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37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Wednesday, October 8, 2003

1535

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

Dr. Thomas Brzustowski (President, Natural Sciences and Engineering Research Council of Canada)

Mrs. Joanne Kelseman (Vice-President of Council, Vice-President, Research, University of Manitoba, Natural Sciences and Engineering Research Council of Canada)

1540

Dr. Thomas Brzustowski

Mrs. Joanne Kelseman

Dr. Thomas Brzustowski

The Chair

Dr. David Strangway (President and Chief Executive Officer, Canada Foundation for Innovation)

1545

1550

The Chair

Mr. John Mountain (Vice-President, Investment Funds Institute of Canada)

1555

The Chair

Dr. Robert J. Giroux (President and Chief Executive Officer, Association of Universities and Colleges of Canada)

1600

The Chair

Mr. Mark Jamison (President, Canadian Magazine Publishers Association)

1605

Mr. Tom Hopkins (Chair, Public Affairs Committee, Canadian Magazine Publishers Association)

1610

The Chair

Mr. Chuck Strahl (Fraser Valley, Canadian Alliance)

1615

The Chair

Dr. David Strangway

Mr. Chuck Strahl

Dr. David Strangway

Mr. Chuck Strahl

Mr. John Mountain

1620

Mr. Chuck Strahl

Mr. John Mountain

Mr. Chuck Strahl

Mr. John Mountain

Mr. Chuck Strahl

The Chair

Ms. Pauline Picard (Drummond, BQ)

Dr. Robert J. Giroux

The Chair

Mr. Robert Best (Vice-President, National Affairs Branch, Association of Universities and Colleges of Canada)

Ms. Pauline Picard

Mr. John Mountain

1625

The Chair

1630

Mr. John Mountain

The Chair

Mr. Tony Valeri (Stoney Creek, Lib.)

The Chair

Dr. David Strangway

1635

The Chair

Dr. Robert J. Giroux

The Chair

Mr. Tony Valeri

The Chair

Dr. Thomas Brzustowski

1640

The Chair

Dr. Thomas Brzustowski

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

1645

The Chair

Dr. Robert J. Giroux

The Chair

Dr. Thomas Brzustowski

The Chair

Mrs. Julie Gelfand (Chair, Green Budget Coalition)

1655

1700

The Chair

Mr. Paul Ledwell (Chairperson, Canadian Consortium for Research)

1705

The Chair

Dr. Martha Crago (President, Canadian Association for Graduate Studies)

1710

1715

The Vice-Chair (Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.))

Dr. Martha Crago

The Vice-Chair (Mr. Nick Discepola)

Dr. Martha Crago

The Chair

Ms. Cathy Moore (Director of Consumer and Government Relations, Canadian National Institute for the Blind)

1720

Ms. Fran Cutler (National Chair, Canadian National Institute for the Blind)

Ms. Cathy Moore

The Chair

Ms. Cathy Moore

The Chair

Mr. Glenn O'Farrell (President and Chief Executive Officer, Canadian Association of Broadcasters)

1725

1730

The Chair

Mr. Chuck Strahl

Mrs. Julie Gelfand

Mr. Chuck Strahl

Mrs. Julie Gelfand

The Chair

Mr. Chuck Strahl

1735

Mrs. Julie Gelfand

The Chair

Ms. Pauline Picard

The Chair

Mr. Roy Cullen (Etobicoke North, Lib.)

Dr. Martha Crago

1740

The Chair

Mr. Nick Discepola

Mr. Paul Ledwell

The Chair

Mr. Brian Masse (Windsor West, NDP)

Ms. Cathy Moore

Mr. Brian Masse

The Chair

CANADA

Standing Committee on Finance

NUMBER 080

2nd SESSION

37th PARLIAMENT

EVIDENCE

Wednesday, October 8, 2003

[Recorded by Electronic Apparatus]

¹ (1535)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): Pursuant to Standing Order 83(1), pre-budget consultations will continue.

We have two panels. As I've advised, there will be some voting in the House later this evening. All of the members of the committee have your brief, so I will advise you that if you can speak to the key messages of your briefs in under seven minutes, it would be appreciated.

I will go in reverse order, and we will have the Natural Sciences and Engineering Research Council of Canada present first. Speaking for them is Joanne Kelseman, vice-president of the council, who is also vice-president, research, University of Manitoba. Welcome, and to the president of the association, welcome again, sir, to you.

Next we have, from the Investment Funds Institute of Canada, John Mountain, vice-president. Then we have the Association of Universities and Colleges of Canada, Robert Giroux, president and chief executive officer, joined today by Robert Best, who is the director of government relations and public affairs. Then we have the Canada Foundation for Innovation, and presenting will be Mr. Strangway, the president and chief executive officer, and Carmen Charette, the senior vice-president. Welcome to you. Finally, from the Canadian Magazine Publishers Association, Tom Hopkins, chair, is with us here, and Mark Jamison, president.

[Translation]

Welcome everyone.

[English]

I believe we'll be starting with Mr. Brzustowski. Go ahead, sir.

[Translation]

Dr. Thomas Brzustowski (President, Natural Sciences and Engineering Research Council of Canada): Thank you, Madam Chair, for inviting us to speak to the committee. If you have no objections, Ms. Kelseman and I will be making our presentation in English.

[English]

Madam Chairman, thank you for the opportunity to meet with you. You will find that this presentation is different from previous presentations you've had from us. The intention is to inform the committee of the new vision of NSERCC as a national Canadian agency that's been adopted quite enthusiastically by our council, and that vision directs NSERCC to take new steps to assist in building a more innovative Canada.

The vision is simply this, that in addition to investing in people, discovery, and innovation through our existing national competition programs that support research in science and engineering at universities, we will reach out across the nation to address the range of issues that have local dimensions and local needs. They're all in research and in innovation and training of highly qualified people, and we will develop a local presence in the regions of Canada to in fact effect a greater achievement in this area.

There are two main elements that shape our vision. One is that gaps have been identified in important activities. They're different in different parts of the country. We've studied them, and we understand them, and we have decided that we're going to act. We're going to start in a very small way with pilot programs within our existing resources, and we'll do this in ways that meet local needs. We believe the public must be involved in supporting how government spends money and in understanding what we do, and we'll make every effort to inform the local public about what we're doing. We will be committed to excellence, as we always have been, but measured in ways that are appropriate to the action.

So I underline, in addition to what NSERCC is doing now, that we will help to meet Canada's needs in the following areas.

Madam Kelseman.

Mrs. Joanne Kelseman (Vice-President of Council, Vice-President, Research, University of Manitoba, Natural Sciences and Engineering Research Council of Canada): Thank you. The first of these areas is the area of science and mathematics education. I think we know that there is widespread and growing recognition that science, literacy, and numeracy are vital skills in the modern economy, but there's also a good deal of dissatisfaction with the quality of science and math education in Canadian schools. Even though NSERCC is a federal agency, we have learned that we can do much to improve the quality of the early preparation of Canadian children in these two foundation subjects.

We believe we can, in partnership with many others who share our concern, assist in developing and improving the skills and resources available to our science and mathematics teachers. We believe we can do this in a way that will be appreciated by the provinces rather than causing federal-provincial issues.

The second area is the area of research capacity building, regional capacity building. NSERCC has studied the needs of universities in Atlantic Canada and in the prairies, and of smaller institutions everywhere in Canada, to build research capacity. These institutions tell us that other programs do not directly address this issue. NSERCC has worked with universities; we know what is needed and universities agree with us. We will design a program to address their research capacity needs, and it will be successful if these universities can acquire the capacity to succeed much better than they do now in national competitions for research support.

¹ (1540)

Dr. Thomas Brzustowski: The next action, Madam Chair, is that we intend to start helping community colleges help innovation at the community level. Community colleges are a valuable knowledge resource in hundreds of communities across Canada. We have worked with the colleges to find out what they need to be more helpful to local small and medium companies in the innovation process and in the training of technology-adept graduates. The colleges tell us we understand their needs and know how to address them, and we will design a pilot program to start on that.

The fourth activity is a national framework for big science projects, expensive projects costing in the range of many tens of millions of dollars. There is no consistent policy, or consistent process, for making decisions in these areas, but they are badly needed, and projects of this kind not only have very compelling scientific merit, must have compelling scientific merit, but they also have local implications for the economy and in terms of prestige. To meet this need, NSERCC is already working with the National Research Council, where most of the expertise in operating large science projects resides within government, and we're developing a framework for assessing big science projects. The same framework will be made available to the applicants and to decision-makers so that decisions can be made in full knowledge of the implications and without surprises.

Mrs. Joanne Kelseman: The fifth area has to do with establishing a regional presence for NSERCC. Many of the new things we intend to do, both in these new initiatives as well as in our current programs, would benefit greatly from NSERCC having a closer connection to the local communities. To achieve this, NSERCC will open regional offices. These offices will have the staff and budgets to enable them to make decisions and to take prompt local action as appropriate. Eventually, we will have small offices in the five main regions of Canada, in Winnipeg, and possibly in Halifax, Montreal, Toronto, and Vancouver.

The last area has to do with public recognition. We believe the public must recognize NSERCC for what it is and what NSERCC does if we are to win their support for our work. To ensure this, we will begin to do business under a new label. One attractive possibility is Science and Engineering Canada. The legal name of NSERCC will not change and will appear in all of our publications, but we will give prominence to this new label when communicating with our public. We will seek to protect the new label and to obtain permission from Treasury Board to use it.

Dr. Thomas Brzustowski: We really do believe that all of these initiatives fit within our mandate, as given by the Natural Sciences and Engineering Research Council Act of 1976-77, and, as I pointed out, we believe we can start on a very small scale with pilot programs within our existing resources but maintain that only for a year. We will delay spending in some programs, we will squeeze some others, but we will find the money in whatever way we can because these things are important. If we seem to be successful at the end of the first year, if it's promising, we will come back to the centre for money to fund these initiatives; otherwise, we will abandon them.

That's our presentation, Madam Chair.

The Chair: Thank you very much.

I'm going to change the schedule to accommodate some flight schedules. We'll go next to the Canadian Foundation for Innovation.

Go ahead, sir.

Dr. David Strangway (President and Chief Executive Officer, Canada Foundation for Innovation): Thank you very much. Madam Chair, MPs, I begin today by thanking the finance committee for allowing us this opportunity to update you on our activities. Today you probably don't realize it, but it marks the eighth visit to this committee since we were created in 1997. The CFI board and staff feel a very great privilege to have the government place their trust in us and accept this with profound humility. We take very seriously our responsibility as stewards of the taxpayers' money and administer our investments in an open, transparent, and accountable manner that is bringing many benefits to the people of Canada.

My presentation will be in three groups: where we've been, where we are, and the road ahead.

Where we've been. Committee members know the story of the Canada Foundation for Innovation well. We were established in 1997 to strengthen the research infrastructure in universities and colleges, research hospitals, and other non-profit research institutions across Canada. To date, the government has entrusted $3.65 billion to the CFI. In turn, the CFI has invested in almost 3,000 infrastructure projects, a significant portion of them in the health sciences.

It is always a pleasure for me to have the occasion to express our appreciation to you for your continued support, most recently in the 2003 budget, but also for the many steps you have taken in reinforcing the ability of Canada's non-government not-for-profit research-performing institutions, which is our mandate across the entire country to perform leading-edge research.

