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37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Tuesday, October 29, 2002

0930

The Chair (Mrs. Sue Barnes (London West, Lib.))

Mr. M. J. Wheeler (Chairman, Industry Steering Committee, Canadian Lightweight Materials Research Initiative)

Mr. William Harney (Director of New Product Development, Magna International, Canadian Lightweight Materials Research Initiative)

0935

0940

The Chair

Lieutenant-General (retired) Richard Evraire (Chairman, Conference of Defence Associations)

0945

The Chair

Mrs. Christina Marchant (Chair, Child Poverty Action Group, Ottawa Child Poverty Action Group)

0950

Professor Adje van de Sande (Ottawa Child Poverty Action Group)

Ms. Christina Marchant

Prof. Adje van de Sande

0955

Ms. Christina Marchant

The Chair

Ms. Sharlyn Ayotte (President and Chief Executive Officer, T-Base Communications Inc.)

Ms. Jillian Deevy (Manager of Web Projects, T-Base Communications Inc.)

1000

1005

The Chair

Ms. Jillian Deevy

The Chair

Chief Cece McCauley (Women Warriors of Sahtu)

1010

The Chair

Mr. Charlie Penson (Peace River, Canadian Alliance)

1015

LGen Richard Evraire

Mr. Charlie Penson

LGen Richard Evraire

1020

Mr. Charlie Penson

The Chair

LGen Richard Evraire

The Chair

Mr. Claude Bachand (Saint-Jean, BQ)

1025

Lt-Gen Richard Evraire

The Chair

Ms. Maria Minna (Beaches—East York, Lib.)

1030

LGen Richard Evraire

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

1035

Prof. Adje van de Sande

Mr. Shawn Murphy

Prof. Adje van de Sande

1040

Mr. Shawn Murphy

Prof. Adje van de Sande

The Chair

Mr. Bryon Wilfert (Oak Ridges, Lib.)

The Chair

LGen Richard Evraire

1045

The Chair

Mr. Bryon Wilfert

Ms. Christina Marchant

Mr. Bryon Wilfert

Prof. Adje van de Sande

The Chair

Mr. Bryon Wilfert

The Chair

Mr. Roy Cullen (Etobicoke North, Lib.)

1050

LGen Richard Evraire

Mr. Roy Cullen

Colonel (Retired) Alain Pellerin, (Executive Director, Conference of Defence Associations)

Mr. Roy Cullen

LGen Richard Evraire

The Chair

LGen Richard Evraire

1055

The Chair

Ms. Pauline Picard (Drummond, BQ)

Prof. Adje van de Sande

Ms. Pauline Picard

Prof. Adje van de Sande

Ms. Pauline Picard

Prof. Adje van de Sande

Ms. Pauline Picard

1100

Prof. Adje van de Sande

The Chair

Mr. Wayne Burroughs (Individual Presentation)

1110

The Chair

Mr. Robert J. Giroux (President, Association of Universities and Colleges of Canada)

1115

1120

The Chair

Mr. Brad Wuetherick (President, Graduate Students Association)

1125

The Chair

Mr. Hans Konow (President and Chief Executive Officer, Canadian Electricity Association)

1130

Mr. Roy Staveley (Senior Vice-President, Public Affairs & Environment, Canadian Electricity Association)

1135

The Chair

Mr. Jeff Ekstein (Chairman of Government Affairs Committee, Canadian Printing Industries Association)

Mr. Pierre Boucher (President, Canadian Printing Industries Association)

1140

Mr. Jeff Ekstein

1145

The Chair

Mr. Harry Kits (Executive Director, Getting Landed Project)

1150

Mr. Andrew Brouwer (Policy Advocate, Getting Landed Project)

The Chair

Mr. Rahim Jaffer (Edmonton—Strathcona, Canadian Alliance)

1155

Mr. Brad Wuetherick

1200

The Chair

Mr. Robert Giroux

The Chair

Ms. Pauline Picard

The Chair

Mr. Robert J. Giroux

1205

The Chair

Mr. Bryon Wilfert

Mr. Brad Wuetherick

1210

The Chair

Mr. Pierre Boucher

The Chair

Mr. Roy Cullen

Mr. Hans Konow

1215

Mr. Roy Cullen

Mr. Roy Staveley

Mr. Roy Cullen

Mr. Wayne Burroughs

Mr. Roy Cullen

Mr. Wayne Burroughs

Mr. Roy Cullen

Mr. Wayne Burroughs

Mr. Roy Cullen

The Chair

Mr. Gary Pillitteri (Niagara Falls, Lib.)

1220

The Chair

Mr. Harry Kits

Mr. Gary Pillitteri

Mr. Brad Wuetherick

1225

The Chair

Ms. Albina Guarnieri (Mississauga East, Lib.)

Mr. Robert J. Giroux

1230

Mr. Brad Wuetherick

Ms. Albina Guarnieri

Mr. Brad Wuetherick

Ms. Albina Guarnieri

Mr. Brad Wuetherick

The Chair

Mr. Robert J. Giroux

The Chair

CANADA

Standing Committee on Finance

NUMBER 008

2nd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, October 29, 2002

[Recorded by Electronic Apparatus]

¿ (0930)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): Good morning. Bienvenue à tous.

We have two panels this morning. We will be joined by more people as the morning goes on.

The first panel from 9:30 to 11 has a number of witnesses: from the Canadian Lightweight Materials Research Initiative, Dr. Wheeler, chair of the Industry Steering Committee, and William Harney, director of new product development at Magna International Inc.; from the Conference of Defence Associations, Colonel Alain Pellerin, executive director, and Lieutenant-General Richard Evraire; from the Ottawa Child Poverty Action Group, Christina Marchant and a professor from Carleton University, Mr. van de Sande; from T-Base Communications Inc., Sharlyn Ayotte and Jillian Deevy, the manager of web projects; and from the Women Warriors of Sahtu, Honorary Chief Cece McCauley. Welcome to all of you, and thank you for coming today.

We will hear from you in the order in which you appear on the agenda. I remind you that your briefs have been given to all the members of the committee ahead of time, and they've been translated. We'd like you to speak to your brief or your notes for approximately seven minutes. I will signal with my hand about 30 seconds before the time is up. I'll try not to interrupt you verbally. If you've gone overtime, I will interrupt. I would prefer that I don't have to. That will leave us some time for questioning by members, which I think is an important part of this process.

We'll commence with the Canadian Lightweight Materials Research Initiative. Dr. Wheeler, are you the one giving the presentation today?

Mr. M. J. Wheeler (Chairman, Industry Steering Committee, Canadian Lightweight Materials Research Initiative): My colleague Mr. Harney is going to give the presentation this morning.

The Chair: Okay. Commencez, s'il vous plaît.

Mr. William Harney (Director of New Product Development, Magna International, Canadian Lightweight Materials Research Initiative): Merci, thank you very much, and good morning.

As shown on the agenda, we represent the Canadian Lightweight Materials Research Initiative. CLiMRI will basically be presenting today a request for extended funding to support our plan, which has been under way for a number of years.

In the future, CLiMRI will improve the innovation performance and competitiveness of the transportation sector and its suppliers in Canada. We also work to create and retain high-quality jobs and develop long-term engineering expertise in Canada. We feel that CLiMRI has a vital role to play in helping to meet the Kyoto targets by reducing energy consumption and greenhouse gases from all types of vehicles, not only in Canada but in all of our export countries.

I'd like to start by saying that CLiMRI is a proven national program. It has been under way for a number of years. It is an industry-led partnership with the government that helps to drive innovation throughout the transportation industries. The ultimate goal of CLiMRI is to reduce vehicle weight through the advancement of technology, not only in terms of materials development but in the application of materials and their use. The reason for doing this is to reduce vehicle energy consumption and thereby reduce greenhouse gas emissions and the use of primary energy. CLiMRI involves the entire spectrum of materials producers, all the way from the basic extractor resources through SMEs to high value-added assemblers at the top of the supply chain, primarily in Canada. It will also accelerate the deployment of new technology and increase employment throughout the industry, not only within automotive but across all transportation sector companies.

On the chart on page 4, which is entitled “Reducing Weight Improves Fuel Efficiency”, the scatter diagram has data taken from the United States Environmental Protection Agency for vehicles built in 2001. If you look at the top right-hand side of the box, it shows that the lower your vehicle mass, the higher your fuel efficiency. As you can see from the scatter of points, the bulk of the points is in the middle part of the chart at the bottom left. The European Community has mandated the production and sale of vehicles, which actually represents the top right-hand corner of this box. That really represents the state of the art today. As a rule of thumb, for every 10% weight reduction in a vehicle, an efficiency improvement of 6% to 8% is achieved for fuel economy.

Fundamentally, we're talking about weight reduction and the use of advanced technologies. But how do we get there? We feel that innovation is paramount to achieving these objectives. Canada's innovation system needs to be strengthened and focused to the benefit of both industry and society as a whole. In respect of the transportation sector, the automotive industry itself, including supply chainers, is critical to our economy, representing over $44 billion in gross domestic product and well over 400,00 direct jobs. However, much of the industry is not protected by intellectual property, and those jobs are vulnerable. We've seen them moving south as assembly businesses erode within Canada. It's possible that this could happen overnight, as we've all witnessed. We feel that innovation is vital to the Canadian auto industry in order for us to not only attain global competitiveness but to maintain a lock on those types of jobs.

So what is CLiMRI's role in terms of innovation? Recently, the federal government embarked upon an initiative to develop an innovation strategy for Canada. CLiMRI led the charge in what is called the lightweight materials or advanced technology sector in this area. We did this by participating in automotive and energy sector round tables both within the natural resources sector and Industry Canada. We brought together the entire Canadian lightweight materials research industry to take part in consultative processes, which led to the development of a ready-to-go strategic action plan for lightweight vehicle technology. This will ultimately address climate change and competitiveness through innovation.

As I mentioned before, CLiMRI is a pre-existing industry-led partnership with government. It has been in operation for over three years. We feel that given the right funding, CLiMRI can be scaled to meet the objectives of the plan and to in fact execute it.

Very briefly, I'd like to go through the plan itself in terms of its main points. The plan would endeavour to leverage CLiMRI's pre-existing government-industry partnership. We would form additional supply chain collaborations to develop products for improved automotive efficiency. We'll develop and retain engineering expertise in Canada, and we'll work, as we do today, to exploit international research initiatives, thereby strengthening Canada's knowledge base. We'll also work to increase design capacity throughout the supply chain, giving Canadians the valuable tools and skills they need to make a difference in terms of developing new product. We'll make more effective use of existing academic programs, and we'll spread and propagate this knowledge throughout the transportation sector, not only in automotive but within aerospace, trains, buses, and rail cars. Fundamentally, CLiMRI would act as a national gateway or router to link and direct activities between emerging and existing clusters in this technology area across all regions of Canada that are involved.

¿ (0935)

One of the ways in which we would do this in a scaled-up CLiMRI would be by looking for developed knowledge workers and by retaining engineers and designers who have skills in this area as they emerge. That will then increase the degree to which intellectual property is retained in Canada. It will allow CLiMRI and Canada to participate in world forums in which significant research is being done in this area today, not only in Europe and Asia, but in America. But ultimately it will provide leadership and guidance to all of our research partners, including academic players, namely AUTO21, for which CLiMRI already serves as the theme coordinator for the materials manufacturing theme. We'll work to create nodes of excellence and foster their growth, and we'll generate intellectual property that is developed, owned, and exploited in Canada in the future.

Just as a very brief example of how the application of advanced technology can make a difference, if a lightweight vehicle space frame was developed using these technologies, we could see a net reduction of 0.2 megatonnes per year on only a 200,000-vehicle production run.

I'll skip to the next point, which is why our government must invest.

Canada is losing ground because countries that are competing with us are investing phenomenal amounts beyond what we do today. Australia invests ten times more than Canada does in this area. Michigan and Germany have recently taken over the lead on fuel cell measures for vehicles. The Germans and Austrians, as well as the Americans, are taking huge strides in this area and are somewhat leaving Canada in the dust. More importantly, in the supply sector, we're seeing an increase in the greenfield or beachhead establishment of factories that are owned and operated by Japanese and German companies that have advanced lightweight materials technology and are moving into our product area.

In conclusion, the need for increased funding is critical and urgent. At present, CLiMRI receives approximately $850,000 Canadian per year, but we feel it needs at least ten times that amount, or $8 million, to make a significant impact in this important area. With this support CLiMRI will help the Canadian industry to improve its competitive position, delivering not only environmental and climate change benefits and innovation and technology leadership in Canada, but an effective industry-government partnership as well. Regional concentrations and clusters in engineering expertise will be fostered, intellectual property that is developed in Canada will remain in Canada, and ultimately we'll see a globally competitive and robust Canadian automotive and transportation industry.

Thank you, Madam Chair.

¿ (0940)

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

We'll now go to the Conference of Defence Associations. Go ahead, sir.

[Translation]

Lieutenant-General (retired) Richard Evraire (Chairman, Conference of Defence Associations): Madam Chair, ladies and gentlemen, good morning.

I am pleased to be presenting the comments of the Conference of Defence Associations on an issue that should be of concern to all Canadians, namely, the fact that the Canadian Armed Forces are in an advanced state of disrepair.

[English]

Madam Chair, this committee is in receipt of the Conference of Defence Associations Institute's latest study, “A Nation At Risk: The Decline of the Canadian Forces”, which was released in October this year. The study is both timely and relevant in light of the Speech from the Throne delivered on September 30.

The government's commitment to set out, before the end of this mandate, a long-term direction on international and defence policy that reflects our values and interests, and one that ensures that Canada's military is equipped to fulfill the demands placed upon it, is very welcome and is seen for what it is: one of a number of steps on a very long journey. It must be realized that this promise will do nothing to solve the current short-term crisis the forces are facing and for which an emergency infusion of funds of $1.5 billion must be made to the defence budget in order to stop further loss of operational capability and further deterioration of existing equipment and infrastructure, as well as allowing for adequate equipment and training of our men and women in uniform. If this short-term action is not taken, the Canadian Forces will continue to dwindle below a level of operational capability already considered inadequate in terms of this government's defence policy—the 1994 defence white paper—and cause serious risk to our nation.

It is no secret that the state of the Canadian Forces is critical. Over the past year, parliamentary and other respected agencies and organizations have confirmed that fact. You will find selected recommendations of twelve of these agencies and organizations at annex C of our report.

[Translation]

A Nation at Risk was drafted with two objectives in mind: to develop and support, through additional facts, the analysis and results of a similar study on defence that we published a year ago and which is entitled Caught in the middle: An assessment of the operational readiness of the Canadian Forces.

To meet this first objective, we are presenting what I can only describe as irrefutable evidence that the Canadian Forces are in a state of crisis.

[English]

For that reason, Madam Chair, I urge this committee to read the document in detail. I promise that you will be troubled by the information we have assembled, as it illustrates the seriousness, the immediacy, and the depth of the malaise affecting the Canadian Forces today, a malaise that cannot be corrected solely through a commitment by the government to set out, some two years from now, a long-term direction on international and defence policy. The personnel, equipment, and training shortfalls the Canadian Forces suffer from today place the Canadian Forces at risk.

Secondly, our study examines how, at a time of growing world instability, the pursuit of Canada's national interests of prosperity, security, and the promotion of Canadian values is also at risk as a direct result of the fact that our armed forces have fallen into disrepair. We have identified three related areas of risk. The first of these is Canada's economy.

Given our extraordinarily heavy reliance on trade with the U.S., any major disruption to the U.S. economy will have severe repercussions on Canada's economy. Canada must, therefore, in a meaningful way, assist the U.S. and other like-minded nations in the maintenance of world peace and security, without which normal trade flows will be disrupted. To do so, Canada must have viable, deployable, and sustainable armed forces. Canada currently cannot claim to have such armed forces.

