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STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Friday, October 9, 1998

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[English]

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

As you know, the finance committee is travelling across the country and members of Parliament are holding local townhall meetings to seek input from Canadians as to what priorities should be for the upcoming budget, the 1999 budget. This exercise last year was quite successful, as over 4,000 people participated in the hearings and gave their input, and many of the recommendations made by the finance committee last year found their way into the budget. So I'm sure we're going to hear some ideas this morning that will also find their way to the budget.

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We have the pleasure to have with us representatives from the Alberta Teachers' Association, the Canadian Association of Student Financial Aid Administrators, the Confederation of Alberta Faculty Associations, the Health Sciences Association of Alberta, Results Canada, United Nurses of Alberta, and the University of Calgary.

This panel will start now, at 9 a.m. and will end at noon, so the way this will work is the following: you'll make your presentation and thereafter we'll engage you in a question and answer session.

We will begin with representatives from the Alberta Teachers' Association. Mr. Tim Johnston, welcome.

Mr. Tim Johnston (Executive Assistant, Alberta Teachers' Association): Thank you, Mr. Chair.

The Alberta Teachers' Association appreciates this opportunity to contribute to the federal government's pre-budget consultations, and we commend you, Mr. Chairman, and the other members of the Standing Committee on Finance for seeking widespread public input on a budget that affects directly the quality of life that Canadians enjoy.

Now that the budget has been balanced, and we commend the government for that achievement, it is time to turn our attention to those in our society who cannot, for whatever reason, take advantage of the opportunities offered by this new era.

For this reason, we would urge you to invest the fiscal dividend in programs to combat child poverty. Such an investment would be consistent with the all-party resolution adopted unanimously by the House of Commons on November 24, 1989, which said to seek to achieve the goal of eliminating child poverty in Canada by the year 2000.

Let me explain why the Alberta Teachers' Association has identified child poverty as an investment priority. In 1990, our president sponsored an invitational meeting on the issue of children and poverty. The purpose of the meeting was to discuss the issue and its implications for education and schools, and to determine an appropriate course of action. Our focus was the estimated 156,000 Alberta children who live in poverty, and the effects of that poverty on their physical, mental, spiritual, moral, and social development.

Every day poverty denies low-income children in our province the rights that their middle- and high-income counterparts take for granted—the rights to adequate nutrition, clothing and housing, to the highest attainable standard of health, to equal educational opportunity, to rest and play, and to safety and security of person.

From that initial meeting was born the Committee on Children and Poverty, which consisted of representatives of the Alberta Teachers' Association, the Alberta Chamber of Commerce, the Alberta Home and School Councils' Association, the Alberta School Boards Association, the College of Alberta School Superintendents, the Edmonton City Centre Church Corporation, and provincial Progressive Conservative, Liberal and New Democratic caucuses.

The committee set itself the task of organizing an invitational conference on child poverty. The conference was held in Edmonton in April 1992. We called the conference Missing Pieces; our logo was a jigsaw map of Alberta with several pieces missing. Those pieces represented the programs, services and opportunities that were missing, and are still missing today, for so many low-income Alberta children in the areas of education, health and social services.

The two-day conference began with a showcase of initiatives in place to address child poverty, and a series of presentations on child poverty issues. Participants then broke into strategy sessions, where they developed 14 recommendations for improvement in the areas of education, health and social services.

These recommendations are among the policies you have before you today. I would like to draw your attention to policies 5.B.20 and 8.B.36 in particular. These are association policies.

First, we would urge you to increase the non-refundable tax credit for charitable donations in order to establish tax parity between charitable and political donations. Specifically, we would urge you to amend the Income Tax Act to increase the non-refundable tax credit for charitable donations to 75% of the first $150 of total donations, 50% of the next $675 of total donations, and 33 1/3% of the amount of total donations exceeding $825, provided that the maximum credit does not exceed 20% of income.

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As governments at all levels continue to download their responsibilities onto governments below them, charitable organizations and their volunteers continue to pick up the slack. We believe it is shameful that on the eve of the new millennium it is still more profitable for Canadians to donate their philanthropic dollars to political parties than it is for them to donate those dollars to charitable organizations that are based in and benefit their own communities. If such organizations are expected to pick up the slack, then it is only proper that Canadians be given a fair and equitable financial incentive to support them in their endeavours.

The second policy, 8.B.36, urges the Government of Alberta to provide funding to enhance local decision making by and among governments and community organizations. While directed toward our provincial government, this recommendation is equally applicable to the federal government.

The Alberta Teachers' Association believes that communities are in the best position to identify their own unique needs and determine how best to meet those needs. When it comes to combating child poverty, one size definitely does not fit all. Our communities must be allowed the opportunity to address the issue within the context of their particular demographic characteristics and resources.

To that end, the Alberta Teachers' Association has taken upon itself the task of initiating a series of round tables on poverty to be held in communities across Alberta.

The goals of the round tables are: one, to bring together sectors of communities to work towards improvements in the lives of people living in poverty; two, to bring together employers who can offer jobs and unemployed and underemployed people who require jobs; three, to bring together people who are experiencing poverty, with a view to providing a forum for them to express in a common voice concerns about their lives and hopes for their futures; four, to bring together representatives of agencies that provide advice and assistance to the business community to provide information concerning benefits to businesses of employing the unemployed and underemployed within the community; five, to bring together representatives of agencies that provide advice and assistance to those experiencing poverty in order that a clear understanding of the full range of support services available is provided to the community; six, to share together information, experiences and aspirations; and seven, to develop together a community plan to alleviate poverty within the community.

The first round table was held in May 1998 in Mill Woods, a community in southeast Edmonton. Round tables are contemplated this year for northeast Calgary, Fort McMurray and Provost.

We would urge you to act on the input from these round tables. The recommendations of the Mill Woods round table, which you have before you, include many targeted toward the federal government. It is not enough for you to read the recommendations and commend the organizers for their efforts.

The people whom these recommendations are designed to help, many of them children, are the very people who cannot, for whatever reason, take advantage of the opportunities offered in this new era. They need your help and they need it now. Please study the recommendations and provide an immediate and constructive response.

The Alberta Teachers' Association has assumed a leadership role in seeking to end child poverty in Alberta. That role is a logical one. The cognitive, psychological and emotional effects of child poverty are manifested daily in schools. As teachers know all too well, their classrooms are not isolated from the largest social order; they are an integral part of that order.

Of course, teachers cannot by themselves be expected to solve the problems associated with child poverty. The solutions are to be found through a holistic approach that involves not only the education sector but also governments, health and social service providers and the business and volunteer communities.

That is why we are appearing before you today. That is why your support of these recommendations is essential.

The Alberta Teachers' Association thanks you for this opportunity to contribute to your pre-budget consultations.

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

We'll now hear from the Canadian Association of Student Financial Aid Administrators, Ms. Teresa Alm president, and Ms. Charlotte French, past president.

Ms. Teresa Alm (President, Canadian Association of Student Financial Aid Administrators): Thank you for the opportunity to be here today.

The Canadian Association of Student Financial Aid Administrators, and I'll refer to ourselves as CASFAA, appreciates the opportunity to participate in these 1999 pre-budget consultations by way of this presentation.

CASFAA's membership includes professional and administrative personnel from universities, colleges and technical institutions that have direct involvement with student financial aid and/or student scholarship programs. Financial aid administrators design, promote, adjudicate, and disburse awards to students in the forms of loans, grants, scholarships, and bursaries. Financial aid administrators at post-secondary institutions have a unique opportunity to interact directly with a large percentage of the student population.

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CASFAA acknowledges that the 1998 budget was a landmark budget for higher education with respect to the student financial aid measures announced. The 1998 budget did lay significant groundwork by providing upfront grants for students with dependants, helping students manage debt by providing tax relief for interest paid on federal and provincial government student loans, expanding the existing federal interest relief program, and introducing debt reduction measures for high-need graduates.

The budget also extended tax measures to assist learners by means of broadening the education tax credit to part-time learners by permitting students to make tax-free withdrawals from RRSPs to encourage lifelong learning.

It also encouraged families to save for their education with the introduction of the Canada savings grant.

A number of students will eventually benefit from these measures. It's anticipated that other financially needy students with receive assistance in 2000, when the Canada Millennium Scholarship Endowment Fund begins to disburse awards.

These programs provide the underpinning necessary to combat the escalating debt loads Canadian students are accumulating.

The 1998 budget can be seen as a turning point in student financial assistance, with the federal government acknowledging the escalating debt levels incurred by students and by introducing various types of grant programs to address the debt issues that have created barriers to accessing higher education in Canada. CASFAA has used these measures as a solid foundation for the future that serves to strengthen the existing Canada student loan program. The effectiveness and impact of these announcements cannot be fully known until the details of all of the measures have been worked out and implemented, particularly in the light of harmonization.

Given the current harmonization discussions occurring between the federal and provincial jurisdictions and the heightened awareness of concerns emerging from the participating lenders, CASFAA has two recommendations to strengthen the student financial assistance programs in Canada.

The first is the introduction of a federal work study program. Work study is a student aid program that allows students with the highest need to earn additional funding without accumulating further debt. CASFAA has been a long-time advocate for the introduction of a national work study program because of the benefits to everyone involved in the program.

Students benefit on two fronts. They benefit financially by means of earning non-repayable aid that addresses unmet needs and limits new debt. Through work study, students acquire skills and knowledge to assist them after completing their education.

For many students, these career-related experiences are in the area of research, where the student has the opportunity to engage in original discoveries. In the end, all Canadians gain from innovative research that is critical to determining the economic success of our nation.

We are also recommending the introduction of a grant for high-need students. We recommend expanding the existing Canada study grant to include upfront grants for those students in highest need. This grant would not be targeted to a specific population, such as the current grants for students with dependants or disabilities. Rather, the grant would be disbursed to those students with unmet needs or high needs. That means those students whose basic financial needs as determined by the government cannot be met through the existing federal or provincial government student loan and grant programs.

The proposed Canada study grant for high-need students will provide the academically qualified students who have very limited resources with a further incentive to pursue higher education and thereby improve his or her opportunities to participate in the labour market.

CASFAA is of the opinion that a national work study program and a Canada study grant for high-need students, together with the measures announced in the 1998 federal budget, can make student aid an effective and comprehensive student support program. All academically qualified Canadians, regardless of financial means, should have the opportunity to pursue a post-secondary education. With a truly comprehensive national student aid program, the goal of increasing accessibility can be achieved.

Thank you.

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The Chairman: Thank you very much.

Now we'll hear from the Confederation of Alberta Faculty Associations. Dr. Scott Grills, welcome.

Dr. Scott Grills (President, Confederation of Alberta Faculty Associations): Thank you for the opportunity to appear before the committee and to offer input into the process as you undertake your important work.

The Confederation of Alberta Faculty Associations represents faculty at the University of Alberta, University of Lethbridge, Athabasca University and Augustana University College.

I will direct my comments toward some of the notable accomplishments of the university sector, areas of concern, and some suggestions we would offer to at least in part address these issues.

First, our accomplishments. The educational base of our population is extremely high, which is prominently reflected in the UNDP ranking of Canada as number one on its human development index. There is no indication that Canadians are changing their minds about the value of post-secondary education. PSE enrolments have climbed 841% between the 1950s and the 1990s.

As Canadians, we should be particularly proud of the accessibility of PSE for Canada's women. Women now make up more than 50% of the graduates in all of the major areas of study, with the exception of mathematics, engineering, and physical sciences.

All indications are that Canadians will continue to seek post-secondary education, and all economic statistics show that the better educated an individual is, the better the prospects for continuing productive employment and one's corresponding status as a taxpayer.

In addition, education leads to economic stability. As our economy becomes more knowledge-based, reliance upon the resource sector and its cyclical qualities decreases. Investment in education holds direct implications for Canada's economic future.

Likewise, investment in research and development holds a variety of benefits for Canadians. However, research and development in Canada is highly dependent upon the university sector, while private sector investment is extremely low in international terms. Nevertheless, the quality of research accomplished by Canadians in the sciences, arts, and humanities is world-class.

Education is the precondition of a democratic society. Similarly, our international position is founded upon an international consciousness that is fostered by our educational institutions. Canadians agree on the importance of education. Approximately 80% of Canadians affirm the role of education for increasing one's life chances.

Here is our current situation. Continued debt reduction is necessary. However, this must be balanced by the recognition that reductions in government spending have come with considerable costs, especially costs imposed through the reduction in transfer payments to the provinces.

Last year's federal budget did contain many provisions, both long-term ones and short-term ones, that will assist Canadian students and researchers. However, these provisions did not touch upon the basic problem of continually declining real funding to institutions. Federal reductions in post-secondary transfers have resulted in provincial reductions to institutional grants. Increased tuition fees for students have not been sufficient to replace the shortfall, nor can they be without becoming a deterrent to continuing one's education.

An important major consequence of increasing tuition is the increasing student debt, which will continue to rise for the foreseeable future. For example, the average Alberta university graduate's debt load increased by $5,000 in one year, going from about $12,000 in 1996 to about $17,000 in 1997. Although it will be moderated somewhat through the Canada Millennium Scholarship Endowment Fund and changes to the RESP system, the barrier to post-secondary education that personal debt poses is a considerable concern.

This is particularly troubling when one considers that major obstacle to post-secondary education access in Canada is class. Young people with lower family incomes or who have fathers in traditionally defined blue-collar occupations are much less likely to attend universities than others. Increasing student debt reinforces existing class barriers.

Less visible, and in some ways less quantifiable, is the stress within our universities. Facilities are extremely crowded. Classes continue to increase in size, limited in many cases only by the size of the classroom. Student-to-faculty ratios increase relentlessly. Salaries and working conditions for faculty have stagnated for more than a decade.

The mean salary for faculty members at the University of Alberta was approximately $57,000 in 1986-87. Corrected for inflation, the mean salary for 1995-96 for the same group declined by more than $1,500 to just more than $55,000. Libraries are faced with ever-increasing costs, made even more debilitating because they are largely in foreign currencies. Public and government expectations of our universities increase. Institutions are expected to be labour market responsive, to lead in information technology, to keep Canada abreast of international research, and to train the researchers of tomorrow.

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In light of our accomplishments and concerns, we would offer the following recommendations. We favour explicit continued federal government involvement in post-secondary education, but we worry that the provinces are not constrained to spend transfers for specified purposes. We would like to see the federal government use its spending powers to establish standards governing student assistance, academic transferability, and interprovincial mobility; to require the provinces to match federal funds; and to enhance our research capacity. While mindful of the constitutional implications of this position and the possible need for provisions to accommodate the uniqueness of the situation of our colleagues in Quebec, we nevertheless endorse the continuing involvement of the federal government in these areas.

Provincial funding for research and development has dropped. Reflecting the reality that the fruits of research do not stay within provincial boundaries, we have seen provincial action that may be described as a race to the bottom.

However, the knowledge industry is national, and therefore it requires continued federal involvement. Specifically, we recommend increased funding to the three granting councils in support of basic research, based upon the principle of non-directed funding and its importance for preserving academic freedom independent of the inherent imperatives of the moment. A relatively small increase in research grants for the social sciences and humanities would have an enormous beneficial impact both practically and on those who work in the area.

Various government departments have launched focused research to support programs in conjunction with the granting councils. We commend this initiative and wish to see it expanded.

We recommend a continuing watch on the problem of student debt and consideration of a remission threshold within the Canadian student loan program.

In conclusion, Canadians have a university system with notable accomplishments, which we should applaud. However, our recommendations point to significant areas of concern. These concerns hold direct implications for the accessibility of university education, the quality of the learners' experience, the depth and range of Canadian research and development, and our ability to attract and retain university faculty. The continuing decline of basic funding to universities carries with it a significant cost to Canadians.

Thank you.

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

We'll now hear from the Health Sciences Association of Alberta, Elisabeth Ballermann, president. Welcome.

Ms. Elisabeth Ballermann (President, Health Sciences Association of Alberta): Thank you, Mr. Chairman.

The Health Sciences Association of Alberta is a trade union representing in excess of 9,000 health care professionals, technologists, and support workers in a variety of health care settings across the province. As such, we negotiate collective agreements, but we also participate in advocacy at various levels of government to advance the social and economic interests of our members. We thank the standing committee for this opportunity to participate in this pre-budget discussion. We'll limit our discussion to labour and social issues, in accordance with our mandate.

Fiscal reform has swept this country. The era of budget cutting and downsizing has been harsh for a large number of public employees and has had a trickle-down effect throughout the economy. The federal deficit has been eliminated, and this government has committed itself to reinvesting surplus funds for the public good. This submission will deal with several broad public policy areas, with the full understanding that they are but a segment of the federal finances. We address methods of dealing with the employment insurance surplus. We support enhanced health and education funding, as well as a renewed infrastructure program and a commitment to research and development activities.

With regard to the employment insurance program, in recent days media reports have suggested the finance minister may propose that a part of the accumulated EI surplus be used to enhance health care spending or to reduce the national debt. The purpose of the surplus is to ensure that the insurance scheme will be able to provide benefits to eligible workers in the event of a major economic recession, and should current market trends continue, we may see such a recession in the near future.

Current reports do indicate the surplus exceeds the projected requirements even for a worst-case projection. This surplus is a result of contributions by employers and employees. Assuming the aforementioned projections are reasonably accurate, the issue is how to deal with the excess funds.

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While we fully support enhanced health care funding, it is HSAA's position that to use the EI surplus for this purpose would constitute an inequitable tax on working Canadians. Furthermore, such a tax would be regressive to the extent that those workers whose income is at the level of the maximum insurable earnings would be contributing the same amount as those whose incomes are substantially higher. This is totally contradictory to the graduated taxation system of Canada, which rightfully requires high-income earners to contribute a higher rate of income tax.

We unequivocally oppose the diversion of the accumulated EI surplus for any purpose other than providing benefits for workers who have contributed to the fund. We propose the following to address this issue.

First, the surplus has accumulated as a result of contribution rates. It has not accurately reflected the actuarial requirements of the insurance scheme. As a first step in addressing this surplus, we recommend the contribution rates be reduced to realistic levels. We are not in a position to suggest specific levels, but are confident the government will be able to do so.

We believe benefit levels and entitlements must be reviewed. In the recent revamp of EI from the old Unemployment Insurance Commission, eligibility and benefit levels were greatly curtailed. We believe enhancements of benefits are in order for both unemployed and sickness and parental entitlement.

If the surplus is of such a magnitude that even with the restoration of benefit levels and enhancements of entitlements it is more than adequate to cover any major economic recession, then such surplus must be returned to the participants. We suggest this be done by a contribution holiday, which would have the effect of maximizing the refund to individuals by avoiding the administrative costs of actually producing individual cheques.

Finally, we believe the employment insurance administration and its fund must not be commingled with government operating funds. It is our position that the premiums paid are held in trust for employees who have contributed, and to use these contributions for any purpose other than the EI-related activities would, in our opinion, constitute a breach of trust and of the fiduciary duty to participants.

In regard to health, cuts to health care funding, whether at the provincial or federal levels, have affected every one of our members, not only by way of actual salary cuts but also through reduction of hours, if not outright layoffs. Both provincial and federal deficits have been eliminated now, obviating the need for continued cuts. We fully support the position of the honourable Minister of Health that if transfer payments in the form of CHST are increased, mechanisms must be put in place to ensure they are actually channelled to the intended goal or program.

We agree provincial governments must not be allowed to use such transfer payments to reduce their own budgets and to finance provincial tax cuts. As with specific EI rates, we are confident the federal government will be able to control and direct the allocation of CHST funding.

With this proviso, we strongly urge the federal government to increase health care funding. As we've stated in past presentations, HSAA strongly believes the withdrawal of substantial federal contributions has compromised Parliament's ability to protect the principles of the Canada Health Act. This recommendation is in keeping with the findings of the national forum, that Canadians value and are prepared to fund their health care system.

