FINA Committee Meeting
Notices of Meeting include information about the subject matter to be examined by the committee and date, time and place of the meeting, as well as a list of any witnesses scheduled to appear. The Evidence is the edited and revised transcript of what is said before a committee. The Minutes of Proceedings are the official record of the business conducted by the committee at a sitting.
For an advanced search, use Publication Search tool.
If you have any questions or comments regarding the accessibility of this publication, please contact us at email@example.com.
STANDING COMMITTEE ON FINANCE
COMITÉ PERMANENT DES FINANCES
[Recorded by Electronic Apparatus]
Tuesday, November 9, 1999
The Chair (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I'd like to call the meeting to order and welcome everyone here this afternoon.
As you know, the finance committee is travelling across the country seeking input for budget 2000, the first budget of the millennium and an important budget for many reasons. Also, given the fact that we're looking at projected surpluses, wise decisions and intelligent choices must be made as we try to build a very productive and just society for all.
We will begin with the Ontario Hospital Association's Mr. Robert Muir, chief operating officer. We also have with us Tony Dagnone, president and chief executive officer, and Major-General Frank Norman.
As you know, gentlemen, you have five minutes to make your introductory remarks. Thereafter, once all the presentations have been made, we enter into a question-and-answer session.
Mr. Tony Dagnone (President and Chief Executive Officer, London Health Sciences Centre, Ontario Hospital Association): Mr. Chairman, thank you very, very much. I want to thank you and the members around this table for allowing ordinary Canadians to make direct representations to our elected leadership, such as yourself.
As I look around this table, I believe we have a common vision and passion. We all want to do the right thing to improve the health care system of our great country. We therefore have a collective obligation to make sure that each of us, in our own way, does everything possible to invest in the future of our Canadian health care system. Why? Because I believe we have a duty and an obligation to make sure Canadians who deserve health care have timely, accessible, quality services.
Without the federal government's leadership, we may place our cherished health care system in jeopardy. That's why we are here taking up a little bit of your time today: to respectfully ask each and every one of you, as our elected leaders, to do everything possible to support the need for us to invest in our health care for Canadians.
Joining me today are Bob Muir, who will be making the rest of the presentation, along with the chairman-elect of the Ontario Hospital Association, Major-General Norman. We are here to answer questions that you or the other members may have.
Mr. Robert K. Muir (Chief Operating Officer and Vice-President of Hospital Relations, Ontario Hospital Association): Thank you, Tony.
I will speak about the slides that you have in front of you, but I want to say at the outset that this country is not alone in grappling with the problems of providing equitable, quality health care. It's obviously an issue throughout the industrialized world, and there are many approaches. There will always be challenges to solve, regardless of the progress we've made to date. However, no matter how difficult these challenges get, we can't lose sight of the fact that we in this country have one of the best health care systems in the world, and it must be preserved. At the Ontario Hospital Association, we believe our generation should leave a health care legacy for future generations. Our well-being and the well-being of our children depend on that.
According to international studies, hospitals in Ontario are more administratively efficient when compared to those the United States, our largest trading partner. As referenced in our submission, several business and economic research organizations note that Canada's publicly funded health care system provides businesses with a competitive advantage when compared to the United States.
The outcomes of health research will be one of the engines of economic growth in the next century. In Ontario, our hospitals have been at the forefront of this growth. For example, just last month, Mr. Dagnone's hospital, the London Health Sciences Centre, announced the successful completion of the world's first closed-chest, robotic-assisted, beating-heart coronary artery bypass graft. That was a first. I think Mr. Dagnone should be congratulated, and particularly his physicians—and he didn't do it.
As all of you know, however, there are stresses in the system. A growing and aging population is placing increasing demands on home care, long-term care and hospital services. Consumer awareness and expectations have increased, placing tremendous strains on operating budgets. In Ontario, there's an aging infrastructure. In this province alone, we need $7.8 billion in capital over the next five to seven years. We need life-saving medical equipment, and there is a real need for new skills and research as technology and patient care services change. In our view, we must therefore move beyond the rhetoric about universal, accessible and affordable health system. The Canada Health Act means something, and the government needs to ensure that its principles are upheld.
We believe the federal budget last year made a significant reinvestment in health care. It will go a long way toward increasing health care public funding to the provinces, but it also must continue. We support the position of the premiers and territorial leaders to fully restore provincial cash transfers to the 1994-95 levels by increasing transfers to $19 billion from $15 billion. We also recognize other federal priorities, and recommend that the federal 2000 budget build on last year's budget by increasing federal transfers to provinces by at least $1.5 billion a year, until those transfers reach the 1994-95 levels.
Major-General Frank Norman (Chair Elect, Ontario Hospital Association): Mr. Chairman, that concludes the formal presentation. I would like to indicate the willingness of the three members of the Ontario Hospital Association who are here today to answer your questions, if we are able to do so.
The Chair: Thank you, Mr. Muir, Mr. Dagnone, and Major-General Norman.
We'll now hear from the Society of Rural Physicians of Canada, represented by Dr. Patty Vann, president, and Dr. Keith MacLellan, past president. Welcome.
Dr. Patty Vann (President, Society of Rural Physicians of Canada): Thank you, Mr. Chairman.
On behalf of the Society of Rural Physicians of Canada, Dr. Keith MacLellan and I would like to thank you for the opportunity to address this committee during its national pre-budget consultations. The society represents physicians in rural and remote communities across this country and is affiliated with the Canadian Medical Association. They work with us on issues of mutual concern.
Dr. MacLellan and I are both full-time rural physicians from communities of fewer than 10,000, and we bring over 30 years of personal experience in rural health care delivery to this table. We are here today to speak for Canadians living in rural and remote areas who are having increasing difficulty accessing health care. We want to speak today about the need for a national rural health strategy for Canada.
All Canadians, not just urban ones, should receive medical care in their own communities whenever possible. We know rural Canadians placed access to care as one of their main concerns during the government's rural dialogue in 1998. The Canada Health Act ensures access to adequate health care for all Canadians, regardless of where they live. The federal government must take an important lead in supporting access to care for rural Canadians.
Remember, rural health care is important. It services close to one-third of Canadians, who live in communities scattered across this vast country, including a large portion of our first nations and Inuit people. It is also important to a large number of other Canadians who spend their vacations exploring this great land.
Remember, rural health care is unique. The people served tend to be older, poor, and have more serious medical problems. Rural Canadians are more likely to be involved in dangerous occupations, such as farming, construction, logging, mining, and fishing, putting them at increased risk for accidents. These industries are not only the economic basis of our communities, but they also account for over 40% of our national exports.
Yet the care of these Canadians is provided by fewer than 15% of the physicians in this country. It is provided in communities often great distances from modern technology and medical specialists. These distances are compounded not only by the nature of our geography but also by the challenges of our climate. It is provided by people who have the clinical courage to work in such areas and who have acquired the additional skills necessary to service these communities.
Despite all of this, the per capita spending on health care for rural Canadians is still well below the national average.
Remember, rural health care is in trouble. There has always been a gap in the standards between urban and rural Canada. This gap is widening. We know we can't have a neurosurgeon, a child psychiatrist, or a CT scanner in every little town. In rural Canada, however, even the ability to care for common events such as heart attacks, pneumonia, and stress-related illnesses is becoming impossible.
Women in rural Canada are finding it difficult to have their babies in their own communities, with their families around them. People have to travel to hospitals hours from their own homes to even have simple tests and operations. Families cannot find counsellors at times of stress. Children with learning difficulties or special challenges cannot obtain help locally. Cancer patients cannot receive their chemotherapy close to their loved ones at a time when they need such comfort and support.
Rural hospitals are being closed or chronically underfunded so that these services can no longer be provided. As well, physicians and nurses are not receiving the appropriate training any longer in this country, or the encouragement, to practise in these areas. Those care providers who are already in rural remote Canada are aging, and a number are moving to urban centres or retiring. Rural Canadians deserve better access to health care than this.
We definitely have a problem, mostly because the model for the Canadian health care system and the training programs for health care providers in this country are urban-based. They've been developed on models that work well in the more densely populated areas, but not in rural Canada.
The problems have been addressed with a variety of band-aid solutions for too many years. Yes, telehealth and technology will help, but who's going to set the child's broken arm, deliver the babies in the middle of the night, or care for someone's first heart attack if the care providers and the facilities are inadequate in rural Canada?
What this country needs is a well-coordinated national strategy aimed specifically at addressing issues of access to care for all rural Canadians. Such a rural strategy would eliminate the two-tier health care system that presently exists. Only the federal government can do this. In our documents we have outlined how.
A national rural health strategy would help to provide realistic guidelines and standards for health care delivery in rural Canada. It would provide the much-needed standards, funding, and training programs for rural health care providers in a logical and accountable manner. Canada needs appropriately trained physicians, nurses, nurse practitioners, therapists, and counsellors to work in rural areas. Canadians need realistic guidelines, standards, and funding for their rural hospitals. Rural-appropriate research is also needed.
We strongly believe the federal government can play a pivotal role in ensuring this happens. This view is supported by the Liberal rural caucus, the rest of the medical community, and community organizations, including the Federation of Canadian Municipalities, the Canadian Federation of Agriculture, and the Canadian Community Newspapers Association. We hope this government has the courage to take the lead in developing a national rural health strategy as outlined, with the appropriate recurrent budget to improve rural health care in the new millennium.
Remember, all of Canada needs a healthy rural Canada. Thank you.
The Chair: Thank you very much, Dr. Vann.
We'll now hear from the Easter Seals/March of Dimes National Council, represented by Mr. Paul Raina, provincial manager of government and corporate relations, Ontario March of Dimes; and Mr. Duncan Reid, past president, Ontario March of Dimes. Welcome.
Mr. Duncan Reid (Past President, Ontario March of Dimes, Easter Seals/March of Dimes National Council): Thank you, Mr. Chairman and the members of your committee, for giving us the opportunity to appear.
The Easter Seals/March of Dimes National Council is the umbrella body that represents all of the provincial Easter Seals societies and the March of Dimes associations across the country. While we both speak for the national body from the March of Dimes side, I can also talk as a former client of the Easter Seals side. Like all kids, I grew up.
The Easter Seals programs for disabilities are important, as are the March of Dimes programs for adults with disabilities. We want to talk in the five minutes available to us about four specific issues that focus to some degree on the social deficit as opposed to the financial deficit. They are important for your consideration. All of the other things in our paper have equal merit and deserve your support.
With respect to the Canada pension plan, becoming disabled is not an act of choice. Collecting disability benefits is not an act of will. Access to the Canada pension plan disability pension should be a basic right by virtue of contributing to the plan and having a disability. No one should have to fight for entitlement. Unfortunately, under the current system, too many people do have to fight for what is a right.
You need to make the application process user-friendly. More should be done to make it possible for frequent contact to occur between applicants and programs administrators. Eligibility assessments should be based on functional ability rather than restricted to medical diagnosis.
Further, disability benefits should provide an income that preserves an individual's self-respect and dignity but not serve as a disincentive to self-sufficiency.
Finally, you need to do something to address the levels of the pension itself; $8,000 and change a year does not allow people in modern-day Canada to live with any sense of dignity.
You need to do a lot. We know the government is doing some wonderful things in relation to getting disabled folks into the workforce. You need to keep funding those. You need to work with provincial partners to make the transition into the workforce more effective. You need to extend the $90 million that is in the opportunities fund to employability assistance for people with disabilities. We would suggest much more than the $90 million, but as a floor position, you should extend the $90 million for a further three years.
We believe strongly that you need to work with your provincial and territorial partners to expand the housing stock for disabled persons and to expand programs to increase disabled families' home renovations. There are some wonderful programs in place that assist disabled adults in terms of having vehicles refitted, but none for children. That's not equitable; that's not fair.
Please look at restoring the eligibility for the disability tax credit to persons with attendant care costs over $10,000. We would further recommend that this provision be reviewed annually to ensure that the cost ceiling is reasonable. And we would urge you to continue your commitment to supporting informal care givers by reviewing that tax credit on an annual basis as a minimum, but to more than likely increase it.
Finally, we're encouraged by a number of things like the Scott report and other initiatives that are happening. We have two last requests that are not really financial, but it's within your power to make these recommendations.
We would ask that you recommend to the government and to Parliament the report tabled by the Subcommittee on the Status of Persons With Disabilities and support its recommendation that a standing committee be established to serve as a catalyst for action to promote equality and the inclusion of people with physical disabilities.
We would also ask that you support the idea of including the health and activity limitation survey in every census. That survey is a valuable guide, and its research touches on showing that the disabled are or are not being included.
I guess I would close with the words of Franklin Roosevelt by reminding you, “The only limit to our realization of tomorrow will be our doubts of today.”
The Chair: That's a good quote. Thank you.
We'll now hear from the Construction Employment Group of Ontario: Mr. Bud Calligan, member of the board of directors; and Eddie Thornton, executive director of the Carpenters and Allied Workers, Local 27. Welcome.
Mr. Bud Calligan (Member, Board of Directors, Construction Employment Opportunities Group of Ontario): Thank you, Mr. Chairman. My name is Bud Calligan. I'm the secretary-treasurer of the Carpenters District Council of Ontario, and I am a director on the board of the Construction Employment Opportunities Group of Ontario, CEOGO. I am pleased to have an opportunity to appear before the committee's pre-budget consultations on behalf of our trade unions, which represent over 41,000 construction workers and their families across Ontario.
CEOGO was formed for the purpose of expanding and enhancing employment opportunities within the construction industry by building on the success of our joint labour-management training trust funds. The issues and recommendations that we are presenting will focus on the construction industry, and they go directly to the matter of working people, their families, and the Canadian economy. Our submission addresses the following issues: tax treatment of training trust funds and training contributions; employment insurance; the underground economy; training for new entrants, apprentices and worker upgrading; and national infrastructure renewal.
In the face of the physical surpluses, we are experiencing a training and skills deficit. We believe that, in this budget, the government must direct its attention to ensuring that people have access to the skills and tools they require to succeed.
Ontario's construction sector was hit very hard in the last recession. It has not fully recovered, and is now facing added pressures and an aging workforce in the face of a technologically changing world. We have seen access to significant supports severely limited or eliminated all together by all levels of government, especially those supports intended to attract new people to the trades. According to Statistics Canada's registered apprenticeship training survey, the building and construction trades labour force was 5.3% smaller in 1996 than it was in 1991. The number of registered apprentices is down 29.7% over the same period, and the number of those finishing their apprenticeship has declined 40.3%. This does not bode well for our industry, and this does not bode well for our economy. Both labour and management continue to partner towards internal solutions to the sector's employment and training needs, but government also has a role to play.
As we stated in last year's pre-budget brief to this committee, access to work and skills training are the most important ways in which the government can improve productivity and expand opportunities into the future. It is under this theme that we are making the recommendations to the finance committee.
On the budget process: We are pleased that the government is adopting a more open budgetary policy with the recent announcement of its multi-year planning surpluses. Longer-term budgetary targets are important in order for Canadians to see where their government is heading on their behalf. We encourage the government to conduct its budgeting with confidence.
On tax reduction and reform: While the government should not abuse its revenue-generating power, it must not abdicate its ability to exercise those powers for the common good. In addition to targeted tax relief for low- and middle-income Canadians, especially the unemployed, we believe the government should amend the Income Tax Act to address negative tax consequences for workers and employers in the construction industry.
Our industry, through multi-employer training trust funds, has established a significant training infrastructure that is capable of addressing our industry's needs. However, the tax treatment of training trust funds and worker-training benefits remains at the discretion of Revenue Canada's interpretation.
Training trust funds should be deemed tax exempt and should be able to secure surplus revenues to meet the training needs of other years. Further, the training benefit provided by training trust funds for workers should be expressly deemed a non-taxable benefit for workers. We ask the committee to consider the importance of training trust funds as a ready-made vehicle to meet the needs of workers in our industry.
On social infrastructure: An underlying tenet of Canada' social infrastructure is helping people acquire the skills and the tools to succeed. This theme has been repeated time and again by the Minister of Finance, as recently as the economic update of November 2. We acknowledge the government's actions on reducing EI premiums, but more attention must be directed to the needs of unemployed workers, who have seen their benefits repeatedly scaled back through various reforms to the EI system.
We believe the government should invest in Canada's social infrastructure in the following manner. Enhance the employment insurance system to ensure that it meets the needs of unemployed Canadians and addresses issues relating to eligibility, level, and duration of benefits. Reassert the federal role in training and improve support for industry training for new entrants, apprentices, and worker-operating.
On the new economy and productivity: The construction industry and its workers are at the forefront of many of society's technological changes. Construction workers are the ones who are responsible for constructing the physical infrastructure of the information highway. Investing in the construction workforce is as important as investing in high-tech product development and the product developers.
We cannot expect the development of skills to remain static. Upgrading the skills of our industry's current or potential employees strengthens the employer's competitive position, improves productivity, creates employment, and contributes to the growth of the economy.
The government can also improve our standard of living and improve the productivity of our entire economy on the eve of the new millennium by undertaking a renewed national infrastructure program in partnership with the provinces, territories, and municipalities, and with input from the industry.
To sum up, we are asking the government to invest in our construction workforce through the various initiatives we have outlined in our submission.
Thank you to the committee for its time and consideration. I would be pleased to answer any questions you have.
The Chair: Thank you very much, Mr. Calligan and Mr. Thornton.
We will now hear from the Laborers' International Union of North America, with Joseph S. Mancinelli and Cosmo Mannella. Welcome.
Mr. Joseph S. Mancinelli (International Vice-President, Central and Eastern Canada Regional Manager, Laborers' International Union of North America): Thank you, Mr. Chairman, for the opportunity to address you and this committee. I'm going to try to squeeze in as much as I can in the next five minutes. We have quite a lengthy brief, touching upon a number of topics.
We are a labour organization that represents approximately 2.5 million workers across this hemisphere and about 80,000 across central and eastern Canada. We have a number of concerns that we would like to highlight today, starting with the Employment Insurance Act.
We were pleased to see that there will be a reduction in employment insurance premiums, from $2.55 to $2.40 in the year 2000, representing about a 6% decline in rates. However, even though there have been these changes, there are a number of problems that still exist within the Employment Insurance Act. We will be making separate representations to Human Resources Development Canada in this regard, but we would like to take this opportunity to highlight the need for further changes to the Employment Insurance Act in order for it to become more equitable for workers in Canada, particularly for seasonal workers, who are penalized through the clawback system.
On goods and services, the GST, and new rental housing investment: The construction of rental buildings generates significant economic benefits across numerous communities in Canada. The 7% GST that applies to final price of rental buildings, land costs, plus construction costs impacts heavily on the cost per unit. Depending on the location of the property, GST payable for a modest unit is roughly $6,200 to $6,800. For a high-end unit, GST payable increases to $8,900 to $10,500. These are significant costs, which have stagnated the construction of rental units.
Our recommendation is that the GST be eliminated from residential rental housing construction, thus creating a significant economic impact on the construction of these units and creating additional other taxes generated by development of the jobs that would be created in this industry.
With regard to skills development, Mr. Chairman, over the past decade, training dollars have flowed to provincial governments, and Human Resources Development Canada has adopted skills development dollars that are put into the hands of the worker and have empowered the workers to go out and find training venues on their own.
I would recommend that training grants be reinstituted to qualified training centres that will provide proper training for skills development to workers across Canada. We recommend that skills development grants be earmarked for approved training centres and institutions across Canada in order to evaluate the skills needed in the workplace and provide adequate training to meet the needs of future workers and employers.
The bulk of our presentation has to do with “brownfield redevelopment”, Mr. Chairman. A number of countries around the world have adopted a system of redevelopment of contaminated land. Canada is one of the few industrialized countries around the world that does not have a brownfield redevelopment program. The success of reclaiming contaminated land lies primarily in the ability of municipal governments to respond effectively to economic, environmental, and social problems within their communities.
However, it is important to keep in mind that this is a national problem, one that affects every community in the country. Therefore, we must see national leadership in order to achieve this goal. In numerous international cities, the remediation of brownfield sites has been a vital part of urban redevelopment and economic redevelopment. In a number of cities in Canada, like Hamilton, Ontario, and Sydney, Nova Scotia, there are a number of catastrophes in the environmental sector that need to be addressed immediately.
We suggest that a superfund be set up by the federal government in order to clean up these very large projects and that a brownfield redevelopment program be developed so municipalities and contractors can access these funds in order to remediate and reclaim land that is no longer being used in the inner cities. This is an inner-city problem throughout every city across Canada; we are seeing a decay in these inner cities because of the number of contaminated sites that are not being remediated, and the cost of development is so high because of the cost of environmental cleanup.
An environmental program such as brownfield redevelopment could work hand in hand with an infrastructure program, for example, which would allow municipalities or corporations or developers the opportunity to offset development costs with this innovative way of stimulating economic growth and getting a lot of the contaminated sites across our cities remediated.
Thank you, Mr. Chairman.
The Chair: Thank you very much, Mr. Mancinelli and Mr. Mannella.
We'll now hear from the Canadian Film and Television Production Association, with Elizabeth McDonald, president and chief executive officer, Linda Schuyler, chair of the board of directors, and Steve Ord, chair of the tax and financing committee. Welcome.
Ms. Elizabeth McDonald (President and Chief Executive Officer, Canadian Film and Television Production Association): Thank you. Thank you very much for this opportunity to appear before the standing committee.
I'm the president and chief executive officer of the Canadian Film and Television Production Association. I'm joined by my colleague, Linda Schuyler, chair of the association's board of directors and president of Epitome Pictures. Linda is the producer of the award-winning and internationally acclaimed Degrassi series of programs and Riverdale, Canada's soap opera.
We are also joined by Steve Ord, the hard-working chair of the association's tax and financing committee and executive vice-president of television production at Alliance-Atlantis. Alliance-Atlantis is a fully integrated production, exhibition, and distribution company of television programming and feature films such as Traders, Due South, Da Vinci's Inquest, and David Cronenberg's Existenz.
