pleased that the Government of Canada is listening, Mr. Chairman, and we're anxious to see the action that's going to come. We remain hopeful that in the programs that will be designed by the federal government over the coming weeks, you'll address these vitally important municipal infrastructure deficits. We certainly hope that they will be embraced by the Province of Ontario as well, and we continue to press our government in that regard.

Municipalities are committed to making this happen in order to invest in the health and safety of our communities and our country. We've seen the proof of what a true tripartite relationship can achieve, and we can go forward into the 21st century together, working for a healthy equality and an enviable quality of life.

At the appropriate time, I will certainly attempt to answer any questions you may have.

The Chair: Thank you very much, Mr. Power.

We'll now hear from Mr. David Langille and Mr. John Anderson, from the Centre for Social Justice. Welcome.

Mr. David Langille (Co-Director, Centre for Social Justice): Thank you.

The Centre for Social Justice is a progressive think tank doing research and education designed to strengthen the movement for social justice.

We bring together people from the universities, unions, safe communities, low-income groups, international development and other community organizations. We are governed by a twenty-member board of directors that is representative of those groups. And we're also quite new. We were founded in 1997 in order to carry on much of the work of the former Jesuit Centre for Social Faith and Justice.

Last year we were really pleased to hear the Minister of Finance, the Honourable Paul Martin, declare that “The federal government's next priority must be to address the growing gap between the rich and the poor”, because much of our work is concentrated on that problem: documenting the increasing disparities of income and wealth, investigating the role of government in moderating those inequalities or exacerbating them, and offering a set of policy alternatives.

I've given you copies of our Growing Gap Report, which was released last fall to considerable media attention. Both from the media response and from our subsequent cross-country tour, we noticed that the report seemed to resonate with Canadians. It spoke about what they were experiencing every day—the rising sense of insecurity and frustration that many Canadians are feeling as they watch some people enjoy increasing affluence while others are suffering greater misery.

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Just to cite you a few of our findings, we know that over the last few years, CEO salaries have been increasing very rapidly, with the top ten CEOs bringing in salaries over $10 million a year. The richest 10% of families were making 21 times more than the poorest 10% of families back in 1973. Now the richest 10% of families are earning 314 times more than the poorest 10%. So we've gone from a factor of 21 times to a factor of 314 times between the top decile and the bottom decile.

The middle income group is shrinking meanwhile. Over the last couple of decades, we've gone from a situation where 60% of families were in the middle income group to now 44% of families. So it's gone from 60% to 44% over a couple of decades.

There's a growing fault line between young people, those under 35, and people over 35. The under-35s, especially youth under 24, are being devalued. They're making less money since 1980. Workers aged 15 to 24 made an average of $8,000 in 1995. That's 20% less than in 1990. As you're soon going to hear from Dr. Prichard, they're not going to be able to afford tuition at this rate. Young men are the hardest hit.

And the government's role? Well, in the past, governments have done a tremendous job at providing stability in the distribution of incomes, but between 1980 and 1996, 60% of families with children earned less income. It was government's cash transfers that saved many of those families from falling into destitution. Without the government's help, the average poor family's income in 1996 would have been $6,000. With government's help, the average family income was $17,000.

Why is this problem happening? We've identified three factors: access to employment—you know, getting a job; secondly, the value of work, the income you're making, whether you're making a decent income, a decent hourly wage; and thirdly, what governments do or don't do. Governments, as I said, can help narrow the gap.

I'll ask Mr. Anderson to speak to that issue.

Mr. John Anderson (Board Member, Centre for Social Justice): I'll speak very briefly on some of the ways the gap can be narrowed. It's particularly appropriate to bring these points out at this time, as Mr. Martin has recently announced there is money in the federal coffers to be able to deal with some of these problems.

The role of government is an extremely important one. The issue is not primarily one of taxes, although if we're looking at taxes, it's rather tax reform, not tax cuts.

We have outlined a whole series of measures to close the gap. In our Growing Gap Report we have a whole chapter that goes into detail on some of these measures. Today I'd like to go into some of the ones you're highlighting for this evening. These are key, and they're doable by the federal government.

The first is a national child care program for early childhood education and development. It's clear this is one of the key elements that allows women to participate fully in our economy on the one hand, and it also allows children to receive the basis of a decent education, which will allow them to participate fully in the future as citizens. We know most studies indicate this is the case. Other countries, such as France and Sweden, already have this as part of their infrastructure. We're far behind those countries.

Second is restoring our employment insurance system, which has been severely cut back. We know today that most people who are unemployed do not receive unemployment insurance. This is a major change that has occurred due to government cutbacks in unemployment insurance. While we don't think they were justified in the past, certainly there's no justification now financially, with the huge surplus in EI funds, to have those premiums rolling in while most unemployed people do not benefit from the insurance plan into which they've paid.

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Thirdly, a national housing program is extremely important. This is something you're going to hear from a number of different sources around the table tonight and I'm sure in subsequent meetings. Clearly the tragedy of the homeless is a solvable tragedy, and the government has absolutely no excuse for not putting into practice a joint program with the provinces to build low-income housing. We know in Ontario, for example, virtually no low-income housing was built last year, nor the year before. And one wonders why there is the problem of the growing gap. Well, if you don't build low-income housing, there's going to be a problem.

Fourthly, one of the ways of raising salaries that doesn't cost very much is to change the rules regarding unionization of federally regulated employees to make it easier for the thousands of workers who are working in low-income jobs for banks, for example, to achieve unionization. Again, that is common in most European societies. In Sweden, Denmark, and those societies, the rate of unionization is double or triple what it is in Canada. This is one of the ways of lowering the gap that doesn't cost the government anything.

Fifthly, welfare payments have to be restored to previous levels. There have been terrible cuts to welfare payments in Ontario in the past five years, which have meant that people who are living on welfare have to resort to food banks just to survive. This is something the federal government can do something about, because it can control the way federal moneys are allocated to the provinces and go back to a system where money is earmarked for specific needs, such as welfare.

Sixth is the question of working time. One of the ways of creating more jobs, and good jobs, is to reduce the work week. They're doing this in France. They're moving to a 35-hour work week. That's what they're doing right now in France. And in many other European countries, they're moving along this direction. There again, that's something the federal government can show the initiative in. There are all kinds of ways of reducing work time, which automatically creates more jobs.

Seventh is raising the minimum wage. Canada has a very, very low minimum wage. In Great Britain they didn't have a minimum wage; they just brought it in. It's about $2 more than the Canadian minimum wage. We should be following that kind of example at the federal level by raising the minimum wage. That would set an example for the provinces to follow suit.

Lastly is restoring public services, particularly around health and education, to former levels of funding.

Things can be done to narrow the gap. Measures can be taken. The federal government no longer has the possibility of saying they don't have the funds to do that. Now the funds are there, and that has to be a priority. We can't live in a society ranked number one by the UN where we still have a growing number of poor, a problem that is growing in intensity each year. We should be ashamed of this, as a society. We have the power to deal with it. We can move on some of these issues in the future, and we hope the government will be interested in doing just that.

Thank you very much.

The Chair: Thank you very much, Mr. Anderson and Mr. Langille.

We'll now move to Ms. Margaret Dinsdale. Welcome.

Ms. Margaret Dinsdale (Individual Presentation): I'd like to thank you, Mr. Chairman, for inviting me to address the committee this evening.

Some of you may know me as a journalist; however, I'm not here tonight as a journalist. I'm not a member of a special interest group, nor am I a member of any political party. I am here tonight as a private citizen who's concerned and anxious about where we are headed as a nation. To illustrate my concerns, I would like to tell you some stories.

The first is about Blinky, whose real name was Findlay Gillis. He was a slightly built older man who suffered some sort of neurological disorder that caused his eyes to constantly blink; hence his nickname. He lived in downtown Toronto, in Mr. Tony Ianno's riding actually. He was on some sort of disability pension. The major portion of any socializing he did was that a couple of times a week he'd frequent a local pub and have a couple of glasses of cheap beer with his contemporaries, as he had been doing for years.

Then the social service benefit cuts came, and he couldn't afford his little treat of the week. In fact he couldn't afford to live where he was living any more.

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The owner of the pub helped find him a room in a rooming house nearby, and helped him move and arranged for his pension cheques to be forwarded. However, for some reason he didn't receive his cheque. For being too shy or too proud or both to beg for further help, he died alone in his room. The cause was determined to be starvation. This was covered in the Toronto Star and Toronto Sun.

How did we let Blinky down? Social service cutbacks that started at the level federal in 1995 with the elimination of the Canada Assistance Plan? A complete lack of any social housing policy on the part of the federal government?

The next story I'm going to tell you is about John and Shirley Cheshire of Ancaster, Ontario. They're 70 years old, of the middle class, worked hard, owned their own home and raised three grown children. Several years ago it was thought that Shirley was developing Alzheimer's disease. But what she has is a rare brain disease called Pick's disease, which literally rots your brain. It is now thought that this is what killed her father and could affect her children and grandchildren as well. As we speak, Shirley has regressed to the emotional and mental equivalent of a two-year-old child and her internal organs are starting to shut down.

The only home care they receive is someone who comes in twice a week to do a few hours of light housekeeping and take Shirley for a walk. John has colitis, cannot drive his car at night and has other health problems. But it's John who has to change Shirley's diapers, do the laundry and administer various medications, monitor every moment of the day. His only alternative is to place his wife of almost 50 years, and mother of his children, in a psychiatric institution. Where is the home care so earnestly promised by this government in the last election? Why aren't there further health care supports for the Cheshires?

The next story I'm going to tell you is about Jane Smith and her children, who are twelve years, ten years, and seven years of age. Jane Smith is not her real name, but this is a true story. Jane has lived all her life in Toronto, and had a steady job in an office but was downsized several years ago. Since then she has had a succession of temporary contract jobs, which means she doesn't have any dental or medical benefits, does not qualify for employment insurance, and certainly has no job security. She pays more than 50% of her income for a small rental townhouse but somehow manages to follow Canada's food guide.

