FINA Committee Meeting
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STANDING COMMITTEE ON FINANCE
COMITÉ PERMANENT DES FINANCES
[Recorded by Electronic Apparatus]
Wednesday, October 31, 2001
The Chair (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I'd like to call the meeting to order and welcome everyone here this afternoon. Pursuant to Standing Order 83.1, we are, of course, partaking in pre-budget consultations.
For this session, we have the pleasure to have with us the following organizations: the Canadian Life and Health Insurance Association; the Canadian Dental Association; the Canadian Abortion Rights Action League; the Canadian Petroleum Products Institute; the Canadian Printing Industries Association; and Celeris Aerospace Canada Inc.
Many of you have previously appeared before the committee. You know you have approximately five to seven minutes to make your presentation. You also know the entire brief is, of course, reviewed by committee members. Thereafter, panellists, after you have all made your presentations, we'll engage in a question-and-answer session.
We'll begin with the Canadian Life and Health Insurance Association, and its president, Mark Daniels.
Mr. Mark R. Daniels (President, Canadian Life and Health Insurance Association): Thank you very much, Mr. Chairman.
I'd like to introduce my colleague Jim Witol, who is CLHIA's vice-president of taxation and research. We appreciate the opportunity to be here.
I guess all of us begin by noting how much the world has changed since we responded to your letter of invitation and submitted our pre-budget brief on August 10. The question that we're all struggling to answer now is how those changes will impact us across all aspects of our lives.
Strictly in a business context, Mr. Chairman, there have been a number of direct impacts on the life and health insurance industry in Canada. Overall, based on early estimates by Canadian life and health insurers, I can tell you the cost to the industry will be in the neighbourhood of $250 million, directly related to the events of September 11. This is a significant amount of money, Mr. Chairman, but in no way does it threaten the financial health of the industry. A group of senior officers working at the CLHIA is continuing to consider emerging issues and to identify areas in which the industry can work together to deal with the continuing repercussions of the events of September 11.
Despite the significant changes that the world has undergone over the past few months, and, in particular, the considerably altered outlook for the Canadian and world economies, we feel the themes of our submission remain relevant. I'd like to make a few summary points by way of an overview.
The committee previously concluded that
the level of taxation of Canadian financial
institutions is damaging to their competitive position
and is increasing costs to Canadian
users of financial services.
It is urgent that the government introduce a
method of taxing financial institutions that is fair,
appropriate and reflects the real economic activity.
Pursuant to these conclusions, the Minister of Finance's February 2000 budget reconfirmed the government's commitment to review financial institutions' capital taxes. Indeed, as part of this review process, the government announced on December 21, 2000, that the temporary capital tax surcharge on deposit-taking institutions would not be extended beyond its scheduled expiry date of October 31, 2000. However, Mr. Chairman, no similar announcement has yet been made with respect to the temporary additional part VI capital tax, which applies only to life and health insurance companies, and which had been scheduled to expire on December 31, 2000.
Another capital tax concern of ours is the way in which the large corporations tax, or LCT, applies to the industry. First of all, although the part I surtax is creditable against the LCT, under normal circumstances the surtax is not nearly high enough to fully offset the LCT. The LCT in fact becomes a permanent capital tax burden on life insurers. Secondly, the LCT includes real estate in its base for financial institutions. This means capital invested in real estate gets taxed twice, thus providing a significant disincentive to invest in real estate.
In this context, Mr. Chairman, to foster more competition and to avoid penalizing solvency in the financial services industry, we would encourage the committee to again recommend that the government promptly conclude its review of financial institution capital taxes by making a commitment to eliminate all capital taxes on financial institutions. As a first step, the government should not extend the temporary, special, additional part VI tax on life insurers past December 31, 2000, and should take steps to address our concerns on the LCT.
Switching gears to post-secondary education, Mr. Chairman, clearly it is an essential component in meeting the objective of providing Canadians with equal opportunities to succeed. Indeed, post-secondary education is an area in which this committee has made important recommendations to enhance access, provide tax support, and encourage education-related savings. In line with the committee's recommendations, the federal government has taken a number of steps in this critically important area, including creating the Canada Education Savings Grant, in connection with the Registered Education Savings Plan, or RESP.
A step that would further improve access to post-secondary education would be to broaden the range of financial institutions permitted to offer RESPs directly. The current trust structure precludes life insurers from offering RESPs. The industry therefore urges the committee to recommend that the legislation relating to RESPs be amended by broadening it to permit non-trusteed contracts, in a manner perfectly consistent with other savings vehicles such as RRSPs and RRIFs. It should be noted, Mr. Chairman, that this proposal would not result in any new government tax expenditures.
Finally, with respect to the committee's goal of providing an environment in which all Canadians can enjoy the best quality of life and standard of living, the industry recommends two additional measures. The first deals with the ability to fund an adequate level of retirement income on a tax-effective basis. Here, in order to better serve retirement goals of Canadians, the industry urges the government to increase the RRSP contribution limit to $17,000 immediately, and ultimately to $27,000. The registered pension plan defined benefit limit should be increased to $3,000 per year of service over a five-year period—and by the way, I think that has been frozen since 1976.
The second quality of life issue that I'd like to address in conclusion is attendant care medical expenses for the elderly and disabled. At present, attendant care costs qualify for medical expense tax credits, but only up to $10,000 annually. This limit has not been adjusted for a number of years, and it is now unrealistically low. We would recommend a substantial increase in the limit, or preferably the elimination of that limit.
Mr. Chairman, that concludes my prepared remarks. Once again, let me thank you for the opportunity to appear before you and your colleagues.
The Chair: Thank you very much, Mr. Daniels.
We will now hear from Dr. George Sweetnam, president-elect of the Canadian Dental Association, and Andrew Jones, director of corporate and government relations. Welcome.
Dr. George Sweetnam (President-Elect, Canadian Dental Association): Mr. Chairman, thank you for inviting me to speak to you today to highlight the concerns of dentists across this country, as outlined in the brief presented to you by the Canadian Dental Association.
My name is Dr. George Sweetnam, and I'm the current president-elect of the CDA. Also joining me today is Andrew Jones, director of corporate and government relations.
As many other presenters have undoubtedly noted, it's a changed world, with changed priorities. The outcomes of the tragedy of September 11 were brought home personally to us at the CDA when members of our board of governors were stranded at airports across the country as they tried to travel to our board meeting, which had been scheduled for the following weekend. Of course, that meeting was cancelled. However, despite the pain and sympathy that we feel for our American neighbours, the CDA realized—as I'm sure all of you have—that we must continue with our daily lives and business. That's what brings us here today.
One of the priorities for Canadians that continues to feature strongly in our minds is health care. In talking to you today, I would like to focus briefly on two key areas of oral health care in this country: the provision of dental care services to first nations, Inuit, and Innu peoples; and escalating tuition fees that threaten the viability and diversity of professional program enrolment and the ability of these same programs to attract and retain top-quality educators.
The federal government, through the First Nations and Inuit Health Branch of Health Canada, administers a program of non-insured health benefits that provide health services to this population, largely through direct reimbursement of private providers, including dentists. The CDA acknowledges the need for this program, and applauds the federal government for undertaking the guardianship of the oral health of this community. However, serious concerns with the administration and structure of the program threaten to undermine its goals of improving the health of its recipients. Ironically, while the first nations, Inuit, and Innu people receiving this benefit would, at first blush, appear to have an advantage in access to care when compared to other Canadians, the oral health of this group lags sadly behind, mirroring that of many developing nations.
In cooperation with Health Canada and the Assembly of First Nations, the CDA has made significant efforts to educate first nations communities about the importance of prevention in oral health. While this message is well received and encouraged in the regions where it is delivered, more needs to be done to improve the oral health status of the first nations people.