The CFTPA represents over 300 independent film and television producers from all regions of the country. As producers of Canadian film and television production, we appreciate this invitation to contribute to the committee's important work.
The committee should be congratulated for the extensive regional consultations it has undertaken this year in its consideration of the government's upcoming budget priorities. We trust that the committee has had the time to consider the suggestions in our brief submitted in September. We will briefly outline our main points, and will be happy to answer any questions or discuss them in greater depth with the committee.
As the committee members are certainly aware, the government has traditionally maintained a strong policy commitment to encourage the growth of a Canadian-owned production sector and the production of Canadian content for film and television. The emergence of a strong industry has been a major success story. Our production industry profile indicates dramatic increases in overall production activity, export dollars and jobs, between 1991 and 1998.
Government support for film and television production has played a critical role in this growth, but our industry has become increasingly less reliant on government funding. Over the past six years, on average, less than 15% of the financing of certified film and television has come from the public sector. So while public funding remains crucial to the financing of Canadian productions and the attainment of the government's cultural objectives, the dramatic developments in export and job figures during this period underline that public funding can also be viewed as an important stimulus or investment for a growing, labour-intensive industry.
We also wish to emphasize strongly that despite some recent press reports suggesting potential misuse of the government support programs by individual producers, our industry members are ardent defenders of the government's production incentive system and its responsible use. The federal government has become an important investor in our industry—a partner in the creation of a dynamic and creative industry that produces important cultural products. In so doing, the government has involved us as an industry in the design and implementation of its incentive system—a system that has reached a high level of effectiveness and efficiency. As a result, a high degree of trust has developed.
This trust is highly valued and something we know we are responsible for that must be preserved and protected, not abused. If cases of misuse occur and they are proven true, we absolutely agree they should be punished. These checks and balances already exist in the system.
As we consider these incidents, though, let us not lose sight of the tremendous success of the system the government has developed, the objective it has met, as well as the strength of the partnership with industry that has grown.
As we outline in our brief, we absolutely agree with a more open budget planning process. As an industry, we have benefited from an open and responsive line of communication with the departments of revenue and finance over the years. The announcement of the film services unit and the film industry advisory committee in July of this year by Revenue Canada are just the most recent examples of the importance of an active consultation process with industry, and the benefits it can have for government. We would recommend it as a model for the government to follow with all industries.
In terms of specific changes to the tax system, we would urge the government to reassess the current structure and design of the Canadian film or video production tax credit, in order to simplify its operation and improve its return to producers of Canadian content. As I've said, the government has maintained a longstanding commitment to a system of tax incentives to encourage Canadian film and television production and the growth of the Canadian independent production sector.
There are now two systems of tax credit for film and television production in this tax system. One is a certified film or video production credit, created in 1995, for productions that meet high levels of Canadian creative and technical content, produced by Canadian-controlled companies. The second is the production services tax credit created in 1997, which provides a rebate of Canadian labour costs to producers or service producers for productions that must meet no minimum Canadian creative content criteria requirements.
While we strongly endorse both credit systems, we are concerned that the support granted by the Canadian government to non-Canadian content productions, through the production services tax credit in the range of 5.5% of the total budget, is too close to the actual incentive achieved by many Canadian content productions. In other words, the incentive to foreign productions is approaching the level of Canadian productions.
Our analysis suggests that this inequity is the result of the overly complicated design of the certified tax credit structure, which needs to be addressed by the Department of Finance. We are currently in the process of discussing this issue with senior finance officials, and the support of this committee would be vital. We want to put our money on the screens of Canadians, not into bank, accounting, and legal fees.
We would also urge the committee to be aware of the need to direct additional resources to the production and promotion of theatrical feature films. Feature films have a very different cultural and economic reality than television productions. Feature films carry the creative experience and vision of a country to its people and to the world. Canadian movies are one of Canada's key international calling cards, and feature films must compete for theatrical audiences against the well-financed and heavily promoted output of the major U.S.-based studios.
Canada's feature film sector has progressed to a new level, and with the help of additional public policy and financial support mechanisms, it should be on the verge of a major breakthrough, both domestically and abroad. Canadian producers now regularly produce high quality, indigenous tales for the international market, including such films as David Cronenberg's Existenz and The Divine Ryans. A specific policy strategy for feature films and additional financial support for the industry at this critical time will help ensure a critical mass of high quality product in the competitive theatrical market.
We understand that the Minister of Canadian Heritage may soon be seeking the support of the Minister of Finance for a new program of support mechanisms to assist these Canadian feature films. We ask for this committee's attention and support for these initiatives.
Finally, as we indicated earlier, the Canadian film and television production sector has grown rapidly, as has the number of jobs linked to it. In 1996-97, the industry supported almost 30,000 direct and 48,000 indirect jobs in every region of the country. There's every indication that as long as there are measures to encourage production in Canada, job creation will continue to expand.
These jobs are closely linked to the new knowledge-based economy. They are highly skilled, well paying, creative positions providing new opportunities, primarily for young people. The production sector is increasingly high tech as well, with major technological development occurring within traditional production and post-production environments, as well as with the creation of new media.
As the industry has expanded, Canada has become well respected for the quality of its creative and technical teams, which in turn helps to generate new market interests and increased investment opportunities. Production increases have resulted in increased demand for trained personnel, however, especially in the regions. Recognizing this, last year at about this time our association approached the Department of Human Resources Development Canada requesting expansion of its investment in our existing mentorship program into a production internship for unemployed youth.
HRDC accepted our proposal, allowing us to offer production internships of approximately 35 weeks each to over 44 applicants across the country. The response was overwhelming from interns and mentors, and the level of demand was high. In fact, the response was so great that we have now requested an expansion of that investment from HRDC. We hope we can count on this committee's support for continued investment in the creation of jobs for Canadian youth in our sector.
The film and television production industry is an important part of the new economy and a growing one. Support for our sector is a good investment in the future of our cultural and economic life and the energy and creativity of our youth.
We would encourage the committee to support recommendations to the finance minister that encourage additional resources to be made available for the creation of on-the-job mentorship internship programs, particularly new technology and content creation industries. Real work situations can provide real skills and lead to future full employment for these young people.
Thank you for your time and consideration. We'll be pleased to answer any questions.
The Chair: Thank you very much, Ms. McDonald.
Now we'll get into the question and answer session. We'll begin with a ten-minute round. Mr. Solberg.
Mr. Monte Solberg (Medicine Hat, Ref.): Thank you very much, Mr. Chair, and thank you to all the witnesses for their presentations.
I want to start by asking questions about the issue of health care. As people probably know, in Canada today the federal government plays a relatively small role when it comes to funding health care. They started out funding about 50%, and that was the point at which they set the standards for the Canada Health Act. Now the federal government's role has diminished to somewhere in the range of 10% to 15%, but they're still setting the standards for the Canada Health Act.
First, is it really fair for a junior partner like the federal government to be calling the shots when they've been the most unreliable when it comes to funding health care?
Secondly, by default, the private sector has picked up a big chunk of health care funding in Canada today. We've relied on them to pick up the slack. The federal government pulled out, and the provincial governments maintained their 50% share. Of course, you people are arguing the private sector probably shouldn't play a role, or so it seems to me—I don't want to put words in your mouth at all—in funding health care. I wonder if you'd care to address that.
Mr. Robert Muir: Thank you.
This is an issue regarding quality and access. We live in a country that was created as a result of I think some wonderful, rather complex thinking about how a federal system would work within a country with provinces. So I don't think the issue of money has as much to do with it as the issue of how to keep the country together. That is based on certain standards and principles that condition not only health care but also many other parts of our life. That's the first issue.
The second issue is about money. The premiers of the provinces and territories have called for re-establishment of the 1994 levels. The first issue therefore is the amount of public money we believe needs to go back into the system in order to maintain certain standards. That is a position all provinces have taken, I think, because their first priority is to ensure that public money is injected into the system.
The third issues is simply this. We don't understand very well in this country the role of the private sector. I think that needs to be considered. It is everywhere. I would remind people that of the 9.5% GDP in this country, the fastest-growing portion is the private sector portion, the private portion. We don't understand much about it, but we'd better do that in order to ensure we get the right balance in the future.
MGen Frank Norman: Could I just carry on a bit from that, Mr. Chair, as the trustee representative here rather than somebody who is faced with the need to actually have to run the system itself?
I think one needs to look at and differentiate what we're talking about when we refer to the private sector playing a role. I have difficulties with the way we use the words because I'm afraid it becomes very much the interpretation of the speaker rather than the other. Let me clarify where I'm coming from here.
If a hospital is, and I believe it to be, a concentration of significant expertise and technology delivered in a high-tech way, we're really talking about accessibility. That's what the hospital does, and quite frankly the infrastructure that supports that is what knits it together. It is there that the private sector has in fact been playing a very significant role for many years.
I think you're well aware that we don't buy equipment with public money. We buy it with money raised locally in the communities. We deliver programs into the communities with regard to improving the health of the community with a combination of many aspects. If, however, we're talking about significantly affecting the universal accessibility that exists under the Canada Health Act, then I would have to differ from, myself, private sector as the best way to solve the accessibility problems.
Mr. Monte Solberg: Thank you for clarifying that. I think that's an important distinction to make.
I'll conclude my questions by simply saying this is an issue we should address. A lot of times, I'm afraid, what happens is that a lot of demagoguery surrounds the whole issue, where right away people say that what you want is the Americanization of health care, or the American-style health care system.
Unfortunately, that cuts off debate just when we should be getting into the debate. In fact, when we talk about private health care in Canada, we really are talking about a significant amount of money that already goes into health care, and we should admit and acknowledge that.
I just want to follow up on that by asking a little bit about the future. You know, in Canada today we are doing okay, with 9.5% of our GDP going into health care, but we do have long waiting lists. We do have needs for all kinds of capital improvement. Of course, what we have facing us down the road is this big demographic crunch. We have a huge liability down the road.
I'm curious to know whether or not you think restoring the transfers we had previously, even if those transfers grew with the population and inflation, would go anywhere near close to helping us deal with that demographic crunch down the road.
Mr. Tony Dagnone: Mr. Solberg, with regard to that last point, restoring the transfer payments would in my view give it a jump start. We have to begin, this afternoon, to plan how we're going to handle the health care needs of the aging Canadian. I think this is where the leadership has to come from, from people around this table. Get that leadership going to invest the money today.
I have a lot of confidence in our physicians, our practitioners. We have the talent and we have the know-how. We need a transfusion of dollars today for the operating dollars so that we can deal with the waiting lists out there.
This is not something in just one province; it's right across Canada. I think we deserve to do a better job for those individuals who are waiting. We need operating dollars today. We need to build the appropriate infrastructure for that aging population. We need to integrate components of the system.
We cannot afford to have individual organizations and providers of health care working by themselves. As Major-General Norman indicated earlier, it all has to knit together. Until we do that, between and among us as health care providers, and between and among the provinces and the partnership with the federal government, we're not going to be ready to look after all of those needs out there.
If there's one plea I would like to make to the elected officials today, it would be this: Let's do everything possible to take the politics out of health care. We don't need politics in health care. I think we have to have assured vision, and that vision is there in front of us. I think we can be the architects of tomorrow's health care system, but, boy, do we need your help—right now.
Mr. Monte Solberg: That's a helpful suggestion.
I have a question for Dr. Vann. It's a very specific question.
Not long ago I had lunch with a friend of mine who is a physician. He wanted to talk to me specifically about rural health care and what we can do to help out in that respect. He said one of the things that encouraged him as a young physician to go and practice in a rural area was the knowledge that he would be able to return a few years later to medical school and pursue a specialty. But he said that's impossible now, which is one of the things that dissuades people from going out into the rural areas in the first place.
Is there something that can be done about this? I'm not certain who makes those calls, if it's the provincial colleges of physicians or not. As well, how much of an impact would it have on getting physicians into rural areas?
Dr. Keith MacLellan (Past President, Society of Rural Physicians of Canada): Can I take that?
Mr. Monte Solberg: Absolutely.
Dr. Keith MacLellan: It's definitely a factor, and it's an important one in the sense that rural areas have always relied on a shifting manpower force, locums moving in for a few years and moving back again. The fact that the training system now is less flexible makes it very difficult for us to recruit physicians to rural areas with the guarantee that if they want to, they can go back again.
This is one other answer to your previous question about the role of the federal government, which we think extends far beyond just funding but not dictating. As outlined by a Health Canada consultant in one of these papers, the provinces are under many difficulties when they're faced with the problem of distribution of physicians and nurses and so on in rural areas. That's because the provinces themselves have difficulty addressing some of the federal standards.
For example, although the universities are funded by the provinces, it's the federal government and national organizations that set training standards, that set standards in terms of accreditation, that set standards in terms of flexibility in the system. We think there's a strong role for the federal government to help the provinces deal with those things.
So flexibility is one piece of the puzzle, definitely.
The Acting Chair (Mr. Roy Cullen (Etobicoke North, Lib.)): Just a very short one, Monte.
Mr. Monte Solberg: Yes.
Just so I understand this, are you saying that it would be, for instance, the national body of physicians and surgeons who would dictate—and that's probably the wrong word—to the universities that the training has to be in a particular way?
Dr. Keith MacLellan: That's correct.
Mr. Monte Solberg: Thank you, that's helpful.
The Acting Chair (Mr. Roy Cullen): Thank you.
Ms. Carolyn Bennett (St. Paul's, Lib.): This is an unfair panel, Mr. Chair. These are all my favourite things.
I have four quick questions. Maybe I'll throw them out there so you can think of your answers.
You have suggested a $50-million fund would be the jump-start—I think it says $50 million in the brief—for a feature film. We've discussed before this the production services credit. I think there was some concern as to whether it even would meet a WTO challenge and what we are actually doing with these foreign production companies, seducing them to come and work here even though our obviously fabulously trained crews get work.
I mean, how much do we really want to keep the production services credit? Would that not be better in a fund for making Canadian-content feature films? Are there any international models that you think work?
To my friends from the disability community, through our opportunities fund we're hoping to create taxpayers, obviously, by getting these people to work. Do you have any data on the number of taxpayers we've created through the opportunities fund?
For the rural physicians, how much does the rural health strategy cost, and would that eventually be something we could export in terms of a model that would work around the world?
Then there's my favourite presentation from last year, from the Ontario Hospital Association. I think that was the first time I'd actually seen people honestly say this isn't about money as much as it is mismanagement in terms of the lack of integration in the health system. We're missing huge savings, and there's huge insecurity in terms of the way it's delivered.
What do we do about the debate of just a CHST transfer without any strings? There is the social union. The provinces did agree to accountability, best practices, and transparency. What do we do about waiting lists that aren't managed properly, when we know there are good models of peer-reviewed waiting list and being able to do that in terms of quality and access?
How do we stop Mike Harris from using $400 million of our dollars as a severance to lay off nurses? We as the federal government get the blame when these things happen. How do we ensure the money is spent properly?
The Acting Chair (Mr. Roy Cullen): Shall we start with the film industry?
Ms. Elizabeth McDonald: On the first question, to clarify, in our brief on the feature film model, what we suggested was $50 million in new money added to existing programs and pulling them together. That's the intent of our original submission.
In terms of the issue of the production services tax credit, we're talking about a balance. I appreciate what a WTO challenge might do, but you should also note that our friends south of the border are actively putting in parallel systems as well, in states such as Missouri and others. So they're actively seeking that work as well. We have excellent crews, etc., so that's part of the reason.
What we're looking for is a balance here. There isn't enough capacity in Canada in the marketplace to just be driven on Canadian production and to sustain the crews through the evolution of the production cycle every year. So the production services tax credit provides an opportunity to keep the workforce going, to allow people to use their skill sets, and to work with large international companies. So we would not support getting rid of that program, because that kind of borrows from Peter to pay Paul.
I referred to The Divine Ryans, which is a production with Chris Zimmer, who is from Nova Scotia and is on the board of the CFTPA. Chris in Atlantic Canada does a mixture of productions. He does service productions and he does Canadian productions. He did New Waterford Girls; he did The Divine Ryans. But he is able to invest some of his own money and be an active participant in that, because he does some of the work for foreign interests that come into Nova Scotia. So in fact it becomes an interesting way to allow the Canadian production community... That's why you can see that overall percentage of public funding is going down as Canadian producers have been inventive.
Finally, you asked me, Dr. Bennett, about the international model. It's hard to say. Steve Ord and I were talking about whether it was the U.K. model or the Australian model, but I guess it has to be a uniquely Canadian model. The U.K. did decide to put a focus on feature films about three or four years ago. You've seen them on the screens. You've seen Notting Hill; you've seen Four Weddings and a Funeral; you've seen Trainspotting. All of that is because the U.K. put a focus.
I don't necessarily think we can adopt either the U.K. or the Australian model, because they have certain things built into them—licence fees, etc.—and we can't roll back the clock. So we have to be uniquely Canadian, but we do have to recognize that the Government of the United Kingdom decided to focus on features, and they've done it in a big way. They've done it in a way that has captured the hearts and minds of people around the world.
The Acting Chair (Mr. Roy Cullen): Okay. Now on the health care issue...
Ms. Carolyn Bennett: Can we do disabilities first?
The Acting Chair (Mr. Roy Cullen): Okay.
Mr. Paul Raina (Provincial Manager of Government and Corporate Relations, Ontario March of Dimes, Easter Seals/March of Dimes National Council): You've given me an opportunity now to get on my soapbox about a couple of issues.
Is the opportunities fund successful? Yes, but that is one step that is needed in helping people get jobs.
Ms. Carolyn Bennett: It's the one at risk.
Mr. Paul Raina: It's the one at risk, but I'll give an example. I was in Brantford last week meeting with a number of people who had graduated from our training programs, and there was a young lady who was in a wheelchair. That's her only disability: she has no leg mobility. She had just finished one of our training programs with, I forget which local college that we conducted. She's now a certified local area network technician.
She can't get a job anywhere in Brantford, because there isn't a single place that can employ her that is accessible. She can't get her wheelchair in the door. She sends off her résumé, they call her up for an interview, and she says, “Are you accessible? Thank you.” The phone gets hung up.
Which takes it to the next step. People can get the training, they can work, and they want to work, but they have to be able to get to work. This brings us to the need for a Canadians with disabilities act or enhancing building codes so that we can slowly, over time, force employers in a lot of cases to simply widen the door and take that step out. That's all that's needed in a lot of cases.
In terms of a specific opportunities fund, you've given me an opportunity now to point out that the Ontario March of Dimes operates a job club funded by the opportunities fund—the only one in the GTA that is specifically for people with disabilities—and it was cancelled about three weeks ago because of overspending. That job club had a 55% success rate, meaning that in the last two years, 125 people with disabilities went out and were successful in getting jobs, are now paying income taxes, and are no longer part of the system. Unfortunately that woman in Brantford is still in the system, because she can't get the opportunity to go out and pay income tax.
All of our job placement programs from all areas have about a 55% to 60% success rate, which is pretty phenomenal, given the clientele we deal with. Certainly there are individuals who have much more specific needs and much more complicated needs, and they are harder to place, but there is a lot of talent out there that gets neglected because of simple issues such as accessibility.
To sum it all up, the one unfortunate thing is that in the last little while, disability issues focused too much on employability. You cannot fire your citizens when they can't get a job. That's one of the reasons we would like to see the full Standing Committee on Human Resources Development and the Status of Persons with Disabilities. Disabilities should be more of a citizenship issue, not exclusively an employment income issue.
We've made tremendous strides in the employability of people with disabilities. Both the federal government and the provincial government have brought in a number of good programs in the last couple of years. But that's step one.
The Acting Chair (Mr. Roy Cullen): Now the health care issue.
Dr. Patty Vann: Yes, you asked how much. We're physicians, not financiers, but in our response to the Barer-Stoddart report on improving access to needed health care in rural and remote areas, which is in your package, we have suggested that $150 million on a recurring basis be dedicated to a national rural health strategy. This would go towards training the physicians, nurses, nurse practitioners, and counsellors we need to practise in these areas. It would go towards setting the standards that welcome people to practise in these areas and make these areas accessible for them. And it would go to helping the infrastructure as well.
Dr. Keith MacLellan: There was a second part to the question, on the international aspect of this.
As Patty said, we've suggested $150 million a year. We're not sure—perhaps it will cost more—but that represents only about 1% of the health transfers that still need to be at least restored from 1994. All countries in the world that have rural areas face the same generic problems in delivering health care to their rural populations, be it in so-called developed countries or in developing countries. Australia, which has similar demographics and geography to ours, has made the most progress. They have a national rural health strategy that has tried to address this problem. We think of course Canadians can do better.
Mr. Tony Dagnone: I believe the two questions you were addressing to us were on accountability and the workforce adjustments that have taken place right across Canada.
In terms of accountability, there is no doubt in our minds that we need to do more to prove to the people who are paying the bills that we are providing good value and doing everything possible to promulgate things such as best practices. If there is a best practice is Women's College in Toronto, we ought to take that best practice and share it right across the system.
We are doing that very thing right now, with the help of the Ontario Hospital Association. They have taken a leadership role in terms of report cards. We are doing the largest patient satisfaction survey in all of North America, and those results will be made available to the public over the next several months. So we are doing some of those things now to try to measure the kind of value we are providing with the tax base we have before us.
In terms of the workforce adjustment, I don't think it's proper for us to lay the blame on any particular premier across Canada. The facts speak for themselves. We began this slippery slope ride five years ago, with the pullback of federal dollars and the pullback of provincial dollars, and we had to deal with fewer dollars in terms of operating our respective organizations. That is why we had to make some adjustments in terms of the workforce.
I think Mr. Harris has moved very quickly to restore some of those moneys. As soon as he got the money back from Ottawa, he moved very quickly to reinvest $300 million in the nursing profession. I think that's a good example of our going back and trying to fill some of those voids that were obviously there that had eroded the system.
I think all that needs to be said there is that I believe—
Ms. Carolyn Bennett: The reduction of transfer was a quarter of what the tax cuts cost, so there were some choices that were made there.
