[Recorded by Electronic Apparatus]

Monday, November 27, 1995

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[English]

The Chair: Please come to order.

The finance committee of the House of Commons is very pleased to be here in Toronto. We look forward to a very extensive day of hearings. Our first session goes from 9 a.m. to 10:45 a.m., from 10:45 a.m. to 12:30 p.m., from 12:30 p.m. to 2 p.m., and from 2 p.m. to 5 p.m. Members will realize there won't be any break, so if you can grab five minutes here and there people will understand. We'll try to have something for lunch in an adjacent room, so people can nip out and just grab a sandwich or something. But in essence we'll be going straight for eight hours.

We're very pleased to have with us today a number of very important witnesses. From the Ad Hoc Coalition Against the Head Tax, we have Avvy Go and Tanya Suvendrini Lena; from the Board of Trade of Metropolitan Toronto, we have John Bech-Hansen, deputy director, and Don McIver; from the Canadian Association for Community Living, we have Jim Mahaffy and Connie Laurin-Bowie; from the Canadian Institute of Child Health, we have Graham Chance; from the Canadian Restaurant and Foodservices Association, there is Michael Ferrabee; we have, from Corporate Moving Services, Pat Baird; from the Family Service Association of Metropolitan Toronto, we have Rosemarie Popham; from the Ontario Council of Agencies Servicing Immigrants, we have Kay Blair, Gordon Moorewood and Sharmini Peries; from the Ontario Coalition of Senior Citizen's Organizations, we have Morris Jesion.

Who is representing the 2% Solution Network, Solvency Analysis Corporation here at the table?

From World Vision Canada, we have Linda Tripp.

Thank you for being with us and we welcome you. Who would like to start? We're suggesting three minutes for opening presentations and then there will be lots of time for you to question one another and have an interchange with our members who are here.

Ms Kay Blair (President, Ontario Council of Agencies Serving Immigrants): Good morning. My name is Kay Blair and I'm the president, on a volunteer basis, of the Ontario Council of Agencies Serving Immigrants. In my full-time capacity I'm the director of a community-based training centre for immigrants and refugees.

Today we would like to focus our presentation primarily on economic stimulation for all Canadians. We recognize the federal government is pursuing a policy of fiscal restraint to address the growing debt. We see that through the reduction of transfer payments to the provinces, cuts in services and particularly training programs, and cuts to the UI system. These are all examples of fiscal restraint.

It is our belief, however, at OCASI that if we are to achieve full economic growth for Canadians, special protection must be given to social programs. We need to take time out to understand the cumulative impact all these cuts will have on all Canadians and, in particular, immigrants and refugees.

It is critical that we also consider the role of government in stimulating the economy as a way of assisting in breaking the cycle of poverty. We need to have a competitive and dynamic workforce in order to address the need for competitiveness in the global marketplace.

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It is on those bases that we appeal to the sensibility of the finance committee in terms of budget preparation for the preservation of social programs, and quality training as a necessity to allow for effective workforce participation. Again, we see this as a critical mechanism that will assist in breaking the cycle of poverty.

When cuts are applied, all cuts must appear to be fair and equitable. Front-end cutting isn't always the effective way of achieving economic growth and full skilled workforce participation.

We think there needs to be a focus on breaking the accountability gap, meaning there must be a fair share in terms of tax payments and the process of collecting taxes. That leads to the possibility of government receiving additional funds that can be infused into social programs.

We see at OCASI a vision of economic renewal based on having a highly skilled diverse workforce as an economic strength. In particular, when we talk about a diverse workforce, we're talking about tapping into the skills and abilities of immigrants and refugees who come to this country. An agile workforce again is critical, meaning we can adapt to the changes within our current new economy.

To be able to stimulate the economy we must have an effective training system that guarantees highly skilled workers, who then contribute to the economic base of the country. There must be mutual obligations and responsibilities and a real partnership between government and its constituencies, not a devolution of the federal responsibilities.

At OCASI we support the full and equal participation of immigrants and refugees in Canadian society. However, we cannot negate the fact that the presence of systemic factors prevents equal participation of particular sectors in this society.

There are individuals who are highly skilled, but their skills are currently untapped. If we need to clearly focus on stimulating our economy while retaining and maintaining a debt-free society, we must begin to tap into all existing resources in an equitable and fair manner.

Thank you.

The Chair: Thank you very much, Ms Blair.

Next, from the restaurant association is Michael Ferrabee, please.

Mr. Michael Ferrabee (Vice-President of Government Affairs, Canadian Restaurant and Foodservices Association): On behalf of the Canadian Restaurant and Foodservices Association, I'd like to thank the finance committee for this invitation to appear as part of the pre-budget consultations.

We applaud the important steps taken by this government in the 1995 budget to reduce the deficit while avoiding, in most instances, an increase in taxes. The deficit should remain the central focus of Mr. Martin's efforts in 1996, with the goal of eliminating it completely before the end of the century, and then vigorously attacking the accumulated deficit.

The Canadian Restaurant and Foodservices Association is very concerned about what has become a budget issue for this government - the GST. The GST needs to be fixed, not through the often suggested course of harmonization, but by correcting the existing flaws. The GST is unfair, overly complex and unnecessarily expensive. It is unfair because of its exemptions. Exemptions force the rate up higher than necessary, create complexity, and facilitate avoidance.

This $720 tin of caviar is tax free.

The Chair: May we keep that sample?

Mr. Ferrabee: This one you can keep. This child's milk is taxed in our restaurants. Where is the logic here?

We have proposed a solution that would fix the GST, which is the business transfer tax. The business transfer tax would restore the integrity to the tax system by taxing all products, make compliance much easier, and save the government hundreds of millions of dollars in administration.

The GST has dramatically affected our industry's market share, as you'll notice from the billboard behind us here, and lost tens of thousands of jobs. Harmonization will cost our consumers $380 million. The GST must be fixed at the federal level before its flaws are amplified provincially. Thank you.

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

Next is Tony Crawford. Hello.

Mr. Tony Crawford (Individual Presentation): Good morning. I'd like to introduce myself. I'm here on my own responsibility. I'm not representing a company. The position I would like to promote at this meeting is, first, that it should be unconstitutional for us to run deficits that can't be supported.

I'd also like to discuss some of the methods by which we can influence proper planning and the proper responsibility within government, as well as the better management of funding to run a better state of affairs.

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

Who are our next witnesses?

Ms Avvy Go (Ad Hoc Coalition Against the Head Tax): I'm Avvy Go. I'm with the Ad Hoc Coalition Against the Head Tax.

Actually, myself and Tanya Lena are here today to represent the Ad Hoc Coalition Against the Head Tax. You may be wondering why we are here, as it seems to be a matter under the immigration jurisdiction.

There was a head tax imposed on Chinese immigrants between 1885 and 1923. The decision to impose a new head tax is a financial decision and that's why we're here today.

We have been advised by the Minister of Citizenship and Immigration that were the head tax not imposed he would have been forced to reduce funding on immigrant settlement by $300 million. The choices that he was given, in our view, were not real choices at all.

I think it's indicative of the policies that the Liberals have adopted since they came to power. By offering Canadians either to go without certain forms of social programs or to put up with a user fee as a way of dealing with the deficit is what the Liberals have been doing.

There are many problems with the head tax, the specifics of which will be addressed by Tanya. I would just like to outline some of our key concerns as to what the head tax really symbolizes with regard to what is wrong with the budget this government has brought down.

Head tax is an example of how this government has ignored real social costs by inflicting social and economic harm on the people in this country, all in the name of deficit reduction. Need I remind you that in the red book the Liberals eloquently spoke out against the Conservative agenda that focused solely on deficits and inflation reduction and how that would result in social costs to Canada.

Should I refresh your memory by referring to the red book where it speaks of the Liberals' commitment to diversity and humanity? The real deficit crisis facing our country today is not a fiscal deficit; it is the lack of political leadership and political will. It is the disintegration of our social network and the destruction of our environment.

Our social structure, our values and principles are what bind Canadians in this country together. The principles that are enshrined in the Canadian Charter of Rights and Freedoms, the principle of equality and the principle of freedom for all must be given meaning in every aspect of government decisions, including decisions around the budget.

All of these are now being threatened by the head tax and other measures such as Bill C-76. It is only by upholding these fundamental principles that we can really truly create and sustain economic growth that would benefit every Canadian as opposed to only the financial markets, where you realize the jobs are not created.

