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37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Thursday, November 6, 2003

0805

The Chair (Mrs. Sue Barnes (London West, Lib.))

Mrs. Hilary Short (President and CEO, Ontario Hospital Association)

0810

The Chair

Mr. Michael Van Every (Chair, Horse Racing Tax Alliance of Canada)

Ms. Catherine Willson (Legal Counsel, Horse Racing Tax Alliance of Canada)

0815

The Chair

Mr. John Morrissey (As Individual)

0820

The Chair

Mr. Peter Currie (Vice-Chairman and Chief Financial Officer, RBC Financial Group, Canadian Bankers Association)

0825

0830

The Chair

Mr. Monte Solberg (Medicine Hat, Canadian Alliance)

Mr. Peter Currie

Mr. Monte Solberg

Mr. Peter Currie

Mr. Monte Solberg

Mr. Peter Currie

0835

Mr. Monte Solberg

Mr. John Morrissey

Mr. Monte Solberg

Mr. Michael Van Every

The Chair

0840

Mr. Bryon Wilfert (Oak Ridges, Lib.)

Mrs. Hilary Short

Mr. Bryon Wilfert

Mrs. Hilary Short

Mr. Bryon Wilfert

Mrs. Hilary Short

Mr. Bryon Wilfert

0845

Mr. Michael Van Every

Mr. Bryon Wilfert

Mr. Michael Van Every

Mr. Bryon Wilfert

Mr. Michael Van Every

Mr. Bryon Wilfert

The Chair

Mr. Scott Brison (Kings—Hants, PC)

0850

The Chair

Mr. Scott Brison

The Chair

Mr. Peter Currie

Mr. Scott Brison

Mr. Peter Currie

0855

Mr. Scott Brison

Mr. John Morrissey

Mr. Scott Brison

Mr. John Morrissey

Mr. Scott Brison

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

The Chair

Mr. Shawn Murphy

Mr. Michael Van Every

0900

Mr. Shawn Murphy

Mr. Michael Van Every

Mr. Shawn Murphy

Mr. Michael Van Every

Mr. Shawn Murphy

Mr. Steve Orsini (Vice-President, Policy and Research, Ontario Hospital Association)

0905

Mr. Shawn Murphy

Mr. Steve Orsini

The Chair

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP)

Mr. Steve Orsini

Ms. Judy Wasylycia-Leis

Mr. Steve Orsini

Mrs. Hilary Short

0910

Ms. Judy Wasylycia-Leis

Mrs. Hilary Short

Ms. Judy Wasylycia-Leis

Mr. Peter Currie

0915

Mr. Kelly Shaughnessy (Vice-President, Banking Operations, Canadian Bankers Association)

The Chair

Mr. Pierre Paquette (Joliette, BQ)

0920

The Chair

Mr. Kelly Shaughnessy

Mr. Pierre Paquette

The Chair

0930

The Chair

Mr. Robert Elliott (President, Canadian Retail Hardware Association)

0935

Mr. David Campbell (Chairman, Government Relations Committee of the Canadian Retail Building Supply Council, Canadian Retail Hardware Association)

The Chair

Ms. Elyse Allan (President and Chief Executive Officer, Toronto Board of Trade)

0940

0945

The Chair

Mr. Alan Redway (Chairman of the Board, Daily Bread Food Bank, Canadian Association of Food Banks)

0950

The Chair

Mr. Matt Ferguson (Public Policy and Research Coordinator, Canadian Association of Food Banks)

0955

Mr. Alan Redway

The Chair

Mr. David Peters (Special Advisor, Affordable and Supportive Housing, Ontario Non-Profit Housing Association)

1000

1005

The Chair

Ms. Susan Pigott (Chief Executive Officer, St. Christopher House)

Mr. John Stapleton (CUSP Fellow, St. Christopher House)

1010

The Chair

Mr. Monte Solberg

1015

Ms. Susan Pigott

Mr. Monte Solberg

Ms. Elyse Allan

1020

Mr. Monte Solberg

The Chair

Mr. Pierre Paquette

The Chair

Mr. David Peters

1025

The Chair

Mr. Alan Redway

The Chair

Mr. Bryon Wilfert

Ms. Elyse Allan

1030

Mr. Bryon Wilfert

Ms. Elyse Allan

Mr. Bryon Wilfert

The Chair

Mr. Matt Ferguson

Mr. Bryon Wilfert

The Chair

Hon. Maria Minna (Beaches—East York, Lib.)

1035

Mr. John Stapleton

The Chair

Hon. Maria Minna

Mr. John Stapleton

Hon. Maria Minna

1040

The Chair

Mr. David Campbell

The Chair

Mr. Scott Brison

The Chair

Mr. Matt Ferguson

1045

Mr. Scott Brison

Mr. Matt Ferguson

Mr. Alan Redway

Mr. Scott Brison

The Chair

Mr. Scott Brison

The Chair

Mr. David Campbell

The Chair

Mr. Shawn Murphy

1050

The Chair

Mr. David Peters

Mr. Shawn Murphy

The Chair

Mr. Gary Pillitteri (Niagara Falls, Lib.)

1055

Ms. Elyse Allan

The Chair

Mr. Gary Pillitteri

Ms. Elyse Allan

The Chair

Ms. Judy Wasylycia-Leis

1100

Mr. Alan Redway

Ms. Judy Wasylycia-Leis

Mr. Alan Redway

Ms. Judy Wasylycia-Leis

The Chair

Mr. David Peters

The Chair

Ms. Susan Pigott

1105

The Chair

Ms. Elaine Teofilovici (Chief Executive Officer, YWCA of Canada)

The Chair

Mrs. Susan Murray (Director, Multiple Sclerosis Society of Canada)

1115

1120

Mr. David Knight (Director, Multiple Sclerosis Society of Canada)

The Chair

Ms. Claire Hopkinson (Chair, Opera.ca)

1125

1130

The Chair

Mr. Donald F. Warden (Fire Chief, Canadian Association of Fire Chiefs)

1135

Mr. Patrick Burke (Fire Chief, Canadian Association of Fire Chiefs)

1140

The Chair

Mr. Gary McNeil (Managing Director and Chief Executive Officer, GO Transit)

1145

The Chair

Ms. Elaine Teofilovici

1150

1155

The Chair

Mr. Ray Riley (Chair, RESP Dealers Association of Canada)

The Chair

Mr. Paul Renaud (Chair, Government Relations Subcommittee, RESP Dealers Association of Canada)

1200

Mr. Ray Riley

The Chair

Mr. Monte Solberg

Mr. Donald F. Warden

Mr. Monte Solberg

1205

Mr. Donald F. Warden

Mr. Monte Solberg

Ms. Claire Hopkinson

The Chair

Ms. Micheline McKay (Executive Director, Opera.ca)

The Chair

Mr. Pierre Paquette

1210

Ms. Susan Murray

Mr. Pierre Paquette

Ms. Susan Murray

Mr. Pierre Paquette

Ms. Elaine Teofilovici

Mr. Pierre Paquette

Ms. Claire Hopkinson

Mr. Pierre Paquette

Mr. Ray Riley

Mr. Pierre Paquette

The Vice-Chair (Mr. Monte Solberg)

Mr. Bryon Wilfert

1215

Mr. Patrick Burke

Mr. Bryon Wilfert

Mr. Patrick Burke

Mr. Bryon Wilfert

Mr. Ray Riley

The Vice-Chair (Mr. Monte Solberg)

Mr. Gary Pillitteri

1220

Mr. Patrick Burke

Mr. Gary Pillitteri

Mr. Patrick Burke

Mr. Gary Pillitteri

Mr. Patrick Burke

The Chair

Mr. Shawn Murphy

1225

Mr. Ray Riley

Mr. Shawn Murphy

Mr. Ray Riley

Mr. Shawn Murphy

Mr. Ray Riley

Mr. Shawn Murphy

The Chair

Hon. Maria Minna

Ms. Elaine Teofilovici

Hon. Maria Minna

Ms. Elaine Teofilovici

Hon. Maria Minna

1230

Ms. Elaine Teofilovici

Hon. Maria Minna

Mr. Paul Renaud

The Chair

Hon. Maria Minna

The Chair

Mr. Ray Riley

The Chair

Ms. Judy Wasylycia-Leis

Ms. Elaine Teofilovici

1235

Ms. Judy Wasylycia-Leis

The Chair

CANADA

Standing Committee on Finance

NUMBER 101

2nd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, November 6, 2003

[Recorded by Electronic Apparatus]

¾ (0805)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): Order.

Pursuant to Standing Order 83.1, we will continue with pre-budget consultations. Today we are in our first panel in Toronto, on November 6.

Colleagues, there have been some changes to this panel. Our first participant is going to be sending in a brief and not doing an oral presentation, so you will have that distributed to your office.

To the panel, welcome to everyone.

We are going to hear from the Ontario Hospital Association. We have with us the president and CEO, Mrs. Hilary Short, together with Steve Orsini, who is the vice-president, policy and research. Welcome to both of you. When we start, you will be going first, because we will follow the agenda order.

From the Horse Racing Tax Alliance of Canada, we have the chair, Michael Van Every—welcome again, sir—together with Catherine Willson as legal counsel. Welcome to you. I think it's your first time at committee, Ms. Willson.

We have, as an individual, John Morrissey. Welcome.

From the Canadian Bankers Association, we have with us today the vice-president of banking operations, Kelly Shaughnessy, and Peter Currie, who is the vice-chairman and chief financial officer of RBC Financial Group, but is here in his capacity as a representative of the CBA.

Others will be joining us and coming in and out. Please feel comfortable getting up and getting coffee, or whatever you need.

We'll hear from all the panellists and then we'll go to rounds of questioning. I'll let you know that this session will end at 9:20 to allow some time for the next panel to establish itself.

For seven minutes, every participant will be allowed to put whatever they want on the record. Towards the end of that, you'll see me raise my pen and maybe wiggle it. That means you're running out of time. I'll give you time to wrap up with a sentence or two and then I will say thank you, which means your mike will turn off. It has been an effective way to do things, but what's most effective is when people stay within the timelines, and that includes my colleagues.

We'll start with you, Ms. Short.

Mrs. Hilary Short (President and CEO, Ontario Hospital Association): Thank you, Madam Chair, for the opportunity to meet with you again. We always welcome the opportunity to participate in your pre-budget hearings.

The Ontario Hospital Association represents 158 non-profit hospital corporations operating on 225 sites in Ontario. We offer the full range of services for mental health rehabilitation, complex continuing care, and acute care. We have small hospitals and leading-edge teaching, research, and specialty hospitals. We provide essential patient care services in communities throughout Ontario for a population of 12 million Canadians. We employ more than 200,000 health care workers and provide a million in-patient care visits and about 500 million emergency care visits, as well as 15 million out-patient visits every year.

We welcome the opportunity today to discuss additional strategies to invest in health care, to enhance Canada's quality and access to care, and to ensure the long-term sustainability of the health care system. Investing in health care has enhanced and will continue to enhance Canada's quality of life and international competitiveness. We have to make the necessary investments to put Canada's health care system on a sustainable track.

The importance of health care for Canada was clearly noted in the Honourable John Manley's economic and fiscal update when he said very recently that Canada's publicly funded health care system plays an important role in building the society Canadians value. It is vital to our quality of life and exemplifies complementary economic and social policies. In this context, it helps provide Canada with a distinct economic advantage of a healthy, productive workforce.

We would like to say a few words about the 2003 health accord. The health accord commits $34.8 billion for health over five years, including direct federal programs. We, in our sector, very much appreciate the significant investment in health care, as it provides needed resources to support patient care and foster activity in such key areas as primary health care, post-acute community-based services, diagnostic equipment, and information technology

While the accord seems impressive and is a rather significant achievement, it is very important to note that the federal investments noted that the first three years of the 2003 health accord are actually re-announcements of the commitments for $3.9 billion previously made in the 2000 health accord. The accord does not increase the cashflow of the CHST, which really weakens federal accountability to funding health care in the future and allows federal cash funding to erode over time.

In addition, the health accord does not include a legislative escalator to ensure federal funding keeps pace with the rising costs of providing patient care. This lack of an escalator does really weaken the federal accountability, and provides the federal government with more flexibility to shift a greater share of the cost of providing health care to the provinces.

I wanted to highlight a very key challenge that has faced our sector this year, and that is SARS. In Ontario, as you know, SARS had a devastating effect. We applaud the federal government's commitment to help cover the cost of SARS, but the additional funding provided so far, the $250 million, will in fact only go partway to alleviating that devastating impact.

We would encourage the federal government, as we will encourage the provincial government, to work together, so that the federal government would fund 50% of total SARS-related health costs and work with all the provinces in investing further in public health and emergency preparedness. We must be better prepared the next time an outbreak of this kind occurs.

We welcome the Honourable John Manley's commitment to provide up to $2 billion for health care spending when the federal books close for 2003-2004. We were heartened to hear him say that they will do their best to provide this $2 billion in additional funding.

However, by waiting until the books close in late summer of next year, the federal government is precluding provinces from accessing this funding in the current year. The unexpected delay of not having received this funding will certainly tend to undermine provincial confidence, if we are not careful, and will further weaken the financial stability of health care provided in Canada.

¾ (0810)

We therefore recommend that the federal government honour its commitment under the 2003 accord and confirm the full $2 billion in additional federal cash transfers for health care in January 2004.

In addition to addressing the shortfalls in the 2003 health accord noted earlier, the OHA would ask you to consider the following for the upcoming federal budget.

We would ask that you commit to increasing the total CHST transfers to the provinces for health care to an appropriate level of total provincial health care spending, such as 50%.

We would ask that you invest in the modernization of health care infrastructure, such as new facilities in high-growth communities and the redevelopment of academic health science centres, as recommended by the Senate committee in its report on health care.

We would ask that you continue to increase federal investments in health care research and innovation to help improve quality, patient safety, and access to care, as well as increase overall system effectiveness and efficiency.

We would ask that you support and encourage the establishment of national and provincial centres of excellence for highly specialized, complex, and low-volume procedures at designated health science facilities across Canada.

We would further ask you to continue to increase health research funding, including indirect costs, and target new investments for advancements in leading-edge research such as genomics and biotechnology, enhanced understanding of the broader determinants of health, improved decision-making for better management and delivery of health care services, and strategies to transform new knowledge into action.

Finally, we would like to thank you very much for the opportunity to participate today, and we offer any support we can to work with you to improve health care in our country.

The Chair: Thank you very much.

I probably should have mentioned right at the outset that when we travel on the road, we don't bring our whole committee; we just bring representatives. In case some of you are wondering where people are, there will be different people here at different times and joining us, but most of us are in Ottawa.

Thank you. You were absolutely on the nose on time. That's great. I'm sure the Horse Racing Tax Alliance of Canada can do the same thing.

Mr. Michael Van Every (Chair, Horse Racing Tax Alliance of Canada): We'll try.

Madam Chair, thank you very much for allowing us to appear before you again. The last time we were here was in 2001.

I have asked Catherine to make opening comments on behalf of our association.

Ms. Catherine Willson (Legal Counsel, Horse Racing Tax Alliance of Canada): Good morning.

We represent the Horse Racing Tax Alliance of Canada, which includes all owners, breeders, race tracks, and industry associations involved with thoroughbred and standard-bred horse racing in Canada.

Some of you may recall that we were in front of this committee in 2001 asking for the removal from section 31 of the Income Tax Act of taxpayers engaged in the breeding and maintaining of horses for racing. At that time, this committee responded with the recommendation that section 31 be repealed. The full text of the recommendation is set out in the materials provided to you.

This recommendation did not become law. Accordingly, the horse racing industry is before you again today requesting equality under the tax system. It wants to be treated like all other businesses in Canada.

This is the problem in a nutshell: Canadians will not invest in a business in which the income is fully taxable if the business is profitable but if it is unprofitable the business losses are not deductible against other income for income tax purposes. This is contrary to the very notion of a business as we know it.

Racehorse owners and breeders are defined as farmers under the Income Tax Act and are therefore subject to section 31 of the Income Tax Act, the restricted farming loss. Simply put, if horse racing is not your main occupation but a secondary business, section 31 of the act restricts the deduction of business losses from the horse racing business against other income to a maximum of $8,750.

Most Canadians take for granted the right to reduce the amount of their income that is subject to taxation from a profitable business or occupation by deducting any losses incurred in an unprofitable business. Racehorse owners and breeders and farm operators alone, among all other types of entrepreneurs, have been singled out for the severely restrictive tax treatment of business losses created by section 31 of the act.

This came about as the result of an attempt by the legislature in 1951 to actually assist the part-time farmer with a limited business loss deduction available for use against the farmer's primary source of income. Such a deduction was not available at that time to any other business. The amount, $5,000, was more than twice the average annual income of a Canadian. This benefit quickly became a curse when, in 1952, losses from secondary businesses became fully deductible for all taxpayers, with the exception of the part-time farmer, still stuck at $5,000. Fifty years later, the amount has increased by under $4,000--not keeping up with inflation.

The legislation is confusing, making planning and compliance difficult. It is applied inconsistently by the Canada Customs and Revenue Agency, and it unfairly singles out the part-time farmer. Most commentators, including the Carter commission report of 1966, advocate the repeal of section 31.

What is the effect of section 31 restrictions on the horse racing industry? It cannot attract investment. As every other industry is allowed the full deduction of business losses, then a person would be better off investing in a restaurant, a retail store, even a high-tech firm, rather than in the horse racing industry.

The horse racing industry is losing current investors and failing to attract new investors, with a corresponding loss in horses, employment, race fields, attendants, and betting revenues. It cannot compete with other Canadian investment opportunities, nor with the U.S. racing industry, both of which are not subject to loss deduction restrictions.

We are losing the ability to compete successfully in the North American market. Most major breeding operations are now located in the U.S., and up to 60% of our race fields are U.S. horses.

Why should you care? The industry is one of the largest employers in Canada, far exceeding the airlines, petroleum refineries, investment houses, and so on. It employs over 100,000 Canadians in full-time or part-time positions, with approximately $1.7 billion in wages and salaries. This industry employs many unskilled and marginalized workers and people in rural areas who might otherwise be unemployed, on welfare or other forms of social assistance. It also houses many of these people at race tracks and farms across the country.

The industry generates annual tax revenues of approximately $890 million. It contributes an estimated $1.9 billion to Ontario's GDP alone.

The economic growth tax billrecently signed into law by President Bush in the U.S. provides big tax incentives for investment in horses in the U.S., clearly recognizing the importance of this industry to the U.S. This is in addition to already favourable tax laws in place in the U.S. and the ability to deduct full losses against income.

¾ (0815)

We are asking that the unfair and anachronistic restraints be removed from this industry and that it be allowed to compete on the same field as other Canadian and U.S. industries.

We thank you for this audience, and ask you to support our request for the removal of the horse racing industry from the application of section 31 of the Income Tax Act.

The Chair: Thank you very much.

Now we'll go to Mr. Morrissey.

Mr. John Morrissey (As Individual): Thank you very much.

I'm John Morrissey. I'm a Toronto lawyer. I appear for my son, David Morrissey, who is a graduate student at the University of Chicago. But the people I represent go beyond him. I represent in some sense, certainly unofficially, all Canadian graduate students in the U.S.A., and as tuitions increase in this country, I think I represent also an increasing number of Canadian graduate students.

Here is the problem: university tuitions are not fully deductible when calculating income tax. The result is that my son is paying too much income tax. Let me develop that a little bit further.

When you calculate income on the income tax form, you add salary and a scholarship. Then you have a deduction for tuition. Typically, for a graduate student the tuition is equal to the scholarship. But the way our system works--and you have my written submission--there is not a full deduction for tuition, and the result is that my son pays too much income tax.

What I'm asking you to do today is recommend to the Minister of Finance that the income tax statute be amended to change that particular inequity.

My submission is consistent with two of the themes of this committee. One of the themes of the committee is to ensure economic growth and job creation. You will do that by putting more money into the pockets of Canadian graduate students. The other theme of this committee is to invest in and care for all members of Canadian society, and you do that also by not penalizing students.

This is a well-recognized problem. In my submission you have the article by Arthur Drache, who is an Ottawa tax lawyer. It's not a new problem. I think it ought to be addressed.

Now I want to lift this point off the page, as it were. So far I've just given you numbers. I'd now like to describe my son's life to you. He's not living in abject poverty, by any means at all. He has a salary of $30,000 Canadian. His tuition is astonishing; it's $45,000 Canadian. When he pays tax, he's taxed as though he has an income of $75,000, but he doesn't get a full tuition deduction for the $45,000. The result is, he's paying about $2,000 Canadian in tax, which, in my submission, he ought not to be paying. That's what I want to change.

My son is not living, as I said, in abject poverty. He's on the south side of Chicago, which is not the world's greatest neighbourhood. He lives in a studio apartment, basically a one-room apartment. He had an attempted break-in recently. What did the thieves do? They tried to break down the door.

The other day when he was walking home--and this is partly my son's personality--he saw a love seat with no cushions on the street. He rolled it home, because he's living in this one-room apartment and looking for ways, if you will, to supplement things.

He files three income tax returns. He files an income tax return with the U.S. Internal Revenue Service--the famous IRS--of roughly $2,000 American. He files a return with the Illinois Department of Revenue, roughly in the order of $600. He pays roughly $5,000 in this country to Canada.

In the U.S.A., his scholarship isn't taxed at all. It never goes onto the income line, so in the U.S.A. he pays taxes as though he earns $30,000 Canadian a year. I'm asking you to amend the statute to achieve that same result for this country.

It will put a few extra thousand Canadian dollars in his pocket. It will do the same for his colleagues at the University of Chicago and his Canadian colleagues elsewhere who have scholarships at the Harvards, the MITs, the Cal Techs, and so on in the U.S.A.

In my submission, I conclude that the current system is unfair, prejudicial, and burdensome.

If you have any questions, I'll be more than delighted to answer.

¾ (0820)

The Chair: Thank you very much.

Now we'll go to the Canadian Bankers Association. Mr. Currie.

Mr. Peter Currie (Vice-Chairman and Chief Financial Officer, RBC Financial Group, Canadian Bankers Association): Thank you, Madam Chair and members of the committee, for providing the Canadian Bankers Association with the opportunity to participate once again in the pre-budget consultation process.

The CBA welcomes the opportunity to offer our industry's views on the discussion themes set out by the committee. In doing so, we want to highlight the budget recommendations in our written submission, which we believe will help us sustain recent momentum and continue to strive toward greater levels of economic prosperity widely shared by all Canadians.

At the outset I'd like to state that Canada's banks have an ingrained commitment to Canadians, to our local communities, and to our national economy. The banks employ over 235,000 Canadians with an annual payroll of $16 billion, and they nurture a culture of community involvement through volunteerism and financial giving. In 2002 alone, bank donations to Canadian charities exceeded $99 million and $141 million worldwide.