A year ago one her children developed a health problem. Jane missed a lot of work to care for her child. She got a little behind on her bills and came very close to becoming homeless. Unfortunately, I don't have the time to tell you all of Jane's struggles, but I'll tell you about the time she was invited to appear on a panel discussion at a local church. She looked forward to being able to tell people what it is really like to struggle, but when she got there, all they wanted to do was advise her on how to shop for food and manage her finances better. “I felt embarrassed and humiliated”, she said. “They knew nothing about me. I could have been a widow. I could have escaped an abusive marriage. I could have thrown out a husband who was addicted to alcohol, drugs, or gambling. They treated me like I was a stupid woman with loose morals.”

Where do we begin to enumerate where we've let Jane and her children down—social housing, access to employment insurance, health care?

While these are grim stories indeed, I know that Canada and Canadians are capable of many great and marvellous things. We are helping the people of Kosovo and East Timor, and so we should. We helped implement the global ban on landmines treaty. We are going to give lots of money and support to the revitalization of Toronto's waterfront. But we have abandoned the most vulnerable here in our own country. I haven't even talked about the homeless and the struggles of our farmers, among others.

How I'm feeling about the plight of people like Blinky and the Cheshires, and Jane Smith and her children, reminds me of a line from a blues song from the Mississippi Delta: “Lord, I'm so disgusted and so dissatisfied”.

On that note, I would like to make the following recommendations for budget 2000. In regard to social housing, ten cities across Canada have declared homelessness a national disaster. The United Nations has sharply criticized Canada for allowing matters to get so out of hand. There are many others, women and men like Blinky, like Jane Smith and her children, who are at risk of homelessness, especially since the removal of rent controls in Ontario. I invite the members to obtain and read Dr. Anne Golden's excellent report on homelessness and immediately implement its recommendations.

Second is employment insurance. I find it shocking that only 30% or so of people who apply for benefits receive them, and that women are assessed at lower rates. I demand that the surplus in this fund be applied to unemployed people, that 70% to 75% of those who apply receive benefits, and that women receive the same assessment as men. I ask that people who are temporarily or seasonally employed or employed part-time have some method of accessing this fund so that when Jane Smith's child is ill she does not have to face financial disaster.

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Three is health care. Where is the promised home care? It's too late for John and Shirley Cheshire. What about when one or more of her children or grandchildren develop this disease? In four and a half more years we will see the restoration of health care funding cut four years ago if government policy doesn't change its mind in the meantime. Most in the field agree that this is not enough.

Four is the GST. The government, who once said they would abandon this aggressive tax system when empowered, now say they are keeping it. Where is the relief in the form of dropping it a percentage point or two? Why is it still being charged on such items as reading materials and feminine sanitary products?

Five is income tax. This government has promised tax cuts, which might appease the lower-income and middle-income tax payer for a while. I demand full and permanent indexation of taxation so that hardworking Canadians are paying a fair portion of taxes instead of seeing constant erosion of real income.

Six is putting Canadians first. We are developing into a nasty society where anyone who falls through the cracks for whatever reason is reviled or ignored. This does not build a healthy community. All Canadians deserve to be recognized and to feel valued.

By implementing my suggestions I believe this would send a clear message to all people in this country that we are all part of a community, and I believe this will build a much better community.

Thank you again, Mr. Chairman, for allowing me to address the committee.

The Chair: Thank you very much, Ms. Dinsdale.

We will now hear from the Gennum Corporation, Douglas Barber, president and chief executive officer. Welcome.

Mr. H. Douglas Barber (President and Chief Executive Officer, Gennum Corporation): Thank you, Mr. Chairman.

I am here tonight with two hats that are not really two hats. I am here as a leader of a small industry and as part of a larger industry, and I'm also here to support the Natural Sciences and Engineering Research Council's submission as a member of that council. While I'm supportive of the whole of their presentation, Dr. Brzustowski may have warned you that you may hear of someone escalating his pitch here for information and communication technology. I'm here to do that tonight.

Our focus—and when I say our focus, our focus as a company and as a group of companies in Canada in the information and communications technology area, and particularly the hardware side of that—is really on highly skilled people to support our growth, and that's why we're here to support the submission by NSERC.

The information and communications technology industry globally is at about a trillion dollars today and growing at close to 15% per year. The hardware side, the microcircuit side of that business, is growing at closer to 20% a year and has been for the last 25 years, and in my opinion will grow at that sort of rate for the next 25 years or more. It is the major and essential engine of productivity and wealth creation for certainly the next quarter of a century. We're going to do things smarter because of the capabilities in information and communication.

But this industry is based primarily on highly knowledgeable learners—and I will say learners because that's where the research side of this thing comes in—and the industry globally is currently limited by the availability of those people.

The countries that have the people are the countries that are thriving, and Canada is in a good position to be one of those countries.

Let me just say a little bit about Gennum. We are a microcircuit company. We design, manufacture, and sell silicon chips from our fabrication facility in Burlington and we sell them globally. North America is not our largest market.

• 1940

We'll be 26 years old in three weeks. That will be 26 years of 21% compounded growth every year and profitability every month of our now 310 months of history. We started with 22 people and today we are 450 people, with a subsidiary in both the U.K. and Japan.

We spend about 28% of our revenue on R and D and on the marketing to direct that R and D. That's almost as much as we spend on manufacturing.

That gives you some idea of the need for these kinds of people in this industry. Our growth is already being constrained by shortages of people in this area.

We're glad to say that we've been part of a group of Canadians who have been working on trying to address that problem. There have been considerable successes. We've been making advances as Canadians.

That's why I'm here. Some of those advances have already been made, but there's one really important piece missing.

First, already three provinces have stood up for doubling the pipeline for information and communications technology people. We're going to be helped a fair bit by the new federal chairs that have been set up to bring in new faculty, because you can't generate more of these types of people if you don't have the teachers and you don't have the facilities to do it. The CFI will help out on that front.

The federal government has had a major initiative going for the last number of years, ably led by John Manley, to attract microcircuit activity into Canada. I believe we're going to be successful. We've learned a lot about how good a place Canada is.

The one thing, still, is that although we may be able to get undergraduate students in place, we don't have any way of generating the professors and we don't have any way of generating the post-graduate students. Those of us who run these industries are all products of the post-graduate programs in Canada, so we understand well how those work.

The federal government funds the research programs that are largely the funding of the post-graduate students in the universities. It is the research programs of the professors. That's where those young people learn how to learn, learn how to learn new things, and it's those kinds of people we need.

In fact, I can leave with you some proposals that are going to be talked about considerably over the next little while.

We believe the post-graduate population in this type of area needs to be about tripled over the next five to six years. That's not a small undertaking. It needs about $160 million over five years to simply support research activities. When you're on the hardware side, that's very much more expensive than doing software or systems development. It really needs to be pretty focused, because it doesn't have the profile of the software and systems side. But it's very necessary, because software is simply the language that tells hardware what to do.

The other thing I would say we have is the students. The hurdle rate for students who want to get into this area is probably somewhere in the region of 92% coming in out of high school. There are lots more students there with qualifications who want to get into this stream of learning who actually take their second and third choices at places like the University of Toronto.

Perhaps Dr. Prichard will contradict me on that—or support me.

I'm here to say, then, that we support and want to move up the requirement of NSERC for information and communication technology. We see that as a very important part of our type of industry and activity being present in Canada, and I want to thank you for the opportunity to express that point of view.

• 1945

The Chair: Thank you, Mr. Barber.

We'll now hear from representatives from the University of Toronto, Dr. Robert Prichard and Dr. Heather Munroe-Blum. Welcome.

Dr. J. Robert S. Prichard (President, University of Toronto): Chairman, thank you very much.

As always, it's an honour to have the opportunity to appear before this committee and participate in the public life of our country. On behalf of my colleague, Dr. Heather Munroe-Blum, I thank you for again extending this honour to me.

Dr. Munroe-Blum is the vice-president for research and international relations at the University of Toronto. She is an epidemiologist by training. She's a scintillatingly good vice-president of the university. The Government of Canada has appointed her to the Medical Research Council of Canada. She also serves as a special adviser to the Government of Ontario on innovation and university-based research.

I'm going to speak first, and Dr. Munroe-Blum is going to supplement my remarks.

We're both here representing the University of Toronto, which, according to a Maclean's magazine issue I saw early this morning, is the top-ranked research university in the nation for the sixth year in a row. We're very proud to be its representatives tonight.

I want to speak to three issues—first, the national government's role in research; second, federal-provincial transfers; and third, the tax treatment of appreciated capital property donated to non-profit organizations.

With respect to the latter two issues, I'm going to do each in about two sentences.

With regard to the issue of the case for increased federal-provincial transfers, the University of Toronto fully associates itself with the brief received by this committee from the Association of Universities and Colleges of Canada, dated September 17, 1999. The brief calls for increased federal transfers to the provinces, earmarked specifically for support of post-secondary education, to help our universities and colleges deal with the extraordinary growth in demand we anticipate over the next decade.

With respect to the tax treatment of appreciated capital property donated to non-profit organizations, the University of Toronto again associates itself, fully and enthusiastically, with the proposition that the taxation of capital gains should be fully eliminated, building on the step taken three years ago to reduce the taxation by half. We, like many others, believe it should be eliminated completely.

We associate ourselves with the brief that will be presented to you tomorrow by Mr. Don Johnson, who has been the leading Canadian advocate of this tax change. We believe the tax change already put in place has made a difference. We believe the full elimination of capital gains, putting us on the same basis with the United States, would dramatically enhance the prospects for all non-profit organizations, from community-based groups to United Way groups to colleges, universities, hospitals, and community foundations. For all of us, it would make a powerful difference.

With those two issues behind me, it allows me to focus exclusively on the question of the federal government's support for research. I have appeared before this committee, as the chairman knows, more times than he cares to remember, and I think on every occasion I've come asking for help. Tonight, however, I want principally to say thank you, and to celebrate what I consider to be an extraordinary step forward for Canada—the Prime Minister's announcement of the 21st century chairs for research excellence.