We have several suggestions as to how the budget can be done in the context of these principles. We have certain alternatives to a head tax, which I will now turn over to Tanya to present.

Ms Tanya Suvendrini Lena (Ad Hoc Coalition Against the Head Tax): In terms of the specific problems with the head tax that we'd like to point out, first of all, it's a tax on a specific group that already pays a regular set of income taxes. We feel this is really an inappropriate way of financing the deficit, to pick specific target groups.

Also, taken to its logical conclusion, if we were going to pick target groups immigrants would not be an ideal one, because what Professor Ather Akbari has shown is that immigrants pay an average of $2,000 per year more than Canadian-born families into the treasury. Settlement services are only $400 extra per year in the first years of settlement.

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They also feel that this is a regressive tax in that it persecutes the people who are the least likely to be able to pay. It also really impairs settlement in the first years, which should be an economic goal. This tax is also inequitable and its revenue gains are not clear, given that the figures given by the Minister of Citizenship and Immigration for the gains from the head tax do not count in the cost of administration.

In terms of alternatives, we'd like to suggest that the government look again at indirect expenditures, including those delivered through the income tax system such as income tax breaks for business lunches and entertainment.

Ms Go: In our submissions we deal with a number of options; for example, the new entertainment tax exemption and the spending on military defence. If you have an obsession with debt and deficit, those are the other options you can look at as well.

I think that overall in our submission we wanted to address the three questions that you propose by looking at the context in which the questions must be answered. We think that without understanding the context you will be answering the wrong questions. It's like asking a judge to pass a sentence for a wrongfully convicted person. No matter how light or how severe the punishment will be, it will never fit the crime. The crime of Canadians will be our complacency and maybe our unwillingness to hold our politicians more accountable than we did in the past.

I will stop here. I urge you to look at options other than the one you have on the table.

The Chair: Thank you, Ms Go and Ms Lena.

Next, from World Vision Canada, Linda Tripp and Ms Sutherns.

Ms Linda Tripp (Vice-President, International and Government Relations, World Vision Canada): Thank you.

Mr. Chairman and members of the committee, it is indeed a privilege to address you this morning, especially in light of the fact that I believe World Vision is the only group coming before you today addressing Canada's role internationally.

Your task of setting priorities and making reasoned choices is onerous in these economically difficult times. But as you set priorities, I urge you to consider Canada's commitment to international development to be one priority we cannot afford to cut further. In fact, it is time we reversed the trend and began moving toward our target of 0.7% of GNP.

I make this statement not from a position of self-interest or from a naively myopic view of the challenges facing Canada. I make this statement because development works and it is in Canada's and Canadians' best interest to do so.

I won't repeat the arguments in our brief because you have them before you, including many supportive statements from government documents themselves concerning Canada's responsibility in the international arena. Rather, I want to focus on the people, the Canadians who give and those who receive the benefits.

First, Canadians support international development. In a recent survey by Insight Canada Research, 89% of Canada supported overseas development assistance. Their generosity is consistent with this message. World Vision Canada's 350,000 supporters give generously and many give sacrificially. As an organization we are not dependent on government funding, but nonetheless CIDA contributions allow us to multiply the benefits for thousands of recipients as a result of it. Our donors see their tax dollars supporting something they believe is important.

Non-government organizations like World Vision maintain a high level of accountability to our donors, to CIDA and to the people we partner with overseas. Transparency and integrity are important characteristics of Canadian non-government organizations.

Second, in the scheme of things, overseas development assistance is still a small expenditure. Many Canadians assume 10¢ to even 30¢ of every tax dollar goes to international development. They are surprised to learn that it is really only about 2¢ out of every tax dollar.

Third, as I said, development works. Unfortunately, the media is less inclined to tell these good news stories, stories about how micro enterprise initiatives for women include additional benefits such as literacy, business management, peer training and AIDS education; stories about how social mobilization efforts increased immunization and health levels such that this particular project was awarded the World Health Organization prize for the most innovative health project in Africa.

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Fourth, there is a successful story about an anti-desertification program in Senegal that received the United Nations environmental award for outstanding contributions in reclaiming dry lands in the Sahel in Africa.

These are only a small sample of what people achieve themselves when given the skills and resources to do so.

Perhaps the greatest success stories are about educating girls. A UNICEF report says that the education of girls is probably the world's best investment. Nothing else has such power to improve family health, slow population growth, and improve the economy.

Fifth, and finally, the benefits of development far outweigh the costs, especially when we address prevention. World Vision is currently implementing a program to ensure adequate levels of iron, vitamin A, and iodine in the diets in four African countries. The World Bank estimates an annual cost of $20 per person to treat malnutrition resulting from these deficiencies. The cost of micronutrient programming is only 50¢ per person. In this case prevention is 40 times cheaper.

Honourable members, Canadians have established a reputation built on a history of values and action in the international arena. Canadian non-governmental organizations and their dollars, as part of civil society, have an important role to play, not alone but in partnership with the state and the market. But in order to ensure that we shall maintain our positive influence, we must continue to shoulder our responsibility in overseas development assistance. This can be possible only if we protect and increase our funding levels for international development.

Thank you very much.

The Chair: Thanks, Ms Tripp.

From the Canadian Association for Community Living, Jim Mahaffy and Connie Laurin-Bowie.

Mr. Jim Mahaffy (Board Member, Canadian Association for Community Living): The Canadian Association for Community Living is a national association that advocates with and on behalf of people who have a mental handicap. It is a federation of ten provincial and two territorial associations, which are made up of 400 local associations. Its 40,000 members include people who themselves have been labelled as having a mental handicap, parents, families, professionals, and advocates.

CACL has concerns that the Canada health and social transfer and other deficit-cutting measures announced in the last federal budget will potentially have a negative impact on the economic and social participation of people who have a disability.

Several factors have contributed to this concern. First, the absence of federal leadership in social policy and decreased funding for health, post-secondary education, and social services will contribute to the further marginalization of people who have a disability. Second, the focus on social service expenditures for the purposes of deficit reduction fails to recognize the social and economic costs associated with inequity. Third, the few strategies that are being used by the federal government to address the revenue side of deficit reduction - for example, employment and economic development - often fail to accommodate those who have been traditionally marginalized in the labour market, including people with disabilities.

Recognizing the federal government's commitment to deficit reduction, CACL proposes a number of specific ways in which the federal government could allay our concerns regarding the participation of people who have a disability. We also have some suggestions that while deficit reduction targets are being met the Canadian government must stress existing inequities in our country.

We have a submission for you, which we would like to be able to circulate. In this submission we want to present an alternate view of the role social security can play in addressing the economic and fiscal issues that face Canadians. Our submission is based on the belief that real growth in the Canadian economy and savings in government spending will come from comprehensive reform of social security systems to ensure that dollars are being better used to support people and encouraging participation and not dependence by the use of tax dollars.

The Chair: Thank you very much.

Our next witness is Mr. Graham Chance, from the Canadian Institute of Child Health.

Mr. Graham Chance (Chairperson, Canadian Institute of Child Health): Along with the brief, I have distributed copies of The Health of Canada's Children, a child health profile that gives full details of the adverse effects of poverty on all Canadian children, especially native children, and the deteriorating state of adolescents' and children's mental health.

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The Canadian Institute of Child Health is concerned that resolution of the fiscal deficit should not worsen the country's already severe social deficits. The policy must not be one of short-term gain for long-term pain, especially if we are concerned for Canada's children, 21% of whom lived in poverty in 1993.

Obviously the deficit must be reduced, but CICH is not equipped to identify a target figure. However, to design a budget that removes the deficit is only part of your challenge. The real challenge is to achieve reductions without sacrificing children's futures and Canada's social stability.

Healthy children and youth comprise and will create Canada's future social capital, and concern for them must be central to the budget framework. It is the children of poor and working poor families, not one of whom could determine the circumstances of their birth nor the environment of their development, who face the greatest disadvantages in preparing for their own lives.

It is not only children of unemployed parents, however, who suffer poverty and dependence. Children of earning families experience poverty of parental time in the circumstances of modern living. Children of dual-earner families spend 40% less time with their parents than these parents spent with theirs.

To overcome this parental time crunch, we suggest the committee support a policy of more equitable distribution of employment. Available work should be shared. Budget measures that might create an environment of jobs and growth include flexible working arrangements that acknowledge parental duties and such measures as legislated time off for children's illness, job sharing, limitation of overtime hours, pension rights for homemakers, and after school activities for families. All of these have potential.