Canada's banks provide crucial financing and credit to Canadians and Canadian businesses. At the end of last year, Canada's banks had over $316 billion in outstanding residential mortgages and more than $148 billion in personal loans. Canada's banks are also the leading source of all business credit provided to Canadian companies, totalling more than $700 billion authorized last year.

The banks continue to invest heavily in developing convenient, multi-channel delivery systems to meet the evolving banking needs of Canadians, including Internet and telephone banking, the long-standing branch system, and ABM networks in communities across our country. In addition, the six largest banks paid over $5.17 billion in taxes to all levels of government in Canada last year, including over $539 million in federal and provincial capital tax.

We believe that the three themes outlined by the committee are to a significant extent interconnected.

We agree with the committee that Canada needs to priorize initiatives that foster innovation, productivity, and a favourable business and social environment in order to assure greater levels of economic prosperity widely shared by all Canadians. Meeting this objective depends in part on creating a competitive business environment that is favourable to investment, encourages high levels of productivity and innovation, and provides for knowledge based, well-paid, value-added jobs.

The CBA believes that continued business tax reform provides a significant part of the answer to meeting the challenges created by globalization, technology, and the mobility of capital and resources.

The CBA supports the significant steps that the federal government has taken to reduce corporate income taxes, to begin phasing out the large corporations tax on capital, and to create a regulatory framework that promotes innovation. In this regard we encourage the government to continue its strategic investment in pursuing the elimination of capital taxes and ensuring the effective corporate tax rates are competitive with other jurisdictions.

The commitment to eliminate capital taxes is of particular importance. Capital taxes penalize corporations for making the very investments in innovation that Canada aspires to achieve. Business leaders and economists across our country agree that capital taxes work against innovation, investment, productivity, and job creation and ultimately undermine the nation's economic prosperity and standard of living.

For the financial services sector, which as a whole bears a disproportionate share of taxes relative to GDP than their competitors, capital taxes create a significant competitive disadvantage. Capital taxes are profit insensitive, taxing the very capital base that financial institutions are required by regulation to maintain to protect against risk in order to ensure financial strength and stability.

Notwithstanding the important steps taken by the federal government, international competition continues to intensify. A June 2003 report prepared by Jack Mintz of the C.D. Howe Institute concluded that the average effective tax rate on capital in the U.S.A. for this year, 2003, is 20.1%, compared to 31.8% in Canada. While U.S. effective tax rates may increase somewhat, for Canada to even achieve comparability, at a minimum it needs to implement business tax reductions planned by federal and provincial governments and achieve, as well as maintain, elimination of capital taxes in several jurisdictions.

Given the globally competitive financial services marketplace and increased mobility of financial services, we believe government must continue to take steps to reform its business tax regime to ensure the competitiveness of corporate taxation in Canada. Capital taxes affect domestic financial institutions more than foreign-owned institutions. Regulatory capital is calculated on a consolidated basis, so even where business is carried on through a foreign subsidiary, additional capital is required in the parent bank and is subject to Canadian capital taxes, thereby reducing the international competitiveness of our banks.

Conversely, foreign competitors operating with a physical presence in our country generally fall under the same regulatory and tax regime as domestic banks and pay Canadian capital taxes based on capital deployed here. However, the balance of their capital, which they deploy globally, remains free of Canadian capital tax. Consequently they have a competitive edge over Canadian financial institutions in attracting and deploying capital.

¾ (0825)

In support of its recommendation to eliminate capital tax, the finance committee made reference to the report prepared by Ernst & Young in 2002, showing that a disproportionate part of the capital tax burden is being borne by the manufacturing, resource, and financial sectors.

The report shows that the financial sector contributed 5.5% of national GDP but paid 21.3% of the large corporations tax. In addition, financial institutions pay a federal part VI tax, a discriminatory tax directly solely at financial institutions.

In addition to phasing out the large corporations tax, we encourage the government to eliminate the federal part VI tax on the capital of financial institutions and pursue effective corporate tax rates that are competitive with those in the U.S.A.

In addition, we believe the federal government, in balancing its strategic priorities and within the constraints of financial prudence, should consider further phased reduction in the rate of corporate income tax with a view to maintaining comparability of effective corporate tax rates with those in the U.S.A and encouraging competitiveness with other jurisdictions.

The CBA believes Canada needs to develop a business tax system that will not only keep jobs in the country but also continue to entice companies to come here. In so doing, Canada will ensure a tax base that will permit it to sustain the important program priorities identified by your government. Implementing a tax structure that would improve Canada's strength and competitiveness works hand in hand with such an agenda.

We're pleased with recent initiatives by the government to reduce the corporate tax burden and reduce distortions in the tax system. We strongly encourage the government to forge ahead with the planned corporate tax cuts. But we are particularly concerned about recent proposals by several provinces to increase corporate income taxes and roll back scheduled rate and capital tax reductions.

By continuing your leadership role in pursuing the elimination of capital taxes, your government can sustain the positive momentum it's created to encourage many provinces to implement similar measures and perhaps reconsider rollbacks.

We're therefore recommending four things: first, accelerate the timetable for phasing out the large corporations tax; second, eliminate the remaining federal capital taxes on financial institutions; third, continue the leadership role in working with the provinces to reform the tax regimes; and fourth, accelerate the corporate income tax rate reductions.

Both government and business, including Canada's banks, want to ensure greater levels of economic prosperity and the highest quality of life for all in Canada. We believe continued progress on tax reform is necessary to ensure these goals.

Madam Chair and committee members, I'd like to thank you for again providing the CBA the opportunity to meet with you this morning. We'd be pleased to answer any questions you may have in due course.

¾ (0830)

The Chair: Thank you very much.

I'm going to give everyone presently in the room seven minutes. We'll start with Mr. Solberg.

Mr. Monte Solberg (Medicine Hat, Canadian Alliance): Thank you, Madam Chair, and thank you to all of our presenters this morning.

I'll start with Mr. Currie's comments.

Mr. Currie, the other day the finance minister was before our committee presenting his economic statement. He argued quite vigorously that corporate taxes in Canada are lower than they are in the United States. But I guess you're saying that in the aggregate they really aren't, that when you take into account all factors, like capital cost allowances and those kinds of things, the tax burden in Canada is still far too high. Is that basically what you're saying?

Mr. Peter Currie: That's the upshot of our position, yes. In aggregate, the tax burden borne by financial services companies in particular in Canada is far higher than it is in other jurisdictions. If you're looking at the broad reach of industries across an economy, you might reach a different conclusion. But certainly in the case of financial services—which frankly is one of Canada's core competencies, in an industrial sense—we bear a significantly higher tax burden than many of our competitors, notably our American competitors.

Mr. Monte Solberg: Capital taxes are particularly punitive. I'm not suggesting we should follow this route, but would the CBA consider replacing capital taxes with other types of tax in the short run to allow the banks to escape capital taxes? They are particularly punitive. They have a far greater impact on efficiency than other types of taxes.

Mr. Peter Currie: Our view is that the entire tax regime needs to be competitive with the primary competitive jurisdictions—let's take the U.S. as an example. In aggregate, our view would be that the overall tax bundle should be competitive in order to attract and retain business, particularly in financial services.

In the context of capital taxes, our fundamental issue is that they're frankly a perverse tax. Capital is put in place by financial institutions—and this is done at the behest of various regulators—to protect against volatility and essentially protect against operating risk within the financial institutions. To tax that in fact goes contrary to the security and stability concept the regulators promote and that is good corporate governance and good prudence.

From a tax-structure perspective, I think we'd be more comfortable with a tax aligned with profit generation rather than one that's aligned with the simple capital structure of an organization.

Mr. Monte Solberg: I'll ask you one more question. This has nothing to do with your presentation, but are you willing to reflect on the issue of bank mergers for a second? It's a big issue, and I'm wondering how comfortable you are with the present process for mergers, which is basically to leave it completely in the hands of the finance minister and I suppose the Prime Minister.

Mr. Peter Currie: Putting my CBA role aside, because the CBA, as you can understand, doesn't take a position on bank mergers other than to suggest they're a viable business strategy, if I put on my RBC hat I would say we're pleased that the finance minister and the government have enunciated a process we might be able to follow starting, I think, in September of next year.

We look forward to that becoming clearer. From an RBC perspective, we've been on the record many times suggesting that combinations in financial services—in banks in particular—are not only viable, but we would suggest quite important to the future sustenance of a world-class financial services sector in this country.

We believe we have one today. We believe we're losing ground to foreign competitors—U.S., European, and Australian—and we don't think that's necessary. We think that with the appropriate scale and scope we can compete with the best in the world. However, as you know, we also serve the owners of our companies and we need to continue to grow our companies. Combinations will enable us to do that, and in jurisdictions beyond Canada.

¾ (0835)

Mr. Monte Solberg: Mr. Morrissey, I appreciate your presentation. I'm just wondering if you have some sense of how broad the scope of this problem is. Do you know offhand how many people would be affected by...

Mr. John Morrissey: No, sir, I'm afraid I don't have that number. I just don't know. I imagine the finance department would know. If not the finance department, then CCRA could determine it for you. As a guess, I would say it's 50,000 to 60,000 people in the U.S. As I mentioned during my presentation, this will be an increasing problem in Canada as tuitions increase here. For example, tuition, I gather, in the dental school at the University of Saskatchewan is now about $30,000 a year.

I see this as an ever-increasing problem but an easy one to repair.

Mr. Monte Solberg: Thank you. I appreciate your presentation.

The horse racing issue, as you rightly point out, has been around for a little while as an issue. I'm wondering if you could give us some insight as to what, when you talk to people at the Department of Finance, the objective is. As you know, we recommended that we go ahead and eliminate this provision from the Income Tax Act. What is their objection? What do they tell you when you talk to them about this?

Mr. Michael Van Every: Thank you.

We received a letter from Mr. Manley about a year ago advising that at that time that it was the Department of Finance's position that the loss of revenue the government would suffer was indeterminable. We found that a bit strange, because all of the tax records are available, and somebody ought to be able to calculate that. And in our submission, we had an economist determine that if it were removed, there would actually be an enhancement to revenues of the government, not a loss of revenue.

The second argument was because the farming community enjoys the benefit of cash basis accounting instead of accrual accounting, and on that basis we had talked to Mr. Martin earlier to suggest that there is an option under the farming rules that allows an individual to elect accrual basis accounting instead of cash. So we said to him, if an individual wants to elect accrual basis, then there ought to be no reason why section 31 would apply. And he accepted that. Unfortunately, he resigned and was replaced by Mr. Manley before that was put into effect.

The other thing we've tried to point out to the Department of Finance is that they continue to hide behind this cash basis of accounting. In fact, cash basis of accounting doesn't exist any more if you incur losses. It's now called modified cash basis of accounting, if you will, because cash basis allows a taxpayer to write off the cost of inventory, and horses are considered inventory. However, if you incur a loss, you have to add back the value of the inventory. So in fact the cash basis of accounting has been so modified since about 1987 that it does not offer the benefit it used to, and therefore we just don't understand that. And we've talked to Mr. Farber at the Department of Finance and we've tried to explain that. They seem to be unwilling to accept it.

The Chair: Thank you to both of you.

In fairness to the CBA, I should put on the record that when we did the bank merger report, the CBA chose not to appear as a witness. I appreciate Mr. Currie saying that that was not the CBA opinion and reinforcing that, because that in fact was the case at the time.

We'll now go to Mr. Wilfert and then over to Mr. Brison.

¾ (0840)

Mr. Bryon Wilfert (Oak Ridges, Lib.): Thank you very much, Madam Chairman.

I thank everyone for coming today.

With regard to health care and the Ontario Hospital Association, you mentioned the government honouring its commitment for the $2 billion. The commitment was actually that as of January 2004, if in fact the fiscal state of the nation is such, we would honour up to $2 billion.

There's another side to the coin, and that is obviously the national health council, which provinces by and large are not honouring. I didn't hear you mention that. And I'm rather unhappy with the Prime Minister's decision to agree to the $2 billion without that caveat. In my view, we should only give money out of that $2 billion to those provinces that signed on, and the rest of it should be put in escrow until such time as those provinces come on board.

I'd like your comments on that.

Mrs. Hilary Short: We just concluded a meeting with all of our hospitals at our convention, and the new Minister of Health of the Liberal government of Ontario, the Honourable George Smitherman, announced unequivocally that the Liberal government in Ontario is fully supportive of the council.

Mr. Bryon Wilfert: Yes. Unfortunately, Ralph Klein of Alberta is not. But Ralph Klein will get the money and so will Mr. McGuinty under the Prime Minister's letter, which I find unacceptable, personally.

Mrs. Hilary Short: The OHA is certainly very supportive of accountability in health care. We are going to be very supportive of any initiatives that relate to moving the system forward in that way. It is our understanding that the Ontario government will have its own standards council for health care as well, and, as I say, has now indicated its full support for the national health council.

In terms of what Mr. Klein chooses to do, I'm not sure that I have a fixed opinion on your proposition, but it's certainly something that could be considered, because I think everyone in health care does not want to see business as usual. We want to see some changes.

Mr. Bryon Wilfert: My concern is that by 2007-08 the federal government will transfer $63 billion to the provinces, and without the kind of accountability and transparency that we need, it's never enough. I really get fatigued listening to people in the health care profession continually coming and saying we need more money, and every time we make these agreements.... I think we need to have a fully publicly funded sustainable system, but the difficulty is that every time we have these agreements, six months later we're always coming back for more. And without the accountability to Canadian taxpayers, we never know where this money goes.

Mrs. Hilary Short: I don't think you will get any argument from our organization in particular. We are the ones who started the whole process of report cards in Ontario. Furthermore, we believe that the time has come when we realize that we cannot just sustain the system in the way it is and that we need to look at far different ways of maintaining our system. Certainly it is our intention to start to build those alliances and partnerships to try to break down the silos so we can have a more integrated system.

I would point out that if you just look at hospital inflation, which I know wearies politicians to the nth degree when you just keep giving us more money, even the Conference Board of Canada would say to you that there inexorable pressures that push hospital costs up. They are related, as you well know, and as I'm sure you're tired of hearing, to the salary and wage components; they relate to the growth and volume of services, particularly in high-growth areas; and they relate to the double-digit increase in drug costs and so on.

I think even without doing anything, hospital costs as they are go up by about 8% a year. So that is why it's critical, as you say, to find new ways of delivering care, making sure that we give the right care to the right people, in the right place at the right time, but also that we do, as we say, find new ways to make sure we track the money and that everyone understands where that money is going.

Mr. Bryon Wilfert: I welcome your comments regarding a medical equipment fund. I think we should have some kind of permanency beyond 2005-2006. The question, of course, would be how to fund it. That's the problem we have with all of the presentations, as we know.

On the horse racing under section 31, I was intrigued by your comment following Mr. Solberg's. You talked about an enhancement, not a loss. Can you briefly elaborate on that, that in fact it wouldn't be a loss to the federal treasury, it would be an enhancement? If that's the case and you have empirical evidence to suggest that, then why did the Department of Finance suggest to you the absolute opposite?

¾ (0845)

Mr. Michael Van Every: That's a good question.

I think it's the short-term loss of revenue that Revenue Canada or the Department of Finance are concerned about--

Mr. Bryon Wilfert: How short term are we talking here?

Mr. Michael Van Every: Professor Kubursi, who is an economic research consultant at McMaster University, did a study for us in 1999. He believed it would increase jobs, increase revenue to the government, increase GDP. He did not put a timeframe on it, but considering that the breeding industry takes approximately four years to produce a horse to a racing age, because the decision to breed today doesn't produce a horse that can race for about four years, I would suggest to you that it's probably a five-year term.

What I have suggested to the Department of Finance is that if they're concerned about the loss of revenue, why not phase it in? Why not take a five- or ten-year approach, but put it in such that over a period of time we can compete on a fair basis with all other industries in Canada?

Mr. Bryon Wilfert: So you want some signal in that regard?

Mr. Michael Van Every: Absolutely, that's really what we're asking for.

When we met with them last year we thought, going forward into the budget for 2003, that we actually had an agreement with the Department of Finance, which is why we didn't come here last year. We met with them and we agreed that it would be increased substantially from the $8,750 to something in the $20,000 range as a start toward a long-term solution to the problem. Then we found there was nothing in the budget last year, so we've really become quite frustrated.

Mr. Bryon Wilfert: And to the Canadian Bankers Association, on capital tax, I certainly supported its elimination. The acceleration concerns me. I wouldn't mind supporting acceleration, but the problem is I don't know where the money's going to come from. And that's with everything. We're not going back into a deficit. The minister was extremely clear on that.

I'm very concerned. We're too close to the bone as it is, and I don't want any surprises like we had in Ontario. So clearly we have to be very prudent. I always support things such as phase-ins, because I think they are important signals, but again they have to be done with a great deal of prudence.

Thank you.

The Chair: Thank you very much.

Now I'll go to Mr. Bryson. You have seven minutes.

Mr. Scott Brison (Kings—Hants, PC): Thank you, Madam Chair.

Thanks to all of you for your presentations this morning.

My first question is to Mr. Currie and Mr. Shaughnessy of the CBA. Over the last ten years there's been some regulatory reform, but in the area of bank mergers the government has been hesitant. We've had the MacKay task force, the House of Commons finance committee response, and the government's framework. In the summer of 2002, the minister allegedly provided a go-ahead, where the government would consider allowing mergers. In the fall of 2002, the Prime Minister said it wouldn't be until after his retirement. Now we're hearing that there may be a new policy on bank mergers after the next election.

During that period of time there's been an unprecedented rapidity of change and rate of global consolidation in this sector. Many people, particularly those concerned about the nine million Canadians who directly or indirectly own bank shares and are depending on the competitiveness of Canadian financial institutions from a retirement savings and income perspective, are concerned that we've lost ground.

On the most recent merger of Bank of America and FleetBoston, according to one recent article the price paid for FleetBoston would have bought CIBC and Scotiabank, and paid shareholders a 12% premium.

With this rate of consolidation, I'd appreciate your feedback on whether or not, from a financial services and industrial strategy perspective, Canadians--not just Canadian bank shareholders--have lost ground, in terms of our ability to be global leaders in this sector, based on the fact that legitimate merger proposals have not been allowed to proceed over the last five years in Canada.

¾ (0850)

The Chair: I'm going to allow the question. We are on pre-budget consultations, and with a very liberal interpretation that could encompass a lot. But it's up to the CBA witnesses whether they wish to deal with this as a CBA issue.

I'm going to allow the witnesses to answer, if they wish.

Mr. Scott Brison: If I may, this affects fiscal issues, because clearly the competitiveness of the Canadian industry is contingent on having effective--

The Chair: I realize that. Mr. Brison, the floor is mine.

The CBA witnesss have the floor if they wish to answer this.

Mr. Peter Currie: Thank you, Madam Chair.

Mr. Brison, the CBA believes that bank combinations, financial services company combinations, are a viable strategy. But that's only one element in the operational effectiveness of the Canadian financial services sectors.

I would add that from a consumer's point of view, Canadians have been well served by the banks over the past hundred years. We have one of the most competitive banking environments in the world, and some of the most cost-effective service delivery mechanisms in the world. At the same time, our banks have been able to evolve and become world leaders in areas such as consumer marketing and technology.

The challenge we face, as you mentioned, is that the landscape is continuing to change. Size or combination is only one element of that change. What's actually more important, from a global competitiveness point of view, is the ability to attract capital and people. That's the essence of our brief. It's not really surrounding mergers as an individual element; it's about overall competitiveness.

We believe that allowing Canadian banks to consolidate and be more forceful players on the world stage is important for the sustenance of the industry in Canada. That will continue to enable attractive shareholder returns to the owners of the banks. It will also continue to allow attractive pricing for consumers of bank products and services.

I don't think the CBA is in a position to comment on whether the path we have followed in Canada over the past five or six years has been helpful or less than helpful to Canadian consumers or shareholders. I will reiterate that we continue to believe that combinations are a viable strategy. We continue to believe that the longer Canadian banks are unable to achieve competitive scale and competitive reach, the more our position will continue to be eroded.

Take the example of my organization, RBC. We were among the top couple of dozen financial services companies in the world ten years ago. Now we're lucky to be in the top 50. At the same time, in an absolute sense, our company has done well for shareholders. But it's a relative game.

Mr. Scott Brison: With the loosening of the ownership rules, the trend of international consolidation, and the fact that we've limited and not allowed internal mergers, do you think more foreign ownership of the Canadian financial services sector in the next ten years is a realistic expectation?

I believe that Canadians are better served by banks with their head offices in Canada than with their head offices in Zurich, Chicago, or New York. Certainly people working in those head offices would agree. I'd appreciate your feedback on what the probability or possibility of that evolution would be.

Mr. Peter Currie: I won't give you an idea of my personal assessment of the probability, because I think today the borders are pretty open. We've got a number of non-domestic banks doing business here in Canada--like ING, HSBC, and Citibank. They are viable and vibrant competitors.

I would agree with you that maintaining the domicile of banks in Canada is important. It's important from a consumer point of view, and it's also important from a social policy perspective. We believe that by maintaining the centres of excellence for leadership of financial services companies in Canada we can continue to offer solid career paths for people, retain high-paying jobs, and facilitate reinvestment in the economy in Canada. That's the thesis the CBA would support, and certainly that our company would support.

¾ (0855)

Mr. Scott Brison: I agree with the Horse Racing Tax Alliance that there is a discriminatory tax treatment of the industry, and it has to be treated as an industry. It's treated more as a hobby, but they're not recognizing the industrial benefit of it.

On health care, one issue we always have to consider is fiscal imbalance. The federal capacity to raise revenue has grown dramatically over the last ten years, and provincial costs for the constitutionally enshrined responsibilities of health care and education have also grown. There is accountability right now in the form of provincial elections. God help any provincial government that doesn't do its utmost to provide quality health care and education.

On the tax treatment of students, one point in your brief that would strengthen it is that families are income-tested in terms of their qualification for student loans.

Mr. John Morrissey: That's not the case.

Mr. Scott Brison: There is income-testing for families to qualify for student loans.

Mr. John Morrissey: I'm sorry--for loans, yes.

Mr. Scott Brison: So I'm suggesting it's unfair for a lot of students who don't qualify for student loans because of family income. In a lot of cases, just because the family may have a reasonable income doesn't mean there's any extra money to pay for education beyond.... If a family has four or five children, or even two or three children, a middle-class income can be swallowed up by that. So even though the family can't afford to pay for the child's education, the child cannot qualify for a student loan. The fact that there's income-testing on student loans denies a lot of middle-income and upper-middle-income children from having access to student loans.

That would strengthen your brief as well, and improve the case for tax deductibility and fairer tax treatment.

The Chair: Thank you.

Now we'll go to Mr. Murphy, please.

Mr. Shawn Murphy (Hillsborough, Lib.): Thank you, Madam Chair.

I just have a question for Catherine Willson and Mr. Van Every.

First of all,I should disclose a minor conflict. I'm indirectly a member of your alliance. As a member of Standardbred Canada, I have raced harness horses on a very modest basis for the last 15 or 20 years. I always kept a day job to supplement my horse income. I advise that to a lot of people.