Mr. Tony Dagnone: But those of us in the health care system don't make those choices. We are there to bring forward the needs of the health care system and then it's up to other individuals to make those decisions about how the tax dollars are used.
Ms. Carolyn Bennett: I guess that's the whole thing about unlimited transfer from the federal government. Does the federal government have a role...
Because quality is not written into the Canada Health Act, we may be the moral authority on health, and I don't think you only have to be a financial partner in order to be trying to enforce what Canadians have said is important to them. Do you think there should be a different kind of relationship that's based on accountability and performance?
MGen Frank Norman: If I could come back on that one, Dr. Bennett, I think one of the things we need to look at, and I mean this very seriously, is there needs to be a national debate as to the expectations of the citizens of this country, in this particular case the health care they have as an expectation. The other aspect of that is the need for that debate to also focus on the amount they're prepared to pay in order to get it.
I come from southeastern Ontario, which, Dr. Vann, is pretty rural in my world, and there are some really interesting pilot projects going on there, which are integrating the health care from the primary care physician and the nurse practitioner in the village, up to the referrals to the tertiary care teaching hospital.
That I think is a legitimate expectation, but it has not been articulated in that way, and it has not been articulated on the basis of the fact that in order to be able to do this and meet these needs, there is an implication of cost involved, and that cost is not, quite frankly, driven as some would like to believe by mismanagements and inefficiencies. I think in fact the system is as close to being as efficient as we can get it at the moment, given what we've got going for us, using the best practices. And there are literally hundreds of them that need to be moved out into the system as a whole. We can probably meet those expectations at a not significantly larger cost.
The Chair: Thank you, Dr. Bennett.
Ms. Albina Guarnieri (Mississauga East, Lib.): Mr. Calligan, certainly all of us here are aware that these are booming times for many workers connected to the housing industry. I hope I'm not overstating the case when I say that. It's a time of great wage increases for rare skills and general prosperity in your industry, at least in the Toronto area.
I think the question pertaining to your industry is how to sustain the performance. And it seems to me one of the most important factors for your workers is to maximize the ability of Canadian families to afford their first home, a renovation or an upgrade. What do you think is the best way to accelerate those choices? Is it a middle class tax cut? Is it a reduction on the GST on new homes? Is it expanded access to RRSP funds? Do you have any comments?
Mr. Bud Calligan: I think all three would certainly be beneficial.
Ms. Albina Guarnieri: If you had to be in our shoes, what would be your priority list?
Mr. Bud Calligan: Obviously, a reduction in GST would trickle right down through the whole system. It would come off the cost of building materials. It would come off the cost that gets passed on to the homeowner, the property. That might be one of the major things that would certainly spur things along.
But again, we're talking about a province-wide shortage in skilled trades. It's not just here in the Toronto area because it's booming. We have to invest.
We've gone through a serious shortage and downturn in the construction industry and we have to rebuild our workforce. We have a seriously aging workforce and we have to find a way to attract young people and to give them the proper skills that are lifelong skills that will give them a good meaningful job for their future.
Ms. Albina Guarnieri: We try to ask every organization to make the same choice the government has to make in selecting the right tax cuts. So I thank you for your comments.
You anticipated my second question, which pertains to training. You mentioned earlier you wanted government to reassert training. Many of your workers may not be physically able to continue working in their trades to retirement, yet if they wait for an injury or an economic downturn before they start retraining, few options will be available. How would your organization view the use of EI funds to support training initiated by workers while they're still employed?
Mr. Bud Calligan: We are currently doing that. In many areas across the province we offer computer training. As you may know, that is now becoming an increased part of the construction industry; computers are used there quite well. So if something does happen to the person because of the physical strains in construction and they can no longer continue in that career, they have other options, such as computer skills.
Some of the technical things we offer are blueprint reading and estimating. Those are all courses that are offered on an ongoing basis to give persons other skills. They can go on to management positions, as a superintendent, as an estimator, as a design consultant, and even on to architecture courses with a little bit of extra help.
Ms. Albina Guarnieri: Are these subsidized by Human Resources Canada, or are they individual things?
Mr. Bud Calligan: From time to time, but right now, no. In the past we have been able to get some funding for that, but right now there's none available to us.
Ms. Albina Guarnieri: Thank you for your comments.
The Chair: Mr. Brison.
Mr. Scott Brison (Kings—Hants, PC): Thank you all for your interventions today. I have a couple of quick questions.
To follow up on Ms. Guarnieri's questions relative to tax policy and the potential impact on housing and construction, I'd like some feedback. There have been a couple of policy initiatives that have been around for some time in Canada at a discussion level and are in fact implemented elsewhere. Mortgage interest deductibility exists in the U.S., France, and the U.K., among other countries. Some see it as a competitive disadvantage in Canada, even to the extent that it may contribute to brain drain between Canada and the U.S. because of the impact on housing costs, etc. I would appreciate your feedback on the impact on your industry and how you would feel about that type of an initiative.
The other initiative is property tax deductibility as an alternative to mortgage interest deductibility and the resultant reduction in double taxation that exists currently with that. So I'd start off with those two tax initiatives.
The Chair: Mr. Mannella or Mr. Mancinelli.
Mr. Joseph Mancinelli: Well, clearly, being able to write off the interest of a mortgage is an attractive tool, one that countries like the United States have been using for quite some time. It's surprising that we Canadians see ourselves as a more progressive society than the United States and in fact they have a number of incentives that do create development dollars as well.
It's the same with infrastructure programs and environmental remediation programs. These exist in the United States. In fact, there are tax incentives for developers associated with remediating sites. In 1998 in the United States, they had a $6.1 billion tax incentive program for contractors who would go in and remediate sites. So tax incentives are clearly an important issue in stimulating the economy.
When the economy is doing well, as it is right now, these issues do not take precedence. A lot of folks are very comfortable, they're out working, and the unemployment rate is much lower, however that's not going to last forever. We need to look at new and innovative ways to stimulate economic growth, and I believe tax incentives are a good way to do it.
The Chair: Are there any further comments? Mr. Calligan.
Mr. Bud Calligan: Everyone knows that a home is the single largest investment people make. The spinoff from buying a home, compared to staying in an apartment, is huge for the economy. There are all the other things that go along with owning a home. They have to buy a lawnmower, obviously, and everything that goes along with maintaining and keeping a house.
That also stimulates the rest of the economy, not just the construction industry. So any kind of tax relief or tax incentive in that way would certainly boost the acquisitions of first-time homebuyers.
Mr. Scott Brison: The other issue is that the average age of the first-time homeowner is apparently increasing. CMHC figures indicate that has been the case in recent years. There's some concern about that, as well as the growth of consumer debt, much of which is related to home ownership. So I appreciate your feedback.
I have questions for the people from the film making lobby. On the foreign tax treatment issue and the foreign tax credit that exists, it's my understanding it has assisted provinces like British Columbia to create an infrastructure, in terms of film production, that benefits the domestic industry significantly. By raising that initiative as a competing interest, don't we risk losing the critical mass, in terms of infrastructure that can actually benefit the industry in Canada?
Ms. Linda Schuyler (Chair, Board of Directors, Canadian Film and Television Production Association): I think we have to come back to Elizabeth's point about balance, because if you look at the production activity in B.C., you'll notice that in balance the majority is service production, with a smaller percentage of indigenous production. Whereas if you look at Ontario, not so much this year but in previous years, we have had a stronger percentage of indigenous production.
On the advantage of having stronger indigenous production, as long as the dollar remains strong, service production is here, but the moment our dollar goes weak the service production pulls out. So the only constant we have is our indigenous production, which is why we speak very highly about the need for balance. As Elizabeth pointed in her example, we have the best crews in the world and our job as producers is to keep those crews working.
We need an infrastructure that will be here and withstand the dollar getting weak, or anything that might happen south of the border. Ideally, we would like to see a balance of about two-thirds domestic production and one-third service production. Once the service production gets over the 50% mark, we start to become concerned, as indigenous producers.
I certainly think you have to look at it very much as a hand-in-glove incentive. We're investing in culture, jobs and our international visibility.
Ms. Elizabeth McDonald: Perhaps I could add to that. The British Columbia government, for example, has invested a lot in ensuring that the indigenous levels of production increase—those numbers are just being collected and we will be making them public in February—and you will notice that over the last two years there's been a large increase in British Columbia. That means the copyright or the intellectual product a producer creates has been kept in Canada, and that is the basis for a long-term industry. That's why there were whoops of joy when Da Vinci's Inquest won its Geminis last Sunday. It is a B.C. production, and that shows they can do both. They need the balance, and British Columbia recognizes that quite clearly now.
Mr. Scott Brison: What is the level of public support for film-making in other countries of comparable size to Canada?
Ms. Elizabeth McDonald: I'm not sure if I have all the data, but Canada lags behind quite significantly. We're behind Australia and Britain. In Germany, the subsidy per capita is $2.39. In the United Kingdom, it's $2.73. Australia has now overtaken Canada at $1.85 per capita. Australia is seriously competing with Canada on both the indigenous and service levels. So we're quite a bit behind. We're an enormous amount behind France—it's not even shown here. It's such a huge gap that it wouldn't have been taken seriously. But the United Kingdom is the one you have to look at because at one time it was almost nothing. Under the former regime of Mr. John Major, they started to—
Ms. Linda Schuyler: What's interesting when you look at those figures, is you have to remember we are also producing in two official languages. So not only are we behind, we are producing in two languages, and basically providing two cultures with entertainment material.
The Chair: Thank you very much.
On behalf of the committee, I'd like to express our sincerest gratitude for your input.
As always, the vast majority of groups that appear in front of us make very strong cases for their issues, which leaves us with the big challenge of balancing and making all the trade-offs. You can rest assured that many of the points raised in today's session will find their way into our report and hopefully into the minister's budget.
By the way, the report will be issued the week of December 10.
The meeting is suspended.
The Chair: I would like to call the meeting to order and welcome everyone here this afternoon for our second session.
We have representatives from the College of Dental Hygienists of Ontario, the Canadian Association for Not-for-Profit RESP Dealers, the Canadian e-Business Opportunities Roundtable, the Canadian Nuclear Society, the City of Markham, and the Neighbourhoods' Forum.
Because of the York region advantage, the Mayor of Markham will go first, since I think, Your Worship, you have to leave. Is that correct?
Mr. Donald Cousens (Mayor of Markham): I have an appointment, Mr. Chair.
The Chair: Do you have five minutes?
Mr. Donald Cousens: I have sufficient time. My concern is I have to be back at the town for four o'clock. So that was my worry.
The Chair: You may begin.
Mr. Donald Cousens: Thank you very much, Mr. Chair and members of the committee. It's a privilege for me to be able to come and make a presentation to the Standing Committee on Finance. As Canadians, I don't think we ever appreciate fully the democratic rights we have. And as a former member of the Ontario legislature for 14 years, having sat on your side of the table, I appreciate the role you play. I thank you. The commitment of time and energy to listen to different presentations is indeed heavy.
I come on behalf of my community. It's a community of 200,000 and growing in the midst of the greater Toronto area and southern part of York region. It neighbours on Mr. Bevilacqua's riding and is truly an area that is in high-growth mode and doing very well.
I have written my presentation out so that you have copies in front of you. I'm going to abbreviate it considerably. I will deal with the first page and just a few sections thereafter. I will not be reading it all, but I'll leave it there for record purposes.
There isn't any doubt, as I'm sure you all realize, of the importance of the GTA as the economic engine of Ontario and indeed of the role it plays in all of Canada. The continued economic prosperity of this GTA requires sound physical infrastructure, and that has to do with transportation, airport transportation, and telecommunications facilities along with the other forms of infrastructure that we need, such as housing and sewer and other facilities.
The growth areas in the GTA, such as our community, the town of Markham, require substantial investment in new infrastructure, particularly in transportation. The current transportation network is unable to move people and goods effectively and efficiently. An inadequate transportation network has serious implications for the GTA, both from the standpoint of economic competitiveness and the quality of life.
A balanced transportation network compromised of both roads and public transit is needed. Unfortunately, per capita transit ridership in the greater Toronto area has been decreasing for the past several years. This trend must be reversed. It can only be reversed by substantial investment in new public transportation infrastructure, particularly in the growth areas of the GTA.
Municipalities do not have sufficient financial resources for investment in new public transportation infrastructure. Historically most of the capital cost of subway and computer rail systems in Canada has been funded by senior levels of government. This is certainly the case throughout North America.
To illustrate part of our problem I refer you to the back of the second page at the bottom. We're in a situation...and the chair of the committee understands it fully because of the limitations within his riding, where there is very limited north-south transportation infrastructure. The rail systems provide two or three trains a day, nothing like the east-west routes. We're into a position now where the costs of double-tracking, grade separation, new stations and new rolling stock would cost in the order of $1 billion.
I move to the very back page of my presentation. The bottom line is that we're in a position now where other jurisdictions across North America...in the United States certainly you have federal and state investment in the infrastructure that's going on within those communities. Unless we begin to see some funding back from the federal government, whether it's through our fuel tax, where the federal government takes $1 billion a year from Ontario, or whether it be through other means... What we really want to stress is the urgency for the federal government to consider its role in funding infrastructure.
I'd like to give suggestions in my final five points. First, identify in the national priorities for infrastructure investment that transportation is a major need. Secondly, and I've written it in the document, is the importance for sewer, water, and the technology improvements we need. Finally, there is the affordable housing issue.
My emphasis today, however, is the transportation requirement. We need your help in providing leadership and input in setting the total funding commitment. We can't just do it by ourselves. If we're asking you to come to the table then I'm prepared to say let's share in the priorities. Indeed, when you've had Minister Collenette—who by the way has been an excellent addition to show concern for the transportation concerns in the GTA—and he had been talking about the rail line to the airport and some other ways, it's beginning to show federal government support for this.
We're indicating as well, in my third point, that the federal government should contribute one-third of the cost of the programming. I'm not talking about a one-time-only Canada infrastructure grant; I'm saying ongoing funding programs that tell us over a period of years how much we can look forward to receiving from the federal government.
By the way, it's not just you we're presenting this presentation to; it's very much a provincial issue as well. You're a federal group of parliamentarians, but it is even more necessary that within the province they participate. So I'm not letting them off the hook for a moment.
I think we need to establish guiding principles for the infrastructure program. If we all agree that these are essential components for a strong economy, so much the better.
We would look forward to participating with you in a very responsible way through AMO, which made a presentation yesterday, to develop criteria and an approval process. I think I make the major point of my whole presentation at the bottom of this: Good city-building is necessary if we're to have good nation-building. If our cities are strong, our nation is strong. If our cities are weak, gridlocked and having unbelievable problems with traffic, it affects the economy, it affects the way of life, it affects society in every possible way. I'm just saying we're at a crisis mode now certainly at our level and would appreciate your empathy, concern, and support on these issues.
The Chair: Thank you very much, Your Worship.
Now we'll hear from the College of Dental Hygienists of Ontario, Ms. Evie Jesin, president. Welcome.
Ms. Evie Jesin (President, College of Dental Hygienists of Ontario): Thank you.
Good afternoon. My name is Evie Jesin and I'm the president of the College of Dental Hygienists of Ontario.
The College of Dental Hygienists of Ontario is the regulatory agency for the more than 6,000 dental hygienists who practise in the province. Our mandate is to regulate the dental hygiene profession in Ontario in the public interest and to advocate that the public receives quality affordable oral health care. We are pleased to participate in the Standing Committee on Finance's consultation process.
Dental hygienists are often the first point of contact in the health system. We assess, plan, and implement preventive services. Through this experience, we have identified serious gaps in the Canadian health care system. We are confident that what we know to be true in Ontario is consistent with the experience of approximately 14,000 dental hygienists across the country.
Dental hygienists share the stated goals of the federal government and of the premiers and the territorial leaders in support of a sustainable, accessible, and affordable health care system. We understand that health care is among the greatest concerns of Canadians and that the delivery of health services must be improved.
Unfortunately, when it comes to oral health care, the Canadian system does not have the attributes of accessibility and affordability desired by Canadians. To date, a fundamental element in the health care system is missing, since public policy makers have ignored medical evidence that clearly indicates that oral disease directly impacts upon the rest of the body. The CDHO, or the college, believes it is unfair and illogical to deny Canadians access to preventive treatment that would eliminate many diseases in the first instance.
Periodontal diseases, or diseases of the supporting tissues around the teeth, are the most prevalent human chronic diseases, accounting for 95% of all chronic disease in children, adolescents, and adults. Recent scientific literature has linked periodontal disease, or gum disease, to major health problems including heart disease, stroke, respiratory disease, osteoporosis and diabetes. Pregnant mothers with periodontal disease have a one in seven chance of giving birth to a baby of low birth weight. Periodontal disease, as a risk factor for low birth weight, is more significant than smoking. The result is that disease in the oral cavity contributes to poor overall health and directly impacts on important aspects of life, including attendance and performance at work and school.
In 1997 the College of Dental Hygienists of Ontario commissioned a Gallup poll and the results indicated that approximately 25% of Ontarians did not receive any oral health care services within the preceding 12 months. Among the primary reasons given by the respondents were the high cost of dental care and the lack of dental insurance.
A 1998 survey in Alberta confirmed similar results. An overwhelming number of respondents, 92.4%, believe that some form of dental insurance plan should cover direct access to dental hygienists and 56.3% stated they felt that direct access to a dental hygienist would save them money. For people living in Ontario, there is an added problem. It is Ontario's current regulatory structure that restricts access and care in favour of an outdated dentist-centred model.
For people with disabilities, the poor, seniors, and those living in remote areas, care is often impossible to get. Further, the 14,000 front-line oral health workers, namely the dental hygienists, have been greatly underutilized in Canada. Contrary to the goals stated by the premiers and the territorial leaders at their recent conference, the Canadian health system is in no way putting the right provider in the right place at the right time and at the right cost. There are many people in the country who do not have access to oral health care services.
So while science tells us that oral health care should be a regular and normal part of the health care system, government funding, taxation policy, and regulations continue to push it outside the system. Many of the individuals whose need for care is the greatest and who will benefit the most by the interventions by oral health care professionals are the ones least likely to have access to such services.
Longer-term budget planning must be accompanied by longer-term health care planning that focuses on improving Canadians' quality of life and on preventing diseases. The dividends will be both immediate and long term. Premiers, territorial leaders, and others can no longer choose to ignore preventive, cost-saving measures that are well within their jurisdictions. As I've stated, proper oral health care today saves significant health care tomorrow and improves the overall health of Canadians.
Our college recommends first that the tax system be modified to allow greater tax incentives for health care practitioners, such as dental hygienists, who are willing to work in underserviced areas.
Secondly, we recommend that tax credits be implemented for those families who do not have dental insurance. The current medical-dental allowance is inadequate and has such a high deductible margin that it is only useful for major medical conditions and does not encourage prevention.
Thirdly, we recommend that a wellness incentive be implemented for those individuals who have demonstrated a desire to achieve a healthy lifestyle by maintaining their health.
Fourth, we recommend that the goods and services tax on basic preventive health aids such as toothbrushes, dental floss, and therapeutic toothpaste be eliminated.
Fifth, we recommend that incentives in transfer payments to provinces be dependent upon regulatory reform, which will ensure access to preventive care and efficient use of health care professionals.
The College of Dental Hygienists of Ontario is encouraged by the government's desire to restore health care funding. In a country as prosperous as ours, it is time to reconnect the oral cavity to total health and well-being. Citizens are being denied preventive services that will decrease their overall need for medical interventions and associated costs. The College of Dental Hygienists of Ontario believes increased health funding must be tied to higher expectations on access, and health care must shift from a treatment model to one of prevention and wellness.
In conclusion, the College of Dental Hygienists of Ontario is committed to ensuring that people have access to affordable oral health services, as it has been scientifically shown that improved oral health care contributes to total health and well-being.
The college appreciates the opportunity to provide input to the Standing Committee on Finance. Thank you.
The Chair: Thank you very much, Ms. Jesin.
We'll now hear from the Canadian Association for Not-for-Profit RESP Dealers, Tom O'Shaughnessy and Ken Goodwin, co-chairs. Welcome.
Mr. Tom O'Shaughnessy (Co-Chair, Canadian Association for Not-for-Profit RESP Dealers): Thank you, Mr. Chairman.
We have passed around a summary of our presentation to the members. I'd appreciate it if you'd follow along as we go through the presentation.
I am Tom O'Shaughnessy, the executive vice-president of Canadian Scholarship Trust Foundation. With me is Ken Goodwin, the executive vice-president of USC Education Savings Plans. We are co-chairs of the Canadian Association of Not-for-Profit RESP dealers.
Our purpose for being here today is to provide the committee with some ideas on how to make post-secondary education more accessible to all Canadians.
It should be of no surprise to any of you that according to Statistics Canada, two out of three new jobs created in Canada today require some kind of post-secondary education. Obviously I think we've seen this trend rising over the last few years, and it will continue to rise in the future. But there are obstacles for the students.
The graph on the next page clearly demonstrates that tuition fees have grown at five times the rate of the consumer price index over the last five years, and on the next page you see that student loan debt is becoming a bigger issue for Canadians and governments across Canada. The most recent Statistics Canada information shows that the average amount owing by students had increased from $6,800 to $7,725 by the end of 1996. In addition, student loan deficits had grown to over 20% by the end of 1996, and we all know this percentage continues to climb.
Mr. Paul Szabo (Mississauga South, Lib.): Is that an average for all students who have debt, or an average for all students?
Mr. Tom O'Shaughnessy: That's for a student who has debt.
The Government of Canada has responded to this need in three ways: first, the introduction of the Millennium Scholarship Endowment Fund; second, by allowing RRSPs to be used for post-secondary education without tax penalty; and third, and probably most importantly, the creation of the Canada education savings grant. These initiatives have been very positive. However, there is still more to be done, especially for children from lower-income and moderate-income families.
Mr. Ken Goodwin (Co-Chair, Canadian Association for Not-for-Profit RESP Dealers): As of January 1999, according to a recent study, only 13% of eligible parents have opened RESPs, and therefore only 13% of the people in Canada are taking advantage of the Canada education savings grant.