Like those of many European countries, Canadian child tax benefits should boost the income of families with children at times of recession. At present they don't.

Canada's child tax benefits have built-in obsolescence. This meagre child-directed funding is too vital for it to disappear.

Child poverty rates in Canada are much worse than they were in 1989, when the Commons vowed to end it by the year 2000. No child support guidelines are in place. The child tax benefit is eroding. Federal spending on child care is capped. But corporations and the wealthy at the same time remain protected.

The institute supports the development of a social investment fund to invest in specific economic needs of families with children, as has been proposed by Campaign 2000. Finance-generating measures include modest taxation of inherited wealth and significant taxation of foreign investments. We have to question the 20% foreign investment for RRSPs at this particular time in the country's economy. Also, modest but guaranteed returns on Canadian investments as opposed to profit-taking through multinationals that we know employ child labour to make their profits should be considered.

Child care. The Liberal red book states, and we certainly agree with it, that quality accessible child care is an economic advantage to Canada. It will enable many parents of over one million children on social assistance to end their dependence on welfare and food banks, and it will directly provide jobs for Canadians.

Devolution is weakening central government. Instead of seeking this course, we believe you should be seeking for ways to preserve what are now universally centrally administered programs, such as medicare and education. Privatization of such sectors will deny equal access for all Canadian children to the very tools necessary for them to develop into healthy and productive adults.

Finally, and in conclusion, through television and in model circumstances of living, children and youth are fed a steady diet of violence while escalating inequalities of opportunity are leading to their and their parents' frustration, anger, and despair.

CICH firmly believes Canadian federal and provincial governments must recognize the potentially perilous course they are setting for this country if they abdicate social responsibility for fiscal responsibility. These two responsibilities must be regarded as inseparable by those elected to govern. Business as usual will not do. If we continue on the present course, societal unrest will follow.

Last week's passage of the gun control legislation reaffirmed to the world that Canada's federal government is still capable of governance that is responsible to its people, and especially to its children. We trust the finance committee is capable of similar positive action.

The Chair: Thank you, Mr. Chance.

From the Ontario Coalition for Senior Citizens, Mr. Hank Goldberg, please.

Mr. Hank Goldberg (Vice-President, Ontario Coalition of Senior Citizens): Thank you, Mr. Chairman.

The Ontario Coalition of Senior Citizens' Organizations is a coalition of over 80 seniors' groups from across Ontario, representing the concerns of over 500,000 senior citizens. On behalf of the coalition, I'd like to thank you for providing us with an opportunity to share our views in preparation for the 1996 budget.

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Here are some of the things we're asking you to consider. What should our deficit reduction target be? How can it be achieved? How many budget measures are to be used to create an environment for jobs and growth? What areas of federal activity should be considered for further cuts, commercialization, privatization, or devolution to other levels of government?

Canadian seniors, like the majority of Canadians, are not opposed to being taxed. We are opposed, however, to the system of taxation in Canada, which is regressive and overly unfair to the majority of Canadians.

Some of the tax expenditures that we feel should be looked at are the levels of retirement savings exemptions, protected family trusts, and business and corporate tax exemptions. Billions have been lost to the government through these forms of expenditures, and the question of how much of this money could be retrieved is a political question, not an economic one.

In dealing with corporate tax, 30 years ago this accounted for approximately 30% of federal revenues. In 1994 this dropped to only 7% of federal revenues. Moreover, in 1993 alone, approximately 63,000 profitable corporations did not pay any taxes.

As for personal taxes, a review of the personal tax system is warranted concerning the number of tax brackets and their thresholds. Changes to the tax system enacted by the previous government created profound inequalities in the tax system. The changes included a decrease in the number of tax brackets, from 10 to 3, between 1987 and 1989. The top marginal tax rate dropped from 36% to 29%, while the bottom rate was boosted from 7% to 17%. These changes have reduced people's will to pay.

On the question of refinancing the debt, it is estimated that 25¢ of every tax dollar goes toward serving our over $40-billion federal debt. A large percentage of this money leaves the country in the form of interest to foreigners who currently hold our debt.

There are a number of mechanisms that should be considered, such as: introducing interest rate controls; shifting reliance to long-term domestic instruments, such as Canada savings bonds; and renegotiating the yields from bonds.

Repatriating the foreign debt should be another thing the government should be looking for. Foreign holdings of the federal debt are estimated at approximately 25%. This diminishes Canada's ability to control its own economy and leaves us vulnerable to international interest rate policies.

As new federal debt is issued and foreign-held bonds come up for sale or renewal, they should be funded domestically from private savings and by the Bank of Canada. Bring interest rates down and adopt alternative inflation-fighting measures. The current policy used in Canada to fight inflation is to maintain both high interest rates and unemployment rates. We find this unacceptable and contrary to the current government's commitment to job creation.

There are alternative inflation-fighting measures available.

First, the Bank of Canada should bring down the level of Canadian interest rates by funding a greater share of the federal and provincial debts.

Second, to prevent excessive increases in the money supply, government should reinstate the requirement for chartered banks to hold a percentage of their deposits on reserve at the Bank of Canada.

As for tax-sheltered savings to benefit Canada, the previous government introduced regulations that allowed up to 20% of assets in such plans to be invested in foreign assets. The regulations should be changed, requiring tax-sheltered savings to be invested in Canada.

We also propose that you introduce a financial transaction tax. The Canadian gross domestic product was approximately $712 billion in 1993. During the same period, the value of financial transactions, including all cheques, transfers, and withdrawals from financial institutions in Canada, was estimated to be $27 trillion. A large portion of this was related to short-term, speculative financial transactions that do not contribute to the gross domestic product.

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We recommend a small tax levy. Something like 0.5% would provide enough revenue to replace both the GST and the PST as well as eliminate the federal deficit.

We think budget measures should be used to create an environment for jobs and growth. The answer to this question is also part of the answer to the preceding question concerning the reduction of the deficit.

In our opinion, the only just and sustainable mechanism for reducing the deficit and restoring fiscal health to the country is through full employment, through striving to create both more and better jobs. The following must be considered: increasing the minimum wage and amending the Employment Standards Act to limit the amount of overtime. Between 1982 and 1993 the number of Ontario employees working 50 hours or more grew by 52%. At the same time long-term unemployment as a share of total unemployment rose to 16.8%.

There are other areas of federal activities that should be considered for further cuts. A look at public financing through the eyes of the marketplace has led to the assumption that the only way to balance budgets or reduce deficits is through cutting costs. Inevitably, these costs are associated with spending on social programs.

This seems to be the path that the federal government has been following for a number of years now. Canada's social programs have sustained Canadians through one of the harshest recessions. They have made this country the number one place to live in the world. They are an integral part of the Canadian identity. Furthermore, more cuts and commercialization, privatization or devolution to other levels of government of federal government activities will only serve to increase the fragmentation of Canada as a whole.

Developing the 1996 budget entails making decisions that affect all of us. We do believe that viable options exist to address the fiscal, economic and social crises of this decade. We need to put all these options on the table for fair and equitable consideration.

On behalf of our organization, we'd like to thank you for listening to our views on these issues.

The Chair: Thanks, Mr. Goldberg.

Lastly, from the Board of Trade of Metropolitan Toronto, we have John Bech-Hansen and Don McIver. Welcome, gentlemen.

Mr. Don McIver (Chair, Economic Policy Committee, Board of Trade of Metropolitan Toronto): Thank you. I've already made copies of the brief that we're presenting available for circulation. There are additional copies at the back of the room if anyone would like to pick one up. I'm not going to go through the entire brief. I will just touch on a few of the highlights.

I have listened to the other presenters around this table and have heard only one person actually refer to the questions that were asked. As you will recall, they were: what the deficit reduction target should be; measures to increase or improve employment; and what federal areas could be considered for privatization or for additional cuts.

Let me start first with the most important issue of deficit reduction. It's very boring and it's very much of an accounting exercise, but it's something that your committee certainly has a good deal of responsibility for overseeing. Many of us would like to bring to this table a lot of additional considerations that are considerably less boring and far more interesting than the accounting identity that we have to come back to. That was the basis of the first question asked of us.

I suggest very strongly that the issue is not the path of deficit reduction, but the path of deficit elimination. I think it's essential because it has a number of benefits. In fact, it has immediate benefits.