You'd be interested, Madam Chair, that not this summer but last summer we had a filly who we named Madam Speaker. Like a lot of things on Parliament Hill, this filly didn't move quickly enough and didn't make it. Perhaps we'll call the next one Madam Chair.

The Chair: I wondered where this would end.

Mr. Shawn Murphy: Anyway, my question to you was going to be on the cost of the proposal. I did support this recommendation two years ago. I take it that your answer, basically, is from a macro-economic basis and there are benefits, but Manley's answer, of course, is that the cost is indeterminable.

I'm talking about the actual cost to the taxpayer outside the macro-economic model. Has there been any really serious effort of trying to model the cost based on what the deductions would be if horse racing and horse breeding were eliminated from section 32(1) of the Income Tax Act?

Mr. Michael Van Every: The answer to the question is no. It's very difficult in our industry to gather financial information from a myriad of small and medium-sized investors, such as yourself.

We understand that the Department of Finance actually has the tax returns, which require the filing of gross losses and then the restricted losses. It seems to us that it ought to be fairly easy for CCRA to add those numbers. We've asked for that information and not been provided with it. It may be that they don't prepare it. In order to get a response that says we think it may be too costly, they must have some sense of what it is.

What's supporting the revenue source for this industry, at the moment, is approximately $300 million of purse money in Canada. What also supports it is sales to the United States. Unfortunately, we're not able to breed the quality of horse that Americans want to buy.

Another support is revenue earned from racing offshore, in the United States principally. It may be interesting for you to know that in the world championship racing that was held two weeks ago in California for thoroughbred racing, there was $14 million of purse money available. There were approximately 100 horses entered in those eight races. There was only one Canadian-bred horse. If we could have a better breeding program and a better ownership program here, we ought to be able to compete internationally for that kind of money to bring back and to augment the revenue sources.

¿ (0900)

Mr. Shawn Murphy: I don't think that's the case in the Standardbred industry, though, for the breeding initiative that you talked about.

Mr. Michael Van Every: That's correct. The Standardbred industry has done a very good job in ranking almost equally with the State of New Jersey in producing very high-quality horses, and is actually bringing in significant amounts of money from racing in the United States.

Mr. Shawn Murphy: You would agree with me that if the cost is actually indeterminable, we'd have to put a cap on it, but the cap should be much larger than what they are talking about now.

Mr. Michael Van Every: That's correct. That's our position, if there is some doubt that there's any reasonable expectation of profit. As you know, those rules have now changed under the case in 2002, which said you no longer have to have a reasonable expectation of profit in business; you have to conduct it in a business-like fashion in the pursuit of profit. That means that virtually everybody who owns a race horse today would qualify as a business.

Once you've made that determination, it seems to me, they ought to be able to be treated like any other business. If you're investing $500,000 or $600,000 in horses, to have a loss restriction of $8,750 isn't sufficient. We had suggested that the Department of Finance raise the amount—what we'd agreed to is somewhere in the $20,000 range for the current year—see it gradually increase, and see what the revenue loss is, if in fact there is a revenue loss to the federal coffers.

One might argue that in a long-term basis it ought to be, until you demonstrate that you are making money, limit the deductions to 50% of all losses. That would go quite a long way, because if someone invests $500,000, then $8,000 is nothing. If they invest $8,000, they're essentially getting a full deduction. It isn't comparable to somebody who wants to invest money.

Mr. Shawn Murphy: My next question is to the Ontario Hospital Association, Ms. Short.

First of all, I want to thank you for your brief. I understand the gist of it, that the old way isn't the way of the future. A lot of your recommendations are on sound footing--for instance, IT and information, bringing in more effectiveness to the system. But there's one recommendation that you made, on page 4, that I was reading last night in the airport, and I nearly choked on my pretzels. This is the one I want to question you on:

That the federal government commit to increasing total CHST transfers to the province for health care to 50 per cent of total provincial health care spending and that this increase be phased in over five years.

Do you have any idea of the cost of that? And where would the money come from? I think you're probably talking about $50 billion.

Mr. Steve Orsini (Vice-President, Policy and Research, Ontario Hospital Association): In response to that, I think there are a number of points in the context that we would like to draw to your attention.

We are equally concerned about the sustainability of the health care system. We have an insurance system that guarantees, in a lot of respects, access to care. We have the Canada Health Act, which specifies that provinces must provide medically necessary services. But unlike the Canada Pension Plan and other public insurance systems, there is no guarantee that the resources will be there to honour that.

I thought that the Senate committee raised some interesting points about the health care guarantee to ensure that.

We're looking for a collaboration, federally and provincially with all the stakeholders, to really focus on making the system sustainable. There has to be accountability at all levels. If we're setting standards and expectations to the public that these services have to be met, then we need all partners to play their particular roles.

If the studies are coming out saying that there is a vertical fiscal imbalance, where the federal government has stronger revenue growth than the provinces, we see that the provinces won't be able to live up to their end of the bargain.

While we're trying to do everything we can to be more accountable and more efficient, we see a growing gap. When the CPP had a huge unfunded liability, it focused the nation on trying to deal with it.

That's why the commitment is there. We don't see the provinces being able to continue to pay for a greater share of the health care costs when the overarching framework is set under the Canada Health Act.

¿ (0905)

Mr. Shawn Murphy: To answer my question, I would see this costing upwards of $50 billion. The revenue would have to come from two sources: it would come from deficit financing or from tax increases.

Mr. Steve Orsini: A number of different national studies have identified different approaches to dealing with that. I think that the Romanow commission looked at surpluses. The Senate committee looked at revenue sources. I think it might be a combination of those, plus driving new efficiencies into the system as well.

The Chair: Thank you very much.

We'll now go Ms. Judy Wasylycia-Leis.

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Thank you, Madam Chairperson.

I have some questions for the Ontario Hospital Association.

Notwithstanding the concerns about accountability and the need for a health council, it seems to me that in fact when the commitment for the $2 billion was made, there were no strings attached as such. I only wanted a clarification on that.

Mr. Steve Orsini: In discussions with the Canadian Health Care Association, their view was that it wasn't 100% clear during the negotiations as to whether or not there were conditions. Although when the accord came out, there was a footnote saying that the $2 billion would be conditional on the contingency—I guess, $3 billion. What came out in the economic and fiscal update was a new twist that was brought to the conditions, in terms of up to $2 billion being settled when the books closed.

It has given an unexpected delay. I don't think that the provinces would really know what to book for this year, or plan to spend this year, to deal with growing pressures in the system. I think that's one of the concerns we raised.

If we can go back to having a clear commitment for the full $2 billion in January, we would certainly feel that would send an important signal to the provinces that there will be money for them to deal with the huge pressures in the system.

Ms. Judy Wasylycia-Leis: As you may have noted in The Globe and Mail today, the Auditor General has also pointed out an unexpected twist and turn in terms of the government putting that condition on the table, given the fact that in the past they have said that any money after the books are closed must go against the debt. We now have a situation where it's possible to suddenly leave the books open to put that money towards health care.

It leads to the question, if that's the case, and given the fact that we had an unexpected and additional $4 billion in the last fiscal year that is going to automatically go against the debt, wouldn't it make sense, in your view, for the government to commit to that $2 billion and give it to you now, so you can actually meet the demands you're facing at present?

Mr. Steve Orsini: We would support a clear commitment in January, or actually right now. In the provinces, hospitals are providing services but don't have the fiscal resources to deliver those services.

I would also point out, and this was in our submission last year, that because of very prudent and good fiscal planning, the federal government has always delivered a surplus much higher than what they were forecasting. It maybe can't rely on that for the future, but last year the books closed at a higher amount. We would support a clear indication now.

Mrs. Hilary Short: I would just add that this is symptomatic of the whole problem related to the funding of health care and hospitals, this continued uncertainty. We never know how money is going to come in or where it's going to come from. If you are the hospital board and you're running a hospital, you have to deliver services. You're accountable for all the money that's spent, but you have no control over the revenues you're going to receive to deliver those services.

We have to change this whole thing, because we need to find new ways of doing this, new ways of the federal government and the provincial government working together so hospitals can have some certainty and stability in the way they are funded and not this constant push-pull of what money is coming in, where it is coming from, and so on.

¿ (0910)

Ms. Judy Wasylycia-Leis: In point in fact, from my calculations it seems there's about $40 billion in surplus money that was unexpected over the last four years. All of that money has gone against the debt, which will actually do little to change the debt-to-GDP ratio, whereas it would make a big difference on the health care front.

Let me ask one more question, and you might want to jump in on both points. It's something Bryon Wilfert doesn't mention when he raises this whole question about the provinces continually coming back to the table for more money, that in fact we've never gotten to the point where there's a reasonable formula where planning can take place. I think he fails to mention that provinces were so upset with the 2003 accord that there wasn't even an official signature to the accord. In fact, it fell far short of what the needs were, and it fell far short of what Romanow recommended.

If somehow we could convince this government in this budget to at least accept the notion that the federal government ought to be putting on the table cash to the tune of at least a 25% share of health care spending--with an escalator clause, with something that reflects population growth--then at least we would have overcome a fundamental flaw in the system and gotten back on a stable footing.

Mrs. Hilary Short: I think there's much to be said for that. Again, I go back to the point that there needs to be some certainty and stability and not this constant uncertainty. I will give the example of SARS this summer. As you know, there was the relationship between the provincial government and federal government. The provincial government in Ontario has now changed, but it was very difficult. We saw what was happening to our hospitals with the costs they were incurring and the devastating impact. We also saw the impact of the federal government and provincial government being unable to break the log jam.

We tried to make the point that the hospitals are caught in the middle when that kind of thing happens and that we need to have different models of working so we don't caught in the middle. I think certainty, stability, and accountability, plus clarity on what roles and responsibilities are whose, are what's needed. Otherwise, we'll continue to have these crises, and as it always appears, hospitals and health care will keep coming back to the table for more money. Well, we need to change that paradigm, in my view.

Ms. Judy Wasylycia-Leis: Thank you.

I have a couple of questions for Peter Currie and the Bankers Association. Under the best of circumstances you wouldn't expect to get much sympathy from me for your call for more tax breaks for the big banks. And today, given what the banks have done to my community--and it would not be that dissimilar for many other communities--I have even less sympathy. Just for your information, Mr. Currie, the big banks have completely deserted my community, which is the north end of Winnipeg. We've lost ten bank branches in the last five years, and there's been no commitment to stay and invest in the community, to stay and create a presence so other businesses might follow and so we can build anew.

Your focus on all this money for charities, which I've heard so many times before, is not the answer. We're talking about investing in community, not a charitable commitment. Therefore, my question to you is, will you support an idea I will put forward for the committee, one that has been suggested before and that is a reality in the United States? I don't often use the American model, but in this case I will. It is for a community reinvestment act so banks are obligated to put something back into communities before they choose to desert and abandon them.

Mr. Peter Currie: Thank you for that question.

Let me clarify our position, to begin with. It may sound as if what we're seeking is simply a tax break for the financial institutions in Canada; we're not. What we're seeking is a realignment of the tax structure that will help the Canadian financial services industry be more competitive on a global basis. That will in fact allow us to generate more sustainable and attractive returns for shareholders in Canada and will make us more cost-effective so we can continue to deliver a very cost-effective product to our consumers in Canada.

In terms of the participation of the Canadian banks in communities, I did mention charitable donations as an example, but I think I also mentioned the fact that we are the leading lenders to business, both large and small business in Canada, and we have every intention of remaining so. I think it's unfortunate that in some cases communities don't have the density of bank branches they once had, but we're under unrelenting pressure from various stakeholders to make ourselves efficient and to continue to deliver product to our customers in an effective way. That translates exactly in our distribution network.

In terms of a CRA, I am familiar with the CRA from our operations in the United States. I don't believe the CBA has a specific view on a community reinvestment act. I may ask Mr. Shaughnessy to make a remark on that in a minute, but I'm going to, Madam Chair, with your permission, comment on behalf of our company, which is familiar with CRA. We don't think it's the best solution possible; we think there are other solutions.

We think that organizations that aspire to high ethical standards and high operating standards will naturally gravitate towards investing in communities. For a retail bank, that's the essence of our business. If we can't connect with our local communities through investment, credit extension, and advocacy of various diversity programs, if we can't reflect in our operations the community we operate in, we won't operate in that community very long. So from an economic point of view, it's in our own self-interest to do that. We approach it economically as opposed to having an intervention from an external agency.

I'd ask Mr. Shaughnessy to make a remark on CRA from a CBA policy perspective.

¿ (0915)

Mr. Kelly Shaughnessy (Vice-President, Banking Operations, Canadian Bankers Association): The last round of financial services legislation that went through required all the major banks to issue a public accountability statement. Those accountability statements were formally published for the first time last year, I think, but a number of the banks had published them the previous year. They clearly outline the commitment and the contribution of the banks to the various communities in which they exist. I note in Mr. Currie's statement that the Canadian banks alone--just the banks, and they are only one of the many players in the financial services industry--had $316 billion in residential mortgages and they had $148 billion in personal loans. The Canadian banks are participating in communities.

There has been--and I've worked in the industry my entire life, but I'm not going to admit how many years that entails--a dramatic change in the way these products and services are delivered. When I first started in the industry, you had to deal at a branch from ten to three o'clock, and maybe on a Thursday evening it might be open from seven to eight o'clock. Today Canadians can access financial services through their banks 24 hours a day, seven days a week, 365 days a year. It can be done through telephone banking, which the vast majority of Canadians have access to, it can be done through Internet banking, and also it can be done through the traditional branch network.

So in fact what we have done--and by the way, there's the ABM network, which I failed to mention--is that we've layered on delivery channel after delivery channel after delivery channel. No single delivery channel in this country has been withdrawn. There has been a reduction in some cases in the number of branches, and in some cases some of the branches have taken a more sales focus, but that is solely because of the alternate delivery channels, that is, the ABM networks, the telephone banking, and the Internet banking, all of which--and I don't want to use this phrase lightly--are truly world-class systems.

[Translation]

The Chair: Merci beaucoup.

Do you have a question, Mr. Paquette?

Mr. Pierre Paquette (Joliette, BQ): I have a short question for the representatives of the Canadian Bankers Association, but I hope that their answer might be a bit longer.

If the federal government were to accept your recommendations on taxation, would you bring back to Canada the capital that is now tucked away in tax havens?

¿ (0920)

[English]

The Chair: Go ahead, Kelly.

Mr. Kelly Shaughnessy: What we are advocating here in our recommendations, I believe, is very, very consistent with the themes of a letter that the committee sent out in June of this year. Those themes included what taxation spending and other measures can we put in place in this country from a public policy point of view for growth and job re-creation, balanced federal budgets, progress in investing and caring for members of Canadian society, and that urban, rural, and remote communities are desirable places to live and work.

There are two ways of achieving tax revenues in this country. One is very, very short term--that is, to increase rates of taxation. So whether it's corporate income tax or capital taxes, increase the rates. That would give a government a very, very short-term boost in revenue, but there isn't an industry in this country that I know of, whether it be the automotive industry, the aircraft industry, or the financial service industry, that is not facing tremendous continental and global competition. That is why we need, in this country, a public policy framework, including a taxation policy, that is globally and continentally competitive.

With that type of framework, what we will have in this country is a higher tax base, and by creating a higher tax base, we will be able to create the revenues for this government--and frankly, all governments--that will permit them to fund their priority programs.

So is it a question of rate, or base? I think what this country will do and how we can achieve our program priorities is to increase the base upon which Canadians pay their taxes.

[Translation]

Mr. Pierre Paquette: You did not answer my question, but I was expecting that.

[English]

The Chair: Okay.

I want to thank the participants on this panel.

I might just note for you, Mr. Van Every, that even though you just filed your brief last year, you got a couple of lines in our report--because I remember doing that, and I just found that now. So that just shows the efficacy of even filing without appearing.

So I want to thank all of you for your participation and for preparing the briefs and getting them into us ahead of time so that we could translate and distribute them, not only to the members present here today, but to all the members of the committee.

As you know, all your briefs do find their way into the finance department, and to the ears of the finance department, because I know they read our Hansard of meetings.

So thank you very much.

We will suspend, colleagues, and start back at 9:30. I intend to quit ten minutes before each panel to give ten minutes in between each panel today.

¿ (0923)

¿ (0929)

¿ (0930)

The Chair: Pursuant to Standing Order 83.1, we will continue with panel two of pre-budget consultations in Toronto on Thursday, November 6.

We will go in the order on our agenda. I would like to welcome all of you.

From the Canadian Retail Hardware Association we have with us today the president, Robert Elliott, together with the chairman of the government relations committee, David Campbell. We welcome both of you. You'll be doing one presentation and you'll be starting in a couple of minutes.

We have the Toronto Board of Trade, the president and CEO, Elyse Allan, and Terri Lohnes, your acting director of policy. Welcome to you.

From the Canadian Association of Food Banks, we have Alan Redway, chairman of the board of the Daily Bread Food Bank, joined with the public policy and research coordinator, Matt Ferguson. Both of these gentlemen have to leave to catch a 10:30 plane, colleagues, so there will be questioning available only until 10:30 for these two. Welcome to our hearings.

The Ontario Non-Profit Housing Association today is represented by the special adviser for affordable and supportive housing, Mr. David Peters. Welcome to you, sir.

And from St. Christopher House, we have the chief executive officer, Susan Pigott, and John Stapleton, CUSP fellow. Welcome to you.

We'll go seven minutes. It's your time to put what you want to say on the record. Everybody will present before we start rounds of questioning, which will be mixed among all the parties of the House.

Who would like to start?

Mr. Elliott, go ahead, sir.

Mr. Robert Elliott (President, Canadian Retail Hardware Association): Thank you, Madam Chair. It's a pleasure, once again, to be here speaking with the committee.

As you heard, my name is Bob Elliott. I'm the president of the Canadian Retail Hardware Association, a national organization with 1,700 hardware, home centre, and building supply retail store members across the country. These stores had total sales last year in the $15 billion range and provided employment to 45,000 Canadians.

Our pre-budget submission represents the view of a coalition comprised of the CRHA, the Canadian Retail Building Supply Council, represented by my colleague here, Dave Campbell, who will be speaking to you in a moment, and the Canadian Hardware and Housewares Manufacturers Association.

Unfortunately, the president of the Canadian Hardware and Housewares Manufacturers Association, Vaughn Crofford, was unable to join us today. However, I do draw your attention to CHHMA's letter of transmittal in our submission stating that it has participated actively in its preparation and supports it without reservation.

Taken as a group, the three members of our coalition represent impressive economic activity in Canada. For example, we collectively have 4,770 companies Canada-wide as members. These companies employed some 120,000 Canadians last year. The hardware and housewares manufacturing industry had total sales in 2002 of about $35 billion, and Canada's hardware retailers and building supply dealers had combined retail sales of an estimated $51 billion last year.

Both my organization and the Canadian Retail Building Supply Council conducted pre-budget surveys of our memberships this past summer. You can be assured, Madam Chair, that the views represented in this submission reflect the results of these surveys.

There are two interconnected themes to our submission. The first deals with the general economic health of the nation, and the second discusses the health of the Canadian residential construction industry. These two themes are related because of the important manner in which general economic health depends on a buoyant housing market.

Page 6 of our submission states that as other industries, including the high-technology sector, motor vehicle manufacturing, the aerospace industry, and equity investing, have all stumbled, the housing industry has contributed steadily to the economy in the 1998 to 2003 period.

Annex 2 to the economic and fiscal update that was presented to you on Monday notes the special contribution of the housing market to the economic well-being of Canada in recent years. These references are on pages 65, 69, and 70. Time does not permit me, however, to read them all to you in these opening remarks, so I'll restrict myself to one quote: “Solid consumer spending and residential investment growth have been important contributing factors to continued domestic demand growth”.

A key recommendation by our coalition is that the standing committee should recognize that it is in the best interests of the Canadian economy to take such steps as are necessary to promote the ongoing health of the nation's housing market.

Our submission documents several factors that could be pointing to a downturn in that market, including a recent statement by the chief economist of the Canada Mortgage and Housing Corporation forecasting a reduction in home construction in 2004; the latest national housing outlook--again from CMHC--predicting that total housing starts will fall from an estimated 203,200 this year to 188,200 in 2004, and total MLS sales will decline from 394,700 units to 378,200 units next year; the tables contained on pages 2 and 3 of our submission demonstrating that the members of both CRHA and CRBSC predict only low to moderate growth rates next year; and the finance minister's February 2003 budget projecting real GDP growth of 3.2% this year and 3.5% in 2004, which was revised downward this week to 1.9% in 2003, with expected growth in 2004 down to 3.0%.

Having painted this general scenario, I'd like to ask my colleague Dave Campbell to explore some of the specific recommendations from our submission.

Thank you.

¿ (0935)

Mr. David Campbell (Chairman, Government Relations Committee of the Canadian Retail Building Supply Council, Canadian Retail Hardware Association): Thank you, Bob.

Madam Chair, I'm here today representing the Canadian Retail Building Supply Council, as chairman of its government relations committee. I'm also president of the Lumber and Building Materials Association of Ontario.

The CRBSC is an umbrella organization comprised of the five provincial and regional building supply dealer associations across Canada. We represent a total of 2,019 member companies, most of which are small businesses.

Last year our industry had total sales in the $35 billion range and employed some 50,000 Canadians. Measures to keep the housing industry healthy involve more than just the good and welfare of companies in the retail building supply and hardware industry. A significant number of the 95,000 employees in our stores, along with the employees in other industries, owe their jobs directly to a healthy residential construction as well a buoyant repairs and renovations environment.

A recent Statistics Canada report on building permits said that among the positive spinoffs in the continued growth in residential housing has been a 4.8% increase in furniture sales and a 3.6% gain in construction employment so far this year.

Members of both the CRBSC and the CRHA were asked to rank measures that could stimulate both residential construction and residential repairs and renovations. Their responses are found on page 8 of our submission and show that the continued low interest rates and consumer confidence are keys to ensuring a healthy housing market.

After these two factors, our survey respondents opted for three extensions to the philosophy of a first-time home buyers program that permits Canadians to borrow from their RRSP savings for the purchase of their first home. Most importantly, they believe that using RRSP savings to finance residential refits for senior citizens should be permitted.

If homeowners could use a portion of their RRSP savings under terms identical to the first-time homeowners program to retrofit their homes to meet the special needs of older family members, for example, parents or grandparents, benefits would result. Senior family members could more easily be kept in a comfortable residential environment. At the same time, the financial drains on the public purse occurring when senior citizens are institutionalized could be lessened.

Second, our members recommend that the current $20,000 maximum that can be withdrawn under the first-time home buyers program should be increased. That limit was established in 1994.

Page 10 of our submission shows how the new housing price index has increased and how the purchasing power of the consumer dollar has depreciated. If the first-time home buyers program is to continue providing the benefits for which it was intended, it is time to increase the maximum amount that can be withdrawn.

