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FINA Committee Meeting

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[Recorded by Electronic Apparatus]

Wednesday, November 24, 1999

• 0840


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

We have the pleasure to have with us a former colleague, for whose attendance we would like to express our gratitude. When I was asked whether we could find time for you, I said we always find time for great colleagues, and we are very happy you are here this morning. I also want to take this opportunity to congratulate you on your electoral success.

Ladies and gentlemen, we have the pleasure to have with us Mr. Elwin Hermanson, leader of the Saskatchewan Party, who is also joined by one of his MLAs, Mr. Randy Weekes. Welcome.

As you know, you have approximately five to ten minutes—nothing has changed; committees still run this way—to make your presentation, and thereafter we will engage in a question and answer session.

Mr. Elwin Hermanson (Leader, Saskatchewan Party): Thank you, Mr. Chairman. It is a privilege to appear before the finance committee, especially on such short notice. We do appreciate that very much. We are glad to be a part of your pre-budget consultation process. I know you have a full agenda and we are the first one, so we'll try to not get you behind schedule by trying to make a couple of points and making them very forcefully.

On September 16 we had an election in Saskatchewan that surprised many people. Saskatchewan's election results also took our government, Mr. Romanow's government, by surprise. In fact, the election for him could be more aptly described as a nightmare, because 60% of the people who cast a ballot on September 16 voted for a change in government. We have to ask the question why—what motivated Saskatchewan families and businesses to vote en masse to throw Roy Romanow a retirement party?

Well, it wasn't the deplorable state of Saskatchewan's highways, although our highways are literally falling apart, and Saskatchewan's portion of the Trans-Canada Highway is a national embarrassment, something the finance committee may want to take note of. And it wasn't Saskatchewan's faltering health care system, although it too had been mismanaged by our provincial government. The Saskatchewan election was fought primarily on two fronts—our crippling tax load, and the worst financial crisis Saskatchewan farm families have faced since the Great Depression.

I'll address the farm crisis in a few minutes, but I want to first address the issue of taxes.

Canadian families pay some of the highest taxes in the industrialized world. Saskatchewan families pay the second highest income taxes in Canada. It doesn't take much imagination to conclude that we have a serious challenge ahead of us if we are to stem the tide of people and jobs going out of Saskatchewan and out of Canada, because high taxes kill jobs and drive investment and job creation and therefore people away. High taxes cripple the economy and steal our competitive advantage. High taxes stifle initiative and threaten the quality of life we enjoy as Canadians.

Simply put, we must cut taxes now.

The number one election issue in Saskatchewan was high taxes. Saskatchewan people voted for a long-term plan to make deep cuts in personal income tax rates. The NDP wasn't listening, the government wasn't listening, and they almost got run out of office.

The lower taxes campaign won as the popular vote, and left the NDP government in a minority situation, while the formation of a Liberal-NDP coalition made Saskatchewan politics look for a while like the home shopping channel, a set of three Liberals sold to the highest bidder at a political “going out of business” sale. And it took a complete Liberal sell-out for the NDP to survive the election.

For the federal government, the message is clear. Come forward with a credible long-term plan to lower personal income taxes or face early retirement. Many ask—and I'm sure you've been asked this—can we afford to lower taxes? We think the opposite question should be asked: can we afford not to lower taxes?

Too often we have seen politicians hide behind the phony argument that tax cuts will hurt the government's ability to provide quality health care and education. Too often we have heard that tax cuts will mean deficit budgets. The truth is that lower taxes strengthen the economy, stimulate job creation, and help grow the tax base from which public services are funded. Look at what has happened in the country of Ireland, and look at what has happened in the province of Alberta.

The real danger lurks just ahead of us if we don't take immediate and bold action at both the federal and provincial levels to cut taxes now. Saskatchewan people voted for the Saskatchewan Party plan to cut the provincial income tax by 20% over four years, reduce the provincial sales tax from 6% to 5%, and eliminate the small business tax over a four-year period. It is a responsible long-term plan to cut taxes within a balanced budget.

Last week, the Saskatchewan Personal Income Tax Review Committee made a very similar recommendation to our government here in Saskatchewan. Saskatchewan families fully expect their provincial government will introduce a long-term plan to cut taxes, and we will push the Romanow government hard on this point. But they expect the federal government to do the same.

Lower taxes will help every person in Saskatchewan—working people, business owners, seniors—and of course, lower taxes will also be a significant help to farm families. The help is greatly needed because prairie agriculture, quite frankly, is in crisis, and so are thousands of farm families and thousands of other families who earn their income either directly or indirectly from farming.

• 0845

As I clearly stated to the agriculture committee in Ottawa last month, the future of thousands of family farms and the prairie economy may depend on the decisions that are made in Ottawa over the next couple of weeks and months. I believe this is a test of the strength of Canadian federation, a federation based on the premise that we help each other in time of great need. Just as the Saskatchewan people have dug deep on many occasions to assist Canadians in other parts of our country during their times of crisis, today thousands of Saskatchewan families are looking to their federal government for help to get through a disaster that is not of their making.

I'm sure every member of this committee is well aware of the international subsidy wars that have led to the current crisis—billions of dollars in farm subsidies by the European Union, billions more in farm subsidies by the American government. They have left Canadian farm families as innocent victims caught in the crossfire of an international trade war. Clearly the long-term solution is to end the international subsidy war. But in the meantime, is the federal government simply going to abandon the family farm? Is the federal government going to allow the economy to be destroyed?

If your committee hears one message from your meetings here today, please hear this one and take it back to the Prime Minister: The federal government's response to the farm crisis, AIDA, is not working in Saskatchewan. AIDA is failing Saskatchewan farm families who are in crisis, and AIDA support in Saskatchewan is clearly inadequate to deal with the farm crisis. AIDA, quite frankly, is a pathetic expenditure of taxpayers' dollars here in this province.

Now, I must also note that the Saskatchewan government bears its share of the blame for the current crisis. In 1992, the Saskatchewan government tore a gaping hole in the farm safety net. They tore up the GRIP programs, cancelled contracts, and never ever replaced it with anything. Therefore, we have the poorest farm safety nets of any province in the country.

Today many farm families are falling through this hole in the safety net that has never been fixed. We blame the province; we blame the NDP for this, not Ottawa. I want to make that clear; it is not all Ottawa's fault. The provincial government must play a role in the long-term solution, and the Saskatchewan Party will push hard for that solution.

However, the immediate crisis, the current record low grain prices, are caused by an international subsidy war and international trade is a federal responsibility. Provinces like Saskatchewan and Manitoba simply cannot afford to fight the American and European treasuries, and quite frankly, even if they could, they shouldn't have to. States like North Dakota and Montana do not use their state treasuries. The money comes from Washington as part of a federal agriculture policy. The federal government in Ottawa has a responsibility to do the same. Current programs fall far short of what is needed and have led to huge discontent amongst Saskatchewan people at both levels of government.

The Saskatchewan Party has made a number of proposals designed to address the failure of the AIDA program and get financial assistance into the hands of farm families quickly.

A few weeks ago, the Saskatchewan Party proposed to pay all remaining AIDA funds allocated to Saskatchewan to farmers by rebating the education portion of property tax and agricultural land. This would quickly and efficiently put cash into the pockets of struggling farm families before Christmas. This simple step would partially address the immediate financial need of farmers and give the federal and provincial governments time to work together to develop a cost-shared emergency farm assistance program that works.

The Saskatchewan Party has also proposed the federal government treat our province the same as Quebec by paying Saskatchewan its share of AIDA funding as a one-lump-sum payment and allowing the provincial government to work with farm organizations to design a program that will get money quickly into the hands of farm families.

Either one of these solutions will work better than the failing AIDA program in addressing the immediate and short-term needs of farm families. Our own MP in cabinet, Ralph Goodale, has admitted AIDA is not working the way it was intended. Our federal agriculture minister, Lyle Vanclief, came to Saskatchewan last week and admitted AIDA is an administrative nightmare that isn't working.

While we appreciate Mr. Vanclief's visit to Saskatchewan, and we are encouraged that he finally has seen the light, Saskatchewan people are very disappointed that Mr. Vanclief has apparently decided the problems with AIDA don't warrant any further funding or fixing. Saskatchewan farm families can be excused if they feel abandoned by an agriculture minister and a federal government that appear to be willing to sacrifice western Canadian farm families—perhaps to protect eastern Canadian farm marketing boards.

• 0850

Many people in Saskatchewan share the view that the federal government is heading to the WTO talks in Seattle ready to offer up western farmers in exchange for continued protection of egg, poultry, and dairy marketing boards. It has not been lost on farm leaders here that Mr. Vanclief is prepared to take whatever action is necessary to protect supply management in Quebec and Ontario, even if it means running farmers off their land in Saskatchewan.

According to the OECD, grain support programs in Canada pay 9¢ out of every dollar of revenue to western farmers, but government-regulated subsidies pay Canadian dairy producers 58¢ out of every dollar of their revenue, while egg producers receive 24¢ out of every dollar from government programs. In fact, over the last 10 years the Canadian grain industry has seen a substantial erosion of government support. At the same time, subsidies for milk, poultry, and egg producers have been maintained or are even higher than the subsidy levels in the United States and Europe.

Instead of exacerbating these obvious inequities, Canadian negotiators should be using the upcoming WTO talks to level the playing field for all producers. In the meantime, the federal government must find the funding to support an efficient agriculture industry that is being pummelled by an international subsidy war. As the president of the Saskatchewan Wheat Pool so eloquently put it to Lyle Vanclief, “If you don't want to support agriculture, quit eating.”

I want to sum up this morning by saying that Saskatchewan families are looking to the federal government for two critically important things. They want to see a long-term plan for significant income tax reduction, one that begins immediately, and they want Ottawa to step to the plate to assist struggling Saskatchewan farm families through the worst agricultural crisis in 60 years.

Quite frankly, I do not believe these two measures are in conflict. You may want to ask me about that. I'd be happy to deal further with it.

I thank you for your interest. I'd be happy to answer any questions.

The Chair: Thank you very much.

We'll now proceed to the question and answer session. Mr. Nystrom, it's going to be a five-minute round.

Hon. Lorne Nystrom (Regina—Qu'Appelle, NDP): Thank you very much, Mr. Chair.

I'd like to welcome Mr. Hermanson and his colleague to our committee here this morning—

Mr. Elwin Hermanson: Thank you.

Mr. Lorne Nystrom: —and I officially congratulate you on your election as leader of the opposition in the Saskatchewan legislature.

I think the important thing this morning, Mr. Hermanson, is to describe to the committee the consequences of not having any federal action in addition to AIDA, to describe it in terms of what it is going to do to the family farm, to the small town, to the Saskatchewan economy in general. I think that's the message we have to hear this morning. Can you describe that in a bit more detail?

Mr. Elwin Hermanson: Absolutely. I have been receiving letters and I have been talking to farm families, but beyond that I've been talking to business owners in the cities of Regina and Saskatoon. I talked to a man the other day who has a long-standing business in Saskatoon. He says he has absolutely no farm customers coming through the door. They used to be a major part of his business.

We have said that this is no longer a farm crisis; this is a Saskatchewan economic crisis. With respect to net realized farm incomes, I know there's some debate over the numbers, but no matter where you peg the numbers, Saskatchewan's numbers are the lowest in all of Canada. This farm crisis, because of the inequities in subsidies, has hit Saskatchewan more directly than any other province, because Saskatchewan, by the nature of its agricultural economy, depends more on grains and oilseeds than any other province. That's not a bad thing. This province is suited for grains and oilseeds.

Saskatchewan producers have diversified. They have gone into specialty crops, which are also under some pressure. As well, we are major livestock producers in this province. It's not a matter of the province's agricultural sector not diversifying to try to meet the needs of world markets—they have.

The problem is—and we have charts here that show it—that subsidies received in the grains and oilseeds industry are the lowest in Canada, by far. The result is a negative net farm income or a very low net farm income, which means no dollars to pay for fuel, for fertilizer. That is the secondary industry in Saskatchewan, which supports agriculture. That's what keeps the rural economy going.

Now we see the crisis moving into the manufacturing sector. There have been significant layoffs in short-line manufacturing companies in Saskatchewan. They are not hiring the hundreds of people they used to. In fact, they have laid off hundreds of people.

The ripple effect throughout the province is one that anticipates that as many as 20% to 40% of producers may not be able to farm next year unless there's an injection of cash from the federal government.

• 0855

I could go on for a long time, Lorne. I think you and I both know that in fact this is not a make-believe situation. Some people will say, well, you're crying wolf. No, we're not crying wolf. If we were crying wolf I wouldn't be here, because I don't believe in playing those kinds of games, and I don't believe you do either.

Mr. Lorne Nystrom: I agree with you in that I don't want to see a tradeoff in Seattle between supply marketing boards and the prairie farmer.

On the other hand, I also support supply marketing. I just wanted to make sure you did the same thing. Do you support the supply marketing boards? We have them here in Saskatchewan as well of course. As you're well aware, my home town of Wynyard has the chicken plant. Supply marketing is important to a lot of our farmers too, in terms of dairy, poultry, and eggs.

Are you saying that we shouldn't be supporting these boards? Are you still in support of them? I just want to make sure I didn't get the wrong message from you.

Mr. Elwin Hermanson: I don't begrudge the successful industries in agriculture, whether they be the feather industry, the dairy industry—or the beef industry, quite frankly, which is the least subsidized of all our agriculture sectors. We have the numbers here. The subsidy for beef in Canada is 6¢ on the dollar. In the U.S. they calculate it at 4¢. Basically it's the same. Our beef industry will do fine. Yes, there will be ups and downs, but there always are in a competitive environment. In the poultry and dairy areas, our subsidies are at an equal level or, in some cases, are even higher than the subsidies of the Americans and the Europeans. We can compete because we're on a level playing field.

It's in the grains and oilseeds and, to a lesser degree, in some of the specialty crops, where other countries have high subsidies and we have low subsidies. I think most producers would like to see subsidies come down internationally, and if they do, they'll accept what the market brings.

But what farmers aren't prepared to accept—and where they expect the federal government to play the role it should play in regard to international trade—is to have high subsidies in our competitors' countries and low subsidies here in Canada, which are forcing the prices down to levels that do not sustain an industry.

Mr. Lorne Nystrom: Just to be clear, Elwin, do you support the four supply management marketing boards that we have? I'm talking about the principle of these boards. Do you support the idea of supply marketing in terms of what we have now in turkey, chicken, dairy, and eggs?

Mr. Elwin Hermanson: I do have some concerns about it. I do support what they're doing. I've been on the record when I was a member of Parliament as not wanting to see that industry suffer. But I know, for instance, that Saskatchewan has far lower quotas than even our portion of the population.... Saskatchewan could expand in the dairy industry and in the feather industry if the quota arrangements were different. We are handicapped. I'd like to see some changes in supply management. I think even supply-managed producers would like to see some changes in that industry.

We also have to look at what opportunities we have internationally. What we don't want to see is unfairness to some sectors of agriculture at the WTO; we don't want to see priorities placed on protecting one at the expense of the other. We sense that this has been the case in the past. We're concerned, going into Seattle, that all the emphasis may be placed on protecting supply management, to the detriment of industries that are extremely important here in Saskatchewan.

Mr. Lorne Nystrom: My next question is about the apparent contradiction you mentioned, which you wanted someone to ask you about.

Mr. Elwin Hermanson: Yes.

Mr. Lorne Nystrom: On the one hand, we get people who are pure free-traders who say no subsidies whatsoever. On the other hand, some of these people are asking for some support now for the prairie farmer. I understand, of course, the massive subsidies in Europe, the subsidies in the United States. We get 9¢ on the dollar in this country in terms of grain farmers, and I think it's 38¢ in the United States and 55% in Europe.

But I wonder if you can elaborate on why that short-term aid is so necessary. I suppose you support the joint Saskatchewan-Manitoba position on $1.3 billion—

Mr. Elwin Hermanson: Right.

Mr. Lorne Nystrom: But you could elaborate a bit on that.

Mr. Elwin Hermanson: Sure. I'd be happy to do that.

One of the main concerns of producers is high input costs. They see their input costs rising while their revenues, their returns on their product, are falling. Lower taxes would help on the input cost side. One of the larger inputs farmers face is the taxation component of their expense column.

A strong economy is what Saskatchewan needs, and lower taxes encourage a strong economy. We believe the injection of cash will strengthen the economy, and we believe the return to the taxpayers will be far greater than if the industry is abandoned and huge adjustments take place. The social adjustments and loss of infrastructure in Saskatchewan would be enormous. The loss to Canada would be enormous if the agriculture sector fails in this province. It will be a huge cost. It will be a cost to Paul Martin that I don't think he has handle on yet, quite frankly.

• 0900

That's why we don't see a conflict in an injection of cash into the agriculture sector while, at the same time, we're pulling for lower taxes that will strengthen the economy. Those two things are not in conflict. In fact those two efforts are in harmony for the long-term benefit of Canada.

The Chair: Thank you, Mr. Nystrom.

Mr. Cullen.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chairman, and thank you, Mr. Hermanson. I'm very interested in your presentation, and I certainly understand—and I'm sure my colleagues do as well—the severity and the gravity of the situation for farmers in Saskatchewan, so I'd like to pick up on a couple of points.