The CDA has also made considerable efforts to work with Health Canada to improve the overall quality and functioning of the program in order to deliver much needed services to the patients. Unfortunately, the resources of the program are too often wasted on bureaucratic red tape that increases the administrative burden of dentists while steering the focus away from the oral health needs of the people.
In its election platform, this government recognized the need to improve the quality of life of aboriginal peoples, and particularly aboriginal children. You now have the opportunity to deliver on your promises by dedicating resources to a recognized problem and, in turn, fostering the healthy growth of children within this segment of Canada's population.
The second set of issues that I would like to bring to your attention is escalating tuitions fees and emerging human resources problems that will affect future generations. The Canadian Dental Association is a member of the National Professional Association Coalition on Tuition, or NPACT, which has already presented to this committee. I'd like to reinforce the message brought to you by Dr. William Easton, who represented NPACT.
For a moment, I'll ask you to put yourselves in the shoes of a high school student contemplating an education in dentistry. If you'd like to attend the University of Western Ontario, for example, your tuition and related fees—putting aside the cost of housing and other living expenses—would average over $23,000 per year. That's on top of the debt you would likely incur while earning a three- or four-year undergraduate degree, which is what most students entering a dental program now have.
You could easily be looking at total education debt load of well over $150,000. Unless you come from a very wealthy family, that kind of money is not easily within reach. You may decide to mortgage your education against the earnings that you expect to achieve upon graduation. But when you look at the high monthly fees for repayment of loans, on top of the escalating costs of establishing a professional practice, you may well feel defeated.
Those of us who are dentists today would like to see a future in which students may choose to join our ranks based on their personal aptitude, ambition, and inclination, not on their socio-economic ranking. We recommend that this committee look for ways to contain tuition fees, and offset the cost that students face by increasing bursaries and scholarships available to professional program candidates.
A related issue of growing concern to the profession is the availability of top-quality dentists interested in pursuing a career in education. Because of the financial constraints faced by universities that have forced them to drive up tuition, funding available for the hiring of professors is limited. The disparity between the income of private-practice dentists and those teaching at our universities is increasing.
Our universities are also having trouble attracting world-class researchers. Regrettably, the Canadian Institutes of Health Research have shortchanged oral health initiatives both in profile—through the naming of the institutes—and when allocating research dollars. Less than 2% of funding in 1999-2000 was awarded to dental researchers. As we have become increasingly aware of the connections between oral health status and systemic health problems such as diabetes, heart disease, and pregnancy outcomes, we recognize that a vital ounce of preventive medicine is being missed.
The so-called U.S. brain drain exacerbates these problems by wooing away quality dental educators and researchers, while at the same time offering to pay off high debt loads incurred by students during post-graduate education.
In the interest of brevity, without going into great detail, I will mention that the brief we are presenting to you today also addresses the requirement for greater emphasis on tobacco control and prevention initiatives—particularly aimed at Canadian youth—as well as the need to eliminate the disparities in savings opportunities for those planning for their retirement through RRSPs.
Thank you again for the opportunity to address you here today, and for giving your full attention to these issues as you go about the important task of weighing the priorities of this budget. I welcome any questions later on.
The Chair: Thank you very much, Dr. Sweetnam.
We'll now hear from the Canadian Abortion Rights Action League, and Ms. Marilyn Wilson. Welcome.
Ms. Marilyn M. Wilson (Executive Director, Canadian Abortion Rights Action League): The Canadian Abortion Rights Action League wishes to thank the committee for the opportunity to present its concerns regarding the inequitable funding of abortion care under the Canada Health Act.
CARAL was responsible for transforming abortion from a criminal act to a safe, legal, medically necessary procedure. It is the only national volunteer organization working full-time to ensure that women of Canada are able to exercise reproductive choice through access to abortion care, in accordance with the five principles of the Canada Health Act: public administration, comprehensiveness, universality, portability, and accessibility.
Under the Canada Health Act, medical services that are rendered by physicians and are deemed to be medically required, such as abortion, are to be covered under medicare whether they are performed in a hospital or in a clinic setting. The act established this condition as a way of eliminating direct charges to patients in the form of extra billing and user charges. Four provinces—Manitoba, Quebec, Nova Scotia, and New Brunswick—are presently contravening this act by refusing to pay for clinic abortions. Also, many provinces have placed abortion on their excluded lists for reciprocal billing, along with non-medically required procedures such as cosmetic surgery. This means a woman who receives abortion care outside her province is forced to pay out of her pocket, without reimbursement by her own province.
The lack of universal access to medicare-funded abortion has become a serious financial problem for women and their families. According to Statistics Canada, therapeutic abortions are most common among women in their twenties. These women accounted for half of all women who obtained an abortion in 1998. The major reason for terminating an unintended pregnancy through abortion in this age group is because of failed contraception.
Women who make the decision to abort a child at a certain point in their lives do so for socio-economic reasons. Sometimes, it is a desire to complete their education and become financially independent. In many cases, couples with children wish to restrict their family size in order to provide them with adequate financial support. More often than not, choosing to have an abortion is a conscious decision not to become a burden on society.
I'd like now to address some of the financial barriers to abortion care.
Two-thirds of all abortions in Canada are carried out in hospitals and are paid for by medicare, but hospital abortion services are disappearing at an alarming rate. A recent CARAL survey of hospitals found that only 1.5% of 68 hospitals in Saskatchewan provide care. In New Brunswick, it is 6.7%, while it's 4% in Alberta. Of course, it is 0% in P.E.I.
One of the factors contributing to the decline in services is the sharp decrease in the number of abortion providers. Physicians who were actively pro-choice because they remember the horror of criminal abortions prior to 1988 are reaching retirement, and medical students are not being trained to take their place. Hospitals merged with Catholic institutions adopt policies that refuse all family planning services. Last, but not least, physicians are afraid, because of the current climate of anti-abortion terrorism that continues to threaten their lives, the lives of their colleagues, and the women they serve.
Lack of clinic services is dangerous to the health and life of women, as every week of delay for a hospital abortion after eight weeks of pregnancy increases the risk of complications. When faced with a six-week wait, women must seek clinic abortions in order to receive timely care. Clinics are based in cities, and women in non-urban areas have to travel long distances from their communities, at their own expense. In the four provinces where hospital waiting lists are long and the provincial government refuses to cover the costs of clinic abortions, women have to pay an average of $500 for the procedure. In P.E.I., women have to travel to another province and personally pay for care of any kind.
At the present time, no medically required service other than abortion is so inaccessible, has to be individually negotiated by a woman, and is open to state interference. It is a blatant injustice that women in some provinces have access to clinic abortion care under medicare, while those in some other provinces do not. Affordable abortions in Canada now depend on a woman's residence and on the size of her pocketbook.
The delivery of abortion care in the current socio-economic environment discriminates against women in their efforts to access this medically required procedure under the Canada Health Act. Although the provinces and territories are constitutionally responsible for the administration and delivery of health care services, the Canada Health Act establishes the criteria and conditions related to insured health care services, as well as the national standards that the provinces and territories must meet in order to receive the full federal cash transfer contribution under the Canada Health and Social Transfer mechanism.
Health care is a matter of provincial jurisdiction, but it is still subject to federal budgetary guidelines as expressed in the Canada Health Act. Currently, New Brunswick, Quebec, Manitoba, and Nova Scotia receive federal grants yet continue to violate the principles of the CHA by refusing to pay clinics for a medically required service that is covered universally when performed in a hospital. To date, the federal government has refused to withhold transfer payments from three of these provinces; with Nova Scotia, the amount of funds withheld is insignificant. The federal government also has failed to use its powers to resolve the matter of reciprocal billing agreements. These are two blatant examples of gender discrimination against women in health care.
