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STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, December 1, 1999

• 1807

[English]

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

I'd like to take this opportunity to welcome the following organizations: the Canadian Alliance of Student Associations, the Canadian Taxpayers Federation, the Green Budget Coalition, the Marine Workers' Federation, and also SUBBOR.

Many of you have appeared before the finance committee, so you know you have approximately five to seven minutes to make your introductory remarks, and thereafter we'll engage in a question-and-answer session.

We'll begin with the Canadian Alliance of Student Associations, represented by Jason Aebig, national director.

Welcome.

Mr. Jason Aebig (National Director, Canadian Alliance of Student Associations): Thank you. Mr. Chairman and committee members, I'm Jason Aebig, national director of the Canadian Alliance of Student Associations. It's my great privilege to represent 285,000 post-secondary education students nationwide and my pleasure to appear before you this evening.

Higher education is a vital part of a strong nation and a strong economy. It's the key to higher incomes, it's the key to a better quality of life, and it's the foundation upon which the social and economic strength of any society rests. Perhaps that's why the Government of Canada chose to invest in students in its first post-deficit budget.

With the announcement of the Canada opportunities strategy in 1998, post-secondary education students and their families received some valuable assistance to finance post-secondary education study.

The creation of the Canada education savings grant, a new tax credit for interest on student assistance, and the millennium scholarship program were important initiatives and important statements about the need to invest in students and in higher learning. Perhaps more important, however, these income measures pointed to the difficulty students and their families were experiencing, grappling with a decade of rising education costs.

Throughout the 1990s, Canadian universities and colleges experienced consistent and dramatic declines in public funding of their core operations. In response, universities and colleges sought ways to streamline operations and increase revenues to backfill the budgetary holes left by governments. Of all the measures employed to offset core funding cuts, tuition and other fees have become the instrument of choice.

In 1980-81, tuition fees represented on average a mere 8% of operating revenue for universities across Canada. In 1996-97, the percentage doubled to 16% overall. In the next five years, many university and college students could contribute as much as 30% of their institutions' operating budget if the trend continues.

To put the rising costs and the frustration of students and their families in context, increases in university tuition and related fees have been consistently greater than the annual rate of inflation. Between 1993 and 1997, the tuition fee price index rose a whopping 43%, while the overall rise in consumer prices was a mere 6%. Over the past decade, students and their families have seen the direct and indirect costs of post-secondary education increase 126%, more than double the cost levels of just nine years ago.

Increasing education costs have been passed from governments through institutions to students and their families. Institutions have had to make up the shortfall through tuition and related fees, prompting many low-income students and their families to borrow increasingly more financial resources to access the classroom.

• 1810

According to Statistics Canada, the average annual Canada student loan disbursement rose by 31% between 1990-91 and 1996-97. Over the same period, the number of borrowers also jumped significantly from 240,000 to some 335,000 students nationwide. For students and their families, these hefty increases in annual borrowing will likely translate into much higher debt loads for future students when today's borrowers begin to consolidate and repay their loans. Today the average debt load in Canada is approximately $19,000, over double its 1990-91 level of just $9,000. Outside this average, debt carried by some students has reached as high as $30,000 and beyond.

For students and their families, the 1990s have been a time of rising education costs, tuition, and fees. The need for more tuition dollars is both a response to decreased government support and an attempt to overcome some of the challenges that have come to grip many institutions across the country. Three institutional challenges deserve special mention and are important to students in the pursuit of a quality post-secondary education.

The first challenge is faculty retention and renewal. Post-secondary education institutions, unable to grapple with decreased core funding support, are no longer able to retain talented researchers, scholars, and lecturers. Talented faculty members are retiring and not being replaced, teaching loads and administrative responsibilities have increased, and many faculty members have left institutions either for the private sector or for the United States. Today there are 11% fewer professors in Canadian universities than there were in 1992, and since 1995 our nation's classrooms have lost 2,300 professors and teachers. Moreover, between now and 2010, more than 20,000 of the country's 33,000 faculty will have retired or departed.

At the same time, the number of students pursuing higher education is on the rise. This points to the second challenge: increased student-teacher ratios. This fall, Canadian universities witnessed the largest one-year jump in enrolment since 1991: an overall increase of 5%, or more than 7,200, new first-year students in the system. In Quebec it ran as high as 6.6%, in Alberta 6.3%, and Ontario is bracing itself for the double cohort: the greatest increase in demand for university opportunities in 30 years.

The last challenge is crumbling infrastructure. Deferred maintenance, aging physical infrastructure and equipment, outdated computer technology, and crumbling physical plants have led to a deterioration of the learning and living environments of many campuses.

Mr. Paul Szabo (Mississauga South, Lib.): Excuse me. Could you just slow down a bit, not because I can't understand you, but because there are people in the back booth trying to translate your every word into French, and there's steam coming out of the room?

Voices: Oh, oh!

Mr. Jason Aebig: No problem. Thank you.

The Chair: It's just a government committee. We go nice and easy.

Voices: Oh, oh!

Mr. Jason Aebig: Okay, thank you, Mr. Chairman.

The cost of deferred maintenance is staggering for most of Canada's major institutions of higher learning. Examples include Dalhousie University, currently at $75 million; Saint Mary's, at more than $33 million; and the University of Calgary, which currently has deferred maintenance of a whopping $85 million.

These problems have hurt students and their capacity to learn. Let there be no misunderstanding; core funding is the core problem. It has fuelled a rapid decline in the quality and affordability of Canada's post-secondary education system at a time in our history when it's truly never been more important.

It is so very important, and Canadians agree. Students, families, administrators, provincial ministers of finance and education, and premiers, Canadians all, are solidly behind the critical importance of higher learning and the need to invest in our collective future. A chorus of consensus; a call to action. It's our hope that this committee's recommendations will reflect both.

I appear before you this evening to encourage the committee to recommend that the federal government increase its transfer in support of post-secondary education by $2 billion in each of the next two years and that it make a long-term commitment to staged increases in transfers for PSE in subsequent years. It is our sincere belief that such a commitment will do much to address the very serious issues and concerns of students and their families right across the country. Further, it will equip universities and colleges with the resources necessary to ensure Canada remains competitive in the knowledge-based economy of the future.

Yours is a daunting task. The choice between so many worthy and competing priorities will no doubt be difficult, but my hope is that I've been able to enlighten and inform the debate and to communicate the critical importance of a healthy post-secondary education sector and the importance of youth to the future prosperity of Canada.

Thank you for allowing me to appear before you tonight.

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

We'll now hear from the Canadian Taxpayers Federation, represented by the federal director, Walter Robinson.

Mr. Walter Robinson (Federal Director, Canadian Taxpayers Federation): Thank you, Mr. Chairman, and once again thank you for the first Christmas card of the season. It arrived in our office today.

A voice: You paid for it.

Voices: Oh, oh!

Mr. Walter Robinson: On behalf of our 80,000 supporters, I appreciate the opportunity to once again appear before you.

The Chair: Just for the record, Mr. Robinson, that wasn't paid with federal funds.

Mr. Walter Robinson: Thank you.

I appreciate the opportunity to once again appear before you—and given the repartee, it's like we're old friends—to outline our ideas for the millennium budget.

• 1815

[Translation]

As usual, I will make my presentation in English, but at the end I will try to answer your questions in the language of your choice.

[English]

Allow me to begin with some words of thanks for the diligent efforts of this committee. With Parliament returning three weeks later than planned, your opportunity to hear from Canadians was constrained. However, the efforts you have made to sit three times a day and still engage Canadians through a national consultation are laudable.

The millennium budget presents an opportunity to reflect the spirit of hope and optimism that comes with the dawn of a new century. Not surprisingly, we believe an ambitious and aggressive program of tax relief and legislated debt reduction is crucial as we enter this new century. Leaving more money in the pockets of Canadians so that they can experience the dignity of better providing for their children and the futures of their families must be a compelling priority to be outlined in your report to the finance minister.

In the brief time I have this evening, allow me to review the salient points of our submission to you.

To begin, we continue to stress that your fiscal strategy must be built on three pillars: tax relief, debt reduction, and redefining the role of government.

With respect to tax relief, our number one priority is to witness an end to bracket creep. This silent tax grab is like an insidious virus. It has moved one in five taxpayers onto the tax rolls or into higher tax brackets. Indeed your 1997 report to the finance minister estimated that 840,000 low-income Canadian families—not individuals, but families—had been pushed onto the tax rolls due to bracket creep. For the government to crow about the removal of 600,000 people from the tax rolls negates the fact that 3.5 million taxpayers, according to the Caledon Institute, have been adversely affected by bracket creep, being pulled onto the tax rolls or into higher tax brackets. If there is one area where you must act, it is here.

There is a national consensus for action on this front, and the economic impact is minimal from a government revenue perspective. Restoring full indexation to the tax system represents the intersection of good fiscal and good social policy. And contrary to government assertions, past actions on increasing the basic personal exemption, while welcome, have not mitigated the effects of bracket creep that have occurred during this administration. In addition, the assessments from the Department of Finance on the effects and impacts of bracket creep have been as clear as mud. Please refer to page 6 of our submission. These contradictory assessments on such a critical issue only serve to further fuel public cynicism toward elected officials and the institutions of government.

The government tax record also provides cause for concern. While economic activity has increased by a nominal 27% in a seven-year period, tax collections in total are up by 36%. This chart is also reproduced in our submission to you. Moreover, the personal income tax burden as a function of the GDP is up by 14% during this same period, from 7.1% of GDP to 8.1% for fiscal year 1999-2000.

Apart from an end to bracket creep, we also recommend the elimination of the 5% surtax and an across-the-board cut in income taxes of 10% for the 2000 taxation year. The total fiscal impact of our recommended measures, in a zero-sum analysis, is $8.91 billion.