With the creation of the CFI in 1997, followed by the Canadian Institutes of Health Research, the Canada research chairs, support for indirect costs, increases to the granting agencies, and, most recently, the investment in the graduate student fund, you are indeed changing Canada's research landscape, and I'm pleased to report that fundamentally the model is working thanks to the cooperation and participation of these partners at all levels.

Where we are. Six years into our mandate there is mounting evidence that the CFI's entirely new approach to addressing the innovation challenge is working. The investments to date in state-of-the-art infrastructure are supporting the development of world-class expertise in communities all across the country and helping them to attract and retain the best research minds in the world.

Since inception, the CFI's programs have served as an agent of transformation, helping to modernize the research landscape in Canada and serving as a catalyst for major institutional change. For example, our creation has produced a mechanism that not only has brought in matching funds but has allowed for significant additional leveraging far beyond that required for the matching funds; it has permitted the introduction of infrastructure-based research platforms, making Canada much more competitive nationally and internationally; and it has enabled research institutes across the country to identify key research areas of significance to Canada by requiring them to set their own priorities through the development of their own strategic research plans.

Yes, the CFI's investments are transforming the research culture in Canada by helping research institutions to focus on where they need and want to go and encouraging them to bring in support from provincial governments, from municipalities, from foundations, and from the private sector.

The government has put into place the necessary conditions to build a truly thriving research enterprise at a level of international excellence that's allowing Canada's institutions to bring in the best researchers in a globally competitive time.

Groundbreaking discoveries on everything from spinal cord research to the reduction of greenhouse gas emissions are improving our quality of life.

Six years into our mandate, I am pleased to report that the CFI has invested over $2 billion into 2,858 projects at 113 institutions in 56 municipalities across Canada's ten provinces, for a total combined contribution of over $5 billion. The CFI is building competencies and has provided support for 1,889 new researchers to give them a kick-start in their careers. CFI has invested in the research infrastructure that supports, so far, 718 people occupied in the Canada research chairs, and the energy continues because we're now reviewing over 500 applications for our fourth major competition.

We are indeed competing to attract and retain the best researchers.

Increasingly, the institutions are seen as the core of a number of rapidly evolving clusters, large and small, across the country, each working in their own communities.

Some institutions have been aggressive at creating spinoff companies for many years and are now realizing significant profits. Others are moving rapidly to develop this activity further. In two years, from 1999 to 2001, for example, licensing income to the institutions has risen by 400% and is continuing to rise rapidly. This revenue is already at 50% on a per research dollar basis of that in the U.S., and the gap is closing very rapidly indeed. Already the Canadian institutions produce twice as many spinoff companies per research dollar as their U.S. counterparts.

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As things stand at this time, looking ahead, the CFI will not have the resources necessary to help institutions maintain this momentum until 2010. Between 2006 and 2010 the CFI will be left with less than 50% of the investment level per year that has occurred in the first few years of our life. Moreover, the infrastructure operating fund ends in 2005, and that's a real issue for institutions. The Canada research chairs infrastructure ends in 2005, and there are many things that need to be thought about as we look to this next period.

Now is the time to ensure that we can continue the momentum. It is important to look at ways to sustain the support for all the building blocks we've already talked about: direct and indirect costs; graduate student support; support for human and physical infrastructure; and helping institutions reach their commercialization goals.

Canada has now developed a global reputation as a place where outstanding research and training is being conducted and we are the envy of the world. Although this new reputation is well deserved, it has not happened by chance. In fact, it is the result of a planned transformation that has taken place across the country and has empowered our researchers and their institutions to reach for the highest levels of excellence, to participate in the new knowledge-based economy, and to compete with the best from around the world.

Thanks to your vision and your ongoing commitment, the Canada Foundation for Innovation and the other agencies will continue to play a significant role in this transformation. By supporting the institutions, we're empowering them to develop partnerships with their provinces, their municipal governments, the private sector, the volunteer sector, and among themselves, all working to implement Canada's innovation strategy.

Thank you, Madam Chair.

¹ (1550)

The Chair: Thank you very much.

Now we'll go to Mr. Mountain of the Investment Funds Institute of Canada.

Mr. John Mountain (Vice-President, Investment Funds Institute of Canada): Thank you, Madam Chair.

Good afternoon, honourable members. It is my pleasure to be here this afternoon to speak to you as you consider the possible budget recommendations your committee will make to the Minister of Finance.

You have received IFIC's written submission. I intend to expand on a couple of points made in that submission and will then gladly answer any questions you have for me.

The Investment Funds Institute of Canada, or IFIC, represents the Canadian mutual fund community. For most Canadians mutual funds are the only practical option for accessing equity and debt investment. IFIC's members currently manage over $412 billion of Canadians' assets, about half of which are the private retirement savings of these individual investors. As mutual funds are one of the primary vehicles in which Canadians save privately for their retirement, IFIC's members are acutely attuned to the retirement needs of the average Canadian. Because fewer and fewer employers in this country offer defined benefit pension plans, private retirement savings programs have become increasingly important to ordinary Canadians as they prepare for their retirement.

IFIC's members are pleased that the minister, in his last budget, reinstated the increased contribution limits for RRSPs that had originally been scheduled to become effective many years earlier. We recognized that, like all Canadians, private savers for retirement needed to help the government solve the problem of its debt burden and accepted the delay in effectiveness of these increased contribution limits. However, the increased limits are still inadequate. The new limits do not take account of the fact that through the extended period when the contribution limit was frozen at $13,500, inflation was occurring, albeit at a low rate. While the increased limits do take into account future inflation, they do not allow Canadians saving for their retirement to compensate for that decade's worth of inflation. Further, every equity investor has seen the value of their investments fall during the last few years as a result of general market conditions.

Canadians who enjoy a defined benefit pension plan are not exposed to this problem, for their employers will be required to top up their pension plans to bring them back to appropriate levels. Canadians saving privately for their retirement do not have this benefit and will suffer during their retirement. For both of these reasons, IFIC urges the committee to recommend to the minister an immediate increase in RRSP contribution limits. As well, we urge the committee to recommend that the minister move forward to implement the tax-deferred savings program, which you recommended last year and which his last budget stated his officials were studying. In our view, the TPSP is the best vehicle for low-income Canadians to save for their retirement.

The risk of not moving forward with both of these initiatives is that an increased number of Canadians will not have adequate resources to provide for themselves during their retirement years, and all levels of government will be forced to significantly increase their spending on social programs in years to come to provide them with services that, if allowed to save appropriately today, these people will have the resources to acquire for themselves.

We have another reason for urging an immediate increase in the RRSP contribution limit. Canada is competing with other countries for skilled talent. Many other countries, particularly the United States and the United Kingdom, offer significantly greater opportunities for individuals to save privately for their retirements. Canada risks losing talent to these other countries if it does not act to increase the ability of private individuals to effectively save for their retirement, and thereby it potentially sacrifices the contributions these individuals could have made to benefit Canada and Canadians generally.

In our written submission we raise three other issues for your consideration. I propose to mention them only briefly, as they are highly technical matters. However, I would be pleased to expand upon them if you wish.

First is to request your support for our call for amendments to section 115.2 of the Income Tax Act to allow the Canadian asset management industry to compete more effectively on a global basis.

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Second, we urge you to recommend a deferral or a repeal of the foreign investment entity rules. These rules are still so complex that practitioners cannot give concrete advice on how they apply—and worse, the Minister of National Revenue will not be able to audit compliance with them.

Finally, we obtained comfort last December that the finance ministers' officials would recommend amendments to the securities lending provisions of the Income Tax Act to allow the lending of exchange traded income trusts. We urge the committee to recommend that this amendment move forward as soon as possible.

I thank you for your attention, and I would be pleased to answer any questions you may have.

The Chair: Thank you very much.

We'll now go to the Association of Universities and Colleges of Canada, and Mr. Giroux.

[Translation]

Dr. Robert J. Giroux (President and Chief Executive Officer, Association of Universities and Colleges of Canada): Madam Chair, thank you for inviting the AUCC to participate again this year in the pre-budget hearings.

Your committee has consistently recognized the importance of university education and research to the economic prospects and well-being of Canadians. Your recommendations have led to a number of important initiatives including the Canada Graduate Scholarships and a permanent program to fund the indirect costs of university research.

The past year has been an important one for Canada's universities. As you will recall, at the Innovation Summit last year, AUCC and the federal government released a Framework of Agreed Principles on Federally Funded University Research. Canadian universities committed to double the amount of research they perform and to increase their efforts to transfer knowledge to their communities, including tripling their collective commercialization performance. The government, for its part, committed to increase its investments in university research. AUCC and the government have worked closely in pursuit of our common goal of enhancing Canadian society through investments in research and knowledge transfer for the benefit of Canadians.

[English]

I must stress, however, Madam Chairman, that we can reach this goal only with the continued strong support of the federal government. By this I mean continued growth in funding to the granting agencies; assistance to develop the research capacity of our universities in all regions of the country; attention to the ongoing needs of our research infrastructure, including the Canada Foundation for Innovation, and the operating costs of large-scale infrastructure projects; efforts to continue attracting our young people into research careers; and, most important, funding support for the indirect cost of research at 40%, as recommended by your committee last year.

The government's efforts to date have generated excitement in the university research community, which is a real turnaround from a decade ago. Without continued support, we risk losing that excitement, draining the momentum, and returning to the unfortunate circumstances of the 1990s. Just as the government has addressed research needs over these last several years, I would suggest it is now time to focus on the education mission of universities over the next several years.

As you will see from our written submission, AUCC is concerned by a number of issues in higher education, which we group together under the themes of capacity, access, and quality. Canada faces a great challenge in the years to come in delivering the kind of higher education that our citizens expect and deserve. The quality of our university graduates, with their skills and creativity, is essential to the creation of wealth in our knowledge economy. In turn, wealth creation makes possible the wide range of goals established by governments, including stable social services, improved health, and a culturally richer society.

Madam Chair, AUCC expects full-time university enrollment to increase by at least 30%, or 200,000 additional students, in the period of 2001 to 2011, due to growth in the 18 to 24 age group, which has traditionally made up the bulk of the student population, as well as to increased participation within the university age cohort and the growing demand for the skills and expertise that university graduates can provide in the labour market.

To meet that demand, universities must have the institutional capacity, the human resources, and the physical and technological infrastructure to offer these students a quality educational experience. This demand is a plain fact on the ground.

Issues surrounding this demand have been framed in terms of accessibility. Unfortunately, Madam Chair, meeting demand by providing access is only one side of the equation. You can't satisfy demand unless you address supply. We need to create the space and other requirements for these 200,000 students, and this includes the housing, support services, classrooms, libraries, and teachers that a quality education requires.

At the same time, we are conscious of the need to make universities more accessible to a greater number of disadvantaged Canadians, such as young people coming from low-income backgrounds, aboriginal Canadians, or the disabled. If we wish, for example, to reduce the gap for lower-income students by half, then we will require an additional 100,000 seats in our universities across the country.

The paramount issue is to ensure that universities have the institutional capacity and resources they need to teach a growing number of students. We need more teachers and more teaching space. Our analyses suggest that universities will have to hire between 35,000 and 40,000 new faculty members in the period of 2001 to 2011. The need for new buildings and upgrades to older facilities includes over $3 billion just for accumulated deferred maintenance.

Without adequate investment in institutional capacity, either accessibility or quality, or both, will suffer. We believe the federal government has an important role to play in finding solutions to these problems. We believe the federal government can provide leadership in the educational mission of universities, just as it has done with university research.