The Ministry of Health has established a $4-million fund to monitor provincial compliance with the CHA. CARAL asks that moneys from this fund be used to rectify the inequitable coverage of abortion services under medicare. We also call upon the Standing Committee on Finance, in striking the next federal budget, to use whatever means possible to ensure that in matters of health and reproductive choice, women have opportunities equal to those of men under the Canada Health Act, to enjoy the best possible quality of life and standard of living.
I would just like to add one more note to the brief that we submitted prior to the events of September 11, and that is to make sure there are sufficient funds, when fighting terrorism, to take care of the need to fight domestic terrorism that has been wreaked against our doctors, their colleagues, and women of this country for the past twenty years.
Thank you very much.
The Chair: We next hear from the Canadian Petroleum Products Institute, and vice-president Bill Simpkins.
Mr. William (Bill) Simpkins (Vice-President, Canadian Petroleum Products Institute): Thank you, Mr. Chairman, for the opportunity to address the committee and to share our views. I apologize that Alain Perez couldn't make it today.
I would like to focus on three themes today: first, that we provide quality, reliable products to consumers at competitive prices that clearly benefit Canadians; second, that we support smart regulations; and third, that our industry is here for the long term.
Just as a little bit of background on CPPI, we represent the refiners and marketers of petroleum products in Canada. Our members are major companies, regional companies, and others, such as Canadian Tire. We generate over $30 billion in revenues annually; on behalf of governments, we collect more than $10 billion in fuel taxes. The industry also exports about $3 billion worth of products, mainly to the U.S., and our members collectively employ some 130,000 Canadians across the country.
The events of September 11 have caused industries and governments around the globe to re-examine their priorities, and it is critical that Canada takes whatever steps are necessary to ensure the free flow of goods and services within our country and across our borders. Our industry requires reliable access to U.S. markets to function effectively.
Another issue that has gained added importance is the issue of secure energy supplies. I want to assure you our members are taking all necessary precautions, and they have reviewed their contingency plans that will ensure a safe supply of fuels to Canadians.
Economic issues and concerns that were present before September 11 remain, and we recognize that government must now examine options and solutions to these issues. We believe this must be done within the framework of a balanced budget, and it's even more important today to ensure that government's resources are allocated to the country's priorities.
The marketing segment of our downstream business is one of the most studied industries in Canada, and we are pleased by the Conference Board of Canada report that concluded that Canadians are well served by our retail industry. The report also confirmed that Canadians pay significantly less for gasoline than U.S. consumers do. In fact, since the crude oil increase of 1999, the Canadian advantage has grown from 1¢ to 2¢ litre to 2¢ to 4¢ per litre at the pump, net of taxes.
Our industry, due to its competitive nature, has been one of the most innovative industries in Canada over the past decade. The structure of the industry is also now evolving. Retailers such as Canadian Tire and Costco are very successful, and even grocery stores such as Safeway and Loblaws are now entering or are expanding their interests in the market in order to compete in the gasoline business. This is a new phenomenon here, but it started in Europe and took the oil industry by surprise. This new reality in Canada is certain to result in even more competition in the marketplace, and will continue to benefit consumers with improved offerings.
Our refineries compete in a continental market. The typical Canadian refiner must be a more efficient, lower-cost operator than the import alternative in order to maintain market share in Canada. Similarly, if refiners want to continue to supply other parts of North America, they have to continue to deliver quality products competitively.
While part of our drive to remain competitive involves securing and retaining corporate skills and resources, governments have a direct impact on our competitiveness. Federally, the government's intervention influences the marketplace in two main areas. One is the Competition Act and how it is enforced, and the other is environmental regulations for our products and facilities.
The Competition Act is currently being reviewed by your colleagues on the industry committee. We said to that committee last week that we support Bill C-23, and we could support a tabled amendment on private access if it contained the necessary safeguards.
The second area of involvement for the federal government is environmental regulations. I can say without equivocation that today the government policy of aligning product specifications with those of our major trading partners is a good policy, and it assures that Canadians will continue to benefit. This new policy means that commodity prices like gasoline and home heating oil will continue to be priced as such, and that North America will be one single market for our products. The alternative, a path chosen fifteen years ago by the State of California, would have meant much higher consumer prices.
When it comes to regulating emissions from refineries, I'd like to share with you a current example of what we mean by smart regulation. At our request, the provinces, even though it is their jurisdiction to regulate, are going to work with the federal government and our industry to define principles and a national framework to regulate refining emissions. These principles, such as defining the performance to be attained, but still allowing the refiner to decide how to achieve the performance, can provide our refiners with a strategic advantage over their U.S. counterparts, who are subject to cumbersome, multi-jurisdictional regulations that are costly to implement.
While many view our industry as the old economy, we are actually a high-tech industry. We have outperformed many segments of the so-called new economy in innovation, improved technology, and productivity gains. From 1989 to 1999, our combined downstream operating costs were cut by an average of 30%. Most of this gain in productivity was achieved through investments in new technology and software. Our industry productivity levels are well ahead of other Canadian manufacturing sectors.
As we look to the future, hybrid cars will be fully commercialized and fuel cell vehicles will appear on our roads. They are powered by hydrogen that is easy to extract from hydrocarbons, which are our product. While our retail network could be adapted to other fuels, we firmly believe hydrocarbons will remain the fuel of choice for future engine technologies. A key part of making the future work better is for governments to ensure that the regulatory framework in which our industry operates is efficient, competitive, and free of subsidies that often only serve a narrow segment of the economy and end up costing more to all Canadians.
To conclude, Canada has an abundant strategic resource that is the cornerstone of our economy and our lifestyle. Canadian consumers are well served by the industry. We are well positioned for the future. Hydrocarbon-based fuels will continue to support future transportation technologies. To maintain our strategic advantage in this vital industry, we must continue to evolve and to innovate both in our refining and marketing businesses. Governments can best support our industry and serve Canadians not by providing subsidies—and thereby picking winners and loser—but by ensuring that we have a smart, responsive regulatory and taxation framework. That way all Canadians can win.
The Chair: Thank you very much, Mr. Simpkins.
Mr. Pierre Boucher (President, Canadian Printing Industries Association): Thank you, Mr. Chairman. At the outset, I'd like to offer the regrets of CPIA's chairman, Steve Cropper, of Quebecor World Calgary, who had other commitments today and could not be with us in this session.
My name is Pierre Boucher, and I'm president of the Canadian Printing Industries Association. With me is Jeff Ekstein, the chairman of our government affairs committee. His full-time job is that of president of the Willow Printing Group, a mid-sized printing company located in Concord, Ontario.
Mr. Chairman, CPIA welcomes this opportunity to appear before the House finance committee. We commend the committee for establishing a fiscal blueprint, and concur with the stated objectives of the current budgetary process. In order to achieve these objectives, difficult decisions must be made with respect to the allocation of the country's surpluses, its tax system, the accumulated debt, health care needs, education, and technological infrastructure. Given the recent tragedy in the United States that affects the world in its entirety, new fiscal elements come into play. They also need to be addressed carefully.
Before we begin our presentation, I'd like to give you a brief overview of the industry.
CPIA is the national voice of the pre-press, press and allied printing industries. Since 1939, the Association has served as the collective body to represent the interests of its member firms for policy formation, regulation and legislation.
CPIA has about 800 members in Canada. We are proud to say that Canada's printing firms are primarily Canadian-owned. More than 76,000 Canadians work in printing industries.
About $10 billions worth of printed products are produced each year by the industry. With a gross output multiplier of 1.9, an additional $9 billions will be generated in other sectors of the economy.
Canada's printing industry represents close to 10% of all manufacturing establishments in Canada. Canada exports close to $1.3 billions worth of commercial printed and related matter each year.
Small firms dominate Canada's commercial printing industry with 75% of companies in the industry employing fewer than 20 employees and less than 3% employing more than 100 employees.