You talked about eliminating the small business tax completely. While there's a recognition that our business taxes are out of line, if you look at the small business tax rate, I think it's the lowest in the G-7. Maybe you could expand on the need to eliminate the small business tax completely.

With respect to farm income, we have a tendency to forget what the federal government has done already, and I just want it on the record. I'm not sure of the exact number, but it's about $1 billion. That's not insignificant.

I'd like to ask a question, Mr. Hermanson, and I'll be the devil's advocate. Do you believe all farms in Saskatchewan are viable in the medium to long run? Especially if you look at the subsidy situation globally, it's going to be hard to compete with the deep pockets of the U.S. and Europe, no matter what we do. I don't know what the outcome of that will be, but I want to contrast the idea of supporting all farms in Saskatchewan with the notion of saying we have to face some reality. There are some farms in Saskatchewan that aren't going to make it. Maybe we need to focus our efforts on those farms that are going to make it, while trying to help the others move into some other transition economy. Is that a viable strategy? Maybe you could comment on both those items for me.

Mr. Elwin Hermanson: I'd be happy to, because those are actually excellent questions.

First of all, on the small business tax, I was referring to our platform provincially. We have a small business corporate tax on businesses that do $200,000 or less of business. I think we currently have the second highest small business tax rate in the country, and it could now even be the highest. It generates about $50 million in revenue for the Province of Saskatchewan. We found ways to internally cover the lost income, the $50 million, if we actually eliminated that tax over four years. What that would do is give Saskatchewan one leg up on the rest of the country. Unless other provinces did the same, we'd be the only province that would have no small business tax at the provincial level. We weren't talking about federal corporate taxes in any way.

Hopefully you will understand that we live beside Alberta, which has lower taxes in every category. Since we need to attract small business to Saskatchewan, we thought that would be an excellent instrument for doing that without jeopardizing the balanced budget in the province.

With regard to AIDA, you said the $1 billion is a lot of money. Yes, it is a lot of money. The problem is that it's only working in some provinces. Because of some uniqueness in Saskatchewan, the province that needs assistance the most is not receiving it. I have the AIDA delivery statistics as of November 17. For Saskatchewan, the number of claims received was 28,805. The number of claims paid was 8,294. The payments totalled $86,083,426. The average payment—and these are the numbers that are easier for us to get our minds around—in Saskatchewan is $10,379. Claims declined numbered 13,623, so of the total claims processed, 21,917, only 10,000 of those claims were successful. More of them were declined than were successful, and the total payout was far less in Saskatchewan than it was in other provinces. That's why there's such a frustration.

This is something you might want to ask your agriculture minister to investigate, but I don't think the money is going to the right people in Saskatchewan. It's based on eligible net sales, and the sense that we're getting is that farmers who shouldn't be getting assistance from AIDA are more successful than farmers who should be getting assistance. I believe that's why there is so much frustration in the program in our province. I'm sure witnesses who follow me will provide you with the information on that, in far more detail.

• 0905

As to whether all farms are viable in Saskatchewan, maybe they are and they're maybe not. The problem right now is that no farms are viable in Saskatchewan; it's just a matter of how long they will be able to hang on, because all farms, except perhaps the beef industry, are losing money.

If you have a larger farm and you've been a good manager, you've been in business for a long time and enjoyed the good years of the 1970s, and your land is paid for, you might be able to hang on for five, six or seven years. Who knows? If you're a younger farmer and you're a good farmer, this year, 1999, may be your last year.

The problem in the industry is that while, yes, it has a relationship to management, that is not the key criterion as to why farms are successful or not in the province. The key criteria are, when did you start, how much debt load do you have, and when will your security or your collateral run out and the banks foreclose on you? Everybody is going down in the same direction, and it's just a matter that the more solid ones will last longer.

If we're on that equal playing field, most farms in Saskatchewan will survive and do very well and will pay income taxes and continue to contribute to the Canadian economy as they have in the past. If there are some farms that are poorly managed—and there are a few, as there are in every industry—they'll go by the boards. That's the way it should be, and nobody minds that as long as the environment is a fair one and we're not being unduly hurt by this trade war, and if we have safety nets that are the equivalent of safety nets in other provinces.

The Chair: Thank you, Mr. Cullen.

Ms. Leung.

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

Thank you, Mr. Hermanson. I enjoyed your presentation.

As a past chair for the northern and western caucus, I know we spent many hours discussing these concerns and your farm crisis. As you know, Minister Ralph Goodale is one of the caucus members. So we have a lot of experts in our group, and I want to convey that we do have a lot of concern for you, to share some of your frustrations and problems.

There are a couple of things I want to ask you. First, we know even in the international caucus reports there is this concern. AIDA, the $900 million, is not working, and I believe there is a plan to revise it. I think you know that. We're trying to look over the requirements, the criteria. I think that's where the problem is, and hopefully that will work out. Do you think the process is the correct one for you?

Secondly, you did speak of a more future-oriented way, but what is in the plans for job training or maybe skill and job training for the younger generation of farmers? Maybe I shouldn't mention it, but we have to be more future oriented.

Those are the two parts.

Mr. Elwin Hermanson: Thank you. Those are excellent questions.

First of all, as far as revising AIDA is concerned, AIDA is such a flawed program that most of the industry in Saskatchewan is very skeptical that it can be fixed. When Mr. Vanclief was here, I believe it was last week, he made a commitment to impress upon his officials, using very strong language, that they deliver the money very quickly. He was talking about having the money from the 1998 year into the farmers' hands by Christmas.

The problem is this: The way it looks to me and to Saskatchewan people is that we have a program that's a disaster and he's trying to make it go faster. It's not necessarily going to fix the problem.

If you're going to change the criteria for AIDA, it would depend on what criteria you were changing. They would have to be so significant that the new AIDA wouldn't look anything like the old AIDA. I don't yet have a sense from Mr. Vanclief that he understands that the changes need to be that great.

When he was here, it seemed as if he thought he could make the program work better without changing it very much, adding $170 million and pumping through the applications more quickly. That will not solve the problem. There's not enough money in AIDA, and some of the key criteria in AIDA—the net eligible sales component of AIDA, the way it's distributed—will not work unless they're changed.

So yes, it could be changed to be made to work, but it would take a very major overall. I don't think Mr. Vanclief understands that yet.

• 0910

On the future of farmers, obviously training is good. Most of our farmers, particularly our young farmers, are very well trained. Most of them have expertise in a number of areas. Many of them are leaving and they are very successful, but they are not successful in Saskatchewan; they are successful in Calgary.

Randy Weekes, my colleague from Biggar, and all our MLAs, no matter which party they're from, could probably list dozens of people they know who were involved in agriculture in Saskatchewan, who have left the industry because they were well trained. They are successful in investment strategies in Calgary, and they're running businesses there.

If the federal government is happy to see Saskatchewan wane as a province and become a real burden to the country, and see Alberta become very successful, just keep doing everything the way you're doing it and that's what will happen.

The problem is not the initiative of Saskatchewan people. Saskatchewan people want to work. They will go to find work, and they will be successful. I think they should be able to be successful in agriculture in Saskatchewan, because Canada needs this industry. The world needs this industry. This is an important industry. Providing food to feed people is a noble industry, one of the most honourable industries in the world. It would be a shame to see that industry at far below its potential.

There are training programs. If need be, farmers will leave the land, they will leave Saskatchewan, and they will be successful. They are doing that. But that's not what I think this committee would want to see.

The Chair: Thank you very much.

Ms. Sophia Leung: I don't know how much you're interested in Kroeger's report. Would you respond? How do you find the recommendations in the Kroeger report affect you?

Mr. Elwin Hermanson: Yes, I can respond, quickly.

There were three areas on which Mr. Kroeger focused, which were fewer issues than Mr. Estey focused on, and there has been some criticism that he has been cherry-picking from the Estey report. He talked about joint access of railroads on rail lines. I believe that's one of the areas Mr. Kroeger looked at. He got a lot of hostility from the railroads on that.

I actually think that's worth pursuing. We need competition in transportation. Grain in Saskatchewan is moved by truck and by rail. There is tremendous competition in the trucking sector, and those costs have come down. In the rail sector, where we have only two large railroads that are cutting back their services, competition is almost non-existent. The railroads will tell you that it exists, but in reality, there is very little competition. I believe anything that would increase that competition would be good for the industry.

Also, I believe the creation of short-line railroads, which Mr. Kroeger looked at, would be positive. I know you're a finance committee and this is a transportation issue, but I would encourage you to look at ways of changing the Canada Transportation Act, which was passed when I was a member of Parliament, to make it friendlier to the creation of short-line railroads, which I believe in some cases, not all cases, could be economically viable and perform a good service to the industry. If you put on your environmental hat, which I know many of you do, rail transportation is much more environmentally friendly than truck transportation, and if we want to meet our Kyoto target, it's important that we maintain a rail system in this country, and particularly in the Prairies, where so much bulk is hauled out by rail.

Mr. Kroeger also talked about the Canadian Wheat Board. I believe his recommendation was that the board should take possession of the grain at port and that the transportation system should move to a more commercially based system.

Quite frankly, I don't see a problem with that. The commercial system seems to be working better for potash, for coal, for lumber, for almost everything other than agriculture, where we have just too many bodies involved in trying to allocate cars and decide which ones go where and when, and somebody has to back off. It's going to be tough to pull the railways out, because it's their system. It's going to be tough to pull the grain companies out, because they are the ones that purchase the grain and want to get it through. So I think there is some validity to moving the Canadian Wheat Board out of the transportation system.

The third area I would mention is the revenue cap. We do need to bring rail transportation costs down. I believe Mr. Kroeger recommended that rail freight rates be reduced by 12%. I would say that's a minimum. Apparently the railroads are now making $5 more per tonne than they used to, and they were making a profit before. They could return $5 a tonne for every tonne of grain shipped and still be making a good profit. So if there are revenue caps, as Mr. Kroeger suggested, I can see some real validity in doing that.

The Chair: Thank you, Ms. Leung.

Mr. Jones.

• 0915

Mr. Jim Jones (Markham, PC): Thank you, Mr. Chairman, and welcome, Mr. Hermanson.

Mr. Elwin Hermanson: Thank you.

Mr. Jim Jones: I'd just like to follow on what Mr. Cullen was saying. Is the family farm viable? What we should be trying to do is protect the family farm. Can you differentiate between the Canadian and the U.S. policies to farming?

Mr. Elwin Hermanson: Sure. The Americans will state at international trade talks that they are opposed to subsidies, and they'll agree to lower subsidies. They agreed to lower their subsidies at the last GATT, the Uruguay Round, I believe it was by 30% over 15 years.

In fact, while Canada has followed that, and in fact exceeded those targets, the Americans have banked those subsidy dollars, and when they need it, they have billions of dollars that they throw to their producers. And they're based on acres.

We're told we can't have an acreage-based program in Saskatchewan. That's what Mr. Vanclief tells us. And right across the border.... A Canadian farmer on the U.S. border, looking south, sees his fellow farmer being paid on an acreage basis. They have a loan program, where they are guaranteed a price for their grain that's above the world price, and if the world price doesn't get up to that loan target, the government makes up the difference. The result is that when prices are depressed, billions of dollars flow directly from the federal treasury in Washington to the producers in the grain-producing states of the midwest. We have to compete against them, because when that happens, it depresses prices. And we can sell only on the world market; we cannot artificially jack up the price.

I've heard politicians say let's guarantee our farmers that they're going to get $10 a bushel on the first 5,000 or 10,000 bushels, just to guarantee them a living. It's very difficult to do that. It's one approach. I don't think it's the best approach, because it's very difficult to deliver. But the Americans are using some tools similar to that in their loan program and their acreage-based subsidies that are leaving our producers, who are just as efficient, perhaps more efficient, high and dry.

Mr. Jim Jones: My understanding is that the Americans have made the decision that it's worth saving the family farm, and really what has to happen in Canada is that we have to make the same decision.

Mr. Cullen asked if farming is viable. I guess if the trend is toward more acreage, then it could still be viable. But I think we have to fundamentally make a decision on whether we are going to put the right tax policies in place to save the traditional family farm. Do you agree that we have to do that?

Mr. Elwin Hermanson: I agree with that. There is an international trend for farms to get larger, and that's part of human nature—you want to expand and do better. But in Saskatchewan we haven't countered that with processing of food within our province. And this is where taxes come in. Our taxes are so high in Saskatchewan that it's more economically viable to take raw products and ship them to Alberta, Manitoba, or Ontario, your province, and have them processed there. And of course that's where the jobs are, and that's why we have an outflow of people from our province to other provinces. Those are some of the internal challenges we have to face in Saskatchewan.

The viability of the industry would be fine if we could fix our safety nets, which the province needs to take the initiative in, and if we could have a level playing field. The federal government needs to take a stand and make sure our producers are not unfairly treated by subsidies.

I don't worship the family farm, but I happen to have a family farm, and I think the family farm is actually one of the more efficient units of agriculture. Some people are saying if we don't protect the family farm, we'll have all these huge corporate farms. Quite frankly, I think a family farm could be more efficient than a huge corporate farm. Labour costs are not always factored in the way they should be in a family farm. A family farm could probably hang on as long as any farm could, given the unfair conditions we're in.

Yes, there has to be some critical mass in the Prairies to be successful. You probably have to have either a mixed farm with at least 1,000 cultivated acres or, if it's not a mixed farm, a couple of thousand acres to be viable. Those are the realities, and the realities south of the border as well, given our climate and everything. That's not in dispute. But we don't have to give up on the family farm, or we don't have to think that we're going to have to have a Cargill or Saskatchewan Wheat Pool owning half a dozen farms in Saskatchewan to be viable. I don't believe that.

Mr. Jim Jones: You mentioned in your presentation that in the early nineties the provincial government stripped away any support or safety net for the family farm. What was that support?

• 0920

Mr. Elwin Hermanson: In the eighties, the gross revenue insurance program, or GRIP, was developed. All three prairie provinces subscribed to it, as did Ontario, which still has the GRIP program. I think it's still even called GRIP in Ontario, unless they've changed it.

It was very expensive. The provinces felt they couldn't afford it. All three prairie provinces cancelled GRIP. The Province of Saskatchewan, we believe, did it illegally. They actually signed contracts and after the contracts were signed, they broke their contracts and then passed a law afterwards saying that what they did was legal. So there's a lot of animosity within Saskatchewan.

When GRIP was cancelled, about $500 million was returned to the provincial and federal treasuries. The federal government didn't ask for it, but of course they had to take it back, because the program no longer existed. The provinces wanted the money to balance their budgets, so they picked on agriculture, and that safety net was gone.

In Alberta they replaced it. They put in a program called FIDP, which is in some ways not that different from AIDA. It's been in place for about seven or eight years. It keeps income levels for agricultural producers up to 70% of what they normally are. They have a long track record. They're not trying to implement this in just a crisis situation, when that's difficult.

Manitoba went another route. They boosted up their crop insurance and put in a disaster component whereby producers pay no premiums on the first 50% of their coverage. Here in Saskatchewan, our government cancelled it and did nothing. They basically played Russian roulette with farmers. They said, well, let's just hope and pray nothing ever goes wrong, because we're the least protected of the three prairie provinces and probably of the entire country. It had to catch up with us, and it has.

So, yes, we are very critical of the province and the fact that we have inferior safety nets, but that's not the point of talking to a federal finance committee. We know something has to be done there. We'll take care of criticizing the provincial government where they need to be criticized. The federal government is responsible for international trade, and it's for that reason that I appear before this committee. If we didn't have an international trade problem, I wouldn't be making this presentation on behalf of agriculture. The federal government needs to take action.

Thank you.

The Chair: Mr. Hermanson, thank you so much for being here today. We certainly appreciated it. It certainly added value to the debate on what the priorities should be as we make recommendations to the Minister of Finance.

Mr. Weekes, we thank you as well.

Mr. Elwin Hermanson: Again, thank you for having us on short notice. We appreciate it.

Good luck in your deliberations. We'll be looking forward to the next budget.

The Chair: Thanks.

We're going to suspend for two minutes.

• 0922

• 0925

The Chair: I'd like to call the meeting to order and to welcome everyone.

We have with us the following organizations: the International Association of Fire Fighters; the University of Saskatchewan; the Saskatchewan Wheat Pool; the Regina Chamber of Commerce; the Federation of Saskatchewan Indian Nations; and as an individual, Mr. John Keen.

We will begin with Mr. Keen.

As you know, you have five minutes to make your statement, and thereafter we'll engage in questions and answers.

Welcome, Mr. Keen.

Mr. John Keen (Individual Presentation): As you see, the presentation I'm going to be making is called “50,000 Whats of Power”.

Creating a budget must be a dreadful job. It's just like running a day care full of spoiled brats. Everybody wants money, including me. I want about $3 billion for a farm policy, a ten-year plan with a five-year review. We need a stable platform—no pun intended—to rebuild our rural society.

Wheat can be the building block. Wheat is grown right across Canada and is acceptable in diets worldwide. Making wheat a dependable earner will reduce pressure on alternate crops and livestock.

Let's combine the American target price with PL-480 plans. These have plans protected American farmers from the market for years. PL-480 is still used. Of course, being Canadian, we will improve on both.

We have to sell 75% of our wheat. Some we sell at a premium, the rest we just sell, and sometimes at much lower prices.