Let me conclude, Madam Chair, with some thoughts on the role the federal government might play.

First, I think it is important that the federal government works constructively with the provinces, which play a central role in providing operating resources to the universities. We propose the creation of a higher education renewal fund, which could include a federal-provincial transfer component over and above the existing Canada social transfer. Over a number of years it could be used for purposes agreed to by the provinces and the federal government, such as the hiring of additional faculty and other capacity needs.

The federal government could also dedicate funds, either separately or through the transfer, to such areas as physical and technological infrastructure.

º (1600)

Expanding access for non-traditional students will also require support and incentives for these individuals to pursue and complete higher education in a timely manner. Measures here could include: reform of the Canada student loans program to better meet student needs; an enhanced system of grants; and targeted federal programing for aboriginal, disabled, and low-income students.

[Translation]

Finally, Madam Chair, to provide students with a quality higher education in today's environment, we must ensure that they are equipped with a knowledge of the world and cross-cultural skills to enable them to thrive in our interconnected world. A two-way flow of students is important here. We recommend grants to enable Canadian students to pursue short-term international study opportunities, including exchanges, as well as measures to encourage international students to study in Canada.

What we propose calls for important investments by the federal government over the next several years. As I remarked earlier, we are calling for a long-term commitment to these issues from the federal government, working with the provinces and the universities.

I hope we can look to your committee for continuing leadership in these important areas. Together we can contribute to improving and enriching Canadian society.

Madam Chair, thank you once again for the opportunity to share these thoughts. Thank you as well to your committee for its leadership over the past several years.

[English]

The Chair: Merci beaucoup pour votre sentiment.

I would now like to go to the Canadian Magazine Publishers Association, and to Mr. Jamison or Mr. Hopkins, whoever is starting your presentation.

Mr. Mark Jamison (President, Canadian Magazine Publishers Association): Thank you. We appreciate this opportunity.

I just want to mention that Tom Hopkins is chair of our public affairs committee. He's also vice-president of Avid Media, which publishes: Canadian Home and Country, Canadian Home Workshop, Outdoor Canada, and Canadian Gardening magazine.

CMPA is the voice for magazines like Tom Hopkins's and 300 others, from various small circulation magazines to the largest names in the business. We've circulated some information about CMPA, so we won't take up time with that today.

I've also brought props, the coveted great Canadian magazine bag, which has many examples of Canadian magazines, which we'll leave behind, including chickaDEE, one of my very favourites.

We also submitted some comments to the committee early in September, which you have, so we won't take up much time now. Tom has a brief statement covering a few of the main points, and then we'd be pleased to answer any questions.

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Mr. Tom Hopkins (Chair, Public Affairs Committee, Canadian Magazine Publishers Association): Thank you, Mark.

To begin, we want to underline the importance of government partnership to the success of Canada's cultural industries in general and to Canadian magazines in particular. We believe the magazine sector has done exceptionally well in meeting Canada's cultural policy goal of ensuring that Canadian perspectives are available to Canadians right across the country.

Approximately 50% of the magazines Canadians read are Canadian. Most of these magazines carry very high levels of Canadian-authored content, up to 80% or more. Overall, Canadians have access to and choose to read very healthy levels of Canadian content. I dare say Canadian music composers and filmmakers would welcome these kinds of numbers.

Key to the success has been the ongoing support for Canadian content by successive federal governments. Support can come in many forms, but a lot of it comes with a price tag. For that reason, these matters are of particular interest to the Minister of Finance, especially at budget time.

In particular, we want to underline the high return the government receives on its investment in our sector. A good example is the publications assistance program, PAP. We provide more detail in our brief, but let me highlight a few key points.

The PAP facilitates the delivery of over 175 million Canadian magazines annually. The program allows affordably priced magazines to be distributed to individual addresses anywhere in Canada, and 80% of consumer magazine distribution is by subscription sales, which are supported by PAP.

This contrasts remarkably with newsstand distribution, the other major delivery mechanism. Over 90% of the revenues of newsstand magazine sales in Canada go to foreign titles. You can see that when you walk into any newsstand.

Without PAP, it is likely that foreign magazines would dominate Canada's subscription sales as well. And PAP is driven by reader demand, since government contributions are based on delivery of paid magazines, magazines that people want and write cheques for.

In short, PAP has made it possible for Canadian writers, photographers, and illustrators to reach Canadian readers, helping to overcome both the geography of Canada and the competitive advantages foreign magazines have in Canada, caused by their enormous economies of scale. We'd like committee members to note the performance of the PAP in meeting cultural policy.

In other recent developments, both the publications assistance program and the Canada magazine fund were reviewed in 2003. We think the two-year review of the PAP has resulted in a better, more efficient, and better targeted program.

Among the highlights, the new formula rewards efficiencies that will result in better use of the government's investment. Eligibility has broadened to provide access to more Canadian magazines, and the formula is more targeted so that smaller titles receive relatively greater percentages of support. The CMPA supports these changes.

One of the recommendations we made relates to the PAP budget. In addition to the new magazines, the program's budget may be strained in years to come. If this occurs, it's because the program is working and Canadians are buying more Canadian content in magazines.

The recommendation we're making to the government, through this committee, is that the program budget increase as required to meet new growth in magazine circulation.

The Canada magazine fund was also reviewed, and its budget was severely cut back. The reduction impacts magazines differently, with some receiving less and others losing eligibility altogether.

Over the past three years, the CMF has facilitated the hiring of editorial staff and invested in new editorial content and the hiring of freelance writers and photographers. Many of these actions will be reviewed with its loss in funding.

While competition from foreign magazines has not taken the course expected three years ago when the fund was established, it is here and it is increasing, as we've explained in our brief. The CMPA will closely monitor the impact of the CMF reduction and its effect on the development of Canadian content for our readers.

Turning to Canada Post, our main channel to Canadians is through Canada Post. It is our Trans-Canada Highway. Over the past few years, Canada Post has aggressively increased its rates for magazine delivery. The increases are far higher than the cost increases in any other area of our business. In fact, the cumulative postal rate increase over the past six years for a typical 350-gram magazine is in excess of 60%.

The CMPA recognizes the importance of an efficient and profitable Canada Post, but we've made it clear to the corporation that the industry can't possibly sustain increases like those that have taken place in the recent past. This is also an issue for the federal finance minister.

º (1610)

As mailing costs rise, costs to the publications assistance program go up, since they are directly tied to the mailing costs for eligible magazines. Either the PAP budget increases to keep pace, or, if the PAP budget remains fixed, the value of the program declines as publishers cut back on circulation to maintain margins. Either way, the objectives of the program are not served by rapidly increasing postal rates.

We met recently with Canada Post senior executives for the following requests: that postal rate increases should be more modest going forward--at least in line with inflation; that the industry be consulted on rates; and that Canada Post provide a predictable three-year rate horizon so that publishers like myself can plan ahead.

An industry-Canada Post group was formed last year to find cost savings at Canada Post in the delivery of magazines. The group was successful, and that work should and will continue over the coming year.

We have recommended to Canada Post that at least half of any margin increase it implements for publications mail should come from cost efficiencies rather than rate increases. We would welcome an endorsement of these objectives from the committee.

Finally, I'd like to make an appeal for a review of Canada's restriction on direct-to-consumer advertising for prescription drugs. We see this as a budget issue because any restriction on industry's ability to gain revenues directly from the market has implications for support through government programs. This is especially true in cases like this one, where the ban on prescription drug advertising is creating a serious and direct competitive imbalance with foreign magazines in our marketplace.

The Food and Drugs Act currently prohibits the direct-to-consumer advertising of prescription pharmaceuticals in Canada, but it's here anyway. Canadians see, on a regular basis, these types of ads in U.S. magazines. We recognize this is a complex issue, mostly in the health policy field. We want to underscore the financial impact it has on the magazine sector in a directly competitive business environment.

U.S. magazines are aggressively pursuing readership in Canada. These magazines compete directly with Canadian magazines for both our readers and our advertisers. The U.S. magazines come into this country in the tens of millions, with no Canadian content and unregulated pharmaceutical advertising.

Pharmaceutical advertising is one of the largest segments of our revenue in the U.S. Extrapolating from the U.S. experience, we estimate this sector could be worth $40 million to $50 million in incremental revenues to Canadian-content magazines. To put this in perspective, this is approximately half the amount the Canadian magazines pay to Canadian freelance writers and photographers annually.

Many in Canada support the introduction of updated regulations on direct-to-consumer advertising to ensure Canadian consumers obtain relevant and accurate information on health and wellness from Canadian sources. The solution is to develop made-in-Canada advertising standards that meet exacting criteria for objectivity, accuracy, and responsibility. Once put in place, this type of advertising would alleviate financial pressure on many Canadian magazines, which rely on advertising for more than 60% of their Canadian revenue, while providing Canadians with current and relevant information.

In closing, I'd like to thank the committee for taking the time to hear us. The federal budget is an important document for Canadians, and these consultations allow all Canadians to have a voice in its creation. We would appreciate your attention to these issues, issues that matter to Canadian magazine publishers. We would be delighted to take any questions you might have.

The Chair: Thank you.

Now I'll go to a round of questioning. I'll take four people for up to six and a half minutes each.

Go ahead, Mr. Strahl.

Mr. Chuck Strahl (Fraser Valley, Canadian Alliance): Thank you, Madam Chair.

Thank you all for making a presentation. This process is valuable to all of us, as we grapple with and try to understand the issues of the day. So thank you for coming and bringing that testimony.

Folks should know that Mr. Strangway and I are practically best friends. We just about wore out I don't know how many airplanes travelling back and forth with one another across the country.

It's a very good presentation, Mr. Strangway too. I noticed you have a couple of quotes from Paul Martin in your document. I'm not sure why you're quoting him. He's not the minister or anything. But they are interesting quotes and may be useful as you're making your case.

I had a couple of questions about the priorities of the spending. All of us, I think, are going to agree quickly that funding basic research is crucial to both Canada's innovation and our competitiveness in the world. I come from a smaller town. I live in Chilliwack, B.C. We have a university-college, and it's not really a research university, but I'm very pleased with the emphasis that NSERCC has on a couple of fronts—deciding to emphasize regional capacity building and research, and also helping colleges help innovation at the community level. These are two things that, in general, make the public both understand the programs better and also filter some of the billions of dollars that are being spent on necessary research—maybe, hopefully—to smaller universities that would like to build that capacity but right now don't have those means.

I like what NSERCC is suggesting there. Two out of their five points are to increase that emphasis. I'm just wondering, Mr. Strangway, if you have a similar program or a similar emphasis that would bring a grin to the president of my local university-college.

º (1615)

The Chair: Doctor, go ahead.

Dr. David Strangway: I think your local university president has a big grin about CFI, because from the very beginning of CFI, starting in 1997, we were one of the very first agencies that allowed colleges in fact to compete and to cooperate, to apply to us. We have a significant program. We have a separate panel that deals with applications from the colleges. There have been some at your university-college, but there's also been a significant amount at the other university-colleges in British Columbia, in particular Malaspina, Okanagan, Kamloops, and so on.

It's been a very aggressive viewpoint from our perspective, to give them the opportunity, in effect, to build the platforms upon which they can do the competitive research. This has been very important to us. We haven't run them as totally separate competitions, because our sense of all of this was we want really a set of standards that everybody deals with. What's interesting, though, is that the success rate of the colleges, the success rate of the smaller universities, and the success rate of the larger universities in the CFI competitions is almost identical.