Due to its size and structure, Canadian printing industry is affected by several government policies having a direct bearing not only on the industry's viability but also on its capacity to create and maintain employment for thousands of Canadians.
It is in this context, Mr. Chairman, that we present our views this afternoon.
I would like now to give the floor to Mr. Ekstein.
Mr. Jeff Ekstein (Chairman, Government Affairs Committee, Canadian Printing Industries Association): Thank you, Pierre.
Mr. Chairman, the first issue I would like to address is that of tax treatment for computer-based equipment. One stated objective of this committee is to give Canadians an equal opportunity to succeed. To achieve this goal, one has no choice but to look south of the border, to what is by far our largest trading partner and our largest competitor. Last year, the Canadian printing industry exported shipments of printed material in an amount equal to about $1.3 billion. Close to 90% of that volume was exported to the United States alone. In total, exports represent 10% of all our production. In order to remain competitive and to give Canadians equal opportunity to succeed, we need to establish a level playing field with the United States in some specific areas. One specific area in which we are at a clear disadvantage is the way our technology is treated in terms of taxation.
The use of computer-based technologies in the printing industry has expanded significantly in recent years. The explosion of digital technology, desktop publishing, and alternative media has forced firms of all sizes to constantly upgrade equipment just to maintain market share. In a manufacturing sector already impacted by fierce competition, this technological revolution has severely impacted the very survival of hundreds of printing firms in Canada.
Unfortunately, manufacturing industries such as printing, which now rely heavily on high-tech equipment for production, are unable to depreciate that equipment based on its actual useful life. In fact, Canada's tax policy respecting the depreciation of computer-based equipment is totally outdated. Currently, it can take in excess of seven years before a piece of computer equipment has substantially depreciated for tax purposes, or even longer for expensive technology devices. This is an unreasonable amount of time, given the rapid obsolescence of this technological equipment.
According to a recent survey, printers are disposing of computers and peripheral equipment within 14 to 36 months. Customers are demanding new and better products and services at an ever increasing rate. As a result, printers must continue to purchase new high-tech equipment to remain competitive. At the same time, no reliable market exists for used computer-based products, since technologically outdated equipment has virtually no value.
Chairman Bevilacqua, I know you visited one of our members, Quebecor Aurora Ltd., within the past year, and saw a lot of the equipment that is used in this high-tech capacity. In speaking with that member, I was informed that in the next six months, they'll be investing $2 million in further high-tech upgrades in order to keep up with competitive forces.
In the United States, Republican Mac Collins and Democrat Benjamin Cardin have introduced legislation that would change the depreciation period for computers and peripheral equipment from five years to two. These two congressmen of opposing parties have undertaken to introduce new legislation “to ensure that computers used in manufacturing processes can be depreciated within their actual useful life.” When enacted, this U.S. government measure is going to have serious implications for Canada.
We have included several charts in our submission to illustrate the effects of tax schedules on our industry. We will not discuss them in detail today, but we urge the committee members to look at them so that they have a true appreciation of our competitive disadvantage.
In order to be competitive with the current U.S. tax rate, the Canadian Printing Industries Association has recommended the adoption of a special high-technology depreciation schedule, which would recognize technological obsolescence by granting an accelerated depreciation of 75% by the end of two years, when most computer equipment has served its actual useful life. For the record, we'd like to point out that the Canadian Federation of Independent Business has recently endorsed our position on this matter. We believe our proposal would serve Canada well, and that the federal government would not see any revenue shortfall, as this is only a timing issue.
It is interesting to note that prior to 1988, most manufacturing and processing machinery and equipment, along with supporting computer equipment, was subject to a class 29 depreciation schedule, which carried a three-year, 25%-50%-25% straight-line write-off. We would hate to think our government had more foresight for these kinds of issues more than a decade ago.
We would also ask that you read all of the testimonials attached as appendix A. They illustrate very well our situation in Canada with respect to your objective to give Canadians an equal opportunity to succeed.
As appendix B, we have also included examples of computer-related equipment used in the printing industry. We invite members of this committee to visit a printing facility in their region to get first-hand exposure to this challenge. CPIA can assist in arranging these visits.
Now I'll turn to everybody's favourite subject, Mr. Chairman, and that's payroll taxes. CPIA's members truly believe employment insurance premiums are too high in Canada. Actually, this view is shared by all industry sectors. As such, it is very frustrating to note that the common call is repeatedly being ignored by the federal government.
The government has consistently claimed the EI fund doesn't really exist, but the premiums employers and employees pay are real and need to be reduced. We strongly oppose the government's practice of amassing moderate surpluses in this account. It has become abundantly clear to all Canadians that EI premiums have become nothing more than a tax grab by the government. This is an unethical and unfair practice that needs to stop.
Employers and employees are paying more in payroll taxes today than they were in 1993. Excessive payroll taxes cost jobs in Canada and limit growth. CPIA would support an introduction of a yearly basic exemption program, as recommended by the Standing Committee on Human Resources and the Status of Persons with Disabilities.
Mr. Chairman, one major irritant that we have within the EI system is the fact that there is no cap on the premiums paid by employers when applied to employees who change employers. Employees are entitled to a reimbursement when they exceed their yearly maximum, but the same does not apply to employers. We ask that employers be treated equally.
With respect to RRSPs, Mr. Chairman, we propose that the government increase RRSP contribution limits to afford Canadians the opportunity to plan their own retirement so that they're not dependent on the solvency of government plans. CPIA recently received a letter from one of its members in Ontario, urging us to call for justice and equity in this area. Specifically, he speaks about the maximum defined benefit pension of his company, which, like others, can only be funded to a set maximum amount of $1,722 per year of service. Pension adjustments also further decrease the ability of individuals to maximize their benefits. Some changes in this area are therefore recommended.
We have two other issues that we'd like to touch on today. They are training and the national debt, and I'd ask Pierre to address those on behalf of CPIA.
Mr. Pierre Boucher: Mr. Chairman, Canada can only remain a major player in the new economy if it undertakes major programs in areas where significant gains can be made globally.
Research and development and education are key areas and the government should demonstrate leadership by establishing effective programs that will ensure we have the appropriate skills, products and knowledge base to meet the challenges of the future.
CPIA recommends the introduction of tax incentives from the federal government to encourage skills upgrading, and leaving training to each employer. This government action would go a long way in addressing our training needs. This would greatly contribute to our ability to remain a major player in the new economy. Many sectors would benefit and it would make Canada more productive, more competitive and certainly more apt to export successfully his know-how, products and services.
Next, Mr. Chairman, CPIA applauds the federal government for the substantive efforts it has made in reducing our national debt, now estimated at $550 billion. We strongly suggest that we stay the course and that we continue to pay down this huge burden now shared by all Canadians. In fact, CPIA recommends that rolling debt targets be set for a minimum of three years, and that at least $3 billion be allocated annually to retire the debt.
Finally, Mr. Chairman, we understand that the government now has to address our needs in terms of national security and military preparedness. We accept that money needs to be spent in those areas. We believe, however, that the debt reduction targets need to be maintained. One funding mechanism is perhaps to cut all subsidies that the government is handing out to corporations and to reallocate them for this federal responsibility.
Again, we thank you for the opportunity to appear before this committee.
The Chair: Thank you very much, Mr. Ekstein and Mr. Boucher.
We will now proceed to Celeris Aerospace Canada president Stephen Hall.
Mr. Stephen Hall (President, Celeris Aerospace Canada Inc.): Thank you very much, Mr. Chairman.
Honourable committee members, ladies and gentlemen, I'd like to address the challenges facing Canadian aerospace small businesses following the tragic events of September 11. To place my comments in context, I'll provide you with a brief summary of the experience of my own firm.