Finally, we urge that the philosophy of the first-time home buyers program be extended to residential repairs and renovations. The risk of permitting Canadians to use a portion a of their RRSP savings, on a temporary basis and with strict repayment provisions, to acquire a first home is obviously seen as acceptable. The repayment risk attached to extending this usage to permit existing homeowners to repair or renovate the residence is even less. The benefit to the housing market of this extension would be significant and the cost to the Government of Canada minimal.

Our key message is that the housing industry in Canada can be expected to contract next year unless some creative approaches are taken in the budget to stimulate the market. The measures we have proposed would go a long way to providing that stimulation to the benefit of the Canadian economy, Canadian employees, our industry, and the government, and without requiring a major new spending initiative.

My colleague Bob Elliott and I look forward to discussing the issues with you this morning.

The Chair: Thank you very much.

I must say I appreciate the organization on your brief with the executive summary, the index, the explanations, and then the list of recommendations--one of many that are so well done--and that's not even talking about the substantive issues. So thank you.

Now we'll go to the Toronto Board of Trade.

Ms. Elyse Allan (President and Chief Executive Officer, Toronto Board of Trade): Thank you very much.

Good morning. Terri and I are delighted to be here. We appreciate the opportunity to comment on the 2004 federal budget.

The Toronto Board of Trade, as you may know, is Canada's largest local chamber of commerce, with over 9,000 members representing all sizes of business from all segments of industry.

The Minister of Finance came before this committee on Monday with some sobering news. While his speech indicated a commitment to maintain a balanced budget, it is clear we are operating in a much different fiscal climate than we were at the beginning of this year. This changing fiscal climate means that the federal government must be more diligent than ever in determining its budget priorities. It must acknowledge our economic realities and make prudent investment allocations while resisting the urge to broaden expenditure commitments.

It is within this context that we present our priorities for the next budget. We know resources are constrained. We know any expenditures must generate positive economic returns. For these two reasons our priorities are twofold. First, Ottawa must take immediate measures to protect its greatest economic contributor, Toronto. Second, Ottawa must continue to be successful in making Canada fiscally competitive.

Our first priority is not a new one. We have been before this committee in the past, advocating action to address Toronto's decline. Others have joined our call, including national business leaders, leading community activists, and everyday Canadians.

As the board's Strong City, Strong Nation report indicated last year, our city is an essential contributor to the federal bottom line. This contribution supports your government's ability to invest in priorities that benefit all Canadians. This includes health care and education. We want to protect this contribution. We want to grow this contribution. This is what drives our focus on investment in Toronto. We know it pays off in enhanced economic returns for the federal government. This meets Minister Manley's criteria for investment, and it must be part of your advice to the government.

To protect Toronto's economic contribution, the federal government, in partnership with the province and city hall, must initiate a five-year investment strategy in Toronto. We are not necessarily advocating new dollars but rather a redirection of existing federal resources towards our city. This five-year strategy would direct capital dollars to three key areas, transit, housing, and our waterfront.

I'll outline the minimum investment required to just keep the status quo. On transit, we estimate the TTC requires close to $2 billion in capital investment over the next five years. This is needed simply to maintain the current state of good repair. Our transit system is currently challenged in providing fast, reliable, and effective service levels. Otherwise, commuters will be pushed into their cars, increasing congestion on our already crowded roads and polluting our environment.

The federal government has acknowledged that investment in transit is critical to meeting our Kyoto commitments. Our proposal on transit does not ask the federal government to fund all of the response to the need. We believe investment in transit is a partnership. Therefore, we're asking Ottawa to fund one-third of the estimated need over five years; this represents a total allocation of $650 million.

This investment would improve service delivery and reliability, enhance environmental performance, and ensure safe operation of a system that moves 1.35 million people per day. It would not support or drive any increased usage of the system beyond 1% a year, despite the significant growth trends predicted for Toronto.

In the second area, housing, we estimate the city requires an additional $130 million from the other orders of government to protect existing city-owned affordable housing. This is not to build new social housing; this is simply to ensure that 45,000 housing units actually remain available to low-income families. Our proposal on affordable housing asks the federal government to fund half of this, which would be $65 million over five years. It would be used to improve building environmental efficiencies, reduce operating costs, and improve safety for the tenants. All it would mean is that more than 70,000 families on the housing waiting list in Toronto would have a chance to access city-owned housing if a vacancy emerged.

The third area, waterfront revitalization, is certainly a top priority for the board. Our members overwhelmingly support this initiative, and we know that the waterfront represents enormous potential for economic growth.

¿ (0940)

The federal government has already committed $500 million, a commitment we welcomed, but this commitment cannot be viewed as a general fund for investment in this region. It was announced for the waterfront and it should be used for the waterfront. We are concerned about the use of these funds to support related projects but not the agreed-upon projects.

We propose that the federal government, together with the city and the province, reallocate the $1.5 billion based on the expected returns on the investment. This would result in the federal government increasing its commitment by $250 million. We recognize this is a significant increase in the federal government commitment, but it actually better reflects the reality that the federal government will be the largest beneficiary of a revitalized waterfront in Toronto.

In summary, our targeted capital investment proposal calls for additional investment in Toronto of just under $200 million annually. This is a stop-gap proposal, a bare minimum to effectively keep the lights on in our city. It does not support city building to ensure Toronto remains globally relevant.

Our second priority reinforces the need for a competitive fiscal agenda to provide a solid foundation for urban economies. This requires commitments on three fronts. First, we must not fall back into deficit by living beyond our means. Expenditure growth should remain in balance with population growth and inflation.

Second, from this it follows that we must maintain a balanced budget. Our ability to keep the budget in the black has afforded us greater fiscal flexibility than many of our G-8 counterparts have. We are paying down the debt as a result, which is saving Canadians billions in debt interest payments. This must continue.

Third, we continue to support the government's actions to make Canada's overall personal and corporate tax system competitive. We must maintain the progress made to date, and we must also be vigilant in ensuring that we do not find ourselves at the back of the pack in terms of tax competitiveness. We applauded this committee's recommendation to eliminate the capital tax, and we were equally supportive when Minister Manley announced in the budget of 2003 that it would be eliminated in 2008.

In summary, it is time for this government to recognize the fiscal importance of a strong Toronto. This means investing strategically in Toronto to generate economic returns. We know there is a growing recognition federally of the need to get involved, so let's get on with it.

Thank you very much.

¿ (0945)

The Chair: Thank you.

It took exactly seven minutes. That's amazing.

Now we'll go to the Canadian Association of Food Banks and Mr. Alan Redway.

Mr. Alan Redway (Chairman of the Board, Daily Bread Food Bank, Canadian Association of Food Banks): Thank you very much, Madam Chair and members of the committee. Thank you for the opportunity to speak to you this morning.

Matt Ferguson, the policy director of the Canadian Association of Food Banks, and I are appearing here on behalf of the association this morning because coincidentally the association is holding its annual general meeting in Ottawa as we are meeting here.

As you may all be very well aware, the Canadian Association of Food Banks is the national umbrella organization representing food banks across Canada. The very first food bank was opened in 1981 in Edmonton, Alberta. Unfortunately, since that time, rather than decreasing and disappearing, food banks have continued to grow, and they now exist not only in large cities but in every rural community as well across the country. As a result, we have food banks in every province and in every territory in Canada.

Originally, of course, food banks were designed to be an emergency stop-gap to help people in the short term. Unfortunately, in recent years the whole system has become institutionalized and it is now in fact a big business, notwithstanding the fact that the main desire and goal of people involved in every food bank across this country is to do away with themselves by eliminating hunger and poverty itself.

We have now reached the stage where each month the number of people who use food banks in Canada actually exceed the entire population of the province of New Brunswick. Now the Canadian Association of Food Banks has some 250 member food banks across the country. But that's really just the tip of the iceberg, because each one of those members has a great many affiliated agencies that distribute food. Here in Toronto, for instance, with Daily Bread Food Bank, we have some 180 agencies that distribute food across the greater Toronto area. That's the case with other member agencies of the Canadian association right across Canada as well.

Our organization, the Canadian Association of Food Banks, is not just a lobby organization in any way. Its main purpose actually is to operate something called the national foodsharing system, which is a system of collecting food and distributing it across the country in a fair manner. That is done and organized with the help and assistance of the railroads and trucking firms that donate their services for free to get food across the country to where it is needed in a fair fashion.

The association in addition to that also conducts research, engages in public education, and advocates in a non-partisan way for changes in public policy to eliminate hunger and poverty across our country. By the way, the Canadian Association of Food Banks does not receive one single cent in core government funding from any level of government. It's all voluntary money, voluntary contributions of time and money.

Each year for the past number of years, the association has conducted a national survey of emergency food programs across the country, and some of the highlights are illustrated in our brief to you. I'll just touch on some of those things briefly.

For one thing, the number of Canadians who depend on food assistance has more than doubled since the Canadian Association of Food Banks first measured the level of national food bank use in 1989.

A poll that was conducted for the association shows that some two-thirds of Canadians are seriously concerned about hunger. And in fact that same survey found that 80% of Canadians believe that the solution lies with government. More than 50% of the families who use food banks have children, and 33% of those families are one-parent families.

¿ (0950)

The overwhelming number of people who rely on food banks, of course, are on social assistance, but there is a significant number who are working poor, not just people on social assistance.

There's this impression that food banks fill the gap of people who need food, but that is absolutely not the case. There's just not enough food that's donated to go around, and the assistance that we give to people who are users of food banks does not satisfy their needs for more, perhaps, than one week in a month. So there's a very large gap here in the food system, and it creates a very major hunger problem and of course is related to the poverty problem across our country.

I'm going to call on Matt Ferguson to outline the recommendations of the Canadian Association of Food Banks to your committee.

The Chair: Go ahead, Mr. Ferguson.

Mr. Matt Ferguson (Public Policy and Research Coordinator, Canadian Association of Food Banks): Thank you, Alan.

Good morning, Madam Chair and members of the committee. As Alan said, we have six recommendations to present to you today. I'll present the first five and then Alan will touch on the last one.

I want to preface my remarks by underlining two points. In 1999, the National Council of Welfare, which is an advisory board to the Minister of Human Resources Development, estimated that it would take $10.2 billion to eliminate poverty in Canada. The cumulative value of all six federal surpluses is now $50 billion. That means we could have eliminated poverty in Canada five times over. So I want to emphasize that the solution is well within reach.

The second thing I want to say is that the CAFB has been handed a mandate by its board of directors to reduce the number of food banks by 25% by 2007. Our interest is in eliminating the root causes for hunger, and with that in mind I'm here to present the first five recommendations of the CAFB.

Recommendation one is on the CHT and the CST. The CAFB recommends that money dedicated to the CST be split between education and social services and that criteria be established to ensure that social programs provide meaningful assistance into the labour markets and that there be national standards to which all provinces and territories conform.

Recommendation two is on living-wage jobs. The CAFB recommends that the federal government reintroduce a federal minimum wage set at $10 an hour and establish a policy that ensures that government contracts be awarded to companies that provide living-wage jobs.

Recommendation three is on employment insurance reform. We recommend that EI be changed to cover at least 70% of unemployed workers and recognize all forms of work, remove features that blame the unemployed for their layoffs, simplify the program, and ensure a benefit structure and financing of EI that reflects regional employment differences.

Fourth is the the national child benefit supplement. We recommend that the government encourage all provincial governments to end the clawback.

And five is on access to regulated child care. We recommend that there are three ways for government to ensure access to child care: first, provide provincial governments with adequate, stable, and long-term funding; second, introduce mandatory national standards to ensure quality of service delivery; and third, establish a mechanism to guarantee provincial compliance with those national standards.

I'll ask Alan to speak on our last point.

¿ (0955)

Mr. Alan Redway: Madam Chair and members of the committee, your mandate, of course, is to make recommendations to the Minister of Finance for his next budget. Very likely by the time the next budget comes around, Mr. Martin will be our Prime Minister. I am one who has nothing but the greatest of respect and admiration for Mr. Martin, personally. He was my Liberal critic when I served in government as the Minister of State for Housing.

In 1990 Mr. Martin released a report of the national Liberal task force on housing. The news report that announced that read in part, and I'd like to quote:

“The housing crisis is growing at an alarming rate and the government sits there and does nothing; it refuses to apply the urgent measures that are required to reverse this deteriorating situation,” noted Mr. Martin. He added that “the lack of affordable housing contributes to and accelerates the cycle of poverty, which is reprehensible in a society as rich as ours.”

Mr. Martin recognized, and continues to recognize--and I'm sure all the members of this committee recognize--the importance of affordable housing in breaking through that poverty cycle. With that in mind, and knowing that Mr. Martin needs your help, I am hopeful and confident that, among your other recommendations, you're going to recommend that affordable housing be a first social policy priority of the government.

Thank you very much.

The Chair: Thank you.

I allowed a couple of further questions, knowing you won't be here for the full time.

The mandate of this committee is also to consult with Canadians, and that's what we're doing, to get your input. There could be a situation where this year something happens out of our control, so that we don't get to a final tabling of the report. That's why we're making sure everybody who wants to present has their evidence heard. And that's what I and the members here are evidencing by being present to listen to and hear your reports today.

Let us now go to the Ontario Non-Profit Housing Association. Mr. Peters, it is your turn.

Mr. David Peters (Special Advisor, Affordable and Supportive Housing, Ontario Non-Profit Housing Association): Thank you very much, Madam Chair.

I couldn't ask for a much more engaging and warmer introduction to my topic than Mr. Redway's comments in the last minute.

I'm actually feeling pretty good about being here today, because I'm surrounded by people who are also very concerned about affordable housing issues, from St. Christopher House, the Toronto Board of Trade, and others.

The Ontario Non-Profit Housing Association represents about 760 non-profit housing providers and about 150,000 rental and tenant households.

I'm not going to go through my brief systematically, which might ball you up a little in terms of the pleasure you get out of some people who are following it exactly. I'm going to pick out a few things I think are important that we want to emphasize to the committee.

The first thing I want to emphasize is some of the discussion going on in Ontario that's suggesting that the higher vacancy rates and the success of some parts of the housing market, which you heard about from the Canadian Retail Hardware Association—and particularly of the ownership market—mean there really isn't an affordable housing crisis any more.

It was a little disconcerting for some of us in our field to carefully read the budget that came out last year, both in Ontario and federally, to see some of the people who were working on the budget celebrating the fact that the housing market was very vigorous.

Of course, there are in fact many housing markets, and the affordable housing market is not so vigorous. The success they're having in the high-end rental luxury market, the success being had by many small investors, who fled the stock market and the bond market and are buying condos and renting them out, creating more rental space in the city, and the success many homeowners are having—a kind of double cohort of tenants graduated out of rental housing last year into home ownership—largely has to do with the tremendous benefits the lower-interest-rate environment is creating. But there aren't that many left with the $25,000 or $30,000 down payment, and the rented condos that are freeing up a little room are going to be gradually sold back into ownership. So there's a danger of masking what's going on and the underlying need for a steady supply of housing.

The Ontario government estimated that about 14,000 units are needed. The current program is producing probably 6,000 or 7,000 across Canada, and our association supports the Federation of Canadian Municipalities' suggestion that it go up to about 10,000 units a year. That would be pushing the budget up from about $200 million to $250 million, which we think is a fairly practical request.

Our biggest emphasis, however, is on the same kind of message you've been getting from the Toronto Board of Trade and others, which is that it's a long-term, consistent environment that's really crucial to develop capacity, to develop steady learning curves, and so on. We're much more interested in a good commitment that lasts over ten years. We noticed that in the last budget they did such a thing for the infrastructure program. They moved it to a ten-year kind of environment, which allows people to plan and make arrangements. Housing is a slow thing to get going, and there is a need for more capacity in our sector, the non-profit housing sector. We think this is very important.

I wanted to make a few comments on the affordable housing program, which is a federal-provincial program. It's a testament to the Government of Canada that they have put this program in place, even though housing hasn't been a really hot topic in the last several years. However, what's happened to the program in Ontario is not a testament to the federal-provincial environment. I'm sure many of you are familiar with the fact that the definition of “affordability” in the program is “average market rents”, which is not really true affordability for the people Alan Redway is concerned about and for many others who are at the lower end.

The program also has to be affordable for ten years, so a private sector submitter has to commit to ten years of affordability. The taxpayer in a sense is borrowing the unit for ten years for $50,000. We think that's probably not the best buy for the taxpayer.

Our hope is that under the program, as it moves into a redesign phase, which it is doing in Ontario with the arrival of the new Liberal government, at least 50% of the units will be available to those people who are on the municipal housing waiting lists, who will end up then paying 30% of their income for rent. We think there is room in the current budget from the Liberal government here in Ontario and their commitment to achieve that goal.

We also think there should be a much greater commitment to supporting and encouraging all sectors to participate in the program. The idea that's been au courant in Ontario in the last years of maxing out the capacity of the private sector should be replaced with the notion of maxing out the capacity of all sectors, including the non-profit sector. Our particular contribution is that our housing is affordable forever. The non-profit sector isn't interested in being free to charge whatever they may get away with in the market after ten years. Our units stay affordable forever.

À (1000)

They're a significant investment for the taxpayer, and they remain serving the objectives the taxpayers look for. We think the program should be designed so that at least 50% of the units are designed to be permanent affordable housing produced by non-profit providers.

I want to say a word about mortgage insurance too. We think CMHC's mandate should be changed so that they're not strictly required to operate as a commercial organization. They're now kind of Janus-faced: half commercial and half intended to make a return for the government, which they do very successfully, and half designed to create a successful and flexible housing market, including affordable housing. But they've taken their ability to approve the mortgage insurance program about as far as they can go right now without a change in the mandate. We would encourage you to look at that situation and encourage the government to look at it.

We also think the federal-provincial methodology is not working. What happened in Ontario with the program when the provincial government decided not to really match the commitments of the federal government is a shame.

We think it makes sense to have a provincial requirement to submit a business plan as to how they're addressing housing problems in their provinces. There should be kind of pass and fail criteria. If there's a reasonably systematic plan in place with reasonable resources, in the context of priorities to address housing issues the federal government should work directly with the provinces; if not, we think they should bypass the provinces and work directly with the cities.

Third and finally, we think there should be a national discussion on the reinvestment of the savings from the existing program obligations. I think this is a very interesting situation, Madam Chair and members of the committee. The federal government agreements for the existing projects that Elyse Allan talked about a minute ago are expiring as we speak.

The real expiry trajectory picks up quickly over the next little while, but it's a 30-year period when all the existing $2 billion worth of agreements expire. The collected savings the federal government is going to make from this will be close to $30 billion. It will help deal with some of the requests Elyse mentioned, in terms of the existing projects and their need for capital and infrastructure support.

We would encourage you to encourage the government to engage the stakeholders in the housing field in a national discussion about how these funds should be reinvested. We think it's a mistake to let them just slowly slide out of the housing field and back into the consolidated revenue fund. We hope you will bring this to the attention of the government in your report to them.

Thank you very much.

À (1005)

The Chair: Thank you very much.

Now we'll go to St. Christopher House.

Ms. Susan Pigott (Chief Executive Officer, St. Christopher House): Good morning. Thank you, Madam Chair, and good morning, committee members. We appreciate the opportunity to speak with you this morning.

St. Christopher House is a 91-year-old community-based agency here in Toronto, providing social services to 10,000 people every year. Most of the people we see at our agency are poor, so we have an interest in initiatives that can improve their income.

Today I'm here with my colleague John Stapleton, who is our visiting policy fellow at St. Chris, to talk to you about registered development savings plans, or RDSPs. This is a new financial vehicle developed by the St. Christopher House community. RDSPs are an alternative to RRSPs that provide the structure for low-income people to accumulate and retain their assets.

I'm going to turn things over to John now to walk you through the RDSP plan.

Mr. John Stapleton (CUSP Fellow, St. Christopher House): Thank you, Susan.

Madam Chair and members of the committee, at page 140 of the budget plan for 2003, Minister Manley said, and I quote:

Moving forward, it is important that the tax system continue to provideeffective mechanisms to support saving. The Government has receivednumerous representations from individuals, researchers and businesses thatCanada’s tax system should be more conducive to saving. The Governmentintends to carefully review these representations and to conduct analysis inorder to identify possible approaches for future improvements. In particular,the Government will examine whether tax pre-paid savings plans could bea useful and appropriate mechanism to improve the tax treatment of savingsand to provide additional savings opportunities for Canadians.

We'd first like to acknowledge that the finance staff will be conducting a consultation on TPSPs later on this month, and we'll be part of that, but we also believe that members should hear our proposal. We're proposing that the Government of Canada formally implement a particular type of tax prepaid savings plan as a true tax advantage savings plan for low-income Canadians who do not benefit from RRSPs. This type of TPSP, as Susan noted, called the registered development savings plan, is specifically designed to protect and maintain the assets and savings of low-income individuals and families.

We also believe that the federal government should adopt a leadership role with provinces and territories by calling for the exemption of the proposed registered development savings plan from provincial and territorial social assistance programs or welfare restrictions on assets and income.

If this is not done, and TPSPs are implemented without special consideration for low-income people, Canada will provide tax advantage savings plans for the rich and middle classes, but nothing for low-income Canadians. Low-income Canadians should be treated fairly when it comes to tax benefits for savings plans.

In the paper we have provided, we go into some detail as to why RRSPs do not work for low-income Canadians. On page 20 of our report, you see that for every advantage that an RRSP has for the well off, there's a clear disadvantage at almost every turn for those who are poor.

Looking at the features, whether it's a tax deduction, the RRSP deadline, the role of investment advisers, the publicity that's available, the prevalence of taxable income, the amount and form, the tax liability at retirement, the relationship with seniors benefits clawbacks, and the crucial role of RRSP loans, there are advantages for the well off for each of these, and disadvantages for the poor.

Yet with all these problems, federal government statistics show that 152,000 Canadian tax filers with less than $10,000 in yearly income have contributed $160 million to RRSPs, not to good effect. If a low-income Canadian with some savings were to go to a knowledgeable RRSP adviser, that adviser would say make sure you don't go on welfare, and whatever you do, cash out your RRSP before you turn 65. What makes TPSPs—and what got our attention—so important for the poor is that, unlike RRSPs, they have the potential to void the latter issue relating to turning 65 years of age.

Because a TPSP is not taxed on redemption, the GIS—guaranteed income supplement—received by a lower-income senior is not reduced by 50¢ on the dollar, which is, of course, what happens with an RRSP, and is why our knowledgeable adviser would advise cashing out before the normal age of retirement of 65. But we still have the first problem related to going on welfare.

Most low-income adults either go on welfare at some time during their working life or live in some fear that they may have to resort to welfare at some point during those working years. You can't have any monetary assets if you go on welfare, we all know that. RRSPs, for example, must be cashed in, and if TPSPs are accepted for implementation, it would be impossible to recommend to provinces and territories that they should simply exempt from welfare rules money that someone might hold within a tax prepaid savings plan. For example, the amount in a TPSP could easily be a million dollars or more.

