FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, October 19, 1998

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[English]

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

This morning we have the pleasure to welcome representatives from the following scheduled organizations: Association culturelle franco-canadienne de la Saskatchewan; the Canadian Mental Health Association, Saskatoon Branch; Immigrant Women Society; Prairie Pools Inc.; Saskatchewan Wheat Pool; and the University of Regina.

We will begin with l'Association culturelle franco-canadienne de la Saskatchewan, Madame Lorraine Archambault, présidente. Welcome.

[Translation]

Ms. Lorraine Archambault (President, Association culturelle franco-canadienne de la Saskatchewan): As President of the Association culturelle franco-canadienne de la Saskatchewan and official spokesperson for the Fransaskois community, let me first thank you for giving us the opportunity to express our opinion. This is a sign that you are willing to listen to us, and for this, we are grateful.

However, allow me to say that there is a difference between listening and actually hearing. We can only hope that you will indeed hear us, and that our presence at these consultations will make a real difference in the final results.

Let me first assure you that we do not question the federal government's efforts to redress public finances. We wish, as all Canadians do, for this country to be economically strong and healthy. However, for our country to be strong and healthy, it must be so in many, many ways. The government of such a country must be concerned about the "wellness" of all its citizens. We must all feel comfortable within its borders. Not an easy task assuredly, but not an impossible one either.

The Francophones of this country are an energetic, untiring, courageous people who contribute in very real and tangible ways to the growth and flourishing of this country. We sincerely believe that the Canadian Francophone community is a big plus of priceless value to this country, a richness that must be nurtured with care and attention.

Canada has made some commitments to its French- and English- speaking communities under the Charter of Rights and Freedoms. Equality of the two official languages is guaranteed by these commitments.

Thanks to its various programs, the federal government has supported, in the past, our efforts to develop the unique character of this country. However, as regards Francophones living in minority situations, recent federal budgets demonstrate an ever- widening gap between its good intentions and the reality in which we actually live.

We know for sure that all Canadians, from all walks of life, have suffered from budget cuts over the last few years. We have all had to get on the bandwagon to help eliminate the deficit. But I must bring to your attention that one of the official groups of this country, the Francophones, have done their part in the battle against the deficit since 1992. For example, the 1998 budget amputated 6.6% of Heritage Canada's global envelope. How did this affect Francophones? Official languages programs were cut by 15%, budgets for education in French by 21% and organizations' operational budgets by 30%.

Here in Saskatchewan, the Fransaskois community has suffered cuts of over 50% in the last few years. The situation is such that every year we are faced with a number of new, very difficult challenges which need to be addressed. I could give you some examples, but my time is limited. Suffice it to say that we have become fragile, when we could have been very strong.

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The financial support which we receive from the federal government definitely helps our community in its development and should allow us to implement mechanisms and tools which are vital to our growth. On the eve of the negotiations for a renewed Canada- community agreement, Heritage Canada must be able to rely upon adequate and sufficient financial resources to cover our needs. It is essential that we continue to receive the necessary financial backing that will allow us to flourish. In return, we can then contribute, we Francophones, to the growth and development of Canada by supporting the federal government in its endeavour to fulfill its role as set out in the amended Official Languages Act of 1988.

Out in the provinces, much of this responsibility lies with the Francophone community, since most of our provincial governments grant us only minimal, or non-existent, support for bilingualism or federal programs.

For those who find that too much money is being invested in Francophone association development initiatives, let me remind them that the budget allocated to aid Francophone communities amounts to 0.2% of the total federal budget—that is only two tenths of 1 percent!

Those who qualify these sums as excessive are wrong. They certainly do not embrace a vision of Canada as described in the Canadian Constitution. Let me also add that we do a great deal of economic diversification and self-financing. As a result, we are not asking Heritage Canada to support us wholly and completely, but only to grant us the balance of what we need so that we can continue to function efficiently and effectively.

The moment to increase our budgets could not be more auspicious or favourable than this very moment. In 1999, Canada will celebrate the 30th anniversary of the Official Languages Act. Canada will also be hosting a major event: the International Francophone Summit in Moncton. If we want Francophones from 48 other countries to really believe that we are a vibrant, dynamic, recognized and respected community across this land, we will have to stand proud and show them in a real and tangible way that this is so. The first concrete action taken to recognize the important role the Francophone community plays in shaping Canada's uniqueness should be in the next federal budgets. The new budget must reflect Canada's commitment towards its Francophone communities.

We also believe that we must be officially recognized, respected and supported from one end of the country to the other, if this government is to promote and serve the interests of national unity. Let us show the Québécois that they do not have to fear assimilation if they choose to remain within Canadian borders. Let us show them that no Francophone living in a minority outside Quebec needs to be afraid of assimilation either, because we will be proud to say that we have a federal government which supports us, which is committed to our survival and to our success. Together, we can face assimilation and beat it into the ground.

In order to accomplish all of this, we strongly recommend: first, that the measures undertaken by the Minister of Heritage Canada to increase the new Canada-community agreement budget be strongly endorsed by Cabinet, and that new funds be allocated to that end. Second, we recommend that the budget allocated to the Official Languages in Education Programs be increased so that this government can fulfill its obligations under section 23 of the Canadian Charter of Rights and Freedoms.

We thank you for your invitation and for your attention.

The Chairman: Thank you, Ms. Archambault.

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[English]

We're now going to hear from Prairie Pools Inc., Mr. Marvin Shauf, vice-chairman. Welcome.

Mr. Marvin Shauf (Vice-Chairman, Prairie Pools Inc.): Thank you.

On behalf of the Prairie Pools, I'd like to thank you for the opportunity to meet with your committee as you consider recommendations for the 1999 federal budget.

I'm here on behalf of the three prairie pools: Alberta Wheat Pool, Manitoba Pool Elevators, and Saskatchewan Wheat Pool. The three pools have worked together for more than 60 years on international and national issues.

Statistics Canada data shows that prairie net farm income in 1997 dropped by 35% in Alberta, 40% in Manitoba, and 84% in Saskatchewan from the 1996 levels. For the first six months in 1998, prairie farm cash receipts are an average of 11% lower than they were in the same period in 1997. And that's cash receipts; when you get to the net income of that, the impact is huge.

The estimated final return for wheat and barley crops, which have just been harvested, is the lowest in more than five years. Canola prices are expected to drop another $35 per tonne this year, and flax will also be reduced.

This is made worse by the steadily increasing cost of producing and transporting prairie grains and oilseeds. Transportation costs have more than doubled since 1995. Machinery operating costs are up by 21%. Fertilizer costs are up 57%. And the cost of crop protection materials has increased by more than 63% in the past five years.

Prairie farmers are almost entirely reliant on the world market. Between 50% and 80% of the grains and oilseeds and their products from the prairies are exported. When world prices are distorted by subsidies and other activities that impact trade, prairie farm income drops.

Our major competitors in the international marketplace are not as vulnerable to world prices. European grain producers receive the equivalent of $175 Canadian just for planting a crop. In addition, they are guaranteed a price for their production. For wheat in 1998 European producers are guaranteed the equivalent of $205 per tonne. That price alone is well above current and projected world prices.

Farmers in the United States are also guaranteed a price for their production. Currently the floor price for wheat in the United States is $145 Canadian per tonne. That alone is higher than the price for wheat projected by the Canadian Wheat Board. In addition, U.S. farmers receive direct support payments. Wheat producers are receiving an additional $24 per tonne.

Domestic support programs like these encourage production. In fact, the European Union government is currently holding its largest stocks of wheat in history. The next step that is taken by these countries is the use of subsidies to help dispose of the stocks. The European Union is now providing export subsidies of more than $60 Canadian per tonne on wheat, $108 per tonne on barley, and over $140 per tonne on malt.

The prices we will be getting are projected to be the lowest in more than five years. There is no market relief on the horizon for farmers who have already experienced a dramatic decline in income.

We would like to work with government in a proactive manner to assess the situation and develop a program that will address the problem without distorting production or reducing the market responsiveness that our industry has worked very hard to develop.

At the same time, we need to address costs. There is a role for government to play in this area. First of all, we urge the government to immediately freeze all cost-recovery initiatives. It's estimated that farmers in Canada already pay well over $100 million annually for services provided or required by the government. Producers cannot afford to pay more.

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While assessing the need for some of these services and how they are provided is a long-term goal, we urge you to recommend that no increases or no new fees be implemented at this time. That would include the Canadian Coast Guard's plans to implement new fees for ice-breaking and an increase in fees for maintenance and dredging in the St. Lawrence Seaway.

Notice has also been given for increased inspection fees for the Canadian Food Inspection Agency. Notice has been given of increased fees to access government loan programs such as farm improvement loans. The Pest Management Regulatory Agency may soon propose an increase, and the Canadian Grain Commission, faced with reduced volumes of grain, will also likely look at some fee increases to address a budget shortfall. These and other steps will result in increased costs to farmers, and they should not be implemented at this time.

Secondly, a major review of the western grain transportation system is nearing completion. We hope this review will result in recommendations that identify and capture hundreds of millions of dollars in efficiency gains for prairie producers.

Thirdly, immediate steps should be taken by all levels of government to address taxation measures that put our producers at a disadvantage to their competitors.

While we realize that taxation issues are difficult, it is in the best interest of farmers, the prairies, and Canada that joint efforts be made to address taxation policy differences.

In the longer term, it is our hope that industry and government will work together to develop and work toward achieving an international trade agreement that will allow our industry to compete based on its natural and quality advantages, which would involve the elimination of export subsidies and significant increases in market access; identify and remove domestic regulatory and other barriers that place our industry at a disadvantage to our competitors; develop a meaningful national safety net program that includes a national disaster program to help producers deal with both weather and market risks; and ensure that producers have the best agronomic and technological tools available by making a solid commitment to the funding of basic agricultural research.

In conclusion, I would like to restate that prairie farmers are in a very difficult financial situation this year. It is a situation that will likely worsen as the European Union increases stocks and uses growing export subsidies to sell them into the international marketplace, and as the effects of the Asian financial crisis continue to be felt.

Prairie Pools wants to work with government and others to develop short-term strategies to help farmers cope with sagging market prices and reduced demand. In the longer term, though, we look forward to international trade rules that allow us to compete fairly and to domestic programs that do not hinder but enhance our natural ability to compete.

Thank you.

The Chairman: Thank you very much, Mr. Shauf.

We'll now hear from the representatives from the Immigrant Women Society: Ms. Judy Kobsar, president; and Bozana Cosic, acting executive director. Welcome.

Ms. Judy Kobsar (President, Immigrant Women of Saskatchewan): First of all, thank you for having Immigrant Women of Saskatchewan, Regina chapter, in your midst this morning.

I'd like to give you some brief information on our mission statement, and then I'll go to an overview.

Immigrant Women of Saskatchewan is committed to the principle of equality for all human beings, and it aspires to eradicate sexism, racism, and all the practices of discrimination, and to the enhancement of intercultural understanding for creating a harmonious society.

IWS is dedicated to promoting immigrant women's well-being by creating social systems that allow these women to participate fully in Canadian society and to accept opportunities for self-actualization.

Immigrant Women of Saskatchewan is a non-profit organization dedicated to achieving equality for immigrant women and to empowering them for facilitating their adaptation to Canadian society.

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IWS lobbies on behalf of immigrant women and their families and also provides relevant services to them. The organization was formed in 1983, and since then it has developed many programs and undertaken several innovative projects for creating awareness about the issues concerning immigrant women and for providing them with support and services.

As an overview of the agency, the IWS Regina chapter provides a holistic approach and services to immigrant women and refugees in Regina by providing educational workshops, skills training, and personality development. It provides referral services and acts as a support group for those who are lonely, disenfranchised, abused, or victims of violence. It also helps immigrant women land jobs in various establishments, especially in crown corporations, by pushing the employment equity program, as well as training immigrants for office work by being volunteers in our own office.

IWS advocates for issues affecting immigrants, through a powerful tool of social change called Popular Theatre, which is our drama group. It also provides workers for cleaning and babysitting, and caregivers to the community. It helps immigrants in their settlement process.

Some of the projects we were able to accomplish were our series of educational development workshops, which dealt with family violence; drama, which is our Popular Theatre; social functions, such as catering; and a TV show that has been going on for the past three to four years, called Global Gourmet, on Cable Regina, channel 7, which more or less brings awareness of our organization and also lets mainstream society see and know what we, as immigrants, have brought to this country.

We also have a support group for immigrant men and youth. The support group for immigrant men is the only one we know of, so far, in this country.

We also network with the National Organization of Immigrant and Visible Minority Women of Canada, which is our national body; Canadian Council for Refugees; Canadian Women's Health Network; Saskatchewan Action Committee; John Howard Society; the YM-YWCA; HELP; the food bank; SEEPA Transition House; Sofia House; Mobile Crisis Centre; Saskatchewan Coalition Against Racism; and Saskatchewan Association on Human Rights.

We are affiliated with a number of member organizations, and I'll name a few of them: Congress of Black Women; Philippine Association of Saskatchewan, Eritrean Women's Association; African Association; Domestic Workers Association; Jamaican Association; Saskatchewan Workers Association; and Caribbean Association.

So far, we have done a lot of training for the year with our women in catering services through the Regina and District Food Bank, and five women from a few of those courses have landed jobs with hotels.

We also have ten women who participate in our drama group, and in our office setting there are two volunteers and one acting executive director, with flexible help from five others.

In terms of funding, we do receive funding from the Status of Women, as well as Canadian Heritage, and we recently received some funding from the provincial government through post-secondary education for the new careers program, which enabled our organization to buy a computer and train some of our members on the use of a computer, as well as training on the Internet and other areas.

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Some of our objectives are to provide a forum for us to voice our needs and concerns, and we also act as an advocacy group for not just immigrant women, but also immigrant men, because we have found that a number of women turn up on our doorstep with their families. So we also have to be able to do work in those areas.

We also do publications. We have about three publications we do every year. The newsletter got started soon after our inception. More recently, however, this newsletter has been changed into a magazine, published on a quarterly basis. The IWS magazine is circulated to its membership and other organizations. Written resource material is developed to enable immigrant women to become knowledgeable on issues such as health, law, violence against women, community services, and other relevant topics.

Thank you.

The Chairman: Thank you very much, Ms. Kobsar.

We'll now hear from the Saskatchewan Wheat Pool, Mr. Marvin Wiens and Mitchell Demyen. Welcome.

Mr. Marvin Wiens (Vice-President, Saskatchewan Wheat Pool): Thank you and good morning. Saskatchewan Wheat Pool appreciates the invitation to again participate in the pre-budget round-table exercise.

First of all, we would like to compliment the government on its budget balancing success. The achievement of a budgetary surplus for the 1997-98 fiscal year was reached ahead of schedule. It is an achievement that the federal government, along with all Canadians, may take credit in realizing. As a result, Canada is better positioned to weather the current global economic uncertainty and to deal with any slowdown in growth that may occur.

When your committee first engaged in consultations late this spring, you invited responses to four questions. You asked what priorities should be set for the fiscal dividend, what strategic investments and tax changes would best achieve these priorities, how Canadians could be helped to take advantage of opportunities offered, and how the government could help ensure a wide range of job opportunities. These questions may reflect more optimistic times than what we are currently experiencing.

We note that the government's decision to allocate last year's surplus to debt reduction to safeguard our financial health at home has become the indispensable condition in the eyes of the finance minister. We agree that some caution is warranted; however, we also agree that your four questions remain valid. Priorities must be set, and if anything, they become even more crucial in times of economic uncertainty.

Saskatchewan Wheat Pool believes that ensuring the health of Canadian agriculture must be made a priority in the next budget. Global economic uncertainty has severely affected our sector. The decline in the purchasing power of Asian countries has cut both the price and quantity of Canadian agricultural produce now exported. Meanwhile, the lower Canadian dollar has increased our production costs, and our price is put in a North American environment. Furthermore, the effects of political intervention through subsidies and trade harassment continue to take their toll. In short, agriculture's reliance on export markets has subjected us to the same kinds of pressures that have caused the federal government to review its own fiscal situation over the last few months.

Our sector has made a significant contribution to the achievement of a balanced budget through reduced program funding and increased cost recovery. Since 1992, direct program payments to producers in the prairie provinces has decreased by nearly 50%. Over approximately the same time, cost-recovery fees have more than doubled.

In percentage terms, those cuts and cost increases have been much more significant than those made by the U.S. and by the EU, our major competitors. Simply put, federal policies are increasingly making agriculture less competitive in the world context. As a result, we strongly believe it's now appropriate to reverse some of the funding cuts and cost-recovery measures the agricultural sector has been previously subjected to.

Regarding cost recovery, we estimate that Canadian agriculture and the agrifood sector will pay over $100 million annually for services that are provided and in many cases required by the federal government. The grain and oilseed industry pays for everything from grading to inspection, from the registration and re-evaluation of crop protection products to navigational aids, and soon for ice-breaking services.

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We are not opposed to cost-recovery actions in general. However, there must be fair consideration to the sector's ability to pay and its competitive position. In the case of mandated services, users should have a say in how or if such services are offered and the amounts charged for such services. Furthermore, service provided in the public interest should be the responsibility of the public.

We would briefly like to mention several other areas. The first area includes the trade negotiations scheduled to commence next year and the current discussions with the U.S. We appreciate the decision of the House of Commons Standing Committee on Agriculture and Agri-Food to examine these issues, and we plan to participate in their work. We urge the Government of Canada to take a strong position in all trade negotiations for free and fair trade, for the reduction of tariffs, for the elimination of export subsidies, and for significant reductions in trade-distorting domestic subsidies. In the long term, improved real market access will be the key to agriculture's international success.

The second area is transportation. In 1995 the federal government repealed the Western Grain Transportation Act and discontinued the Crow benefit, which provided western grain and oilseed farmers with $550 million in freight assistance annually. These actions have lowered producers' incomes dramatically and unleashed significant structural adjustments and pressure to reduce our rail infrastructure. This has in turn put significant pressure on our road infrastructure, which now must be redeveloped and upgraded, at significant cost. Additional federal funding to offset the adjustments created by this policy change is appropriate.

The third area is taxation policy. This is one of the most significant impediments to the sector's international competitiveness. It is extremely important that a coordinated effort be made by all levels of government to address taxation policy and its impact.

Furthermore, we wish to mention public funding for agricultural research. New developments in production practices, the use of advanced technological equipment, strides in biotechnology, and the development of new varieties all contribute to a competitive, more environmentally sustainable agriculture sector in the long term. We urge the federal government to place a higher priority on funding for agricultural research.

Finally, we wish to stress the importance of an adequate farm safety net system. When producers cannot earn a return from the marketplace because of international factors—factors that are well beyond their control—it is incumbent on government to provide a safety net, as is done for others in society. Since 1993 federal spending on safety net programs has declined, from a high of more than $2 billion in 1993 to approximately $700 million in 1998—and that's for all of Canada. In view of the factors mentioned earlier, we must stress that the total amount of funding provided by the government for current safety net programs is simply inadequate. Comprehensive safety net programs designed to defend farmers from these uncontrollable factors are an essential part of the economic partnership between government and industry.

We urge the committee to re-examine the government's spending commitment to these programs. We request that the federal funding of safety nets be determined once program need is assessed, and that the federal government task the national safety net consultation committee with developing a national disaster assistance program.

Earlier this morning I participated in a conference call of the advisory committee on the farm stress line here in Saskatchewan. We were informed that the number of calls to the farm stress line was at a record level in September. The total has increased because of the farm income situation that we're facing in Saskatchewan and in the prairie provinces right now.

In conclusion, safety nets, cost recovery, trade negotiations, transportation, taxation policy, and agricultural research all play a significant role in a short-term and long-term economic well-being of the agricultural sector. We urge your committee to give serious consideration to these areas as you consider recommendations on the focus of the next federal budget.

The Chairman: Thank you very much, Mr. Wiens.

We'll now hear from Ms. Marjorie Brown, president of the University of Regina Graduate Students' Association. Welcome.

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Ms. Marjorie Brown (President, University of Regina Graduate Students' Association): I would like to thank the committee for the opportunity to make a presentation on behalf of students in this province. I am speaking for the Graduate Students' Association, which represents approximately 750 graduate students at the University of Regina; however, we work very closely with the University of Regina Students' Union, which represents approximately 10,000 students.

The Graduate Students' Association, in conjunction with various other education organizations, would like to note that the 1998 budget clearly had education as a focus. For that, we were pleased. There were several positive measures in the last budget, particularly the Canada study grants for students with dependants and the increased funding that was received by granting councils. There were some other potentially positive measures, such as interest relief for students. We would like to note that the interest relief program does not actually touch the capital portion of student loans, though. Thus we feel it's perhaps more beneficial to the banks that are receiving the interest payments than it is to the students who are suffering from the high debt load.

The loan remission program was another potential positive. However, it's unfortunately only accessible to a very limited number of students. Essentially, it's accessible to only the worst-case-scenario students. Those would be students who have been paying off their loans for at least five years and have used up all other programs to provide them with loan relief.

There were three programs introduced by the government in the last budget that are often given quite a bit of attention, but which we in fact find highly problematic. They are the registered education savings programs, tax credits, and the millennium scholarship fund.

The registered education savings program does nothing for low-income individuals. Essentially, it encourages families to begin saving for their children's post-secondary education basically from birth. For a low-income family, that's simply not a reality. We see this as relieving some of the burden on the government to provide education funding when students actually reach the age when they're entering post-secondary education, leaving the families that were unable to engage in this period of saving in a very precarious position.

By the same measure, tax credits for post-secondary education costs are only targeted at students who do in fact have a high income, which is very unlikely when you consider that youth unemployment is over 15% and that the average student debt is currently $25,000.

The millennium scholarship fund provided us with some hope that we might receive some grants for students, but calculations show that the millennium scholarship fund will likely only help 7% of needy students, not the 75% of students that we estimate are actually in need. Furthermore, we're somewhat concerned about the private interests that appear to dominate the millennium scholarship fund board. The chair of the board is the CEO of Bell Canada, and two other executives or directors from Bell Canada also sit on the board. Conversely, only one student has a seat on this board. And incidentally, Bell Canada still owes the government $1.9 billion in deferred taxes from 1995, so if the government is looking for increased funding for post-secondary education, that's perhaps one area it could examine.

The recent second annual education industry conference confirmed our fears about the privatized direction of the post-secondary education system. We therefore join the Council of Ministers of Education, the ministers from the various provinces, in calling on the federal government to ensure that the millennium scholarship fund is distributed through the current student financial assistance mechanisms, so that it does reach students who are in need.

We're extremely concerned about the bankruptcy measures introduced in the past year. Students are now banned from declaring bankruptcy for ten years. Some bankruptcy trustees have estimated that this may even increase suicide rates among students who hold student loans, due to the desperation they may face about their high debt loads.

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Frankly, we can't understand why these measures were introduced. Only 18% of the student loans that were given out in 1996 are currently in a default position. Since the student loan program was introduced in 1964, 93% of student loans have been paid back. Finally, only 15% of big business loans have been paid back since 1982. So if the federal government is looking for defaulters on loans, I think students are clearly the wrong place to be looking.

We're also concerned about increased credit checks and the possibility that students can have their loans denied through a Governor-in-Council process. We have four recommendations for the 1999 federal budget. We'd like to see the modifications outlined to the programs that were introduced in 1998 and we have four main directions that we think will provide some relief for students who are beleaguered currently by increasing tuition fees, decreasing student financial assistance, increasing debt loads, and uncertain employment prospects.