As for advanced education, funding cuts have had an effect, as has been said, on post-secondary education. They have spurred dramatic tuition increases in most areas, class sizes have increased, choices have declined, and corporate sponsorship is increasing. More fundamentally, post-secondary education is beyond the realistic reach of many bright young Canadians, purely on financial grounds. HSAA believes the federal government must play a key role in ensuring that educational opportunities are accessible to all.

Nevertheless, workforce and education planning must be done with sufficient foresight to avoid shortages and gluts of specific skills. Health professions in particular have seen an exodus from Canada in the past few years. HSAA believes it is imperative young Canadians have an opportunity to practise their occupations in Canada. We must ensure sufficient positions exist to equalize the international migration of skilled individuals.

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On infrastructure, as part of the efforts to curb fiscal deficits, governments at all levels have also curtailed necessary infrastructure maintenance and development. Consequently, public buildings, roads, and other structures in many areas of the country are in poor condition. Failure to deal with maintenance needs will undoubtedly result in ever higher costs to restore these resources or to develop them to adequately meet the needs of the public. This government's infrastructure programs were of substantial assistance in addressing some of these needs, with the added benefit of creating real jobs for many Canadians. HSAA supports the allocation of funds to again provide a program to deal with any public infrastructure needs. We would, however, object to some of the applications in the past, which have enhanced private for-profit ventures, particularly sports organizations.

With regard to research and technology, the percentage of gross national product Canada spends on research and development is paltry compared with other developed nations. In order for our country to be able to compete internationally, we believe it is imperative Canada display a serious commitment to research and development. Canada must move beyond being seen as a primarily resource-based economy, and to do so it must demonstrate its support for scientific inquiry.

The submission of the Health Sciences Association of Alberta is of necessity limited in its scope. The areas highlighted—that is, employment insurance, health infrastructure, advanced education, research, and technology—are ones that directly affect our members. We are cognizant the committee's scope is much broader than the issues identified and addressed. However, we hope our views will be of assistance.

Thank you.

The Chairman: Thank you very much.

We'll now hear from Results Canada, Ms. Catherine Little, national manager. Welcome.

Ms. Catherine Little (National Manager, Results Canada): Welcome, and welcome to the other members of the committee.

For those of you who are not familiar with Results Canada, we're a grassroots citizens' lobby group whose aim is to create the political will to end hunger and absolute poverty and to demonstrate that individuals make a difference. So I'd like to think I speak somewhat on behalf of the 1.3 billion people on this planet who live on less than $1 a day.

Thank you to my co-witnesses for laying some groundwork on what is happening in Canada.

Now I'd like to turn to our foreign aid budget. One grim fact that still exists on this planet is that 33,000 children die every day, largely of preventable diseases. That's 12 million children every year. It is equitable to two preventable holocausts per year. These are children who live mostly in the developing countries and who die because they lack basic food, water, sanitation, and medicine. We're simply not providing basic human needs.

This October marks the 30th anniversary of CIDA, an agency created to give life to Lester B. Pearson's dream of Canadian leadership in contributing to peace and prosperity on this planet. Lester Pearson was a man who suggested the goal of 0.7% as the percentage of gross national product each country could give to foreign aid. The way it's turning out, we are now at a 30-year low, which I don't believe was his intention.

Also, no other government sector has been cut as much as the foreign aid budget. We peaked in 1991 with 0.49%, and in succeeding budgets over the last six years we've been cut 29%. Now we're at 0.27% of GDP. Along with these cuts there has also been a disproportionate cut in the percentage of money going to the least developed country. A reference has already been made today to the United Nations development report, where we were ranked number one. This year we actually fell from number six to number eleven out of the seventeen developed countries in the amount of money we give to foreign aid.

I say there is no excuse why we can't recommit and start now, so my recommendation to the committee is to increase the amount of money going to our ODA. Sweden, Norway, and Denmark consistently exceed 0.7%, and they have maintained that for several years. Australia and Great Britain are presently increasing their amount of money going to aid.

There are solutions everywhere. UNICEF is the organization that primarily has all the information on inexpensive and very cost-effective things, such as oral rehydration that saves lives, rather than having children dying of diarrhea. Mere pennies can give vitamin A to children, which prevents blindness and other infections, and on and on in that regard. A lot of the micro-nutrients are amazingly cost-effective and cost pennies.

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Historically, UNICEF estimates that approximately half the economic growth achieved by the U.K. and other western European countries between 1790 and 1980 is attributable to better nutrition and improved health and sanitary conditions. I would say North America is no different, and my other colleagues have spoken here about how important nutrition and education are to the health of every country.

So it's our opportunity, with a budget coming up— Historically Canada has been generous, and studies show Canadians still want to share their wealth with the poorest, particularly with those most in need. There's been support throughout the media. CIDA did cut the immunization program, and through support of the media and others it has been reinstated. Immunization is one of the most cost-effective ways of saving children's lives. I think we need agreement that recommitting to foreign aid is of top priority.

Being the top country in the UNDP report I think gives us the responsibility to ensure that those families at the bottom at least have their basic social services needs met. Although last year there was a slight windfall of $90 million due to some prepayment of UN fees, in this budget coming up there's to be still another fall, and everything is showing we're going to continue to decrease foreign aid. I'm here to request that this trend reverse itself and we start increasing.

In regard to tied aid, although our government has stated a commitment to reduce the amount of tied aid, in the last ten years we've actually gone from having 60% to 70% of all our ODA never leave this country. So as well as starting to increase our money to ODA, we can best leverage that effect by dedicating a percentage of that aid specifically to basic social services. That's defined as primary health care, primary education, basic water and sanitation, and micro-credit—small loans to the poorest. The World Bank and the consultant group assisting the poorest define “poorest” in the developing world as the bottom 50% of those people living below the poverty line. In the industrialized countries it's those living below the poverty line.

We say basic social social services and micro-credit because these are two that have proven track records of having the largest social impact for the smallest investment. And as people speaking to education— Just like in this country, education, as the World Bank study shows, particularly for girls, is probably the most cost-effective investment available in the developing world.

We could also give priority to countries that give priority in their own domestic expenditures to their poorest citizens. We could do something along the lines of the 20/20 initiative the UN social development summit spoke to in 1985 in Copenhagen, where we in the developing world would give 20% of our foreign aid budget to basic social services, and 20% of the domestic budget in the developing countries would go to basic social services for their own citizens. We can support that. We could also develop a matching mechanism so that for every additional dollar that goes to micro-credit for the poorest, or to basic social services, we could add another Canadian dollar.

Our basic recommendation is that it's time to recommit to the 0.7% of Lester Pearson's goals, and start increasing our funding for ODA and targeting it specifically to the purposes of the poorest, in the areas of basic social sectors, micro-credit, and, as we have in our report, support for the international financial institutions in those areas that target the poorest of the poor.

In conclusion, I say the world is at a crossroads. We have an unprecedented opportunity to end the needless death and suffering of the millions by applying proven, low-cost, sustainable measures. Never before has it been possible to bridge the gap between affluence and destitution. There is an opportunity to meet everyone's basic needs within a decade with the effective use of moderately increased aid resources.

It is a down-to-earth goal that every taxpayer can support even in a period of fiscal limitations. The price tag in the initial year is $500 million per year, which includes $350 million for basic social services, $50 million for micro-credit for the poor, and $100 million for the international financial institutions. It is very affordable. It does not involve reinstituting so much as half of the budget cuts.

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Our report also suggests that we could continue to increase the funding for ODA to, within ten years, be back to the level we were at when the budget cuts started, pre-Mulroney and continuing through this Liberal government.

In conclusion, I say it goes to the heart of what we would choose to be as a country on the international scene: a country whose generosity peaked in the late 1980s and is now on the decline, or a proud and confident society that begins the millennium with a new resolve to make a difference on the planet.

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

We'll now hear from the United Nurses of Alberta. Heather Smith, welcome.

Ms. Heather Smith (President, United Nurses of Alberta): I thank the chair and this committee for providing United Nurses of Alberta with the opportunity to speak to you this morning. I'm here representing United Nurses of Alberta, a trade union that advocates on behalf of 17,000 registered nurses and registered psychiatric nurses across the province of Alberta, in a wide variety of settings from community to the continuum of acute care. We work in coalition with seniors, teachers, and other unions to advocate for public health care.

Just one year ago, Minister of Finance Paul Martin announced that the federal deficit was the smallest federal deficit in over two decades. As a proportion of our economy, at 1.1% of the gross domestic product, it is the lowest deficit recorded since 1970-71. The press release went on to say:

    “The government welcomes a broad public debate about how to use the fiscal dividend.

That's part of why we're here today, and it's much appreciated.

    The debate should be about national priorities—about how to build a strong economy and a strong society

—I would add emphasis there—

    one of both opportunity and security,” the Minister said. “What we must do is to ensure that the quality of growth we all seek contributes to the quality of life Canadians deserve.”

The press release was accompanied by the “Economic and Fiscal Update: Strong Economy, Strong Society—Security & Opportunity”, issued October 15, 1997. On page 56 it reads:

    This means ensuring that Canada's valued health, education and social programs are there for those who need them. The federal government is determined to build a society of skills, innovation and security, where each element reinforces the other, creating and sustaining jobs and raising the Canadian standard of living.

Again, on page 57:

    Over the last four years, the federal government has pursued a strategy of restoring Canada's fiscal health as a means to creating the conditions for stronger economic growth and job creation and sustaining the long-term viability of Canada's health, education and social programs—

    The challenge now is to build on these achievements so as to assure Canadians of a strong economy and a strong society for the future. The key lies in maintaining fiscal health while at the same time making strategic investments to build opportunity and security for all Canadians.

I ask these questions: Where is the evidence that Canadians feel secure about their health care system today? What has to be done to enhance the fiscal health of health care?

As I prepared this presentation, I could not stop thinking about a couple I met with on Monday of this week. She is a registered nurse, and her husband is self-employed. Her dilemma is that she is not dying fast enough and she wants to die at home. She has been ill for more than the thirty months covered by our negotiated supplementary health benefits. Although they have the ability to afford the premiums for private supplementary coverage, her cancer invalidates her. She qualifies only for the most meagre of Blue Cross coverage.

Her fear is that she will live and require drugs, services and devices that will not be covered by either the provincial health plan or the secondary benefits she will purchase. She does not want a financial burden—caused by her death and her desire to die at home—to jeopardize her husband's business. Her desire to die at home means she must subsidize our health care system even though it would truly be cost-effective for the health care system. Although she is terminal, she wants to fight to prevent other Canadians from experiencing the anguish and emotional distress she is undergoing.

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This woman has family and has the financial ability to pay for private supplementary coverage. She has had thirty months' worth of enhanced coverage. She is far more fortunate than many Canadians. But if she lives until the next federal budget is presented, will she see initiatives that reflect strategic investments that build security for all Canadians, as promised by the finance minister?

I'm going to speak about federal leadership and budget priorities that I believe are consistent with the strengthening of our economy and our society. Our planning and priority horizons should not be limited to one year—and I have recommendations that go beyond a one-year timeframe. If we are unable to “afford” initiatives this year, when will we? What will be done specifically for health care to ensure viability, accountability and expansion to achieve fiscal health or well-being?

One year ago, Albertans identified very clear fiscal priorities for the province of Alberta. I do not believe the needs and will of the people of Alberta differ drastically from the will, needs, hopes and aspirations of their fellow Canadians. Albertans want to see investment in our people, our health care and our education.

In “The Budget in Brief”, February 24, 1998, Finance Minister Martin said:

    The tax measures are first steps. Looking ahead, we will build upon them as we can. We will do so with the nation's economic and social needs very much at the forefront of our consideration. We will do so in a measured and responsible way. Let there be no doubt: as soon as we can afford it, taxes will be further reduced.

We suggest to you that reinvestment takes priority over tax reductions. This is consistent with the direction given during the 1997 growth summit process here in Alberta. Albertans believe that overall budget initiatives, priorities and planning should be geared toward reinvestment in the people of Alberta and towards the support and enhancement of a strong and cohesive Canadian society.

Enhanced health care programs are far more than an equitable way of relieving burdens. The wrong Canadians are subsidizing our health care system. All Canadians will benefit from a health care system that does not disproportionately tax the sick.

Greater emphasis must be placed on fair taxation and on ensuring that individuals and corporations do not elude their responsibilities—and in my written document I've quoted from The Financial Post of May 9, 1996.

Reinvestment in good programs that reduce disparity and enhance social cohesion should be the priority of the federal government—those being health care, post-secondary education, and income support. We believe that strong federal participation and leadership is imperative, but it will not be tolerated by the provinces and territories unless accompanied by vigorous financial participation. We recommend that the federal government abandon the present funding arrangement, the Canada health and social transfer, in favour of program-specific funding inclusive of national standards, accountability and enforcement provisions.

Further, in terms of health care, we recommend that the federal government return to a 50-50 cost-sharing arrangement with the provinces. Diminished federal financial support has reduced the credibility of federal government attempts to encourage compliance with the Canada Health Act. We do not support the suggestion arising out of the social union discussions: that third-party arbitration should be used as a means to resolve disputes between the provinces and the federal government. The federal government should not abdicate its authority and responsibility to act on behalf of all Canadians.

One year ago, we were encouraged when the National Forum on Health supported the development of home care and pharmacare programs. I personally had the pleasure of attending the national conference on home care in Halifax earlier this year. There, Michael Decter stated that home care spending amounts to $2 billion per year. When I asked, though, he was unable to quantify the amount spent by individual Canadians to augment provincial funding.

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To our knowledge, no one has attempted to quantify the hidden costs to business and health care. Those hidden costs come in terms of lost time in providing care, and the secondary health needs and costs associated with exhausted informal care providers. It is time for Canadians to share the financial burden paid by individuals and families for private insurance and out-of-pocket expenses. We know that a single-payer system, in which costs are distributed across the full population, is the most cost-effective system, and the only way to promote universal access.

We believe a comprehensive home care program, supported by community health centres and inclusive of ambulance services, will have a positive financial impact on overall costs and a positive effect on the quality of life of those served. The shift from hospital care to community-based care has been hampered by the offloading of medication costs. We therefore recommend that the federal government set aside additional resources to support the implementation of these initiatives—home care and pharmacare—and recommend a 50-50 cost-sharing program with the provincial governments. As a minimum, the 1999 federal budget should allocate $2 billion for home care and basic pharmacare coverage. We further recommend the development of a comprehensive pharmacare program by 2002, supported by more appropriate pharmaceutical legislation.

A week ago, I attended a meeting of the College of Physicians and Surgeons of Alberta in Calgary because, once again, exploiters exerted pressure to expand their role in delivering health care services. The underfunding of our health care system has resulted in a crisis of confidence, and has made us vulnerable to quick-fix but, I point out, non-cost-effective or equitable solutions offered by these health care entrepreneurs.

We believe the growing private presence in our public system poses a threat not only to the Canadian health care system but to the very principles that underpin national unity. We recommend that resources be dedicated to a national dialogue to determine the extent to which private for-profit interests are tolerated in a country whose public health care system is the envy of the international community. I did raise this last year with this committee, and I point to two inclusions in your package: a series of postcards that health care advocates in this province have initiated, as well as an explanation of that initiative.

I know our time here is limited, but I encourage this committee and all federal legislators to look beyond the next federal budget. The sustainability of our nation is dependent on more than a one-year fiscal plan. Our health as a people is impacted by what you do and do not do. By not implementing a national home care program, you will continue to disproportionately burden those who are sick and their families. By not amending the patent protection act and not implementing a pharmacare program, you can be seen as fiscally irresponsible. By not addressing private for-profit initiatives, you will not only be fiscally irresponsible, you will be promoting the development of a multi-tiered health care system that you claim to abhor.

As a final note, we will be providing a supplement to our recommendations today to cover the areas of the Health Protection Branch, bank mergers, international trade agreements, and employment insurance. With that, I thank the committee for permitting our presence here.

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

We'll now hear from a representative from the University of Calgary. Dr. Fritzler, welcome.

Dr. Marvin Fritzler (Individual Presentation): Thank you, and good morning. As others have said, we really appreciate the process. For those of you who do not regard Canada's finest city as your home, welcome to Calgary.

I don't represent the University of Calgary; that's just where I hang my hat every day. Today, I'm representing the health care research and biomedical research community of this country. That, in other fora that you participate in, will be presented by the Association of Canadian Medical Colleges and the Coalition for Biomedical and Health Research.

One of the advantages of going last is that I won't be reading my presentation. If you'll pardon me, I can be emotional about this, but I'll try not to be.

I'm a third-generation Canadian. I'm not unique in this country, but significant changes are required if we believe the information- and knowledge-based economy in this country is a winning strategy.

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The brief I presented to you gives a lot of detail. I want to focus on the first and last pages. The last page, appendix I, shows a graph that illustrates what at first glance may be a very optimistic view of the health research and biomedical picture. It's a snapshot of what has happened at the University of Calgary in the 1990s.

You'll see that we have increased the intake of health research funds in this city by almost 60% in the period from 1991 to 1997-98. Those funds, which now exceed $50 million, are leveraged to a ratio of 3:1—and this figure is the same virtually right across this country. That is, for every dollar we bring in, three dollars are leveraged.

You might ask where that comes from. If you look at the bottom part of the graph, you'll see two lines. One represents the resources that we derive from the Medical Research Council. Over the past ten years, they have remained fairly constant. We're proud of that because the budget at the MRC has declined over that period of time, as most of you know, but we've remained competitive. As you can also see, the Alberta advantage, through the Alberta Heritage Foundation for Medical Research, has supplemented that with levels that are almost identical to those of the Medical Research Council.

Those are the major contributors to the biomedical and health research dollar that we attract. If you add them up, though, they only account for 30% of the funds that are used for biomedical research today, 1997-98. Where does the rest come from? It comes from two sources that are increasing. One is industry, which for us means primarily the Pharmaceutical Manufacturers Association of Canada; and the other is foreign research dollars that are coming into Canada because we have a viable resource based in our university health research sector.

I want to just go through the recommendations. The recommendations on the first page are a summary of the detail that's contained in the rest of the submission. Many of these recommendations you'll hear again because, as I've said, we are endorsing presentations of other bodies that are meeting with other parts of the committee as you move across the country.

The issue of recruitment and retention addresses the problem of the brain drain, and that's why I started off emotionally. I served as a consultant to the Medical Research Council of Canada and to the Natural Sciences and Engineering Research Council on the issue of the brain drain. When the report comes out, you'll be hearing that for every one scientist in the biomedical and health research sector who is attracted to Canada, we are losing five. The three recommendations that follow are therefore made to address the brain drain.

It is recommended that incremental funds be established to permit substantial and timely commitments to the most qualified—and I emphasize “the most qualified”—and promising recruits to Canada.

On recommendation two, you've already heard about the salaries in our universities. It is recommended that novel and innovative funding be created for clinician scientists to the extent that this will be an attractive career pathway. The clinician scientist is a unique entity. By and large, these are physicians who have added a dimension of being able to engage in meaningful applied research after their clinical training. The health care economy in this country and in this province is not conducive to the activity of that unique individual. The salaries are terrible. What do they have to do to keep bread on the table? They have to go to see patients all the time, thus they never make it to the applied level of their research. Continued success of this program is essential for the development of legitimate translational research activities in medicine.

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Recommendation number three—I've said five out, one in—we're losing the best. Yes, we have high-quality people here, but the stress— The market right now internationally is such that in the biomedical and health research area, we are losing our best. For that reason we recommend that a national strategy emphasizing the clear development of productive senior scientists be articulated and supported to avert the brain drain. Any program should consider means to reinvest in this key knowledge resource through re-establishment funding.

Trainees: You've heard about the students. The millennium fund is an important step in the right direction. But in the case of our graduate and post-graduate trainees, they are leaving this country to receive high-quality training. That was a strategy that worked well in the seventies and eighties. In the past they've returned. I can tell you, from personal experience, that the best are not returning, because the climate here is not conducive to that. I can point to one of my own students who went to La Jolla, California, to receive training in the very best biotechnology, cloning allergens into plants so that we have a much better resource in terms of desensitizing patients who have allergies. We have the technology right here in Calgary. He was offered $1 million in start-up funds to stay in California and a salary three times what we could offer him in Calgary.