Turning to our second pillar, a mandatory legislated schedule of debt reduction should be instituted. As we detail in our submission, simply sticking to a declining debt-to-GDP ratio, while a good start, is not sufficient. Indeed the government could run deficits half the rate of economic growth and still see the debt-to-GDP ratio decline. For an example of this, please refer to page 13 of our submission. Such an approach is akin to hoping your salary increases to shrink the relative size of your credit card debts.

In addition, the government's current practice of allocating a contingency reserve, plus the prudence measures announced in the economic statement, again while welcome, are simply not enough. Asking ten generations of future taxpayers to pay for the excess of two generations, yours and mine, is reprehensible. It is tantamount to intergenerational tax evasion.

We recommend that a minimum amount of $7 billion should be designated as a line item expenditure beginning in the fiscal year 2000-01. By 2003-04 this dedicated amount should rise to and remain at a minimum figure of 9% of projected annual federal income tax revenue collections.

So far we've advocated almost $16 billion in tax and debt relief measures. Our submission, once again, identifies $12 billion in expenditure reductions or revenue-generating initiatives to address the zero-sum fiscal impact of those recommendations. The remaining $4 billion can be funded out of the projected surplus of overtaxation.

• 1820

This brings us to the most important pillar upon which you should base your fiscal strategy—I would encourage you to listen closely—and that is redefining the role of government. As we enter the 21st century we must prioritize the use and allocation of our tax dollars. Obviously needed social services, and the provision of public goods, must rank at the top of any list. But areas like corporate welfare, millennium party funding, and the billions of waste and mismanagement that three successive Auditor Generals have identified need to be addressed. To simply conduct this debate through a myopic focus on anticipated surpluses ignores the mishmash of priorities and questionable allocations that still permeate that $112 billion annual program spending envelope.

To conclude, our recommendations constitute $16 billion zero-sum revenue impact for the federal government. Allow me to reiterate, please.

On the tax cut front, eliminating bracket creep must be your number one priority. However, tax relief and debt reduction constitute the easy task. The arduous work demands that you look to the future. Social programs like the CPP and medicare are built on foundations that are, quite frankly, similar to a pyramid scheme. Taken together, the unfunded liabilities for these two obligations commit future taxpayers to over $2 trillion worth of taxes. We simply cannot sustain this burden under the current funding arrangements. This is not ideology. It is simple actuarial arithmetic.

We need a different approach if we are to meet our obligations to older generations, to our parents and grandparents, not to mention our children and their capacity to care for us in our final years.

To redefine the role of government, elected officials must abandon their current paradigm. Short-term planning cannot be viewed as the late evening news or tomorrow's headlines. Long-term planning must look further than the next electoral cycle. A cross-generational focus must infect and permeate every aspect of your deliberations.

As Auditor General Denis Desautels noted in his report yesterday:

    This is especially true today, given projected demographic trends and their consequences for public finances. ... Decisions we make today will define the choices available to Canadians not just this year and next, but decades ahead. Should we leave that legacy to chance?

No, we should not. No, you should not. Mr. Chairman, allow me to close with the same thought I left you with last year. As an ancient Chinese proverb states, it is not the heavily taxed realm that executes great deeds, but the moderately taxed one.

[Translation]

Thank you once again for your attention. I look forward to your questions.

[English]

The Chair: Thank you, Mr. Walter Robinson.

We'll now hear from the Green Budget Coalition, Julie Gelfand, chair, and executive director of the Canadian Nature Federation; and John Moffet, consultant, Resource Futures International. Welcome.

[Translation]

Ms. Julie Gelfand (President, Green Budget Coalition; Executive Director, Canadian Nature Federation): Good evening, ladies and gentlemen.

I will also give most of my presentation in English, but I will be pleased to answer questions in French.

I am here tonight representing a historic coalition of environmental groups. This is the first time we are appearing before you. The coalition has brought together 15 environmental groups of all sorts, from Greenpeace at one end to Ducks Unlimited at the other.

[English]

I'm here tonight representing an historic coalition of environmental and conservation groups that spans the spectrum of conservation and environmental groups all the way from Greenpeace on one end, to Ducks Unlimited perhaps on the other end, and everybody in between. We have the David Suzuki Foundation, the World Wildlife Fund, the Nature Conservancy of Canada; almost all of the major groups of Canada have come together to put forward for the first time a submission to the Minister of Finance on the budget, and to your committee.

I'll be doing the speech and then John and I will try to answer all your questions. In previous years many of the organizations I'm representing tonight have made separate submissions to the budget process. Some things have changed that have brought us together this year.

Our country is falling behind the international benchmark in terms of how to address environmental challenges in a manner that also supports our commitments to productivity, innovation, and equity. We are not adequately protecting our environment, and we are missing an opportunity to use the budget to stimulate the kinds of economic solutions that will ensure sustained prosperity for Canadians in the 21st century.

• 1825

Our submission calls for two things. First is a staged multi-year strategic reinvestment in protecting Canada's environment. Second, and possibly more interesting, we're calling for a multi-year strategy for budget reform to address the systemic issues that impede decision-making by individuals, by governments and by businesses, that would integrate both environmental and economic considerations. So I'd like to address these issues one after the other.

First I'll address the reinvestment issue. We've had years and years of federal cuts to environmental programming, combined with major cuts in the provinces, which have severely dented Canada's ability to protect its environmental and human health. Canada has prided itself on being one of the cleanest countries on the planet. In fact we still are one of the cleanest countries on the planet, but we are losing our ability to maintain that leadership position in the world. International organizations such as the North American Commission on Environmental Co-operation and the OECD are reporting worsening trends on many environmental issues in our country.

We face an extremely urgent need to preserve our representative species and spaces. All you have to do is travel to Europe to realize that what they call a forest is a joke. You come back to Canada and say we have an international obligation to protect large tracts of wilderness, because what they call wilderness is worse than what we would consider a municipal park to be. So from a worldwide perspective, Canada must be protecting nature, and large tracts of it, because the rest of the planet basically doesn't have any left.

We also face an urgent need to remediate the significant threats to human health posed by many of the contaminated sites that have not yet been cleaned up, and you can think of the Sydney tar ponds. You can also think to your own children perhaps, or grandchildren, who are having increasing rates of asthma, increasing rates of cancer. Many of these are most probably linked to environmental contaminants.

We also face an urgent need to enhance our knowledge and capacity to increase productivity by making more efficient use of energy and natural resources and by polluting less.

So some of the measures in our submission are designed to help address Canada's immediate restoration and protection needs. But they're not simply requests to pour more money into existing programs and systems.

Our submissions represent innovative partnership ways that we can achieve environmental protection in Canada. We're not calling for going back to where we used to be. We're calling for looking at new ways, new partnerships, that can help us generate new knowledge and new capacity in ways that are very different from what we've done in the past.

The second part of our submission is designed to complement this reinvestment. These measures will start with the longer-term structural reform of our environmental and economic policies so that they reinforce rather than compete with each other. You've always heard of jobs versus the environment; we actually believe that by protecting the environment, we'll actually have more jobs.

Some of the measures represent an initial reformulation of Canada's environmental policy to focus on the causes of unsustainable behaviour rather than trying to resolve the symptoms. Many are designed to illustrate the possibility of more closely aligning employment and skills development objectives with environmental protection concerns. In doing so, we have drawn on the repeated findings of studies from the OECD and the U.S. Department of Labor and others that show that well-designed environmental protection policies enhance and don't in fact diminish employment.

Most fundamentally, these submissions address the need to reform the fiscal regime. Notwithstanding our recent economic upturn, Canada, like most industrial countries, continues to struggle with the multiple imperatives of fostering economic growth, reducing public sector debt, reducing persistent high regional unemployment, and protecting human and environmental health.

Increasingly around the world, academics, coalitions of tax reform advocates, and environmental interest groups and politicians are recognizing that green budget reform can help address all of these issues. There are actually thick tomes and books of green budget reform examples from various countries about how green budget reform actually helps stimulate the economy and provide jobs.

We need to follow the lead of several foreign governments in shifting taxes from good things such as employment to bad things such as pollution. In our continued reluctance to use the fiscal regime to promote environmentally appropriate decisions, we're falling behind many of our most important economic competitors. Countries such as Japan, Germany, the Netherlands, and various Scandinavian countries have all started to focus on the way fiscal policies discourage work, discourage savings, and discourage investment. These governments are overcoming these inefficiencies by shifting part of the tax structure away from income and payroll taxes and towards consumption taxes, including environmental taxes.

• 1830

Their efforts have been applauded by leading international business organizations such as the World Business Council on Sustainable Development, which includes some of the globe's largest transnational corporations. And even here in Canada, just last week the British Columbia finance minister, Paul Ramsey, released a discussion paper on environmental tax shifting.

In doing so, the minister stated that:

    Several European countries have shown tax-shifting to be an effective tool for cleaning up and protecting the environment, creating jobs, increasing business competitiveness and, at the same time, maintaining government revenues for important social programs.

It sounds perfect to me.

At the heart of our submission, then, is a plea to start identifying the ways in which environmental considerations can and should be integrated into the overall budget. In continuing to treat environmental protection as an agenda divorced from other societal priorities, Canada is playing a high-risk game. We risk losing the healthy environment on which our healthy population is based. We risk losing the healthy population on which our tourism is based, on which our international reputation is based. And we risk having our economy fall irrevocably behind those who are capitalizing on the enormous economic opportunities that are emerging for eco-efficient businesses.

This submission thus represents the beginning of a long-term reform process. On behalf of my numerous colleagues from Greenpeace to Ducks Unlimited and everybody in between, I urge you to review our submission carefully, and I urge you to recognize that a healthy environment is necessary to ensure a healthy population, a healthy future for our children, and a healthy economy.

Thank you. Merci.

The Chair: Thank you very much. That's quite a coalition.

We'll now hear from the Marine Workers Federation, Bob Chernecki, assistant to the president of CAW; Les Holloway, executive director, Marine Workers Federation; and Richard Gauvin, president, Syndicat des travailleurs des industries Davie. Welcome.