Celeris Aerospace Canada is an Ottawa-based, high-tech aerospace firm that has been in business for over nine years. We make extensive use of the Internet, both to provide services to our clients and to access the specialists needed to complete our contracts. The last ten months have proved to be very challenging. In addition to having to weather the downturn in the high-tech sector, we are now dealing with the aftermath of September 11. In our own case, within four weeks of the tragic events in the United States, we had one ongoing contract cancelled, one follow-on contract that was due to start in September postponed indefinitely, and a U.S. contract slowed down.
The economic hardships currently faced by Celeris Aerospace are also being faced by many other small businesses in the aerospace sector. Recent information published by the Air Industries Association of Canada estimates that as many as 30% of Canada's small aerospace firms could go out of business within the next six to twelve months as a direct result of the terrorist attacks. This data, based in part on a limited survey of their members, indicates that respondents anticipate anywhere from a 15% to a 50% immediate reduction in revenues in the coming months. Furthermore, the majority of the respondents consider that they will need to secure some form of loan guarantees if they are in fact to survive.
Following the terrorist attacks, many leaders, including Prime Minister Chrétien, stated that the best way to combat terrorism is to go about business as usual. While many small business owners have attempted to do this, they are faced with the challenge of trying to conduct business as usual in a business environment that is far from usual.
The ongoing uncertainty about the war on terrorism and the possibility of further terrorist acts have resulted in larger aerospace organizations conserving their cash and adopting a wait-and-see attitude. This approach is optimistically anticipated to last at least six months, and realistically will probably last from twelve to eighteen months. Consequently, many smaller aerospace firms are faced with the prospect of trying to survive with little to no additional collateral, and with a minimal chance of securing any sizeable contracts within the next six to nine months. In this environment, traditional financial institutions are extremely reluctant to extend existing lines of credit or to provide new loans.
The owners of small aerospace firms are fiercely independent and are able to manage the ebb and flow of the normal business cycle. However, the tidal wave of September 11 means that if they are to survive, they need some immediate, focused assistance. For this reason, I would note that while the initiative of the Honourable Minister of Finance to tender a budget on December 11 is a positive step, many small firms are concerned that any assistance provided by the traditional budgetary process may arrive too late.
I believe federal and provincial authorities could help to ensure the survival, competitiveness, and future growth of many small Canadian aerospace firms by implementing actions such as the provision of loan guarantees for small aerospace firms—and in attachment B, you will see a small business act in the States that we're competing against, under which this has already been done in the U.S.; allowing employment insurance recipients to work for small aerospace companies while continuing to receive EI payments; increasing the sole-source limits for government contracts to $100,000 Canadian; shortening the government payment cycle to ten days net, with no early payment penalty; bringing forward the awarding of contracts the federal government had scheduled for release within the next two years, to within the next three to six months; and providing a six-month to one-year moratorium on source deduction GST and PST payments.
I realize implementing these suggestions will have short-term economic implications for the Government of Canada. However, I believe the circumstances in which we find ourselves require greater emphasis to be placed on the long-term economic implications of sustained damage to Canada's small business aerospace infrastructure.
I will conclude by proposing that a small business state-of-emergency conference be convened within the next two weeks, aimed at addressing the issues I have presented. The conference would involve key members of federal, provincial, financial, and business organizations. It would be comprised of working groups that have a three-day mandate to develop practical solutions that can be implemented by mid-December 2001. Delegates attending the conference must either attend as resources able to guide the deliberations or as representatives able to commit their organizations to the allocation of resources and the passing of legislation within appropriate timeframes. The focus of the conference would be on creating a solid action plan.
I admit that prior to September 11, such a proposal would have been considered impossible, but we live in times when radical action is urgently required to address the impossible. I believe we can fight terrorism and the fear and anxiety it imposes by utilizing the creativeness and ingenuity for which Canadians have gained worldwide renown. However, as one small business, or even as a member of a group of small businesses, this is a battle that cannot be fought alone. Canadian aerospace small businesses are ready and willing to contribute to this fight. However, we need your assistance to access the tools that will ensure that we succeed.
I thank you for your time, and particularly for also including me on the agenda at fairly short notice.
The Chair: Thank you very much, Mr. Hall.
We will now proceed to the question and answer session. It will be a five-minute round, beginning with Mr. Kenney, who will be followed by Mr. Epp.
Mr. Jason Kenney (Calgary Southeast, Canadian Alliance): Is that five each, Mr. Chair?
The Chair: Five in total.
Mr. Jason Kenney: Thank you, Mr. Chairman.
I would just like to thank the panellists. I have a question about employment insurance first.
A couple of the panellists, including the CPIA, have discussed the large employment insurance surplus and the burden that the premiums impose on employers in terms of job creation. I was interested to hear that the CPIA in particular endorses the service industry's call for a yearly basic exemption at the bottom end of the EI premiums. I'm wondering, though, if that really solves the problem fundamentally in terms of this payroll tax on jobs.
Has your industry association considered, or would you support in principle, looking at more fundamental reforms of the EI program that would reduce its costs, similar to reforms that were recently repealed in legislation last year? Would you, for instance, be willing to consider—and other panellists could briefly comment on this if they're interested—an experience-rated system that is strictly an employment insurance program? Right now, only about 40% of the payouts actually go to employment benefits. The rest of the money goes to training and so on.
Mr. Pierre Boucher: Mr. Chairman, the experience-rated system has been discussed many times before. Many groups have commented on it, and it needs to be addressed carefully.
The current rate is an impediment to employment, and it is our understanding that some consultations were to take place this fall to address the EI system, how we could perhaps reform it, and how it should be restructured. We certainly would welcome this opportunity, because we see it as a problem. Again, our main concern is the great amount of money sitting in that account. It should be used for retraining or training purposes or to facilitate the entry of new persons into the workforce.
Mr. Jason Kenney: My next question is for Ms. Wilson.
Frankly, I was confused by your submission, Ms. Wilson. Throughout it, you refer to abortion as a medically necessary service for the purposes of the Canada Health Act. Quoting from your submission, though, you say in the seventh paragraph that women who obtain abortions
do so for socio-economic reasons. Sometimes it is a
desire to complete their education and become
financially independent. In many cases, couples with
children, wish to restrict their family size in order to
provide them with adequate financial support.
You indicate that they are often choosing abortion as a conscious decision not to become a socio-economic burden on society.
How can a service that is sought and obtained for social and economic reasons be medically necessary?
Ms. Marilyn Wilson: Under the Canada Health Act, “medically necessary” is determined to be covered by medicare when it's decided upon by the college of physicians and surgeons in each province. That has happened. The policy was also set by Health Canada, under the former Minister of Health Diane Marleau. She stated that this policy was to be applied whether abortions were performed in a clinic or in a hospital, because once a procedure is deemed medically necessary, it has to be covered under medicare under both the hospital and clinic services.
I don't see how this has to do with the decision a woman makes. My point in that particular statement was that making the decision to have an abortion is a highly moral decision on the part of women and their families. More often than not, it is made because these women and their families do not want to bring children into the world when they cannot adequately support or care for—
Mr. Jason Kenney: Again, you're reasserting that it's done principally for economic reasons, not medical reasons.
Ms. Marilyn Wilson: I think that is part of their consideration, but the term “medically necessary” is based in—
Mr. Jason Kenney: “Medically necessary” doesn't mean it's medically necessary, is that what you're saying?
Ms. Marilyn Wilson: “Medically necessary” or “medically required” are medical terms, because this is the only procedure that can terminate an unintended pregnancy. It's a medical term.
Mr. Jason Kenney: It doesn't sound like a medical term.
My next question is if—
An hon. member: It's medically necessary.
Mr. Jason Kenney: She just said it's for social and economic reasons. I don't know how you can have a medical procedure that is medically necessary but is done for reasons other than medical reasons.