If we were to go back in time to 1993-94 and the same committee was sitting around discussing the same issue, and if we had then moved immediately to a balanced budget, there would be an expenditure difference between that year and the upcoming fiscal year of almost $13 billion. In other words, if you want to find $13 billion in cuts, I can tell you where to find them. Find them in debt service. You could have, we could have - I'm not attributing blame. We as a country could have balanced the budget in 1993-94 and had almost $13 billion more next year to distribute.

It's also important to look at this from an immediate perspective because of the risks. Now, as an economist - and I know that this committee has previously been provided with information on the accuracy of economic forecasts - I know that we cannot as a group accurately forecast the economy at its turning point; that is, when we're moving into a recession. But as a group, you will find that virtually all Canadian economists will recognize that there is a considerable risk, a high probability of recession, some time before the end of this decade. Because of that, it is important that we get our fiscal house in order so that when economic results come in at less than we anticipate, the finances will be able to adapt to that.

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The auditor general has made a considerable effort lately, in his second-to-last report, to highlight the importance of debt, of the achievement of a stable debt-to-GDP ratio as a means of providing a stable, sustainable fiscal environment for the country. The truth is that the sustainability or the achievement of a stable debt-to-GDP ratio is dependent not only on the numerator, debt, but also on the denominator, GDP. As a consequence of the economic slowdown we've seen already this year, that very critical ratio is actually accelerated, not decelerated.

So if you want to achieve stability of the debt-to-GDP ratio, which the auditor general suggested as being the primary first step towards fiscal rectitude, the safest, most obvious way to do that is to eliminate the deficit.

I think, judging from my conversations with people engaged in the financial markets both here and abroad, the path that is required is something like the following. The 3% that has been promised for next year has to be met, but it is the responsibility of the finance department at that time to provide us with an out-year forecast, beyond that year. At that time, I think they have to bring in a number that is 2% or less.

I think it is also crucial and critical at this time to go one step further and provide the country and the financial community with the path beyond that. I think it has to be zero before the mandate of this government runs out. Fiscal year 1998-99 would just about cover that. It has to be not reduced but eliminated at that point.

Let me quickly and briefly cover the two other questions that were asked of us. There was a question of what we can do or what government can do, what environment can be achieved in order to allow growth to expand to allow employment to grow in this country. Quite frankly, it's deeply regrettable, but any fiscal stimulus that could be applied to mitigate some of the unfortunate consequences of downsizing...that money has already been spent. There are simply no funds for economic stimulation. I think most people who look at the accounts recognize that.

With respect to the issue of specific spending measures, we've detailed a number of suggestions. I certainly won't go through them all. I thought I might touch on one or two as matters of principle. They're basically the same as those we presented to this committee last year.

Number one, the country can no longer afford the form of fiscal equalization with which we are familiar. The country was not born as a mutual providence society, but as a confederation of constituents with similar commercial and political interests. One of the most insidious barriers to overall growth has been the persistent transfer of resources to less sustainable economies rather than the encouragement of people migration to those regions of the country where economic growth has been faster.

We recommend the abolition of all regional industrial incentive programs. I suggest that you take a look at the auditor general's report to see just how inefficient and ineffective they have been.

We suggest considerably further reform to the unemployment insurance program than has already been suggested. In the event that the economic conditions deteriorate faster than we anticipate - that is, faster than the Department of Finance or economists anticipate - we suggest a contingency plan, which might consist of a 5% cut across the board to all recipients of government payments, unless they are actual arm's length contracts.

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We have a few other suggestions in our brief. Let me bring it to a conclusion at this point and thank you for listening to us.

The Chair: Thank you, Mr. McIver.

[Translation]

I would like to introduce you to the members who are with us today. They are, from Quebec, Mr. Pierre Brien and Mr. Paul Crête;

[English]

from British Columbia, Mr. Herb Grubel; from Manitoba, Mr. David Walker; from Toronto, Maria Minna; from Manitoba, Mr. Ron Fewchuk; from Toronto, Mr. Jesse Flis; from just outside Toronto, Mr. Julian Reed; from just outside Metro as well, Alex Shepherd; and from Manitoulin Island, Brent St. Denis.

[Translation]

Mr. Brien, please proceed.

Mr. Brien (Témiscamingue): My question is for the people from the Chamber of Commerce, but first of all, I would like to make a brief comment.

One of the first measures proposed is to call into question the federal equalization payments system. That makes me smile, because the system contains a certain number of imbalances.

The day Ontario is ready to question the fact that it receives 50% of research and development expenditures and that it is the biggest beneficiary of the Auto Pact, we might be able to discuss equalization payments or transfers to the provinces.

In point 6 or 7, you say that corporate grants must be reduced. I have trouble understanding that, because your members, who are businesses, are the first to knock on our door and to ask us for grants and assistance.

As representatives of these members, you say that corporate grants must be reduced, but individually, each one of your members behaves like someone who wants to get one. There might be some way of organizing your members in that respect. That's my first question.

Secondly, I'd like your comments on the measure proposed by the Ontario Coalition of Senior Citizens' Organizations which is in favour of repatriating the foreign debt. There's a lot of talk about this measure, but there are also repercussions. I would like you to explain the Chamber of Commerce's view on this point. If Mr. Goldberg wants to respond to what you say, he may do so.

[English]

Mr. McIver: Thank you very much. Let me deal with the first question, the issue of business subsidies.

Of course, if business subsidies are made available, people are going to take advantage of them. Not only the Toronto Board of Trade but the Canadian Chamber of Commerce, speaking on behalf of businesses across the country, has consistently moved to a position of suggesting that business subsidies are inefficient and ineffective, and the consequence of providing them is simply that other companies then see an opportunity to take advantage of a program.

I don't need to tell you - I'm sure you've seen how very often these subsidies are inefficient - but if you provide them, if you say it's there and it's available to sign up for, of course they're going to do it. I really don't see any inconsistency with respect to that.

On the issue of the repatriation of debt, let me speak as an economist. We often fail to recognize the big picture, as it were. To say we want to bring the debt back home is fine, but in point of fact, what we are doing and what we have done deliberately, perhaps without recognizing it specifically, is borrow from foreigners in order to maintain our standard of living today.

If you bring the debt back home, how do you do it? As was suggested, you can get the Bank of Canada to buy the debt, but that is nothing other than straight inflation. The Bank of Canada prints money, and all of a sudden those of us - and that's all of us - who hold that debt in one form or another, either as individuals or in our pension plans or in our RRSPs, find the value, the purchasing power, of that debt has suddenly evaporated by 25%.

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So we need to continue borrowing only because we insist upon consuming more as a country each year than we earn. It's as simple as that.

Mr. Goldberg: I suggest that if the 20% of an RRSP that's allowed to be used as part of the investment of your RRSP were brought back to be invested in Canada, it would go a long way in bringing that debt back. As well, we could use the Bank of Canada, which, to my knowledge, hasn't really done much to try to repatriate the debt. I don't see any problem with doing away with some of the foreign investment that's been taking place with our RRSPs, especially the 20%.

[Translation]

The Chairman: Thank you very much. Mr. Grubel, please proceed.

[English]

Mr. Grubel (Capilano - Howe Sound): Thank you, Mr. Chairman.

I have a quick word for Mr. Goldberg. In fact we heard this idea suggested many times at these hearings. We brought in experts, not just private sector economists, but also financial experts, and they all said there are no matching bullets of this sort.

The big problem is that Canadians, at the drop of a hat, can move their funds abroad whenever the opportunity presents itself. Therefore the solution of bringing back the debt does nothing to restore economic freedom for a different policy. I can assure you that if this were a viable solution it would have been tried.

I'm very disturbed by the list of suggestions you have for policies. I believe that if they were introduced, freedom in this country would be irretrievably lost. We have seen in many countries of the world that when these proposals you have indicated are introduced, the police state takes off. That is a very great sacrifice to make in order to restore the deficit, but I respect your opinion, sir.

I would like to ask a question, if I may, of the representative from the Coalition Against the Head Tax.

Akbar Said was one of my students. In fact I was one of his thesis supervisors.

I'm very well aware of the fact that on average the highly educated and young people who come to Canada as immigrants - I was one of them - pay considerably higher taxes than the average and consume less in social services than the average. My constituents also know this, and as a result of this they have been saying it costs a great deal when people apply to come to this country. They are obviously much better off than they would be abroad. That's why they want to come.