¿ (0945)

[Translation]

The second sector at risk is Canada's security. In this case, we are talking about security with respect to the numerous threats from abroad and also from within Canada. It is essential that we defend Canada's territory and that of North America, working together with the United States. If we are not prepared to contribute to this security in a viable manner, Canada's sovereignty will be jeopardized.

[English]

If Canadians are not prepared to contribute in a meaningful way and in a viable way to the defence of Canada, and if a threat to our country is viewed by the United States as a threat to their territorial integrity, then the U.S. will surely defend their territory, as well as our own, in whatever way suits them. This, Madam Chair, cannot but result in a severe loss of our sovereignty. To quote Minister McCallum, from his recent Toronto speech, “Sovereignty...doesn't come cheap.”

The CDA Institute's study “A Nation at Risk” shows that problems common to all three of Canada's armed services, as well as to the reserves and the logistics element, contribute to the crisis in Canadian defence. These problems are as follows.

The first is inadequate funding. This is the fundamental problem, and the others flow from it.

The second is demilitarization. Between one-quarter and one-third of the budget of the Department of National Defence is not available for spending on military capabilities. This point is addressed in annex A of our study, and I will briefly address it in my concluding remarks.

The third is a severe shortage of personnel, especially those with leadership experience and technical skills.

Fourth, there is a severe shortage of spare parts and other supplies.

Fifth, equipment is rusting out.

Finally, sixth, the Canadian infrastructure on military bases is decaying.

When we apply this template of problems to each of the components of Canada's military, we quickly see the risks emerge. In the interests of brevity, Madam Chair, I respectfully refer you to the details contained in our study “A Nation at Risk”.

Madam Chair, I cannot end my intervention without drawing your attention to an important fact regarding government-reported funding of DND and the Canadian Forces. Repeatedly of late, and most recently in its response to the latest SCONDVA recommendations, the government has stated that it has added $5.1 billion to the DND budget since 1999. What it does not say is that up to one-quarter of that amount has been assigned to non-operational objectives or to service the operations and maintenance deficit. The Auditor General has identified this latter amount as $1.3 billion per annum. Over the period 1999 to 2007, in which the $5.1 billion is to be applied, the cumulative operation and maintenance deficit will be $8.4 billion.

As well, the Auditor General has identified additional shortfalls of some $5 billion to $6 billion in the DND capital account. Most importantly, over the same period, only $750 million of the $5.1 billion has been added to the DND budget base. This means that most of the money will either be used to pay current bills or be transferred to other government agencies or to provinces, with little left over to stabilize the decline of the Canadian Forces and prepare for the future. In other words, the $5.1-billion expenditure will barely allow DND and the Canadian Forces to keep their heads above water.

We in CDA are especially worried that the defence update now under way in DND will result in more cuts to military capabilities and will amount to little more than an exercise aimed at constraining our armed forces to live within the existing annual budget of $12 billion, 25% of which is spent on requirements other than direct operational readiness requirements. This will increase the decline of the forces.

The CDA recommends that the update be used to support a request for an emergency additional allocation of $1.5 billion to the DND budget base in order to arrest the decline of the forces and provide a stable foundation for rehabilitation. The Canadian government's promise of an international defence policy review that would hopefully result in a new white paper and, as recommended by this committee last year, a commitment by the government to embark on a five-year plan for the revitalization and modernization of the forces, would significantly increase the budget of DND as a percentage of GDP. In this vein, we fully support SCONDVA's recommended increase to the defence budget to 1.5% to 1.6% of GDP over the next three years, an increase from the current 1.1%.

[Translation]

Madam Chair, thank you for your welcome attention. I would be pleased to entertain any questions.

[English]

The Chair: Thank you.

We'll now move to the Ottawa Child Poverty Action Group, and Ms. Marchant.

Mrs. Christina Marchant (Chair, Child Poverty Action Group, Ottawa Child Poverty Action Group): First of all, I'd like to thank you for taking the time to hear from us today.

In the 2002 Speech from the Throne, the government recognized the social impact of economic policies and promised to build policies that ensure that no Canadian child continues to suffer the debilitating effects of poverty. We believe that in order to fully address child and family poverty, a combination of income interventions and community programming are needed. We're here to outline to you three priorities in the economic area that we feel would alleviate the social impact of economic policies on the poor children of Canada.

Adje's going to talk about the first one, I will do the second, he will cover the third, and then I will close.

¿ (0950)

Professor Adje van de Sande (Ottawa Child Poverty Action Group): The first priority is to consolidate the Canada child tax benefit into a single program that provides a maximum benefit of $4,200 per child to all low-, modest-, and middle-income families. As it stands right now, the CTB and supplement do not benefit the poorest of the poor. The national child benefit was designed as part of the federal children's agenda in order to improve the situation of all poor children. It was intended that this would augment the income of people with extremely low incomes. However, all but three provinces claw back the supplement from families on social assistance. As a result, a large percentage of children—children whose families most need the funds—are not benefiting from the national child benefit program.

Sixty per cent of poor families rely on social assistance. The child tax benefit ignores the reality that there are not enough jobs to go around in today's economy, and the jobs that exist are increasingly low-paying.

Caring for children is the reason that many single parents are on income assistance. The clawback policy discriminates against low-income parents who have no alternative way of supporting themselves while caring for their children full-time. As a result of the clawback, 60% of poor two-parent families and 80% of poor single-parent families have seen no improvement in their standard of living since the introduction of the national child benefit.

Welfare incomes for families with children have declined across the country, except in the three provinces that chose not to claw back the supplement to the child tax benefit. The policy as it exists suggests that parents with children from working poor families whose main source of income comes from employment are more deserving of assistance than children raised in families that are primarily dependent on welfare programs. This is both unfair and discriminatory to Canada's children.

Increasing the national child benefit and rescinding the clawback would help to reduce the depth of poverty in Canada by 50%. This strategy would yield immediate economic benefits. Money would be in the hands of people and would be spent by those people who live in the community.

Ms. Christina Marchant: Turning to the second priority that we'd like to present to you, by using funding and policy mechanisms, the federal government could provide leadership to establish universal, inclusive, and accessible early childhood education and child care services. Affordable, high-quality early childhood education and regulated child care are key to an anti-poverty strategy in Canada. According to Campaign 2000, programs that deliver seamless child care and early childhood education can enrich early development and can support parents, both as parents and as participants in the labour force and in training.

Without a nationally licensed and regulated child care program, the only option left to many single parents is to remain on social assistance. I think it has been well proven that one of the most effective ways of allowing people to leave social assistance and return to the work is for them to be able to access licensed, regulated, affordable child care.

I also want to point out to you that within the current social union framework agreement, some provinces—Ontario, Alberta, and British Columbia—are choosing not to use the government's early childhood development initiative funds to enhance regulated child care spaces. I'm going to talk about that a bit more closer to the end of the presentation.

Prof. Adje van de Sande: The third priority is a commitment to a national affordable housing strategy leading to the creation of 20,000 new affordable units each year for 10 years and the rehabilitation of 10,000 affordable units each year. The recommendations in priority 3 are supported by the Canadian Federation of Municipalities. We congratulate the government on its willingness to step back into affordable housing, albeit cautiously. Moneys have been made available through the supportive community partnership initiatives, and these will expire as of March 2003. Capital grants programs are also helpful, but a national housing strategy is required, as housing is a key determinant of health and social well-being. According to Campaign 2000, realistically addressing the scope of the housing crisis requires an increase in the government's current investment of $170 million per year to at least $1 billion per year over the next five years.

We must remind ourselves that housing is a basic human right, entrenched in article 27 of the UN Convention on the Rights of the Child, of which Canada is a signatory. It states:

Parties recognize the right of every child to a standard of living adequate for the child's physical, mental, spiritual, moral and social development.

Parties, in accordance with national conditions and within their means, shall take appropriate measures to assist parents and others responsible for the child to implement this right and shall in case of need provide material assistance and support programs, particularly with regard to nutrition, clothing and housing.

Despite this, in many provinces affordable housing is not being built, because those provinces--for example, Ontario--refuse to match federal contributions out of provincial coffers. In many cases responsibility has been left to the municipalities to scramble for funds. Without cost-sharing in the provinces and territories, the effectiveness of Canada's new housing program will be severely reduced.

¿ (0955)

Ms. Christina Marchant: The points we're raising here aren't new, but despite repeated promises and claims, the number of Canadian children living in poverty has increased by 30% over the past 10 years. Right now one in five Canadian children lives in poverty. Significant changes are required in federal economic policy in order to truly improve the lot of poor children. At present the federal government spends $11.1 billion on all children's programs. We are urging the government to invest a further $5.1 billion per year over the next four years, and we're recommending that it come from the projected budget surplus and that moneys be taken from other programs to really support the children who are coming up and will be building our communities over the coming generations.

Thank you for your attention and your time.

The Chair: Thank you very much.

We'll now move to T-Base Communications Inc., Ms. Ayotte.

Ms. Sharlyn Ayotte (President and Chief Executive Officer, T-Base Communications Inc.): Actually, there will be two of us.

Thank you once again for this opportunity to participate in this round of consultation. As committed Canadians, we cherish this honour and privilege. This is our fifth presentation to the Standing Committee on Finance. Each year we've outlined the legislation, statistics, and demographics and developed a case for the need for accessible design in the delivery of programs and services from the Government of Canada. This year, as well as supporting the social case for accessible design, we'd like to introduce the rationale for the inclusion of business in the dialogue about universal accessible design within government.

I'm turning it over to Jillian now.

Ms. Jillian Deevy (Manager of Web Projects, T-Base Communications Inc.): Thank you.

The Government of Canada has a clear duty to make information available to citizens and federal public sector employees through formats, technologies, and delivery channels that are accessible. Measures have been introduced, however, that threaten to exclude millions of people from mainstream access to information. The delivery of accessible information formats, such as large print, audio recordings, Braille, e-text, and delivery channels, such as the Internet, are at risk of being offloaded to the voluntary sector. This initiative has been taken without consulting those stakeholders who are profoundly affected by the impact of these changes and will lead to the creation of separate and exclusionary, rather than mainstream, systems of information delivery. What is the real cost to society when we support parallel and exclusionary systems?

Prior to the advent of technology, the distribution of information to people with different communication styles was achieved through the establishment of separate delivery channels and often through charitable organizations. The approach of specialized planning for special audiences or needs focuses on “who”. This “who” approach requires government to financially support parallel and segregated service delivery models, an expensive and exclusionary undertaking that frequently leaves citizens without timely or usable information. Through offloading information service delivery to the charitable sector, the development of duplicated channels is supported, when only one universally designed system is required. Such duplication affects the ability of government to efficiently use financial resources and stands in the way of building world-class systems of high quality that are available and accessible to everyone.

We do not believe it is our government's intention to compromise our rights of citizenship by supporting segregated service delivery models instead of the mainstream, as promised. It is not the intent or in the spirit of the Canadian Charter of Rights and Freedoms to offload our basic rights of access to information to charity. What happens to our rights of citizenship when individuals and corporations reduce or stop giving? Is our right to information sacrificed?

We truly do not believe our elected leaders want to create a two-tiered democracy. Is it appropriate or equitable for the Government of Canada to exact taxes from all citizens to support service systems that are available and accessible only to some, while millions of Canadians are forced to depend on the benevolence of charity for the delivery of information? That is, however, the road we are currently headed down, and it is fraught with risks to democracy, human rights, and our social and economic well-being.

For example, the model for delivering library services for blind and print-handicapped people is segregated and offered as a parallel service. This model is far from equal to the mainstream model of public libraries, which offer commercially available audio books from the publishing sector, ensure compensation to the copyright holder, expand the existing collection of audio books available to everyone, and create opportunity within the publishing sector. With this particular example, there are three publicly funded library infrastructures being hastily developed to meet the requirements for sound-based reading material. One of these duplicate services requires proprietary technology and proof of disability identification to allow access to the recordings.

Private sector enterprises responding to the growing demand for accessible information products and services have developed innovative systems and technologies that are receptive, efficient, economical, and of the highest quality. Different delivery channels and formats are accommodated, delays are avoided, and costs are minimized.

À (1000)

Accessibility encompasses disability. Today, however, it is much broader than that. Although people with disabilities have traditionally faced barriers to access, modern information formats, web page designs, and technologies can deny or provide access to anyone for a variety of reasons. Everyone here has probably experienced the frustration of attempting to open an electronic document and being unable to because of the format or application it was created in. Now imagine trying to open your briefing note, your stock portfolio, or a page from your corporate financial report during a business trip using your cell phone, only to find it is presented in a web page that doesn't work with your Internet access technology. Therefore, web designs that provide access to people who require screen readers also provide access to people who require portable universal communication devices and services. Why people use specific technologies or various information format doesn't really matter. Truck drivers choose to listen to audio books because it's complementary to their job and, thankfully, not because they're blind. Accessibility is about the cross-platform design of information, applications, and technologies. Accessibility reflects our preferences for communication, technology, life, or work style and geographical location, and accessibility benefits everyone.

Currently, standards exist within government for mainstream technologies, while adaptive technology solutions are being created separately or on an individual basis. This presents a disconnection in the integration of adaptive technologies to work with mainstream standards. Responsibly serving the information needs of Canadians means addressing the ways and means in which people communicate. Universal design and application of information, technologies, and the supporting infrastructure--the “what”--rather than the trend of separate programs and services, is the appropriate approach to achieving mainstream services. Such a “what”, not “who” approach can produce information, accessible technology infrastructures, and mainstream delivery channels that respect the different communication styles of people. This approach is critical for achieving a model of connectivity that is timely, cost-effective, and inclusive.

The Government of Canada demonstrated its ability to produce a modern and inclusive window of service when the Treasury Board ministers approved the common look and feel standards for Government of Canada Internet websites two and a half years ago. Departments' and agencies' Internet websites are to be compliant with the standards by December 31 this year. Their adoption by the Government of Canada ensures that information content and web designs will accommodate Canadians' diverse communication styles, geographical location, and technology preferences.

Government has got it right in another policy initiative. In June of this year it passed a new policy on the duty to accommodate persons with disabilities in the federal public sector. In passing this policy, government has taken a leadership role in setting the stage for the universal design of its employment framework and creating the kinds of opportunities to design information and technologies everyone can benefit from. In doing this, government is also providing new opportunities for the private sector to take a lead in the design of these information and technology systems.

We request that funding and resources for the following initiatives be considered in the 2003 federal budget of the Government of Canada.

Integrate accessibility requirements into federal procurement policy and accessibility criteria into the terms and conditions of government contracts, grants, and contributions. This demonstration of government commitment and leadership will ensure that Canadians' rights to access to information are protected.

Change the two ongoing dialogues between government and the voluntary sector and between government and the private sector into a trilateral conversation. This will clarify the competitive and technological situations enormously. It will also demonstrate to industry the importance of accessibility, both as a social responsibility and as a market opportunity.

Develop accessible consultation methodologies and communication strategies for all federal consultation initiatives. Notify citizens about upcoming consultations via accessible channels and formats.

Develop integrated technology standards essential for providing contemporary information systems accessible to everyone.

Provide the common look and feel program with the financial resources required to provide government departments with knowledge and tools necessary to meet the objectives of government on-line by 2005.

Develop a cross-government integrated approach for publishing information formats for multichannel delivery.

À (1005)

The Chair: Thank you very much. Those are the recommendations. Was there one more?

Ms. Jillian Deevy: I have a conclusion.