In your submission, you say clinic abortions in some provinces aren't financed. I don't think that's completely accurate. My understanding is that several provinces finance the physician's fee portion of abortions performed in freestanding clinics, but not the facility fee, which is an extra billing on top of the physician's service.
The federal government has threatened to—and in some cases actually has—penalize provinces by withholding cash transfers for allowing extra billing to occur in private clinics. If you were consistent in your advocacy of the Canada Health Act and opposed to privatization of medical services, wouldn't you in fact think the federal government should withhold transfers to provinces that allow the operation of freestanding clinics that permit extra billing for facility fees?
Ms. Marilyn Wilson: I have to return to the point of a procedure that is deemed to be medically required. It then has to be covered under medicare if it is performed in a hospital or in a clinic. There's no differentiation to be made in that.
Mr. Jason Kenney: The physician's fee does, but not the facility fee. That's quite clear.
Ms. Marilyn Wilson: Both should be covered, because they're both covered under the hospital abortion care.
Mr. Jason Kenney: I see. So do you think the federal government would be consistent in its application of this rule if it were to tell the Gimbel Eye Centre in Alberta, for instance, through the Alberta government, that it can't charge facility fees for necessary services, while it allowed the abortion clinics to do so? Do you think that's a consistent application of the law?
Ms. Marilyn Wilson: I keep coming back to the same point about a procedure that is deemed to be medically necessary—and it is medically necessary to end an unintended pregnancy. For that procedure, if it is decided that it is medically necessary and it is covered under medicare in a hospital, there is no reason why it should not be covered in a clinic as well.
Mr. Jason Kenney: All right, you're using a circular argument to determine that it's a medically necessary procedure. You're saying it's medically necessary if they say it's medically necessary, so it's medically necessary. In your submission, though, you tell us that the provinces have in fact excluded abortion from the list of the reciprocal billing agreements, which I believe are actually agreements maintained by Health Canada as a service to the provincial health departments.
Let me put it to you this way: If the provinces have in fact excluded it as a medically necessary service for reciprocal billing purposes, does that not reasonably indicate that it's not considered a medically necessary procedure by the provinces? It's a reasonable question, I think. You've raised it.
Ms. Marilyn Wilson: It has already been confirmed that it is a medically necessary procedure. It has been agreed upon by the physicians, who have the right to establish it as such under medicare in each province.
Mr. Jason Kenney: Then why has it be excluded from the reciprocal billing agreements?
Ms. Marilyn Wilson: That is our question. It should not be excluded. It is not an optional procedure, such as cosmetic surgery.
Mr. Jason Kenney: Would you agree that the federal government's failure, from your perspective, to penalize provinces for excluding this procedure from the reciprocal billing agreements constitutes a tacit admission on the part of the federal government that it does not regard this as a necessary medical procedure?
Ms. Marilyn Wilson: The federal government has a role to play on the committee that rules on reciprocal agreements. Each province has its own representatives on that committee, but the federal government does have a role to play if a consensus cannot be reached. All we're asking is that the federal government play that role and have them reach consensus on this reciprocal billing agreement.
Mr. Jason Kenney: I just have one last question, then I will cede the balance to my colleague.
In the last bullet in your submission, you say that to not finance the facility fee at freestanding private clinics constitutes a form of discrimination—I'm looking for the precise wording—against women. Is it not also true that some procedures are only applicable to men—such as vasectomies—and that they are not covered under medical insurance as medically necessary procedures? Would that constitute discrimination against men, or would that just be a determination of what is medically necessary?
Ms. Marilyn Wilson: In the determination of what's medically necessary, it really has to do with health and welfare of the woman. I think it's based on pre-1988 decisions, when it was a criminal act to have an abortion and women were dying as a result of that. That's the thinking and the feeling behind this submission. We do not want to return to those days of criminal abortion.
The Chair: Thank you very much. We'll allow for fifteen minutes to be shared between the following members: Murphy, Leung, Cullen, and Bennett.
Mr. Shawn Murphy (Hillsborough, Lib.): Thank you very much, Mr. Chairman. I just have a few questions.
The first question I have is to Dr. Sweetnam, of the Canadian Dental Association. Presently, consumers of dental services are exempt from paying GST. Do you think this exemption should continue? If so, why?
Dr. George Sweetnam: I believe the current regulations were set up with the $30,000 limit, and the appliances that are provided and would be applicable would not exceed that amount in most practice cases.
Mr. Shawn Murphy: My question is about the people who purchase dental services. They are now exempt from paying GST. Should the exemption change? A lot of people argue that they shouldn't be exempted, that when they go in and pay their hundred-dollar dental fee, they should pay GST.
Dr. George Sweetnam: The obvious answer to that particular question is that those costs would be added directly to that person's health care. As soon as the goods and services tax is imposed upon the patient, that would be a cost against their personal health care. I do not feel they should have to cover that.
Mr. Shawn Murphy: I just have one other question. It's to either Mr. Boucher or Mr. Ekstein, from the Canadian Printing Industries Association, and it goes back to the entire discussion on EI. I understand the argument that your organization, like many other business organizations, wants premiums reduced. We all understand the figures on how much was taken from the fund, and the so-called surplus that really isn't a surplus.
If these rates were to come down dramatically, the Canadian government, especially in these very tight times, would have to either raise taxes or cut expenses dramatically. I don't see that there are always areas in which expenses can be cut. Where would you see the federal government going if it did in fact decide to lower premiums dramatically?
Mr. Pierre Boucher: Mr. Chairman, we're quite clear on the fact that it is perceived as a tax on Canadians, but that should not be the case. It's an impediment on our ability to employ and be productive in Canada. If a shortfall is going to be created for the Canadian government in terms of revenues, then the government will have to address how additional revenues can be created. However, we believe that by reducing the premiums, you will have a positive effect that will stimulate the economy and therefore have a positive effect on the overall economy.
The Chair: Thank you, Mr. Murphy.
Ms. Sophia Leung (Vancouver Kingsway, Lib.): Thank you, Mr. Chair.
Thank you for your presentations. They have been very informative.
My first question is for the CDA's Dr. Sweetnam.
It's commendable that the CDA recognizes the needs of the people of the first nation and the Inuit.
I have a two-part question. First, the isolated areas usually have a shortage of professionals, such as MDs and dentists. How would you resolve that? Secondly, what is your payment coverage for people like that?
Dr. George Sweetnam: We're working very hard to get people to go to more remote areas. Getting the care out to those people is a difficult problem. It's hard to get people set up in those communities.
One of the problems with basic dental care is, of course, that a person cannot walk in with a doctor's bag and examine patients on a table. We have to have all the equipment necessary to perform dental care. In some cases, it's therefore more reasonable to bring people out to the dental care.
One of the things that pops into my mind is an anecdote that I heard just the other day. We're encouraging people to go to outlying areas. Our current president and CEO were up in Yellowknife very recently, and what they found was that the practitioners are all trying to encourage other people to come in. They've had two young people come in and set up practice. These people enjoyed the area and really liked living there, but given their frustrations with the non-insured health benefits, they had simply gave after a while and left. That's one of the complications in getting people to remote areas.
It's simply a matter of encouraging people to travel to these areas and making it economically viable to do so.
Ms. Sophia Leung: For CPIA, I know your industry's product is of a very high quality in Canada. In the meantime, I understand that in terms of competition in the world, the Canadian industry is becoming less and less competitive. The market is really not moving. Can you tell me how you would combat that?
Also, you mentioned special training. I'm just wondering if you have a special course, maybe in technical schools, to help you to keep up with your demand.
Mr. Pierre Boucher: Mr. Chairman, on the issue of our competitiveness, we'd like to bring that back to the depreciation of computer-based equipment. In our industry, we can only remain competitive if we can adopt the latest equipment and latest technologies. We can print more quickly, we can print better, and we can deliver more quickly. These are now demands by the market that need to be met, particularly as we embark into the export market. We have increased our share in that area—which is very positive—and we need to continue to do that.