We need to create an environment that's going to train our graduate students in the appropriate places. We have the quality here now in Canada, but we also need to create an environment to track them back.

The last four bullets summarize a solution really to the problems I've presented to you, and they are endorsing recommendations and submissions you'll hear across this country.

The Canada Foundation for Innovation was an important step for the government. However, this five-year program, in the first year of competition, had a $2 billion call on that fund, which in the first year is only $200 million. A $2 billion call on a resource of only $200 million should tell you quickly the depth at which we are suffering in the infrastructure resources at our post-secondary education institutions in this country.

We recommend that you continue to support the CFI, but more importantly, the standing committee will have received a brief from Dr. Strangway, who has urged the government to take another serious look at the CFI program, because the depth of the need is much greater than the current allocation.

Secondly, we support the submission of the Pharmaceutical Manufacturers Association in requesting an improved tax incentive to track more pharmaceutical research to Canada. I've already said our only areas of growth are in the industry contribution to the research dollar. We need to improve on that. We don't want to rely entirely on taxpayers' money as directed by the Government of Canada. But the environment right now for pharmaceutical research in this country is not entirely conducive to that. Tax incentives are needed to attract that kind of investment here.

Thirdly, a solution to all of this would come by allocating 1% of the health budget to biomedical and health research. I don't know of a successful business in this city or in this country that does not have the foresight to invest at least 1% of their operating budget in R and D. It makes business sense. Why does it make business sense? I've already told you. That dollar is leveraged three to one.

Lastly, you will see a recommendation coming to establish the Canadian institutes of health research. This will be an answer that will cover many of the concerns I've addressed above, at least in the biomedical and health research sector. This will be presented by the Medical Research Council with the support of the other councils, the Association of Canadian Medical Colleges, and the Coalition for Biomedical and Health Research.

Thank you for this opportunity.

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

We will now start our question period with Mr. Harris, followed by Mr. Desrochers.

Mr. Dick Harris (Prince George—Bulkley Valley, Ref.): Thank you, Mr. Chairman, and presenters, thank you for your excellent presentations.

My first question will be to those involved in education. I know you're all involved somewhat in education, except for Ms. Little—who is involved as well.

I guess this is specifically to the Alberta Teachers' Association, Mr. Johnston. It's quite a lengthy presentation, and you pointed out the need for funding in so many areas. One area that has a special meaning for me is in the area of funding for special education students. I know that's been decreasing on a provincial level as a result of cutbacks. In your presentation I don't see any recommendation that funding be enhanced for special education or special needs students. I think we all know that unless we can continue to provide education and training at various levels of their development, we're guaranteed to have these individuals dependent on the social safety net for the rest of their lives. Studies have shown that where we can provide enhanced training, not only with education but also in job skills training, the chances of getting off the social safety net dramatically increase.

Was it an oversight that you have left this group out?

Mr. Tim Johnston: Mr. Harris, the association is a policy-driven organization and it's fearfully democratic. Its policies derive from the 30,000 members who constitute the Alberta Teachers' Association. We do have policy on those very issues that you mention and they are of concern to us, but we believe that for the purpose of this particular testimony it would probably be more efficient if we focused on the needs of children in poverty in particular.

We have certainly addressed the same kinds of issues you mentioned to the provincial Department of Education, and those are concerns that we have.

Mr. Dick Harris: Thank you.

I think in your presentation you called for an increase in the tax deductible for charitable giving. If your recommendation were to be adopted to allow the extra tax deduction— have you done any projection as to what you would expect the increase in giving would be? What kind of an impact would it make on charitable giving?

Mr. Tim Johnston: We haven't done statistical research. I think we echo the views of other members of our committee on children in poverty. I think it's a feeling more than anything else we can report to you that people would be encouraged to support charitable organizations in that way.

In my association we're talking about international assistance here, for example, and how much of the federal budget is given to that. As an association, we provide 1% of our net revenue to international assistance, particularly to teachers overseas. We think that's a good thing to do. Our members encourage that and so on. So I suppose if you translated that back it would be an encouraging effect for people to contribute to agencies or movements that they feel would make a difference.

Mr. Dick Harris: Thank you.

Dr. Fritzler, you made a statement in your presentation that the salaries are so low for clinical scientists that they have trouble putting bread on the table. Could you give me an idea of what the average salary for a clinical scientist is in this province?

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Dr. Marvin Fritzler: It depends on the level at which the scientist is at in the academic system. The starting base salary at the University of Calgary for a clinician scientist is in the range of $36,000 to $40,000 a year gross.

Mr. Dick Harris: Rising to what, at the higher level?

Dr. Marvin Fritzler: Rising to, at full professor level, $50,000 to $55,000.

Mr. Dick Harris: And there's no—

Dr. Marvin Fritzler: This is not your problem perhaps, but the University of Calgary ranks in the lower 20% of Canadian universities.

Mr. Dick Harris: Thank you.

Now to the Confederation of Alberta Faculty Associations. You had made the statement that the average salary for your faculty was around, taking inflation into consideration, $55,000 a year.

Dr. Scott Grills: That is the average salary for our members at the University of Alberta.

Mr. Dick Harris: Right. Can you give me an idea of what kind of disparity exists between a faculty in Washington State or Idaho doing the same job?

Dr. Scott Grills: When you're looking at comparisons internationally and nationally of our members, the University of Alberta has the strongest salary base. However, they compare quite unfavourably in comparison to faculty at the University of Toronto or the University of British Columbia, and likely compare unfavourably to other research-based U.S. institutions, recognizing that there's quite a diversity of institutions in the sorts of areas you're talking about.

Mr. Dick Harris: One of your recommendations was that additional resources would attract and retain the best teachers in research through competitive salaries and reasonable working conditions. I was just trying to get an idea of what would be a competitive salary that would look after the ability to attract. What would a competitive salary be?

Dr. Scott Grills: You'd be looking at having to move salaries in Alberta up in the 20% to 30% range.

Mr. Dick Harris: Thank you.

Dr. Marvin Fritzler: Could I add that it does not include the Canadian dollar exchange as well.

Mr. Dick Harris: Of course.

Dr. Marvin Fritzler: If you were going to factor that in, it would be much higher.

Mr. Dick Harris: Yes. The last question I have is for Results Canada, Ms. Little. We all realize that we have a global social responsibility to do what we can and as much as we can to relieve the poverty and the disparity in nations that are so much worse off than we are. One of the concerns about foreign aid has always been, and I suppose still is, the fact that in many countries there's a problem in actually getting the aid that we commit to the people who need it. And despite the fact that this problem has been known for many years, foreign aid is actually stolen in many cases by governments of countries where it goes to help their people.

What kinds of safeguards or monitoring or accountability have been put in place over the last four or five years to ensure that a much higher percentage of foreign aid is actually getting to the people who need it?

Ms. Catherine Little: I'd like to think we'd take some responsibility for having propped up some corrupt governments. It's not just all happening over there. We have supported governments and we've given aid to governments where we know there's graft and everything happening on. So it's part of our responsibility. We can stop doing that.

But as noted in our brief, what we suggest is that to get to the poorest you need to do basic social services. You need to get money to primary health care, primary education, and most of that gets done through the non-governmental organizations. And then micro-credit is something that's emerging again as one of the most effective tools for eradicating poverty. So institutions like the Grameen Bank in Bangladesh, which I think operates in Central and South America, and there are a number— Again, it's directly through them that you get your biggest bang for your buck. So it's how we give the money that makes the biggest difference.

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Mr. Dick Harris: I know that.

Ms. Catherine Little: Our suggestion is that to get it to the poorest of the poor is where you make your greatest investment.

Mr. Dick Harris: Thank you.

Mr. Tim Johnston: Mr. Chairman, if I may also comment, the experience of my association and the Canadian Teachers' Federation has been that we work overseas with non-governmental organizations. I think that the capacity, the ingenuity and creativity that non-governmental organizations bring to international assistance has to be very highly rated, because these are programs that teachers in Alberta are delivering first-hand to teachers anywhere you want to mention. That person-to-person and agency-to-agency support and development is extremely valuable and extremely effective.

It may be something in the entire scope of where Canadian foreign dollars are going. Are they going to NGO support or are they going to government-to-government support? I think the NGO field should be looked at again or should continue to be looked at, because I believe it's a very effective way of delivering this kind of support.

Mr. Dick Harris: This is my last question.

There have been claims made and studies done that one of the most effective methods of getting aid overseas or to Third World countries is by working through many religious organizations. Do you agree with the effectiveness of that method?

Mr. Tim Johnston: If I may respond, Mr. Harris, I certainly would. The Mennonite Central Committee comes to mind. For example, there are the wonderful things they can manage to do. I think it's because of the network of friends, members of the congregations, or whatever, that they have throughout the world and they do deliver excellent programs.

Mr. Dick Harris: Thank you.

The Chairman: No further questions, Mr. Harris?

Mr. Dick Harris: No.

The Chairman: Mr. Desrochers.

[Translation]

Mr. Odina Desrochers (Lotbinière, BQ): First of all, I'd like to thank you for coming here today to present your opinions and comments on the budget to be tabled by the federal government in February.

Listening to you this morning, it seemed to me that you were here not only to indicate your concerns to the federal government but also to express your many reservations about your provincial government's performance. Several of those who are present are active in the fields of health and education. As you know, in August the provincial premiers signed a social contract requesting the federal government to respect their jurisdictions in the fields of health and education. As part of this new approach, how would you see the federal government responding to the concerns and positions you expressed this morning?

[English]

Ms. Elisabeth Ballermann: If I may, certainly we believe—and I would echo the comments of my colleague from United Nurses—that one of the ways the federal government can deal with having some real impact is by committing adequate funding. As the funding for health care particularly has shrunk, the ability to exert any kind of pressure to ensure national standards has declined incrementally. That, we believe, is certainly one of the major ways of dealing with this.

We understand the jurisdictional issues, but we believe that by looking at creative ways of dealing with things such as the home care program that has been suggested, or pharmacare, specifically targeting dollars for such programs, the federal government should have and does have a clear role in ensuring national standards.

Medicare is acknowledged by Canadians across the country as one of the most fundamental values. We may have some issues with the division of powers insofar as there needs to be some sort of national standards. We know that those divisions of powers aren't likely to change any time in the near future, but we certainly look at whatever creative mechanisms the federal government can come in with, such as Mr. Rock's suggestion that if there is increasing funding it will be very directly tied to some expectations. We would certainly support that.

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[Translation]

The Chairman: Does anyone else wish to speak?

[English]

Ms. Heather Smith: I'm not sure if I completely understood your question, but I think we most desperately need to achieve some equity in terms of what is accessible. We in Alberta have had the experience of regionalization and the creation of 17 different jurisdictions with respect to health care, with varying levels of support and services being provided. That's part of the reason for our recommendations around pharmacare specifically.

I think the goal is important, and the goal of the funding arrangements and the agreements between the provinces should be that Canadians do not fear or have any trepidation about moving from province to province or going from province to province, in terms of being unsure of what health services are provided and covered. How we get to an agreement with compliance is certainly subject to negotiation. But I feel the federal government is an appropriate central player in that and is important in terms of setting and monitoring standards. How we get there, I guess, is your question.

Dr. Marvin Fritzler: I've alluded to a couple of possible solutions to the dilemma faced in the investment in a knowledge-based economy, particularly biomedical and health research. One is the 1% solution. We're not only asking the federal government to participate in that; we have put the same proposal to Alberta Health. I grant you we've been caught up with issues, as Ms. Smith has just said, in the reorganization of health care in this province, and the focus has been on health care delivery and streamlining the system.

We need to look seriously now, both federally and provincially, at what is going to add value to the system and where the additional resources are going to come from. They will come in part through attraction of international dollars to this country, and if we don't have the infrastructure to support that in the biomedical health research industry, we won't realize it.

Members of the Pharmaceutical Manufacturers Association of Canada now provide meaningful support to health research in Canada, but it isn't going to grow unless something changes. In fact, it's in serious danger of declining. We've had two majors move out of Calgary in our health sciences sector just because they found better deals elsewhere, one of them being in New Jersey.

I'd also like to add that the generics add nothing at this stage to the R and D environment in our universities and research institutes.

The Chairman: Are there any further questions?

[Translation]

Mr. Odina Desrochers: Any other comments?

[English]

The Chairman: No more comments.

[Translation]

Mr. Odina Desrochers: Thank you.

[English]

Ms. Elisabeth Ballermann: I'd just like to add one comment with regard to health care and its interrelationship with advanced education. One of the things we are certainly seeing is that as the ability of health care professionals to do their jobs in simply dealing with patients has shrunk, so has their ability to provide adequate training or excellence in training for new professionals coming through the educational system.

We have had identification from some of the post-secondary educational institutions, but they are having difficulty finding proper placements for students. We must have a much longer-term view of where we're going. If the people who are now being trained for health professions, or any other profession for that matter, aren't able to get proper training and there isn't financial support at various levels of government for that, we will be seeing a decline in the level of excellence we can provide. The brain drain Dr. Fritzler spoke of is very much an issue in that regard.

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[Translation]

Mr. Odina Desrochers: Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Desrochers.

[English]

Ms. Leung.

Ms. Sophia Leung (Vancouver Kingsway, Lib.): Thank you, Mr. Chairman. I want to thank all the presenters for their fine presentations.

My first question is addressed to Tim Johnston. I congratulate you for your fine work on child poverty. I'm from Vancouver, B.C., and we also work very hard on the same topic.

When you encounter one child living in poverty, you actually meet a family living in poverty, so I'd like to suggest we expand that more to concern for families in poverty. Of course there's the motherhood statement and child poverty may have more attraction, but I would like all of us to think much broader than that.

I'd like any of you to comment.

Mr. Tim Johnston: Thank you, Mr. Chair. Thank you for those comments, Ms. Leung.

You're absolutely correct. We have provided you with a document called, “The Round Tables on Poverty Connecting Our Community”. It's an initiative of the association and some of the organizations we work with in the Mill Woods community. It was a very simple way of bringing together people who experience poverty.

We cannot simply bring together children who live in poverty; that just doesn't work. You have to work with the entire family, and beyond that you need to work with the community. Rather than working with poverty in Edmonton, we worked with poverty in one particular neighbourhood of Edmonton, and we used that as a model, in a sense.

So your remarks are very well taken, and we completely agree that's the only way we can approach this.

Ms. Sophia Leung: Do you have any strategy to expand that to cover the family as a unit, instead of just focusing on the child?

Mr. Tim Johnston: Yes, everything we're doing is based on the family. We understand that the child is part of the family and you must help the family in order to help the child.

Teachers, of course, see the effects of poverty on children in their classes, but we know that's connected back to the family. Any good teacher works with the family as best they can within the school system, so we understand that.

Ms. Sophia Leung: Thank you.

I'd like to address Dr. Fritzler. I really enjoyed your very powerful and clear concerns. On the brain drain, I want you to know I have worked on that. I'm from B.C. and I even go further; I organized a round table for the Honourable Paul Martin to listen to two university presidents from B.C. and a number of medical researchers. We addressed that over and over, and you certainly have my support. I addressed that in the national caucus.

I don't think we can expect the government to perform miracles. We have a very limited surplus. I know it's very hard to compete with such financial attractions from California, as you cited. It's literally impossible. But on the other hand, perhaps we could think about other sectors.

I've worked with many NGOs before from the arts, cultural, medical and educational fields, and we are all trying to turn to industry, business and the private sector. We really have to explore those areas. As you indicated when you presented your figures, you have had excellent success in turning to industry, so I would really think that's another area we should explore more.

I believe private donations could also be encouraged and generated. I would like to again cite some examples from Vancouver. You mentioned my friend, Dr. David Strangway, from the University of British Columbia. He was literally the most successful man and attracted millions of dollars to the campus. A new $10-million building, the Chan Centre for the Performing Arts, was built and many others. By the way, they have all given, not only Asians but Chinese.

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I just feel that's another area we should look into and I wanted to take the opportunity to mention it to you.

Recently I was totally surprised. I was approached by McGill University. The principal mentioned to me that a known donor—I don't know the donor—donated not a large amount but a good sum of money to establish a fellowship in honour of my late husband.

Those are the areas that we usually don't think about, but I think it's time. We expect a lot of surplus that we don't have. I just wanted to mention that to you. Would you like to comment on that?

Dr. Marvin Fritzler: Thank you. I appreciate your support, and I agree with you 100%. In fact the strategy at the University of Calgary follows much along the lines that you describe, and more and more other Canadian universities are falling in line.

If you look through the details of my submission you'll see that at the University of Calgary, less than 30% of our faculty in the faculty of medicine is supported by advanced education funds. Where does the rest come from? It comes from private donations, chairs, professorships, industry, and the whole milieu that you've described. So I agree with you completely.

The issue, though, is for operating funds in research. Where will that come from? Yes, industry is a growth one and international investment is a growth one, but we need to strengthen the base at our national research councils, that's for sure.

Thank you.

Ms. Sophia Leung: You also mentioned the innovation fund. Do you feel this is not quite sufficient?

Dr. Marvin Fritzler: Certainly if you look at the pressure in the first year of a five-year plan, $2 billion on a call of $200 million that's available only in this year, it strikes me right away that even in that year the depth of the need is much greater than even I imagined. I have not sat on the committees. I have a close friend who has, and in his view the requests they saw at the panel were legitimate. He was as surprised as I was at the depth, once you put it all together in a national picture, of the need.

So it isn't sufficient, but again, I don't think it's necessary for the federal government to fill in that gap. We have to look at the other sectors, as you said. Industry needs to step to the table as well, because if we're going to foster their products they need to be more involved.

Ms. Sophia Leung: I think that's what we are doing in B.C., attracting a lot of special pharmaceutical and high-tech industries. That would be the source of support to be generated.

Dr. Marvin Fritzler: The Canada Foundation for Innovation was a significant step in the right direction. There's no mistake about that. But you can't build a building and not have the resources to operate it by not addressing the operating issue fully. Even the restoration in the current fiscal budget to the Medical Research Council only brought us back to 1994 levels. We still rank at the bottom of G-7 nations in the area of biomedical health research investment.

Ms. Sophia Leung: I just have one question to address to Heather Smith.

Before I move on, Dr. Fritzler, you know that my colleagues and I have lobbied for the MRC increase.

Dr. Marvin Fritzler: Yes. Thank you.

Ms. Sophia Leung: Heather, I really enjoyed your presentation. Your recommendation focused on home care and basic pharmacare. You asked for $2 billion for home care and pharmacare. Suppose we have a very limited surplus, we'll say around $3 billion. We have a very long wish list. How would you recommend we do this?

Ms. Heather Smith: I would agree with you that there's going to be a lot of competing interest, and I recognize that even in making this recommendation. However, I think it is imperative that we start and launch a home care program.

The Minister of Finance has talked about tax reduction. I believe it is more important to maintain current taxing levels and provide relief to those who most need it, those who are paying out of pocket and are most compromised. I do believe we have the resources.

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I suggest to you that if we launch it quickly, as proposed here— I've never been to a conference where there was such unanimous common support for recommendations as the home care conference. They were adamant to have it studied even sooner. But I think the sooner we get it launched, the sooner we will recognize cost effectiveness. I think the Canadian public will really support it, because they will have reduced costs in other areas.

If we have this, I would suggest there are savings even in terms of business, in terms of secondary private insurance activities. I think there are a number of spinoffs that will create savings in the totality of the economy that will justify it. The sooner we get in there and get some control in terms of cost, I think we will see the long-term benefit, just as we've seen with medicare generally. I think we can afford it.

Ms. Sophia Leung: Thank you.

Mr. Chairman, my last question is addressed to Ms. Little. I strongly believe that we do have a duty to provide foreign aid. Again, I think we have to look at our own fiscal abilities to see what we can do. I certainly appreciate your presentation.

Thank you, Mr. Chair.