The accessibility of government information is as fundamentally important, far-reaching, and politically pressing as the issues that gave rise to the official languages program. Based in law and policy, the official languages program changed the character and culture of the Canadian public service and led Canadians to a new awareness of equity and opportunity. Establishment of an accessibility program will similarly give rise to an effective framework for the development and delivery of accessibility arrangements, not only in government on-line, but in all aspects of government communications, information management, and information technology.

Thank you.

The Chair: Thank you very much.

We'll go to our last presenter, from the Women Warriors of Sahtu, honorary Chief McCauley. Go ahead.

Chief Cece McCauley (Women Warriors of Sahtu): Madame Chairman, ladies and gentlemen, I come from the Northwest Territories, and this is our second presentation to the finance committee.

Out of desperation, almost three years ago the women of the Sahtu region formed a society, and we call ourselves the Women Warriors of Sahtu. We have been lobbying the government in Ottawa since January 2000 to have the Mackenzie Highway in the Northwest Territories completed from Fort Wrigley to Inuvik. I don't know if most of you know where that is. Our hopes were, and remain, high. We did a lot of homework and sent packages of information to every senator and to about 90 members of Parliament in January 2000.

The Northwest Territories is on the verge of an industrial explosion that will benefit all of Canada, north and south, immensely. Within the next decade, projections call for at least three diamond mines producing up to 15% of the world's gems, quality stones, worth $1.6 billion annually, plus construction of a $3-billion natural gas pipeline to feed energy to North American markets. These projects alone contribute over $65 billion to national GDP and generate $17 billion in royalties and tax revenue, while creating some 270,000 person years of employment across Canada over the next 20 years. In fact, southern Canada stands to capture at least 60% of the jobs and more than 95% of the fiscal proceeds from all Northwest Territories resource extraction. These megaprojects only scratch the surface of the Northwest Territories' immense store of minerals, petroleum, and hydro resources.

We are very few people in the Northwest Territories, about 20,000 taxpayers. Our votes don't count, and we're new to government. We've only had a government up there for the last 43 years. They moved into the north but haven't done too much about it. But how can we grow if you don't develop the north?

The Northwest Territories Business Coalition, representing all major territorial business groups, supports this initiative, not only because our companies will benefit, but also because the entire country will profit by investing taxpayers' money in projects that promise a sustainable economic return.

The Canadian government should study Alaska. It is as far north as the Northwest Territories. Compare their population and advancement. The simple answer is that they have invested in highways and communications.

Over the years, delegations, one after another, have travelled to Ottawa from the Northwest Territories, meeting with the Prime Minister, MPs, politicians, policy advisers, executive assistants, and decision-makers, with one message: Help! There is a huge opportunity, with riches for all Canadians to enjoy. All we need is an extension of the Mackenzie Highway that will connect the whole territory with the Yukon Territory and the rest of Canada.

Northern B.C. and northern Alberta have said for years they want to do business in the Northwest Territories, but they need mobility--highways.

Canadian sovereignty is at risk. The northwest passage is going to be shorter and cheaper, and we need protection for that huge coastline.

À (1010)

The highway will cut 500 miles from the distance from Alberta to the Beaufort Sea, because right now we have to go through the Yukon and Whitehorse and make that huge loop. A freight truck loaded in Edmonton, Alberta, costs between $4,000 and $7,000. This is added to the cost of food and goods. Most importantly, tourists will enjoy the Mackenzie Valley, as well as the Yukon, if we put in that highway and make the distance shorter. They will be able to make the loop around and see the whole territory.

The Trans-Canada Highway will extend from sea to sea to sea. People won't have to fly from Inuvik to Tuktoyaktuk to put their feet in the Arctic Ocean. There will be better access to market trade and an increase in private investment, new partnerships, imports, and exports. We will be investing in people with the highway. There will be access to training schools, methods, and introduction, in their pursuit of careers, through affordable travel.

Young people see an exciting world out there on the TV, a world they cannot be part of. They wonder why. They need money and an affordable way to travel--a highway. Isolation creates a lot of misery and hopelessness.

We hear all these great speeches the Prime Minister makes when he calls on the world leaders and the wealthiest people to do business and create partnerships for development, growth, and prosperity--not charity. He wants investments, to create a proper climate, with democracy and human rights. The goal of the government is nothing less than to make Canada a land of ever-widening opportunities. It hopes to ensure that the benefits of the new economy touch all the communities and lift the lives of families in Canada. We hear all this good talk, but they never look in their backyard at the Northwest Territories. You may say we are Canada's third-world country.

The Women Warriors have started to raise money through a highway trust. People have been donating $5, $100. So far, we have about $4,000. We thought if we did this and the government saw that we were trying our best, they might really come to our rescue.

Thank you, Madam.

The Chair: Thank you, Chief McCauley. Thank you for all of your written presentations, which will be read, and also your verbal comments.

Now we'll go to six-minute rounds of questioning, starting with Mr. Penson.

Mr. Charlie Penson (Peace River, Canadian Alliance): Thank you, Madam Chair. I want to welcome the panel here this morning. I thought there were some very good presentations.

Chief McCauley, my riding of Peace River borders the Northwest Territories and is the main supply route by land into the Northwest Territories to Yellowknife. I certainly hear what you're saying, in terms of expanding that Mackenzie Valley highway. It seems to me it's an investment in the future.

It's interesting that the last time I was flying home, I was sitting next to a fellow who was travelling to Grand Prairie from Brazil. He worked for De Beers mining company, an international company that is making huge investments, as you have just said, in the Canadian arctic. That kind of infrastructure would support some of the developments that are happening in terms of natural resources. So I encourage you to continue to push for that extension of the highway. Canadians will also be able to see, as you've just told us, that it's a very important tourist area, in order to see what Canada's north is really like.

But I want to focus my questions to the Canadian Conference of Defence Associations this morning. Mr. Evraire, you have painted a very bleak picture for Canada's military. There's nothing really new here, but it adds to the concerns many people have that we are under-funding our military, and therefore losing opportunity and influence with some of our major trading partners, such as the United States.

I've noticed that you've said we are freeloading, if you like, in terms of defence. That presents a problem for us, in association with our sovereignty, in not being able to defend our own country. Essentially, we are ceding that to the United States.

Is that the point you were making? Could you just expand on that a little bit?

À (1015)

LGen Richard Evraire: Madam Chair, thank you.

Yes, indeed, that's precisely the point. We are a member of a number of alliances. We obviously have considerable interest in the defence of our own territory and the territory of North America in conjunction with the Americans. We sincerely believe the level of personnel in the forces today is not sufficient to provide what we would term a viable contribution to the defence of North America and to the maintenance of our commitments offshore within NATO, a very important element in our foreign policy and defence policy construct, and to UN peacekeeping and a variety of other peace initiatives.

Unless the Canadian government is funding a size of forces that is adequate and that is considered to be viable and adequate by our allies, then our influence will simply wane. If indeed we reach that almost unthinkable situation where our own territory is under threat and we are not able to contribute viably, and the Americans--or other allies, for that matter--have to do it for us, then I suspect we'll all agree that our sovereignty has taken a real kick in the shins.

Thank you, Madam Chairman.

Mr. Charlie Penson: In terms of risk to sovereignty, or in terms of problems with terrorism, we were recently reminded by what happened in Russia the other day just how it can hit anybody in their own backyard. Look at the United States on September 11 a year ago.

I think the point you're making in regard to the United States is that if the United States becomes more vulnerable, the size of our trade relationship with the United States is so large, and we are hooked into that to such a degree, that we would also be very vulnerable. I'm wondering if you could elaborate on that aspect of it. I'd like to hear a little bit more about what you're saying there.

LGen Richard Evraire: If we think back to September 11 of last year, we were also treated, as it were, to visions of border crossing plug-ups. There was an incredible delay at the borders, not only at the Windsor-Detroit crossing area but many other places along the border. That was a small illustration of the difficulty that would obtain if indeed terrorism acts or acts of that sort were perpetrated somewhere else in the United States, or in Canada, for that matter.

As you well know, 87% of our trade is with the United States, and I suspect that the disruptions caused on September 11 were merely an indication of the danger our own economy is in if interruptions to the normal flow of commerce between the United States and Canada occur.

In keeping with the importance of trade to our economy, we believe Canada must contribute viably to the defence of our own territory and, in alliance with the United States, to the security of North America in order to preserve our trade relations with the United States. But as I also mentioned in my prepared remarks, even more importantly, we should be maintaining or contributing to peace worldwide so that the Americans and ourselves are able to continue the trade. If this flow is disrupted internationally, if it is disrupted between Canada and the United States, then Canadians will very quickly realize how important that trade was, because the economy will suffer as a result.

Thank you.

À (1020)

Mr. Charlie Penson: I understand that you're calling for increased funding from the federal government. You will be happy to know that the Canadian Alliance supports that.

You've made a statement here that I can hardly believe. You're saying that within 18 months, 40% to 50% of the army's weapons and vehicles fleet could be grounded because of a lack of spare parts if they don't receive an infusion of money. Is that...?

The Chair: Short answer, please.

LGen Richard Evraire: Yes, there currently is such a large deficit in the operations and maintenance budget that the bins are essentially empty in many areas. Therefore, spare parts are not available, and this equipment is simply non-functional.

Thank you.

The Chair: Thank you very much.

[Translation]

It is now your turn, Mr. Bachand. You have six minutes.

Mr. Claude Bachand (Saint-Jean, BQ): First of all, I do not know if it's the first time you have appeared here--it is certainly not the first appearance for people from the Conference of Defence Associations, who are used to this type of committee-- but I must tell you that we members of Parliament are often called upon to deal with numerous requests and the exercise is not an easy one. The groups before us today come from many sectors and we are forced to set priorities. It is never easy.

My question is for the people from the Conference of Defence Associations.

You will understand that I'm not talking just about requests from the army, but also requests from everybody. I would like to draw your attention to the fact that, according to the polls, when people are asked to choose priorities, very few of them put national defence at the top of the list. That puts us in a very difficult situation. I must confess that although I am the defence critic, I am sometimes compelled to say that yes, there are some priorities, when you look at certain problems pertaining to defence.

I would like to ask you two specific questions.

Since I am a sovereignist, I am naturally interested in the issue of sovereignty. I feel that Canada's sovereignty has been under attack for a long time. You are certainly familiar with the Monroe doctrine. At that time, the American President told Canada not to be concerned because if ever it were to come under attack, the United States would come to its assistance. Foreign forces cannot be allowed to occupy Canadian territory. So you're going to have to explain to me why the issue of sovereignty is weaker today than it was at that time.

My second question deals with national defence policy. You talked about the report from the Standing Committee on National Defence. I am part of that committee. As you know, we drafted a dissenting opinion. Before we earmarked huge sums of money for national defence, we want to have a policy on defence. Our current defence policy is eight years old. It was up-to-date back then, but it no longer is. Perhaps the time has come to make choices. Canada looks like a poor cousin at NATO. It spends 1.2% of its GDP. In NATO, Canada comes second-last. Luxembourg is at the bottom of the list, and we are just a bit above it.

I understand all of that. I also know that the navy can't take its ships out because they don't have enough seamen. I know that we are cannibalizing our F-18s because we don't have enough parts. And I also know that our soldiers are worn out because they are rotated too often. But something is happening at NATO, and that is called specialization. More and more people are wondering whether or not Canada should be specializing.

That is my question. Do you agree with that? Generals have talked to me about this issue. Obviously, the air force general has told me that aviation needs to be given priority, whereas the navy general says that it should be the navy, but as elected officials and guardians of the people's money, we have to make choices. I would like to hear what you have to say about specialization. Do you feel that this is an option that we should explore seriously?

À (1025)

Lt-Gen Richard Evraire: Madam Chair, thank you very much.

Indeed, for the past 50 years we've been talking about specialization within NATO, our most important alliance, and this hasn't happened yet. We know full well that by specializing, we abandon important aspects of our capacity to fight and defend ourselves. Consequently, we rely on our allies, our neighbours, to help us out. We are hoping, at any rate, that this will be the case because if they do not need their forces, everything will be all right, but should they need them, we will not be given top priority. In our opinion, specialization is illusory. We need to equip ourselves with a multi-purpose capacity, multi-purpose, not excessive, which will enable us to deal with threats, regardless of what they may be. So we do not believe in this concept of specialization per se.

As regards the issue of sovereignty, as a Canadian, may I say that I am proud to be able to defend my own territory. Obviously, we realize that, given the size of Canada's territory, we cannot defend everything. We must, and we have been doing this moreover since 1949, with the NATO alliance and government policy since then, include, in both our foreign and defence policy, the importance of creating alliances. We have done this with the Americans. We have a tremendous number of exchanges with them and we have all kinds of agreements within NATO and the United Nations, NATO being, in my opinion, the most significant of these three components.

So as far as national pride is concerned, I feel that we have no other choice but to form alliances. However, because we have national pride, I believe that we have a responsibility to make a viable contribution. Such a contribution is difficult to define, but I think that, at one point, we are capable of determining whether or not we are relying on others or making a contribution. NORAD, the other North American alliances, the Atlantic Alliance, are essential alliances. I think that, strictly from the point of view of sovereignty and also pride, we must be able to contribute to these alliances and not use the excuse that the Americans will come to our aid. We do not have to ask ourselves who they will defend first should they come under attack.

[English]

The Chair: C'est tout.

Madam Minna, followed by Mr. Murphy, and then Mr. Wilfert.

Ms. Maria Minna (Beaches—East York, Lib.): Thank you, Madam Chair. I'll try to be very quick.

With respect to child poverty, to go to there first, I'm not going to ask questions. I fully support what you said. I was one of the eight MPs who worked to get the child benefit going--not the clawback part--and also the early education and child care. Your recommendations are sound. I think once we get down that road, we will address the issue of poverty in this country.

I want to go over to Lieutenant General Evraire. Your first comment was about security. You mentioned the pile-up after September 11. With respect, I don't quite accept that. The pile-up after September 11 at our borders had nothing much to do with military matters. The United States, with its huge military and all its security systems, wasn't able to stop the planes from coming in. I'm not suggesting that we don't need to look at increasing spending for defence and assisting; I'm saying we're exaggerating some of the stuff. With respect, to deal with the pile-up at the border, I don't think we needed the military. The problem was fear, and that's understood, and the military alone isn't going to stop all of the situation happening.

I think also we have to talk about the issue of terrorism and why that exists in matters of aid and international development and eliminating poverty in our world. I think if we do that, we might also minimize terrorism. I'm not suggesting that terrorism will disappear altogether, but I am suggesting that if we address the issue of poverty in our world, we might also bring that down considerably.

I think we have to look at some balancing here. I wanted to ask you two questions. With respect to the choices this group has to make concerning child poverty in our own society, acute poverty world-wide, defence, and other pressures we have, is there a specific recommendation--I haven't read your document thoroughly yet--a specific dollar amount you think would assist the absolute need of defence at the moment, and then take us to where we want to go in a slower sense?

Second, the expense you mentioned was $5.1 billion. Could you explain a little more how we spent that much money and it didn't quite make a difference to the actual problem you've just outlined to us?

À (1030)

LGen Richard Evraire: I do agree that a direct intervention on September 11, or at least the border issue, would not have made much of a difference. I guess the point I was trying to make was that unless we contribute viably to world peace and security, these sorts of things might continue to occur with greater frequency.

Might I simply point to the Prime Minister's African initiative last year? Our suggestion in CDA is that assistance to third-world countries generally can only be done in an environment of peace and security. You simply can't expect a third-world country to develop economically or any other way unless there is peace and security in that particular country and in countries around it. Contributing to world peace and security through a viable armed force with other like-minded countries I think is an important issue. As a consequence, if one relates terrorism to the situation in disadvantaged countries, as some have, I suspect there is a direct correlation.