Mr. Bob Chernecki (Assistant to the President, Canadian Auto Workers Union): Thank you. It is important for us to appear before the committee, and we thank you for the time.

I do want to start by saying that the most important document you have in front of you today—and you have two—is one that deals with a procedure we believe the finance committee can address in the upcoming budget. It deals with how you can help this industry.

Today we have 238,000 members in our union. The shipbuilding industry at one time employed 10,000 or 11,000 workers. Today you're looking at fewer than 4,000 across the country. So what can the finance committee do, what can the Government of Canada do, to help this industry?

First, I should say, and be clear, that this is not a document that deals with looking for handouts. We're talking about what we believe is an impurity in a policy that Canada currently has in shipbuilding. It does not recognize what the rest of the world is doing. It does not, in our minds, assist the shipowners and shipbuilders in attempting to be anywhere near competitive with the rest of the countries.

I want to bring your attention to the document that deals with four issues. We're dealing with page 2, which refers to a level playing field. And what does that mean?

If you look today at what's happening in the rest of the world...and I particularly want to mention and deal with the United States, which is our biggest trading partner most days in this important industry. They have, and have had, the help of industry and of government in the United States. What they have done is protect the principle of subsidy for the shipbuilding industry in the United States. That is commonly known as the Jones Act, in which they are protecting the position that ships must be built, must be manned, must be flagged, and are protected in the United States.

• 1835

We don't have any other mechanism to get into that market in the U.S. Our current strategy in the federal government is the NAFTA, and obviously the government supports that initiative. I don't think I have to go through how we feel about NAFTA and what we believe it's done to the country.

Here is a situation where we were attempting to get to a level playing field. The United States protected the Jones Act under NAFTA, and here we are suffering in a very important industry to the country. We're suffering because the government will not put forth a policy that will deal with this issue.

What I think is most important about our document is that it also includes and enjoys the support of industry in the country. Most days we're applauded as unions and we're applauded as governments and we're applauded as industry if we can get in a room together and have a good discussion about how to fix problems in the country. We've been attempting to get the government on side and at least give us a forum and a consulting process where both industry and unions can put their arguments across on this issue.

On pages 2, 3, and 4 of the document, you'll see what the finance committee can do to help this industry. I don't know how else to describe it.

This is Terry O'Toole. He's the president of a local in Saint John, New Brunswick. We have no work after Christmas in that facility, no work at all. That's not because this industry is not high tech or because industry hasn't protected itself or built for the future. It's because of a policy that, quite frankly, is insane. When you look at what other countries can do and what they have done with subsidies protecting this industry, we are absolutely at the bottom of the list and we are suffering because of it.

I'm going to leave it there. The document is there before you.

The second agreement deals with the support we have from chambers of commerce across the Atlantic provinces, in Quebec, and in British Columbia. It deals with a recent internal report by the Liberal government on the issue of shipbuilding. I really encourage you to read it. It does put in perspective what we are missing in this industry, we believe for the first time.

I'm going to move over to Les Holloway, the president of the Federation of Labour.

Mr. Les Holloway (Executive Director, Marine Workers' Federation): I'll make my comments brief. I've addressed the committee and I thank the committee for the opportunity to be here a second time. I addressed you in Nova Scotia; I'm sure some of you will recall that.

I'd like to say for the record that I sit here as part of a coalition of unions: the Marine Workers' Federation and the Canadian Auto Workers Union. Philippe Tremblay, with the Fédération de la Métallurgie Inc., CSN in Quebec, is also a part of that coalition, as are the workers from the west coast. The document that sits in front of you has broad-based support from the union, but as well has support from the employer groups, as was mentioned by Bob Chernecki.

I do want to say that I want to dispel some myths. Some may find it amazing to know that a frigate has more than eleven times the technology in it than the most sophisticated commercial aircraft we build in this country. It's not a sunset industry. It's not an industry that can be termed a smokestack industry.

Over 75% of all goods that move in the world will move in ships at some time. We can capture an opportunity in Canada if we can get somebody to listen to the stakeholders in the industry saying that we can fix some of the problems we face and be competitive in the international marketplace if in fact we can at least sit down and start to talk about some of the issues.

I want to read to you a document from a committee that was struck from the Atlantic federal Liberal caucus. There are some federal MPs here, so you will probably find this comment very interesting. If you look at the document they released, “Atlantic Canada: Catching Tomorrow's Wave”, you will find a section in there on shipbuilding, calling on the same thing we're calling on, and that's a meeting of stakeholders and the development of an industrial strategy for this industry.

• 1840

We will copy just this section out of that document. They say in the very last paragraph:

    We agree: it is time that Canada adopt a National Shipbuilding Policy, one that creates the climate for our shipyards not only to remain in business, but to compete effectively for the emerging shipbuilding opportunities both overseas and at home, in connection with the oil and gas development projects taking place in Atlantic Canada.

That's a report done by Atlantic Canada Liberal MPs, who live in a part of the country that knows the value of a shipbuilding industry.

It was mentioned that we have Terry O'Toole from our union here. You will also hear from my friend very briefly on the problems they're facing in the province of Quebec. I should say that none of this is the fault of the workers or of the industry in this country.

As we sit today, at the World Trade Organization talks in Seattle we were told that at some time that discussion will get around to the issue of dealing with the worldwide subsidies in the industry that we're forced to compete with. Every other nation in the world has a shipbuilding policy that offers direct subsidies, financing programs that allow their shipyards to compete unfairly with ours. As we sit there in the WTO, be aware that the U.K. just announced more subsidies for their industry. Germany has announced more subsidies for their industry.

We are not even asking for subsidies. We're asking for policies that will create an environment that will allow our industry to be able to compete. This is a very high-tech industry, an industry of the future, and a very necessary industry for a country such as Canada if we want to maintain our status as a proud maritime nation. You can't do that if in fact you don't have a proud shipbuilding industry.

I'd like to defer now to my very good friend, Philippe Tremblay, who would like to say a few words as well.

[Translation]

Mr. Philippe Tremblay (Spokesperson, Fédération de la métallurgie Inc., CSN): I will try to give you some examples of the tax impact when a shipyard is not operating. This applies to all shipyards across Canada—whether in Quebec City, St. John, Vancouver or Ontario—shipyards of the size of those that still exist in Canada.

To begin with, rationalizations took place that involved significant sacrifices on the part of all workers. In our opinion, there is now room for all the shipyards that still exist and no more rationalizations should be undertaken. That is why we are asking for a policy to help those shipyards that have survived.

The four main shipyards that I mentioned, when they are working, have an average of 1,600 workers. The resulting payroll is about $65 million a year, which produces annual tax revenues for the federal government of some $8.7 million, based on a modest tax rate of 13.5%.

To that must be added the employment insurance premiums paid by workers, revenues of $4.8 million a year to the government, based on a rate of 7.5%. The combined total of employment insurance and income tax—at the federal level alone—is approximately $70 million a year on average over a five-year period.

In an industrial sector, there is also the multiplier factor to take into account the creation of indirect jobs: contractors, steel suppliers, etc.. The factor is 1.5 for each shipyard worker.

Therefore, when the shipyards are empty, that means that nearly twice as many outside jobs are lost. In Quebec, there are still 80 jobs in this industry. In December, the St. John shipyard will be empty and in Vancouver things are not going well either.

Moreover, the jobs lost in the shipyards cannot be transferred elsewhere in Canada, since the work involved is done in other countries. We are therefore talking about net losses for the Canadian government. You also have to add in the employment insurance benefits that will have to be paid to all those who have lost their jobs. If employment insurance rates are taken into account, the whole thing costs a lot more than implementing an active shipbuilding policy would. Such a policy already exists, but, in our opinion, it is not functional. If it was, the shipyards would not be empty.

• 1845

All the shipyards, not only in Quebec but across Canada, will be empty by Christmas. We therefore need to get contracts from elsewhere. We maintain and we have the figures to show that the workers have done their part by changing their conditions of work and increasing their flexibility and productivity. Now we need a policy to enable them to compete effectively with foreign countries. Canada does not currently have such a policy.

Thank you.

[English]

Mr. Bob Chernecki: Thank you.

Just as one final comment if I may, Mr. Chairman, since a few weeks ago, there has been this raging debate in Newfoundland and Labrador about a lack of ferries. You may have seen or may have heard about the truckers who blocked a bridge because they were demonstrating against the fact that they couldn't get across and that their goods weren't moving. Well, lo and behold, in its wisdom, the government of the day bought and purchased a ferry overseas. It made absolutely no sense. That decision infuriated the premiers of the Atlantic provinces and it infuriated us. All the government had to do was think a bit. We could have taken that work, spread it out over three or four provinces, and built that ship in Atlantic Canada. It's things like this that just absolutely make no sense to Canadians, especially to those who have no work after Christmas.

We're not here for a handout. As Les points out, we're not looking to take out a smokestack industry and make it DaimlerChrysler or Mercedes overnight. We're not trying to do that. The message we're trying to deliver here is that in terms of bank loans, equity funding, lease packages or shipyard creditor subsidies, this committee and this government can make one heck of a difference in this country in terms of putting people, including young people, back to work for the future. These jobs are high tech.

Thank you very much.

The Chair: Thank you.

Mr. Philippe Tremblay: I just want to add something.

[Translation]

We simply want to remind you that we are a coalition. This is the first time that all unions and employers in Canada have come together in this way. We recently submitted to the federal government, to Mr. Chrétien, letters of support with 150,000 signatures, but we have heard nothing back. It may be time for Canada to do something.

[English]

The Chair: I appreciate that.

We're going to move to Mr. Gregory Vogt, president, and Mike Sommerville, chief financial officer, SUBBOR. Welcome.

Mr. Gregory M. Vogt (President, Super Blue Box Recycling Corp. (SUBBOR)): Thank you. I'm Gregory Vogt, and I'm president of Super Blue Box Recycling, otherwise known as SUBBOR. With me is Mike Sommerville, also from SUBBOR.