Mr. Tom O'Shaughnessy: As not-for-profit organizations that focus on the lower-income and moderate-income families, we're receiving compelling evidence from our over 2,000 representatives across Canada that show lower-income to moderate-income families have less awareness and understanding of the grant, and therefore less motivation to use it.
Our objective today is to provide the committee with some ideas on how to increase the number of lower-income to middle-income families who take advantage of the Canada education savings grant.
Mr. Ken Goodwin: We'd like to provide you today with five different options to address these issues.
The first option is to increase the benefit at the lower level. Tom and I have been working with the finance department on initiatives to promote RESPs for over four years, and our companies have been working with Canadians for over 30 years in this area. We find that they do respond to incentives. When the grant was established in 1998, we recommended a 30% incentive on the first thousand dollars invested. We still believe this would address the discrepancy for lower-income Canadians.
Mr. Tom O'Shaughnessy: The second option is to provide a supplement to the child tax benefit for those who save in an RESP. One of the primary reasons families are not contributing to an RESP is they have funds for food, shelter, and basic needs, but very little else. We can address this concern by providing a supplement to the federal child tax benefit for those who contribute to an RESP for their children.
Mr. Ken Goodwin: The third option is to provide a supplement to the Canada Pension Plan for those who contribute to RESPs for their grandchildren.
Mr. Tom O'Shaughnessy: The fourth option is to allow organizations, not just individuals, to make contributions. Many children in the lower-income environment do not come from traditional family units. We should allow and encourage Canadian organizations, like corporations, community groups, social agencies and native bands, to make contributions to RESPs.
Mr. Ken Goodwin: The fifth option is to involve the provincial government in a program like this, and that would make it more attractive to Canadians across the country. We believe it would be worth while to provide an incentive for provincial governments, in their federal transfer payments, that would allow provincial top-ups of the grant.
Mr. Tom O'Shaughnessy: We have three recommendations to make today. The first and probably the best thing we believe the government could do is to cross-promote the grant with other programs, such as the child tax benefit and the Canada Pension Plan. We feel this will increase the awareness and broaden the usage of the grant and will increase the opportunity for lower-income to moderate-income families to access post-secondary education.
Mr. Ken Goodwin: Our second recommendation is to allow organizations to receive the grant, not just individuals. Why is this a good thing? Primarily, it would improve opportunities for children of lower-income and moderate-income Canadians by shifting the focus to the students and away from the parents.
Mr. Tom O'Shaughnessy: Our third recommendation is to provide an incentive for the provinces and territories to offer their own grant on RESP savings, in addition to the Canada education savings grant. This could be accomplished by tying provincial transfer payments on education to a provincial RESP grant program. Again, the reasons are exactly the same: to increase the awareness and usage of the grant, and also ultimately to reduce the cost of student loan programs and write-offs being incurred by the federal and provincial governments.
Mr. Ken Goodwin: The last few slides in our presentation provide more information about the Canadian Association of Not-for-Profit RESP Dealers and information on how to contact us.
It has been a pleasure meeting with you today. We look forward to your comments and questions and also to working with you in the coming months to make post-secondary education more affordable for all Canadians. Thank you very much.
Mr. Tom O'Shaughnessy: Thank you.
The Chair: Thank you very much.
We'll now move to the Canadian e-Business Opportunities Roundtable, with Ms. Sara Allan, manager, Boston Consulting Group of Canada; John Eckert, managing partner, McLean Warson Capital; and Ronan McGrath, president and chief information officer, Rogers Cantel. Welcome.
Ms. Sara Allan (Manager, Boston Consulting Group of Canada; Canadian e-Business Opportunities Roundtable): Good afternoon. My name is Sara Allan, and I'm with the Boston Consulting Group, but I'm actually here today representing an organization called the Canadian e-Business Opportunities Roundtable. The round table is a voluntary group of Canadian business leaders and educators who are committed to fostering the development of a vibrant Internet economy in Canada. The group is co-chaired by John Roth of Nortel and David Pecaut of the Boston Consulting Group, both of whom express their regrets at not being here today to express the opinions of the round table.
The roundtable has been working over the summer to identify challenges and opportunities for Canada in this new facet of the Internet economy.
No one can deny the impact the Internet is going to have on the ability of businesses to do business in a whole new way and the impact it is going to have on citizens, business, government, and education for interaction in different ways. Already, the Internet economy in the U.S., the definition of which we have on page 2 of the presentation you have in front of you, represents close to half a trillion dollars, by recent estimates, and is growing at a rate of over 70% a year. We estimate that in Canada the situation could be similar and that the Internet economy has the potential to add $40 billion in additional revenues to the Canadian economy over the next five years and to create, in a conservative estimate, at least 100,000 new jobs.
The roundtable would like to propose a vision for Canada, that is, that Canada become a global leader in e-business by doing two things: accelerating the adoption by business of the Internet as a new tool for doing business and fostering a dynamic environment in Canada for the creation of new Internet-related businesses.
The roundtable will be issuing a report in the coming weeks and months, which will outline many ideas we have on how to do this better, but it's our belief that in order to capture the opportunity, the public and private sectors really need to work together.
Today we'd like to share with you some very specific proposals on how tax policy can be used to address some critical issues that have surfaced in our investigations and are currently constraining Canada's ability to foster a dynamic, homegrown Internet economy.
Page 4 of the presentation outlines some of these issues in more detail. I'll just go through them quickly. The first three issues really address some of the barriers that new start-ups in Canada face as they're trying to get started and to grow: the availability of financing, the ability to attract talent, and the ability to actually stay in Canada through to a stage where they can start to compete globally, without running into significant barriers.
We have several recommendations to address some of these issues. First of all, expand the pool of available capital in Canada for new Internet and technology-related ventures. Venture capital is one of the key ingredients fuelling the incredible growth in the Internet across the world, particularly in the United States.
The pool in Canada is small, and we think there are several ways in which it could be expanded. First, eliminate restrictions under current tax treaties on the flow of foreign investment into Canada by protecting foreign investors, regardless of the vehicles they invest through. Second, allow Canadian venture capital funds to defer capital gains taxation, provided that the proceeds from any investment are rolled into another qualified investment; in this way, the pool of capital available for new seed ventures in Canada would be expanded significantly.
In regard to the second issue, we recommend addressing it through allowing deferred taxation when Canadian companies merge with foreign entities by using an exchange of shares. Currently that results in a tax liability for Canadian entrepreneurs who are merging with foreign entities, resulting in them being forced to sell a portion of their position in order to fund that liability at the time of the merger. We feel it's important that Canadian companies are able to access the international marketplace, and if that is the best way to do it, it should be easy for them to do so.
Finally, to allow Canadian companies to compete in the war for talent for skilled e-business professionals, we think we should we allow them to use stock options more effectively as a vehicle of compensation. In order to do this, to level the playing field versus the way taxation of options is treated in other countries, we think option benefits should be taxed at the time of the sale of the underlying security instead of at the time the option benefit is realized.
I'd like to point out that these proposals do not represent reductions in the current tax base but are merely a deferral of taxes on companies that either do not exist today or are in a fledgling stage.
Next we have a recommendation to address an issue we've come across, that is, that there's a low sense of urgency and awareness amongst the broader Canadian business community around the potential of the Internet to change and revolutionize the way they do business. We recommend providing specific incentives targeted at small and medium-sized business in Canada for e-business-related investments. It would be time limited and would allow them to see the urgency, which will enable them to compete more effectively.
Finally, on the next page, we have two additional recommendations that are targeted at really boosting the attractiveness of Canada as an environment for e-commerce and e-business relative to the rest of the world.
First of all, we would support a proposition that is now in front of the Ontario government and allows for certain capital gains tax exemptions for employees of Internet and technology-related companies. Finally, we would support narrowing the gap between Canadian and U.S. capital gains taxation rates in order to encourage Canadian companies and managers to stay in Canada. The gap today is very large on the capital gains front, and we think this is a significant disincentive for companies to stay in Canada and serve a global marketplace from Canada.
These proposals are modest in nature, but we feel they really would play a major role in stimulating the Canadian economy in the new and exciting knowledge-based sector and would potentially have a great impact on helping fund future surpluses.
Our submission outlines these proposals in much more detail. We look forward to any questions you may have on these proposals and to discussing them further with you.
Thank you very much.
The Chair: Thank you very much. I'm sure there will be questions—and that is a positive comment, by the way.
Now we'll hear from the Canadian Nuclear Society, with Professor David Jackson. Welcome.
Professor David Jackson (Spokesperson, Canadian Nuclear Society): Thank you, Mr. Chairman.
Creative research drives economic growth through innovation, and Canadians have already reaped substantial economic growth and social benefits from the innovation sparked by their investment in nuclear research and development. This brief recommends continued government investment to update and renew nuclear research capacity, in particular, the funding of a new nuclear research facility called the Canadian Neutron Facility, or CNF. This is based on three arguments.
The first argument is past success: Canada's CANDU reactor is one of only two major reactor types being sold worldwide and was the product of the federal government's research and development investment, mainly at Chalk River labs. The CANDU system is by far the largest and most successful innovation ever to emerge from federal government labs. It gave rise to a domestic nuclear power industry supplying some 17% of the nation's electricity and up to 70% of Ontario's electricity. CANDU export sales have also provided substantial benefits to Canadian manufacturers.
Additional important innovations from nuclear R and D funded by the federal government include a variety of technologies involving radioisotopes for medical diagnosis and treatment—for example, cobalt radiation treatment machines. A Canadian business spun out of this research, MDS Nordion, has become an international leader in the field of medical and industrial applications of isotopes, on the basis of this research. Since one in three Canadians entering hospital undergoes some procedure involving radioisotopes, these development have also significantly benefited the health and well-being of Canadians.
No other investment in federal government R and D even approaches this record of successful innovation resulting in important new products and large-scale economic activity. There are large present benefits, which is the second prong of the argument. The results of nuclear R and D benefit all parts of Canada.
As an example, it is appropriate at this regional consultation to stress the economic benefits to Ontario. The 1997 sale of two CANDU reactors to China resulted in $1 billion worth of business for Canadian industry, 90% of that in Ontario, with the creation of thousands of high-technology jobs. For this reason, the Prime Minister and the Premier of Ontario have both been very active in promoting CANDU sales on Team Canada export missions.
The federal government supports AECL's efforts in the promotion of reactor sales and the financing and management of offshore reactor projects. While there are benefits to other provinces, by the far the largest portion of the economic activity generated from nuclear power flows to many manufacturers and services geographically scattered over Ontario. In fact, benefiting are some 150 large firms and some thousand smaller contractors. Therefore, it is clear that the economic impact of the R and D funded by the federal government has created and continues to create export sales in the $1 billion range whose impact extends over many companies in various regions of Ontario.
The third argument is the need for new investment. The market prospects for CANDU are bright. There is growing environmental concern about the greenhouse gases generated by fossil fuels, the urgent need for new electrical capacity, especially in emerging Asian economies, and the longer-term need to replace and update existing electrical generation plants.
More R and D is required to keep the CANDU system competitive internationally, thus to ensure that the export sales will keep the benefits flowing. In particular, it will be critical in future to do research to reduce the cost of our reactors so Canada can compete effectively in world markets.
The government has elected to upgrade the research infrastructure in our universities by establishing the Canadian Foundation for Innovation. And I might just say, as a person from a university, that's an excellent program. I applaud this initiative and agree with others that it's now time refurbish the government's own internal in-house research facilities in the same way they have funded the refurbishing of university facilities.
At present there is an urgent need to replace the aging research reactors—some of them are 45 years old—used to do nuclear R and D. The proposed Canadian neutron facility, the CNF, is a small but powerful research reactor that can be used not only to test new components for the next generation of CANDU, but also to perform research on new materials. This is a very important area of technology, with many industrial applications using a neutron produced by the reactor. This was a specialty pioneered by Canadians and recognized by the award of the Nobel Prize to McMaster's Professor Brockhouse.
Therefore there is strong support for the CNF from many universities, industries, and professional associations all across Canada. The CNF is a key to future benefits from nuclear research. I would strongly urge the government to fund this important facility in the next budget.
Thank you for your attention.
The Chair: Thank you very much, Professor Jackson.
We'll now hear from Neighborhoods' Forum, Ms. Lisa Immen, chairman, and Ewen McCuaig, vice-chair. Welcome.
Ms. Lisa Stephens Immen (Chairman, Neighborhoods' Forum): Thank you. Thank you for agreeing to see us on such short notice. I regret that as a result I do not have a written presentation for you, but we will be brief.
The Neighborhoods' Forum is the council of resident community and business associations in Toronto's downtown core. Our purpose is to enable and support all measures that enhance the quality of life in Toronto's centre, which as you know is at the heart of Canada's premier economic engine and urban economy, and also Canada's largest tax base.
To that end we are represented on a number of major committees in the city, and our member associations, of which there are now 18, are widely involved in all aspects of the social, economic, political, legal, and media affairs of our community.
I am acting as chairman of the committee. I, like all members of the committee, do this in a completely volunteer capacity. We have a budget of zero, and money that we spend out of pocket for fax machines. With me is Ewen McCuaig, our vice-chair member of the executive council, who is also president of Winchester Park Residents Association. The Winchester Park is one of the most innovative and aggressive, I think, of the urban resident associations in Canada. They've done a tremendous amount of work in the fabric of urban life.
Also we have brought with us Mary Taylor, executive secretary, out of the field as it were, working with the Christian Resource Centre in Regent Park. We wish to address you this afternoon on the subject of housing policy and its impact on our city.
Now, we understand from our sources there is little chance of a national housing policy under this government. This is despite the recognition by many responsible and thoughtful groups of the need for a long-term strategic top-down planning in housing to replace the present system of crisis management. In lieu of that, though, we are seeking better coordination between the levels of government, among the federal government, the province, and the cities.
It has been said that life in Toronto, Toronto's governance, is a tale of three cities, and we taxpayers must live in all three of them. Others say that trying to get anything done on that basis is like playing pickup ball against the Harlem Globetrotters, always one pass ahead of you.
As you must recognize, these tactics can create a dangerous leadership vacuum where nobody really is in charge of what is becoming an increasingly unstable and untenable situation among the underhoused and homeless. This is something that affects and destabilizes the entire fabric of our urban life. Problems become chronic conditions for which no one really is responsible.
In case you think this is an insignificant issue in this city, let me remind you that the downtown core contains 83% of all single men's hostel spaces in Canada, and that the overwhelming majority of all shelter spaces in Canada are in Toronto.
The city spends the largest portion of its budget on housing and social welfare issues combined. Almost three-quarters of the homeless come not just from outside the city, but from outside the province. That's according to the Golden report. More than one-third of all immigrants and refugees make their way to Toronto every year. A significant proportion of those refugee claimants become an expense to the city.
The present three-year funding agreement we have with you is a stopgap and does not get us any basis for decent long-term planning. As Mr. Martin himself said to the editorial board of the Toronto Star only last week, you have to deal with homelessness if you are going to succeed. I don't believe you can develop a modern economy and leave vast segments of your population behind. We expect leadership from somewhere, and we do not think it's unreasonable for that leadership to begin here.
I am not talking about Ms. Bradshaw's mandate, if indeed she has one, but about the real need to recognize that having downloaded responsibility for housing issues to the provinces does not exonerate you from the consequences, financially and socially, of other federal policies such as those on immigration, refugees, aboriginal issues, and tax incentives for housing providers. And it is budget that speaks most strongly to the government's real priorities on these issues.
The lack of a national housing policy implicitly requires you to treat Toronto as a separate case and to treat it realistically. That means compensating us properly for our real role and expenses in housing—both immigrants and Canadians who come here from other parts of Canada and become an expense on our social and economic infrastructure.
The Neighborhoods' Forum supports as well a fair-share policy that distributes shelters and subsidized housing throughout all areas of Canada where that support is needed—and it is everywhere. The need is plainly not confined to the city's downtown core, where the bulk of that is done now.
To that end, we ask you to take seriously your responsibility and capacity to provide income tax incentives to private housing and shelter providers across Canada. It is not enough to simply keep writing cheques with our money for makeshift solutions. You must also make it viable for entrepreneurs, private investors, and other interested parties to create affordable housing. That means, at the end of day, you must have a national housing policy.
Thank you. I look forward to your questions.
The Chair: Thank you very much, Ms. Immen.
We'll start with a question and answer session. It will be a ten-minute round, beginning with Mr. Solberg.
Mr. Monte Solberg: Thank you very much, Mr. Chairman. Mr. Chairman, I hope you'll note that capital gains keeps coming up one way or the other through a lot of the witnesses we've had today. And I would suggest even what we've heard just now is probably somewhat a reflection on punitive capital gains taxes in Canada today.
I am interested in addressing specifically some of the things, off the top at least, we've heard with respect to e-commerce. One of the mandates of this committee was to look at the productivity issue. Of course we know to the south of us the United States has made huge productivity gains over the last little while, due in large part to their embracing of information technology. Today one of the fastest-growing aspects of the IT industry is e-commerce. One of the things that has allowed e-commerce and IT to really explode in the United States is their ability to form capital. I think largely that has to do with the fact they have easier taxes than we have in Canada, or at least it's a big part of it.
Having said all that, having this mandate we also have the Prime Minister saying that if taxes are too high in Canada then you should just go to the United States. I'm curious to know from our guests representing the e-commerce roundtable whether or not there are a lot of people doing exactly that, going to the United States, and how severe a problem it is. If we take the sorts of steps you've mentioned here, would it be enough to staunch the flow of people and business to the United States?
The Chair: Mr. Eckert.
Mr. John Eckert (Managing Partner, McLean Watson Capital, Canadian e-Business Opportunities Roundtable): My name's John Eckert and I'm with McLean Watson Capital. We're a venture capitalist and we focus purely on the IT sector, and more specifically we're focused on the software and Internet areas.
I can tell you that to merely change the tax rate in Canada and lower it isn't going to turn things around overnight, but it is a significant contributor and one that continually does erode. Those enlightened entrepreneurs that are aware of this and are driven to a large extent by the profit incentive are very interested in getting the best deal.
In the U.S. there are other attractions. But certainly if somebody who is outstanding in his or her field decides to make a go of it, all other things being equal, they're much more likely to go to the place where the most money can be made.
Having said that, when we as venture capitalists invest in companies, we are also very interested in making sure that they are great successes. So one of our objectives is to move those companies to the jurisdiction of greatest benefit, and to a large extent that's the U.S. This morning I met with a company we're very interested in. We're likely going to go ahead with $3 million U.S. financing. But core to the plan is that they move to New York City. There are reasons in addition to this, but New York City is very attractive. They're very excited, because they also know that the tax regime is lower. It may sound unpatriotic, but that is a reality.
I think anything the government can do in the way of making Canadian capital gains rates more in line with what is available in the U.S. will over time definitely filter back and begin to form the kind of infrastructure that will not only maintain and reward those that are in Canada but as well attract those that are outside of Canada. There's no reason that over time we can't begin a bit of a reverse flow of expertise.
Mr. Monte Solberg: Alan Greenspan, chairman of the Federal Reserve, has continually argued for cutting capital gains taxes in the United States even more. In fact, at present Congress is entertaining proposals to do that. I think right now the effective tax rate in Canada is about 37.5%. In the States it's around 20% and going farther south. Will that mean we'll see this trend exacerbated? How sensitive is capital to those types of changes to the capital gains tax rate? Would it have a big impact if their taxes went even lower? Would Canadian business continue to flow south even faster?
Mr. John Eckert: I think so. I think in the end it's net after-tax profits, and to the extent the gap widens, it's only going to exacerbate the situation.
Those involved in this round table raised this as an issue, but we've addressed it more specifically in that we've not tried to change the world but rather to put forth recommendations that address more specifically the e-commerce sector in the hope that the government will realize that this is a very dynamic growth engine, and we're at the very early days, and to the extent we want to get our share of the global e-commerce pie, we had better start to do something dramatic in terms of trying to stem the flow of capital. It would be a step, and it would be one that would need to be stuck to over the long term, because there are other issues that need to then come into play.
Mr. Monte Solberg: Mr. Chairman, I would like to ask a lot more questions on that issue, but I'll just be disciplined and not do that right now.
But I do want to go to the homeless issue for a moment. I really do appreciate your raising the issue of incentives for entrepreneurs to build more housing. Previous to 1971 we didn't have capital gains taxes in Canada, and my understanding is that we had a lot more building of apartments and housing for people. Since that time, we've lost a big chunk of the incentive to do that, and as a result, we're not seeing the kind of building we used to see. This has not been part of the discussion on homelessness at all so far. It has been glossed over. We've heard people saying that we should go out and build social housing for people, but we just don't hear about capital gains tax cuts. I don't know if you would want to comment on that. But I do appreciate your raising it. It has a lot more credibility coming from you, as someone who is affected by it in your role, than it does from politicians like me, who some people would suspect have a vested interest in pushing those sorts of things.
Ms. Lisa Stephens Immen: That's absolutely correct, Mr. Solberg. Since 1971 there has been no significant increase in the rental housing stock in Ontario. The rap against that was because we had rental price controls, and the complaint was that was inhibiting. Since those controls have been removed, there has been no movement at all to increase the rental stock, and we are still looking at vacancy rates much less than one-half of 1%, in some areas one-tenth of 1%. And we are still looking at the vast preponderance of people paying most of their disposable income—I don't know why we call it disposable income—as rental, just simply to keep a roof over their head.
It is a precarious and dangerous situation. This is at a point where the economy is on a high. We don't have any buffer at all when that thing goes south, and it will. Things will change. We're in a very precarious position on that. Part of the tossing of the ball is, housing is the responsibility of the province, and all this kind of thing, and property taxes go to the city, and the city is negotiating with the province, so we aren't going to get involved. You know how that goes.
