Thank you very much, Mr. Chairman. Thank you for the opportunity to meet. I hope the committee will also refer to our written brief.
The National Council of Welfare agrees with the goal of prosperity for all Canadians. In order to achieve this goal, however, it is not enough to examine the health of Canada's businesses; it requires that everyone can participate in our economy and society.
Most people do not require incentives to work. Many women and men in fact work very hard for little or no pay. People need an opportunity, supports, and decent compensation for their efforts: 4.8 million Canadians live below the poverty line in spite of a period of prosperity; 17.6% of children live in poverty; 48.9% of female lone-parents live in poverty. Recent immigrants, visible minorities, aboriginal peoples, and people with disabilities face poverty rates much higher than the Canadian average.
The majority of people in poverty are employed or struggling on fixed pensions. For the 1.8 million women, men, and children who are on welfare, the situation is truly bleak. Welfare rates across Canada are far below the poverty line and many have declined dramatically since 1986.
The one overall policy measure that we think is crucial, therefore, is a national anti-poverty strategy. Countries such as the United Kingdom and Ireland have adopted such strategies. Here in our own country of Canada, Quebec and Newfoundland and Labrador have done so as well.
The council just yesterday launched an online questionnaire to find out what Canadians think about an anti-poverty strategy. This is not a partisan issue. Existing strategies have been developed by governments with widely differing political views.
What is common to all the strategies is the setting of goals and timetables for poverty reduction and accountability mechanisms to track those results. Governments then develop the best policy mix to get on with the results. We think the federal government needs such a strategy to reach the goal of a prosperous Canada for all.
What is the alternative? Leaving almost 5 million Canadians behind, when we are facing labour shortages and an aging population? Leaving 1.2 million children with a very limited future?
How can Canada compete with so many of its own team on the sidelines? Investments today to reduce poverty would soon do wonders for the economy and increase our tax base. Lower costs for programs for social assistance, health care, and criminal justice would follow.
I want to share some examples of strategies that have clear goals and timetables. Canada, through the United Nations, is committed to reducing global poverty by half by 2015, but we have no domestic objectives. Quebec has set out to become, by 2013, a nation having fewer people in poverty. Newfoundland and Labrador over ten years intends to transform from a province with the most poverty to one with the least. The U.K. aims to eliminate child poverty by 2020.
In Canada, the council believes the federal government must play a leadership role. First, we need a minister and a cabinet committee to take charge. We need to analyze the root causes of poverty and coordinate programs within and across all orders of government to avoid giving with one hand and taking away with the other. We need a process that involves Canadians to set goals, targets, and priorities.
We need to restore valuable social infrastructure programs that are mere shadows of their former selves. And we need to develop innovative programs to meet the new demands of the 21st century. Using Canada's social transfer to improve social assistance is one way of doing this. Other ways are increasing employment insurance rates; increasing child benefit up to $5,000; creating child care spaces across the country; affordable housing; establishing a $10-per-hour federal minimum wage; and also creating an aboriginal poverty strategy.
In closing, ladies and gentlemen, I want to stress that true prosperity in our great, diverse society means investing wisely so that everyone can contribute and benefit. Poverty is costly and it is not inevitable. It is the result of policy decisions. We must do better.
Thank you very much, Mr. Chair.
Thank you, Mr. Chairman.
The Conseil canadien de la coopération represents a network of francophone cooperatives across Canada and more than 8 million francophone cooperative members in over 3,300 cooperatives, whose consolidated assets now exceed $125 billion.
As part of these pre-budget consultations, Mr. Chairman, the Conseil canadien de la coopération would hereby like to share with the committee a number of suggestions and proposals. My submission will focus on four axes, the first of which is the capitalization of cooperatives, or the introduction of a cooperative investment plan.
The Cooperative Investment Plan, an investment plan designed to meet the identified needs of cooperatives, promotes and enhances the growth and capitalization of eligible cooperative enterprises, because this is the primary tool that allows cooperatives to grow and develop across Canada.The plan primarily targets worker cooperatives, producers and the agricultural sector in general.
The CCC testified before the committee in 2004. In the 2005 budget, the Canadian government made a commitment to continue studying the idea of creating a cooperative investment plan. It should be remembered that this plan grants a tax benefit to members who acquire eligible preferred shares, thereby making capitalization possible. Such a plan was first established in Quebec over 20 years ago. Currently, over $200 million has been invested in cooperatives to allow for their development and sustained growth.
Therefore, Mr. Chairman, we call upon the Minister of Finance to introduce a nation-wide cooperative investment plan for agricultural cooperatives and worker cooperatives in its 2007 budget. I would point out that these are long-awaited initiatives.
Axis 2 , Mr. Chairman, is the cooperative development initiative, a five-year program instituted in 2003. The purpose of the CDI is to help groups develop the cooperative model, to assist with research and to test innovative applications of the cooperative model.
Our submission notes the lack of available financial resources to the advisory service component. This became clear last year following an exercise conducted with the Cooperatives Secretariat.
Mr. Chairman, we ask the Canadian government to confirm the renewal of the existing partnership agreement with the Conseil canadien de la coopération and with the Canadian Co-operative Association with a view to extending the program until the Co-operative Development Initiative comes to an end. We would like the government to make a commitment in its next budget to renew the program for the 2008-2013 period before the current phase of the initiative expires.
Axis 3, Mr. Chairman, is the social economy sector. In 2004, the Canadian government committed to a social economy development program to promote businesses involved in the health care, home care and community care sectors.
Recently, as part of its cost-cutting exercise, the Canadian government eliminated certain program components. We are asking the Canadian government to reinstate in its 2007 budget a development incentive program for cooperatives and social economy enterprises.
The final axis, Mr. Chairman, is the funding of the Conseil canadien de la coopération. The CCC represents all provincial councils and we ask for greater, ongoing support from the Canadian government, so that we may promote the development of francophone cooperatives across Canada.
In conclusion, we ask that the Canadian government acknowledge more forcefully the cooperative movement as a partner in social and economic development across Canada. The cooperative formula was first developed over a century ago and provides the community with an opportunity to take charge of its own affairs and in the process, ensure its survival. The population of Canada is concentrated in some densely populated areas, while certain other regions are threatened. We want to be perceived as the government's partner in social and economic development.
Hi. My name is Mark Goldblatt, and I am the president of the Canadian Worker Cooperative Federation.
I am going to divide my short remarks into three areas--what a worker co-op is, how the model can be applied in enterprise situations, and then our specific budget requests.
First, what are worker co-ops? Quite specifically, they are employee-owned businesses that are structured on a cooperative basis, on the basis of one member, one vote. Every employee of the cooperative is a member. Worker co-ops may have the same structure and division of labour as similar privately owned corporations; the difference is that they bring efficiencies and productivity gains because people are basically working for themselves.
In terms of areas where this worker co-op model can be applied, I think there are basically three. The first area is small business start-ups. As an example, here in Ottawa we have a worker co-op called La Siembra Co-operative, which imports and distributes fair trade products like cocoa sourced from cooperatives of small farmers in the developing world. That's a start-up worker cooperative, and in that case growing very rapidly.
The second area in which we have successfully applied the worker co-op model is when you have a small or medium-sized business and the owner is retiring. Statistics Canada is reporting that thousands of small businesses—I don't have the exact numbers—are facing a situation where the owner is retiring, has no children to take over the business, and is committed to trying to help retain the jobs for his employees.
One example of that model would be the Moncton Restaurant Equipment Co-operative in Moncton, New Brunswick. Mr. Gorman, the owner of the firm for many years, was retiring. He sold his business to his own employees, structured on a worker co-op basis.