Mr. Chuck Strahl: Just as an encouragement, I know I've had a professor or two in my office wondering how to access some research money. They're not familiar with it, possibly, because their university is not giving them the information or it's not available to them. But as a point of reference, the emphasis on the NSERCC proposal is obvious and upfront and transparent. It's not in your presentation, and perhaps it could be, just to encourage the successes, as you say, at the local level.

Dr. David Strangway: When you have the opportunity, I suggest you look at the longer brief we submitted, and also look at our website because our website is exceedingly open and transparent. It's updated at regular intervals and all of the information is there. So I think the colleges and universities and university-colleges have a very good understanding of these programs.

Some colleges don't apply to us because this is not the area they're heading into, but when they do apply, as I say, their success rates are just the same as the success rates whether you're small or whether you're large. That's been very gratifying for us—to see that capacity build up. Frankly, one of the things I personally enjoy immensely is going to visit some of the colleges and finding out the impact it has actually had there.

Mr. Chuck Strahl: It's certainly a good way to get public support for this sort of initiative, because those kinds of colleges, of course, are very close to the community and they have to rely on the community interaction to make these successful.

My other question, because we're short of time, was to the Investment Funds Institute. Maybe it's because we're on a theme of education here, but I wondered if you had anything to add about the registered education savings plans, those sorts of things. This is all about RESPs. I'm going to agree with much of what you proposed there. Is there anything you deal with, as far as education funds, that you would like to emphasize?

Mr. John Mountain: Thank you.

We do administer RESPs through our members, and it's not really within the purview of this committee. The dealings with the administrators of the RESP program have been difficult over the years since the grant provision was brought in. The bureaucrats there tell us how to administer the program without asking for input on the best ways of administering the program, creating significant cost and confusion, because they tell us without understanding what's possible.

º (1620)

Mr. Chuck Strahl: They tell you what? They tell you what to administer?

Mr. John Mountain: How to administer the program. It's an administrative problem, but beyond that we think it's a great program.

Mr. Chuck Strahl: It may be beneficial, if it's of interest to you, to give us some details, or maybe you've provided it in another brief. If there are difficulties, it may not be exactly this committee, but if it's a financial announcement, it will be something we could help with or at least be interested in.

Mr. John Mountain: We have made numerous written submissions on the issue, which I would be happy to provide to you.

Mr. Chuck Strahl: Thank you.

[Translation]

The Chair: Go ahead, Ms. Picard.

Ms. Pauline Picard (Drummond, BQ): Thank you, Madam Chair.

My question is directed to Mr. Giroux.

In your presentation, you recommend, among other things, that the government reform the Canada Student Loans Program, enhance the system of grants and create a new program targeting disabled, aboriginal and low-income students.

What do you see as being the biggest problem with the Canada Student Loans Program? What type of program for low-income students do you envisage? By the way, that is a very laudable objective, in my view.

Dr. Robert J. Giroux: If you don't mind, Madam Chair, I'll ask Mr. Best to field that question. He's far more familiar than I am with the particulars of this issue.

[English]

The Chair: Mr. Best.

[Translation]

Mr. Robert Best (Vice-President, National Affairs Branch, Association of Universities and Colleges of Canada): Thank you.

There are several issues to consider in the case of the Canada Student Loans Program.

First of all, the loan limits haven't changed in nearly 10 years. Clearly, some students are not receiving all the money they need. The whole issue of monthly limits is extremely important. However, if we adjust the limits without also looking at the amount of the subsidies awarded under the program, we run the risk of increasing student debt load. Therefore, it's important to review all program components to ensure that students in need of assistance have access to the funds they need and that in the process, we don't add to their debt load.

In terms of targeted programs, what we do know is that for certain groups, the Canada Student Loans Program is inadequate. Targeted measures are needed to help groups that traditionally are not represented in the student population. We're working on this issue and we hope to have more details for you later.

Ms. Pauline Picard: Thank you.

My next question is for Mr. Mountain. I don't believe you had the opportunity to elaborate on the amendments you're seeking.

You mentioned a proposed amendment to the Income Tax Act. I didn't understand the rest. Why are you asking for this amendment?

You also mentioned securities lending arrangements.

I'd like you to elaborate further on these proposed amendments, since you didn't have time to do that earlier.

[English]

Mr. John Mountain: Absolutely, I would be happy to.

There are three technical amendments that I spoke to at the very end of my remarks. They are quite technical, so bear with me as I try to explain them.

The first is section 115.2 of the Income Tax Act, which was brought in a couple of years ago to allow Canadian organizations both to provide investment management advice and back-office support to offshore assets in a way that would not expose those assets to the risk of Canadian income taxation. This was done to allow Canadian companies to compete with their British, American, and German counterparts, who all have the right to advise foreign assets without those assets being subject to domestic taxation. The rules were brought in to enable this result.

Unfortunately, there are a couple of technical problems in the way they are structured, which need to be solved. We have been writing to the minister and his officials asking for relief on these. There should be no policy objection to solving the problem; it's just a matter of priorities. So we ask this committee to help us in this objective.

The second issue is the foreign investment entity rules, which are designed to prevent Canadians from escaping taxation in Canada through investments in trusts outside of Canada. While we all agree this is a worthwhile objective, these rules, as currently drafted, are incomprehensible. We have been advised by major accounting and legal firms who practice in this area that they will not be able to give clear advice as to what is an FIE and what is not. So we have asked for deferral until these rules are clarified, or repeal of these rules in the hope that we could go back to square one and come up with something clear, simple, and easy to apply, which will allow everybody to know what's onside and what's offside.

The third technical issue is also the subject of your last question, securities lending arrangements. Under section 260 of the Income Tax Act, an owner of a security may lend that security to another person without it being considered to be a disposition for tax purposes, provided certain provisions are complied with in the structuring of that arrangement. When that provision was introduced about 10 years ago, the instruments that qualified were the only instruments that were widely traded—stocks and bonds. Today, however, there are a multitude of instruments that are exchange listed and traded, such as income trusts, which would be the largest example, which are not allowed under these provisions. This causes disequilibrium in the marketplace for income trusts, because the securities lending activity allows the market to smooth the gap between supply and demand without creating huge volatility. The effect of volatility is that it increases the bid-ask spread. The income trust market is subject to this volatility and this increased bid-ask spread, because these instruments cannot be lent.

The other issue is that securities lending is a very good source of revenue for institutional investors who continue to believe in a specific security; it allows them to earn extra money on that security. By denying to institutional investors the ability to lend those instruments, you're denying their investors, who are primarily people saving for retirement, the ability to earn incremental income at very little risk.

º (1625)

The Chair: Mr. Mountain, I would suggest that if you wish to put more detail on this and forward it to the clerk, we'd be happy to circulate it to the members.

º (1630)

Mr. John Mountain: Thank you.

We have extensive documentation on all these issues, which I would be happy to forward to the clerk.

The Chair: I think that would be a good idea, seeing as two people have already asked about that.

Thank you, and now we'll go to Mr. Valeri, followed by Mr. Murphy.

Mr. Tony Valeri (Stoney Creek, Lib.): Thank you, Madam Chair.

Welcome, everyone, to the committee. I have some more general questions, and then I'd like to follow up with more specific questions on the financing side of it. But the CFI, NSERC, and the Association of Universities and Colleges often come here and talk about the need for additional funding to meet, obviously, the demand that far exceeds the amount of money that's there.

In terms of the research and innovation that goes on in the country and the higher learning, do we have the right model? Do we have the right approach? Can any of you speak to weaknesses there might be in the approach we've taken as a country?

I know earlier in the week NSERC had some people up, leaders of tomorrow--and it was our good fortune to have, amongst others, four from McMaster who I had a chance to chat with. In terms of basic research, they talk about the need for greater flexibility in that research money and that sometimes you get locked in.

You apply for your money to do certain things, but as you're in the middle of your research, you find other exciting things that develop from that, and you sometimes find that, with the funding structure we have, you're not able to pursue those. That got me thinking, what are we actually doing with the overall research and innovation funding models?

So I'm interested in hearing whether any of you who are directly involved have any comment to make on potential weaknesses, and obviously where we can improve.

I think everyone around the table buys into the need for more research. We understand that as being the foundation and the building block of an innovative economy, because we often talk about basic applied research and the commercialization of it. But as someone who receives this information, I sometimes try to look at it in component forms and see the linkages and how it flows through. I very often am not able to do that, yet as members of this committee, what we do hear consistently from groups is that we need more resources. So I'd just like to understand the broader picture.

The Chair: We'll start off with the foundation and then go to the colleges and universities and NSERC, the three.

Dr. David Strangway: I'll make my comments in two parts. First, having been president of a university for many years in the 1990s, and realizing, as Dr. Giroux said, that these issues were not in fact being adequately dealt with at the time, I'd have to say that what has happened and all of the things that have happened together have had an incredible impact. It's a whole new world for people in universities and research today, compared to what it would have been before 1997-98. That's the fundamental good news of it.

I joke occasionally and say it would almost be fun to be a university president again, because now you have the opportunity to hire, to recruit, to bring in these really talented people.

Are there some issues? Of course there are, but I don't think a world in which you have one-stop shopping, which is what some people would like to have, is very effective, because then you will find researchers in a situation where if they lose out in one year because they're not competitive or don't put in a good enough proposal, they're out of the business for a while and it's hard to get back in again.

So I think multiple-stop shopping is one of the remarkable things about what has been happening, but there are some holes. I would say there are two, from my perspective.

One of the holes that is quite serious--NSERC referred to it, and I think AUCC would probably refer to it--is that particularly for larger equipment and facilities, it is very difficult to deal with the ongoing operating costs. We are able to provide some start-up help with respect to operating costs, but if you're putting in a fairly large facility in Saskatoon, to pick a random example, there are issues that arise as to how you can sustain that in the longer run. So I'd say that's one of the holes, if you will.

The second issue is very interesting to me as well. The renewal of researchers in this country, which started about two or three years ago and is under way now with the massive retirement and turnovers, is absolutely incredible. If those new young people who are coming in with a very good start to their research careers do not see the operating grants of the various granting councils rise to a level where they can continue to be globally competitive, we could find that two, three, or four years from now this immense momentum that has been created could be lost because these young people would have opportunities to go other places.

For me, those would be the big holes that have to be thought about.

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The Chair: Next, the Association of Universities and Colleges, Dr. Giroux.

Dr. Robert J. Giroux: I certainly support what Dr. Strangway has said.

I would like to add two other points. One of them is that we have certainly observed in the past seven, eight, ten years or more that the research function at universities has become more and more complex. The complexity is not only in terms of the various programs that universities and researchers can apply to, but it has also been increased by the whole question of research ethics, ethics boards, and what will happen if you do research involving, for example, humans, research with animals, and so on. These are all areas that have added to the complexity.

That's why we applauded so strongly the payment of the indirect costs of research, because it was a gap in terms of the resources available to universities in order to meet those particular needs. The indirect cost will also support, for example, providing more resources to universities in the area of commercialization, to be able to identify and proceed with some of the results of the research that are commercializable, and many of them are not.

The other area I would like to talk about--which was raised by Tom Brzustowski, and we've also raised it many times--is that across Canada we have institutions in many different parts of the country, many different regions, and they are very strong supporters of their local economy. They are strong supporters of the innovation that takes place there. They are in need of a boost in terms of the research capacity, in terms of their being able to establish a sustained research effort and have the necessary people, the necessary human resources, the necessary infrastructure in place.

