FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 9, 1999

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[English]

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

This is our first session of the morning. We have the pleasure to have with us representatives from the following organizations: the National Association of Women and the Law; the Toronto Disaster Relief Committee; the Committee on Monetary and Economic Reform; the Economic Community Starting Centre: Job Creation Inc.; the National Action Committee on the Status of Women; and the Ontario Coalition of Senior Citizens' Organizations.

You've all been here before, I gather. You have approximately five minutes each to make your presentations. Thereafter, we will engage in a question and answer session.

We will begin with Kim Brooks from the National Association of Women and the Law. Welcome.

Ms. Kim Brooks (Member, Fiscal Policies Working Group, National Association of Women and the Law): Good morning. I'm pleased to be here this morning on behalf of the National Association of Women and the Law.

I'm not sure if our brief has been distributed, but this year we chose not to provide a full brief to the committee. That was a difficult decision. On one hand, we wanted to ensure that women's equality concerns were presented before the committee, but on the other hand, our experience with the consultative process has been that the concerns raised by women's equality-seeking groups have not been taken fully into account in the budget-making process, despite the commitment by the Liberal government to implement gender-based analysis of all public policies, including public policies in the fiscal arena.

Instead of the kind of consultative process currently in place, NAWL proposes a consultative process with the Minister of Finance and his officials to have direct discussions with women's equality advocates with expertise in economic policy issues. I understand that this kind of process has been implemented with significant success by the ministry of justice.

In addition, I think women's groups and the federal government would greatly benefit from the opportunity for women's equality-seeking groups to work together to formulate collective recommendations for government, rather than having each particular group present their concerns.

Because we haven't provided a full brief, I've also provided copies of the full briefs we have provided over the last year. I've left copies of last year's pre-budget brief written in August 1998, a brief to the subcommittee on tax fairness for Canadian families written in May 1999, and a response to the subcommittee's report.

Again, although we have decided not to present on the full range of issues, I want to highlight two issues of particular concern for NAWL.

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First, NAWL supports the idea of a children's budget. Child poverty in Canada and the poverty of single mothers in Canada must be eliminated. Inadequate child care, parental leave, and other programs needed to support mothers—who also work for pay—the lack of adequate transition housing, and legal aid exacerbate the situation of children and women living in poverty in Canada.

In order to eliminate, or at least reduce, child poverty and the poverty of women living with low incomes, NAWL strongly urges the committee to create a national early years education and care program. This program would ideally make universal, non-profit, high-quality services available to all parents of preschool children, regardless of the labour force status of those families.

In addition to an early years education and care program, NAWL supports enhancements to Canada's child tax benefit. We also support the extension of employment insurance benefits for maternity and parental leaves, as proposed.

A second area of concern involves recent calls for the implementation of tax cuts. NAWL strongly urges the committee to consider carefully the value of tax cuts, given that the fiscal deficit has left a massive social deficit in its wake. Instead, we urge the committee to recommend the reconstruction of Canada's social programs, addressing particularly high levels of poverty and homelessness currently experienced by Canadians, before providing tax relief to high-income Canadians.

If the committee determines it will provide tax relief, NAWL suggests continuing increasing the basic personal credit and restoring full indexing to the dollar value of credits as a method of providing tax relief in a manner that will assist all Canadians equally.

Thank you.

The Chair: Thank you.

We will now hear from Kira Heineck of the Toronto Disaster Relief Committee. Welcome.

Ms. Kira Heineck (Coordinator, Toronto Disaster Relief Committee): Hi. I am also pleased to be here this morning, and thank you for coming to hear our concerns.

The Toronto Disaster Relief Committee, as many of you hopefully know by now, is a group that came together about a year ago to declare homelessness a national disaster. The group consists of a broad range of different people who have worked with homelessness, either as front-line workers delivering care to homeless people, professors studying homelessness, people involved in government and media relations, community health workers, and business people and activists.

We speak for a broad community, not only in Toronto, but also across the country. Our work so far has been endorsed by over 400 organizations, including the city councils of Toronto, Ottawa-Carleton, Nepean, Vancouver, Victoria, and Peel; the Big City Mayors' Caucus of the Federation of Canadian Municipalities; the federal caucus of the National Democratic Party; the Canadian Housing and Renewal Association; and the list continues.

By endorsing the TDRC, these groups and city councils have agreed that homelessness in Canada is a national disaster. What does that mean exactly?

In the brief I've given you, there are many examples of why we think homelessness is a disaster in Canada. I won't go over them now, but I ask you to read them later at your leisure.

I want to highlight a couple of things, and the most important and pressing reason why it's important to act as if homelessness is a disaster is the deaths that occur. We're seeing about two deaths a week in Toronto, on average. People are dying in Ottawa and Halifax. We have had about 43 deaths already in Ottawa so far this year. Again, it's a difficult thing to count.

A recent study in Toronto by Dr. Steven Huang of St. Michael's Hospital shows that homeless men aged 18 to 24 have a mortality rate that is eight times higher than the general population for that age group. It's terrible to have to sit here today and say this, but we've had another death this weekend in Toronto of a young man who died outside—someone who was known to many of us who work in the Queen and Bathurst area. That's why we have come together and are such urgent activists for this.

I want to give you two quick examples of the major disaster site in Toronto. The hostel system in Toronto is completely full. This again is something that happens in disaster zones. People have nowhere to sleep, so they come to the emergency shelters, but Toronto can't handle that any more because of increasing numbers of homeless people. Our director of hostel services, John Jagt, has admitted many times now, starting in September, that they're totally full.

I've attached to your brief an article entitled “Why Open the Armouries”? It explains the mental and physical health dangers of running a hostel system that is full. However, even though this is the case, people are still desperately trying to get in. During a rainstorm in late September, one overnight emergency shelter that's set up to take 80 people had in it 160 people. People were sleeping shoulder to shoulder on concrete floors. They didn't have enough blankets for everybody. Even then, people were heard knocking on the doors, trying to get in, because it was such a terrible, cold, wet night outside. So this is what we're dealing with.

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The other thing it's really important to point out is that in Toronto, growing numbers of homeless people are families with children. Again, you'll find a report that speaks to that attached to your brief.

In Ontario—and this really speaks to the tragedy we're facing—homelessness has become a cause of death so recognized that coroners have been told in their last newsletter, the Mortem Post, to consider homelessness a factor when examining and investigating death.

That being said—and again, I would ask you to read the details in your brief—we're here to say two things today.

First of all, homelessness is about lack of housing, period. The only thing homeless people have in common is that they're unhoused. Affordable housing is the key to ending homelessness and easing the housing crisis we face in Canada.

Research in all jurisdictions, including Canada and the United States, clearly concludes that the availability of long-term, affordable rental housing is the solution for 80% of the people who are homeless or at risk of being homeless.

Homelessness in Canada is the fallout of the twin problems of affordability and supply. Build enough affordable housing and return to more equitable social assistance levels and we can house the vast majority of Canada's homeless people immediately.

You'll find in your brief a list of federal policy decisions made since 1994 that we feel are directly responsible for the homelessness disaster. Again, I won't go over them right now, but they're there.

Many will continue to speak to you on your tour across the country about the federal government's role and the role its policies have played in the current housing crisis and homelessness disaster. Yes, it is a very big problem in Toronto, but it's not isolated to Toronto, as you'll hear. It is a made-in-Canada problem, and we all will say that it demands Canada-wide solutions. The responsibility of the federal government to provide the affordable and supportive housing needed to end the homelessness disaster, not only by housing its current victims but also by preventing further people from becoming homeless, cannot be overstated.

So we're here today to make one simple recommendation on how the federal government should budget its money in the upcoming years: spend it on housing. We need you to spearhead a massive reinvestment in affordable housing programs and related initiatives, including appropriate supports and just levels of social assistance to end homelessness.

The single most important thing we can do in this regard is to implement a national housing strategy. We're the only industrialized country right now not to have one. To fund this housing strategy, we propose the 1% solution.

The 1% solution calls on all levels of government to spend an additional 1% of their existing total budgets on housing. The 1% solution is based on a calculation of the combined spending of all levels of government—federal, provincial, territorial, and municipal. If you add up the amount of money all levels of government are spending on housing, it equals about 1% of overall government spending. We're asking you to double this annually.

For the federal budget, the first commitment in implementing the 1% solution would be that you allocate an additional $2 billion to housing. This is to create new, affordable housing supply programs and related homelessness initiatives.

The homeless and underhoused in Canada do not constitute a special interest group. I think it's really important to emphasize that. We are not asking for favours or charity. Adequate and affordable housing is not a luxury. It's a basic human right that is being denied far too many people in Canada right now, and you, the federal government, have the means to change that. We urge you to take leadership, end the jurisdictional squabbling that's been a problem for many years now, and lead all levels of government to affordable housing supply in this country. Implement the 1% solution, build the necessary homes, and raise the social assistance rates to justly reflect the economic reality of poverty in this country.

The most recent figure for homeless people in Canada—and again, it's a very difficult thing to count, but this 10-year-old statistic comes from Stats Canada—is about 200,000. That's one in 153 people. I hope that's quite a shocking thing to realize. It's not because 153 of us suffer from different behavioural problems, are individual failures, are drug addicts, are disabled or insane or whatever the stereotype of homeless people may be. It's simply because there are not enough good, affordable homes for us in Canada right now.

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We ask you to take strong action and to designate massive new funding—as I said, a minimum of $2 billion a year—to the national housing strategy. Do this and you will all be—and I'm not exaggerating—heroes for generations to come.

Thank you.

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

We'll now hear from the chairman of the Committee on Monetary and Economic Reform, William Krehm. Welcome.

Mr. William Krehm (Chairman, Committee on Monetary and Economic Reform): Thank you very much, Mr. Chairman and members.

We must congratulate the Minister of Finance on his surplus, but we also should render thanks to those out of whose hide much of that surplus was taken: the homeless who have been referred to, those who, in this wealthiest of Canadian cities, are throwing up shanty towns in the Don Valley. We were led to believe these sacrifices were a necessity. If we didn't do it, the International Monetary Fund, which was already supposed to be knocking at our door, would move right through it.

Today, the IMF is having some second thoughts about the correctness of its policies, and our government has just introduced a good deed done in stealth: accrual accountancy that is capital budgeting. Let me explain that. Up to now, the Government of Canada has been using a type of accountancy that could land a private firm in jail. Let me quote from the Canada Year Book, 1988, page 22-6, to describe it:

Fixed capital assets, such as government buildings and public works, are charged to budgetary expenditures at the time of acquisition...and are shown on the statement of assets and liabilities at a nominal value of $1.00.

If you try writing off physical capital investments in a single year, the price level simply has to go up. If Imperial Oil wrote off its wells, pipelines, refineries, etc., in a single year, the price of gasoline would be through the ceiling. By mistaking the effects of this for inflation, the Bank of Canada brought in high interest rates that shrank the tax base and ravaged the government's cashflow. That tore a huge hole in the government's cash box.

In this way, flawed accountancy misled our government to slash social programs. There is thus a distinct causal connection between the government's bum accountancy and our present hospital, educational, and other crises. In that sense, the introduction of accrual accountancy, which I applaud, is a bit of a concession. It would be a more impressive concession if it were not accompanied by the surrepticiousness in which it is made. Confessional boxes are all right in their place, not in matters of public policy of such moment. It was reported only—guess where—in Conrad Black's National Post. The date, if you haven't read it, was July 20.

One would think this would be a time of lighting candles to the Lord and for trumpets to resound throughout the land. Not so. It was not even mentioned by the Globe and Mail or by the Toronto Star.

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It's a jubilee year, you know. We're reaching the....

The amazing thing in that article—it's a historical document, and all of us here, both witnesses and members of Parliament, should get a copy—which was written by Kathryn May, is that it quotes Denis Desautels, the Auditor General, as saying, most amazingly, that “the sudden appearance of $50-billion worth of assets on the balance sheet won't change Canada's financial position.” If you applied the same elementary accountancy to human capital, education, health, social security, whether in the form of direct government expenditures or grants to the provinces for such purposes, it would be considerably more than $50 billion.

From a very similar dish of surreptitious accountancy improvement introduced by the U.S. government on January 1, 1996—Mr. Clinton just wanted a statistic, he didn't want to rouse the sleeping dogs of the right—they calculated that carrying it back and including the depreciated assets right from when there was a budget—the American Civil War, I suppose—it would be $1 trillion in assets suddenly discovered. That statistic, by the way, is a factor in the boom in the States. The stock market is the main factor.

Considering that we have an economy that is roughly one-tenth of the American one, and that we must have more public infrastructures, taking one-tenth of the American figure, just on the unrecognized physical assets, physical infrastructures, we would arrive at $100 billion. If you took into consideration the human capital, even our past prime minister—I notice he is doing well, and I wish him well—used to get lyrical on how important human capital was, between slashing the expenditures for it.

I have an appendix—it did not appear in the original brief—on the statistics of the calculation and the details of the Americans sneaking in government savings. I would like to put it on record.

The Chair: Is it possible for you to table that? Also, you can start wrapping up the presentation.

Mr. William Krehm: Yes, I'll wrap it up very simply.

With all respect, Mr. Martin hasn't a clue what the actual surplus is in this country. He won't have a clue until he takes into account the assets that do not appear on the balance sheet. Until he does that, there should be a suspension of privatization. With the Parliament Buildings on the books at $1, you could sell them for $1,000, book a $999 capital gain, and, before the television cameras, apply it to reducing the deficit. There is a surplus larger than Mr. Martin says, but there is a growing deficit in information, and with that comes an appalling deficit in morality.

You politicians, who are very necessary to our society, must wonder from time to time why you are treated with such a lack of respect. The answer is—

Mr. Scott Brison (Kings—Hants, PC): We earn that lack of respect.

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Mr. William Krehm: No, no, no. With the best of intentions, anybody elected to office would find that the Mother Hubbard theorem has swung into action. The cupboard is bare, and there are always too many children.

Here is what I suggest.

The Chair: Mr. Krehm, one thing we do learn as politicians is that you also have to respect time. It's quite valuable. So if you could wrap it up, I'll give you one more minute.

Mr. William Krehm: Well, it's been 40 years since a royal commission recommended accrual accountancy. You do respect time. I am winding up this—

The Chair: I don't want to stay here for 40 years, though.

Mr. William Krehm: No, you won't. I have just four or five suggestions.

Use the surplus to repeal the GST over the same two-year period in which accrual accountancy is being phased in. That is a tax cut. I don't know why it isn't mentioned. The Liberals came to power promising to do that. It's time. There's no better way of getting the respect of the country and winning the next election than carrying out your promises.