I've had the privilege to serve as president of the University of Toronto for almost a decade now, and there's no question in my mind that the single most significant advance in public support for research and innovation that has taken place on my watch has been the announcement by the Prime Minister a couple of weeks ago. His commitment to creating initially 1,200 chairs, to grow to 2,000 chairs, is an extraordinary step forward. It is a remarkable national commitment that will make a very large difference, from coast to coast, at every university in the country, to our capacity to attract and keep the best and brightest young minds in Canada, to draw to Canada exceptionally talented people from abroad, and to create an atmosphere of both innovation and excellence on our campuses.

I cannot put too strongly how we at the University of Toronto, in partnership with our sister institutions across the country, feel this was the right decision at the right time—a bold, powerful decision for which we want to give unqualified support and applause.

Why is this so terrific? What is it about this that excites me so much? There are many dimensions to this, but let me, in point form, set them out.

• 1950

First, we know that the key to productivity, the key to growth, is innovation, and this, in a single announcement, will significantly enhance our capacity to make our contribution to Canada's capacity for innovation.

Second, the decision clearly vindicates the federal role, the national role, in the support for research and innovation.

Third, in one announcement, the Government of Canada is addressing our two greatest competitive disadvantages with the rest of North America: the previous absence of adequate support for people and the absence of any support from the federal government for the indirect costs of research. This announcement makes an important contribution to both.

Fourth, this announcement is important for its boldness and simply for its scale. This is a large and meaningful intervention on the part of the national government.

Fifth, it embraces all fields of inquiry at our universities. It does not focus only on science and technology. It embraces all the fields of our universities, across the full spectrum of knowledge. That is refreshing and important.

Sixth, this chair program is designed to reward excellence and to reward performance. The chairs are to be distributed based on excellence and on the performance of each university, and that is as it should be, thereby creating further incentives for more excellence and more performance.

Seventh, under this program the national government is assuming full responsibility for its cost. There are no matching requirements, no forced provincial contributions, no forced private sector contributions. The government is simply assuming full responsibility for the most important of all elements in our capacity: outstanding individuals from home and abroad. As a result, it will liberate these individuals to focus on the most fundamental aspects of research, which, over the long term, is what advances fields of inquiry.

Eighth, the program has been designed to be as flexible as possible, allowing us, again, to focus on exceptionally able people, keeping the best young Canadians in Canada, repatriating outstanding Canadians from abroad, and bringing to Canada outstanding scholars, to allow us to achieve internationally significant levels of achievement in our field.

Finally, I might say that this program is rewarding because it places great confidence in the ability of our 85 universities across the country to make the program work, believing we're well placed to do so.

So Mr. Chairman, I want to say to you, thank you. I want to say through you to all members of the House of Commons and particularly to the Prime Minister, thank you for this very important announcement. I congratulate the government on its boldness. I undertake to you—and I know I can undertake this on behalf of all university presidents in Canada—that we will do our best to realize the full possibilities of this program.

This program follows the earlier announcements of the Canada Foundation for Innovation and the Canadian Institutes for Health Research. The combined effect of these three initiatives over the past four years is really quite extraordinary in getting our universities and, indeed, our country, back in the hunt of international competitiveness in the field of research and innovation.

The remaining primary issue facing us in the field of research, which will be before you in the days, weeks, months, and indeed, years ahead, is to also find an appropriate way for the federal government to now support us as we bring together these elements, to support us in meeting the indirect costs of research, to give us the capacity to support our graduate students, to support the commercialization of our research, to support our post-doctoral fellows, and to give us the space and the equipment our faculty and students need so that we can bring all the pieces together and get the full benefit of each of these important national investments.

With those words, Mr. Chairman, I'd like to now turn to my colleague, Dr. Munroe-Blum, because she can speak to the implications of this for the province. One of our strongest reasons for endorsing this is that the federal government has embraced its role so fully and so skilfully and has now left room for appropriate provincial action.

Dr. Heather Munroe-Blum (Vice-President, Research and International Relations, University of Toronto): Thank you.

I also want to say how honoured I am to be here this evening and to have the opportunity to speak with you briefly.

Robert Prichard has really said much of the message that Canada's university community would want to convey, but on behalf of ourselves—the University of Toronto—and also on behalf of all Canadian researchers, let me add to his words my own words of thanks for the really extraordinary new investments of the federal government in the chairs for the 21st century program, in the Canada Foundation for Innovation, in the Canadian institutes for health research, in the networks of centres of excellence, and in the enhanced budgets to the federal granting councils.

• 1955

These programs together invest in the pillars of a productive, internationally competitive research enterprise. They invest in our talent. They invest in a world-class infrastructure. They invest in the programs that have done so much to position Canadians and Canadian research in the knowledge economy, contributing as we do so disproportionately to the world pool of information technology and discovery.

These investments couldn't have come at a better time. They are the very signal that is required to engender not just hope but deep engagement on the part of Canadian researchers in fulfilling their full potential and capabilities. That's what colleagues want: to be able to do everything in Canada at the highest level and to use their talents optimally. These new programs allow just that.

I want to underscore what Rob Prichard said about the distinctive and important nature of the twenty-first century chairs for research excellence, that is, that they are an autonomous instrument. They do, for the very first time at the federal level, acknowledge the full cost of research and stop what has been historically a displacement of research costs onto the other programs of universities, particularly the academic programs. It's extremely important in that respect.

These investments also come at an important time because many of the provinces of Canada are working to create their own innovation strategies in preparing for the 21st century and the new millennium. Coming as the 21st century chairs program does, it's a great complement to a number of the initiatives that are taking place at the provincial level.

For example, over the past three years, the Province of Ontario has invested a new $1.5 billion in research-related innovation programs that speak to the same principles that the 21st century chairs program does: competitiveness, distinctiveness, and the ability to be responsive to talent and to opportunity.

I think it's very important that we continue to look at science policy, research policy, in this country, doing everything possible to harmonize federal policy with provincial policy. We are a large geography with a very small population and we are operating in the global economy. It may have been that 20 years ago you could do things well at the local level and have a economic impact at the local level. That's no longer the case. If we're not internationally competitive in what we do, it is not worthwhile for anyone, most of all those who are undertaking it.

Being a small population competing on the global platform, we have to harness our full capacity at the provincial level and at the federal level. These new programs of the federal government, partnered with a number of new initiatives at the provincial level, really signal every opportunity for Canada to be a significant leader in the global economy. There are only leaders who play in the global economy; there are no followers. We're very encouraged that the world is not going to pass us by. We'll take every opportunity to fill the full potential of these new investments.

Thank you very much. We look forward to working with you and to doing everything we can to facilitate federal-provincial harmonization of science policy.

The Chair: Thank you very much, Dr. Prichard and Dr. Monroe-Blum. That's very encouraging. We're here tomorrow. You can come back if you like.

Now we'll hear from the Ontario Public School Boards, with the president, Liz Sandals, and the director of policy, Camille Quenneville. Welcome.

Ms. Liz Sandals (President, Ontario Public School Boards' Association): Thank you, Mr. Chair and committee members, for the opportunity to participate in your pre-budget hearings. I believe you have a copy of our brief, which has been distributed.

I want to begin by describing the organization which I'm representing here today. The Ontario Public School Boards' Association represents public school boards of all sizes from all regions of Ontario. OPSBA, representing the interests of more than 1.7 million elementary and secondary students and more than 500,000 adult learners, is the association to which the Ontario government turns for the views and recommendations of public school boards. I also sit on the board of directors of the Canadian School Boards' Association as their second vice-president.

• 2000

I'm going to be very upfront in terms of what we recommend to you for your budget deliberations. We believe it is time for Canada to invest in our children. A significant portion of the federal surplus should be directed to programs that benefit children and youth. It is indeed time for a children's budget.

First, we recommend the implementation of the national children's agenda. Our association was delighted at the progress the federal government and the provinces made in developing the social framework agreement and the resulting national children's agenda. We strongly agree with the goals of the national children's agenda. We believe the agenda is a partnership, and the school system is a key partner playing a central role in the lives of children.

There are three areas I'd like to address particularly—early years, nutrition programs for pregnant women and young children, and children's mental health—which I think hook into your national children's agenda.

In Ontario, the Fraser Mustard and Margaret McCain report, entitled Early Years Study: Reversing the Real Brain Drain, brought together experts from all areas in the field of early childhood development. The recent Speech from the Throne in Ontario committed our provincial government to assisting all children. Our association will continue to lobby the provincial government to act on this report and follow through with its commitment. However, it is critical that the federal government also provide support for early childhood development programs.

We also believe it is vitally important to provide nutrition programs for pregnant women and young children. Research shows that children who are poorly nourished in utero or in infancy are less likely to succeed in school.

Many young people in Ontario have mental health problems. These are the children who overburden teachers and cause chaos in the classroom. They stress their parents to the breaking point and contribute disproportionately to the violence in our communities. We know treatment programs work, and we ask for your support in ensuring that children's mental health services are adequately funded.

Secondly, we recommend an increase in the child tax benefit and increases in funding to develop an integrated service delivery model to meet the needs of children at risk. I know you are all well aware of the relationship between child poverty, readiness to learn, and school success. There is an abundance of research that demonstrates quite clearly that children who come from poverty are much more likely to perform poorly in school. An increase in the Canada child tax benefit will assist low-income and middle-income families in particular in providing for their children. We commend you for the increases you have made in the child tax benefit in the past year and encourage you to further enhance this benefit to stem the tide of child poverty.

Because of funding cutbacks or reductions in services provided by both provincial and municipal agencies assisting children, school boards find themselves with an ever-increasing responsibility for the social and emotional well-being of the students they serve. We cannot do it alone. We ask for federal cooperation in providing integrated services for children.