As for priorities, the $5.1 billion, as I explained in my text, has gone to many different parts of the budget, some of which have simply not been for operational readiness. I could point to the 25% annually that is spent on pensions for retired service personnel, $1 million annually for environment issues--the clean-up of Argentia is one example--transfers to provinces, $450 million for nuclear, biological, and chemical defence training and equipment in the year 2001, and $450 million to Ontario and Quebec in either 1999 or 2000 in relation to the participation of the Canadian Forces in assistance to these provinces--the ice storm comes to mind.

Our bottom-line recommendation is that in order to stop the disappearance of operational capabilities, because they are being degraded currently, to stop the bleeding, we recommend $1.5 billion as the amount to prevent further deterioration. We also, of course, are pleased that the government is undertaking an international and defence policy review, but that will only be completed in a couple of years' time. We can't wait till then, we have to stop the bleeding now, otherwise, two years from now you will be hoping to build on a foundation that is in many parts crumbling. Critical mass in a number of operational capabilities is an issue here. If you go below that critical mass, you simply start from zero, as opposed to building on what there's now. We wish to prevent that base from crumbling.

Thank you very much.

The Chair: Thank you very much.

Mr. Murphy.

Mr. Shawn Murphy (Hillsborough, Lib.): Thank you very much, Madam Chair.

First, I want to thank all the presenters.

There are a few issues I want to explore further with Madam Marchant on the whole issue of child poverty. This is a tremendously important topic, but it's one of the most frustrating issues we, as parliamentarians, deal with, mainly because we're dealing with federal-provincial relations. There are, then, basically four issues, the reduction of child poverty, early childhood education, affordable housing, the national child benefit.

With the national child benefit, you hit the nail on the head. There are only three provinces that don't claw this back. The Prime Minister announced in the Speech from the Throne released two weeks ago that the national child benefit was going to be increased, but I looked at that and said it's not going to help the people who need it the most, it's not going to help anything. We've been through a very lengthy negotiation with all ten provinces on the affordable housing initiative, and I believe the only province that actually took it seriously and was prepared to spend some money was Quebec. The province I come from said no, we're not putting any money into it. I understand in Ontario it was very minor compared to what the federal government was doing.

I guess my question to you--and this discussion is going continue and continue--is, do you meet with the provincial governments, and do you have any suggestions as to how this issue may be handled? I don't see it going away and it's going to be a tremendously frustrating and complicated area. You've made a request for $5 billion. Let's assume that's seen the light of day--I'm awfully afraid that not one cent of that additional revenue would find its way into the pockets of the people you represent.

À (1035)

Prof. Adje van de Sande: One of the issues is SUFA, the social union framework agreement between the federal government and the provinces. As it stands now, social assistance, child welfare, and those kinds of issues are under provincial jurisdiction. Therefore, the federal government has to work through the provinces in order to provide these funds to Canadians. That wasn't always the case.

There were programs that existed in the past—for instance, the Canada Assistance Plan—in which the federal government made money available to the provinces with certain strings attached. If the provinces wanted to take advantage of this money, they would have to meet certain conditions that were verifiable. What we're therefore suggesting is that the SUFA, the social union framework agreement, be renegotiated so that if the provinces want this kind of money it comes with certain strings attached, to make sure that the money goes directly to the people who need these funds.

I understand that with the attack on the deficit in the last decade, the federal government had to retreat from the whole area of social policy, as a way of dealing with the deficit, thus giving more and more responsibility to the provinces. What we're suggesting now, though, is that now that we're into an era of surpluses, it's time for the federal government to get back into the whole area of social policy. Renegotiate the social union framework to insist that this money goes directly to the Canadians who need it.

Mr. Shawn Murphy: You made the recommendation that $5 billion a year was needed. Do you have any specific recommendation as to where this comes from? As you can appreciate, we have requests from Health, Defence, Environment, foreign aid, and the list goes on.

Prof. Adje van de Sande: It was a couple of throne speeches ago that the Honourable Paul Martin suggested that when we came into an era of surpluses, 50% of the surpluses would be devoted to reducing the debt and 50% would go to social programs. What we're saying is that we're looking at a surplus of $10 billion right now. We're asking that 50% of that surplus be devoted to the federal government keeping its promise to Canada's children by investing in the national child benefit program and changing the rules to make sure that children get this money directly. I think that would meet the government's own commitment to helping to reduce child poverty.

If that money were made available, then in a very short period of time we could reduce child poverty in Canada by 50%. I think it should be seen as an investment, not as frivolous left-wing spending. It's an investment that will pay off and will save us money in the long run.

À (1040)

Mr. Shawn Murphy: How would this $5 billion in your recommendation be allocated? Or is it just a global figure that you're calling for?

Prof. Adje van de Sande: We have three priorities. The first area is increasing the national child benefit program to $4,500 for the lowest-income families. Right now, I think it stands at $2,400, so the bulk of the money would go there. One of the other areas, as we mentioned, would be having a national child care program, and a third area would be housing. The federal government used to be involved in housing, and we're asking for $1 billion to be invested in a national housing program.

The Chair: Thank you very much.

Bryon Wilfert, please, for six minutes.

Mr. Bryon Wilfert (Oak Ridges, Lib.): Thank you very much, Madam Chair.

Thank you for coming today, everyone. I have a number of comments.

The backdrop obviously is that we as a government are not going to go back into a deficit. There's no such thing as a short-term deficit. The last one was 24 years long.

The fact is that the two looming issues facing the government, in my view, are health care and Kyoto. We talk about surpluses. There are no surpluses. You can never have a surplus when you have a $540-billion debt, although I would say that by paying off the national debt we saved $3 billion in interest this year alone. We can use that $3 billion for many of the very worthwhile programs and issues that have been raised here today.

Colonel Pellerin, you and I go back some way, and you certainly know my views on defence spending. I'm certainly very supportive, although I must say the paper that was presented.... I don't disagree with all of the content, but I would suggest the tone is probably far more negative than maybe it should be. In my view, it does not outline some of the very important contributions we have been making. I think that needs to be underlined.

I do agree with you on the issue of operational readiness, and particularly on the work that has been done by the government on the quality of life. I think that's extremely important in terms of the rotation issue and making sure our personnel are not stretched to the limit.

But both you and the lieutenant-general mentioned the $1.5 billion. I wonder if we could note, of course, that we've been adding significantly over the last five years. Yes, there were significant cutbacks, and as someone indicated, we can't be at the washroom when it comes time to pay the cheque. Obviously, we need to make sure we're at the table and are paying the bills.

I'd like to know something about the $1.5 billion—and this same question can be asked of everyone else. Given that there are limited resources, where do you see those dollars being allocated specifically now, given the fact that, yes, we need to pay our way, we need to make sure that...? For example, there's no point in having the state-of-the-art frigates that we have if we don't have the supply ships for them. Absolutely. There's one simple example. So I put that question to you.

On the issue of child poverty, you list three areas that I don't disagree with, although I certainly concur with my colleague that the provinces have a significant role. In fact, in my view, they are the problem and not the solution. On the national housing issue, Ontario is an excellent example of us putting money on the table and them saying in-kind service is basically using the municipalities. What's your priority of the three? We can't do all three in this budget, in my view, but I'd like to know what you think the priority is.

On the comment about information, I absolutely agree with you. I don't see any figures, but I certainly agree that there are many areas there that we really need to continue to push on.

In the next round, I'd love to talk about the north. If I could, though, maybe we can hear some quick comments on those now, because I know six minutes is short.

The Chair: Thank you.

We'll start with the military.

LGen Richard Evraire: In terms of priorities, yes, indeed, a great deal of money has been spent on quality of life. Of late, however, we have discovered that indeed some of the spending on quality of life has been at the expense of capital moneys. Therefore, renewal of equipment needing replacement has been delayed further.

May I say that, in terms of the $1.5 billion, what we are suggesting here is that we prevent further loss of operational capability. That means spending on operation and maintenance of equipment, and also spending on training.

We have a reduced number of personnel. Indeed, we are losing many and recruiting some. It's not a perfect exchange, but these new recruits indeed must be trained. Currently there is a deficit in training funds. As an example, ammunition amounts are in seriously short supply. Therefore, we see this $1.5 billion being spent on such items in order to prevent further deterioration of operational capability and equipment.

Thank you very much.

À (1045)

The Chair: Ms. Marchant.

Mr. Bryon Wilfert: On that $5 billion that you mentioned, can you tell me where you got that figure, or how you established that figure?

Ms. Christina Marchant: The figure that we quoted was actually from a study done by Campaign 2000, which is a national anti-child-poverty group. We used their research in order to create this brief.

If we had to choose just one of our priorities, we'd ask you to increase the national child tax benefit to $4,200 per year per family. That would reduce child poverty in Canada right away by 50%, so I think that gives the biggest bang for your buck. But to do that, as you said, the other thing you have to do is renegotiate the social union framework agreement or start giving money directly to municipalities rather than going through the provinces. You did that with the SCPI funds, the housing funds, and that worked well. You could look at just negotiating directly with municipalities.

Mr. Bryon Wilfert: If I could just make a quick comment, as an old FCM president, I can say I'm all for that, except that it raises tremendous expectations. It also gets the provinces off the hook, and I think one of the issues we have to deal with is the clawback issue. It's the same thing with the issue of millennium scholarships, etc., where the provinces do this two-step.

Just as a quick comment on the $5 billion that you mentioned, where did they get the $5 billion figure from? How did they arrive at it?

Prof. Adje van de Sande: It's always been a principle of Campaign 2000 that we've made this commitment to Canada's children. Paul Martin suggested that 50% of whatever surplus we have should be devoted half to social programs, half to reducing the debt. But one budget after another we haven't really followed that. We're saying that with this particular budget surplus, let's take 50%, the $10 billion, and devote it to keeping a promise that the federal government made in 1989 to Canada's children.

So we're just asking the federal government to keep its promise to Canada's children. We're not asking for anything more.

The Chair: Thank you very much.

I'll just clarify that I think that was debt and tax reduction.

Mr. Bryon Wilfert: I was just going to say that.

The Chair: We'll go to Mr. Cullen for six minutes and then we'll finish with Madam Picard.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Madam Chair.

I thank the presenters. I'm sorry I missed some of your presentations, but I have read your briefs.

Mr. van de Sande, I think you were using CAP as almost a proxy for more accountability. I agree with you on more accountability, although I'm not sure CAP is the instrument. I worked at the provincial level, and it was seen as fifty-cent dollars--one of the reasons the government moved away from CAP. But I do take your point.

I'd like to go to defence spending, and address a few questions to Lieutenant-General Evraire and Colonel Pellerin.

My first question is more general and maybe more provocative, but if we have time, I'd later like to get into the question of supply chain management and logistics and warehousing, because I do have a concern that DND is about to leave some money on the table. And if the department is looking for more money, that does concern me.

It seems--to me, in any case--that Canada-U.S. relations over the last many years have soured, although “soured” may be too strong a term. We see it on the trade files, especially farm aid, softwood lumber, steel, and a few others. The first side of my question is, do you think the fact that Canada is not paying the freight, if you like, on defence spending has resulted in some of that change in our relationship? The flip side of that would be, if that is the case, if there is some truth to that--and I'm not sure if there is--then it seems to me it would make sense for us, if we're going to increase defence spending, to get something back from the U.S.

I mean, I'm a proud Canadian as well, and I'd like to see us have a strong national defence system. Sometimes I think we try to do too much with too little, but the reality, it seems to me, is that we could free-ride the Americans. They desperately want us to spend more on defence. Wouldn't we be smart to try to get something in return?

À (1050)

LGen Richard Evraire: I suggest that we are indeed getting a great deal in return. We have more than 50 agreements with the Americans in terms of training exchanges and use of their facilities in the United States. We can only point, of course, to NORAD at Cheyenne Mountain as probably the largest return of any single engagement we have with the Americans.

I would suggest to you that the Americans currently simply feel a certain amount of frustration. I must point to our report, where indications are given of the frustration on the part of a number of Americans in the State Department, in the White House, and in the Pentagon, who are only too pleased to cheer whenever Canada provides some support, as it did, for instance, in Afghanistan. My goodness, they were ecstatic at that contribution.

We also recognize that they, a little more privately, will tell us, “Honestly, you are not spending as much as you should in terms of your capacity to do so, and we would certainly enjoy a greater contribution.”

Mr. Roy Cullen: I actually was thinking in broader terms. It may be an unfair question, because these are political kinds of choices, but it seems to me that the U.S. administration on some of the trade files has been very silent and not very active. I think we should use some of that leverage if we're going to do something on defence.

Nonetheless, let's go back to the issue of supply chain management. I am concerned that there was a process, which you're probably familiar with, that it looks like DND is trying to move away from. I've also been involved in management, and I know some of the organizational politics that can come into play.

You made a point about short-term savings, that they will evaporate in the future, but I wonder if you could comment generally. There is a lot of money sitting on the table here, and I'm worried that DND is walking away from it because of some concerns about outsourcing, etc. I wonder if you could speak to that issue.

Colonel (Retired) Alain Pellerin, (Executive Director, Conference of Defence Associations): On the issue of out-contracting supply, and also the support we've seen, for example, in Bosnia, which is a good example, the original intent of the government was to save money. It didn't save money, but in the process it reduced the amount of logistic support we had within the armed forces, and out-contracted that to ATCO in Bosnia, for instance.

But this created its own problem, because now we can't support our own forces, should we have to deploy them outside the country, say in Afghanistan or Iraq, if that ever comes up. So it has created, in a sense, a very difficult situation. I don't think it has saved the money they originally thought it would.

Mr. Roy Cullen: I don't want to get into the specifics of it here, but I'm meeting with the minister and his staff to try to sort this out. This is an international company that is basically guaranteeing the savings, and they are fully capable of doing it. But I do take your point that some of these people, if they're in an outsourcing capacity, could be enticed away, so there could be a loss of personnel.

That might be a valid argument, in my view, but I just have a concern that if the Department of Defence is seeking a lot more money, and because of some organizational politics--and it may not be only that, I'm just putting that on the table--they may walk from some significant savings in an area that is kind of administrative.

LGen Richard Evraire: May I make just one other point on this issue, Madam Chair?

The Chair: Yes, final point.

LGen Richard Evraire: The concern, of course, is the company in question provides logistic support in an area that is essentially benign, fairly safe; but were the forces to deploy in an operational theatre, I believe the contract does not call for these persons to continue working in a shooting war environment. As a consequence, the logistic support is at risk.

À (1055)

The Chair: We'll move on to Madam Picard.

[Translation]

Ms. Pauline Picard (Drummond, BQ): Thank you very much.

I would like to ask Ms. Marchant or Mr. van de Sande a question. According to recent statistics, the Canadian economy is in good shape, with strong job growth and, for 2002-2003, we are predicting or announcing very good economic growth. But despite all of that, despite all of these improvements, the National Council of Welfare feels that the poverty rate has not declined in Canada.

How do you explain the fact that economic growth has not resulted in a reduction of child poverty? God knows that we have poor children because we have poor parents. Do you think that the current initiatives of the federal government are not targeting the right priorities?

Prof. Adje van de Sande: Thank you, Madam Chair.

The problem is that the jobs that are currently being created are often part-time or contract jobs. That means that these are often jobs that do not provide any benefits or job security. I think that there has been a change in the types of employment that we are creating. Even with economic growth, there certainly is a problem with respect to the types of jobs created. So families with a modest income are not necessarily going to benefit from the economic growth.