We're in a severe financial crisis. We heard from everyone here on how many good causes there are on which money could be spent. My constituents are asking me why these immigrants don't, when they come in, pay for some of the costs they're imposing on all of us and on all of those other good causes on which money could be spent.

I would like one of the representatives from this coalition to tell me what I should tell my constituents.

Ms Go: I think it is your responsibility to educate your constituency about the contribution made by immigrants to this country. If you're well aware of that and if you're well aware of the fact that immigrants are already paying more taxes than the services they receive, then it is your responsibility to tell them that.

More fundamentally, immigration to Canada is not just about how much it costs or what the economic benefits are. We have international obligations towards refugees. We have internal, national obligations to bring in families of Canadians so they can reunite with their families from abroad. These are all integral parts of our immigration system.

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It is not just about who can afford to come and who cannot. All the other fundamental issues have to be looked at as well.

What is so fundamentally wrong with this head tax, just like many of the other immigration policies that this Liberal government has brought in, is that it singles out a couple of groups of people, the immigrants and refugees, and blames them for all the economic problems, or says that they are not contributing enough, causing more racism in our society, while at the same time you just sit here and talk about what your constituency...without challenging some of the assumptions behind that -

Mr. Grubel: I beg your pardon, Madam, but some of my constituents to whom I refer have below-average income. They're at the poverty line.

As Mr. Axworthy has shown, the average immigrant pays higher taxes than the average Canadian, because he has higher-than-average income. This, by definition, means that those people should be paying higher contributions to government services.

Ms Go: But they are paying a higher contribution. As you pointed out, they are paying more taxes because they are making more money. But there are also many immigrants who come here without money - they come here with skills that are not being recognized by this country - and there are people who are here to seek asylum because they have to flee persecution. So what are you going to tell your constituents about those people?

Mr. Crawford: I'm wondering about point number 1. The reason why I came here - and all I got was a briefing - was a letter to say, would you identify your deficit target reduction, how best is this achieved, etc. These are the questions I was hoping to address.

In the introduction that everybody has opened up with, they've come up with different individual tax interests, and so on.

My feeling is - and I've said this at previous committee meetings - that if we have a deficit target, then it should be very definitive, it should be constitutionally supported, and it should be managed towards. I wonder if there's any material or evidence that the committee has brought to give me a frame of reference by which I could perhaps do some better analysis than by hearing a lot of individual points being brought up, perhaps out of context.

The Chair: We'll be happy to provide you with some information afterwards.

Every other witness who has come here has come with a very specific agenda and understood, from everything that was put out, exactly what issues we were confronting.

Ms Tripp: I want to pick up on responding to the questions that we were given prior to coming here.

Of course, in our brief and in my opening statements I was identifying Canada's responsibility in the international arena.

In terms of solutions, I don't think it's fair just to come here and tell the government not to cut ODA, but, rather, to offer solutions.

One solution we've offered - it's outlined in our brief - is for the government to give serious consideration to the taxing of casino and lottery winnings.

This is a huge amount of money. I think the figure for Ontario alone is hundreds of millions of dollars. This is money that Canadians do not sweat for. We are one of the most highly taxed nations in the western world, and yet people with very minimum investment, sometimes a dollar to buy a lottery ticket, get huge amounts of money in return. I think this is an area where the Canadian taxpayers would not be opposed to the government imposing a tax, and, depending on how it was imposed - it could be on a sliding scale - this could be at least one step towards deficit reduction.

It could be an area where some of the representatives around this room, some of the organizations, could be protected, including ODA, because of income from that area. So I would like to offer that as a possible solution, rather than just asking the government not to cut.

Ms Minna (Beaches - Woodbine): You mentioned, Mr. McIver, that you want to see the deficit eliminated. I've heard this before. What I would like to know is specifically how we would eliminate the deficit without creating complete social havoc, because that's where the cuts have been so far, and that is where I still seem to see the cuts coming from, from the suggestions you were making.

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The other question has to do with international forces. Some people have talked about a Tobin tax; the transnational companies and the effects...and the total control they have...of picking up their cash and going wherever they want; the international market, where it seems as if somebody is playing a bit of monopoly, Russian roulette, with the investments on international markets and the brokerage that goes on. The market is unregulated internationally. There doesn't seem to be, as far as I can see, a willingness on the part of the western industrialized nations to look at how the nation state's powers or strengths have been diminished by international markets and globalization.

I wonder if you have looked at that issue, to see how we can somehow deal with the fairness and the balance of getting to the elimination-of-deficit issue, as you are suggesting, but at the same time maintaining some balance and order in our society both in Canada and elsewhere. It affects us, but it affects other nations as well. We are not independent or isolated on this issue.

Mr. McIver: Let me start with the second question first. I would be tempted to answer part of your question with another question: why regulate the international community? What is it that demands that it be regulated? Are we in a society that automatically assumes free enterprise -

Ms Minna: I can answer, if you like. Then you can answer too, so there's a bit of a dialogue.

My understanding has always been that we have ascribed perfection to the private sector. I think that's not accurate. In fact, my private sector friends say that's not quite right; nobody is perfection. So we are working on the wrong premise.

The other is that the bottom line of the transnational, multinational private sector, and rightly so, is profits for themselves. This is their mandate from their shareholders. That is not the mandate of a nation. Therefore how do you now balance the two? If you have no regulation and the sole vision, sole purpose, sole objective of the markets is pure profit for the people who are investing, at some point we have to balance the situation.

Mr. McIver: I will try to avoid engaging in a philosophical debate -

Ms Minna: I am just saying that is my premise.

Mr. McIver: If you look at other countries, other systems in the world, and see what has happened when the profit motive has been eliminated.... I am perfectly comfortable...and I am not going to suggest for a minute that unregulated activity is desirable. Many forms of activity beg to be regulated. I will simply suggest in passing...is it necessarily obvious that we should do so?

But let's accept the premise that it's desirable to regulate the international financial community. The real reason why other governments haven't had any will to do so is that you can't do it. That has been the basic problem. The Tobin-type tax is a nice idea, but it overlooks the fact that you are still trying to abstract from the international financial community a large chunk of money. It may be a very, very small ratio, but it is still a large chunk of money.

I believe it was Mr. Grubel who suggested that one of the difficulties when you start mucking around with your regulatory environment is that Canadians themselves are amongst the very first to transfer their funds out of the country. And quite rightly so. If you think it's your pension, your retirement, and your income security that are at stake, of course you're going to take that type of action.

I come back to your first question. You were asking me how I would go about it. The easy answer is to say, hey, you people are elected representatives, it is your job to go out there; it has to be done. To a degree that is fair, because our government has the accounts, has full knowledge of what the fiscal situation is, and has responsibility for deciding on behalf of Canadians exactly which programs should be continued, which ones should be abandoned.

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That's a factual answer, and I appreciate that, but we have presented in our brief a number of areas that deserve very serious consideration. They would generate a very substantial amount of savings. Thank you very much.

The Chair: Ms Minna, and other members, we have received a request from two additional individuals to appear before us this morning and make a very brief representation each. They were not on the agenda, but I am going to suggest that we hear them both very briefly. That's with your permission, and the permission of our other panellists, who did give us notice that they would be with us. Is that agreeable?

Some hon. members: Agreed.

The Chair: I would like to introduce Josephine Grey from Low Income Families Together.Ms Grey, could you tell us briefly what you were going to talk about?

Ms Josephine Grey (Low Income Families Together): Basically, we have an objection to the fact that there are no organizations on this list that represent low-income people. That's one of the reasons we came here today.

We would also like to state that we find the questions that were asked from this committee to be very leading and narrow. These questions presume that there is no other way to go other than -

The Chair: You are entitled to present us with any ideas you wish. We welcome those, so please feel free to do so.

Ms Grey: I believe there are many alternatives to the current directions the Canadian government is taking in devolving the responsibility for the welfare of its citizens to the provinces. I believe that you can see by the example of this province of Ontario that the idea of cutting loose any responsibility and refusing to enforce the Canada assistance plan, which is still in effect, has been disastrous for our population.

I would suggest that the first order of business of this government would be to put into place protections that equal or exceed those of the Canada assistance plan so that people do not have to become homeless and starve to death as a result of brutish and inconsiderate governments like the one we have in this province.