You said earlier on, Mr. Chair, that we should take it nice and easy. In the light of taking it nice and easy, we're going to do a little bit of show-and-tell. It's normally something that my 6-year-old son does at school, and he's taught me how to do this.

In my little presentation, I'd like to talk about who we are very briefly; what the technology is that I'd like to talk about—and some of the things that I've brought here are going to help me with that—why we are here, which I think is pretty important even though it's 6.45 p.m. and we're all staying late; and what we'd like you to do.

Moving back to the top of that list, I'm going to try to give you the 60-second blurb of who we are.

First of all, we're a Canadian company. We've been around for 15 years, doing environmental and power projects. Also, all of the principals of the company are professional engineers. That gives you a flavour of the fact that we're techies, we're into science, we're into technology, and we're into building things. We're Ontario's tenth-largest power producer, so we're into doing real things; we're on the map, so to speak.

We're also Canada's largest reducer of greenhouse gases. As far as I know, we're also North America's largest reducer of greenhouse gases, and we're very proud of that.

And finally, we're the developers of the SUBBOR technology, which leads me into my next point, and that's what the technology is that I'd like to talk to you about.

I'll now start to use the props.

I have unsorted parliamentary garbage—it's important to understand that—that I collected this morning from some of the offices here. From this garbage, we'd like to make a number of things with our technology. First, we'd like to make recyclable products—anything such as steel, plastic, paper—that we will sell back to industry. For us, it's a product.

• 1850

The other thing we want to make is peat. A lot of people might know exactly what peat is, but this is peat. If you've done gardening, you probably know exactly what it is. That's what we'd like to make out of the organic constituent of the garbage. This wonderful poinsettia is growing in peat from municipal solid waste. You touch it, you feel it, you put it through the scientific tests; it's the best stuff around. It's as good as any peat moss you would buy; I would argue, better. We've grown tomatoes in it.

Finally, we'd like to make electricity. One of the products of our technology is when the anaerobic bacteria eat the organic part of the waste. It can't eat the steel and the plastic, but it certainly can eat the organic part, that rotten tomato you threw out last night. That turns into methane gas. Methane gas is like natural gas. We can turn that into electricity. Of course, electricity is a valuable commodity, and it can pay for a lot of what we want to do.

Our technology involves no incineration and no landfilling. We can eliminate those two environmental scourges completely. This technology sounds fantastic, but it's supported by the National Research Council. We've done a $2-million research program with them. Technology Partnerships Canada is our partner now in a project. Industry Canada; Environment Canada; TEAM, Technology Early Action Measures—all federal initiatives, federal agencies, federal programs.... Why is the federal government partners with us? It's because our technology can meet Kyoto. Just doing the major metropolitan areas, we can make a significant shot, arguably 50% of our entire Kyoto commitment.

We're talking about a technology that's going to pay its own way. In Guelph, as we speak, we are finalizing the construction of the world's first commercial demonstration on this technology. It is a $20-million facility, with $5 million of the government's money through Industry Canada and $15 million of our money. This is hard-earned money that we have put in to lead this nation in the municipal solid waste processing area.

That facility is coming on-line later this month, so the results are coming in very soon. The Americans are so excited about it that the Environmental Protection Agency is doing their own independent verification of our technology, the first time they've done that on foreign soil, and they've put a lot of money into that too. So we're even getting the Americans to support us. The technology saves municipalities money.

Why are we here? We need your leadership to implement SUBBOR, the name of this technology. There's a lot of inertia to overcome in any industry. To roll out a technology, to meet our Kyoto commitments, we need leadership.

How do we think this committee can deal with that? In our brief, we've talked about a repayable infrastructure program—repayable. We believe for an infrastructure program to be honest and have a business argument associated with it, it should be repaid. We're not looking for a handout, as other people here have said; we actually want to repay it at commercial interest rates. If you look at our brief, we've outlined how that's supposed to work. That will kickstart this technology across the country.

Very specifically, what do we want to have done? Through this repayable infrastructure program, we want you to incent the municipal governments, who ultimately control waste, to get out of the Stone Age. Stop throwing garbage into a hole in the ground. Start doing the high-tech thing that makes these exciting products I have in front of me. We will meet Kyoto, save tax dollars, and show and have a leadership role on the world stage.

In a specific example, right now Toronto, our major metropolitan area in this country, is about to decide the future of its waste. Lend us your voice. Tell Mel to do the right thing. Help Mel cut down on his hot air. Let's meet Kyoto in Toronto.

SUBBOR is the number one technology to meet Kyoto, bar none. That's being said by government agencies. If Canada is to show this leadership, we need this incentive for municipalities with this repayable infrastructure program.

Thank you very much.

The Chair: Thank you.

I'd recommend that if any member wants to get a briefing, it's quite an interesting piece of technology they have there.

• 1855

Now we move to the question-and-answer session. We'll start with Mr. Forseth. I think we'll have a five-minute round.

Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Ref.): I have to leave very shortly. I only really have time for one question, so I'll ask the Canadian Taxpayers Federation.

I'm looking on page 18 of your brief. You outline four big recommendations. They're huge: end bracket creep, eliminate the 5% surtax, a 10% income tax cut, and legislative debt reduction. You said clearly that your number one priority was ending bracket creep.

I was looking at recommendation three, where we have three levels of rates: 17%, 26%, and 29%. You just want to lower those to 15%, 24%, and 27%. In your thinking about the mix of what you recommend, why didn't you go for a single rate of tax? What was some of the thinking on why you felt you couldn't get there or why you shouldn't go there?

Mr. Walter Robinson: Thank you for your question.

With respect to a single rate of tax, I know the Alberta government is moving forward in that regard in terms of decoupling from the federal income tax system. We believe first and foremost that we need to lessen government's appetite for tax revenues before we move to a substantive discussion of tax reform.

I'm glad, Mr. Forseth, that you called it a single rate of tax and not a flat tax, because a single rate of tax still provides a very generous personal exemption for the lowest-income Canadians, who should not be paying a single penny of tax anyway. We still collect about $7 billion from 6 million Canadians earning $30,000 or less and recycle a lot of that money back to them in the form of benefits. We believe you shouldn't take it from them in the first place.

The issue with respect to that is that I think in this country there's still a very strong political constituency for a progressive tax rate regime. To move from where we are today in terms of lowering taxes to get to a single rate of taxation, I think we miss some various steps along the way in framing public opinion, moving public opinion to that regard.

One day in the future I would like to see a single rate of taxation. From a personal point of view, I think that would be extremely welcome and would allow Canadians.... You're going to see that the provinces are going to do that first for tax jurisdiction shopping and investment decisions between provinces. As usual, this decision will probably come to the federal level of the taxation framework last.

Mr. Paul Forseth: Just to follow up, in essence what you're saying is that it's a political problem based on what people believe. It's a perceptual and understanding problem rather than necessarily doing what is wise for the economy from an administrative point of view.

Mr. Walter Robinson: You could definitely frame it that way in terms of having Canadians buy in, so to speak, to a single rate of taxation.

The other thing people would say is that we've always heard the argument that tax cuts are for the rich. Well, give me strength, please. As we've argued in our pre-budget submission, making bracket creep the number one priority would disproportionately or more seriously help low-income and lower-middle-income Canadians first and foremost.

What we're trying to show people is that tax relief is for all taxpayers, framing it in a way so that this government can say it's not only good fiscal policy, it's good social policy. At the end of the day, we don't care who takes the credit for the tax relief or how they frame it from a political point of view. We just want to see it happen.

Mr. Paul Forseth: Thank you.

The Chair: Mr. Dubé.

[Translation]

Mr. Antoine Dubé (Lévis-et-Chutes-de-la-Chaudière, BQ): Since there are a number of people who wish to speak, I will address my remarks to the coalition from the shipbuilding industry.

Before asking my question, I would simply like to point out, for the information of the other committee members, that the coalition has seven demands. The first three are contained in a private member's bill that I have introduced in the House. I introduced it again this fall, after doing so last April. The second reading debate lasted one hour. Since debate on private member's bills occurs on a rotation basis, the final debate on this bill will coincide with the presentation of the next budget. Your appearance here therefore seems to me to be very timely. You are speaking to the Finance Committee, and my questions will deal with the three measures which I feel are relevant to this committee.

One of the measures involves exempting new ships built in Canadian shipyards from Revenue Canada regulations concerning lease-backs. I know what the justification is, but I would like to let someone from the coalition explain it.

• 1900

The second measure that involves the Department of Finance is the creation of a reimbursable tax credit. I would like to emphasize the word reimbursable. I would like to give you an opportunity to explain that as well.

The other measure relates indirectly to the Finance Committee, since it proposes an improved export finance and loan guarantee program similar to the one in the United States, called Title XI. EDC has a similar program, which comes under the Department of International Trade.

I would like you to explain these three measures which are covered in my bill, the other measures that relate more to International Trade and other agencies.

This is an open question. I want to give you time to explain your proposals.

[English]

The Chair: Mr. Holloway, would you like to start?

Mr. Les Holloway: I'll try to answer the questions. As you were asking your questions—

[Translation]

Mr. Antoine Dubé: We are talking about points a), b) and c).

[English]

Mr. Les Holloway: Yes, I'll take them in that order, and obviously my colleagues, if they want to, can add anything. “A” is a provision that's offered presently in the United States. We make reference to it as the Title XI program. It's a program that offers 87.5% of the cost of the vessel over a 25-year period. They offer that to any company that wants to build a vessel in an American shipyard. That can be a company from any country in the world. If they want to build in the American shipyard, they can access that financing.

One of the better examples as to how that creates the kind of environment shipowners would want to go to and have their ships built there, we have a situation where Secunda Marine, out of Nova Scotia, built two supply vessels in 1997 in a Mississippi shipyard. They built those vessels accessing the Title XI program; they got 87.5% financing of the vessels for the 25-year period.