We think that in the current era of balanced government budgets there is now a clear need for the government to intervene in the economy through reinvesting in social programs and rejecting the calls for tax cuts. It's clear that the world economic system is currently in a period of crisis. We have seen the collapse of economies in Asia, we have seen domestic indicators such as record drops in the stock market, and we have heard various politicians explain that we are in fact perhaps entering a period of recession.

During a period of economic crisis, stability in the economic system is necessary. Stability will not be gained by governments further withdrawing from the economic arena. Stability will be gained by governments intervening in the economy and providing regulation of the economy. Individual citizens need to feel this stability, and government can provide that through government social programs that redistribute the wealth we have in Canada and provide opportunities for working people and Canadians who've fallen into poverty.

The Graduate Students' Association calls on the government to reject calls for tax cuts as a premature measure in the current economic situation. We call on the government to reinvest the budgetary surplus into the social programs that have sustained the massive cuts during the past few years.

We believe it is time for the government to work at creating accessibility to post-secondary education. The Canada health and social transfer has removed $2.29 billion from post-secondary education since 1993. The results of this withdrawal of funds are clear, as I stated earlier. Average student debt loads are up from $5,260 in 1982 to $25,000 per student currently. At my own university I've seen tuition fees go up over 100% in the last 10 years, and similar increases can be found at other institutions across the country. My own tuition, since I began my first year as an undergraduate student to what is now my second year as a graduate student, has doubled. My access to funds, however, has not doubled.

We find this situation is ironic, given that countries with fully funded post-secondary education programs credit their zero tuition fee policies with enhancing economic opportunities for students within the country and in turn providing needed economic growth for the country. Recently the President of Ireland, Mary McAleese, was in Canada and she remarked on the success of Ireland's free tuition policy. McAleese also noted that this increased access to university helps achieve rural economic development, and that is an issue of particular importance to Saskatchewan students.

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In addition to facing declining access to post-secondary education, students—and graduate students in particular—have suffered a dramatic decrease in the funding that is available to us to carry out research. This decline in funding makes continuing post-secondary education past the undergraduate level a very difficult endeavour, both personally and in terms of what students are able to achieve through the limited research resources available to them. There were some increases made to the granting councils in the last budget, but it only brought them up to 1993 levels.

To make post-secondary education accessible to Canadians and to provide the country with the workable vehicle for economic stability and growth, the Graduate Students' Association calls on the government to immediately implement a national tuition fee freeze. This would provide some stability in the lives of students like myself. I've seen tuition double within my own education career.

We call on the government to convert the Millennium Scholarship Endowment Fund to a system of entirely needs-based grants.

We call for an end to discriminatory student loan bankruptcy measures.

We call for the prohibition of private for-profit post-secondary education programs, which is a growing reality in this era of post-secondary education cutbacks. Private companies have been very blatant in stating that the underfunding of post-secondary education has given them an opportunity to move into the market and turn it into a for-profit system.

We call for an increase in funding to granting councils, in particular the Social Sciences and Humanities Research Council.

Finally, we believe it is time that the government do more to address youth unemployment and to return the employment insurance surplus to the workers who paid into the program. The percentage of unemployed youth in Canada continues to remain above the 15% mark, minimizing the opportunities for students to deal with the high costs of post-secondary education. Clearly, you can see how that impacts upon the viability of programs like tax credits or registered education savings programs. If the jobs aren't there to gain the money, these programs are of little value.

The private sector has proven that alone it is not able to provide adequate education opportunities for young people, and this is during periods of economic growth and stability. As we enter a period of recession, students are very worried at leaving their prospects in the hands of the private sector. The government has a role here to increase stability and economic development through intervening and creating serious programs to address youth unemployment.

The cuts to the employment insurance program have also caused serious hardships for unemployed Canadians. The effects of these hardships are evident in the high levels of poverty that the United Nations reports continue to indicate exist in Canada, and even in the crisis of homelessness that we now see. Students in particular are routinely denied employment insurance. Benefits are highly restrictive due to the nature of the system, and currently only 36% of unemployed workers are eligible to receive any benefits. Economic stability is not created through high levels of unemployment and poverty. Therefore, the Graduate Students' Association calls on the government to commit to developing additional programs to address youth unemployment and to return the employment insurance surplus to the workers and employers who paid into the plan through lifting restrictions on employment insurance eligibility and increasing benefit levels.

It's certain that the 1999 federal budget process will be a difficult one, with many competing interests present asking for their concerns to be heard. The possibility of a surplus from the 1998 budget and the surplus that exists in the employment insurance program no doubt add to this difficulty. The government will face much pressure from the private sector to further remove itself from the lives of Canadians and provide additional financial incentives for businesses through measures such as tax cuts. However, we would like to remind the government that the deficit was eliminated on the backs of working people in Canada and the poor through massive cuts to social programs such as post-secondary education. In addition, working Canadians and poor people are entering a period of great financial uncertainty, a period when strong government intervention will be required to ensure that the quality of life enjoyed by these people does not further decline and that access to basic social programs is not further restricted.

The Graduate Students' Association at the University of Regina urges the government to remember these facts during the budget process and to follow the recommendations set out here to achieve some reduction of need in the lives of Canadian students.

Thank you.

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The Chairman: Thank you very much, Ms. Brown.

For the question and answer session, we will begin with Mr. Epp.

Mr. Ken Epp (Elk Island, Ref.): Thank you very much, Mr. Chairman.

I should begin by saying thank you to all of the witnesses who have come today. You of course live in Saskatchewan, all of you, so you're close to home. For me it's a homecoming of sorts, since I graduated from a university in this very city a number of years ago.

I'm very interested in your different presentations. We're talking about budgeting, and I have to budget my time, since I'm very limited, before the other members get the floor. So I'd like you to make your answers really succinct, if you will please.

My first question is for Ms. Kobsar. You gave us a great outline of everything that you do, but I failed to hear, and maybe I missed it, any specific recommendations for the budgetary process, which is why we're here. Do you have a specific recommendation? What should the federal government do in its next budget that would help you?

Ms. Judy Kobsar: Thank you very much, Mr. Epp. I'm sorry I didn't touch quite clearly on that.

I would very much like the federal government at the next budget to give us more funding. Immigrant women and visible minority families and refugees have projects they would like to execute, but there is not enough funding that comes from the federal government. As I mentioned earlier, we do get some funding from the Secretary of State for Status of Women. That is the only funding we get from the federal government. Other than that, there is nothing else coming in.

We somewhat make do with our catering, which we have in place. There are a number of women who are in social services who assist in catering. So whatever moneys they get from that, and we get 15% as an organization—

Mr. Ken Epp: Okay. If I may interrupt you then, what you'd like to see is more direct funding from the government.

Ms. Judy Kobsar: Yes.

Mr. Ken Epp: In one of the previous budgets not long ago, the government increased the amount of deductibility for charitable donations to 50% of one's net income. Does that help you? Do you do private fundraising?

Ms. Jody Kobsar: We do private fundraising, of course, in the form of dinners and that sort of thing, banquets in the past, and it helps a little bit.

Mr. Ken Epp: But do your people give you donations as a charitable...? Are you a registered—

Ms. Judy Kobsar: No, we don't get donations, because we do not have a charitable number.

Mr. Ken Epp: Did you want one?

Ms. Judy Kobsar: Yes.

Mr. Ken Epp: Have you applied for one? Have you been refused?

Ms. Judy Kobsar: Yes, we applied and we were turned down—weren't we?

Ms. Bozana Cosic (Acting Executive Director, Immigrant Women of Saskatchewan): Yes.

Ms. Judy Kobsar: Yes. We are on the waiting list.

So that is what has been hampering us, because there are a number of people who would love to give to us, but there is no charitable number. As a matter of fact, if I may just go on a little bit, the United Way in Regina is willing to give us money at this point in time, but because we do not have a charitable number, that is what is hampering us at the moment.

Mr. Ken Epp: It seems to me that those are maybe areas that should be pursued.

Ms. Judy Kobsar: Yes.

Mr. Ken Epp: Anyway, I do need to run along, because I have a whole bunch of questions.

Having grown up on a farm in Saskatchewan, I am intrigued with these guys. You know, the problems just don't change. I remember when I was a kid growing up on a farm close to Swift Current in southern Saskatchewan, my dad was talking about these same things, although in those days the Crow rate was still in place, even though we had to give our grain a joyride to Winnipeg in order to collect it. There were all sorts of different aberrations in it.

I'd like to ask a question of either of the people who have spoken from the farm community. In terms of government subsidy, we know there's been a dramatic change in this. There used to be some directly funded programs. Have they all gone now? Is there nothing left? Do you really think that it's a proper role of the federal government to tax everybody and then just put money in the hands of one sector in the business community, namely the farmers?

Mr. Marvin Wiens: You're correct that basically support for agriculture in western Canada, and in all of Canada, has disappeared from the federal government budget, other than the $700 million I talked about in the safety net package that is still there. But if we want to maintain an agricultural industry in Canada and if we want to increase exports, double exports by the year 2005, which is the goal of the federal government from the agriculture sector, we have to support our industry in the time when they're facing competition from subsidized products coming out of the U.S. and the EU.

• 1155

It's largely the European Union that has created the problem. They've got surpluses that they've created through domestic subsidies. That decreases world prices. We have to compete with those world prices. We have no direct subsidies that will support farmers until we get to some sensible trade rules, which we all hope for.

Farmers aren't looking for government to support their industry over the long term. They want to be self-sufficient, and they've worked towards getting there. But if we continually have these reduced world prices caused by other government interventions in other parts of the world, Canadian farmers will not survive.

The Chairman: Mr. Shauf.

Mr. Marvin Shauf: Part of the problem we're experiencing right now in agriculture is as a result of some of the agreements that have been made. Europe has subsidized domestically, which has caused significant amounts of production and storage there for product that hasn't made its way into the marketplace. Because there is a new round of trade talks coming and Europe wants to have these stocks depleted by the time they get to these new rules that would limit them, what they have done is taken some of their export subsidy capability from years gone by and rolled that ahead to where they are applying that to products going into the marketplace right now.

So you see some of the ridiculously high numbers that I talked about in my presentation being applied to these products coming out of Europe. Those have effectively pushed the world price of product down, and will continue to do so until probably the year 2000, when there will be the next round and some of the limitations of the next round will begin to limit their ability to be able to do that.

So for both Europe and the United States, the next year and a half or two years are going to be years when they apply a lot of export subsidies. The impact for Canadian producers over the next two years is going to be large.

Mr. Ken Epp: Okay.

I imagine this is maybe out of your area, since you are in the wheat pooling business and collection and delivery to the market of wheat, but in terms of actual specific farm needs, I personally have heard from a number of farmers who are just mad as everything about the GST. They spend huge amounts of time adding up their little nickels and dimes at the end of the year in order to claim a rebate. If they don't do it, they give up $5,000 or $10,000 or whatever in rebates they're entitled to. I talked to one farmer who said that he spent a whole two weeks doing that when his work year was over, and he would rather have been using that time in some productive measure instead of just meeting this.... Do you get any number of complaints? How does the GST affect you? Are you happy with it?

Mr. Marvin Shauf: Happy with it I think is a relative term. The paying of GST and the calculation of it to get it back is a frustration. With some of the financial issues that are in producers' faces at this point relative to the marketplace and the subsidies that are reducing their income, the GST, while it is a significant frustration, probably isn't on the radar screen as far as issues for them to deal with of concern right now.

Mr. Ken Epp: But you don't really represent individual farmers in your presentation here. You're representing the marketing of grain, right? Is that true?

Mr. Marvin Shauf: We represent the pools. I'm representing the pools, the province of Saskatchewan pool, which I get to as being a delegate and the director in my local community, which is in the southeast corner of this province. I have about 5,000 producers I'm directly responsible to.

Mr. Ken Epp: Okay.

Just really quickly, with respect to transportation, costs are going up and subsidies by the federal government are being taken out. What is the answer to this? Because we find from the railway companies that their costs are going up and they've got to get somebody to pay for this. The farmers will end up paying for it. What is the answer to transportation?

• 1200

It seems to me that one of the big problems the farmers face is their cost in getting their grain, once they've produced it, off the yard and down to the ultimate buyer. It's a huge cost. In fact, one farmer told me he thought the costs of their grain in total were only about half; the other half was what they paid after the grain left their yard.

Mr. Marvin Wiens: I'd like to comment on that, if I could.

Transportation costs are significant. I'm a farmer as well as vice-president of Saskatchewan Wheat Pool, and just on my farm alone, my transportation costs have increased about $10,000 in the last few years. But the issue is much greater than that. Farmers in western Canada are now looking at ways to address that issue. They're looking at issues like diversifying into livestock. They're looking into value-added opportunities where they process more product in western Canada. They're looking at all kinds of things, and they have done a lot of those things, and some positive things have happened relative to that.

With the current prices in the world, even livestock prices, for example, have decreased dramatically. So some of the things they've attempted to do haven't accomplished what we were hoping would happen, until we get to some of these new rules that we're talking about in trade.

So we're asking for help from the federal government in three areas: cost recovery, taxation, and the upcoming trade discussions as well as interim help through the safety net program we've talked about. Those are the three areas that we think the federal government—and we're pushing our provincial governments as well in these areas.

Mr. Ken Epp: Mr. Chairman, my time is up in this round so I'm going to now concede, but I want these people to be thinking about this. When I get another chance, the question I'm going to ask is, what words do you want the Minister of Finance to say next February? What are the most important words he can say?

Okay, I'm finished.

The Chairman: Thank you, Mr. Epp.

Mr. Nystrom.

Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP): Thank you, Mr. Chair. I want to apologize for being a bit late. Our plane arrived a little late this morning, so I missed part of the presentations and I haven't had a chance to read them.

I also want to welcome my colleagues to Saskatchewan, to God's land. Enjoy your stay here for the next day or two.

I have a couple of quick questions for each group, if I may.

First of all, to the wheat pools, net farm income in our province has dropped by 84%, as you point out in your brief, in 1997. That's a very steep drop in income that affects the entire economy. Nation-wide it's about 40%. Net farm income also dropped in the first six months of 1998—in addition to the 84% drop we've already experienced. In the United States, Congress has just approved a farm aid subsidy bill of about $6 billion U.S. The subsidies in Europe are allowed, I think, $200 a tonne on wheat, if I'm not mistaken—you can correct that if you want.

I'd like to ask you the following question. Would you be in favour of an emergency aid program at this time? We've done that as Canadian governments from time to time in the past. When market forces are beyond the control of the farmer, no matter what he or she does, or subsidies in other parts of the world put our farmers in a position where there is no level playing field, there is no choice but to go bankrupt or have some emergency aid.

My second question would be, in terms of the long run in farm safety programs, would you base these on a rough cost of production formula? What would the rough cost to the national treasury be of a long-term program?

These are two separate questions—to either one of you.

The Chairman: Mr. Shauf.

Mr. Marvin Shauf: Thank you.

In response to the first question, the subsidy levels in the United States and the European Union, it seems to me that the federal government does need to do something relative to looking at an emergency within agriculture. The answer, I think, to that one is yes. I think it needs to be looked at as an investment in the future, of not only agriculture in Canada but also of the Canadian economy. Agricultural exports are very important to Canada in the long term, in the future as well as they have been in the past.

Agriculture exports have increased significantly in value over the last number of years, but there's been an objective set to double the value of agricultural exports by 2005. In order to be able to achieve that, agriculture needs to have a bridge between now and then. If we don't do something about investing in agriculture and allow international subsidies to bankrupt agriculture within Canada, we will be neglecting a significant piece of Canada's future economy. That, I think, is my answer to your first question.

• 1205

Mr. Lorne Nystrom: Maybe just a quick question on that, and the question would be, how much would you be looking at? The United States is around $6 billion U.S. If we did 10% of that here, that might be $700 million or $800 million Canadian, or roughly in that ballpark. Would that be roughly what you're looking at?

The other question is, when? The money is there now in terms of a budget surplus. Last year it was $3.5 billion; this coming year it's maybe $5 billion, $10 billion, $12 billion, depending on the economy. I would argue that it's better to spend some of that in areas like social programs and emergency programs like Farm Aid, which also stimulate the general economy, and the federal government gets some money back in terms of tax revenues as well.

So what number are you looking at in terms of a ballpark? Secondly, when? Before spring seeding, I assume, but....

Mr. Marvin Shauf: We haven't attempted to put a number out, for a couple of reasons, I guess. People will begin to argue with the number rather than the issue, and I think it's an issue that in Canada we need to look at.... Deal with the issue; don't fight over the number.

The second part of it—when? I think soon, because I think there are implications of not dealing with this that will trickle through the economy and cause significant damage to the economy, not just to Saskatchewan but to western Canada certainly, and, from what I understand, most of Canada, in reality.

As far as a long-term program is concerned, I think it's something we need to think seriously about, how we put that long-term program together. If you look at the United States and you look at the dollars they're spending, they still have problems. It seems to me that something that goes on and on and on becomes capitalized. The net result of it is that you don't have sufficient help.

It seems to me that we need to look at something that is a bridge to the future, but not an ongoing program, other than a disaster component, which is something that I think we can put in place that deals with a shock in the economy but isn't something that you count on year after year as a money shovel.

Mr. Lorne Nystrom: Mr. Wiens.

Mr. Marvin Wiens: I would agree with everything that was said, but the only thing I would add is that the mood in western Canada is dangerous in the sense that farmers in western Canada gave up their transportation subsidy back in 1995, in good faith, believing that other countries of the world would follow suit and reduce subsidies and we would get our dollars out of the marketplace. By and large, that hasn't happened. Within the trade rules, the Europeans have continued to subsidize domestically and they've got this huge production hanging over the market.

What concerns me, if we don't see a move by our federal government to support agriculture in western Canada in the short term to counteract what's happening in the rest of the world.... People are giving up. I mentioned that I was on a conference call of the advisory unit of the farm stress line here in Saskatchewan just this morning, and that's what they're hearing on the calls to the stress line. People are saying “There's no future. Our government is not going to support us like governments in the rest of the world, so why bother? Why not just walk away?” We could lose a whole generation of farmers because there's no optimism there.

There are opportunities in agriculture in western Canada, and farmers are looking at those opportunities and will face that future if the playing field is level. But we can't compete with the treasuries of other parts of the world, and I guess that's what we're asking for, first of all.

I would agree with you, Mr. Nystrom, that in the short term we need something very quickly to send a message, but we also need some long-term planning to shore up the safety net package we already have there. Crop insurance and the NISA program are reasonably well accepted by western Canadian farmers, but we're missing one leg of that safety net package. That's why we've been calling for a disaster component to that safety net package. The federal government has in place a national safety net review committee. I'm part of that committee. It has representatives of farmers from all across Canada. That would be one vehicle they could use to get the numbers that are needed and the types of program that might be needed to shore up our safety net package.

• 1210

Mr. Lorne Nystrom: The federal government does have a contingency fund of $3 billion for emergencies.

I think a billion dollars was spent in an emergency program in 1986-87. Going back to the Diefenbaker days there were deficiency payments and acreage payments as well.

I'd like to ask Marjorie Brown a question, if I may. You mentioned tuition fees, and that's extremely important, and you mentioned that Ireland had no tuition fees. What other countries have no tuition fees or extremely low tuition fees? Can you give us an idea of how much it would cost in this country if we were to move towards that policy, in terms of phasing it in over a number of years? I certainly think you're on the right ground in terms of going in that direction, but if you can give us a bit more information...if not, you can perhaps supply it later on.

Ms. Marjorie Brown: I actually have some facts and figures here. There's only one other OECD country that has higher fees than Canada. We are the second highest in the world in terms of industrialized countries. We are also among the absolute lowest in terms of student financial assistance, and by that I mean grants.

In terms of cost to the federal government, there would be upfront costs of investing in education, but we have been consistently arguing that the costs will be recouped through the benefits it provides. Right now you have a generation of students graduating with mortgages of $25,000, on average. When they seek employment, the first thing they need to do is start paying back that mortgage, and that prohibits them from participating in the economic arena in the same way that students were able to 20 or 30 years ago when there were greater levels of assistance available or at least lower costs.

We recommend that the government could be recouping the money in the economic arena through the active participation of students who graduate, without the uncertainty—governments talk about this all the time, that when people face economic uncertainty, they're not likely to buy, and that's the situation of students right now. It doesn't stimulate the economy when students are in that position.

Also, it's been demonstrated in other countries that students who graduate with post-secondary education are capable of earning a higher income. A higher income in turn means higher income taxes paid. So the government will see direct revenue from the ability of students to be paying into the tax system, as opposed to students having to simply receive some form of assistance because they're unable to find employment and unable to support themselves.

[Translation]

Mr. Lorne Nystrom: Ms. Archambault, you said that the federal government had cut budgets here in Saskatchewan by approximately 50%. When were these cuts made? Were budgets cut more in Saskatchewan than they were in other provinces, or were the cuts the same in all provinces? That is important for us to know.

Ms. Lorraine Archambault: The 50% budget cuts here in Saskatchewan occurred about three years ago.

Mr. Lorne Nystrom: Three years ago?

Ms. Lorraine Archambault: That's right. Under the original agreement, we were supposed to receive $10 million over three years, yet the present agreement and the agreement before that provide for only $5.2 million over three years. And budgets had already been cut before that. I do not believe that the cuts were as considerable in other provinces. Here in Saskatchewan, we are already on our third agreement; yet other provinces are still operating under their first agreement.

Mr. Lorne Nystrom: Why have the cuts in Saskatchewan been bigger than in other provinces, like Manitoba or Nova Scotia?

Ms. Lorraine Archambault: That is a question you should put to Heritage Canada. It may be because we had first signed agreements in 1988, while the other provinces only signed agreements three to five years ago. So Heritage Canada may feel we have already received our fair share, and may be focussing on helping other provinces more. Nowadays, more provinces do have such agreements.

• 1215

[English]

Mr. Lorne Nystrom: If I have time, Mr. Chairman, I have a quick question for Judy, if I may, or a colleague.

In terms of the funding from the federal government, or lack thereof, is there a difference in terms of Saskatchewan and the other provinces? Do other associations do better than ours? Is there something we should be aware of whereby we could help you in terms of creating more of a level playing field? Do you have a national organization or council? Do you keep in touch, for example, with the Ontario, Quebec, or B.C. councils? Do they have a different relationship, or is the situation about the same?

Ms. Judy Kobsar: Thank you for the question, Mr. Nystrom.

We do have a national organization. It's called the National Organization of Immigrant and Visible Minority Women of Canada. The head office is in Ottawa on Bank Street.

We do not get any funding directly from them. They receive direct funding from the federal government. That organization consists of various committees and council members from all across the province who are representative of the various immigrant, minority, and refugee committees.

We have found out that Saskatchewan does not get enough funding, and we're not quite sure why. But places like Quebec, Ontario, and Manitoba, just to name a few, and even Montreal, receive higher funding than we do. As I mentioned earlier, we do get some funding from the Department of Canadian Heritage once a year, and we also get some funding from the Status of Women Canada, and that's it.

One of our major problems is that we do not have a charitable number. We applied about a year ago, but were turned down. The United Way came to our rescue just a few weeks ago and decided to apply for us. It's now in the Supreme Court, and we're hoping we will be successful.