I would also suggest that there are many, many other ways to pay down a deficit, which I believe has been exaggerated. These ways include: asking corporations and banks to pay their back taxes; reinstating the power of the Bank of Canada to have more control over our economy; and having this government decide that in fact the welfare of its citizens are more important than payments that are allegedly owed to those who are extremely wealthy and do not need my money, my children's money, or anybody else's money from the low- or middle-income class in this country. Thank you.

The Chair: Thank you very much, Ms Grey.

Ms Ng, you represent the National Action Committee on the Status of Women.

Ms Winnie Ng (Ontario Regional Representative, National Action Committee on the Status of Women): I am the southern Ontario regional representative.

The Chair: We heard from NAC in Ottawa just a couple of days ago. Do you have anything different to add from what they presented?

Ms Ng: This is what we want to add from southern Ontario, particularly from the Ontario perspective. I'm here with a group of representatives from different community organizations that have been fighting against the Mike Harris agenda. Ontario, as you are aware, is going through such harsh cutbacks and restructuring, and it's the women and children who are bearing the brunt.

I'm here to say that it is the Harris government agenda and it's part of your federal government's agenda. We are here to say that this whole pre-budget consultation is a charade to prepare what you're going to announce February in the budget.

We are here to say no to the CHST. What you'll be doing with the CHST is dismantling what we have that holds this country together. It's absurd that when you have a unity panel going around trying to find ways to keep the country together, you are going to implement the CHST and dismantle the social fabric of this country.

We are saying that you're abdicating your responsibility as a federal government to keep national standards at bay. You're providing more room for provincial governments, like the Harris and Klein governments, making it easier for them to do what they have to do. Then it will be the women and the children and the families who are getting into more devastating poverty. We don't think that's acceptable.

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I sincerely think if you're going to travel through this country and hear from the people of Canada and then come back with the same proposals you intend to put forward, then this will be a real farce. Other people are going to come here and speak.

We are very clearly saying no to CHST. If you want to keep this country together, this federal government shouldn't have the conscience or the political hypocrisy to put that forward.

The Chair: Thank you very much.

Ms Ng: There are more people who can come up and speak.

The Chair: I'm sorry. I'm going to suggest, out of respect for the witnesses who did give us notice, that we could arrange with other witnesses who have not been accommodated by you on your agenda maybe to do it at the end of the day. There might be some time then, if you wouldn't mind. That way we will be able to respect the rights of all witnesses before us. We certainly welcome your presentations to us this morning.

Mr. Jesse Flis, please.

Mr. Flis (Parkdale - High Park): Thank you, Mr. Chairman.

I'd like to put the record straight on the committee here. Avvy Go made a presentation about the head tax.

I am deadly opposed to any head tax. The head tax, as I understood it, was placed on one group of Canadians and not on others, whereas this is a service tax, which is placed on everyone. We put a service tax on passports, for example. So I don't think we should be talking about head tax there. It's clearly a service. It's a user-pay policy of the government.

Also, I'd like to ask a question of World Vision. I welcome their brief urging that our government move back towards the target of 0.7% of GNP for ODA. This was a figure set by the late Lester B. Pearson. Unfortunately we're slipping and coming way below that target.

You also gave us a concrete suggestion about taxing casinos and lotteries. But you also know the annual deficit and the public debt facing us: over $500 billion in public debt.

What would be your recommendation about increasing the ODA towards 0.7%? Would you begin that after we have balanced our books and have written off the public debt, or would you recommend we begin that next fiscal year? If so, where would that additional funding come from?

Ms Tripp: Mr. Flis, we would recommend that we not wait, that we need to address this now. By next year Canada will have slipped to 0.27% of GNP from the target of 0.7%. We have consistently been going down for the last several years.

I just want to remind people that in spite of all the issues Canada faces, Canada was the number one country in the UNDP report on the human development index. That's based on access to education, access to health care, literacy, life expectancy, economy, and all the rest. Internationally, we need to keep that in perspective.

In addition to the lotteries and casinos we've identified...which, by the way, was a recommendation of this very committee last year, and the amounts they estimated were very conservative, around $200 million.... Those would be extremely conservative, and the government could realize a lot more tax revenues if a tax were applied.

Another area where the government could look seriously is when you compare defence spending against ODA. By next year defence spending is going to be 5.4 times more than international development.

We know security is an issue. It's identified in Canada and the world, and Canada is committed to security. But you don't get security with military spending. You get security through international development, where people have the resources, have the ability to develop themselves and take control of their own situation.

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Right now, Canadian military forces and Canadian NGOs find themselves working side by side more and more in areas of conflict. If you took two countries like Angola and Cambodia - and some of Canada's military spending went into mine clearance, as opposed to some of the other things Canada spends its defence money on - they could begin the slow climb back to economic stability and wouldn't require the kind of emergency response they've had in the past.

Obviously, there are several issues you have to take into consideration, but those are two. The lotteries and casinos and defence spending should come more in line with Canada's commitment to economic prosperity around the world, rather than being 5.4 times what we're spending on ODA.

Thank you.

Mr. Flis: I'm the member of Parliament for Parkdale - Hyde Park and there are many small family businesses along Queen Street, King Street, Roncesvalles, Bloor, etc.

I'd be interested in hearing from some of our people around the table who have direct experience in either running a small business or know people who are, about what the government should do with the GST.

In my town hall meetings now, some are saying they already have all the computer software they need, so they can live with the GST if we have to reduce the deficit. The majority say to scrap it because it's hurting their businesses. I'm wondering if we can have some input on that.

The Chair: Mr. Ferrabee would just love to answer that question.

Mr. Ferrabee: We've suggested in our brief that the government take a serious look at reforming the GST. I know there have been a lot of suggestions for a variety of different ways.

We've suggested a business transfer tax, which would have the effect of bringing the rate down considerably. It would be much easier to administer and would deal with some of our concerns, which I've illustrated here on the board behind me, as well as in our presentation.

The problem with the GST, as we see it, is the exemptions that are created within it, which make it unnecessarily complex. We spend about six times what a country like New Zealand spends on a per capita basis to administer its tax, principally because of the exemptions. We also think the rate could come down substantially and significantly.

We think we could make it much easier to administer by businesses, but it's very important that the federal government and this committee consider fixing the tax at the federal level before they make the mistake of trying to amplify it at the provincial level through harmonization. It is a problem tax. The problems inherent in it aren't going to go away if you harmonize it with the provincial tax. You will end up with the same problems. You will just end up with two taxes combined in one.

We think this committee should take some time to consider that. It should take a serious look at the business transfer tax and make a recommendation to the Minister of Finance that this be the course he proceeds with.

The Chair: Thanks, Mr. Ferrabee.

Mr. Mahaffy.

Mr. Mahaffy: We would like to respond to the issue raised by a group present here about the CHST. Our interest in bringing this issue to the committee is not one of specialized interests, but one that reflects a concern that the CHST and its implementation withdraws the federal government from leadership in terms of many initiatives to provide a social framework for Canada.

We think the CHST is something the government brought in as a temporary measure to address the types of issues the finance committee is trying to grapple with today. But we would like to suggest all these issues are inextricably linked; the economic health of the country is inextricably linked with the social health, and so on. Any consideration of financial measures must be taken with regard to a broader leadership in government as a whole in terms of reforming programs and services.

Great financial savings and efficiencies could be created by reforming Canada's social programs and making them not only more efficient, but more effective in terms of addressing people's problems. We feel this is the kind of duality that has to be adopted in any type of fiscal management approach.

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The Chair: Mr. Mahaffy, that recommendation is music to our ears. If there are efficiencies within the existing system...where we're wasting money and not delivering value to the people who need it the most, we would welcome working with you to find those particular steps. Perhaps we could have our staff meet with you right after this presentation to get some of those details.

Thank you.

Mr. Mahaffy: Thank you.

The Chair: Mr. Moorewood.

Mr. Moorewood (Ontario Council of Agencies Serving Immigrants): Just building on what Jim Mahaffy has said, and going back to comments Mr. Grubel made, OCASI is an association that represents 140 agencies working at the community level in Ontario. I think it reflects similar community-based, multi-service organizations across the country that are very cost efficient and effective in dealing with some of these issues.

Mr. Flis is talking about the small business sector and dealing with the GST. The people we're serving may be concerned about things like the GST, but more importantly they are concerned about how to break in and apply their resources and strengths and experience to developing business, and having access to it.

I am troubled by Mr. Grubel's words, as he looks around the table and says there are many good causes. I would dispute that they are merely good causes. I think these are fundamental activities, programs and initiatives that contribute heavily to the health of our communities and our economic health.