There's a third example of where you'll find a lot of worker co-op applications, and that's in the area of employee buyouts of larger businesses structured as worker cooperatives. One well-known example in Canada would be the worker co-op buyout of Algoma Steel in Sault Ste. Marie quite some years ago. It saved the business and it saved the jobs until the point when there was an upturn in the steel market. That particular type of employee buyout was led by the trade union--in that specific instance, the United Steelworkers.
So there is a definite history of union-led employee buyouts structured as worker cooperatives.
In terms of our budget requests, I am going to repeat some of the remarks already made by my colleague from the CCC. They bear repeating, because these are budget requests that all the national cooperative organizations have worked out together.
As our first point, we recommend that in budget 2007 the federal government announce the creation of a federal cooperative investment plan designed to encourage investment in cooperatives. A CIP would provide a tax credit to those who invest in agricultural co-ops and in co-ops owned by employees. This would significantly assist the cooperatives in raising capital for their businesses. The resulting influx of capital would be used by cooperatives to expand employment, increase economic activity, and branch out into other value-added businesses.
As our second budget request, we're recommending that the 2007 federal budget reconsider the cuts to the social economy initiative announced by ministers Flaherty and Baird on September 25, 2006, and roll out the social economy in all parts of Canada.
My last point, also mentioned by my colleague from CCC, is that we are recommending that in the 2007 federal budget the government signal its intent to develop a new public-private partnership with the cooperative sector, designed to strengthen Canada's grassroots network of co-op enterprise and community entrepreneurs.
Essentially, we did have a five-year, $15 million co-op development initiative. There was a technical assistance component of $1 million a year. It was split up by 17 different francophone and anglophone associations across the country. The program has just been totally oversubscribed.
The other component of that co-op development initiative was to provide help for start-up cooperatives in the area of feasibility and business plan development. By the time we got to the end of the two years of the five-year program, we had already received requests for the entire amount of money.
So we're looking for a dramatic expansion of that program, based on the track record of what the additional existing program achieved.
Thank you very much.
Thank you for the opportunity to participate this morning.
The Canadian Association of Retired Persons agrees that in order to sustain Canada's place in a competitive world, it's important that actions be taken to ensure that our citizens are healthy, that they have proper skills, and that they are presented with appropriate incentives to work and to save. We agree that it is imperative that our nation has the sound infrastructure that is required by citizens who are seeking a high quality of life. Older Canadians must be embraced in this process. Our population is living longer, healthier, and active lives. Seniors continue to have a lot to contribute, and society can benefit from what they--we--have to offer.
CARP's mandate is to promote and protect the rights and quality of life for mature Canadians. Our mission is to provide practical recommendations for the issues we raise. In conformity with this mission, and in order to sustain Canada's place in a competitive world, CARP's brief presents 46 recommendations, including the following: a House or a Senate standing committee to assess the impact of the demographic shift on our society and to identify and root out ageism and age discrimination wherever it exists; a national home care program that includes chronic and community continuing care, with transparency and accountability; a national mental health strategy, as outlined in the Kirby-Keon report, with the immediate set up of a commission; a national family caregivers' support strategy; pan-Canadian wait time guarantees; Canada assuming a leading role globally in creating and protecting safe, healthy, and sustainable clean air and water; long-term CMHC funding to the provinces and territories for subsidies and grants for affordable rental housing--please don't privatize CMHC, in fact, use the surplus to build more truly affordable housing; funding and tax credits to make continuing education, exercise, etc., available, accessible, and affordable for all seniors, using as a model the tax credit for children's sports activities; abolition of mandatory retirement where it exists under federal government jurisdiction; the federal government's proposed $3 billion CPP contribution to be put into OAS/GIS instead; increased OAS annual payments in order to meet the real cost of living--not excluding volatile items in the CPI--thus enabling seniors to purchase more, as well as to pay more taxes; GIS payments to the level of the low income cut-off line across the country; allowing all registered retirement pensions to be split; direct 100% access to LIF principal in federally regulated pensions, such as is now available to LIF holders over 90, we are told; the age of the conversion of RRSPs into RRIFs restored to age 71; and seniors to determine the annual amount they withdraw from their RRIF or LRIF.
We also would like to see the benefits of filing an income tax return clearly and broadly advertised to seniors, highlighting, for example, deductions, benefits, and GST rebates; continuation of the current five-year deadline for paying pension shortfalls and the retention of under-funded pensions as a legal liability on a company's books; and the taxable rate on U.S. social security received by Canadian residents restored to 50%.
Canada is on the cusp of a major demographic evolution, as is the rest of the world, and about one quarter of our population will be 65 by 2030. If society chooses to ignore them, everyone will suffer. In the brief moment I have, I just want to point out that quality of life has a strong correlation with the productivity of our country. I have to express CARP's shock and dismay that the federal government would arbitrarily determine value for money, without any public or stakeholder consultation, or presenting alternative policies. These cuts will adversely impact a lot of CARP's constituents, Status of Women volunteers, adult literacy, and more. We urge the government to rethink this proposal.
Thank you very much.
Thank you, Mr. Chairman.
I'm here today representing the Canadian Alliance on Mental Illness and Mental Health.
Two of my colleagues, Dr. John Service, our past chair, and Connie McKnight, our current co-chair, are only available for questions.
The Canadian Alliance on Mental Illness and Mental Health has filed a brief that we hope is understandable, readable, and that sets out our targets without too much interspersion.
Judy has already mentioned the CARP support for the Canadian Mental Health Commission. Of course, that's the main thrust of our own request.
The Canadian Alliance on Mental Illness and Mental Health is the largest coalition or association of national not-for-profit NGOs, including consumer family organizations, service providers, and professional organizations. There is no other like it in Canada or in the world. We cover the entire spectrum of service delivery, including patients, and we pick up the Canadian Medical Association, the Canadian Psychological Association, and the Canadian Psychiatric Association, plus disability groups such as the National Network for Mental Health.
We have a broad voice. We have a tremendous grassroots capacity to get to our communities and understand what they want. And I'll tell you exactly what they want. They want you to recommend to the federal government—to Mr. Flaherty and whoever else you have to go to—to fund the establishment of the Canadian Mental Health Commission, as recommended by the Senate standing committee.
The Senate standing committee, as I'm sure you know—and I'm sure you've all seen this “Out of the Shadows at Last” document—recommended that the Canadian Mental Health Commission be established and become operational by September 1, 2006. We're a bit late, but we're ready to move forward as quickly as possible. We have great hopes that you will do that. The funding required is $17 million a year, which is not significant, in our opinion, compared to the other funds paid on health care activities.
The other aspect that we'd ask you to fund is the research component, again as recommended by the Senate standing committee, which is a $25-million-a-year fund that would go to the Institute of Neurosciences, Mental Health and Addiction, one of the Canadian institutes of health research, and would be managed similar to the AIDS fund, which you already fund on a regular basis.
The third funding aspect that we want you to look at very carefully is the funding of the Public Health Agency and Health Canada to fund surveillance and data-gathering aspects. As much as we'd like to, we can't rely on the Canadian Institute for Health Information and others, because hospital records show only about 15% of the actual mental illnesses in Canada. The vast majority of mental illnesses are treated in the community by psychological services, EAP providers, and others. It's absolutely essential that we acquire that data in order to provide us with comparative information, so that we can deal with the real aspects of the cost of mental illness in Canada.
The brief sets out in significant detail the cost of mental illness in Canada. I'm sure you all know the business issues; it costs $33 billion a year. Health care costs are about $14 billion. Suicides are incredible. We have an unconscionably high rate of suicide for a country that calls itself advanced. We have issues in our aboriginal mental health that are beyond belief and need to be dealt with. Poverty issues are more often than not associated with mental health issues.