We also have volunteers in the office. We have staff in the office who are to be paid. So it's very rough at the moment.

The Chairman: Are there any further comments?

Mr. Lorne Nystrom: Do I have more time?

The Chairman: Sure, go ahead.

Mr. Lorne Nystrom: I want to go back to the Saskatchewan Wheat Pool again. I think the emergency aid issue is one that people don't really understand across the country. Even in Regina, I met people who don't understand the severity of the crisis. Just in the last week, I met farmers who are going out of business and have suffered all kinds of family stress in terms of separations and so on. They're facing bankruptcy.

I was in the little town of Lestock, which is in my riding, last Thursday night, after our meetings in Toronto in the morning, to see some of the real fear. I guess that's the best way of summarizing it. It's beyond people's control. They're good, efficient, productive farmers who work very hard, but the playing field is not level.

I don't know how we can communicate that to the rest of the country. My question is one of frustration. Are you talking to other farm organizations? I know the CFA has been talking a bit about this. Are you trying to organize sort of a united front across the country to explain the severity of the problem?

If we don't do something between now and spring, a lot of farmers will disappear. That's an economic disaster, not only to the farmers at a personal level, but to the country as a whole, including the long-term balancing of budgets and the debt and deficit problems as well.

Are you trying to organize nationally? Are you organizing a national lobbying campaign toward MPs? Can you just enlighten us a bit on what your plans are?

Mr. Marvin Shauf: We have talked about this at CFA. We have talked with some other farm groups. A lot of farmers have really believed the soundtrack that there is no money for agriculture. I think that's why you see the quiet desperation. That's why you don't hear a lot of people making a lot of complaints.

It seems to me that what we've got going on in agriculture at this point is some very quiet damage. We are going to lose some very significant resources in terms of producer capabilities and some very valuable assets for Canada's agriculture future. All of this is being caused by something on which I'm not sure there's a great deal of understanding, which is the impact on world market prices of export subsidies in other countries.

• 1220

If Europeans are paying $140 per tonne for somebody to buy malt from them, that pushes down the international price of that product from where it should normally be to $140 a tonne, because nobody is going to pay you any more for that. With this being an already low-valued commodity, there is no way producers can compete against that in their own right.

Mr. Lorne Nystrom: People believe that we moved into a so-called free trade era and that this is all beautiful and lovely, but it's anything but that in terms of grain wars, the export enhancement program in the United States, the programs of the European Common Market, and so on.

Can you give us any idea of what percentage of the Saskatchewan farmers are really on the brink between now and spring seeding? I think we have, what is it, 58,000 or 60,000 farmers in the province. Can you give us a rough percentage, either one of you, of what we're looking at here in human terms? I know it's a hard figure to nail down. It's not precise, but are we looking at about 10%, 20%, or 30%?

Mr. Marvin Wiens: Well, I'm not sure I can give you an exact number, but I know that the optimism for the future is that probably 100% of farmers in western Canada and in Saskatchewan are looking at their future and wondering whether there is one because of some of the things that are happening.

As I said earlier, we believed very strongly that if we achieved some things around trade negotiations then there would be a level playing field. We're hoping this will happen in the next round and we'll achieve some more things. We're encouraging the federal government to do that. That hasn't happened at this point in time, so a significant number are in a serious financial situation. I can't stress enough that the kinds of comments you've heard, we've heard as well: people are just giving up.

In the 1980s you saw rallies. People were getting together to ask the agriculture minister to come out to western Canada and listen to them. I don't think you'll see that now. People talk about it back home, but they're going to walk away instead. They're going to say if they don't see some help from the federal government, they're going to walk away. So that's the big concern we have.

We all believe there is a future. We know there is a future out there, but we have to get to that future.

The Chairman: Thanks very much, Mr. Wiens.

Ms. Sophia Leung.

Ms. Sophia Leung (Vancouver Kingsway, Lib.): Thank you, Mr. Chair.

I want to thank all the witnesses for their presentations. You've given me a lot of good information for me to learn some of your concerns about the issues.

My question refers to the wheat pool. I want to say, as the newly elected chair for the north and the western Liberal caucus, that I want to reassure you that this is one item I'm going to place on our agenda after I finish these hearings and when I'm in Ottawa.

You also have a very strong supporter in Ralph Goodale. You know him. Each time he sees me he says he has to talk with me. I tell him to prepare that for discussion in our caucus, which means that 30 of us will hear it.

I would suggest that you should maybe make your papers available to my office. I can assist you. Before we get that on the agenda, I will pass it around to all the members so we have a much deeper understanding of your concern.

I really think your problems are very complex. We agree, but I want to reassure you again that we are interested. I want you to pass around to your farmers that we look at it regularly and on an ongoing basis.

Now, I have some questions for you. For your safety net, we have already given you $700 million. That's not a small sum. What do you have in mind? Do you think we have to extend the increase? That's one thing.

The second thing is that I think very obviously we have to increase exports. I don't know what. I didn't get too much data on that. I know that China is the major market for you. Are you still working on that and expanding that? I don't think China has been really touched by the so-called Asian crisis yet.

Of course it's very difficult for Canadians to compete with the EU and the U.S. You already made it very clear, but again I'd like you to answer the two-part question.

Mr. Marvin Wiens: Thank you very much for the question. We appreciate your words of support. We really do appreciate that.

• 1225

First of all, on the $700 million question, that is for all of Canada. Saskatchewan only receives a percentage of that. I believe around 35% to 40% of that is what the Saskatchewan share is. That has to help farmers right from Newfoundland to B.C. So it's not just for Saskatchewan.

We're saying there needs to be an additional program put in place that would trigger if world prices go below a certain level, and they've already done that. It's hard to describe the NISA program very quickly to you, but it's a program whereby farmers put money into an account, it's matched by government, and farmers can withdraw that when their farm incomes drop below a certain level. For farmers who have been in the business for many years that program is quite successful. It's been in operation for three or four years. They have some knowledge there then that they will be able to use during this time. Unfortunately, there is a large number of younger beginning farmers who do not have money in those accounts. So they have no program they can access, even though the federal government has had this program in place for a few years.

We need a program that will address some of the people who are falling between the cracks, if you want to call it that, in this present financial crisis.

The other point I'd like to make—I didn't answer it very well earlier—is that in our discussions we have been trying to join forces with all other farm groups across western Canada to raise the profile of this issue. Just this past week we met with our provincial agricultural minister here in the province of Saskatchewan, and this was a public meeting, so I can quote him. He did indicate that if we can convince the federal government of the need for these dollars we're talking about, the provincial government is prepared to go to their finance people and talk about their share. He went on record to say that. Generally the split of the funding has been 60% federal and 40% provincial. So we have our provincial agriculture minister saying that he's prepared to go to his finance people if we can convince the federal people to do their 60% share.

Ms. Sophia Leung: That's good news. Have you conveyed that to Minister Goodale?

Mr. Marvin Wiens: We will be doing that. We meet with him on a fairly regular basis and we will be passing that on. I know there were a number of other farm groups that were represented at the meeting the other night in Regina, and I'm sure they will be passing that message on as well.

Ms. Sophia Leung: I would also like to mention to you that in the national Liberal caucus we have a very active rural caucus. I think you should also make a connection with them. I'll also speak to the chair, because we all get his regular report. I think his name is Larry. I will get the name to you. I would really like to help you as much as possible to get your concerns close to Ottawa. I will tell you how you can contact me.

I want to move on and to congratulate the ladies, who did a very excellent job. My first question is to Madam Archambault. I think all of you are doing a super job and that you require more support. I hear that very clearly now. Are you getting any provincial support, or is that not their concern?

Ms. Lorraine Archambault: We get a very minimal amount of support from our province. We have in the last three years, though, acquired our own governance for our schools from the province, but we have not yet attained equivalency of quality in education with the anglophone schools. So there is a lot of work to be done there. As far as help to the francophone communities is concerned, there is very little available at the moment. I have a feeling that the provincial government, although open to listen to us, still feels that bilingualism is a federal affair. So we have difficulty getting what we need. We are in dialogue with them and we are trying to get some programs going with them.

We're also diversifying in other ways. As I said, we're not expecting Heritage Canada to give us all of our budget. We are diversifying and we are self-financing as well. So we're only asking Heritage Canada for part of our budget needs.

Ms. Sophia Leung: Judy, I think your organization is doing a really good job, which the community needs.

• 1230

I'm from Vancouver, B.C. We have many immigrant women, so you have my support as an immigrant woman myself.

I'd like to really urge you to get that non-profit number. It's essential. I'm surprised that you were established in 1983 here. I've been involved in organizing many community groups in Vancouver, so I know that's almost a must. It's an important thing.

I note that you've already received support from the Secretary of State for Status of Women and Heritage Canada. As a matter of fact, I know Hedy Fry from Vancouver. I know she is very strong in supporting programs like yours.

I really think it's important that you should mobilize the local community, and in B.C. this is almost the traditional way. We mobilize our local community first, really to show what we can do when we demonstrate. And then we ask for support from provincial and federal funding groups. I was very involved, and we'd get strong funding. Sometimes the B.C. provincial government would give $1 million and the federal government matched it very well. So I really feel you should probably get your community built up more. I think you are doing that, but meantime I just want to encourage you.

Ms. Judy Kobsar: Thank you.

Ms. Sophia Leung: I have a last question for Ms. Brown. Interestingly enough, last weekend I was attending a Liberal convention in Whistler, beautiful Whistler. A couple of people lobbied me on your behalf for the post-secondary education, especially specifically on the topic of a tax credit for the scholarship fund. There was a lot of discussion that it is really not fair. Those people who are the donors speak to me. It takes quite a bit away from the recipients. Would you like to address that a little bit more so I can get a little bit more from your point of view?

Ms. Marjorie Brown: You're speaking about the Millennium Scholarship Endowment Fund?

Ms. Sophia Leung: No, just scholarship.

Ms. Marjorie Brown: Okay.

Ms. Sophia Leung: Suppose you receive a fellowship scholarship, but meantime it's now considered as income and you have to pay the tax. So a lot of people are talking about whether consideration should be given to that. Would you address that quickly?

Ms. Marjorie Brown: As a graduate student, that is more of a reality than for undergraduate students, because on the whole we do receive some form of funding or scholarship. But the important thing to know is that in order for that to be taken off in tax you have to meet a certain level of income, and increasingly students are not meeting that level of income, certainly not in terms of the funding they're receiving. Maybe if they can secure a part-time job in addition, their income might start to reach that level.

It does provide some assistance for students at the PhD level, and a little bit for students at the master's level, but when you speak of the majority of the students who are at the undergraduate level that's where it doesn't provide much assistance, because those students are the ones who are definitely accessing student financial assistance and they're borrowing money, not making money. So it's a very limited benefit, because the numbers decline as you go up further in the graduate education.

I can even speak of my personal situation. A tax credit would have absolutely no impact at all on the funding I receive as a graduate student. Because that funding is inadequate and I work outside as well there's some impact there, but just in terms of providing funding as students it would have no impact.

Ms. Sophia Leung: The tax credit, the tax deduction from that doesn't affect you as much.

Ms. Marjorie Brown: It would not if it were limited to the funding I am receiving.

What I'm saying there is that funding levels are not adequate for that to be an impact, so a more upfront way in order to make it an impact would be instead of providing tax credits to increase the funding levels available. This would be a real benefit that would reach students up front when they're paying the cost.

Ms. Sophia Leung: Thank you.

I'm not sure whether you're aware that in Ottawa we have a committee called the post-secondary committee chaired by Peter Adams. I think it would be another avenue for you to reach us.

Ms. Marjorie Brown: Thank you.

Ms. Sophia Leung: Thank you, Mr. Chair.

The Chairman: Thank you very much, Ms. Leung.

We will now hear questions from Ms. Bennett.

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Ms. Carolyn Bennett (St. Paul's, Lib.): Thank you.

With the people who also have part-time jobs, one of the things that has been bothering a lot of us, particularly if we look at all of the people who are at lower incomes, is whether raising the personal tax exemption would help more people. I worry about the people on disability pensions and fixed incomes, but obviously there's a whole bunch of graduate students who, because of scholarships plus part-time jobs, sneak into actually having to pay taxes. I'm wondering what your organization's response would be to increasing the personal tax exemption across the board and whether that would help your group.

Ms. Marjorie Brown: We have no objection to raising the personal tax exemption, but it wouldn't be the most effective way to address graduate students' needs. Graduate studies is a full-time job if you're going to do it well. Unfortunately, certainly at the University of Regina, there are very few students who are able to do it as a full-time job. That means the quality of the research is compromised.

Ms. Carolyn Bennett: Do you get paid for the tutoring and stuff? Isn't there funding exchange for that?

Ms. Marjorie Brown: This is where the cuts really come into play, because as the federal government has cut education budgets to the provincial governments, they in turn have cut funding to the universities, which have cut the funding available to us. So the tutoring that's available is about 90 hours over an entire semester. That works out to maybe $2,000 over an entire semester, which is not enough to provide a living income and pay for any research students are engaging in.

The faculty can provide some scholarships, but those are also limited by the cuts the university has sustained. The outside sources of funding, such as NSERC, SSHRC, and the Medical Research Council, have been cut. In Saskatchewan last year there were no Medical Research Council grants at all until they revisited it and provided us with one.

So if you're going to address need, addressing it up front, in terms of providing more support, would have a greater impact on the lives of graduate students. It would allow us to reduce the number of hours we're working at part-time jobs and that would have a greater impact on our education.

Ms. Carolyn Bennett: I don't think people see grants from the funding council as actually jobs. I think we have to do a better job of explaining that when we give money to granting councils we're actually creating jobs.

I was interested in you singling out the Social Sciences and Humanities Research Council. Do you think it was unfairly cut, or do you think we should actually be raising the funding to all of the granting councils?

Ms. Marjorie Brown: I think funding needs to be raised to all the councils, but the SSHRC is traditionally overlooked because social sciences and humanities research isn't often seen as the same type of hard research that's done, for instance, by NSERC and the Medical Research Council. That's an unfortunate oversight, because there are many advances in the social aspects of our lives that are made through research funded by grants such as SSHRC.

Ms. Carolyn Bennett: In Dr. Friesen's new proposal for Canadian institutes of health, they are hooking up the various academic centres in health across the country. We hope they will also be dealing with the social determinants of health, such as poverty and violence and all of those things. Have you and your association had any feedback? Have you seen their proposal? Are you comfortable that some of the social sciences will be reflected in that new set of institutes?

Ms. Marjorie Brown: I'm not actually familiar with that.

Ms. Carolyn Bennett: Obviously the Irish model is something that's very interesting to lots of us in terms of how well Ireland has ended up doing. It was interesting in your brief where you said university access achieved rural economic development. How do you see decreased tuition having a strong effect on the rural scene?

Ms. Marjorie Brown: It's a far greater impediment to students from a rural background to completely disrupt their lives and move to a large urban centre to access post-secondary education. There's a huge barrier, even a psychological barrier, when you consider that in addition to that disruption you have to go into debt $25,000 to do it. There's a greater incentive or greater mobility for rural students when they don't face that cost barrier, and they can then return to their rural communities. When they return it provides increased knowledge capital in those communities, which helps to continue the viability of those communities.

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Ms. Carolyn Bennett: Thank you.

As you know—and this is for most of the panellists—the federal government is in the business of doing the social union negotiations with the provinces. When the president of the University of Toronto was before us on Thursday we asked him a little about tuition. In the social union negotiations, it's the first time we've seen the word “accountability” come up. With the CHST for post-secondary education, do you think the federal government should have a say in how high tuition fees can go?

Ms. Marjorie Brown: Absolutely. We have no opposition to government intervention in regulating tuition fees, and in fact we would welcome it. In our province the provincial government has managed to backfill a number of the cuts, so the budgets to the institutions have remained a little more stable than they have in other provinces. But the institutions have not lived up to that. They have continued to raise fees despite that funding. If the federal government is to raise funding, we do not oppose a hand in controlling the institutions and saying this money must be put toward lowering tuition fees.

Ms. Carolyn Bennett: So like health care, where accessibility is part of the Canada Health Act, do you see that accessibility is a key feature in post-secondary education?

Ms. Marjorie Brown: Absolutely. We would welcome a national education act or standards.

Ms. Carolyn Bennett: For the francophone community, I think we've been impressed, particularly in western Canada, with the strength of the presentations. We are very grateful, because it is our instinct that in the unity project there's nothing more important than having strong francophone communities across the country. We think our Quebec friends don't understand that very well.

When I look at the numbers you've presented here in terms of a 50% federal cut to the programs in this province.... Do you think in the social union negotiations the federal government should be asking for some sort of accountability on this piece with the provinces as they negotiate? Or is it something you think the federal government should be prepared to just fund?

Ms. Lorraine Archambault: No. As a matter of fact, I've been telling our provincial government that in regard to national unity, every province should be concerned about the whole question. Really, bilingualism should be a concern for everyone, and the provinces need to put more money into the programs. This would certainly show Quebec that la francophonie is alive and well in this country and they wouldn't have to fear assimilation, as I said in my brief.

I know that in Saskatchewan and a lot of provinces the francophones are really trying to get the provinces on board here, to also show they're proud of this fact and it's not always hidden or talked about behind closed doors. So it's very important.

Ms. Carolyn Bennett: Not to put words in your mouth, but the Calgary agreement in terms of Quebec being unique is one thing, but you actually believe the provinces have to put their money where their mouths are in terms of showing that having strong francophone communities in each of these provinces is equally important and it is very important that the provinces actually designate funds for this project.

Ms. Lorraine Archambault: Yes, it's very important.

Ms. Carolyn Bennett: It wouldn't be the same if all that money came from Ottawa.

Ms. Lorraine Archambault: No, it would be much better if it came from both levels of government.

Ms. Carolyn Bennett: Okay.

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I have one more question for the immigrant women's groups. I'm concerned about the charitable status. Given the fact you're doing as well as you are on advocacy, do you think it's more difficult to achieve charitable status? I think Revenue Canada has some rules saying that if more than 10% of your activity is in advocacy, you are viewed to be less of a charity. Do you think we should be changing rules such as that?

At one of the conferences I was at this weekend, the people certainly felt that if the government is going to talk about partnerships, we actually have to be able to get people effectively to the table. This means there has to be more provision for core funding and the kinds of things that allow organizations such as the one you represent to come to the table effectively.

Ms. Judy Kobsar: We do not receive core funding at all.

Ms. Carolyn Bennett: No, I think it's an ongoing—

Ms. Judy Kobsar: We still have staff in our office who have to be paid. Bozana Cosic is one of our staff members—she's our program coordinator—and there are other staff members in the office.

Our one major problem is the charitable number. If we could get that, you would be surprised to see how many donations we would get. There are people who come to our office to give us donations, but they turn away because we do not have a charitable number. For instance, McCallum Hill is a big name in the province, and she has come to give us money. When she realized we do not have a charitable number, we were turned down.

Ms. Carolyn Bennett: This has been around for a long time. Do you think your organizations are perceived to be doing more advocacy than service, and that's why you've had trouble?

Ms. Judy Kobsar: I think so.

Ms. Carolyn Bennett: Do you think we should be changing the rules?

Ms. Judy Kobsar: Yes, it would be great if the rules were changed. I would appreciate that.

Ms. Carolyn Bennett: I would like to just offer you an opportunity to do a small commercial for core funding. I guess the groups I've heard from are saying that if we gave them a little bit for core funding, they could go out and fundraise and do special projects. If the money is only coming for special projects, then they have to keep reinventing themselves as projects. That provides insecurity.

Ms. Judy Kobsar: If we could get some core funding, that would be great. We could then go on from there.

Ms. Carolyn Bennett: Would you be able to explain that to our friends in the Reform Party?

Ms. Judy Kobsar: Okay.

Ms. Bozana Cosic: You asked for a timesheet, actually, for a passing sheet. At aboriginal family services, we have computer classes for immigrants and the native people together. We just had to reapply for funding for a four-month program. We got it, but they didn't give us enough money, which means we have to cut back the hours.

It's really important that immigrant people have computer skills. Many of them, including myself, don't have any. We have very educated people who come here. They're lawyers or doctors, but they are stuck. They need much more education. Usually we need to help new immigrants, but, as Judy said, the biggest problem is in reaching the numbers. I have many programs and many ideas, but I can't move without money.

Ms. Carolyn Bennett: I should know this, but has the labour market agreement been signed in Saskatchewan in terms of the training now being the responsibility of the province?

Ms. Bozana Cosic: Yes.

Ms. Carolyn Bennett: Are you able to share with your parallel organizations across the country in terms of the needs of immigrant women for skills? In my riding we have Skills for Change. I think it's very good in dealing with, again, these people who are coming in from all different countries and are highly skilled but maybe need telephone skills or need something else. Obviously, solutions percolate from the ground up; they rarely come from the top down. Is there an ability for the federal government or organizations like yours to share that information with other groups or organizations across the country?

Ms. Bozana Cosic: As I said, we started to have many partnerships with other organizations, like the Open Door Society and many others, aboriginal associations like—

Ms. Carolyn Bennett: But that's again local.

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Ms. Bozana Cosic: I've been with Immigrant Women of Saskatchewan since last July. I'm still new here, because I just came to Canada two years ago. I don't know enough, but Judy has been there.

Mr. Judy Kobsar: Yes, Carolyn, we have been able to share our experiences with other provinces. For instance, we have shared with the Immigrant Women's Network of Vancouver. We have sent them information on some of the programs that we have done—either mentoring programs or immigrant—and they have shared theirs with us. They have also told us how much money they receive from the federal government and the provincial government, and that sort of thing. What we also try to do is tie into what they have done, and they try to tie into what we have done, in order to expand and to see if we can get more money. So we have been able to share. And as I mentioned, there is a national organization. When it gets together once a month, it takes in all of our concerns and discusses them at that level in Ottawa.

Ms. Carolyn Bennett: Right, thank you.

The Chairman: Thank you, Ms. Bennett.

I'm just going to take you back to a question Mr. Epp asked in reference to what the priorities should be for the upcoming budget.

I want to report to you that as we travel across the country and as members of Parliament on both sides of the House engage in town-hall meetings and in a real national conversation with Canadians, what we find is that there are many demands placed on the Minister of Finance. Quite frankly, there are people in this country who want us to concentrate on the reduction of the debt. There are others who want a personal income tax cut. There are still other individuals and parties who want to return approximately $5 billion in so-called employment insurance funds to the employers and employees. Of course you also have the provinces requesting more money through transfer payments. The list is endless.

We add the numbers up from time to time, and at the end of the day we find out that we're back in a deficit position. But we also know that one thing Canadians don't want is for us to return to the deficit position we were in. As you probably recall, we had to deal with a $42 billion deficit as recently as 1993. As a result, the economy suffered a great deal.

I want to go back to the employment insurance issue, because it's an extremely important one. If we were to listen to those individuals who want that money returned to the employers and employees, what you would face is essentially a budget speech from the Minister of Finance in February that would basically have two lines to it. It would state that he has borrowed $3 billion from the contingency reserve fund and has returned $5 billion to employers and employees. That would be just about it when it comes to expenditures.

If this committee were in fact to recommend that particular strategy, as you can probably tell, many—if not all—of your demands would not be dealt with at all. They would not even be touched.

My question is a very simple one. Given the two options, what do you think we should be doing? Should we be reducing the national debt, increasing transfers to the provinces, giving some tax relief, returning some EI money to either increase benefits or lower premiums?