The vastly improved balance sheet from the recognition of reasonable value to the government's physical assets should strengthen the case that always existed for the federal government doing more of its financing with the Bank of Canada and less with the commercial banks. Since the federal government is the sole shareholder of the Bank of Canada, the interest on the government bonds held by it reverts substantially to the government as dividends.

Over a five-year period, the holdings of the Bank of Canada federal bonds should be increased step by step from the approximate 5% of the funded debt to the 20%-plus level at which it stood in 1977.

The fourth is the restoration of grants to the provinces for such programs, provided they respect federal standards. The provinces have no shares in the Bank of Canada and none of the interest they pay will revert to them. It will revert to the federal government, however, and making use of that will do more to rejuvenate Confederation than 25 additional constitutional conferences.

Public housing and other infrastructure programs should be expanded. Funding should be increased for environmental conservation programs. The Bank of Canada should be utilized for financing such capital programs by provinces and municipalities. This can be done under paragraph 18(c) of the Bank of Canada Act, which authorizes the bank to buy and sell securities issued or guaranteed by Canada or any province.

That, Mr. Chairman, is the essence of it. I would like to leave with you a copy of this expanded version, largely because of the information that financial analysts have completely ignored on the job that the Americans did in recognizing public savings in 1996.

The Chair: Thank you, Mr. Krehm.

We'll hear from the Economic Community Starting Centre: Job Creation Inc., represented by Ms. Monique Bokya-Lokumo and Coordinator Mimi Mapasa. Welcome.

Ms. Monique Bokya-Lokumo (Director, Economic Community Starting Centre: Job Creation Inc.): Welcome, everybody. This is our national participation on the pre-budget consultation of the Standing Committee on Finance. We would like to thank you for inviting the agency to answer questions relating to Canadian society. Our submission is based on social infrastructure, number 3, and productivity, number 5.

Regarding the community and the economy, we ask the Standing Committee on Finance to carefully consider this unique opportunity of an early year 2000 program called neighbourhood job creation.

We are a bilingual agency. That's why we talk in French and in English

[Translation]

about a job creation program which relies directly on human resources.

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[English]

This program is on the key components of the future and a secure society. We have added six annexes to this submission, and you have all of these submissions.

Our request is for the funding of the organization and economic community activities. We give you this report concerning our organization and its experience.

The Economic Community Starting Centre: Job Creation Inc.,

[Translation]

The Economic Community Starting Centre Job Creation Inc.

[English]

is involved in neighbourhood job creation, staffing plans, and a hiring component. The economic centre and job creation: the growing economy secures businesses and helps people to get jobs and enjoy their lives. Community centres and job creation: people in the same area will be involved in industry development through job creation activities. Staffing centre and job creation: this is the first time all over the world that the job market is open to everybody. Job creation centre: this is an early year 2000 economic activity. Both employers and people are focused on the local growing economy and job development.

We have a program in this organization called “Stop! We've got the answer”, a bilingual neighbourhood direct job creation program. We created this program because we are experienced in teaching community organizations and providing industry advice.

Number one, this program provides information on North American and international job markets. Number two, it gathers people from the same area, including employers, workers, unemployed, and provides an education centre to create jobs and be of help to the local economy. Number three, it establishes an economic balance between job demand and job supply. Number four, it plans community job markets to short, medium, and long term. Number five, using specific methodology in school programs, it secures the future for our children by teaching them how to create jobs. This is the program and also the organization.

I will continue this in French. On April 15, 1999, we sent a letter to Mr. Chrétien, Mr. Paul Martin, and Mr. Pettigrew, although now that has changed.

[Translation]

Dear Sirs:

The Economic Community Starting Centre Job Creation Inc. submitted a request for funding of planned job creation activities on November 17, 1998 during the round of pre-budget consultations. Members in attendance and officials in the audience seemed to appreciate the project and the agency left a list of its community job creation activities with the Finance Committee for consideration for funding purposes. At this time, we would like to resubmit this request.

The year 2000 is fast approaching and Canadians want to take their place in a society that has a global focus on ideas and achievements is global in nature. We are in urgent need of financial assistance.

Some representations were made to government agencies during the project's early stages, but certain ill-intentioned persons highjacked our ideas for their own personal gain.

However, this will never stop us...

Therefore, we are appealing to you on a personal level...

That is we are appealing to Mr. Chrétien and today, to the Finance Committee.

We are appealing to you on a personal level to grant us funding without delay to carry out community based economic activities.

Without your assistance, this project will not come to fruition and benefit Canadians.

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We have come here today to seek an answer from the committee about the funding of our agency and of its community and economic activities. As I've just explained, at stake is the future of Canadians.

Many groups have made representations to your committee. All have asked for funding. We believe that Canadians need new ideas and new energy.

The project that we are proposing today is unique in that it gives the community some economic clout and calls upon every component of the community to create jobs and spur growth. We have already begun our efforts in this area, despite our meagre resources. We have already compiled a list of employers who are enthusiastic supporters of this project.

[English]

This is the employer's letter:

Welcome to the year 2000 neighbourhood job creation and employment community service agreement. You are invited to join a business group for community direct job creation. Together we will develop a new community job service. Built on the growing economy, the staffing plan would be our key component.

[Translation]

We have sent employers the letter that I've just read and we have asked them a series of questions.

[English]

Would you like to participate in direct job creation? Some of them said yes, we are going to create a team of employers for direct job creation and local economic development. This is one of the answers amongst the employers. Another question was, would you like to establish a balance between job demand and job supply in your business and with other employers? The answer was yes. Would you like to organize a local job market on the short, medium, and long term? He said yes, and he gave his business number and his name.

This is the new, big idea to develop the economy and jobs early in the year 2000. Thank you.

The Chair: Thank you very much, Ms. Bokya-Lokumo.

We'll now hear from the National Action Committee on the Status of Women, Joan Grant-Cummings, president. Welcome.

Ms. Joan Grant-Cummings (President, National Action Committee on the Status of Women): Thank you. We're pleased to present again.

I want to start our presentation by framing it within two things that have happened this year. Earlier on this year the government, provinces, and territories presented us with a social union framework. The underlying principle for the social union framework was that Canada's social union should reflect and give expression to the fundamental values of Canadians, which are equality, respect for diversity, fairness, individual dignity and responsibility, mutual aid, and our responsibilities for one another.

In addition to that, in Minister Martin's recent economic and fiscal update, he made the statement that fiscal responsibility is essential. But by itself, it does not constitute a road map to the future. How can we provide every Canadian with an equal opportunity to succeed?

A lot has been made about the fact that we're doing budgeting in a post-deficit era, or at least in a post-fiscal deficit era. The thrust of our presentation will be around addressing the social deficit that has grown over the last five years or so. While we may be able to say that we have blackened the books and are enjoying a surplus, certainly some Canadians are not enjoying the benefits of that blackening of the books and of the current, so-called economic boom.

I want to share with you just a few things about where women are placed in the economy. Although government, other members of Parliament, and some members of society feel that women's equality has come a long way, not all women have felt the touch of equality in their lives. In the new economy in particular this is very clear. The National Council of Welfare's latest report again says that over five million Canadians are living in poverty, and 70% of these are women, in particular single mothers and young, unattached women.

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Of course we know about child poverty. It's easier to talk about that amongst you all than it is to talk about women's poverty, because it then means you have to deal with women's issues. You find it easier to deal with children's issues.

The fact is, within the new economy, the greatest growth in jobs has been in non-standard jobs, and women occupy 75% of those non-standard jobs. This has had an impact on women's economic health. I'm sure you're all aware of the latest study that shows, for example, in that much touted category of self-employed women—women as entrepreneurs—three-quarters of us are making $15,000 as so-called self-employed people. Men in the same category are making, on the average, $25,000. We still endure a wage gap that, depending on who we are, can be as low as 50¢ for new immigrant women, and on the other side, 73¢. So that isn't a battle that has been won as yet.

The fact that women make up the majority of people in non-standard jobs—part-time, contingent, seasonal labour, this new category of self-employed—has had a direct impact not only on our income but on our access to benefits, in particular our access to the new employment insurance. Only 33% of women across the country can access unemployment insurance, and within some provinces it's worse. In Ontario it's 25%. In Regina it's 19%.

The fact that only 40% of women qualify for maternity benefits under the new employment insurance is a clear regressive step for women within the economy, and that is directly tied to the fact that women are increasingly in non-standard work. In order for us to qualify for employment insurance, the amount of hours worked with the new system cancels us out in many, many cases.

Unless we come up with some new technology or a better family policy, women are still the people who are the primary child-rearers. We're still the ones doing the elder care, caring for sick families, and taking time off from work. That impacts on our ability to access employment insurance.

So one of the things we clearly want to recommend of course is that there must be changes to the current employment insurance scheme that see at least 70% of unemployed workers being able to access this scheme.

The government needs to address the issue of women's access to maternity benefits under the new employment insurance scheme. We cannot endure a situation where a maximum of 44% of women who are on maternity leave can access these benefits. This is a scheme we pay into. Rearing children at home is not an issue of being unemployed. You are working to raise children who, later on, the economy benefits from as workers. So while we want them in our economy to work in our factories and our corporate boardrooms, we do not care about what happens to them before the age of 16 or 18.

The minister also talked about the fact that we have a contingency budget and this surplus. Women in Canada have been waiting long enough for a national child care program. We have been provided with the social union framework. As far as NAC is concerned, as well as most women's groups we know about and child care advocates, this social union framework has to be put to some use.

So what we are recommending is that we have a new social program for the new millennium, and that new social program is a national early childhood development strategy, including a child care program.

The Liberals rode in on a tide of pink in 1993 with this promise. With the downloading, child care has got worse at the municipal level, because at each step of the downloading, less money is put towards the social economy. Child care is one of the issues that still has not been solved in terms of women being able to access the job market. Also, for women who stay at home, it is an important feature in child development.

We feel the rhetoric around children and caring for children has to stop, and there can only be action. One of the clearest and most concrete actions is finally for Canada to stop being a laggard compared to our European counterparts and some of our counterparts in the south and to have this national child care program.

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Added to that, while the finance minister talks about having a contingency plan for emergencies, we do have an emergency. Poverty is an emergency in our society. It creates food insecurity. It creates homelessness. We support the 1% housing solution campaign.

Internationally, we signed onto Habitat I and II, guaranteeing every Canadian the right to housing, shelter, and food security. We are passing over the fact that on the streets of Toronto in this cold, harsh climate we have in Canada, two to three people end up dead, and we're not seeing this as an emergency. It's actually a slap in the face to Canadians who are being provided with the social union framework.

We don't have a national housing strategy or policy any more in this country. That is something that has to be addressed in this budget in the year 2000. Homelessness can't wait to be addressed any more. Neither can children or women who have children continue to wait for the government to decide on whether or not having a comprehensive family policy, including a national child care program, has to wait any more.

Also, the government has talked about increasing the levels of immigration and a few years ago came in with the latest head tax of $975, claiming this was going toward processing immigrants' administrative costs and toward servicing immigrant settlements, but at the same time you have cut immigrant settlement services. Yet your studies show how new immigrants support the economy, make the economy even more healthy in terms of goods and services.

So it's high time you abolish this regressive head tax on new immigrants and refugees in the country. If we're talking about all of us as Canadians being part of a social union framework and we're all contributing in our different ways, then new immigrants should not be made to feel they're a burden on society, when actually they are giving more to Canada in terms of what they bring and what they're doing than they're getting in supports to integrate within Canada. So we again want to reiterate what we have said for the past three years: that this head tax be abolished.

The last issue I want to reiterate is a standing item with us. This is the tenth year after the December 6 massacre. NAC was the group that campaigned and lobbied the government to have December 6 be a particular memorial around violence against women. We're coming up to the tenth anniversary, and while there's been more public education and awareness around this issue, violence is still a scourge in our society that women have to deal with.

With the housing crisis, with the crisis around child care, and with the inequities in the economy, women's situations have been exacerbated in terms of being able to flee violent homes and in terms of being able to pick up their lives after they have got out of violent situations.

We have asked over and over for the federal government to make a concrete commitment to grassroots women's equality services to deal with violence against women. Those are the programs that have been shown to assist women and to assist the country. There has been a direct link between the underfunding or de-funding of feminist grassroots services to deal with violence against women and the number of women.... For example, in Ontario 66% of women polled said they would rather stay in a violent situation than risk poverty by leaving, because there are no shelters and services in their community.

This is a very concrete way, a very concrete strategy, that we can employ, one that has been applauded by the UN. The UN itself has said we have regressed in our strategy, because we have undermined the very kinds of programs that can do this.

We reiterate that we came up with a figure five years ago. It would take $50 million invested in grassroots services across the country to deal with some of these issues, as well as the changes within the justice system. So that's what we are again saying to the finance minister.

I want to end by reminding him what he said in his November 2 economic and fiscal update:

Fiscal responsibility is essential. But by itself, it does not constitute a road map to the future.

Thank you very much.

• 0950

The Chair: Thank you very much, Ms. Grant-Cummings.

We'll now hear from the Ontario Coalition of Senior Citizens' Organizations, Vice-President Hank Goldberg. Welcome.

Mr. Hank Goldberg (Vice-President, Ontario Coalition of Senior Citizens' Organizations): On behalf of the Ontario Coalition of Senior Citizens' Organizations, I want to thank you for providing us with this opportunity to express our views.

The coalition is an organization of senior citizens. Our mission is to improve the quality of life of Ontario seniors. Our membership includes over 130 seniors organizations, and we represent around 500,000 senior citizens from across Ontario.

As seniors, we are very concerned about our country and our society, not only for ourselves but for the future of our children and our grandchildren. That is why we feel it is important for us to have input into the 2000 federal budget.

There are four areas that we feel should be taken into consideration when planning the 2000 federal budget. These are taxation, goods and services tax, health care, and housing the homeless.

First, on taxation, like the majority of Canadians, Canadian seniors are not opposed to being taxed. However, we are opposed to the system of taxation in Canada, which is regressive and overtly unfair to the majority of Canadians. Some of the greatest strains placed on public finances today include the following tax expenditures: the high retirement savings exemptions; the protected family trusts; and corporate tax exemptions. Billions of dollars have been lost to the government through these forms of expenditures. Immediate and comprehensive review of all forms of taxation and tax expenditures must be undertaken.

Canadians are angry over the inequitable and unfair taxation policy that large corporations take advantage of. At a time when the large banks are making record profits, they are being taxed less than someone who is just breaking even. A significant portion of the federal deficit can be attributed directly to the deferral and undercollection of corporate taxes.