School boards too have had to deal with funding reductions. The programs that boards have developed, including nutrition or breakfast programs, parenting programs, violence prevention programs, and counselling programs, have all been reduced. English-as-a-second-language programs have suffered serious cutbacks. The Canadian School Boards Association recently passed a motion to encourage the federal government to make the needs of children a high priority when developing legislation related to immigration, to increase funding available to provinces to meet the educational needs of children whose first language is not English, or in the case of Quebec, French, and to strengthen partnerships and stakeholder relations by explicitly including school boards as partners in the development and implementation of immigration legislation and policy. We deal directly with huge numbers of immigrant children, and we feel that the board should be consulted when we are looking at these policies.

• 2005

Thirdly, we recommend the development and implementation of a national child care strategy ensuring all children requiring care outside the home have access to affordable licensed care provided by qualified individuals in a safe, stimulating, and nurturing environment. It has been proven that high-quality child care experiences enhance a child's intellectual and school-related skills. When placed in high-quality child care programs, children with low socio-economic status are less likely to repeat school grades or to be placed in special education classes and are more likely to complete high school and pursue vocational or academic training compared to those children without early childhood education experiences.

In summary, at this time of economic growth we continue to have outrageously high numbers of children living in poverty. We believe a permanent investment of programs to meet the needs of children is the wisest investment. The national children's agenda may be the beginning of great things to come if we collectively take advantage of this opportunity. An increase in the national child tax benefit and a national child care program strategy will ensure children have the foundation they need to begin school ready to learn.

We understand that education is a provincial mandate. However, we believe the welfare of children is everyone's responsibility.

Thank you for your time. I would be pleased to answer questions.

The Chair: Thank you very much, Ms. Sandals.

Now we'll move to a question and answer session. It will be a ten-minute round. We will begin with Mr. Epp, followed by Mr. Cullen, Ms. Guarnieri, and Mr. Szabo.

Mr. Ken Epp (Elk Island, Ref.): Thank you, Mr. Speaker...or Mr. Chair. It's getting late. We've been here for how many hours now? I guess some of us are starting to see double.

I have appreciated all your presentations. I have four pages of notes. Having taught for 31 years, I've sometimes measured the quality of a student's work by how much paper he gave me, so I guess this shows the quality of your work here.

I have a number of different questions. First of all, to the municipalities, I get different readings out west when it comes to the funding of infrastructure. What some of the municipalities in my riding and others in the prairies have told me is that the federal infrastructure program has a serious flaw, which is that they force municipalities to come up with ways of spending money or else they don't get it. Since they pay only one-third of it out of their municipal funds, and one-third comes from the province and one-third from the federal government, they now have to spend it within a certain timeline and on projects that have an envelope of approval characteristics. So they end up spending the money on things that normally they would not want to spend it on. They would rather spend it on something else that wouldn't qualify. Consequently, the taxpayers send their money to the municipality and the province and to Ottawa, and then it comes back and they've lost the freedom to spend it on things they really want.

Judging by what you said, your association supports that 100%. Do you ever have these complaints here, or is it just out west that we get that?

Mr. Michael Power: Thank you very much, Mr. Chair and Mr. Epp.

I've talked to my colleagues out west as well, the presidents of the municipal associations in western Canada, and they've indicated to me they have the same difficulties and the same problems that we have in Ontario with crumbling infrastructure and with maintaining the infrastructure. You will have noted that in the presentation we made we were very careful to say that an infrastructure program needs to be designed with the input of the municipal order of government, their involvement in developing the criteria and the conditions under which the program is undertaken, and they need to be part of the decision-making process. This was a difficulty in the second phase of infrastructure programming in Ontario because our government at the time chose to go their own way and they made the decisions as though municipalities weren't part of it.

Everything I've heard from my colleagues in British Columbia and Alberta—and I was with Jack Hayden from Alberta yesterday in Newfoundland—and from Harrison Sinclair in Saskatchewan is that they're all very positive about an infrastructure program. The key thing is—and we think this is where the federal government is wise—it doesn't happen tomorrow. You're dealing with a program that will not come into being until the year 2000 so that we have the appropriate time to plan and to put it in place.

• 2010

We all know that the booming economy of Canada, and in particular of Ontario, is based on the sound infrastructure. Without that sound infrastructure our booming economy can be in trouble, especially in transportation areas and in providing services of a hard nature in communities.

What you are hearing, I think, to be quite honest, may go back to the first infrastructure program, where there were a lot of programs that perhaps shouldn't have been involved, and I'll be the first to admit that. We don't need to build any more bocce courts, if you'll forgive me. I know I'm treading on dangerous water. I know, Mr. Chairman, that's dangerous.

The Chair: It wasn't my riding, Mr. Power.

Mr. Michael Power: But we do need to move forward in terms of the hard infrastructure, and I think that's what the federal government has signalled. That's what the municipalities right across this nation are saying very clearly to you.

Mr. Ken Epp: I appreciate that, and I'm very glad you put that on the record. If the program is going to work, then let's make sure it works for the municipalities for whom it's designed. So that's really good.

Now, you also indicated that you would support gas and fuel tax targeted to infrastructure. Are you talking about the federal fuel tax?

Mr. Michael Power: We're taking the same message to you that we've taken to our province and the same message that our sister association, the Federation of Canadian Municipalities, has taken to the federal government. The Government of Canada has said it's in favour of a national transportation policy. With regard to transportation in the broadest sense, transit as well as roads and the rest of it, we're saying that a portion of the moneys that are collected for fuel taxes and other vehicle-related fees should go toward maintaining the transportation infrastructure of this nation. We can't move goods from east to west and north to south unless we have the capability of doing it.

In Ontario, for example—and you're seeing it in the west as well—we're seeing a total gridlock with regard to the movement of goods, and this does not help. We can hear that in terms of the auto industry of Ontario and of Canada the economy is booming like never before, but it all depends on goods being moved on a 24-hour basis, and the gridlock is creating a problem. If you talk to the citizens in my community, as I do, you'll find that they really believe some of the money from fuel tax and what they pay for the licence on their car goes back into transportation. You and I know it's a little different from that.

What we're saying very clearly is that it's time to think that way. It's time to make a commitment to transportation. What's a way of doing it? A way of doing it is to take money that is taken out of transportation and invest it back into transportation. That's why we are making that suggestion very strongly. As you go across this nation, you will find that you will hear that from every municipal group. We're saying that transportation is a key issue. Here is a way of maintaining the transportation infrastructure of Canada.

Mr. Ken Epp: I think there's room for a little bit of feedback from here. I'm very proud to be part of a party that has had that as its policy since day one. So we're ahead of you.

A voice : But you're not government yet.

Mr. Ken Epp: It'll come.

I want to move to Mr. Langille and Mr. Anderson, because one of the things they said distressed me greatly. It has to do with the reliability of transportation. We have a new act that says that the ports may not be closed if they are to load ships with grain. In my riding I have a number of chemical plants that add a great deal to the economy of not only our community and our province but also of Canada. They ship their goods right around the world, and most of it goes through the western ports. As of today those western ports are closed because of union action. Yet one of the things you said was that we need to promote more unions. That's certainly not the sentiment from the people in my riding who are being told, don't bother coming to work because the only ones we want to come to work are those that are necessary to shut down the plant.

• 2015

I want you to reconcile that. Do we need more unions, or do we need more responsible unions? Do we need a better system of establishing dispute resolution?

Mr. John Anderson: I'll answer that one as someone who teaches labour studies at McMaster University as well as being associated with the centre.

I think if we look at the countries around the world where the inequality between rich and poor is the lowest, we see it's those countries that have much higher rates of unionization than does Canada. While Canada has a higher rate than the United States, which is around 14% and where the inequality between rich and poor is even greater than that of Canada, Canada's rate of around 30% is not an enviable one by the standards of most European countries.

We know from studies that people who belong to unions earn more than people who don't. This information is from Statistics Canada. This is not something we as a centre have done work on, but this is the case. One of the ways we can help people at the low end of the scale, where so many people are, to rise up is to provide them with good jobs and also with the opportunity for unionization in those jobs. I think that is very important. On the other hand, I think that is not enough if you don't have a climate that encourages good industrial relations and negotiations between employers and unions. That is also part of how you promote a society where unionized workers play a key role in terms of narrowing that gap. So I think both of those are needed. You need more unionization, and you also need a better climate of labour relations.

Mr. Ken Epp: It's a bit of a stretch from talking about the budget and the pre-budget consultation, but since I have you here, I want to ask you this. I'm going to put the ball back in your court. How would you solve this problem? We have literally thousands of farmers on the prairies who are facing bankruptcy. That doesn't mean only losing their job. It means losing their life savings. It means losing a family farm that has been in the family, in some cases, for 100 years. It means losing the home. The children are going to be displaced. There's no reasonable way to make a livelihood. They're facing bankruptcy.

Their lot in life has been very difficult. For most farmers, if they compute their hourly salary over the last 10 years, it probably comes down to $5 or less an hour in the years they made money. Now they're being held hostage by unions who say they are not satisfied with $18.95 an hour, they want $23.52 an hour. They really don't understand.

How would you reconcile that? To me that is doing just the opposite from what you state your goal is, and that is to bring together the gap between the rich and the poor. What you're doing is taking very well-off union workers and putting them further ahead while putting people who are poor into bankruptcy.

The Chair: Thank you, Mr. Epp.

Mr. David Langille: Very briefly, our democratic system is messy, our court system is litigious, and our collective bargaining system is often confrontational. But these systems of ours are preferable to the alternatives. They're not ideal. They could be improved. We don't want to see harmonization downwards to a lower level. We'd like to see people rising to a higher and more secure standard of living.

I feel dearly for those farmers out on the prairies. My mother is from Saskatchewan. I think it's the cutthroat capitalism, that competitiveness of the free market, that's partly responsible here. On the prairies we've developed over many years systems of managed marketing through marketing boards, the Wheat Board, and so on that helped to guarantee a rising standard of living for our prairie farmers. Now, I'm afraid, in this new free trade environment it's dog-eat-dog and that cutthroat capitalism, and people are suffering. That's what we'd like to see changed, and I hope you can help and cooperate in that process.