That's why we're very pleased with the initiative that NSERC is undertaking on that front, and we have also come to this committee quite a few times in the past supporting that particular area, which is to allow the country as a whole to benefit very strongly from the research effort.

The Chair: Thank you.

Dr. Brzustowski.

Mr. Tony Valeri: Just before we go on, maybe you can respond to this as well, Doctor. Would you support national laboratories being deployed out into the regions? I know this might be a hot topic. I'm interested in a reaction to that, because there are often synergies in other parts of the economy. If we believe there are regional benefits that institutions, regions, and research play, then what about the national laboratories? Instead of refurbishing them here in Ottawa, are there opportunities to leverage existing private sector and academic excellence in various parts of the country and then merge those labs and have adjunct professorships and that sort of thing?

The Chair: I'm going to go to Dr. Brzustowski to answer that.

Dr. Thomas Brzustowski: I also have two points I want to make, but on that last one, we see evidence that, for example, an NRC lab close to the university campus brings wonderful benefits locally through exactly the mechanisms you described.

For example, the Plant Biotechnology Institute in Saskatoon has created a great deal of activity and some world-leading plant biotech start-ups. The new laboratory--for which I understand the ground was broken just last weekend--for nanotechnology on the campus of the University of Alberta will do the same thing, and ditto the potato research lab of Agriculture and Agri-Food Canada on the campus of the University of New Brunswick. There are countless examples.

So it's very clear that new labs are being set up in proximity to universities, having all the positive impacts you've identified. As to whether existing labs should be relocated, I would have to leave that to people like the NRC, for example, to talk about, but there's no question that the symbiosis of government scientists acting as adjuncts, alongside university professors, teachers, and a concentration of expertise is a great Canadian model and it works.

How many people outside of the rest of the world--that means in Canada--know that St. John's, Newfoundland, is a world centre of expertise in marine dynamics?

So your model is good. I think it's happening. Whether it should happen retroactively in some sense, I can't say.

º (1640)

The Chair: Would you like to quickly make your other two points?

Dr. Thomas Brzustowski: I want to underline a point that Dr. Strangway made. This was handed out; we prepared this because the data came only after we'd submitted our submission to you.

This we consider a major indicator of the government's success in the initiatives taken after 1997. It's the very quick drawing number of first-time applicants for our credentialing, for our main grant for basic research. The challenge, of course, is to find the money to fund them because they're growing much more quickly than we thought. All of that is against an almost static total number of professors.

People who are retiring now were hired by Canadian universities in the 1960s, early 1970s. They may have stopped doing research. They may have been in smaller universities that never did research. All of their replacements want to do research and they're now qualified. This is a huge success, but there's a price to pay for that success. You have to pay for the activity.

The point I want to make has to do with innovation. Commercialization--and the word “commerce” is the root of that--is the business of the private sector, largely. Do we have gaps? I'd say we have time lags. We are doing the right thing at the front end. We are educating highly qualified people in an environment where new ideas and new knowledge comes to them.

The private sector in this country will have to do a great deal more, and we all know that the target for 2010 in the innovation strategy has the public sector doubling its research activity and the private sector tripling its R and D activity, the “D” being the development of products. This is a real challenge.

Universities are helping with the creation of start-up companies to build a receptor capacity. We're here not because we're not clever enough to know that it's important; our economic history got us here.

I would like to think we could give, as government, some incentive to people not just to do R and D.... We have excellent R and D tax credits. They're widely applauded. What we don't have is something that gives business the incentive to create wealth and to make profit out of new products at the shipping dock end of things. I'd like to think that rather than identifying large gaps beyond the ones that have been identified, we have more a question of time lags.

The Chair: Thank you.

Mr. Murphy, for the final questions.

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

I have perhaps some macroeconomic questions to ask Mr. Giroux on the funding of universities. I've been on this committee three years now. It used to be that the proposals came and they were framed in millions of dollars. Now everything you hear is in billions of dollars. You have to ask the question, whatever happened to the million-dollar bill?

Again, this is a general question, and perhaps some of the other presenters may jump in to answer too. We have a situation here in Canada where I don't think the economy is quite as buoyant as it was thought originally or six or eight months out. We have the SARS virus, the mad cow situation, and the Canadian dollar. A lot of the private sector forecasters have revised their GDP forecasts downward.

Minister Manley is appearing before this committee three weeks from Monday, on November 3, but I don't think things are going to be quite as rosy as we might have thought a year ago.

At the same time, we have a lot of requests out there. We know that health care is the number one priority of all Canadians. The government responded last fall. The position from the provincial premiers, from the provincial health ministers, was that it's not enough. We've had the municipalities in before us. There's a deal that they seem to think has been struck, or it's out there, for $2.5 billion. These are all billions of dollars we're talking about now. The child care advocates are requesting a fairly major and significant influx of federal money.

I woke up this morning and read the Globe and Mail. Ten premiers met yesterday, and their big request is that equalization has to be restructured. There has to be a major influx of $3 billion of federal money.

Of course, the universities again are a very important part of our economy. You don't have to convince me of the importance of universities, of the pressures you're under, of the increased students you need and how important universities and community colleges are to the economy of our regions.

Again, looking at it from a macro level, where do you see the money coming from?

All of those five areas I talked about have one commonality: they're all provincial jurisdictions. So I guess looking at it as a member of the finance committee that writes a report to government, going forward, you have to act responsibly. I don't think we can burden future generations of this country.

Where do you see the money coming from for these requests? Do you want to prioritize it?

º (1645)

The Chair: Dr. Giroux.

Dr. Robert J. Giroux: Thank you, Mr. Murphy. I'd like to point out that we still like millions. Even so, we will continue to accept that.

I'd like to answer this question from two perspectives. Yes, there's no doubt that we're all expecting Mr. Manley to come in with some strongly revised downward growth forecasts for this fiscal year. However, I'm reading articles more and more that say our economy is strong, our economy is rebounding. I think if we don't have the unfortunate circumstances that were quite plentiful this year happening over the next few years—SARS, mad cow disease, the Canadian dollar versus the American dollar, and others—our economy will continue to grow.

And in Mr. Manley's forecast, although he's only done it for two to three years in a row, there were some strong surplus dollars put in there that I think the government will have to make some tough choices on.

The second part of my question, though, is the following. There are tremendous pressures in this country from health, from the environment, from the municipalities, as you rightly point out. In order to pay for these, you have to create wealth. It's wealth creation that is at issue here. And I don't think you'll find any country in the world, particularly those that are now progressing so well, whether it's Sweden, Finland, or Iceland, where the economies are growing, Ireland, the United States and so forth.... They all agree that education is not an expenditure; it's an investment. The investment in education creates that wealth. It creates the knowledgeable workers, it creates the innovators, it creates the entrepreneur. And these three types of people contribute to the wealth creation of this country.

We have statistics that show, for example, that the proportion of university graduates in the population is about 15% at the moment. We're talking about statistics dating from 2001. They are contributing about 35% of the income tax in this country. This 15% accounts for 35%. And they are the recipients of government transfers, health costs and others, to the extent of 8%. So they're twice their proportion in terms of being the recipient of government transfers, but they are contributing 35% to the economy. We think that's a telling case. It shows that the government will need to sit down with the provinces and develop programs that will meet the needs we've been putting forward. That's why we've approached this from a longer-term perspective.

The Chair: Thank you.

Dr. Brzustowski, I'm going to give you two sentences or so, because unfortunately we're going to have votes and I have another panel to do.

Dr. Thomas Brzustowski: Thank you for that.

It's all about wealth creation. There's the answer. The innovation strategy, if it succeeds, will create a mindset in the Canadian private sector that will have people looking for opportunities to add value across all sectors of our economy, and therefore, since wealth is created where value is added, provide the money to invest in all of these things.

The Chair: Thank you very much.

On behalf of the colleagues here today and all the members of the committee, we thank you for your input, for all of your contributions. Your specific reports are very valued by this committee.

I will suspend the meeting and let you clear the area.

º (1649)

º (1651)

The Chair: We will continue with our second panel on pre-budget consultations.

We have with us, from the Green Budget Coalition, Julie Gelfand. She is the chair and she will be presenting first.

From the Canadian Consortium for Research, we have Paul Ledwell, chairperson, and Paul Jones, accompanying him as a member. Welcome to you both.

From the Canadian Association for Graduate Studies, we have Martha Crago, president, and Jean-Pierre Gaboury, executive director.Bienvenue, Monsieur.

From the Canadian National Institute for the Blind, Cathy Moore is the director of consumer and government relations and Fran Cutler is the national chair. Welcome to both of you also.

And from the Canadian Association of Broadcasters, we have Mr. Glenn O'Farrell, who is the president and chief executive officer.

As I've advised you, there will be bells starting to ring at 5:45 p.m. The vote is not until 6 p.m. We will go until the vote. I will remain until all the questions are done.

With that in mind, you have up to seven minutes. We all have your briefs, so you can speak to your briefs, if necessary.

Go ahead, from the Green Budget Coalition.

Mrs. Julie Gelfand (Chair, Green Budget Coalition): Thank you very much. Thank you for the invitation. On behalf of 17 of Canada's national environmental and conservation organizations, the Green Budget Coalition is pleased to be here.

We were founded in 1999 and have been presenting to this committee since that time. We're actually quite thrilled with last year's budget where the government put almost $3 billion of investment into the environment. We think that's a great first step, but it isn't done yet.

We believe, and we've believed this for years, that the budget is actually the single most important environmental policy statement that's made by a government on an annual basis. The budget provides us with a real opportunity to introduce lasting solutions to problems that have been bothering Canadians for a long time.

You may be aware that a few days ago the Conference Board of Canada released details of its latest assessment report on our country. While we scored fairly well on the economic front and moderately well in the areas of innovation and education, our performance on a range of health and social measures came up quite short compared to many other countries. But our environmental performance according to the Conference Board of Canada is actually abysmal. This gave me great concern.

The Conference Board survey is actually a benchmark exercise that goes well beyond the United Nations' better known human development index for which Canada always scores near or at the top. It disturbed me that a nation as advanced and sophisticated and as successful as ours could come up so short in relation to the environment. From my perspective, and from our perspective, it's truly disappointing.

Upon further reflection, it struck me that I'm just over 40 years old, and in all the years I've been cognizant, maybe since I was 12, I've known nothing but crisis and decline when it comes to the health of the Canadian environment. I'd ask you to ask yourself the same question. Ever since you've been around and cognizant, which way has the environment been going? Is it getting better, or is it getting worse? I think overall it's been getting worse.

We know that the old ways of doing things are simply not sustainable. We now recognize that there are certain counterproductive policies underlying many of Canada's environmental problems. For instance, our tax structure needs to be aligned so that pollution is actually discouraged, not condoned. Polluters should be held accountable for the burden that their activities place on all of us, on our health and the health of our children.

By the same token, those who take active steps towards a sustainable economy should actually be rewarded for their investment. We don't do this. We subsidize fossil fuel. We subsidize nuclear. We do not subsidize wind very much. We do not subsidize the more renewable forms of energy production.

One measure I want to talk about that is increasingly being used by governments around the world is called ecological fiscal reform. It's the use of financial incentives and disincentives to create an environmentally sustainable economy. Ecological fiscal reform makes it non-cost-effective to operate in an environmentally unsustainable manner. It creates conditions whereby it is more financially attractive to implement environmental measures, and often this is all it takes to tip the balance toward sustainable development.