Under this plan, the government will buy any wheat remaining when the price falls by 20%. This price plus the premium price will be pooled and paid to producers by the Wheat Board. The Wheat Board can do the selling, keep the books, and distribute the cash. No complicated formulas are needed.

Countries to receive the grain will be selected by both per capita income and their cooperation in the second part of our program.

The Wheat Board can act as a government agency delivering to the client country and collecting the going price in a client's currency. That money will stay with the client to be used as a source of low-cost loans, mainly in rural areas. This is based on the model of Grameen Bank. Access to low-cost credit is the best way to improve disposable income for poor people, and we must develop customers, not exploit them.

That money is only on loan. It can be used to help a bank that makes micro-loans or to help start such a bank. Most poor people pay such high interest rates that a decent rate can save them money and still yield a profit. Over time, we should recover our money.

This model could be the future way of doing business. People in both developed and undeveloped countries no longer accept exploitation. We see that often in demonstrations. This weekend in Seattle, we may see a major confrontation. I hope it is peaceful.

Getting the money will be a problem. Just to find a possible $10 billion surplus the country had to shortchange schools and hospitals and create an underclass of the homeless and the hungry. On top of that, we need an extra $20 billion a year right now for roads, bridges, sewage plants, and housing. That blows the tax cut theory right out of the water.

That brings us right back to the $3 billion on my shopping list. If the money is to be found, it will have to come from the rich kids. Poor kids don't have money. That's the reason they're poor.

Over the last 25 years we've moved $1 trillion in interest from taxpayers to bondholders, and we've lost another $1 trillion through tax expenditures, tax remissions, transfer pricing, and offshore shenanigans.

If the American experience is duplicated in Canada, about 40% of that money went to the top half of 1% of the population. That's about $16 billion for each of the 50,000 families at the top of the food chain. That's being added to at the rate of close to $1 million a year. That's one of the reasons they're rich kids.

So if I want the money, that's where it is, but getting the whole $3 billion from the top 50,000 will mean taking $60,000 from each family. That's over 16¢ out of every dollar they'll get from the government this year.

That explains my title for the paper, “50,000 Whats of Power”. When we tell them we're taking $60,000, all 50,000 will say “What?”—and believe me, those 50,000 people have power.

• 0930

The Chair: Thank you for that.

We'll now hear from the International Association of Fire Fighters. Mr. Gerry Huget is president of the Saskatchewan Professional Fire Fighters Association, and Kevin Tetlow, treasurer.


Mr. Gerry Huget (Representative, International Association of Fire Fighters): Good morning.

This issue may have come to your table a couple of times before your arrival in Regina, but we're here to reinforce the position.

On behalf of over 650 professional firefighters in our province who also hold membership in the International Association of Fire Fighters, with representation in eight of our cities, I am pleased to have the opportunity to address the committee on an issue of concern to our members. The issue is pension reform for firefighters.

As you may know, our job is one of the most dangerous and physically demanding occupations in the workforce. Not only are the physical demands high but we also, on a routine basis, through the course of our profession, are subject to the exposure of hazardous materials, toxic combustibles, and communicable diseases. Despite constant improvements in protective clothing and equipment and the strengthening of health and safety regulations, firefighters continue to face high risks in occupational disease, death, and injury.

It is well known that firefighters die younger than the rest of the population. Despite the fact that fire departments are recruiting and hiring the physically healthy elite from the population, our members are contracting various types of cancer and heart disease at an alarming rate.

I can tell you, from my own experience as a front-line firefighter for over 23 years, there is a physical toll on the body that quickly accelerates with age. Quite simply, this is an occupation with a correlation of cancer and heart disease directly linked to exposure, age, and years of service.

Studies suggest that the firefighter who continues to work past the age of 55 is subject to a dramatic increase in the risk factor of being injured, killed, or succumbing to cancer or heart disease. It is not in the best interests of the firefighter, the fire department, or the public we have sworn to serve to have a workforce of people who have gone beyond their physical limitations because of age to carry out the duty of protecting life and property.

Canada's Income Tax Act regulations define firefighting as a public safety occupation. Pursuant to that definition and the wording of the regulations, Canadian firefighters are able to retire at age 55. The regulations also stipulate that the maximum benefit accrual rate for years of service is 2% under a defined benefit pension plan for all occupations.

Canadian firefighters therefore have the ability to retire earlier than most occupations but are financially penalized for doing so, as contributions or credit for years of service cease on retirement. In other words, there is no opportunity for firefighters to make up the reduction in retirement income.

One could assume, if there is recognition by the regulations that firefighters can or should retire at the age of 55 for a number of reasons, that perhaps the accrual rate should then have been adjusted to allow this to happen without penalizing the occupational groups of workers it was intended for. The regulations fall short of addressing the issue of allowing firefighters to make up the shortfall in pension contributions at an increased level. At the current accrual rate of 2%, there is no opportunity for our members to contribute more to the registered pension plan to offset their lost retirement income.

We strongly recommend a regulatory change to the Income Tax Act by the Minister of Finance that would increase the maximum pension accrual rate from 2% to 2.33% for Canada's professional career firefighters. The proposed regulatory change would be the crucial first step in this process, as firefighters would have to make that same change within their respective pension legislation and then bargain the increased contributions with their employer. This simple change to the Income Tax Act would provide firefighters with the opportunity to collectively bargain for a fair and equitable pension on retirement.

This government already recognizes that firefighters have to retire early by virtue of its definition of “public safety officer” in the regulations. Retirement has a special significance for professional career firefighters because they are faced with some grim facts of life expectancy.

We believe now is the time to correct this long-standing inequity. Not only will this proposed regulatory change bring a sense of fairness and recognition to incumbent firefighters but it will also create a safer and healthier workplace for future members who choose to enter our profession.

Firefighters from Saskatchewan as well as our counterparts from across Canada have travelled to Ottawa in the spring of each year to raise this issue with our members of Parliament. We continue to come in hope that, one day, pension reform for firefighters will reach a resolve. It has been my experience from talking to members from all political parties that there was a strong indication of support on this issue.

• 0935

Another way the government could help correct pension inequity for firefighters is to support a private member's bill submitted by member of Parliament Lorne Nystrom. In April 1998 member of Parliament Lorne Nystrom introduced a private member's bill, C-395, in the House of Commons. This bill would allow firefighters to access reduced CPP benefits at age 55 and unreduced CPP benefits at age 60. We'd like thank Mr. Nystrom for his efforts, and we ask that all members of Parliament support his initiative.

In conclusion, I would like to again thank the committee for your consideration on this matter and for the opportunity to speak on behalf of professional firefighters in Saskatchewan and to share with you an issue of utmost importance to our members. Thank you.

The Chair: Thank you very much.

We'll now hear from the University of Saskatchewan's Dr. Michael Atkinson, vice-president, academic.

Dr. Michael Atkinson (Vice-President (Academic), University of Saskatchewan): Thank you very much, Mr. Chair.

Thank you very much, members of the committee, for the opportunity to appear before you today.

The University of Saskatchewan has about 19,000 students. We consider ourselves a mid-sized university by Canadian standards, but a university that offers a very wide variety of programs.

We share with all other universities in this country the fate of having been cut back severely over the last fifteen years. Our university has responded the way others have. We have arranged for early retirement so that we can expedite the departure of faculty and staff—in our case some 225 faculty over the last ten years. We've increased tuition fees and other kinds of fees to try to compensate and keep the quality of the educational experience we can offer at its highest level.

That's why we, and I know other universities in the country, welcome the federal re-entry into the post-secondary area. Its re-entry is most appreciated in the form of initially the CFI, the Canada Foundation for Innovation. In the case of the University of Saskatchewan, we are the fortunate and also deserving recipients of the synchrotron investment. The Canadian Institutes of Health Research are another important initiative that will involve the universities. We welcome that and praise the federal government for its initiative. Finally, with the announcement in the latest throne speech of the 21st century chairs, frankly we couldn't have heard better news from the federal government.

All together, this represents a real renaissance and a recognition on the part of the federal government of the importance of research; the critical importance of universities in research in this country, relative to some others, where industrial research is much more intensive; and perhaps also the danger of losing highly qualified people. That's a danger we face on a daily basis in the universities.

Overall, the impact of these investments on post-secondary education is going to be enormously positive. I can't emphasize enough how critically important it is and how much we are appreciative of it.

It will create some problems for us, and I want you to bear these in mind. One of them will be, without a doubt, an increase in the upward pressure on wages in universities. One cannot introduce this many new positions, as welcome as they are, without creating that upward wage pressure. It will force universities to compete with one another, in some cases for relatively few new faculty members coming onstream. It's something we'll have to cope with, and we're prepared to cope with it, but I wanted to mention it.

I also want to mention that almost all universities in this country are unprepared in terms of space and other infrastructural requirements. Before I came to the University of Saskatchewan, I was at McMaster University, and they anticipate receiving around a hundred of these new chairs. I won't speak for the University of Saskatchewan, but I'll tell you it's the same message. Accommodating a hundred new faculty members, with the laboratory requirements they have, will put enormous pressures on that university, just as it will on ours and every other university in the country.

These programs do a great deal to re-energize the research enterprise at universities, but they do not do a lot of things—and they're not intended to do a lot of things—that absolutely need to be done.

They don't provide for the recognition that we will have more students in this system in the next ten years than we have now, and that will place increased pressure on our capacity to teach.

Also, they don't recognize the incredible increases in the cost of academic and administrative computing.

• 0940

At the University of Saskatchewan, these important initiatives won't help us accommodate the difficult demographic shifts we face in terms of the growth of an aboriginal population with little familial experience with a university or any kind of post-secondary education.

These initiatives won't help us improve the quality of the international experience of our students, something that is happening all over the world as universities strive very hard to make sure their students have an international experience. That's something we are really crippled in our ability to respond to.

These initiatives, as important as they are, won't provide for the faculty training that's necessary to put courses on-line and to get our faculty members up to speed in the new technologies.

And these initiatives, as important as they are, won't help us meet the backlog of deferred maintenance—in the case of the University of Saskatchewan, over $100 million, and in other universities, far exceeding that.

So my message is one of gratitude on the part of the university system in general for the recognition of the erosion of support for universities and the critical importance universities are going to play in the 21st century. It's also a message that we need critical help in maintaining the fundamentals of the university.

The federal government's initiatives are critically important to regrow our research capacity. What we need as well are resources in the hands of provincial governments, whose responsibility the universities are, who would then in turn pass them on to the universities.

Since 1994 federal cash transfers in support of health, education, and social services, as you know, have declined from over $18 billion to $12 billion. Much of that has been restored in the context of the health transfer. I'm here today to ask your committee to seriously consider doing the same thing for post-secondary education—not because the initiatives that have been announced aren't important, and not because they won't have a great impact. They will. But the universities' needs are considerable, and they're diverse.

It's critically important, and I hope you'll recognize that there is support out there in the population for an investment in education—support among people who are worried, and rightfully so, that the only way the universities will be able to compensate for the cuts that have been made is to increase our tuition, sometimes to the point that many families will not to be able to afford to have that experience on the part of their sons and daughters.

In closing, let me say I recognize there have been difficulties in the past around transfers from the federal government to the provinces and then on to the universities—problems associated with appropriate recognition of the importance of the federal role. Obviously the new initiatives—the CFI initiative and the 21st century chairs—will go some considerable distance to addressing that problem.

I'm asking that as you consider restoring the transfers to post-secondary education, you also consider challenging the provinces, as we have, to join with you in a post-secondary education or universities accord—one that will give the federal government appropriate recognition for the restoration that I hope will be forthcoming.

Thank you very much.

The Chair: Thank you, Dr. Atkinson.

We'll now hear from Saskatchewan Wheat Pool, represented by Mr. Lyle Knutson, director, and Dan Schmeiser, manager, economic development.


Mr. Lyle Knutson (Director, Saskatchewan Wheat Pool): Thank you very much, Mr. Chairman. It's a pleasure to be here this morning.

My name is Lyle Knutson. I'm from a small farming community called Elbow, which is midway between Moose Jaw and Saskatoon here in Saskatchewan. I'm a grain and oilseed producer, and I'm here representing Saskatchewan Wheat Pool and its 50,000 members.

The pool does appreciate your committee's invitation to provide input into this budget-making process. I want to commend the committee for taking the time to come out here and hear from the groups and individuals you're going to be hearing from over the course of the day.

Many times, the finance minister, Mr. Paul Martin, has indicated the sacrifice Canadians have made in achieving this budget surplus. We have to acknowledge that a significant amount of that surplus stems from the cuts to services and increased costs to farmers and rural Canadians.

Our government now may focus its public discussion on the use of these surplus funds, which our finance minister predicts will reach some $95 billion after five years. We're pleased that discussion, such as with this committee, will be used as a base for the setting of the country's priorities. We all agree that the focus should be on achieving a rising standard of living and an enhanced quality of life for all Canadians.

• 0945

On behalf of our farmer members, the Saskatchewan Wheat Pool wishes to stress the need for agricultural and rural programs that truly realize such an outcome. Even after the recently announced addition to the federal aid initiative is taken into account, the government's response to the farm income crisis to date has, unfortunately, been inadequate. We strongly emphasize that the economic injury must be addressed to ensure a viable agricultural industry in Saskatchewan and the west.

We believe our agricultural sector is a key strength of our national economy and society. Agriculture definitely offers an enormous opportunity to capture some of the benefits of an expanding global marketplace. If rural Canada is to prosper and its communities are to have new hope, the future agricultural policies adopted by our federal government will be key.

This September, Canadians got some insight into the economic and human costs of the agricultural crisis, from the results of the survey done by the Angus Reid Group. In the Prairies, 68% of survey respondents and 74% of Saskatchewan respondents indicated that the economic health of their farms would most likely be worse this year compared to last year. Furthermore, without major changes in commodity prices or government support for another year, 39% of all farmers interviewed said they would either seriously consider getting out of farming—35%—or would get out of farming—4%—by next year. In Saskatchewan 8%, or double the number of farmers, indicated they would leave their farms by next year.

We believe action by our federal government should take several forms. It should include direct and immediate financial assistance and adequate long-term funding for an effective safety net program. It should also include lower grain transportation rates, a rollback of federal user fees and cost recovery actions, and reductions to taxes on inputs.

At the end of October, a delegation from Saskatchewan and Manitoba requested $1.3 billion in direct financial assistance. I think that was referred to earlier to this committee. This assistance would address the imbalance and support for our grain and oilseed farmers vis-à-vis their U.S. and European competitors. We strongly advise the federal government to revisit this request and act more favourably upon it.

We wish to compliment the government on the trade position that has been adopted in advance of the start of trade talks in Seattle. I think they're getting underway this week. The elimination of export subsidies and the reduction in trade-distorting domestic support, along with improvements in market access, would place Canadian grain and oilseed producers on a more equal competitive footing in terms that currently exist. We encourage our government to stick to their objectives as the negotiations unfold. However, we must remember that any benefit that's achieved in this process will only be realized in the long haul.

The National Safety Net Advisory Committee has stressed that current safety net programs are inadequate and underfunded. In view of this, we urge the finance committee to re-examine the government's spending commitment to this area. The future approach taken must be to provide farmers with programs that offer the degree of stability and support they need to ensure long-term viability.

We specifically request that federal funding of safety nets be determined once program need is assessed. Secondly, we request that the federal government task the national advisory committee with developing a national disaster assistance program.

In another very important area, the loss of the federal transportation assistance program, which was known around here as the Crow subsidy, has more than doubled the cost of moving grains, oilseeds and their products to export position. I'll give you a clear example of the effect it's had on my farm. In 1995, it cost me 35¢ a bushel to move hard red spring wheat from my farm to port. Today, I pay $1.09 for that bushel from my farm. As you can see, on an average farm with 30,000 bushels, and just in my small community, millions of dollars have been taken out. That has lowered our incomes very directly.

The costing analysis that was performed during this summer's industry consultation, known as the Kroeger process, identified that rail freight rates for grain were well above the cost of service, and that's inclusive of a profitable return to the railroads. Given this determination, we urge the government to adjust rail freight rates to option C, as outlined in the Arthur Kroeger's report—the very lowest possible option.

• 0950

We stress that such action would not be an expense to the federal government, but would result in cost savings to producers that would be in excess of $170 million. I emphasize, it will not cost taxpayers one cent. It'll have a tremendous impact on my farm.

Furthermore, we urge the federal government to act on the components of his recommendations that improve service, increase efficiency, and lead to greater accountability and competition in the rail transportation system.

Federal cost recovery initiatives have increased existing fees and added new fees for the services federal departments provide. This has risen by $30 million between 1994-95 and 1997-98. An additional concern is that the ongoing budgetary shortfalls at the Canadian Grain Commission will lead to further charges that will be borne by producers. We're not saying we oppose some cost recovery actions; however, we are saying as a minimum, given the current agricultural situation, no new cost recovery action should be undertaken by the federal government.

Taxation is one of the most significant impediments to Canadian agricultural competitiveness. We believe it's extremely important that a coordinated effort be made by all levels of government to address taxation policy and its competitive factor on the sector.

Studies have indicated a very high rate of return for every dollar invested in agricultural research. Not only is such spending important to the national economy, it is essential to our domestic agricultural industry to remain competitive within the growing world economy.