Within its own jurisdiction, the federal government has the capacity to move forward on a number of issues, particularly federal correctional issues. As Judge Ted Ormston will tell you, the courts are now the largest warehousers or keepers of people with mental illnesses. It's a national disgrace as well, and something that should be attended to.
And as I'm sure you know, Howard Sapers issued his report yesterday and made it available to all MPs.
The second issue is the Department of National Defence and the mental health issues of our armed forces. Post-traumatic stress syndrome is incredible. Again it's something that needs to be addressed, and it can be addressed through the Mental Health Commission.
Those are just some of the issues.
Quickly, one of the questions that was asked of me was to compare mental health with other groups.The prevalence of mental illness in Canada is 10.4%. The one-time federal allocation for mental illness research is 1.5%. The ongoing federal allocation for mental illness research is 1.3%. Diabetes has an impact rate of 4.8%. It gets 30% of federal funding.
I'll stop there, but I'd be happy to answer any questions, as would Dr. Service or Connie McKnight.
Thank you very much for the opportunity.
[Witness speaks in her native language]
I am here with Aboriginal Institutes' Consortium, which was established in 1994 to address the collective needs of aboriginal-owned and -controlled post-secondary education and training institutions.
Recognition and resources continue to be the key issues impacting the institutes today. The membership of the consortium, which is located in Ontario, consists of eight institutions in aboriginal communities from Akwesasne, which is near Cornwall, all the way to Fort Frances in northwestern Ontario.
Aboriginal institutions were established by first nations communities to address the lifelong learning needs and the development capacity of first nations communities. They fill a unique need that cannot be duplicated by mainstream institutions.
The bulk of the students who enrol are adult learners who would not necessarily compete for space in mainstream post-secondary institutions. And believe me, there are a lot of them, because secondary schools have not been able to address the needs of aboriginal learners.
Aboriginal institutions are student-focused; they provide culturally relevant, community-based programs in culturally enriched learning environments that address the learning styles of aboriginal people.
The types of programs we deliver include literacy, secondary and alternative secondary programs, adult education, trades, pre-apprenticeship, apprenticeship, and provincially recognized certificate, diploma, and degree programs.
Areas of programming we deliver include automotive, aviation, media, human services, nursing, paramedic, computer, language, renewable energy, welding, pipefitting, and much more.
Aboriginal institutions support all levels of education in our communities through the delivery of teacher education and curriculum development; they host youth science and technology camps and career fairs and conduct school evaluations, and more.
Aboriginal institutions demonstrate great success in attracting students and in increasing the educational attainment level of aboriginal students.
Our institutions in Ontario have educated more than 27,000 learners over 11 years. We've experienced an increase in enrolment of over 92% in five years. We can demonstrate success rates of up to 98% and we provide more than 400 jobs in aboriginal communities. Throughout Canada, more than 60 aboriginal institutions can demonstrate similar success.
Aboriginal institutions are key drivers of economic success in aboriginal communities, much like colleges and universities in mainstream society.
The challenge is that aboriginal institutions lack formal recognition by the federal government and as such are not eligible for secure and adequate funding from any source for operations, infrastructure, facilities maintenance, or research. In addition, student credentials do not have the same currency as those from provincially or federally recognized institutions.
Aboriginal institutions get caught up in the jurisdictional debate between the federal and provincial governments. The federal government supports aboriginal post-secondary education as a matter of social policy. The provincial governments say it's a federal responsibility.
We're seeking federal recognition to build upon the success achieved by aboriginal institutions. We need access to secure and stable funding and we need to provide aboriginal institutions with recognized authority to grant certificates, diplomas, and degrees.
The Consortium is also seeking an immediate infusion into the national allocation of the federal post-secondary student support program to address the level of funding required in each province to support the stability and development of aboriginal institutions, and to support students.
One of our institutions, First Nations Technical Institute, received 549 registrations this fall, but 271 of those students were not able to enroll because they weren't able to get support through the federal post-secondary student support program.
I have with me the president of First Nations Technical Institute, Tim Thompson, as well as the chair of the National Association of Indigenous Institutes of Higher Learning, Trevor Lewis.
The Ontario Museum Association, or OMA, represents some 600 museums, art galleries, and historic sites, both large and small, in every corner of Ontario. We appreciate this opportunity to present the views of Ontario museums to the direction of the federal 2007 budget.
We fully support the Canadian Museums Association's call for the implementation of the new Canadian museums policy, and appreciate that Canadian Heritage Minister Bev Oda recently signalled the urgency of this matter. We are working with Minister Oda and her Ontario counterpart, Minister Caroline Di Cocco, to ensure that museums in Ontario contribute to the vitality and prosperity of our citizens and communities.
The key to long-term business planning and growth for museums all across Canada is predictability in revenue. The OMA urges the government to implement a robust policy framework that allows that predictable, sustainable public support. An appropriately funded federal program, in concert with more adequate provincial and municipal support, will give Canadians the opportunity to enjoy the full potential that museums can offer.
I assure you museums do make a difference. Museums are integral to the quality of community life and the appeal of a community. Museums provide unique services to communities all across Canada by preserving our collective memory, telling our stories, and passing on a rich legacy to future generations. Museums reach out to all demographics, including children, youth, and new Canadians. Canadian parents view museums as one of the most important places for educating their children, along with schools and libraries.
Museums also provide opportunities for civic engagement and volunteerism. Museum volunteers contribute work valued at more than $40 million per year across Canada. Museums also contribute to Canada's cultural infrastructure. Ontario museums contributed $355 million to the provincial GDP in 2001, and obviously the full economic impact is much higher through service industries. Museums help to create a well-educated, creative, and competitive labour force. They provide employment to 11,700 workers across Ontario. Canadians and visitors from abroad value our museums. Total attendance at Ontario museums is almost 19 million a year, which is a 12% increase over the past 10 years.
The Ontario Museum Association joins with its partners like the Canadian Museums Association in calling on the federal government to implement a new museums policy that adequately and appropriately supports museums in Ontario and throughout the country. Investments in Canada's cultural infrastructure are as important as those made to support public infrastructure in areas such as transportation, schools, and hospitals. Attractive and vibrant cities and communities are places where people want to live, invest, and work.
Support of our heritage organizations like museums is the responsibility of all levels of government. No level of government can do it alone. It is incumbent on the federal government to assume the leadership at the national level in the implementation of a museums policy that will work in concert with other governments across the country.
It is important that the federal government's role extend beyond federal museums to include the viability and growth of locally run museums, which are essential to local economies and to preserving the history of local communities across Canada. Each museum tells an important part of the Canadian story.
We ask the Standing Committee on Finance to endorse our recommendations calling for new and predictable, sustainable funding to allow museums greater ability to contribute to Canada's social, economic, and cultural economy.
And thank you to all of our panellists for your presentations.
I'd like to talk a bit about poverty.
It's nice to see John Murphy. I know that you're no stranger to Ottawa, and it's good to see you again.
I'd like to just chat a bit, because it seems to me that one of the big issues facing Canada in the next little while is whether we are even going to make an attempt to bridge the gap between the rich and the poor. I would argue that successive governments of different stripes have at least claimed that was their goal, although we've fallen short in a lot of cases. But some of the measures that were introduced in this past budget, such as the GST cut and the proposed continuation of that to go to 5%, have actually been trumpeted as being good for lowest-income Canadians because personal income tax may not affect them but GST does.
I wonder if you have a view on whether reducing the GST is of benefit to the lowest-income Canadians.
In our view, lowering the GST and the child benefit and so on are band-aid approach material. What needs to be done is a much broader approach to the reduction of poverty, because the GST, really, does not affect poor people. They don't buy the big items, so it's just of no benefit. If you were making huge sums of money, it might make a difference.