Today the federal statutory corporate tax rate is 28%, yet few corporations pay this much tax on their net profits because they use many tax breaks and loopholes to reduce the amounts they actually pay. Every year the federal government loses millions of dollars in revenue that it could have collected from corporations.

In 1995, for example, the last year for which figures are known, there were 90,415 profitable corporations in Canada, with total profits of $18.6 billion, that paid no income tax. Thousands more corporations had their tax bills reduced through various tax breaks and loopholes. The lost revenue from these tax breaks were a major contributor to Canada's national debt. The burden of paying off that debt has fallen on ordinary working people through their taxes and eroded social programs.

Profitable corporations should be required to pay their fair share of taxes, just like average Canadian citizens. Therefore, we're asking the government not only to collect taxes from corporations but to increase the amount collected from the business community. More attention needs to be paid to large corporate taxation practices.

A review of the personal income tax system is also warranted concerning the number of tax brackets and their thresholds. Changes to the tax system enacted by the Mulroney government created profound inequalities in the tax system. The changes include a decrease in the number of tax brackets from 10 to three between 1987 and 1989, and the top marginal tax rate was decreased from 36% to 29%, while the bottom rate, at 17%, increased from 7%. For instance, someone who has a taxable income of $30,000 is paying the same tax rate as someone who makes $59,180, and someone who has an income of $60,000 is taxed at the same rate as someone who makes $200,000 or more. This is unjust. We need a progressive tax system. The system should be fair, based on a person's ability to pay.

The majority of private savings in Canada are held in the following tax shelter vehicles: RRSPs, pension plans, and life insurance plans. Regulations must be changed requiring tax sheltered savings to be invested in Canada, including both government bonds and private sector investments, and to reduce the high RRSP tax exemption level.

On the goods and services tax, according to the National Advisory Council on Aging, seniors spend more money than any other age group, usually on taxable items, to offset declines in our physical or mental state, despite claims that we spend less money than other age groups and therefore are less affected by sales tax. However, we are less able to afford these purchases due to increases in taxes, such as the GST. Large proportions of seniors have low to modest incomes and rely solely on their pension cheques for monetary support. In fact, recent statistics report that one in five seniors lives in poverty with a median income of less than $16,000.

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A recent Carleton University study showed that for those people who earn less than $10,000, the GST takes 14.6% of their income, while those who earn $100,000 to $150,000 have only 7% of their income taken by the GST. By implementing a tax that falls more heavily on those who have to spend all or most of their income to support their families, the government has been able to reduce the tax burden on wealthy Canadians while making it more and more difficult for low-income Canadians, of which many of these are seniors, to make ends meet and to afford some of the necessary expenses such as food and medication.

We would like to see a reduction in the goods and services tax by at least 1%, as a starter towards eliminating it completely, in order to assist those people whose incomes make it difficult for them to buy the items they need because of the high taxes.

On health care, the implementation of the Canada health and social transfer signalled the start of the end of national standards for health care. The Canada Health Act guarantees that all Canadians have access to a health care system that is universal, comprehensive, accessible, portable, and publicly administered. The Canada Health Act ensures that we have a universal health care system that is protected from extra billing and user fees. The provisions of the Canada Health Act prevent the creation of a two-tiered system in which access to and quality of health care is based on ability to pay.

Even though the Canada Health Act exists, it has not stopped hospital and health care cutbacks by the provinces. Thousands of Canadians find that their health is suffering from these cutbacks. More money needs to be put into our health care system to offset these cutbacks and to ensure that the system will continue to work to help all Canadians.

The last issue, and not the least important, is the housing of the homeless. The 1999 federal budget did not allot any new money to social housing, despite various reports from across Canada declaring homelessness to be a national disaster.

There has been an increase in the numbers of homeless people over the last few years. The rising costs of maintaining social housing and building new units, as well as the lack of incentives from their construction, are leaving people with limited incomes with fewer and fewer housing options. Seniors are a growing part of this group, as many are retired, with their federal pensions as their only source of income, insufficient for them to meet even their basic living expenses. Money needs to be put into housing so that affordable and decent housing can be made available to the thousands of Canadians who lack homes.

OCSCO supports motion M-604, introduced by MP Libby Davies in the House of Commons, which proposes that the federal government develop a federal housing strategy that would allot 1% of its budget towards housing. We urge you to support the federal housing strategy to ensure that money in the 2000 budget is put towards resolving this national disaster.

On behalf of our organization, I'd like to thank you for listening to our views today on these issues. Developing the 2000 budget entails making decisions that affect all of us. We do believe viable options exist to address the fiscal, economic, and social crisis of this decade. What we need to do is put all these options on the table for fair and equitable consideration.

We must remember that we do have choices. These choices will ultimately determine the type of society in which we live.

Thank you.

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

We'll now proceed to the question and answer session. We'll have a seven-minute round.

Mr. Epp and Mr. Solberg, I understand you'll be splitting your time.

Mr. Monte Solberg (Medicine Hat, Ref.): Thank you, Mr. Chairman, and thank you to the presenters today.

I'll start by asking Mr. Goldberg a question. You seem to premise a lot of your argument on your assertion that wealthy Canadians aren't paying enough in taxes, and that the banks, for instance, aren't contributing enough in the form of taxes.

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But the information I have shows that, for instance, the top 1% of income earners in Canada today pay 17% of all the taxes. The top 10%, who are Canadians earning more than $50,000, pay 50% of all the taxes. Based on those numbers, which come from Revenue Canada, I'm wondering how you can suggest that somehow those people aren't paying their fair share.

Mr. Hank Goldberg: Our reasoning is that the people who are least able to pay are still paying the majority of taxes. We think that large corporations get tremendous tax breaks.

Mr. Monte Solberg: Well, first of all—

Mr. Hank Goldberg: We know that some individuals pay their taxes, but a lot of them don't pay the taxes they would normally pay without a lot of the breaks they get, based on what their earnings are based on. If you have your earnings based on stocks, on dividends, and that kind of thing, you only pay a smaller portion of that dollar. A buck is not a buck.

Mr. Monte Solberg: But I've just laid out some facts for you. Income taxes take into account capital gain.

I think it's important that we argue facts here. You've made assertions, but you haven't backed them up with evidence. I'm telling you that the top 1% of income earners in Canada pay 17% of all the taxes, and the top 10%, who are people who earn more than $50,000—which isn't a lot of money by today's standards, I would argue—pay 50%.

You just said the majority of lower-income Canadians pay a majority of the taxes. You just finished saying that a minute ago.

Mr. Hank Goldberg: Yes.

Mr. Monte Solberg: Now, how can you say that without any evidence and without laying out any facts? You've just brought forward an assertion.

Mr. Hank Goldberg: I didn't bring the evidence with us, but the surveys, the information we have, indicate that they don't pay their fair share of taxes.

Mr. Monte Solberg: What is “fair share”, though?

Mr. Hank Goldberg: Well, I guess with all the tax breaks that someone gets, and it depends on the kind of earnings you make...a buck is not a buck. If I earned a $1 for working, I'd pay my tax on the dollar I earned. If I get it through dividends, I don't pay a buck for a buck; I pay a smaller portion of that money as taxes. It's not part of the taxable income.

Mr. Monte Solberg: But according to the numbers, again—

Mr. Hank Goldberg: I realize the numbers. The thing is, you can say the top 1% are paying 17%, but maybe they should be paying 20% or 30%, based on a buck is a buck.

Mr. Monte Solberg: So if people who are on the low end of the income scale...and I'll grant you people on the low end of the income scale do pay too much in taxes. I agree with that. But we are talking about a situation where we have a surplus, so why not lower taxes for all Canadians? What's wrong with that? Wouldn't that help Canadians of all stripes by creating more activity in the economy?

Mr. Hank Goldberg: Our position is that middle-income and low-income earners should be getting the tax breaks, not the people who are earning $100,000, $200,000, and $300,000. They are doing quite well as it is.

Mr. Monte Solberg: I just want to quickly take up—and then I'll pass this to my colleague—your assertion that the banks aren't paying their fair share of taxes. You realize that banks are the most highly taxed companies in Canada. In the financial services sector, 56% of all their pre-tax profits go towards taxes. Do you realize that?

Mr. Hank Goldberg: What I've heard is that they get reductions in their taxes. When they appeal their tax rates, they seem to come out paying less, especially here in Toronto, where we've noticed that they pay less in their realty taxes because they've had them reduced. We're looking at loopholes that allow them to not pay the kind of buck for a buck that everybody else has to pay.

Mr. Monte Solberg: You realize, too, that they employ about 270,000 people, and that people who make profits from the banks are just about everybody, probably, in this room. Anybody who has a mutual fund, an RRSP or whatever, benefits from that, including pension fund members, many of whom belong to small unions and are not making a lot of money. They benefit by those profits. You realize that—seniors in particular.

Mr. Hank Goldberg: Well, I don't know. As for the seniors I've talked to, not too many of them have money invested in stocks and mutual funds.

Mr. Monte Solberg: That surprises me.

Mr. Hank Goldberg: When one in five are living in poverty or below the poverty line, that doesn't surprise me.

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Mr. Monte Solberg: In other words, 80% aren't living in poverty, by your own numbers.

Mr. Hank Goldberg: We haven't broken it down. Some of them may not be living in poverty, but they're at that level where they're on the verge of that.

The Chair: I just want you to know that the first questioner got 80% of the time.

Mr. Epp.

Mr. Ken Epp (Elk Island, Ref.): The top 10% pay 80% of the taxes.

Thank you, Mr. Chairman.

Thank you all for your presentations. I found them very interesting. I've written a number of notes. I don't have time to talk to all of you, but I want to speak briefly with Ms. Heineck with respect to homelessness.

You gave a very good presentation. I particularly appreciated the fact that, as I understand from you, you are working with these people directly.

I'd like you to answer just one question for me. In your estimate of all of the people who tonight in Toronto will not have a place to sleep, of all of those people, can you give us a bit of a breakdown as to the reasons for that? Why are these people homeless? I don't know if you can do that.

Ms. Kira Heineck: Are you asking why they're sleeping outside or why they are homeless to begin with?

Mr. Ken Epp: Why are they homeless? What proportion of them are youngsters who have run away from home? What proportion of them are mentally ill? What proportion of them are disassociated from their families for other reasons, etc.?

Ms. Kira Heineck: Different statistics exist for doing that kind of breakdown, but again, it's very difficult to collect accurate numbers. The Golden report, which your government actually did fund, has a lot of those numbers. It's actually a pretty good description of the homeless disaster.

But I would argue that it's not necessarily the right way to conceptualize why they're there, because the only difference, really, between the people we see on the streets suffering from problems and those we don't see who are suffering from the same problems is that the people we see don't have a home.

There are many people who have family troubles, drug addictions, or mental health problems and who are still housed and cared for, in varying degrees, of course, of support. They are not on the street because of the simple fact that they have a home. As for the people we see in the parks, on street corners, and on the grates tonight and tomorrow night, really the only reason they're there is that they don't have shelter and they don't have an adequate home.

Mr. Ken Epp: Okay. What I'm trying to get at is the root cause of it. I guess we don't have time, because my time is almost up.

I simply want to ask one question. If you were the king, but of course we don't have a king—

Ms. Kira Heineck: Or queen.

Mr. Ken Epp: —in Canada. The queen...if you were the supreme ruler, the prime minister, let's say, and you could solve this, what would you do?

Ms. Kira Heineck: I would build homes. I would start tomorrow to build affordable housing. In Ontario in 1995, about 17,000 units of non-profit and co-op housing were cancelled with one signature from Premier Harris. I would bring those back on line. Some of those foundations were already started. We could build enough housing in the next year to house 80% of the people out there.

I would implement a national housing strategy that brought all the levels of government together but was flexible enough to allow local solutions for different populations. We can go back to your first question here. Certain percentages of people do need special support for their physical and mental disabilities. I would integrate that with the national leadership, though, so that the supply would be adequate across the entire country.

Mr. Ken Epp: My time is up. Thank you very much.

The Chair: Thank you, Mr. Epp.

We will go to Mr. Szabo, then Ms. Guarnieri, then Mr. Graham, and then we'll go to Mr. Brison, and we'll do that in 20 minutes.

Mr. Paul Szabo (Mississauga South, Lib.): Thank you to all.

One of the questions I have is one you may want to give your opinions on with regard to homelessness and the need for affordable housing. In our existing social housing structure, there is a rule that says you can't put low-income people together all by themselves. You have to integrate them with people who pay market rent. In fact, 60% of people in social housing pay market rent and 40% have rent geared to income or rent supplement arrangements, and that's so we don't stigmatize or whatever. It's an interesting model, but I'm wondering whether or not having a home is worth the risk of someone knowing you are in dire straits. Why do we have some of our social housing being occupied by people who don't need it or can afford to have a market rent elsewhere?

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Ms. Kira Heineck: I think your comments and questions bring up a variety of responses. First of all, we're not just talking about a homeless disaster but also a very real and large housing crisis. There are very many people who are paying what we might consider market rent in those social housing and co-op units, yet still are paying a rent that is lower than the private rental market sector. It keeps them in a safe place in terms of their risk of homelessness if those units weren't available. I think the national housing strategy should implement more of those affordable housing units at a market level and also those at much under market level for those people in poverty and in welfare.

As for your assertion that you don't think it's worth it to let people know, to assume the stigma of being in social housing, I would say 99% of people sleeping on sidewalks don't give a damn what people think about them if they have a warm, safe place to sleep.

Mr. Paul Szabo: I have one last question. The Golden report identifies that about 42% of the homeless in Toronto did not come from Toronto; it was the urban magnet situation. That says to me a bunch of things, one of which is that some communities aren't caring for their own. It's also the Field of Dreams; if you build it they will come. It seems that we built it and, boy, did they come.

Is there anybody who has a strategy to deal with the urban magnet problem that Toronto has?

Ms. Kira Heineck: Again, I think the national housing strategy that we propose addresses those questions. Also, I would say that as Toronto is the economic centre of the country, you will always attract more people than other centres, and some of those people aren't going to be able to compete and will end up needing support services here, of course. But a national housing strategy would allow for places like Barrie and Peterborough and North Bay—again, I'm more familiar with Ontario data—to build the affordable housing required in those cities, which have vacancy rates...and where the gap between the rents and what poor people can afford is higher than even Toronto. So if you balance those things out in those communities with enough affordable housing, fewer people will come to the centre.

Another important reason, though, is it speaks to the national problems of social assistance levels, the equity of them, and other poverty issues, and the gap between rich and poor that needs to be addressed in general as well.

The Chair: Thank you, Mr. Szabo.

Ms. Guarnieri.

Ms. Albina Guarnieri (Mississauga East, Lib.): Thank you, Mr. Chair.