So what's the solution? The solution is to create the specialized TPSP that we are calling for here today, a modest TPSP that will level the playing field and provide for low-income, tax-paying Canadians a tax advantage instrument specifically designed for their circumstances.

I'll go briefly through the design as we see it. It is proposed that tax prepaid savings plans be added to the Income Tax Act as a savings vehicle. The principle in a TPSP would not be tax-deductible upon registration or taxable on redemption. RESPs would be added as a special TPSP for negotiation between the federal, provincial, and territorial governments in regard to assets restrictions on welfare programs.

À (1010)

As with TPSPs, contributions to and withdrawals from RDSPs would be exempt from taxation. For TPSPs, no approval is needed regarding spending of the assets. That's true with RRSPs. With RDSPs, earnings realized within the plan would be exempt from taxation, as long as the proceeds were eventually disposed of on approved items. Once approved for tentative inclusion in the Income Tax Act, provinces and territories would be approached to exempt RDSPs from welfare assets and income restrictions.

Unlike registered home ownership savings plans or registered education savings plans, there would be a basket of approved destinations. The ultimate destination for spending RDSPs would be subject to demonstrating that a set of clear guidelines have been met.

This would allow people of low income and wealth to begin building their assets by saving in a structured way for the things that they need both in retirement and their more immediate future without penalty. RDSPs would also significantly lower rates of welfare dependency, as they would provide an economic cushion for people who would otherwise be faced with returning or going on welfare. All moneys would be exempt under assets and income rules, as I've said. We see a maximum cap of about $25,000. This amount would grow within the plan.

One exception would be made for windfalls and the whole of the $25,000 that we see as the cap fee to be paid in the form of compensation that would be paid to a low-income person, or from some other source, like an inheritance. Low-income people who may be facing other challenges in their lives would benefit from having a place to park a windfall until such time as they achieved greater income stability, or until they had a cogent plan for the fund. Often windfall money is squandered at a certain point in a person's life, when it could have a more optimal use at a later date.

Thank you very much.

The Chair: Thank you very much. I appreciate the very detailed brief that you gave on that, too.

With all the members in the room, I think we're going to have to go with a six-minute round to stick to our timeline, colleagues--six minutes each. That includes, by the way, panellists, your answers. Keep that in mind too.

Go ahead, Mr. Solberg.

Mr. Monte Solberg: Thank you very much, Madam Chair.

Thank you to all the presenters. There were some very interesting presentations.

I want to start with Mr. Stapleton. First of all, I just have to say that I appreciate very much the thought you've put into this. It's a very interesting idea. I share your concern about what happens to people who turn 65, use their RRSPs, and then make themselves effectively ineligible for a guaranteed income supplement. It's very distressing that this goes on, and on, and on. I certainly think we should recommend that we find a way to change that.

One way to do it is the TPSP. It's a great idea, generally. And I would even suggest for people in the housing industry, if you want to find a way to encourage people to have money for home repairs, instead of changing RRSPs to allow that, a TPSP I think is a more effective way, because it does not distort and discriminate against any particular sector.

I am interested in the philosophy behind the RDSP as well. I'm wondering, first of all, whether or not your support for this is universally shared in the anti-poverty movement. I favour this very much. I like the idea of it, because it gives people who are at the low end of the income scale a real asset, something they can be proud they've actually earned and have set aside. I'm wondering if you find general enthusiasm for this idea in the anti-poverty sector.

À (1015)

Ms. Susan Pigott: May I just respond to that, quickly?

This RDSP is a fairly new idea. Where it's gaining a lot of support is among anti-poverty activists who are interested in the asset-oriented anti-poverty strategies. You're probably aware that Human Resources Development Canada is now experimenting with individual development accounts, which are essentially plans whereby individuals who are low-income are matched $3 to $1 by the federal government for every dollar they're able to save.

This type of asset-oriented anti-poverty work is very prevalent now in Great Britain and in the States. I think there's growing interest in it here in Canada. We're certainly interested in it at St. Christopher House. But it is a new approach to looking at this, one which I'm hoping will gain ground rapidly.

Mr. Monte Solberg: Thank you. It's exciting. I wish I had more time to talk about it, but I had better ask some other questions.

Ms. Allan, first of all, in your brief you asked for really quite a bit of money for Toronto--and I understand why, and there are good arguments to be made for that. I think it's around $1 billion. The problem, of course, is that all jurisdictions want money for infrastructure. And the concern I have about going to the federal government and making your case and asking for basically, in this case, five years of commitment to funding is that it does not impose a discipline on that particular municipality.

Municipalities that have kept up their infrastructure--and I'm not saying Toronto is worse or better than anyone else--in a sense are penalized by it because of that approach. I'm wondering whether it wouldn't make more sense to take money from gas taxes, for instance, and just leave it with the municipalities.

We passed a motion in the House the other day along these lines, but there's no mention of it in your brief, which I was a little surprised at. Do you favour that approach? Wouldn't it make more sense to go that way so that you have a steady stream of income coming into your coffers that you can count on and plan with, as opposed to having to come every few years to make your case to the federal government?

Ms. Elyse Allan: Absolutely, so I appreciate the question.

In the Strong City, Strong Nation report, the board actually put forward three recommendations. One was that we have such a serious situation in terms of an immediate gap around these areas of infrastructure that we felt that we needed to put something in place right away that really dealt with a crisis, particularly in the area of the TTC, subways and transit.

The second recommendation was around city governance with respect to the accountability of the municipalities to cope with increased responsibility with respect to a new funding arrangement.

The third recommendation was in fact that we would come up with a new deal that would be a long-term, sustainable model of public finance, a new public finance model for cities.

So this is really what we perceived as step one, while we have also released our recommendations around a new city governance model that we think would ensure more responsibility around the management of a new public finance model.

With respect to the new public finance model, I think what we are looking at and have a group working on right now is the difference in how you would fund that. If one cent per litre is in fact just another form of granting, then to simply use it as a formula for calculation is still at the whim. It's not necessarily putting the accountability with the taxpayer if it's just really another granting model.

So we're actually just weighing, I think, in coming forward with a recommendation around principles of what a new public finance model would look like. Is it actually a vacating of tax room, which the municipality has the option to step into if they so choose, but they would be enabled; or is it really two cents per litre, but that just ends up being another grant?

À (1020)

Mr. Monte Solberg: All right. I take your point.

[Translation]

The Chair: That's all.

Mr. Paquette, you have six minutes.

Mr. Pierre Paquette: Thank you, Madam Chair.

My first questions will be to the representatives of the Canadian Association of Food Banks and of the Ontario Non-Profit Housing Association.

I am always astounded at the complacency of the groups who work in community settings in their dealings with the federal government in Canada. In your papers, you say that, if some money is invested, the federal government must ensure that all sorts of conditions are set and that provinces are accountable to the federal government, even though, generally speaking, most problems have been caused by the federal government itself.

In the case of social housing, it was Mr. Mulroney who put a stop to federal support during his mandate. In his last budget, Mr. Martin announced a few crumbs to which Mr. Manley added a few more crumbs in the most recent federal budget.

Yesterday, in Montreal, FRAPRU told us that, in Quebec, for new social housing, the federal government contributed at the same rate as at the end of the 1980s between 1990 and 2001, for an average of 5,272 housing units a year. This would mean that Quebec now has some 50 more social housing units than before. FRAPRU added that the only possible conclusion was that the federal government was largely to blame for the present crisis.

Why make the wolf responsible for caring for the sheep? I am astounded when I see that, especially as the federal government is mostly responsible for the situation. I would not be saying that if you were proposing to force the federal government to pass legislation which would ensure that it would never withdraw from a sector in which it is investing. The problem for the provinces and Quebec is that, when the federal government takes some initiative, we never know when it will withdraw from it. This makes people scared to join.

When we take our own initiatives, we are penalized by the federal government, for instance in the case of the $5 a day day care network in Quebec. Quebeckers pay more taxes to the federal government in part because their day care costs are lower and they do not have the same deduction as other Canadians.

I truly do not understand why you do not require more from the federal government. I understand that certain provinces, be it Ontario or Alberta, are making difficulties, but I believe that provincial governments and especially the Quebec government must first be accountable to their own citizens at election time and not to the federal big brother which keeps putting obstacles in their way.

[English]

The Chair: Who would like to start on that?

Mr. Peters.

Mr. David Peters: Thank you for the question.

I'll start with a very blunt comment, Madam Chair.

In the housing field certainly, and I think in many other fields, Canadians and Ontarians and taxpayers despair of the amount of stuff that doesn't happen in our country while the federal and provincial levels of government try to work out their differences. I hope you're getting this kind of feedback a lot, because in our particular case--and that's the reason I made the suggestion for some kind of model where there's an agreed-upon overall effort being made everywhere--then all three levels of government share. That's point number one.

Point number two is that there are some problems, really, that aren't going to get solved except with the cooperation of all three levels of government, and as this trend towards decentralization grows and the concern and reconfiguration of the economic engines around the idea of the cities, and even the larger cities, takes on more weight, then the need for all three levels to pitch in on some of these problems becomes even more important.

Third, in Ontario, the weak link in the chain for the last eight years has been the Ontario government, to be honest with you, which really wasn't interested in cooperating with the federal government on many of these issues in the housing field, and not the federal government, which in fact we think has taken its responsibilities in the housing field more seriously.

The answer to your question is not that we don't feel that the federal government should be doing more. We think they should be doing more. Our particular interest is the same as the board of trade--that is, a long-term planning environment for housing. In fact, we'd rather have that than a vast gob of money in year one and nothing in year two. So that's kind of the sensibility our world comes from in that respect.

À (1025)

The Chair: I have one minute, if somebody else wants to say something on this area.

Mr. Alan Redway: May I say merci, Monsieur Paquette, pour votre commentaire et des questions.

Certainly the federal government has responsibilities here, as do the provincial governments.

I have to compliment Quebec for being one of the few provinces that still has a social housing program.

There's still no question about the fact that the federal government did opt out of providing new affordable housing dollars there. It has started to get back in. We congratulate it for that, but we hope it will come back in a more massive way in the near future.

That was the thrust of my thoughts. It should be a first priority with the federal government, as it should be with all provincial governments as well.

The Chair: Thank you.

Now we go to Mr. Wilfert for six minutes, please.

Mr. Bryon Wilfert: Thank you, Madam Chairman.

Thank you, everyone, for coming.

Ms. Allan, you clearly indicated that there's a much different fiscal climate from what there was at the beginning of the year. I think it's the context we're all obviously operating in.

I think that one of our strongest recommendations to the government will have to be the acceleration of the systemic and ongoing examination of expenditures. We currently have a $180 billion budget and 400,000 employees. Clearly, without re-enacting a full program review, the minister this year, as you know, did the $1 billion reallocation. I think we have to do more, because obviously we do not have the resources.

Having said that, with regard to the city of Toronto, as you know, the Prime Minister's urban task force—which I was a member of, and I was a former president of the FCM—identified over $55 billion that goes to the five largest urban regions in the country.

I would suggest that you're right, there are increased municipal responsibilities. I would suggest to you, with great respect, that it's the provinces that have not expanded the powers of cities, which they need to do in order to give those cities power. I'm not suggesting increased taxation, but if they want to apply a hotel tax, whatever it happens to be, as some do allow currently in some provincial jurisdictions, that would allow for more accountability. I'm for more accountability for cities.

What you have put before us, again, looks like some marquee programs, which some cities claim they don't like, although the federal government has had more interaction with cities in this country in the last ten years than any government before.

I would suggest to you that if there's going to be a gas tax transfer directly to cities—Quebec notwithstanding, because they don't allow it—we're going to have to come up with a mechanism that's fail-proof and that also shows the accountability of where those dollars are going.

I'm not heartened by the five mayoralty candidates' comments on taxation, quite frankly. “Let somebody else pay for Toronto” seems to be the slogan, which as a former Torontonian I'm not that keen on.

I only make those comments to you. I wondered whether you have also been pushing the other side of the envelope, in terms of getting the province to really come up with a municipal act that empowers cities, including Toronto, to do the kinds of things they need to do in partnership. We're here to be partners, but not the ATM machine for the city of Toronto or anybody else.

Ms. Elyse Allan: Well, we certainly agree with your final remark there. I think what's very important is that in what we are bringing forward, you used the term “marquee programs”. In fact, it's not marquee programs. It's no ribbon cutting.

The moneys we're talking about for the TTC are fundamentally to ensure that in fact the number of trains and buses that we have on the streets and on the rails are there two to three years from now, despite a burgeoning population growth in the area and in the region using those resources.

The funds that are being requested will provide for less than 1% growth. Certainly in an area where we're committed to meet things such as Kyoto, we need to be driving much higher growth levels in our transit system.

À (1030)

Mr. Bryon Wilfert: Do you remember the partnership, by the way, the 75-25 on capital costs that we used to have that is now gone?

Ms. Elyse Allan: Yes.

Let me go back. In terms of your request, I think one thing you did comment on was who is spending. I think in my remarks I made the point that we are in fact going forward and have divided these three funding areas equally among all three levels of government. The only place where we see a distinct difference in the funding arrangement would be on the waterfront, and that's because of the cash flows. The federal government reaps a significantly greater benefit than the other orders of government from the waterfront.

In terms of transit and in fact in terms of housing, we have already gone to the province under the previous government and have been working with them in terms of commitment to this area. As well, municipally we have been working with the municipal government. And we'll work with the new one in terms of them equally committing. We see all three parties coming forward.

We have also brought to the table the private sector, which, both on the housing side and on the transit side, particularly the pension funds, is very interested in trying to get involved, because we know there is not enough money to go around to fund our infrastructure requirements.

Mr. Bryon Wilfert: Absolutely. In all of the presentations I've heard, I certainly agree with the child benefit and the clawback from the provinces, etc. The Non-Profit Housing Association have ten recommendations. The hardware group has ten. They're all very good recommendations. The problem is that some of them obviously cost money--some not as much, some otherwise. I would really appreciate having them prioritized in terms of what it is you really need. Obviously, it's like having a wish list. We're not going to be able to do them all, but it would certainly give me a better direction.

Certainly, as the parliamentary secretary to the minister, I can't talk to the minister about ten recommendations. The first question he always asks me is what is their bottom line? What do they really need? What is their priority? How do we look at it, when some of them are phased-in recommendations, etc.?

If you could do that for the benefit of the committee, it would always help.

Does anyone have any priority you'd like to tell me about?

The Chair: You have thirty seconds, so let's hear it.

Mr. Matt Ferguson: I would certainly say, from the position of the CAFB, that we're extremely concerned about introducing guidelines on how the CHST will be spent, especially in ensuring that there's a split between social services funding and education. Those are both areas that are always put under pressure. We'd really like to make sure that attention was given to that.

Mr. Bryon Wilfert: I agree with you. I absolutely agree with you. I think there's more transparency.

The Chair: Thank you very much.

Now I'll go to the Honourable Maria Minna.

Hon. Maria Minna (Beaches—East York, Lib.): Thank you, Madam Chair.

First, I wanted to start with the Association of Food Banks. I personally would love to see this country get to the point where we don't need food banks.

I recall growing up as an immigrant child and being poor. At the time in the 1950s, we didn't have food banks, but somehow we managed. I'd like to see us get back to that. That is my preference. I'm sure that we could sit down for a longer period of time and figure out how we could get there.

The splitting of the CHST and education is something the official policy committee of the Liberal caucus has been discussing. In fact, we had a meeting last week with all of the colleges and universities in the educational systems. We actually asked them a series of questions on how they would see that this would actually happen, and what kind of condition and what kind of structure they would see in terms of post-secondary education nationally. Of course, the next topic would be on the CHST, the shape that would take, the kinds of criteria and so on that we'd have in there

I agree with you 100% that it would create, once and for all, the kind of transparency that we need in the areas of health, social transfer, and education--which we had to some degree under the old CAP system. I say that because I don't disagree with what you present.

On the pensions, the retirement side, with St. Christopher House, I don't know if you're appearing tomorrow. The Toronto Liberal caucus is having a public consultation that I am chairing on pension reform and seniors. It's a Prime Minister's task force. While the Prime Minister is having tributes given to him in the House, nonetheless the report will go to the Prime Minister, whether it be Mr. Chrétien or Mr. Martin. When it's ready, the report will go to them.

It was short notice because the Prime Minister set up the task force a few weeks back and wanted a report by December 10. This is a first cut, and then we will probably be coming back for a second cut.

The comment you make with respect to the RRSP being totally non-usable for poor Canadians is absolutely true, but it's not really usable for the average Canadian either. Unless you have well over $100,000 saved, you really are not going to benefit from RRSPs. The average RRSP contribution is something like $2,500 or $5,000 a year. Over a lifetime, it doesn't really help. We need to look at other methods to address poor Canadians, as well as low-income and middle-income Canadians.

I would like to understand from you more on how the RDSP would work, exactly. Have you thought about the structure of that at all in terms of how it would actually be applied?

I know that the Americans have different systems. I've been looking for some new structures to recommend to the government.

À (1035)

Mr. John Stapleton: Our brief does have a detailed design of the RDSP, but we do believe that it should be a secure instrument. If there is any one part of the Canadian society that we should be helping to save, it's low-income people. It's nice for middle-income people and the rich, but it's essential for low-income people.

The Chair: Colleagues, there was a 26-page preamble, and then the speaking points.

Hon. Maria Minna: I will get to all the pages, I promise.

My other question is on the RESP. The Canadian Federation of Students made a presentation to us and basically said that the RESP was not a good tool for education saving because it didn't help the poor or average Canadian. The more money you have to put away, the more money you have at the end to pay for your children, and low-income Canadians really aren't able to put enough away to make a real difference.

The reason I raise this is twofold, and I'd like you to give me some input. I have some concerns about tax credits being the social vehicle we use at times, because they tend to benefit people who have money to save. If you don't have money to save, a tax credit isn't going to do you a great deal of good.

I wonder if you could tell me how effective it is or not, and what you would replace it with, if you've thought about that at all.

Mr. John Stapleton: Certainly refundable tax credits work for the poor, and tax exemptions don't work for the poor, so we would support anything that puts more money into the pockets of poor people. But specifically, we see an equity issue when we have a proposal for a TPSP that would specifically advantage those people with additional money. So we see refundable tax credits as the answer, as opposed to tax exemptions. That's how we've designed the proposal.

Hon. Maria Minna: Okay.

I have a final point for the Canadian Retail Hardware Association. In your submission, your third recommendation says the way to address our social, economic, and all other issues lies primarily in debt reduction and lower taxes, and only to some degree in economic stimulation. Then you end up saying “They do not lie in increased spending...or in increased support of national training programs”.

I have to tell you, I fail to see the logic behind that recommendation. My understanding is that our low debt-to-GDP ratio is primarily due to economic growth, not to how much we've paid down on the actual debt. So that in itself doesn't really lower the debt-to-GDP ratio. The other thing is, how low do you see the debt-to-GDP ratio going? Would you accept 30% or 25%? We're now at 44.2%, I think.

On increased support for national training programs, it seems to me that investing in research, human resources, training, and education actually goes to productivity and increased economic growth in some areas of investment we've listened to this morning. That would assist with the growth of the economy, which would assist in the lowering of the debt-to-GDP ratio.

I would like to see us lower the debt-to-GDP ratio by growing the economy, as opposed to simply cutting the debt and just about everything else, as that recommendation seems to suggest.

À (1040)

The Chair: A brief comment on that, Mr. Campbell.

Mr. David Campbell: Thank you.

We certainly support training programs, but not at the expense of increasing the debt. In our opinion, debt reduction is the primary focus that the government should have, and we wouldn't want to see them lose focus on debt reduction. By reducing the debt, more money would be available from interest savings, so the market would be able to create its own training programs. Less government intervention is better, versus having the market drive the training programs on its own.

The Chair: Mr. Brison, six minutes.

Mr. Scott Brison: Thank you, Madam Chair.

Thanks to all of you for your presentations today.

I'd like to welcome Mr. Redway here. I also want to welcome Matt Ferguson, who studied at Acadia University in my riding, and worked part-time in my office. He was editor of the Athenaeum, the Acadia University newspaper. It's great to see you here with us today.

There's been some discussion here on federal tax measures that can actually help alleviate poverty and deal with the issue. I agree that refundable tax credits are a fairer and more effective way to try to address the issue, but in the U.S. there's something called an earned income tax credit that is particularly helpful in moving people from social assistance to working.

Currently in Canada, if an individual goes from being on social assistance to working, in many cases they are making a decision to actually bring home less money to their family. We can't blame someone for doing what is in the best interest of their family, in an immediate sense, by not taking a low-wage job and losing all the benefits.

I think it's time for the federal government to work with the provinces. We have first ministers conferences focused on health care. We have discussions on a wide range of issues. But there needs to be a way to sort out the mishmash of federal-provincial tax and social investment measures and move....

Mr. Redway made the comment that for 30 years there's been discussion of a guaranteed annual income. There are proponents of this sort of approach on the right and on the left. But it doesn't matter where you are on the political spectrum ideologically, this is an issue we're not dealing with and continue to ignore. So earned income tax credit is one approach I'd appreciate your view on.

Raising the basic personal exemption to $15,000 in Canada would take around 2.2 million low-income Canadians off the tax rolls and reduce some of those disincentives.

We had a great presentation this week from Hope Cottage in Halifax--a soup kitchen--on these issues. It was insightful because they referred to the fact that a lot of us talk about people who are able-bodied but not working. What we're ignoring is the percentage of people using the food banks and homeless shelters who are suffering from some forms of mental illness and addiction. The rate of addiction within these communities is extraordinary.

I would appreciate your views on what you see as the federal role, potentially, in working with the provinces to deal with mental illness and addiction issues as seriously as we deal with the health care debate in a general sense. We don't seem to be making any progress in destigmatizing mental illness--and addiction is part of that--and talking about it enough to actually do something about it. I think that is a driver in the communities you're seeking to serve, and I'd appreciate your view on those issues.

The Chair: Mr. Ferguson.

Mr. Matt Ferguson: Thank you for your question.

Let me just begin by saying that as a former staffer of Mr. Brison's office, I'm acquainted with low-paying jobs.

(Laughter)

À (1045)

Mr. Scott Brison: Wait until I talk to your grandfather.

Mr. Matt Ferguson: He'll probably still vote for you.

Our organization would certainly support an increase in the personal income tax exemption to $15,000. But a lot of the problems we see with people on welfare have to do with a lack of national standards. The elimination of the CAP program and the devolution of minimum wages to the provinces aggravated the problems we've seen in terms of low-income users and the disparity among the welfare rates in the different provinces.

On the last point you made, about addiction and mental illness, that's certainly something we are very concerned about. What we need there is a set of federal proposals that the federal government would be able to use as a national standard in the hope of encouraging provincial compliance, whether it's through refundable tax credits, or something of the sort.