Recently we saw that there was a drop in the poverty rate by 1% or 2%, but generally speaking, the poverty rate has held steady at one out of five. So nearly 20% of children continue to live in poverty. I think that it is the type of job created that is really posing the problem now.

Ms. Pauline Picard: We know that Canada ratified an agreement in 1989, I believe, to eliminate poverty in Canada within 10 years. We are now in 2002, and absolutely nothing has changed. So the efforts made to eliminate poverty really did not do much to lower poverty in Canada; we see that it increased. It is only the most recent statistics that indicate a slight drop. So we did not meet our commitment to reduce poverty in Canada.

Do you think that the initiatives taken were inadequate, or do you think it is because we did not target the right things?

Prof. Adje van de Sande: The real problem lies in the agreement with the provinces. You know that, in 1989, the House of Commons adopted a resolution to eliminate poverty by the year 2000. The federal government established the National Child Benefit System to start reducing the poverty rate amongst children. Unfortunately, the agreement gave full control to the provinces. The provinces have the power to take back 100% of this amount from all families on social assistance. That means that the children who really need the benefit, who are the most vulnerable, are not receiving one cent of this money set aside for Canadian children by the federal government.

Ms. Pauline Picard: You are talking about the tax credit, right?

Prof. Adje van de Sande: Yes, that's right.

Ms. Pauline Picard: I believe that this matter comes under provincial jurisdiction. The real problem lies in the area of transfer payments. So we have to come to an agreement with the provinces. The federal government must transfer an adequate amount of money to enable the provinces to implement measures to support poor families. Quebec, among other things, has set up a $5-a-day day care system. This is one means to achieve this, and the government, instead of creating other programs, should support and improve the system that is in place. It's like that in other provinces as well, we need money to implement programs like that one in order to support families. The role of the federal government is to transfer money. I think that not enough money is being transferred to help poor families.

Thank you.

Á (1100)

Prof. Adje van de Sande: With all due respect, Ms. Picard, I would say that I do not believe that this will resolve the problem, because even if the federal government were to increase the tax benefit for children to $4,200--this is what we're asking for-- there is nothing that says that the provinces will be compelled to turn this money over to families on social assistance. That is certainly the case in Ontario, where 100% of this amount is taken away from the families.

So I think that that is what the problem is all about. Even if the federal government were to continue increasing the amount of money, that will not resolve the problem with respect to the agreement with the provinces. If the provinces were to agree to turn this money directly over to the families who need it, that would not necessarily eliminate poverty in its entirety, but it would certainly reduce the poverty rate by 50%.

[English]

The Chair: Thank you very much. As chair, and on behalf of the members of this committee, we appreciate the information you've provided us. Every time we sit here we learn something new.

Mr. Harney, your point about the reduction in fuel economy in relation to greenhouse gases was important, and new to this table.

I'm really pleased that all of you have taken the time, put the effort into your briefs, and allowed us to question you and listen to your answers today. Thank you very much for coming.

We will suspend for a minute or two and go to our second panel.

Á (1101)

Á (1105)

The Chair: Pursuant to Standing Order 83(1) on pre-budget discussions, we have a number of individuals and organizations with us this morning: as an individual, Wayne Burroughs; from the Association of Universities and Colleges of Canada, Dr. Robert Giroux, president--welcome again; Brad Wuetherick, who is going to present on behalf of the Graduate Students Association; from the Canadian Electricity Association, Roy Staveley, and with him, as president and CEO, Hans Konow; from the Canadian Printing Industries Association, Pierre Boucher, president, and Jeff Ekstein, chairman of CPIA's government affairs committee; and from the Getting Landed Project, Andrew Brouwer, who is the policy advocate, and Harry Kits, the executive director.

Welcome to all of you. We'll do your presentations in the order in which they occur. You have seven minutes. If you watch me, I'll give you a slight hand signal at about six minutes, thirty seconds. All of your briefs have been translated, if you've had them in to us in advance--and we appreciate that--and they've been circulated among all the members. If you speak to your brief now, there will be time for questioning.

Mr. Burroughs, please go ahead, sir.

Mr. Wayne Burroughs (Individual Presentation): Madam Chair, committee members, good morning. Thank you for the opportunity to appear before you today.

As one who has been personally affected by Revenue Canada's highly inequitable maximum allowable pension rule, I wish to share with you my frustrations and concerns, and those of many senior managers in Canadian business today.

Presently the maximum defined pension benefit that can be funded under Revenue Canada's rule is $1,722 per year of service. Accordingly, employers are unable to fund pensions to compensate senior managers at the level defined by most pension formulae. What this means is that higher-salaried managers receive proportionately less pension than their employees do.

In addition, Revenue Canada also assesses a pension adjustment of $13,500 annually on the value of maximum pension credits at $1,722 per year of service. This prohibits the employee from contributing to a tax-deductible registered retirement savings plan to supplement his or her pension income.

Profit-sharing and employee savings plans are subject to the same pension adjustment, which effectively eliminates any possibility of an employee-financed tax-deductible savings program. RRSPs, DPSPs, and EPSPs also have a $13,500 maximum annual contribution level, which also is affected by the pension adjustment, which maxes out at $13,500 a year. There's absolutely no way to beat the system.

This pension adjustment is expected to be increased in 2005 to $14,500 per year, as the RRSP contribution limit is being raised. Please note, though, that the executive pensions have remained fixed, although the value of the pension, as it's expressed in this pension adjustment, is increased every time the RRSP contribution limit increases. In summary, the company can't pay you the pension plan, and you can't save in a tax-deductible RRSP, you can't contribute to an RRSP.

The $1,722 maximum pension figure hasn't been increased since 1976, although it is expected to increase to $1,745 shortly. The 1976 figure was based on an $86,000 salary, which was considered to be considered a typical executive salary of the day. Inflation has since driven this number to well in excess of $225,000, although the pension remains the same. We are 25 years behind the times.

In summary, what we have here is a tax grab by our federal government. Anyone saving for a respectable retirement must do so with money accumulated after having paid income tax at the highest taxable income level. Frankly, it fosters mistrust in the political system. While many companies address the pension shortfall with a supplemental pension plan designed to accumulate funds on an after-tax basis to make up the difference on retirement, a great many do not. I want to point out to you that much of Canadian industry is American-owned, and these folks don't understand the system, or they choose not to understand the system, in that it's different from theirs. On principle, they're reluctant to have a pension plan that differs from their own, and they prefer to hide behind the law and to save money.

How does this affect me? I expect to retire in 2 years after 16-plus years of service on a pension that is less than 10% of my current earnings. If I were retiring after 35 years on the job, my pension would still be less than 20% of current earnings. During the years I've worked for the firm I've paid taxes that are many times the pension allowance the government will permit me to retire on, and at this point I'd like to ask you to visualize how much you earn and how you would like to retire on 10% or 20% of that amount. Clearly, looking at my grey hair and given my close proximity to retirement, this exercise really isn't about me, because if you make changes, they are unlikely to be retroactive and won't benefit me on a personal basis. I'm here to try to correct what I perceive to be an injustice. I believe the situation is grossly unfair, and in the longer term it will encourage our senior managers to apply for transfers to the United States, where there's a better tax system.

Recently, the federal government approved generous pension increases to all members of Parliament. Government pensions are indexed to inflation, and even without this feature, they're far superior to pensions that are paid to private sector individuals, and we are the ones who are called upon to finance these government plans.

Ladies and gentlemen, something needs to be done about this issue. I strongly recommend that executives be permitted to proportionally participate in company pension plans in the same manner as all other members of the plan, and if this can't be done, then at least set up a tax-deductible framework whereby executives can fund their own pensions. Business people are pretty self-reliant. When they need a helping hand they look down and usually find it at the end of their right arm. Give them the opportunity to do this. Most of you are not responsible for this problem, you didn't create it, but frankly, unless you leave here with a determination to do something about it, you will be responsible. The legislation needs to be changed now to render justice and equity for all members of Canadian pension plans.

Thank you for your attention.

Á (1110)

The Chair: Thank you for that and for meeting our time restraints.

From the Association of Universities and Colleges of Canada, Dr. Giroux.

[Translation]

Mr. Giroux, please begin.

Mr. Robert J. Giroux (President, Association of Universities and Colleges of Canada): Madam Chair, thank you for inviting us, the AUCC and myself, to participate in these pre-budget hearings. I am delighted to have the opportunity to update the members of the committee on the challenges ahead for universities and to suggest ways to address them.

[English]

Since I last appeared before this committee, AUCC has engaged energetically in the federal government's consultations on innovation. Earlier this summer we released a concrete action plan on behalf of our 93 member institutions. Canadians recognize the role universities play in their local communities and for the country as a whole and place increasing demands and expectations on universities. The plan makes very clear the collective commitments universities are prepared to make in order to meet these expectations. Our action plan was sent to the committee with our pre-budget submission, and I have copies with me should more be needed.

Currently, universities educate more than 1.3 million people each year, including 650,000 full-time undergraduate and graduate students, 275,000 part-time undergraduate and graduate students, and an estimated 400,000 learners enrolled in continuing education programs. Universities foster the skills and attributes that are particularly important in today's workplace and employers seek, not only technical skills, but also those core competences and skills, such as communications, problem solving, international knowledge, and cross-cultural awareness, the adaptability students acquire, particularly through their studies in the arts and sciences.

Universities across the country also perform a third of all research and development in Canada, and in addition, they play essential roles in their communities, not only as centres of learning, research, and knowledge transfer, but also through their theatres, museums, art galleries, concerts, public lectures, exhibits, libraries, and athletic facilities.

Á (1115)

[Translation]

Universities are ready and willing to build on these already substantial contributions. They are eager to perform more research, to produce more highly- qualified graduates, and to play an even more central role in empowering their communities through knowledge and innovation. Universities are committed to ensuring that more Canadians from traditionally disadvantaged groups, such as aboriginal people, are able to obtain the benefits of higher education so that all Canadians -- and their communities -- can be participants in the knowledge economy.

[English]

Two weeks ago AUCC released an important research report called “Trends in Higher Education”. This consideration of trends not only provides a clear snapshot of where universities are at the moment, but through an analysis of factors that will drive change over the next decade, establishes projections for the future. These projections help highlight the tremendous challenges universities are facing that I shared with your committee when I appeared before you last spring.

By 2011 universities will have to deal with a 30% increase in enrollment. There are more and more individuals of university age--the so-called baby boom echo--and more and more of them expect access to university education. If, and only if, universities have the capacity, we anticipate that there will be as many as 200,000 more full-time students by 2011.

We're also facing a challenge on the faculty front. More than 40,000 new faculty members will be needed over the next decade to replace those who retire and leave and to ensure a quality education for all students. And as I said, universities are conducting a third of all research in Canada and are challenged to do substantially more.

To respond to these challenges, a greater commitment to higher education is needed. It is a commitment to our future. Universities' ability to meet enrollment demands, to renew faculty, to improve the quality of the educational experience, and to conduct more research will depend in large measure on their capacity to increase their human and physical resources. The overall financial health of the institutions is crucial. While the demands on universities are increasing, public funding, in real terms, remains well below the levels recorded a decade ago. This is a long-term issue that needs to be resolved by the federal and provincial governments working together.

The cost of not meeting these challenges, Madam Chair, is considerable. Education and innovation are key factors in improving our national productivity, which will lead in turn to a higher standard of living and more wealth for the country. The ability of governments to fund social programs, including health, education, and social welfare, will depend in large measure on tax revenues from university graduates.

[Translation]

Madam Chair, the federal government, in its next budget, can contribute to the institutional health of universities by building on the significant initiatives it has launched in recent years. The members of this committee are familiar with these priority areas. They were mentioned in the Speech from the Throne and highlighted in the Prime Minister's reply. They are the need to fund the indirect costs of research, to build research capacity across the country, to better support graduate education and graduate students and to increase research through the three federal granting agencies.

Madam Chair, the case for the indirect costs of research is now well understood. Every time the federal government makes a one-dollar grant to research, universities have to pay at least 40 cents more to support that research. These unaddressed costs are a significant burden on a university budget and represent $400 million that universities must divert from teaching, student services and other areas of operation just to underwrite federal research.

In the December 2001 budget, the federal government--to its great credit--recognized its responsibility in this area both by allocating $200 million on a one-time basis to alleviate some of the burden on universities, and by committing to providing ongoing support to indirect costs.

Á (1120)

We hope your committee will support our recommendation that the government act on this commitment in the next budget by announcing a permanent program to fund the indirect costs of federally-sponsored research at the level of 40 per cent of the direct costs.

[English]

We also strongly believe that the innovation potential of all regions of the country needs to be harnessed and bolstered. The federal government has made investments....

Do you want me to move on? I'll just summarize the last part, Madam Chair.

First of all, we are also putting forward—and you have copies of it—a research capacity program in smaller universities. We also strongly support programs to increase the pool of graduate students who are attending our universities, in order to meet the very heavy requirements of the knowledge economy. Finally, we are recommending doubling the budgets of the granting councils—which is of course a commitment of the federal government—with a particular emphasis on the funding imbalance in social sciences and humanities research.

Thank you, Madam Chair.

The Chair: Merci.

From the Graduate Students' Association of Canada, please go ahead, Mr. Wuetherick.

Mr. Brad Wuetherick (President, Graduate Students Association): Thank you, Madam Chair.

My name is Brad Wuetherick, and I am the chair of the Graduate Students Association of Canada, or GSAC. We're pleased to participate in these pre-budget hearings, and it brings me great pleasure to be representing the graduate students of Canada before this committee as we move forward with the innovation agenda and begin to work together in partnership to meet the needs of the Canadian post-secondary sector.

Since the release of the innovation agenda in early 2002, the Graduate Students Association of Canada has been actively involved in the preparation of a policy paper responding to achieving excellence in knowledge matters, as well as participating in various regional innovations such as some HRDC round tables. We have also undertaken a campaign to raise the profile of graduate student issues among the federal cabinet, MPs, government officials, and with the public.

To put the graduate enterprise into perspective, according to the Canadian Association of Graduate Studies, there are around 140,000 graduate students currently in Canada pursuing masters and doctoral studies. The recent AUCC study Trends in higher education states that in 2001 there were 23,400 masters degrees and 4,100 doctoral degrees granted in Canada.

Graduate students play a multi-faceted role within the university structure as teachers, researchers, award winners, and mentors for undergraduates, as well as being students. Universities perform one-third of all research and development in Canada. Without graduate students, much of that research would not be possible. As well, the majority of graduate students at all universities engage in both research and teaching.

Graduate students across the country want to work together with the government to meet the needs of our universities and our growing knowledge-based economy. The federal innovation agenda outlines a small aspect of the government's plan on graduate education. Some of the highlights include increasing graduate student enrollment every year by 5% for the remainder of this decade, as well as doubling the research fellowships provided through the granting councils at both the masters and PhD levels.

The Graduate Students Association of Canada could summarize the one aspect we would like to see the federal government emphasize as it moves forward with this agenda, and the one area that is of most concern to us if it's not addressed: capacity. That's capacity in terms of research funding and graduate student support; capacity in terms of supervisory capabilities, teaching and library resources, physical infrastructure, deferred maintenance, and the establishment of a quality learning environment; capacity in terms of increased responsibilities with resources; and capacity in terms of adequate student financial assistance.

We feel it is absolutely essential that certain aspects of innovation in Canada that are not adequately discussed within the two innovation papers must be considered as the federal budget is being developed. First, the goal of increased graduate student numbers by 5% each year for the remainder of this decade is an aggressive and very necessary goal. The Graduate Students Association of Canada does not believe, however, that we truly understand the impact that such an increase would have on the post-secondary education system.