My question is for Ms. Joan Grant-Cummings. In your brief you set out the laudable goals that disadvantaged members of Canadian society should participate in sharing the country's resources. I think there isn't a person in the room who would disagree with that maxim. However, in your brief you oppose tax cuts, you certainly oppose any change to the 5% high-income surtax, and at the same time you call for tax fairness and for programs that assist single-income households. You've stated in your remarks that the rhetoric has to stop and you expressed a deep concern for women at home.

A middle-income tax cut would seem to address your concern for fairness as it would lower the tax gap between single- and double-wage-earner families with the same household income. It would also, I'd argue, recognize the unpaid work that women do by not disadvantaging the income of families where the woman chooses to work at home. Why wouldn't your organization support such a positive change for women in this country?

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Ms. Joan Grant-Cummings: Which positive change?

Ms. Albina Guarnieri: A middle-income tax cut would certainly advantage women who work at home or choose to work at home. Why would you oppose that?

Ms. Joan Grant-Cummings: We have never said we oppose that.

Ms. Albina Guarnieri: I misread your brief then.

Ms. Joan Grant-Cummings: We have always maintained that women have a right to stay at home and raise their children and women have a right to go to work while they're parents. What we do oppose is the creation of deserving and undeserving categories of mothers.

For example, a single mother who's on social assistance is treated like a welfare bum while a middle-income mother who decides to stay at home and raise her children...she and the single mother who's on social assistance raising her children are valued differently within our society. So if we're going to talk about tax breaks, we have to deal with that inequity of how we see these two different mothers, because we do not see them as both valued mothers in our society raising children.

We have the national child tax benefit, for example, that we're applauding as a major strategy to deal with child poverty, but women on social assistance do not have access to that, and some groups of people who have access to it endure a clawback because they have access to it. Again, we're setting up these categories of who is a deserving and an undeserving mother or poor family or poor working family.

It's that kind of unfairness that makes us, within the women's movement, very distrustful when government talks about giving wonderful working mothers at home a break versus the low-income mother, because the way in which it is done is not from a perspective of equity.

We have said in the past that, yes, modest, low-income people in our community could probably endure a tax cut, because we agree with Hank Goldberg that they're paying more in our society. That is not an issue for us. But if we're going to come up with a tax system that deals with the issue of family policy, then all of us must have benefit from that tax system. And we haven't heard of one as yet that treats the inequities between these two categories of mother.

Ms. Albina Guarnieri: Some might argue that your brief really gives us a lot of reasons to not only resist tax cuts but actually to raise taxes substantially. You're spending list includes national day care, pharmacare, home care, increase in the child tax benefit, social housing, elimination of the head tax for immigration, and more grants for advocacy groups.

Have you placed a price tag on this agenda? What would it cost the average, typical Canadian household if your wish list were met?

Ms. Joan Grant-Cummings: It is not a wish list; it's a strategy. When we're talking about equality, we're talking about different strategies of how equality can be achieved in our society. And when we're talking about the achievement of equality we're talking about people's equal access to health care, access to child care, access to homes and food security, etc. We believe governments' first responsibility is to ensure that all of us have access to those social programs and public services that facilitate our participation in Canadian society.

As far as I am concerned, in terms of what is in this document, it's the only way we could possibly have a social union framework. Unless all of us have access to those social services and public services when we need them, some of us are going to be left out of it. That's why we have the homeless crisis. That's why we have a child care problem. That is why we have unfairness in our tax system.

We don't see these things as just expensive wish list items. We see them as affirmative structures in our society to advance the equality and the participation of all Canadians.

We took moneys out of the UI system in order to reduce the deficit and what did it do? It made unemployed workers become invisible and expendable in our society. We didn't have a national housing strategy, so we now have almost 300,000 homeless people. In fact, what we're doing now is costing us more.

We're saying that these things would cost us less in the long run, and we cannot continue to orchestrate a surplus based on the undermining of whole groups of people within our society. We can't just keep on saying we have this wonderful surplus and we're doing well when it has been done based on disadvantaging core members of our society. That's what we're saying.

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Ms. Albina Guarnieri: I don't think anyone would disagree with the laudable goals you are setting out. But you really haven't sat down and put a price tag to all the items you've mentioned. And in your brief—

Ms. Joan Grant-Cummings: We support the alternative federal budget, and that is the process that works for women's groups in terms of itemizing how these items can be afforded. I think the alternative federal budget is very, very clear. Minister Martin is very aware of it, and that's the financial strategy we support to deal with all the items you have raised.

Ms. Albina Guarnieri: Well, the only comment I would make is that in your brief you caution us against mouthing platitudes, and I took your advice to heart. I think that as much as we support all these laudable goals, it has to be coupled with fiscal sanity at the end of the day.

Ms. Joan Grant-Cummings: That's what it is. It is with fiscal sanity. Our fiscal sanity includes ensuring that people in Canada do not go homeless, do not go without food security, and have access to health care.

The Chair: Thank you, Ms. Guarnieri.

We'll hear now from Mr. Graham.

Mr. Bill Graham (Toronto Centre—Rosedale, Lib.): Thank you very much, Mr. Chairman.

I have three questions for three different people. I'm going to put all three, and then they can perhaps wrap them up in one.

The first would be to Ms. Brooks, from the women's law institute. This is a process question. You started out by saying you're disappointed with this process and therefore would like to go straight to the minister. Are you not concerned that by doing that you'll lose the ability of influencing members of Parliament, and by ignoring them, create a system that is going to be top-down driven, rather than allowing this process, which in fact brings in the opposition members, us, and others who are not in the ministry?

One of the important things about this process—and I don't normally sit on this committee, but I know it from my own committee—is that the whole object is to bring people into contact with members of Parliament and to refresh ideas. It seems to me your suggestion is slightly anti-democratic and rather top-down driven. I just want to leave that with you. Maybe you have a comment on it.

My second question would be to anybody on the panel as to.... I'm getting reports in my riding about the fact that the child tax benefit, which provides benefits for many women, is now being taken away by the provincial government because they tax it back. I would be interested to know whether you could speak about the consequences of that on women, and what your view about that situation is. That would be two questions to you.

This question is to Mr. Krehm. Mr. Krehm, of course you're a constituent of mine, a very prominent member of the riding, so I'm very pleased to see you here. You're very well known for your monetary views. Normally, I don't sit on this committee. I was sorry you had to encourage Mr. Brison and Mr. Solberg by saying Mr. Martin doesn't have a clue, but we'll leave that aside for the moment.

But let me ask you—

Mr. William Krehm: [Editor's Note: Inaudible]...have a clue.

Mr. Bill Graham: Well, that's what I was worried about. But my question to you is prefaced by this. I very much appreciate your comments about the accounting process of the federal government. I don't know about members of this committee, but my experience is that they're totally inaccessible, totally impenetrable, and totally not understandable. And that's when it's good.

Anything that could make them more in accordance with normal accounting principles would be helpful. But it concerned me a little that your statement seemed to suggest that we could use revising capital values as a way of spending money. I mean, obviously there's a difference between cashflow of the government and its capital assets.

I'm going to ask one more question, and then I think we'll go to you one after another. Is that correct, Mr. Chairman?

[Translation]

My final question is for Ms. Bokya-Lokumo. If I understand correctly, you're a Francophone from Africa.

Ms. Monique Bokya-Lokumo: Yes, that's correct.

Mr. Bill Graham: Toronto is currently home to a large number of Francophones of African descent. I was wondering if your organization recognizes that the needs of this community are unique. Are there other communities in Toronto with different needs that could stand to benefit from your economic proposal?

Ms. Monique Bokya-Lokumo: I'd like to answer that question, Mr. Chairman.

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As you know, my background is in the field of community organization. I'm familiar with community needs. When it comes to job creation, the community knows what people need and takes care of its own members. What does the word "community" stand for? You talked about the African community, but with globalization, communities are no longer clearly defined. Tomorrow there will no longer be Africans, Chinese, French Canadians or English Canadians. Our responses must be geared to the society of tomorrow.

Of course we need to address the needs of Africans, but their needs are the same as those of all Canadians, whether white, black or aboriginal. As human beings, our needs are the same. Whether a person is of African or some other descent, that person still needs to work. The community—not Ottawa or Mike Harris, but the community—must be able to care for its own.

When it comes to creating jobs, it doesn't matter to us if an employer is Chinese or African. One person who agreed to come on board is of Chinese extraction, while another hails from England. It makes no difference to us. We provide assistance equally to members of the African, Chinese and all other communities, because our concern is for the well-being of all individuals.

As I was saying, the community must care for its own and create job opportunities for its members. Canada is a multicultural, tremendously wealthy country. The time has come to put this wealth to good use. We must not say that an African should eat and live like the people of Africa. His needs are the same as yours or mine or anyone else's, for that matter. These individuals will have to contend with the North American reality of the future.

Tomorrow, it will matter little whether a person is an African, a black person or an aboriginal. All human beings need work, shelter and the other necessities of life. Each community is different and must join forces with other communities to address issues such as employment, housing and so forth.

I live in Scarborough and people in my community do not have a great deal of money. We are planning to get together and bring in an employer from North York to give us some advice and to help further our growth as a community.

We are working toward a united community in future, not toward separate communities for the poor and the rich. That is our agency's goal. I am speaking to you in my capacity of community organizer.

The community does not distinguish between different groups, but rather gives everyone an opportunity to live as human beings.

[English]

The Chair: Thank you very much.

Who else was going to comment? Mr. Krehm and Ms. Brooks.

Mr. William Krehm: I think we have things a little topsy-turvy here. If you buy a house and you take out a mortgage, you calculate your net worth by putting the depreciated value of the house you bought as an asset and the mortgage as a liability. If you forgot about the house and included only the mortgage, that wouldn't make sense. You'd be bankrupt. Actually, certain interests were favoured by forgetting about the house in federal politics, because that is when the tax system and so much else, the distribution of the national income.... The abnormality is not that we are rediscovering the assets we paid for, but that we forgot them in the first instance. It hearkens back to a time when the government was no more than jails, Parliament, police and, well, very few roads and bridges. But if we forgot about the roads and bridges, as we have, and had only the debt to build them, it's an enormity; otherwise the government wouldn't be changing it.

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There may be other factors there, but I don't want to take the time that inspires them.

I spent a few days in Britain last week and learned that a memo was circulating through the Bank of England to introduce capital budgeting in England. So it's in the air for a good reason and perhaps not so good a reason.

The Chair: Thank you.

Ms. Brooks.

Ms. Kim Brooks: I want to respond briefly to your consultation question. Part of our concern is with the seriousness of the process, and I appreciate the chance to speak to a diverse group of people. Preparing something to bring to the committee takes an enormous amount of work for all the organizations that are here, and we all do it in our free time. We take time away from our jobs to come here to speak with you. We hope our ideas are taken seriously by the committee.

It's very hard to sum up in five minutes the kind of work we've been doing and to respond to one question from the committee that is a concern of mine but may or may not be something that is the focus of your group, but I appreciate the chance to do that.

I note, for example, in the economic and fiscal update that the government spent a long period of time consulting with private economists about how to calculate the surplus. In determining how we might spend that surplus and how we might rectify our social deficit, I wish we would take the consultation process with groups like ours that spend our free time doing that kind of work as seriously as that calculation was taken.

The Chair: Thank you, Ms. Brooks. It's a point well taken.

You probably know this, but I would like to let you know that I request briefs from organizations in the summer because that gives our researchers and members of Parliament in this committee an opportunity to read the briefs. So actually, before you even show up we know more or less what you're going to say, and that is the only reason we say that five minutes should give you a sense of giving us a summary.

Of course, you also know that over 400 groups participate in our hearings. That's not including the thousands of people who participate at the grassroots level with members of Parliament, who hold town hall meetings throughout our country.

So I want to give you a sense that the inputs are not just what you see today, but first of all, they are national in scope, and secondly, all the members of Parliament who wish to participate may participate.

Having said that, I simply would like to thank you very much for your input, and you can rest assured that your words are noted and reflected upon.

We're going to suspend for approximately five minutes to set up the next group.

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The Chair: I'd like to call the meeting to order and welcome everyone here this morning for our second session of pre-budget consultations.

We have representatives from the Association of Canadian Publishers and the Council for Business and the Arts in Canada. We also have some individual representations: the Friends of Canadian Broadcasting, the American Federation of Musicians of the United States and Canada, and the Writers' Union of Canada.

We will begin with the Association of Canadian Publishers, the president, Michael Harrison and council member, Diane Davy. Welcome.

Mr. Michael Harrison (President, Association of Canadian Publishers): Thank you.

I'm Michael Harrison, president of the Association of Canadian Publishers. I'm also vice-president of Broadview Press, which is an academic publisher of social science and humanities titles for universities. With me is Diane Davy, who's also on council. She's also publisher at Greey de Pencier Books/Owl Books, and past president of the Canadian Magazine Publishers Association.

The Association of Canadian Publishers is the organization that represents Canadian-owned houses, largely English language. We have about 145 members. They're of all sizes, from very small to very large, from McClelland & Stewart and Stoddart Publishing. We are in every region of the country, including the Yukon and Quebec, so we have a wide representation of membership. We really publish for Canadians right across the country; to Canadians right across the country; and, thanks to our export business, to a very rapidly increasing number of readers of Canadian authors and Canadian books outside this country.

Canadian publishing has had some major achievements. Canadian authors have won most of the major awards, certainly in the English language—the Booker Prize, the Prix Goncourt, and the Orange Prize. Of course, we have our own prizes, which have been feted over the last couple of weeks in Ottawa—the Giller Prize and the Governor General's Awards.

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Of all books purchased in Canada, 30% are Canadian authored. This contrasts with about 5% 30 years ago. So there's been a phenomenal growth in Canadians' awareness of their own authors and in Canadian authors being out there.

These authors are now internationally recognized, but in many cases the international recognition is the icing on the cake. There are many more authors who cater to small niches—to text book publishing, to poetry, to a world that will have more particular relevance to Canada than to the international plane. But the fact is that we do it with the best of them.

The industry right now is definitely undergoing some interesting changes. The biggest difficulty Canadian publishers face is something we call the margin gap. There has been free trade in book publishing for many years, and of course we support that. Most books sold in Canada come from other countries; certainly, from an English language standpoint, from the United States and Britain. I've mentioned 30% is the Canadian share.

Because of that, prices in this country are effectively set south of the border. They're set in the United States and obviously translated to the Canadian dollar. Yet a Canadian publisher has a much smaller market, in general, to cater to.