As far as training is concerned, the difficulty in this industry is that there are some good schools—Ryerson, in Toronto, for example—but once you've entered the workforce, with all the new technology and the new means of doing business that are imposed on us, you need continuing education. That's where the employers face the challenge, but no follow-through mechanisms in Canada serve that well.
With your indulgence, Mr. Chairman, I'd like to give one example. Some years ago, the Province of Quebec instituted what they call a grant and levy program. All employers are required to put some money in, and when they do training, the government matches that amount of money. That facilitates training in the workforce. We believe the Canadian government should take leadership in that area by instituting a similar program, except that there would not be any levy. We believe the huge amount of money that you have in the EI account right now should serve that purpose for the interim basis.
The Chair: Thank you, Ms. Leung.
You have five minutes, Mr. Cullen.
Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chairman, and thank you to the presenters. I'll go first to CPPI.
Mr. Simpkins, I believe your industry has an interest in seeing our national highway system renewed. You're probably also aware of the government's resistance to dedicated fuel taxes. In fact, if you look at the economy today, if we had a lot of dedicated taxes, we'd be very much in a jam, as my colleague pointed out at a meeting earlier.
One of my colleagues who has been working on this particular initiative told me—and you can either confirm it or reject it today—that CPPI would be prepared to take, let's say, a cent per litre at the pumps and put that money into some sort of national highway authority or national highway fund put together by the provinces, the federal government, and the private sector. Basically, a cent per litre at the pump, from your members, could go directly into such a fund. Is that a story we can put in the bank?
Mr. Bill Simpkins: I haven't heard that—and it's really not up to us to collect taxes.
Mr. Roy Cullen: No, it wouldn't be called a tax. It would be out of the goodness of your hearts that you'd crank up... if everyone put up a cent per litre, it would just go into this fund. You haven't heard about that theory, right?
Mr. Bill Simpkins: I haven't heard about it.
Mr. Roy Cullen: I thought it was kind of a stretch, but if you have any information on that, it would be useful to pursue it.
To the printing industry's Mr. Boucher and Mr. Ekstein, capital cost allowance is a fairly technical issue, and an important issue, admittedly. I was looking at your schedule and the U.S. advantage. It balloons out, and then it comes back in. You haven't looked at that in terms of the time value of money, but presumably the advantage flattens out toward the end. Given that money has value over time, that probably makes your case a bit stronger.
The government, working with the Department of Finance, is interested in focusing on economic useful life, as opposed to a whole pile of gimmicks. How are your discussions going with the department? Are you getting closer to convincing them that this is closer to economic useful life?
Mr. Jeff Ekstein: We have had meetings, and we've made some positive progress toward an understanding with the department.
It's difficult, as you point out, with the situation in the U.S. Looking at the numbers, they currently have about a 5.5% advantage. If their two-year write-off comes into effect, that's going to severely disadvantage Canadians.
As of September 6, we have had a meeting with the finance department that we viewed to be positive. They were asking for our cooperation in trying to determine what a definition would be of this high-tech equipment. We have since gone back to our sister association in the States to try to get them to help us with a definition as well. So we're hoping we are making progress in the right direction.
Mr. Roy Cullen: Good. As my colleague pointed out, you do a lot of great work, and I hope we can make some progress on that issue.
I had a question for Dr. Sweetnam. I noticed in your brief that you were talking about dental services for first nations, but you're focusing on prevention programs. I met with a group of your dentists, and we talked a lot about this preapproval process with the Department of Health federally. You know, they nickel and dime every treatment to death, if I can use the vernacular. Frankly, I was swayed by that argument, and I met with some aboriginal groups.
I took this up with the Minister of Health, and he encouraged me to write a letter. I did that, and I got a nice letter back in reply. I'd like to get into that just momentarily, but I'm wondering if you are moving away from this preapproval process because it's a problem, or if you are now focusing on prevention programs. Or are you still pursuing both issues?
Dr. George Sweetnam: Mr. Chairman, Mr. Cullen, first of all, I'd like to thank you very much for the letter that you wrote on our behalf. That certainly has caused movement among the bureaucrats we have been talking to, and we're making some progress on that particular issue.
Prevention is always the key, foremost issue with dentistry. It's the only 100% preventable epidemic in the world. As a profession, we will always be focused on that area, and we certainly are with the first nations people. However, we are still having problems on predetermination and things like that, and we are working on those problems. Thanks to your efforts, we at least have the attention of the department's ear at the moment.
Mr. Roy Cullen: I'm glad to hear that. Maybe my remarks will be more polite.
In the letter that the minister signed, he says:
In 1997, the NIHB Program introduced a national needs-based
dental predetermination program. This approach, with
emphasis on client need, was recommended by the
Canadian Dental Association... and
was developed with their participation and support.
Maybe that is the case, but I suppose the world does change. Do you have any comment on that? In 1997, was the world different, or were you involved in the process?
Dr. George Sweetnam: Again, that does go back slightly before my time.
Our problem basically is that in dealing with current dental insurance and predetermination, the predetermination looks at the service to be provided and decides whether or not it's covered under a contractual agreement. In the case of predetermination in this plan, another dentist has a look at the treatment and decides whether or not it is necessary. Technically, then, two dentists are looking after one patient. To us, that is duplication and it's not quite necessary.
Mr. Roy Cullen: Well, good luck in your efforts. I hope the committee can support you on that as well. Thank you.
The Chair: Thank you very much, Mr. Cullen.
We have a five-minute round for Mr. Nystrom and Mr. Brison.
Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP): Thank you, Mr. Chair.
First of all, I want to ask a question of Ms. Wilson, if I may.
You're talking about abortions not being provided on an equitable basis across the country. I agree that there should be freedom of choice for women in this country, and that we have to provide the service equally across the country. There are great changes between the provinces, Prince Edward Island being an example of where there's zero access at hospitals, with other provinces having reasonable access at hospitals.
You also say there's a $4-million fund, and you want that fund to be used to monitor compliance with the Canada Health Act, while it should also be used to rectify some of the inequities. Can you tell us a little bit more in terms of how you envisage that this would happen? What kind of money would be needed to make sure we have equality of access to services for women, so that we treat everybody equally, regardless of where they live?
In a country like ours, we should have equal access to all the services provided by the public sector, whether we're in Prince Edward Island, Regina, Montreal, or Toronto. It's a service that's there for all Canadians, and it should treat Canadians equally. I agree it's a woman's right to choose, and if we make that decision as a society, then the service should be available on an equal basis.
Ms. Marilyn Wilson: Thank you.
I think the first step that can be taken is to deal with the four provinces acting in defiance of the Canada Health Act—New Brunswick, Manitoba, Quebec, and Nova Scotia. Minister Rock has made some overtures in that direction—to New Brunswick specifically, in January of last year—but nothing has come from that. These provinces should have their transfer payments withheld until they cover clinic-based abortions. That's the first step.
The other problem that I address in the brief is diminishing hospital services, which are disappearing at an alarming rate. This is because hospitals are allowed to set their own policies in terms of whether or not they will provide services having to do with abortion.
A situation also exists in New Brunswick. The policy of the New Brunswick government is to still have two physicians having to give approval to award an abortion to a woman. That is strictly against the law, because it goes back to the therapeutic abortion committees of 1969.
These issues need to be addressed. The provinces should not be able to set barriers to abortion care in any province. They should have transfer payments withheld until they comply with the CHA. That's a first step.
Mr. Lorne Nystrom: Is the $4-million fund adequate, or would you need more than $4 million?
Ms. Marilyn Wilson: I think it would certainly be adequate to take care of our concerns in terms of clinic funding.