Then, of course, to really compound the negative impact on Canadian shipyards, they brought it in under NAFTA, exempt from the 25% tariff, which is the only thing that we have in Canada when a Canadian company builds outside. But NAFTA exempts the Americans, so it was like a double whammy for us on that issue. That financing package is a very important piece of the puzzle and it's offered in a lot of nations. The United States is the best example of that.

The next one is the excluding of new construction ships—“B”—built in Canadian shipyards from present Revenue Canada leasing regulations. Presently, if you buy the vessel outright, the issue of writing down of the cost of that, the depreciation of that, is not bad at all.

But the issue within shipbuilding today is that we're in a global marketplace, so we have to deal with the reality of the global marketplace, and leasing is the more favourable way to go. That's when those provisions aren't as appealing. Basically, as we say in our document, they are really unattractive to shipowners and it completely uneconomical for them to build in this country.

We're saying that we should look at that in Canada to see if in fact we can create some kind of loosening of that, an exemption from that, so that leasing would in fact be included.

As for the provision of a refundable tax credit to Canadian shipbuilders who would contract to build a ship or contract to conversion with change of mission mid-life or a major refit in a Canadian shipyard, the best example you can see of that—and it has worked—is part of the provincial policy they have in Quebec now, which has been touted as part of the reason they were successful in securing a number of contracts.

• 1905

We're saying that we should look at what they have done in Quebec and consider that too, in a policy manner, as a strategy for the industry overall to in fact create an environment whereby we can entice and encourage shipowners to do their building of vessels here—and we want to do it.

Our colleague Peter Cairns, with the shipbuilding association, refers to this document, as we refer to it too, as revenue neutral. We believe it's not a cost. We're not talking about subsidies; we're talking about creating policies that would in fact create an environment.

I don't know if that answers, long-windedly, the questions from the honourable member, but—

[Translation]

Mr. Antoine Dubé: Thank you.

[English]

The Chair: Thank you, Mr. Holloway.

Mr. Cullen.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chairman, and thank you to all the presenters here today.

I have a question for Mr. Vogt and Mr. Sommerville at SUBBOR. In the pilot project you have now in Guelph, basically their trucks are bringing and dumping the municipal waste into this digester, which is going to create the products that you talked about.

I had the opportunity to see your operation in Vaughan, which is off a landfill, and you have another one in Toronto. I wondered if you could put it in terms that the committee can understand in regard to the amount of methane gas—through pipes that are under the landfill—you're pulling off and how much electricity you're generating from those landfills. Maybe you can put it in the context of how much power that is or how many houses that would heat or something. Can you can do it in those terms?

Then, the way I understand your technology, in regard to the Guelph demonstration project, if every major municipality did that, we could eliminate landfills completely. Is that correct?

Mr. Gregory Vogt: That's right.

Getting back to the earlier part of your question, the two facilities that you reference there are the world's second- and third-largest facilities that collect landfill gas.

Right now, most of our waste goes into landfills. The gas that we collect—from basically all of Toronto's waste that has been dumped there over the last 20 years—generates 60 megawatts of power. The way I like to put it is that we cook all the turkeys in Pickering and Newmarket. That's a lot of people and a lot of homes being provided with electrical power, which makes us the tenth-largest private power producer in the province.

The amount of gas in one year is 250,000 tonnes. There's an awful lot of gas that comes out of garbage, and that's why landfills are such a bad greenhouse gas actor. With the new technology, the landfill is eliminated completely. You no longer need to throw your garbage in the ground. Instead, you put it into these digesters, as you said, where, rather than taking 100 years to digest the waste, we can digest it in 40 days. In those 40 days, because we're digesting it so quickly, we produce even more biogas. We get the environmental benefit of doing it quickly and we get the environmental benefit of getting the quantity of energy out so we can produce electricity.

Mr. Roy Cullen: I have just one more question, if I may, Mr. Chairman.

Is the demonstration plant, the one in Guelph right now, a totally closed-loop system in the sense that there are no environmental hazards associated with the plant itself?

Mr. Gregory Vogt: We don't touch groundwater. Nothing goes into the ground. Nothing goes into the water. Nothing goes into the air. The only contact we have with the environment is when we actually make the electricity. The engines that would then run, effectively running on natural gas or biogas, would have an emission not unlike what would come out of your home-heating furnace if it were running on natural gas. It's a very clean electricity, and it displaces other forms of electrical power generation.

Mr. Roy Cullen: The point is, when you take the garbage, it's a biological digestion, as opposed to.... A lot of people think of it in terms of incineration, but it's nothing like that at all. It's a biochemical or whatever type of process, is it not?

Mr. Gregory Vogt: Exactly. It's biologically driven by naturally occurring bacteria, and therefore we call it a biogas. Indeed, our technology has already received the EcoLogo certification from TerraChoice.

Mr. Roy Cullen: When will you have the evaluation data from your pilot plan in Guelph, which you said the EPA is also monitoring?

Mr. Gregory Vogt: We will have preliminary data in the first quarter and finalized results and an EPA report probably in the third quarter of the upcoming year, so we're talking about the period of March to September of the year 2000.

• 1910

The Chair: That was your last question. Right, Mr. Cullen?

Mr. Roy Cullen: Thank you.

The Chair: Mr. Pillitteri.

Mr. Gary Pillitteri (Niagara Falls, Lib.): Thank you very much, Mr. Chairman.

Just to follow up, there was a remark that Mr. Lastman is hot air. I think he was not offending anyone in here, because there are four members from Toronto, you know.

A voice: No one.

The Chair: Nobody!

Some hon. members: Oh, oh!

Mr. Gary Pillitteri: But let me ask you a question. Of course this recycling already is partially recycled. I don't want to get the wrong impression. You need the municipalities, who are cooperating to be being part of blue box. The garbage has already been sorted in some sense through the blue box process. Do you need any additional sorting? Or is just as it comes off the actual trucks?

Mr. Gregory Vogt: That's why we brought in this bag. We can take it in the form in which the majority of you produce most of your garbage. We take it in its unsorted state and machines do all the work.

Mr. Gary Pillitteri: Tell me, do you also operate the blue box?

Mr. Gregory Vogt: We don't operate the blue box program, but if the city wanted us to site a blue box centre where we could accept both, that's not a problem. In a sense, the front part of our system is very similar, so we could easily work with either an integrated or non-integrated blue box collection system. That's not a concern whatsoever. Indeed, a lot of the work in terms of how the blue box equipment works was actually pioneered by my partner.

Mr. Gary Pillitteri: So therefore it would not make any difference, actually, if municipalities don't have a blue box program. Actually, that could be implemented there too. Is that what you're saying?

Mr. Gregory Vogt: Exactly. It's complementary to blue box.

Mr. Gary Pillitteri: Thank you.

The Chair: Thank you, Mr. Pillitteri.

Mr. Szabo, followed by Mrs. Redman, and then we'll go to Mr. Jones and back to Mr. Dubé.

Mr. Paul Szabo: Mr. Chairman, I want to suggest that this has to be the most innovative presentation I've seen since I've been involved with the finance committee.

I'm really impressed by where this is going. It has to do with cleaning up Canada's environment. It has to do with potentially achieving 50% of Canada's Kyoto commitment.

Our committee does not have many opportunities to comment on non-finance matters per se. This is ultimately an environmental matter that has significant financial implications, and there seems to be a great deal of support and involvement already from the Government of Canada through Industry Canada and through, I guess, the related ministries.

I would certainly hope this particular proposal will be noted in our report, simply from the standpoint that it provides some variety, which we have not had. I would really like to see this in the report because I think this is something Canadians would definitely support in terms of the environmental implications. I think the responsible way in which these kinds of projects should be encouraged...I think we should say, please have a look at this, and we should allow the various departments to have a very careful look to determine what contributions....

I want to congratulate SUBBOR for an innovative presentation and, just as importantly, for what I think is a very important initiative, which should be reflective of the kinds of things Canadians have been very well known for around the world. I could see this as exportable technology with a Canadian company, Mr. Chairman. The potential here is just too great to ignore, so I hope we'll see it in the report.

I do have a question for Mr. Robinson. It would be not a very good meeting with him here if I didn't ask him at least one.

Walter.

Mrs. Karen Redman (Kitchener Centre, Lib.): Surely you can call him Walter by now.

Mr. Paul Szabo: Well, Mr. Robinson.

Mrs. Karen Redman: Did you exchange Christmas cards?

Mr. Paul Szabo: We did.

Bracket creep is, I think, one of the most interesting discussion points. Let's take a simple example.

• 1915

Let's say inflation in a particular year was 2%. It used to be that a basic personal amount would be indexed by 2%, worth about $70 in additional credit. To Canadian taxpayers it would mean a little under $20 in their pockets for a year because of that indexation. So you get an idea of the magnitude of indexing the basic personal amount.

I've often wondered—and maybe you can try to explain this to me—if we should be indexing tax components so that we basically insulate Canadian taxpayers from the impacts of inflation. What happens to all of the expenses the government itself incurs...because they experience inflation as well. Civil service salaries just increased by 2%. We have a very large payroll within the Canadian government. I think 75% of our costs are human resources costs.

If the government has a balanced budget, how can it rationalize indexing but not get some type of offset to take care of the fact that it has its own natural inflationary factor?

Mr. Walter Robinson: Thank you, Paul, if I may, through you, Mr. Chairman.

Mr. Szabo, it's a pleasure to speak to you again this time around.

For some of the other people here, Mr. Szabo and I have a great history of spirited debate at this committee.

May I say as well, Mr. Szabo, that your book, The Child Poverty Solution, was an interesting contribution to public policy debate, and I agree with many of your conclusions.