A 5% increase in graduate student numbers every year would be the equivalent of adding a University of British Columbia graduate school to the post-secondary sector every year, or approximately 7,000 graduate students. Issues include adequate funding, adequate research, and teaching infrastructure, and the problem is actually very substantial. As part of this concern, we recognize that in order to begin addressing some of these capacity issues faced by Canadian universities as they attempt to move forward toward this goal, the federal government must ensure that a permanent indirect cost-of-research program is implemented at the level of 40% of the direct costs faced by each institution.

The innovation papers also discuss the importance of doubling the number of research fellowships given out to graduate students by the granting councils. This is an exceptional goal and is applauded by the members of the Graduate Students Association of Canada. There are, however, numerous other federal departments involved in funding graduate student research at Canadian universities, including programs run by CIDA, the National Research Council of Canada, and others. These should also be a priority as we move forward with the innovation agenda. To do so, I believe the federal government must establish a vision for graduate student funding in Canada. Such a vision must be created in consultation with federal stakeholders in graduate education.

In light of the current social, cultural, religious, and economic problems faced around the world over the past year, we also believe social sciences and humanities research is absolutely fundamental to the development of our global economy. The innovation papers do little to address the issues around the disproportionately small amounts of funding available for social sciences and humanities research. They also diminish the importance of this research compared to research that “brings goods to market”.

Á (1125)

Therefore, the Graduate Students Association of Canada calls on the federal government to fund a one-time, disproportionate increase to the Social Sciences and Humanities Research Council to address this imbalance. This money should be used to fund a masters fellowship or masters scholarship at the Social Sciences and Humanities Research Council that currently does not exist, in addition to increases in the existing doctoral fellowships and faculty grants.

We also believe the CIHR budget should be expanded so that an effective masters scholarship program can be implemented there as well. None is currently available. We also believe the NSERC and CIHR summer studentship programs should be expanded, and that such a program should be introduced to the Social Sciences and Humanities Research Council. If we can't develop undergraduate exposure to research, we're not going to be able to attract graduate students in the future.

The innovation papers do not adequately discuss the importance of an altered and improved student financial aid system either. Particularly, this is the case for graduate student users of the student finance system. Graduate students are disproportionately disadvantaged by the current Canada student loans program when compared to any other users.

Several studies across Canada have shown that the average age of graduate students in Canada is around 31 years. Most of these students require different accommodations and living expenses from those 18- to 23-year-old undergraduates that the Canada student loans program is designed for. For example, $600 rent, $150 for utilities, $150 for food, and $100 for miscellaneous expenses is equal to $12,000 per year in living expenses. Very few graduate students can live on that kind of an income. And that is prior to paying the fees for a graduate education—fees that are climbing substantially in Canada and bring the real cost of pursuing a graduate degree from $15,000 to $19,000.

We also believe the innovation papers need to begin to coordinate communication between federal departments—for example, with Citizenship and Immigration Canada and the Canadian International Development Agency in terms of bringing along international student recruitment as an integral part of our innovation strategy. More importantly, we also believe Health Canada must play a critical role in implementing the innovation agenda.

There are a number of other areas that the Graduate Students Association of Canada believes must be addressed, and the brief I provided today can expand on some of these for you. We do believe the federal government should engage Canadians, and particularly education and research stakeholders, to help to establish priority areas for the innovation agenda that can be explored and implemented.

It is absolutely critical to engage current graduate students in this consultation process. Current graduate students are the future of Canadian innovation. It is necessary for them to be working with the federal government, supporting an innovation vision for Canada that matches the academic and research needs of the private and public sectors.

Thank you again, Madam Chair, for allowing us to participate in your hearings. I look forward to answering any questions you and your colleagues may have.

The Chair: Thank you very much.

We'll now go to the Canadian Electricity Association, and Mr. Konow.

Mr. Hans Konow (President and Chief Executive Officer, Canadian Electricity Association): Thank you very much, Madam Chair, ladies and gentlemen.

The Canadian Electricity Association is pleased to have this opportunity to testify before the standing committee. I'm accompanied by Roy Staveley, our senior vice-president responsible for this issue.

CEA, as many of you may be aware, represents about 95% of the generation, transmission, and distribution of electricity in Canada. Our industry contributes about 3.6% to GDP, and employs about 80,000 people. We have approximately $130 billion in assets, and annual sales of about $33 billion. Annual exports are in the range of $2 billion to $4 billion. From that you can perceive that we are a capital-intensive industry, and therefore issues such as CCA rates have a determining effect on investment patterns.

Before moving directly to our presentation, which I'll ask Mr. Staveley to run through with you, I'd like to proceed with a high-level overview of the importance of CCA rates, with particular attention to the issue of potential contribution to greenhouse gas emissions, in light of the topicality of that particular challenge.

On the importance of CCA rates, the Canadian electricity industry is going through significant change, bringing with it increased competition, market restructuring, and regulatory uncertainty. Today, almost half of Canadians are served by fully competitive wholesale and retail markets. This contributes to an enhanced business risk and greater exposure to the realities of international capital markets, where investment flows to locations offering competitive tax regimes and greater regulatory certainty, in essence, where rates of return are most predictable and attractive.

As a result, the relatively low rates of return within the Canadian electricity industry are making it increasingly difficult to attract the necessary investment capital to meet challenges, such as the growing domestic demand for power, replacement of aging infrastructure, accelerating our environmental performance, or delivering the level of power quality that consumers are demanding, while at the same time maintaining competitive prices. Enhanced CCA rates for electricity assets will be a critical step in addressing the industry's ability to remain competitive, and in overcoming the uncertainties of a changing market and regulatory framework.

On the issue of climate change, it's difficult to accurately quantify emission reductions, as a result of CCA rate changes. However, studies completed by Ernst & Young show that enhanced CCA rates will contribute to reducing greenhouse gas emissions. Recent modelling based on a business-as-usual scenario, and the industry's proposed commitment to adopt an emissions standard equivalent to that which would be produced by combined-cycle gas generation, reveals that greenhouse gas emissions could be reduced by as much as 6 megatonnes to 8 megatonnes per year by 2010, increasing annually to 24 megatonnes by 2020.

An increase in CCA rates for electricity assets will help make this possible by accelerating capital stock turnover, and through investment in research and development and deployment of innovative new technologies. As has already been noted, CCA rate improvements will also address a number of other challenges, such as increasing the industry's reliability, power quality, overall environmental performance, customer service, and competitiveness.

All of this can be accomplished without appreciably drawing on federal government net revenues. In fact, it's projected that future tax revenues from resulting higher investment and economic growth will have an offsetting effect in the longer term, providing a positive net revenue stream for the government. We believe this represents a win-win proposition for Canada, where significant benefit can be achieved ultimately, at little or no cost to the federal government.

I'll ask Mr. Staveley to take us through the elements of our submission, in brief.

Á (1130)

Mr. Roy Staveley (Senior Vice-President, Public Affairs & Environment, Canadian Electricity Association): I would like to build on the comments made by my colleague by referring to our presentation entitled “The Rationale for Improving CCA Rates for the Canadian Electricity Industry”. It's dated September 2002, and it was submitted to this committee.

Referring to the first page, I would like to comment on the fact that the industry will need to replace, repower, or build 35,000 megawatts of capacity over the next 20 years. Just to put that in perspective, we're talking about 40% of the current generation in Canada. The cost of that will be about $150 billion, in our estimation, and much of that will have to be funded by the private capital market.

If we go to slide 2 on Canadian national capital expenditures, this investment becomes most critical when one considers the decline in annual investment for generation, transmission, and distribution assets, a decline that is now at the point of about 50% of the investment that existed in 1991. This has occurred despite the fact that industry growth has been between 1.2% and 1.5% per year, and this is projected to continue over the next 20 years.

If we go to slide 3, we're suggesting that an early decision on CCA rates is required given the long lead times for new construction--sometimes that takes many years, depending on the generation--and to address the more immediate challenges facing the industry, which were mentioned earlier: reliability, environment, customer service, etc.

On slide 4 on Canadian electric power reserve margins, I would like to point out by way of example that new construction is required early to address reserve margins, which have hit historic lows in this country, showing that capacity tightness in certain regions is already becoming evident. You can see from the graph that reserve margins in this country for electricity have continued to drop and are at historic lows.

On the next slide regarding competitive disadvantage, I would comment to you that the changes to CCA rates will contribute significantly to the sector's competitiveness and ability to continue to supply reliable low-cost energy. Since environmental performance, including reducing greenhouse gases, is a priority for this country, the proposed CCA rate changes will contribute to earlier turnover of capital stock in favour of more efficient plants and will encourage emerging cleaner technology development.

The construction and development of generating facilities and infrastructure in Canada will provide effective fiscal policy stimulus to the Canadian economy, given the capital investment and the role this industry plays in that economy. Increased levels of investment in new capacity and infrastructure will contribute to both energy security and reliability.

Moving on to CCA rates for improved performance, I'd like to talk to you about class 43.1. CEA advocates broadening the eligibility requirements of this particular classification and increasing standards for energy efficiency and alternative energy technologies with the objective of further reducing greenhouse gas emissions.

On the final slide, I would like to mention once again that the impact of CCA rates, and CEA's request related to those rates, on the federal government's net revenues would be extremely modest in the short run and will offer the prospect of increased revenues in the longer term. These are very carefully assessed studies, which were done by Ernst & Young. They have been shared with the finance department. This offers a value proposition, in our opinion, in which a range of benefits could be achieved, including further greenhouse gas emission reductions within a low-risk, cost-effective framework.

I would like to thank the committee.

Á (1135)

The Chair: Thank you very much.

We'll now go to the Canadian Printing Industries Association, Mr. Ekstein. Go ahead.

Mr. Jeff Ekstein (Chairman of Government Affairs Committee, Canadian Printing Industries Association): Thank you very much, Madam Chair and members of the committee.

At the outset I would like to offer regrets on behalf of the chairman of the Canadian Printing Industries Association, Mr. Bob Kadis of Bowne of Canada in Toronto, who has other commitments today and could not participate in this session.

My name is Jeff Ekstein. I'm chairman of CPIA's government affairs committee. My full-time job is president of Willow Printing Group in Concord, Ontario, which is a mid-sized printing company. Appearing with me today is Pierre Boucher, the president of CPIA.

CPIA welcomes this opportunity to appear before the House of Commons Standing Committee on Finance. We believe this committee is an ideal medium for stakeholders to express their views on issues affecting all Canadians. We commend the government for engaging in such discussions, which I'm sure help by getting a first-hand understanding of the challenging issues facing Canadians.

Significant changes have taken place over the last year, particularly since the tragic events of September 11. In recent years Canada has enjoyed a buoyant economy, which enabled the federal government to accumulate surpluses, reduce debt, reduce taxes, and invest in specific programs for the benefit of Canadians. The challenge now is to ensure that we can maintain and improve our level of economic prosperity and quality of life. We commend this committee for choosing this theme, as many Canadians are now insecure about their future and their quality of life.

Before I begin the presentation, even though I've started an introduction, I'll ask CPIA president, Pierre Boucher, to give you a brief overview of our industry.

Pierre.

[Translation]

Mr. Pierre Boucher (President, Canadian Printing Industries Association): Madam Chair, committee members, the CPIA is the national representative of the Canadian pre-press, printing and related activities industry. Since 1939, the Canadian Printing Industries Association has represented the collective interests of member companies with regard to policies, regulations and legislation. The CPIA has about 800 members in Canada.

We are proud to be able to say that the Canadian printing industry is almost entirely owned by Canadians. More than 98,000 Canadian men and women work in the printing industry. The annual volume of printed products is worth about $11 billion. With an overall multiplier effect of 1.9% on production, the industry injects more than $9 billion into other areas of the economy.

The Canadian printing industry includes nearly 10% of all manufacturing establishments in Canada and as such it is the biggest manufacturing industry in the country in terms of the number of companies.

Canadian exports of commercial printed products and of related products to the United States amount to more than $1.8 billion a year. The commercial printing sector is mainly made up of small companies. Seventy-five per cent of them have less than 20 employees and only 3% have more than 100 employees.

Given its size and structure, the Canadian printing industry is affected by several government policies that directly impact not only the industry's profitability, but also its capacity to create and maintain jobs for thousands of Canadian men and women.

This is the context for the views we will be putting forward this morning.

Á (1140)

[English]

Mr. Jeff Ekstein: The main issue I would like to discuss is innovation in productivity and how outdated capital cost allowance rates negatively affect us. The House finance committee recognized this last year when the following recommendation was made in the final report:

“That the government undertake the research necessary for a comprehensive reform of the capital cost allowance rates to better reflect the pace of technological change in the ever-shortening economic life of modern machinery and equipment.”

The Government of Canada has since identified the commercial printing industry as a priority sector in seeking the views of business and academic communities on Canada's innovation strategy. The government's major initiative to enhance Canada's innovation performance has championed our industry. Through participating in the consultation process, it's easy for me to see how other departments besides HRDC and Industry Canada play a role in shaping innovation for Canada in the coming years. In my opinion, Finance plays a critical role, and this committee is a key stakeholder in the overall process.

In its white paper on innovation the government states that two ways to raise a country's standard of living are to increase the number of people working and to raise the level of innovation and productivity. Industry Canada's document notes that our productivity gap with the United States has continued to widen over the last few years. The document states that the gap is primarily due to the size and productivity growth of the information and communications technology sector.

Printing certainly forms part of the communications sector, as we have been and continue to be the preferred medium to transfer information and knowledge, despite the fact that we have become a mature industry threatened by other means of communications. The document shows that labour productivity in the printing industry is 35% higher in the U.S. Although this figure seems much too high, we cannot dispute the advantage the United States has over our country. For Canada to increase its productivity and to remain competitive, it has to innovate, adopt, adapt the latest technologies in the areas of manufacturing and communications.

However, our ability to do so is limited by an antiquated CCA rate that does not recognize the technological revolution that has taken place in the printing industry. CPIA has been asking the government for a number of years that Canada's tax policy regarding the depreciation of computer-assisted equipment be modernized. Tax schedules created in the late 1980s no longer serve our needs in the new millennium. In fact, we believe the current CCA rates have helped to widen our productivity gap with the United States.

The pace of innovation is actually the biggest challenge facing the commercial printing industry. Companies must constantly reinvest in new computer-based hardware and software, as the technology becomes obsolete very quickly. It now takes between 24 and 36 months for computers and peripheral equipment to become obsolete. At the present time it can take in excess of seven years before a piece of computer equipment is substantially depreciated for tax purposes. Canada's chartered banks recognize the short competitive life of advanced technology and often refuse to accept book value when it comes to financing. A high-tech piece of equipment purchased only two years ago has no value to the bank and will not be accepted as collateral. In fact, no reliable market exists for this used equipment, and there is virtually no value for technologically outdated equipment.

This is a real challenge for our industry, mainly due to our unique size and structure. In numbers of establishments, as Pierre has noted, we're the largest manufacturing industry in the nation, but 75% of these companies have fewer than 20 employees. They are the quintessential small business. Access to capital financing is difficult, and as a result, we need a tax schedule that favours technological development and takes this economic reality into consideration. Otherwise, where else do we turn for funding? To personal savings, which now leaves families at risk.

In March of this year the U.S. government introduced an accelerated schedule as part of its stimulus package, recognizing that investment in new technology will help to revive the economy and boost their productivity. This recent change will only widen the gap further between Canada and the U.S. Prior to the change Canadian companies were already at a 5.5% disadvantage. According to a recent industry survey, 85% of print executives considered the tax depreciation schedule imposed by the federal government an impediment in their adopting and purchasing the latest technology.