Mr. Lorne Nystrom: My next question is to the Canadian Petroleum Products Institute. We hear a lot of talk now about trying to find some alternatives to gas and oil, like fuel cells, hydrogen, ethanol, wind energy, and so on. What advice do you have to our committee in terms of how much money we should be putting into research for alternative sources of energy? There is a lot of concern about greenhouse gas effects and the use of oil on pollution, the environment, and the like. You, of course, represent the petroleum industry, but what are your thoughts and advice in terms of looking for alternatives?
I ask that not in an unfriendly way, because I come from Saskatchewan, which has a gas and oil industry. But is certainly a lot of pressure now to put more and more into renewables. I think that's the way our society is moving, so I just wondered what your thoughts and advice might be on that.
Mr. Bill Simpkins: I think the market will really determine that. When we look at alternative sources of energy, we really do talk about engine technologies and where they're going. That will really determine the requirements for fuels. The future of fuel cells is certainly something we're looking at, and our industry believes we're probably best positioned to provide the hydrogen, through our hydrocarbon business, to supply the fuel cells.
Mr. Lorne Nystrom: What about the federal government in terms of R and D money? Should the federal government be channelling more and more money into this field? You say the market will decide. The consumer will decide in the end, but governments have to make choices sometimes in terms of where research and development money goes. A lot of people feel the priority placed on this area has not been high enough.
Mr. Bill Simpkins: I think a huge innovation agenda exists within the federal government now, and it sees research in all areas as certainly being important. There's also an understanding in our industry as well that research does occur. It's part of our business. The major oil companies and the major car companies do work together. Regardless of the new engine technologies that are made available, and regardless of the ones that prove to be acceptable to consumers, our industry will continue to reliably supply those new technologies.
Mr. Lorne Nystrom: The last question would be on public transit. We have had a lot of people making representations to us, and many have said we have to put a lot more money into rapid rail transit, into maybe having some federal funding of city buses, and things of that sort. We have a lot of traffic congestion in places like the metropolitan area of Toronto, on Highway 401, and so on. What is your advice to us in terms of what we should be doing in this area? Should we be putting a lot more money into rapid rail? Should we be moving more cargo on rail instead of by trucks, thus taking some of the vehicles off the highways? If you look at Europe and other parts of the world, rail is a much higher priority in many of those countries.
Mr. Bill Simpkins: It may sound counterintuitive coming from our industry, but we certainly believe conservation and using fuels wisely are very important not only to Canada, but to North America. We use a lot more fuels per capita in Canada and North America than they do in Europe. We firmly believe there are opportunities to conserve fuels, and consumers have a role to play in that in some way.
There should be more programs. We're getting involved in one now, in order to hopefully dialogue with consumers so that they can understand that this is a precious resource that should be consumed wisely.
The Chair: Thank you, Mr. Nystrom.
Mr. Scott Brison (Kings—Hants, PC/DR): Thank you, Mr. Chair.
I'd like to thank all of our witnesses today for their interventions.
My first question is to the life and health insurance industry people. I support the notion of eliminating capital taxes and increasing the RRSP contribution limits, but what is your position on foreign content limits? Would you support a dramatic increase in foreign content limits, which would allow a greater ability to achieve geographical diversification in investments? Also, what's your position on capital gains taxes, which are very different from capital taxes? Could you comment on your position on those two issues?
Mr. Mark Daniels: I'll ask my colleague to comment on the capital gains.
On the foreign content issue, we've never found occasion to get heavily behind that issue, largely because prudent investing seems to be falling somewhat short of the limits right now. On the whole, though, we would argue that those limits probably don't serve a useful function and may be inhibiting freedom of choice. But we've never found occasion to get heavily behind raising those limits in a substantial way. Again, though, that's because, by and large, the limits aren't tested even under the present law.
Mr. James Witol (Vice-President, Taxation and Research, Canadian Life and Health Insurance Association): Mr. Chairman, the life insurance industry unfortunately doesn't have much experience with capital gains taxes at the current time, because when a life insurance company sells a stock or a bond, it pays tax at 100% on a capital gains rate. If we sell real estate, that will get the capital gains rate. Some years ago, the Minister of Finance decided it would be a good thing if financial institutions paid full tax on all gains.
Mr. Scott Brison: To the aerospace group, prior to September 11, there had been a major downturn in the airline industry globally. I have an article in front of me from the July 7 edition of The Economist magazine. At that point, The Economist pointed out that after a period of growth of 5% per year in terms of air traffic globally over a period of several years, air traffic had been down this past year in America, in Europe, and in Canada.
Have you people tried to determine what losses are attributable to September 11 and the aftermath of September 11, and what losses would have occurred anyway? Clearly, the industry was in a tailspin globally prior to that. Would you feel it would be reasonable for the government to compensate and to assist with those losses attributable to September 11 and its aftermath, as opposed to a more broadly based bailout?
Mr. Stephen Hall: In terms of the airline industry, yes, airline traffic has been going down. It's a little bit more difficult for me to comment on that, because a lot of my business actually doesn't come directly from the airline industry. In our particular case, we do support maintenance that is in fact trying to extend the life of aircraft, which dovetails with the circumstances you have defined. That has certainly gone down. Basically, although there was some downturn in the airline industry itself, the maintenance and ongoing use of aircraft was certainly going fairly strongly. As of September 11, that has been reduced.
I can give a personal example of the cascade effect post-September 11, and that is that Bombardier has not yet lost one order, but people are asking the company to park aircraft. Subsequently, they've laid off 3,800 people and have tried to call work back in. That has now cascaded. In fact, that was one of the reasons why I lost one of my own contracts. So for many of us who perhaps don't work very directly for the airline industries, there is a very direct impact, although, in fairness, we were also involved in the high-tech industry, and there has been a downturn in it.
In terms of whether or not we should subsidize, I'd refer you to my attachment B, which contains the Economic Industry Disaster Loans Program from the United States Small Business Administration.
Mr. Scott Brison: But in the U.S., was an attempt made to try to separate what the losses were—
Mr. Stephen Hall: Yes, they are doing that. From the literature in my brief, I believe that what they're looking at is the idea of giving firms up to $1.5 million at 4% for up to 30 years. Again, that is something Canadian firms will unfortunately have to compete with. It's in place now, and as far as I'm aware, no corresponding action is in place for Canadian firms.
Mr. Scott Brison: Thank you.
I have a question for the printing industry. I didn't see the cost to the treasury in terms of providing identical tax treatment and in terms of capital cost allowance to the U.S. Have you calculated the cost of your proposal? I think it's a good proposal, and I think it makes a lot of sense, but have you calculated what you would expect the cost of doing this to be on a per year basis for the Government of Canada?
Mr. Pierre Boucher: Mr. Chairman, we have not done so, but it is something we've talked about and would certainly like to undertake. Again, we believe the outcome would be a net benefit.
Mr. Scott Brison: Would the lion's share of the equipment being purchased by most of your members come from the U.S.? Would that be a reasonable assumption? Is a lot of the equipment being purchased U.S. equipment?
Mr. Pierre Boucher: It's from different places. Heidelberg, Germany, is a big supplier as well.
Mr. Scott Brison: What I'm getting at is that our Canadian dollar hit record lows today. I'd be interested in your views and your members' views of what the impact is on your industry in terms of costs for the types of equipment you need to improve your productivity and your competitiveness.
Mr. Pierre Boucher: This is something we would certainly like to look into, given the dollar value, but it's a matter of us meeting the needs of our clients. We have no choice but to invest, so we're looking for an accelerated depreciation of the equipment.
Mr. Scott Brison: Thank you.
The Chair: Thank you, Mr. Brison.
On behalf of the committee, I want to express to you our gratitude for the input you have given to us. As you know, we count on your input every year before we produce a report for the Minister of Finance. As always, your insight is always welcome.
We're going to adjourned the meeting to the call of the Chair.