Mr. Epp, I hope you don't mind if I borrow the gist of your questions.

Mr. Ken Epp: You're the chairman.

The Chairman: Do you think we should be returning $5 billion from the EI fund to the employers and employees?

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Ms. Marjorie Brown: Yes, I do, absolutely. Otherwise, that fund was collected under false pretences. It is not income tax, it is not corporate tax. It is a fund for unemployed workers. To collect it as employers' contributions, to take it from the employees who pay it every time on their paycheques, and to then turn around and use it to fund other programs is absolutely unfair to the people who put their faith in that program.

Just to continue from that, I don't think that maintaining EI as the separate insurance program that it is limits the scope of this budget. In fact, I think that if the government does not address demands from, farm groups, for instance, students or health care, it will find itself back in a deficit situation. Withdrawing from economic intervention at a time of crisis and saying that the private sector will be able to ride this crisis out, that the free market will regulate this crisis, is simply not true. If we look at Japan, the government there has in fact moved to nationalize banks in an effort to stabilize the economic crisis.

I think the role for the government is not to look to EI as a solution but to look to the meaningful measures they can make in the economy to generate stability for ordinary working Canadians so that we can work, pay taxes, and have a stable economy, which in turn will keep the deficit down.

The Chairman: So you're saying that when we're in a deficit we're in a better position.

Ms. Marjorie Brown: No, I'm not. I'm talking about Keynesian economics. As we're going into a period of instability and recession here, the role for the government is to help us ride that out. It's not to withdraw.

The indicators are clear that the economic situation is not improving right now. To withdraw and to allow the free market to solve the problems is not any solution at all. That's not working in Asia. Country after country requires massive intervention, not only by national governments, but by the IMF. I don't know why we think the situation in Canada would be different and that we should withdraw, or why a free market that has had wildly erratic stock market turns in the last few months and has seen the dollar plunging can somehow provide us with solutions.

Solutions come through helping working people, through keeping unemployment benefits stable, through having accessible education, through helping with the crisis that farmers are in, through all these types of measures. That's what will provide the solution. That's what will keep revenue and the economy in this country stable.

The Chairman: Let me understand that, because maybe I'm not following it.

You agree with the fact that the vast majority of Canadians—at least the ones I speak to, which include a pretty good cross-section—tell me they don't want to go back into a deficit position at all. It's just the furthest thought in their minds. They didn't like it when we were in that position, and they've understood that the economy suffered quite a bit. We all remember the double-digit unemployment rates and everything else that comes with those types of economic conditions.

My question is simple. If you have an $8 billion surplus and you're saying $5 billion should be going to returning EI funds to workers and employers, that leaves you with $3 billion. That $3 billion has already been committed to the debt reduction plan known as the contingency reserve fund. You have no money left for anything else because a large majority of Canadians—I don't know what the percentage would be—want a balanced budget. If you are going to return the EI money, I don't understand where you're going to get money for health care, for education for the students you represent, or for those individuals who feel they've worked hard and want a personal income tax cut. Where is the money coming from?

Ms. Marjorie Brown: Again, I want to stress that employment insurance is not simply another line item in the government's budget. It is an insurance program that is separate from the general revenues of this country. And the money is there.

The Chairman: That's not the case, by the way.

Ms. Marjorie Brown: Well, it is put forward as a program that is there in times of need when we're unemployed workers, and not to be another form of tax. If that's what the government wants to do, then the government should be up front about it and should simply collect another level of tax from employers and employees. Don't say this is an employment insurance program, and that only 36% of unemployed workers will be able to access it when they are in a time of need. But the money is there.

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I think you're right that we can meet these targets, and I'll tell you some of the places where the money is. It's in the 85% of the uncollected loans on large businesses since 1982. That's where a whole lot of money is. It's in the record profits the banks are facing. That's where a whole lot of money is.

You have to ask yourself, if the banks get record profits year after year and if there's 85% in uncollected large corporate loans, then why are farmers suffering? Why is there record high unemployment, and why is youth unemployment over 15%? There are indicators that suggest that certain sectors of the economy are doing quite well, but it's not trickling down to ordinary Canadians.

We're suggesting that there's a role for government here to intervene, regulate, and redistribute so that in this period of economic crisis this wealth does trickle down to reach the people who need it. It needs to reach ordinary Canadians. That's what the government's role in this budget should be.

The Chairman: So then you basically say that if there's an $8 billion surplus, we should return $5 billion to EI, and $3 billion will go to the debt, which has already been stated by even the Prime Minister. Then there's nothing left. So essentially you're saying to go back to a deficit position.

Ms. Marjorie Brown: No, because it's not such a simple situation. We could even take a step back and look at how we got into a deficit situation in the first place, what a deficit is, and what interests were involved in creating the situation whereby we all think we're under this continual economic crisis of deficit and debt. But it's not as simple as that.

What we should be doing is looking at the totality of the economic system and what measures the government can make to balance out the ebbs and flows to get the highs and lows to a normal sustainable level for ordinary Canadians. It's not as simple as saying that there are one, two, or three things we can do. All the sectors need to be considered.

There are sectors that have great wealth that is not being shared with other Canadians. That's an avenue this budget can look at. How do we redistribute that wealth so we can address unemployment rates and the cuts in social programs that Canadians—

The Chairman: I think you make excellent points. Having said that, the reality is that I think what you're talking about is sort of a division for the country. The reality is that while all that is going on, there are some accounting realities we have to deal with.

If this budget is going to have a $5 billion to $8 billion deficit, taking everything that you've said as being very important, I think that, quite frankly, the Minister of Finance and the government need to signal to Canadians where we are going to end up and how we're going to get there in all sorts of speeches. I take that for granted.

But when it comes to the actual accounting of this fiscal year, for the 1999 budget, this is the reality we may in fact face. So as far as you're concerned, the priority should be returning money to the employers and employees. That's clear.

Madame Archambault.

Ms. Lorraine Archambault: Certainly we want to reduce the debt. I would certainly be in favour of that. But I have two questions. When you talk about your tax cuts, are you talking about tax cuts to individuals or corporations? Is it everybody across the board? Just what kinds of tax cuts do you have in mind?

My other question is, for this EI money—I have a tendency to simplify things—does it have to all be returned in one year to that fund, or can it be done over a period of time?

The Chairman: We're role-reversing here.

Some of the issues that have come up vis-à-vis personal income tax, for example, is the raising of the basic personal exemption and the elimination of surtaxes that were introduced to reduce the deficit.

On the issue of EI, this is really the debate. Some people are advocating that it should happen right away, which will limit of course the room to manoeuvre for the federal government to deal with programs like yours and everybody's on this panel, including those for graduate students. That's basically where the challenge is.

Ms. Lorraine Archambault: But I guess my question hasn't really been answered. Is it possible that this EI money could be returned over a period of three or four years—

The Chairman: Exactly.

Ms. Lorraine Archambault: —rather than all in one chunk in one year?

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The Chairman: That was my answer. We're debating that particular issue right now.

Ms. Lorraine Archambault: Oh, you're debating it. Okay.

The Chairman: That's the reason I asked you that question. I wanted to find out what Canadians would like. Would they like the return of the money all at once, limiting the room to manoeuvre on the other issues, or should it be phased in through a long period? That's what the estimate would be.

Ms. Lorraine Archambault: Okay, I guess my personal opinion would be to do it over a period of time. I think the money should go back to where it belongs, but do it over a period of time.

The Chairman: Over a period of time, yes.

Mr. Shauf.

Mr. Marvin Shauf: Thank you. There are several points I think I need to make.

I think it's the responsibility of government to create a competitive climate for growth. I think that to look at things on a one-year basis in terms of budget is probably too short a term. I think the government needs to look at a longer term than what is happening specifically in an individual year and make all the decisions within that one year rather than looking at a longer term.

It seems to me that over the last number of years agriculture has had a lot of federal dollars removed from agriculture, so it bothers me to hear amounts being identified as to the source and wondering whether we put the money in here. I think it would be very damaging to Canada if we identified dollars as being part of a specific fund and then said that those dollars were going to be put into agriculture to invest in the future. I think that would be damaging within Canada.

But I do believe that Canada does need to look at a number of things, agriculture specifically, in investing it for the long-term future. Agriculture does have a future once we get into sensible trade rules that begin to limit some nonsensical things that our competitors are able to do at this point.

These rules have been negotiated. They have been agreed to, and by and large I think our competitors are playing within those rules. Canada has gone beyond the reduction in funding commitments that have been made. Canada has done those because of budget reductions and deficit reductions that we wanted to make within the country.

So I think that in large part a lot of the playing field, being as unlevel as it is, has been a result in Canada of cutting back funding much more quickly than our competitors have.

There's going to be a period of time that will be very intense before we get into the next round of negotiations, but I think Canada needs to step up to the plate and protect agriculture in this next year and a half to two years.

The Chairman: Thank you.

Mr. Epp.

Mr. Ken Epp: Thank you.

I'd like to address the problems of students for the next few minutes. I didn't get around to that in my first round of questioning.

Marjorie, I want to ask you just a few questions. What's your major or program?

Ms. Marjorie Brown: Political science.

Mr. Ken Epp: Political science. Okay, I sort of detected that. I thought maybe it was a cross between that and economics.

Can you tell me either from your experience or from any data you have what the rough breakdown of costs is when a student attends university? Is it 50% for tuition, 25% for books, and 25% for living? What is the breakdown of costs approximately?

Ms. Marjorie Brown: I'm doing some quick math in my head right now. As for tuition and fees, students are eligible for roughly $12,000 of assistance in a year. Of that, tuition and fees can roughly be figured in at about $3,000. This is the situation in Saskatchewan. So that's a quarter of the cost.

That leaves students on a budget of about $9,000 for rent, food, transportation, and clothing costs. That's a very, very low budget to try to live on.

Mr. Ken Epp: Okay, and where does the cost of books come in?

Ms. Marjorie Brown: Books are increasingly expensive. Students can look at spending about $1,000 a year on books. That's on top of tuition fees and related university fees.

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It's really important to note that universities have been engaging in a program of masking the tuition fees lately. They have ancillary fees, parking fees, all sorts of related fees. The net effect is that students pay more, but universities manage to claim that they're not raising their tuition fees as much as they actually are.

Mr. Ken Epp: That seems to be a strategy of all levels of governments, doesn't it?

The next question I have is what proportion of these costs do you think should be paid by say the taxpayer, through government grants, government subsidies directed to universities, money the taxpayer pays directly?

Ms. Marjorie Brown: It's difficult to give a simple upfront answer to that, because I think it depends on the mechanism you select for paying.

If there are adequate employment opportunities, for instance summer employment programs for students in which they can earn a reasonable income, then I think it's perfectly reasonable to suggest that students would bear a larger burden of the tuition fee and related university fees. But with unemployment at 15%, that's not very feasible at the moment. In fact an increase in work programs would provide job training as well, so it would be quite a long-term vision to have.

In the absence of that, there are options in terms of providing loans or providing grants. With loans, the problem I outlined earlier is that it inhibits students' participation in the economy once they graduate, because they spend most of their income paying off that loan, and the only place that goes is into the profits of banks, not into the general economy.

In the OECD, as I said, Canada provides the second lowest in terms of federal support for tuition fees and what not. And among all the OECD countries there are only two countries that provide no form of a national grant system, and that's Canada and Japan. Clearly, all the other industrialized countries think there's a greater federal role to be played in terms of providing for upfront costs, student financial assistance while they're in university, and programs that allow them to generate some income so that they can pay some of the costs as well.

Mr. Ken Epp: Would you be in favour of no tuition fees at all for university students?

Ms. Marjorie Brown: I would, and I think it's important to note that is not going against the trend. Sort of a myth has been developed here in Canada that it's normal to pay tuition fees and that we have to emulate only the United States in terms of how we fund our post-secondary education programs. But that's not the case at all. Many industrialized countries have no post-secondary education fees because the belief is that by providing access to education you generate well-trained, highly educated workers, who in turn give the benefit to the economy. You can move towards a more technology-intensive, more intellectually based economy, because workers have been able to train for that.

Mr. Ken Epp: Do you think presently the situation among students is one of crisis, one of despair? Would you use those words?

Ms. Marjorie Brown: Absolutely. A $25,000 debt upon graduation, when you're 22 or 23 years old...I think some students have even lost touch with what that means, because the number is so high that you can't even realistically plan how you're going to pay it back.

On top of that, we now have this change in the bankruptcy law, where for ten years students are unable to declare bankruptcy. We have a student advocate in the students' union coming in saying they absolutely don't know what they're going to do. They have no idea how to deal with this, because unemployment is so high, because their debt is so high. They have no options in front of them, and despite the fact that 93% of student loans have been paid back, this prohibition on declaring bankruptcy now exists.

Mr. Ken Epp: That was my next question, and it's interesting that you should bring it up before I did. I know in your previous intervention you talked about this, and it was one of your recommendations that these rules on bankruptcy should not be strengthened.

The fact of the matter is, if we, the taxpayers, lend the students money, we do believe we should get it back. So if students are in increasing numbers using the bankruptcy rule in order to convert their loan into a grant from the taxpayer, coming from you that seems unusual, because you strike me as being an analytic and very intelligent young lady and you are saying to us now that what we need to do is to provide a means by which all these students can declare bankruptcy. In other words, they start their professional careers with a black mark on their financial record.

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I'm surprised that comes from you. I would think you would rather advocate a reduction in the amount of debt so that those students don't have to declare bankruptcy, because they can in fact pay their bills.

Ms. Marjorie Brown: Absolutely, that is what we are advocating. But in the midst of working on those issues we were faced with this discriminatory prohibition on bankruptcy. That's basically our issue, that there's this discriminatory ten-year prohibition.

That is for your worst-case scenario student, for whom everything goes wrong financially and they have no other options. We're not suggesting that student turn to that as the solution; we're simply saying that option does need to be available because sometimes everything does go wrong.

The statistics bear out that students are not turning to bankruptcy in increasing numbers. In 1993 the rate was 21%; in 1994, 16%; in 1995, 14%. So in fact students are using bankruptcy as an option in decreasing numbers. But the option still does need to be there for those few students who cannot make their payments, and right now the option isn't there. There's this discriminatory ten-year prohibition.

What is a student supposed to do when nothing works out? They can't find a job, they can't make their payments, they have children to support, and now they can't declare bankruptcy.

Mr. Ken Epp: I'm spending a lot of my time with you because I'm really interested in this.

By the way, I worked in post-secondary education for 27 years of my life, so I have great empathy for students.

I would like to know what you would recommend in terms of providing jobs for students. I know when I was a student that was how I made my money. I almost hesitate to confess this to you lest it make you overwhelmingly jealous, but every summer when I worked right here in this city I made about 50% more money than I needed for the year. That's the only time in my life that I've had a great surplus that I could play with. That, of course, is gone now because of our whole economic scenario in the country and probably around the world.

What specifically would you like to see in the budget that would do something really tangible, would be the best deal possible for the taxpayer, and would best help the students to provide them with good summer jobs so that they could in fact pay their own way and come out the other end with a degree and no certificate of debt?

Ms. Marjorie Brown: There are three areas. The first is relevant mainly to graduate students, and that is that increases to the granting councils, which we talked about before, actually do provide high-technology jobs.

The second area is increase funding for the universities, because actually the universities are capable of generating quite a fair number of jobs for students. They have been less able to do that in recent years as the budgets have declined. One of the first things to be cut was student employment. That's unfortunate, because often that employment is in the field in which the student is studying, so it's very relevant for when they graduate.

The third area that would definitely have a benefit for the taxpayer is in terms of co-op jobs. Increasingly, different universities partner their program with a co-operative work program that allows students to work in their field. So enhanced opportunities for co-operative employment would have the double benefit of giving students the means of generating income and providing them with training in the field in which they're studying.

Mr. Ken Epp: Okay.

In one area that you talked about a little bit, you came up with quite a different solution, or at least you failed to mention a solution I thought of.

I hesitate to say this, but it's over 40 years ago now when I was a student and I had to pay into what was then the UIC fund. When I went to collect when my summer job was over and I went back to school, I was told, “Sorry, you're not eligible because you're not available for work; you're going to school.” So I wrote a letter—I remember this distinctly—with a copy to my employer, which said, “How can you force me to buy an insurance policy from which, by very definition, I cannot benefit?”

So I objected way back in the 1950s about having to pay into UIC as a student, without any ability to collect. Really, what they were doing was taking my earnings and using that to subsidize, at that time, fishermen who were making $18,000 a year in six months and collecting pogey the next six months. I remember being upset about that particular issue at that time.

That has not changed. Students in summer jobs still pay what are now so affectionately called “the EI premiums”. We sometimes talk of it as E-I-E-I-O. But you're still paying it.

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Why don't you, as a student, come up and tell this committee, this chairman, and the finance minister to make a resolution in this budget that students will receive a full rebate of their EI premiums in fall when they register in another university program? Why don't you make that recommendation?

Ms. Marjorie Brown: Because, unfortunately, the reality of just taking a job for the summer doesn't exist for many students any more. A great number of students look to work throughout the year, and that's in terms of part-time work through the year. So actually students are in need of employment insurance when part-way through that year the job disappears and the students are left without their income. That would be an ideal situation if students could go work for the four months of the summer and then return to full-time studies in the fall, but with the increasing number of part-time students, that's not the reality any more.

There are only 36% of unemployed workers who are eligible for EI. You see students among that majority who are ineligible for EI.

Mr. Ken Epp: Are you students really pleased with the fact that the present government is intent on collecting GST on books and collecting royalties on used books, so that when you go to buy even a used book from a student from the previous year you'll end up paying the royalties again? Are you really pleased with that?

Ms. Marjorie Brown: No.

Mr. Ken Epp: Why didn't you say so?

Ms. Marjorie Brown: There are so many things. The list is extensive of the areas we would like to see addressed. And of course a regressive sales tax does not help students.

Mr. Ken Epp: It is a very regressive tax.

Mr. Chairman, I think perhaps even though we're here to hear the witnesses, I'd like to put on the record very clearly that we need to address the needs of students. Let's provide them with the tax regime that allows them to manage their own affairs. And I'm distressed along with Marjorie about the number of students I had who had a crushing debt load when they left school.

Our view of debt has so totally taken up our society that whether it's the government, whether it's the individual, or whether it's farmers or whether it's students, we somehow think that the way to solve the problem is to borrow our way out of it. It really isn't. So that's a closing statement on this.

I'd also like to just mention that those who are against the reduction of the debt now that we have a balanced budget must always remember that if we didn't have that debt, we could, with the interest we're paying now on the debt, just the interest, provide free university education for every student in this country, plus substantially increase the grants for health care in the country.

Right now $31 billion a year goes to interest, and economically that is just a huge amount of money. I think it should be a great goal of ours to stop loading successive generations with the debts and the interest payments of the previous ones. So that's my own little personal philosophy, and that follows, to an extent, the philosophy of the party to which I belong. In fact it's one of the things that drew me to it.

I noticed before that your ten-minute thing didn't mean anything to the other guys, so I presume it means nothing for me now, so I'm going to talk back to the farmers again.

I asked you before to think about this question, and it is that in the upcoming budget in February, when presumably Paul Martin will still be the finance minister—we don't know, sometimes these political winds change—when he stands up in the House of Commons to give his budget speech, what would be the one, two, or three primary sentences that you would like to hear? That's what this committee is going around the country for. We're trying to hear from the people what should be in the budget. This is a pre-budget consultation, so can you focus as tightly as possible on your top two or three priorities?

The Chairman: Mr. Shauf.

Mr. Marvin Shauf: What I believe the finance minister would need to say relative to agriculture is that we need to invest in agriculture, and we need to attempt to level the playing field for agriculture until the appropriate trading rules apply that do it on an international basis.

Mr. Marvin Wiens: I would say an announcement that would suggest they're prepared to freeze cost-recovery initiatives the federal government has been involved in, and to maintain our competitiveness through any reduction in taxation, in any areas they can look at. And the third area would be to direct additional moneys to a safey net program, to a disaster program that will take us through this period of time to get us to the next round beyond the WTO trade negotiations where we're hoping to see increased world prices and we can get our dollars from the marketplace, which is what we're hoping for. So those three areas are what I'd be looking for.

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Mr. Ken Epp: Excellent.

I think it would be fair to all the other presenters to also respond to that question, if you wish.

Ms. Judy Kobsar: I would just like to say that for immigrant, minority, and refugee women—this is not just for the province of Saskatchewan but all across the board—appropriate funding should be made available to help them execute or expedite their projects. For new immigrants coming from war-torn zones, for instance, from Bosnia, where Bozana is from—she's from the Yugoslav Republic—and from places such as Liberia, Sudan, and other South American countries that are going through war at this point in time, for those people coming in, who are educated, immigrant organizations should be given appropriate funding in order to help them with their assimilation into Canada.

Mr. Ken Epp: Thank you.

Marjorie, you had your say, I guess.

Ms. Archambault was not here to hear the question, so that finishes my intervention at this time. Thank you, Mr. Chairman.

Ms. Lorraine Archambault: I'm here.

Mr. Ken Epp: Do you want to answer the question?

The question I asked of the others, and it was at the close of my previous intervention, was if you could put words into the Minister of Finance's mouth next February, what would be your top two or three priorities? What would you like him to include in the budget as pertaining to your area—as specifically as possible?

Ms. Lorraine Archambault: Certainly that we will keep on trying to reduce the debt.

Secondly, in my area, the francophone community has fallen back over the last few years because of budget cuts, and we are an important element to the national unity of this country. We are included in the Charter of Rights and Freedoms, the Constitution of this country. Even if they double what they've given us, we still wouldn't be using up even one-half of 1% of the total federal budget. I would like to hear him say that they will substantially increase the Canada community agreements.

Mr. Ken Epp: If I may follow up for just a second on this, you start out by saying continue to decrease the debt. Since we now have a balanced budget and we have some surplus presumably available, although that's not totally certain due to the economic upheavals—you're basically saying “reduce the debt on everybody else's program but double mine”. Am I hearing you right?

Ms. Lorraine Archambault: As I said, we would still not be using up even one-half of 1% of the budget.

Mr. Ken Epp: So you're not retracting the statement. Thank you.

The Chairman: Mr. Nystrom.

Mr. Lorne Nystrom: Thank you, Mr. Chairman.

I say to Mr. Epp and others that it's not a question of whether to reduce the debt or the deficit; it's how you do it. There are many different ways of doing it. One of the big reasons why we have such a huge debt in the country was the policy of John Crow, Governor of the Bank of Canada back in the eighties, when we had extremely high interest rates, at one time 5% higher than the United States. I think that had the effect of slowing down the economy so much and exacerbating the situation that people were thrown out of work and there was less economic growth generated. Then of course the interest rates and the debt went up and it became a vicious cycle, a dog chasing its tail.

The question occurs, how do we get out of this? As the wheat pool said this morning, and others, we were brought out of it through radical cutbacks in spending—and Marjorie mentioned this as well—on the backs of ordinary people in this country as well as through tax increases.

Mr. Ken Epp: Huge tax increases.

Mr. Lorne Nystrom: Tremendous tax increases right across the board. We can point fingers and blame all kinds of people, but I don't want to do that this morning. I want to hear from you.

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I wanted to ask, going back again to the wheat pool—Mr. Demyen wanted to say something a long time ago.