The Chairman: Thank you, Ms. Leung.

Mr. Valeri.

Mr. Tony Valeri (Stoney Creek, Lib.): Thank you, Mr. Chairman. I just want to pick up on a little of what Ms. Leung has said and in particular deal with the brief from the Health Sciences Association and the comments made about employment insurance. I just want to share with you a bit of the exercise we go through as parliamentarians when we're trying to reconcile what we hear and what we've got to work with and put that into the context of a recommendation to the Minister of Finance.

Private sector forecasters talk about a possible surplus of anywhere between $5 billion and $7 billion, mostly downgraded because of what's going on in the global economy and some slower growth that they would expect to happen in Canada. Included in that $5 billion to $7 billion is a $3 billion contingency fund, which is essentially meant to ensure that the books stay in balance and is there to deal with any surprise that may come our way.

Back in 1986 the employment insurance program, as requested by the Auditor General, was consolidated within the general revenues of the government. The logic behind that was that back in 1986 there was in fact a $6 billion deficit in the account and the government of the day, according to the Auditor General, was actually understating the deficit that they were publicly disclosing by the $6 billion. The theory is that if the government is going to stand behind a program and pay for a program, then the government must include that program in its total numbers.

If it's a separate arm's length fund, like the Canada Foundation for Innovation, which is out there with a separate board—the government has initially put in some seed money to start it off and now you leverage it and you've got private sector contributions—that doesn't stay on the books of the government. For instance, if the Canada Foundation for Innovation ever got into difficulty, it would then be a decision of the government to say yes, we will refund the foundation, but it's not an ongoing liability, because it's off the books and it's outside. The government is not standing behind the program. It would be a policy decision whether one would want to put the $2 billion in that you are referring to.

With respect to employment insurance, it is a government program. So when there's a deficit in the program, the government needs to pay for the benefits that are owing to Canadians.

I want to stress the point that when in your brief you talk about a restoration of benefit levels or enhancement of entitlement or any of those types of things, in essence the only way to accomplish that would be to trade off something else, which means if you want to enhance benefits then perhaps you're not going to be able to do more in research, health care, personal income tax, or reducing premiums. Okay, so it's a trade-off that we really have to deal with.

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So my question would be, given that we would have about $2 billion of actual moneys to decide what to do with in this particular budget based on private sector forecasts, what are you suggesting we do?

Ms. Elisabeth Ballermann: Our brief does speak to a number of options. We are not suggesting that necessarily one option be used exclusively or that there's an opportunity to mix or match. As for the employment insurance fund, which is a result of premiums paid by employees and employers, we recognize the issue of the restructuring back in the 1980s and the deficits. We do know that there has been recent encouragement by opposition parties to create employment insurance as in fact a separate arm's-length organization from the government itself.

Our organization has not had an opportunity to debate that issue in detail, so I cannot say to you that this would be the recommendation of our organization. But we do feel that the funds that are there, the surplus that has been created, having been contributed by the employers and the employees, is and should be subject to separate treatment. To use that fund in the general operating revenues seems to be, in our opinion, contradictory to the purpose of the fund.

The Canada Pension Plan has been in a similar situation in the commingling of the funds or sitting as a separate fund. We're starting to get that under control.

Mr. Tony Valeri: I think you make a very good point with the Canada Pension Plan, because it's a separate fund that stands on its own. Employer and employee contributions are supporting the Canada Pension Plan, which has the provinces as joint stewards.

You're suggesting that it run as a separate fund and that the money be returned. You say this so-called surplus is there, so the money should be returned to the workers and the employees. You're essentially suggesting that for every 5¢ reduction in the premium, you would be decreasing the consolidated revenue fund by approximately $350 million.

If in fact we were to do what's said by the opposition parties and in fact the actuary—his role is in terms of saying that this premium needs to balance off over a business cycle—we would essentially be back into a deficit.

Ms. Elisabeth Ballermann: We are in a surplus, and my understanding is that the surplus is growing. I do not pretend to be an economist, but I do know that there are economists and actuaries who have the ability to determine what contribution level ought to be set in order to maintain that equilibrium and ensure that the reserves meet the contingencies that are required. We've addressed that. Assuming the actuarial predictions are reasonably accurate, this is what we're suggesting.

There is a surplus. So the question becomes whose surplus is it? Does it belong appropriately in the operating funds of the government in general or ought it to be dealt with separately? It's our opinion that it ought to be dealt with separately.

Mr. Tony Valeri: Part of the challenge that certainly I face—I'm sure other members of Parliament face it as well—is that it's a complicated issue. First of all, I don't pretend to understand the whole thing. But there is no actual surplus, there is a notional surplus, which is used in order to calculate a premium level.

So if there were a fund that was sitting on the side here of $19 billion or so, then I really don't think that anyone would have much difficulty in saying that there's $19 billion sitting over here in real money so now let's talk about how to reallocate that. Certainly we'll do something with benefits and premiums and certainly keep some there for a rainy day in terms of actual reserves.

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But there is no actual fund set aside; it's a notional account. The commissioners calculate how much premiums come in, how much benefits go out, and what it costs to run the program. Then, at the end of the day, the account needs to balance to zero. When it balances to zero, they set an actual premium rate.

The perception out there is that there's $19 billion of actual money to talk about. The point I'm making is that there will probably only be anywhere between $5 billion and $6 billion, with $3 billion of that being the contingency fund. It comes down to what we're able to do with that $2 billion to $3 billion in terms of priorities.

Knowing that we can't be all things to all people, what are those real priorities we should be focusing on? I would accept your suggestion if you feel that it should be the return of premiums to workers and employers. Certainly that's a valid suggestion, but it would come off the $2 billion. So then what else is it that we would do in order to try to reflect what Canadians are saying as far as what they'd like to see in the budget is concerned?

Ms. Elisabeth Ballermann: On a priority basis, again, recognizing that a reduction in premiums quite frankly would probably not be a huge amount to any one individual, I would suggest that our recommendations would certainly go toward the priority being looking at the benefit levels. It's similar to looking at what we really need to provide by way of services, whether these are in health care or employment insurance, before we start talking about premium reductions and tax reductions. Quite frankly, they're all the same thing.

The Chairman: Okay. Does anyone else have a question?

Ms. Heather Smith: I have a question actually for Mr. Valeri.

When we were talking about a $5-billion to $7-billion surplus, I think you said it was from the private sector. Is there a public sector projection that's different from the $5 billion to $7 billion?

Mr. Tony Valeri: The public sector projection would be coming in the budget, or it would come in an actual government document. As part of the budget process over the last number of years, we brought together 20 or so private sector forecasters and asked them what they thought would happen in the Canadian economy. Is GDP going to go up? Where are interest rates going to be? We asked them to give us those kinds of numbers.

Based on those numbers, then, we add prudence to that, because we want to be very cautious. We increase interest rates for our planning purposes. We decrease GDP growth for our planning purposes. Then we come up with the amount of money we feel we're going to have. Then you get into the whole budget process.

Ms. Heather Smith: So the term “private sector” is referring to non-governmental advisers.

Mr. Tony Valeri: Absolutely, they're stock market analysts and people who are supposedly in the know.

Ms. Heather Smith: Okay, I wasn't sure about that.

Second, how long is a business cycle? You made reference to it in terms of saying that by the next business cycle there might be a deficit again.

Mr. Tony Valeri: That number is changing as well. Most people used to think that a business cycle was anywhere from five years, but now it has gone beyond that. A lot of it has to do with the improvements in productivity whereby people feel that the economy can only take so much before you get a slowdown and then you get into a different business cycle.

Now, that business cycle seems to be extending. As we're seeing in the U.S., a lot of it has to do with the improved productivity that's going on there. So the economy keeps creeping up. But as a period of time, it could be five years or seven years. Maybe it could be three, depending on what country you're in.

Ms. Heather Smith: So in terms of EI and the next business cycle being in a deficit, it could be anywhere from 5 to 10 years in terms of seeing that deficit.

Mr. Tony Valeri: This would be like a slowdown in the economy and then a change in the actual account.

Ms. Heather Smith: Can I continue?

The Chairman: I'm kind of enjoying this conversation, so go ahead.

Ms. Heather Smith: As for the assurance provided by the federal government in terms of holding those EI dollars not in a separate account, would it be reasonable that there could be an assurance that if those moneys are diverted from the surplus for EI—whether or not there is that surplus there, but the perceived surplus—it would be with a guarantee of no diminishing in the current benefits, that we're not going to go backwards? I think there's a real concern that government holds the money and makes the rules. If you take out the money, what are unemployed workers going to be left with in the future?

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Mr. Tony Valeri: Yes, I think that's a very valid point, because that is a concern out there. With respect to employment insurance, the whole principle behind going forward is obviously to not have to react to the spikes that go on in the up and down turn of the business cycle. As we've continued to bring down the EI rates over the last number of years, obviously we would want to continue to do that. You would also not want to in any way change or diminish the benefits provided since the last changes, which could have an impact, quite frankly.

Ms. Heather Smith: Can I make a comment? In terms of health care generally, I believe that the financial stabilizing of health care is very important in terms of health, that people who become unemployed place far more demands on the health care system, but also it will reduce some of the fluctuation we've seen within the health care system, creating incredible ups and downs whereby some 60,000 health care workers lost their jobs and put a drain on EI. Now we're in a deficit in terms of skilled health care workers and are going to expend incredible resources—and in this province we've already started it—trying to recruit and retain.

So in addition to positive impacts on the public in terms of personal outlays, costs for private insurance, there are secondary benefits to stabilizing it in terms of health care workers.

The Chairman: Thank you. Dr. Fritzler.

Dr. Marvin Fritzler: One of the questions you asked was what do Canadians want? I hope what I presented this morning, although it was presented in that context, isn't just what I want and isn't just what ACMC wants and what MRC wants.

Later this month we will launch a health research awareness week, and you will see evidence published in a special edition of The Globe and Mail and La Presse showing what Canadians want in the area of health research. This was a study conducted by an independent survey group in Ottawa. Even to my surprise, there is extremely overwhelming support by Canadians for health and biomedical research in this country. I didn't go into the details on that, but you will see that later this month.

Mr. Tony Valeri: Great. Thank you.

Ms. Elisabeth Ballermann: I'd just like to address one thing. I don't want to belabour the issue of the EI surplus or what they will do with it, but I would just like to express that I think Canadians are really puzzled by this. We have a surplus, but it's not a real surplus. It's a notional surplus. There is an account somewhere. Maybe there is or there isn't.

I'm a Canadian. I'm not an economist; I don't pretend to know all the ins and outs of major finance. I do know that in this electronic world there isn't real money in many places. My accounts probably don't have real money in them. These are now notional withdrawals and additions.

It is really important for the government to know that Canadians are going to have a great deal of cynicism if they are faced with conflicting terms. There is a surplus, but there really isn't. We want the truth from our government and we want to have it in a form that is understandable. For us to sit there and debate this, is there a government surplus as a whole or is there a deficit, really increases the cynicism Canadians will have as to the trustworthiness of what is being told to them through the government and other sources.

The Chairman: I want to comment for a second.

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What Canadians expect from an EI fund, I think, is that if they're ever unemployed there's going to be a benefit there. So if that's made clear to the Canadian people, then I think they would agree with the fact that this fund, whether notional or call it what you like— I think if we have x amount of people who lose their jobs, what they want is security. They want to know that if one day they lose their jobs they're going to have benefits there. There's going to be a cheque there that's going to allow me to buy bread. It's going to allow me to do all the things that I have to do to keep on living. Right? That's what they want. And I think that's going to be there, that's guaranteed. The benefits are guaranteed to the people. There's no question about that.

The other issue is that it almost comes to a point where we have to realize as Canadians that we're very competitive when it comes to payroll taxes and we do live in an interdependent economy with all sorts of other countries. And if we're very competitive on the payroll taxes but we are not competitive on personal income tax, then it would seem to me that the focus of the shift is to making sure that we become competitive on the personal income tax side as well as the employment insurance side.

I think it's the issue of people feeling that there's been a theft by the government and all this kind of thing. The same people were around criticizing the federal government for being in a deficit position at the same time, when we were as a federal government financing the employment insurance account. I think the inconsistency in the argument is crystal clear.

Why don't we just make it very clear to Canadians. You have employment insurance because if you lose your job you'll have benefits. That's guaranteed. Do you think Canadians would have a different view if that was made very clear to them, that this was there for them?

Ms. Elizabeth Ballermann: I think the issue is partly in the fact that there are payroll taxes. People are saying, just like if I'm paying extended health benefits, for my health benefit dollar I expect a certain level of coverage. If in fact I am paying more than the coverage I'm going to get from that in the end, I'm going to have to look at whether I should be paying less. And that is the whole question.

If in fact the EI were being paid totally through tax dollars, I would have absolutely no issue with this, but working Canadians are of the view that we are the people who are paying premiums in order to fund this benefit. And therefore to take the premiums that we have paid for this benefit and use it for anything else is inconsistent to us.

The Chairman: That's true. You can say that about anything, really. You can say that about taxes in general. People pay taxes; it goes to the general revenue in just the same way as it goes to employment insurance. What level of taxation is acceptable? If you don't want hospitals and roads, and if you don't want anything else that taxes go to, I guess you can have it all back. But the reality is that life must go on and there are priorities.

If we were to look at just what the so-called fighters for employment insurance, who never believed in employment insurance before when the debate was going on, are now saying, that you must return the money to the people of Canada— I guess we could return all the money to the people of Canada, but you couldn't do anything on the tax side; you couldn't do anything on student loans, you couldn't do anything on the health side. You couldn't do anything except have the finance minister get up on budget day and say, fellow Canadians, get excited about this budget. We are going to return $5 billion to $7 billion to EI and we're not going to do anything on the debt, we're not going to do anything on personal income tax, because it's just what we think is the right thing to do.

Do you know what? From what I've heard across the country, I don't think Canadians will rally around a budget like that, nor would they get too excited, nor would young people who are looking for opportunities get excited, about the prospects of a future that only speaks to returning EI premiums. Are you excited about a one-line budget that says we're going to return EI? Does it excite you who are fighting for students who need loans?

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Ms. Teresa Alm: No.

The Chairman: Does it excite you who are fighting for people who need health care? Does it excite you who are trying to fight the brain drain? Who does it excite?

Dr. Marvin Fritzler: Our EIs go to the U.S.

Ms. Heather Smith: Mr. Chair, I'd like to suggest there perhaps is some history in this province you're not aware of in terms of the notion of moneys going into the general revenue of a government with a guarantee benefits will be provided. The health care unions and others here, including the teachers, will recall that is what happened with our pensions. All of a sudden we were told there was a huge deficit with the pensions, which was going to require a surcharge from employees and employers. We were told it was going to take forty years to pay off this horrendous deficit that had been created. It actually was paid off in five years, I believe, but at the time we were told it would take forty years to pay it off.

So I think there's some history in terms of don't worry, it's guaranteed. We had that assurance, and all of a sudden we were told to ante up more because the money wasn't there.

I think the issues around EI go back to a time when there were concerns we didn't have adequate resources for EI. You yourself said all you care about when you're unemployed is that you're getting a benefit. Many Canadians found out that benefit was not what they believed it was going to be when they paid the premiums to begin with and that it was perhaps not all that adequate. So I think there are some latent concerns about that.

I do want to make a comment, sir, in terms of whether or not as a nation we are competitive in terms of our payroll tax and our personal income tax. What I would like to see this finance minister do is clearly articulate what social advantage we as Canadians get from our tax dollars. Canadians are not paying $500 a month for health care premiums as they are in the United States. So yes, we may have more personal income tax, but what is the value of those taxes that puts us in fact in a superior competitive position with other countries?

The Chairman: You get medicare. We do that with 9% of GDP, and it gives companies a competitive advantage.

Ms. Heather Smith: Exactly. I hear all kinds of talk generally in terms of how we need to reduce taxes because we have to be competitive internationally. What we have in terms of health care does make us competitive internationally, and enhancement is in fact going to do more. I think businesses would be very enhanced by not having to pay exorbitant, ever-escalating premiums on behalf of employees because of escalating drug costs and uninsured services within provinces. Everybody will benefit, business included.

The Chairman: You mentioned history, and I have a version of history as a federal politician. I was the parliamentary secretary when we were introducing changes to the former unemployment insurance. One thing I found out, for example, was that the unemployment insurance program per se, the benefits, were creating an economic distortion because they were far too generous when compared with the average industrial wage.

Some people might say we shouldn't care about the average industrial wage. Yes, you should, and do you know why? Because you can't have an economy where employers are competing for labour with a government-sponsored or government-run program. You can't have that. It's just the wrong thing to do. You can't have people who are looking for workers competing with unemployment insurance for the same pool of labour. That can't happen. In the economy it just doesn't work. It doesn't make it efficient and it doesn't make sense.

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Ms. Heather Smith: Are you saying here that EI should always be less than minimum wage—

The Chairman: No, the average industrial wage is far from being minimum wage.

Ms. Heather Smith: Yes, I know, but—

The Chairman: It's above that, but it can't be away above that because it creates a certain— That's why it was dropped to $39,000 in insurable earnings. Also, as far as history goes, in a ten-year span we saw the program go from $8 billion to $20 billion, and the government was financing it—parts of it, not all of it—and they get it back with interest.

So it goes back to my original point, that the real issue of employment insurance is about having a safety guard at the end in case you lose your job. That's really the issue we ought to be focusing on: do we have guarantees?

You are saying that with the teachers' pension plan here in Alberta—

Ms. Heather Smith: Well, this is the local authorities.

The Chairman: Well, there was a problem, and what I'm saying is that I have never heard the Minister of Finance say that if you're unemployed in Canada you won't be taken care of.

Mr. Valeri can—

Ms. Heather Smith: EI may say that; the minister may not.

Mr. Tony Valeri: But it is the government. It's not a separate commission.

Ms. Heather Smith: Yes, and I don't think we want to go into issues around whether or not people are having difficulty with approving—

Mr. Tony Valeri: Sure.

I have a quick follow-up in terms of taxes. You asked what it is that we get for our taxes, and the response was certainly health care.

But when the discussion comes to personal income taxes, I just want to be clear that at least when I'm talking about personal income taxes, I'm not talking about a race to the bottom in the sense that we want to cut taxes and just have a whole bunch of other people suffer because we don't have enough revenue to run core programs. When it comes to taxes, what I'm talking about are things such as whether it is fair right now in this country when you have someone who is earning $10,000 or $11,000 in income paying $200 or $300 in taxes, or when a retired person is paying income tax because they're earning $9,000, $10,000 or $11,000 a year.

When I'm talking income taxes, I'm talking about trying to assist those individuals who are not exactly at the higher end of the income scale, who are in a lot of cases working poor, trying to put more back into their pockets as well, and also dealing with things like the child tax benefit or the GST rebate. If we don't do something with personal income taxes in terms of exemptions— those people, once they earn a little more, end up getting a clawback on their child tax benefit or on their GST rebate and they're no further ahead. They're into this whole cycle of not being able to improve their quality of life, even though they're working a lot more.

It comes into the mix where you have this pot and now how do you try to best serve the interests of the Canadian people? You all represent the interests of the Canadian people when you come here and speak on behalf of your organizations, because you have people who are a part of those organizations who believe in you're saying.

So when it comes to taxes, I just wanted to clarify the point that this is really where I'm coming from. I'm not necessarily coming from a reduction in taxes for somebody making $200,000 a year.

Ms. Heather Smith: Well, that's good to hear.

I support the idea of fair taxation, and there are terrible concerns and issues with the working poor in this country. If we are to look at health care expenditures generally and the subsidies we have to put in place for the very poor, then pharmacare and home care programs become even more affordable. Instead of making it a special provision because of how poor you are, it's there; we shift those resources from that pile to this pile and add to it from all Canadians.

The Chairman: Thank you. Are there any further comments?

Ms. Catherine Little: Yes, unfortunately I have to leave. I have an engagement with the Rotary Club in town, where I'm speaking and celebrating the handing over of a cheque of about $10,000—which will be matched with a little bit more—that is going to a micro-credit bank in Indonesia.