Mr. Alan Redway: I'd just like to say that you are dead-on when you identify the fact that the vast majority of people using food banks definitely have some sort of mental disability or handicap. It is very deceptive, because they do appear to be able-bodied people, and the average citizens says, “Why can't they go out and get a job? Don't bother us, don't go to a food bank, or don't collect welfare.” In fact, there are these very hidden disabilities from both addiction and mental illness. As one who has seen that problem, even within my own family, I know it is a major problem, one that should be addressed by all levels of government.

Mr. Scott Brison: One of your former colleagues, the Honourable Michael Wilson, has done a lot to try to destigmatize the treatment of that.

This is an area of public policy on which I'm not going to bias you with my view, but I'd appreciate feedback on the whole issue of mortgage interest deductibility. It pops up like a kind of public policy Loch Ness monster every now and then. Every few years there's a sighting of this kind of public policy, most recently provincially in Ontario but historically going back to the 1979 federal budget, and of course it exists in the U.S. I'd appreciate your view of it from a building trades perspective.

The Chair: A very short answer.

Mr. Scott Brison: I have one comment with regard to Matt, though. Matt, you would never have developed your empathy with the impoverished if you hadn't worked for me.

The Chair: Did you wish to make a comment on that or not?

Mr. David Campbell: Well, we would certainly look at mortgage interest deductibility as a way of stimulating the economy for more construction so more tax dollars are available for the many fine social programs. We see that as an opportunity to stimulate the economy.

The Chair: Thank you very much.

Mr. Pillitteri and Mr. Murphy say they're going to share six minutes. We'll see.

I was astounded at your stat in the food bank brief that says students made up 42.2% of all Canadian food bank users in March 2003. That's something the Department of Finance has to listen to.

Go ahead, Mr. Murphy.

Mr. Shawn Murphy: Thank you, Madam Chair. I will attempt to be brief.

My first question is to Mr. Peters. Perhaps you could take off your Ontario Non-Profit Housing Association hat and I could ask this personally.

There are whole different modes of delivery for non-profit housing. We have the co-op method, we have provincial government-owned housing corporations, we have the NGOs delivering it, we have the private sector with some subsidization, and of course there was the older form back in the sixties, a sort of a cooperative ownership that was more prevalent.

From your experience, and obviously you're very knowledgeable in this area, we have to look at effectiveness. What is the best bang for the buck, the best bang for government money? From your experience in this industry, what do you think is the best methodology for delivery of affordable housing? I know your association couldn't take an official view. That's why I asked you to respond from a personal point of view.

À (1050)

The Chair: Go ahead, Mr. Peters.

Mr. David Peters: We're a very reasonable association, so there's not a whole lot of gap between my views and whatever....

I just finished a period of time working for the Ontario government as the director of market housing, so I'm quite familiar with the ideas behind, so to speak, maximizing the capacity of the free market. There's a role for that.

Our association's view is that one of the problems in the history of Canadian policy is on-again, off-again programs backing one horse for ten years. It was public housing up until the seventies, and then we decided that wasn't good. Furthermore, we decided to vilify it, saying it had turned out to be a terrible way to build housing for those in need, and switched over to non-profit housing. We went with that for a long period of time and then decided to can that and vilify that.

So you have this environment of on-again, off-again housing, and the first big problem is not having long-term consistency, not building the kind of framework that maximizes the capacity of all the sectors. As Elyse and Alan said, the private sector in Ontario here is very interested in doing things. They need some support, though, because of the way the economics of housing works. That's point number one.

The private sector has more capacity to build, but they need a return. That's one area to pay attention to, and there are tax opportunities and other ways to do that. The key areas for the private sector are probably in tax policy, on which there's lots of material written and about which I'm sure you've heard.

The non-profit sector is committed to affordable housing forever, and not to take advantage of that seems to me to be a disaster in terms of maximizing the capacity of all sectors in Canada.

The key potential to maximize the capacity of the non-profit and co-op sectors is to design programs that give them a bit of a break, particularly in the financial area in the upfront period, where they need some support to get into the building department with a permit request, and that requires some money. For example, CMHC has a program that offers pre-development funding up to $100,000 for non-profit groups. Perversely, for reasons no one is really clear on, non-profit groups that are in the government's affordable rental housing program are not eligible for that money.

Mr. Shawn Murphy: I just have one last comment, not even a question. I believe my time is up.

I'm very intrigued by the recommendation...it wasn't a recommendation, actually; it was in the Canadian Retail Hardware Association brief. It was on the RRSPs and seniors being allowed to take certain funds out to be used to renovate their homes, especially renovations for special needs. Certainly that's something I'd like to pursue, because you're right into the health envelope and the home care envelope. I don't see it costing the Canadian taxpayers more than a very little money, and I think you'd be able to accomplish a lot. I just wanted to say I do support that.

The Chair: Thank you very much.

Mr. Pillitteri.

Mr. Gary Pillitteri (Niagara Falls, Lib.): Thank you very much, Madam Chair.

I was going through Shawn a little bit, but let me ask one question here to Ms. Allan.

First of all, I want to make a comment. We were talking about the federal government's role in trying to give cities, specifically large cities, a tax, what you call a venue, transferring the ability to collect their own taxes. I'm afraid of this in a sense. Let me be quite clear. When we did have--we still have--the ability to give the provinces tax room, which we have today... any time an election comes... Let's say the federal government only spends 14¢ of every dollar on medicare. They're not taking into account the tax point transfers to the provinces, so cumulatively, if you take a look at it, it's more like 34¢ of every dollar, not 14¢, but we get bombarded with this lots of times.

The same way, even with some tax points transferred to the cities, be it a gas tax or whatever, how would they spend it? What check valve would they have? It's no different today, when provincially we have the tax transfers and some people--the Province of Ontario, actually--went out and gave us free tax cuts and really forgot a lot of things that were happening.

Would you say that possibly this would be better done under the infrastructure program, where the large cities... There are big ticket items, like sewage or whatever. It would be very costly for the city, for one level of government, to take it over. Maybe there could be an increase in the infrastructure program, the three levels of government being brought in, the municipalities of course being approved by the provincial governments, and of course the three of them funding it.

I think that would be more of a check valve. I would be more in tune with that, rather than giving direct tax revenues to the cities, one being large or even smaller, without any check valve, because you never know. We can go back to 1984, when they said they were going to balance the budget in five years. They accumulated $300 billion in debt and never did balance the budget. That's where I'm going now: if this revenue were given directly to a municipality, what check valve would they have in there?

À (1055)

Ms. Elyse Allan: It's a very good question. The board is looking forward to coming out with some very specific recommendations. I don't want to come out ahead of those, other than to share with you the debate we're having.

Clearly, the infrastructure needs are significant. We agree that everybody should be contributing. We certainly are looking at the federal government for much more contribution on the infrastructure side. I think the challenge we have had in the past with granting is that even though we contribute a net $7.9 billion to the federal government on an annual basis, we have not been seeing the return for the infrastructure needs that we have.

We don't have predictability and a sustained form of financing coming from the federal government to meet the city's infrastructure needs, let alone those of our friends in Montreal, Vancouver, and Calgary--the major infrastructure needs.

While it's good to say that's a more direct way and everybody would contribute, the fact of the matter is history hasn't shown that to be happening. We're not getting those types of grants. And TTC cars aren't planned in one-year or even two-year election cycles. We have to plan for TTC spending on capital equipment ten years out, in terms of rail track, hydro rights of way, and everything else. So it doesn't fit nicely into an election cycle.

Unless we can come up with a grant program that is sustainable and predictable with guaranteed funding, it makes it very hard to meet the capital needs for infrastructure.

That is why the issue becomes how we provide some more autonomy, not to the exclusion of granting, but how we give more autonomy to the municipalities so at least if they have the tax authority, you're putting responsibility and accountability with the person who's collecting and making the decision on the taxes.

That's very important, because if you just give us a grant, then of course you have the city saying they will spend the money you have given us. So we think it's very important that he who spends has accountability and direct connection to the taxpayers who are giving that money so that ultimately you're responsible for the money you've been given and you make your commitment--for example, if I said I was going to put it into TTC, here is the result of my investment in TTC.

The Chair: Thank you very much.

Mr. Gary Pillitteri: I have just one small comment.

This year the federal government did come to the aid of Toronto, the TTC, in subsidies, actually, which were very much needed. This came in a couple of times in Toronto.

I still have that problem of having it totally in the hands of one government, because for too long I've seen it really deviate from the taxpayers. The money's not being spent well, sometimes.

Ms. Elyse Allan: I would agree it should be a mix of all, with different roles for each.

The Chair: Go ahead, Ms. Wasylycia-Leis. You have up to six minutes.

Ms. Judy Wasylycia-Leis: Thank you, Madam Chairperson.

Let me quickly ask Alan Redway a question. I know you have to leave.

I'm glad you reminded us of the words of Paul Martin. I think it's very helpful to be reminded of some of the previous promises. We can all work to hold him to account.

On the issues that really have the most to do with this rise in food banks and the poverty in our midst, a lot of the problems can be traced back to those cuts by Paul Martin back in the 1995-96 era. We're still living with those today. With respect to the CST, the Canadian social transfer, the silence from Paul Martin and this government as a whole is deafening. There are no conditions attached to the CST. There is no framework. There is no guiding principle.

I think you need to give us some advice on how we're going to convince Paul Martin to live up to his words and actually put some meat, some flesh, on the CST skeleton.

Á (1100)

Mr. Alan Redway: Well, as you know, I am not a member of the government party. In fairness to Mr. Martin, I do believe he hasn't yet had the opportunity to flesh out what he has in mind. I am optimistic and hopeful that we will see him carry out some of these things that he's indicated in the past he has been very committed to. I would trust that some of those things would relate to the items you have mentioned.

But I think we can go back, as well, and perhaps provide you and the committee with some further guidelines on some of these specific policies and recommendations that we've made.

Ms. Judy Wasylycia-Leis: What Paul Martin has fleshed out is his commitment to maintain the tax cuts, to continue to roll them out, and to continue to reduce the debt-to-GDP ratio, which means there is very little flexibility left in terms of meeting the commitments you're talking about.

So I think you need to be clear in terms of the choices at hand and the hard choices Paul Martin is going to have to make. He can't keep giving us the rhetoric about social programs and at the same time use all available flexibility to maintain this very right-wing, conservative agenda.

Mr. Alan Redway: I certainly understand what you're saying, and I agree with it. You are still serving in the political sphere, and I have in the past. I've been through years and years of people making statements, making commitments, and then having to modify them afterward, one way or another. Sometimes they're modified and there are pleasant surprises for us. Sometimes it's the opposite. We see that right now with the difficulties the provincial government here in Ontario is facing. They've made all sorts of commitments and are having to modify them.

However, I'm prepared to give Mr. Martin the benefit of the doubt for now. Let's not come down with a sledgehammer on his head until we see what he does when he's in office.

Ms. Judy Wasylycia-Leis: Well, let me ask Susan, David, and John a similar question. What advice would you give to us as we prepare a report on the upcoming budget pertaining to these hard choices? Or do you not see them as hard choices?

What advice would you give to Paul Martin as he commits expenditures, commits revenue to tax cuts and debt reduction, versus finally addressing the social deficit and the human debt?

What advice would you give to the Toronto Board of Trade—and this is a way of getting a question to you—which seems to want it both ways, which calls for massive expenditure in terms of infrastructure in the province, in the city of Toronto, and at the same time wants Paul Martin to hold the line on debt reduction, tax competitiveness, and continuation of the tax reductions?

The Chair: This will be the final answer of the morning for this panel.

Go ahead.

Mr. David Peters: I'll be very brief.

Our advice would be if you don't have enough money to do everything we wish you could do and feel you should do in our field, then you should create a stable, long-term environment for affordable housing and for the government's role in housing, perhaps with less, but with long-term commitment, much the same as you are doing for infrastructure in the way that Elyse Allan spoke of earlier.

My advice to Elyse Allan would be to keep on supporting the affordable housing that the Board of Trade is supporting.

The Chair: Ms. Spigott.

Ms. Susan Pigott: On the income side of things, many people in the social policy world now are of the feeling that it's time for a modernization of our income security programs. This is not an easy thing to do. It will take unprecedented cooperation between the federal and provincial governments. We've already alluded to some of the problems we've had in other jurisdictions with that.

A particularly necessary starting place is with working-age adults. We have some social architecture for seniors, we have the social architecture now for income transfers to families with small children. We have a mess where EI drops off into the mire of provincial social assistance. So while we recognize that there isn't enough money perhaps to restore things to the way they were ten years ago on the income transfer side, there are plenty of improvements that could be made by a wholesale modernization of the system.

The social policy community led by places like the Caledon Institute and CPRN are ready for this. Those of us working in the field are ready to enter into that process. We do need some leadership from the federal government.

Á (1105)

The Chair: Thank you to all of our panellists, not only for your presence and for answering our questions, but for the energy and thought you put into your briefs and for giving them to us early enough that we could translate and distribute them to all of the members of our committee.

We will suspend for just enough time to change panels, because we are running five minutes late.

Á (1106)

Á (1112)

The Chair: Order.

We will return to our third panel of the morning.

We'd like to welcome all of the witnesses this morning.

First, from the Multiple Sclerosis Society of Canada, two of the directors are with us this morning, Susan Murray and David Knight. Welcome to you both.

Next, from Opera.ca, we have Claire Hopkinson, who is the chair of that organization, and Micheline McKay, executive director. Welcome to you.

Then we have, from the Canadian Association of Fire Chiefs, Donald Warden, who is a fire chief, and he is joined by Fire Chief Patrick Burke. Thank you very much for joining us.

From GO Transit, we have the managing director and CEO, Gary McNeil. We welcome your presence today.

And from the YWCA of Canada, Elaine Teofilovici--

Ms. Elaine Teofilovici (Chief Executive Officer, YWCA of Canada): Teofilovici.

The Chair: Not even close. I apologize. My maiden name was Farrugia, and I understand this is difficult.

Elaine, if I may, I'm going to call you Elaine, and that way we'll get it right.

And from the RESP Dealers Association of Canada we have the chair, Ray Riley, and also the chair of the government relations subcommittee, Paul Renaud. Bienvenue.

Thank you very much, ladies and gentlemen. We will commence with the hearings, so I'll ask the cameras now to leave the room. Good try, though.

We will go up to seven minutes, and the floor is with Ms. Murray or Mr. Knight.

Mrs. Susan Murray (Director, Multiple Sclerosis Society of Canada): Thank you, Madam Chair.

Good morning. I'm a volunteer of the MS Society. David Knight has been introduced. We are both national directors on the board of the MS Society of Canada.

The MS Society's 2004 budget recommendations certainly reflect the needs of the approximately 50,000 Canadians with MS, as well as their families and caregivers.

Members, you have our submission, so I think we're going to quickly focus on highlighting areas in which the finance department has the most responsibility.

The society believes that the government has made--and thank you very much--some progress during the past year in addressing some of the real needs of people with disabilities. Last year members of this committee recommended that the federal government study the feasibility of a refundable disability tax credit, enhanced tax assistance to disabled Canadians and their caregivers, and options for providing enhanced labour market supports, which Sue Pigott was talking about, to disabled Canadians.

There have, in 2003, been some initial steps in this direction. As the result of the Romanow and Kirby reports, the health care accord is committing to move investments in diagnostic technology and access to catastrophic drug coverage for all Canadians, not the kinds of hit-and-miss programs now in place across the country. We absolutely applaud the direction.

Our one recommendation is that we would urge, as we urged the health committee of the House last week, to speed up this timetable, if possible, to the end of 2004-05.

The initial action toward establishing a home care program across Canada is also important. Unfortunately, most people with chronic illnesses and disabilities are excluded. We find this a regrettable omission, since more and more studies conclude that providing home care is most effective, since it keeps people in their homes and out of expensive hospitals and long-term-care institutions.

Income support is a critical issue for people with MS. MS usually strikes young people, we're now finding, unfortunately, from as early as three or four years old to 20 to 40. They're in the middle of building their careers and finishing school often, and they often have to leave the workforce early, generally 10 to 15 years after they're diagnosed.

Canada Pension Plan disability benefits are a key support for people with MS. As of December 1999 more than 10,000 people with MS were receiving CPP disability benefits.

In our brief we commend the Standing Committee on Human Resources Development and the Status of Persons with Disabilities for the well-reasoned recommendations made in their June 2003 report entitled Listening to Canadians: A First View of the Futureof the Canada Pension Plan Disability Program. We would love to see it adopted. It's an absolutely superb report.

For people with MS, the issues that need to be resolved include the definition of “disability”, which disqualifies many individuals with MS because the disease is episodic and unpredictable rather than prolonged, as stated in the legislation.

In addition, changes to contribution requirements, which require four out of six contribution years, unfairly discriminate against people with MS due to the episodic nature of the illness. The previous five out of ten we believe is fairer for people who have episodic illnesses. Most people with MS want to work.

We also suggest that the finance committee recommend changes to the current $3,900 cut-off for part-time work, which is too low for individuals who may be able to manage part-time or occasional employment. The society urges that the government put a priority on keeping people in the workforce. Again, if possible, raising this cut-off would be a really positive signal to people with disabilities.

The DTC, disability tax credit, also contributes to income security by providing some small level of tax relief for people with disabilities, including, obviously, people with MS.

Again, I want to compliment the committee. We're very pleased with developments initiated this year by the Minister of Finance and the Minister of National Revenue and the Canada Customs and Revenue Agency to resolve a number of problematic issues. Again, the leadership of this committee with HRDC and CCRA was the reason this happened, Madam Chair.

Á (1115)

We participated through the summer in consultation with CCRA on changes to the DTC application form and also provided input into the technical advisorycommittee on tax measures for persons with disabilities.

I was in Regina two weeks ago at the annual family conference for about 300 people with MS and their caregivers, and I gave a speech celebrating social action and some of the work we've been doing with your government. I had an absolute round of applause on the new DTC form that is law on January 1, 2004, because that's how much it means to people that doctors now across the country will have a standard set of definitions for MS, rather than one doctor who doesn't understand this complex illness saying no, and someone else saying yes. It is, again, a direct result of the leadership of this committee.

Our key areas of concern still relating to the DTC, which again we have highlighted with the advisory committee, are similar to our comments on CPP disability benefits, in that people with MS are often disqualified, again, because of its episodic nature. As we urged last year, we do hope the Income Tax Act can be amended to make the DTC a refundable credit.

Now I am briefly going to turn to David Knight on a couple of new recommendations.

Á (1120)

Mr. David Knight (Director, Multiple Sclerosis Society of Canada): Thank you.

I have just a couple of specific things, but first of all I'll give a little background, if I may, on the sources of funding for the MS Society.

Since we were founded in 1948, we have been almost totally dependent on donations from individuals, foundations, and corporations in Canada. We have received very little in the way of government funding, either direct or indirect.

The tax treatment of donations does provide an incentive for individuals and corporations to make donations, and we hope that favourable tax treatment will continue, and indeed that at some point in time it might be enhanced.

I have nothing more on that particular subject, but I do have two “innovative” ideas, you might call them, that we'd like to put before you. One concerns postage costs, and the other concerns relief of some of our receipting costs.

Our biggest single fundraising campaign is our direct-mail campaign, under which we currently mail over eight million pieces of mail every year. From that campaign we receive more than 400,000 donations back through the mail annually. The major expense of our program, obviously, is postage rates, and contary to what many believe, we pay commercial postage rates. Charities do not receive any break on postage rates from those that normal commercial enterprises pay.

Those direct-mail revenues bring about $12 million of gross revenue to us each year, so any postage saving would translate into money available for what we do, which is provide services to individuals who are affected by MS and fund research into the causes and cure for MS.

In the United States there is a two-tiered service, as I understand it, with respect to postage; not-for-profit organizations get a break on their postage rates. That is the first recommendation we have for you. It concerns postage rates. It is that the Government of Canada make a subsidy to Canada Post with respect to three areas of postage costs: postage costs for direct-mail campaigns, costs for business reply mail, and costs for sending out receipts for donations.

We also ask that the level for required issuance of receipts for tax deductions be raised for charities to $250. I believe it's $15 currently. Again I borrow from the U.S., where donation receipts are not required for tax deductions of less than $250. The risk that goes with it is viewed as being readily offset by the cost of administration.

Those are our two principal recommendations with respect to postage and to receipting.

I have some numbers with respect to the amounts the society would save as a result of those recommendations. I do not have numbers with respect to the total cost to Canada, obviously, because I don't have numbers for all the other charitable organizations in Canada. But believe me, the numbers are significant.

Thank you.

The Chair: Thank you.

Now we'll go to Opera.ca.

Ms. Claire Hopkinson (Chair, Opera.ca): Thank you, Madam Chair.

I'm a volunteer chair for Opera.ca, which is the service organization for all the opera companies in Canada. We really appreciate the opportunity to meet with you here today and to share with you our views on how the Canadian opera sector, and indeed the arts community, helps to enhance the lives of individual Canadians and make our communities more desirable places to live.

Obviously those of us who work in opera and in the arts are passionate about the work we do. Fundamentally we believe it contributes to the quality and the meaning of life for all Canadians. The arts are about bringing expression and definition to the values and challenges we face as Canadians, in our communities and in our country.

In our opera companies we're telling stories that are both universal and local. For instance, we bring authors such as Robertson Davies and Margaret Atwood to the stage, transforming their celebrated prose into the power of music and drama.

We tell stories about our national identity, such as Iron Road, which acknowledged and celebrated the contributions of early Chinese immigrants to the building of our national railroad, and Louis Riel, the opera, which dramatized a cultural icon.

Á (1125)

We tell stories that are personal and relevant in our communities, such as the tragic personal legacy of slavery in Nova Scotia, as told in the award-winning opera Beatrice Chancy, and Filomena, the recent opera on the dramatic life and death of the last woman hanged in Alberta. It tells a compelling story of the struggles of Italian immigrants in Canada.

Those are just a few examples of the wonderful and successful opera productions that are created by Canadian artists and brought to life by our opera companies.

We are heartened by the growing public acknowledgement we hear about the role of cultural institutions and organizations, as we did here in Toronto upon the announcement of the major cultural infrastructure investments. Across the country many governments of all stripes are slowing beginning to reinvest in their arts sector through their public arts councils and foundations. Any support to our member companies and organizations is always appreciated.

With the right conditions, though, we believe we have much more to offer Canadians. Opera and the arts have much to contribute as we Canadians explore new ways to embrace newcomers to our country, to deal with worldwide issues, and to better understand the challenges our society faces.

Today, I will address key recommendations we make in our brief to the committee. These speak directly to ways and means of bringing tangible results to the objectives of making our villages, our towns, and our cities better places to live in. For example, my company—a mid-size opera company, Tapestry New Opera Works—has an education program, a very exciting initiative that ties students directly into the creative process.

Recently we involved native students from Manitoulin Island in creating their own opera around historical issues of exploitation of Inuit culture and resources. At L’Opéra de Québec they have a unique, exciting program called Dessine-moi un opéra! where students compete to have their designs used in actual opera productions. Those are very empowering programs.