If he is aware of the kind of contribution in taxation and the low use of social funds, I know he's also aware of the barriers people face in bringing those experiences and expertise to the community. We need to take dollars and focus those programs on the skills and on liberating this wealth of expertise in our communities.

Secondly, we have organizations that have taken twenty years to build community infrastructure and develop volunteers. We hear, let's dump the responsibility on volunteers in the community. At the same time, we're cutting the very structures around which people organize, whether it's community economic development, social service delivery, or providing supports.

We need to find some ways of redirecting and maintaining those dollars at the community level. This is an incredibly important economic investment.

The Chair: Thank you, Mr. Moorewood.

[Translation]

I will give the floor to Mr. Crête who would like to ask you some questions.

Mr. Crête (Kamouraska - Rivière-du-Loup): I enjoyed the comments on the role of the provincial governments and the federal government. I am somewhat surprised to hear that it is not the level of government people are at that makes them more or less humane. There is no automatic relationship between the two. You can't say that when someone is with the federal government, he is more humane than if he were with a province.

That brings us back to our structural problem: there is a government that has taxation and spending powers in all sectors, and another government, the provincial government, which is on the front line and does not have these powers.

If I were a federalist, I would look into making deep structural changes to ensure that when a government takes certain steps, it is assessed on its ability to meet these conditions. Then jurisdiction and taxation powers would be clearly defined. Is that not the source of the malaise we are experiencing throughout Canada currently?

The Chairman: Who would like to respond?

Ms Connie Laurin-Bowie (Coordinator and Government Liaison, Canadian Association for Community Living): May I answer that, Mr. Chairman? I will answer in English.

[English]

As a national association, we have examined the issues of decentralization and talked about reforming structures. You'll note in our brief that we've put forward an argument. Rather than discussing it in terms of the role the federal or provincial government needs to play, we have talked about it in terms of the need to reform social programs generally.

The issue for us in the CHST is twofold. First, the amount of money being transferred, as you well know, is a lot less than what the provinces had under CAP and EPF. Therefore they have less capacity to deal with some of the social reforms they need to grapple with. As the people behind us will attest to, in Ontario those transfers have resulted in part in what Mike Harris is calling his common-sense revolution.

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The issue for us is not about which government is doing the social programming; it is about what standards we have in place in this country, whatever government is implementing them. So what we've proposed is a social audit that would allow for both levels of government to be accountable to Canadians for social programs and what levels we find acceptable in this society.

There are other sorts of things we've tried to address. If you look at the way our social programs work right now, in order to receive any kind of support, people with disabilities, as an example of a lot of other marginalized groups, have to be on the welfare system. As soon as you walk outside of the welfare system and try to get a job, you lose everything if you have a disability. I think there are examples of that when you look at child care, when you look at a whole series of other social programming.

The problems we have in this country relate to people being excluded. So yes, it needs to be a reform of the whole system, and there are issues for which government is able to do it more effectively. We support community-based economic initiatives and provincial flexibility in providing programming, but we think there needs to be a national discussion and basis for what principles and objectives of society we should put forward.

[Translation]

Mr. Crête: So you do not make a distinction between Canadian and federal standards. From a federalist perspective, standards could be applied to all of Canada, but this would not necessarily be the federal government's vision. It could be the vision of all that Canada could be.

[English]

Ms Laurin-Bowie: We acknowledge the distinction between national and federal objectives, as you pointed out. For our association, the important point to make is that the federal government does have a role in those national principles and objectives, in setting them and bringing people to the table. At least it should be acting as a facilitator for communities and provinces to come together and decide what those national objectives should be.

The Chair: Mr. Chance, please.

Mr. Chance: Mr. Chairman, I was offended at Mr. Grubel's suggestion that we represent good causes around this table today. The children of Canada are more than good causes, Mr. Grubel. They are our future and your future.

Essentially, you dismissed Dr. Goldberg's suggestions, the whole lot of them, carte blanche. I'd suggest that Dr. Goldberg had some suggestions that you dismissed on the basis that they would erode Canadian freedom. Those of us with means in this country certainly have freedom.

Is it freedom, Mr. Grubel, to have $1.47 per person per day, apart from roof, food and clothing? That's the poverty line. Many people in this country exist well below the poverty line. In Canada in 1993, 41% of couples aged 30 and under with children lived below that poverty line; 91% of single women with children lived below that poverty line, $8,000 below that poverty line.

I'd submit, Mr. Grubel, that is not freedom.

The Chair: Thank you.

Mr. Crawford.

Mr. Crawford: I'd like to come back to a number of points, especially with Mr. Flis asking about small business, which I can represent. It's a point of criticism really. I think it would help with regard to some of the things that have just been mentioned about unemployment.

I've been in Canada as a landed immigrant. I've been a Canadian citizen for about twenty years, and I've tried to run businesses, and I do run businesses successfully, I hope.

What I feel is wrong - and this is where you were asking your question - is that there are fundamental flaws in the financial structures, which seem to be imposed on us as we try to make a business and employ people. These fundamental flaws become punitive to the point where in fact I will not hire people. I simply cannot afford it because the taxes come back to us as a corporation in such a way that we can see the benefit of not hiring people.

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Instead, we employ them, which is different from hiring. I feel the hiring policies would be sustainable and would sustain some of the things that you folks talk about as being good for people. I'd certainly like a job in the sense that it would be sustaining me and my children. I can't do that. The taxes are punitive.

Your other question was about GST. Michael made some points on that.

As far as I can tell, when GST is imposed on a company it's another punitive cost. I think this is a reflection on the fundamental structures we're talking about here, which are also flawed. It seems to me that not only is it a cost to us to gather GST, it's a cost to you. Furthermore it's a higher cost than the benefit of collecting it. In other words, you're paying more for a dollar that you collect. I think that's unsustainable as well and it's a reflection of the financial structures, which simply don't work.

The Chair: Thank you, Mr. Crawford.

[Translation]

Before going on to a new witness, I will give Mr. Shepherd the floor.

[English]

Mr. Shepherd, do you have a question?

Mr. Shepherd (Durham): I would like to direct my question to the Canadian Association for Community Living. We've been talking back and forth about the social transfer. In your recommendations you noted that there may well be a level for those transfers beyond which, for some reason or other, provinces would refuse to negotiate in the concept of establishing national standards and so forth.

Have you given some thought as to what that level is, how you would define it, and whether it's based on population or on total dollars?

Ms Laurin-Bowie: We've had this question before. I think the words we used were ``not negligible''. That's pretty vague, and I know that there are a number of people in our association and in your government who are looking into a more concrete examination of what amount of money would be sufficient to encourage provinces to come to the table to discuss ``principles and objectives''. I guess that's the terminology the minister used in his budget speech.

Here's the short answer. We don't have a number. We believe that in some provinces the transfers that now exist have come very close to that negligible amount. We know that under CAP they were diminishing. When we talk about the CHST and our concerns, that's not to say we were ever proposing that CAP was the solution. We knew, just as this government did, that CAP was a problem, and we always advocated change.

I think there is an amount below which the federal government can at least say it will not diminish the money - and again, we need to figure out what that number is - so that provinces will have a future interest in coming to the table. If they know that tomorrow it's going to be cut and that it's going to continue being cut, then even now, no matter how much you're giving to the provinces, they're not going to be interested in coming to the table, because they have no future interest. They'll just say no because this is a temporary measure.

The Chair: Thank you, Mr. Shepherd.

We've now come to the moment when I would like each of our participants to take fifteen or twenty seconds to summarize their position for all of us.

We have two new participants at the table. Are you representing two other groups?

From the Ecumenical Coalition For Economic Justice we have Lorraine Michael. Did you want to make a very brief statement? I'm sorry, but we've run out of time.

Ms Lorraine Michael (Representative, Ecumenical Coalition For Economic Justice): Yes, I would like to make a very brief statement.

The Chair: Please.

Ms Michael: I do work for the Ecumenical Coalition For Economic Justice. I am here as an individual staff person.

This year we did not receive any of the information with regard to the consultations. We have made presentations in the past.

However, I think if we had received the information and if we had come to the table there would be nothing new for us to say, though I will say, Mr. Peterson, that I am going to send you our two latest economic justice reports, which deal with the economic issues that I think the finance committee should be dealing with, specifically with regard to issues around - I know you hate it when we say this but I'm going to say it again - interest rates and alternatives to the direction in which we're going. We will send our report to you.