The Rotary Club, which is classed as a non-governmental organization, has another format. They have done a huge amount of work with Polio Plus Partners, and polio is going to be eradicated in the near future. And the Kiwanis have taken on iodine deficiency diseases. So I'm going to celebrate that and I have to leave.

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But just to go back to priorities, and of course my cause, the interdependence and what we're seeing in this Asian crisis, there are a lot of Canadians who think we need to do things at home first and there's that whole scenario. But guess what? We do live in a global world. I don't think there's anybody who doesn't think our dollar drop has something to do with the crisis going on around the world. If that doesn't bring it home that we don't live in isolation— When there are 800 million who go to bed hungry in this world every night, it's a priority that is there and it's something we need you to attend to, because the numbers are getting larger in the developing world.

The president of the World Bank, Mr. Wolfensohn, when he goes into the financial community in the U.K., throws away his traditional speech and says “You cannot give to your children the world you live in right now if you do not attend to the poverty in this world.”

Thank you.

The Chairman: Ms. Little, just so we can get your comment on that, you'd like to see a budget that speaks to a little bit more than just employment insurance.

Ms. Catherine Little: Yes, I would like a budget that reverses the trend of the last six budgets toward reducing ODA, and even within the ODA budget I'd like to see a commitment to the poor—and not food aid and not shelter, but basic social services micro-credit.

Thank you.

The Chairman: Thank you.

Mr. Harris.

Mr. Dick Harris: Thank you, Mr. Chairman. Ms. Ballermann and Ms. Smith raised a couple of points that I think were worthy of providing some more input into.

I think, Ms. Ballermann, concerning the EI fund, what you wanted from government was clarity and transparency in just exactly what these funds are, the amount of them. Is there a surplus or isn't there? Well, maybe I can try to clear the air here.

The fact is that by the end of 1998 there is anticipated to be around a $19-billion or $20-billion excess in the EI fund to look after the current obligations. The EI commission has established that there should be about a $15-billion rainy day fund to look after any recessionary impact there might be down the road. So that means we will have, by the end of this year, approximately $5 billion in excess of the rainy day fund. The whole debate around the country is about what to do with that excess over top of the reserve fund.

There are many who believe that should be returned to the employees and the employers who paid into it, and that in fact because it does amount to about 33% in excess of the rainy day fund, that 33% can be considered simply another payroll tax. I happen to support that notion.

So there is a large cry from various organizations—and we've heard it in our travels this week—that the government should do the right thing and return that by way of lowering EI premiums to workers and employers, believing that a dollar left in the hands of a worker/employer is better than a dollar in the hands of the government. That opinion is gaining wide support, and I seem to get the indication that this is sort of the opinion you represent today.

The government, on the other hand, is saying maybe we should apply it to a broad tax cut to social programs.

People tend to get confused when it comes to what these premiums they have been paying are really for. One could say that if you were to accept that the excess could be spent in any way, then you would also accept that if you had a 33% surcharge on your house insurance, as long as the insurance was there you would be okay with that. But I don't think that's what workers and employers want. They would like to see those excess premiums returned to them. Also, based on the statistic that for every 1% increase or decrease in the EI premiums it's estimated that 40,000 jobs could be created in Canada— In other words, if they go up 1%, then 40,000 jobs are lost. If there is a 1% decrease, then 40,000 could be created by that money being out in the private sector and in the hands of the workers.

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I just wanted to add this point of view to the discussion today because I think it's been missed thus far.

Ms. Elisabeth Ballermann: I'd like to thank you for that addition. It's a very important point and I think I couldn't have said it any more clearly myself.

I do want to take some exception. Our organization is not for one moment suggesting the entire federal budget deal only with employment insurance. To suggest this is not a fair summarization of what we're dealing with. If we are talking about the 1% creating 40,000 jobs, the tax revenues created by that, in and of itself, will have a dramatic impact on what our federal fiscal picture would look like.

So I certainly stand by my comments.

Ms. Heather Smith: I would just like to clarify. It would be wrong to suggest we have taken a fixed position in terms of EI. In fact, that's why I said we will be providing a supplementary. But I just want to make some comments.

I would not support a reduction in premiums. If we were to do anything, I would perhaps like to see an enhancement of benefits. If you reduce premiums today, with this business cycle stuff it's very possible that there will be needs in the future. It is far more difficult a threshold to raise the premium than it is to leave it there and use it in other ways. Let's say we reduce the premium because of this surplus, and it's a blip in terms of the overall cycle. We're going to be doing Canadian workers a great disservice if in the future we say, sorry, we have a deficit, we have to increase it, and the threshold becomes too great to overcome in terms of the premiums going up. Use it. Use it wisely, but don't reduce the premiums.

I'm not sure of where the factual information comes from in statements about an increase of one point. Is this what you said?

Mr. Dick Harris: Yes.

Ms. Heather Smith: This increase would cost us 40,000 jobs?

Mr. Dick Harris: This comes from Statistics Canada.

Ms. Heather Smith: From Statistics Canada?

Mr. Dick Harris: Yes.

Ms. Heather Smith: Forty thousand jobs?

Mr. Dick Harris: A 1% increase in EI premiums results in the loss of 40,000 jobs. These numbers are actuarial numbers used when considering tax rates.

The Chairman: You're saying— what exactly are you saying?

Mr. Dick Harris: I was just pointing out a statistic available from the EI Commission and Statistics Canada that a 1% increase or decrease in the EI rate represents a 40,000-job sway one way or the other. Those statistics are available to anyone.

The Chairman: So if we reduce the EI account by—

Mr. Dick Harris: If we reduce the EI premium rate by 1%, it has the potential of creating 40,000 jobs out there in the—

The Chairman: So at 10%, it would create 400,000 jobs.

Mr. Dick Harris: A 1% decrease in the EI premium rate, if you went from 2.5% to 1.5%, or 3.5% to 2.5% of the payroll—

The Chairman: So you're saying a 10% reduction in the EI premium would create 400,000 jobs.

Mr. Dick Harris: No. We don't charge 10% premium on the wages. I'm talking about the rate that's charged against the payroll.

Mr. Tony Valeri: Essentially, you're saying a 1% decrease in the premium paid would create 40,000 jobs.

Mr. Dick Harris: No. What I'm saying is if the premium rate is 2.4% of your income, if it was dropped to 1.4%, 40,000 jobs could be created.

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Mr. Tony Valeri: That's not exactly 1%; that's almost 50%. You could hardly say that's a 1% decrease. If you reduce a payroll tax of 2.4% of income to 1.4%—I mean, 1.2% is 50%—you're just over 50%, so you're talking about anywhere between a 40% and 45% reduction in the premium in order to create the 40,000 jobs.

Mr. Dick Harris: You clearly know I was talking about the percent applied to the payroll.

Mr. Tony Valeri: No, I didn't.

Mr. Dick Harris: Using your figures, it would be a 45% decrease.

Mr. Tony Valeri: For the benefit of the witnesses, if you said a 40% to 45% reduction in the payroll rates would create 40,000 jobs, I think you would say okay. But I think the way the witnesses understood it—and correct me if I'm wrong—was that a 1% reduction would create 40,000 jobs. I think that's just the way they understood it.

Mr. Dick Harris: Okay. Well, I think we all know what I was saying.

The Chairman: If that were the case, one of the recommendations this committee would make would be to reduce it by 10% and we'd create 400,000 jobs.

Mr. Dick Harris: I think my colleagues from the government knew exactly what I was saying, but we don't want to get political here.

A witness: You weren't talking to us; you were talking to them.

Mr. Tony Valeri: Mr. Harris, I clearly did not understand what you were saying. I'm not going to engage in that sort of thing, but I thought the witnesses understood that to be a 1% reduction. That's the only reason for my intervention.

The Chairman: Thank you, Mr. Harris.

Ms. Bennett.

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

I think it was a terrific panel in terms of what is actually in front of us. I guess one of the things I'm most concerned and excited about is that the word “accountability” is creeping into the social union negotiations between the feds and the provinces, and we will actually have to start figuring out how that might happen.

The Canada Health Act had its own limitations because, as we all know, it was written when people stayed in the hospital for all of their bouts of pneumonia and didn't have to pay for expensive drugs. They stayed in the hospital for all of their rehab after their broken hips, so there wasn't the issue of home care. As we embark on this next budget, and maybe the one after it, we will have to figure out what actually is measurable in the accountability piece, in the way the Canada Health Act was previously there.

As we look to other measurable things, whether it's post-secondary education and wanting standards for governing student assistance, academic transfer ability standards, tuition—from Dr. Grills—or readiness to learn standards in terms of child poverty, I think there's a lot of appetite now to start measuring some of this stuff and determining how we, as a federal government, can look at these things in a way that assures Canadians that the money we give the provinces won't go to tax cuts, particularly in this province and the one I live in.

I would like some help on the kinds of things you think would be possible to measure. How would you tie the dollars to those things in a way that would actually bring back the confidence Canadians used to have in their education and health care systems for the future?

Regarding the CAFA presentation, some of your problems in these work study programs have been created by the increase in tuition. High-need students wouldn't be in as much trouble if the tuitions were down. What do we do about universities that seem to be attracting as many American students as possible and turning down Canadian kids because they can get revenue at McGill for fancy brochures that attract as many Americans as possible to help balance their budgets? Is that okay? Is it something the federal government should have a say in?

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How do we start measuring and holding the provinces accountable for the money we give? I'm referring to the areas of health care, poverty, readiness to learn, and post-secondary education. Does anybody want to have a go?

Ms. Elisabeth Ballermann: Certainly within health care we share the concern that as we have reduced funding for health care, we have regional health authorities in this province who are running deficits. The question is whether there is perhaps an incentive to start attracting patients from the United States who will pay top dollar to have their hip surgeries, back surgeries, or whatever done in order to supplement those funds.

Of course, as you are probably well aware, the whole question of private for-profit hospital care surgical facilities in this province is a major issue. We certainly feel there is the potential that if such an initiative were allowed and propagated, Canadians who are now facing waiting lists for elective surgery— Quite frankly, I have some difficulty with the term “elective” because it suggests I'm choosing to have this surgery. It is surgery that is medically necessary; I just won't die tomorrow if I don't have it. So those waiting lists for medically necessary services are at an all-time high, and we would be looking at bringing in Americans when beds are already scarce. Yes, they will pay more dollars. Will they be increasing capacity? That would be the argument, and it's a very difficult one to make.

Certainly the federal government needs to be able to put into place some sort of mechanism to say this will go directly to health care, this will go to a home care program, and this will go to a pharmacare program, if that's what happens in the end. We will be watching you very carefully, as we did with the balanced billing or extra billing, and if we see that this is simply being used to finance tax cuts, for example, we will be reducing that again.

It's a very difficult question. I don't pretend to have the answers, but I'm sure there are people who would be able to deal with some of those things, such as attaching some of those terms, quite frankly, to the funding.

Ms. Carolyn Bennett: The issue is that if the government all of a sudden said there will be home care—Manitoba already has it—each province would come to the table with a different sort of voucher for whether they had already paid for more drugs in terms of a more comprehensive pharmacare program. None of them are perfect. That's certainly what we heard at the home care conference, the pharmacare conference, and the information technology conference. It's quite clear that the provinces aren't equal, and if you move from province to province you won't get home care or pharmacare.

Could the federal government say all provinces have to have a home care program at least as good as Quebec's, and have that as our national standard? One of my problems is that whether you're an NGO or a regional health authority, actually starting to measure waiting lists in a standard way costs money. So you're taking patient dollars to do measurement. Should the federal government be paying for that information technology infrastructure to help measure the stuff so we can actually start to hold the provinces accountable, but in a way that isn't politically driven and isn't— for all the waiting lists already?

We want to measure it in a certain way from the time the patient has chest pain, not from when the patient has already had the catheterization, which is the way the cardiac lists are sorted out. The $2.2 million the federal government has now given the four western provinces to start on a waiting list for cardiac care project—that's $2.2 million for just the cardiac care piece. It will cost a lot of money if we're going to do this properly.

I just want help and direction.

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The Chairman: Ms. Alm.

Ms. Teresa Alm: Just to change the topic to the area of student aid, in relation to your original question, student aid is indeed monitored by the federal government and is quite measurable. One of the things we see is that we have many students who are truly in high need.

We have heard today about the poverty of children, and of course these children have parents. For these parents to break the barriers they find themselves in they need to take action. One of the ways we can increase life chances for these people is to offer them education, but they need financing for their university, college, or technical school education. We need to provide them with the opportunities.

These are very bright people and they see that the existing program offers them a lot of debt in helping them to break those barriers, yet at the same time it doesn't even help to meet all of their immediate needs of surviving from day to day, putting food on the table, and those sorts of things, while pursuing that university education in order to break the chains of poverty they find themselves in.

Ms. Carolyn Bennett: Are you comfortable that the way we measure need across the country is pretty uniform?

Ms. Teresa Alm: With the Canada student loans program it certainly is uniform, with the exception of the province and territory that do not participate in the Canada student loans program. We essentially have a model that is consistent throughout the country. We have the provincial jurisdictions involved in that as well. Some are offering more grants than others, but with the Canada student loans program as the basis there is a consistency.

Ms. Carolyn Bennett: Is it taking into consideration this great disparity in tuition from province to province?

Ms. Teresa Alm: Is there that much of a disparity from province to province? Weren't you supposed to take Quebec out of there?

Ms. Carolyn Bennett: In Ontario they have just hiked their fees hugely, and medical school fees are huge.

Ms. Charlotte French: Certain programs have higher tuition fees, and that's been allowed to happen for different reasons, but most of the students we see—

Ms. Carolyn Bennett: I guess I'm looking at the words “allowed to happen”. Is that something the federal government should have a say in? Have we allowed it and should we?

Ms. Charlotte French: To some extent you have allowed it. But with most of the students we see, the costs affecting them aren't specifically tuition. It's also living costs. These are people who are giving up employment they already have in order to retrain. They come from families that can't support them. They are from single-parent families, and once the student is 18 or 19 there's no longer child support; there are no longer other sources. So there aren't other mechanisms for them to have their living expenses covered. Even the idea of living at home isn't a possibility any more. So tuition is part of the equation, but the biggest cost is actually living expenses.

The Chairman: The comments, Ms. Bennett, have inspired other people to join in the debate. Mr. Johnston, Dr. Grills, and Ms. Smith, in that order, please.

Mr. Tim Johnston: The question from Ms. Bennett certainly makes us think about what we know about the structure of Canada and how things operate. It's a very difficult question you ask, particularly when you ask about the measurement nationally of educational standards.

Health may have a bit of an advantage because in Ottawa there is a minister of health. There is not a minister of education to be seen, so it's a rather different set of circumstances we face in the educational sector.

If you look at the kinds of measurements—the standard measurements, the TIMSS and all the rest of these sorts of things that measure achievement—the provinces tend to look at themselves and say “We're doing a little better than you are this time around”, and so on. Striving for improvement is always there.

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With regard to how much money comes back to the provinces in terms of the transfer payments for education and then how much is for primary education, secondary education, or whatever, I just don't know how that operates, to be honest with you. But I guess it's a different kind of thing. You don't have the same kinds of tags on that as you would with national programs or programs that are fronted by a ministry. So it's a difficult thing.

I suppose the Council of Ministers of Education acts in this way to some extent, when the provincial ministers of education meet to examine the standards and achievements. That's one way we gain a national picture. There are also the meetings held across the country of teacher organizations such as mine, for example, where we look at how we're doing in terms of our professional development and the achievements of the students we teach.

But it's a tough question. How do we do it and how do you attach some sort of a connection between what we offer in terms of financial support, in whatever way it's offered, to a provincial government like ours that isn't particularly interested in being told how to do things in any way?

Ms. Carolyn Bennett: One of the things that has worked is the CAPC program, which comes out of the ministry of health. It is for community development. We can look at poverty as a social determinant of health, and this initiative has involved the setting up of programs across the country that are geared to kids. I think there has not been a lot of wrangling over this money. People seem to welcome it and are using it wisely.

Was the CAPC program identified as a good thing in any of your round tables on poverty?

Mr. Tim Johnston: No. The people we're working with in the round tables, Mr. Chair, are very much the ordinary people in the community, including business people. A large number of these people who come together actually live in poverty. This is how we structure these things. People just don't have a concept about a lot of these things. We don't know about them, and it's not the sort of thing that's mentioned. What we're looking at right now in our round tables on poverty are very concrete things we can do on our block today. That's how basic it is. We haven't gotten anywhere near talking about all the other kinds of programs and supports the provincial, municipal, or federal governments provide.

Ms. Carolyn Bennett: It's going to be awfully hard for me to go asking for more money for CAPC. You have to find out how many you have.

The Chairman: Ms. Bennett, thank you.

Dr. Grills.

Dr. Scott Grills: In some ways I don't want to end up stepping in front of the Canadian Association of University Teachers on this, because I understand they're going to be bringing something forward. But this is just too inviting a topic to let go by. It would be tempting in some ways to suggest we'd like you to do to our provincial government what they did to us, which is impose a series of performance indicators, measures, and the like when the university system already had them in place. But I'll resist that temptation.

It deserves resisting because of the experience we've seen in other nations where they've tried this. For example, Great Britain's attempts at it produced something that seems to be an omnibus government bureaucracy that's spending something in the order of £50 million a year in measuring, assessing, and evaluating the university system. Of course, as you rightly point out, that's all money that's no longer going into the system itself but is just measuring the system.

Ms. Carolyn Bennett: They don't have nasty little provinces either.

Dr. Scott Grills: I'll let that go, too. Some provinces are nastier than others.

The Millennium Scholarship Endowment Fund provides an example of how money can be directed by the federal government into post-secondary education in a way that generally has been greeted with a fair degree of success, even though some provinces are sputtering about it at this point. One of the successes of that program is that it speaks to one of the fundamental qualities of post-secondary education, and it's the sort of issue Canadians generally agree on. We don't want just to hear “Here's the EI money back”. We want to make sure people are accomplishing a lot of things.

So in that vein the federal government may very well find directing money on a matching-grant basis to the sectors I'm interested in is productive. They may find clauses that prohibit provinces from moving towards privatization agendas are exceedingly helpful in preserving public access to post-secondary education in Canada. Examining meaningful remission thresholds for student debt and tying money to provincial cooperation and interprovincial mobility may be very practical ways to do things, as opposed to creating an additional government bureaucracy that in fact, I would argue, would simply be measuring a system that is already highly effective.

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The Alberta experience in measuring and measuring and measuring is that students are very satisfied with post-secondary education, and the only real, meaningful differences they've been able to turn on us relative to funding are simply changes in enrolment.

The Chairman: Thank you, Dr. Grills.

You have a final comment for this panel, Ms. Smith.

Ms. Heather Smith: Just in terms of accountability within health, I agree with another panel member here who suggested it might be a little bit easier in health, because I think we're really talking about governments being able to report: this is the money we have; this is where we spent it. We have difficulty in this province getting that even in terms of a regional basis right now. The way we decentralized health care has created reporting mechanisms such that we actually have less health information now than we had four years ago. But I think it is possible to re-establish, if there's a political will to do so, in terms of requiring at the provincial level specific reporting mechanisms and accountabilities from the regional health authorities.

Part of the problem with health of course is that some outcomes are not measurable. When you put money into health promotion and prevention, you may not see outcomes for 20 years. How do you know, or how do you quantify, that some dollars put into appropriate acute care funding and infection control in acute care in fact did not cost community workers risk, illness, and transmission, even in terms of VRE? So it's not a one-for-one.

What I would point out and caution against is any suggestion of a black and white list of services. We are not supportive of that. In terms of what is appropriate for home care, I think there's enough expertise in the field across the country. I would like to see stronger support maintained internally in terms of the federal department of health, but I think we have the expertise. I think we could say “Here is a good example, let's start with this one. Let's evaluate how effective that was in terms of addressing needs. Where are the gaps remaining with this one?” We could do that with the intention of enhancing, rather than saying “This is going to be it. It's carved in stone; this is all we're ever going to cover. End of story.”