In considering our recommendations, please bear in mind that they are consistent with many of those made by other cultural and non-profit organizations. I encourage this committee to note the synergy and the unity of message emerging from these hearings as you consider your own budget recommendations.

I am also pleased that both the Professional Association of Canadian Theatres and Orchestras Canada, two organizations we work with closely in the performing arts, endorse and support the recommendations contained in our brief.

Opera.ca was heartened and encouraged by the Government of Canada's $560-million Tomorrow Starts Today commitment to the cultural sector in 2001. Indeed, Opera.ca and its members have benefited from the Government of Canada's increased commitment to the arts.

We applaud this initiative, as we did when I had the very exciting privilege to announce this major news to over 500 opera professionals from around the world gathered in Atlanta on the very day the funding was unveiled by the Prime Minister in Toronto. I can tell you that our American counterparts were very impressed, and I was delighted to deliver that news.

Recommendation number one: While acknowledging the fiscal challenges of the Government of Canada and the need for prudent management of the budget, Opera.ca recommends that the Government of Canada renew its commitment to the funding announced in 2001 and that this support be augmented and incorporated into the base cultural spending envelope. This will really help to create a more stable operating environment for arts companies, arts organizations, opera companies, and artists across the country.

We are also encouraged by the recent initiatives to foster greater nationwide debate about the role of municipalities in cultural support and planning. The Creative Cities Network and other pivotal initiatives, such as the creative spaces and places conference, which was recently convened in Toronto, speak to the enhanced role of municipal planners and decision-makers in cultural policy.

Recommendation number two: As the Government of Canada engages the other levels of government in dialogue about a new deal for Canadian cities and towns, we recommend that the budget acknowledge the role of culture in the revitalization of our municipalities, and that any reallocation of resources to municipalities earmark an adequate portion for arts and culture.

Opera.ca acknowledges with great appreciation the initiatives of the Government of Canada and others to enhance funding, particularly in the area of capacity building and stabilization. In the drive for increased accountability, which Opera.ca fully embraces, the underlying objective is that programs are being lost, so we urge that.... The reporting requirements are very onerous, and it makes it impossible for small companies, many with two to three staff members, to actually consider applying.

In our recommendation number three Opera.ca encourages the government and its funding partners to streamline and consolidate funding programs, so the fundamental purposes of the programs may be recognized. We urge the committee to recognize the exceedingly lean administrative structures of opera companies, and by extension most arts organizations, and to encourage a more efficient, less time-consuming funding apparatus.

Canadian opera companies have heeded the call for increased private investment. It's clear that with 32% of total revenue coming from individual citizens, from corporate and foundation giving, opera is part of a growing strength to charitable giving.

Our recommendation number four is that the committee reiterate its recommendation that the federal government amend the Income Tax Act to eliminate the capital gains inclusion rate applied to donations of publicly traded securities to charitable organizations, including private foundations.

Á (1130)

In conclusion, I can think of no better way to end my presentation than by bringing you a message from Paris, where Ben Heppner is currently wowing audiences there. He asked me to say:

Canada has an abundant wealth of artistic talent and creative vision. I urge the Finance Committee to endorse the recommendations of Opera.ca and indeed other arts organizations, so that we can fully realize our country's potential.

Again, thank you very much for this opportunity.

The Chair: Thank you.

Now, from the Canadian Association of Fire Chiefs, Chief Warden. Go ahead, sir.

Mr. Donald F. Warden (Fire Chief, Canadian Association of Fire Chiefs): Good morning, Madam Chair.

On behalf of more than 1,000 chief fire officers comprising the Canadian Association of Fire Chiefs, thank you for the opportunity to present our pre-budget concerns to you.

My name is Don Warden, and I'm the fire chief at Wasaga Beach, Ontario. I'm here in my capacity as chair of our association's government relations committee. With me today is Fire Chief Pat Burke, who is our committee's vice-chair and who will be speaking to you in a few moments.

The 2001 census stated that the population of the 25 largest census metropolitan areas in Canada was 19,623,300. All but one of these census metropolitan areas is represented within the CAFC membership. Therefore, the CAFC members are the first emergency responders to arrive on the scene of a fire or other serious incident for 99.3% of Canadians living in 24 of the 25 largest census metropolitan areas.

The 2001 census also revealed a total Canadian population that year of 30,007,094. CAFC members were responsible for protecting the lives and property of 67.6% of that total population. That is a reflection of the fact that virtually all the smaller communities in Canada are served by volunteer fire departments.

At its annual conference, CAFC devotes several hours to debate of policy. Several of the recommendations contained in this submission have been ratified as a result of this process and therefore represent a consensus position of Canadian fire chiefs.

In addition, as part of its preparation for this submission, CAFC surveyed its members on a range of issues. Responses were received from fire chiefs of all provinces and territories. Therefore, I can assure you that our brief today reflects a broad consensus of Canada's chief fire officers.

Page 1 of our submission includes a statement that underscores most of our submission. It reads as follows:

Firefighting is one of the truly dangerous occupations. Whenever a full-time or volunteer firefighter responds to an emergency, the risk of injury or death is ever-present. Fundamental to the prevention of casualties within the Fire services is the availability of the equipment and training required to address emergencies. This is a theme that will emerge repeatedly throughout this submission, and it is one to which the Standing Committee should direct serious attention.

The title of our submission asks the question, “How Safe Are Canadian Communities?” This is a valiant question from two perspectives. First, the pre-election platform document of the current government, which was entitled “Opportunities For All” contained a promise to help Canadians make the urban-rural communities safer.

Second, largely in response to the September 11, 2001 terrorist attacks in the United States, the December 2001 federal budget allotted significant funds to Canada's Office of Critical Infrastructure Protection and Emergency Preparedness (OCIPEP). Two of the purposes of these funds were: one, to improve laboratories and purchase specialized equipment to strengthen Canada's ability to respond to chemical, biological, or nuclear threats; two, to improve the ability to protect Canada's infrastructure, such as water, energy utilities, transportation, and communication systems.

Our pre-budget submission comments at length on these two issues. I would ask Fire Chief Pat Burke to summarize our findings in the ensuing recommendations.

Á (1135)

Mr. Patrick Burke (Fire Chief, Canadian Association of Fire Chiefs): Thanks, Don, Madam Chair, and members of the committee.

By way of background, I serve as fire chief of Niagara Falls right now, and prior to that I was the deputy chief for the city of Windsor. I mention that because I've spent my entire career on a Canada-U.S. border where there are difficulties and special challenges in terms of infrastructure, transportation, immigration, and unfortunately, the ongoing threats of terrorism.

In our pre-budget survey this year, we asked our members to rate how much safer our communities have become in the three years since the pre-election promise that Don referred to a moment ago was made. The results, regrettably, are not encouraging.

While 19% of the responding fire chiefs said their communities had become safer, 65% of them reported no change in the safety status of their municipalities, and an alarming 13% actually believed their communities had become less safe in the past three years.

With respect to the progress being made by OCIPEP to address the issues for which it was allocated specific funding in the December 2001 budget, the results are similar. Much progress or at least some progress to strengthen the ability of Canadian communities to respond to chemical, biological, radiological, and nuclear incidents was reported by 24% of the responding fire chiefs, and to improve critical infrastructure protection was reported by 15% of the respondents.

What truly should concern the standing committee is that 74% of the fire chiefs reported little or no progress on the CBRN front, while 82% of them saw a lack of progress in improving critical infrastructure protection.

Our submission makes nine recommendations, seven of which relate directly to the survey results that I have just reported to you, and they are found on pages 18 and 19 of our brief. In summary, they state as follows:

The standing committee should recognize that much remains to be done to make Canadian communities safer and hence more desirable places in which to live and work.

Progress to strengthen the ability of the fire services to respond to CBRN incidents should be accelerated.

The lack of progress that has been made to better protect critical infrastructure at the community level should be addressed on a priority basis.

The next budget should include additional funding for OCIPEP to improve the quality of education and training through the Joint Emergency Preparedness Program.

OCIPEP should commit itself to making JEPP education and training related to civil preparedness for emergencies more important to the fire services, particularly to fire departments in rural and remote areas.

The standing committee should recommend that the Partnerships Toward Safer Communities initiative receive meaningful financial support in the forthcoming budget.

The standing committee should commit itself to an in-depth study of the manner in which public revenues are shared among the three levels of government.

Madam Chair, these recommendations require the strong support of your committee. The fact that a catastrophic incident has not occurred in the past three years, and particularly since the September 11, 2001 terrorist attacks, should not be viewed as an excuse for complacency.

The thinness of the veneer was demonstrated over and over again this year. SARS, out-of-control wildfires in parts of our country, and the short-term collapse of the electrical infrastructure in Ontario are just a few dramatic examples of how close to the line we have come several times in recent months.

The standing committee should regard investments in line with recommendations we have made to you this year as an important and cost-effective means of minimizing the potential for an impact of a truly catastrophic event, either caused by nature or man-made.

The standing committee has expressed an interest in hearing how the quality of life in rural and remote communities can be enhanced. These communities share one common characteristic: they're protected by volunteer firefighters. We have to do some things to enhance the attraction of volunteer firefighters. We can do that by excluding the requirement to pay EI and CPP contributions and providing a tax credit in the amount of $500 for employers who employ volunteer firefighters.

We thank you for your attention to our presentation.

Á (1140)

The Chair: Thank you. We have your full brief also.

Now we'll go to GO Transit. Mr. McNeil, the floor is yours for seven minutes.

Mr. Gary McNeil (Managing Director and Chief Executive Officer, GO Transit): Thank you for giving GO Transit the opportunity to present its business case and the business case for transit in major urban centres.

Public transit in Canada carries almost two billion people each year to and from jobs, schools, hospitals, stores, and entertainment centres. In major urban centres, it is one of the most efficient and effective ways of moving around the city, and it is a critical lifeline for the economic vitality of large urban centres.

In the greater Toronto area, GO Transit carries more than 44 million passengers each year, and most of those trips are longer-distance trips to and from jobs in the heart of the city. When created in 1967, GO Transit was designed to be an alternative to building new freeways from the suburbs to downtown Toronto, and it has performed spectacularly. In just one rush hour, the GO rail system carries the same number of people into downtown Toronto as four Gardiner Expressways and four Don Valley Parkways. To carry the same number of people by car you would need 48 lanes of freeway traffic. Most of those trip lengths are long--32 kilometres is the average trip taken on GO Transit.

GO Transit has dramatically shaped and influenced the growth of downtown Toronto. In the past 30 years employment in the core has doubled in size, but the number of automobiles entering the core has stayed the same. The TTC ridership has actually dropped, but our ridership has grown by over 100,000 more trips per day. All of the core's downtown growth has been supported by GO Transit over that time period.

But the continued growth of the financial core of the greatest city in Canada is at risk. There is no more transportation capacity to serve the core. The roads are congested, the TTC subway system is at capacity, and the GO rail system is full. It is safe to say that in Toronto there is not a need for people to be encouraged to switch to transit. Our problem is that we do not have enough capacity to handle today's people.

Employers looking at places to set up or expand their businesses know this. The ability to get skilled labour to and from places of employment is critical for business success. In downtown Toronto, this is becoming impossible.

Over the next 30 years, the population of the GTA and the surrounding region will increase by over three million people. As long as immigration occurs, the growth of Toronto will also occur. To handle those people and hopefully the jobs that they will go to we must build more roads and more transit. We never have a problem building more roads in the GTA, but it seems that the long-term commitment to build more transit is ever elusive. GO Transit and the other GTA transit systems are key to the economic strength and well-being of the GTA.

Studies from the 1980s and 1990s confirm that traffic gridlocks cost businesses about $2 billion in lost productivity each year. The figure is now greater than this, and continues to rise. This cost affects our international competitiveness as well as the cost of nearly every product that we as consumers purchase in Canada.

In recent years a growing chorus of business leaders, policy-makers, and concerned citizens have identified gridlock as a major threat to this region's competitiveness. With free trade and globalization making competition for business location a cross-border affair, Canada stands to lose businesses and jobs if growing congestion continues to interfere with the efficient movement of goods and people through the region. Much of this congestion is in areas served by GO Transit.

All levels of government have recognized the need to support GO Transit's growth. The municipalities are supporting GO's growth through development charges and direct tax donations to our capital plans. The provincial government fully supports GO's operating subsidy, which by the way is over 85%--one of the best cost recoveries of any transit system in the world--as well as all of our state-of-goods repair capital.

The federal government has recently announced a commitment of funds for an element of our rail infrastructure needs. GO welcomes this announcement and trusts that your government will follow through with its multi-year support and recognize that this support needs to be ongoing as Canada continues to grow.

Even though our 10-year plan is relatively modest, the impact is substantial. Our plan will essentially carry the same number of people as 32 lanes of additional expressways. Combined with 48 expressway lanes, as I mentioned earlier, this will mean that GO will remove the need for 80 lanes of freeways. Remember, each new GO customer supports additional office development in downtown Toronto, which provides an economic benefit for all three levels of government.

Á (1145)

A recently completed economy analysis found that the economic benefit to government of the development and operation of a single downtown office space, which represents one commuter, was about $750,000 in tax revenue over 25 years. The new growth in downtown Toronto served by GO Transit will result in a financial payback that exceeds $20 billion over a 25-year period. Without new transportation services, the growth will not happen.

I can go into other areas, such as health and the environment, where the support of greenhouse gas removal and benefits to health care in the sense of air quality and fewer traffic accidents is important, but time is limited here. Here are some facts, though.

The average Toronto car carries 1.16 people. One GO bus can replace more than 40 cars. One GO Train carries the same number of people as 1,400 cars. If those 1,400 cars were parked bumper to bumper, the line would be seven kilometres long. On a typical day, GO operates 178 train trips into and out of Toronto, so you can imagine the number of cars we remove from the road.

Transport Canada has estimated that on a per capita basis each new GO passenger removes three tonnes of greenhouse gases every year. This is three times the per person target set in the climate change plan for Canada.

No one can dispute that GO Transit really makes a difference in improving the life and health of those living in this urban centre. Toronto is at the heart of the economic engine of Canada, and GO is key to making this engine run. Breaking up the gridlock to allow goods to move and moving people efficiently in an environmentally friendly way satisfies many of the federal government's objectives.

Therefore, in establishing your budgets for the next fiscal year and for many years to come, it is important that the most senior level of government not forget the needs of transportation in large urban centres. We help to keep Canada healthy, both fiscally and environmentally.

Thank you once again for the opportunity to talk to you, and thank you for your past support. We hope we can continue our partnership with you.

The Chair: Thank you very much.

Over the past two weeks we have talked about gridlock in Vancouver, and in Montreal yesterday, so this is becoming a very important issue across the country.

Now I'll go to the YWCA of Canada. Go ahead, Madam.

Ms. Elaine Teofilovici: Thank you very much, Madam Chair and members of the committee, for inviting us to present several recommendations that will benefit women and children in Canada.

The YWCA of Canada is the national office for 40 YWCAs and YMCA-YWCAs. They represent the largest network of shelters and second-stage housing in the country. Together we have 45 facilities and 24 sites that receive women and children who are fleeing violence.

We are also a provider of visitation programs, child care, after-school child care, camping, and recreational activities for children, so we are well aware of the impact of the breakdown of families and the impact of violence and abuse in families in Canada. Not surprisingly, the focus of this brief will address violence against women and its eradication, as well as the programs needed to support these women and children to reintegrate into a healthy life.

What the YWCA knows and wishes policy-makers to know is that prosperity is not helping Canadian women break the cycle of violence. In 2001, 69 Canadian women were killed by their intimate partner or ex-partner, which is 17 more than the previous year, an increase of 32%.

According to Statistics Canada, in the year ending March 31, 2002, a total of 55,901 women and 45,347 dependent children were admitted to shelters as a result of domestic violence. This is a 20% increase from the year 2000. The seriousness of abuse of women and the cost both in tangible and intangible terms, not only to the women and the children but also to the rest of Canada, should not be underestimated.

More evidence tells us that a staggering 39% of Canadian women have had at least one experience of sexual assault since the age of 16, but also that three in ten women currently or previously married in Canada have experienced at least one incident of physical or sexual violence at the hands of a marital partner.

While no woman is immune to violence, some are more vulnerable. Young women under the age of 25 are the group at the highest risk. The risk is most prevalent around a woman's pregnancy, when she is having her first child, putting at risk both herself and the child. Spousal homicide rates for aboriginal women are more than eight times the rate for non-aboriginal women.

The list of consequences derived from the experience of violence is huge. Many of you may be familiar with the report compiled that the cost of violence in Canada is $4.2 billion a year, while more inclusive reports tell us that the actual cost is $46 billion a year in related services.

In the 30 years since shelters began operating in Canada, there has been little investment in change, in expansion, in developing best practices, prevention, and education. By and large, they have remained crisis- and security-oriented facilities that have not really changed the picture of violence against women and children in Canada.

With increasing demands and increasing resources, shelters barely survive. Second-stage housing, which could have developed into much more progressive and preventative units, have been eliminated in many provinces and subsidized housing devolved to municipalities who themselves are struggling with serious budgetary deficits.

Women not only have to face abuse, but they must leave their homes, networks, and communities. That's the system in Canada. The lack of affordable housing and the other multiple challenges they must face leave them incredibly vulnerable to the reoccurrence of violence in their lives.

YWCA of Canada would therefore like to recommend that the federal government make a commitment to taking leadership in designing a comprehensive national plan that will effectively decrease violence against women in Canada, including discussions with service providers, policy-makers, legislative bodies, and survivors of violence, within a federal-provincial-territorial arena.

Á (1150)

The government should support research that will assist policy-makers in understanding and dealing with the complexity of domestic violence; provide substantial financial commitment to emergency shelters, second stage and permanent housing projects dedicated to women fleeing abuse; and provide adequate legal aid funding for family law assistance.

Being in the business of shelter and second-stage housing, one of our biggest problems is when the women are ready to reintegrate society, where do they go to live?

There is a huge national housing crisis in this country. We cannot find affordable spaces for these women. The drastic cutbacks in the construction of social housing in the mid-1990s and the reduction of construction of rental housing units by the private sector has led to declining vacancy rates in all major urban centres, high pressure for rent increases, and severe housing shortages in many Canadian cities. This limits the options for women trying to escape violence.

Lack of affordable housing is one of the most compelling reasons why women return to abusive relationships. In Toronto, at our YWCA shelters, an astonishing 70% of women who come to our doors are turned away because the system is in a bottleneck. There is nowhere the women currently staying in YWCA shelters can move to, because their incomes are too low and rents are too high.

This situation requires immediate public intervention. With minimum salaries of $7 and less in Canada, no woman with children can afford a decent and secure housing proposition. Single moms live on $9,000, beneath the poverty line, and in some provinces even experience clawbacks on their social welfare revenues.

The YWCA of Canada recommends that the federal government establish a national housing plan, allocate resources to expand social housing initiatives through programs such as the affordable rental program, and increase pressure on the provinces to hold the matching funds commitments outlined in the affordable housing framework agreement.

Furthermore, YWCA of Canada recommends that extensive services need to be put in place for screening cases for violence against women and children, training legal professionals and other family law professionals, and providing tools for family court personnel—women's advocates who can provide safety planning and family court support for women who are leaving violent relationships.

I'm done. I would like to direct the attention of the members to the fact that the last pillar of supporting women in leaving violent relationships is the need for early quality child care.

Thank you very much.

Á (1155)

The Chair: Thank you very much.

We do have the full brief with the excellent recommendations in it, so we can pay attention to that as members.

Now we have the RESP Dealers Association of Canada. Mr. Riley, the floor is yours.

Mr. Ray Riley (Chair, RESP Dealers Association of Canada): Thank you, Madam Chair.

The RESP Dealers Association of Canada was formed in the year 2000, when the individual companies that comprised the association realized that it was best to work together and establish a unified voice in the marketplace, as well as establish increased proficiency standards for the people who represent us in the sales of our products in the home.

The association members have over 1.1 million accounts, covering over 940,000 Canadian children, and over $4 billion in assets on deposit. We've received over $2.2 billion of RESP contributions and have paid out over $1 billion of RESP funds since the 1998 federal budget. We are currently in the process, as I mentioned earlier, of instituting increased proficiency standards for our industry.

At last year's hearings, this federal finance committee approved our recommendation to increase the Canada education savings grant to 30% for the first $1,000 invested, to help low- to moderate-income families. This committee also agreed to protect RESP savings from bankruptcy and social assistance requirements.

I'm pleased to note that the Senate Committee on Banking, Trade and Commerce recently also supported this position.

We were delighted that the committee supported our recommendations, and hope that you will do so again so that they may be included in the next budget.

At this point, my colleague, Paul Renaud, will discuss the costs of education and other aspects that influence your decision.

The Chair: Mr. Renaud.

Mr. Paul Renaud (Chair, Government Relations Subcommittee, RESP Dealers Association of Canada): Thank you, Madam Chair.

Just to build on the points Mr. Riley has made, the cost of education continues to climb at an alarming rate--and I'm sure I don't need to tell the members of this committee that information. You'll find a chart on page 7 of our brief that gives you a national average in the current educational year for the cost of post-secondary education, both with residence and without, as well as some of the rates of increase that are being experienced across the country.

The next page has a very interesting graph I would draw your attention to. The solid slope in that graph is in fact the increasing cost of education, whereas the bars represent either CPI or family income indexes. As you can see, they intersected at around 1990, and then after that the cost of education has just continued to soar.

We would reflect on the fact with you that in addition to this very successful program the federal government has for encouraging families to save for post-secondary education, which of course is the Canada education savings grant, we as an association have been actively promoting the provincial involvement in this particular endeavour. We have had initiatives at a variety of provincial governments, including here in Ontario, in Alberta, in Manitoba, in New Brunswick, and in various other provincial jurisdictions. In fact, we have ongoing discussions in all provincial jurisdictions about the need for the provincial governments to participate in this initiative.

So we would certainly encourage this committee to once again reflect upon and consider the recommendations that we as an association are bringing forward to the table. Mr. Riley will just go back through those recommendations, which are found at the end of the brief we submitted.

Â (1200)

Mr. Ray Riley: We recommend, number one, to increase the benefit at the lower level, which means we would target the grant to encourage low- to moderate-income families to save more by increasing the grant to 30% on the first $1,000 invested. And the finance department, as I mentioned, has already supported the protection of the RESP in cases of bankruptcy.

We would like the government to raise the awareness among Canadian families of RESPs by cross-promoting them to target audiences such as recipients of federal family benefit programs, parents, grandparents, and students.

Finally, we would also encourage provincial initiatives and steps taken by provinces to supplement the grant as an additional incentive for low- to moderate-income families.

We'd like to make changes to the human resources development act. We would like to see provincial grants be CESG eligible, and we would also encourage social assistance legislation changes to protect RESP savings.

Thank you.

The Chair: Thank you very much.

As we have panels starting at 1:30, I need to keep these people going, so I've been planning to feed them.