What we need, Mr. Savage, is a pan-Canadian reduction strategy that allows the federal government to take leadership, with its partners in the provinces and the territories, to take a look at how you can bring those departments together, in fact, instituting a new department with a leader. You need to look at how you can best bring together all of those departments that affect people's lives, and begin to look at targets that you need to set--around housing, around social assistance, around a number of issues that need to be worked on with the provincial and territorial governments--and then evaluate. Have amounts of dollars in your budgets to go after that reduction strategy, and then evaluate what's happening to see if we have arrived where we wanted to be.
It's not a dream at all. I mean, Newfoundland and Labrador are doing it. Quebec is doing it.
In Ireland, for instance, they started a reduction strategy. They were at 15% of their population living below the poverty line, and they brought that down to 5%. Now, there's a real indication that this can be done. And if we can do it in some of our provincial territories like Quebec and Newfoundland and Labrador, we certainly can do it at the federal level and begin to give that leadership and vision that's required for this country.
We have a morally disgraceful situation with 4.9 million people, 1.2 million children, living in poverty, and for a country as wealthy as Canada that is not satisfactory.
Specifically on the GST, I appreciate your answer. People are loath to say they don't want lower GST, but at the end of the day, it's about choices. There's a certain number of dollars in the federal treasury, and if you're taking billions out to give it to those who disproportionately need it less, then you're actually doing less for those who need it the most. And there are ways other than personal income tax. According to the Caledon Institute, the child tax benefit, introduced, I think, in 1997, has actually had an impact on child poverty.
One of the proposals that has been made regarding the universal child care benefit to $1,200—and again, there have been studies indicating it actually helps those who need it the least because of the way it's taxed—is that if you're going to that, then you should perhaps do it through the young-child supplement of the child tax benefit.
Have you a thought on that?
Well, I think that makes sense.
But people basically want to get back to work, and one of the elements that's going to allow that to happen is that people have affordable child care that's consistent. The $100 a month on the child care supplement is some help, in terms of income, for people, but it's not what's required. Again, in my view it's a band-aid approach, and we need a wider picture of all of this to make sure we have the spaces for people to use and be able to get back to work.
It's not just child care. There are many elements that are required to make this happen, but certainly child care is one of them, and a very important one.
Thank you, Mr. Chairman.
Thank you everyone for joining us here today.
My first question is for Mr. Murphy. I've read your recommendations. In Point 2, you mention employment insurance. Interestingly, you reminded us that currently, only four out of every ten unemployed workers receive EI benefits when they need them. I submit to you and to committee members that any insurance plan that offers benefits to only four out of every ten insured members in need would be perceived as scandalous, and rightly so.
Furthermore, the benefit rate is quite low because for several years now, the government has been reducing benefits and restricting program eligibility, while at the same time maintaining employer and employee premium levels for the most part. As a result, the EI fund has amassed an enormous surplus.
The Bloc Québécois has called for—and in the past the Conservatives have agreed with us—for an independent employment insurance fund and has demanded that employee premiums be used solely to provide benefits to people who are out of work.
Do you agree with our position, or do you think any surplus funds should be deemed to be part of the government's Consolidated Revenue Fund?
Yes. I just spoke at a conference in Nova Scotia with teachers. The topic they asked me to talk about was youth poverty. What's happening is extraordinary. We don't have a youth strategy either in this country, and it's indeed required.
If you were a poor individual, a poor mother, you could not afford, if you were on EI, to go and get 55% of something that's well below the poverty line, so that whole group of people.... It's okay for people with middle income and above, but poor Canadians really can't access it; they have to go back to work very quickly, because 55% of something below the poverty line is not very much money.
Consequently, we're hurting our ability to raise children. Children are getting hurt, because their mothers have to go back to work very quickly, and 55% of little is not very much. That's where we need to change these things and have access. That fund needs to be enriched, particularly for low-income people, and also so that they can use some of the tools of the EI program--the training, etc.--to be able to go back to work.
I also liked what you had to say in point 4 about how important it is for society to invest in day care services.
There are many reasons why this is so. Those who testify before the committee list a variety of reasons why the government should invest in day care. The arguments are piling up. Many point to the advantages of investing in this sector.
I'm pleased to see you present a new argument, namely the fight against poverty. You demonstrated that for a single mother, day care costs are often so exorbitant that her only choice, or almost, is to stay home and collect welfare. Ultimately, this entails a cost to our society.
Are these merely isolated cases, or is this a common problem that needs to be addressed?
No, actually, the economic definition of a regressive tax is one that is blind to the economic circumstances of the person paying the tax, as opposed to a progressive tax, which people can afford to pay. So the more they can afford to pay, the more they pay.
The GST is a regressive tax. A regressive tax, which my friend John McCallum, the esteemed economist, would surely back me up on, is one that lower-income people pay as a proportionately higher proportion of their income than wealthy people do. That's a regressive tax. The GST is blind to whether you make $100,000 or $10,000 when you buy an article that has GST on it. You pay the same.
Therefore, would you not agree that lowering the GST is actually of more benefit to lower-income people than to higher-income people, which calls into question your statement that it doesn't affect low-income people because they don't buy big items? I'm interested in your response.
First of all, I want to apologize that I did not introduce my colleague Bill Gleberzon, who came from Toronto to be here today, and I invite him to the table to help me answer the question.
In terms of the cuts that have just been announced, if it was based, as we understand, on value for money, then what are the alternatives that would be more cost-effective? That's what we're asking for. We're not disputing that perhaps it could be done better, but not to do it at all, whether it's museums, whether it's adult literacy, whether it's palliative care, these things are essential to people's quality of life, and if they are not provided with some of the essentials it's going to cost the system a lot more.
The social economy program was launched in 2004. It enables social economy enterprises, cooperatives as well as non-profit organizations, to acquire capital. At this stage, the focus of our concern is capitalization.
We're proposing that this initiative be reintroduced. In all, there are four social economy agencies located in Quebec, Ontario, Western Canada and Atlantic Canada. The Quebec agency has been around for some time and its positive benefits are well known. However, the three other agencies were lagging behind and we wanted them pick up the pace. But in actual fact, this initiative was stopped. There has been talk of enterprises that make up the new fabric of the social economy and that will help satisfy the needs of the public. There is talk of creating businesses to address community needs. We're proposing that this component be reintroduced so that businesses can acquire capital and grow.
In short, we're asking the government to reintroduce this measure which fundamentally, in our opinion, was not that costly to maintain.
Thank you Mr. Chairman.
During our last week of consultations, we travelled to Western Canada to meet with people from various regions. I have to say that I was very pleased—and I still am—to be a member of the Standing Committee on Finance. We had an opportunity to exchange ideas and listen to some constructive comments, all in a congenial setting.
Unfortunately, I'm a little disappointed because since our return last Monday, the situation appears to have deteriorated. I hope that stops. I'll leave it up to each one of you to reflect upon the reasons why the situation has gone downhill since Monday.
Mr. Chairman, I would suggest that you personally talk to some of the committee members to stop the situation from deterioriating even further.
On that note, I have a question for Ms. Cutler.
At the end of your submission and recommendations, you propose that the 50 per cent rate of taxation on U.S. social security benefits collected by Canadian residents be reinstated.
I have to admit that this is the first I've heard speak of this. Since you are recommending reinstatement, what is the story behind this and what is prompting you to make this suggestion?
I do want to ask a couple of questions. I know I only have five minutes, so I'm going to jump right into it.
Mr. Séguin, I have a couple of points. During your presentation you articulated that you were looking for new, predictable, and sustainable funding. That's contrary to the way the MAP program is run; it's allocated on a grants basis.
I take from your comments that you're actually opposed to the direction that MAP was taking with respect to funds being allocated based on applications being submitted and either being turned down or approved. Obviously, if you submit an application there is nothing predictable about whether you are actually going to get the grant.