That basically is the problem we have created with the Canada Health Act, saying this is going to cover hospital and medical care, and then we had devolution, which some provinces have attempted to deal with. Others have simply said, black and white, it's not covered; it's not our responsibility. So it can be done.

The Chairman: Ms. Smith, Ms. Bennett, thank you.

On behalf of the committee, I'd like to thank you very much.

As you probably noticed, this committee is challenged in many ways. As we crisscross the country, we hear from people who want to reduce the national debt, we hear from people who want to reduce EI premiums and increase benefits, we hear from people who want to invest in health care, research and development, and student aid, which is an important issue. We hear from so many people, and we have to do all this—at least for this year, if we're to believe private forecasters—with anywhere from $5 billion to $7 billion. We know that $3 billion has been dedicated toward debt reduction, through the contingency reserve fund, and there are people advocating the return of $5 billion to EI. Three plus five equals eight, so you understand what I mean.

But one thing is clear to us, and that is that all the witnesses who have appeared in front of us really have the national interest at heart. I think you're all driven by a sense of improving the quality of life for the people, whether you're talking about health care, students, or research and development. And you're speaking in a very emotional and passionate way because you understand that building a country is about challenges and choices and trade-offs.

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I want to tell you something. We're going to be leaving Calgary this afternoon, but we will be taking back to Ottawa a message that is loud and clear. People want us to focus not only on the immediate but also on the future, and one of the challenges Minister Martin needs to address in this coming budget is to give Canadians a sense of where the future is and where we are going, to start putting some markers down.

For the people concerned about health care, about where that is going, for those individuals concerned about our competitiveness as an issue, for people concerned about the brain drain, we need to get, and hope to get, a sense of where we're going. After all, leadership comes down to the ability to paint the future. Whether it's a budget speech or a Speech from the Throne, the government has a responsibility to make Canadians see themselves within that future. It is only then that people will rally behind the government to make sure those challenges are overcome and the best choices are made for the people of Canada.

I wanted to say these words because I want you to know that we take what you say in a very serious way and that it speaks to an inherent value in Canadians that says we're willing to risk the benefits of our common citizenship. And that speaks to what I think this exercise is all about.

So thank you very much for your input. We're very grateful.

We're going to take a two- to three-minute break, and we'll be back with the Calgary Chamber of Commerce.

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The Chairman: I'd like to call the meeting to order and welcome representatives from the Calgary Chamber of Commerce, Mr. G. McKenzie, Mr. S. Ballard, and Mr. Huddlestone. Welcome.

As you know, we're travelling across the country seeking input as to what the priorities should be for the upcoming federal budget. We look forward to your point of view. The chamber has always given us insightful information and has really been helpful in making sure we are guided in the right direction.

Mr. McKenzie, will you be speaking?

Mr. George McKenzie (Chair, Tax and Economic Affairs Committee, Calgary Chamber of Commerce): Yes.

The Chairman: Thank you very much.

Mr. George McKenzie: You've met my confreres, Mr. Huddlestone and Mr. Ballard, so I won't bother to introduce them again on record. For myself, I want to make clear that I'm not an economist. I'm a lawyer, so my comments are fairly broad and fairly general, but hopefully they represent the position of the chamber.

I'd also like to express the apologies of our president, Ms. Pheiffer, who isn't able to attend. She had hoped to be able to attend but wasn't able to.

We don't have a formal submission as such, but we have provided your committee with copies of the resolution that was passed at the Canadian Chamber of Commerce. It's a resolution that was authored by the Calgary chamber and it was passed at the annual meeting of the Canadian Chamber of Commerce in September, just a few weeks ago. It deals with the plight of the Canadian dollar and what the Calgary chamber and now the Canadian chamber perceive to be the matters that need to be addressed in order to strengthen the position of the dollar.

In terms of the particular resolution, again, while it addresses the plight of the Canadian dollar, it basically asserts that the weakness is obviously reflective of the Canadian economy as the high debt and the high taxes in Canada are recognized, we believe internationally, as being a weakness in the structure—a very fundamental structure of the Canadian economy. As soon as difficulties arise, that's recognized and the Canadian dollar takes a beating.

As is indicated in that particular resolution, the Canadian dollar has been in decline for some 25 years, and it's asserted in there that in fact our standard of living is going to suffer from that and has been suffering from that over an extended period of time. It's felt that the only way we can really turn this thing around in terms of improving our position is to attack the debt and reduce taxes to the point where it makes the country more attractive.

I know you've indicated in your earlier comments that a prior group— you've had a variety of people come before you, some of them looking for debt reduction and this type of thing. The question then becomes, how do you do that? Unfortunately, as I said, I qualified my comments by saying I'm not an economist, but I'm speaking for the chamber in terms of people who are out on the firing line.

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Our chamber represents approximately 2,600 businesses and has 4,500 members. We're the second largest chamber in the country, and 80% to 85% of our members are small businesses. Over half of our members have only one to five employees. This is the perspective we're bringing to the table and where we're coming from. We're not here representing big business. We're here representing the small businessman and how he struggles from day to day. As I'm sure the committee has been told and is well aware, the greatest job creators in the country are the small businesses. That's really what drives the economy.

From the perspective of the small businessman, the concern we wish to express to the committee today is basically about the approach taken in the last budget to debt reduction and what was perceived by our chamber certainly as a lack of commitment on the part of the Minister of Finance to debt reduction. I know the talk has gone to debt reduction.

Apparently we've solved the problem of annual deficits. We're not convinced of that in terms of it being anything more than smoke and mirrors, and in fact—and I stand to be corrected—the projections now are that without the so-called rainy day fund and some application of the EI surplus to the current year's budget, there would actually be a deficit again this year. But we now seem to be somehow prepared to accept that as being acceptable, and we're now into a position where we are talking about only reducing the debt. But we're only going to reduce the debt to the extent that the projections made come through and eventually the economy is going to grow to a point where the debt-to-GDP ratio is going to fall to an acceptable level. From our perspective as a chamber, that's not an acceptable approach to the problem.

We're reminded somewhat of the approach taken back in the early 1980s. The committee may not wish to be reminded of this, but back in 1980 the Minister of Finance, on the forecast that a barrel of oil was going to be worth $60, introduced the national energy program and the PGRT. At that point, the program, with the projections made, was not only going to fund all the costs of our new social programs but in fact was going to eliminate the debt. But it was all premised on the $60 a barrel.

From our perspective now, we see this approach being somewhat akin to that where the Minister of Finance is relying on some rosy projections in terms of economic growth as a means of effectively not reducing the debt but simply reducing the ratio of the debt to the GDP. We're concerned that this is simply not satisfactory in these circumstances. You can't rely on these forecasts. You have to plan for the worst.

We can see why we need to plan for the worst just in what's happened in the last eight to nine months, from the time of the last budget. It takes very little to turn what was perceived to be a very strong and vibrant economy into something that's now perhaps suspect, if you will, and certainly an economy where there are grave concerns about the talk about the “R” word and all the rest of it. I think we have to be very careful in terms of relying on these projections because it has been proven many times in the past that projections really very infrequently come true.

Our fundamental position is that the debt is too high and taxes are too high. You can't deal with the debt problem by simply establishing what I think you referred to as the contingency reserve fund, the rainy day fund, as it's called, the $3 billion fund, and saying we'll pay the debt down if we don't need it to balance the budget. Apparently this year you're going to need that to balance the budget. Is that it?

Mr. Sean Ballard (Analyst, Policy and Planning, Calgary Chamber of Commerce): I think it will be used to create the surplus of $7 billion or so.

Mr. George McKenzie: So it will go towards the debt. And then there's the whole question of the EI surplus. It seems to be a very political matter. I know the Minister of Finance is obviously a politician and politics are going to enter into it. It is a complicated issue. There is a need for more money.

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There's also, we believe, a need to deal with the structure of the economy. Fundamentally, we feel if you can reduce the debt, you'll reduce the cost of servicing that debt, and having reduced the cost of servicing the debt, you will then have the funds available to create these programs and to fill the needs that exist. The reason we're in the position we are in today, with our hands tied in terms of an inability to really deal with the needs, is the high cost of servicing the debt. That's our perspective of the problem. Until we get to addressing the size of the debt and reducing the servicing cost of that debt, we're never going to get to a position where we're going to be in control, if you will, of our own destiny and our own economy.

I would just refer the committee to page 2 of the resolution, where you see the recommendations that were adopted by the Canadian Chamber of Commerce. Again, they're fairly general, but they need to be addressed. We agree with the earlier comment that it's not something that needs to be addressed in the short term but rather in the long term. The debt is not going to go away overnight, but in the long term we really need to focus on reducing the debt. That will give you the flexibility to decrease taxes and increase productivity. The payroll taxes, employment insurance, CPP, all of these things in our belief are counterproductive to job creation, which is really the engine that's going to drive the economy into the future.

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

Mr. Harris.

Mr. Dick Harris: Thank you, Mr. Chairman, and welcome panel. We appreciate your presence here today.

Mr. McKenzie, I like the context you put the subject of our debt burden in. It's easy to lose sight of just how burdensome this debt is if we continue looking at it from a debt-to-GDP ratio. The fact is we have an $800 billion GDP and a $400 billion debt, and you can say it's 50%. We'll be heroes if we reduce that to 40% by increasing our GDP to $1 trillion. But the fact is we still have that $400 billion debt, and the service charges that accrue on it are terribly detrimental to our financial position. What's even worse is that if we ever had a hiccup in our GDP—let's say it dropped to $700 billion—the amount would dramatically rise even though our debt may have stayed the same. So I like the picture you've painted for us that reducing the debt in absolute terms should be a priority of the government. We can relate it even to our own household income. We can say our mortgage is very manageable based on the income we're getting right now, but if there's a hiccup in your income and an interruption in your cashflow, then the mortgage becomes a greater burden on your household well-being.

I also appreciate your pointing out that it's not really clear we have a balanced budget when you consider the EI surplus and the internal borrowing that has gone on to reach this balanced budget Mr. Martin has been so proud of. You're saying any real surpluses we realize should be applied to debt reduction and tax reduction and in absolute terms. I know this is just a comment, but I'd like you to reinforce that for the benefit of my colleagues.

Mr. George McKenzie: I'd like to pick up on your analogy to the home mortgage. Speaking personally, I wasn't in a position to be able to start saving for retirement or anything else until I had pay off my mortgage. Until you pay off your debt, you're not in a position to drive your own destiny in terms of what you're going to do. So I quite like the analogy.

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Now, there's some level of debt that is acceptable. I don't think we're suggesting that the level of debt be reduced to zero. But we believe that if you want the flexibility to be able to address the programs that you want to address from a government level, you're not in a position to do that now because you haven't dealt with the very basic problem of the debt and the fact that taxes are too high, which is really the engine that allows you to keep the debt where it is.

So yes, we're very much wanting to see the absolute amount of debt reduced.

Mr. Dick Harris: Quite frankly, Mr. Chairman, I appreciate the brief. I really embrace the recommendations that this group has put forward. I don't have any further questions, but I'd like to thank them and assure them that I will do my best to ensure that their recommendations are somewhere in our final report.

Thank you very much.

The Chairman: Thank you, Mr. Harris.

Just for further clarification, what's the position of the chamber of commerce on EI, the employment insurance?

Mr. George McKenzie: On September 1, 1998, we issued a press release. Our position is that we advocate changes in the system. Canadian businesses and employers deserve a further reduction of 40¢ in the premiums. We're looking for the application of the EI surplus to the purpose for which it was collected, and that is to the EI program, and that it be designated as such and that there be a reduction in premiums. Premiums are a payroll tax, and we view payroll taxes as being counterproductive to job creation.

So the reduction in premiums is where the chamber sits in terms of the EI situation.

The Chairman: If the reduction in premiums were to bring us back to a deficit position, would you accept that?

Mr. George McKenzie: I don't know the answer to that. If it were to bring us back into a deficit position? No, it can't.

The Chairman: You just said you want to make sure the $3 billion actually goes towards the debt. As a matter of fact, I gather you probably want even more money going towards the debt. Is that correct?

Mr. George McKenzie: That's right.

The Chairman: So if we have a surplus of only $7 billion, let's say—$5 billion to $8 billion; Mr. Valeri provided us with those numbers—from the private sector, then I guess—

Mr. George McKenzie: Cut programs.

The Chairman: Yes. At 40¢, how much would that cost?

Mr. George McKenzie: It's only $273 on a salary of $32,500.

The Chairman: How much would it cost the treasury?

Mr. Tony Valeri: About $2.7 billion. That was just a quick calculation. Every 5¢ is worth $350 million.

The Chairman: So you have $3 billion going to—

Okay. Mr. Valeri.

Mr. Tony Valeri: I have just a couple of comments. Thank you for the brief.

In your remarks, you talked about how the Minister of Finance and the government should not rely on rosy economic projections. In fact, I find it quite ironic that over the last number of budgets when the economy was actually perceived to be doing quite well, the minister was often accused of being over-cautious and over-prudent. You know, let loose with some of that money to stop over-emphasizing your cautiousness in terms of reducing the GDP. When the private sector said the GDP would be rising, you'd be shaving off a percentage of that for prudent reasons. When interest rates were supposed to drop, the budget process called for a higher interest rate in order to protect against a possible change in the economy.

We've all experienced and have seen very quickly how the global economy can change. And yet the chamber of commerce is before the finance committee saying that the government should not rely on rosy projections. I find that doesn't seem to be in sync with what in fact we were being accused of beforehand.

• 1415

Essentially, regarding the comment about planning for the worst, I think that's probably been sort of an underlying principle of building budgets since 1993, that you do have to plan for the worst because in a global economy, as most of your members know, markets change rather quickly and so you try to be cautious as you move forward.

I have a specific question, though, since you talk about the emphasis of paying down debt. Months ago most economists and market watchers had a real emphasis on paying down debt. That seems to have shifted a little bit, to the point where people—Sherry Cooper comes to mind right off the top—now say do taxes, because the global economy is slowing down and we see our economy sputtering a bit. The growth projections are down. Do taxes. Don't lose sight of paying down debt, but if you have to do one thing, you do taxes.

I just wonder how you have reconciled that or whether you've given that much thought.

Mr. George McKenzie: I remember Ms. Cooper's comments in that regard. Beauty is in the eye of the beholder. I think if you're looking at an economy—

I took economics back in university 30 or 35 years ago, and all I remember from my economics was that in good times the government should be cutting and in bad times it should be spending. And if we are in good times— I know we've gone through some good times and we've gone through some serious cutting, but if we're still in good times, then— The sense the chamber has, I believe, is that the Minister of Finance is somewhat in a state of euphoria over the fact that he's balanced the budget, and we're concerned that balancing the budget is only one step and a very first step that needs to be addressed.

A lot of pain and suffering have gone on. Alberta hasn't been deprived of any of that, as you're probably aware. But I think the feeling is that we need to plan for the worst and in our planning we need to include debt reduction and/or tax reductions as the economists might suggest, whichever one is more constructive at any particular point in time. But not to leave debt reduction the way it was left in the last budget, I guess, is where our concern arises.

Mr. Tony Valeri: Yes. I guess from your perspective a contingency reserve that's not required to balance the budget going towards the debt is not good enough. I take that point.

Mr. George McKenzie: Right.

Mr. Tony Valeri: Yet when you have a year-end adjustment— The books close for the government at the end of March, and then between April and August you have a whole bunch of year-end adjustments. There's essentially nowhere for that money to go except to pay down debt. So from our perspective, you not only have a contingency reserve going to debt as long as you're able to balance the budget, but you also have that other number.

My point is that in a world of trade-offs—and the chair talked about $5 billion to $7 billion that the private sector economists talk about in terms of the potential surplus—how do you divvy it up? You're saying do debt, do taxes, cut spending if you need to find some more money. The three areas that the government spends the bulk of its money on are transfers to people, transfers to provinces and interest on the debt. While I agree with you that a reduction in the absolute value of the debt will provide you with some freedom to reallocate the taxes to whatever the Canadian priorities are, we're now facing a situation where there's potential slowdown in the global economy. We have limited resources. What do you do? Is it just debt? Is it as simple as that, as just saying cut debt and everything else will take care of itself?

The difference between a private situation— I mean, I have a mortgage, I pay my mortgage. I don't save until I pay my mortgage. A private individual doesn't necessarily have to worry about trying to keep an economy going, whereas a government needs to pull some levers and try to assist by lowering taxes or lowering interest rates through the Bank of Canada. You have those other things that you have to keep in mind in order to keep the train rolling.

• 1420

Mr. George McKenzie: I'm not an economist, and I don't want to get into a debate with you, but there is another school of thought that says a government has never created a job in the history of government. Governments don't create jobs; individuals and businesses create jobs.

Mr. Tony Valeri: Absolutely, but you do so in a certain environment. Governments do balance budgets. Governments do have an impact on interest rates and inflation. If you're suggesting that with 4% or 5% inflation and 10% interest rates the private sector would be creating as many jobs as they are in today's environment, then I'd suggest to you that this is wrong. I'm in full agreement with you that we don't create jobs, the private sector does that, but you certainly have a role to play in the environment of the private sector and how it can operate.

Mr. George McKenzie: Then you get into a very philosophical discussion as to how much government intervention should there be. What do you subsidize? What don't you subsidize? Where do you draw the line? Obviously, when you have this supposedly big pot of funds that you can spread out, you get the sense that you can influence the economy.

Here's our feeling. This may be Reaganomics, if you will, but the sense of the chamber and its members is that if you put the money into the hands of individuals, they'll create the jobs and provide you with the engine to reduce debt and taxes and make sure you have enough funds overall, in terms of government revenue, to undertake the programs we can then afford.

Mr. Tony Valeri: So in a world of $5 billion, you would take $3 billion and put it toward debt—this is the contingency reserve—while $2 billion would be out there and—I don't want to put words in your mouth—you would essentially cut taxes. Or we could put the $5 billion toward the debt.

Mr. George McKenzie: Yes. I wouldn't undertake any new program spending in the immediate future.

Mr. Tony Valeri: Sure, so it would be debt and taxes in whatever ratio.

Mr. George McKenzie: Yes, I think that's fair.

Mr. Tony Valeri: Okay, thank you.

The Chairman: Do you have a question?

Ms. Carolyn Bennett: The idea of new program spending is something that I would like your members' point of view on.

Let's highlight health care. We have an aging population. We have more Canadians. We have a huge decrease in the confidence that Canadians have in their health care system. It's measurable. There's a big call for the government to do something about this.

I wonder whether you have any guilt, when you give charts like this in terms of the tax burden, that you aren't clear that Canadians don't have to cut a cheque for $10,000 a year for their health premiums. It's an “apples and oranges” graph because of what we cover with our taxes in this country.

If we lose and erode the confidence that Canadians have in the health care system, there will be huge pressure for a two-tiered system, which will cost your members a huge amount of money in insurance premiums and in the kind of thing that happens when people demand a second tier. One of the attractive features in creating jobs in this country, particularly for the companies that have lots of employees, is the fact that we have a public health care system that is viewed to be pretty good.

Somebody like me worries that if we erode the confidence of Canadians and we don't keep up and we don't spend a little bit more money when the population is aging and there are a few more Canadians around and we haven't been measuring or keeping up with the research and development, or particularly the information technology in the health care sector, then this is going to cost a bit of money. I would have some trouble saying to Canadians in the next budget that we don't care about that; that we don't care that their waiting lists are longer; that we actually think we should be paying down the debt; that there are only these two things in this budget, debt and taxes.

• 1425

Mr. George McKenzie: I can understand where you're coming from with that. Just using the millennium fund, the education fund, as another example, it's arguing against motherhood to argue against educating your young people. Your future is your young people. They have to be educated and they have to be able to compete.

If we believe the statistics, what we're doing now is educating people who are moving out of the country. We're losing our best to somewhere else, so maybe there's something wrong with the system. We do have health care and it's a wonderful thing, but maybe we're living beyond our means.