I will go for five-minute rounds to the six people in the room right now. That will go for half an hour, and it will keep you just five minutes beyond your scheduled departure time, if that's agreeable to my colleagues. Is that okay?

Go ahead, Mr. Solberg.

Mr. Monte Solberg: Thank you very much, Madam Chair.

I appreciate the presentations. I guess I had better just jump right in.

I'd like to ask a question of Chief Warden with respect to the overall tenor of your brief, which seems to indicate that you feel the government has perhaps fallen asleep with respect to preparation in the event of a terrorist attack. Would it be fair to characterize where the government is at today as being at pre-9/11 levels again in terms of the concern they show with respect to being prepared for a terrorist attack?

Mr. Donald F. Warden: I don't think they're at pre-2001 levels. They have made some progress. I know they have established some major teams across Canada. We feel it has not gone far enough.

Our biggest concern is for the other areas that aren't protected or equipped and trained properly to deal with those incidents. It takes three or four hours to get those major teams to that area. What do you do in the meantime? There are fire departments out there that do not have any equipment or training of any sort to be able to hold a situation until such time as assistance arrives.

This is where we feel the government has certainly fallen back on what their promises were in the previous budget. We do not feel that OCIPEP has taken the funding to that level or supplied the equipment and training that is necessary for the first responders to an incident.

Mr. Monte Solberg: Do you get most of your funding through the Department of National Defence for this kind of thing? Is that correct? Is that where it comes from? I thought there was training that was available through National Defence, but it was not forthcoming.

As a follow-on question, if in fact that's the case, is it appropriate to have National Defence look after this, or does it almost require a separate agency to be in charge of this?

Â (1205)

Mr. Donald F. Warden: I think you'll notice in our brief that we're also asking for somebody from the parliamentary system to take charge and be responsible for the fire services in Canada the way they were some years ago, but that has gone amok.

DND really does not fund us. All of our funding comes from the local taxpayers at this time. We thank OCIPEP and the federal government for what they have done to bring some money to the table for the large team, but the training is not available. Everybody can't go to Arnprior, which is under the direction of DND. The Canadian Emergency Preparedness College is now in Ottawa. We do realize it's a position and a situation of the federal government. They must deal through the provincial EMO offices. We also support that concept.

Our organization has no problem working with the provincial EMO section, but what we're saying is the money that is allotted should be specified directly to the local fire departments and emergency responders to ensure that money reaches them, so they can get the equipment and the training.

Mr. Monte Solberg: Okay. Thank you.

Time is so short, I have just a comment, really, to the RESP dealers. Suffice it to say that I think many of us feel that this is a program that works quite well. Just in general, I would say—I won't speak for everyone, I'll speak for myself—I'm very supportive of the program. Obviously, we would like to see it work even better. If we can encourage people to save for their own education, that's a good thing. Generally speaking, without having had a chance to really think through everything you're arguing for, I just want you to know that I'm generally supportive. I'll just leave it at that.

I have a question for representatives from Opera.ca. Many of us are very supportive of the arts. The arts are a good thing. I agree with your arguments about enhancing the standard of living when you have a strong cultural community. But there is a criticism that is levelled at opera, and I'm going to ask you to address it, and it is this. Often people argue that when we give money to opera, or to the arts in general, very often what we're doing is subsidizing people who are quite well off, because obviously people who attend the opera tend to be better educated and better off. How do you answer that in a day and age when there are so many people here looking for funding?

Ms. Claire Hopkinson: I'm going to ask Micheline McKay to speak to this.

The Chair: Ms. McKay.

Ms. Micheline McKay (Executive Director, Opera.ca): Thank you.

There's no question that is a perception. However, if you take a look at the programs of our companies, either in the children's education programs or in their outreach programs, they really do reach down into all elements of the community. You could look at any company across this country, from Victoria right through to the east coast, where they have extensive programs reaching into inner city schools and things like that.

For instance, the Vancouver Opera reaches up to 60,000 students, not only in the greater Vancouver area but right up the coast, with programs that take the works into the schools, that work with children and allow them to express themselves in a way they don't otherwise have. These kids are then taking their parents to the opera. We are certainly sensitive to the notion that opera in particular, and in the arts in general, is seen as an elite activity.

Claire spoke to the program they had on Manitoulin Island, which was really about reaching out to native children. So it's a perception we have to respond to. It's not a correct perception in its entirety, and everything we do levers more activity in the community.

The Chair: I'm sorry, but the time is well over.

[Translation]

Mr. Paquette, you have five minutes.

Mr. Pierre Paquette: Thank you, Madam Chair.

My question is for the representatives of the Multiple Sclerosis Society of Canada. You have made a number of recommendations, as you did last year, concerning the disability tax credit. A motion was passed by the House of Commons, nearly unanimously, to my knowledge, about this tax credit , and Mr. Manley has said that he was quite open to discussion. Has anything happened in the past year?

Â (1210)

Ms. Susan Murray: Yes, sir,

[English]

there has been some movement on that. Mr. Manley did not move as far as we'd like on the disability tax credit, but in our brief we referred to the technical advisory committee, which is led by Madam Caplan and in which the Department of Finance and HRDC are involved. We're moving forward, but the issue has not been resolved yet with Mr. Manley. All the support you could give we would appreciate.

[Translation]

Mr. Pierre Paquette: You can be sure of our support, including for the refundable credit. I know that many people with relatively low incomes must go through a lot of trouble to get a tax credit of about $900. It would seem normal to me that people be compensated for their efforts. The tax credit should do what it's meant to do.

Ms. Susan Murray: Thank you, sir.

Mr. Pierre Paquette: It was my pleasure.

My next question is for Ms. Teofilovici of YWCA Canada. Your last recommendation was about day care services. I wonder if you should not add another recommendation to that. If the federal government decided not to follow up on your recommendation and not to support the creation of a Canada-wide day care network, should it not at least abstain from penalizing the provinces which provide day care services?

Let's take my own case as an example. I live in Quebec and I have three children. For the first child, I was paying $25 a day to the day care centre. I was allowed a $25-a-day deduction by the federal government. I now pay $5 because we have a program which is mostly subsidized by the Quebec government, but I have lost the deduction. Quebec taxpayers are paying more taxes to Ottawa because their own government has taken action such as you recommend.

Should you not complete your recommendation by hoping that the federal government might one day contribute also?

Ms. Elaine Teofilovici: I think that this is an excellent suggestion and we shall take note of what you have said. Taxation policies are unequal in Canada and Quebec is considered to be one of the most progressive provinces in the field of day care services. It has one of the most satisfactory programs in Canada. It should certainly not be penalized because it has a good program.

Mr. Pierre Paquette: I have one last question and it is for the representatives of Opera.ca.

Yesterday, in Montreal, we met with people from the Mouvement pour les arts et les lettres. They made a recommendation identical to your first one. They suggested an additional amount of $300 million for the Canada Council for the Arts. Have you determined the amount which would be needed to meet the needs of the arts?

[English]

Ms. Claire Hopkinson: Thank you very much for that question.

We don't have a particular number in mind. We work very closely with the Canada Council for the Arts, and we believe they will be putting forward their own submission. We generally work with them on a problematical level to determine what the needs of the community are.

[Translation]

Mr. Pierre Paquette: I have one last question and it is for the representatives of the Canadian Association of Not-for-Profit RESP Dealers. I should first tell you that I have RESPs for each of my three children and that I am quite familiar with this program.

At one point, you had a problem with social insurance numbers. When the application was made, the parents were asked to provide the SIN of their child. Some dealers came to me and said that this was a problem for them. It often happened that parents did not have a SIN for their children when they made the application. It was the case for me. Afterwards, parents had to apply for a SIN for their children. Has this matter been settled?

Mr. Ray Riley: Yes, Mr. Paquette. We proposed a solution which was accepted by the federal government. We have now changed the way we invest the money. The problem is now solved. The government has acted on our suggestion.

Mr. Pierre Paquette: You are lucky. You are the only group of all those we have met in our trip to have solved its problem this past year.

[English]

The Vice-Chair (Mr. Monte Solberg): Excuse me. We're going to have to wrap up here pretty quickly, so we'll go Mr. Wilfert now.

Mr. Bryon Wilfert: Thank you, Mr. Chairman.

To the Canadian Association of Fire Chiefs, as you know, we established OCIPEP before the United States established the Homeland Security, and yet we've fallen behind, as you say, in terms of some of the funding aspects. I'm assuming that of your seven recommendations your priority is around OCIPEP. Is that correct?

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Mr. Patrick Burke: I think the priority is to get the funding in place so that it's a more direct stream coming down to the street level where it's needed. I think overall what's happened is that OCIPEP and a lot of the federal funding that's been made available has been geared towards two parts of preparedness. It's been geared towards intelligence gathering and prevention, which is laudable, and it's been geared towards planning. But very little has been dedicated to the response capability, and that's the very street level, where it's needed. We need a more direct line of funding down to the street level for every fire department in Canada.

Mr. Bryon Wilfert: I would agree with you. My question is, how do we do it? What is the mechanism? We seem to write a lot of cheques at the federal level, and they seem to get eaten up, and of course there's no credit to the federal government or accountability to the federal government.

Mr. Patrick Burke: Short of reworking what OCIPEP is all about and setting up a separate structure, I think it would be worth while to put some new parameters around the OCIPEP funding, because the OCIPEP funding comes down to the province and then goes from the province down to the municipal level. If there were some parameters that made it a more direct stream down to the street, to the local municipal level, for the fire departments it would be very helpful.

Mr. Bryon Wilfert: Thank you.

With regard to the opera, I certainly agree with your one recommendation that if we're going to reallocate or send funds there should be in fact a portion dedicated to the arts and culture. We deal a lot with infrastructure issues, and I'm certainly supportive of infrastructure, but there are also the soft services people talk about. You can't have a city without a heart in it, and obviously earmarking them is important.

I say to GO Transit, we know the Prime Minister's urban task force has talked about—and we recommended, in fact—a national transit plan. Of course there has to be the appropriate massing; obviously we're not going to be funding transit in areas where it's not appropriate. I was pleased at least that you recognize the Canada strategic infrastructure fund.

The only problem when we do these agreements, and in Ontario we announced $435 million with GO in York Region, etc., is that it took the Ontario government of the day quite a long time to actually agree, which is more than annoying. So we announced it ahead of them, and then finally they came on board. That's a part of the difficulties we seem to have in these agreements.

I won't get into all the complaints I have about GO Transit from Richmond Hill. Not just getting on it, but being able to park is an issue. I think there needs to be more cooperation between GO and municipal governments. It's ludicrous for somebody to have to pay $125 a month in fines in order to take the GO downtown.

RESP Dealers, I thought your comment about the children in registered RESPs being more likely to complete post-secondary education than those not was a very interesting one. Anything we can do on raising awareness I would agree with. I supported the recommendation on the 30% last year, so I would agree with it.

Again, it's only money; that's the problem we have. As I've said before, our issue will be to continue to look at doing systematic and ongoing examinations of government spending in order to accelerate the $1 billion reallocation issue, as we did this year. Clearly there has to be more of it, because we obviously don't have the money. They all cost money.

Mr. Ray Riley: We appreciate that.

The Vice-Chair (Mr. Monte Solberg): Thanks very much, Mr. Wilfert.

Mr. Pillitteri.

Mr. Gary Pillitteri: My questioning is to the fire chiefs, especially because we have an old fire chief from Niagara Falls, the area I represent, making this presentation. Welcome

For years we've had a program, the JEPP program, and it seems to me that some municipalities more than others have taken up its availability through the defence department to have some of its resources to get equipment. Your report shows that the municipalities that have full-time rather than part-time fire chiefs use it more. Why is it not taken up so much by smaller communities? Even in Niagara Falls we have rural communities where firefighting is all done by the volunteer sector, by volunteer firefighters, and money from this program is not taken up. Is that because it's cumbersome to make applications to it, or is it a case of not having the part of the money needed to invest in partnering with the federal government so as to get these moneys?

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Mr. Patrick Burke: I think the volunteers generally across the country, especially in the rural areas, don't have a lot of money. It really becomes a matter of their ability to do some things. Even under JEPP funding there is a 55%-45% split, and it's extremely difficult for a lot of people to match it.

The other thing about JEPP funding is that it's set aside for some emergency preparedness purposes. There are some things you do in the fire service on first response that might not necessarily fit into the definition.

One of the things that's different between Canada and the United States that way—and Homeland Security, as was mentioned earlier—is that there are some direct grants available specifically for the fire service so that they can at least raise the level of their response capability up to a certain point. They provide funding not only for equipment and capital purchases, but also for staffing.

Mr. Gary Pillitteri: To follow up on that, you mentioned security and terrorism. Has there been much interest by the Americans and also Canadians—on both sides—in doing joint exercises and reaching some common understanding? How well do we do in that department, in doing joint training for a shared response mechanism?

Mr. Patrick Burke: I think along the borders people have been very diligent about it. I know that even prior to 9/11, when I was in Windsor, we had some joint exercises and operations with the City of Detroit and parts of Michigan. In our own area, in the Niagara region, we've had a number of exercises that have had cross-border representation from the different agencies. There are a few of us from the area who are sitting on the Maritime Advisory Committee, with the U.S. Coast Guard taking the lead. We're trying to be involved that way.

I might indicate that's where we find out how short we are in terms of funding, when we take a look at some of things that are going on. We've had some presentations at those cross-border sessions where they've made some significant inroads in being prepared for the appropriate response and getting equipment, simply because the grant set-up was a little bit different from what we have to cope with.

Mr. Gary Pillitteri: Do you think something should be specially earmarked in border communities in order to address this, rather than make it a whole package?

Mr. Patrick Burke: I think border communities create a different type of need for response and a risk that has to be addressed, but I think there are risks in all parts of Canada. I think it really has to be addressed in a little more focused way than it has been.

You can separate those risks and identify those that are peculiar and particular to the border, because we do have them. I've lived in the two busiest international border-crossing points throughout my whole career. I've seen some of the difficulties and some of the problems and some of the special risks that present themselves.

The Chair: Thank you very much.

Mr. Murphy.

Mr. Shawn Murphy: I have a number of questions, but I really don't have time; we're under a tight deadline here. But I'll put a couple of questions to the RESP Dealers, Mr. Riley and Mr. Renaud.

Like my colleague, I think this is an excellent program. But the Government of Canada is under extreme pressure to finance post-secondary education, and there has been some commentary that the RESP is not geared toward the low-income Canadian who can't afford to go to university, as is the case with the educational tax credit. Actually, the education tax credit is probably the much bigger offender in that regard. This is some tax commentary.

In your brief you indicate there are 1.1 million RESP accounts. Would it be possible to provide a breakdown of the income levels of the families that take advantage of this program?

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Mr. Ray Riley: I believe the member companies would have that data, and we could make it available.

Mr. Shawn Murphy: I think it would be great if it were shown that the lower-middle families are taking advantage of it, because I think that's the targeted area here.

Secondly, though, and this is geared to your awareness issue, I'd really like to know the percentage breakdown vis-à-vis parents and grandparents, because I think we have a real problem in awareness: that the grandparents of children who are six, seven, eight, or ten years old perhaps aren't aware of the program. I think that really might be the target audience we should be drilling to find: what the percentage of grandparents is compared with parents.

Mr. Ray Riley: I don't have the definitive number. My instincts would tell me that probably only 10% of it would be grandparent support, at most.

The grandparent's position is “I did my part in educating my son or daughter. It's their turn now to do their job.” But it is still a segment of the population that we are trying to target, because the disposable income, in some cases, is also there to support the grandchildren.

Mr. Shawn Murphy: You don't have the figures in your brief, but I take it that in the last three years there has been fairly substantial growth in the whole program.

Mr. Ray Riley: There is, very much so.

Mr. Shawn Murphy: I have no other questions.

The Chair: Thank you very much.

Then Ms. Minna has the next six minutes.

Hon. Maria Minna: Thank you, Madam Chair.

I want to go to the YWCA first.

There's no question that the issue of domestic violence against these women is a major problem. I was aware of the facts before you came today. What I want to ask you, though, are two questions that have been at the back of my mind for some time as to why to some degree it has fallen off the agenda.

It hasn't really been discussed. It really doesn't seem to be a priority in policy, and I'm wondering to what extent that has do with the elimination of the National Women's Commission, which as you know was folded into Status of Women Canada, and therefore there wasn't this independent body.

The other question has to do with the strength of women's organizations in the country to be able to continue the funding to organizations, to be able to continue to raise and then keep this type of issue on the front burner, as opposed to....

Ms. Elaine Teofilovici: I think what your question alludes to is that there is no more leadership in the country to take on this issue and to try to drive it somewhere.

Hon. Maria Minna: Right.

Ms. Elaine Teofilovici: All there is right now are separate, individualized, related efforts, right and left, to protect these women, period. There is no national plan, no national will, no national policy, no national volition. It's just, “Let's hope that not more of them die.” That's the size of it.

So I agree. I think there have been some actions that have totally erased in Canada any form of leadership towards this issue, and we will not progress. We don't have any form of sustaining funding to create any permanent leadership in this area, and the problem is just going to go on and on and on. And yes, I think the loss of the commission was a huge loss.

Hon. Maria Minna: So you would recommend the re-establishment of something like it.

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Ms. Elaine Teofilovici: Absolutely.

Hon. Maria Minna: Thank you.

Since time is always tight, I want to move on to the RESP Dealers Association.

I agree with you with respect to the 30% and the low-income.... I brought that up last year.

I have two questions and two concerns.

I'm not sure the extent to which low- to moderate-income Canadians are not investing because of lack of knowledge of the fund or whether it's just that they don't have the money. In a city like Toronto, where you're paying over $1,000 for rent, if you have a couple of kids and you're earning a minimum wage or moderate wage, I'm not quite sure where you're going to get the funds to put away, to start with. That's question number one. I'm concerned whether the mechanism we're using, the RESP, is the wrong one to help those young people with respect to saving for....

The other question is, shouldn't 30% be weighted? I support the 30%, but I'm not sure that I necessarily support the 30% of $1,000. If I'm making $100,000 and he's making $30,000, I'm not sure that I should get the 30%. Maybe he should. Maybe it would be a bit higher than 30% if we weighted it to the lower one, to equalize the thing a bit.

I'm glad to see that 80% of children who go to post-secondary education do have savings, but the reality is that if you just don't have the money, you just don't have it to put away. We've just heard others on housing and what have you.

So I'm just trying to find out through questions, first, is this mechanism the appropriate one to deal with the problem of low- to moderate-income Canadians? The other question is on the 30%. Should it be weighted?

Mr. Paul Renaud: Thank you, Madam Chairman.

Certainly the issue of awareness is one we are very concerned about, both from the perspective that Canadians in general are not aware of this program, but also because the awareness of the target audience, if you will, the low- to moderate-income families, seems to be of concern as well. The information has not been included in our brief, but studies have indicated that fewer than 25% of Canadians are actually aware of the RESP program, and an even smaller number participate in it at this point in time.

The question of how to bring the awareness to Canadians, as a whole, is one issue, and of course the awareness of the target group of low- to moderate-income Canadian families is a second issue. The recommendation here, relative to trying to get awareness through other methods that touch low- to moderate-income Canadian families, such as family assistance programs and cross-pollinating the awareness process, is one that I think is long overdue and should be taken up aggressively.

With respect to whether this particular program is the best way to address the need, certainly the only successful program that we have seen, to this point in time, for this particular need of helping families save has been the Canada education savings grant. Student loan programs at the provincial level, while they tend to be short-term fixes, tend to create as many problems as they solve. Tuition freezes are, again, short-term solutions that create more problems than they solve, as is evidenced by some of the impacts of unfreezing tuitions in provincial jurisdictions across the country in recent years.

The Chair: Thank you very much.

Hon. Maria Minna: I'm sorry, Madam Chair, on the 30%--

The Chair: On the 30%, Mr. Riley, go ahead with a very brief answer, please.

Mr. Ray Riley: I share your concern. I think it could be done. It could be 30% at an income level, or varied on the income level. This is something that could be done.

For the lower-income families, the entry level is very low into an RESP. You don't have to invest a large number. So it is a good vehicle, but obviously the less people invest, the less they get at the end to cover the cost of education.

The Chair: I am going to beg the panellists' indulgence and allow Ms. Wasylycia-Leis five minutes also.

I had told them they would be leaving now.

Ms. Judy Wasylycia-Leis: I'll be very quick.

I would like to focus in on women's issues and ask Elaine Teofilovici to comment about this issue that Maria Minna has addressed as well, the invisibility of women's issues on the federal agenda, and actually the lack of any kind of a visible program around women and violence.

When I've raised this in the House, lack of funding for shelters and lack of funding for second-stage housing, the Minister Responsible for the Status of Women, Jean Augustine, said the government is doing everything possible--we're doing everything we can. I can't find anything it is doing. I don't see any direct funding. I think the government moved away from any kind of direct support for women's shelters. We lost a lot with CAP when that was disbanded, and nothing has taken its place.

Can you tell us what is now being spent in this area, what the program is, and what we should put in this budget?

Ms. Elaine Teofilovici: The federal government spends money on subsidies and projects. For a women's organization, for example, to survive, we have to spend about 30% of our time writing projects to try to get funding that lasts a year, and then start again the year after. All we do is spend our time writing projects to have one-year funding that doesn't do anything, because a year's funding has no kind of sustainability of a long-term vision of anything. And in any event, the government changes its focus on what it wants to fund every three years.

The system does not work at all. There is no coordination. There is no seamlessness. There is nothing. There is no funding for women's organizations, as of 1996. Nothing is sustaining women's organizations; they are poor, divided, struggling to survive. There is no mechanism, no organization. NAC is falling apart at the seams. There is no more an organization to voice women's issues to keep the federal government accountable for what it's doing for women. Frankly, women are overwhelmed with balancing family responsibilities and work that they are, by and far, removed from another obligation after being on boards of schools and after doing volunteer work in the community, and so on and so forth.

The bottom line is that there has been a tremendous devolvement of any leadership to the women's organization sector, which itself is perishing. What we need here is obviously leadership. We need a ministry that has some oomph, some money or something, and that takes leadership on these issues, which has not been the case for the past ten years.

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Ms. Judy Wasylycia-Leis: Thank you very much.

The Chair: Thank you very much.

Every panel is excellent when we come before you, but all of you come mainly with requests for money. You, as well as we, heard the budget update. I've heard about resources down in the States, but this country has decided not to do deficit financing. I think that's what the taxpayers have asked for. So it is about the reallocation of resources and re-prioritization. This is something the government's going to have to struggle with.

But I think it's important that we hear the voices of a cross-section of our society in all the places we can go. By the end of this week this committee will have heard presentations from over 500 witnesses and over 300 national organizations. Whether or not we're together to write our report, your voices will have been heard and your positions will be in the mix of what will have to be considered in the next budget. So we thank you for your participation.

To my colleagues, I remind you, we're back in this room in 50 minutes, and we go to Room G across the hall right now.

Thank you very much.

We are adjourned.