These financial incentives and disincentives are particularly effective in a market-based economy such as Canada. We know that producers and consumers have consistently shown an inclination to react to economic stimuli. Let me try to give you an example of a practical application of ecological fiscal reform. We could start reducing employer payroll taxes and at the same time increase the tax on Canada's natural capital.

What am I talking about when I say natural capital? I'm talking about the raw material that our economy depends on—the land, the air, the water. When an aluminum producer produces aluminum, they don't factor in the cost of the water they're using. They don't factor in what goes out the stack in terms of the air pollution that's going out the door.

Basically our natural capital in this country is finite. God is not creating any more of it. What we have on the planet is all we have. We have to use it properly. What's really puzzling from our perspective is why we give it away so cheaply. We should be encouraging the wise use of our natural capital through taxation, and that's where your committee can help us. This taxation should reflect the true price of the assets that are really precious to us—clean air, clean water. These things have to be priced, have to be internalized into the business model, so that people actually think about how much it's actually costing us as a community.

º (1655)

We're not proposing a tax grab whatsoever. The idea is that as we gradually increase the taxes on our natural resources, we gradually reduce the tax on payroll taxes by exactly the same amount. In other words, it will be revenue neutral. Employers and industry would not feel the pinch because the extra they're paying for nature--for air and water--they are in turn saving on their labour costs. Where the labour costs go down, what happens? We get more employment.

This type of ecological fiscal reform measure has been introduced in many countries, including the United Kingdom, Germany, Italy, the Netherlands, Sweden, Denmark, Finland, and Norway. Many of these countries finished up there with Canada, or even higher, on the Conference Board of Canada's assessment of top economic performers. All of these countries finished higher than Canada on the Conference Board's assessment of environmental performance. It's clear that environmental progress need not come at the expense of economic gains. In fact, it's becoming more and more apparent that the opposite is the case.

Several of the countries that scored ahead of Canada have introduced additional ecological fiscal reform measures, and some of these are in our recommendations to you and to the Department of Finance. These include user fees on toxic chemicals, removing the GST exemption on pesticides, tax incentives for hybrid vehicles such as the Toyota Prius or the Honda Insight. Many of us would probably buy one of those hybrid vehicles, but with the gap being $10,000 between a Corolla and a Prius, you're not going to go there. If the government provided some tax credits, more people would move on it.

Canada is home to 10% of what remains of the world's forests and a quarter of the earth's boreal forests, 20% of the world's fresh water, and over a quarter of the world's wilderness. We need to take care of this asset. It could be what makes us economically distinctive around the world. We could become the nature nation, but we need the fiscal and economic policies around that to ensure that we're not using up this natural capital and that we're moving towards taxing the bad stuff and not taxing the good stuff.

Thank you very much.

» (1700)

The Chair: Thank you for your presentation.

Canadian Consortium for Research, please go ahead, sir.

[Translation]

Mr. Paul Ledwell (Chairperson, Canadian Consortium for Research): Thank you, Madam Chair, members of the committee, for inviting us here today.

[English]

The Canadian Consortium for Research is pleased to be here. It is an organization that was established in 1976 to help advance understanding of the importance of research and education for a healthy society and economy. Today, we represent over 450,000 members, researchers, practitioners, and students in 18 national organizations across the full spectrum of the sciences.

Today, we're here to underline three main points. First, the Government of Canada must continue to increase research activity in all sectors so that we meet the needs of Canadians and keep pace with our international competitors.

Second, the Government of Canada should pay particular attention to the social sciences and humanities, where there is presently an opportunity to advance Canada's existing leadership in these fields—and also in order to effectively invest in this chronically underfunded sector of research.

Third, the Government of Canada should move quickly to address the question of core support for all Canadian universities by developing a pan-Canadian mechanism that ensures adequate, accountable, and transparent funding support.

As we just heard prior to these presentations, the Government of Canada, prompted by reports from this committee, has made tremendous investments in research and education in the past eight years. The Canada Foundation for Innovation, the development of the Canadian Institutes of Health Research, increases in funding for the Social Sciences and Humanities Research Council and the Natural Sciences and Engineering Research Council, the Canada research chairs, the introduction of a program of indirect costs of research, and, most recently, the Canada graduate scholarships have all been much needed initiatives and greatly valued contributions to the research enterprise in Canada. These efforts have had an important and positive impact on the research community and universities.

But as Canada has invested, so has the rest of the world. Through the 1990s, the U.S., Japan, and European nations all maintained strong growth in their funding of the direct and indirect costs of research. If Canada is to meet its stated goal of moving from fourteenth to fifth in research and development, these above-stated initiatives will have to be maintained—and in fact stepped up.

As you know, demographic pressures are confronting all parts of Canadian society, but the distress is becoming great in our institutions of higher learning. Current projections are that Canadian universities will need to replace or hire 30,000 new faculty members by 2011, and over the same period enrollments are expected to climb by up to 200,000 students. Such increases will be seen even more acutely in graduate studies, as the need for renewal in universities is matched by that in other sectors—public, private, and not-for-profit—where highly qualified personnel are required.

These demographic changes translate into increased pressure on all aspects of the higher education system. Undergraduate students demand and deserve the same quality education as their predecessors. Graduate students need well-equipped facilities and adequate faculty supervision to ensure they are prepared to meet the challenges of advanced careers in research, government, or in the private sector. Faculty require ample access to research funding and access to the best facilities possible for their teaching and research.

Universities generally continue to struggle to seek the means to support all of these needs and to sustain the institution so that it can fully meet all aspects of its mission—teaching, research, and community development.

These things are particularly crucial as Canada seeks to keep its best and brightest, to attract top international researchers for positions here in this country, and as our institutions and researchers generally seek to strengthen their international collaborations.

The significant recent progress made by the Government of Canada in support of research and innovation is to be applauded, and it has sustained universities at a time when the core support has been drastically reduced. This progress, though, needs to be increased as we seek to maintain and build our innovation capacity and competitiveness. In particular, and as we heard before, support for the principal federal research funding agencies is paramount in building research capacity in Canada. Such support must be mapped out to ensure strong long-term development.

In our brief we have been clear in making recommendations as to what we think those targets should be. First, as a priority, the government should provide active support for the proposed transformation of the Social Sciences and Humanities Research Council, with a view to increasing investments supporting social, human, and cultural research, to a level of $400 million by 2007-08. This support will particularly get to all institutions in all regions of the country. As questions were raised earlier, I can tell you that if you're interested in supporting research across this country and all kinds of institutions, support for the Social Sciences and Humanities Research Council will make that happen.

Second, we propose that the budget for the Canadian Institutes of Health Research be set at $1 billion by 2007-08.

Third, the budget for the Natural Sciences and Engineering Research Council should be $915 million by 2007-08.

» (1705)

In addition to longer-term funding projections, greater flexibility in planning for the expenditure of these funds will ensure that these agencies can respond to multi-sectoral and longer-range projects that will provide us with the research results and understanding we need from our science. Consequently, the consortium has recommended that these agencies be permitted to carry over a minimum of 5% and a maximum of 10% of annual funding from one fiscal year to the next.

While increased planned support for research through the federal funding agencies is essential, adequate reinvestment in government science, and particularly at the National Research Council, is also crucial.

We acknowledge that all of this research support from the Government of Canada must come with an acceptance of a greater degree of accountability for all who receive support, including universities. And we do support the development of a reporting framework that ensures the outcomes and impact of these investments are well understood by all Canadians.

Investments in research and innovation are essential, but Canada also needs a solid foundation from which to develop this research, namely, our universities. Two-thirds of all scientific papers published in Canada come from our universities, and fully one-third of all research and development in this country comes from these post-secondary institutions, a level far exceeding that in other industrialized nations.

At present, this research foundation is seriously eroded. Over the past decade, government operating grants to universities declined by 23% and as a share of university income have fallen from 78.5% to just less than 60%. The Canadian Association of University Teachers has estimated that the federal cash contribution available for post-secondary education is 50% lower in 2002 than it was a decade earlier and represents the lowest level of cash investment by Ottawa in more than 30 years. Of course, the provinces share responsibility for the overall decreases in core university operating support. Only two provinces, Manitoba and Saskatchewan, have increased their funding support, and the biggest declines have in fact come from two of Canada's richest provinces, Ontario and Alberta.

A lack of adequate public support for our universities means that the quality of education for our students will suffer at all levels and across the entire country. The knock-on effects of a decade of declining funding are significant, and include: crumbling buildings and outdated labs; larger classes, increasingly being taught by part-time sessional instructors; and libraries that are falling behind in their resources.

It is imperative that both levels of government work in accord with each other to ensure that our national system of post-secondary education remains competitive and provides for quality education for all students. Without this, investments in research will be undermined. This research, support for advanced and foundational research, both in universities and in government, and a recommitment to the core support of the institutions that carry out this research will ensure that we have a strong economy, a strong society, and a strong nation.

Thank you.

The Chair: Thank you.

Now we'll go to the Canadian Association for Graduate Studies.

Ms. Crago, go ahead.

Dr. Martha Crago (President, Canadian Association for Graduate Studies): Thank you, Madam Chair. We're delighted to be invited to present our ideas to you here today.

We are an organization that represents the 46 Canadian universities that have graduate programs and the 100,000 graduate students who study in those programs.

I think as an association we share very deeply Canada's national priority to position itself as a leader in the technological and social innovation of the world and to become a global force for economic, scientific, social, political, and cultural prominence.

Achieving this for this country and for its universities means we have to have well-supported research and top-quality graduate education. Therefore, we believe graduate education is a national priority and investment in it is an investment in the future of Canada.

For this reason, CAGS is extremely appreciative of what the Canadian government has done to invest in research and research students in the recent past. We are committed to working with this government to increase the number of people with graduate degrees, which will increase the highly qualified personnel, which will increase the technological and social innovation of the country. We are committed to working on shortening times to completion so the development of this personnel will be faster; improving graduation rates in our universities; and providing students with cutting-edge, innovative educational programs at the graduate and research level.

Our goal is to join the government in the promotion of top-quality graduate education, and we believe that kind of education has five key elements. I'm going to speak to each of them in turn.

First, there has to be ample funding. If we're going to increase students, we're going to have to increase that funding. So we recommend that funding to the federal agencies be increased substantially so they can fund an increased number of graduate students.

There is a number of kinds of funding to graduate students that come from the federal agencies. One is individual fellowships of the variety of the Canadian graduate scholarships. These are awarded to students by the federal agencies, and we are extremely appreciative of the government's investment in the Canadian graduate scholarships.

But a second kind of very important funding that comes to Canadian graduate students is what are called stipends, which are paid from research grants. This is a form of funding--and I'm going to come back to this issue in a minute--that is available to both national and international students.

You know that the Canadian graduate scholarships right now are available only to national students. But stipends are a very important form of payment to students because they imply that they are working in team research, and team involvement has been shown in recent studies in the United States to be a very key factor in the good graduation rates and short times to completion of graduate studies, which is very important in the Canadian scenario at this time. It means the students are involved in a team. It can also mean they can be paid a form of grant called a training grant, where students are grouped together across universities and across disciplines.

So despite the wonderful Canada graduate scholarships that we love and adore, we do believe there is an increased need of funding. It will go to the councils, it will form other individual scholarships, and it will form stipends and training grants paid to students. If we're going to increase the number of graduate students in this country, we have to increase their funding.