So we're looking at you and what you can and must do in terms of the income tax incentives and the revenue incentives associated with that, whether it is to the builders of the things, which they must have, or to individuals and parties of any kind that are prepared to make additional accommodation available, whether that's going to be granny flats, small self-contained units, or whatever it is as conversion, whatever it is that people are prepared to do, and they do need to do something simply to keep their own roof over their own head. You just have to cut them some slack somewhere, because otherwise we're looking down a black hole on it.
Ewen, would you like to add to that?
Mr. Ewen McCuaig (Vice-Chair, Neighborhoods' Forum): Our counsellor and budget chief in Toronto, Tom Jakobek, has recently had a rather dramatic conversion to the need for housing. He is to bring forth—it hasn't yet appeared in the paper, other than a brief mention—models from New York, where concessions to builders have been very helpful in solving the problem.
Mr. Monte Solberg: Thank you very much, Mr. Chairman.
The Chair: Next is Mr. Graham, followed by Mr. Szabo.
Mr. Bill Graham (Toronto Centre—Rosedale, Lib.): Thank you very much, Mr. Chairman.
I'd like to thank Ms. Stephens Immen and Mr. McCuaig for coming here to remind Ms. Bennett, myself, and the other members of this committee that downtown Toronto is the largest single tax base in Canada and that we also are the inheritors of many of the social problems that don't start in Toronto but that end up there because of what I think my colleague, Mr. Szabo, calls the urban magnet of the situation. But whatever the cause of it, we see the effects you described so cogently.
I really congratulate you on your recommendation that this committee should be looking at an income tax component. I don't normally sit on this committee, but that is the dimension of what they should be doing. Presumably, other committees and other ministries will be looking at other solutions.
Since you're very knowledgeable in this area, maybe you can help me and some of the other members of the committee with regard to the lack of coherence not just between provincial and federal programs in this area but within the federal sphere itself. I've been trying to get a better handle on what is being done for the homeless and housing in downtown Toronto within the federal sphere. I find that there are programs in Public Works, HRDC, Indian Affairs, and Health Canada, and nobody really knows how much anyone is putting into what or where. I'm just wondering if you could help the members of the committee have a better understanding of what the federal government is doing in various departments, or are you as puzzled as I am as to exactly where it's coming from and where it's going to?
Ms. Lisa Stephens Immen: You've really hit the nail on the head there. We are much worse than puzzled. I think we are at the point of being prepared to look at almost anything but this as an answer. What we are doing now with the three-part government hand-off of one thing to another and so on is simply not working and has no prospect of working. As programs increase, as budgets increase, as levels of things increase, it is only getting worse and more complicated. Yes, you're quite correct that within any individual government—and I don't want to single out you here in the room—the right hand doesn't know what the left is doing. Programs are going on and on and various things are happening that no one else really is able to utilize or have any access to.
At the beginning of my volunteer career on this, I sought out some advice on that, and someone said there are only three things that are going to happen when you go to city hall or any place to try to get something done. In the first place someone is going to tell you we're really, truly, madly, deeply sympathetic, but actually it's not our problem, because it really belongs over there. That is going to be the first response: “It's not my problem; it has to go someplace else.”
If you can prove to them that it is their problem and they do have a responsibility in that area, the second response will be, “Oh, but we have a program for that”. Merely showing that they are throwing money at something is to be taken as evidence of concern without any real question: Are these effective? What kind of bang are we getting for our buck on any of this stuff? That never happens.
If those two things have gone through and you have shown you have a program in the province but it still doesn't solve the problem, the final line of defence is “Let's appoint a royal commission, and that will sandbag the thing safely into the next election.” We've been through that too with the Golden report and the mayor's report on homelessness. We've done a thorough study of the thing, and all the issues are quite clear.
One of the things that is clearest is that everyone has to step up to the plate and join in and solve this, because it's not going to happen otherwise. If we don't start thinking differently about many of the things we're doing and become more and more willing to sit down at the table together, we're not going to get anywhere.
This is the Neighbourhoods' Forum's primary function and value in the downtown core. Because we write the cheques for all this at the end of the day, because we employ you, we're able to insist that we have you at the table at a meeting. A persistent problem has been that one level of government won't sit at the table with another, because if they're going to be there, whose meeting is it? Well, we're able to say “It's our meeting, and we'd like to allocate these things fairly among you.” We've been able to make a fair amount of progress in small ways on things, but at least we are setting a precedent for that.
One of the disturbing things to me about all of that is something that is being mooted around. If you ask anybody, “If Quebec were to walk, what would happen?”... The Province of Toronto movement, if you want to call it that, is gaining ground, with a critical mass now of almost 5 million people in the GTA. The idea is to take over from the province health care administration and educational standards. Then once we get to the federal government, well, maybe we need a federal government for national defence and foreign affairs.
The Chair: Pre-budget hearings as well.
Ms. Lisa Stephens Immen: You have a problem.
Mr. Bill Graham: It's normal to see things born at a pre-budget hearing. Mr. Bevilacqua will be perceived as a midwife.
Voices: Oh, oh!
Ms. Lisa Stephens Immen: So when we say we need leadership and we need a proactive zing, somebody had better step up to it.
The Chair: Thank you.
Mr. Graham, do you want to step up?
Mr. Bill Graham: I think I'll stay out of that one. We have enough constitutional problems without jumping into that, although I certainly agree.
I think Mr. McCuaig wanted to add something to that.
Mr. Ewen McCuaig: As Mr. Graham has suggested, there have been a number of worthy programs from Ottawa, even recently, but they tend to be small. They've been effective but not particularly coordinated. We need much bigger help. It is generally acknowledged that a large percentage of renters in Toronto are one paycheque away from homelessness.
The Chair: Good point.
Mr. Paul Szabo: Mr. Chairman, I want to split my time with Mr. Cullen. I want to ask just one question to Lisa and to Ewen.
The Golden report identifies that 42% of the homeless in Toronto did not come from Toronto; they've come from all across Canada. It's kind of like Field of Dreams: “If you build it, they will come.” If that's true, that means Toronto provides more than adequately for its homeless. It also probably means other communities have not stepped up in taking care of their own. This obviously has to be dealt with. Have you thought about what should be done to deal with the urban magnet problem?
Ms. Lisa Stephens Immen: Very much so, and this is what we call our fair share policy. A lot of people say “Not in my backyard.” Our point is, “Hey, our backyard is full.” We have them all for everybody downtown, and it's time for everyone else to step up to the plate and recognize that the problems originate in your own community, your home community, and that the best place for any individual who is going through those stresses is on familiar ground, on home territory, where they have at least some understanding of the access they might have to friends, family, church, school, or any kind of social structure.
With all the money in the world, we can't hope to replicate that social structure, and that's important for people who come off the moon to us into the centre of downtown Toronto. All we can do is keep them alive, and that's not a solution. So you're quite right.
Certainly one of the things you could do is weigh those incentives as you do and balance them outwards so that communities in outlying areas can assume greater responsibility for their own people.
[Editor's Note: Inaudible]
Mr. Paul Szabo: —
Ms. Lisa Stephens Immen: Yes. This has been discussed. Sure, we'll take care of them for you, and we'll send you the bill. Yes, we'll do it, but we'll send the bill to every other jurisdiction that has a person there because of that.
One of my messages has to be, “Yes, you're welcome in Toronto, you're welcome downtown, but bring something with you in the way of ambition, talent, education, or sheer guts, and don't come and expect us to carry you.”
The Chair: Mr. Cullen.
Mr. Roy Cullen: Thank you, Mr. Chairman.
Thank you, colleagues.
I'd like to ask a question of Ms. Stephens Immen and Mr. McCuaig, and then if I have time of Mr. O'Shaughnessy and Mr. Goodwin.
Ms. Stephens Immen, your presentation was excellent. The issues are clear, even though Mr. Solberg thought he heard capital gains tax. Maybe you said it, but you can answer that later.
I think most of us recognize the link between the homeless and affordable housing, or the lack thereof, which clearly there is in Ontario. There are also other issues, though: mental health issues and other associated issues. Our government has put a lot of money into that more recently.
I think what you were looking for were perhaps some tax policy solutions to the affordable housing issue, and I don't think that is limited to capital gains considerations. You correct me if I'm wrong.
Maybe you could give us some information that would guide the committee. If we're looking at tax policy solutions to the affordable housing issue, a couple of the issues that I think one would wrestle with are the following.
How do you deliver tax policy solutions to the affordable housing question if you have different situations across Canada? For example, Toronto clearly has an affordable housing problem, and Ontario does, but other cities such as Montreal and others across Canada may not. How do you target affordable housing and not target housing generally? In other words, how do you have tax policies that simply address affordable housing stock, not total housing stock?
And how do you develop tax policies that deliver something that is abuse-proof? We have had other situations with the MURBs and other tax policy solutions that have created some types of abuse.
I don't know if you have all the answers for that today, but if you have any ideas, it would be useful if we could hear from you on that, either today or later.
Ms. Lisa Stephens Immen: Certainly there's a parallel situation in the child benefit, which for many, many years Canada simply gave to everyone with a baby and recognized that it would be taxed back from those who had sufficient means and were paying enough taxes to do that. With something like a housing allowance, it's a no-brainer to give across the board and get back one way or another. And you guys are experts at getting it all back. That's certainly one place to start.
Mr. Roy Cullen: Okay.
[Editor's Note: Inaudible]
Mr. Bill Graham: —
Ms. Lisa Stephens Immen: We pay. It always comes back to the taxpayer writing the cheque for everything at all levels.
Mr. Roy Cullen: Mr. McCuaig.
Mr. Ewen McCuaig: We have huge agencies that deal with that population. For instance, the Toronto Housing Company deals with 28,000 tenants, and they have mechanisms for screening. So I'm sure mechanisms can be found to screen people on the basis of income.
But I would like to add that apart from our request for a national housing policy with concessions to developers, we have no problem if Ottawa decides to spend significant dollars to create low-cost housing in Toronto.
Mr. Roy Cullen: Yes, and anything's possible. You know our government has indicated its intention to devolve social housing, but nonetheless...
I'll move to Mr. O'Shaughnessy and Mr. Goodwin.
The RESPs and the grants seem to me to be a huge success story. In your brief you have some information that I just wanted to clarify. In the finance minister's economic update, he says: “In the short time since the CESG was introduced only 21 months ago, private savings have doubled to $5 billion.” In your brief you talk about $2.5 billion. Are we talking about the same number there? Is someone right and someone wrong?
Mr. Tom O'Shaughnessy: The $2.5 billion are assets under administration amongst our own organization and our association, not the total savings across the country.
Mr. Roy Cullen: Okay. Because if you look at the growth in the number of accounts, I know there's been a phenomenal take-up. It's a tremendous program, in my view.
When you talk about the 16% take-up of eligible participants, over what period of time has that happened? It seems to have been a very quick take-up of a program, and it's continuing to grow. Do you have any sense of the trend line on the program?
Mr. Ken Goodwin: I think there quite obviously has been a big take-up in the last year since the grants came on. It has been a success.
From our position, I guess, as not-for-profit dealers, we're concerned about the lower- to moderate-income people. More than 95% of the people make less than $75,000 a year. The growth in the grant program, from our internal sense, seems to be at the higher-income level as opposed to lower-income.
Our philosophy is that this program should help to reduce the student loan issues of the future, and it's not the higher-income people but lower-income who are going to generate student loan problems. We want to incent the lower-income people to put some money into these types of programs as well.
Mr. Roy Cullen: Thank you. That's helpful.
Are you aware of any abuse taking place in this program, in either your sector, the not-for-profit sector, or the other sector? Is there any evidence of any abuse?
Mr. Tom O'Shaughnessy: Not that we have experienced, no.
Mr. Roy Cullen: Okay. Thank you.
The Chair: I have a question before I go to Mr. Brison.
With regard to the obstacles, you say here that 17.6% defaulted within 12 months. That's within 12 months of what?
Mr. Tom O'Shaughnessy: Within 12 months of consolidating.
The Chair: I'm just wondering, because I remember we made some changes to give say 60 months of interest relief to students. When you think about it, if you can't find a job within 60 months after graduation, you have a big problem. I mean, I think the government is trying to meet students halfway.
Do you think 60 months is enough, after graduation, to... You know about the interest relief component, of course.
Mr. Tom O'Shaughnessy: Yes, we do.
I don't think it's our position to be able to make a comment one way or another on the student loan program other than to say that even with a 60-month relief, or a 30-month relief, there is a significant cost to the government of providing a significant number of loans to low-income and moderate-income students. The idea is, whether it's a 60-month relief or some other relief, the cost to the government would be reduced significantly if low-income and moderate-income families were actually saving prior to the child going to school, as opposed to relying on the student grant program and the relief period afterwards if they don't get a job.
The Chair: Okay.
Mr. Scott Brison: Thank you, Mr. Chair.
Thank you all for your presentations today.
My first question is relative to the RESP vehicle. We've heard from a number of groups involved in the investment area that the foreign content limit does reduce the return on investment for Canadians, either in RRSPs or with the public service pension plans, etc. Recognizing that there are some derivatives, or vehicles to escape that, what is your opinion on the foreign content limits?
Mr. Ken Goodwin: With regard to the RESP, there is no foreign content limit at all.
Mr. Scott Brison: None at all?
Mr. Ken Goodwin: No.
Mr. Scott Brison: I wasn't aware of that.
Mr. Ken Goodwin: Having said that, however, again, there are restrictions on the RRSP investments, but not the RESP investments.
Mr. Scott Brison: You see, our pressure has worked. Finally, finally some action from these guys.
Mr. Tom O'Shaughnessy: Maybe I can just clarify that.
There are the same limits on the investment vehicles that you can enter into as RRSPs, but there is no foreign content limit on RESPs.
Mr. Scott Brison: Okay. So in terms of the vehicles you can invest in, the same criteria exist, relative to foreign content, for RRSPs.
If there is some flexibility, some ability for people to move from an RESP vehicle to an RRSP vehicle, surely to goodness the criteria must be identical. I would be thrilled to learn that the government has actually been innovative enough to remove the foreign content limit on RESPs, but I would be surprised.
The Chair: It's the letters that are confusing you, I think, the “E” and the “R”.
Mr. Scott Brison: The fact is, the ability to transfer funds between RESPs and RRSPs is there. There is an ability to do that.
Mr. Tom O'Shaughnessy: That's correct.
Mr. Scott Brison: Okay. So it would be counterintuitive that there would not be, if there was a foreign content limit on investment in one... There isn't any in RESPs at all?
Mr. Tom O'Shaughnessy: There's no foreign content limit in RESPs. No, there isn't.
Mr. Scott Brison: That's fascinating. Good to know.
Mr. Monte Solberg: Your time is up.
Voices: Oh, oh.
The Chair: Do you have any further questions?
Mr. Scott Brison: Absolutely.
On the RESP, the millennium scholarship fund didn't provide any flexibility in terms of private education or post-secondary education or the emerging growth that is occurring in, for instance, career colleges.
Can one use an RESP investment for private colleges?
Mr. Ken Goodwin: Yes. Most post-secondary education is eligible for RESP withdrawals, but there are certain rules on the length of the plan.
Mr. Scott Brison: Okay. But there's no accreditation process relative to the private colleges?
Mr. Ken Goodwin: Yes, there is some.
Mr. Tom O'Shaughnessy: Obviously the federal government goes through a process of accrediting post-secondary institutions. Many private organizations have been accredited. Some have not. Most of them are accredited on the basis of having some requirements in terms of their particular programs or the process in which they accept individuals beyond the high school level.
So we utilize the government plan quite effectively.
Mr. Scott Brison: Okay. That's good, relative to the RESP questions. Having now forced the government to remove foreign content limits on RESPs, I feel comfortable enough now to go on to e-commerce.
The capital gains tax issue has been raised from the perspective of the brain drain. What about the question of the impact of capital gains on capital in terms of the access to capital in Canada? There's a scarcity, and there's a fear that currently, with the rate of capital gains, we're locking up an awful lot of capital. For instance, in terms of people with bank stocks for 30 years, if it weren't for this distortionary tax they would otherwise would free up their capital to invest in things like the high-tech sector.
Ms. Sara Allan: I think one of the issues we'd like to focus on is the ability to foster a very thriving, proactive base of venture capital in Canada managed by professional fund managers. To that extent, one of the issues we've highlighted is that there are certain provisions that prevent or make it unattractive for foreign investors to invest in Canadian venture funds, depending on the vehicle they are using to invest.
Specifically, if a foreign venture fund is a limited liability company in the U.S., they then are not protected under the current tax treaty against having to pay Canadian taxes. Therefore, that's a bit of a barrier for foreign funds to flow into Canadian venture capital funds to expand the available pool and to tap into the immense amount of capital that's floating around in the United States and very eager to invest in this particular sector.
With respect to individual investors and capital gains, I don't know, John, if you would want to comment on that.
I mean, the issue we'd like to focus on is allowing Canadian companies to stay in Canada, to access the capital they need to be able to link into the networks of fund managers, who can enable them to grow and thrive and access a global marketplace while staying in Canada. Capital gains obviously plays a role in both the formation of that pool and making it attractive for the company to stay in Canada from the perspective of the entrepreneurs and the start-up management.
Certainly we're seeing a brain drain of individuals, but even more alarmingly we're seeing a company drain of whole companies, with associated jobs and spillover benefits moving to the U.S. to access that capital pool and that dynamic economy that is driving down there. That's what we would like to address.
Mr. Scott Brison: The other positive relative to capital gains tax reduction is that in other jurisdictions, reductions of capital gains taxes or inclusion rates have not affected revenue that much because there's been an increase in the level of activities. That's just as part of your case.
Mr. John Eckert: In the velocity; I think that's true. I don't think it takes a genius to conclude that if tax rates are lower, those that are sitting with unrealized capital gains would be more inclined to take profits, pay a lesser amount of tax, and roll it again. I'm not sure those sitting in conservative bank stocks are the sort of people that would be looking towards the sectors we're advocating, but there is probably a large pool of money that would be more inclined to do so.
I think it's very important to accent what Sara mentioned, which is one way we could really unleash a lot of economic power in Canada is to somehow make it possible for foreign bodies, foreign pension funds, foreign corporations or university endowment funds—whatever they may be—who want to invest in Canada to do it such that they're not looking at the punitive tax rates in Canada on their after-tax return. I think that's probably quite easily addressable and almost overnight would result in a flood of money into Canada. There's a lot of money down in the States in particular that is interested in Canada, but all other things being equal, if they're looking at a fund in the U.S. and one in Canada and both look attractive, then the after-tax rate will kill the Canadian opportunity.
This was an issue in Israel as well a few years back, and they addressed it by opening up the doors and providing somewhat tax neutrality, and I think very quickly they spawned a dynamic sector that is world class in its calibre.
Mr. Scott Brison: Or Ireland's tax reform.
Mr. John Eckert: Ireland as well. I don't know that they're necessarily as far along as Israel.
Ms. Sara Allan: Just to clarify, specifically what we're talking about here is the principle of tax neutrality. Obviously if individual foreign investors want to invest in Canadian companies as individuals, they are protected under tax treaties and they pay the tax in their jurisdictions. It's when they are investing through a different type of vehicle, a pension fund or a limited liability company, that there's a lack of clarity around the taxation ruling. Really, we're talking about a principle of tax neutrality.
Mr. Ronan McGrath (Chief Information Officer and President, Shared Services, Rogers Cantel): The other thing I would add is that we're now well into a post-industrial economy, where the concept of a job for life for young graduates is nonsense. The concept of waiting for pensions and so on just no longer fits their economic model. They've seen their parents go through downsizing and corporate trimming and all of that stuff. So a lot of the best graduates see their role as being entrepreneurial.
This economy is completely mobile. All the means of production are in the hands of the individual, and they can go anywhere in a flash. There's no bricks and mortar, there's nothing to move, no machinery—it's getting on a plane and moving. Increasingly, these are people who have a global marketplace. If they can't get what they want here, they'll get it somewhere else.
The Chair: Thank you, Mr. Brison.
I have a follow-up question on these policy recommendations you make. In any commerce, speed is extremely important. I mean, being the first one in the market is crucial. Amazon.com, for example, being the first one in there—you probably know Barnes & Noble has been in that industry for the longest time, yet their number in the Internet business is really insignificant when you compare it with Amazon.com.
So when you are requesting these policy changes, it's not for like ten years down the road. You're saying these are things we need to do immediately; otherwise we may actually miss the whole e-commerce revolution. Is that true?
Ms. Sara Allen: Absolutely. I think there's a tremendous sense of urgency around limiting some of these specific barriers to enable the industry to start to thrive immediately. We're not just talking about retailers and allowing the Canadian retail sector to catch up, although that is important. We're also talking about all of the various service companies and technology companies that feed the Internet, in which sectors Canada is already starting from a very strong base and has the opportunity to truly be a global leader, whether it's in web tools or encryption technologies or the basic network technologies or new services on the Internet and accessing new markets that Canadian companies are restricted from accessing because of geographic reasons.
So there's a huge range of opportunity out there for Canadian companies of all kinds, as well as to stimulate a whole new economy of new kinds of companies.
The Chair: The large growth in this area is not business to consumer but business to business—is that right?
Ms. Sara Allan: That's correct. The business-to-business piece of electronic commerce outnumbers the business-to-consumer piece just in terms of the nature of the transactions, obviously, because there are so many more steps in the chain. You get that repeated transaction being conducted electronically.
Business to business also offers tremendous opportunities for productivity improvement, efficiency gains, by eliminating excessive paperwork and transaction costs in basic purchase orders, etc. It really and truly offers an opportunity for companies to become more competitive, as well as to access customers and suppliers they never would have been able to access before in a very efficient way. It in itself offers a real opportunity for many Canadian sectors to be able to compete more effectively in terms of productivity.
The Chair: Thank you very much. On behalf of the committee, I'd like to thank you. It has obviously been a very interesting panel.
As you can probably tell, everyone is focused on one ultimate goal; that is, how do you improve the quality of life and the standard of living for Canadians? We may come at it from a different point of view, but essentially that is our ultimate goal.