The Saskatchewan Wheat Pool is disappointed that despite the proven benefits to the industry, the environment, and the economy, federal government spending on research remains well below the level of the early 1990s. We would urge the federal government to place a higher priority on funding for agricultural research.

In conclusion, the Saskatchewan Wheat Pool urges the federal government to act in support of the agricultural sector, which is consistent with the direction envisioned in the throne speech and delivers on the promises made in our finance minister's economic statement.

In the short term, the government must immediately revisit and act upon the recent request for direct financial assistance. In the longer term, future safety net design, trade negotiations, transportation, cost recovery, taxation policy, and agricultural research will all play significant roles in the economic well-being of the agricultural sector.

We urge your committee to give serious consideration to these areas, as you deliberate on the focus of the next federal budget.

With that, I'd just like to thank you, Mr. Chairman, for your kind attention.

The Chair: Thank you very much.

We'll now hear from the Regina Chamber of Commerce, Mr. Jim Deane, president; and Bev Robertson, volunteer member, small business committee. Welcome.

Mr. Jim Deane (President, Regina Chamber of Commerce): Thank you Mr. Chairman. Good morning. On behalf of the 900 member businesses of the Regina Chamber of Commerce, I would like to thank you for this opportunity to present the chamber's views on the future of the Canadian economy.

With me here today is Bev Robertson, who is an entrepreneur, a member of the chamber's small business committee, and the author of the chamber's productivity resolution, which was presented to the Canadian Chamber of Commerce in November. The resolution was unanimously adopted by the Canadian chamber and will frame the Canadian chamber's public policy position for the forthcoming year.

I recognize that we only have five minutes to make our presentation, and I'll be turning the floor over to Bev in a moment to discuss our specific recommendations. But before I do, I want to take a minute to express our concern regarding the high personal income tax rates in this country.

Each year, the Regina Chamber of Commerce surveys our members on their views on their economic outlook. Our members have responded overwhelming that the number one issue facing their businesses today is taxes. Further, when asked what would have the most positive impact on their businesses, our members again overwhelming responded with broad-based personal income relief. We simply have to put more of their own money back in the hands of our consumers.

Finally, we recognize that new spending initiatives are part of the budget surplus debate. However, it is our view that the list of new initiatives should be very short. At the top of that list must be the western Canadian farm income crisis.

Again, thank you for the opportunity to present our views. I'll turn the floor over to my colleague Bev Robertson.

The Chair: Thank you, Mr. Deane.

• 0955

Mr. Bev Robertson (Volunteer Member, Small Business Committee, Regina Chamber of Commerce): I sat down yesterday to write some speaking notes on the resolution, which will be presented to you and presumably has also been circulated in Ottawa by the Canadian Chamber of Commerce. I found myself instead writing an update to that since it was about three months old, addressing issues that evolved in both the economy and the debate on the economy. So that summary turned into an update, and I'm now giving a summary of a summary, in effect.

Let me emphasize that talking about productivity is talking about wealth generation, not wealth redistribution. We need the wealth in order to maintain our standard of living and our social safety net. In fact I can't help but note, given the fact that many of the things that will be presented to you today will deal with the agricultural farm crisis, that if we had addressed this issue seriously several years ago, we might be having a very different debate today about what we should do about the farm crisis.

This is, again, for the benefit of all Canadians, for the health of Canadians' quality of life, not just for business in Canada. Similarly, it requires efforts by all groups of Canadians: governments, business and labour. I have to point out that the resolution has four legs relating to many of the things said here today: taxes, regulation, education, and research and development.

I think we need also to address the fact that the Canadian economy has shown some signs of life recently. In terms of what that means, I will personally say I think it simply means that the change in our way of life and our economy affected by the silicon chip has simply arrived in Canada five years after it arrived in the U.S. and in many other parts of the world. And it will allow us, as we are now doing, to catch up to where we were before. But that was already a weak position. So I want to address any claim that we don't need to worry about the economy or productivity because it's taking care of itself. No, it's not. It's simply getting back to where we were in the past, which was not where we wanted to be.

More specifically, since presumably this committee is particularly interested in taxes, I think I need to point out that both theory and practice dictate that the greatest boost to the economy comes from lowering personal taxes. Again, I think that's a manifestation of the fact that we're not talking just about business here, we're talking about the economy of Canada.

I'd like to also advocate more privatization where possible, lower provincial barriers to both business and labour—the flow of those.

The Mintz report was addressed at the meeting where this resolution was adopted. It was not included because it was feared that too many people didn't know what was in it. But I do know what is in it and I do support the general theme of the Mintz report, which is consistent with the theme of the Vicq report in this province, that the tax base should be made more even across the board as well as lowered.

Finally, very quickly, we've had many advocates of lower taxes in the past and we've had a variety of consequences. The argument is made today that lower tax rates will lead to lower tax revenue, and Ireland, the U.S., Alberta, and Ontario seem to have proven that. But I think we have to be careful to make note that Canada as a whole in the past has used that argument and it didn't work, and I think we can remember Reaganomics and other various names for these kinds of policies in the past where they didn't work. So we need to make sure we understand why they didn't work in some cases and did in the others, and I think it has to do with economic discipline on the part of the governments involved.

Thank you.

The Chair: Thank you.

Mr. Deane, do you have a final comment? No.

Now we'll hear from the Federation of Saskatchewan Indian Nations, Don Ross, the portfolio director.

Mr. Don Ross (Executive Portfolio Director, Federation of Saskatchewan Indian Nations): Good morning, everybody. I'd like to thank the committee for allowing us to make a presentation to you this morning.

I'm here on behalf of the Vice-Chief Lindsey Cyr and the Federation of Saskatchewan Indian Nations, which is the strongest and oldest provincial organization representing first nations people in Canada.

The Federation of Saskatchewan Indian Nations represents 72 first nations, and the FSIN is governed by our chiefs and assembly. The chief and vice-chief of the FSIN are elected by the chiefs and headmen of the first nations in accordance with the FSIN Elections Act and our customary law.

The executive work on behalf of the first nations to lobby, to facilitate, and to implement policies and programs that promote and protect their collective rights and our collective rights and treaties.

We'd like to speak to you today about the issues that will be facing your government in establishing the priorities for the next budget. I realize that everyone is focusing on priorities for the allocation of surpluses. I'm here to give you an appreciation for the issues that face first nations people and the potential for the impact of these issues beyond our communities. I believe the cost of finding solutions to first nations issues will pay significant dividends to all Canadians. We also want to ensure that first nations are not only addressed in the aboriginal policy of Canada's budget, but emphasize on how we fit into the planning, programming and priorities, as outlined in the recent Speech from the Throne.

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The challenges facing first nations are summarized in the social and economic statistics that I have distributed to you this morning. These statistics are a report card on the history of the Indian Act and the Indian policies of Canada.

I'm going to highlight some of the statistics for you. First nations people are very young. The median age of first nations people of this province is 17 years. The median age for non-first-nations people in Saskatchewan is 35. Saskatchewan first nations people are three times more likely to have less than grade 9 education. Saskatchewan first nations people are three times more likely to be a one-parent family. Saskatchewan first nations have an overcrowded dwelling rate 16 times greater than the rest of Canada. Saskatchewan first nations people have an unemployment rate 4.5 times the rate of the rest of Saskatchewan, and when we are employed, we have average incomes less than in the rest of Canada.

When people talk about wanting first nations people to be equal to other Canadians, I hope they have these statistics in mind. We would very much like these statistics to change and to be equal to the rest of Canada. The cost in social, human, and fiscal terms would be greatly less if these numbers were changed.

In an effort to address these issues, the FSIN has entered into processes with Canada and the Government of Saskatchewan to explore new governance and fiscal relationships that will address these problems. A focus on governance and fiscal issues is required, because this is not just a money issue. For many years, government has thrown money at issues without success. It is time we focus on the fundamental change in our relationship that will ensure the real priorities are addressed and real successes achieved.

Through the combined discussions of a governance table and a fiscal relations table over the past two years, the Government of Canada and the Government of Saskatchewan, along with the FSIN, has come to some common understandings that will form the basis for our vision for the future of first nations people in Saskatchewan. From our standpoint, this speaks volumes in making our first nations communities survive, and ensuring communities have the opportunity to thrive within the new understanding of the treaty relationships in Canada.

New governance and fiscal arrangements should go beyond the individual written promises of the treaties to achieve the spirit and intent behind the treaties, this being the peaceful co-existence of our nations, so that we then have the opportunity to thrive as have other Canadians who have entered into this partnership called Canada through treaty. Our vision for self-governance, rather than being focused on government alone, starts at the community level, which will flow governance and fiscal elements.

First nations communities' vision includes empowering first nations communities that have a real sense of control over their destinies. It would mean first nations communities have the means to improve their well-being so that it is comparable with non-first-nations communities, thus providing them with the social and economic conditions that will allow them to thrive in the future, and that communities and their members have access to resources and tools that generate the opportunities for contributing to social and economic development.

Our communities are proud of their place in Saskatchewan and in Canada. Our communities have the desire for, and can achieve, greater self-reliance. Our members, both on and off reserve, actively participate in their government and have a sense of belonging to it. Our satisfaction is that the treaty relationship is being honoured by all parties to the treaties.

For governance, our vision includes recognition of the primary authority of each first nations government to agree upon areas consistent with the inherent right of self-government; first nations governance that operates at the community, regional and provincial-wide levels, while respecting the individual first nations as a basic unit of that governance; governance systems that reflect the unique traditions, history and culture of first nations people, which may make them quite different from non-Indian government systems; implementation through staging that reflects the capacity and the priorities of first nations communities; governments that are seen as legitimate by their citizens, are recognized as such by the provincial and federal governments, have the power to achieve true self-determination and also the adequate resources to achieve it.

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The fiscal elements of our vision include financial contributions to first nations governance based on each party's availability of resources and the need to provide compatible programs and services leading to greater self-reliance while honouring treaty obligations; making available the resources for achieving levels of well-being for first nations people that are compatible with non-first-nations people; a government-to-government fiscal relationship that embodies the principles of fiscal equity, compatibility of programs and services, accountability, affordability, and sustainability.

What we envision above will not happen overnight. It will need to evolve and will require much work and of course the support of first nations and non-first-nations people.

The resources to begin to make the fundamental change in the outlook of first nations will be defined in the final agreements of our processes. We must, however, recognize that there is a window of opportunity to make these changes successful. The circumstances of our young people with their limited immediate opportunities and the social conditions in which they live need to be addressed now. If we wait for the long-term developments, it will be much more difficult and expensive to make real change.

The budgets of Canada need to have a long-term view of the needs of first nations people. The Royal Commission on Aboriginal Peoples calls for this long-term view to make effective change. We think we have the processes to begin negotiate this change and we will require the resources to ensure that we do not make the problems worse but can move towards a positive solution.

We are pleased that the government's priorities speak to a higher quality of life for all Canadians, the development of youth and children, the health and quality care of Canadians, and stronger communities. We must now ensure that the circumstances of first nations are addressed, because it is obvious that our problems in these areas are not at par with those of the rest of average Canadians.

We must also ensure that the current programs and services changes will help build towards the new relationship we have outlined in our vision. We must ensure that these changes that are negotiated are cost-managed in the short term so as to enhance the long-term social and economic benefit.

Thank you very much.

The Chair: Thank you very much, Mr. Ross. I'd like to thank everyone.

Now we'll proceed to the question and answer session. It will be a five-minute round.

Mr. Epp.

Mr. Ken Epp (Elk Island, Ref.): Thank you very much, Mr. Chairman, and thank you all for your presentations. Quickly, my apologies for being a few minutes late. I came from Ottawa by the very fastest route and got to Regina just before I came here.

Let's get on with some of these questions. First of all, I would like talk to Dr. Atkinson. I happen to be a graduate of the University of Saskatchewan in Saskatoon many years ago, long before you were even thought of.

The Chair: Back in the 1930s.

Mr. Ken Epp: A little after the 1930s.

You indicated, in regard to these chairs, that you were both excited about them and worried about them. Are you suggesting that in the budget there should be additional funding to support these chair positions? I think that's what you were saying. I want to affirm it or have you explain that.

Dr. Michael Atkinson: Thank you for the opportunity.

The chairs themselves represent a real advance on thinking about funding. They are, first of all, not entirely confined to the natural sciences; there will be provision for chairs in the social sciences, and that's very good. They'll be modest, but at least this program is intended to address some of the pressing needs across the university.

The other positive feature about the way the chairs have been organized, as I understand it—and we're working in a dynamic environment; the actual policies around the chairs are being put together, as I understand it—is that these chairs will not just pay the salaries of the faculty members we recruit, but they will also pay for some of the infrastructural costs associated with their recruitment. We've learned that it is pointless to hire a very fine academic in, say, chemistry without providing a significant amount of resources for start-up and for technical help.

Mr. Epp, the way the program is shaping up now is that there should be adequate support around each one of the chairs that are allocated to each of the universities. That's what appears to be the case.

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So what I'm saying is not to take issue with the program but to point out that the program will create second-tier problems for the universities. Beyond that, of course, there are things this program does not do that the universities have enormous needs around.

So for the federal government to simply say they've introduced this, and that's what they're going to do, even though this is good and we agree, it would leave the universities—it would leave the provinces as well, but it will really leave the universities—holding a huge set of problems. I guess I'm here to say I'm hopeful the federal government will recognize that its responsibility to post-secondary education is broader than the responsibility as encompassed by this program.

Mr. Ken Epp: I would like then to repeat my question and I would like you to answer it. Are you asking us in the budget to allocate more funding than presently is envisioned for these chairs to support them—

Dr. Michael Atkinson: No.

Mr. Ken Epp: —or is it enough? You're saying it's enough. Okay, thank you.

I'd like to talk more to you, but unfortunately my time is rapidly disappearing.

I need to talk to the wheat pool people. I have a whole bunch of questions, but the one I want to talk about is this. You asked for a reduction of freight rates, and of course this is a pre-budget consultation. What specifically are you asking for the government to do in the budget that would reduce freight rates?

Mr. Lyle Knutson: Thanks for the question, Mr. Epp.

I think this is an area that is going to fall directly into the lap of Mr. Collenette. What we would hope for is that this committee could make some recommendations to cabinet that would have some weight with Mr. Collenette as well. It's going to be a cabinet decision on where the Kroeger process or where the recommendations are taken. All we're saying is that this one area would not necessarily be a budgetary area but it would have a tremendous impact for western farmers who are suffering the effects of high freight rates.

Mr. Ken Epp: When the Crow rate was abandoned, there was a payout to this thing, which was apparently a perpetual agreement. It was just wiped out by the federal government giving a cash payout. Does that not adequately compensate for that?

Mr. Lyle Knutson: The answer to that is no, it does not. It was a payout on a capital basis. There are many producers who are in a share crop situation or lease situation who may or may not have received some of that. As you are aware, some went to banks and financial institutions. That was not an adequate response to the elimination of the Crow rate. The problems that are out in the farm community, while compounded immensely by the subsidies that are going on around the world, particularly the EU and U.S., are only further aggravated by the high freight costs we're paying right now.

The Chair: Thank you, Mr. Epp.

Mr. Nystrom.

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

I should probably officially welcome my colleagues to Saskatchewan, to Regina, this morning and thank the committee for coming to our province.

I would like to ask a couple of very quick questions, the first one to Mr. Knutson.

I think you said the average farm is around 30,000 bushels in terms of production, and when the Crow was eliminated the costs went up in your case from 35¢ a bushel to $1.09. It works out to a cutback of about $22,200. It's my understanding the Crow benefit would be a long way shy of that. I think the important thing to get across today is that because of the trade wars and because of our overzealous government cutting back on our support programs, we're in a situation that's not of the farmers' making in this province.

I suppose I would ask the question, if no extra assistance is going to come from Ottawa in the next year, what is going to happen in terms of the Saskatchewan farmer a year or two down the road? The small towns, the villages, the business community—what is this province going to look like in a couple of years without any more assistance?

Mr. Lyle Knutson: That's what really concerns us. We're seeing the evidence already, in effect, given the reasons we outlined. It will only be exacerbated if we don't find answers to the problems that are out there. In our paper we've gone the broad approach, offering a number of alternatives. It isn't necessarily going to be one thing, although I have had a producer tell me that if we could only get back a good part of what we lost with the elimination of the Crow, that would go some way toward solving some of the income problems. I do believe there are a number of issues on the table and I think we've tried to outline a few of them.

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As far as the problem goes, it can only get worse. I think it goes back to the statistics that were quoted in the document with regard to the feeling of producers now. They're questioning whether they should continue on in farming. And the producers that still have equity, that still have net worth, and are seeing it year by year eroded, are going to say it's time to put an end to that and move on to something else. It's not because of bad business decisions or poor management, it's a result of some of the policies that have taken place, plus the trade war we're being asked to fight.

Mr. Lorne Nystrom: My next question is to Bev Robertson, who is very enthused about the idea of productivity and what we do about it in our country, and I certainly appreciate the thought-out position he's taken on this over the last year or two.

I wanted to ask you to help us prioritize the priorities within that priority, Bev. Suppose the Prime Minister were to give you a call today and say, “Look, Mr. Robertson, I'll make you the head of our productivity council; you've got a billion dollars a year for the next five years.” How would you roughly prioritize the areas you're recommending to us in terms of importance and in terms of the step-by-step process? And how would you tie in Don Ross's people, the aboriginal people, who are so important in our province and in our country and in our city? That's a very simple question.