We also recommend that there be asymmetrical funding to the Social Sciences and Humanities Research Council and that the government mandate and pay for its transformation. We say this because the students in humanities and social science disciplines are those who have the lowest graduation rates and times to completion at this time. It's imperative that this change, and to help that change happen there has to be an increased investment. They are the worst funded of the students in our universities at this time; therefore, it's little surprise that they have the lowest graduation rates and the longest times to completion. Better funding to them will be a major factor in improving these graduation rates and times to completion.

Furthermore, because of the importance of social integration and being involved in team research, there is a need for transformation of social science research funding and doing. This is the kind of transformation that could position graduate students in the social sciences and humanities in more of a group context in creating linkages across our universities from one end of the country to the other in the form of training grants.

So we recommend those two things.

» (1710)

We also want to underline for this committee an incredible, extraordinary window of opportunity that exists for Canadian universities at this time.

There are some very dramatic statistics being produced by Canadian universities in comparison to American universities. Some of our Canadian universities are experiencing as much as twice as many applications from international students since 2001. My own university, McGill University, is getting over two and a half times the number of applicants from other countries.

In comparison, at a recent meeting I was at of graduate deans from the top 60 research universities in North America, I heard that many prominent American universities are experiencing severe declines in applications from international students.

Funding international students in our universities--and you'll remember they have to pay higher fees than anybody else--will increase the highly qualified personnel we will have available, will increase the social diversity of our universities, which is an important component, and will put Canada in a position of leadership as a destination of choice for international graduate students.

It seems very well worth this country's time and money to invest in these students at this particular point in history, so we recommend you do so by improving the ways in which international graduate students can seek employment--they and their spouses--in Canada, and that you do so by increasing the number of Canada graduate scholarships, earmarking the increase for bringing in the best and brightest international students.

Many international graduate students choose to stay in Canada after they study here. Others go back and provide us with very essential research links to their countries in the future.

Next, we want to underline the key element of the importance of ample operating-cost money. The nature of the kind of project that a graduate student can do with their supervisor is very highly linked to the amount of money there is available to do research. Canadian researchers receive less operating-cost money than many other researchers in other countries in the world. Those limits limit also the kind, type, and amount of research the graduate students can do. So to make ample training opportunities to push our innovation agendas, we need better operating costs for research.

Finally, we need well-equipped--

» (1715)

The Vice-Chair (Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.)): Can I just caution you that we have votes in about half an hour? I want to leave ample time, and you're already over your time. I hate to interrupt you, but I notice from your presentation you still have another three or four points.

Dr. Martha Crago: Yes, but these ones are fast.

The Vice-Chair (Mr. Nick Discepola): All right.

Dr. Martha Crago: The next one is well-equipped research laboratories.

Thank you for the CFI, but we do encourage you to include graduate student funding in the calculation of the base amounts for the indirect costs. Universities educating a large number of graduate students need the kinds of facilities that will encompass them and the indirect costs for that.

We also applaud you for the CRCs. They're giving us many more supervisors to supervise the increased number of graduate students.

Finally, we think the interaction between scholars and scientists with their peer scholars and scientists is very important. To build upon the CFI facilities and the CRC mentors, it will be very important to have a graduate student mobility initiative in this country that would allow students to move from university to university for periods of time to share in facilities at other universities and to share in the quality of mentorship that exists in other universities.

That's the end of the story, and we thank you very much for hearing us out.

The Chair: Thank you very much.

Now we go to the Canadian National Institute for the Blind, Cathy Moore.

Please go ahead.

Ms. Cathy Moore (Director of Consumer and Government Relations, Canadian National Institute for the Blind): Thank you, Madam Chair and honourable members.

Thank you for the opportunity of presenting this brief today. You are very patient with the many requests for money that you've heard today and on other days.

I would like to begin by saying that we are suggesting in our brief and the six recommendations we are bringing forward that if appropriate supports are in place for people who are blind, visually impaired, or deaf-blind in Canada, the result will be people who are independent, who can take full citizenship, who can take their place in Canadian society, and who will ultimately be taxpayers. So this is the end deliverable that we are talking about. The recommendations are supports to help make that possible.

Our first recommendation falls under what we like to call the right to read. In Canada, CNIB is the main producer of content in Braille or audio books. Braille and audio books or e-text are the only things a person who is perceptually disabled is able to use to access print.

Despite 85 years, marvellous volunteers, and our best efforts, we have located in the AMICUS catalogue of the Library and Archives of Canada...so we know for a fact that of material available to the sighted public, only 5% is available to people requiring Braille, audio books, or e-text. What does that mean? In front of me I have the yellow pages and the white pages of the Ottawa telephone book. That means the sighted public gets to read every one of these numbers. Canadians who are perceptually disabled get to read one. It's not an equitable situation.

Secondly, we would encourage the federal government to begin to help us increase the availability, the content, of alternative format in Canada. We would like the federal government to lead the development of a made-in-Canada network involving public libraries, educational libraries, that would allow us to distribute this increased content to Canadians who are perceptually disabled. We would like the federal government to lead this initiative through the Council on Access to Information for Print-Disabled Canadians, which is now located within the Library and Archives of Canada, and doing a fine job, and is able to also take on this additional initiative.

We would like to also say that the Canadian Library Association and the Learning Disabilities Association of Canada support this. The Movement for Canadian Literacy, which is a coalition of Canadian literacy coalitions, supports this initiative and the federal government's leadership within that.

On the third recommendation, I would like to ask all of you if you could just tell me quickly with regard to the software used for the computers in your office whether the programming language used to develop it is JAVA, C++, or Visual Basic? Can anybody answer that question? Well, if you can't answer that question, then I can't tell you for sure that a blind person could work in your office and use a screen reader.

My point is nobody needs to know this information except some specialized employment service deliverers, either through the CNIB or through the community, who are able to work on the accommodations required in order to allow blind people to go to work. It's specialized knowledge, but it's essential. If you have it, people go to work. If you don't have that knowledge available to employers, people don't go to work.

We would like to applaud the Canadian government in their continued funding of the Opportunities Fund through HRDC. The Opportunities Fund is an excellent, sensitive, responsive program to the needs of people with disabilities who are trying to return or enter the labour market.

We would like to encourage the continued support of that program and increased resources toward it, and that one of the increases would go towards the specialized accommodation and marketing services required to get people who are blind, visually impaired, or deaf-blind off the income support system and into the taxpaying attachment to the labour market.

Under the right to vision care, we would like to again ask the Canadian government to take leadership in directing the use of some health care dollars toward vision care services. These vision care services would include things like assistive devices programs. The assistive devices programs are something my esteemed colleague, Fran Cutler, will speak to.

» (1720)

Ms. Fran Cutler (National Chair, Canadian National Institute for the Blind): Thank you.

Quite simply, technology liberates blind and vision-impaired people. There are low-tech and high-tech assistive devices: a powerful magnifier that one can wear around one's neck or use in one's hand; different glasses with telescopic aids or with very high-powered reading lenses; a monocular, a one-legged binocular, that allows me to read this fitting title on one of the murals above to do with the spirit of the printed word. It is fitting that we should be here in the Reading Room.

People with any degree of vision loss can be independent in the workplace and in their home environment through technology, but, alas, technology can cost amounts varying from $5 to $5,000. There is help in only four provinces in purchasing these devices. Here in Ontario, two-thirds of the cost of many devices is covered through the assistive devices program. The provinces of Quebec, Saskatchewan, and Alberta also have programs that are not quite as comprehensive. If you go to B.C., Atlantic Canada, or Manitoba, there is nothing to help you in being liberated through technological equipment, which gets better and better with every year. There need to be national standards for these devices. Otherwise there will be hundreds of thousands of Canadians, both in the labour force and in the retirement community, whose quality of life will be diminished, and their ability to be independent will gradually fade away.

Ms. Cathy Moore: Thank you, Fran.

Madam Chair, if I run out of time, you'll have to tell me, because I won't see you no matter how dramatic your hand gestures may be.

The Chair: You have 30 seconds.

Ms. Cathy Moore: Thank you.

The cost of doing nothing is premature institutionalization of seniors, depression, and lifetime dependence on an income support system. The cost of doing something is, as I said at the beginning, independence, full citizenship, and taxpayers.

The Chair: Thank you very much.

From the Canadian Association of Broadcasters, Glenn O'Farrell.

Please go ahead, sir.

[Translation]

Mr. Glenn O'Farrell (President and Chief Executive Officer, Canadian Association of Broadcasters): Good evening, Madam Chair, members of the committee. Thank you for the opportunity to present our views to you.

My name is Glenn O'Farrell and I'm the President and Chief Executive Officer of the Canadian Association of Broadcasters.

We represent the vast majority of private radio and television stations.

[English]

I'm here this afternoon to speak to you about the subject of television programming. We know you have already heard from many Canadians on this issue, and you will hear from more.

Let me get directly to the point. Viewer numbers show that Canada's private broadcasters provide the windows through which most Canadians get to see, hear, and enjoy the best of Canadian culture. We have the will to produce it; we have the creative talent to do it. What we don't have is a plan, a national television programming plan or a strategy that harmonizes CRTC Canadian programming requirements, as established by their licence decisions, with fiscal policy providing support mechanisms.

Let me explain. Canadian private television broadcasters are licensed to provide programming services in accordance with the licences they hold. The individual programming requirements placed on each private broadcaster are developed to comply with CRTC policy and regulation, which in turn are designed to provide Canadian audiences with diverse programming choices.

By many accounts we have the best broadcasting system in the world. The private sector, through commercial revenue sources ranging from advertising to subscription fees paid by consumers to receive the services, support their businesses through those streams.

As you would expect, the single largest expenditure category is programming. The realities of our regulated industry demonstrate that given our market size and the cost of producing programming, the commercial marketplace is capable of sustaining certain genres of programming—for example, news and sports, among others—and is incapable of sustaining other programming categories such as drama.

If you go back to the original bargain between the regulator and the private sector that sought licences from the regulator, the regulatory contract between private broadcasters and the CRTC was rooted in a very complex paradigm, a public policy objective. Yet its commercial underpinnings were fairly straightforward: Canadian programming to be provided by private broadcasters would be financed by its commercial revenue or by a cross-subsidy flowing from the revenue derived from the U.S programming that the private broadcasters showed on their channel.

However, as the broadcasting system evolved, adding more and more Canadian and non-Canadian channel choice for consumers to enjoy, audiences fragmented very significantly, and the original, commercial, rather straightforward underpinnings of the regulatory contract became severely strained.

As we appear before you this afternoon, we take pride in the fact that government, in partnership with private broadcasters and distributors, has developed a sophisticated, enviable broadcasting system. However, along the way we have neglected to develop a plan to harmonize government's so-called cultural policy of creating more Canadian programming options for consumers with a support mechanism through fiscal policy for the programming that cannot be sustained currently by market conditions.

Why is that? Well the CRTC, responding to the Canadian public's desire for more choice and variety, has issued licences to an ever-increasing number of television services, each with a mandate to deliver Canadian programming content. That's the demand side of the equation. The demand has shot up because so many new licences have been added to the system as consumers have demanded more and more.

For instance, conventional television over the air has grown in recent years, and the number of pay and specialty services has shot up exponentially. If you go back to 1996, the year the Canadian Television Fund was created, the number of English and French language services licensed by the CRTC since that date has tripled, growing from 38 in 1996 to 118. Each of these 118 services has conditions of licence requiring varying degrees of Canadian content, which range from 50% to over 80% of their program schedules. The effect of this regulatory policy is good; it's to offer Canadian choices to viewers.