In fiscal 1997-98, the government had a surplus of $3.5 billion, and they chose without too much consultation to spend every penny without reducing the debt. I argued that was the wrong thing to do. This year, depending on what's happening around the world, the surplus could be an awful lot higher. It could be $10 billion or $15 billion. It might be lower at $7 billion, but there will be a surplus there. The question is, how do we spend it?

When you're looking at a recessionary situation in the world—two-thirds of the world is now in recession and we may be—the last thing the government should be doing is cutting back. They should be spending a good hunk of that surplus on programs that will stimulate jobs in the country. Part of it should be on an emergency farm relief program, because it would not only help the farmers and others, but it would also stimulate the economy in terms of job creation.

I want to ask you a very specific question. If there is a farm relief program of so many hundreds of millions of dollars, how would the farmers spend that money? Would most of it be spent on goods and services that would be bought in the country?

We are now joined by Mr. Martin's parliamentary secretary, Mr. Valeri. It's important that he hear this as well. How would that money be spent in terms of the benefit to the economy, outside of the farm community?

Mr. Marvin Wiens: The money would go back into the economy. I think a good example is the lay-offs in the agricultural sector, relative to manufacturing. All manufacturing sectors related to agriculture are laying off large numbers of people, for example, Flexi-Coil, Case IH, John Deere, and jobs in eastern Canada. I talked to a salesman in the car industry the other day and he said his income was half of what it was the year before.

Farmers very quickly spend those dollars on things they need to run their operations, so it benefits the economy in western Canada very directly. The money, unfortunately, can't stay in the hands of the farmer because he has to pay his bills.

Mr. Lorne Nystrom: So the farmer spending the money would be an immediate stimulus to the entire economy. This would result in a little lower unemployment rate and fewer revenues from the federal government going out in terms of EI payments, welfare from the provincial governments, and so on. What is the flip side of that? If nothing happens, what are the costs?

Mr. Marvin Wiens: The flip side is exactly what we're seeing. The organization we represent, the Saskatchewan Wheat Pool, is laying off people as we speak. We've had to do that. The economy is tightening up. Significantly fewer dollars are being spent compared to a year ago and we've had to start cutbacks, along with everybody else related to the economy in western Canada. The kinds of jobs we were providing in the past just won't be there.

We've tried to look for new opportunities, and we're expanding in the livestock area to provide new jobs in western Canada. Unfortunately, they're not going to replace the ones we will perhaps have to eliminate because of the cutbacks in spending in the agricultural sector in western Canada.

I guess what has concerned us is exactly what we talked about earlier during this session, that we weren't even aware of this in Saskatchewan six months ago. I think the awareness is increasing. In talking to the federal Minister of Agriculture, Mr. Vanclief, he is much more aware of the seriousness of the situation in western Canada. We appreciate the opportunities we've had to present that case to Mr. Goodale and Mr. Vanclief, and we'll continue to do that.

When the government decides where their spending priorities will be in the upcoming session—we understand the needs of health care and education—we want to go on record as saying unfortunately agriculture is on that list as well.

Mr. Lorne Nystrom: I think you're right. A lot of people don't understand the gravity of the situation. When net farm income drops by 84%, which it has in this province, there's a real crisis out there in the towns and cities as well. I think the priority of the government should be the social programs and education plus emergency aid, and this is really an emergency situation we should be spending money on.

Do you have any advice to the committee as to how an emergency aid proposal should be structured? Should it be based on an acreage payment in terms of cultivated acres? Should it cover more than just the grain sector? Do you have any advice in terms of what you'd like to see there? The long term is something else.

Mr. Marvin Shauf: In the short term, probably the number one issue is to understand that there is a problem, and number two, to make the commitment to resolve that issue. A number of existing mechanisms may be applicable, as far as whatever may be distributed.

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Mr. Marvin Wiens: One additional point to make in this area is that in the past, when we have seen a reduction in income in the grain sector, generally the income from the livestock sector has counter-balanced that or been better. In this case, we have had a reduction of income in all sectors, whether it's cattle, pork, or the grain sector. Unfortunately, there are not a lot of options out there that the agricultural community can look at for one sector to support the other sector in agriculture right now.

Mr. Lorne Nystrom: What has happened in terms of the increase in the cost of production? I understand it's running ahead of the inflation rate in terms of machinery costs and so on. Is that accurate?

Mr. Marvin Shauf: Yes, it is accurate. In the presentation I made, transportation costs have doubled since 1995. Machinery costs are up over 21%, fertilizer costs are up 57%, crop protection materials have increased by 63% over the past five years. It's well ahead of inflation.

Mr. Lorne Nystrom: In terms of a long-term program, what would be the role of the federal government in terms of cost? You're looking at something here that would be cost-shared with the provinces and the producers as well, but do you have any advice to the committee as to what the long-term commitment might be?

It would depend, I guess, on the cycles of agriculture, a bit like the unemployment insurance fund that is set up to conquer cyclical balance, in terms of more pay-outs when times are tough and a bigger surplus when times are good. Do you have any advice for the committee? Perhaps Mr. Demyen could add something to that.

Mr. Marvin Wiens: It's a very hard number to put a handle on. We do have a national safety net advisory committee at the federal level that has asked federal and provincial government people to look at the need in this area, and they are working on that.

To put a hard and fast number on it...hopefully, it won't be for a long term. As I said earlier, we're looking for the dollars out of the marketplace, and if we can accomplish some of the things around trade issues, hopefully that will happen in the future. But in the short term that isn't happening. We can very clearly point to the reduction in incomes caused by international trade problems. What the long-term number will be, we don't know. We do know there is a need for additional dollars in the safety net package.

The Chairman: Thank you, Mr. Wiens. We'll have a final question from Mr. Valeri.

Mr. Tony Valeri (Stoney Creek, Lib.): Thank you, Mr. Chairman. I just have a couple of comments based on what Mr. Nystrom said earlier about the recent surplus in 1997-98, and just an overall comment. I think you would all agree, and correct me if I'm wrong, that first and foremost as we move into this next budget period, government should essentially do what it can do best, always understanding that the government from now on really wants to stay in balance.

The government shouldn't be out trying to spend money it doesn't have. I really want to hear some feedback on that because that's the underlying principle as we move forward, and that principle really wasn't something that just happened; it was the result of pre-budget consultations dating back to 1993-94. As we went out and met with Canadians, the overriding message was always, “Listen, the first thing you have to do is start to live within your means, and beyond that you have to prioritize and focus on what Canadians want, always within those means.”

The comment was that the 1997-98 surplus went to debt, and I think perhaps Mr. Nystrom may have been insinuating that we could have done something else with that money to be counter-cyclical to the economy. I just want to put this out there.

Essentially, the government runs from April 1 to March 31, and unless—and there is some issue with the Auditor General right now—in my mind you announce a program, commit to funding that program, and articulate how that program is going to work, you essentially can't book the cost of that program. When the books close on March 31, essentially there's no further programming. What you have from March 31 to some time in August are year-end adjustments.

• 1340

Those adjustments sometimes go negative and they sometimes go positive. When they go positive, the only place the money can go is to debt repayment. It can't go to other programming, as Mr. Nystrom is suggesting. You can't, once the year is closed, then announce a program for the 1997-98 period. All you can do with that money is throw it at debt or deficit, which is essentially what happened. This is why, in fact, we were able to hit our target so well and actually do better than most people anticipated. The year-end numbers were good, and we were allowed to pay down the deficit even further. That's the same scenario with debt.

So when you hear about $3.5 billion and why didn't the government give out that pool or safety net for these upcoming negotiations, it's truly not a fair comment, because the number is something that's predetermined. I just wanted to put that out as a point of information. I'm not attacking you on that particular point.

As we go forward, most private sector economists are saying there may be a surplus out there of $5 billion to $7 billion, of which $3 billion would be a contingency reserve fund so that we stay in balance. As we move forward with essentially the $2 billion, you talk about putting in place some stabilization programs and safety net programs. I don't know whether I misunderstood you, but is there an actual figure in mind for what that pool would be and how it would be funded? Is it a cost-sharing pool? Is it strictly the government putting in money? Could you just expand on that a little bit?

Mr. Marvin Wiens: No, the present safety net package is a cost-sharing program. It's about $1 billion right across Canada, of which about $600 million to $700 million is federal dollars and roughly $400 million is provincial government dollars. So it's a cost-sharing program.

Under both crop insurance and NISA, the two major components of our safety net package, farmers pay premiums. So farmers share in that as well. I'm glad you pointed that out. That's an important component as well. Farmers are prepared to do that, and they have done that in the past.

I think it was before you were here that I pointed out that, unfortunately, for a fair number of younger producers, they don't have a fund built up because they haven't been in the business long enough.

Say you're a young farmer. I could use my son as an example. He's been farming for two years. He basically has no component in the NISA program because he hasn't been in the business long enough. It's very difficult for him to fund the severe downturn in his farm income that he's facing this year because he hasn't been able to participate in a program that's been in place for a while.

We have a significant number of our producers.... In fact, if you look at the averages in Saskatchewan, I think there's about $18,000 in the NISA program, half of which is government money, half of which is producer money. Well, $18,000 in today's farm business is a very small amount to try to fund a severe drop in farm income.

Mr. Lorne Nystrom: That's the average?

Mr. Marvin Wiens: That's the average.

Mr. Tony Valeri: You also mentioned that normally the grain sector and livestock were counterbalancing each other, but it's not the case now. What's the cause? Is it something that could have been predicted, or is this sort of a blip? Do you expect this to be ongoing, or is this just something that's occurring now? It's a bit of an education, from my perspective.

Mr. Marvin Wiens: We don't expect it to be ongoing. The livestock sector in western Canada is investing money right now even though the prices are down. They believe there is a future in which there will be dollars to be made.

The pork industry is a very good example. The latest numbers I heard say that we will probably be close to doubling the production of pork in this province within the next couple of years.

So farmers and organizations like ours, Saskatchewan Wheat Pool, are investing money in the livestock industry even though they are incurring losses in the production of that livestock right now. Hopefully, the economic crisis in the world is going to be over the short term. The Asian community is a huge market for livestock, and when that turns around, we in western Canada want to be part of that economic turnaround in the livestock industry.

Mr. Tony Valeri: Okay. I just have a last question.

• 1345

Agree or disagree that as we move forward the priorities in fact should be to ensure that the budget stays balanced, that there is some tax relief where it's required—I think it's unfortunate that in this country we still have senior citizens and people in the low-income bracket who are paying taxes; people earning $11,000 or $12,000 a year are paying federal tax—and reinvest in health care.

I guess I'm asking you to take off your hat for a second. I'm not disputing with you that agriculture should not be on that list of priorities, but in terms of the top three or four priorities, are you in agreement with that statement?

We can go across the panel here.

The Chairman: Ms. Archambault.

Ms. Lorraine Archambault: Yes, reducing the debt is a top priority. But there is sometimes a good cycle that develops when we get help from the government. For example, in my area we use some of that money to create jobs, because we hire people who help the volunteers do the work that has to be done. Therefore, through income tax revenue, the federal government does get some of its money back.

We don't just run around speaking French all the time; we are doing economic development and tourist development, and this helps our towns and our cities and our province. Therefore, we are contributing some of what we get back into the economy, and I think this is very important to consider when you are giving money to groups.

Mrs. Kobsar was saying here this morning that they have staff too, so they create jobs as well.

I think that has to be considered when you're thinking about our budgets.

The Chairman: Mr. Wiens?

Mr. Shauf?

Mr. Marvin Shauf: Under normal circumstances, I agree that what you have laid out are at least very important issues.

The only thing I would argue with is reducing the debt, tax relief, and social programs. All of those things have a cost, and I think we need to look after the economic bill payers in this country, the things that do generate the foreign currency, the things that build the jobs within Canada.

If we neglect those, then for all of those other things...we won't be able to do the tax cuts; we won't be able to have the social programs without the economic wealth that we can create through the things that generate foreign exchange. So I think those ultimately have to be top priorities.

Mr. Tony Valeri: If I could paraphrase for you, you would essentially support a position that said the government should, or would in fact, benefit through subsidization of the agriculture industry and would be further along in being able to pay down debt, being able to reinvest in health care, and being able to provide tax relief.

Mr. Marvin Shauf: I believe very firmly that this is a short-term issue for agriculture, as it will be for some other sectors as well.

For agriculture, we can already see the rules coming into play that will limit our exporting competitors from doing things that are trashing world market prices. I also believe that unless we provide a cushion for our agriculture to ride these next couple of years, a lot of the higher-value commodities will not be produced here, a lot of the higher-risk commodities will not be produced here, and a lot of the value-adding components will not be added here. Those benefits will flow to other countries, and we cannot afford to let that happen through the next two- or three-year period.

The Chairman: Are there any further comments?

Mr. Mitchell Demyen (Policy and Economic Research Division, Saskatchewan Wheat Pool): If I could add to that comment, when I look at what the international currency people say as to why the Canadian dollar is being affected, it's because of our reliance on primary industry exports. That's one of the key factors.

When you look at the federal government's predicament, the concerns they have over the future, it's again because of our reliance on the different markets of the world that are going through turmoil. When you put that back to a domestic situation, you realize it's the domestic industries like agriculture that are really facing a lot more risks, a lot more of the brunt of what's happening. That's one of the reasons I think the need to address agriculture is much greater.

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Mr. Tony Valeri: Thank you.

The Chairman: Thank you, Mr. Valeri.

On behalf of the committee, I'd like to thank the panellists. This has been a great panel, as you can gather from the number of questions you were asked and also the excellent answers. This serves us quite well as a committee, because as we travel across the country we really get a good cross-section of the priorities and indeed find out what the challenges are in our country. Of course, all this information is taken very seriously and really is the foundation of the recommendations we make to the Minister of Finance. So on behalf of the committee, once again, thank you very much.

The meeting is suspended until 1.30 p.m.

• 1351

• 1537

The Chairman: I call the meeting back to order and welcome everyone here this afternoon in Saskatoon as we continue on with our study of the pre-budget consultation process.

As you know, we've been travelling across the country, listening to Canadians from coast to coast to coast as to what their priorities and views are in relation to the 1999 federal budget. So we look forward to your comments.

We have the pleasure to have with us Dr. Louis Delbaere, Dr. Valerie Verge, Dr. Andrew Gloster, and from the Saskatchewan School Trustees Association we have Debbie Ward, president.

As you probably know, you have five to seven minutes to make your presentation, and thereafter we will engage in a question and answer session.

We will begin with Dr. Louis Delbaere. Welcome.

Dr. Louis Delbaere (Individual Presentation): Thank you, Mr. Chair, special guests, colleagues.

What is one of the most efficient ways of job creation? Increased health research funding. About 75% of research grants go to hire people, professional people, to train, and also to take these people as employees. These salaries have a three to four times multiplier effect on the economy. I mean, we all know that if you have more jobs you will get much more, especially in the community where those people are working. They all pay Revenue Canada as well.

The current tight research now from the different agencies has made it difficult for many researchers, in that when they get a terminal grant from say the Medical Research Council, they have to lay off people and they can't make plans for the future. Fifty percent of newly funded research from MRC lose their awards two years into their first renewal; they don't get renewed. So half the people who get funded as new researchers are shut off in two years' time. Combined with the other people who are in this system, this is a very inefficient means of using resources. You have to keep closing down labs, letting go trained people. It costs money to train them and then you lose their training when you have to let them go.

In our department, Dr. Kandelwal, biochemistry, three years ago received a terminal grant from the Medical Research Council. He had a very good research associate, very competent, and he had to let him go. Subsequently this fellow went to Denver, Colorado, where he is working in research at the university. His wife worked for me as a technician. She was an excellent technician, and she had to go too. So as a result of losing an MRC grant, we lost two very well trained people to the United States.

It's difficult to get and to retain good-quality people, and research funding is one of the major problems.

• 1540

Because the federal agencies such as MRC receive funding from taxpayers across the whole country, there's a mandate to fund research across the country. Universities train undergraduates and graduate students and institutes have many researchers. They do little training. So people who work at universities have other commitments on their time besides research. Yet they're the ones who produce the people who go out to work in academia, in industry, and in institutes. So it's important that universities get funded properly.

The small centres that we have in Saskatchewan are really susceptible to this problem of having your time diluted so you have less time for research. We still have excellent researchers here, but it's more difficult to compete nationally with institutes that don't have these other commitments.

MRC used to have a development grant program that helped to address this issue. Through this development grant we were able to hire several researchers at the University of Saskatchewan, give them start-up funds for their laboratories, and fund their salaries for five years. In the department of biochemistry we were able to hire six people in this manner, to bring them here to help to address the regional disparities that occur. It worked. They were able to compete nationally for research grants, and that whole program worked.

Small centres like ourselves don't have many research institutes. We don't have the ability to devote our time entirely to research. However, the MRC has discontinued the old development grant system, and as a result we've slipped further behind nationally. We need some means of continually addressing this problem so that we are funding across the country.

The proposed institute for health research is certainly one of the solutions to the problem. It will provide more funding for health research and that will help to eliminate the tight money situation. Certainly it will help to contribute everywhere, but I still think there should be some regional areas to be looked at to make sure those funds go across the country.

If the regional distribution is considered, then I think the proposed CIHR has an excellent chance of providing more jobs across the country, especially for our young people, and training for them and jobs for the future in this area. I think this area, especially the area of biotechnology, is really the growth industry in this country, if not the world.

Thank you for your attention.

The Chairman: Thank you very much, Dr. Delbaere.

We'll now have back-to-back presentations from Dr. Verge and Dr. Gloster. Welcome.

Dr. Valerie M.K. Verge (Individual Presentation): Thank you.

I'm going to use the overhead. I promise you that I have a big enough voice to be able to do without a microphone. Oh, there is a microphone.

I was trained in Montreal at one of the best neurological training facilities, at McGill University in the department of neurology and neurosurgery. I was trained at a time when we were acutely aware of how beneficial adequate funding of medical research really was. We had very strong research groups that were internationally recognized. We had adequate research funds. This was back.... I came first on my BSc before I started my graduate work in 1986. I started working as a technician and got hooked on the research. But I started with one of the best groups in the world. We had international recognition.

• 1545

As a result, when I chose this as my career path, I had excellent scientific training that offered many opportunities to me. I was able to go and do post-doctoral studies anywhere in the world, basically. After I finished I had multiple offers of employment at the various universities. I chose Saskatchewan because I met a farmer from this region. This was actually the first place that I had to actually apply for a position, because at the time I was not aware of the research that was going on here. However, many opportunities were open to me.

The research we did in those early years when it was well funded made major impacts in terms of our understanding of why the nervous system doesn't regrow after injury and stroke. It gave us many insights into what's now forming many people's research on how to get things to repair themselves.

I was also very fortunate when I first came back to Canada after doing my post-doctoral training in Sweden and came back here to the University of Saskatchewan to be part of a centre of excellence for neuroscience research. This centre of excellence, once again, was well funded and provided me with many contacts, many interactions, actually led to the spin-off of multiple biotech companies, some of which are still surviving. Many have met their demise, but of course we all know that 80% of companies do meet their demise.

I came back and got a Medical Research Council of Canada scholarship. I have served the past three years on the grant council review committee, and have in the past two years been serving on the standing committee for science and research at the Medical Research Council. Many opportunities—a very depressing time.

I came out of this really stellar time for scientific research full of hope, full of promise. I still am, because I'm not giving up.

What have the shortfalls in funding led to? Well, as I know from sitting on that research committee and knowing the number of grants that we can fund now, which are minuscule compared to what we used to be able to.... Not only are they minuscule—we try to maximize that—but the levels at which we fund currently are the lowest in the G-7 nations for funding biomedical research. Our current grants that we give people to do research with are one-third of what the average research grant in the States sees. We have to buy things in American dollars, too. And as you heard from Dr. Delbaere, two-thirds of that salary goes into just hiring personnel.

It's so bad right now that even whenever I was granted a renewal and I'd pass through that all-important first renewal, it was at one of the worst times at the MRC, so it was cut by 29%. So now I'm forced to do my research on 29% less than what was deemed the minimum necessary to do that research. So my hands are tied.

It slows down the machine to a crawl, weakens groups, leads to low morale, which of course is not good for productivity. I've also had to become a satellite of a U.S. biotech firm. In order to do my research I need very expensive molecules. I can't buy them with the grant money that I get right now, so I signed an agreement with a biotech firm that gives them all the intellectual rights. This means that if I come up with a new therapy.... Yes, I'm really grateful to be able to do the research and possibly impact upon people's lives, but if I come up with a solution, the intellectual property is theirs. They will benefit from it with regard to biotechnology.

Many people and many of my colleagues have actually had to choose alternative career paths. They can no longer be scientists. Some of them have gone into lucrative aspects of this. It's made people think and become creative, so some of it's positive. But in terms of many.... My own sister is now in the States. And many of my other colleagues are post-doctoral and can't find jobs. They can't even enter into the system.

We know statistically that 30% of the highly skilled scientific personnel are lost now to the U.S. biotech firms. For Canadians this leads to less hope of discovery, fewer trained personnel. We can't train as many students. We have to be able to assure the students a salary while they're being trained under us, and we can't do that because we don't have the money. So we're losing all our brilliant minds. They're going on scholarship to the States for graduate work. Why wouldn't they? People are always willing to take very fine minds. And believe me, Saskatchewan has a lot of fine minds.

• 1550

What are the consequences for Canadian health? The minute you start seeing this loss of vibrant research-intensive medical schools, what do you get? You lose all hope of developing biotechnology here in Canada. More importantly, we won't even be able to train the trainees for the biotech firms in the United States any longer, because we are able to train fewer and fewer.

I think the most important impact comes from.... My husband farms, and quite often here in rural Saskatchewan.... For instance, I know from being at McGill that a research-intensive medical school has the best in current therapies and treatments. The best residents come there to train. It attracts good people. So having a vibrant research community attracts the best. As a consequence of that, you end up with better medical care. You end up keeping all the discoveries here in Canada. You end up with intellectual property. You end up with the best-trained people. You end up employing—as I say, we employ lots of people, everyone, on our research grants.

The saddest thing is whenever I hear out there in rural Saskatchewan people saying, “There's no hope that I can get in soon enough in order to get this cancer diagnosed. I know I have cancer.” They go down to the Mayo. The Mayo Clinic has people in there in one or two days. Within one week they have the diagnosis and the whole treatment regime, which they then come trotting up to Canada with. Of course it's hard for the Canadians to follow all the time, saying, “We don't even know if we can fit you in for that regime.”

So we have to think twice about what's happening, not just to the overall medical care but the ramifications of having more research and better research for these Canadians and for the scientific community at large.

I want to close on one point. Sitting on the standing committee for science and research at the Medical Research Council, I don't know how depressing.... You can all imagine how depressing this has been for everyone fiscally in the past little while. But last March one of our duties was to decide.... I sit on one of the grant reviews, so I know very well what these ratings mean. This is how we will rank a research grant: 4.5 to 4.9—outstanding, excellent, very good, solid significant research. Everything three and above is deemed fundable research that should be funded by the people evaluating the research. It goes through a rigorous analysis. There are sometimes up to six people reviewing it in detail. It goes in front of a committee of an additional 15 people. So once it comes through all that rigour, we say anything 3.0 and above should be funded.