Sir, can you confirm for me that you're not happy with the MAP program, to begin with?
Thank you, Mr. Chairman.
Thank you to the presenters. It's always interesting.
Time is limited, so I'm going to try to ask a couple of brief questions and maybe leave some time for my colleague, Mr. McKay.
Mr. Murphy, just to continue the line of questioning Mr. Savage had, we've been hearing from quite a few post-secondary education groups--colleges, universities--and they've all been asking for the same thing you've been asking for--to separate the Canada social transfer payments. You're asking for an increase, but do you have a breakdown of how much is dedicated to post-secondary? Does $2 billion make—
Mr. Chair, thank you very much.
It's a pleasure to be here once again. Our brief is just being handed out to you now. I apologize; we just got the call on Friday. You will find copies of our brief in French and English being distributed to you at this moment.
I'd like to focus in on just two items primarily, for the consultations today. The first one is the SR&ED tax credit and changes that we would like to see in the SR&ED program. The second one is access to capital, primarily limited private equity capital, and structural problems coming in from the United States.
On the SR&ED tax credit system, earlier this year OCRI and ITAC jointly commissioned a paper on how to improve productivity through the SR&ED program. The purpose for doing this was because we have made representations to this committee for the last number of years on changes that are necessary to the SR&ED program, and we have seen some of those changes implemented, but many of them not. I understand the challenges this committee has, because there have been over 13 different submissions made to this committee over the past number of years. What we did was we retained some former officials from the Department of Finance and from CRA to actually help us with this study, to look at all those 13 reports that were produced to come up with what is the main recommendation that we find is consistent among all these reports.
You will find in our brief that what we have is a synopsis of this. The main thing we are asking for is when you take a look at the SR&ED program, which does finance private sector innovation in this country, what we like to see is that all SR&ED claims become refundable, and refundable up to the $10 million in qualified R and D expenditures to a maximum of 20% or $2 million.
Now, we did have officials from the Department of Finance, so the next question that's usually asked is what is the cost of this to the treasury? We cannot estimate it to any fine level because the data are just not available to do that. We do know that there are over 11,000 claimants every year in the SR&ED program, and that a combination of the credits going forward is about $2.6 billion in the refundability. We estimate that the cost to make all claims refundable up to $2 million would be between $500 million and $1 billion. But it would certainly go a long way to encourage R and D performers in Canada to continue to do so, and also to increase that level of productivity improvements.
The second item that we'd like to bring to your attention, which we have done before, is on the venture capital and the private equity side. Ottawa has been very fortunate to attract, on a consistent basis, between 20% and 25% of all the venture capital money that flows into Canadian companies. We are also very successful at getting approximately 50% of all foreign venture capital that comes into Canada. However, that silver lining has a bit of a cloud over it because there are barriers to U.S. limited partnerships investing in Canada that cause them not to. And most of the companies that receive U.S. venture capital financing are forced to go through a very complicated structure to either change their head office to a U.S.-based company or to do something with their shares, which makes it very awkward for them, and very expensive, and typically we lose these companies to the U.S.; they now become U.S. head office companies.
What we are recommending to the finance committee is that you take a look at some of these provisions that are restricting or limiting the foreign limited partners from investing in Canada. Those conditions have been made public in a number of different fora, and through the task force on early stage financing, which functioned a number of years ago, and the main issues here are to remove the barriers to treat the U.S. tax-exempt institutions from investing in Canada in a tax-exempt fashion in Canada; to remove the Income Tax Act provisions that trigger taxation from cross-border mergers; and to remove the IT provisions that trigger withholding tax on capital gains made by foreign investments in private equity.
Mr. Chair, these are not going to cost the treasury very much money because they're not investing right now in Canada. As a result of this, their money is staying offshore and they're forcing Canadian companies to structure themselves to be offshore entities.
Thank you very much for giving me the opportunity to be here today.
My name is Ken Elliott. I am the president of the Co-operative Housing Federation of Canada. I live in the Eastwood Housing Co-op in Woodstock, New Brunswick, where for the last 15 years I've had the privilege of raising my children as a single parent and experiencing first-hand what a community, in particular a co-op community, is all about.
Cooperative housing in Canada is a success story dating back almost 40 years. Today, housing co-ops provide over 90,000 safe, secure, affordable homes for over a quarter of a million Canadians in every province and territory. Many of them are in all of your ridings.
About 40% of these households use federal or provincial assistance, paying rents that are set at an affordable level according to their income. Other households pay market rents. Housing co-ops are mixed-income communities and provide good, affordable rental homes for the working poor, seniors, young families, and middle-income households.
But there is an increasing need for more cooperative housing, particularly in the major urban centres. We believe cooperative housing could provide ongoing affordable homes for some of the 1.4 million Canadians spending more than they can afford for housing. The housing market has failed these people, and the government needs to intervene to provide this assistance. We're asking for government policies that will allow some of the funds flowing through the provinces for housing to be used to create more new cooperative housing.
What's more, we can provide an opportunity for more affording housing in our own existing cooperative housing stock. These co-ops could have the ability to subsidize more households, but unfortunately they do not have access to the federal subsidy intended in the program. Because of a flaw in the administration of the program, the subsidy co-ops receive is lower than it should be. Restoring this lost subsidy to these federally funded housing cooperatives would be a simple, effective, and quick way to create more affordable housing across Canada, as would making additional rent supplements available.
In closing, we strongly recommend that the following initiatives be included in the 2007 federal budget: one, federal funds to support the development of new housing cooperatives, or the addition of new units in existing co-ops delivered through the provinces and territories through capital grants or forgivable loans; two, allocation of funds to the provinces and territories that can be used to provide rent supplements to existing housing co-ops and allow existing housing co-ops to accommodate more low-income households; three, new capital funding that will fix leaky co-ops in British Columbia and housing co-ops in Quebec that were developed under the stringent modesty criteria; four, continued funding for other initiatives that address homelessness, such as the Supporting Communities Partnership Initiative, SCPI.
Affordable housing should be considered part of the infrastructure needed for healthy, safe neighbourhoods and cities. Housing cooperatives are ready to work with you to make this happen.
It's a pleasure to address this committee on the subject of adult literacy and its impact on our country. The briefing document for this committee, “Canada's Place in a Competitive World”, asks us to consider whether our citizens have “the proper skills...to work and to save.” At ABC Canada Literacy Foundation, we are very concerned that millions of Canadians do not have the proper skills to work and contribute to our nation in a changing world.
One of the foundations of any nation's competitiveness is the literacy of its citizens. Stats Canada tells us that adult literacy is increasingly understood to be fundamental to an industrialized nation's economic performance, and also to the individual's social and economic well-being, especially in the context of rapid social and economic change.
Here is the heart of the problem: adults with low literacy levels make up 42% of our population. That represents nine million adult Canadians. It's an astonishing number that represents everyone from those who can read and write very little to those who dropped out of high school before earning their diploma, and even to those people who have a diploma but still can't read and write at a proficient level.
Many of these adults are employed but in jobs with a very low literacy requirement, and these jobs are becoming harder to find and keep as the technology and the literacy demands placed upon employees increase. The majority of new jobs in the future are expected to go to people with at least some post-secondary qualifications.
Stats Canada and the Organization for Economic Co-operation and Development state that Canada's low literacy levels have not improved in a decade. We pay a collective economic price for this persistent dilemma of low literacy. Differences in average literacy skills explain over half of the differences in long-term economic growth in the world's richest countries, including Canada.
An investment in adult literacy is a direct investment in Canada's productivity. StatsCan research indicates that a rise of 1% in literacy is associated with a 2.5% rise in productivity and a 1.5% rise in gross domestic product per person. This means that if Canada found a way to increase literacy levels by 10% over a decade, GDP per capita would rise a staggering 15%, equal to roughly $118 billion, in today's terms.