I recently visited a printing house that caters to both American and Canadian publishing houses. The average print run for their American customers was something like 22,000 copies, whereas their Canadian customers were only ordering 3,600 copies. So you can get a very quick sense that the economy of scale that publishers enjoy in Canada isn't anything like what our friends to the south enjoy. That is really the fundamental problem. It's just very hard to make an adequate margin that allows you to publish more authors, to grow, and to increasingly compete.

Look at the world we have to compete with. There's incredible concentration that's going on. Bertelsmann recently bought up Random House and Doubleday and merged those two companies in Canada. That one combined company is now larger in trade sales than the top five Canadian-owned companies. I'm talking about McClelland & Stewart, Stoddart Publishing, and houses like that. You can imagine the economic clout they have to attract the top authors—the people who actually make money and support these businesses.

On the domestic side, we've also seen enormous concentration on the retail level. Chapters is selling an awful lot of books, but the fact is they now represent up to 60% of many of our members' businesses. As anybody who reads the book press knows, Chapters, through its wholesale operation, Pegasus, is demanding a much larger discount from publishers on the books sold to the operation. Houses that are already existing on a very slim margin are finding that extra 4% or 5% or more required is enough to put them into negative territory.

On top of this, we all know about the electronic environment that exists on the Internet. Publishers often survive in Canada by having agencies buy books from the U.K. or the United States and selling them into Canada. Yet there's very little to stop Canadians from buying books on Amazon, which means the books are often supplied by the parent source in the United States. They can buy around, effectively.

The Department of Canadian Heritage has worked very closely with the association to develop a three-point plan in the last few years. The first point has been restoration of funding. This is going back to program review, where publishers took major cuts in their funding from government. That funding has now thankfully been restored.

The department has created a federal loan program, largely of benefit to smaller publishing houses that traditionally have had a difficult time finding a line of credit from a bank. This program is now in place and our members are taking advantage of it. That also has been useful.

Moving ahead, we've been trying to grapple with the ongoing and widely recognized and reported undercapitalization problem. Because their margins are so slim, it is very difficult to attract new investment into these companies. As a sideline feature, a lot of these companies are owned by owner-managers. Some of this crowd are increasingly greying, and some are facing the prospect of having to retire with no obvious way of selling their businesses and finding a way to make a living in their retirement.

To cover both of these things, our publishing industry has come up with a plan we call EPIC, which stands for equity publisher investment credit.

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We've been looking for a tax break for people who invest in Canadian-owned companies. We haven't determined the amounts. It's been suggested that it would cost something like $50 million over five years—so $10 million a year.

The advantage is it would bring in new investors with new money, which we think would rejuvenate as well as recapitalize our companies. In many ways, it would offset the disincentives that are sometimes created by direct grant programs. It would focus the publisher's attention on acting like a responsible business, which they have to do to meet investors' demands.

What we're asking for today is not mentioned in the upcoming budget. We are still working on this plan with the department. They're looking at a study that is now underway, and we hope to be reporting very soon. We are looking for this community to do something that has been very effective in the past, that is, to support the idea of a tax credit for the industry in the same way you supported restoration of funding and a loan program in the past. In this sense, we think it's vital that we work with this committee.

Moving beyond, this past year's battle over the magazine legislation has woken us up. We realize that we function in a global world, and in order to have room for our government to support its vital cultural industries, there needs to be an international mechanism that allows—and recognizes—sovereign governments to support their own industries.

The Department of Canadian Heritage has been instrumental in promoting the plan to get a cultural instrument worked into the World Trade Organization. There are now a number of broad-based coalitions that are working toward this. We are working closely with all these groups and support their efforts.

I want to finish by saying that the throne speech has recently and very pleasantly equated health, education, and culture as three broad and main goals of this government. We applaud this. We look to the future from this committee, and other committees, to help us get an international cultural instrument for trade, and we look forward to a recommendation on the tax equity.

Thank you for your time.

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

We'll now hear from the Council for Business and the Arts in Canada, Ms. Sarah Iley, president and chief executive officer, and Hon. Hal Jackman, deputy chair. Welcome.

Ms. Sarah J.E. Iley (President and Chief Executive Officer, Council for Business and the Arts in Canada): Thank you very much, Mr. Chairman. I'm here to speak on behalf of the Council for Business and the Arts in Canada. My deputy chairman, Hal Jackman, will add a few words toward the end of the presentation.

The council itself has been in existence for 25 years. It is a private sector coalition of businesses that support the arts through their own donations and sponsorship programs. We have been involved in the process of budget-making in the past, served on the Canada Council Task Force on tax reform, and are very appreciative of the fact that the Standing Committee on Finance has listened in the past to our requests for some tax incentives for charitable giving that we thought were very important. We are therefore hopeful that you will be as receptive to our suggestions today.

When we look at the federal budget for culture, despite the words in the throne speech—I echo Michael's applause for the words that equate health, education, and culture and the importance of them—the reality is that the federal budget for culture, in total, is 1.7% of the total federal budget. When you then get down to the not-for-profit performing arts and art galleries and museums across this country, they receive in total 4% of that 1.7%. It is a very small percentage of federal funds.

Yet those organizations are in many ways the research and development end of the arts. That's where the experimental work gets made and where actors and artists are trained. It's the whole range of participation in the arts that is available to Canadians right across this country through the not-for-profit charitable performing arts organizations, art galleries, and museums.

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The recommendation of the Council for Business and the Arts has always been to increase private sector support of the arts, to increase the level of participation of private individuals and corporations in support of their arts organizations right across the country. We feel that to date we've been fairly successful.

In terms of the performing arts—and we know this by virtue of the fact that we survey performing arts organizations, galleries, and museums every year—the reality is that 22% of the budgets of performing arts organizations now comes from the private sector. That is balanced by about 27% from the public sector.

It's our view that there's a lot more room for growth from the private sector because, as the national survey on giving and volunteering points out, only 3% of Canadians actually make donations to culture. We would like to expand that.

We have tried many different ways over the years to broaden the base of support. We've tried education. We've tried recognition; we have a number of recognition programs. But we were intrigued when looking at the report entitled Working Together, a Government of Canada/Voluntary Sector Joint Initiative, which looks at a variety of different mechanisms for supporting the charitable sector.

There is, of course, tax assistance. We'll speak a little about that. There is contributing. There is core funding.

But it's our view that to really look for sustainable increases in support of the arts, what really would work is a matching fund program, which would serve as an incentive to bring people into supporting arts organizations, to bring in people and businesses that have not been involved before. It has certainly been the experience in Ontario, through the Ontario arts endowment program, that matching funds serve as a tremendous incentive.

I'm just going to use an example as to why this is very important. I was in Prince George, British Columbia, this weekend. There's absolutely no question that the two main businesses there, Canfor and Northwood, are extremely supportive of the brand-new art gallery that is going in, of the new museum that is being expanded, and of the new theatre. I put the emphasis on “new” because I think it's important to realize that with all of the emphasis on new technologies and new ways of enjoying culture, the reality is that people still like to enjoy live performances and view exhibits in museums.

The reality is that those two major employers have been very supportive of the arts, but they are finding it extremely difficult to bring new people into supporting the arts. That's why we are recommending a matching fund program, which is outlined in some detail in the submission. We've been working with the Department of Canadian Heritage on this. They have looked at this as one mechanism. We would really encourage the Standing Committee on Finance to do the same.

We are also endorsing three other tax assistance measures. Don Johnson will be speaking to one: the complete elimination of the capital gains tax on gifts of appreciated property.

We also think the bias against private foundations should be eliminated. There has been a bias in terms of the gifting arrangement for gifts that have appreciated. Public securities have favoured public foundations and public charities. We think that bias should be eliminated.

We also think there should be an extension of the capital gains incentive to not only gifts of stock but gifts of stock options.

There are copies of this submission for each of you to read.

I wanted to ask Mr. Jackman to just say a few words about how the matching has worked in Ontario.

Hon. H.N.R. Jackman (Deputy Chair, Council for Business and the Arts in Canada): Thank you, Mr. Chairman.

I had the privilege, along with Don Johnson and a few others, of appearing before this committee about three years ago, when we were lobbying for more favourable tax treatment on gifts of appreciated property. After our presentation, this committee made a report. You pointed out in the report—these are not my figures but the figures from the House of Commons report—that charitable giving on a per capita basis relative to incomes in Canada was about one-third of what it was in the United States. Corporate giving was less than half of what it was in the United States. Your report, Chairman, went on to say that if Canadians gave as much relative to our incomes as is given in the United States, that would be a total of $6 billion more a year to Canadian charities.

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In Canada we pride ourselves on being a kind, gentle, and generous nation. That may be true for the government programs we support, but it is not true if you look at private philanthropy. So we have come to the conclusion that the thrust of government policy must be to encourage private sector giving, and that is why we like the idea, as Sarah just mentioned, that government funds will flow to match what the private sector does.

I also happen to be chairman of the Ontario Arts Council. The provincial government set up a program whereby $25 million of Ontario government money would match private sector funds for endowment purposes in the performing arts. After a year of operation of that program, endowments totalling $25 million have been set up in the performing arts. To put that figure in perspective, the Ontario government, through the Ontario Arts Council, only gives about $12 million a year to performing arts organizations. So that one gesture of the Ontario government of setting up an endowment fund that will match what the private sector contributes has put another $25 million on top. Three times as much money is going to the arts. This is from the Harris government, which is perceived as not being favourable to the arts. The fact of the matter is that because of this matching program, the funding has gone up.

Whatever you do—and I support what the book publishers say—should reward what Canadians themselves do. I think that's the trend in other countries, and it has been very successful in Ontario. I suggest you follow that in your deliberations.

Thank you, Chairman.

The Chair: Thank you very much, and thank you, Ms. Iley.

Now we'll hear from Mr. Donald Johnson. Welcome.

Mr. Donald K. Johnson (Individual Presentation): Thank you very much, Mr. Chairman. I'm here today as a volunteer. Between Anne Golden and myself, we are involved in each of the major areas of the charitable sector. Anne Golden is president of the United Way and obviously can speak for the social services sector, and I serve on the boards of not-for-profit organizations in health care, education, medical research, and the arts.

Three years ago, as Mr. Jackman was saying, we appeared in front of this committee recommending an exemption for gifts of appreciated capital property from capital gains taxes. This committee supported that recommendation in its report to the finance minister. I believe the recommendation of this committee was crucial to the finance minister's decision in the February 1997 budget to cut the capital gains tax in half on gifts of appreciated securities.

So we would very much appreciate the support of this committee going forward with this recommendation. Today we are recommending that the government eliminate the remaining capital gains tax on gifts of appreciated securities. The reason we are recommending this is because the evidence to date shows that the new measure is working and meeting the tests the government set for this proposal three years ago.

There are significant incremental gifts of appreciated securities being given to charities in each area of the charitable sector. That includes the United Way, universities, hospitals, arts organizations, and research institutes.

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The U.S. experience, where they have had a complete capital gains exemption for decades, shows how important that exemption is to building much needed endowment funds. One example: the University of Toronto has the largest endowment fund in Canada, $1 billion Canadian. Harvard University, which is one-fifth the size of the University of Toronto, has an endowment fund of $16 billion. Ninety percent of the donations to form these endowments come from gifts of appreciated capital property, primarily securities.

There has been a lot of discussion in the press about the brain drain for corporations in Canada competing with global competitors. There is a brain drain in the not-for-profit sector. Our universities, hospitals, and research institutes are competing for the best faculty, the best students, the best researchers, and the best medical professionals, and the endowments these U.S. organizations have built up over the years are an important factor in how they attract the best faculty, the best students, the best researchers, and the best medical professionals. So going the rest of the way and eliminating the rest of the capital gains tax will certainly help our institutions compete on a level playing field with the United States.

The key question is, what are the costs and benefits? The cost of going the rest of the way to finish the job is minuscule. The cost—and this is based on an analysis by tax policy professionals who used to be with the federal government—would be less than 1% of the federal budget surplus that is forecast for this year. So the cost is minuscule.

What are the benefits? The benefits over time will mean that hundreds of millions of dollars of incremental donations will be given to charities in every area of the charitable sector, including education, health care, social services, culture, and research. We believe now is the time to finish the job, and we strongly recommend that the government eliminate the remaining capital gains tax on gifts of listed securities.

Thank you very much, and I'll now turn the remainder of the time over to Anne Golden.

Ms. Anne Golden (Individual Presentation): Thank you very much. It's a pleasure to be here.

I'm here really to underscore one critical point, and that is that extending this legislation—finishing the job, as Don puts it—would help the little charities and the smaller donors, not just the big ones. I know it's a concern among some that the benefits of this legislation go to the larger hospitals and universities. I'm here to tell you that is not the case.

Since you changed the law over two years ago, we at the United Way have received $5 million in gifts from 129 different donors. They range from wealthy people to university professors. Just this year someone gave us a gift that went from $2,000 to $6,500 through shares. This is happening, plus we're working on a number of gifts that prove the point.

In terms of the United Way, all of the new money that's raised each year goes to our funding priorities. The bulk of our 200 charities are small and sophisticated, and they can't afford fundraisers. Increasingly, in terms of changes in public policies, we are their lifeline.

We have been able to sustain the health of the social services infrastructure in Toronto. It's not an easy job because of changes in public policy at both the federal and provincial levels, but we're doing it through expanded fundraising. The money raised goes to help kids under six who are at risk; it fights hunger and homelessness; it goes to help people who are abused, largely women, of course; and it goes to help refugees and immigrants settle. Those are the priorities, and that's who you'd be helping with this legislation. We're asking you to untie our hands and give us access to these funds.

By way of conclusion, I would just say that your government and our provincial government are increasingly relying on the voluntary sector to do the job. There's a lot of rhetoric out there about the health of the voluntary sector being key to the health of this country, our cities, and our provinces. If we believe that, let's finish the job. Give us access to the money so that we can do our job. Thank you.

The Chair: Thank you very much, Ms. Golden and Mr. Johnson.

We will now go to the Friends of Canadian Broadcasting, Mr. Ian Morrison. Welcome.

Mr. Ian Morrison (Spokesperson, Friends of Canadian Broadcasting): Thanks, Mr. Chair and members of the committee.

The Friends of Canadian Broadcasting acknowledges the opportunity your committee has afforded to Canadians to contribute ideas to the pre-budget consultation process.

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Your 1999 approach is novel in seeking thematic advice, and we applaud that initiative, but we also believe that the process you have advanced is flawed because it pre-defines those topics deemed important while excluding fundamental economic and cultural issues that underlie the health of the Canadian community.