The challenge we face as a committee is that we have to draw the road map on how we're going to get there. That's the challenge. In this debate there will be trade-offs we will have to make, but you can rest assured that our goal is the same as yours: we do want to improve the standard of living for Canadians and their quality of life. So thank you for your contribution.
I'm going to suspend for five minutes.
The Chair: I'd like to call the meeting to order and welcome everyone here this afternoon.
This is our final session of the day. We have representatives from the C.D. Howe Institute, the City of Toronto, the Canadian Urban Institute, the Nature Conservancy Canada, and the Ontario Non-Profit Housing Association. We also have some individuals who will be making presentations.
The first speaker is Mr. William Robson, senior policy analyst from the C.D. Howe Institute. As you know, you have five to six minutes to make your presentation. That will allow us more time for the question and answer session. Welcome.
Mr. William Robson (Senior Policy Analyst, C.D. Howe Institute): Thank you very much. Thanks for the invitation to be here. As you open yet another one of these sessions with a round of advice-givers in front of you, you must occasionally wonder about your choice of careers. So let me start by saying that we on this side of the table appreciate these consultations. I think they help to shape better budgets.
It's a special pleasure to be here in the wake of last week's fiscal statement, because we now have—as we didn't before—five-year economic and fiscal projections. We also have explicit judgments about what size of prudence cushions would protect the budget targets from nasty surprises.
This sort of forecasting amid uncertainty is something we've done a lot of work on at the C.D. Howe Institute recently, so I should start by saying I really like that new approach. What's more, the baseline figures and the prudence factors generally look eminently reasonable. Indeed, the five-year totals are so similar to what we published before the update that somebody asked me if there had been a leak. So I must say there was not; it's a coincidence that just testifies to the high quality of the work on both sides.
What that work says, of course, is that over the next five years we can implement some $23 billion in tax cuts and spending increases, with virtually complete confidence that the budget will stay in surplus. So in my remaining time in front of you, I would like to say a few things about how to make that $23 billion total even bigger.
To start with the outlook on budget surpluses, it concerns me a little that the figures in the fall update separated these new prudence factors from the old contingency reserves. We know that unneeded contingency reserves are supposed to pay down debt, but we don't know what unneeded prudence factors will do. After the last-minute spending that erased better-than-expected budget outcomes over the last four years, I worry that those prudence factors will be spent.
If they are spent, that $23 billion will still be there. But if they're not spent and the economy co-operates, total surpluses, unneeded prudence factors, plus the contingency reserves over the next five years could be at least twice as big as the contingency reserves alone, at $3 billion a year for the contingency reserves and more than twice that for the total.
There are many uncertainties in budgeting, but the link between debt and interest costs is not one of them. The more debt we pay down over the next five years, the less interest we will have to pay at the end. As a result of that, we could have a lot more than $23 billion to work with.
Turning to spending, even without those unneeded prudence cushions, $23 billion is pretty serious money for new programs. Again, what we will actually get in five years will depend on what we do meanwhile. A number of our major transfer programs of elderly benefits, the GST credit and the child benefit are clawed back as their recipients' incomes rise. As a result, many low- and middle-income Canadians pay much more of each additional dollar they earn in taxes than their more heavily taxed high-income counterparts.
There's no easy answer to this tradeoff between generous benefits on the one hand and stiff clawbacks on the other. But if we want that $23 billion total to grow, we need to ensure that enrichments to these programs lower the clawback rates and don't raise them.
More positively, investments in research infrastructure and information systems can raise growth further, but these new economy buzzwords often hide bad old industrial policy. We're talking about new monitoring and cost-benefit analysis of health care spending, and we should do no less for subsidies to businesses and universities.
I want to save the best for last here and turn to taxes. Not only low-income and middle-income Canadians, but all Canadians, face very high tax rates, as both workers and owners of Canadian companies through their retirement savings. Requests for special tax treatment of capital gains for high-tech stock options or tax breaks for NHL teams tell me, not that we need more loopholes, but that the tax burden in Canada generally is too high.
By now, members of this committee need no reminding that our personal tax rates rise very rapidly at relatively modest income levels. But I would like to add that our high corporate tax rates are increasingly out of line internationally, and are highest on the knowledge-oriented companies we typically look toward to boost our growth in the future.
We now think we have $23 billion to work with. If we devote a good share of that toward making Canada a friendlier environment for working, saving and investing, at the end of five years we should end up with a lot more than $23 billion to enjoy.
In closing, I would repeat that the $23 billion unveiled in the fall update is a welcome and realistic estimate of our room to move over the next five years, but it's not a fixed number. It could be larger yet, and with smart use of that budget room, it will be.
The Chair: Thank you very much, Mr. Robson.
We'll now hear from City of Toronto councillor Brad Duguid and Mr. Jack Layton, councillor and chair of the environmental task force.
Mr. Jack Layton (Chair, Environmental Task Force, City of Toronto): Thank you, Mr. Chairman. I will go first and Brad will pick it up from there.
First of all, to the longstanding members of the committee, my father wanted to say hello. He's not doing too badly and sends his regards.
We're also bringing greetings on behalf of our mayor, who of course would have given you a much more enthusiastic presence, with metaphors and hyperbole we can't possibly match. So you'll have a more level presentation from us than you would get from Mel, who I think we can fairly say has some pretty deep concerns about the situation we're facing in the city of Toronto.
As Torontonians, we're also aligning ourselves with and working very closely with cities across the country. I've worked very hard with them to produce the Federation of Canadian Municipalities' quality of life infrastructure budget proposals, which I know you are familiar with.
We want to thank you for coming to the GTA for these hearings. We think it's an excellent initiative. As you can see, it has allowed some of the kinds of people who probably couldn't have made their way to Ottawa, such as the community groups you just heard from, to share their views with you, and we think that's very important.
The underlying theme of our presentation is that as restructuring of responsibilities has flowed down to municipalities, the property tax remains an unsustainable revenue source to deal with the various responsibilities that have ended up on our table. Faced with that, we have to begin to talk about other arrangements in certain key policy areas. That's really what the FCM proposal and our submissions to you are all about.
Our council has endorsed the FCM document, so I don't have to go through it in detail, but I do want to highlight a couple of key things. First of all, we believe the programs have to be tripartite—all three levels of government have to be involved. We don't want to see situations where, for example, municipalities are asked to spend money on things they don't want to spend money on, because that way you don't get the community support and resentment can build up.
The successful projects last time around involved that kind of tripartite engagement. Of course, it had an advantage to everybody because it brought everybody else's money to the table, and everybody got some leverage out of it. We've structured our proposals through the FCM very much along those lines. Nobody is asked to bear the full brunt; everybody has to come to the table with money, commitment, and engagement to make these projects work. And the credit flows where credit is due, which is everywhere. Those are fundamental beliefs of how we think these things can work.
We are particularly concerned about the funding partnership in the area of transportation. Frankly, we don't have much of a partnership in the area of funding transportation any more, certainly not in Toronto, and in Ontario generally. The funding of transportation has devolved, essentially, to the municipal level of government. There's remarkably little coming back, yet transportation-based taxes, particularly fuel taxes, flow into the coffers of all governments.
We'd like you to consider the model that's now being adopted in the States. We used to think we did everything better than the U.S., but now we think maybe there are a few things they're doing that we should look at. One example is the dedication of some portion of the fuel tax to the transportation challenges faced across the country.
In some areas there will be an emphasis on roads, as a result of the situation in those parts of the country, particularly out west. Other places, like Toronto, are most concerned about public transit. We now believe, pretty well unanimously across the GTA, we can't meet the increased demand with just roads any more. So transportation is key and the infrastructure's important to make Toronto competitive. In just a moment you'll hear more about that from a study that was done by the Canadian Urban Institute.
We've also tried to be quite innovative in some of our recommendations to you. For example, in the environmental infrastructure section of our proposals, the FCM has drawn on some Toronto experiences. You may have heard of the Toronto Atmospheric Fund and the Better Buildings Partnership. This is a fund the city has invested in, and we're making lots of money on it.
We're doing extremely well with investments in building retrofits, and suggest that a national model be modelled on what we're doing in Toronto. I'm pleased to report that today I received a letter from the Minister of Environment, David Anderson, who has looked it over and is very enthusiastic about it.
It's a question of whether you can move on it now or whether you have to wait until the climate change discussions with the provinces are complete. We'd like to suggest there's no need to wait on this because nobody's saying no. On items where people are saying no, maybe you will have to wait. But on a better buildings retrofit program and a start-up investment fund, like we have in Toronto, I think you'll see there can be some terrific results and return on your investment.
Finally, of course, I have to emphasize housing and homelessness. We have two major studies for you to consider. One is the Anne Golden study, which I know many of you are familiar with. It focused on the situation in Toronto. It was a shocker because of the magnitude of the problem, which we had perhaps not understood very well.
What was also, in a sense, surprising to a lot of Canadians, and certainly to some of us in Toronto, was it seemed to attract a lot of interest across the country. Indeed, last June when we met with the mayors of the big cities across the country, the municipal governments and your minister, Claudette Bradshaw, who's been to all of our communities to talk about these issues, we discovered it truly was a national issue.
There is one and a half times as much homelessness per capita in Victoria as there is in Toronto. There is one and a half times as much homelessness per capita in Quebec City as in Montreal. There are homeless shelters opening up in almost every major community now across the country, and we have a huge problem emerging.
The FGM has developed a housing strategy, in close consultation with your officials. It will require the federal government to make a new decision to move into the funding of the bricks and mortar required to house low-income Canadians—a change in direction to be sure.
We've consulted with all of the premiers directly. I personally have spoken with every single one of them, on behalf of our mayor, and every one of them said, “We will not be and are not an obstacle to federal re-engagement in the construction of affordable housing”.
Hopefully these are issues you will find useful and important. We've tried to provide constructive suggestions. We've tried to structure our program proposals, bearing in mind the things you have on your plate to think about, such as interprovincial relations and so, and not simply walk in with a plea for money.
We're offering a plea for partnership. The City of Toronto is doing its part. We're putting up all kinds of land and money to try to make things happen, and we'd love to work with you to achieve these goals.
The Chair: Thank you.
We'll now hear from Brad Duguid, who is also the chair of the community services committee.
Mr. Brad Duguid (Chair, Community Services Committee, City of Toronto): Thank you, Mr. Chairman.
Following Councillor Layton is kind of like trying to catch up with a speeding freight train. You just grab on and try to hold on tight and not fall off. So I won't be able to match Councillor Layton's rhetorical flourish or expertise on the issue of housing, but as chair of community services, it's an issue we've been working on very diligently over the last number of months and years.
I met a number of you in my days on Parliament Hill as an executive assistant, back in the early 1990s. It's no secret that Councillor Layton and I don't share the same political and philosophical partisan party backgrounds. But on this issue, as on a number of others we've worked on together, we stand united. The fact we are here working together on this issue is an indication that housing is not a partisan issue and is really a tragedy. Homelessness is a tragedy. We encourage you to work with us to try to address this very serious problem in Toronto and across Canada.
As a councillor with Liberal ties, I want to say clearly to the government members of the committee that the people of Toronto do expect a significant contribution from the federal government to assist, if not lead, the effort to address the housing crisis in Toronto and other cities across Canada.
That being said, we're very pleased to see the government signalling its intention in the throne speech to address the needs of families and children in the coming years, and I'd like to turn to that issue now if I may.
Our city council believes there is a need for a strong federal role in the area of children and family policy, including ensuring national standards and adequate funding for early childhood development programs. The recently released “Toronto Report Card on Children, 1999” confirms that the situation of many children in this city needs improving and provides further evidence of the need for all levels of government to work together to improve our children's well-being.
If we haven't sent a copy of that report to you, we'll make sure you do get it. I think it is well worth reading. It provides a real snapshot of where we are in Toronto and the conditions our children in the city of Toronto are living in right as we speak.
City council has identified some priorities for federal action. First, the federal government should commit itself to a five-year investment plan to address child poverty and promote the well-being of children, with clear federal objectives and targets.
As well, we would like to see social investment in children by the federal government grow by at least 1% of our national growth over five years. To reach that target, it's estimated we'd be looking at probably about $2 billion a year for that five-year period.
Moreover, children and families require a mix of income and service supports to address their needs and enhance their states of well-being. The key foundations of this should include the development of comprehensive child benefit systems for low-, modest- and middle-income families, the use of a national infrastructure fund to support provinces and municipalities in the development of public systems of learning and care, and in the construction of urgently required affordable housing options.
Lastly, we believe the federal government should make the healthy development of young children a first priority in that five-year plan by allocating that $2 billion in the 2000 budget to establish the national infrastructure fund for early learning and care.
I'd like to finish with the issue of municipal costs associated with immigrants and refugees. I think a number of you have probably seen that bandied about in the newspapers over the last little while.
The city of Toronto is the most popular destination for immigrants and refugees coming to Toronto. We receive 56% of newcomers to Ontario and 42.3% of all newcomers to Canada. The City of Toronto supports the principle that newcomers must have access to appropriate levels of support to settle, adopt and integrate into all aspects of community life.
As a key destination for newcomers to Canada, it's critical that supports and services to immigrants and refugees in Toronto continue to be provided. But the issue is not really whether these services should be provided; it's which level of government has access to adequate resources to fund these services appropriately to best meet newcomer needs. In any given month, approximately 8,000 social assistance cases are refugees. An additional 6,000 cases are immigrants receiving social assistance because of sponsorship breakdown. Based on average cost, the municipal funding share is estimated at $23.9 million annually.
As well, 450 refugee claimants are accommodated in the emergency shelter system on any given night. That costs the City of Toronto about $1.9 million. In addition, it's estimated that 90% of the 500 tuberculosis cases in Toronto occur in those who are foreign-born, and that 50% of active TB cases occur in the first five years after immigration. This costs the City of Toronto approximately $1.1 million to $1.9 million annually.
The City of Toronto seeks a commitment by the federal government to share Toronto's significant costs for providing emergency shelter and public health services for refugees, and social assistance for refugee claimants and in the case of sponsorship breakdown.
The City of Toronto urges the federal government to respond to the needs of immigrants and refugees who are homeless by providing orientation information to refugee claimants when they arrive in Canada, allowing refugee claimants to access basic settlement services such as language orientation and help in finding housing, and providing capital funding for another emergency shelter for refugees in Toronto.
The requests made today by Councillor Layton and I are really part of formal requests the City of Toronto has made by and large to the federal government over the last year or so. We trust that committee members recognize the importance of investing in urban infrastructure, housing and homelessness, children, and immigrant and refugee settlement needs.
We thank you for the opportunity to address you today, and we look forward to any questions you may have. Thank you.
The Chair: Thank you very much. I'm sure there will be questions later on.
Now we'll hear from the Canadian Urban Institute, John Farrow, president.
Mr. John E.L. Farrow (President, Canadian Urban Institute): Thank you, Mr. Chairman and ladies and gentlemen. It's a pleasure to be here.
Let me explain why I'm here. I'm here because we recently undertook a study called “What the Competition is Doing”, looking at the situation in American cities and comparing it with Canadian cities. In fact, in a post-free-trade environment, Canadian cities are competing head to head with American cities for investment, for brains, and the level of investment that's going on in American cities means they're becoming much more competitive. My proposition to you, stimulated by this study, is that we have to meet that competition.
We traditionally viewed ourselves as having a competitive advantage, the quality of life in our cities being better. In fact, when one looks at what is happening and will happen in the future as a result of the investment, the competitive advantage we had offered in terms of quality of life is being eroded.
So I would like to make three points. First of all, it is an investment, and it's an investment because most of our economic activity is located in our cities. Traditionally, manufacturing and other activities were located in cities, but in the knowledge economy, in the service economy, more and more of that activity is focused in the city.
Secondly, we are competing head to head, and when you look at what is happening in the American cities, you find that the traditional view of us having a strong advantage in terms of quality of life is not there any more. There has been a steep decline in U.S. crime rates. And we know, of course, unemployment rates are very low. There's a group, a cadre of powerful mayors, a powerful group of city managers who have strategies to reinvest and build their cities in a way that makes them very attractive places for knowledge workers and for people investing in knowledge industries to go.
I can give you various examples of how these sorts of investments are being made, but probably one of the most dramatic would be the elevated waterfront expressway in Boston being replaced by a tunnel in the downtown. The cost is $10 billion, and it's a 13-year project. It's an enormous investment, probably one of the largest ones in the U.S., but there are examples across a whole range of U.S. cities, driven by federal government programs.
There's the TEA21 program, which has a first-year budget of $217 billion, the community development block grant program, and the home investment programs. They're not the only ones. There's a series of these programs focused by the federal government on those cities.
Cities in Canada are the platform for Canada's future economic growth. In a sense, it's an irony that we have a federal government with departments focused on the agriculture, fishery, and natural resources sectors of the economy, but we don't have the same sort of department focused on cities, which are going to be the home for the next generation of economic growth.
My recommendation to you is that there's a need for Canadian cities to improve their competitive position relative to the United States. That requires an investment in infrastructure that is directly going to support business investment, which means hard infrastructure and telecommunications, but also softer infrastructure, the sort of investment that my friends from the city of Toronto are suggesting, which is going to address issues of quality of life.
At the end of the day, we in all the Canadian cities are competing for investment. We're competing for the best brains to build our businesses, and they're going to go into those cities. If they haven't the base to which to go, they will go to the U.S., and I think that's going to be our loss.
Thank you very much.
The Chair: Thank you very much, Mr. Farrow.
We'll now hear from Nature Conservancy Canada, with Mr. John Lounds and Ms. Thea Silver. Welcome.
Mr. John Lounds (Executive Director, Nature Conservancy of Canada): Thank you, Mr. Chairman, committee members, and fellow guests.
We'd like to talk today about something that's important to the very idea of Canada itself: the conservation of natural areas and habitat for species at risk.
We, as Canada, have committed to protecting species at risk and their critical habitats and to extending the national parks system. This commitment was reiterated in the October 12 Speech from the Throne.
With this in mind, I would like you to just consider the following facts. More than 50% of Canada's species at risk live in habitat found on the 10% of land that's privately owned in this country. Conserving habitat on private lands around national parks is essential for maintaining park integrity. Canada will need to conserve this critical habitat on private land if it's to meet its goals. Canada's goals for protecting species at risk will not be met without the support, enthusiasm, and action of Canada's citizens who are landowners.
To ensure the preservation of habitat critical to species at risk, Canada needs to encourage those who own ecologically significant land—not just any land, but land certified as ecologically sensitive by Environment Canada—either to donate their land for conservation purposes or to donate a conservation easement to protect that habitat in perpetuity. Both these donations are called ecological gifts.
The current provisions for donating ecological gifts do not encourage Canadians who own ecologically significant land to make such a donation. In fact, they work to discourage such behaviour. This is because, more often than not, there are capital gains considerations because the land has been stewarded over many years. I would like to give you an example, which is on page 4 of the material we've provided to you.
A conservation-minded landowner has ecologically significant land purchased at $50,000, which she has stewarded over many years. It's now valued at $100,000. She fits the profile of most people considering donating their land for conservation. She's a senior citizen with a modest income, and her land is one of her largest assets. She'd like to donate the property to the Government of Canada or the Nature Conservancy of Canada to conserve for all time. She has asked an accountant to advise her on how to proceed.
If she donates the property, she'll receive a donation receipt for the $100,000. The fair market value is determined by an accredited real estate appraiser. At a marginal tax rate of 50%, this receipt will result in an effective tax credit of $50,000. However, she'll have to reduce this credit by the deemed capital gains tax payable, $18,750, which is based on a 50% marginal rate applied to the 75% of the $50,000 capital gain.
This deemed tax is then applied against the tax credit, reducing the effective tax credit to $31,250 for a $100,000 gift. Her accountant advises her that, amazingly enough, she'll be financially better off selling her land and donating the proceeds of the sale. If she sells the land for $100,000, she'll incur the capital gains tax and her net proceeds will be $81,250. She can then donate the after-tax proceeds to the government or the Nature Conservancy of Canada. She'll get a receipt for $81,250, and at the marginal rate of 50%, the receipt will result in an effective tax credit of $40,625.
So by selling the land and donating the proceeds, our landowner receives a tax credit of $40,625, while the tax credit from a straight donation is $31,250—or $9,375 less for directly donating the land. The result described here—that selling and donating the proceeds yields a larger tax credit than a straight donation of land—occurs no matter what the marginal tax rate or the amount of the capital gain.
The message from the Government of Canada is simple: even if you're inclined to donate your ecologically significant land, you should sell it. Imagine our difficulty in explaining this situation to prospective donors of land.
Not only are Canadians discouraged from gifting Canada's ecological properties, this tax treatment for such gifts is worse than that for gifts of Canadian art, with no deemed capital gains, and gifts of Canadian securities, one half the rate of deemed capital gains tax.
If we are to encourage, not discourage, Canadian landowners from participating in the conservation of species at risk and in the extension of our national parks, as noted in the throne speech, we must reduce the capital gains tax provisions on donations of ecological gifts.
Therefore, we respectively request that the Standing Committee on Finance recommend to the government that certified ecological gifts, and certainly those harbouring endangered species, be exempted from deemed capital gains tax. At the very least, to ensure that the tax result for a donor of an ecological gift is the same when the donor sells the land and donates the proceeds, the deemed capital gains tax rate on an ecological gift should be reduced to one-half its current rate. This would provide the same treatment as is now provided by gifts of Canadian securities.
According to a report yesterday in the paper, government documents on endangered species protection stated that:
On private lands in particular, landowners should be
encouraged to protect species and their habitat and be
provided with the tools and incentives to foster such
Removing capital gains tax from ecological gifts provides a key tool and incentive for doing so. This reflects the direction given in the Speech from the Throne and we think it's now time to place this recommendation squarely in front of the Minister of Finance.
Thank you very much.
The Chair: Thank you very much.
We will now hear from the Ontario Non-Profit Housing Association, with Ms. Robin Campbell. Welcome.
Ms. Robin Campbell (Executive Director, Ontario Non-Profit Housing Association): Thank you for the opportunity to address the committee today.