A recent report from the Canadian Council on Learning comes to the conclusion—and we agree—that government has an important role to play in encouraging and facilitating investment in learning by firms and workers. We believe that the federal government, in partnership with the provinces, territories, and business, could play a unique and powerful role in increasing the literacy levels of Canadians.
We have two recommendations to make to the committee as it considers the budget. The first is to adopt a national plan to address Canada's literacy gaps. Last year the seven national literacy organizations worked to create a national literacy action plan. In essence, the plan calls for the development of a quality adult literacy basic education system, so that learners of any age can increase their skill levels.
The United Kingdom is a leader in its creation of the national skills for life program, a broad government initiative that is well on its way to meeting a target of 1.5 million citizens trained by 2007. A Canadian strategy would set national goals and targets, standardize results, and ensure that all provinces and territories reach national goals.
Our second recommendation is a call to restore the funding to the national literacy secretariat, funded through the Department of Human Resources and Social Development. This program has just undergone a significant reduction in its budget, due to the federal spending cuts announced on September 25. The program budget was cut by $17.7 million. These are funds that previously supported the provincial and territorial literacy coalitions—organizations that are fundamental to the development and implementation of adult literacy services across the country.
The cuts have been severe, and I'll tell you about a few of them. The Yukon Literacy Coalition programs are jeopardized, and unless additional funds are found, the coalition will close its doors. The Northwest Territories Literacy Council has seen one-third of its budget cut. Literacy BC will lose support of a number of its activities, including the development of literacy practitioners in the field. Half of Literacy Alberta's funding is cut, and the Saskatchewan Literacy Network reports that it's in immediate jeopardy of closing its doors. Literacy Partners of Manitoba will lose 80% of its funding. I could go on and on. Every single coalition is hurting because of these cuts.
We would ask that the $17.7 million be restored in the next budget. We would also ask that provincial and territorial groups be reinstated as eligible recipients of funding through this program. These groups are really the backbone of our nation's adult literacy programs.
Literacy and essential skills upgrading is fundamental to Canada's economic prosperity and competitiveness, as I have pointed out. Other western nations are waking up to the challenges of adult literacy and the implications for their nations in the longer term.
If Canada is to maintain and increase its competitiveness, it must address the millions of Canadians who struggle with basic literacy. We live in a world where those who read and write with proficiency will be highly sought and those who do not will be left behind.
I have a day job as the vice-president of tax and estate planning with AIM Trimark Investments. AIM Trimark is also a member of the Investment Funds Institute of Canada, so I also volunteer with that organization and head up their taxation working group. It's in that capacity that I come here today to make some comments specifically on what the Investment Funds Institute of Canada is looking for as recommendations on tax policy.
Specifically, we really believe that as a country we need to address the issue of secure retirement for all Canadians. We have an increasing number of Canadians who are reaching retirement age, the baby boomers—you've been reading about that in all the local media—and we have a number of recommendations, which I'll take you through. They're fully in our brief, which we've circulated earlier. We want to encourage Canadians themselves to sit in the driver's seat when it comes to saving for their own retirement, as opposed to relying solely on government programs or even partially on government subsidies.
We have a number of recommendations that specifically focus on incentives that will encourage and enable all Canadians to save for their own retirement. In fact, we have divided our five recommendations into two sections. We have a number of recommendations on non-registered investing—this would be investing outside of a pension plan or an RRSP or RRIF—and we have a number of recommendations for registered investing.
Firstly, on the non-registered side our first recommendation is to maybe do some further research and perhaps implement the tax pre-paid savings program or TPSP. This was talked about a couple of years ago and is very similar to a Roth IRA that exists in the United States. This type of savings vehicle would allow every Canadian to contribute to a tax-deferred vehicle. They wouldn't get a tax deduction for those contributions, but while the money is inside the plan it would grow on a tax-deferred basis. The added benefit is that when the money comes out, it is also non-taxed. The real benefit here is that if it's non-taxable on the way out, it will probably encourage lower-income Canadians to start saving for retirement.
The current problem you're all familiar with is the very convoluted clawback system we have for the guaranteed income supplement. There have been numerous studies that show that for lower-income Canadians it doesn't make sense to save inside a registered plan, because every dollar they take out of that plan directly impacts their government support. If they were able to save in a different type of vehicle, such as a tax pre-paid savings plan, having the withdrawals come out on a tax-free basis might encourage them to save for their own retirement.
Furthermore, we would recommend introducing some type of grant program—similar, let's say, to the RESP education savings grant of 20%. Let's say a low-income Canadian, defined as someone getting under $35,000 or so a year, could contribute $1,000 to this type of vehicle. Perhaps there'd be a 20% matching grant by the government of $200, to encourage all Canadians to save for their own retirement.
Our second recommendation would follow up on the suggestion that was made in the run-up to the recent election by the Conservatives, which was the elimination or at least deferral of the capital gains tax. We certainly know, in looking at behavioural finance studies, that one of the biggest impetus for people reallocating assets is the inherent capital gains. As the Conservatives suggested in their election brief, the ability to defer capital gains tax if you reinvest the proceeds within six months is a very attractive idea.
The question is implementation. There have been a number of ideas suggested on how this might work. One was by the C.D. Howe Institute, suggesting that there might be a capital gains deferral account. While this idea is certainly intriguing, the implementation administratively might be complex. Perhaps the government wants to go back to re-examine something like an exemption for capital gains entirely. That would really simplify the system.
Turning to the registered plans side, we have three recommendations. The first one is simply to increase the age at which you are required to take money out of an RRSP. With Canadians living longer, and also with Canadians working longer, it might make sense to increase that age, which is now at 69, and bring it up to maybe 73.
Second of all, for low-income Canadians we would like to exclude any RRSP and RRIF withdrawals, when they're taken out, from income—in other words, from income in terms of the GIS clawback. We would like to see, if lower-income Canadians withdraw money they've managed to save for their own retirement inside an RRSP or RRIF, that those withdrawals are excluded from the calculation of the guaranteed income supplement, so that they would actually be encouraged to save for their own retirement.
Finally, here is our last recommendation. Although we found that the RRSP contribution limits have been increasing over the last number of years, what we would recommend is that we continue to allow further increases to the RRSP limits, so that Canadians who need to save on average about 70% of their earnings to be able to have retirement income would be able to also maximize their opportunities.
Thank you very much.
I am Al Cormier, representing Electric Mobility Canada, which is an organization of industry members that are devoted exclusively to the promotion of electric mobility as a readily available made-in-Canada solution to our country's increasingly complex energy and environmental problems. Accompanying me today is Phil Cahley, president and CEO of the Canadian Courier & Logistics Association, as well as the chair of my government relations committee, Mike Elwood.
We are here to talk about the possibility of accelerating the use of hybrid electric technology in Canada's commercial fleets. The current situation is that we don't pay enough attention to commercial fleets in terms of their contribution to the environment. They operate mainly in urban areas and in constant stop-and-go traffic. They frequently stop for deliveries and pickups, and there is a lot of idling involved. They consume large quantities of fuel and produce significant amounts of smog-related emissions. Our research shows that even though they only drive about 12% of the mileage, they contribute about 25% of the ground-level emissions.
Hybrid electric vehicles in commercial fleets can be an important contributor to a reduction of smog and an improvement in air quality. They can reduce overall fuel consumption by 40% to 50%. An important point to remember is that when it is idling, the engine in the hybrid electric vehicle shuts down. There is no fuel consumed, and therefore zero emissions while idling. We estimate that running about 10,000 commercial electric hybrid vehicles would have the same environmental impact as removing all cars from the streets of Toronto for 30 days. To put it another way, one commercial hybrid electric van equals 17 Toyota Priuses in terms of emission.