For example, the Canadian broadcasting and entertainment industries make an important economic, social, and cultural contribution to our country. At the leading edge of new technology, they're a critical part of the knowledge economy and they contribute significantly to employment, particularly among young people. All this is true in no small part because Canadians spend billions of dollars supporting those industries through tax dollars, cable subscriptions, and product costs, which support the advertising industry. Yet based on your July 1999 website news release, comments on this topic would appear to be off the agenda.

Such a turn of events could not happen in the United States Senate or House of Representatives committees because the American entertainment industry is that country's leading exporter and a strong contributor to its balance of payments. No prelude to an American federal budgetary process would bypass the entertainment industry. Recognition of the importance of the entertainment industry in Washington explains why the American government is so intent on winning access to foreign broadcasting and entertainment markets.

Very soon—I know you know this—the World Trade Organization will begin a round of talks to eliminate trade barriers. Canada's private broadcasting industrial lobby, the Canadian Association of Broadcasters, has already signalled its willingness to sell out to American interests and investors.

Meanwhile, budget restrictions to the parliamentary allocation to the CBC, in direct defiance of the Liberal Party's 1993 red book promise, to the tune of $400 million, are killing CBC radio services in local communities across the land, while increasing reliance on advertising is slowly choking CBC television's public service mandate. The combined effect of these federal policies is to throttle the ability of Canadians to share stories and experiences with each other. This increases regional and linguistic alienation throughout Canada.

Friends of Canadian Broadcasting therefore recommends that your committee include among its priorities the following recommendations.

The federal government should ask the CRTC to undertake a public consultation on how adequately to fund the nation-building work of the CBC. The government should instruct the CRTC, through its power of policy direction under the Broadcasting Act, to prevent cable monopolies from reducing their contributions on behalf of subscribers to the Canadian Television Fund. At least half the funds administered by that Canadian Television Fund should be reserved for productions aired by the CBC. The government should inform the CRTC that it is broadcasting policy to maximize the value of Canadian professional sports rights in the Canadian audio-visual system. The method of appointment of the CBC board of directors and its president should be reformed to ensure merit appointments at arm's length from the governing party and under the active scrutiny of the House of Commons heritage committee. And finally, the government should refuse to capitulate to regulated industry-led pressure to reduce the requirement for Canadian ownership in broadcasting and telecommunications.

Thanks, Mr. Chair. That's three and a half minutes.

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

We will now hear from the American Federation of Musicians of the United States and Canada, Laura Brownell and Christine Little. Welcome.

Ms. Laura Brownell (Supervisor, Symphonic Services Division, American Federation of Musicians of the United States and Canada): Thank you. I appreciate you providing me with an opportunity to speak today. My name is Laura Brownell. I'm here with Christine Little to represent the Canadian office of the American Federation of Musicians, also known as the AFM. The AFM is a professional association that represents musicians in Canada and the United States.

You have all received, and most likely have read, the September submission from the Canadian Conference of the Arts. The AFM is a member of the CCA, and we are very much in support of its recommendations, which to a large extent echo the recommendations contained in the report of the Standing Committee on Canadian Heritage, A Sense of Place—A Sense of Being.

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You are probably all asking yourselves why you need to hear the same old song again from the musicians. The value that I hope to add to this discussion is to provide illustrations from the unique perspective of the musician. I want to help you see how the lives of Canadian musicians and the people who enjoy their music will be affected by decisions made by this committee.

I'd like to start with what I hope is a fundamental premise. I think we can all agree that we want to ensure that the music we are hearing in this country includes music that is created by Canadians and that expresses the unique values and qualities of our culture.

To achieve that end, I would suggest that the following could be our joint goal: first of all, to make it possible for aspiring Canadian musicians to obtain top-quality, uniquely Canadian training; secondly, to provide programs and incentives that will place artists in Canadian performing arts institutions despite the challenge that our geography presents; and thirdly, to make it possible for Canadian musicians, as largely self-employed artists, to enjoy a secure and healthy lifestyle so that selecting and continuing in an artistic career remains a viable option.

I would like to highlight some of the key Canadian Conference of the Arts recommendations and try to explain to you how, in a concrete way, these recommendations would help achieve the goals I've outlined. I will start with measures that would support organizations that engage our musicians, and following that, I will look at measures that would support the artist directly.

First and foremost for our performing arts organizations is the issue of Canada Council funding. We thank the government for restoring that funding. In the early 1990s, when Canada Council funds were cut and the grants therefore were cut significantly, virtually every performing organization passed those grant reductions through to the musicians in the form of reduced seasons, reduced fees, or both, resulting in a severe loss of income, and in some cases threats of bankruptcy.

But also the music itself got smaller. I heard Mahler performed with six violins when there should have been 40. I saw oboes pretending to be flutes and tubas pretending to be contrabassoons so that extra musicians would not have to be engaged. I saw marvellous romantic and modern contemporary Canadian repertories being overlooked repeatedly in favour of a steady diet of Mozart and Haydn. I love Mozart and Haydn, but anything else was considered too expensive to mount.

It has taken years to recover. Yes, we are finally recovering. Let's not go to that place again, please.

Equally important in our view—and I bow to the comments of the Council for Business and the Arts—I believe strongly that we must develop programs to support collaborative efforts between government and the private sector.

One example of such an effort is the concept of the stabilization fund. I will admit that I was and still am concerned about those funds for precisely the reason identified in the CCA submission. I will also admit that major organizations such as the symphonies of Edmonton and Vancouver have prospered under stabilization programs.

We are asking the government to continue to help the DCH invest in stabilization funds, please, but make sure that you and the Department of Canadian Heritage know what you are buying with your investment. Fund criteria must ensure that asking an organization to live within its means does not preclude a commitment to excellence. Otherwise, what's the point?

Next is the issue of infrastructure. The CCA submission mentions the National Arts Centre facility as being in need of a major overhaul. Let me add another to the mix. I think we all know that Roy Thomson Hall in Toronto is a major issue in the current Toronto Symphony strike. There are many organizations across the country that would do better instantly if they had a good home in which to perform. Please support CCA recommendation 5, that the Government of Canada re-establish a capital fund for essential maintenance of Canada's cultural facilities.

We ask that support for touring be expanded. One of the greatest pleasures in my artistic life was during my years as a symphony violinist. There was nothing like presenting a concert to the people of, for example, a small northern Ontario community. They would pack the place. They would hang on every sound. They would give us a standing ovation no matter how we played, although we tried to play our best, and plied us with homebaked thank yous at the reception. Please work with the Department of Canadian Heritage to make that possible again, as well as funding for the truly world-class organizations who can and should act as our worldwide ambassadors.

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Tax incentives for charitable giving must also be extended, as other people have already so ably pointed out. Our organizations do need to become less vulnerable to changes in direct government funding, and these changes can happen at all levels, not just the federal level. Progress has been made—and we thank you—in the area of tax incentives for the large gifts. Can you help us now to tap into the tremendous potential of the small but devoted giver? Please support CCA recommendation 10 to provide incentives for modest charitable donations and to facilitate the stretch provision that would provide motivation for larger gifts.

Training and mobility assistance are critically important parts of the picture if we are to maintain a truly Canadian musical voice. We join the CCA in asking that national training schools be provided with support on a stable multi-year basis. We also ask that this type of support be extended to include organizations such as the National Youth Orchestra and the mobility assistance program. I cannot stress enough how important those two organizations and programs are to making sure we have Canadians in our Canadian orchestras. If these programs are not supported, I can guarantee you that those chairs will quickly be filled with musicians from the United States. It's just easier to go that way than this way if we don't help.

Let's turn our attention to the individual artist. There are benefits that flow from the self-employed status of most musicians, but there is also pain. For example, when the Hamilton Philharmonic Orchestra closed its doors in 1996, musicians who had enjoyed steady work for decades in some cases found themselves on the streets, with no employment insurance cheques, with nothing, not a penny, just hardship.

There was a young violinist who developed a repetitive strain injury. She could not work for 10 months. There was no worker's compensation, no disability insurance. She was totally reliant on the goodwill of the orchestra management to give her time to heal. She drained her entire savings during that 10-month period and is one of a great many musicians in our country who have suffered in similar situations. There is no safety net.

I would like to ask the Government of Canada to urgently examine issues relating to taxation and the provision of social benefits to self-employed individuals with a view to adapting current measures to better suit today's workforce and the workforce of tomorrow. It isn't just artists and musicians. Self-employment is growing in our country. It is the way things are going, and we do have to find a way to take care of all of our citizens.

There are of course other issues of fundamental importance, such as ongoing stable funding for the CBC. We are also concerned about about neighbouring rights legislation, but there isn't time to deal with all of those today.

I hope I have left you with an enhanced view of the impact that policies you create do have on musical life in Canada. I thank you for your time.

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

We'll now hear from the Writers' Union of Canada, Christopher Moore, chairperson. Welcome.

Mr. Christopher Moore (Chairperson, Writers' Union of Canada): Thank you, Mr. Chair and members of Parliament.

I speak today as a writer and also as this year's chair of the Writers' Union of Canada. The union represents 1,200 book writers from across Canada. I'm pleased to say that the brief we have presented is supported by a dozen other writers' organizations from across the country, including UNEQ, Union des écrivaines et écrivains québécois, the French language writers' organization in Quebec.

Our brief focuses on just four specific proposals. The first one is a plea for an equity change, for fairness in the tax system as it affects writers. Writers frequently work for years on a single project—particularly book writers do. They may spend several years producing a book, which then generates income effectively in a single year. As a result, writers pay higher taxes on the same income than taxpayers whose income is evenly spread out.

We have proposed income back averaging as the solution to this problem. The tax money we pay affects the creative wellspring of our culture, we believe. All of the measures that the government institutes to encourage creativity are hampered and account for little, it seems to me, if come tax time creators are forced to pay a tax premium for having chosen to devote their working lives to creation. Our recent financial study demonstrates indeed that year-to-year income fluctuations of 100% are common among writers.

Your colleagues on the heritage committee in their report of last June also urged the government to address these tax issues for writers. The government has responded that it will, and we have indeed had some further discussions with officials in the Department of Finance. I'm happy to say your committee has supported this proposal of ours for the last three years. In fact, Merilyn Simonds, my colleague, who I think has frequently appeared before you, intended to be here and was taken ill in Kingston and is not able to be here today. But as you know, we've brought this up before. I think we're beginning to talk to Finance about it. We will appreciate your continued support.

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In regard to our other proposal, the finance ministry has occasionally suggested that while this solution to our tax problem may be fair, it's complex and cumbersome, so that fairness is, in a sense, a problem of cumbersomeness. We have suggested in our brief an alternative proposal if the finance department finds income back averaging too complicated. We've taken note that in Quebec the Quebec tax regime several years ago instituted a complete deduction for income from copyright. That means that for songwriters, composers, writers, and others who are the wellsprings of creativity that the entertainment industry and the creative industry works on, if they're creating that material that drives the whole industry, the Quebec government simply doesn't tax that income any more. We think it's a proposal that has merit. We think it may well be worth adopting to the rest of Canada.

Our additional proposals essentially concern the Canada Council for the Arts. I share the remarks of some others who have spoken urging that the Canada Council for the Arts is a vitally important source of support for individual creators, writers, and other creators in the arts. We urge continued support by the Government of Canada to the Canada Council for the Arts.

Thank you very much.

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

That wraps up the presentations right now. We'll get to the interesting part now, the question and answer session. We'll begin with Mr. Solberg. It will be a 10-minute round.

Mr. Monte Solberg: Thank you very much, Mr. Chair. Thank you to all the presenters for the presentations today.

I will start simply by saying I don't think anybody in the room would deny that culture is an absolutely essential part of what makes us Canadian. I must say I'm also very encouraged to hear from so many people who are advocating tax-type changes to help them do what they want to do. I think that's very refreshing.

I want to comment first by saying that I support very strongly the idea of the elimination of capital gains taxes when it comes to making a donation to a charitable organization. I think it's a wonderful way to re-establish the connection between the income people earn and the things they believe in. I think that's unfortunately what is missing from a large part of the cultural sector today, frankly, because on the government side, or where the government kicks in and gives money to the arts, very often that connection is lost because that money is taken from people through the tax system. People have no say in it, and then it's passed on to groups that they may or may not support or projects that they may or may not support. Doing it through the tax system allows them to have that direct connection to the organizations and groups they believe in. I very much support the idea of using the tax system to do that.

I have a question for Mr. Morrison, though. Although it doesn't explicitly say in your presentation, that I can see, I take it that you're advocating a fairly large increase in spending for the CBC based on your assertion that we should eliminate advertising revenue as a way to keep the CBC going. Is that $400 million figure in there what you're advocating should be put back into the CBC in lieu of eliminating advertising revenue?

Mr. Ian Morrison: No. We're not even advocating eliminating advertising revenue, Mr. Solberg. We're advocating reducing the CBC television system's dependency on advertising revenue so that it is more free to do the kind of cultural programming that does not depend exclusively on mass audience. We noted the $400 million figure. In fact the Government of Canada has implemented your party's CBC policy, because Mr. Manning in 1993 called for that reduction in support to the CBC.

We're calling in this recommendation for the government to ask an arm's-length body—and we've identified the CRTC as qualified for this—to identify the appropriate way to finance the CBC. Most other national public broadcasters in the world: NHK, Japan; BBC, U.K.; the Deutsche Welle—I could go around the world, other than the United States—are funded through a subscription fee basis. That was in fact a recommendation of a committee chaired by Pierre Juneau a few years ago.

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We would like an objective review, not just of the amount of money that should go to the CBC but to the way it gets there, to create more stability and more assurance, because the net result of this government's policy has been to reduce the capacity of the CBC to be active in radio and television locally and regionally and to shove it into more dependency on advertising.

Mr. Monte Solberg: Remind us again why the CBC needs to have funding at all given the fact that there are so many Canadian players now in the broadcast industry, whether it's Bravo or Showcase, to appeal to some of those narrower groups you alluded to earlier. Why do we need the CBC? We have all the other networks.

Mr. Ian Morrison: Keeping in mind the necessity of being brief, I'll just give you two or three reasons.

One is that somewhat more than 80% of Canadians believe the CBC should be funded at least as well as it is now and half of them think it should be funded better. My source is a Compas poll of May 1999. Half of the supporters of your party agree with that, by the way.

Mr. Monte Solberg: Is that CBC in total? Is that radio and TV?

Mr. Ian Morrison: The whole corporation. Perhaps from that far away you can see the red on this chart.

Mr. Monte Solberg: Yes.

Mr. Ian Morrison: The network at the top is the CBC. The time span is 7 p.m. to 11 p.m., and the seven areas of the chart are the seven days of the week. What you're looking at is what is available in the Vancouver market in the month of March 1998. That is what the CBC makes available, this is what the CTV affiliate station makes available in Canadian programming during that period when people are watching, and this is what Global makes available. Canadians need Canadian choices, and they believe very strongly that this is the case.