Mr. Ken Epp: Thank you.

The Chair: Mr. Cullen.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chair.

Thank you, panellists. If I have time, I have a question for Mr. Power, Mr. Barber, Dr. Prichard, and Dr. Heather Munroe-Blum. I'll go right into it.

• 2020

Mr. Power, if the federal government went into another infrastructure program, do you have a sense of how the municipalities in Ontario would stack up if they were invited by the Ontario government for their input, which we can always hope for? How do you think the priorities would stack up in Ontario municipalities in terms of social infrastructure versus physical infrastructure, and do you have a sense of how that might be different from other municipalities across Canada?

Mr. Michael Power: I think in our discussions, Mr. Cullen, with our colleagues right across the nation, we've agreed and we look upon it that the physical infrastructure is the area where the greatest input needs to happen, not only in the Ontario jurisdiction but in other provincial jurisdictions. The municipal order of government has been more and more empowered and handed off items by their respective provincial governments.

That's partly because the provincial governments have learned that municipal governments can deliver the programs more effectively and efficiently than they can. They don't like to say that all the time, but that's really what they're saying to us and what they're doing. What you would find in Ontario very clearly is a preponderance of applications dealing with the physical side of infrastructure. And that's why we've said very clearly as an association, in consultation with our membership, that the municipal order of government needs to be involved in developing the principles and the criteria under which the program will be operated, and then they need to be involved in selecting.

Premier Harris has been very clear in saying he's in favour of an infrastructure program. The federal government hasn't yet put one on the table. So perhaps between the two of us, between the municipal order of government and the federal order of government, we can put a program on the table that will convince the premier and the Government of Ontario to come forward on a tripartite program. And I think you will find the kind of program that municipalities will put forward is one you'd be very pleased to see.

Mr. Roy Cullen: The other night in Toronto, in caucus, we met with the Canadian Federation of Mayors and Municipalities and I was interested and surprised by the priority they attached to social infrastructure. So I wondered if in Ontario, where the social infrastructure seems to have been hammered, if I can use that term, a fair bit, that would be seen as a priority here.

However, if I may, I'll move on now to to Mr. Barber. I was interested in the emphasis you placed on the hardware side. We often hear about the software side. I'm hoping that we get a semiconductor plant in Canada. Investment Partnerships Canada has been working hard on that, and Burlington is probably well positioned. I wish Toronto were better positioned, but we're all neighbours and friends.

I got involved with the City of Toronto to push the city to try to attract a computer chip plant, and I think the City of Toronto itself is a little late into the game. The benefits are obvious in the sense of jobs and capital investment. What convinced me to get into the game for the City of Toronto was when I met with ITAC Ontario and SMART Toronto, and they talked about the synergies of a commodity chip plant and this huge IT sector here in Toronto. You live and breathe this, so could you elaborate on that? I took it on faith, but could you talk about the synergies there would be between a commodity chip plant and the type of thing you're doing?

Mr. Douglas Barber: The synergy I was talking about first is that we need people. We need people who are knowledgeable and deeply knowledgeable, people with post-graduate degrees in areas such as this. It's hard to get that momentum going if you actually don't have a lot of activity in the area. So there is a synergy in terms of what can happen with the universities and community colleges and so on if there's an activity of that size.

Mr. Roy Cullen: Why don't we switch then to the people side, because I'm curious. You talked clearly about the need at the PhD level, but I know in my riding companies that are involved in this type of work are also saying there's a real shortage of technicians, people with the technology.... Are you finding both, or is your real emphasis on the PhD level and the trebling of that?

Mr. Douglas Barber: No. We need all of them, but when you talk about needing all of them you need the PhDs to teach them. The point I was making is that we're not going to be able to double the pipeline. In fact, at most of the universities I know, including the University of Toronto, most of the people who train the people we're interested in are going to retire in the next ten years. They're going to have to be replaced, but we also need to double or triple the number who are there. Where are they going to come from? They have to come out of the graduate programs. So we're eating the seeds before we sow.

• 2025

Mr. Roy Cullen: That's what I'm trying to find out. You don't need PhDs presumably at the college level to teach technologists, right? Correct me if I'm wrong.

Mr. Douglas Barber: I suppose you don't, but I think there still are quite a number who do that at the community colleges too.

Mr. Roy Cullen: That's what I'm trying to get at: where is the need, where do you see the need?

Mr. Douglas Barber: The most intense need is actually in the university graduate side and often at the master's degree level. There is very intense competition globally for designers and for people who develop software, the language to work on the hardware systems.

Mr. Roy Cullen: What would a commodity chip plant do for a Toronto or Burlington in terms of the information technology sector?

Mr. Douglas Barber: A chip plant, of the kind I think we're trying to attract, would probably cost somewhere between $2 billion and $5 billion Canadian to put in place. It would probably employ something in the region of 3,000 people directly. But the multiplier effect, and it would ripple all the way into Toronto, easily, is six times to ten times that.

Mr. Roy Cullen: I am aware that the capital is enormous and of the high-paying jobs.

Dr. Prichard, I was really gratified to hear your comments. I went back to the Minister of Finance's economic statement, and one thing he mentions in there is this huge growth in the U.S. economy, in the performing U.S. economy, which is basically in a high-tech sector. Some of that growth can be derived from research that was done in the 1950s, 1960s, and 1970s. So I am a great believer, myself, in basic research, in the idea of going back and refilling the well.

We've all had this discussion many times before about how much basic research do you need and that whole continuum, but one of the things when I was involved with the Prime Minister's task force on commercializing government research, science research, was the question of the commercialization of access to capital and also intellectual property. They were seen to be stumbling blocks. At many of the universities—and I think at University of Toronto you have a similar set-up—there is a body that acts as an intermediary, taking university research science into the private sector. I wonder if you could describe how that works in the University of Toronto context, and how well it's working in the sense of access to capital and the incentives in terms of intellectual property rights. Are we doing a better job? Obviously we could do more basic research, but are we doing a good job or a better job of getting that research out into the private sector?

Dr. Robert Prichard: Thank you very much, Mr. Cullen. Dr. Munroe-Blum is responsible for the innovation foundation at the University of Toronto, which is our commercialization arm, so I'll invite her to respond to your question.

Dr. Heather Munroe-Blum: I believe we're doing in Canada a very good job. I think there are a number of experiments in play across the country, as there should be, in different policies for intellectual property management. At the University of Toronto, currently, our innovation foundation is a fully owned—by the University of Toronto—separately incorporated foundation that does not have a monopoly on the University of Toronto's intellectual property, nor are all professors at the University of Toronto required to go through the innovation foundation. We believe it is a competitive market and we want to create a lot of collaboration between our colleagues and the private sector and other partners in disseminating the product of university research.

We're doing well at that. There are very few programs, however, in the country and at the provincial level that support these commercialization activities. And we commend the ACST report that said it was very important that we both invest in the basic research that leads to this intellectual property and that we also create resources to invest in the commercialization activities. I believe it's important that we have autonomy in how we do this, that we do it well, and that there is opportunity for us to grow.

This is an area that is really a moving picture, not just for universities, but worldwide, in terms of how best to create the investment opportunities and how best to actually protect our intellectual property so that it can be commercialized, so that it can really get lift in making a difference to the communities we serve. I'd say we're on the way there. We don't do badly by way of comparison with our American counterparts. Having lacked in Canada indirect cost recovery on research, as has been mentioned, we have very little give to engage in those commercialization activities. There are a couple of new opportunities to do that well, and we're eager to take it further.

• 2030

Mr. Roy Cullen: I have one last very quick question, if I may, Mr. Chair.

Dr. Prichard, you came here to thank the government, and I appreciate that, but you also alluded to one missing link. I forget the terminology you used, but it was some sort of glue to pull together all this—the Canadian Foundation for Innovation and the research chairs. We may have blown the wad last year, and maybe this year—I don't know—but what exactly were you speaking of, and how could the federal government be of assistance?

Dr. Robert Prichard: Thank you for the question, Mr. Cullen.

The key for us to be fully in the hunt is to be internationally competitive, and the reality for Canadian universities and Canadian university-based researchers is to be competitive with the United States. That's the reality of our circumstance.

Now that we've taken each of the steps I have recorded, when all is said and done, the single largest difference between our circumstance and the circumstance of a faculty member of a university just south of the border—the State University of New York at Buffalo or the University of Michigan at Ann Arbor—is that when a faculty member at the University of Michigan receives a major research grant from Washington, they receive the direct cost of that grant, and the university receives the indirect cost of providing the laboratory, the space, the electricity, the equipment, and all that goes around it. And the rate at which that comes to the University of Michigan is about 50% again, so if the grant were $100,000 to a faculty member to do the work, it would be $50,000 to create the environment. It's called the indirect cost recovery. Some people call it the full cost or the overhead cost. “Indirect cost” is the technical term.

In Canada, when a faculty member at my university receives that grant of $100,000 to do a particular piece of research, to pay for the direct costs of materials and the like, we, the university, receive nothing from the Government of Canada in support of that faculty member. That means, as Dr. Munroe-Blum said, we must take the $50,000. The cost is the same, so to subsidize the research grant we've received from the Government of Canada, we must take the $50,000 from the money that was provided by the province to educate our students. So we're taking away—we're displacing, to use Dr. Munroe-Blum's term—the money that should be spent on our students in order to provide this environment.

The effect of that has been that the more successful a university is in attracting research—and I say proudly my university colleagues have been the most successful—the more must be taken from the students. What does that manifest itself as? Faculty-student ratios that are not adequate to providing good undergraduate education, as well as deteriorating facilities for classrooms, because the money must go to the laboratories.