Just a word about our association: We're a membership-based organization of about 700 non-profit housing corporations throughout the province. We're what we'd say is a virtual United Way of housing, with community-based groups from church groups to service clubs. Every kind of volunteer-based organization participates in non-profit housing. We house, as I mentioned, about a quarter of a million tenants, mostly low-income families, singles, and the hardest to house, the chronically homeless.
Today's concerns about homelessness must be seen within the broader context of the affordable housing crisis. As Anne Golden, who coordinated the Toronto mayor's task force on homelessness, said, homelessness is what happens at the edges. The heart of the matter is the lack of affordable housing. Canada's social infrastructure needs to take this into account in the next federal budget, and affordable housing should be at the heart of any social investment program.
Just a little historical backdrop: From 1973 until the federal government withdrew from a national housing program in 1993, community-sponsored non-profit and cooperative housing had been the preferred choice of both federal and provincial governments for delivering subsidized housing. Prior to 1973, government-owned public housing was the vehicle. Since the Second World War, we've consistently had national housing programs which directly funded assisted housing and which complemented the mortgage, insurance, and lending practices of the Canada Mortgage and Housing Corporation.
There were many innovative and internationally lauded features of our programs and, indeed, Canada was not alone in the western industrialized world with non-profit national housing initiatives.
I, too, would like to draw some parallels to our American counterparts to the south. What we see today is that even the United States continues to put a strong emphasis on and funding into affordable rental housing as an essential element of social infrastructure. The U.S. has various tax credits and low-interest mortgage vehicles as well as direct grant programs for affordable rental housing.
In order to ensure that the lowest-income households are included, for many decades the U.S. government has also provided low-income subsidies linked to these initiatives through HUD, its housing and urban development department. Much of the housing is delivered through the non-profit housing vehicle.
However, if we look again to the south, between 1995 and 1998, Congress cancelled new funding, just for the annual housing subsidies. However, after HUD released a report in 1998 showing that the number of tenant households unable to afford their rents or find suitable housing had jumped, Congress restored funding for 1999, to allow new low-income subsidies for 50,000 tenant households, and the federal budgets for the next two years call for increasing that to 100,000 new household subsidies each year.
The parallels to our own situation are striking. Following the cancellation of federal funding for new non-profit housing in 1993 and the cancellation of provincial programs in 1995, daily we hear increased calls for the federal government to include funding for affordable housing in the next budget.
Just this September HUD called for an increased level of U.S. government appropriation for housing, and the U.S. report echoes very similar findings in a housing study that was released in Ontario last week. The HUD report found that rents had been rising at twice the rate of inflation and that tenant incomes have not kept pace with the supply of available housing. HUD declared today that one in four households in the U.S. is defined as struggling, with greater numbers than before falling below the low-income threshold. It's interesting to note that the U.S. government's own housing department lays the responsibility for the worsening situation for low-income tenants directly at the door of the U.S. Congress and their cancellation of new rental subsidy programs for the four-year period between 1995 and 1998.
As I said, the parallels to our situation are striking. Last week a report was released entitled Where's Home? Part 2, by a coalition called Housing Again, which is a partnership of organizations concerned about affordable housing, of which ONPHA is one.
Following the original Where's Home? report, which was released in May of last year, we released data on 13 municipalities in Ontario, bringing to 21 the cities and regions that have been studied. It has become more than clear that the problems of housing and homelessness are not a Toronto-based problem. Over the last 10 years right across the province rents have risen faster than inflation in 19 of the 21 municipalities, while tenant income has declined. There's a serious shortage of rental housing in many parts of Ontario, and there has been a sharp increase in the number of tenants with affordability problems. Today almost half of tenant households in Ontario pay more than 30% of their income in rent. That's gross income. That's more than they can afford. Almost one in four tenants is at potential risk of homelessness. They're paying more than one-half of their gross income in rent.
Just like the HUD report, the original Where's Home? and Where's Home? Part 2 show that the cancellation of federal and provincial housing programs made a bad situation much worse. Like the HUD report, Where's Home? calls for significant new funding from the federal government. It also asks for new provincial funding for affordable housing.
The lesson to be learned here is that a national government policy to walk away from funding new affordable housing hurts the most vulnerable citizens and is not sustainable. We're not aware of any other industrialized western nation that does not have senior governments involved in an affordable housing program.
The scale of the problem demands a greater response than tinkering with the property taxes and development fees that affect all rental housing, although these initiatives are welcomed. As my municipal counterparts have said, while municipal governments must be responsible for affordable housing within the limits of their jurisdiction and resources, no person can truly expect the property tax base to support the depth of subsidy required. Both senior levels of government must commit to accepting that social infrastructure is as critical as hard infrastructure, such as roads, transport, and communications.
We support the proposal made by others, including the Federation of Canadian Municipalities, that calls for a federal-provincial infrastructure program with a significant housing component. They've established reasonable annual targets over the next 10 years for the production of 20,000 new rental housing units per year, the rehabilitation of 10,000 existing rental units, and the provision of 40,000 low-income housing subsidies. Anything else is just tinkering.
I've brought copies of the executive summary of our Where's Home? and Where's Home? Part 2 reports to leave with the committee. I think you will find its findings surprising.
Let me say in closing that our members have been providing community-based solutions to affordable housing within a non-profit and volunteer structure for 25 years. This form of housing is locally sensitive. It harnesses volunteer efforts in a way that avoids the top-down, government-led public housing approaches of the past. We have a growing homelessness and broader affordable housing needs, and I know that the non-profit sector is ready to help. We look to the federal budget for the means and the funding to do so. Thank you.
The Chair: Thank you very much, Ms. Campbell.
We will now hear from Blaine and Jeanie Scott. Welcome.
Ms. Jeanie Scott (Individual Presentation): Thank you. I'd like to thank you, first of all, for providing us with the opportunity to have our views heard today.
My name is Jeanie, and my husband's name is Blaine. I'm 38 years old and have been married to Blaine for 16 years. He is an elementary school teacher. We have four children ages five to fifteen. We have struggled to provide for our family's needs on one income for most of our married lives.
The main concern we would like to express to you today pertains to the inequitable taxation of one-income families under our present taxation legislation. As a single-income family, we are being discriminated against by our government's biased tax laws. As individual citizens, we have the right to raise our children and distribute labour within our family unit as we see fit without fear of monetary penalty by Revenue Canada. Although in reality single-income families divide their income, the Government of Canada fails to recognize this fact in its taxation of the family.
Mr. Blaine Scott (Individual Presentation): Most Canadian families are no longer able to claim dependent children on the tax form. There's a general frustration with the child tax credit system, which claims to offer itself as a trade-off for the removal of children as tax deductions in the last few years. Eligibility for the child tax credit has become more restrictive, and each year the age criterion is lowered. The expense of children, however, increases with the age of the child. It does not decrease.
The child tax credit system should not be made part of the process of personal income tax, because it can delay benefits being received by a family for almost two years after the birth of a child. The child care allowance should be administered in an efficient and timely manner to provide for the immediate needs of all children.
Ms. Jeanie Scott: For the past 16 years I've laboured in the home, and since 1998 I have also home-schooled our three youngest children. Under the present tax system my unpaid labour goes unrecognized by this government. Dual-income families can claim child care expenses to reduce their taxable earnings. There is no comparable deduction for our household. The spousal deduction does not directly reduce our net income and therefore cannot be equated with the child care expense deduction. That two-income families can use day care expenses while the primary caregiver in the home cannot is a double standard.
Why do these inequities exist? Both dual-income and single-income families, perhaps with children or other dependants, are all working, contributing members of this society. Both represent the most fundamentally important unit across our society, that of the family, and so should be taxed in a fair and non-judgmental manner.
Mr. Blaine Scott: We're proposing the re-evaluation of taxation based on income-sharing for both single-income and dual-income households. Regardless of individual earnings, taxes should be based on a family's collective income.
Our standard of living has suffered greatly through the last 16 years of ever increasing taxation. We have been without a vehicle, we have received constant financial support from our parents, and we have never taken a vacation. We use clothing exchanges and frequently barter and trade our skills for products and services we cannot otherwise afford, while having to pay well over half our income to the government when all taxes are taken into account.
Ms. Jeanie Scott: A family's expenditures are a constant. We must feed, clothe, and educate our children to the best of our abilities as their parents. We have become very creative and imaginative with little disposable income, but the increasing expense of raising a family now and into the future is frightening.
The only variable we see here is taxation, and as a Canadian family, we are being taxed to death. Federal, provincial, and municipal taxes and the GST are destroying this family's opportunity to save for the future. How can we hope to survive financially when taxes constantly increase along with government spending? We ask ourselves this question repeatedly with the knowledge that members of our own family have left this country as a direct result of Canadian tax laws. Many of our friends and family presently live in the U.S. on higher disposable incomes with more equitable deductions.
This government's response to our lifestyle of sacrifice is to pressure me as the non-income earning person to join the workforce full time and to earn a wage on a par with my husband. Present tax laws penalize one-income households and favour dual-income earning families. This pattern of taxation is social engineering.
Mr. Blaine Scott: We find it incredulous that the government has judicial, regulatory, and dispensary roles relating to taxation, yet they continue to make inequitable tax laws that have been designed to gain the greatest amount of revenue from Canadian families. Despite implementing legislation in favour of freedom of choice on numerous other issues, the government, in our view, has blatantly ignored its duty to protect this freedom among working Canadian families. All Canadians are entitled to live and raise their children as they see fit under the law without fear of discrimination by any level of government.
Ms. Jeanie Scott: Income-sharing will bring equality to all taxpayers. We realize that this will reduce federal tax revenues. As a single-income family of six, we have learned to live on less. We expect our government to do the same.
As Mr. Martin determines how the budget surplus is to be spent, our hope is that he will look at reforming our system of taxation by legislating income-sharing for all Canadians, altering the child tax credit system to make it more responsible to the needs of all Canadian children and their parents, and providing tax credits for home-schooling parents.
Taxes are inevitable and necessary. We know this. They must also be fair and equitable across the demographics of all Canadian society.
Thank you very much.
Mr. Blaine Scott: Thank you.
The Chair: Thank you.
We will get to the question and answer session and begin with Mr. Solberg. It's going to be a ten-minute round.
Mr. Monte Solberg: Thank you very much, Mr. Chairman, and thank you to all the presenters. There are a lot of different questions I would like to ask, but I'm going to start with the Scotts.
I really do appreciate what you had to say, and I could tell you that I'm certainly sympathetic to what you're saying. I believe very strongly that we have to find a way to honour single-income families in the tax code for what they do, for the labour they undertake in raising a family. And it's about time we did that. So I want to start by letting you know that I'm certainly supportive of this, and I know some of my colleagues are as well.
I want to ask you a question about the tax credit situation. You mentioned income-splitting and you mentioned that using the tax credit system can delay the impact it has on your family. I'm wondering if you've given thought to the idea of going back to the deduction model. Because of course what happens when you have a deduction for each child is then if you're employed by someone else your employer takes that into account and right away your take-home pay goes up immediately upon having that child. Would that benefit you quite a bit? Is that what you're thinking of?
Mr. Blaine Scott: I see what you're saying, and I would agree with you. I don't necessarily see the previous system of being deducted at the time, which you're describing, as being an answer either.
I would see it more as a situation of can the government not be more responsive to the birth of a child, and when the birth of a child comes... Right now they tie it into the tax form. We have friends expecting their child in February. We talked to them and said we're appearing before this committee, so what feedback can you give us? And that's partly what's behind this comment. They won't receive any reflection in their child tax allowance until after the following year, when they claim they've had a child. So it's almost going to be a year and a half before they see any funds. I'm not sure if it's retroactive or whether they go back and say you've had the child for a year, here's some money. But when you have children... This will be their fifth child, and they need that money now.
If the government has seen fit to give this money at the time, and we certainly appreciate it as families, I would like to see the government be more responsive. As we said, we want to see it in a more timely manner. If they could take it outside of the structure of the tax system... I don't know how they'd do that; we'd have to sit down and think about it. But there certainly have to be ways whereby they could be more responsive. Maybe it could be being able to claim a child just with a form instead of waiting to file that the following year. And in terms of what is the government to base your claim on, they could look at the previous year's taxation.
Mr. Monte Solberg: Thank you.
I have so many questions I'd like to ask you, but I have other questions to ask as well, so I'll move to some of the other witnesses.
I'll start with the Nature Conservancy with a point, and then you can respond later if you wish. First of all, I congratulate you on the work you do. I appreciate the cooperative approach you're taking with landowners. I think it's wonderful. In fact I would argue the minister could learn from your approach, whereby you acknowledge that so many people do want to be good stewards of the land and want to find ways to leave land in the hands of the conservancy and protect endangered species and that sort of thing.
Earlier witnesses have argued the same sort of thing you've argued, which is that we have to allow the charitable sector to grow and pick up some of the slack from the government side by treating capital gains differently from how we've treated them in the past. I'll just leave that as a comment for now, and when I wrap up you're welcome to comment on it.
I want to switch over to Bill Robson for a moment. As always, your presentation was very good. I'm interested in one thing you say in here in particular. There are lots of things we can talk about, but one thing is the $124 billion a year on programs that the government spends. You make the point in a footnote that the government is being a little deceptive about what constitutes spending by really taking what used to be the family allowance and converting it into a benefit that they had on the tax side now through the—
Mr. Paul Szabo: It wasn't on the tax side. You're talking about the child tax benefit?
Mr. Monte Solberg: No. The GST credit and child benefit are on the tax side now and delivered through the tax system. The point is that it's $124 billion when you add it all up. My understanding is that would put us pretty near the peak of real per capita spending that we've ever had in this country. I conclude, given we're near this peak, that if we had spending growing just with an increase in population and inflation, we would still have extraordinarily high levels of spending but we would have the rest of that surplus to devote to a couple of pretty pressing areas: one is debt reduction and the other is tax relief. Is my analysis correct with respect to real per capita spending, in your opinion?
Mr. William Robson: I think if we were to look at spending and adjust it for inflation and population growth it wouldn't take away the achievement entirely of the last few years of having got federal spending down as part of this process of getting the books in order and getting us into a sustainable situation.
That having been said, it is a problem that the use of the tax system to administer this program appears to justify subtracting it from tax revenue. There are a number of things that go wrong as a result of this statement. The obvious one, which you mentioned, is that it makes the government look smaller than it is. It also gives us a very peculiar view of what we might do if we decided to increase that spending program in order to cut taxes. For one thing, we would accomplish a rather remarkable feat: we would have a tax cut that actually increased the marginal tax rates that many Canadians face. That's a rather odd thing to be able to do, and most tax cuts don't do that. But when you actually have a transfer program that you call a tax cut, there is a problem there.
I think the other important point to make about that—we can go on about the importance of accounting and various things for a while—is looking forward, it's not appropriate to treat increases in the child tax benefit as though they are tax cuts when we're steering by this 50% of whatever surplus needs to be spent and then the rest goes to debt reduction and tax cuts.
It is a spending program. It takes money from one group of people and gives money to another group of people. Tax cuts are different. Tax cuts leave the money in the hands of the people who earned it in the first place. Those things have very different effects. They're not the same economically and they're not the same politically.
Looking forward, I know the government is committed to increasing this transfer by additional amounts, and that's fine, because it addresses a key need. But as I indicated earlier, it's important to make the design right and it's important also to be up front about what it is. It's a new transfer. It's a big spending program. It's getting increasingly large. It's beginning to loom as large as many of the others that we talk about all the time, unemployment insurance and so on, and it's important that the government recognize it for what it is. It's a transfer program: it takes from one group of people and gives to another. And it's not appropriate to deduct it from taxes and therefore forget that it exists in the overall budget.
Mr. Monte Solberg: I have one more question, if I could, to Councillors Layton and Duguid and really to Robin Campbell as well. Earlier today we heard what I thought was a pretty good analysis of one of the things that has got us into this problem of not having adequate housing for people, which is simply that one of the great incentives we had in the past for building housing was that people expected a profit on it. Now, with the capital gains tax in place since 1971, we've hardly seen the rental stock improve at all because that great incentive has been taken away. I'm wondering why you haven't addressed that. Do you believe it's a problem, and shouldn't we be addressing it? Should we cut capital gains taxes to give that incentive back to people who used to build lots of apartments, lots of rental housing?
Mr. Brad Duguid: Your question actually is very timely. Just last week our community services committee looked at the prospect of incentives to encourage developers and builders to build affordable housing.
We're looking at it from our perspective, as well as that of others. We're looking at the property tax and other things the city may be able to do, other incentives the city may be able to provide. But we're also going to be looking to other levels of government to try to do what they can to provide incentives as well, whether it's waiving the GST on building materials or waiving the provincial sales tax on building materials, or whether it's looking at the income tax provisions.
At one time, building affordable housing was a good thing to do, I suppose, to shelter other income. Not that we're wanting to create loopholes, but, at the same time, if it leads to a positive social gain, we might want to take another look at it. I think we're certainly open to looking at any creative ways in which the federal government can adjust the tax system to provide an incentive for affordable housing.
Mr. Jack Layton: Just to add very briefly to that, it's a good question. We have been meeting with the development industry to try to ascertain what some of the blockages are for their construction of affordable housing. They haven't emphasized that one. Some groups within the development industry have. Because there wasn't a fully developed consensus on a proposal, on just exactly how it would work, I think that's why you don't see it here, but we're continuing to do that kind of work.
We also have to note, though, that even with those kinds of incentives for the construction of rental housing, what all of our studies have indicated is that even if rental housing could be built and rented at “market rent”, there would still be a very large number of people who simply couldn't afford those rents. That's what the developers have come to us and said. The tenants we're trying to house can't pay the rents to cover the costs that the developers face. They can try to shave those things and should shave those things down, but they're still going to need something over and above that. This is of course the same conclusion the Americans have reached.
Mr. Monte Solberg: But I don't think we would expect homeless people to move into new housing. I think we'd see a shift of people who are in housing that maybe is a little older now moving into some of the newer places. It would kind of work its way along, if you get my point.
Mr. Jack Layton: That's the trickle-up analysis, and the evidence doesn't support it. We have a large amount of housing under construction in Toronto now, including small, condo-type units, but the trickle-up is not happening. What's happening is that people are moving out of apartments and the low-income, affordable apartments are so scare that the population of homeless people still rises. Indeed, you can find vacant condos at the high end.
The flow would only work if people had the kinds of flexibilities with their incomes to cover off the rents for which the available units are renting, and that's where the gap is. The bottom 20% of the population just isn't there. They just can't play in that market. Right now, they basically have to stay where they are. If they move out, they're in trouble.
The Chair: Thank you, Mr. Solberg.
Mr. Roy Cullen: Thank you, Mr. Chairman, and thank you for your presentation, panellists.
I'm glad to hear that a capital gains tax reduction is not the only solution to the issue of affordable housing in Ontario, in Toronto. I'm still looking for what the solutions might be. All of us are. It's a difficult problem, a difficult question to try to solve through tax policy, so I think any ideas that you have for our government would be useful in that regard.
I would like to come to Mr. Robson of the C.D. Howe Institute. In your presentation, Mr. Robson, you talk about prudent budgeting. In the economic and fiscal update that the Minister of Finance presented a week or two ago, the expenditure line is based on the increase in demographics and inflation, and it assumes current policy decisions.
The government has talked about tax reductions based on the capacity of the economy to deliver tax reductions. Some have suggested this creates a bit of nervousness, if you like, in terms of making sure the expenditure line has some restraint on it. There have been some suggestions that the government should commit to some expenditure restraint line, if you like. The “how” or the “if” is the question, I guess.
I'm wondering if you think it would be a good idea for the government to commit to a certain expenditure trend line. You could do that in different ways. You could just commit to it politically or you could legislate it and regulate it. There are a number of different options. Do you think that would be a good idea. How would you do it if it is a good idea? Do you have any thoughts on that?
Mr. William Robson: The short answer is that I do think it's a good idea. It's not realistic to expect too much from that kind of a process. We all know five-year plans have a way of going askew, and that's going to be as true in the future as it has been in the past. But I think it is very definitely a good idea, and it's one of the reasons I think this five-year planning horizon is a good one. We've gotten out of the crisis atmosphere, and we've gotten away from the really urgently driven need to reduce borrowing.
That was very effective as a restraint on spending. Looking forward, however, it's pretty clear that we do need some longer-term framework. I won't even mention the federal situation. There's been talk of adding up the wish lists and seeing how massive the total gets, but I'll cite the examples of Ontario and Alberta, which have been two of the more fiscally aggressive provinces over the last few years. They now have spending demands that are out all over the place. They're way over what their original spending targets were, and they're clearly going to do that again. Without even poking any fingers in any federal eyes, I'd say that's just a reality of governing.
If it were up to me, I'd say spending that grows in line with inflation and population growth is the right way to do it. The reason for that is that when I look ten, fifteen, or even twenty years down the road, I see enormous pressure for new spending. I'm going to be in line for some medical care expenses myself, I'm sure, and some of the people who proceeded me in the baby boom are going to be dipping into that pot in a big way. It pays to look further ahead and to see those things.
Realistically, we're going to spend a bit more. There are some big gaps to fill federally—I'm aware of that—even when it comes down to civil service remuneration, so I don't think I'm going to quite get my wish there. But I would support that longer-term trajectory and the basic constraint that it puts on people in saying everything they want can't be an incremental new program. Fight with your colleagues, debate it, saw if off, and figure out how to do it within that overall envelope.
Mr. Roy Cullen: Okay, thank you.
Mr. Farrow, I'm going to read you're report with interest. As I was listening to you here, though, my mind was running back to that KPMG study last year that was co-sponsored by Canada, the United States, and I think some European countries. It basically showed that Canadian cities are quite competitive with other cities internationally. I know there was some debate at that time, and that it had to do with the Canada-U.S. dollar, but I think there was some consensus that while the dollar played a big part, it wasn't the only factor. How does that stack up against what you're finding here?