So if the private sector were able to do that job, we would support the private sector taking over. But in every western country, other than the United States, there is a strongly funded public broadcaster. The BBC, for example, on a per capita basis gets two times the revenue from public sources that the CBC does. The figure for Germany is three times. The figure for Japan is double.

So it's not a question of no CBC. The public is on the side of a strong CBC. It's a question of taking an objective look at how to make it happen.

To an extent your party has moved in that direction. We have tracked your pronouncements on the topic and you are no longer calling for the privatization of the CBC.

Mr. Monte Solberg: Just so we're clear on this, we've always advocated that CBC radio should be maintained and that CBC television should be privatized, and that still stands—not Newsworld but the other network.

Isn't it true, though, that ratings for CBC are very near historical lows for CBC television,? And isn't that really the most important poll of all, what people will actually do?

Mr. Ian Morrison: Since the dawn of the broadcasting age, about 33% of English-Canadian viewing has been Canadian programming. That has held for decades. Of that 33% who are viewing Canadian programming, the CBC assembles a very substantial majority of it. Audiences are quite strong for American programming delivered by private broadcasters, but not for Canadian programming delivered by private broadcasters.

If we were concerned for the other official language, which the Friends of Canadian Broadcasting do not pretend to speak for, we would then say the figures are quite reversed. Viewing of Canadian programming in the French language throughout the country, particularly in the Quebec market, is extremely strong, and the leader in that Canadian programming is SRC, Société Radio-Canada.

Mr. Monte Solberg: I would expect that reflects the fact that so much French language programming in the world would probably only be available through SRC.

Mr. Ian Morrison: TVA can access it as well.

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Mr. Monte Solberg: Again to my point, though, the fact is that ratings have fallen dramatically. It seems people aren't that supportive when push comes to shove for the CBC, yet you're advocating a big injection of cash. That's ultimately what you're saying. Shouldn't there be some kind of connection between how much people are willing to watch CBC and the level of government support they get?

Mr. Ian Morrison: Since 1983 the CRTC, acting at arm's length from the government—we don't want the Prime Minister handing out broadcasting licences—has licensed approximately 60 cable-delivered specialty channels. Of those, two have been given to the CBC. That process has led to audience fragmentation, which in turn has lowered the share of all the major broadcasters. The CTV share has gone down as the share of the total, just as the CBC share has gone down.

The argument in public broadcasting circles around the world is not around audience share, which is more a matter of tracking eyeballs for advertisers, but around the availability of important programming. When you get something important, like a Quebec referendum, you will find the trust that exists in the journalistic operations of CBC radio and television is much higher than that available to private sector organizations. That, in turn, is reflected in the polls that I could provide you, if you're interested.

The Chair: You have time for a question.

Mr. Ken Epp: I have some questions I would like to direct to probably all of you. You've indicated that it would help you a lot if we could arrange the tax system in such a way that you would get recognition for charitable donations, and I think that's a move that in general I would probably support. But then you've gone further, and several of you have asked for matching grants from the government.

I would just like to ask you to give me an argument for when I'm discussing with other people who we've heard at this committee the priorities of the government with respect to how it spends the money it has taken from the taxpayers. We had some very impassioned pleas here for help for the poverty-stricken of the world and the country. We've had a lot of emphasis on homelessness and the need for the government to spend money on providing homes for people who have no homes at all, to give them some shelter. Yet here you are saying the taxpayers' money should also be used to fund generally reasonably well-off people who go out to listen to music—by the way, this is not my idea, I'm just trying to create an argument here—in fancy concert halls, and things like that. How would you argue? Give me some help here.

Ms. Sarah Iley: If I can respond to that, please, this isn't a competition. I don't think anybody would debate that there are tremendous needs in Canada for social services, but that is not to preclude the fact that there is also a need for people to do more with their healthy bodies and their educated minds than just have them. Culture is really terribly important to people, and if you need evidence of that, I'm sure you can find that in your own riding. I think the example of Prince George is a perfect one. The reality is that while it may have five hockey rinks and a lot of other recreational activities—it's a very young community; the average age is 31—the people feel the need for a symphony orchestra, because people want to go and hear live music. And we're not talking about a fancy concert hall either. We're not talking about an expensive outing. We're talking about families who go to have a variety of different kinds of experiences.

Whether they are hearing music, seeing theatre, or attending different kinds of concerts and festivals, all of these things matter to Canadians. It's evidenced by the fact that they go out in tens of millions to see these things, and they see them in communities right across the country. There's a reason we have 88 symphony orchestras, for instance, many of which are in very small communities. The fact is that there is a tremendous need in Canada to experience culture.

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When you ask why we are suggesting matching funds, we're looking at an incentive. We're looking at a five-year window, a way to bring other players into the field, because there is a sense that there has been tremendous support from a very small circle of people who have dug deeper and deeper into their own pockets because of the importance of cultural institutions. We think this should be something in which we want the behaviour of the population to recognize that the government can't provide all of these things, and that if people don't begin to get into the habit of support, these things will in fact disappear. What we're looking for—and I won't speak for you—is also a short-term incentive that will actually trigger a change in behaviour. I think the attitude is already there. It's the change in behaviour that we're looking for.

Mr. Ken Epp: Just so you understand me, I'm a musician myself. At least I was when I was younger. I just really love good music, and I always have. That's my particular preference. I'm not as much into the visual art, but I think it's particularly important for us to make sure that young people have an opportunity to be trained in and to participate in these activities.

So I'm with you in that respect, but I guess I would like to see that the actual direction in which the arts go is more driven by the patrons of the arts instead of by special interest groups who are able to wrangle government funding.

Ms. Sarah Iley: That's the exact point of matching funds. This actually plays very well into the role of the federal government here. When you look at our survey of performing arts organizations and museums and galleries across the country, it's pretty evident that there is a lot of support right across the country. Where the federal support is isn't necessarily right across the country. One of the things we would like to see in a matching fund is that federal support is actually matching the desires and needs of people in their own communities.

I'll just pick a couple of examples. If you total the funding for the National Arts Centre, it is $20 million a year. If you then total all of the federal support for performing arts organizations across Alberta and British Columbia, you get just about $20 million. That gives you some indication in terms of where the federal government is seen to be supportive of arts organizations in this country. We really need to look at the blend.

The other example would be the national museums and galleries. The four of them in Ottawa get about $128 million a year. They're very important institutions, but so are the museums and galleries across the country that get $15 million a year in museum assistance from the federal government.

We think the matching approach enables the federal government to support directly those organizations that matter tremendously to communities right from the far west coast to the far east coast and the north. We think that's a very good way to supplement and recognize the kind of support that private investors and private patrons have for the arts in this country, beyond a very Ottawa-centric level of support for a lot of the arts organizations in Ottawa.

The Chair: We have two interveners, Ms. Brownell and Ms. Davy.

Ms. Laura Brownell: Thank you.

I wanted to add that I've had an opportunity to speak with a man named Paul Judy. Are you familiar with him? He heads the Symphony Orchestra Institute, which is based in Chicago. He's a former Chicago Symphony board member. He takes a great interest in the activities in Canada, as well as those in the United States, and he has certainly offered the opinion to me about exactly what Ms. Iley is saying. We need help learning how to change our habits.

I was very interested in the figures Mr. Jackman presented in terms of the difference per capita, adjusted for income, in what our giving habits are. The reason why I juxtaposed the plea for continued direct funding with a plea to find ways to collaborate is precisely that we need to do these things in a way that is gradual and not harmful. The cuts to the Canada Council grants in the early nineties are a perfect example of what happens when you just simply grab a chunk of money away without some way of easing the transition. Tremendous pain results, and the artistic result is not what anyone wants.

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I know the mantra of the arts organizations in this country for years has been that of direct government funding. Personally, my experience has been that our organizations do become reliant on those cheques, and they become complacent. They are not in touch with their communities. Worst of all, if a cut happens, it's like they've just lost a leg. They don't have a net; they don't have the endowments; they don't have a cushion. I would welcome policies that would help us gradually change from that approach, but not all at once, please.

The Chair: Ms. Davy.

Ms. Diane Davy (Council Member, Association of Canadian Publishers): I second everything the previous two speakers said, but I also want to go back to address the issue of culture as an elitist occupation, specifically from my perspective as a children's book publisher.

You yourself said you were concerned about the young of the nation. When I was a kid in school, my textbook reflected an American reality. If there was a math problem with coins, the coins would be American. If it was a geography problem, it would have something to do with Washington and Seattle. I think one of the huge successes of the cultural initiatives and policies that have existed over the past 30 years has in fact been to allow us to develop a broad base of cultural initiatives for our young, so that our kids have a concept of themselves as Canadians.

I can now publish a book like Wow Canada!, something that gives kids a perspective of their country from their point of view. When I was a kid, I didn't have that. I didn't know an author could be somebody like me. I thought...in fact, I knew authors came from away. They came from the States, from the U.K. I had no concept that I could grow up to be an author or an illustrator. But now we have touring programs in the schools. We have other wonderful programs in the performing arts. Essentially, through a combination of private initiatives and public policy, we have generated an industry over the past 30 years that allows our young people to grow up with a perspective about themselves as Canadians.

The Chair: Thank you.

We'll now move to Ms. Bennett.

Mrs. Carolyn Bennett (St. Paul's, Lib.): My question was for Ms. Golden, but unfortunately—

The Chair: She's not here.

Mrs. Carolyn Bennett: I'm sure her colleagues will fill in.

As you know, in terms of the politics of anything that has to do with capital gains, people think we are treating rich people well again. I am impressed that there is a lot of anecdotal evidence. Do you know if the finance department knows the percentage of donations that are now in stocks and shares—appendix A is interesting—or is a centre for philanthropy...? I mean, there must be some cash reason for why people, in terms of not wanting to or not being able to pay the capital gain right now, would be happy to hand over their stocks. Do you expect a big blip in what we could anticipate in terms of the number of people taking advantage of this program if we did it?

Also, I think it would be really important that the charitable organizations really measure the good that comes from this, because it's politics. I was therefore hoping Ms. Golden would have been able to fill us in on what the impact is that has been felt on the ground in this sort of hopeful influx.

I had a question for Mr. Moore—and I think I asked him the same question last year. Being married to an independent film producer, I was wondering if he would qualify under your suggestion.

Mr. Bill Graham: Conflict of interest.

Some hon. members: Oh, oh!

Ms. Carolyn Bennett: It sometimes seems to take us four or five years to get one of his houses of cards onto the screen. Anyway, that was my....

Mr. Donald Johnson: Maybe I can respond to the first question.

The change in the capital gains tax treatment of charitable donations was announced in the February 1997 budget, so it has been in effect for almost three years now. I have spoken with the officials in the Department of Finance, but they have not yet crunched the numbers.

In terms of making a decision on eliminating the rest of the tax, I think there are two very compelling reasons. First of all, there is the anecdotal evidence. Every day I hear of new examples of significant donations of appreciated securities to charities in every area of the charitable sector. Two weeks ago Finance Minister Paul Martin participated in a press conference with Anne Golden at the United Way headquarters. That was where Ms. Golden announced that over $5 million in shares had been given to the United Way since the change took place, and I think that was from 127 different donors.

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One of the concerns people have expressed is whether the donations will be incremental and donated fairly across the charitable sector. Also, what about the smaller charities? That's a valid concern. I think Anne Golden can speak more convincingly than anyone else in the social services sector to demonstrate what has happened in the United Way of Toronto. This is one city that received $5 million, and most of those donations are incremental to what people would have given before.

In turn, the United Way basically provides financial support to 200 social and health agencies in the greater Toronto area. Those small agencies do not have the ability to raise funds on their own, so what better way for that to happen than to have the United Way deliver those donations to these very worthy organizations?

So there's a tremendous amount of anecdotal evidence to indicate that it is incremental and it is being distributed in every area of the charitable sector.

The other reason I believe the government can make that decision now rather than waiting for another two years, which is what they talked about initially, is that this is really not an experiment. The United States has proven that this capital gains exemption works.

I think an analysis of the hard data from all the tax returns for 1997, 1998, and 1999 would be interesting, but I don't think it's particularly relevant to the decision. I can give one example. Two weeks ago an individual announced a donation of $150 million worth of shares to Stanford University. If that donation had been subject to the current Canadian tax treatment, the 50% capital gains tax, that donor would have had to have paid a capital gains tax of $28 million. Clearly, the donor who gave $150 million worth of shares would not have given that amount if he had had to pay a $28 million capital gains tax when he made the gift.

In principle, taxing a donor for making a gift is wrong, so the recommendation essentially is to remove this barrier to giving. I think it comes down to, how do we compete with the organizations in the United States?

Also, I think most political parties today endorse the principle of fiscal responsibility balanced by a social conscience. A number of the organizations in the charitable sector have suffered from the necessary but unfortunate cutbacks in government support. We're not going to go back to deficit budgets. I think all parties basically are in favour of balanced budgets. So there is a limit to how much the government can provide in the way of support to these organizations. How do we find a way to get the private sector to give more? That requires a new source of donors.

I think the government has pointed out that for cash gifts, donors in Canada are treated more generously than those in the United States. The reason for that is, of course, because our tax rates are higher. We can't expect people to give more cash than they're already giving. There's a limit to their income. So we need a new source of donations. That new source consists of people who may have significant assets in the form of securities but don't necessarily have large incomes. Removal of this remaining barrier to giving will unlock further incremental sources of private sector donations.

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It doesn't cost the government a lot of money. Less than 1% of the current federal budget surplus that is forecast for this year is not a material amount of cost, but the benefits are going to be huge. I really think now is the time for that to happen.

The Chair: Mr. Cullen.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chairman, and thank you, panellists.

I have three questions, if I have time, for three different groups.

I'd like to pick up on Ms. Bennett's point and go back to Mr. Jackman's earlier point that we are realizing that governments can't do everything and that we need to encourage the voluntary sector. I support that notion in concept.

Mr. Johnson, you're vice-chairman of Nesbitt Burns. Is that correct?

Mr. Donald Johnson: That's correct.

Mr. Roy Cullen: Would you and your board agree to make an investment of this magnitude based on anecdotal evidence?

Mr. Donald Johnson: Yes, I would because this is not an experiment, and there is so much evidence of incremental donations since this change took place. You can analyse the hard data of the tax returns forever, and what's it going to show? It's going to show an increase in giving and that these incremental donations are going to every area of the charitable sector. That's the real test. In addition to that, as I mentioned, we know how it works in the United States. To make a decision you have to assess what are the costs, the benefits, and the risks of making this decision. I believe the risks are minimal because it has been clearly demonstrated by all the anecdotal evidence and the U.S. experience that it will work.