So the proposal the AUCC has put forward is that we develop a Canadian version, a made-in-Canada version, of indirect cost recovery to put us on a level playing field with the major universities in the United States and their relationship to Washington. This would provide for resources to help us commercialize, to answer your earlier question, the resources to turn on the lights and pay the special electricity, and the resources to put into the graduate students and the post-doctorate fellows, which Dr. Barber was speaking of the urgent need for—the variety of things that at present are excluded.

That is the final piece of the puzzle. With CFI for infrastructure, CIHR for the direct costs of research and health sciences, an improved NSERC, an improved SSHRC, and then the indirect costs combined with this research, we've done it. At that point, the Canadian faculty members, in my view, are back on a level playing field. Canadians have demonstrated for over 75 years, since the Nobel Prize for insulin, that we can compete with the very best in the world when the playing field is level. That's the last piece of the puzzle.

The Chair: Thank you.

Ms. Guarnieri.

Ms. Albina Guarnieri (Mississauga East, Lib.): Mr. Langille, you talked earlier about cut-throat capitalism. In a Darwinian modern economy without borders, it seems to me impossible to restrain the incomes of the richest 20% or 10% through taxation. They would simply move south of the border or elsewhere.

• 2035

The only immediate way, it seems to me, to try to address the inequities you so eloquently referred to earlier might be through radical income supplements to the poorest 20%. To what extent do you think, realistically, we could supplement low incomes, even if we used the entire surplus?

Mr. David Langille: I do not want to see you use the entire surplus for that purpose. I would rather see people have the jobs and the means and the wherewithal to be able to make a living for themselves. That would protect their dignity and their self-worth and so forth. That would be the optimal solution. The government could play a role in job creation.

I noted in going through a speech by the Honourable Paul Martin:

...at the heart of globalization lies an inherent bias toward inequality. The immediate availability of virtually unlimited choice means that we are creating a world where the best will do very well but where second best will fall far, far behind.

That exacerbates the existing disparities between a few winners and everyone else. In other words, it's going to turn our society into a rigid world of haves and have-nots.

The finance minister goes through and talks about how we create a world where the gap between rich and poor is narrowed, and the role of the federal government in doing that.

Job creation is number one. Another way is by putting a better value on those people who are earning low incomes. If we raised the minimum wage, wouldn't we help those people who are just struggling by on marginal wages right now? That's a very positive step.

We can provide social supports so that we can get women in particular working when they want to work. There are many women who want to work, but they can't get adequate child care here in the city of Toronto. It's a reality we face day to day. My brother and his wife can't benefit from the new program of parental leave that's just been announced, because she's pregnant right now. You could help her. Without reforming the Employment Insurance Act itself, there are provisions right now, as I described in the brief, whereby that plan could be kicked in and some Canadians could enjoy those parental leave provisions right now.

We could also move on the national child care program right now. It was promised during the last election. I think there will be a lot of Canadians disappointed if it's not dealt with.

I hope those are some areas where there might be some motion.

Ms. Albina Guarnieri: Thank you for a very realistic answer.

Ms. Dinsdale.

Ms. Margaret Dinsdale: If we invest in the poor.... Most developed countries in the world have a social housing program. We have withdrawn from that completely, and we've seen a direct increase in the numbers of people living on the street and the hidden homeless.

It costs $3,000 a month for a family of four to be put up in a motel room on Kingston Road, and the municipality is paying most of that at the moment. How much more would it cost to help a family at risk—because we don't have rent controls any more in Ontario—and support them to stay in their homes? What would be the cost to the social housing program? John Sewell, former mayor of Toronto, said that at any given time, 20% of the people in society cannot pay market rent or are paying much too much for rent.

Look at Jane Smith and her children and how much better a life they would have. She can't help them with future education. I'm sure one or more of her children would love to go on to university, but they'd have no help from her and they would have a crippling debt.

So in the long run, by not caring for people, we are increasing a social debt, because it's known that people who are poor have more health problems—

Ms. Albina Guarnieri: [Inaudible—Editor]...dealing with real poverty and then supplementing it with training and social programs?

Ms. Margaret Dinsdale: Oh, absolutely. I grew up in a small business, a family-run business, so I'm not just wanting you to throw money at it and fix it. I'm very pleased that the deficit has been eliminated and that we're working toward debt reduction. That's great. But we also need to look at the suffering that is going on.

• 2040

In my role as a journalist, I talk to many front-line social workers. They don't have to see the figures; they see it. The system is working with less to deal with bigger problems. It makes for a much less healthy society.

We want children to grow up bright and intelligent and be able to participate in the new economy. But the way it's going now, people are hurting and it's not healthy.

Ms. Albina Guarnieri: Thank you.

I have one quick question for Dr. Prichard. You were good enough to highlight government initiatives that will draw and inspire talent to this country. Drawing from your experience of University of Toronto graduates and alumni, are taxes a direct reason for the alleged departure of graduates—the brain drain—or is it simply the overheated demand in the United States? Is it really a tax issue, or can one draw a conclusion that it's merely the nature of competition? Do you have any insights that would help us?

Dr. Robert Prichard: My own belief is that the principal concern of our most promising graduates is for opportunity to realize their dreams. They hope they can continue with the dreams that attracted them to our university. They are very mobile and will go where they believe opportunity is greatest. I think any nation that imposes unreasonable levels of taxation on its most mobile and talented citizens will lose them disproportionately. That's not Canada.

No doubt we all hope that in due course and in a measured way, our taxes will be lower than they are now, and we'll focus on lowering the taxes that are most prone to encouraging talented, mobile people to leave—personal income taxes as opposed to the other forms of taxes. I support that.

The real question for the young people we have graduating is whether they have opportunity. Do they have a Gennum Corporation to work for, where they can see a future? Do they have a university they can join to work at where they can see a future? Do they have a financial services industry they believe has a real international future? Is there a series of public institutions they can join to try to make a difference in our community?

For me, it's all about opportunity and how government can skilfully make its contribution to creating opportunity without, at the same time, imposing levels of taxation that are likely to encourage undue flight, because of disparity with other nations in the world.

When I look at it, I am personally persuaded there are major areas of investment-enhancing opportunity in Canada that should make a prime claim on the attentions of the Government of Canada, just as I spoke of it tonight. But if we listen to the Minister of Finance, and I have no reason to doubt him, it sounds like that's possible, as well as some measured multi-year tax reductions. I don't doubt that would benefit our students.

Within that, I believe selective tax reductions—focused tax measures—can make a large difference, in terms of opportunity, at relatively modest cost to the federal treasury. I remind you of our support for the full exemption from capital gain on appreciated capital properties donated to non-profit organizations. In our experience, when we measure the difference between opportunity in the United States and the opportunity for young people here, that is a systematic difference that is systematically disadvantaging Canadian public institutions. I think we can eliminate that at very modest cost.

Last Saturday night in Cambridge, Massachusetts, the Massachusetts Institute of Technology held a kick-off dinner for its fundraising campaign to raise in excess of $1 billion U.S. In the middle of dinner, a motivated a graduate of MIT spoke of having been brought to the United States as a graduate student. He had created a company. He had made a good deal of money. He sold his company to Lucent. He stood up, unannounced, and without preparation, advanced and committed $100 million of shares of appreciated capital property to help give the MIT campaign a good start.

• 2045

That has never happened in the history of Canada. In the history of Canada, no one individual has stepped forward in that way. Arguably, the Mannix family in Alberta did something comparable in a whole series of charities, but this hasn't happened in the history of Canada. It has now happened over and over in the United States. I believe the principal difference in that is the differential treatment of appreciated capital property. That is why I so strongly endorse Mr. Johnson's brief, which you'll hear tomorrow; this will create opportunity, and opportunity is what's going to keep young Canadians in Canada, in my view.

Ms. Albina Guarnieri: That's encouraging.

Mr. Langille, did you have a comment?

Mr. David Langille: We often hear the argument made that in order to remain competitive with the U.S. we have to cut taxes in order to attract highly skilled workers and reverse the brain drain. As a matter of fact, the data shows that we have a net brain gain. We lose an average of about 8,500 university graduates to the U.S. per year, while we're gaining over 32,000 from other countries.

The one field in which we do experience a loss is health. Why? Nurses. They're going south. Why? Because tax cuts to the hospital system mean we have to lay off our nurses. They're going south. That's the number one occupational category that's heading out of the country: nurses. If you want to reverse that drain, restore the funding to health care.

In fact, Ekos did a poll on re-thinking government and asked people what the federal government's priorities should be. Tax cuts placed seventh behind health care, education, child poverty, improving productivity, supporting children and families, and reducing the national debt.

I'm really worried that this clamour for tax cuts is going to permanently lower the government's revenue and reduce its capacity to provide public services, clearing the way for increased privatization of health, education, and those other services.

The Chair: Mr. Langille, I just want to follow up on this issue of the brain drain. I think there is brain drain, by the way.

Mr. David Langille: Oh, I'm not denying it, but I'm saying that it's in one sector.

The Chair: I know far too many people who work down south. They've left for a number of reasons. I also think that Dr. Prichard is correct when he says that there are centres of opportunity developing in the United States.

But the tax argument is an interesting argument because people think it's only on the income tax side that it's the issue. The reality is that those centres of opportunity may also exist because of favourable tax conditions in the United States. So tax issues, to me, are not an issue that should be relegated only to the personal side. Business and corporate taxation also needs to be factored in.

Now, I know that we make a lot of comparisons with other countries on payroll taxes and on income tax and others. But quite frankly, the reality is that most of our business is done with the United States. Ninety percent of the Canadian population lives within 100 miles of the American border. We are in a free trade area with the United States. That is the reality.

I'm not saying that we have to become “Americans”, although I have no problem with being called a North American. We have to deal with that reality; it's there and we live it every day. What is it, a billion dollars that crosses the border each and every day? That has to mean something in terms of our economic system. The likelihood is that 300 million people are probably not going to make major changes to accommodate 30 million. Logic would prevail in that conclusion, right?

So what is it that we have to do to make sure that we also maintain a competitive edge?