With respect to the bracket creep question, this is the situation we had when we had indexation in the tax system not only for the associated credits and thresholds for taxpayers but also for government expenditures throughout the seventies. If you take a look at our presentation in the aggregate with regard to the cumulative effect, according to the Caledon Institute, according to C.D. Howe, according to us—and we derived our numbers with the experts from C.D. Howe—and according to KPMG, bracket creep now accounts for $10 billion in extra taxes that taxpayers would not be paying if we had indexed brackets all along. This was much before your government had come in, no doubt about that.

We have said that if we just continue to offset the brackets for inflation with expenditures for inflation, we move no further ahead. We just keep moving the bar up and up. We've said, yes, you need to restore that sense of fiscal sanity for Canadian taxpayers—and again, it is the intersection of good social and fiscal policy—but on the government expenditure side, the third pillar, as we point out, tax cuts and debt reduction—and I don't mean to trivialize them—are really an academic exercise to a certain degree.

Redefining the role of government, Mr. Szabo, is what we are looking for from this government. The finance minister said in his 1997 economic statement that he wanted to engage Canadians in that debate. We don't think that debate has occurred. In the context of this surplus, we're not looking at the entire $112 billion spending envelope of government.

Time and time again we've said—and you've heard it from us in the past—to take a look at initiatives such as corporate welfare and industrial subsidies. Take a look at initiatives such as overlap and duplication between federal and provincial governments.

We were disappointed that the federal government backed off its proposed seniors benefit. We thought that while the clawback and the bar might have been too low, it was a way of dealing with escalating pension costs and targeting to those most in need, redefining the role of where your expenditure's going to go.

I think that's how I would answer your question, Mr. Szabo.

Mr. Paul Szabo: Basically, instead of giving the government inflation protection, we're telling government to find the money elsewhere and we're all level.

Mr. Walter Robinson: What we're saying to the government is that if you believe you have to prioritize, as we noted, then you need to prioritize your expenditures. If you believe health care is fundamentally essential, and there's no doubt your polls tell you that—indeed, those are some of the actions you took in the last budget—then fund that greater than the rate of inflation, if you need to do so, from existing budget envelopes and other areas.

Mr. Paul Szabo: Let me suggest to you that when you use the number $10 billion in terms of the cumulative impact of bracket creep—

Mr. Walter Robinson: That's each year now.

Mr. Paul Szabo: I understand that.

If I were to look at our current fiscal situation, knowing that we have just gotten to a post-deficit scenario, if Mulroney hadn't de-indexed, the amount of annual deficits would have been substantially larger since that time, cumulatively, in terms of its annual impact on the debt, and today, if the government's objective were in fact to get the deficit down to 3% of GDP and in fact to ultimately balance the budget, there would have to have been other offsets to the cost of indexation to be able to achieve the targets.

• 1920

It's your assertion that we've taken $10 billion a year more out of taxpayers, but billions of dollars in additional benefits have been distributed to taxpayers, whether it be through the Canada child tax benefit or through other programs that have been introduced.

No matter how you cut it, there is only one taxpayer. If you give on one side, but your objectives are to balance the books to demonstrate fiscal responsibility, then you have to curtail either appropriate social spending or in fact other tax benefits to Canadians that they may otherwise get, such as the elimination of the 3% surtax. It's a balancing act.

Is not the bottom line looking at where we are in terms of the bottom line and what we can afford to give rather than what would have been nice to have, forget about the consequences?

Mr. Walter Robinson: We're not saying forget about the consequences. To deal with the hypothetical supposition in your question, indeed, if the Mulroney government had not partially de-indexed and we were moving to those massive deficits, we would have seen a national consensus in the late 1980s to mid-1980s on the deficit front as opposed to the mess that, respectfully, you did inherit.

On the issue of the bottom line, well, the bottom line is for Canadian taxpayers. You spoke with respect to those benefits that are redistributed back. Bracket creep has ensured that those benefits have basically become a ceiling that low-income Canadians hit much higher and faster. More of their incomes are exposed to inflation growth. Then there's the clawback on the goods and services tax credit, on the child tax benefit, that kicks in. That's why I say it's regressive and punishes poor Canadians.

Returning to the bottom line, however, the bottom line is that the disposable income for Canadians is less. Our savings rate is the lowest in the industrialized world, and 21¢ out of every family's expenditure dollar still goes to support taxes. You know the numbers. You've heard them from us. You've heard them from your own department at Statistics Canada. That's the bottom line for us. Canadians are crying out.

As we note on page 12 of our submission, your finance minister has spoken, more eloquently than I, to that issue of why Canadians deserve to keep more money in their pockets.

Mr. Paul Szabo: Thank you, sir.

The Chair: Ms. Redman.

Mrs. Karen Redman: Thank you, Mr. Chairperson.

I have a couple of questions, but first I'm looking for a quick point of clarification.

I can't remember if it was you, Mr. Holloway, who made the comment about a level of government buying a ferry. Which government was that?

Mr. Les Holloway: Purchases of vessels, large procurement purchases, have always taken place in Canada. There's a need for a new ferry because of the capacity problems between Nova Scotia and Newfoundland and Labrador. The federal government has taken on purchasing a vessel from Europe.

Mrs. Karen Redman: So it's the federal government as opposed to a provincial government.

Mr. Les Holloway: Yes, it's a federal government purchase. Considering the problems in the shipbuilding industry and procurement issues such as this one on large purchases and the building of vessels, we're saying that vessel should be built in Canada. If anything, it should be a short-term lease to deal with the capacity problems in the short term, with the object of designing and building a vessel to suit the needs of Newfoundland for well into the 21st century. That's what we're saying should happen. Instead, they're purchasing from Europe.

Mrs. Karen Redman: I appreciate the point and the rationale. You've made that very clearly. I just didn't hear you identify whether it was the federal government or a provincial government.

Mr. Les Holloway: It's the federal government.

Mrs. Karen Redman: That's the clarification I was seeking.

Ms. Gelfand, we've had many really compelling presentations. One of the ones we heard in Vancouver came from Mayor Beth Johnson. I believe she was from Surrey. She was talking about the infrastructure program. It's something that was mentioned in the Speech from the Throne. It certainly was met with a lot of support from FCM, the Federation of Canadian Municipalities.

Mayor Johnson was suggesting that perhaps we look at some type of incentive for communities that are thinking green. She was talking about sustainable development involving public transit and about communities looking at ways to get rid of greenhouse gas emissions and dealing with some of the Kyoto undertakings we've taken internationally.

I was wondering if you could respond on behalf of your organization.

• 1925

Ms. Julie Gelfand: Absolutely.

We've been in touch with two other environmental submissions that you have had in front of you. One was from the Federation of Canadian Municipalities, and the other was from the National Round Table on the Environment and the Economy.

We have been continuing to dialogue with the Canadian Federation of Municipalities. We tried to get them into our submission, but because they represented such a different sector of society, the actual municipalities, they felt it would be better if they made a separate submission. Our group would actually fully support the Federation of Canadian Municipalities' brief to you, and I'm sure they support ours as well.

We would support any kind of green infrastructure program that would encourage increased use of transit, or increased sewage handling in terms of getting rid of a different kind of waste and cleaning up that problem as well, because Canada pumps out a lot of raw sewage right into lakes and rivers and the oceans, as you know. So we would be very supportive of a community-based green infrastructure program. To us, that would be part of greening the millennium budget.

Mrs. Karen Redman: Actually, I think I saw a diagram in your brief that would address that.

I'd just like to plug the fact that Waterloo region is actually the home of the blue box, and I come from the Waterloo region.

If I promise to be really short in my question and Mr. Robinson promises to be really short in his answer, can I ask one more question?

The Chair: Yes.

Mrs. Karen Redman: Thank you.

You reflect an attitude and a belief that I hear in my community. But I also have Project Ploughshares in my community. The Mennonite Central Committee is also very active in my community, as is MEDA, which is their development arm. Last night we heard some really compelling statements and arguments and pleas that we should live up to our 7% of GDP investment in international development, because it's an undertaking that Canada has made internationally. We have made undertakings with reproductive issues. I believe we have $50 million in that, but our undertaking was $200 million, so we're falling fall short of something that, internationally, we have stated is a priority for Canadians.

In your submission, you talk about rethinking departmental priorities in helping to redefine government. I just wonder where we account for that, in your view. I find that to be a really compelling need. Whether we express it all the time or not, it's part of what makes Canadians who we are.

The Chair: Thanks for your short question, Mrs. Redman.

Mr. Walter Robinson: Through you to Ms. Redman, Mr. Chairman, we don't profess to represent the views of all Canadians. We represent the views of our 80,000 supporters, and my submission here reflects those views through a national survey of them.

With respect to our international commitments, Canada must defend its commitment or lack of commitment to those ententes and agreements through our multilateral institutions. As well, I am fully respectful of the fact that we are presenting one point of view. You, as a member of Parliament, and this committee must reflect what you believe to be a balance of the different views that you hear. I can only argue as vociferously and passionately as I can for our position, because we think it is in the best interests of our supporters, and hopefully those of all Canadians.

The Chair: Thank, Mrs. Redman.

Mr. Vogt, as you probably know, Mr. Jones and I represent an area of York region. Mr. Jones is really wondering why your light went off. Did you run out of methane from your garbage bag?

Voices: Oh, oh!

Mr. Gregory Vogt: Your clerk asked me to—

The Chair: Just kidding.

Mr. Jones, go ahead.

Mr. Gregory Vogt: There's only so much gas.

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

My first question is to the Canadian Taxpayers Federation. In your brief, you mention a debt reduction schedule. What is a reasonable debt reduction timetable, in years, and why do you think the government is reluctant to implement or legislate such a timetable?

Mr. Walter Robinson: Let me get to the second part of the question first.

Through you to Mr. Jones, Mr. Chairman, for us the issue here is one of inconsistency to a degree. I don't want to speculate on the finance minister's motives or those of the government, because there are some days when we're applauding the finance minister and there are other days when we're pushing him in another direction. However, we find it inconsistent that this government and this finance minister, respectfully, had a set target each and every year for deficit reduction: it was going to be x “come hell or high water”, according to the famous sound bite from Finance Minister Paul Martin.