We sat around the committee trying to figure out where the cut-off line was going to be last year. We couldn't get it down to 4.0 given the funds we had. In order to get it down to 4.0, that means only the most excellent grants.... You're missing out on all of this very good research that should be done as well. But in order to get even just this category funded, we had to say there was going to be a 26% cut across the board.

Luckily, we had a bit of a reprieve. We were able to lower it down to 3.89. But that meant—I don't have my numbers at hand—there were actually an additional 100 research grants that were funded and had a chance to get started. So this was significant.

The last competition was a little bit better—3.74. But we're nowhere near this 3.0, where research that should be funded is not funded. I hope you realize just how many good scientists are out there and how many good proposals come forward and the small percentage we get to fund. Even whenever we do fund them, we do it at one-third the average grant of the United States. We have to compete with that, and it's becoming very hard.

Thank you. I'll hand it over to Andrew right now to continue.

The Chairman: Thank you very much.

Dr. Gloster.

Dr. Andrew Gloster (Individual Presentation): Thank you very much for this opportunity to speak to you today. I was told that I had a minute and a half, so hopefully I'll be fairly short and concise.

The Chairman: I think we'll double that.

Dr. Andrew Gloster: You'll double that and I'll have three?

The Chairman: That's your time, not your funding.

• 1555

Dr. Andrew Gloster: I've been trained in a couple of excellent and well-respected labs in Canada. It was a real priority for me to stay in Canada, and I was fortunate enough to get one of the few jobs remaining in Canada in academics. I've been an assistant professor at the University of Saskatchewan for the past year.

Unfortunately, I'm starting my research time at a time of dismal funding. My research has direct application to the treatment of a myriad of degenerative diseases. I applied at the last MRC grant competition. The grant was favourably reviewed, and, unfortunately, I just missed the cut-off. I've been given a one-year bridge funding grant because I was very close to the cut-off line and there was some bridge funding that was arranged between Saskatchewan Health and the MRC.

I'm very grateful for that funding, but my funding is very tenuous and it's very difficult to establish a research program when you only have funding one year at a time. You don't know whether it's going to be continuing. You don't know whether to hire someone, because you may have to let them go within a year. To a certain extent, I'm quite pessimistic about the future—or my future—for research in this country. From conversations I've had with people at my age and my stage in my career, I think this feeling is quite widespread.

When we sit around and talk about research and about funding, one theme keeps coming up, and that is, will you end up going to the United States. The principal reason for going to the United States is not lower taxes or because they want to live in sunny California, although that appeals to many people. The principal reason for wanting to go to the United States is that there is money for research. We have a lot of very well-trained people who have invested a long period of their lives training to do research. They love research and want to do it.

The feeling is for many that it can't be done in Canada any more, or that you may get established only to lose your funding and then drop out of the system. It's very difficult once you start research if you drop out of the system. You're not publishing and so you don't get any more research grants. In many ways, it's a one-way door. Many people fear they are going to walk out that one-way door and end up exiting research, and they don't want to do that. So many are making the choice of whether to go to the United States.

This seems to me to be a colossal waste of all the money that was spent training these individuals. Most of these individuals will have done an undergraduate degree, post-graduate degrees, and will have spent time in a research lab as post-doctoral fellows. It's a huge loss in terms of all the money the Canadian government has spent training these individuals, as well as the huge loss of potential these people have to contribute to our society.

The last lab I was in when I was doing my post-doctoral fellowship was very well funded at the time, and that's not so true today. We were encouraged to patent our research, and while I was there I participated in some research that led to a couple of patents. One of the patents ended up forming the basis leading to the establishment of a biotech company, which was founded by my supervisor and two other supervisors at McGill. I think they now employ about 20 or 30 individuals. I can't help but wonder if we do not fund research here, how many more potential companies will not form, how many people will end up moving to the United States, and how much health research that can lead to the treatment of diseases won't be done.

I just want to point out, from a personal standpoint, that it's very difficult for a young researcher to envision a research career in Canada right now. It's not impossible, but it's getting more and more difficult.

I think I'll end it there.

The Chairman: Thank you very much, Dr. Gloster.

• 1600

We'll now hear from the Saskatchewan School Trustees Association: Ms. Debbie Ward, president, and Mr. Craig Melvin, executive director. Welcome.

Ms. Debbie Ward (President, Saskatchewan School Trustees Association): Thank you very much. Good afternoon, everyone.

As you said, my name is Debbie Ward. I'm a trustee with the Regina Catholic School Board and president of our association.

Craig is sitting around the corner here and I think it's kind of appropriate; we think of education as being a cornerstone for our province, for sure, if not for the country.

I want to thank you for taking the time to be here and for giving us the opportunity to make this presentation today.

We've given you a copy of our brief. It's not my intention to go through that brief, but I would just highlight some of the points.

The SSTA is an organization that represents all school boards in Saskatchewan. Our membership is voluntary and diverse. It includes urban, rural, and northern boards. Some of our boards are as small as possibly 50 students; others have over 25,000.

The challenges our boards face are no different from those of other school boards across this country. Inadequate funding, declining and sparse populations in some areas, and an ever-increasing population of special-needs students are a few of those challenges.

For all our boards, poverty is an issue, as it is for our province and for our country. I'd like to give you a few examples of this.

In one health district in northern Saskatchewan, the average occupancy of a single family dwelling is 14 people. Children in those situations go to school tired, undernourished, and unable to learn.

In many of our inner city schools, the turnover rate of students is over 100%. Because their parents are constantly moving, children attend several different schools in one year. It's hard for them to learn.

Most of the inmates of the jails in this province have come from a background of poverty, and many of them did not complete elementary or high school.

In 1989, the House of Commons unanimously passed a resolution to eliminate child poverty in Canada by the year 2000. Since then, Saskatchewan has committed itself to action on this issue. The Canadian School Boards Association, through resolutions at its general meeting, has committed itself to action, and our own organization has done the same.

Despite those efforts, poverty has grown. In 1995, 21% of all children in our country lived in poverty. That was a 58% increase since the 1989 resolution, and I'm sure this has increased considerably since that time.

Our organization is here today because of our strong belief in the link between the social environment of a child and the success that child experiences at school. We believe the future of this country lies in the hands of our children. The only way we can be assured of a strong economy and a healthy civic society in Canada is by investing in our children. That investment needs to happen now. Every year of delay means that another group of children enters school disadvantaged, while still another leaves school without the necessary skills to survive in our society.

We are here to ask for the support of the federal government. That support is needed in two ways, both financially and in leadership.

As far as leadership goes, there are many things that need to be done, but the SSTA is particularly interested in leadership that provides for collaboration among partners.

At the national level, the National Children's Alliance, a group of organizations with an interest in the well-being of children and youth, have put together Investing in children and youth: A national children's agenda. In that document, 10 principles are outlined that the alliance believes must guide the development of policy directives or initiatives intended to enhance the well-being of our children. A strong focus of those principles is partnership.

In Saskatchewan, we have the Child Action Plan. It is a program developed in partnership among government agencies and local communities to deal with the issue of poverty.

At the local level, we have school-based programs called integrated school-linked services, which bring a broad range of provincial and community levels, social and health services and programs together at the school level.

We in Saskatchewan are used to working together with each other to get things done. We encourage the federal government to do the same, to work in conjunction with the provinces and other partners, in particular school boards, to develop a plan to address the needs of our children in poverty.

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The national agenda suggests that the components of such a plan should include income security, social and community support, national research and monitoring, and building the capacity of communities to support families and children in need. The SSTA agrees with these but would add the establishment of clear targets for service delivery expectations, the provision of long-term operating and capital funding, assurance of local community-level direction and control of program development and delivery, flexibility of response, and the support of partnerships among the provinces, school boards, and other agencies.

Financially, the SSTA is concerned about a lack of sufficient funds to initiate and sustain services. The agenda of the National Children's Alliance suggests actions the federal government needs to take in order to secure any kind of change in the status of children living in poverty in this country. They include investing an additional $850 million and indexing the national child benefit, expanding the national child benefit to all low-income families, investing $2,000 per child through a tax credit, reviewing the impact of tax policy on families with children with special needs, and providing for improved parental leave benefits.

The SSTA supports all of these actions but in particular feels that the commitment to the national child benefit needs to be accelerated. As I stated before, our children and their families need your help now.

I could give you more examples of how poverty affects the children in our province. There is no doubt whatsoever that children living in poverty do not do as well in school as other children. School boards are doing what they can to alleviate the problem, but a strong national direction must be implemented if we're going to see real success.

Thank you for hearing our presentation. We look forward to the results of your consultations across this country.

Thank you.

The Chairman: Thank you very much, Ms. Ward.

Now we'll move to the presentation by Mr. Buckmaster. Welcome.

Mr. Archie G. Buckmaster (Individual Presentation): Thank you. Mr. Chairman, honourable members of Parliament, guests, fellow presenters, I really appreciate this opportunity to make a presentation. I am very glad that this is occurring. If this had been done several years ago, maybe we wouldn't have the problem we have now with our debt and perhaps it would have been addressed much sooner.

The first topic I want to address is the debt, and I don't think I have to spend much time on it. It's pretty well agreed that we have to hold it. It's going to be very difficult, because I see, and I think a lot of other people see, a recession coming, which is going to mean reduced revenues for the government. It's a time when spending should be increased, but due to the position we're in it's going to be very difficult to do.

The point I really want to make, and I haven't heard anybody bring this up, is that the disparity between the rich and the poor has been increasing. This is a reported statistic. One of the things that is causing this to increase is the debt, in that the lower-income people pay most of the taxes. If my memory serves me right, some 50% of the taxes are paid by 20% of taxpayers. Then the interest goes out on bonds, and it's not the poor people who own the bonds. Debt is very hard on poor people.

We have to think of the poor people because they're the people who supply the biggest impact on purchases. We all need people to purchase the products we make and the services we provide.

It's similar to building a building. Our labour is the foundation. If we use poor labour, we're going to have a building that falls down. By poor labour, I mean by not paying our labour well. Ford realized this years ago, as did our leaders after the Great Depression. They put in programs whereby the lower-income people were brought up.

• 1610

I realize this was addressed in the last budget to some small extent, but I think it's something that really has to be looked at more. There has to be a more evening out of incomes.

I'm a small business man. I'm probably going to make some of my customers angry, because I know a lot of them tend not to think along this line, but this is something I believe, and that's why I'm here.

As far as taxes go, decreasing taxes is a popular thing, and I think it's being used to buy votes. While it might help some, I don't think it has a big effect. We can look at what happened during the Devine administration when he started reducing taxes. I think with a recession—maybe depression—coming we're soon going to see the policy of Ontario decreasing taxes before they have their debt under control. Controlling the debt has a much bigger effect on the bottom line of the country, I believe, than reducing taxes at this time. We have to face the fact that we have one tremendous debt. Somewhere around 40¢ of every dollar goes towards the debt. I think that's a little lower now because of the reduced interest rates, but the interest rates may go back up. I don't think so. I think we're in an era similar to 1929 myself, or leading up to it. I hate to be so negative.

It looks good when the economies are going very well, as they are in Ontario. Ontario's income is coming from the booming economy in the States. They can reduce taxes, and it looks good, but when their exports start to fall because the American economy starts to go down, it's going to be a problem. It's something we have to face.

What I'm saying is that we have to do something to counter the effect of the negative income redistribution that has occurred through the interest on the debt.

I would like to see us go back to the larger number of gradations in the tax system. I'm often told that complicates the system. I think somebody who has an income where they have to worry about the number of gradations the tax system goes through can well afford either an accountant or a computer to handle that.

There are other ways the tax system should be simplified. The last time it was simplified I think it added two kilograms to the weight of the tax documents. We may need to go right to the basics and start all over.

As you can see, I put this together rather quickly, so I might be jumping around.

This is getting into the employment insurance fund—I still say it's unemployment—and medicare. I think there should be separate accounts set up for those. They should not all be lumped into a general account. I agree with the young lady this morning that the EI fund should be kept separate. If medicare was taken out, people could look at their taxes and say, “This is what our taxes are and this is what the medicare cost is”. It would be much easier to compare it to the States. I don't think we'll ever get down to the point where the States are because we have a much larger country; we have much more area to cover per capita. Look at our roads.

By keeping separate accounts, we're better able to account where the costs are and how it's affecting other parts of the economy. A good example is here in Saskatchewan where we're having a terrific problem with our roadbeds. The trucking industry is subsidized. In large part the roadbeds are built by the government. The rails weren't. The rails are shutting down. I have a note here that every time the government subsidizes an inefficient means of providing a service, our economy becomes more inefficient.

• 1615

The third area is spending.

I should have taken my watch off.

The Chairman: That's okay. Go ahead.

Mr. Archie Buckmaster: I'd like to see subsidies cut to business and other areas. I'm philosophically against subsidies, and that relates back to the last statement. I think it supports industries that shouldn't be supported, that probably should fail. If it isn't doing that, it's often supporting people who don't really need it and are just creaming it. I could give you some really good experiences, especially in the area of employment assistance. Very often an industry wants to expand. It isn't that they're expanding because there's an employment subsidy available; they say, well, we have to expand; what can we get out of the government. I worked in that area.

I think we have to support the military with equipment and manpower. I think a lot of deficiencies have to be looked at in the military, and maybe an outside committee or group should be set up to study efficiency improvements and cost controls within the military.

I put this together last night in a quick hurry because I heard about this on the news.

One thing that occurred to me is Y2K. I hope people realize how much of a problem that is going to be. It's going to take a tremendous number of resources out of the economy, and it's going to mean money is not available for things we would really like to have them available for.

Education should remain a provincial matter. Negotiate national standards. This is similar to medicare. I don't believe the federal government should be heavily into those areas. I'll just say it that way. I wasn't particularly happy last year with the scholarship fund that was set up. I realize the federal government wants some recognition for what they're doing and the ideas they create, but at the same time I think they have to allow the people who are near the problems to deal with the problems.

In that line, I have to stick mainly to income tax and redistribute the receipts through equalization payments. That's something that I do think is necessary. Parts of the country aren't able to get along quite as well as the others, and the equalization payments, through the transfer payments, are required.

I'd like to see the CPP slowly converted to a fully funded...say, 2% or 3% per year, so in 30 or 50 years—that's a long time, but eventually it would be fully funded.

A very important part of our economy is infrastructure—roads, sewers, etc. In general, tax the user. That gets back to having separate accounts instead of having one big general account. Keynesian economics would still work. The problem is we're so far in debt that we have a hard time practising it because we don't have the funds to do it.

• 1620

Private debt is just as bad—and this is getting into some of the situation we see around us. As I said, I think we're getting into a situation similar to 1929. The problem there was a leverage problem, where debt ratio to capital was way out of line. We have a problem like that right now. That's what I see, anyway. I have some background in economics.

A very good example is the hedge funds that really aren't hedge funds at all, and the collapse of that fund. A long-term capital management fund is what it is. At one point, it was 400 to 1 debt to investment. The last I saw it they had worked it down to 100 to 4, or 1 in 25. So they have $25 of debt to every $1 of investment.

When I started using the banks, the capital reserve was set at 20% of the loans, and I don't think that's a bad idea. A lot of these things came in after the Depression. People learned a lot after that Depression. That was a very hard time. I'm barely old enough to remember some of the effects of that. It's very easy for us to overlook what has happened in the past.

I don't envy you your job. You have probably the toughest job in the country. I'll say that.

The Chairman: We're going to write it down.

Mr. Archie Buckmaster: The thing is to try to find out where the most effective place for the money is, the most effective place to either increase or reduce taxes.

I have a little chart here, which is actually on the logging and fishing industry in B.C., but that's a basic industry, similar to farming; it's food.

When it comes to farming, I have to say this. If you look at any job, if you trace it back—the restaurant worker. Who uses that restaurant worker? It's a Flexi-Coil manufacturer who eats there. Who uses that? Well, that's a farmer. I could go through many more steps, through lawyers, through everybody. It will all lead back to the farmer.

I think that's one thing the Europeans have over us. They realize that the farmer is the base of their economy, and that's one of the reasons they have less severe recessions than we do.

It's very important to support the farm economy. It's not just another piece of the economy; it's the base of the economy. I don't know how hard I can stress that.

I told all my friends, anyone I knew who was in stocks, what was going to happen as far as the stock market went this summer. I told them that last spring. You can tell when this is going to happen just by watching farm prices.

That's about all I have to say. Thank you very much.

The Chairman: Thank you very much, Mr. Buckmaster.

Now we'll enter into a question and answer session. We'll begin with Mr. Epp, with a ten-minute round.

Mr. Ken Epp: Thank you. I would like to begin by saying thank you to all for your very lucid presentations. I find this fascinating, to see the competition for the tax dollar. Underlying all of this is the fact that there is only one taxpayer, and some say we are being taxed to death. Yet I hear from some of you, “Don't cut taxes; let's keep that economy rolling with tax dollars.” It's an interesting debate.

First of all, I would like to talk to these research types.

• 1625

Dr. Valerie Verge: We like to be referred to as mad scientists.

Mr. Ken Epp: Mad scientists, medical scientists.

I'm really quite convinced that your case is a strong one, that our country, in the long run, can only be as good as the foundation on which we build. And the foundation on which we build, both economically and in terms of our standard of living, is what kind of research do we have, what kinds of scientists and engineers and other people do we have, with good, high-quality technical skills, to basically give us the amenities of life, which we basically have almost come to take for granted.

I am frustrated, though, because as we listen to different people around the country, we hear this question of the brain drain. And we sure heard it from you today: that our brightest young people are being enticed to go primarily to the United States, not because of lower taxes, although we've heard that too. Some have said that we're losing our people because they can go down there and make more money with a smaller tax base.

In fact in Ottawa we had one group present to us that some of their people were leaving because after the basic necessities of life, including food, shelter, clothing, health care, automobile or transportation costs, and everything, after the necessities of life they had up to five times as much disposable income left when they went to the States.

So it is a factor. Some of you said it's not a factor, it's not the important one. I can see that for the bespectacled researcher his projects are number one, and he can live in poverty as long as you give him his toys to work on. I don't use the word “toys” disparagingly; it's the hardware that you need, the facilities, the staff—give me the computer so I can run my data and do my statistics, and I don't really care if I don't have any money at all, except I do need to pay my bills and look after my family. A lot of people have said that.

Here you are saying that they're leaving because of much more research money available in the States. My question is, do they get it from their government, or do they get it from private enterprise there? It seems to me that more of it in the States comes from the private enterprise firms.

Dr. Valerie Verge: May I answer that question? I do have the stats on hand.

The NIH funds the majority, like the MRC in Canada, of medical research in the States. Currently, the average NIH research grant, as I had said, is about three times that of the average Canadian grant. That is after the overhead is removed.

Mr. Ken Epp: In American dollars?

Dr. Valerie Verge: No, this is actually how much you would have. When you're in America you have to spend American dollars. So if I get $50,000 Canadian, they would get $150,000 U.S. Not only that, but as a priority, the States currently spends 2% to 3% of their total health budget on biomedical research. Canada spends 0.3%.

You're going to be hearing a proposal come forward for the Canadian Institutes of Health Research where they're going to be proposing a mere 1%. And I want you to keep in mind that whenever they talk about medical research, the umbrella of the Medical Research Council right now includes basic discoveries, such as the type of research we are trying to do, which will hopefully have therapeutic implications, right down to implementation at the level of clinical trials and everything.

So the impact on Canadians as a whole for that 1% that they're proposing is tremendous. Currently it is only 0.3%, and that's why there is such a crisis. We are very grateful to the government for reinstating us back to the 1994-95 levels of funding. Don't get me wrong. It was very nice to see that extra being funded this year. But it's still nowhere near taking advantage of the capabilities of Canadian scientists.

Mr. Ken Epp: Were we better off in the 1970s, 1980s?

Dr. Valerie Verge: We were definitely better off in the 1970s, the early 1980s. It's just basically that science has gone in such a catapult fashion forward, and with the explosion of technologies you hear now on almost a regular basis of discoveries being made. This is the type of impact that can be made—not only discoveries, but the formation of whole industries and the employing of many, many people.

This impacts on people's health, which we're going to have to do; otherwise we're going to end up in a bottleneck situation in which everyone from our generation, the baby-boomers, becomes sick at the same time and dies at the same time. What we're hoping to do is spread that out over a reasonable period of time, so that some of them will die a bit later.

Mr. Ken Epp: Yes. Of course, eventually everyone dies.

• 1630

Dr. Valerie Verge: Oh, there will be new things wrong.

Mr. Ken Epp: One of the presenters this morning, in pushing her case for more funding, said please remember that the total spending here is only 0.2% of the total national expenditure. What percentage are you talking about?

Dr. Valerie Verge: Of the total national?

Mr. Ken Epp: Yes.

Dr. Valerie Verge: I don't know. But I know of the current health budget, we currently get 0.3%.

Mr. Ken Epp: Of the health budget.

Dr. Valerie Verge: Of the health budget. Of the health budget, 0.3% goes to the Medical Research Council for funding of biomedical research. They are going forward with a proposal to increase that with a new vision to 1% and to create a Canadian institution for health research that will be an industry unto itself, as well as providing biomedical research discoveries.

Mr. Ken Epp: In terms of efficiency—and you're right in the middle of this thing—obviously the bigger the government bureaucracy and the more loops you have to jump through, the less real work is done. I spoke to one researcher who said that he wished that he wouldn't have to spend—what was it?—one-eighth of his budget on simply filling in government forms, in terms of the time they had to take, and so on. Is that a factor for you at all? I'm sure that won't come directly in the budget statement, but it's something we need to look at.

Dr. Valerie Verge: More so these days than ever before. Because we get fewer and fewer dollars from any one place, we spend a considerable portion of our time filling out research grant applications. Each one of those takes weeks to months to prepare. So you're talking about months of the researcher's valuable research time, which once again could impact upon people's health, being spent preparing grant applications to get another piddly few dollars, and the whole sum won't give you a basis from which you can at least conduct a portion of your research.

Dr. Louis Delbaere: I would say that if there are more funds available from one particular source, if it's the Canadian Institute for Health Research, or MRC, or some combination, then you would only have to fill out one application form every three years, for example, rather than continually writing three or four applications a year to get funding, or to try to keep your funding going through the different agencies.

Mr. Ken Epp: Representing the taxpayer, though, I think we have to have a good degree of accountability. In some areas of government spending, that has been rather substantially lacking, where people get totally unaccounted-for funds. We think of.... Well, Heritage Canada is one of them, where you basically put in that you want to study this or study that, and you get a grant for $80,000 to study the sexual aberrations of the tsetse fly in South America, or something. These types of things make taxpayers mad.

In your area, what would you say, in terms of trying to reach a balance in accountability versus time taken of very highly educated, skilled people? Because your applications for funding and your justifications can't just be turned over to technicians; there has to be somebody there who actually knows what they're talking about when they're making these justifications.

Dr. Louis Delbaere: Certainly all of our applications are judged by our peers, mostly in Canada, but sometimes in the States and in Britain.

Mr. Ken Epp: Is that an effective system?

Dr. Louis Delbaere: Oh, definitely. It's very effective.

So we're ranked among ourselves and we're ranked also internationally. We have to be able to compete nationally and internationally to get funded, and then after two or three years we have to show our results, we have to show our productivity—what have we done for that amount of money. So we are accountable continually. Unlike a government laboratory, we are accountable continually.

Mr. Ken Epp: Okay, but my question is whether that is in balance. Is there too much of your time spent on that? Do you think that it's out of balance?