On the issue of brain drain, again, if one person leaves our country, it's one person too many. Do you understand? We have to raise the bar on that particular issue.

Mr. David Langille: I get your point.

The Chair: That's the point I'm making: what's the answer?

Does the brain drain exist or not? Well, I'll put that aside for a bit. Now, why are we not working towards creating as much opportunity as possible so that everybody stays here?

Mr. David Langille: But you've done a fairly good job in making Canada competitive. Pat yourself on the back. OECD figures show that Canada's corporate tax regime places in the middle of the pack of the 29 member countries.

What about the main competitor? The international accounting firm, KPMG, has done several studies that show that Canada's effective corporate tax rate, the actual rate of tax these days, is very competitive. In one such study, ranked with Britain, the U.S., Germany, France, Italy, and Sweden, Canada had the lowest corporate tax rate: 27%, compared to 40% in the United States.

The Chair: But in fairness, who's our interaction with?

• 2050

Mr. David Langille: With the U.S.

But I'm saying that our corporate tax rate is 27% compared to an effective corporate tax rate in the United States of 40%. The two other major taxes affecting location investment are payroll taxes and property taxes and are significantly lower in Canada than in the U.S. and other countries. That's from KPMG.

Dr. Robert Prichard: Sir, could I just comment briefly on the issue of young people?

The Chair: Dr. Prichard.

Dr. Robert Prichard: First, six times as many students from Canada go to higher education in the United States as come from the United States to Canada. That's a big brain drain problem, because they often fall in love, they find opportunity.... It's a very serious dilemma for us that so many young people at that formative, critical moment in their lives are having that experience of crossing the border when we're not having an equal flow of students coming the other way. There are a lot of things we could do to enhance the flow of students coming from abroad to Canada if we set our minds to it.

Number two, on our study of this, we've been working with the Prime Minister's advisory council on science and technology and trying to do a detailed study across the major universities of Canada on the issue of how many professors we are losing and how many we are gaining from abroad. It is the persistent finding that we are losing more of these highly talented people than we are gaining. Second, of those that we lose, we're losing some of our very best.

So it's both quantitative and qualitative. Quantitatively, whatever Mr. Langille says about general numbers, in the cause I know best, the production of ideas, we are losing more than we are gaining. Second, within those that we lose, represented disproportionately are some of the most able people, who we can't afford to lose. The best astrophysicist at the University of Toronto has gone. A top physicist at the University of Toronto has gone. The outstanding biostatistician at the University of Toronto has gone. One of arguably our two or three finest computer scientists has gone. These are terrible losses, each one of them.

We are blessed with many very good people and we will remain a great university, but Canada is losing some extraordinary people.

When we talk about brain drain, Mr. Chairman, I endorse your view. Losing any one of these people is one too many, and we're losing a lot from coast to coast. We must bear down on it.

Again that's why I came: principally to say thank you. This will equip us to retain some of the very best. It will equip us to go outside Canada and bring back to Canada people who have left. It will equip us to go to other nations and bring back people of extraordinary talent or bring people of extraordinary talent to Canada. Any complacency on this issue because of aggregate numbers is complacency improperly placed.

The Chair: Ms. Margaret Dinsdale.

Ms. Margaret Dinsdale: I do realize that these are very valid arguments from the gentlemen on either side of me, but also, where do these talents come from? From children. While we have these discussions, let's remember our children, as Mrs. Sandals so eloquently put it earlier.

I have a youngest son who's still in the public school system in Toronto. The class sizes are enormous. There are large pockets of immigrant children whose English is...myriad languages are spoken, not just one. The schools are under incredible pressure. The families are suffering; I've talked to many teachers. There are breakfast programs and lunch programs because children aren't being fed. We all know about brain development and learning and this sort of thing.

A lot of it is due to social housing cuts, cuts to benefits, lack of jobs, lack of well-paying jobs, etc. So while we have these discussions on brain drains, etc., let's please remember where these brains come from.

The Chair: An excellent point.

Mr. John Anderson: As somebody who has worked for many years in the area of faculty unionism, I just want to say that I think it's important to note that many of the problems we are having now are because of the underfunding of our universities. The universities are not receiving the same kind of funding that they did 20 or 30 years ago. Maybe there are some exceptions, but in general this is the case.

To go back to something that Dr. Prichard said, I think it is a much healthier aspect to go on to the idea of building up our institutions so that they offer exciting opportunities for highly educated people who want to remain here. That's not done by cutting personal income taxes. That's done by funding universities and building up the opportunities for those universities.

• 2055

Also, when we're looking at students going south of the border, I think a very easy way, a very easy remedy to that at very little cost to the government, would be that of lowering the tremendous university fees, which are rising at a great rate.

In terms of my own children now, I'm faced with the choice of probably sending them to university in Quebec, where, because they were born in Quebec, they will pay a much lower fee than the Ontario rates, which have gone out of all proportion of being really affordable for most middle-income Canadians. That is one way of keeping people here, making opportunities in terms of fees and opportunities as graduate students. I think that's a very good approach that we should be looking at, and that is something the federal government could do.

The Chair: One of the challenges I face is that I have to go to your average Canadian family, whose average disposable income in the past 10 years has declined by approximately 6%, and tell them that tax cuts are not really important. In essence, if we do give them a tax cut, what we're actually telling them is that because of this tax cut, you're going to have the same disposable income you had 10 years ago. Do you understand?

To me, the tax cut debate is also one of social justice, the sorts of things you're advocating. Because of the impact of deindexation in our system, because of bracket creep and other issues we have to deal with, a tax cut would help families restore some disposal income. If after ten years you're not moving ahead, you're not going to have very much hope for a bright future, not only for yourself but for future generations.

On the fact that the Minister of Finance has stated clearly that there was going to be a tax cut in the next budget, I'm with him 150%, because it has to be done just to restore some kind of sanity in our economic system.

Mr. John Anderson: I guess it depends on what kind of tax cut that is, because in Ontario we've seen tax cuts that are across-the-board percentage drops in income tax that have favoured people in the top 10% of the income bracket who have enough to buy a new car just with the tax cut, whereas somebody at the bottom gets $200, enough to buy a cup of coffee every second day or something like that.

Concerning taxes, I think it's important also to look at the idea that people are prepared to pay taxes as long as they see that they're getting benefits from those taxes in terms of public services. What we've seen in Canada in recent years are tremendous cutbacks to the institutions for which we're paying those taxes. We've seen cutbacks to health care, to education, and in terms of employment insurance. It's no wonder that somebody who's paying into the employment insurance fund asks, “Why should I be paying the amount of money I'm paying—because when I get unemployed it lasts a shorter time, and some or most people don't get unemployment insurance.”

The Chair: Maybe we should just say we have payroll taxes, because right now they're levied, and this is the price of doing business in Canada. We're competitive on that part. If you want to do business in Canada as an employer and employee, this is how much you pay.

Mr. John Anderson: I think if there are tax cuts, we have to look at the issue of fairness and how those tax cuts are administered. But we also have to look at how we can develop the institutions so that people are getting a fair deal for their taxes and are really seeing the benefits of those taxes in terms of government services.

The Chair: But I'm saying it would certainly clear up the problem with this account that exists—or doesn't exist, depending on who you talk to, because it goes into general revenues—and this so-called surplus in an account that really doesn't exist. Why don't we just get rid of that and say if you want to do business in Canada, there's a payroll tax you pay, just like other countries do?

Dr. Heather Monroe-Blum: Mr. Chair, I think what will drive up wages is really having a competitive economy. This is all about productivity and innovation; this is not about more regulation. Tax cuts may have a modest role to play, but what I think we really want to have is an economy that's competitive internationally. We want to have jobs that make a difference and that will allow Canada to be a real player in the global economy. That's all about investing exactly where the federal government has invested—in innovation, in knowledge creation, and in reinforcement of our talents.

• 2100

We heard about opportunity being the biggest draw to talent. I believe that's right. That's our experience. I think tax cuts are a modest piece of that. Regulation is antithetical to productivity and innovation, and it's really about being competitive globally.

The Chair: So you would favour foreign airlines doing domestic routes, right?

Voices: Oh, oh!

Dr. Heather Munroe-Blum: We could have a long conversation about that one.

The Chair: Mr. Barber.

Mr. Douglas Barber: I'm glad Heather raised that particular issue. I guess one of the things I find is that spending all your energy trying to manage costs and expenditures and so on really gets you down, but in the end, the thing that's really going to matter for Canada is whether we can create the wealth or whether we can create the value internationally that gives us a position where we enjoy a healthier country.

I think productivity is the big issue. As I said at the beginning, we've been in business for 26 years. We're a global company. We do a lot more business in Japan than we do in Canada. I travel every year to all the developed countries in the world.

When we started out our business, our dollar was at a 4¢ premium to the American dollar. Today it's at a 50% discount. That's the lowest change that's occurred in the major developed countries. All you have to do is go and pay for a hotel room or a meal in any other country in the world to know that Canada is the bargain basement of the countries. That just tells me we're not creating wealth in the same way they are.

We do have to make the investments in our young people, because that's how wealth is going to be created in the next 25 or 50 years. That's the plea I'm trying to make. They want to have the opportunity—which I think is what you're saying—to make something really happen here. Most of them have family here. They've grown up here. They're not anxious to leave. Most of them will stay. They don't have to be paid the same amount or taxed the same way. They want that opportunity.

As a country, I think we have to look at giving them the opportunity, and giving them freedom to take advantage of the opportunity, not burdening them and making them dependent people who have lost their self-respect and self-esteem. Give them the chance.

The kind of thing I was talking about earlier is one where there are opportunities. Our young people want to get into those opportunities, and we don't have the capacity to give them that chance.

At Gennum, for the last three years we have never recruited a person in those high-demand areas who comes out of places like U of T with a Bachelor's or Master's or PhD with less than four offers and at least one offer from outside the country.