Our member companies produced the technology used in these vehicles. The technology is used in several types, including the delivery vans used mainly by our members of the Canadian Courier & Logistics Association. Canada has a vibrant but nascent industry in this field, involving names like Orion Bus in Mississauga; Nova Bus of Saint-Eustache; New Flyer Industries Canada, of Winnipeg; Overland Custom Coach of Thorndale, Ontario; Unicell Ltd. of Toronto; Azure Dynamics of Vancouver; and others who provide products for commercial hybrid electric vehicles. They have invented these leading technologies, but are not yet at a commercial mass production stage.
As with all new technologies, their initial premium costs are high, due to low sales volume. Currently extra costs for these vehicles range between $25,000 and $200,000, depending on their size. We're talking from delivery vans right up to urban city buses. The payback period is therefore up to 8 years, which is not really acceptable for most commercial decisions.
That's why we are here today. We're proposing to you a three-year program of financial incentives for commercial vehicles, to reduce the premium cost of the hybrid electric technology to acceptable levels so that the payback period could be three years, which is acceptable for most commercial decisions.
We're proposing a three-year financial incentives program for commercial vehicles to offset the high cost associated with the use of electric hybrid vehicle technology.
By introducing 10,000 electric vehicles into the marketplace for commercial vehicles, our members believe we would reach a tipping point that would bring us to mass production levels and reduce the cost and the payback period. Our proposal calls for a program of $200 million over three years, which would lead to an average of about $20,000 per hybrid vehicle purchased by commercial fleets. That could be in the form of tax credits, direct funding programs, or other vehicles. Such a program would reduce GHG emissions by about 110,000 tonnes and NOx by 1,700 tonnes.
Investments we propose can be used now to acquire technology that will bring the desired result now in a measurable and quantifiable way. Other countries have many similar programs. We'd be glad to provide you with details, which were submitted in our detailed proposal.
In summary, we're advising that commercial hybrid vehicles are a practical solution to environmental problems. They are available now; the technology is proven, it's Canadian made, and it can make a major and quantifiable impact on air quality. Canadian companies are leaders in this area, but need government support to fully commercialize their technology and create jobs in industrial development in our country.
Establishing the financial incentive we propose would be a win-win situation for our environment and the economy. The Canadian courier industry is a major client of this kind of technology. For example, Purolator has purchased 20 of these already, and are planning to get another 110. They are already realizing a fuel saving of 40%. The technology is available. The interest is there. The benefits are quantifiable and supportable.
Thank you for your time.
My name is Mike Tarr, and I want to thank you for allowing us to appear before you. I am the chairman of the board of Credit Union Central of Canada, or Canadian Central, as it's usually known. I too have a day job, and it's CEO of Northern Savings Credit Union, located on the north coast of British Columbia.
Canadian Central is a federally regulated financial institution that operates as a national trade association for the 504 affiliate credit unions we represent through nine provincial centrals. Our credit unions employ more than 24,000 Canadians who serve almost five million members across the country. At the end of the second quarter of this year our affiliated credit unions held close to $91 billion in assets. Between the second quarter of 2005 and 2006 our growth was approximately 10.5%
I'd like to spend a few moments talking about some concerns and focus that we have in terms of specific budget recommendations.
First is agriculture policy. Credit unions have a very strong presence in rural Canada. In Saskatchewan, for example, they represent probably 40% of the total financial services marketplace, and they have a growing book of agriculture business. So we are concerned with the agricultural economy. In particular, the credit union system supports the federal government's efforts to promote the biofuels sector, and more specifically the government's commitment to implementing a 5% average renewable-content requirement in transportation fuel by the year 2010.
We believe this is a very important step. We applaud the government for the direction it's taking, but we believe the framework that is put together for this has to include more than simply loan guarantees and the traditional roles government sees the private sector play.
We think tax policy, trade policy, environmental policy, research and development backed by the government, and financial incentives to lenders have to work in a coherent fashion so they make sense and then they can result in the leverage that's necessary for this initiative to move forward.
We have also been active and participating in consultations aimed at reforming the Farm Improvement and Marketing Cooperatives Loans Act. We look forward to proposed reforms being tabled in the near future. We agree in principle that a revised program could usefully target new farmers and intergenerational farm transfers while also seeking to expand the relevance of agricultural cooperatives.
In terms of tax policy, the credit union system is also engaged in lending to small and medium-sized enterprises across the country, or what is often called small business. On a consolidated basis, credit union participation in the SME market equals about $18 billion, which is only $2 billion less than the leading lender to small business in Canada, the Royal Bank.
Credit unions would like to strengthen that engagement with the sector, but lenders are concerned that federal tax legislation and Canada Revenue Agency practices act as impediments. Specifically in reference to the CRA, we are concerned with their policy that is eroding the quality of security that borrowers pledge to lenders. This is particularly true in the case of crown super-priorities. For example, in situations where lenders must sell assets of a small-business debtor, it is common for the CRA to come forward after the sale of assets and claim an interest in the proceeds of the sale because the SME was in arrears to the crown.
Compounding this problem is the fact that it is difficult to obtain accurate information from the CRA regarding the status of a business borrower's obligation. Clearly we get hit both in the front end and the back end of this policy and practice. If the government is concerned with the growth of the SME sector, as I think it ought to be, it should address these issues. These are, in our view, unnecessary impediments.
Thank you, Mr. Chair, and thank you all for your presentations.
To begin with the subject of literacy, having spent six years in politics and 18 years teaching in a university I obviously appreciate the importance of education. When you add to that the China-India global competition and that we can't compete on low wages, we have no alternative but to compete with our brain power. When you put in, as well, your figure of 42% illiteracy, which I didn't know was so high—putting all of that together, it's obvious to me that it's not only socially mean-spirited but economically super-foolish to cut literacy at this time.
So I guess I have a double-barrelled question to you, and you could answer one or both, as you see fit. It seems so obvious. Do you have any explanation as to why the government would do this? Second, can you tell us in human terms what the implications of these cuts are in any of these provinces you've described?
We think currently, if you read the literature that's out there—there was a certain study done a few years ago, even, by the C.D. Howe Institute on this exact issue of low-income Canadians trying to save for retirement—there really is no incentive right now for someone making, if I can generalize, under $25,000 or $30,000 a year to save at all, because the government will take care of them. Now, it won't do so at a very high level, but certainly they'll get things like a guaranteed income supplement or provincial Medicaid programs that we have across the provinces.
What we're recommending is that if we had some kind of incentive program—and we're not talking about a lot, but just an initiative—whereby, let's say, you could save $1,000 a year..... If someone—a family, let's say, making $30,000 to $35,000 a year—could save $1,000 and not risk, when they take the money out upon retirement, losing their government benefits, they'd still be able to get the government benefits they've been entitled to, which are currently acting as a disincentive to save.
We would say, on the one hand, that changing the policy to introduce either a new vehicle such as a tax prepaid savings plan from which withdrawals would not affect clawbacks, or exempting from the definition of “clawbacks” RRSP or RRIF withdrawals later on as retirement income, might act as an additional incentive—not to mention establishing a grant program similar to the RESPs, whereby the government might contribute 20% on a deferred basis into the plan.
Thank you, Mr. Chairman. I'd like to thank you all for your presentations.
Mr. Cormier, I listened very closely to what you had t o say, particularly when you mentioned that according to one study, light and medium-duty commercial vehicles represent 12% of miles driven but generate up to 25% of all ground-level emissions in urban environments.
This situation is not about to get any better. You propose a solution that I find most interesting, namely a tax incentive for courier companies that purchase hybrid vehicles.
You maintain that one hybrid electric delivery van has as great an impact on emission reductions as 17 Toyota Prius automobiles.