Mr. Roy Cullen: Intuitively, I think it probably makes sense. But I don't understand why the onus is on the Department of Finance to crunch the data.

I'd like to move on.

Mr. Donald Johnson: On the Department of Finance—sorry, go ahead.

Mr. Roy Cullen: I think I'll leave that point now and move on, if I may.

This is directed to Mr. Harrison and Ms. Davy. First of all, the market share for Canadian writers of 30% is, I think, incredibly good news. I find that very encouraging.

With regard to your proposal on the investment tax credit, the way it's described here is that the cost is sort of fleshed out, but you indicated you're talking with the Department of Finance, and you're asking this committee to support whatever it is you finally come up with. Is it going to change significantly from what you've proposed here? If so, how are we going to know about that before we submit our report in early December? Could you undertake to provide the committee with any further details? I think you can understand the difficulty this committee would have in supporting something without knowing the parameters.

Mr. Michael Harrison: We can certainly provide you with more information about our proposal. We were not expecting an actual recommendation for a particular plan in this upcoming budget. What we're looking for is a recommendation in principle of the concept of a tax-based program in the sense that we think it will make a big difference to the industry. But the detail of this thing is something we've proposed. We're still working with the Department of Canadian Heritage on how that actually might be spelled out. It's the principle we're hoping to move ahead with right now, looking to a future budget.

Mr. Roy Cullen: I'm not sure how this committee works in that regard, Mr. Chairman, but hopefully, if we were going to recommend anything, it would be based on some facts you presented here and any modification of your proposal that comes from your discussions with the government.

Mr. Michael Harrison: Absolutely. We can supply the committee with information now.

Mr. Roy Cullen: Okay. Thank you.

Mr. Morrison, at the risk of raising your anger level, I'd like to ask you the following question. Sometimes governing and management is about making choices with scarce resources. Maybe you've been asked this before, but I haven't asked you, and I haven't heard your answer. Are you equally friendly to CBC radio and television, or would you make a distinction?

Mr. Ian Morrison: On the English language side, 80% of Canadians watch the English television network for at least half an hour a week, and 33% of Canadians listen to CBC radio one or two hours per week. So the radio service is more of a minority concern that has a quite devoted following.

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People who know the television industry understand that, in general, people watch programs rather than channels. There are exceptions, but generally that's the case. So the brand loyalty to CBC television is less strongly felt by a much larger percentage of the population. In our judgment, both of these instruments are important in what I described as nation building and the objectives of the Broadcasting Act.

I can't assemble any anger whatsoever in responding to you, but I would just conclude by saying that when we do analyse what people think and we ask them which is more important—this is the Compas organization, our polling firm—in defending and protecting Canadian culture in the audio-visual system, CBC television or CBC radio, by a two to one margin Canadians choose CBC television.

Mr. Roy Cullen: Thank you.

Mr. Bill Graham: What about the French language side?

Mr. Ian Morrison: On the French language side, it's just the opposite in terms of loyalty. The strength of the SRC television system is very established amongst francophones, and the radio system a little bit less so. However, the audience for French language CBC radio is also in a dimension about the same as that for English radio.

Mr. Bill Graham: Thank you.

The Chair: Thank you, Mr. Graham and Mr. Morrison.

Mr. Brison.

Mr. Scott Brison: Thank you, Mr. Chair.

Thank you for your interventions. It has been an interesting morning. We've heard everything from issues of homelessness to Haydn, and so we've gone from too few homes to too much Haydn in one morning. But it has been a fascinating opportunity for us to learn directly some of the priorities of Canadians.

One of the things that has occurred over the last several years has been a reduction of the government's role, for instance, in the provision of services, some of which were seen as fairly essential services, whether it was the federal government's role in low-income housing or the provincial government's and federal government's role decreasing in a number of areas.

Commensurate to that decline in the role of the government, there has been an increase in the role of the volunteer sector. I guess that's why your proposal relative to the capital gains tax issue, in terms of contributions, makes so much sense at this time. I understand there's an approximate cost of about $50 million, potentially, with the elimination of capital gains on these gifts. Is that approximately the cost you're assessing?

Mr. Donald Johnson: Yes. An estimate was made three years ago when we made the submission for a complete exemption. The best estimate—and these are very rough figures—was that it would cost, for a complete exemption, between $20 million and $70 million a year in the initial years. So we cut that in half and said the incremental cost of going the rest of the way would be between $10 million and $35 million a year, which is substantially less than 1% of the $5 billion surplus.

Mr. H.N.R. Jackman: A $50-million loss to the government translates into many more times that to the charities, and that's the significant thing.

Don mentioned the case of Stanford. A fellow gave $125 million; he saved himself $25 million in tax. Probably the Department of National Revenue will say, well, look, we gave $25 million to that guy. But the truth is, if it weren't for the exemptions, he never would have given the money and the government never would have gotten the money. Just keep that in mind.

Thank you.

Mr. Scott Brison: Thank you.

It's important as government sees some opportunities or is setting priorities for reinvestment, for instance, even on the social side, that the volunteer sector be recognized as a potential vehicle for that reinvestment, for a couple of reasons. One is, in some cases the volunteer sector may be better at identifying needs and also may be able to address those needs more efficiently, without what can be often the impedimenta of the bureaucracy of government. So we are firmly in support of your proposal.

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I have one question further. I recognize it doesn't connect directly with your presentation, but it's on the issue of capital gains in general. We have about twice the capital gains rates in Canada as exist in the U.S., and that is having a very negative impact, for instance, on the high-tech sector, where increasingly stock options are being used as compensatory assets and vehicles.

Would you support a dramatic decrease in capital gains taxes in general, a reduction in the inclusion rate either to half its current rate or to 66%, for instance? What type of decrease would you support? The information from the U.S. and from other jurisdictions where there has been a reduction in capital gains tax shows it has not cost the treasury a lot. In fact it's been a minimal cost, because it unlocks so much capital and increases the level of economic activity.

Mr. Donald Johnson: The general area of capital gains tax is not part of our submission. However, I as an individual would strongly endorse a significant reduction in the capital gains tax. My understanding is that the capital gains tax in the United States for long-term gains over a year is 20%. So in Canada, with a zero cost base, it would be about 37.5%. I would strongly support that as a real way to help create an environment in Canada that supports entrepreneurism, new business, and hence employment.

I know an income tax cut of $100 a year for every working Canadian would cost over $1 billion a year in forgone taxes. I'm sure a dramatic reduction in the capital gains tax would be much less loss in tax revenues but would have a significant impact on creating an environment for companies to start up here and grow and create jobs. So personally I would strongly support cutting the capital gains tax in half for all gains so that we're competitive with the U.S.

Mr. Ian Morrison: Mr. Brison, you could reduce the cost of the whole issue in terms of forgone revenue by just exempting Mr. Jackman from the provision.

Mr. Scott Brison: Thank you, Mr. Morrison.

The issue of funding for the arts is always contentious in a period of restraint. A case needs to be made for the importance of the arts, even from an educational perspective. I understand, Mr. Johnson, that as a matter of fact the investment banking community is looking very favourably at those with undergraduate degrees in arts as opposed to undergraduate degrees in business, etc. But people don't pursue undergraduate educations in the arts unless they're exposed to art and to the arts.

Any civilized society has always supported and nurtured the arts. It's important that while we move in the direction of using tax policy as a vehicle for supporting art through contributions, we do not lose sight of the importance of general funding through government.

Part of it also is a censorship issue. If we eliminate too radically support for the arts or general funding for the arts, we can get into situations where we see populism being used as a vehicle to reduce the rights of the minority and in fact reduce the quality of the arts. That is an issue—

Mr. H.N.R. Jackman: You can get that with government too. The government is very subject to.... Look at The Valour and the Horror thing on the CBC. In fact the CBC had to apologize.

What we really need is a multiplicity of donors, not just one. I have nothing against the Canada Council, but we are trying to shift more of the government funding of the arts to matching private sectors so that we get a double-whammy, so that we get more.

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Mr. Scott Brison: Yes, the leveraging is there, but we also don't want to see the types of activities we've seen in New York City with Giuliani and the Brooklyn Museum of Art. I think we can have both.

Mr. Morrison, relative to funding for CBC, are you amenable to a new funding formula that involves, for instance, allowing private contributions and a system whereby the type of tax policy changes that Mr. Johnson and Mr. Jackman are advocating could benefit the CBC, through private contributors contributing directly to public broadcasting in Canada, as exists in the U.S. with the national Public Broadcasting System?

Mr. Ian Morrison: No change is required in public policy to make that happen. A gift to the crown would apply to the CBC, and the CBC could easily qualify for something equivalent to charitable status. They have not chosen, as a matter of policy, to do so.

Mr. Scott Brison: Why?

Mr. Ian Morrison: Well, I don't speak for them. They don't even like me on some occasions. I just would say it is the type of question, if I could come back to the recommendation we put before you, that somebody objective and informed ought to be looking at, and we think the agency is the CRTC.

Mr. Scott Brison: And maybe the Canadian Tax Foundation?

Mr. Ian Morrison: Oh, sure, and the Friends of Canadian Broadcasting.

Mr. Scott Brison: Okay.

Mr. Harrison, from the publisher's perspective, wouldn't the Internet represent a bit of a democratization on the distribution side that could actually benefit you people and help counter the corporate concentration on the distribution side that exists with the Chapters of the world? With the depth of distance as a determinant in the cost of telecommunications and with the increasingly pervasive nature of the Internet, wouldn't that represent a democratization of the distribution side for your members?

Mr. Michael Harrison: The Internet is an interesting phenomenon. There's no question that it's helping to sell books. We still look with interest at the fact that Amazon and Chapters are not yet making money on their Internet distribution.

What's more likely to happen is that the Internet will increase concentration. Yes, you can find one million books on Amazon or 600,000 on the Chapters site, but the emphasis is on those companies that can afford to promote the books, either in conjunction with Chapters or Amazon or in the greater public. So in a sense it's drawing more and more attention to fewer and fewer books. We're getting a wider distribution of books, yes, but the practical consequence is that it's actually further increasing concentration, both at the retail level amongst the people who own these operations, Amazon or Chapters—and Chapters of course is also a bookstore operation and now a wholesaler operation—and also with the publishers that can best afford to feed the publicity machine that goes along with those Internet providers.

The reality of actually drawing people to a site at a smaller publisher still hasn't been proven out. In other words, it's there, but how to get people to your site is the real issue.

Mr. Scott Brison: But the economies of scale that existed with traditional distribution—i.e., the physical bookstores, etc.—are less with the Internet. Intuitively, it should represent an opportunity.

Mr. Michael Harrison: We do recognize it as an opportunity, but as some people like to say, it's not a magic bullet. It's not going to solve the problems that are more widespread in the industry. It's unfolding, and we don't know what the ultimate answer is.

Mr. Scott Brison: I have one last question relative to the capital gains tax exemption for contributions. This is partially in response to Mr. Cullen's question. Has there been or could there be some comparison, numerically or quantitatively, of the leveraging impact you're describing? It has to be there. The amount of leveraging that would come out of these contributions would be far greater than what the government could achieve through direct investment. That kind of information would really be very helpful.

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It seems intuitive that it would be there. Do you have some more on that?

Mr. Donald Johnson: It's very difficult to quantify the response to that question. Mr. Jackman's comment was that Americans give on average three times as much as Canadians on a per capita basis. There are a number of reasons for that. They may be wealthier, they may be more generous, etc.

However, I personally believe—and I've had a lot of conversations with a lot of people on the subject over the last few years—that the biggest single difference is the capital gains exemption. They have no barrier to giving assets in the United States. Bill Hewlett and David Packard gave $600 million to Stanford University. The founder of CNN gave $1 billion of shares in Time Warner to the United Nations. They wouldn't have conceived of giving those assets had they been taxed on their gifts.

I can speak from personal experience. Anne Golden is not here now, but at Nesbitt Burns we pride ourselves on being significant contributors to the United Way, and our partners are expected to give at a top level. I personally in the last three years have given seven times what I previously gave to the United Way in the form of cash from a salary deduction. I now give seven times that amount in the form of shares.

It just makes common sense.

Mr. Scott Brison: Okay. As I said earlier, we are firmly in support of this, but a number of Canadians and groups have told us we have to get our tax system more closely in line with that of our trading partners, in particular the U.S. It's a uniquely Canadian way that we, as a kinder and gentler society, as Mr. Jackman mentioned earlier, start in areas of philanthropy and charitable contribution.

So perhaps the first step we can make to level the playing field in our tax system will be on the charitable contribution side. That is a uniquely Canadian way to address the complexities of tax policy.

Mr. Donald Johnson: I have one final point. This recommendation does not conflict with the other public policy proposals of tax cuts, debt reduction, or selective spending increases, because the cost is not that material in relation to the size of the budget surplus. But as a priority, it should be right at the top of the list.

Thank you very much for this opportunity to be here.

Mr. Scott Brison: Thank you.

The Chair: Thank you, Mr. Johnson.

Mr. Brison, thank you for your comments, although I think we ought to be a little bit more aggressive on the tax side. There's no question about that.

I want to thank everyone. In the past couple of days here in Toronto, there have been some very interesting interventions. We've covered a wide spectrum, from people looking for social justice to broadcasting to business groups. It's been a great exercise, and we want to thank you.

Mr. Jackman, you said Americans are more generous than Canadians. I think if you were to take a poll across the country, you'd probably find that we as Canadians think we are in fact more generous than Americans. Every time I participate in these pre-budget consultations, I think we ought to have a myth-busting exercise about our country and get all the facts on the table about a number of issues. Only then can we make really wise decisions.

I applaud the reference to the elimination of capital gains. It's an issue we will study very carefully in this committee. Regardless of what you may read in the press—that in fact the only issue we're going to deal with vis-à-vis taxation is personal income tax—that's wrong. All taxes are on the table in this committee, and we'll be looking at the taxation system in its entirety.

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It is very clear to us that in order to move this country forward, in order to have the types of programs everybody is advocating, we need to generate greater wealth. And there are certain prerequisites to the generation of wealth so that we can continue to have the kinds of social programs we have grown accustomed to.

The point I'm making is that you should look to this committee to clearly outline a generation-of-wealth agenda, with a purpose—there's no question about it—a socio-economic purpose that will speak to getting Canada ready and equipping Canada to compete at the global level. Now is the time to do it. We certainly cannot hold back any further.

Thank you very much for your input.

Mr. Donald Johnson: Thanks very much for the opportunity to be here.

The Chair: The meeting is adjourned.