Á (1145)

Our recommendation is the adoption of a special high-technology depreciation schedule that would recognize technological obsolescence by granting an accelerated depreciation of 75% at the end of two years, when equipment has served its actual useful life--that's the key phrase, actual useful life. For the record, we would like to point out that the Canadian Federation of Independent Business has endorsed this position as well. We believe our proposal will serve Canada well and that the federal government would not see any revenue shortfall, as this is only a timing issue. It is interesting to note that prior to 1988 most manufacturing and processing machinery and equipment and supporting computer equipment was subject to a class 29 depreciation schedule that carried a three-year, 50%, 25-25, straight-line write-off. We would hate to think our government had more foresight in these things more than a decade ago.

We therefore urge the committee to restate its recommendation and to call upon the government to take immediate action in this area. We also invite all the committee members here today to visit a print plant in their region and get first-hand exposure to the challenges facing the industry. CPRA can assist in arranging these visits.

The Chair: Thank you very much. We appreciate that.

Our final presenter of this morning is Mr. Kits.

Mr. Harry Kits (Executive Director, Getting Landed Project): Thank you very much for the opportunity to be here.

Madam Chair, members of the committee, and colleagues, I'm the executive director of Citizens for Public Justice and the Getting Landed Project. I'm joined by Andrew Brouwer, who's a policy advocate with the Getting Landed Project and an executive committee member of the Canadian Council for Refugees. Andrew and I will each do a part of this presentation.

You should have before you, I hope, a statement we brought along today. I know there was a bit of confusion about the brief we submitted, so you may not have seen that. If you haven't, we'll make sure you get it. because it has some of the details in it.

We're here today with a very simple and inexpensive policy proposal that would have an enormous impact on one of Canada's most vulnerable populations, refugee youth. As you'll see from our brief, we would like this committee to recommend that the next federal budget include an amendment to the Canada Student Financial Assistance Act to enable recognized refugees to apply on an equal basis for student loans and make available the funds needed to implement that change.

Just let me give you one story. A young woman from Somalia arrived in Canada in 1995 and was accepted as a recognized refugee. Two years later she graduated from high school as an Ontario scholar with an average of 92.5%. She won a Governor General's academic medal. She has long dreamed of becoming a doctor and wanted to study biochemistry at university last fall. Finances, however, have forced her to abandon her dream. She's ineligible for a Canada student loan. Her parents are back in Somalia and her only relative in Canada is her brother, who is also struggling financially.

In today's knowledge economy higher education is a prerequisite for success. As the federal government's Knowledge Matters: Skills and Learning for Canadians puts it, post-secondary education is already required for most of the new jobs in today's economy and will be demanded for almost all new jobs in the 21st century. For those without a post-secondary education employment prospects are dimming rapidly. Canada's student loan program and its provincial counterparts are rooted in this understanding that education is a critical component of social and economic development, and some of the others in this panel have addressed that issue as well.

Access to higher education isn't solely an economic matter, of course. It's also a core human right protected by such international agreements as the Universal Declaration of Human Rights and the International Covenant on Economic, Social and Cultural Rights. Yet under current Canada student loans legislation only Canadian citizens and permanent residents, what we used to call landed immigrants, qualify for student loans. Recognized refugees, now known as protected persons under the new Immigration and Refugee Protection Act, are currently excluded. This exclusion is bad for recognized refugees and bad for Canada as well.

My colleague will take over here.

Á (1150)

Mr. Andrew Brouwer (Policy Advocate, Getting Landed Project): Thank you.

To be very clear, the people we're talking about here are recognized refugees. These are people who have had a hearing before the Immigration and Refugee Board, and the board has determined that they genuinely need Canada's protection. These people are in Canada to stay. They have a right under the Immigration and Refugee Protection Act to apply for permanent residence and eventually Canadian citizenship. They are effectively Canadians-in-waiting.

Unfortunately, this process of getting your landed status takes some time, generally at least a year, but in many cases two or three years or significantly longer. During this period, unless they have significant financial resources of their own, it's virtually impossible for them to go to a college or a university. In most cases that means they can't get started in their post-secondary education. Given that recognized refugees are here to stay, it makes no sense to delay their access to education. The sooner they begin their studies, the sooner they become self-supporting, full participants and contributors to Canadian society and the economy. Conversely, the longer their education is delayed, the greater the risk that they will have forfeited the opportunity to go to school full-time.

The cost of our proposal is tiny. It's estimated that there are about 1,000 students or potential students who are affected by this policy. That means the initial cost of the amendment would be about $4.5 million; this figure has been confirmed by HRDC. That's less than one-third of 1% of what Canada currently spends on the Canada student loans program. To go by the federal experience of lending money to immigrants under a different program, the repayment rate can be expected to be in the neighbourhood of 92%. That puts the final cost of this amendment at just about $360,000, a drop in the federal budget bucket, but one that would give these Canadians-in-waiting a huge leg up.

The text of our recommendation can be found on the front page of our brief. I'll just read it quickly, because I gather the brief hasn't been circulated.

We recommend that the Standing Committee on Finance urge the Government of Canada to include in the 2002-2003 federal budget an amendment to paragraph 2(1)(a) of the Canada Student Financial Assistance Act qualifying protected persons for student financial assistance on an equal basis with Canadian citizens and permanent residents and an allocation of funds to the student loans program sufficient to cover this small number of additional eligible students. Again, the estimate is about $4.5 million.

The proposal we've just made is supported by a wide range of civil society groups, as well as the federal Ministers of Human Resources Development and Citizenship and Immigration. All the federal parties have previously expressed their support for this change, and the provinces are, to the best of our knowledge, also on side. All that's needed now is for the budget to include the policy amendment and the small allocation of additional funding. Madam Chair, we strongly urge you to remember the situation faced by recognized refugees in Canada and to include this proposal in your report.

Thank you for your time. We'd be happy to answer any questions you may have.

The Chair: Thank you very much.

We'll be ending at 12:30, so I'll have five-minute rounds for six questioners.

Mr. Jaffer.

Mr. Rahim Jaffer (Edmonton—Strathcona, Canadian Alliance): Thank you, Madam Chair.

Thanks to all of the presenters today. There was a lot of pertinent information. Unfortunately, there's not enough time for follow-up questions, but I'll do my best to get in a couple.

I'll start with Mr. Giroux and Mr. Wuetherick in regard to education. I notice in the brief you've presented, Mr. Giroux, there's an astounding figure when you look at the amount that U.S. universities spend per student as compared with Canadian universities. There's a difference of about $4,500 Canadian per student. And I'm curious about the effect of this, because it looked like the trends have gone down in Canada, as opposed to the U.S. Obviously, education spending and administration is a provincial jurisdiction, and I know, Mr. Wuetherick, you talked about the issue of coordination.

So I'd like to know what effect this spending discrepancy has had on our ability to compete and retain students and graduate students and research here in Canada. At the same time, what can be done to coordinate better efforts? You started to talk about that, Mr. Wuetherick, and maybe you can expand on how we can coordinate better between the federal focus on education and provincial counterparts.

Á (1155)

Mr. Brad Wuetherick: Madam Chair, I can start, but I'm sure Dr. Giroux will have lots to add.

I think one of the ways in which we do need to start, from the perspective of federal government coordination, is by establishing a minister at the federal government level who is responsible for education. The Council of Ministers of Education at the provincial level meets regularly, but the federal government actually sends different ministers to almost every separate meeting. It's really difficult to coordinate where we're going in terms of post-secondary education across the country, and I think that would be a first step.

I also think there needs to be a very big effort at the stakeholder level of coordinating as well. One thing that I know both my association and I'm sure Dr. Giroux's association are trying to work on quite a lot is getting the provincial stakeholders in education discussing with their provincial governments the exact types of things that as national stakeholders we're presenting to the federal government. That's the second thing I would say we're really trying to do.

In terms of the actual impact of the trend in terms of finances, I would say there is a definite market for Canadian students to go to the United States. When a lot of the colleagues I finished my bachelor's degree with looked at graduate schools to pursue advanced education, they all went south of the border. I know that's a problem at the faculty level as well. While I would actually argue that it's getting better, I would still say the issue of the so-called brain drain is a concern.

Â (1200)

The Chair: Robert Giroux.

Mr. Robert Giroux: Thank you, Madam Chair.

First of all, Mr. Jaffer, you mentioned the $4,500 gap. That's very much reflected in two or three very key indicators. About two years ago, we supported the report by the Canadian Association of University Business Officers on deferred maintenance. We estimated deferred maintenance at about $3.6 billion, which is now a very conservative estimate in light of new statistics.

What does that mean? It means that universities, because they did not have the necessary funding per student, had to make some very tough decisions in terms of where to put their resources. If you have a building that should be maintained this year but could be sustained for another couple of years, you make that kind of decision; you delay it. That's one of the key elements, and it's now beginning to catch up to our institutions all across the country. It's a major requirement.

The second one, of course, is that we have also had to increase significantly the student-faculty ratio. It was about 24:1 in 1980. It's now 36:1.

Now, there is always room for efficiencies in terms of student-faculty ratios. At the same time, however, university education is getting extremely complex today. When the student-faculty ratio goes up, it becomes much more difficult to spend the time necessary to mentor students and to assist them with their research and a lot of their other projects.

And there are others. Our libraries are in dire need of improvement in order to be updated with the new technology.

These are all signs of this type of thing, and yet universities are asked every year to take on more and more students. We've seen a little bit of an increase in provincial government funding in Quebec. Ontario is putting money in terms of the double cohort students and so on. At the same time, we're still very far behind. Overall, I think it is going to affect the quality of education.

I support what my colleague said, that the federal and provincial governments need to sit down together and take a hard look at this. As I said in my presentation, we need to have the best quality of university graduates and the best numbers. They produce wealth, and that's what's necessary to sustain all of our social and health programs in the country. As we can see from the reports coming out, there are tremendous demands on that front.

[Translation]

The Chair: Ms. Picard.

Ms. Pauline Picard: Thank you, Madam Chair.

I have three questions for Mr. Giroux; however, I would first like to come back to the comments made by Mr. Burroughs regarding the pension plan. Like you, I also believe it is high time that we study this matter. There are many elderly Canadians living on $12,000 a year. That is below the poverty line and is frankly unacceptable. I believe that this question could be treated as a priority. The federal government currently has a surplus of almost $10 billion. It would seem, then, that the time has come to turn our attention to the elderly. When we speak of poverty, we ought to make mention of the fact that some elderly people are very poor. If we want to rid Canada of poverty, then we are going to have to study the question of the old age pension plan.

Mr. Giroux, in your opinion, what have the Canadian Millennium Scholarships done for students? Has the average debt load dropped?

I'm going to ask you three fairly short questions and then you'll have the opportunity to give me your answers.

To what extent has the increase in tuition fees constituted a deterrent to low income students?

Do you believe that the funds allocated to universities for research are distributed fairly?

The Chair: Go ahead Mr. Giroux.

Mr. Robert J. Giroux: Let me begin by saying that, although I don't have all the details, I do know that the Canadian Millennium Scholarship Foundation published a report a month or a month and a half ago. The report contains a lot of statistics about the impact of the scholarships, about trends and about factors which influence students' decisions to attend university.

I'm not in a position to give you a detailed answer. The only thing that I do know is that, in offering scholarships as opposed to relying solely on student loans, we have undoubtedly contributed to reducing the average debt load which students have when they leave university. I believe that the average debt load, which used to stand at around $25,000, is now estimated to be around $20,000. This is still a substantial amount of money. The average debt load is lower in Quebec because of their tuition fee situation.

Has the increase in tuition fees affected accessibility to university courses?

First of all, as you know, tuition fees are not standardized across the country. I will try to base my answer on the country as a whole.

Last week, during our members' meeting, we showed that, over the course of the past three years, the number of students registered in our universities has increased by 45,000. This constitutes an increase that is five times higher than what population trends would have led us to expect. In other words, given the number of people aged between 18 and 21, we would have expected an increase of 3%. Instead, we have seen an increase of 15%. This increase is five times higher than would have been expected. In many provinces, tuition fees have increased substantially. For example, in Nova Scotia, tuition fees are comparatively very high; they are on the upswing in Ontario, and so forth.

The data suggest that tuition fees are a factor in accessibility; however, we maintain that they are not the principal factor. The principal factor is that young people need to go to university. This need to go to university is, in part, related to population trends. However, it is also related to the fact that more people now go to university, something that can be linked to parental influence. Nowadays many parents have been to university themselves, a fact which encourages their children to do the same.

Secondly, and this is something that has been mentioned by my colleague, people are realizing that, increasingly, the jobs that are available require a university education.

You also inquired as to whether research funds were distributed fairly.

As you know, at the federal government level, research funds are based on the peer review system, which we believe to be the best review system. I believe that a lot of progress has been made recently regarding the allocation of research funds. In fact, this very morning, a report from an organization called InfoSource Research, and I have the English version of the text here, noted that there has been an increase in the research funds granted to universities over the past year. The report says that many small universities have registered very impressive increases over the past year. It gives the example of Ryerson, which had an increase of 74%, and the University of Prince Edward Island which had an increase of 128%, and so on.

It would seem then that regional universities, that is to say the smallest universities, are already feeling real benefits. That is why we have suggested that there be a program to allow us to build on this foundation.

[English]

I'm sorry, Madam Chair, to have been so long. There were three questions.

Â (1205)

The Chair: You did very well. Merci beaucoup.

Mr. Wilfert, go ahead.

Mr. Bryon Wilfert: Thank you, Madam Chairman.

First of all, I thank everyone for attending.

On the issue of Canadian Electricity Association, one area that I'm extremely familiar with is CCA rate class 43.1. That's something I've been pushing for a number of years, when I used to be the chair of the district energy committee of the FCM and as president. I can say to you, in terms of Kyoto, this is probably one of the most important, dealing with district energy, because of the front-end costs. Certainly anything we can do to continue to push for a change in that rate would be welcome and certainly contribute significantly to the issue of global warming. To me, the issues dealing with the Kyoto protocol are well addressed, particularly in areas such as district energy.

On the issue of post-secondary funding, I would be curious about comments with regard to the CHST. As one who personally would like to see it unbundled, I believe much of the discussion about post-secondary education gets lost in the fact that when we send a dollar to the provinces, they can play whatever games they like with regard to either health care, post-secondary education, or social spending. To me, that's a problem, because the theory is, of course, that they know what their priorities are and they allocate accordingly, but it also gives them the opportunity to blame us. Also, on the issue of millennium scholarships, we had the unfortunate situation in Ontario of the clawback there. So it may be well intentioned, but unfortunately there are those issues.

On the issue of the printing, I strongly support the notion on the capital-cost allowance issue. And again, I'm always interested in what these are going to cost us, particular given no deficit--we don't want to go into a deficit--in the issues I've talked about many times on Kyoto and on health care. But I think that is something very important, the issue of competitiveness and the issue of depreciation, because of the costs associated with the type of equipment, the type of computer equipment particularly, that your industry deals with.

No, we haven't given up on the national debt. Of course, the other week the minister announced a $8.9-billion application. We're the only G-7 state doing this, and to me, that's extremely important, and at the same time, having our five fiscal budgets being balanced or better.

I'm interested in any comments with regard to the CHST, anything else you'd like to add on class 43, and on the cost appreciation. Thank you.

The Chair: Mr. Wuetherick.

Mr. Brad Wuetherick: One of the things I didn't get a chance to talk to in my actual presentation, but it is in the budget submission that I made, is recommendation 10, on page 11 of our document, which talks about the need to develop a Canada post-secondary education act, which I know is not new to this body. I know the Canadian Alliance of Student Associations has brought the same idea forward, whereby we actually develop parameters that provinces can agree to, through the social union framework agreement, for direct transfers for post-secondary education similar to the health system that was recently developed.