What we need today, in 2003, in light of this exponential growth of Canadian services and Canadian programming offerings, is to focus and develop fiscal policy in a manner that will deal with what is not sustainable in the marketplace with new fiscal measures.

The Canadian government has long recognized the need to support the production of certain Canadian programming content that is not market sustainable, through financial mechanisms such as the Canadian Television Fund. Unfortunately, these financial mechanisms—the supply side of the equation—have not kept pace with the increase in CRTC-awarded licences for new programming, which is the demand side; hence we have a disconnect between supply and demand.

» (1725)

We don't want to go over what this committee knows all too well, and that is that there is a Canadian Television Fund that was cut back by $25 million in the last budget. A number of pronouncements have been made, including the Canadian heritage committee's findings urging that the amount be reinstated.

What we urge this committee to do is go beyond just reinstating the amount and help develop a plan. We would call upon this committee to recommend that Canadian Heritage, Canadian finance, and industry be led through a process that will develop a sustainable, accountable, and transparent plan, one where we don't go through this process every year of having to come before government to make a case on numbers that are shifting and equations that are changing. We think we can come with a sustainable plan that would match cultural policy with fiscal ability to support Canadian programming. We suggest, Madam Chair, that this be the work of this committee: (a) to reinstate the CTF funding for the next budget to $100 million; and (b) to develop a plan, through an initiative that this committee can recommend, where Canadian Heritage and the Department of Finance would lead industry to a process that we believe would yield a very favourable result.

Thank you very much.

» (1730)

The Chair: Thank you. The bell that is ringing is not a 30-minute bell but a 15-minute bell.

You may ask a couple of questions, Mr. Strahl, then Ms. Picard may, and then I will go as long as I can.

Mr. Chuck Strahl: Thank you, Madam Chair.

And I thank all of the witnesses for their presentations. Personally, I like the presentation format where you “bold face” the recommendations you make—several of you have done that—and actually put a summary of those recommendations at the end of your paper. Personally, I think that's wise; I recommend it to all of you. Those who did so furnish a kind of Coles notes of the whole thing. When this is all said and done, we're going to have an awful pile of paper, and this is going to be very useful. I personally would like to recommend it.

I want to ask the Green Budget Coalition a question. I come from the logging industry. You asked the question, have things improved? Actually, yes, they have improved considerably. Since I was in the industry 15 years ago, there have been huge strides in consciousness of the necessity to be environmentally friendly. There's been vast progress, and I'm kind of proud of the industry for the changes they've made to address that.

What I wondered about in your recommendations to meet Kyoto targets specifically is whether you think we should be giving financial aid or tax incentives to developing technologies such as wind technology, for example, or whether we should give equal incentives to proven technologies, for example, hydroelectric development?

I mention this because of some efforts in my own area, where people have tried to develop micro-hydroelectric projects working with the aboriginal communities in some rather remote areas, but they find they bump up against the problem that all the government focus is on new technology and new ideas—which I don't oppose. The problem is the proven technology, which would help the aboriginal communities and be a sustainable Kyoto-friendly way of developing energy, is not there for them.

The provincial government has dropped their taxes—for example, the PST on pipeline products—specifically for that purpose. Do you feel it would be useful, instead of directing all of the efforts towards new technology and new innovation, to recognize that we should help all energy that's renewable, not just the new stuff?

Mrs. Julie Gelfand: Yes, I think overall we would agree. Our biggest concern is how much the federal government is already subsidizing fossil fuel and nuclear. There are billions of dollars to be saved getting those companies off what I would call corporate welfare and start moving them towards much more environmentally friendly energy production types. I think hydro would be one of them. There's tidal; there's biogas; there's a whole slew of technologies. But I think you're talking about in-stream hydro, are you?

Mr. Chuck Strahl: Yes.

Mrs. Julie Gelfand: The hydros that are right in streams should be promoted, from our perspective.

The Chair: You can have a quick follow-up.

Mr. Chuck Strahl: I thank you for that.

I think that would be wise overall. I would only mention as well that although I know there's an aversion to fossil fuels, they are going to be used, as you know. We're going to need to develop them and continue to use them—perhaps in declining percentages, but we are going to need them. And even, I have to say, to make some of these projects available for these aboriginal communities, we also have to have good infrastructure development, including roads, to make them viable.

It's a quid pro quo for some of these communities: they need roads—access—or else the rest of the project isn't viable. I'd like to help them be viable.

» (1735)

Mrs. Julie Gelfand: I think you should read some of the comments from some of the leading oil and gas companies. The presidents are talking about how we will not be a fossil fuel-based economy in 25 years, so we need to be careful about how many roads we're building into wilderness that opens up those areas to logging and poaching--other types of activities that may not be that friendly. I shouldn't say logging, more like poaching.

But the country still has a lot of places that don't have roads. We're one of the few countries that have that kind of wilderness still available. We want to keep it, because from a tourism perspective, it could be one of the leading ways that Canada could be viewed worldwide....

The Chair: Madam Picard.

[Translation]

Ms. Pauline Picard: I'd like to comment, Madam Chair.

I very much appreciated the testimony presented here today. I understand the needs expressed. All education sector representatives who spoke today conveyed the same message to the committee, namely that the sector needs more permanent funding, both at the research and university levels. I think the committee has indeed taken note of this request.

I also want to say how touched I was by the presentation given by the representatives of the association for the visually impaired. I hope that we are able to address some of their pressing needs.

This isn't the first time we've heard about the problem raised by the Canadian Association of Broadcasters. I think it's high time we turn our attention to this issue. I'm from Drummondville, located between Montreal and Quebec City, and broadcasters and the media have been encountering some major problems. Drummondville is one hour away from Montreal, and one hour and 15 minutes from Quebec City and in terms of our identity, we are not well represented at all. Cuts of the magnitude we have just witnessed show no regard for the public. I hope that a strategic plan will be devised to support all communities across the country.

Thank you.

[English]

The Chair: Merci beaucoup.

Mr. Cullen.

Mr. Roy Cullen (Etobicoke North, Lib.): I just have one question to Dr. Crago.

When we look at making Canada innovative and more productive, research is playing a critical role. I wonder if you could comment on the balance between the work we do in basic research and the work we do in more applied research. When you go through that kind of continuum, do we have the right balance in Canada?

And could you comment on the state of technology transfer and technology diffusion? We know not all research has to be applied, but we do know, it seems to me, that research needs to lead to something at some point, and people need to understand what research problems are being solved and what research problems are already solved, so we don't go and reinvent the wheel.

Could you comment on that for me, please?

Dr. Martha Crago: Yes, I will make a comment. It's sort of an interesting perspective on this.

There was a study conducted recently in the United States that showed when graduate students enter graduate studies, 70% of them think they're going to become university professors. By the time they graduate, 70% of them want to work outside of the university, because more and more, people are getting interested in the non-academic forms of research that can take place. I think this is probably a pretty positive thing because it means we'll hit it somewhere about 50-50.

Increasingly, people are doing what's called re-envisioning some of these graduate studies research programs to figure out ways to make them connect more strongly to things outside of academia--in other words, applied research, not only basic research. Increasingly, students will conduct their research right in the middle of a company, places that we at McGill call non-university partners--in other words, people who are there where research is being produced in an applied way. Students are reaching out and doing their research with those partners, often in their facilities.

I think we're moving to a position in our universities.... It used to be that you got a PhD because you wanted to become an academic. I think now there are many choices open, and we're reshaping and refashioning our programs to help students meet those choices.

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The Chair: Mr. Discepola.

Mr. Nick Discepola: My question dovetails Mr. Cullen's. I'll ask it very quickly, in view of the bell.

I think it was Mr. Ledwell who made the recommendation that we increase research activity—and I underlined when you said it—in all sectors. I'm wondering if that is the best strategy for a government to undertake, in view of Kyoto commitments or other priorities or directions we want to take the country in.

Should we be funding research in all activities or should we be looking at targeted areas that might provide an immediate, greater benefit?

Mr. Paul Ledwell: I think it's important to look at all areas. Getting to some of the questions that were asked earlier, we do need to have that foundational research done before we can actually move into applied areas. So we have consciously said all sectors, all sectors meaning all parts of university research and all parts of government research as well.

There can be better coordination of that research, there's no question, within government in particular. If we look at climatology, there are about five different government departments involved in that area. That research could be brought together much better than it is now.

So I think it is important to have that base, to have the foundation done, because we don't know the issues that are going to be coming up.

We may want to respond to immediate issues as they appear to us now, but.... The best example is that three years ago nobody was talking about the study of Islam as being important for us as a society. Now, obviously, it is.

So it's important that we have a balance, that we are looking at foundational, basic research and also at applied areas. The two don't have to be considered separate; I think there is a link between them.

The Chair: Thank you.

For colleagues who wish to go to the House, I will stay here to complete the questions. I'm going to excuse my colleagues so they can make the vote.

Mr. Masse, go ahead.

Mr. Brian Masse (Windsor West, NDP): Thank you, Madam Chair.

I could ask a question of everyone, but because of the bells, I can't. I'm going to scope it down to the CNIB.

I'm a former member of the board of directors for the Essex-Kent district, and I've been a job developer for 10 years for persons with physical disabilities. You hit the mark about the lack of investment. I like the characterization about premature institutionalization of individuals because of the lack of supports out there.

Very quickly, how significant, in terms of a minor investment for the job developer, are the marketing initiatives or the small coaching that can take place? What type of a maximum can we realize for people, getting them into jobs, and sustaining them?

Do you believe, at the end of the day, we can actually save taxes by allowing people to be independent and putting them into the system?

Ms. Cathy Moore: I think there's no question of that.

We've had a pilot project, funded by the Opportunities Fund, that put in what we called “marketing”--awareness for employers--and we put in accommodation as a free service that was offered to employers prepared to hire people. We are placing people in competitive employment--and I underline “competitive”, not made-for jobs or temporary jobs, but competitive mainstream employment for 60 people a year.

Some of those 60 people were quite long-term unemployed people, off the EI system and onto provincial income support, who are now working in competitive, mainstream employment in jobs that are as permanent as any of ours are.

Mr. Brian Masse: That's a fantastic hidden Canadian story, and it's a tragedy we don't invest more. In my program, for every dollar the government put in, we took three dollars off social assistance.

I congratulate you for your advocacy, and hopefully you will continue to work to get this out there, because it's sad and unacceptable what's happening.

Thank you, Madam Chair.

The Chair: Thank you very much.

I also was a former member of the advisory board in London-St. Thomas for the CNIB, as you probably know, so I'm also very sympathetic and very pleased to hear what you said about the Opportunities Fund, because I think that's vitally important.

For the broadcasters, in my home town we lost probably our first opportunity to do a television production this year. So it's a very sensitive issue in my home town also.

To the graduate students and researchers, your comments are dovetailing with other evidence we've heard over the last couple of days.

And in regard to the environmental aspects, I think we're getting there. Certainly more has to be done, because we all need air and water. When I was a young person, you thought of those as free commodities. Maybe they're not so free today.

I'm sorry this panel is going to be cut a little short. My colleagues do have all of your materials, and I thank you for putting them in so we could get them translated and distributed, and for taking the time today to make your presentations and answer our questions. I know if colleagues have any further questions, they'll be in touch with you directly. If you have any further things you wish to distribute to committee members, you can do it through our clerk, and we will make sure they get to the right places.

So I thank you, and I hope tonight you will all catch your planes, trains, or whatever.

We are now adjourned.