Dr. Louis Delbaere: If you've had a good track record and shown your productivity every three or four years, that's enough, certainly, to get renewed.

Mr. Ken Epp: Yes.

Dr. Valerie Verge: Once again, this back-loops onto getting adequate funding in the first place. As to whether or not it's an efficient use of time, really and truly, with a soon-to-be three-year-old, teaching at the university, sitting on federal committees, and running a research lab, one large research grant would definitely be enough to make substantial headway in my own research program, rather than two or three or four. I would like one substantial research grant where I would justify all of the expenses. You have to do that item by item on your grant. It would be rigorously reviewed.

• 1635

Currently we are only funding the most excellent of the research out there and not even getting anywhere near the levels of funding research that should be funded that's still out there. So I think it could be a much more efficient use of time if we could get adequate funding at one go.

Mr. Ken Epp: Okay.

Dr. Louis Delbaere: I would just like to add to the comment about NIH funding in the States. Not only is it now significantly more than what we're getting, but there's also a proposal by the President to make it five times as much in five years. So they are going to be attracting all the biotechnology people from Canada. There's going to be one big vacuum coming in unless we do something. This 1% of the health budget going toward this institute for health research is a good step toward addressing that. The situation's only going to get worse unless something is done.

Mr. Ken Epp: Okay. I have more questions for the other witnesses, but I'll do that in my next round, if I may.

The Chairman: Why don't you continue.

Mr. Ken Epp: You want me to carry on?

The Chairman: Sure.

Mr. Ken Epp: Okay. I'd like to talk a little bit with Mr. Buckmaster.

I was quite intrigued with this presentation, because it's handwritten. It means that you sat down last night and you tried to put down on paper what you were thinking. But I also detect that what you were thinking here is the result of many, many years of coming together. It's a conglomeration of many different ideas.

It seems to me that you contradict yourself, though, because you speak about paying down the debt, and you say there's a fallacy in reducing taxes before debt relief; yet at the same time, it appears to me that you're saying get the government out of the picture. I don't exactly know where you're going here when you say that debt increases the poor and helps the rich, and yet you don't want to pay it back. I don't quite understand that. Am I misreading you?

Mr. Archie Buckmaster: What I'm saying there is that because a large number of people at the bottom of the pay scale are paying a large percentage of the tax, they are putting money into the government coffers and they're not getting it back. It's going to the top end, to the people and the companies and the banks that own the bonds. That money is going out there. That's something that has been lost in the system. People haven't realized the transfer of wealth from the poor to the rich due to the debt. I'm saying that's another reason for us to keep our eye on the debt and reduce it. It's going to be very difficult in the near future because of the situation I see us getting into.

Mr. Ken Epp: Okay. How do you then reconcile your statements that say you'd like to have more steps in the income tax system and you'd like there to be tax increases for the higher-income people, and a couple of lines later you say simplify the tax system? On one hand you're saying make more steps in it and make sure that we arrange things so that higher-income people pay more, but then you want to simplify it. To me those are mutually incompatible.

Mr. Archie Buckmaster: Yes. I tried to address that when I said a lot of people tell me this is complicating it.

As far as the number of steps go, I don't think that's complicating. It's not much of a complicating aspect of the Income Tax Act. Like I said, if you have the money that you can afford to worry about that aspect of the tax, you can well enough buy a computer and a program to figure out what effect the different tax bracket will have on you, or your accountant will do it. Like some people I've heard on the radio say, “I don't know; my accountant looks after it.”

• 1640

What makes the tax system complicated are all the little exemptions, especially on the business end, which is where I am. There are just too many things to look after and to keep your mind on. Every time there's a budget there's another addition to the Income Tax Act, and it just gets bigger and bigger and bigger.

Mr. Ken Epp: Do you agree with the statement that most jobs are created by and that the biggest driver in the economy is small business? On the prairies, that would include farmers.

Mr. Archie Buckmaster: Basically, yes.

Mr. Ken Epp: Well, if you have a graduated income tax system that says we're going to tax the dickens out of you as soon as you start making money, what's that going to do to incentive? What's it going to do to the idea of having people stay here? We've talked about young people who are leaving because, among other things, the tax regime says they're better off somewhere else in the world than in Canada. What does that do to people of means? Right now, we have a finance minister whose companies are not registered in Canada because he's found places where the tax regimes are more favourable.

Mr. Archie Buckmaster: Actually, that was something I was thinking about last night.

Mr. Ken Epp: So if you have a tax regime that says the higher-income people are going to pay through the nose, they're just going to leave, and there goes the engine of our economy.

Mr. Archie Buckmaster: I think that's where our mistake is. That's not where the engine of our economy is. The engine of our economy is the people who purchase the goods.

Mr. Ken Epp: Yes, but if there are no goods to purchase....

Mr. Archie Buckmaster: There'll be goods to purchase.

Mr. Ken Epp: Yes, but we'll end up purchasing goods that have been imported from other countries, and our money leaves the country.

Mr. Archie Buckmaster: That's something our government is going to have to address then. That's what I was thinking about last night, but I didn't get it in here. There are lots of things you can address, but one thing we definitely have to address is capital that's leaving the country in that manner. We have to address capital that isn't taxed as it goes out of the country.

Mr. Ken Epp: Okay. On page 4 you talk about spending and you get into the good old Constitution here. You say, “Education should remain a provincial matter.” Later on, you say the same about medicare. Our Constitution provides that education and health care are provincial jurisdictions, but you put in brackets “enforced thru equalization”. This is exactly what the federal government has done over the last x number of years. It has said health care is provincial, but the provinces must do this and this and this or it will just keep the money. We therefore have provinces like Alberta or Saskatchewan or British Columbia that would like to do some different things in terms of their medical fields—and also in education—but the federal government has never said that if they're going to do that, they're out of this system and Ottawa will stop taxing them for that portion. The federal government still takes our money, but now we no longer have the right to get our own money back. If that's not control, then what is it?

So again I think there's a contradiction when you say it should remain a provincial matter but should be enforced through equalization.

Mr. Archie Buckmaster: These are very short notes, but I also say in there that it has to be done through negotiation between the provincial and federal governments. The way I see it, whenever a group of people get together and negotiate something, there has to be some means of enforcing what they've agreed to.

Mr. Ken Epp: Well, if there's a contract, it has to be enforced or it's null and void.

Mr. Archie Buckmaster: Yes, that's right. And this is what I'm talking about.

Mr. Ken Epp: Okay, I've now used twenty minutes. I'm quitting whether you want me to or not.

The Chairman: That's okay. It does happen from time to time that members don't want any further questions.

Mr. Nystrom.

Mr. Lorne Nystrom: Yes, on behalf of Carolyn Bennett, I wanted to ask Mr. Epp about the tsetse fly and the $80,000 grants. She's been beside herself for the last ten minutes over here.

Mr. Ken Epp: Oh, really. Actually, I don't have those things right here at my fingertips, but there has been some very interesting research.

Mr. Lorne Nystrom: Actually, she thought you got bit.

The Chairman: What did you have at your fingertips, the tsetse fly or the report?

Mr. Ken Epp: I don't have the actual numbers, but I can get them if you're really interested.

The Chairman: Okay. Anyway, go ahead, Mr. Nystrom.

Mr. Lorne Nystrom: I just saved a question for her later on.

Welcome to all the witnesses. Like this morning, we again have a diverse group here. I want to ask you a few questions, and I'll start off with the medical research community.

• 1645

What you point out here this afternoon is really very frightening in terms of the long term for our country, in my opinion. Some people say that reducing the debt or reducing taxes are the only two options. I think one thing we can talk about too is the growth of our country and economy, and investing in our country, and so on. One way of bringing down the debt and deficit is to have a good, strong, growing economy.

We made a couple of mistakes historically. One was John Crow in 1987 and 1986 with his policy of high interest rates. That really slowed down the economy. I also think the Minister of Finance went too quickly in his budget of February 1995 in terms of just radical, severe cutbacks right across the board. I think those both exacerbated the problem of the debt and deficit.

Anyway, that being said, I want you to tell us a bit more about how we compare to other countries. You say our funding for medical research is the lowest in the G-7. It's all in the chart there?

Dr. Valerie Verge: It's all on the graph. I can give it to you afterwards.

Mr. Lorne Nystrom: Okay. I just wanted to get that very useful picture to have in terms of how we compare.

Dr. Valerie Verge: I guess I should point it out here. This line in red is the NIH in the United States. It's going straight upwards, okay? This is projecting from 1991 to 2000.

France saw a small dip around 1994, but it increased back up and above the levels. They've gone up since 1991 as well.

The United Kingdom has seen tremendous growth. They've put in a tremendous investment. I know from colleagues of mine who are forming groups that they're going to make a big impact in the next short while.

Canada is unfortunately this little black line on the bottom. It's very close to the zero-percent-increase mark, dipping down below it with those tremendous cut-offs during that period in 1997 when I said we were practically crying around the table. It's coming back up to the 1994-95 levels now with the small, minor increase foreseen for the future, which will not be enough to maintain the scientific community here.

You should look at primarily the United States, the NIH, not the small cancer foundations, although they make a tremendous contribution.

If it were not for the cancer foundation and everything else here in Canada, we would have lost many more of our researchers. Through the philanthropic contributions of people around this table, their research dollars have had a tremendous impact on keeping researchers here. Nonetheless, it's a minor splash in the water compared to the amount that is given by the Medical Research Council. We're looking at a very dismal picture for the future.

Mr. Lorne Nystrom: I was just going to ask you one more question. We're talking here this afternoon about medical research. How does public funding for medical research compare to other kinds of research and development in the country? Is it the same kind of a trend line?

Also, you wanted to add something.

Dr. Louis Delbaere: What I wanted to add was the fact that in the United States, industry doesn't do that much funding for health research, certainly not to universities and so on. It's not a big item.

The other part was about medical research. The Medical Research Council budget is about half that of NSERC.

Dr. Valerie Verge: It's much less. In current dollars in millions, NSERC is currently up at about $500 million, while basically we're at $266 million for the Medical Research Council.

We had a major push. The reason why that's up there is because of the grassroots effort that was mounted by the medical community last year and brought to the attention of many people. So they reaped the benefit. They got the same percentage increase, and they reaped the benefit of all of our efforts, but we do not hear too much of a thank you back from them for that.

Dr. Louis Delbaere: So NSERC gets about twice the amount of money right now as MRC.

Mr. Lorne Nystrom: I wanted to ask you how much money would have to be injected into the system to bring us up to the rough average of the G-7.

Dr. Valerie Verge: You're going to hear that proposal go forward by the Canadian Institutes for Health Research committee. They are talking about increasing it to 1% of the total budget. That will allow us to fund one-third more researchers at a level comparable to that of the States right now, but as you heard, they're planning on increasing their research budget by five times. But to even get to that level means you are going to retain the fine people you're training in this country, and you are going to bolster many creative minds into catapulting Canadian health into the 21st century.

Dr. Louis Delbaere: I think it's sort of tripling the budget.

Dr. Valerie Verge: Yes, it's essentially an injection of $500 million on top of the $266 million. It's going to be 1% of the current health budget.

• 1650

Mr. Lorne Nystrom: So your recommendation to us is that we should be recommending to the finance minister and the Department of Health—

Dr. Valerie Verge: I'm sorry. Of course, they're talking about implementing it over a three-year period, such that it would be $150 million in the first year, $300 million in the second year, and then $500 million. We have no doubt that we cannot absorb a tremendous amount of money in the first instance, because of course you have to put the whole infrastructure in place.

So the immediate thing would be to just sustain what's there and make sure nothing happens to that. Then we'll look forward to growth by building up and developing the whole infrastructure that would support this type of growth we're talking about in this sector.

Mr. Lorne Nystrom: This is my last question to your group today. In addition to this presentation today, what kind of campaign are you undertaking to make us aware of it? When I say “us”, I mean the members of Parliament, the House of Commons, and the public.

There are so many competing interests and visions, as you know, and there's only a certain amount of pie in the country to divide up. There's an old saying that on the farm—you mentioned your husband's a farmer—the squeaky wheel gets the grease. What kind of campaign are you considering? There are many organizations that have very effective lobbying campaigns, such as the bankers, insurance companies, and others, to name but a few. Are you considering a lobbying campaign about this story today, which is a very scary story, not just to us around this table here but to other MPs as well and the national media?

Dr. Valerie Verge: First, they're going to be informing.... They basically have on board right now a committee of 33 people of all interests in health research in Canada. That includes all of the major funding agencies, as well as the major teaching hospitals. So the first thing was to inform everyone at the upper levels where Canadian research is first developed and get them all onside.

You will soon see, in the near future, a research awareness week that's going to be mounted at many of the Canadian teaching hospitals throughout Canada through which the general public will be brought on side. Then you're going to see, once again, many letters hopefully coming across your desk, not only from researchers, students, and scientists in training, but also hopefully from the general public as they are brought on side as to the long-term implications and benefits of medical research. So hopefully, this will be along with a critical meeting on October 28 between the Minister of Health and this committee.

Mr. Lorne Nystrom: I'd like to ask a couple of questions now of the Saskatchewan School Trustees Association. Ms. Ward mentioned the inner city, poverty, and so on. I represent quite a bit of the inner city in Regina.

My sister, by the way, teaches in a school that is on the fringes of the inner city. Just on the weekend she was talking about some of the problems of poverty in her school. One child has tremendous learning difficulties. No wonder. His mother is a prostitute, the father is a pimp, and they sell drugs on the side to make big money. He was born with fetal alcohol syndrome. What despair and lack of hope there is for a child like this. There is story after story like that.

Again, how can you get your message across? What kind of a campaign are you conducting to bring us the kind of information you brought to us today, to the public in general and to all members of Parliament?

I suppose the other question would be, what are you looking at in the next budget in terms of extra dollars for education to combat child poverty and to inject money into the educational system?

Ms. Debbie Ward: I can talk to you a bit about what we're doing in terms of lobbying and getting our message across. I'll let Craig talk to you about the financial aspect of it.

We are part of the Canadian School Boards Association, which is part of the National Children's Alliance. That group of people is working, I think fairly diligently, to get the message across. We certainly do have a campaign, and we'll be talking to MPs. We certainly are talking provincially about this.

Mr. Craig Melvin (Executive Director, Saskatchewan School Trustees Association): Our concern at this time is for those children who are not yet in school, such as the three-year-old and four-year-old children in Saskatchewan and in Canada.

Here is a quick estimate. Say that in Saskatchewan schools we spend something in the order of $5,000 per child for their education. If you were to think in terms of a program initiated at the school or other levels for three-year-olds and four-years-olds in Saskatchewan, and if that were to cost about $3,000 per child, it would cost us something in the order, in this province, of about $75 million to put that into place. If you say in Canada we are about 4% of the population, some quick math would suggest it would take about $1.8 billion to put that kind of program in place.

• 1655

The approach being suggested here is not necessarily one that puts large national programs in place for three- and four-year-olds, but rather one that directs support as much as it can to communities to help build the capacity of those communities to support families, and in turn for those families to support their children, who then in our view would succeed much better in school.

So it seems to us that what we need here are programs developed cooperatively between Canada, the provinces, and agencies at the local level, to respond with hopefully manageable amounts of resources that direct them at the community level in a way that helps to build the capacity at the local level. Some money is required, but we need to be very creative in how we spend it.

Mr. Lorne Nystrom: I wanted to get back to you again and follow up with some of the questions my reform colleague was asking. I don't think it would be that complicated to have another couple of steps in the income tax system. We used to have seven or eight at one time. It went down to five and now it's down to three. It isn't any more complicated to have five than it is to have three. I just wonder whether you want to expand a bit more on that for us.

Mr. Archie Buckmaster: I'd like to see that in order to redistribute income. That's the whole idea of it. Right now it's a terrible shock if someone gets a wage increase that takes them over that bump from one wage category to the next. I would see trying to get more of the high-income earners into it that way with a higher tax than is current.

When I first started paying tax the top rate was 80%. I'm not saying we should go that high, but I think the people who are earning a lot of money, someone like a bank manager who earns $4 million—

Mr. Lorne Nystrom: You're talking about a bank president.

Mr. Archie Buckmaster: I mean a bank president, yes.

If he pays 80%, he still keeps more than the majority of the people in this country are keeping. That's why I see increasing the steps to make it smoother, and also to redistribute the income more to counterbalance the effect this wealth transfer has had through interest on the debt.

Mr. Lorne Nystrom: I think Ms. Bennett wants to ask about the tsetse flies.

The Chairman: Go ahead, Ms. Bennett.

Ms. Carolyn Bennett: I think my colleague's question reflects a lack of understanding in how actually going down a list of research projects in a public accounts kind of way demonstrates they don't get it.

Sometimes the best thing in politics is to be able to paint a picture. You can't do it today, but I would love if you could come back another time to tell us, or send me a letter explaining some research project that actually unleashed a better understanding of DNA or some other thing. I think there continues to be a sort of putdown over why the government is funding this and that and a lack of understanding of the fact that researchers have to move from this project to that project, which naturally leads to this project, and it has to be autonomous and peer reviewed. I don't think they get peer reviewed either.

• 1700

Do you have an example of something that sounds funny to our colleagues but actually ends up with a result that changes the way we understand the way things work?

The Chairman: If you have something funny, tell us.

Mr. Lorne Nystrom: The sex life of a tsetse fly.

Dr. Valerie Verge: I can't think of anything really funny, except to tell you—

Mr. Tony Valeri: We'll take minor funny.

Dr. Valerie Verge: —about my own area of research. Everyone knows about spinal cord injury and how hard it is for the nervous system to repair itself. When I first entered into the research in the eighties, the understanding was it could even regrow. We made tremendous headway in terms of demonstrating to people that it can regrow. But the environment it's in doesn't allow it to regrow. It's an inhibitor. You can well imagine with such fine-tuned circuitry it's probably there for a reason.

After that, colleagues of mine, as well as others from the U.S. and elsewhere, made major headway in terms of demonstrating that there are specific molecules in our brains that actually cause this inhibition. Now we're working desperately and very hard. It's like a thousand-piece jigsaw puzzle and we're all contributing minor pieces to this puzzle, which leads to “Eureka!” one day when you finally see where those last ten pieces fit in. There are therapies being developed and tested right now. The molecules I'm working on, for instance, are going into phase three of diabetes trials for actually helping people with diabetic neuropathies.

That's very gratifying to see. It's very gratifying to see that a lot of the research I've done has led to a better understanding of why it has reached that point.

There are lots of little ones like that. We have Nobel Prize winners in this country, such as Michael Smith. At first people asked “Why do you want to chop up DNA? What does that get you?” That has allowed everyone around the world to take the genes of choice that are implicated in a disease and chop out pieces to determine whether the function is destroyed, until the key part is found. Once it's found, therapeutics can be designed for that part. That has led to an ability to understand genes and what their function is. They're minor at first, until they can be put into the bigger picture. It's rare that the bigger picture is seen all at once.

Ms. Carolyn Bennett: When you mounted your very successful campaign in January toward the February budget, in terms of restoring the MRC funding, some of the most pointed examples for somebody like me, who is on a faculty of medicine somewhere, was the graph you showed today in terms of the fabulous programs that were actually being turned down.

Is there any country in the world where everything from 3.0 up is funded? Is that too much to ask for? Do you think if we actually move to this new model, in terms of institutes of health, we would actually be able to promise researchers anything from 3.0 up, anything that's of sound scientific basis and deserves to get funded would get funded?

Dr. Valerie Verge: We were doing that in the sixties and seventies—

Dr. Louis Delbaere: And early eighties. We were doing that. Everything from about 3.0 and above was being funded in Canada.

Ms. Carolyn Bennett: So the morale problem is.... It used to be that if you had something of sound scientific base that was peer reviewed—

Dr. Louis Delbaere: And productive.

Ms. Carolyn Bennett: —which meant the garbage stuff didn't get funded, as soon as you got to the level where your peers thought it was worth funding, it got funded.

Dr. Louis Delbaere: You could plan for the long term and not have to worry about applying again.

Ms. Carolyn Bennett: You get the business of these people who have only one or two years of funding. If they get cut off they have to close down their labs, lay off their people, and all of that.

If you're on a sound scientific track, the chance of being all of a sudden cut off at the knees is very little—

Dr. Valerie Verge: It really is.

Ms. Carolyn Bennett: —if you move to the previous way of funding medical research.

Dr. Valerie Verge: It's not so much the previous way. I think the new vision has a lot to do with partnership and strengthening through groups. This is one of the reasons why we were very fortunate to be able to form a neuroscience research centre two years after I came here.

• 1705

It's really powerful to sit around with five or six colleagues and discuss ideas and have a similar understanding but all be working at different aspects of it so you have unique angles on the interpretation. Another big part of the future is that we realize a lot of the big advances are going to come through collaboration. The world is becoming smaller and smaller.

Ms. Carolyn Bennett: My colleague was asking about all the paperwork, and I think it's upsetting to people how much work they have to put into getting the funding. But I don't think it's the government bureaucracy. If you had steady work and safe funding, you wouldn't be filling out all these other forms.

There seems to be a call for some sort of one-stop shopping. Will the institutes do that for you? For instance, the arthritis institute would have a partnership with the arthritis society, and together they would be able to provide one-stop shopping for arthritis researchers.

Dr. Valerie Verge: That's precisely it. MRC has recently initiated that, but of course they don't have tremendous funds available for this partnering aspect at the level of studentship. There's been a tremendous cut in student funding, so one way they've tried to remedy that is by going to the different health organizations and saying, to the arthritis society for instance, “If we pay 50% and you pay 50%, when someone goes through the peer review and is deemed a student worthy of funding, it will go ahead. You'll pay 50% and we'll pay 50% and we'll get two students in the system as opposed to one.”

Ms. Carolyn Bennett: So whether it's the arthritis society, the heart foundation, or the cancer society, these researchers don't have to apply to all of these places. They would do the one peer review saying it's worth funding and the partnership would then sort out how to do that.

Dr. Valerie Verge: Yes. No one loves filling out research grant applications. You really want just an adequate source from one place to be able to fund the research program.

Dr. Louis Delbaere: The proposal then is to have one peer review system. Otherwise the same people are called upon to review for heart and stroke, MRC, and arthritis. It also centralizes it all. It would be much better to have one centre than to have to send three or four grant applications.

Ms. Carolyn Bennett: I want to comment on Dr. Gloster's point that if people really are going south of the border for stable funding, it isn't necessarily about their taxes.

Dr. Andrew Gloster: I'm sure for some people it is, and if you are going to move it would be great to pay lower taxes. But I think the primary reason people are going is for the lack of funding. I think all of us would rather be paid more, and hopefully the financial situation of the country will change so our salaries will go up or our taxes will go down. Any movement in that regard would be appreciated by not only us but by all Canadians.

The one thing researchers want to be able to do is research, and if they can't do it, that's a very strong impetus to leave the country. It's probably the primary one, although I'm sure there will be a number of people who will leave for lucrative jobs in the United States based primarily on higher salaries and lower taxes.

Ms. Carolyn Bennett: One of the researchers who came to my office talked about this special fellowship that has almost a Nobel track record. People who are viewed to be on their way can get a million dollars with no strings attached.

Dr. Andrew Gloster: Howard Hughes.

Ms. Carolyn Bennett: Yes, it's the Howard Hughes fellowship. It would be pretty hard for us to fight that.