I know of one person recently who had eight offers, four of which were outside Canada and four of which were in different countries, not just in the U.S. One was in the U.S. but the rest were in other countries. We have difficulty hiring anybody from any of those other countries because we can't afford to pay the hotel rooms—and we can't afford to pay their salaries, either.

Creating wealth is the issue here in Canada, then, as far as I can see. We all have to get on with it. I think productivity is the issue.

I was in hospital this summer, and I thought about this productivity thing. I began calculating how many chairs we have in waiting rooms in Canada. I think in Canada we have something more than a million people sitting in waiting rooms all the time.

Let's eliminate waiting rooms. They are a big contributor to a lack of productivity. There are a lot of things we can do that are not just hammering industry, which only employs 18% of the workforce. Everybody has to be a productive contributor. We have to give the opportunities to create wealth.

The Chair: Thank you.

Ms. Sandals.

Ms. Liz Sandals: I've been sitting here listening to this with fascination. I happened to grow up on a university campus, and spent most of my working life there, so I'm certainly not hostile to universities. But it seems to me we've spent a great deal of focus on less than 1% of the population, which would be the population of people who go on to do PhDs.

• 2105

While it's absolutely essential that we have that opportunity to develop our leadership and invest in computer science—and I actually teach computer science, so they're bang on with what they're saying about post-graduate opportunities in computer science—I think we need to remember and put into focus that in order for these workplaces to be productive, you don't need just the 1% leadership, you need a workforce that is highly educated. You are not going to have a generally highly educated workforce unless you back up a few steps and look at the early childhood development and education of all the children.

Certainly I agree with much of what has been said here, but we need to remember the more general educational and early childhood development issues.

Thank you.

The Chair: Thank you. Also, we need to keep in mind that all the goals, as you say, are not mutually exclusive. I think we can all achieve those things.

Dr. Robert Prichard: I have a very brief comment.

We have a very serious problem in Canada, which is that 18% of our high school students don't complete high school. That's a huge potential liability to Canada over the next 40 years, because as you know, the number of jobs that have been created for people with less than high school education in Canada over the last decade is a very negative number. There's been job shrinkage in those areas. If we can work with our public school systems to get that number down, it will pay dividends for a generation of Canadians.

What I'm speaking of, I hope, is the importance of opportunity. That isn't in any sense inconsistent with also bearing down on finding out why it is that 18% of male students drop out and don't complete high school, and 10% of female students. The national average is 14%, male and female, but it's 18% of young males. If we could bear down on that issue with our colleagues in the school system, we'd be doing very well.

At the university we're very satisfied with the job that's being done in the public school system. I'm a champion of the public school system. I don't associate myself with those who say that the students of today aren't as well prepared as those of my time, or times before mine. I find the students better prepared today than when I was coming to university.

I am very concerned about this 18% of young males who aren't coming, because they're going to be, for the next 45 years, facing extraordinarily difficult circumstances. I think anything we can do to keep them in school, get them through school, or get them back to school will make a big difference to our competitiveness, our productivity, and our capacity to grow well.

The Chair: Mr. Szabo.

Mr. Paul Szabo (Mississauga South, Lib.): The dropouts you refer to are Canada's poor in waiting.

This is a great group, and I bet we could talk for hours. We can't, but let me, just from having listened to it, suggest to you that to some extent we are somewhat in denial of important facts in different areas. It's because it suits our purpose.

The Golden report said 42% of Toronto's homeless don't come from Toronto. The urban magnet problem is serious, and some communities aren't taking care of their own. We have to deal with that. Golden did not include a chart in her report, which I think would have been so helpful to so many people. If you look through it, you'll find that of the homeless in Toronto, 35% are mentally ill; 28% are youth alienated from their families, of which 70% have experienced physical or sexual abuse; 18% are aboriginals off reserve; 10% are abused women; and 9% are a potpourri.

If you consider who those homeless really are, we're not talking as much about economic homelessness as social homelessness. These are people who have families, but they have no one who really loves them. It's really a problem.

Dr. Prichard, you said six Canadians go to the States, compared to one coming up to Canada. Actually, when you think about it, on a per capita basis, that's excellent for Canada. They have ten times more schools. They have ten times more opportunities. They also have scholarship programs we can't possibly compete with. I think that probably translates into saying our situation is a little better than you may have described it. You may want to think about my offbeat logic.

• 2110

Somehow we seem to be in denial about people making a lot of money. You know, only 4% of Canadians make more than $75,000 a year, based on 1997 statistics from Revenue Canada. But they also pay 38% of all income taxes and 42% of all charitable giving. They do contribute an awful lot, and it's not just for them. Those people don't live in isolation. The denial is that for every one of those who's successful, they happen to be our so-called best and brightest. They're the ones who have the ideas, are creating the jobs, and there's a ripple effect from those people.

I don't think we should ever compare and put down people who make lots of money in Canada, because good things happen from that.

The report from social justice compares what happened between 1973 and 1996. Isn't this awful, it said; now there's 314 times more money made in the top percentile versus the lowest percentile. There is total denial of the fact that between 1973 and 1996 the divorce rate in Canada went from 14% to 40%. The number of common-law relationships increased to one million families in Canada. Their breakdown rate is 50% higher than that of married couples. The number of people who separate, who don't follow through to divorce, has skyrocketed. Family breakdown is a very significant factor in terms of the social problems we have touched on.

In the McCain-Mustard report, there's a chart that shows the risk areas of children and the amount of money we spend. The lowest amount of money we spend is in the early years. We spend lots more money in junior kindergarten, senior kindergarten, etc. Yet all of the research studies say the first three years are the important ones, particularly the first year because of the neural development issues.

One of the principal recommendations in the McCain-Mustard report was enriched preschool for four-year-olds and five-year-olds. That's billions of dollars. I'm sorry, but the research does not support the conclusions they reached. How can we argue on child poverty or something like that, and then make recommendations that actually have nothing to do with dealing with child poverty?

Twelve percent of families in Canada are lone-parent families, and they account for 54% of all children living in poverty. We are in denial if we don't talk about family breakdown and social breakdown. Then ask yourselves whether or not it is our responsibility to deal with problems after we've got them, or whether there should be some very sober thinking about how we mitigate against the problems occurring in the first instance.

I hate to raise so much stuff with you, because I know you've got lots of stuff. But I want you to know that I believe family breakdown, or the erosion of the Canadian family, is a very significant element that has been ignored in much of the dialogue we have had in research and even on some of these panels.

Dr. Robert Prichard: I'd just like to respond very narrowly on the one point, Mr. Szabo, that you directed to me, regarding whether it was good news or bad news that six times as many Canadians go to the United States for university as come from the United States to Canada. It's very bad news.

If it were based on population, there would be ten times as many Americans coming to Canada as there would be Canadians going to the United States. As it is, we have six times as many Canadians going to the United States as there are Americans coming to Canada for university. It is a very substantial trade deficit in students. More importantly, it becomes a major trade deficit in human talent from Canada, of very talented young people.

Why do they do it? They do it for the exceptional opportunity that's being offered, because of public institutions and private institutions. There are remarkable opportunities that are available to our students.

Let me give you a personal example. I graduated from high school in 1967. Three members of the graduating class from my high school left to go to university in the United States. In the graduating class of 1999—which I know about because my son was in the class, 32 years later—50% of the students applied to leave Canada to go to the United States, to the United Kingdom and France. To go from three students in the class to 50% of the class applying—I don't yet know the closing number on how many went—is a radical statistic on students seeking opportunity outside of Canada.

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We will lose some of those students. They will not come back because they will fall in love, have personal relationships—opportunities will come to them. It isn't that they don't love their country; it is just that their lives take different courses. We must find ways to keep more of those Canadians here. We must find ways to attract many more talented young people to Canada to experience our post-secondary institutions, become Canadians, make a contribution, and enrich our lives here.

The Chair: Ms. Dinsdale, followed by Mr. Langille.

Ms. Margaret Dinsdale: I know you are very concerned, Mr. Szabo, about families, and so you should be, but perhaps you are being just a tad simplistic. We also have to look at issues that more women are leaving battering husbands. That is a factor, perhaps. We also have to look at the fact that many industry jobs are gone, due to factors such as globalization. As we all know, financial stress puts a great burden on a family.

I'm not sure what your point is about families, but I would like to go back to children. In 1995, when the government cut the health care and social services budget so severely and rapidly, it sent a clear signal to many young Canadians that it was tough and hopeless. We're developing quite a few young teenagers who feel it's just hopeless and too hard. They may not have the intellectual capacity to get BAs and MAs. They just want jobs. They just want to work to support their families—that sort of thing.

I think what the government really needs to do is kind of an intangible thing—more so than dollars. It needs to let young people know they are valued, no matter what socio-economic background they come from.

The Chair: You get the last word tonight.

Mr. David Langille: Thank you. I just can't help but respond very briefly to this business about the ongoing debate over brain drain and academic....

I teach at York University, and we've managed to attract some of the best and brightest teachers from around the world. I think if you want to improve the quality of teaching, the best thing you can do is help lower those tuition levels and reduce class sizes. It is not just a matter of paying higher wages. We don't expect salaries over $100,000 when we teach political science.

As for the matter of family values, I'm very happy to report that on November 30 in the evening we have organized a research workshop on how to develop more progressive family policies here in Canada. We've attracted four of the best people from Canadian Policy Research Networks Inc. and from our other noted institutions here in Canada to address these very problems, because we recognize there is a problem.

I think it is a failure, sort of, here in Canada. We've allowed the whole debate on family values to be taken over by the far right. They've sort of determined the direction of family policy—or they've tried to. It is time we reasserted a more progressive family policy that will address some of those problems you raised so eloquently.

Thank you very much.

The Chair: Thank you very much, on behalf of the committee. You could probably tell this was a very interesting panel—we stayed overtime. We covered a wide spectrum of issues. It just goes to prove the sort of challenge we face as a committee to try to balance and do some tradeoffs as we make recommendations to the Minister of Finance. There's no question that you've added great value to the debate, and we thank you.

The meeting is adjourned.