Mr. Bev Robertson: Well, can you give me a month to work on that?

First of all, I'm representing, in a sense, the Canadian Chamber of Commerce, the Regina Chamber of Commerce, its small business committee, and in some sense maybe myself here. So first I have to decide on who I'm speaking for.

I think if I get away from my own view here—I'm not saying I'm contradicting it—I'm quite sure the chambers of commerce would feel we should be talking first of all about the tax issue as number one. I think I have deliberately tried to broaden the discussion to include other issues that are related to productivity and that generally are being discussed in other parts of the world. Certainly if one came from Ireland one would be talking about education as probably number two, at least; and research and development, number three; and the barriers to trade between the provinces, number four.

I actually did answer your question there, I think. But I frankly would like to have had a chance to first think a few weeks, and then write an article on it, or something or other, because there's so much in what you ask. You're asking me to be more specific, and I'd love to do that, but I'd have to think more.

Mr. Lorne Nystrom: If I have time for one more question, Mr. Chair, I'd like to ask Don Ross what the priorities would be in terms of economic development for first nations people—not just in first nations, Don, but also in the cities in terms of aboriginal people, in the cities of Regina and Saskatoon. What kinds of programs would you recommend to the committee that we recommend to the Minister of Finance in terms of the priorities?

Mr. Don Ross: I guess if you look at the existing resources that government spends in this area, 10% of the money that is being spent right now by the federal government is targeted for social programming, 10% for economic development, and you wonder why we're in these kinds of statistics.

Mr. Lorne Nystrom: Right.

Mr. Don Ross: And I think if you look at the economic benefit of that social programming.... I'll use housing as an example. There has not been an urban housing program; it's been left off the national agenda since 1986 or 1987. So for 10 years our people have been moving into the cities with no housing strategy. But if you tie housing to economics, and you tie the whole unit, we're spending in Saskatchewan roughly $40 million in housing from the federal government, both on CMHC and section 95 and the on-reserve housing program, yet our people get no economic benefits from that $40 million. It goes to the small business community, the lumber yards, the contractors, and so all the benefits of the $40 million social program go to the non-Indian community. And yet we can't get a job in those lumber yards, we can't get a job in those stores, we can't get a job at those manufacturing companies—sashing, doors, shingles, you name it.

So if you take a look at the $40 million—we're trying to ask the government to agree to look at a new fiscal arrangement where we have control of the $40 million, so we get not only the social benefit in the house at the end of the day, but we get the economic benefits of the jobs and all the economic spinoffs of that $40 million a year.

If you just take that one example of housing and move it across the line departments to that 90% of the money, the $6 billion that's being spent on aboriginal people in Canada, if Saskatchewan's population is roughly 12% to 14% of that aboriginal population, then 12% or 14% of that budget is targeted to Saskatchewan, and yet we're not getting the economic benefits. You can tie it to our First Nations Bank and to SIGA and other economic opportunities we're dealing with right now. But we can't do CMHC loans even though we have a first nations class A chartered bank, because CMHC says we have to do direct lending to our communities.

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So there are government policies and programs in governance, and that's why we say we have to take a look at the whole new area of fiscal and governance with our people. We're doing that right now through negotiation, but we need this committee to understand that.

The Chair: Ms. Leung.

Ms. Sophia Leung: Thank you all for your very thoughtful presentations. I've learned a lot from you. I'm from B.C.

I want to address my first question to Dr. Atkinson. Last week the post-secondary education committee had a meeting with AUCC executives in Ottawa. We had a very good discussion. Actually, they share a lot of similar sentiments as you present. We did discuss increasing the transfer payments. As you know, education and health are provincial responsibilities. If the funding is increased, how can we ensure that it will go toward post-secondary education to assist you?

Dr. Michael Atkinson: It's hard for me to prescribe a particular transfer mechanism, but—

Ms. Sophia Leung: I'm not asking you about a mechanism, just the concept in general. Maybe I should clarify. In the health area, we did achieve the social union.

Dr. Michael Atkinson: I would suggest that the provinces and the federal government be asked to sign an accord that is similar to the health accord, one that would compel the provinces to spend the money on universities and other post-secondary institutions. I think a formal agreement like that is the only way the federal government is going to be able to capture some of the recognition it is looking for. I think that inside that accord it is possible to provide some additional direction, if you felt that was necessary—as was the case with the millennium fund for students—to the province and then to the universities to use these moneys in particular ways.

I want to emphasize that the universities value the autonomy they have and that directing funds to universities with particular kinds of requirements attached to them seriously compromises our capacity to actually provide for that kind of autonomy.

On the other hand, so desperate is the university situation that we would welcome support on the part of the provinces through the federal government in terms we can live with. I think it is possible to craft a post-secondary accord that would meet the requirements of the federal government, the provincial government, and the universities, and I'd urge you to consider that possibility.

Ms. Sophia Leung: Thank you.

Mr. Chair, I'd like to direct another question to Mr. Ross. I am really very alarmed by your statistic. It's not a very encouraging one.

What is your sort of self-help policy in terms of education? I raised the question because, as you know, Canada has been built by many new immigrants and they reached success through education. I wonder, what is your thinking in terms of education?

Mr. Don Ross: Actually, today our vice-chief is involved in a sod-turning ceremony at the Saskatchewan Indian Federated College at the University of Regina, in partnership with the university. That is the first first-nations-owned and -controlled university in Canada. We started with 25 students back in the early 1970s and we're now up to about 2,500. Again, the economic spinoffs for the University of Regina are just tremendous, along with the money students are spending on housing and everything else in the city of Regina.

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So we have a university. We also have the Saskatchewan Indian Institute of Technologies for the technical side of the trades. So we have the institutions in place to administer education and to implement our treaty right to education on both the post-secondary side and the technical side.

Our kindergarten-to-12 system at the band level is under our jurisdiction and our control. Because of the provincial government's regulations and authority under education, it's causing us problems in terms of our kindergarten-to-12 curriculum development. When we developed our own curriculum to start teaching our children to be proud of who they are and where they came from and tried to get that into the mainstream curriculum, it caused some problems.

So that's where we're headed. We have the infrastructure. Now we need resources to match.

The Chair: On behalf of the committee, I'd like to thank you.

As you know, as we travel across the country, we hear many demands.

Mr. Keen, you were going to comment on something.

Mr. John Keen: Yes, I'd like to make a comment.

Mr. Hermanson and some other people have been talking about this table that shows the various levels of subsidy in the United States and Canada. That table has no relevance for this purpose. You'll notice that it gives dairy subsidies for Canada of 56%. The way that's arrived at is to determine what level of pricing within a country is higher than it would be at the lowest possible level it could be arrived at.

I believe the OECD arrived at that figure by taking the cost of a Canadian mixing powdered milk from New Zealand. To them that difference in price represents a subsidy to the dairy industry. I got Ralph Ferguson, whom some of you people would know, to get me the figures the other night. As a matter of fact, for the dairy industry in Canada, if you're shipping fluid milk, Ontario's running at about 1.4%, not 56%. So we're using an improper instrument. We're trying to use a hammer as a screwdriver.

The Chair: That's a good point.

Let me finish what I started saying earlier on. I want to thank you very much.

As you know, we're travelling across the country, and there are many demands made on the committee vis-à-vis the needs and requirements of Canadians. Essentially, we're driven by the ultimate goal, and that is how we as a committee can make recommendations to the Minister of Finance that (a) reflect the priorities and needs of Canadians and (b) ultimately increase the standard of living and the quality of life for the people of Canada. It is within this kind of framework that we will be making the recommendations to the Minister of Finance the week of December 10.

I simply want to tell you that I think your presentation certainly added value to the debate. Of course, because you make such a strong case, it makes our job a lot more difficult. We'll try to be up to the challenge. But there is no question that, like life, there are tradeoffs that have to be made, and we'll have to keep in mind all the representations made from coast to coast to coast as we make those recommendations.

Once again, thank you very much.

We're going to suspend for one minute.

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The Chair: Once again, welcome, everyone.

I have the pleasure to announce to the members of the committee this morning that we have the following organizations with us for this session: Ag-West Biotech Inc., the Canadian Association of the Non-Employed, the National Shared Parenting Association, the Wynyard and District Chamber of Commerce, and the SouthEast Concerned Agricultural Producers.

As you know, you have five minutes to make your presentation. Thereafter we'll engage in a question and answer session. We will begin with Mr. Peter McCann.


Mr. Peter McCann (President, Ag-West Biotech Inc.): Thank you, Mr. Chairman, and thank you very much for the opportunity to speak to the committee.

I want to talk to you today about agricultural biotechnology, specifically about the importance of continuing to fund—and hopefully to increase funding—for this very important area. The committee has heard, in different locations, about the importance of genomics in the human health field and in other areas such as natural resources. Genomics has a hugely important role to play for agriculture as well.

First, a word about my own organization, Ag-West Biotech. We are a not-for-profit corporation and are 10 years old this year. Our mandate is to support the development of the ag-biotech industry in the province of Saskatchewan. We've had some modest success in that. In and around the University of Saskatchewan, we now have 50 different organizations, about 2,000 jobs, and $200 million a year in sales, directly from agricultural biotechnology. We're located at Innovation Place, which is the well-known research park at the University of Saskatchewan. We believe that Saskatchewan is the North American centre for agricultural biotechnology.

The strength we have in Saskatchewan in this area stems from the Agriculture and Agri-Food Canada research centre, in which the federal government recently reinvested $50 million. We have a state-of-the-art facility. From the National Research Council, we have the Plant Biotechnology Institute there, and of course there are the two university colleges at University of Saskatchewan, the College of Agriculture and the College of Veterinary Medicine.

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We are well recognized. This year we have had visits from the ministers of agriculture of China, Brazil, and Chile. I will be leaving these meetings today in order to meet with a government delegation from Denmark that is in town this afternoon. We are seen as an example for others in the world to follow.

Agricultural genomics represents a completely new wave for agricultural research, and it will revitalize what is a traditional industry. Genomics is the study of the genetics, the complement of genes, in an organism and their specific composition in terms of their chemistry and the way they relate together.

This science will provide the basis for the next 25 years of work in agricultural biotechnology as well as in human health areas. It's an essential tool to keep farmers competitive. The committee has heard very much this morning about the importance of and the state of the situation with regard to farmers in Saskatchewan and western Canada. Agricultural biotechnology, particularly through genomics, will give farmers the tools they need in order to be competitive into the future.

The U.S. and EU governments are investing very heavily in agricultural genomics. We already have strengths in Canada—specific strengths. As well as those in Saskatoon, we also have them at the University of Guelph, at UBC, at McGill, and at Laval. But we do need significant new funding to nationally coordinate the efforts in agricultural genomics.

Genome Canada is an organization you have heard something of. It will provide leadership and national coordination and it will ensure the excellence of the science as it goes forward in Canada. It will be a fully accountable body that will complement the work of the granting councils and the CFI.

The concept is that Genome Canada will set up a small number of highly concentrated genome centres across Canada in regional centres of expertise—we would hope that one of those might be in Saskatchewan—to make available leading-edge technology and equipment to Canadian scientists. It will also operate some research projects of its own.

The centres will offer state-of-the-art, high-speed research facilities and the people to operate them. Some of the areas in which we'll work are: gene sequencing, proteomics, bioinformatics, genotyping, and functional genomics. A very important part of each of these centres will be the study of the ethical, legal, and social issues that are around the issues of biotechnology in general. This has been referred to as GELS. There, leadership is coming from the University of Montreal and also from the University of Saskatchewan in terms of agriculture.

In addition to that program, also involved in each of centres will be public awareness and information programs to ensure that the public understands what is going on—and hopefully has some sympathy for it.

A national agricultural genome centre will be a partnership of university and private organizations. It will support and enhance Canada's $30-billion-a-year agricultural industry and be regionally located in an established centre of expertise. A number of projects have been identified that could be candidates for it, like, for example, the development of new crops—to give Canadian farmers new crops to sell in overseas markets—adding value to crops such as wheat and corn, the production of new varieties of legumes such as soy and pulses, and the improvement of livestock.

We have completed a national consultation process. We have met with over 100 agricultural scientists at 21 research centres across Canada. We've held meetings in seven of the ten provinces. The need for the initiative has been validated and we have achieved consensus—something that's always easy to do when you're talking to 100 scientists. A draft business plan has been developed. Again, 5% of whatever budget we're allocated will be given over to the study of the ethical, legal, and social issues around biotechnology.

The outcomes that we anticipate for Canada from the formation and establishment of an agricultural genome centre include the increase in high-value crops and animals for export markets, enhanced food quality and safety, because many of these developments will be towards improved nutrition of these crops, and higher yields. We will see reduced crop and animal losses and increased productivity and less use of fertilizers and reduced use of pesticides. We'll see agrifood products with enhanced nutritional value, and new sustainable non-food products. Industrial feed stock is a very interesting area.

Right now in the United States, for example, farmers are growing varieties of corn that are specifically not for human consumption but produce blood protein fractions now being used in the treatment of human conditions. One can imagine the advantages to be had from this type of technology, where just a few thousand acres can produce what is currently ten times the world's available supply of certain blood fractions. Widespread and low-cost applications are tremendous opportunities.

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We also produce industrial feedstocks agriculturally. There's work going on at the National Research Council in Saskatoon right now, for example, in development of polymers in wheat, in the use of the starch in wheat as a polymer source instead of as a food source in order to replace petrochemicals on a sustainable and non-polluting basis.

We would also expect from the establishment of an agricultural genome centre that Canada's international stature as a leader would be enhanced.

In summary, Mr. Chairman, Canada needs a strong, coordinated, national commitment to genomics. Genome Canada will provide that leadership. The provinces and industry are strongly supportive and will contribute approximately 30% of the cost. Large-scale investment is needed. The request is for $395 million over five years, of which a new federal investment of $250 million is being requested.

Other nations are into this already and are ahead of us. To give you a couple of quick examples, the multinational company, Novartis, in the fall of last year—alone—invested $650 million U.S. in an agricultural genomics centre in La Jolla, California. BASF, the very large German chemical company, has recently invested $100 million in a small university-based company in Boston. These investments are being made now. Canada must have a position in this area in order to remain competitive for the future, because these large companies are patenting the technologies, locking them up, and making them unavailable.

Thank you very much indeed, Mr. Chairman. I look forward to any questions.

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

We'll now hear from the Canadian Association of the Non-Employed, with Ms. Joan Johannson, chairperson.


Ms. Joan Johannson (Chairperson, Canadian Association of the Non-Employed): Good morning.

We are all Canadians, yet we live in two different worlds. My world is invisible to you. There is a barrier between us. It's like one of those one-way mirrors in which I can see you, what you've done, and what you're doing to me and the rest of the millions of men, women, and children living in destitution. On the other hand, I and my brothers and sisters who have been marginalized are invisible to you. Is it any wonder that some have begun to protest, and to protest more violently? More and more will feel this is the only way they can be heard. However, I am here today to do my best with words.

The letter I received from the committee speaks of the government's plan to provide for a rising standard of living and an enhanced quality of life for Canadians. It's clear that the wealth of the country is growing. For some it's growing at an amazing rate; in 1997 the millionaires' club tripled, to 220,000. But for most of us, the standard of living is dropping. For example, the disposable income of families raising young children is lower today than it was in 1981. There are tons of statistics about this. One good place to read about it is in The Growing Gap: A Report on Growing Inequality Between the Rich and Poor in Canada, a report on growing inequality between the rich and poor in Canada.

So let's be clear. This is the framework we're working with: the economy is fine and the people are starving.

Related to your areas of concern, number one, budget-making: We appreciate this opportunity to speak to the committee, but let's not pretend that this is any more than a token consultation. The committee is not even stopping in Manitoba this year.

The issue of setting targets is a worthy one; however, targets for what? That is the key question. The government is preoccupied with targets around debt reduction. May I remind you that ten years ago all members of Parliament set another target? The target was to eliminate child poverty by the year 2000. What happened to that target?

Number two, tax relief and reform: may I comment on the whole issue of taxes? This government, along with many others in this country, has made taxes a dirty word by the simple tactic of adding the word “burden”. Taxes are only a burden when the tax system is unfair. Taxes themselves are a way of providing services and redistributing wealth. Does this government have any intention of closing the gap between the rich and the poor by redistributing the wealth of this country? Only if this is in fact your goal would any suggestions I make be accepted.

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Third, on social infrastructure, the Canadian social infrastructure was destroyed with the introduction of the Canada health and social transfer. Not only were billions taken out of the system, but the rights under the Canada Assistance Plan were removed. Now there's a proposal to strengthen Canada's infrastructure. The suggestion is not to put all the money back that was taken; the suggestion is to “enhance access to higher education and restore health care funding”. Nothing is said about restoring funding to welfare programs, and nothing is said about restoring the CAP rights.

Our priorities for renewed infrastructure are to make sure every Canadian man, woman, and child has adequate food, clothing, shelter, and access to transportation and communication. Some first steps towards this would be to restore the EI program. Money taken out of the EI fund for general revenues is not your money. The only honourable course is to give it to the unemployed. It's their money; it's not yours. Then you can restore funding for social assistance, increase the federal minimum wage, and ensure that all children receive the new child benefit. We used to do this; I'm old enough to remember the family allowance.