Could you elaborate further on that statement? Are there any studies corroborating your claim that committee members could see?
The social economy initiative, basically, was to provide infrastructure funding for infrastructure and for seeding for a number of programs at the local community level, particularly focused on assisting people who are currently somewhat disadvantaged in the marketplace. It was for investments in small business and a variety of other things that people wish to do.
In my own province, for example, in my own riding, in my own area, we had joined with a local community futures organization and were ready to announce a micro-lending program that was aimed specifically at beginning entrepreneurs. At the last minute, of course, with the funding cuts, our partner was not able to contribute and we're now having to go back and rethink and remobilize. I think the initiative cuts have really caught a large number of people unaware. They were something of a surprise, and as a result there is some disorder right now in the whole social economy area.
My view, personally, is that moneys that were earmarked for things that actually had a practical application in terms of allowing people to become more independent financially was a good news story, not just for those people, but for the communities and for both levels, the provincial and federal governments. So we're hopeful, at this point, that after some review these funds will be brought back.
Thank you, Mr. Chairperson.
I'd like to come back to literacy. I wouldn't want the impression left on the record that the $17 million the government is cutting out of literacy is simply administrative or there to create round tables. Just for you to clarify, Margaret, you indicated that a number of important groups lost all their funding, making it impossible to provide the direct service that helps people get the skills they need. Just as one example, I will put on the record the following:
|As Learner Outreach Coordinator for Literacy Partners of Manitoba (one of the coalitions that recently lost all of their federal funding), I answer all incoming calls on the LEARN line from adult learners seeking help with reading and writing. My job is to assess their needs and refer them to a literacy program or adult learning centre that best suit their needs. I am often the first person that they reach out to for help. Here is a sampling of a few of the calls I received....
| A 40 year old male who needs to upgrade his math skills in order to pass a test for a new job.
| A 45 year old male who wants to improve his reading and writing skills because he is embarrassed by his inability to read....
I could go on and on. I think you need to put on the record, Margaret, what is being lost by these cuts and say that it is not simply extra administrative, round tables, loosey-goosey stuff. This is real, hard programming that helps people better themselves.
You're absolutely right, and it would be remiss of me not to explain that these coalitions really are the backbone of literacy programs in the country. As you mentioned, they are generally the first point of referral for someone seeking help, often through our own LEARN Lines. The coalitions also run their own 1-800 numbers for people seeking help.
In Nunavut, all of the training programs for adult educators are going to be gone, and the training programs are provided by the coalition. Literacy programming in the Nunavut Arctic College is at risk because of this.
These are hard programs, either for literacy instructors or for learners, that are managed, run, and supported by these coalitions across the country.
One other thing, and maybe this is for everybody on the panel. Ken Georgetti, the head of the Canadian Labour Congress, has said the following: “Raising the basic numeracy and literacy of these workers”--who lack basic skills and cannot access training—“which means investing in adult learning and literacy programs, would do more to raise overall productivity and address the shortage of skilled workers than any tax cut in the next budget.”
Would anyone disagree with that?
I think it's important, because we are told that there's this high illiteracy rate, that the education system must have done something wrong. Therefore we're going to cut our investment in adult learning and basically at the same time not increase transfers to the provinces for education, creating an enormous problem.
I represent a constituency that is one of the most hard-pressed in this country, where people are working hard to help themselves by accessing literacy programs, or groups using the volunteer support program, or the social economy initiative, or they're developing co-op housing. They're finding their lifeblood cut out from under them. I look to all of you to help us reverse this agenda.
To Mr. Elliott, on social housing, you know that we've had this problem for a long time. I found it interesting that John McCallum raised the issue of social housing, when in fact we lost all social housing and any kind of a national housing program with the cuts back in the 1995 Liberal budget. I think it's important for us to get back on track with some new social housing program and cooperative housing program. How do we do that now, after ten years of inaction and a Conservative government that might be reluctant to invest in the public sector or in the cooperative sector?
Mr. McCallum asked you a question about the take-up of RESPs for low-income folks, and I guess I'm not as optimistic as you are with respect to low-income people picking up on a plan like this.
I'm glad to see on item number two that you noticed the Conservative proposal in the campaign of this cycling around the capital gain is just administratively impossible. I think it's a better idea, and I don't know whether it's a good idea, but it's a better idea to just create a lifetime exemption. I think that's probably administratively a lot simpler.
I agree with you on increasing the limit on the RRIF age. I think 73 is a little aggressive; restoring it to 71 would make some more sense.
I have a question with respect to your fourth proposal, which is the GIS clawback. I understand it from the GIS recipient, but on the other hand it's difficult for me to understand how you would take a chunk of cash that a person has saved over a lifetime in an RRSP, which is essentially tax-postponed money, and then when it comes to being withdrawn it effectively becomes tax-exempt money.
Thank you very much, Mr. Chairman.
Thank you for joining us and for participating in these consultations.
I have a question for Mr. Elliott regarding cooperative and affordable social housing. I tend to agree that investment is needed to improve the quality and quantity of affordable housing units in our communities.
Are there other options that we should be considering? Has your organization thought about other initiatives that the government could pursue to assist people in need of housing?
What happens when the government, a Crown corporation or a state-owned company disposes of public lands? In my riding, for example, the Canada Post Corporation is selling off a large tract of surplus land.
The land will be sold to the highest bidder. Generally speaking, the party that can afford to pay top dollar will have the resources to build luxury condos on the site. There is no incentive for people to build housing cooperatives. Could the government promote the construction of social housing by making this land available or by selling it off at a lower price to housing cooperatives?
I have three folks I would like to speak to, so I would ask that you be quick. I would much appreciate it.
Mr. Elliott, one of the comments we heard from Mr. McCallum asked you a very unfair and leading question, I think, in the sense of what this government hasn't committed to social housing. In fact it has, whether it is aboriginal reserve housing or off-reserve housing. Also the government has invested $800 million into social housing on a per-capita basis to the provinces. In fact, I think you mentioned you're from Newfoundland, which will receive over $20 million of that funding.
I just wanted to hear from you that the commitment this government has made to social housing in this country is a pretty good one.
I also wanted to follow up.... And it's too bad Ms. Wasylycia-Leis isn't here, because she was talking about the person in Manitoba who was working the phone on the educational issue. The organization she worked for had a help line, a LEARN line. Last year it received 333 calls, which is less than one a day, and one-third of those who called were people with a grade 12 education or more who called the wrong place. So I don't know if that's a great example of success. It's a bit, but it's a bigger story than was indicated.
Ms. Eaton, I wish I could ask you a couple of questions, but I'm hoping to get a little bit more detail about your foundation and how your funding is received, how it's allocated, and the benefits derived. I'd really appreciate getting that.
Mr. Cormier, one of the questions I had for you related directly to the examples you highlighted. Could you expand briefly on the success of one of them--I think you mentioned Purolator.
Ms. Eaton, like many people in Canada, I got involved in literacy at the local level. In Nova Scotia, we have Literacy Nova Scotia. Anne Marie Downey is a really passionate advocate. In my own hometown of Dartmouth we have Roderick Fraser. These people work on literacy with nothing, and it's an unbelievable slight to them that they would have a cut forced on them.
One can only shudder to think what Peter Gzowski might be thinking in his grave, as well as other champions of literacy. One of the great things about the Peter Gzowski golf tournaments, which support literacy, was that the golfers always heard from an adult learner after the golf tournament. I can think of so many times when people were amazed by the change in somebody who had access to literacy delivered through programs that are now facing cuts.
You've outlined your concerns here. This is more of a general question. Do you think it would be helpful for the federal cabinet to have a learner come and visit them at the next cabinet meeting, so they understand the difference literacy can make in somebody's life?