At the chamber of commerce, we sat around and asked ourselves what we are going to do in terms of this millennium fund, this education fund. Our sense was that, yes, it is money well spent if we can afford it. But the concern was the creation of a bureaucracy to administer it. Why are we now creating a separate bureaucracy to administer this new education fund? That's just creating more expense. If that's the approach the government is going to take with a new program, we're just falling back into the same old trap that we've fallen into before. Why do we need this separate administration?

We think there are ways to create programs that can be more efficient. If you look at the terms of the fifth recommendation we have made, you have to create a balance. We say to target any new spending at restoring cuts to provincial transfers rather than at one-time projects or tertiary programs.

If you live in Calgary, or if you live anywhere in Alberta, you're aware that they blew up a hospital here last week. We're very much aware that there have been significant cuts in health care, and we're very much aware that there have been some complaints. I know they're talking about reducing the waiting list for MRIs and those kinds of things. There are problems in the system, but they're coping. Those problems have certainly caused everyone to draw back to try to get by. I think the headline in the paper today was, “Calgary regional health authorities project 1,000 jobs lost in the health care system”. There are problems there, and we have to—

Ms. Carolyn Bennett: And every regional authority in this province will have a deficit this year.

Mr. George McKenzie: Right.

Ms. Carolyn Bennett: How realistic is that kind of planning?

Mr. George McKenzie: How realistic?

Ms. Carolyn Bennett: Well, they can't do it with the money they've been given. They cannot deliver the programs, and they're also laying off 1,000 people in a province that's growing in population.

Mr. George McKenzie: Yes, and that has to be addressed.

In terms of preparing your budget, I don't have the background to be able to tell you what goes where, to whom, and this type of thing, but you have to be aware of the problem. You've raised one side of the issue. We're looking at it from the perspective of the businessman. We're saying that if you have the flexibility, don't create any new programs. If you're going to spend money, restore or properly fund programs that are in existence and really get serious about paying down the debt.

Ms. Carolyn Bennett: So if we restored the CHST a little bit, would you be happy with that?

Mr. George McKenzie: The money has to come from somewhere. We either have to cut services or fund the services that are there. I'm not able to tell you whether or not there's an ability at this point in time to cut services further. I don't have that knowledge. If there is an ability to cut services, that's where I would start. If I can't cut services, then I have to fund the services that are there.

The Chairman: Thank you, Ms. Bennett.

Ms. Leung.

• 1430

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

Thank you for your fine presentation. I was very interested when you mentioned encouragement for investment and increased productivity. I'm from Vancouver, B.C. We enjoyed growth for a few years, but now we are facing a lot of problems, so I just want to explore your ideas. How are we going to increase our investments? We can't just solely depend on taxation. We all know that. Do you have any suggestions for B.C.? We are facing low commodity prices, and our industries and resources are all a little bit of a problem. I just want to explore that and get your ideas about how to encourage investment and increase productivity without solely depending on the taxation cuts.

Mr. George McKenzie: To pick up on the earlier point, governments do have a responsibility in creating an atmosphere that's conducive to investment.

Now let's get political. My understanding of a big part of the problem in B.C. is the perception of the Government of British Columbia. My understanding of the businessman's perspective is that it's a big problem; people aren't investing there because of the climate that's created by the particular government in power in British Columbia, but I have no empirical evidence to suggest whether that's accurate or not.

With a lot of these things, I'm always astounded at how perspective becomes reality in the very short term. In what was perceived in Canada to be a very vibrant and strong economy, people are now starting to have concerns. What changed it? You hear the chairman of the Bank of Canada saying that we have low interest rates, we have low inflation, that we have a strong infrastructure. The banks all say it, and everybody else is saying it too. But it's not happening. So I can't tell you, in terms of—

Ms. Sophia Leung: I think we are all aware that the world's economy plays a very important role and affects all of us, Mr. McKenzie. I would say that's probably an easy way to point it out. But I want to point out that I'm thinking about investment—not just financial investment, but investment in education, in the people. You touched on the brain drain. All this is very important, but I don't think taxation is the main reason for it.

We heard many presentations just before yours, and I was trying to say the same thing. I think we have to really look at the transfer payments. There is a great need to talk about health care and education. I just wanted to share that. Of course, you only emphasize paying down the debt and cutting the taxes. There are a lot of ideas, but in the meantime, what about preserving our basic quality of life? That's very important for Canadians.

Mr. George McKenzie: My only response is that our perception is that if you look at what's happened over the last 25 years and at the way we've been carrying on for the last 25 years, we've been eroding our quality of life. Our concern is that if we continue on the same track, we're going to continue to erode the quality of life to the point where we're going to become a third-rate country, in effect. Our standard of living is going to keep declining relative to other economies unless we address the very systemic problems that exist in our economy. We perceive those problems to be high debt and high taxes.

I understand that we have these programs, but it then becomes a function of deciding what you want to do and where you want to be twenty years from now, not where you want to be tomorrow. Do we want to be sitting here twenty years from now and still be talking about a debt problem, or do we want to be here twenty years from now talking about how we're going to spend all the money we've saved now that we don't have to pay this huge interest cost on our debt? That's really what we're talking about.

Ms. Sophia Leung: Thank you.

The Chairman: Thank you, Ms. Leung.

I was going to ask a question, but I'll defer to you, Mr. Harris.

• 1435

Mr. Dick Harris: I wanted to make a couple of comments. Mr. McKenzie, I think what your group is clearly saying is that we need long-term solutions, not short-term, band-aid-type fixes that will make people feel good for a few years, say, leading up to an election or something like that.

Mr. George McKenzie: Heaven forbid.

The Chairman: That's the way some would characterize such things, but some of us think generationally.

Mr. Dick Harris: Incidentally, Mr. McKenzie, in response to Ms. Leung's comments you referred to one of the real problems we have in British Columbia. You said the government has a role to play in creating an environment where business can flourish and where the economy can make some gains. You were reluctant to mention Glen Clark and the NDP government, but I'm not, so we'll let that get on the record. That's certainly one of the problems we have in B.C. There's no environment for achievement in the province of British Columbia.

You brought up the millennium fund in connection with your point number 5, target new spending on restoring cuts to provincial transfers rather than on one-time projects or tertiary programs. I think that's an excellent recommendation. The fact is, because of our dire financial situation over the last number of years, there has been about $8 billion, I think, taken out of health care and education transfer payments. What you're saying is if there are any real surpluses realized, we should be starting to put back the funding the government has taken out of those programs over the last seven, eight, nine years, rather than one-shot, feel-good-for-now-type programs.

Mr. George McKenzie: I think that's right.

Mr. Dick Harris: Thank you. Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Harris.

Mr. McKenzie, most people who appear in front of this committee during these hearings give us a list of opinions, of course, but they also tend to give us a list of what's wrong with the country, because that's what we're trying to fix. But I think there has also been a sense in this country that we are not celebrating the achievements we have made. I tell you this in all sincerity.

I was sitting on the opposition benches during the Mulroney era, and it was really frustrating to see how the Minister of Finance would always miss his target. The only certainty after you heard the speech on those budgets is that the guy would miss the target. That was beyond a shadow of a doubt.

We've travelled a long road from the $42 billion. There are some who will say it has been done with EI funds. The reality is that when the fund was in a deficit position, that exacerbated the deficit position of the government back then as well. So it's a two-way street; it's not just one.

I want to talk to you about some of the issues related to the fundamentals. If you were to design the perfect economic conditions for economic growth to take place, they would probably include low inflation, a lowering of the unemployment rate, and a reduction of the deficit and/or debt. We have these conditions, and yet we seem to think somehow we're not going in the right direction. My point of reference is always where we've been. To me, distance travelled in anything you do, whether it's life, politics, or budgets, is very important. You have to know where you came from to figure out (a) where you're going and (b) where you are. So we've made, I think, some serious headway.

• 1440

Quite frankly, I don't share the gloom expressed by some people about our economy. I think we would have been worse off if we hadn't taken some decisive action on the deficit and hadn't made some wise investments in restoring some of the health transfers. When you look, for example, at the raising of the basic personal exemption and movement on the surtax last year, all these things are building blocks for what I think is a long-term vision of lowering the tax burden on Canadians and lowering the debt. I'm just wondering, do you sense that optimism, or am I looking at statistics in a different way?

Mr. George McKenzie: I live in Alberta. I don't have a sense of optimism in Alberta right now because oil is $14 or $15 a barrel. Alberta lives and dies with $20 oil; if oil goes to $10 a barrel we're dead. And that's where the optimism comes in. The concern in Alberta has always been with taxes being too high.

I practise tax law. I'm a lawyer, I do tax law, and I'm a firm believer that I would be out of a job if the tax rate in Canada were 30%. People paying 46%—corporate tax, personal tax, or whatever—feel they need to minimize, or make sure they're not paying anything more than the absolute last cent they have to pay.

There isn't a sense of optimism, even with the buoyant economy— you know, this becomes very political. Everybody I know in Alberta was extremely disappointed with the Progressive Conservative government in the nine years it was in power because it didn't take the kind of action that was perceived should have been taken at that time, and which people are now asking this government to take, saying the problem was just delayed.

When Mr. Mulroney backed down from the senior citizens on Parliament Hill, I think it was in 1984—it was one of the first things he did—it was perceived to be a devastating thing. He should have made those hard decisions in 1984, and I dare say we wouldn't have the concerns we have now. The big problem right now is the interest on the debt, and that's what's tying your hands in terms of all the social programs we recognize we need.

Let's take a long-term perspective. We're not here looking at reducing taxes to put money in our pockets; we're looking at reducing taxes as a way of driving the economy. I don't know if it's right or not; Reagan thought it was. I think that was the foundation of his economic philosophy. He raised taxes over his term of office, but the sense is that perhaps President Clinton benefited from some of the stuff Reagan did. And the economy did turn around.

It is a huge problem. We like living here; it's a heck of a nice place to live. But are we living beyond our means?

The Chairman: One of my senses is I think we live in a world of instant gratification, quite frankly. From the remote control on your TV set right to everybody wanting everything “yesterday”. The reality is certain things are going to take time. We can't reduce the debt tomorrow as in “tomorrow”. There isn't that type of booming economic growth; it's impossible. Nor can we reduce all the taxes all at once. Nor can we deal with Ms. Bennett's health issue. I think people have to understand not everything can happen all at once simultaneously; there are going to be some choices.

I'm just wondering, in your discussion with your membership, whether or not this sense of “we need to do everything now” prevails, or is there the sense, as you correctly say, that long-term strategy is the route to go? And do the people have patience for that?

Mr. George McKenzie: They do. The concern is there isn't a long-term strategy in place. I'll go back to my comment that the $3 billion contingency reserve fund is not perceived by our membership to be something that addresses the problem.

• 1445

I think our membership would feel a lot more comfortable and be a lot more optimistic about their future and their long-term future if they could see the government firmly committed to debt reduction in a reasonable way. If it involves a debt reduction of only $1 billion this year, then you're far better off having it as a firm, budgeted commitment and not a contingency reserve fund. If it's budgeted that you're going to pay the deficit down by $3 billion, don't call it a contingency reserve fund, call it a pay-down of the debt and budget for it.

The Chairman: That's a given. When you go back to your membership, tell them the $3 billion is going toward the debt, period. That's the way it has happened thus far.

You've said you want to focus on the debt, but you also want tax cuts. That costs money. I'm talking about from the federal treasury. That's not cheap.

Mr. George McKenzie: You're raising taxes every year by not indexing.

The Chairman: I'm fully aware of that bracket creep and de-indexation.

Mr. George McKenzie: There's bracket creep and just inflation. If you bought inventory last year, even if inflation is only 1%, it's a gain on your inventory. That would complicate the system irreparably, but we all know that bracket creep costs taxpayers a significant amount of money over the long term. If we look over the number of years that the automatic increase has been eliminated, it's a significant tax increase.

When I talk about a decrease in taxes, I'm talking about middle income. I'm talking about a saving of maybe $250 to $500. It's psychological. It's something that will spur people on to gain some encouragement. They'll take the $500 and spend it. If they save it, perhaps that's better still. The people they save it with will invest it. But it's all perception.

It's the same thing with the Canada Pension Plan. We had a presentation yesterday and it was brought home to us that if you talk to any 25-year-old who knows anything about the Canada Pension Plan and ask them if they expect to ever get anything out of it when they retire, they'll tell you no. That's the perception.

The same thing applies to the economy and the federal treasury. The perception people have now is that things, while they are good, are going to get worse. You have to convince them that things are going to get better and you have to have a program that will stimulate that kind of thought.

The Chairman: So basically you have to have the people behind you to actualize budget measures, in terms of vision. Is that it?

Mr. George McKenzie: Yes.

The Chairman: I think you were here listening to the other panel, right?

Mr. George McKenzie: We came in very late and you were just questioning them.

The Chairman: People asked about the debt issue, the tax issue, etc. We listed all of them. To rally everybody requires major expenditures on the part of the government because everyone has their own little interest.

Mr. George McKenzie: It's really interesting, because ten years ago the chamber's tax and economic affairs committee was talking about the deficit. Every pre-budget submission we gave talked about reducing the deficit. I think the sense now is that if we talk about debt reduction long enough, at some point enough people will listen and it will become the next target of the government. It will be the same with CPP and all these things. Until the politicians are convinced that the population is knowledgeable enough and concerned enough about this that they need to do something about it, they won't do anything about it.

That's the perception over here and that's why we're here putting our position forward in terms of debt reduction and tax reduction. It's something that needs to be on the table. It needs to be considered. If it doesn't happen, we'll just keep hammering away at it until it does happen so that you don't lose sight of it.

• 1450

The Chairman: Just to let you know, last year this committee recommended to the Minister of Finance that he set a target of between 50% to 60% of the GDP vis-à-vis the national debt. I think that's certainly the message we heard loud and clear. It wasn't just business groups, by the way, that were calling for it back then, but social groups and other groups understood the relationship between the debt and other issues like interest rates and everything else.

Ms. Bennett, did you want to comment?

Ms. Carolyn Bennett: It was interesting when you said “as goes the price of oil, so goes Alberta”. I guess one of our concerns is how we look forward. One of the problems for the Canadian dollar has been the perception of us as a resource-based economy. How can we accept that there isn't also in your membership planning for Ballard fuel cells and hydrogen-based energy? That's because you can't be stuck with “as goes oil, so goes Alberta” for very long, I don't think.

As much as you have to keep telling government about debt and deficit, I guess our feeling is that someday maybe the chamber of commerce will talk to us about the difference between the rich and the poor as a bad thing for this country. At the moment, you have people in this province going to work from a hostel because there's no affordable housing. Why would anybody want to come and work in this province if there's no place to live?

Mr. George McKenzie: Because there are jobs and taxes are low here.

Ms. Carolyn Bennett: At a certain point, when there's no place to live, won't they stop coming?

Mr. George McKenzie: No, they'll keep coming because there are jobs here, and eventually the houses will get built and they'll live here. People want jobs. Talk to anybody. Ask people on welfare or unemployment. After their health, the next thing they want is a job because it creates respectability. It does all the rest of it.

Again, this is very political, but I have a sense that in Alberta we are making a very strong effort to diversify our economy. We're succeeding in doing that.

When you see Canadian Pacific moving its head office to Calgary, just as an example, and you ask them why they did that, a lot of it is economics. They only had to pay $20 a foot for office space in Calgary; they were paying $50 a foot in Toronto and Montreal.

We have resources, fuel, people, and a low tax base. Whenever you hear Alberta politicians speak, they like to talk about the Alberta advantage, and a big part of the Alberta advantage is a low personal income tax rate and no sales tax. Quite apart from everything else, you still need to have the infrastructure and the services there to service the industry, but that's not an insignificant thing.

I have clients who want to establish residence in Alberta on December 31 so they can pay Alberta personal income tax, which is 10% less than it is in B.C. or Ontario. People are very much concerned about taxes. They're ready to pay their fair share, but they're ready to go to some length to make sure they only pay their fair share.

Again, you can create the climate. B.C. is in a very unfortunate circumstance. They were doing very well. They were dealing with the Asian community, which was driving their economy. It's a resource-based economy. If that falls off the table, where do you end up? You would be in some difficulty.

That's why you do have to try to diversify. I dare say that anybody looking right now at establishing themselves in B.C. versus establishing themselves in Alberta is going to be more inclined to come to Alberta because of the reasons I've indicated. That's what's happening right now.

Oil isn't what's bringing people to Alberta. Oil isn't what's creating the housing shortage. With the so-called Alberta advantage, people can see that for the long term they can do better here than they can in B.C. because of the climate that exists for investment.

Talk about a political statement. I mean, there you go.

The Chairman: That wasn't so political.

Mr. George McKenzie: No?

• 1455

The Chairman: Ms Bennett, thank you very much.

Mr. McKenzie, Mr. Huddlestone, and Mr. Ballard, thank you so much for your excellent presentations. As we work on our plan to give Canadians an advantage, we will certainly keep your thoughts and perspective in mind. It's a message we've heard from a number of people. But as always, this committee is charged with the responsibility of creating a balanced approach on all these issues we have to deal with. Your thoughts are certainly appreciated. Thank you.

We're going to take a two-minute break, and then we'll hear from l'Association canadienne-française de l'Alberta.

• 1456




• 1509

The Chairman: I'd like call the meeting to order. This afternoon, I have the pleasure to welcome Ms. Suzanne de Courville Nicol Sawyer, vice-president of L'Association canadienne-française de l'Alberta.

Welcome. Please take your time, and then we'll get into a question and answer session.

• 1510

Ms. Suzanne de Courville Nicol Sawyer (Vice-President, Association canadienne-française de l'Alberta): Thank you. I've prepared the presentation

[Translation]

in French. I shall simply read it and then

[English]

I'll certainly be happy to take questions in English or whatever.

[Translation]

Mr. Chairman, members of the committee, let me introduce myself. My name is Suzanne de Courville Nicol Sawyer and I am vice- president of the Alberta French-Canadian Association for the Banff, Calgary and Red Deer region, having been elected at the annual general assembly last June. On this same occasion, Mr. Roger Lalonde, whom you invited to appear today, was concluding his mandate as president, the position then being filled by Mr. Robert Mercier who entrusted me with the responsibility of meeting you today.

We received your invitation on September 16 and our meeting was confirmed to me only last Friday. In these conditions, I hope you will understand that it was impossible for us to have our brief sent to you in advance in both official languages, as we would have wished to do.

The French-Canadian Association of Alberta has been serving the French-language community since 1926. It acts as the official representative of the French-speaking population of the province. It aims to represent the francophone population of Alberta, to promote the moral, intellectual, cultural, social and economic welfare of Alberta francophones; encourage, facilitate and develop education in French; establish and maintain contacts with the French-speaking world in general; and maintain friendly relations with groups of different ethnic origin in the province.

Our association devotes its energy and resources to various activities such as community development, le Gala albertain de la chanson, sugar bush outings, book fairs, la Fête franco-albertaine, meetings with business people, training programs for artists, a wide range of socio-cultural activities, training programs for volunteers, performances, school management, a liaison service with regional offices, lobbying and political information with the different levels of government, the promotion of francophone activities, technical support for the creation of new groups, sports and recreation and camps for young people.

The provincial ACFA offices are located in Edmonton. The association has some 7,000 members throughout the province and 11 regional chapters including the Calgary, Banff and Red Deer one, of which I am the vice-president.

I'd like to talk to you briefly about my experience so that you understand that the message that I am conveying today on behalf of the regional ACFA and the francophone community of Calgary is the result of a long and varied experience, that is 15 years of volunteer work on my part.

I am a consultant in communications and a freelance columnist by profession. For over a decade I have been writing articles for Le Franco, the only weekly provincial French-language newspaper in Alberta. After the 1997 federal elections, I wrote a column twice a week in the Calgary Sun until last May.