So in that sense, I agree that it's very frustrating when we see the federal government come forward with health and social transfers, and then there are so many people fighting at the provincial government for those dollars that it ends up, quite often, getting sucked into the black hole of health care. It's very frustrating from an education side to see that happen, but I think there are ways we can do that, and the social union framework agreement does set up some parameters.

Â (1210)

The Chair: Mr. Boucher.

Mr. Pierre Boucher: Thank you, Madam Chair.

We believe there will be a net effect of zero, in terms of the cost of the CCA proposal we've made. This could have profound effects in our industry.

Right now, for example, some school programs are being closed for lack of funding. They don't have proper space or equipment. Children are not prepared to enroll in programs where they have antiquated pieces of equipment. As printers are able to depreciate their equipment faster, they can perhaps then be in a position to donate some of that equipment; therefore that would be one spinoff effect.

We've been working with the Department of Finance for quite some time, asking them to help us identify what the cost may be--again, we believe it will have a net effect of zero--because we believe that when the government is prepared and willing to look at or adopt a position, they will ultimately do that exercise. They have not done so, and we're still awaiting a response from them, to undertake that exercise jointly. We believe it will increase our productivity.

Mr. Ekstein explained the gap we have with the United States. Partly it's because of the adoption of the latest technology. They've increased the gap by introducing new legislation this year in March, and that may put us in jeopardy. We've been able to expand our export market, and we're concerned about this latest proposal by the United States, and no movement on the Canadian side.

So I think there's a golden opportunity for us to move forward with that proposal, do the proper studies that are required, help industry thrive and become more productive, and reduce the gap between us and the United States.

The Chair: Thank you.

Go ahead, Mr. Cullen.

Mr. Roy Cullen: Thank you, Madam Chair, and thank you to the presenters.

First of all, Mr. Kits and Mr. Brouwer, I couldn't agree more with what you're proposing. It's overdue. In fact, the Somali woman you described could have easily come from Etobicoke North. I have a very large Somali refugee population.

In fact, I think our colleague Bill Graham had a private member's bill that would have dealt with this question. But I've been focussing on trying to help people get landed more quickly. We've made a lot of progress, but there are still a lot of refugees who can't access the education system, and I think it's something we should do. I just wanted to say that.

Mr. Konow and Mr. Staveley, in the tax policies you're looking to have some change, it seems to me you don't differentiate between the types of electricity. I'm not an electricity guru by any stretch, but it seems to me it can be created using many different means. There is water power generation--hydro. There are nuclear, cogeneration, coal-fired, and gas-fired plants. So the CCA rules you're looking for wouldn't differentiate between what I'll call green power and not-so-green power--brown power. Is that correct?

Mr. Hans Konow: It is certainly difficult to track the colour of the electrons, but not wanting to make light of the comment, you're right, we do not discriminate between the options. We believe that in many ways the market is providing appropriate signals around the appetite for Canadians to purchase green power, and we support that. We support the availability of green-power options for Canadians.

But fundamentally, when we're talking about something in the order of 30% or 40% of our existing capacity being replaced over the next 20 years, we're talking about a very large increment of power production. We think selecting a winner, in that respect, based on, say, environmental criteria, would be ill-advised.

An example is the run-up in natural gas prices that occurred a couple of years ago, when the supply of natural gas was tight and the California markets' prices were spiking. You can get the perverse effect of unaffordable supplies, if you just focus on a single fuel option.

So our view is that you put the right conditions in place, and then let the other market signals drive the decisions by investors, in terms of which area they get into. Of course, we in Canada have very low-emission technology such as hydro, which is about 60% of our generation today, and nuclear, which is about another 15%, so our fossil component is a relatively small component of the whole, but very concentrated in certain markets.

All in all, our view is if you get the capital to flow in the right direction...and I would note here that it is important for us not to assume that Canada will forever have a comparative advantage in electricity, because that was built on readily accessible hydro facilities and coal. The cost of both are going up, so the balance between them and natural gas and future clean-coal technology, or whatever, is very difficult for us to engineer, as opposed to creating the conditions for which the market will help make those decisions.

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Mr. Roy Cullen: Thank you. I take your points, but it would probably be fair to say as well that, for your association, it would be hard to take a position that would differentiate between green power and not-so-green power, would it not?

Mr. Roy Staveley: Well, we do very clearly support changes to class 43.1. It goes to Mr. Wilfert's comments, in that we want to see class 43.1 broadened. A lot of emerging technologies are not included in that incentive class. We also believe there should be a review, with some further consideration given to an enhanced tax credit, because a lot of those companies are not necessarily in a profitable position to take full advantage of class 43.1.

So it's not that we're indifferent to these emerging technologies, it's just what you do about the other 98% of the generation in this country and the vast new construction that's going to be required.

Mr. Roy Cullen: Thank you.

For you, Mr. Burroughs, I have two questions. First, could you tell me what the annual pension is for someone who sat on a backbench for ten years?

Secondly, in terms of stock options, for example, do executives feature those in terms of their retirement planning? Are they a retirement planning tool? You hear a lot of horror stories about executive stock options that are really not correlated with corporate performance. In terms of retirement planning, I just wondered if they're seen as part of that equation.

Mr. Wayne Burroughs: I think it depends on the organization in which you're employed, and many certainly do. We are a private company and there are no stock options.

What was your first question again?

Mr. Roy Cullen: My first question was what the pension is for an MP who sat on the backbench for ten years.

Mr. Wayne Burroughs: Frankly, in exact dollars, I don't know. I just know it's a lot better than mine.

Mr. Roy Cullen: I know the answer, and I think it's about $30,000 or $35,000. The reason I bring it up is that there's a lot of stuff in the media about ministers who have been around for 40 years—I'm exaggerating—and been in cabinet maybe for 15. For some of the stuff you read, I would take it with a grain of salt. I've gone to the House of Commons because I was curious what it would be if I hung around for ten years. I know the number. It's a reasonable pension, but it's way below what I read about in the press. I just wanted to make that clear.

Mr. Wayne Burroughs: No, I understand that, and it is indexed. I certainly don't begrudge anybody getting a good pension, and certainly not our members of Parliament, because I realize there are certain risks to what you do in terms of re-election.

Mr. Roy Cullen: Thank you.

The Chair: Mr. Pillitteri.

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

Good morning, presenters. I have seen some of you here before many times, but two things really struck me this morning. Mr. Kits made a presentation about eligibility for student loans in education. I really believe we should not be treating anyone any differently. If someone is a landed immigrant or someone has been given the okay to stay under refugee status, both them are actually Canadian citizens in waiting. But I don't know if I would extend this to any refugee who is not legally accepted as a landed immigrant yet. Would you answer that? I'll go on to a couple more questions first, though.

I have a question about the printery. Yes, being a businessman, I think one should be able to write off something as fast as possible when it no longer is useful. I don't think any one of us should keep anything on the books when it's not useful to a company.

You said to visit a printery. I have. I visited the Mackenzie Heritage Printery Museum, in Queenston. That's about the extent to which I visited one. It's in my riding in Niagara Falls. I think it dates to sometime in the early 1800s.

One question that I also want to ask is to Mr. Brad Wuetherick, and that is about the responsibility of a student in regard to student loans. It really puzzled me this week when I received one letter from a student. I received several, but this one really puzzled me. I think you may also have some responsibility for telling the students whose responsibility it is for that loans that they have.

Let me just quote you three parts of this letter. She said she applied and received the loans. Then, in having the loans to pay back afterward, when she was finished, she made inquiries to three different branches on how to pay the loan back. At the end, she ends up by saying she cannot really make the payments and that she wants forgiveness of the loan, debt reduction, and all of the above.

I cannot really accept the fact that you're now saying the government should get its act together in getting all these loans together. When I go to a bank and I borrow money, either as a businessman or as an individual, I think I should have the responsibility of knowing who I'm going to pay back. That person does not know who to pay back? I find that really offensive. Members of government, members of Parliament, try their best in order to make things available, but that person is not taking the responsibility of knowing who to pay back.

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The Chair: We'll start with Mr. Kits.

Mr. Harry Kits: Very clearly, we are asking for the term “protected persons”—which is defined in the Immigration and Refugee Protection Act—to be added into the Canada Student Loans Act. It's a very defined wording that affects those who have gone through the process and have been recognized by the Immigration and Refugee Board. What we're asking for is a recognition that this amount of loans, this $4.5 million, we think will probably in the end cost no more than $360,000 over time if we look at the repayment rate that immigrants and refugees typically have.

Mr. Gary Pillitteri: Thank you.

Mr. Brad Wuetherick: Regarding the actual confusion a lot of students do have with regard to paying back their student loans, I'm actually in this boat. I've been in the post-secondary system since 1992, and even if you just look at my Canada student loan, which is only part of it, because I've also got provincial student loans, pre-1995 there was a certain system with a certain repayment, while from 1995 to 2000 the risk was shared with the banks. Now we're actually into direct financing with the federal government through a service provider, EduLinks.

There's confusion about what actually is happening. Apart from the fact that this last year I was told I can't go to CIBC any more to fill out the forms, there's very little understanding of how, on the administration side, the actual programs work. A lot of students are very confused. For seven years I dealt directly with CIBC, and I have no problem with going there, but dealing with CIBC involved two separate loan systems. One of them was the risk-shared one, which I'm actually paying off to CIBC itself. Some other ones I'm paying through CIBC, and that money goes back to the federal government. The last one I'm paying directly back to the federal government through EduLinks. I have an advantage in that EduLinks is actually the service provider for CIBC as well, so I'm doing everything through one service provider.

On top of that you can add the provincial student loans, which have also undergone transformation, and a lot of students, when they first get their loan forms signed, are given one form or two forms they get filled out. They understand they're getting a Canada student loan, a provincial student loan. They don't understand the administrative structure that has undergone some serious change in the last ten years of the Canada student loan program.

Students should take some responsibility for this. I think there are a lot of 18-year-old students who come in and don't quite understand that this is a proper bank loan they are undertaking. I think there is some role for our associations to inform those students. Through the national advisory group on student financial aid that I sit on, as does AUCC, we've been discussing how we communicate to these students quite a lot. That's one of the biggest problems we are trying to address.

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The Chair: We have one more questioner for the day, Ms. Guarnieri.

Ms. Albina Guarnieri (Mississauga East, Lib.): I'd like to welcome Mr. Giroux for his first appearance since his transformation as a political football when our leadership race began.

On what the federal government can do to help students afford their education, I would like you to rate the federal programs we have in respect of their impact and value to students. I'm referring in particular to RESPs and the matching grants, research grants, NSERC for instance, as well as direct funding to the provinces. This is really a follow-up to Mr. Wilfert's question, and I certainly extend this question to Mr. Wuetherick too. Would you like to see the money allocated directly to support the provinces, or do these federal programs, for instance, deserve priority status?

Mr. Robert J. Giroux: First of all, I think you mentioned RESPs. We think the federal government has done the right thing in terms of encouraging more financing through the RESP program. It's recognized, of course, that in many parts of Canada the fees for students will go up, but there are also the very heavy maintenance costs--housing, transportation, food, and so on--and the more you can set aside, the better it is in the long term. I'm taking advantage of them for my grandchildren, by the way, because my children are all grown up.

With respect to research grants, we of course support very strongly the role of the federal government in that matter. We support very strongly the continuation of the direction that they have set because of the importance of sustaining and increasing university research. That's a major component in terms of not only its university context but also what it can contribute to the knowledge transfer in the economy, per se.

I didn't answer the question that was raised previously by Mr. Wilfert with regard to direct funding to the provinces. It's been a very frustrating area. I appeared before this committee maybe four or five years ago, and we did support at the time increasing transfer payments to the provinces. But it's been frustrating in the sense that every time we do make that request, many people at the federal level will say, “Well, yes, but can you guarantee that it will go towards post-secondary education?”

As you know, we cannot do that. The CHST is all-inclusive. And if you look at the text of the premiers meetings and the health ministers meetings, they're very much focused on health. I'm not blaming them--it is a major issue--but at the same time it makes it extremely difficult.

So we would certainly favour, if the federal government wants to go into this, some targeted funding, and more specific targeted funding, maybe going back to the EPS process that we had previously. But we also would need to have a strong commitment on the part of the provinces that they would in fact put the money in post-secondary education. I mean, it's fine to talk about targeted funding, but if it goes into the various provincial ministries of finance and gets lost--we call it the black hole--that's not going to solve the situation either.

So there would have to be a very strong commitment, and that's where I think it's important that the federal government and the provinces start to look at where they're going with this, at the importance of it, and agree on these particular kinds of commitments.

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Mr. Brad Wuetherick: Just very quickly, Madam Chair, I would like to say that I support wholeheartedly what Dr. Giroux just said about the direct funding. I think we do need to have funding to the provinces. That has to be a priority, but I think it needs to be directed somehow.

If there is extra money on the table, I don't imagine very many provinces are going to say no to it. It's just a matter of defining parameters under which the federal government and the provincial governments can agree to do that. We very firmly agree that the research grants and the Canada student loans program and a number of other federal initiatives need to be the priority.

I just want to make one comment about RESPs. It's unfortunate that RESPs aren't being taken out by more individuals, but I think the biggest thing that needs to happen around this...and it's a change that in the States, everybody, no matter what income level, knows you need to save for your children's education. That mentality hasn't come up in Canada yet. We aren't at the level where every parent thinks, “I need to support my child.” A lot of parents who are in high-income tax brackets don't support their children when they go on to post-secondary education.

So we do need to create that mentality in Canada. How you do that, I'm not sure, but I think all of us, as stakeholders in education, need to start working on that. Hopefully the federal government can help us do that.

Ms. Albina Guarnieri: Since the government doesn't have direct control over tuition fees, should the focus of the government be on the quality of education, creating world-class institutions and accessibility, rather than taking the blame for tuition fees, for instance?

Mr. Brad Wuetherick: There isn't a graduate student in Canada who is going to argue against making our institutions world-class and of the best quality possible. I do think there needs to also be a balance. You can't just try to focus on that, without addressing some of the issues with higher fees and accessibility that do come up. In that sense, for my stakeholders, I would argue that quality is, no matter what, the priority. We need to have a quality program, we need to have quality research, we need to have quality infrastructure, and that's the area I would say the government needs to focus on. But it can't be at the expense of ignoring this other one.

Ms. Albina Guarnieri: When you pay, would you like front-load payments, or would you like higher taxes to pay for the programs? I guess that's the real fix we're in.

Mr. Brad Wuetherick: That's a philosophical question.

Ms. Albina Guarnieri: It's a practical question.

Mr. Brad Wuetherick: Well, it is, but it's also a philosophical one, a user fee versus a higher social system. I do take your point, and I think there's some work there.

Ms. Albina Guarnieri: Thank you.

The Chair: Dr. Giroux.

Mr. Robert J. Giroux: I want to add one last comment. We talk a lot about increasing fees, but a Statistics Canada report came out recently that shows that over the period of the last five or six years the bursaries and scholarships offered by institutions have increased fivefold also. The institutions are making sure they can supplement the income of the students, and that has been as a result of funding mechanisms they've put in place. In some provinces they have to take a third of the added fees towards scholarships for needy students--that happens in Ontario. That's another thing that's making it easier to absorb the fee increases.

The Chair: On behalf of all the members of the committee, I'm glad you took the time to present your briefs, to write your briefs in detail, and to be engaged today in discussions. Thank you very much.

To my colleagues I just want to point out that tomorrow we're in Halifax. We start at 8:30 a.m. Atlantic time.

The meeting is adjourned.