Fourth, on the new economy, the new economy is spoken of as though it's the old economy with a few additions, such as new technology and greater globalization. My understanding of the new economy is that the communications revolution will have as far-reaching effects as did the industrial revolution.

Wealth is no longer connected to goods and services. The labour of the average worker is needed less and less. What could the government do about it? An obvious example is the Tobin tax on financial transactions. Another is the 32-hour work week.

Fifth, on productivity, it's touching that the government continues to have this blind faith in economic growth as the answer to all our prayers. In the finance committee's report, Productivity with a Purpose: Improving the Standing Living of Canadians, we're told that if the pie gets bigger, we all get bigger pieces. Well, actually the pie continues to grow, and only the rich get bigger pieces.

Finally, I'm amazed that this government continues on its economic course as though there is no environmental crisis. The planet we live on is as invisible as the poor and the marginalized, and just as the people have begun to protest their inhuman treatment, the planet itself begins to quake.

The word “economy” comes from words that mean ordering the household. The finance committee is in charge of the Canadian household. You have not taken care of your responsibilities to the citizens. This society is not a business; it is a family. You have allowed the weakest members to sicken and to die, and you don't believe this because you don't see it. The one-way mirror only reflects back to you the images of you and your family and your world.

Thank you.

The Chair: Thank you very much, Ms. Johannson, and thank you also for speaking on behalf of people of Manitoba. We've had many representatives from the province of Manitoba appear in front of the committee in these pre-budget consultations, and you may also know that part of this process of pre-budget consultations includes members of Parliament holding town hall meetings and addressing precisely the same questions that the committee is addressing, and then reporting to the committee the input of Canadians from coast to coast to coast.

I just want to make sure the entire process is fully understood. Thanks for your comments.

We'll hear from the National Shared Parenting Association, Ms. Joni Andrychuk, president. Welcome.

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Ms. Joni Andrychuk (President, National Shared Parenting Association): Thank you.

Our proposal today involves two major components. The first is the education of parents immediately after marital separation, and the second is education for children to help them cope better with the trauma of divorce.

Our focus is the integration of community support groups and volunteers working in conjunction with federal and provincial governments to help heal the children of divorce and their parents. This would be in keeping with the recommendations of the 1998 joint Senate and House committee study on child custody and access, wherein one of the major components was for a national divorce education program. This would also be in keeping with the United Nations Convention on the Rights of the Child.

Our federal government has made it no secret that it has a national children's agenda. The Adult Children of Divorce and the National Shared Parenting Association commend the government for this initiative. The children's agenda is projected to impact positively the standard of living, health, education and overall happiness of the Canadian child, regardless of age, race or economic class.

However, there is a difference between material assistance and emotional health. The government is concentrating on programs such as the child tax credit to ensure that there's enough money to look after children, or increased maternity leave to look after young children, and day care programs to ensure parents can work to provide for their children, and even programs under the federal child support guidelines to ensure that deadbeat parents pay their child support. Lots of money is being funnelled towards the materialistic side of child issues.

Conversely, little has been done to date to ensure that children grow up with a sound mind, being loved, cared for, and knowing they can depend on not one, but both parents. Little has been done to ensure that our children grow up with self-esteem, good morals and ethics, respect for others, and the ability to raise the next generation of Canadians.

The child of divorce has been overlooked. Half of Canadian children will experience the misfortune of their parents' divorce. Consider that 50,000 Canadian children a year will experience the throes of their parents' divorce. They're innocent, unwilling, and usually unknowing participants in what amounts to the destruction of their family. The secure life they are familiar with is gone. Life becomes uncertain, and they get thrown into the adversarial divorce forum.

Often separating couples do not have the ability to split amicably, and they get caught up in the system, which is comprised of expensive litigation mired with complex legal terminology and considerable mistrust of the other side. That is the nature of litigation.

Of the approximately 15% of Canadian couples who do not split amicably, 7,500 children are affected with an ugly divorce and custody battle. The lives of these children become a living hell. Unfortunately, they can't verbalize their feelings, nor can they seek counselling to help them deal with their trauma. Currently our government offers nothing for the children of divorce.

It is common knowledge that the following applies to children of divorce: 75% of youth suicides, 85% of behavioural disorders, 71% of high-school dropouts, 85% of imprisoned youth, and 75% of teen pregnancies. As well, they have greater alcohol and drug use, greater risk of mental illness, including depression and anxiety disorders; they suffer from low self-esteem, have less empathy for others, and have a greater risk of marital dysfunction as adults.

The first part of our educational proposal is education for parents after divorce. There needs to be mandatory education for all separating and divorced parents immediately upon marital breakup. Although children suffer the most from divorce, after the parents have become educated they will be better able to deal with decisions regarding the welfare of the children. This would be similar to when the oxygen masks come down in an airplane; you need to put your mask on first before you can help the children.

Parenting After Separation is a workshop developed in an Alberta study, which has already been a success story. This is a mandatory six-hour divorce education program. The Adult Children of Divorce proposes that the federal government allocate funds on behalf of the children of divorce to implement a similar program to the entire nation.

The Alberta project was the brainchild of psychologist Dr. Kent Taylor and Queen's Bench judge Madam Justice Trussler of Edmonton. Initially, the Chief Justice of Alberta agreed to the pilot project in the city of Edmonton. According to the feedback received by the chief justice and other judges and lawyers alike, the program was a great success. Apparently, lawyers reported they saw an improved attitude in their clients, especially relating to putting their children's needs before their own. The mandatory divorce education program was then adopted by the Alberta government.

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The key to this education program and others like it is that the federal government work closely with the provinces and community outreach programs, such as the Adult Children of Divorce, family service bureaus, etc. Currently, Alberta's education program is being implemented by a non-profit association called the Family Centre. The Alberta program is being run on $325,000 a year. This money comes from the federal government's child support guidelines implementation fund given to each province.

The course, Parenting After Separation, is a six-hour workshop presented in two three-hour parts. The workshop provides information for parents about the divorce process, its effects on the children, some techniques for improving communication, and the legal issues that affect them and their children. It encourages mediation to resolve disputes. There's education on how to develop a parenting plan to help parents reach agreements on how they will continue to be parents while they are ending their relationship as husband and wife. The group ranges in size but never exceeds more than 50 participants.

It is important that people are educated on the dynamics of divorce. For the children, so many things change. When you examine even the relationships with the extended family, you see how many people are affected by divorce.

There are so many changes a child has to cope with during this very difficult time. These include such issues as a new school or a new home. There may be a new step-parent or new siblings. These education programs assist in how to deal with those issues.

While divorce may mean happier times for parents, it is not necessarily the case of the children. It is helpful for a parent to understand all of the changes and disruptions experienced by that child, so they can help them.

Children need information about the pending break-up and divorce. However, the information must be at their level of understanding, and the information must not be one-sided. They need to know every detail and they also need to know they can ask questions.

The workshop is designed to provide information. When parents understand what's happening to them, they're better able to cope with what's happening to their children and can help support them. The workshop encourages parenting plans to help the parents deal with issues on money, access, decision-making and residency. They promote mediation, which is often a preferred solution and makes both parties a lot happier than a judge-imposed order.

There are two manuals in the program. One is a leader's guide for the instructor. The parents in the program get a participation manual.

Just to illustrate some of the things in the program, it talks about the stages of separation and divorce, issues to resolve during separation and divorce, shared parenting, parallel parenting, the role of the natural parents, the step-parent, the children's feelings, what children need, teen relationships, guardianship custody and access—the list goes on. It's very informative for people going through a divorce.

All residents located within one hour of these centres must take the course. It's mandatory. If you're outside the centre, you're given a workbook you can work with and you hand in sheets. You cannot go through the functions of the divorce without the sign-off for participation in the course.

The second stage is divorce education for children, which can be enacted nationally after the first stage has already been developed. Once we get the parents educated, we'll look at the children's education, which can be a voluntary program based on whether the parents feel the children need to be involved in the program. Either of the parents can facilitate it.

Mary Gordon, the parenting administrator of the Toronto Board of Education, recently stated:

    Parents of the “me generation” underestimated the impact of divorce on children and the vital role they play in their healthy development. The parent-child relationship is unparalleled in its intimacy and ability to nurture and instil confidence in children.... Parents must be responsible grownups looking out for the people they've brought into this world.

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A University of Nebraska sociologist, Paul Amato, tracked 2,000 families over 20 years. In a 1999 story in Psychology Today, he is quoted as saying:

    The dissolution of a home that they thought was stable is an unwelcome and disturbing event in the lives of these offspring. Low conflict divorce shatters kids' sense of trust, creating psychological distress as they grow older. They have trouble forming relationships of their own and are particularly unhappy as adults.

This is low-conflict divorce. When we have high-conflict divorce, we start getting into the statistics I mentioned earlier of 75% of youth suicides.

There are other educational programs that can come from this, such as premarital education, which we might want to consider in the future.

Through funding by either transfer payments to the provinces or federal infrastructure, every province should and could have similar programs to the Alberta model. The course is not unlike many other provincial courses that must be attended for certain functions or tasks, such as driver training or work-skills training.

Parenting is probably the most important vocation in the world. If we could compare it to all other things people do, there are few training courses available for new parents, and there are even fewer divorce education programs in Canada.

If our government truly feels compelled to help the children of Canada, it should start by educating the parents of divorce, as the divorce phenomenon will impact virtually 50% of our precious children. Children's programs can then be developed for those parents who feel their children could benefit. If we want to have a functional and well-adjusted population, we need to ensure the mental as well as the physical needs of our children are met.

Thank you very much.

The Chair: Thank you very much.

We'll now hear from the Wynyard and District Chamber of Commerce president, Mr. Darwin Brown. Welcome.

Mr. Darwin Brown (President, Wynyard and District Chamber of Commerce): Good morning. Thank you for giving me an opportunity to speak to you today, and thank you for stopping in Saskatchewan and making an effort to hear the concerns of the Saskatchewan people.

I'm here this morning as a businessperson and as president of the Wynyard and District Chamber of Commerce, representing over 85 members.

For over three generations, Canadians have enjoyed a cheap food policy, primarily due to the hardworking, innovative and most efficient farmers in the world. Canadian Western Agribition, which is going on right now in Regina, is a perfect example of this. The world comes here to see and learn from the best.

Today, the farmer grows a bushel of wheat that costs him just over $3 to produce. For that same bushel of wheat, he gets paid just over $2. That same bushel of wheat produces approximately 77 loaves of bread. At an average of $1.49 a loaf, the farmer can't buy two loaves of bread with a bushel of wheat. The part-time student at Safeway gets paid more for bagging the bread than the farmer gets for growing the wheat.

I could give you several examples of similar illustrations using other farm commodities, but time today will not permit. Suffice it to say that a negative farm net income is a very serious problem. What a shame that the farmer has to have an above-average bumper crop to have any hope of maybe breaking even, never mind droughts, floods, frost, bugs and disease. Now the farmer has skyrocketing input costs and plummeting commodity prices, all of which are beyond his control.

As a businessperson in small-town Saskatchewan, I am very concerned about the effects this is having on rural Saskatchewan, such as urbanization, out-migration, school closures, hospital closures, health care cutbacks, shrinking tax base, deteriorating rural roads, not to mention farm families' stress, increased poverty for farm families and their children, and an increased suicide rate. You need to know that a crisis at the farm gate is also a crisis on main street in rural Saskatchewan. It is also a crisis for municipal and rural-municipal governments.

Desperate times call for desperate measures. It is time for politicians to put aside their partisan politics and work together to come up with some creative solutions to save the family farm. Make no mistake about it, the family farm is worth saving. Our cheap food policy and our rural way of life depend on it. Right now the control of our food is in the hands of many. Lose the family farm and you are giving control of our food to a few corporations. We will all pay for that for generations to come.

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The federal government is projecting budget surpluses of $95 billion over the next five years. It is forecast that net farm income will be negative for the next five years. Two things need to happen: first, a short-term, immediate cash injection of over $1 billion so that farmers can survive through the next crop year; and second, scrap AIDA, a bureaucratic nightmare and a miserable failure at helping those who need it most, and come up with a long-term safety net program that guarantees at least the cost of production—a program that is designed to benefit the farmers more than the accountants. If nothing is done, it is predicted that as many as one-third of farmers will not be able to put a crop in next spring. Once the farmer leaves the farm, he's not coming back.

Thank you.

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

We'll now hear from SouthEast Concerned Agricultural Producers, Mr. Tom Cameron and Mr. Murray Firth. Welcome.

Mr. Tom Cameron (Spokesperson, SouthEast Concerned Agricultural Producers): Thank you. We've just heard a lot of the things from Mr. Brown from Wynyard, but as agriculture producers from southeast Saskatchewan, we are pleased to have the opportunity to talk with members of the finance committee.

Our greatest difficulty lies in discussing our challenges and our immediate crisis in five minutes.

Prairie producers have not been standing still waiting for the world to pass by. Our livestock industry is relatively healthy right now. Investments have been made in specialty livestock, cattle, and hog production. The federal contribution to the Stockman's Arena, which was opened just last Sunday, is certainly appreciated.

The grains and oilseeds sector has undergone a revolution. In 1982 there were 400,000 acres of specialty crops in Saskatchewan. This year the acreage is about four million. Wheat is no longer the dominant crop; in fact much of the wheat is grown only because a cereal is needed to complete the crop rotation. These new crops require a large capital investment in land and specialized machinery. There are high input costs in chemicals, fertilizers, and seeds. New technology and management methods needed to increase our productivity do not come cheaply.

One of our area producers calculates the cost of producing an acre of canola at $148. His revenue projection is $137, for a net loss of $11. Crop insurance would pay only $87 for a total crop failure, so there's a little bit of difference in the numbers.

Farmers in general, and not just young ones, are computer and market literate. Farm parents are forcing their children to go to university, to go to tech school.

Five years ago they saw a future in agriculture. Today they have lost all faith in the future. Despite everything we have done to modernize and diversify, the grains and oilseeds sector is facing a deep crisis. Canada has withdrawn most of the traditional federally funded programs that were in place. Our competitors have not. Our agricultural producers have been placed on an unfair playing field.

Other countries have not followed our lead. They are not reducing their support for farmers; rather, they are finding ways to give more funding. This has had a very negative impact on almost all commodity prices.

Without getting into a numbers debate, we point out that the sum total of the loss of the Western Grain Transportation Act, the increase in federal cost recovery fees, and the Canadian Grain Commission fees is $630 million yearly. Farmers have certainly contributed their fair share toward balancing the budget.

We do have programs in place that were meant to provide stability for producers. I think most farmers would agree that NISA is a good program. It could certainly be improved, and we look to our farm and government leaders to do this. I realize that it's an ongoing process to try to improve these programs.

Crop insurance could be a valuable tool, but it does need improvement. I can assure you, coming from southeast Saskatchewan, that it needs a lot of improvement, because it did not meet the needs of the flooded area this spring. We were under a lot of stress. We did receive some assistance, but it was certainly not what the papers reported us receiving.

We've been told to be in existing programs if we wish to receive extra funding. There are valid reasons that 40% of the acreage in southeast Saskatchewan is not enrolled in the program. And we understand that this holds true for most of Saskatchewan.

Improve the program to make it of more value to producers. This would require increased federal funding, and this is probably not something that should happen in the next two months. If we're going to improve crop insurance, start from the ground up and work toward a long-term program.

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Last week Mr. Vanclief acknowledged that a lot of farmers referred to our latest program as “AIDA-you”, a new cuss word. He has made changes to the program, and they're welcome; they'll help a few farmers. He also indicated his awareness that a lot of producers have been falling through the cracks. Unfortunately these cracks are wider than the boards between. We look at our comrades in the northwest of Saskatchewan: they had a good crop this year, but in the previous four years they had basically drought, and they are in trouble.

Three years of drought do not produce a very high reference margin in the program. 1998 was also a drought year. They did not receive too much AIDA money. Other areas may have had three bumper crops, followed by an average crop in 1998, which would trigger substantial AIDA money. We don't begrudge those people the money in those areas, but make it a fair program, so that if you have a disaster it does pay.

It did not hit the target, and there are lots of examples of that unfairness even within a smaller community where two farmers will have exactly the same operation, but because of some quirk in the way they did something, one receives money, one doesn't. AIDA must ensure that all producers are treated fairly.

There's a debate involving farm statistics right now. Manitoba and Saskatchewan have requested $1.3 billion in emergency assistance. I think we would agree with Mr. Brown from Wynyard that in fact we do need some assistance, and we need it fairly soon. It will not come through AIDA.

We want to tell you that real people and real communities are in severe financial stress. It is not just the small farmer who continues to grow wheat who is in trouble. There are a lot of farm families facing a bleak winter. There are large and small operations. In short, they are from all sectors. It could be a young individual or it could be an older farmer. We have lots of small operations that are very successful. They've found a way to be successful. They haven't stood still. Even a good crop in some areas hasn't helped when prices are so low.

Mr. Vanclief was in Saskatchewan last week. It would seem the Saskatchewan farmers tried to give him a respectful audience. Should our farm delegation return to Ottawa to discuss our crisis and our needs, we would hope they will also be shown the same respect. We do need immediate financial assistance.

We would ask you, as members of Parliament on the finance committee, to let Mr. Martin know the following as he is preparing his coming budget.