• 1930

As I pointed out in our brief, we believe in legislated or fixed amounts, as we've seen in Alberta, Manitoba, and other jurisdictions that are now dealing with debt, and it's regardless of partisan affiliation. As I pointed out to you, it is mathematically possible to run a deficit that is half the amount of economic growth and still reduce your debt-to-GDP ratio, and I don't think anybody wants us to return to that scenario.

Coming back to the first question, we racked up this deficit for the most part in 28 years, and I don't say it lightly when I say that to ask Canadians to pay that off over 10, 70, 80, 100, or 120 years is intergenerational tax evasion. All a debt is is an obligation for future taxpayers. The C. D. Howe Institute has shown that successive generations of taxpayers will pay a higher tax burden due to unfunded liabilities in health care, pensions, the aging of the baby boomers, and a continual growth in government expenditures.

Realistically, I can't give you a number. That's for you to decide. But for something more than $3 billion a year or moving to the $7 billion prudence factor five years out from now, we believe somewhere between 9% or above of the personal income tax revenue collection would get you there, as your revenues are projected to grow in about 60 to 70 years. That would be consistent. You'd love to get it over with tomorrow, but that's financially impossible.

Mr. Jim Jones: Thank you.

I'd like to direct a couple of questions to the shipbuilding industry. For that ferry you mentioned, can you give me a guesstimate of the number of man-hours it would have taken to build that ferry?

The second question has to do with having a level playing field, which you've outlined in your brief. I'm a bit familiar with the Saint John yard. I realize that at one point you had bid on 55 or 65 requests for proposals and lost every one. If you had a level playing field, how much business would you have?

Mr. Les Holloway: I'll try to address the second question first. That's a guesstimate I don't think I'd be qualified to make. The way I'd like to address that question would be to say that we've recognized in Canada that we now must play a part in a globalized economy. Through agreements such as NAFTA, we recognize in Canada that we must trade with other nations and work and sign agreements with other nations, and we continue to move in that direction. If that is the case, then it's probably fair to say that we all want to be on the same playing field.

That's the basis of our policy document. Every other nation in the world has a policy, and because they have policies, they are building ships. The United States is doing very well. The programs they have put in place are doing very well, and they have very good experience rates. Title XI financing, for instance, has practically no default at all, and it has generated billions of dollars' worth of work in their shipyards. The Mississippi shipyard will be building two cruise ships, the first cruise ships to be built in the United States in over 30 years. It's because of programs such as those financing packages that allow them to compete against countries such as Italy, which has specialized in the cruise ship market.

It's a matter of finding innovative ways to create the opportunities here. So we're asking that we be put on that same field. Then we have to carve out our niches. We have to be aggressive in that global market. But we have to be on the same field to be able to compete, and we're not there now.

On the other point you raised about the ferry and the man-hours, I'd like to defer to my friends from Quebec. For those who don't know, they built the Joey Smallwood ferry, which presently runs from Nova Scotia to Newfoundland, and they would probably have a better estimate of the numbers. It would generate a fair amount of activity in a very desperate industry.

[Translation]

Mr. Richard Gauvin (President, Syndicat des travailleurs des industries Davie): How many hours are we talking about? We may be talking about several million hours. I would say that the most important aspect of this whole thing that we've undertaken jointly is to attain a certain level of competitivity which is difficult when compared to all shipyards. Our present undertaking to find work doesn't necessarily mean our goal is to be the best shipyard in the world.

• 1935

A certain number of ships are built every year around the world; we're talking about 1,500 ships. These ships are divided into three categories: from 5,000 to 40,000 tons; from 40,000 to 75,000 tons; and the 75,000 tonners that come out of very specialized shipyards. Some shipyards, in Japan and Korea, employ 14,000 or 15,000 people. They're not the ones we have to compete with to survive. The point isn't necessarily being first but finding ourselves in the right niche. What is important is knowing where we're trying to be competitive.

There are a lot of factors that have to be taken into account. For example, it could be the size of our shipyards, the size of our equipment or the size of the building modules that are used to build those ships. That's how it goes all across Canada in our shipyards. So there are certain niches we can be aiming for to achieve a certain competitivity.

Today, in most yards, whether in St. John, New Brunswick, or in BC or Nova Scotia, certain changes have been made; equipment was modernized over the last seven or eight years. We have efficient manpower, whether it's in Quebec, New Brunswick or BC. All those yards can very easily compare to those in the rest of the world for those aspects. Just think about what was done at the MIL Davie yard in Quebec where they modernized the Spirit of Columbus platform which was an extraordinary accomplishment. Just think about the Amethysts contracts that are built in Korea for Brazil and whose technological design was done in that yard.

What I mean is that for some aspects, we're at the same level as all the others and that the quality coming from our yards is absolutely comparable.

I'll use a very simple and clear example to demonstrate. If you have to run the 100 meters and your competitor has a 30-yard advantage on you, you probably won't get to the finish line at the same time he does. He has a better chance of getting there first. That's sort of what we're thinking about when we're suggesting a marine policy.

I'll give you another example that has an extremely important impact. In Quebec, at the Davie yard, between 1987 and 1993, we had a yearly average of about 2,700 jobs generating some $125 million in payroll. That gave a direct generation, in the area, of some $40 million in economic activity. Messrs. Tremblay and Holloway, before, were mentioning greater economic benefits than simply the creation of direct jobs, which is indirect jobs.

Now it's clear that this also generates income for provincial governments. That's why we're going ahead with our proposal. Next week, I'll have the opportunity of making a presentation to the Industry Committee on this. I can tell you that all the social problems stemming from this do have a cost that we are unfortunately unable to quantify black on white in order to impress them upon you.

At home, we have had suicides, family problems, divorces and financial problems. We've been through the whole raft of problems. Today, we're 80 workers in that yard. In St. John, New Brunswick, I think that as of December there's absolutely none. That's the way it goes everywhere across Canada.

So it's a very important source of jobs. We have an exceptionally qualified work force. Our technology is very advanced. The ship design systems are very good; there is nothing like them elsewhere in the world. This is a very important expertise and, in my opinion, we should do everything for this industry to survive.

The Chair: Thank you. Mr. Jones, anymore questions?

[English]

Mr. Jim Jones: Yes.

How much Canadian content would be in a ship? And last, you mentioned you're coming to the industry committee next week, and I'm on the industry committee. One thing that would be very helpful is if you could do an analysis of...I'm going to say the Saint John yard, but it could be the other yards too, based on the criteria where you say you need help. If you could go back over the 55 or 65 proposals and show that if you had some of these things, you might have won these, that would be very helpful in showing how maybe some of the limitation factors are impeding business.

• 1940

Personally, I think we have as serious a crisis in the shipbuilding industry, when you look at the couple of million man-hours that could go into a ship, as we do in the farming industry and as we see starting to emerge in the culture industry, the magazine industry. I've had them in my office, and probably several of you have had them in your offices, in the last couple of days. This is serious too.

I know they have the Jones Act in the U.S. Maybe we have to—

Mr. Roy Cullen: [Inaudible—Editor].

Mr. Jim Jones: No, but somehow we have to play ball and help our people, just as the Americans help their own.

Those are all the questions I have.

The Chair: Very well said, Mr. Jones.

[Translation]

Mr. Dubé, do you have another question?

Mr. Antoine Dubé: Yes. I even have five questions.

[English]

The Chair: Oh, Mr. Holloway.

Mr. Les Holloway: There was a question on Canadian content.

I want to make one other point first. If Canada captured just 1% of the world market, every shipyard in this country would be working to capacity. That means as well that for every one shipyard worker, in the statistics we showed you, 2.5 to 3 jobs are created in supply and service sector industries outside the industry right across the country. For instance, the frigate program in Saint John dry dock and as well in the Quebec Davie yard created jobs as far away as British Columbia and in the prairie provinces.

So 1% is all that would be required. We don't plan and state that our policy would make us this world dominator in shipbuilding, but it would create a lot of well-paying jobs.

On the whole issue of Canadian content, shipbuilding is a very labour-intensive industry. I just want to give you some statistics. Our union, the Canadian Auto Workers Union, did a sectoral analysis of almost every industry in Canada. The GDP per worker in shipbuilding is $84,000. That's 68% more than the Canadian average.

Labour productivity is up by 46%. I can't argue the numbers with you, but we can get the guy who can: Jim Stanford did a big part of putting this document together. But productivity is substantially up, and the GDP per worker is substantive, at 68% higher than the average, as I said.

So it's a very labour-intensive, very sound economic turbine for a lot of coastal communities that are in dire need of that type of activity.

The Chair: Thank you, Mr. Holloway. As a matter of fact Mr. Stanford will be appearing in front of our committee tomorrow. Perhaps we'll place that question then. Thank you.

[Translation]

Mr. Dubé.

Mr. Antoine Dubé: My first question is about the 1%. At the end of the last war, Canada was one of the top 10 shipowners. It had a fleet and it was really a major country in that regard. Canada is bounded by three oceans and has the longest inland navigable waterway near its biggest market, the United States, which are across the Great Lakes. Since then, the navy and shipbuilding have gradually lost ground.

Something else has been happening as well. Canadian shipowners have been building their ships elsewhere. In some cases, they are flying foreign flags. Why? For tax reasons. There are tax havens in certain parts of the world.

Canada does not want to subsidize its shipyards, even though all the other countries do so, except perhaps the United States, which apply protectionist measures.

Worse still, we have the most stringent tax policies for the shipbuilding industry. I have seen the situation in some other countries. Some of them exempt their shipyards from taxation. They exempt them from taxes and also subsidize them. Something has to be done about this in the WTO negotiations. Your colleague, Mr. Pettigrew, said that he would try to do something. It is important.

Those who speak out against shipbuilding say that it is an industry in decline. You have just talked to us about technological advantages, but given that you are unions representing workers, I would like you to tell us, from the perspective of productivity, about the hourly wages and compare them with other countries, so that we can see whether Canada is so overpriced.