Dr. Valerie Verge: One of the things we cannot reward as adequately as we would like to in our system as it stands is true innovation. We just don't have the funds to be high risk takers at the moment. That's really terrible whenever you talk about research and discovery.

The institutes could possibly take a few more risks on projects that have very calculated risks built into them but have the possibility of making tremendous inroads in terms of our understanding—an impact on medical discovery. At the moment we don't have too many places where you can go anywhere with no strings attached. Those are very few and far between.

Ms. Carolyn Bennett: Just to go over it again, Clinton's promise to the NIH is at the moment 2% to 3% of health care funding. That's public health care funding—is that right? What would that end up being?

• 1710

Dr. Valerie Verge: On a per capita basis—I have that right here too. I'll give you 1997-98, because that's where we currently stand. On a per capita basis, Canada's MRC spends $8.23 on research funding. The United States NIH, at a per capita in Canadian dollars, is $66.64, which at the time this was made up was probably about 40%. That's about roughly just under $50—about $48. But you're talking then.... They pay six times more. They invest six times more in research funding than the Canadians do on a per capita basis. They have a heck of a lot more people down there too. That was last year.

Ms. Carolyn Bennett: Yes.

Dr. Valerie Verge: The projections are going ridiculously, and we're just going to fall through the cracks. That's the only way to put it in terms of differential.

Ms. Carolyn Bennett: That's just from their government funding.

Dr. Valerie Verge: It's purely from government funding.

Ms. Carolyn Bennett: All their foundations and everything sort of fall in to actually represent...whether it's Howard Hughes or whatever. That represents a whole other big pot of funds.

Dr. Valerie Verge: Unconditional.

Ms. Carolyn Bennett: Okay. So we're hoping to do 1% above public funding for health care.

Dr. Valerie Verge: Yes.

Ms. Carolyn Bennett: We also hope this new model of the CIHR would make it easier for foundations and that sort of fundraising for these things, because it's already more likely to be successful.

Dr. Valerie Verge: Definitely.

Ms. Carolyn Bennett: Okay. That's good, thank you. I guess in our readiness-to-learn project over here, I was just wondering what.... Allan Rock and John Godfrey met with some of the people and a number of the children's community organizations in Toronto Thursday night, and I guess there was a huge call for....

Some of them are CAPC funded, some of them aren't CAPC funded, and some of them would like to be. Here in Saskatchewan, do the community organizations know CAPC? Do they think there's increased capacity to build on that? Frankly, in looking at it from a health care budget point of view, to be able to give things that are working well in the communities whatever little bit of extra money there is seems like an easy way to target money to something that's working. Do you have CAPC community programs for kids that you can comment on?

Mr. Craig Melvin: We have numerous programs that are either funded by the province or jointly funded federally and by the province and communities here in Saskatchewan. Many of those are community based. The vast majority of those are working extremely well. Largely it's because, as we've said earlier, it built that sort of capacity at the local level.

It's interesting to me, if I might, in that here we have what we would regard as a national crisis—the number of children living in poverty. And while we have those sorts of programs, we're almost apologetic in a sense about what it would cost us to feed our children. It strikes me even with respect.... Lorne Nystrom asked the question: well, what kind of campaign are you mounting in order to generate support for this initiative? I guess I would ask what kind of campaign do we have to mount to generate support to feed our children? I think that's the issue for this nation.

This is a hard problem. It requires support. But the government has all sorts of support on the ground, right through committed community groups and agencies. I know this from school boards across the nation and I certainly know it from provincial governments. I know the federal government is moving towards a national children's agenda. It's all very positive, but it's absolutely essential that we give everything we can to support it.

• 1715

Ms. Carolyn Bennett: One of the things that has often been commented on is food security, whether you call it that or whether it's just the rapid growth of food banks and how insecure people feel about kids who are hungry. We know that when kids are hungry their parents are probably hungrier because they will always give the food to the kids first.

As for the fact that rent has become such a huge item with the lack of affordable housing, is that something that's being addressed here in Saskatchewan? Unfortunately, in Ontario, which is where I'm from, we have a social services minister who last week decided that there needn't be any more social housing. Experts told her it wasn't necessary. I was wondering what your point of view on that would be.

Ms. Debbie Ward: I couldn't tell you exactly what our social housing program is. It's not good enough, for sure. When I spoke about our inner city schools and the high turnover rate of students, the main reason for it is because they are sort of one step ahead of the landlord or the housing is so bad that they just can't live there any more.

Ms. Carolyn Bennett: Do you have kids coming to schools from hostels?

Ms. Debbie Ward: Yes, for sure.

Ms. Carolyn Bennett: I think what we're finding in Toronto is that a significant percentage of families in hostels actually includes kids, which I think is even less acceptable.

What about readiness to learn in terms of national standards? I think a number of members of our caucus are very keen, whether it's fetal alcohol syndrome or learning disabilities, for there to be some ability to measure and know as kids enter the school system where they're at and be able to do what we can.

Also, obviously in certain parts of the country, English is a second language. Then, because there aren't enough teaching assistants, in grade 2 they find that this becomes a learning disability, but actually it was just that they didn't speak English particularly well before they got there.

Ms. Debbie Ward: Well, in Saskatchewan, we don't have programs for three-year-olds and four-year-olds. I think part of what we're looking at in getting them ready for kindergarten is to have some of those pre-kindergarten programs that would have them ready to learn.

Mr. Craig Melvin: In terms of the question about standards, that's one of the things various groups across Canada who are concerned about this issue are asking for. What we should be doing is setting, if not standards, at least targets for us to aim toward in terms of providing support for families. That crosses a broad spectrum.

You suggested there are perhaps some educational targets. I think you're probably right. These could be readiness-to-learn targets. Those can be developed and assessed, and we can decide whether or not we're actually making progress.

There are also targets associated with the economic status of the home, the social conditions in which they live, and certainly the health of children and mothers as well, I suggest.

Increasingly, we're learning. It's interesting to listen to the scientific community. One of the things that we in education are learning is that we need to pay a lot more attention to their research because they are providing us with a wealth of information.

The distressing part of this is that we're learning that children's growth and development prior to reaching school is probably far more critical to their ultimate success, whether or not they become researchers, than what we're able to do in school. That's why it's so incredibly important that we begin to find ways to reach out and deal with these children.

Ms. Carolyn Bennett: A paper was released last week that said kids are ready for full-day kindergarten. I also think there's a feeling that full-day kindergarten, day care, and early childhood education would be a better continuum than the patchwork quilt that most families have to put up with now. Do you have—

Ms. Debbie Ward: From a mother's point of view, I think it probably would be much easier to deal with. First of all, in Saskatchewan, because of the rural base, we have lots of full-day kindergarten, although they only go every second day. When we talk to those trustees, they don't feel that's a problem.

Continuity of learning, though, I think is—

Ms. Carolyn Bennett: That's having the same person.

• 1720

Ms. Debbie Ward: Yes, and I guess the other thing is we'd want to see it be optional for people to be able to put their children into situations like that, or to have options. It would be nice if the option could be that they could be in kindergarten or start at three years of age and continue all the way through. But it's not necessary for everybody, so we'd like to see the options for them.

Ms. Carolyn Bennett: My sister is home schooling her children in Alberta, but a lot of it was because of the distance. Perhaps the hour unsupervised in the bus every day was not attractive. I wonder whether there's more of those sorts of geographic realities in this country that are just only now percolating to the surface, that there are all these kids on buses unsupervised other than by the poor driver. Maybe we need an educational component to that. Maybe we can do our heritage moment, instead of using...a small commercial.

Thank you very much. It's very complicated.

The Chairman: Do you want to expand on the last point? Thank you, Ms. Bennett.

Mr. Valeri.

Mr. Tony Valeri: Thank you, Mr. Chairman. I have a couple of questions and a comment.

Mr. Buckmaster, in your proposal you said—and I want to make sure I didn't misunderstand it or that I'm not reading this incorrectly—the poor pay the largest portion of taxes. In the last budget the government did attempt to alleviate some of that tax burden with the basic exemption, and then they sort of went up the income scale in terms of the actual 3% surtax.

When you say the largest portion of taxes, you're referring to their own tax bill, because in effect it's 12% of Canadian taxpayers, the highest taxed Canadians, who pay approximately 55% of the total taxes in the country. So it's really skewed. A very small percentage of Canadians pay the major portion of the tax bill in Canada.

Mr. Archie Buckmaster: I don't have the figures.

Mr. Tony Valeri: Okay. I wanted to make sure of that.

Mr. Archie Buckmaster: That doesn't seem, by my recollection, the way it is. As I say, I put this together, and I could do the research.

Mr. Tony Valeri: Sure.

Mr. Archie Buckmaster: I'll take your word for it if that's so. I didn't think it was nearly that high.

Mr. Tony Valeri: Part of the challenge is that you have a lot of low-income Canadians who are paying taxes today, so you have to do something there. But there's also this other pressure coming that you have a small percentage of Canadian taxpayers who are funding a large part of the actual tax bill. It's a matter of trying to balance off and do what you can within the means that we have.

Mr. Archie Buckmaster: I definitely agree with you. I think a lot of it is looking at spending. One thing—and I think I have notes about it, but I didn't enlarge on it—is any action the government does affects the budget. If it's not in the budget, it affects the year-end. As the chairman was saying this morning, there would be so much left over and that goes into paying off the debt, or if you don't have enough it increases the deficit. I'm surprised you haven't heard this yet.

I don't own a gun—I hope I never will—but the cost of that gun control program is, for most of the people out here, absolutely ridiculous. If I want to get a gun, your registration isn't going to stop me from getting a gun. I suspect it was to satisfy maybe even a personal promise. I don't know. I think you have to look at what's cost-effective.

The Chairman: You don't think fulfilling a promise is the way to work?

Mr. Archie Buckmaster: I think the promise shouldn't have been made.

Mr. Tony Valeri: It's always the challenge within the country that you have so many varying opinions across this vast country. Of course, that particular program is supported in other parts of the country and not supported in some parts of the country.

Mr. Archie Buckmaster: I realize that. It's proving to be much more costly, and people here forecasted the cost it was going to be.

• 1725

Here's a very personal thing. I've been a victim of attempted robbery three times in the last three years. I had my house robbed before that. I call up the RCMP and I get an answering machine; it says stay on the line if it's important. So I stay on the line and I get somebody down in Regina who can't get a hold of anybody at the time, but they put the message out to a detachment that isn't even near Saskatoon—well, it's near Saskatoon, but it's not the correct detachment. What are these people doing, filling out the forms for some government function, or what? They sure don't seem to be where they used to be. I remember when the policemen were out working on crime.

Mr. Tony Valeri: I'm sure there are some out there working on crime.

I have another question for you. You talk about setting up separate accounts and about setting up a separate EI fund.

Mr. Archie Buckmaster: I think that is set up, under the latest—

Mr. Tony Valeri: No, it's not, actually. It was in 1986 that the Auditor General required the consolidation of that particular fund.

Mr. Archie Buckmaster: Didn't your government pass a law setting it up as a separate fund, and that's what he wants to change?

Mr. Tony Valeri: No, it's been part of consolidated revenues since 1986.

I'm not disagreeing or agreeing with your statement about a separate fund, but the question I had—and I'm wondering whether you would agree or disagree with this—is if there was a separate and distinct fund outside of government, would you agree with the proposition that under this separate account and separate fund the government not stand behind the program, not play a role in setting the premiums, and not play a role in establishing the rules of the program or the benefits? Would you agree with that?

Mr. Archie Buckmaster: I wouldn't say they shouldn't play a role. But I'm not talking about even a totally separated fund. I just think the money should not go into general revenue, because you would be better able to account for it.

Mr. Tony Valeri: The problem with that is the Auditor General won't allow us to have it both ways. The Auditor General clearly states that if as a government you are going to stand behind the program, then you have to account for that program within your general revenues; you have to account for any deficit that may occur.

Mr. Archie Buckmaster: You could set it up as a circuit.

Mr. Tony Valeri: I think the crucial point is whether the government is going to stand behind it. If the government stands behind it, then it is a program and a potential liability for the government. So that means you've got to include it in your books. Back in 1986 the deficit was understated by $6 billion because of a deficit in the EI program, and because it was a separate fund at that time, the government didn't report it. But the Auditor General said you are going to pay out those benefits, which will put you $6 billion in the hole, so you have to account for that $6 billion in your total numbers.

Mr. Archie Buckmaster: I see what you're getting at.

Mr. Tony Valeri: It's really a call of the Auditor General. That's why it's where it is. I just wondered, if you bring it out, if you're also supporting the idea that the government also step out of that program and allow, as Mr. Epp and the Reform Party are proposing, the set-up of a separate commission, which would merely set the rates. The NDP is, I guess, supporting a program that sets the rates, the programs, and all that other stuff. The government wouldn't really participate.

Mr. Archie Buckmaster: No, what I would like to see is the surplus.... It's a book surplus now. It's not a cash surplus, it's a book surplus. I'd like to see that book surplus distributed back to the people who paid into that program. That's basically what I'm saying.

With reference to the Auditor General, I agree with the Auditor General. If the government's going to stand behind a program, they have to show it on their books. But they can still trace it in a separate account. Do you know what I'm saying?

Mr. Tony Valeri: Again, as the Reform Party is proposing, would you also agree with a return of some $6 billion or $7 billion, which will put us back in a deficit?

Mr. Ken Epp: Come on.

Mr. Tony Valeri: I guess the chairman often uses this example, which asks, do you want a one-line or a two-line budget?

Mr. Archie Buckmaster: It all comes out.

Mr. Tony Valeri: You know the budget this year is a return of EI premiums to the tune of $6 billion. Is that something you'd support?

Mr. Archie Buckmaster: I think that money should be returned. If it means showing a deficit this year, so be it.

Mr. Tony Valeri: So you would support going back to a deficit?

• 1730

Mr. Archie Buckmaster: Are we really in a deficit? It goes back to what the young lady said this morning: it's a matter of being honest with us, the people. I think that's something very important for our government to look at, because right now there's a big question about the integrity of government.

Mr. Tony Valeri: I don't think you can get much more transparent than having the finance minister stand up and say that the books have been balanced and the EI premiums that were paid will go into consolidated revenues. It's those premiums, along with the other taxes that have been paid by Canadians, that have balanced the books. I don't think you can be much more transparent than that.

Mr. Archie Buckmaster: It's open, but it's saying—

Mr. Tony Valeri: You might disagree with it, but I don't think it's a question of transparency.

Mr. Archie Buckmaster: This is what it's saying to me. I don't pay into unemployment, but if I were, the government would be saying that they're collecting this as an insurance against my unemployment. They have restrictions on the reasons by which you can claim it, but it's basically an insurance for that.

Now they're saying they over-collected, and they're just going to keep this and put it somewhere else.

Mr. Tony Valeri: No, the government has never said that the benefits are not there. The benefits are still there. Because the government stands behind the program, when you qualify for EI, you will always get your benefits, whether there's a surplus or a deficit in the program.

Mr. Archie Buckmaster: I disagree with you.

Mr. Tony Valeri: Well, if that were the case, then the Auditor General wouldn't have a problem. He would say to make it a separate fund and don't account for it.

Mr. Archie Buckmaster: Currently, you're collecting much more than is required through that program.

Mr. Tony Valeri: That's right.

Mr. Archie Buckmaster: So if you keep doing this, it's not being used for unemployment insurance. You're collecting it for other reasons.

Mr. Tony Valeri: You balance the books with it. Essentially, you may put money back into employment programs. The question is, do you want a return of EI premiums as we go into this next budget—that's really the challenge we face—or do you want to fund medical research or put money back into health care or provide a general tax cut that affects 14 million tax payers instead of 8 million taxpayers if you just do EI. A personal income tax cut would help self-employed people and retired people instead of just people who are working. That's the question we're faced with.

Mr. Archie Buckmaster: Again, it's a case of honesty and accountability with our government. I think it's very important. I realize you can't always make every promise. A lot of promises that governments make are really hot air, but it's really seen as a dishonest move to collect that money as an insurance and then say you're collecting a lot more than you need. You say we should keep giving it to you and you'll just put it somewhere else.

Mr. Tony Valeri: You pay taxes on gasoline for road taxes. Some people drive on roads with potholes. Is that dishonest as well?

That's the whole problem with earmarked taxes, you see. You, on the one side, want to argue that if you're paying taxes for a specific purpose, then that's what it should be used for, but if in fact you run out of money in that pot, then other taxpayers should be paying the benefits for those people who have paid the premiums. On the flip side, you don't accept the argument. That's the challenge with earmarked taxes.

When the account was in deficit by $6 billion, you had those Canadians who were paying taxes in this country who never qualified for EI because they were self-employed or retired. Their tax money was being used to pay EI benefits. Were they supposed to call the finance minister to say that their money was not to be used to pay out EI benefits because not enough premiums were paid to cover their costs?

Mr. Archie Buckmaster: I have no problem with the government using the surplus, but not indefinitely. Those people got paid back. Those taxpayers who put money—

• 1735

Mr. Tony Valeri: How did they get paid back? The tax rates haven't gone down. They've only gone down beginning with the last budget.

Mr. Archie Buckmaster: The surplus went from a deficit to a level amount at that time when the deficit in the unemployment insurance fund was covered. In effect those people, the average taxpayers, got their money back.

They don't get it back from my pocket. It just went back into—

Mr. Tony Valeri: We all benefit from a balanced budget. But anyway, I take your point.

The other question I had was with respect to medical research funding. Could I ask you to take your research hat off for a second?

I want to preface what I'm going to say by saying I really support the research aspect of health care. But I wonder. The reality is there is pressure out there. Many Canadians who might be outside of the research community say we have some challenges with health care. These challenges with health care are the waiting lists, the surgery, the MRIs. It's at the delivery level. We feel uncertain about the future of health care in this country because of what we experience when we go to the hospital. How do we balance this with your request for the kind of research money you're asking for?

Dr. Valerie Verge: This sounds like the kinds of conversations I've had at 11 p.m. with my husband. He would say, “Well what gives you the right to ask for more money when all Canadians need investment? Agriculture needs investment and so does everyone else.” This is a very valid question. I think the counter to it is very easy to see. Without research, you are not going to get new, more cost-effective treatments for diseases. You are not going to prevent someone from getting Alzheimer's disease. The burden of a disease on a government far outweighs the minimal cost of doing the research that can lead to financial rewards by government in terms of their own medical costs in the system. People will not need the MRIs if they don't come down with the diseases.

Dr. Louis Delbaere: In terms of preventing as well as curing, one of the projects funded at the University of Saskatchewan because extra money came in was dealing with tuberculosis, particularly with natives. The antibiotic resistance type of tuberculosis is becoming prevalent. It's a very big problem all over the world. In Saskatchewan, particularly with the natives, it's becoming a major problem.

So this was funded and eventually it may lead to prevention and possibly treatment of tuberculosis.

Dr. Andrew Gloster: I don't think there's ever been a time when we have found out as much information on all these varied diseases. For the longest time, we had no idea what was the basis of them. We could describe the pathology, describe what was going on, but we had no idea of the causes of these diseases.

Now every week, every month, you hear more genes implicated, another two or three genes implicated. We're starting to figure out the possible mechanisms involved in these diseases and likely therapeutic interventions to counter them.

So I think now the promise is out there that there will be treatments available for some diseases, such as Alzheimer's disease, which take up an enormous amount of the health budget. Given the amount of money spent on caring for patients, even if you make very small advances there could be huge contributions to the budget surplus in the future.

So I think there is the promise. We need to spend the money on health care now. But we can't do it and leave out all the research so there's no money for future benefits to come down the line.

Mr. Tony Valeri: That was really my follow-up question. In terms of the health care initiative, is funding research, in your mind, enough in the health care envelope? Is the health care system sufficiently funded?

Dr. Valerie Verge: No. Currently, as you mentioned, there are deficits in many areas of health care, not only in research. I believe in efficiency. I believe we've made tremendous inroads in terms of streamlining operations. But as well, a whole key to getting adequate medical support and treatment is through the enticement of qualified people into the system and through support for these qualified people.

• 1740

So this is going to be on top of everything else, in terms of dealing with long waits and what not. I know here in Saskatchewan it really scares me that our ability, for instance, to even attract specialists is tremendously compromised by the fact that you're dealing with tremendous strains on a system in which you've got all of this territory and so few places to deal with the people. Also, of course, as I know all too well and as I mentioned before, vibrant, research-intensive medical schools attract these people.

You end up with better qualified residents and with stronger programs within the health care system itself, because there is research being done in it.

It's sort of a catch-22, where if you don't have one, you can't expect the other one to grow or for stress on the other one to alleviate itself. In terms of the future, too, as we know, who would have ever predicted that antibiotic-resistant bacteria were going to be such a problem in our current day?

Well, if the research machine doesn't keep on going, we're not going to be able to face the new challenges in the future either. And what you need are people constantly trying to challenge current scientific thought and moving off in new directions.

Mr. Tony Valeri: I just have one final question and comment. It's really for my own benefit more than anything.

You talked about your particular circumstance, and you said that in order to ensure some funding, you became a satellite of a U.S. biomedical company. In essence, what you've done is pre-sold your intellectual property—

Dr. Valerie Verge: Exactly.

Mr. Tony Valeri: —in exchange for—

Dr. Valerie Verge: In exchange for my own desire to do something better for mankind as a whole and my desire to satisfy my own scientific curiosity and inner drive.

So without those molecules, to test what they do in the system, I can't answer the question.

Mr. Tony Valeri: But is that the norm or is that the exception?

Dr. Valerie Verge: It's not so much the exception these days. I know that many people sign collaborative agreements with biotechnological firms, by which you do give up either full intellectual property or a percentage thereof.

Mr. Tony Valeri: Thank you.

The Chairman: Thank you very much, Mr. Valeri.

On behalf of the committee, I'd like to thank you very much. It's been a very interesting panel; that's why we're running a little bit behind schedule now.

I want to say to you it's obvious from this panel that the challenges we face and the tradeoffs and choices we must deal with are many. But I do want to say something, which is that the day Canada decided to become a very important country in the sense of the global village, we made some choices. Some of the choices were about building a highly skilled, highly paid society that produces high value-added products. If you want to build an innovative economy, you simply can't do it without an R and D infrastructure or medical research.

So if we're going to stay on the road that I think we took when we did meet that phase in our history, where we really had to choose which road we were going to take, then I don't think, quite frankly, we have much of a choice but to make those types of investments, not to mention the fact that it is only through generation of wealth and increasing productivity that child poverty and other issues can be dealt with. You simply can't have programs coming out of nowhere. They all need funding; they all need innovation. They all need these elements that are crucial to the development of a society.

So as this is actually the last presentation here in Saskatoon.... Saskatoon has proven to be quite an important stop, because you've clearly illustrated that in fact everything is interrelated, and if we want to maintain a clear perspective on the issue, everything you've said has to be really taken into consideration.

The other important element, of course, is investing in people. The new world order tells you very clearly the economies that invest in human resources development are the economies that are going to be the winners. It is very important input in a competitive economy, which, by the way, does not mean an economy that is not compassionate and caring. The two are not mutually exclusive. As a matter of fact, I think the more competitive and the more productive you are, the more caring you can become, because you may have some wealth to share.

All in all, this has been a very interesting discussion today, and I thank you very much on behalf of the committee.

The meeting is adjourned.