Use the budget to recognize agriculture as one of our primary industries. We create wealth, unlike the NHL, which only recycles that wealth.

We need a financial commitment for programs that will keep our industry alive and thriving until fair world trade rules have been implemented. We wish our government the best of luck in the coming weeks in Seattle.

Use the budget to tell our industry and our young people that there is a future that is worth while.

Despair and hurt are found throughout the province. This struck home to me in a conversation recently with a young neighbour. Both he and his brother have recently married. They farm with their parents in a diversified grain and livestock farm. They have done a lot of different things to try to make a go of it. In 1998 AIDA missed them. The son mentioned to his father that while it was in pretty good shape, the old century stone farm house needed shingling. The father told him it may be better to hang on and wait for another year to see if he was still here.

Young farmers have left a number of the areas. A lot of other farmers have been living on equity and depreciation, hoping things would improve. Perhaps Mr. Vanclief can convince the rest of the world to eliminate unfair subsidies and implement fair trading rules by Christmas. If he could do that, he could probably become president of the World Trade Organization.

Earlier this month CBC sponsored a panel presentation at Carlisle. A young farmer made an emotional statement that he had taken the Canadian flag down after he heard of the reception given our farm delegation in Ottawa. He challenged the Prime Minister to make him want to put that flag up again. As members of Parliament, you have the opportunity to try to help him raise the Canadian flag again for the fifth generation in that family farm.

Thank you.

The Chair: Thank you very much, Mr. Cameron. We'll now go to the question and answer session. It will be a six-minute round.

Mr. Epp.

Mr. Ken Epp: Thank you, Mr. Chairman.

Thank you very much for being here today. I know that some of you have travelled a fair distance, and you've taken the trouble to give us a written report in most cases.

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Ms. Andrychuk, I heard from your statements a lot of descriptions of your programs and your ideas of what should be done. But we're here as a finance committee seeking input into the budgetary process and asking basically what we should advise Mr. Martin when he brings down his budget next February.

It occurred to me while you were speaking—and you outlined all of the challenges to families that are involved in divorce—that perhaps we should be spending a little more effort trying to prevent divorce in the first place. I wonder whether you or your organization have any suggestions in the budgetary process on what we can do to help keep families together. And secondly, is there anything in the budgetary process that should be directed toward what you're trying to accomplish?

Ms. Joni Andrychuk: Actually, in the second.... Once we implement the education for parents after divorce—because I realize funds are limited—and then focus on the children, we would like to see premarital education imposed as mandatory before people get married. Currently, we look at premarital arrangements and stuff as just being a part of the church or something similar to that, when really it is part.... You need a licence to get married, just like you need a driver's licence. It's one of the fundamental things. Marriage isn't the only way we get children, but children are usually a product of marriage.

Susan Wright, a child and family therapist at the Peel Children's Centre in Toronto stated:

    Marriage isn't just a heart commitment—it's a head commitment as well. Before investing in a permanent relationship, couples should discuss mutual values and goals, ability to negotiate differences and parenting views. In our society, people invest more time buying a house or a car than planning a future with a prospective spouse and children.

So that's where I think we would get the most benefit in trying to keep couples together, because a lot of people get married not knowing what marriage is all about.

Mr. Ken Epp: Are you suggesting perhaps the budget should have a clause in it that says that you will not get your income tax refund unless you can show a certificate that you've taken this course? I'm having a little difficulty. I agree with your cause and what you're saying, and I've observed the trauma that's involved in divorce. As I said, I think we should perhaps look at ways in which we all can work together—governments, churches, individuals, and families—to try to keep marriages intact. But we have to deal with the reality that it doesn't always happen.

I still don't quite see why you're here at the finance committee, because you haven't said anything to the finance committee about what we should do in the budget to promote your cause.

Ms. Joni Andrychuk: Money could be put aside, or handed to the province—it can be handled many ways, by national funding or to the province—to handle the education of parents after divorce. When parents become educated and they realize the harmful effects on their children, that spreads out into the community. When people are more informed and understand more, they may talk over coffee about the effects it has on children. It's a community culture that gets created when you have divorce programs such as education. And you don't need to have punitive damages on it, such as withholding tax refunds. The premarital information, before they get issued a marriage licence, may deter people from getting a marriage licence. But I don't think so. I think when people are getting married, they do want to talk about some of the issues that maybe their parents neglected to talk to them about—on the seriousness of a marriage.

But once the government implements the funds and makes it mandatory for people to have this divorce education, our community will change and our values will change, because we will no longer be raising a generation of Canadians who are unable to handle divorce because their parents got divorced, and they suffered all the emotional effects of that divorce. So the values and the community will start to grow.

Mr. Ken Epp: Okay, we could go on and on. I'd like to talk to you for about five hours or more—

Ms. Joni Andrychuk: Well, thank you.

Mr. Ken Epp: —but I have six minutes, so I'm going to have to go to my next one with my last minute.

I want to talk to the agriculture people. I suppose we have a number of those here. The Wynyard Chamber of Commerce certainly talked almost exclusively about the agricultural crisis. I'm just wondering whether any of you who had....

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Say you were king—or in Canada the equivalent is Prime Minister—and you could solve the problem, you could put out a solution to it. I know we talk about short-term right now to tide us over and then long-term. What is the long-term solution? Again, I ask you to focus on how it impinges on the upcoming federal budget.

Mr. Tom Cameron: We know how much it will cost us to save the family farm. We have to ask ourselves how much it will cost us if we lose the family farm.

We need to have different levels of government work together, put aside the partisan differences, and design and create, in consultation with the interest groups, a safety net program that will work. We've had several attempts, hits and misses. There has to be a way. We have to get creative. I don't know if that's going to mean a food tax. I don't know how exactly it's going to be implemented. But we have to find a way to be able to keep that family farmer on the family farm that his family has been farming for generations. That's critical and vital to our cheap food policy and to the survival of the Prairies.

Mr. Ken Epp: You've restated your case with respect to the need for it, but you haven't given us a solution.

Mr. Tom Cameron: You're looking for the details?

Mr. Ken Epp: My time is up, so I guess I'm just going to have to ask you, if you have an actual, workable solution, would you send it to us?

Mr. Tom Cameron: Sure.

Mr. Ken Epp: We have to go to the next questioner. Sorry, I'm out of time.

The Acting Chair (Mrs. Karen Redman (Kitchener Centre, Lib.)): Thank you, Mr. Epp.

Mr. Firth, would you like to quickly add your comments?

Mr. Murray Firth (Spokesperson, SouthEast Concerned Agricultural Producers): Yes, thank you.

In response to the question, one of the things that bothers us most in the farm community is this. If I were king.... To restore faith is to restore hope. Too many of us in the farm community are Tom's age and my age, in our fifties. We need young people coming in. People are not coming in at 25. We need people who are interested in agriculture.

Probably these people will be off the farms and they'll come back with degrees, but they're not entering agriculture. There's a severe hurt. It's not showing up so much right now, because the grain is being produced and oilseeds are being produced, but five, ten, or fifteen years down the line, when people want to retire, unless there's a huge influx of corporate farms—and they have to be run as cheaply as the present farms are, the family farms—unless there is hope for agriculture in the future, young people will not be there.

To get that hope, you need a commitment from the federal government that yes, we want to see family farms on the Prairies in Canada. There have been two programs, and everybody alluded to them: NISA and crop insurance. Crop insurance, particularly in Saskatchewan, needs quite a bit of work. I've worked both formally and informally with crop insurance people trying to improve things, and they're well aware of the problems. The main problem is they say “Yes, we'd like to do this, but this costs money, big money. We have to go to the provincial government, or if it's cost-shared, we have to go to the federal government.” All of a sudden we're looking down the line five years before we get a very minuscule change made. That does not help the situation at all. We need some major cash influx into crop insurance to get some major changes to backstop people.

As well, as the third line of defence, we have AIDA, a hastily thought-up program that came in very quickly. Unfortunately, when the federal government removed the Crow benefit and went to more of a user-pay way of dealing with western Canada, they said they were going to come up with a third line of defence, and that third line of defence was not worked on until it should have been implemented. Then all of a sudden, bang, we had AIDA. It hasn't worked very well.

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So if I were king, I would put more cash into existing programs and get a third line of defence in there immediately.

The Acting Chair (Mrs. Karen Redman): Thank you, Mr. Firth.

We'll now hear from the Honourable Lorne Nystrom for a six-minute round.

Mr. Lorne Nystrom: Thank you, Madam Chair.

I want to welcome all the witnesses here this morning and start off with Mr. Brown. Darwin Brown is from Wynyard, my hometown, and it's the first time I recall someone from the small town of Wynyard being here before the committee in many, many years.

Just by way of background, I want to tell the committee that Mr. Brown's organization, the Wynyard Chamber of Commerce, initiated a farm support group in the chamber in Wynyard some time ago and had a public meeting, which a lot of people attended. They've contacted other chambers around the province to try to build a support network for the farmers for assistance immediately.

Mr. Brown, can you tell us what the impact on main street has been of this farm crisis? And when I ask that, I think of Wynyard as one of the more fortunate towns. We have there a large poultry plant that employs several hundred people, which other towns don't have. We also have a sodium sulphate plant nearby, which also employs sixty- or seventy-odd people. So we have those base industries.

In that context, I wonder if you can give us an idea what the effect is on main street. And perhaps, Darwin, if you could, think also beyond Wynyard to other small towns. I think of Punnichy, Raymore, Lestock, Foam Lake, and other small towns in the area that don't have a chicken plant or a sodium sulphate plant that is really stable in the community. It's important to give us an idea of what is really happening on main street in small-town Saskatchewan.

Mr. Darwin Brown: The farm crisis has impacted on every single business on main street as far as the bottom line is concerned.

I'm in the insurance business, and obviously farm insurance is a very big part of my business. Every year there are fewer and fewer farms to insure. Every farmer we are insuring is looking for ways to cut back and cut corners and save. And you can't blame them. The money just isn't there.

We've seen school closures in our area. We've seen hospitals cutting back, as far as health care is concerned.

To be sure, as far as jobs are concerned, the bottom line of every business person has been affected.

What Mr. Nystrom is saying is true. We are in a very fortunate position in Wynyard. We are doing better than most other small towns in Saskatchewan, because we have some of these other industries in our area. As well, our farmers have done very well in the last several years. We've had very good weather, very good crops, bumper crops for the last several years. Yet the farmers are hurting and suffering, and we're seeing the effects of that. So I know that if we're hurting, if we're suffering, there are many, many areas throughout Saskatchewan that are hurting worse than us.

Mr. Lorne Nystrom: So it's not just a farm issue; it's an issue on coffee row with people in the small towns, the retired folks, everybody.

Mr. Darwin Brown: Absolutely. It affects and impacts on the entire community, the entire area.

Mr. Lorne Nystrom: My follow-up to you, and also to Mr. Cameron and Mr. Firth, is this. If no additional aid comes from the federal government before Christmas, or indeed Mr. Martin's budget in February, what do you see for rural Saskatchewan a couple of years down the road? What if we do not make a recommendation, or what if Mr. Martin does not accept our recommendation even if we do make one, and there's no extra help forthcoming?

The subsidies are going to stay, at least for a while. Even if you're the Pope, you can't just snap your fingers and they disappear overnight. So if we are unsuccessful in persuading the powers that be to spend some of that $95 billion on an emergency program and a good, long-term farm program, what will rural Saskatchewan look like in a few years, Mr. Brown and Mr. Cameron?

Mr. Tom Cameron: Probably in a few years you'll continue to see some of the younger farmers out of agriculture. While they're still young, they don't have a lot of equity invested, so they can walk away and hopefully get a job somewhere else. They don't have a lot of their life committed to agriculture as yet. They would like to, but they won't be able to do that.

You'll probably see a move to larger and larger farms. We've begun to see some management farming showing up in Saskatchewan. If you want to go to the city, if you want to move off the farms, you simply hire a management firm to take care of the farming for you. That causes a loss in your community of people, and that will be a loss down the road.

If there's no short-term assistance, I think you'll see a lot of farmers who are dumb enough to keep on farming in the short term, but if there's nothing there in the long term, I think you'll find that's where the real crunch comes, because that's where the lack of hope is.

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This summer, we were fortunate enough to have the three opposition leaders tour southeast Saskatchewan. We didn't have bumper crops down that way, Mr. Brown. A lot of us didn't have any crops at all. We don't have anything to fall back on, so we're in some difficulty. But even then, while a lot of people are saying we need short-term assistance, you really have to have the long-term program there.

We met with Danny Foster in Winnipeg. We presented a brief to him ahead of time and then went in and discussed it for three hours. We continue to talk with Doug Hedley. We're trying to use every means possible to try to find some solutions, but I don't know what the long term will bring. I don't think we'll be here in five years to return to talk to you about this. By then, I think it will have moved on to corporate farms, and that will have a drastic impact on the fabric of rural life.

Mr. Darwin Brown: I think we're seeing an attitude of desperation that borders on panic. There are many farms that are well established, well run, and well managed—they have been for several generations—with not a lot of debt, and they have an attitude that there have always been tough times. Farming has always had its ups and downs. The farmer is probably the most resilient worker in the Canadian economy. If this was almost any other industry, it would have been finished long ago, but the farmer has hung in there and has always managed to struggle through. The attitude has always been that, around the corner, next year's going to be a little better. Farmers always managed to hang on to that little glimmer of hope that things were going to pick up. You don't see that now. You see real doom and gloom, real concern and worry.

There's a lot of stress, and there are a lot of problems. There are reports and there are the statistics. The thing that I'm reading and hearing and seeing firsthand is that perhaps as many as one-third of the farmers we now have will not be putting a crop in this spring. That's serious.

The Acting Chair (Mrs. Karen Redman): Thank you.

We'll go to Mr. Cullen.

Mr. Roy Cullen: Thank you, Madam Chair.

Thank you for being here today and sharing your views with us, presenters. I have a question for the farmers and those who are interested and want to comment on agricultural issues.

A message we've heard a few times from farmers is that Canadians have enjoyed cheap food or low-cost food because of a highly efficient farming sector. Let's assume that's true. In terms of where we take that, there's a message here that maybe I'm not picking up.

If you look at the western farmer, isn't the issue mostly world commodity prices? Even if governments in Canada were to regulate and, let's say, set certain prices for agricultural products for Canadian consumers—it just so happens that it's going on in some parts of Canada—would that really even help the Saskatchewan farmer? Is that possible?

A witness: I guess there are a lot of ways to look at it. I don't know if a food tax would be the answer. We have been paying a lot of.... We don't pay very much for our food. I think people in the east think that basically, if the farmers want more money for their product in Canada, easterners will simply buy it from the States. In fact, that's what will happen under the free trade rules.

It could be difficult to put a food tax on. It has to come from a commitment to agriculture by the Canadian taxpayer, and not just to the farmer in Saskatchewan or in Manitoba, but to the apple industry in British Columbia, to the potato producer in Prince Edward Island, to the corn producer and the hog industry in Ontario, to the dairy industry in Quebec. All across the country, you have to make a commitment. In some sectors of the agricultural industry in Canada, there is that commitment. In many other sectors, there isn't as of yet, and we need that commitment there.

Mr. Roy Cullen: There are different ways to come at the problem. One is to look at the cost side, and the other way is to look at the pricing side. What I'm hearing you say is that if we accept the premise that Canadians are getting low-cost food because of an efficient farming sector—which I think is probably true—are you saying we should make a commitment on the cost side? Federally, I'm not sure we can do anything, but are you saying some government, or someone, should do something with respect to pricing? I'm talking particularly about the western farmers right now.

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Mr. Tom Cameron: I think you'll probably find that.... I was going to mention that you can only push things so fast, but you can also pull change. We're going to have to move towards an era when farmers and Canadians realize that we are no longer the breadbasket of the world, that China, India, etc., are starting to become exporting nations. We'll probably never see a return to the high price levels of wheat.

We need to diversify, and we have been diversifying. I had a whole first page on it until Ms. Scullion told me I'd better make sure I was at five minutes. I cut out that whole first page and put it in three or four lines.

You will cross Saskatchewan nowadays and you'll find that what used to be golden fields of wheat have been replaced by every colour imaginable, with every kind of crop imaginable. But those crops are small-market.

Mr. Roy Cullen: If I could just interject, maybe I'm not making my question very clear. When you talk about farmers not getting good prices for product, you're talking about the world's pricing. In terms of your domestic market, the prices that you get domestically, it's a very small percentage of your production, isn't that correct?

Mr. Tom Cameron: In Canada, yes.

Mr. Roy Cullen: When I hear that, I know I shouldn't translate that into a message, into something that says we should regulate prices domestically in Canada, forgetting which level of government can do it. We need a stronger commitment on the cost side in terms of subsidy or support, isn't that right?

Mr. Tom Cameron: Yes, through transitional support or some kind of.... I don't like the term “subsidy”, but at one time we had a fairly significant, larger amount of support from the government, and that's been lost.

We're undergoing a lot of change right now, and we are moving towards a new system. I don't like the idea of regulating prices. I think that just leads to trouble throughout the world. That's part of the problem right now. We need to reduce those barriers rather than increase them.

It may be, for example, the fees we pay for the Canadian Grain Commission. A lot of those fees used to be paid by the federal government. In the interest of going to a user-pay system, we've been paying more and more of that. We're now paying about $50 million a year in Canadian Grain Commission fees. We've begun to pay the cost of dredging the St. Lawrence Seaway and the canal system to keep it deepened. We pay part of the cost for that.