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I wanted to speak as an individual because this year I had the experience of being on the Canadian delegation as an NGO observer both at the Beijing conference and at the last preparatory round of talks for Copenhagen in New York in January. So twice this year I have been on Canadian delegations as an NGO observer, listening to our government in the international arena making commitments with regard to care for people, the care for children and the care for women in our country.

On an individual level, as a person who's been an activist for almost thirty years, I am tired of having to repeat the same stuff. I'm listening at this table today and people are saying the things that if we were here we'd say, but I'm tired of saying it over and over and the governments of this country not listening. That goes for the federal government and the provincial governments. The relationship between the two cannot be denied. Even though there are different areas of responsibility, what's happening on one level affects the other level.

In the name of everybody who's in this room, in the name of people I have represented for years and years, I'm just sick and tired of us talking and talking and nobody paying attention.

Voices: Hear, hear!

Ms Michael: That's why I'm no longer being polite and that's why I'm not doing the polite thing. I'm tired.

The Chair: Well, I'm glad that in spite of your fatigue you still took the time to come here.

I would ask our participants to sum up briefly, to remind everybody else of their main points.

Ms Blair.

Ms Blair: In the world market, Canada is the envy of many countries. They see us as progressive, humanitarian and caring. However, with the absence of fairness, equity and justice in this country, we cannot continue to pretend to the world that we're good.

While others might think immigrants and refugees to this country are a drain or a burden on this society, it must be recognized that immigrants and refugees to this country have come here with skills and talent that is currently underutilized. Their countries have invested in them, and we as Canadians need to value that.

When we talk about economic renewal and stimulating the economy towards sustainability, the skills and talents of all Canadians must be used. It's on this basis that I'm here today to say please read our brief. We have some very specific recommendations in there that we would like you to consider.

The Chair: Thanks, Ms Blair.

I wish we had more time. I would welcome more time with you, but we've had some unexpected witnesses and we have other witnesses coming.

Mr. Ferrabee, please.

Mr. Ferrabee: Our message to this committee first and foremost is you should take a serious look at the federal level at scrapping the tax and, as our presentation says, replacing it with the BTT. It will solve the problem of the exemptions that have led to our market decline represented here, as well as the ridiculousness of this $727 thing of caviar with no tax on it and this child's milk carton being taxed in our restaurants.

Thank you.

The Chair: Thank you, Mr. Ferrabee.

Mr. Crawford.

Mr. Crawford: In summary I would like to say again that running deficits as we do should not be allowed. There should be some rule in place that it is not allowed. A financial infrastructure should be in place to have targets that are measurable and sustainable.

Your programs should be assessed more than they appear to be in meetings like these. It seems to me I don't have facts -

The Chair: Thank you, Mr. Crawford.

Mr. Crawford: I can see that this magical machine -

The Chair: Mr. Chorostecki, please. I apologize that we didn't give you a chance before.

Mr. Jim Chorostecki (Individual Presentation): I may have difficulty doing this in fifteen seconds, but I'll try to do it as quickly as possible.

I want to start off by apologizing to the other presenters here. I don't mean to intrude on your time, but you have to understand that I don't have an organization representing me per se.

I'm a parent of a child who's severely disabled. I found out about this meeting literally with a call late last night from a friend who had read an article in The Toronto Star about our predicament.

Our predicament is a direct result of the work of this committee and the government. What I need to try to convey to you in a very short period of time is that the kinds of decisions you're making about the funding provided for the care of severely disabled children like my son are having a direct effect on his life and on our family life.

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To sit around and talk about the very real concerns that are happening in the economy, without stopping to think about the results of the kinds of decisions that are being made on the families who are here and the people who are at the weakest point in our society, our children - my child....

In this situation you have to look at the impact of what you're doing. When you're talking about cutting the funding to health services, when you're talking about moving the funding from the federal to the provincial, the reality is that you're talking about reducing the support that keeps my child alive.

I'm just one of many parents. I wish we were better organized, and maybe you're going to force us to become better organized. Maybe you're going to force us to try to get together so that we can get an invitation to come to speak at these meetings as well.

The Chair: We will welcome your presence in the future.

Ms Tripp: I would refer to the title of our brief, ``International Assistance is a Sound Investment''. I appreciate the comments about children being tomorrow's future, not just the children of Canada but the children of the world.

I would offer that Canada has to keep this commitment. These are the commitments of Canadians to move toward the 0.7% of GNP for our overseas development assistance. This is not just an investment in a prosperous and secure world for the beneficiaries; it's an investment in the future for Canadians, as well.

We can move toward this by starting to tax lottery and casino winnings. We can review how we use our defence spending to make it more appropriate in terms of international assistance.

I would offer that Canadians support international development and the values that Canada has always represented at home and internationally.

Mr. Mahaffy: The message we've heard this morning is that we're not a group of diverse interests but we all have a very great concern about the kind of country Canada is. With this in mind, we realize that social security and equity must be prerequisites for stable economic growth and that fighting deficit measures only on the expenditure side will result in increased economic and social costs in the short term.

Programs and federal budget measures must be focused on getting people into Canadian life and economy-making to participate. As an example of that, we have estimates that it costs approximately $4.6 billion to keep people who have disabilities out of the employment market.

Mr. Chance: I would summarize by saying that many young Canadians, including youth and children, are angry and feel their needs are rejected by governments. There are worsening inequalities of opportunity in Canada today.

If we are to avoid social chaos in the future, then we have to develop civic societies that utilize the principles of social capital. Angry young people do not create good potential for social capital. Please look at their interests and those of their families in your budgetary considerations. Fix some means for more equitable distribution of taxation - some of those suggestions byDr. Goldberg - and of wealth for the future, but by all means maintain the power of central government and do not allow the Harrises of this world to deny the needs of children.

Mr. Goldberg: While I represent the senior citizens in Ontario, our proposals were meant to encompass the population as a whole.

We think that a fair taxation system that would increase the amount of money available to the government, rather than cutting social services, would be the ideal situation.

I take issue with something that was said regarding the fact that if a government is trying to control its economy, especially the tax-sheltered portion that leaves the country, then this would lead to a police state. That's totally unacceptable and should never even be mentioned in the context of government trying to control the economy.

Mr. McIver: First, please read our brief. It was written to be read.

Second, around this table today I hear an apparent contradiction between the need for social investment and the accounting realities.

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If I could make one suggestion to this committee, I would suggest that either through your own research or through the Department of Finance you calculate the full-employment deficit of this country. When that is recognized, it will help put in perspective the extremely difficult decisions that are ahead for all of us.

The Chair: Thank you very much.

To our witnesses, may I say this. I have not heard any of you say we do not have to worry about the deficit or the debt. What I appreciate is that most of you have brought us suggestions for how we might deal with it other than by cutting the areas you represent. You've talked very eloquently and forcefully about the social deficit we face here in Canada - those with disabilities, children in poverty, those people who are on social assistance today - and you've talked about the social deficit in our world globally.

I would like to say to our witness Lorraine Michael, if you were with us last year, you would have realized we'd be meeting this year and we'll be meeting next year.

To those of you who don't get a specific invitation, you don't need one. Apply to us, if you would, the next time.

Some of the solutions we've heard were very interesting. We've had the view put forth byMr. Goldberg, supported by Mr. Chance, that simply through monetary policy there's a very easy and painless solution: the bank can print the money and the bank can carry the debt.

I'm sorry, but you did say print the money, because that's what it means to have the Bank of Canada hold more of the debt. That is how it comes about.

But if there were a painless way to do this, then you're assuming there's a conspiracy not to adopt those routes in monetary policy. I would welcome further input from you and from the economists who support you, because you're not alone in presenting this to us, and if there is that painless solution out of this mess we're in, then I would certainly be the first person to welcome it.

We've heard a number of suggestions for cutting the debt and deficit, some of the biggest being cutting defence expenditures; getting rid of the meal and entertainment expense tax, which the restaurant group wouldn't like; the Tobin tax; restricting investments; these sorts of issues. We've heard suggestions on how we might have to look at jobs and work-sharing in the future. You've given us a lot to think about. I hope as we go about this task of meeting our deficit and debt targets none of us will neglect to keep in the foremost of our minds those in our country who are most in need.

On behalf of all members, may I thank you.

We will take a break. This part of the meeting is adjourned.