My passion is my people, and my country is Canada. I lived in Africa, Australia, Europe and the USA from 1973 to 1978. This provided tremendous benefits and expanded my horizons. My roots in the Canadian West go back to 1978, but when I returned there in 1989 I gained new insight into the history of francophone life in Canada, especially that of the Franco-Albertans, which I was only vaguely aware of before. That was when I decided to go all-out into a career of voluntary work for francophones, one of Canada's two founding peoples.

There is so much work to be done. During those turbulent but dynamic years of involvement with francophones in the West, I held positions such as president of la Ronge Daycare, founder and joint chair of the Parents for French Immersion La Ronge committee, member of La Ronge School Board, deputy chair of the Calgary Theatre Company, deputy chair of the Planning Committee for the Calgary Community School Centre since 1989, and founding member of the Calgary Community School Centre; now known as La Cité des Rocheuses, and inaugurated in September 1997.

• 1515

You each received an information kit with copies of our community newspaper Le Chinook. I was also president of Calgary's Club Inter, an organization for francophone business people, and I am currently chair of the Coordination Council, South Central region No 6, Francophone Education. I am quite involved, aren't I? I have held the latter position since 1994, when I was appointed by the Alberta Education Department.

In this kit you will find a special edition on francophone education in the August issue of Le Chinook. It should give you a good insight into the educational situation here.

Fifteen years in 15 lines—it doesn't take long.

I was born in Hull, Québec in 1949. That was the year when Newfoundland joined Confederation and the Supreme Court replaced the British Court as the highest court of appeal. I say this to underscore the importance of the role played by the Supreme Court of Canada in protecting our country's francophone rights.

[English]

—Britain's Judicial Committee of the Privy Council—

[Translation]

If it were not for the decisions handed down by the Supreme Court of Canada in cases such as Mahé vs Alberta, in March 1990, and for leaders with a true Canadian outlook, such as Premier Ralph Klein here in Alberta, francophone education rights would have continued to be usurped without there being any official recourse for francophones.

I would invite you to look at the special edition on education in the August issue of Le Chinook, and at an article that I submitted just a few days ago, in English of course, to the Calgary Herald, to be published soon, rather than repeat all the information here. I think that it will provide some interesting reading for you.

Let start at the beginning—the real beginning, which dates back over 150 years, before looking at the four main questions pertaining to your pre-budgetary consultations. In my opinion, priorities is the key word. Once the priorities have been established, everything will fall into place. But how does one set priorities? In my opinion, it is not too difficult: any commercial enterprise, community organization, etc. must determine what its mission is and have a vision and some values. Without this it is difficult to embark on a steady course; such uncertainty leads to inefficiency and failure.

In this order of ideas, without having completed this basic first step—at least as far as I am aware—Canada is letting itself be pressured by external forces whose vision is quite different from that shared by Sir John A. Macdonald and Sir George Étienne Cartier.

In 1838 and 1839, Lord Durham—you will all be very familiar with him and this period of history—who was at that time Governor General and High Commissioner of British North America, recommended that Upper Canada and Lower Canada be united in order to speed up the assimilation of the French Canadians. Durham and his heirs have continued their destructive efforts of assimilation since then, maintaining an adversarial approach instead of working hand in hand to build, as a team and a family. What a loss of precious energy and talent, which instead could have gone to building a more united people and creating and unshakable economic power.

That wasn't the case, and now we hear complaints that bilingualism and francophones are far too expensive, while francophones must continually fight for access to even basic services in the areas of health and education for their children. Such constraints are measurably harmful to our individual and collective development as full-fledged Canadians. These limitations and restrictions fill our children, our students, the next generation, with uncertainty and timidity, preventing them from growing up with a feeling of pride, which they deserve. And everywhere, the insidious assimilation of francophones continues.

• 1520

In 1991, here in Alberta, of the 28,725 children aged 18 and under, children of parents covered by section 23 of the Canadian Charter of Rights and Freedoms, only 7,075, or 25%, spoke French.

The situation is not entirely gloomy, however. The good news is that services to francophones are being beefed up here in Calgary, as new partnerships are developed with the provincial government. I'm referring to labour force programs, assistance for job searches, and related measures.

This week saw the announcement of an agreement signed between Advanced Education and Career Development and ROCC Inc., an association of community agencies in Calgary. I would mention the request for school governance for the Centre-South area of Alberta, which we submitted to the education department in May, and to which we hope to receive an answer soon. I would also mention various economic development projects which are being planned by our community team in Calgary.

These services don't come cheap and this is where priorities become important.

If we believe in a Canada where it is possible to grow up, to start a family, to pursue a career and to live in both official languages, in any corner of our country, there should be no question, no hesitation and no doubt as to the legitimacy of this type of request and as to the benefits that can be gained in the near future by investing in these projects.

We shouldn't expect that the damage done by 125 years of assimilation policies can be repaired in 25 years solely by means of special agreements signed with the federal government. The Canadian Charter of Rights and Freedoms, the Official Languages Act, especially sections 41 and 42, recognize that francophones are entitled to redress. They are essential tools for safeguarding our future as francophones, and Canada's identity.

Those who do not share the Canadian vision of our country are turning their back on the historical fact of the founding peoples, and they reach decisions without taking our past into account, as though they wish to erase our Canadian history. They contradict themselves, noisily taking up the cause of Canadian unity and insulting the members of one of our founding peoples by their refusal to recognize their identity. While affirming that we should all be treated equally, they maintain—no doubt without realizing exactly what they are saying—that the French language is Canada's "second" official language, and not "the other" official language.

This week, we are celebrating National Family Week. There are all kinds of families. When I was chair of the Calgary Canada Day Committee, again as a volunteer, I took great pleasure in underscoring the fact that Canada is the best country in the world, as many others do. Once again this year, it has been recognized as such. In my speeches, I always spoke very proudly of the great Canadian family with its 60 million or so citizens, of which 7 million form the big francophone family, of which I'm also very proud to be a part.

Two founding peoples whose language and culture are different but complementary. Two Canadian realities: francophones living as a majority in Quebec, but almost a million of them who are growing, flourishing and developing, often against the current, all across Canada.

The Canadian francophonie is a wealth that must be protected and not stepped upon; cultivated and not choked off; encouraged, and not pushed around; valued and not humiliated; celebrated and not hidden.

Did you know that Alberta is home to the largest number of francophones in Canada west of Ontario? That's a well-kept secret. In Alberta, the challenge is even greater because of the fact that this francophone population is scattered throughout the province. There is, however, a concentration of francophones in the north of the province, including a basin of some 26,000 in Edmonton.

According to 1991 statistics, Alberta was home to some 215,000 bilingual people, including 75,000 francophones. Some 55,000 bilingual individuals live in Calgary, including approximately 15,000 francophones. Calgary has about 30 francophone organizations and associations, only a minority of which receive funds from the federal government. And yet, these funds are indispensable for the survival of these organizations and essential for the future of the francophone community in that city.

• 1525

Since 1993, we have absorbed the shock of budget cuts, like all other Canadians have had to do. But now, it is high time that the Government of Canada reinvest in the future of our country and provide adequate funding that is necessary for the Canadian francophonie in general and the francophone community of Calgary in particular.

Just as a sapling needs special attention and nutrients to grow and become a strong, solid tree later on, our growing community needs special attention. Five years ago, we were told: "The cutbacks are coming. You have to strive for self-sufficiency." Yes, we must become self-sufficient, but through economic development, which has not been done up until now for the simple reason that francophones were too busy fighting for the recognition of education rights for their children.

The day our community becomes entirely self-sufficient, we can all celebrate, but the rug can't be pulled out from under us. You can't hurry time.

Whatever the answers might be, everything goes back to the question of Canadian priorities on the national, provincial, municipal, local and individual levels. In his book entitled French Canadians—An Outsider's Inside Look at Québec, author Michel Gratton writes:

[English]

    Since our defeat on the Plains of Abraham, we have lived in fear—fear of the English, fear of obliteration and as I hope to show, fear of ourselves. — I long for the day when I can wake up and say as a Franco-Ontarian songwriter so aptly put it, that we have found “notre place” our place in this country. I long for the day when my people will no longer be afraid because we will have allies—English-speaking Canadians—on our side.

[Translation]

Calgary's francophone community is at a critical point in its history, and we need allies.

We hope that Finance Minister Paul Martin, Prime Minister Jean Chrétien, the federal government and you, the members of the Standing Committee on Finance, will be part of this team.

Thank you.

The Chairman: Thank you very much.

Ms. Bennett.

Ms. Carolyn Bennett: Thank you.

[English]

We talked a little bit about this in British Columbia. I think for those of us from Upper and Lower Canada, or maybe with the Acadians, there is perhaps more of an acknowledgement of francophone Canadians. During the Winnipeg flood, I think it was surprising to some Quebeckers to find out there were French-speaking people sitting out there in Manitoba or in St. Paul, Alberta.

Obviously, having vibrant French communities and resources across this country is good for the future of this country and for the whole unity issue. Is there something more we should be doing to let the people in Quebec know this is important? Obviously, what you're saying is that we need to make sure you stay vibrant here, but we don't seem to be doing a good enough job of communicating your very existence to the people whom we obviously want to make feel at home in our country, those in Quebec.

Ms. Suzanne de Courville Nicol Sawyer: You bring up a very major, very important point, and that is communications.

I'm always amazed. I'm originally from Quebec, and I have family in Montreal, but they have no idea. First of all, they can't believe that I'm doing what I'm doing out here. I have to say that I had to come out west to wake all this stuff up. There was no problem when I lived in Ottawa; everybody's equal there. When you come out here, it's quite different. It's a reality check.

I spoke with someone recently, a good Liberal lady who doesn't speak French. She's from Kingston, Ontario, and she said she never knew there was a problem until she moved out west. It's like there's this dividing line that just stops communications. The winds change. There's something in the air. I don't know what it is.

• 1530

When you talk about giving information to Quebec and that francophones exist everywhere in Canada, that's one part of it. But the other part that's equally as important is the sensitization of the majority of anglophones to their minority francophone reality in their very backyard, which many people don't know of and others don't care about. It's such a waste, because you have what I compare to a diamond in the rough. If you look at Manitoba, they have le Festival du Voyageur. They have done wonderful things with economic development and tourism. That's where we're at now. That's where we want to go, what we want to do with Calgary, and there's no reason why it shouldn't happen. The support just isn't there, and at every door there are constant challenges.

The facility you will find the information on in your package,

[Translation]

La Cité des Rocheuses is a community school centre.

[English]

It's a new concept in education where you have a school and community centre together. It's one and the same; it's like Siamese twins. It's not a school and a centre; it's together. It's not like I'm here and my heart is over there; it's altogether. But the city refuses to recognize this. We're in a tangle now where they want $115,000 worth of taxes because they consider that we are an ethnic, cultural— not even community, it's an ethnocultural centre. So you have the communication gap between a vocabulary at the federal level of government that is not accepted and integrated and adopted at other levels of government, including the provincial and municipal governments.

I think something needs to happen, and I don't know how this can happen. We talk about working together and tearing down barriers, interprovincial barriers, and everything that goes with it, yet there's that friction between the provincial and federal; this is my turf and that's your turf and don't come on my turf. That has to stop certainly where it concerns la francophonie, because it really hurts us. As a volunteer you can only go on for so long, and after awhile you're just beating your head against the wall.

So communication— absolutely, to reach out to the people of Quebec, to let them know. I don't know if it's through concentrated efforts such as les vignettes that we see. I think those are really great. I love those. I've become a history fanatic. For somebody who failed history in high school, boy, look at me now. I think it really has to go hand in hand, because it's always Quebec, Quebec, Quebec—I'll say that. Yes, it's Quebec, but it's all of Canada and it's the two linguistic dualities. Each has to be communicated the same message to work together, to reinforce each other rather than butting heads all the time.

Ms. Carolyn Bennett: In your brief you talked about the ability in terms of school and health care— What is the reality of a francophone family in Alberta being able to have education in French and receive health care?

Ms. Suzanne de Courville Nicol Sawyer: Health care, I would tell you, is certainly non-existent in the formal sense that you cannot go into the hospital, except Peter Lougheed or whatever, and start talking in French. I might get lucky and there might be somebody there who speaks French, but there is nothing formal. Efforts are being made towards that. There are people who are in that field of expertise, and I know there are initiatives under way.

As far as the school is concerned, which is my area of expertise, things are getting much better. As of 1984 you had the first two francophone schools that were open where French was a first-language program. You have many French immersion schools. It's a big success. We probably have the highest number per capita right here in Calgary in all of Canada, I think, but the francophone French as a first language is different. It's for les ayants droit. They're learning in French; they're also learning English, of course, but it is a different system from the French immersion program.

• 1535

In 1994 the first two schools were opened, one in Edmonton, Maurice Lavallé, and one here, École St-Antoine, to 128 students from kindergarten to grade 6. Now the school is part of the Centre scolaire communautaire, Cité des Rocheuses. The school remains a Catholic school, École Sainte-Marguerite-Bourgeoys. The student enrolment is 630 from kindergarten to grade 12.

Last September we, as the coordinating council I talked about, which I chair, with the full cooperation of the Calgary Board of Education, opened a public school. It's non-denominational francophone. It's the first in Alberta under the jurisdiction of an English language school board. It has from kindergarten to grade 5 and it has 54 students. This year it's from kindergarten to grade 6, because they add a grade as they go up, with 124 students.

The numbers are there. We have a potential of close to 6,500 students just in our area who could be registered in French as a first-language program but are not. They are in English. They are in immersion. They are in private schools. There are situations where certain parents who did not want their children being educated in Catholic schools and had no alternative but French immersion, which is not meant for francophones, put them in private schools. And they have to pay for this. Do you want to compare it with Quebec? Do Quebec anglophones pay for the education of their children in English? I don't think so.

This is where we are. We've come a long way. There are now 17 schools open in Alberta, from 1984 with two. There are many more to be opened. In our projection to the Minister of Education and the department of education—we give them a yearly projection—we said that here there should be at least a minimum of two more schools open in Calgary, then another one just north in the Cochrane-Airdrie area, and another south in Okotoks—that type of thing.

Ms. Carolyn Bennett: You have radio and television. What do you do about film and French cinema?

Ms. Suzanne de Courville Nicol Sawyer: There are some films that we—

Ms. Carolyn Bennett: How do you watch it, or how do you get it here?

Ms. Suzanne de Courville Nicol Sawyer: Basically we rely, as you said, on Radio-Canada. Absolutely.

Ms. Carolyn Bennett: But first-run French Canadian films—you can't see them?

Ms. Suzanne de Courville Nicol Sawyer: Guess what? I don't think I've ever been to a first-run French Canadian film out here. I know they show them at the Plaza, but, mea culpa, I've never been to one. It's there, but you just don't have what you would have in Ottawa or elsewhere.

So for the cultural aspect, certainly—

Ms. Carolyn Bennett: But when we worry about the cinema— You say there are a million people outside of Quebec. Is that not more than our total aboriginal population? When you think about the presence that it has in our country and the fabric of our country, you're invisible.

Ms. Suzanne de Courville Nicol Sawyer: Yes. We're the best kept secret in Canada. We're the invisible minority.

The Chairman: Thank you, Ms. Bennett.

Ms. Leung, a final question.

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

I was very interested in your presentation. I must congratulate you. You did a wonderful job. You must be very proud.

Ms. Suzanne de Courville Nicol Sawyer: Thank you.

Ms. Sophia Leung: You almost single-handedly did all that. It was quite an increase.

I'd like to know a little bit about what your community is like. What are the numbers?

Ms. Suzanne de Courville Nicol Sawyer: Here in Calgary there is a bilingual population of about 55,000, of which approximately 15,000 are francophones whose mother tongue is French, like myself.

Ms. Sophia Leung: Do you have any social organizations supporting you?

Ms. Suzanne de Courville Nicol Sawyer: Yes, we have the school community centre, the Centre scolaire communautaire, that I told you about. When you get a chance, look in the information kit.

It is the rallying point. It just opened. I worked on that from 1989 as a volunteer, so it was a very proud moment when we had the official opening last year with Senator Hayes, who was there to cut the ribbon, and other officials. It is a new concept in education.

• 1540

When you're in a minority situation, it's not just a school. You have l'école, le foyer, la communauté—school, home, and community—which work together. They're like the trinity. We won't say Holy Trinity. The foyer reinforces the education portion, and then you have your community activities.

Being in a minority situation, the minute you step outside that circle, everything is in English, of course. It's nothing new. I was born in Quebec but raised in Ottawa. I remember as a teenager my parents would speak to me in French and I'd answer them in English. I don't know how many times I almost left École Notre-Dame to go to school in English, but I never quite did that. So history repeats itself.

But when you go further and further west and further and further away from your main hub of activity and population base, it becomes increasingly difficult to protect your language and culture and to pass it on to your children. As an example, I'm married to an anglophone who doesn't speak French. It really didn't matter until the kids came along. But now he's always gone, so he still doesn't speak French. But that's okay. Our children went to school that was conducted completely in French until grade 9 and 10, but they're in English now, and there's nothing I can do about it. They have one school in all of Calgary, and they had to travel three hours by bus and train. Voyons, cela n'a pas de bon sens. So what are you going to do? You have this beautiful school five minutes away with great music programs, so you have no choice.

I'm just one of many. That's part of assimilation. I look at my kids and I shake my head. I talk to them in French and they answer me in English. I figure, oh, well, I did the same thing. Hopefully, when they get older they will renouveler. They will pick up their roots and they'll maintain them.

There are about 30 different associations. There's the theatre, a business club, and the church, of course—

Ms. Sophia Leung: So you socialize with other non-French-speaking groups.

Ms. Suzanne de Courville Nicol Sawyer: Oh, yes, absolutely.

Ms. Sophia Leung: I just quickly want to comment, because I'm from B.C. Vancouver is very multicultural, so we do have different groups. In the meantime it's difficult to retain your heritage and your language. This is why I think you're doing very well.

Ms. Suzanne de Courville Nicol Sawyer: Thank you. It's such a challenge.

The thing that's important is to remind people we're not doing this for us. It's part of the Canadian identity. If you wipe out the francophone population—and that's eventually what some people would love to do—you won't have the same Canada. Do you want a unilingual English Canada? Maybe it will be unilingual English and become just a big America.

Ms. Sophia Leung: But do you agree we are becoming multicultural, besides being francophone?

Ms. Suzanne de Courville Nicol Sawyer: I think official multiculturalism was recognized in the seventies. All the different ethnic groups, the people who immigrate here, bring great richness to this country. There's no question about that.

But the important thing is as immigration increases, new Canadians are somehow clearly understood. That's another part of communication. I can see by the way you're talking to me you do understand, but not everyone speaks the way you do. So there's that constant haranguing of “We're better than you”. There's that whole unhealthy, competitive atmosphere that has been encouraged in this country. It really needs to be stopped and reversed, and it can be, so that we're all comfortable in our own spaces without threatening others or making others feel we are a threat.

Ms. Sophia Leung: Yes, I agree with you. I think we should live in harmony, not competing but accepting each other. It doesn't matter what your race or language is.

The Chairman: Thank you, Ms. Leung.

I would like to thank you very much. Sometimes, upon those moments of reflection—and as politicians, we do have them once in a while—you often ask yourself how, with all the challenges we face as a nation, this country still works quite well. I think in large measure it works very well because of people like you who take on these challenges. These are not easy tasks.

• 1545

Ms. Suzanne de Courville Nicol Sawyer: No.

The Chairman: You probably embody that saying “fixing what is wrong with Canada with what is right with Canada”. If I can say this in a very personal way, there's a lot right about you and what you do for the people of this country and this province. So I wish you the very best in this quasi adventure, but I also want you to know you have many people in the Canadian Parliament who are very sensitive about the issues you have cited. We certainly are in this committee, and we have taken note of the many challenges you face.

Thank you very much.

Ms. Suzanne de Courville Nicol Sawyer: Thank you, and I hope you'll tell the other members who weren't here what a great presentation they missed.

The Chairman: Thank you.

The meeting is adjourned.