Mr. Roy Cullen: Mr. Chairman, I have just one last question. Again, I'd like to direct it to you, Mr. Cameron, along with Mr. Firth and others who might well be prepared to comment.

We heard earlier from Mr. Hermanson, the leader of the opposition, that AIDA was not working, that there was a problem with the program design in that it wasn't targeted at the right people. There was also an administrative, bureaucratic problem in filling out forms, etc. He contended that unless there were major changes to AIDA.... In his view, it would be very difficult to revamp AIDA. It's almost like something that is not fixable. Could you comment on whether AIDA is fixable? Is the major problem the program design in terms of targeting, or is it just the administrative burden?

Mr. Tom Cameron: I think there are a lot of things wrong with AIDA, and your question is quite valid. Maybe the most important thing is whether we start from square one again, or try to go from where we are now. Probably it would sound like Mr. Brown and I might have a difference of opinion on this, but we're not sure we need to tamper with AIDA in the second year of the program. A lot of money has already been advanced through the advance payment program.

People have been taking a look at this. Particularly in the southeast, we think a significant amount of money is going to come into the southeast under this program, so you're going to find that you pulled the rug from underneath everybody's feet. People have already been pencilling in everything for the second year of the program, depending upon it. Do you just let that go and create your own new program? I don't know. I think I'd want to see some assurances that this would be a fair program for everybody.

Mr. Roy Cullen: Mr. Brown, would you care to comment?

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Mr. Darwin Brown: AIDA, because it is targeting income, I think misses on a lot of areas. I mean, it'll work well when you have one really bad year, where you have a case of a flood or a drought or that type of thing. It fills the gap in those situations. But I see the main problem as being the low commodity price. If it's costing me $3 to produce a bushel of wheat and I can only sell it for $2, that's a problem.

To get back to your first question, ultimately the goal is to level the playing field internationally, because 75% of what we produce is exported to world markets. We're dependent on that.

In the meantime, we have to decide as a country if agriculture is important to us. Are we going to be able to keep those people in the game until we can work out some of these other things? That's what the federal government needs to determine. The message we're getting so far is, no, it's not very important to us.

We don't really matter, and that's a very serious concern.

The Chair: Thank you, Mr. Cullen.

Further comments?

Mr. McCann.

Mr. Peter McCann: Just to further complicate the issue for the committee, the agriculture industry depends to a large extent on the international markets, and those markets themselves are changing. That's why you need agricultural research.

As our traditional trading partners have become more affluent, their dietary needs have changed. Countries that now exist on diets of cereal products, for example, want to eat more chicken, want to eat more pork, and want to eat more beef. We need the crops that will better meet those types of dietary needs.

Some of our competitors are already in those areas. They're working on materials that will be preferred by customers in Southeast Asia, for example. We'll begin to lose some of the markets not because we're not competitive but because we simply don't have the right products.

The Chair: Mr. Firth.

Mr. Murray Firth: I think part of your question could be answered by the fact that, too, a lot of times we don't recognize how many taxes are paid by farmers, directly or indirectly, be it through the money they pay in income tax or fuel tax or chemicals tax or transportation tax.

When we look at other exporting countries, many of them do not have those taxes, or at least that heavy a burden of taxes, or they may simply be closer to an export position, without the transportation costs that add a great burden onto the producer.

If these taxes were reviewed and brought in line with those of some of the other exporting countries, it would aid farmers a great deal.

The Chair: Thank you.

Ms. Redman.

Mrs. Karen Redman: Thank you.

This question may be somewhat philosophical as opposed to the very concrete examples you've been giving us. I'd like to first direct it to Ms. Johannson and then Mr. Brown.

I had a town hall meeting in my riding in southern Ontario. One of the people at that pre-budget consultation said that, in his opinion, we don't have a surplus; that money is still owing against the debt, which I believe is about $563 billion right now. In his opinion, there is no surplus.

We've projected that there will be probably about a $5.5 billion surplus after taking into account the $3 billion contingency fund and using prudent factors. Those are the government's own figures. My question is, to whom does that surplus belong?

Very clearly, we raise funds through taxes. Certainly EI benefits have been a lightning rod of interest across this nation in terms of the fact that they go into general revenues. Some of the cutbacks this government had to do through leadership and wrestling down the deficit have had a real impact on communities.

Ms. Johannson, I think you did a good job of talking about some of the social costs that have come with tightening that belt. So my real question is, to whom does that surplus belong?

Ms. Joan Johannson: The first obvious answer is that part of surplus is from the EI fund. It just boggles my mind. In terms of unemployed workers, we know that 87% used to qualify for EI, but with the changes, 37% to 40% get EI. That means 40% of unemployed workers no longer have an income, and the income they get is about 50% of what they got when they were working.

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So I look at that as plain and simple theft, that part of that surplus that comes from EI is not general revenue; it's from the EI fund, and that was put in the fund for unemployed workers. I don't understand why the people who have been laid off, who have lost their jobs through downsizing and amalgamations and all of these things, who put their money into the EI fund, are now denied money. I could put a human face on it of people to whom this has happened.

Mrs. Karen Redman: What you'd like to see is how people qualify for benefits.

Ms. Joan Johannson: Right. The changes and how people qualify mean that half the people who used to qualify no longer qualify for EI. That means they're pushed onto the welfare rolls.

I don't know if you understand how devastating that is to a person. In Winnipeg, a single person getting welfare gets a total of $411 a month for food, clothing and shelter. How is it possible for somebody to live on that? It's not.

What you're creating is a whole class of people who aren't eating and are depressed. You've taken the money out of the society, and you've taken away from the people at the bottom. That means everybody suffers. The man who loses his job and then is depressed goes to his doctor and gets medication and whatever else he needs, so the health care system has to put money into it.

It's the situation we're talking about, the parenting thing, about prevention. We could prevent all the kinds of physical and mental problems that happen to huge numbers of people in our society.

So it's a matter of why aren't we giving people the basic amounts to live on when we have the money to do it? We know we did for our senior citizens. We decided to do it, and we did it.

Mrs. Karen Redman: I don't mean to put words in your mouth, but is your suggestion to depict it as an employment insurance program, talk about a guaranteed annual wage, and move away from the insurance piece of it?

Ms. Joan Johannson: That's another issue, guaranteed annual income that we've talked about as a way of delivering money to people. I know in Manitoba in the 1960s we did this with the Mincome experiment. It's the simplest way to deliver money to people who don't have work in the paid marketplace.

So you could do that. You could get rid of the EI and the welfare and all the other programs—the CRISP, the SAFFR, the child benefit, and all that stuff. You could easily put in a guaranteed annual income, or what they call in Quebec “a citizen's income”, or whatever you want to call it.

The reason you do that is because you're assuming that it's not the person's fault they don't have paid work. I listened to all of this information about the farmers, and there's no suggestion that it's the fault of the farmer who is losing his farm; we talk about what the government can do. But when we talk about the unemployed worker, it's always somehow this person's fault, and so we don't want to help. We don't want to help him or her or her children.

What you have to do is build a society where you assume that people are doing the best they can. Thousands of people are not going to have paid work. It's the whole technological revolution that we're talking about. People are writing books like The End of Work.

We know we don't need as much work from people in the traditional sense that we used to have. We know you can use computers to do all kinds of things. In Europe, they're changing. They're making shorter work times as way of getting the work spread out over the society.

What it all boils down to is, is the society responsible for its citizens, its children, its men and women? Once you make that decision, then you say, okay, how do we do it? But if you decide it's the unemployed person's fault, then you'll never do anything to help that person.

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So in the same way as it's not the farmer's fault that he has a drought or whatever it is, it's not the unemployed worker's fault that he doesn't have work. You have to make that decision and then say, how can we change that; how can we make it better?

The Chair: Thank you.

Ms. Leung.

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

I have a question for Mr. Peter McCann.

There are growing concerns about genetically modified food, specifically on the labelling. As you know, there is a great deal of discussion in the private and public sector. So I'd like your opinion on how we can safeguard our future consumption.

Mr. Peter McCann: One of the initiatives the genome centres would put in place is a large portion of the budget to study exactly those issues and in fact to do research on them and to produce both public and academic scholarly papers in that area. There's certainly a great deal of public inquiry right now about genetically modified products in the food chain. The issue of course is spreading from Europe.

The issue of labelling is a very complex one. If it were as simple as putting a label on a product, something like an aspartame label on a low-calorie drink that said this is what it contains, that would be very simple. But the first question that would be asked if you did that would be, well, this doesn't convey any information at all to me about this particular product. It would then require further, more detailed labelling, and so on.

By the way, that is exactly what's happening in Europe. There is no such thing as one successful labelling system, so it simply doesn't work.

The whole question of labelling, of course, is around the fact that because this particular process has been used to develop a product, it should therefore be labelled. That's the European way of looking at it. The Canadian and the U.S. way is to say, if this product is the same as the one that was produced by any other way, then why do you need to label it? It's the principle of substantial equivalence, which I'm sure the committee is aware of.

It's rather similar to saying this field was harvested by a red combine and this field was harvested by a green combine, and we should actually state that on the label.

The Canadian Food Inspection Agency ensures that the food is extremely safe. In fact foods that have been developed through biotechnology are about the most tested products that have ever hit the market anywhere in North America, and we have a system that is, quite literally, the best in the world.

I mentioned earlier that I have to meet this afternoon with some politicians from Denmark. They are over here specifically looking at the Canadian system of regulating the safety of food and the availability of food that has genetically modified components. The hope is that they will use some elements of the Canadian system in their own national systems in Denmark.

The Chair: Thank you, Ms. Leung.

Mr. Jones, you're the final questioner.

Mr. Jim Jones: Thank you, Mr. Chairman.

I would like to direct my questions to Mr. Firth and Mr. Cameron.

One of the things I think we have to come to recognize is, is the Canadian farm worth saving? You're down in the southern part of Saskatchewan, near the U.S. border. I'd like you to contrast what you're going through in comparison to your neighbour just on the other side of the border. Are they experiencing the same problems? If not, why not?

Also, you mention the transition of the family farm from father to son in the U.S. versus here. What different type of tax incentives do they have down there versus up here?

Mr. Murray Firth: Actually, I farm right on the border. I have a section of land right on the North Dakota border. In some ways there is a lot of difference, and in some ways there's very little difference. Obviously the way a farmer down there and a farmer in Canada look at and operate their farms won't be significantly different. The way the government views both farmers does seem to be where the big significance is.

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Down there, of course, they got into the heavy subsidy programming back in the 1950s or the 1960s. Consequently a lot of their subsidies—they've enjoyed a lot of very high-income years, which allowed them to capitalize some of that subsidy into facilities and machinery and land. But it's also changed their outlook somewhat as opposed to how we view things. Because our government did not subsidize us, as we talked about earlier, nearly to the level that the Americans have been subsidized, we tend to use our knowledge and expertise to become much more efficient.

It's interesting to look at the last 10 or 15 years; where the advent of more efficient ways of agriculture have developed, they've developed in western Canada, in Saskatchewan. I'm talking about air seeders, zero till farming, organic farming—all of these actually started in western Canada and tended to move south into different pockets.

We have survived up here simply by being efficient, where they have been able to survive with more of their subsidies capitalized into their land cost, by the government helping them. I guess that's our problem up here. We're backed up against the wall. They're still getting, well, $22 billion this year, and we're getting a quarter of that or less.

Anyway, is that answering your question?

Mr. Jim Jones: What about the transition of the farm from father to son from a taxation standpoint, Canada and the U.S.?

Mr. Murray Firth: I'm not certain enough about their government involvement to know whether there are any intergenerational taxes and that sort of thing. But they do seem to have quite a few younger farmers because of their system. It has encouraged their young people to come to the farms, join the family farm. There are many younger people down there.

Mr. Jim Jones: It's my understanding the U.S. has made the decision that it is worth saving the family farm, and I think Canada has to make the decision. Is it worth saving the family farm? If it is, then maybe we have to look at other examples in other countries, and we should be doing the same thing.

Mr. Murray Firth: I guess one of the key things in the difference is in durum. Locally we looked at the markets, and we said it doesn't look good for durum, but then it didn't look good for anything else either. So we might have backed away from durum, to some extent, in our area. Down there, with one of their government programs, they set a floor price for durum, and it meant that if I grew durum, I was guaranteed. So they put a whole bunch of money into durum and a whole bunch of acreage into durum that normally they wouldn't have. There was the difference. If you tie assistance directly to a commodity it destroys it; it disrupts the market signals.

One of the things we're beginning to understand from talking with some of the government bureaucrats is that we've been running like hell and the government has been running like hell trying to make a transition, but we're beginning to wonder if we're running in the same direction. Do we have a vision for agriculture in Canada? If we do, does our vision match the government's vision? And I'm not talking just about the government in power; I'm talking about all the political parties that represent all Canadians.

When we had the three political leaders out, we did ask them to go back and talk to their own caucuses. We asked the Liberals to talk to their caucus: What is your vision of agriculture? Where do you want it to go? Begin to talk about that, have that discussion with all Canadians, because as long as we're only able to talk among ourselves in the Prairies, we can tell each other how bad off we are and we'll all say, yes, it sure is, but we won't get anywhere.

We need to engage Canada in that discussion, as to where they place the value of a primary industry. We're a primary industry much the same as mining, forestry, etc. That's what you base a country on. That's where the wealth is created and where your original jobs come from.

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Your service industries are necessary—unfortunately they've been increasing at a faster rate in Canada right now than the primary industries have—but they don't create any wealth. Ms. Johannson was talking about the unemployed, and I can certainly sympathize. No one looks at someone losing a job as it being their fault. I know farmers—maybe a few farmers, but.... We're like all Canadians, we don't look at it that way. We look at it as that you've tried your best, and when things pick up you'll be back at it.

Thank you.

The Chair: Any further comments? Mr. Brown.

Mr. Darwin Brown: I guess I'm astounded we're even sitting here discussing whether the family farm is worth saving. I guess the question has to be, what's the consequence of that? The land will be farmed. The farmers that are leaving, and the older farmers that are retiring, and the ones that are dying, that aren't being picked up by the families—those farms are still being farmed, they're just getting larger and larger.

At the rate we're going, it won't be very long before there are just four or five farms in Saskatchewan—corporate farms. What you're doing in essence is giving up control of your food production, right through processing until it gets to the shelf, to the multinational corporations, where they can control the flow of the food and the supply of the food.

Part of the problem right now is that some people might think maybe we have too much, and that's why we have such a poor price. Think of what the oil companies are doing. If you can control the production, you could make the price anything you want it to be.

Mr. Jim Jones: Mr. Brown, my question was more that I do recognize that trend. What do we have to do to make sure this doesn't happen this way? For people who have spent all their lives and many generations of their family on the farm, how can we ensure they can keep their farms?

Mr. Darwin Brown: I guess I'm not convinced the federal government understands that and is convinced of the importance of preserving the family farm, and that we are in fact better served as a country, as a nation, by having a farm farmed by the family rather than by the corporation. There's been no indication, or no response, from the federal government to indicate to the Saskatchewan farmer that the government is interested in preserving the family farm.

The Chair: Any further comment? Mr. Cameron.

Mr. Tom Cameron: I guess if you want to target specifically family farms—and I do agree we have to have the family farms. We don't want to go like Montana, where you go mile upon mile.... This fall one of the local herds of buffalo that are in the area now got out and they were roaming through the fields just south of me, and I watched them. There were a couple of guys on horseback staying a safe distance back, kind of gently herding them back to where they were supposed to be. They went through my neighbour's crop, and between the buffalo and my house there was a small herd of deer going in the opposite direction, just bouncing along. I thought, is this the future? Is it going to return back to the buffalo and the deer?

The way you protect the family farms is you sit down and discuss what kind of family farm we're talking about, first of all. Secondly, you apply programs specifically to the family farm. You put limits on acres. You put limits on the amounts given. That's a decision the government can make if you want to target specific things.

In Saskatchewan, for example, we have targeted the fuel tax rebate at $900 for the operation. If I only have one section of land I get $900. If I have 10 sections of land I get $900. So the family farm, the smaller operator, has an advantage. Mind you, there are ways around that, and that's where you get into the integrity of some of these programs. Basically, you can channel money with the rules you put on a program.

A witness: Can I just say one thing? I totally agree with protecting and saving the family farm. My main concern at this point is, do we have any concern with saving and protecting the children of Canada? Today we all know it's the tenth anniversary of the government's decision to end child poverty in Canada. I don't see that happening. I don't see any political will. If there's anything that needs to be done in this country, it's to make sure our children have enough to eat and a place to live. Surely to God that should be our priority.

The Chair: Thank you.

Thank you, Mr. Jones.

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On behalf of the committee, I'd like to thank you for your thoughtful presentations. As you know, your panel is a clear indication of the fact that we're dealing with many issues. There are some issues that require immediate attention and there are also some issues that speak to a longer-term focus. We as a committee have the challenge to balance those two choices.

Having said that, I don't want people to think those two views of what are in fact the priorities are mutually exclusive. As a matter of fact, I think they both speak to the issue of improving the quality of life for Canadians and improving their standard of living, which is ultimately how we measure the success or failure of public policy.

On behalf of the committee once again, thank you very much.