Mr. John Farrow: The KPMG study looked at the issue through the eyes of corporations currently, and the decisions they were making at the time. What we've tried to do here is look ahead, because the competitive position of our cities is really set well ahead by the investments we make today. You know how hard it is to change investment priorities. We're suggesting to you that the U.S., though it came from a long way back in many cities, has woken up to the need to invest heavily in its cities and is upgrading significantly.
Interestingly enough, the reason why we do this stuff here out of Toronto is that they're upgrading significantly, drawing on Canadian expertise. They're drawing consultants, architects, planners and economists from across Canada, and they're upgrading their cities significantly. It was the fact that all these experts from across Canada are flying south every week to work on U.S. projects that really alerted us to the fact that there's something going on here. And it's not just in one city, it's in many cities, and it's supported by federal programs.
Mr. Roy Cullen: Mr. Chairman, that leads well into my next and last question, which is to Councillors Layton and Duguid and to Robin Campbell, on the question on infrastructure and whether our federal government should go into another infrastructure program. There's been more and more discussion, including by the Federation of Canadian Municipalities, which actually appeared in front of our Toronto caucus not too long ago. I was amazed at the emphasis they put on social infrastructure.
If you look at affordable housing, it would seem to me that dealing with the homeless would be an element of social infrastructure. If municipalities and other stakeholder groups were asked by the Ontario government what the priority is, how do you think social infrastructure would stack up against physical infrastructure renewal, not only in the context of what Mr. Farrow had said, but in the context of the obvious need there?
Mr. Jack Layton: I think there'd be a balanced response, a balanced comeback from our municipalities. That's reflected both in the Association of Municipalities of Ontario, AMO—which has endorsed this federal document and has been very active in its creation—and certainly in the FCM.
It's important to remember that FCM is a very interesting organization. We have mayors and councillors from every political party, from small communities right up to the largest cities, and we have a huge consensus on this. It is not a compromise kind of document. It wasn't done with trade-offs. It was done with a real sense of trying to understand the different issues in order to bring them forward as a package. We hooked onto this “quality of life” phrase because, really, that's what we're all working on. That's certainly the case at the city level, and I think all of us in government are trying to work on it. I have to tell you that we were thrilled to hear the word seventeen times in the first four sentences of the throne speech, because it was great to see we were thinking along the same lines. It's vitally important to match and balance investment in social infrastructure at the same time as in more hard infrastructure, if you will.
We have suggested a kind of potential breakdown between the levels of government here, recognizing the social union discussions and so on. It's important to note that the premiers have convened a forum on housing, with a specific mandate to find out ways of working with the federal government to address this issue. That was new at the premiers conference, and it's a very exciting initiative. It's as though people are beginning to move back into that area, and we think that's great.
We thought the bricks and mortar piece, the capital side of the housing funding, was most appropriately a situation at the federal level in a sense. Some of the income transfer portions of the program—rent supplementation and that type of thing—because they have to do with income transfers given the social union discussions, might then fit more appropriately at that level.
So while we haven't tried to nail down the divisions between the federal and provincial governments—and we wouldn't presume to do so in cities and towns—we've tried to recognize those discussions and structure our proposals accordingly. That's why we think it is a balanced and comprehensive kind of approach, and that's what our members demanded of us. I think there's a lot of support for it.
Mr. Brad Duguid: Just to add briefly to that, I agree with what Councillor Layton said. I don't think it's a housing versus transportation issue at all, or a quality of life versus economic prosperity issue. I don't think you can have one without the other. If you don't have a good quality of life in the city, you're not going to have the business investment that you want in the city. If you don't have good transportation infrastructure and other infrastructure, businesses are going to leave and your assessment base is going to be reduced. How are you then going to pay for the social services you require in order to run a good, efficient, and effective city with a good quality of life?
Mr. Roy Cullen: Ms. Campbell, do you have any comments?
Ms. Robin Campbell: I concur with my two colleagues, but I just want to emphasize that this problem cannot be solved without some significant resource from senior levels of government. We can deal with eliminating some of the costs of developing rental housing, such as removing the GST and PST or giving some incentives through the tax system. But at the end of the day there will be—and will continue to be—a gap between the economics of getting a unit of rental housing and what people can afford. That must be addressed by bringing the capital costs through some direct subsidy. There are a variety of ways of making that direct subsidy, but it does need a direct cash investment plus rent subsidies or housing subsidies for low-income people.
Mr. Roy Cullen: Mr. Chair, there was an article in the Star a couple of weeks ago... I don't believe everything I read in the Star or the Post or whatever, but it was an interesting article about this architect who has really focused on low-cost affordable housing, no frills, and the contention was he's brought housing costs within a realistic range of what is possible.
I was thinking if there were some tax policies that would facilitate that and make it even more interesting... Are we getting close when we look at concepts like that, or is there still this huge gap that is insurmountable?
Ms. Robin Campbell: I think we'll get closer. I think there are changes to the building code, for example, that will bring the capital cost of housing down. But no studies, including studies produced by the current Conservative government in Ontario, have shown that you can make affordable housing available without direct government input. The best you can do is get a unit at a more affordable market rent.
The targets we've tried to achieve are something between $800 and $900 per month, which is affordable in the city of Toronto. That's not affordable for the one in every four tenants in Ontario who pay more than 50% of their gross income in rent. We're talking about bringing that down to about $500 a month, and that must be done through a rent subsidy program.
Mr. Roy Cullen: Thank you.
The Chair: Mr. Szabo.
Mr. Paul Szabo: Thank you, Mr. Chair.
I want to thank the Scotts for their passion about taxation of the family. I've introduced that bill myself on income-splitting, but it's more for discussion purposes. Its flaws are that it does nothing for lone-parent families, which represent about 14% of all families, and it also does not help any family where the lone income-earner makes less than $30,000 a year, because they're already at the lowest possible rate, so there's no benefit. But you're absolutely right, we have to do something for the family, and we will.
We'll ask Mr. Robson if he's going to help us here. Earlier this year the C.D. Howe Institute released a report on the taxation of two-income versus one-income couples. It was basically a $60,000 scenario versus two $30,000 scenarios. The onclusion was that in fact the $60,000 one-income-earner family paid more tax. Can you just confirm to the committee that has nothing to do with whether you have children or not? Childless couples have exactly the same situation.
Mr. William Robson: The problem of a two-income family paying less tax than a one-income family with the same income has everything to do with an individually based tax system and a graduated rate structure.
Mr. Paul Szabo: Sure.
Mr. William Robson: Do you want me to go on?
Mr. Paul Szabo: No, that's fine. We have more. As a result of that, things moved on and we had a subcommittee of the finance committee to address the issue that ignited, and a report was issued. I'm not sure if you've seen the report. Have you? Are you aware of the report?
Mr. William Robson: It's not ringing a bell right now, but that could be me.
Mr. Paul Szabo: Okay. The committee found that the proper analysis was not to compare one family to another family but rather to address a family itself and its choices depending on the circumstances. So if the starting point is that both persons are in the labour force and then they have a child, they have a choice: they can hire someone and get the child care expense deduction or they can have one of them withdraw from the labour force temporarily and lose the net income of the job.
The conclusion we came to was that by far the greatest differential between one-income and two-income families was the loss of the net paycheque, where you withdrew from the workforce.
We also found that with the child care expense deduction—and the recent figures have come out for 1997—despite the fact that you can claim $5,000 for each preschool child and $3,000 for each school-age child, in 1997 only about 25% of all couples who were two-income-earner families with children even claimed any child care expense deduction, and the average amount claimed by people who did claim it was only $2,550.
It is absolutely astounding that everybody thinks the differential in the problem is the child care expense deduction. In fact, it meant on average about $600 in the pocket of a second-earning spouse earning say $30,000.
Our conclusions were to re-examine the child care expense deduction; secondly, to extend parental leave up to a full year; thirdly, to extend a caregiver benefit to families who provide direct parental care and deliver it through the Canada child tax benefit system; fourth, to examine the possibilities of attachment to the Canada Pension Plan system for those who had withdrawn, so that instead of just having a child-rearing drop-out provision where you don't get penalized, in fact there would be some continuity in the accrual of CPP benefits, which would recognize the true value of raising children in the home.
Mr. William Robson: I have some reservations on the sorts of recommendations you are making. Let me go to the very straightforward situation that says you ought to try to tax people equally who have equal disposable income, equal consuming power. Suppose you have a family on the one hand that has no children and has a disposable income of $50,000, and on the other hand you have a family with a higher disposable income but children they have to provide for, and at the end of providing for the children they still have $50,000. That's a rather high number, but let's just go with it, because it's nice and round.
If you provide a deduction in respect of the cost of raising those kids to the family that has the kids, you're going to treat them equally, because they are each going to get taxed on that $50,000. If you provide something else, like a credit, you're not going to end up relieving the family with kids of the same amount of tax as you would have with a deduction. You're going to treat them unequally.
Mr. Paul Szabo: We're not proposing a credit. Through the Canada child tax benefit system it's not taxable.
Mr. William Robson: But it amounts to the same thing: you're not relieving people of the cost of raising the children.
Mr. Paul Szabo: No, it's a level benefit for all.
Mr. William Robson: The family with kids is going to end up paying more tax. As I see it, the difficulty right now isn't with the child care expense deduction. It's funny that's the only deduction related to earning income we still have. We used to have others, and that made some sense.
Mr. Paul Szabo: We have RRSPs.
Mr. William Robson: That's not a deduction in respect to the expense of earning income.
Mr. Paul Szabo: It's related to earning income.
Mr. William Robson: That's a different story. But I don't have a problem with that. What I do have a problem with is that it makes certain types of deductions that relate to the cost of raising children available only to people who aren't looking after their children full-time themselves. That does strike me as unfair. And I will confess I have three children who are being looked after by a stay-at-home spouse right now. I'm quite conscious of the problems that are being mentioned over here, and I do have some direct stake in that situation, so you can discount my observations to some extent.
I don't think it's a problem with the existence of the child care expense deduction. It seems to me you could iron out a lot of the inequities in this system if you simply made a deduction available in respect of children. Not to go on at too great a length here, family income taxation would make a lot of sense, but we're not going to get there, so I'm not even considering that right now. In Canada we seem to have decided that's politically unacceptable and we're not going to get over that hump in the short term.
I wouldn't mess with the Canada Pension Plan. The Canada Pension Plan is rickety enough already in terms of the redistribution we do through it. It is not a good step, I think, to look at the Canada Pension Plan and try to figure out ways of making it more redistributive, because the predominant redistributive feature in the Canada Pension Plan is from younger people to older people, and every time we make it more redistributive that tilt increases. In the long run, I think that's not a healthy situation for our country.
The Chair: Okay.
Mr. Paul Szabo: Mr. Chairman, I just want to get a quick answer from Mr. Layton about whether he's got any thoughts on how Toronto deals with the 42% of Toronto's homeless that don't come from Toronto.
Mr. Jack Layton: Well, naturally, we'd be thrilled if others would help us out. On the other hand, we don't take too rigid a view on this. We don't like to say we are not going to take care of them. At different times in our history, people have flowed in and out of this country and in and out of different cities. So we don't want to be too rigid.
On the other hand, we have tried to break that number down a little bit to analyse what's going on. We have concluded that, first of all, the fact that some come from all across the country suggests a federal role might be appropriate in responding to the homelessness situation. In other words, not just the City of Toronto property tax dollar ought to be carrying it.
I mean, if it were just a small amount, probably we wouldn't...and we haven't, over the years, paid a whole lot of attention. Seaton House was there for everybody. We paid it and that was it. But now we're opening a hostel a month and still not staying ahead of the problem. There will be at least a thousand people sleeping on the streets of Toronto tonight. Those are huge numbers. We can't keep up with them. So that's number one.
Brad Duguid mentioned immigrants. I won't repeat what he said, but certainly in terms of immigrants and refugees coming in, especially refugee funding and so on, and the aboriginal community, for which there is a clear federal constitutional responsibility, we're picking that up right now. We're happy to help out, but it gets to be a strain after a while.
Ultimately, none of us wants to see what we're seeing in the streets of our city today, that's for sure.
Mr. Brad Duguid: Perhaps I could add to that a little bit.
We will have created, by mid-December, 675 new shelter spaces this year alone. That should meet our anticipated need. If it does not, then I can't help but think it may be a self-fulfilling prophesy that the more spaces we create, the more people come, and the more people need to use it.
The concern I have about this is that we've gone from spending $60 million a year on shelters to what will probably next year be $90 million. That's money that could be spent creating affordable housing. Rather than putting money into dealing with the symptom, we'd much rather be putting dollars into dealing with the problem of creating affordable housing.
Mr. Paul Szabo: Mr. Robson, does the C.D. Howe Institute have a thought on how to address homelessness—whose responsibility it is and how to address it?
Mr. William Robson: It's not an area in which we've done a lot of work. I guess I do have a question as to why it's a federal responsibility rather than a provincial responsibility. At the moment, clearly, that's because the federal government's the one who has the money, but in principle I would have thought of it as being the type of problem that is uniquely local in important respects when it comes to a number of questions about how you deliver this service.
The federal government has been involved with it in the past. I don't know if that was a tremendously happy experience, but I guess that would be one of the major questions I would ask.
Given the character of the homeless population—and I don't know if my fellow witnesses would like to say anything about this—it's clear that a very large proportion of the people who are sleeping in the streets are not there strictly speaking because they couldn't afford rent. There are other problems as well.
Again, it may be partly for that reason a local issue. You're dealing with quite a diverse population when you're talking about the homeless, and the federal government may be a rather blunt tool to use in trying to address that type of problem.
So I guess what I'd do is try to raise the threshold a little bit, not saying it's out of the question but just raising some questions in connection with how you address that at the federal level.
The Chair: Thank you, Mr. Szabo.
Mr. Brison, you're the final questioner.
Mr. Scott Brison: Thank you, Mr. Chairman.
Mr. Robson, the Mintz report, which was tabled to a finance committee a year and a half ago, had some very good recommendations relative to addressing the distortionary nature of our corporate tax code. The issue of capital taxes, or profit-insensitive taxes, was addressed. If implemented, the recommendations in the report would be revenue-neutral, but those tax reforms, if combined with tax reduction, could actually eliminate any losers at all on that.
In your opinion, why hasn't there been action on something like that, on something as instrumental to productivity and competitiveness from a global perspective? Why would that not be acted on? What are the political reasons that would not be actively pursued?
Mr. William Robson: You hinted at them in your preamble. Revenue-neutral tax changes are politically deadly, because for every winner there's a loser.
At the time those recommendations were out there, clearly there didn't appear to be much fiscal room to move. We weren't looking far enough ahead to see it and we didn't want to start spending money before we knew it was there. Now that it's clear there is room for tax cuts, I think some of those recommendations do need a second look.
You commented on the distortions. I think one of the most striking aspects of the distortions in the corporate tax system is that the heaviest tax burdens are imposed on the new-economy industries, the ones we typically think of as being knowledge-intensive, service-oriented industries. That seems to be a very perverse type of industrial policy.
Now that there is some room to move, the remaining hurdle to get over is just the very straightforward one that corporate tax cuts don't strike most people as all that politically pressing. Canadians do not typically make the connection between either the health of the corporate sector and their own job prospects or the fact that the pension savings of Canadians own the Canadian corporate sector. I mean, that's who owns it. But people don't easily make that connection. That's just a fact of life.
I think the task from a political point of view, to put it in a way that's probably a bit impolitic in a setting like this, is that you have your personal tax cut agenda—and that's clearly the priority—but what you want to do is sneak in a couple of key business tax changes while the personal tax changes are happening.
Corporate tax rates are going down around the world. The focus in the fall update was on the G-7 countries, but you're missing a lot of the key action when you look only at the G-7 countries. Australia, Ireland—a lot of countries have gotten over this political hurdle somewhere, and they're raising the same proportion of their economies and corporate tax revenues with much lower tax rates, which tells me that perhaps there's some gain to be had by being a bit more competitive on that front.
Mr. Scott Brison: Some countries, such as Ireland, have used corporate tax reform as a vehicle for growth. I think we're, what, the second-highest country now in the OECD in terms of corporate tax rates?
Mr. William Robson: Yes. Our tax rates are second to Japan, but Japan is no great example nowadays of how you want to encourage growth in your economy.
Again, I'll make a very impolitic comment. If you encourage businesses to locate their head offices and production facilities in your country, you can tax the people who work there just a little higher, as we seem to like to do in Canada, and you'll get your government revenue coming in. It's a very effective way to operate.
Look at Ireland next to the U.K. We often feel we just can't compete with the U.S. Well, if you're just a little bit better, you can compete with your larger neighbour and do very well.
Mr. Scott Brison: Thank you.
I have a question for the councillors relative to infrastructure programs. Would it not be better to have an ongoing, as opposed to sporadic, approach to these programs? Typically these programs are developed based on four-year electoral cycles as opposed to ongoing needs. Even the cost of infrastructure investment is increased because of the rush of money, trying to find a place for it to be spent, etc.
Would it not make more sense to have an ongoing infrastructure program as opposed to the way we're doing it now?
Mr. Jack Layton: That is such a good point I can say we agree completely with it. In fact, our proposal is a ten-year plan. It's detailed with expenditures over those ten years, including some significant returns to the government as well through some of the investment strategies suggested there.
So I agree completely with what you said. I couldn't have said it better.
Mr. Scott Brison: I think we should look at ten-year electoral cycles, but that's another issue.
Voices: Oh, oh!
Mr. Jack Layton: Those who are elected often advocate that.
Mr. Scott Brison: On the family taxation issue, I'm working with a group of tax experts on the PC tax task force. One of the ideas that has come forward on the issue of family taxation is making it optional for families to choose whether to file as a family unit or as individuals.
Some people have concerns about forcing families to file jointly, because ultimately that could subordinate the role of the lower-income earner, and may subordinate, for example, in many cases, the role of women in those situations. So there's some discomfort about that. Making it optional would potentially address the issue where there is a discriminatory effect without creating some other bias.
Mr. Blaine Scott: Leaving it as an option is a very wise decision. The crux of our hope is that the government is going to try to be more equitable amongst all people who file tax forms. To leave it as an option is in keeping with that spirit, because of course then they have the choice. But right now there is no choice at all.
Mr. Scott Brison: Mr. Robson?
Mr. William Robson: I definitely want to answer.
I remarked already that allowing taxation on a family basis does make sense. Looking at the Canadian political scene, the nature of the debate, and some of the comments you made just now, I have tended to write that off as a possibility, at least in the near term. I'm encouraged to think it might be possible. As an option, it would make a lot of sense, because it immediately gets rid of the inequity.
Mr. Scott Brison: I have one last comment, on the issue of nature conservancy and the donation of land.
We heard earlier from people who were expressing support for eliminating capital gains on the donation of securities to charities. One of the comments I made at that time is that everywhere we're talking about in tax reform increasingly is focused on bringing Canada in line with what is occurring in other countries, from a competitiveness perspective. It's my understanding that currently there's no capital gains on the donation of land in the U.S. We could perhaps start aligning ourselves more closely with the U.S., from a tax perspective, in a very Canadian way by focusing on those environmentally sound and philanthropic attributes that are essentially Canadian. Perhaps we could move the government a little more quickly on this issue, if not on the other ones as quickly as we'd like.
Mr. John Lounds: Yes, you're absolutely right that in the United States there is no deemed capital gains on easements of land or conservation easements. I thank you for your comments, and I just hope committee members can push this forward, because that's absolutely where we're coming from: Can we open up this way to go and see environmentally sensitive land and other important aspects of our country conserved as a result of this encouragement?
Mr. Scott Brison: And Mr. Robson would like to see no capital gains, period, correct?
The Chair: He would like to see no taxes.
Voices: Oh, oh!
Mr. William Robson: I was very frustrated by the fact that lowering the rates doesn't get rid of this problem. Obviously the lower your rates are, the less serious all such problems become, but unfortunately my magic bullet, which the chairman is alluding to, doesn't seem to work in this particular case.
The Chair: Thank you, Mr. Brison.
Thank you, Mr. Robson.
I'd like to thank the panellists. We've been now at this for about a week, and it's been a very interesting experience. We were very happy with the statement made by the Minister of Finance, given the fact that many of us were elected back in 1988 or 1993, and we remember then the state of the country's finances. So we're pretty optimistic about the future.
Having said that, though, getting the books balanced was a really focused approach: you knew you had to get to zero. Now this is really challenging, because after a week, we have heard from many different interests.
We have heard from people who are concerned about housing and homelessness, very valid concerns, and we have heard concerns raised by the cultural industry.
There are those individuals who of course want tax cuts, both at the personal level, but now, because of the surplus, people think this committee ought to get more ambitious and also look at business and corporate taxation.
We had individuals concerned about technology, research and development, greater assistance for post-secondary education, the brain drain, and of course concerns about the debt. People want to aggressively reduce the debt.
We're looking also at the challenges we face in the new economy with e-commerce and how important it is for us to make the legislative changes—not just to make them, but to make them very quickly, because apparently the e-commerce world moves very, very quickly.
Individuals came here with concerns about charitable organizations. In Ottawa we heard from first nations and individuals who were advocating a greater funding perhaps to spur on an environmental technology area.
And of course one of the greatest needs with an aging society is the issue of health care. People also wanted money—or funding, I should say, or as we call them, investments—for agricultural issues. And just recently, today, we heard the call for a national day care program and a children's agenda.
I think you get my point, right? It is going to be quite a challenge to try to reflect everybody's opinions and try to make as many people happy as possible.
Essentially, though, after you go through this entire list, you come out with a sense that the only way we're going to be able to do this today, tomorrow, or the day after is if we're able to generate greater wealth for our country. How are we going to do that? Really that is where the debate ought to be. Nobody disagrees with the issue of a children's agenda, nobody disagrees with the issue of the environment, and on and on. The point is, how do we get there? This is the big challenge we face.
Of course you can read our response to the challenge on December 10, when we issue our report to the Minister of Finance. I trust this committee will make sure the opinions expressed by what I consider this excellent panel will be definitely reflected in that report.
Thank you. The meeting is adjourned.