Third, do you think that including shipbuilding in NAFTA would have any impact on Canadian shipyards?

• 1945

Finally, I included in my private member's bill the measures that have been put forward jointly by the three unions, which is a first in Canada, as well as by the employers. I took them and put them in a private member's bill that I introduced. I must say that I feel some reluctance from the Liberal side. There are 100 members of Parliament who signed my bill, but there was not a single Liberal among them, of course.

Without wanting to get into partisan politics, I would ask you if you believe that the fact that a bill comes from an opposition member is enough for the Liberal majority to want to block it.

Mr. Philippe Tremblay: With respect to hourly wages, we were recently in a situation, given the financial difficulties of the Quebec shipyard, where we were actively seeking buyers around the world. When you want to find buyers, you have to have a good product to sell, that applies to all Canadian shipyards, whether they are in St. John or in Vancouver.

We compared our hourly rates with those in Germany, France, Finland, Japan and even Korea. The hourly rate in Canada in the shipbuilding industry is between $40 and $55, taking into account benefits, overhead, administration, etc.. Everywhere else in the world, it is around $100. So if the hourly wages are not the issue, there is really not a productivity problem.

Our hourly rates are about the same as those in Korea, except that in Korea they bid below cost and the government, at the end of the year, writes off the debt because these are state-owned companies. We can never compete with them; it is totally impossible. It is not a question of wages. Their rates are the same as ours. Productivity is not higher. It is the hidden subsidies that prevent us from being able to compete.

On your question about NAFTA, there is no doubt that if it were not for the Jones Act and NAFTA, we could also sell or build ships for U.S. shipping. NAFTA currently makes that impossible because shipbuilding is not covered.

The United States is protectionist to the point that a ship used for carrying goods or cabotage in the United States must be built there. It has to fly the American flag. It cannot be registered anywhere else. It must be built in the United States and its crew must be American.

If this industry was part of the free trade agreement and if this protectionist legislation was not in place, we could bid to build American ships, which we cannot do at present. Even if we have the best prices in the world, we could not do that. The only thing that we can do is to subcontract.

Regarding your last question, that is whether the fact that you are in the opposition will jeopardize the private member's bill, we hope that that will not be the case.

Unlike in the past, when each labour body or each province tried to make its own representations to the government each time to try to get a shipbuilding policy, we have come together for once and tried to take a concerted approach.

We do know that when the government passes legislation to help industries, the opposition's role is often criticized. That is why we decided that if we worked with all the opposition parties this time and agreed on a bill, the party in office could no longer have any objections. And if no one criticized the initiative, it would be seen as a positive action.

Since we know that Mr. Martin might have a special interest in the shipbuilding industry and that he might not want to feel as if he was in a conflict of interest, we made sure that the opposition agreed with our proposal. If the opposition agrees, I imagine that the government will have to go ahead. There will not be any criticism and the government will be congratulated.

[English]

The Chair: Mr. Dubé was kidding. He knows that's not the way we operate.

[Translation]

Mr. Dubé.

Mr. Antoine Dubé: That's fine.

The Chair: That is all? Do you have another question?

Mr. Antoine Dubé: I would have a number of other questions, but I will conclude by urging my colleagues to remember this point. All the provincial premiers, including the Liberal premiers, agreed with these demands at a conference held in Quebec City earlier this year. It was a resolution brought by Liberal supporters to the Liberal convention two years ago. A number of members of Parliament, whom I will not name today, voted in favour of a shipbuilding policy then. All I would ask you is to be consistent and on the same side as all those people.

• 1950

There is, however, one problem, and this is perhaps the last question I will ask. A shipyard represents a large number of employees here. In Lévis, when things were going well, there were 3,000 workers, plus their families, plus all the people attracted by the economic spinoffs, for a total of perhaps 10,000 people. In my riding, I have no choice: I have to be concerned with this issue. But because this issue is very geographically specific, as is the case also in St. John and Vancouver, it is difficult. There are perhaps 8 or 10 members of Parliament who are more concerned politically about this issue, whereas the ultimate cause...

I will close by asking you what would happen if you closed everything. What would the consequences be? For example, when a ship went aground in the St. Lawrence—there have been two recent cases in the Quebec City region—what would happen if there was no longer any shipyard capable of repairing it? What would the consequences be? In a worst-case scenario, you could close everything, declare bankruptcy and walk away. This country which borders on three oceans, which has the longest navigable waterway in the world, would have no one capable of repairing ships.

Mr. Philippe Tremblay: They will have to be towed to Europe. They will tow them to Korea to have them repaired if there are no shipyards in Canada. What can I say? It will cause ecological disasters.

[English]

The Chair: Mr. Holloway.

Mr. Les Holloway: Mr. Chairman, very briefly, I would just like to make a couple of points.

One is to the issue of the three coastlines. I would agree with that, but I would add something else. What do we do as a nation when we need our shipbuilding industry to support our sovereignty as a nation, to support our defence, not only to build our frigates but to maintain them in possible times of conflict? If we don't support shipbuilding as a nation today, you won't have it when you need the shipbuilding industry. In our view, there has to be a shipbuilding industry if you truly want to maintain your sovereignty as a nation.

The other thing is—and it speaks to the issue of what we want from this committee—the issue of our whole initiative having been one geared around wanting to have the debate in some national forum led by the federal government, to recognize that there are serious problems in our industry and, by bringing the stakeholders together, to find out what we can do to create a solution to some of the problems that exist. That has been our thrust. It's not one of saying we have all the answers. We know the government would table in such a forum issues that would have to be addressed in relation to some of the solutions we say exist, but we think it's important that we have that debate. And having that debate, we believe, would result in a policy that would support the industry.

Remember that what we have in front of you, why we sit in front of you, is because we can't have the debate. We can sit and talk to National Hockey League teams, National Hockey League players, the millionaires, but we have thousands of shipyard workers, and we're saying we'd like to have the debate. We don't care if they're no-brainer positions—whatever position you want to put on the table. But allow the stakeholders to sit there with us and say, there are problems in the industry. What can we do, if anything, to fix them? We say there are solutions. There are solutions to the problems, but we can't even get the federal government to this point, to want to sit.

So we would ask this committee to be a part of that initiative on our behalf, to say that there's a real opportunity to do something for this industry that would be very positive for the economies of a lot of areas in this country that need to maintain economic activity. That's the biggest part of our thrust.

The Chair: Thanks, Mr. Holloway.

Mr. Robinson.

Mr. Walter Robinson: Just for the record, Mr. Chair, Mr. Holloway brings out a very good point—the question of priorities. This government and this cabinet should not be looking at bailing out 22-year-old millionaires on skates and equally affluent middle-aged bosses. Deal with all the priorities that are much higher on the public policy radar screen, that have been addressed here this evening.

I think that's something we would all agree upon.

The Chair: Thank you.

Mr. Jones, do you have another question?

Mr. Jim Jones: I have two brief questions. One is to Jason.

Jason, there are a lot of demands on the educational system. Based on that, and maybe limited money, in what alternative ways could we deliver the education that is needed to the population out there?

Mr. Jason Aebig: If your question is with reference to the increasing enrolments—

Mr. Jim Jones: I'm just saying money. You said you need more money for bricks and mortar and for professors, and that the cost of education per student is high. Well, instead of just throwing more money at it, are there other alternatives for delivering some of that education to the people who need it?

• 1955

Mr. Jason Aebig: That's an excellent question. Unfortunately, one of the main avenues for that kind of support to find its way to folks like me at the bottom is, indeed, through the transfer. And when that specific model was introduced in 1995, it really did limit the opportunities for the federal government to get directly involved in some of the issues I talked about.

The only thing I could suggest, though, is that the federal government does have a very specific role in providing some leadership to these provinces to get their heads wrapped around the kind of vision that was articulated in the throne speech. We saw that will to act with health last year. Even with that same transfer, the same ambiguities, and the same kind of loss of accountability, it was done because it was seen as a national priority. I would suggest that the federal government has a role in using the transfer model currently in place to establish some leadership and ground rules for provincial premiers and ministers of finance with respect to this transfer.

Mr. Jim Jones: I have one last question.

Gregory, I also enjoyed your presentation. What type of volume, tonnage, can one of these recycling plants, or whatever you call it, handle in a day?

Mr. Gregory Vogt: Normally we work on an annual average, where we'd say commercially it really should be 100,000 tonnes per year plus, which means it would deal with a city of a population of roughly 100,000, because in this country everybody makes about a tonne of waste a year. That gives you a sort of flavour for it. On a daily basis, then, that works out to about a couple of hundred tonnes a day.

Mr. Jim Jones: What's the volume that Keele Valley is generating right now?

Mr. Gregory Vogt: Currently, Keele Valley receives almost 800 tonnes a day, sometimes well over that.

The Chair: Thank you, Mr. Jones.

On behalf of the committee, I want to thank you all. The fact that we carried this overtime—by the way, committee hearings are not taxed if we go overtime, which would also make Mr. Robinson very happy—is testimony to the fact that we really enjoyed the input we received. We dealt with some very, very key issues, like the issue of taxes, which is becoming one of the key issues across the country; the environment and environmental technology; the specific concerns of the shipbuilding industry; and education.

We thank you very much for bringing those to our attention. You make a strong case for your points of view, and that makes our job a little bit more difficult, because we must also lay out the priorities, and our challenge is of course that we can't address all of them. We have to go through each one and choose.

However, everything we do on this committee goes through one essential filter, and that is that all decisions we make are based on how we can improve the standard of living of Canadians, and it is through that filter that we get our answers. And I must say that all the cases we heard tonight speak to that particular ultimate goal. So I thank you very much for adding a great deal of value to the debate.

So look forward to next week, when we report to the Minister of Finance—hopefully on Friday, December 10.

On behalf of the committee, thank you again.

The meeting is adjourned.