We will commence--or I should more accurately say we should recommence.
The finance committee has been hearing submissions from across Canada for the past number of weeks. I want to commend my committee members for their dedication to this task, but I can tell you, I believe we are more stimulated and interested in the presentations now than we were at the outset. It has been a wonderful education, and we thank you for being part of that process of educating us on your point of view. We look forward to your presentations, and I thank you.
We are going to begin with five-minute presentations, but before we do that, I want to give you a little coaching here. I will give you an indication when you have one minute or less remaining, if you care to make some eye contact with me, and then we will unceremoniously cut you off at five minutes to allow all of us to participate in this process. I prepare you for that in advance. Thank you.
Now, from the Consortium of Women's Organizations of Nova Scotia, Stella Lord is here. Welcome to you. You have five minutes. Take it away.
First of all, I'd like to draw your attention to a letter I would like to have written into the record, from the Sisters of St. Martha in Antigonish, who also support our brief. As you'll see, the brief has been presented by a number of women's organizations in Nova Scotia.
We thank the committee for the opportunity to bring forward concerns and recommendations that speak to the importance of ensuring that strong social programs are recognized and essential for the social and economic development and well-being of Canada and of everyone who lives here.
The organizations that comprise our coalition have been working together to bring attention to the need to proactively address the widening gap in income between the rich and the poor, the weakening and dismantling of Canada's social programs, and the ongoing exclusion of many sectors of society from full participation in it.
We believe the federal government has a strong role to play in creating both social and economic policies that acknowledge the right of all to a decent standard of living and advance inclusion and full participation, regardless of where they live, the economic situation of their province or territory, or their personal social and economic situation.
As organizations that work with women, we understand that poverty and exclusion are linked and that they are the result of an economic agenda that is narrowly focused and does not take into account that the economic health of a country and its people is interdependent with social well-being. We also understand that there are high economic and social costs to poverty and exclusion, and that poverty and exclusion are gendered.
This means that poverty affects women more profoundly than men. In Canada, one in every seven women lives in poverty, and regardless how poverty is measured, women are disproportionately likely to live in poverty. This is most clear in the case of single mothers, where the likelihood of poverty is particularly high.
Because women live in the deepest and most persistent poverty, the measure of the effectiveness of any step the federal government takes to address it must be the impact the programs and policies have on the poorest of women.
If there is the political will to do so, we believe that poverty and the risk of poverty can be reduced, if not eliminated. Historically, the federal government has played an important role in developing programs that alleviate or prevent poverty. Without the federal government we wouldn't have housing programs and we wouldn't have had the Canada Assistance Plan. Many provinces would not have been able to provide welfare and other services.
But it appears that the federal government is now stepping back from the crucial role it has played historically in ensuring adequate and equitable social programs and services across Canada. This has been particularly evident with the elimination of the Canada Assistance Plan and the implementation of block funding through CHST in 1995, the cancellation of the federal-provincial child care agreements earlier this year, and the more recent cuts to programs in the last month or so that directly affect the health and well-being of women and communities.
Key problems that have emerged in the wake of these cuts and that have been identified by our coalition and other women's groups are: the deterioration of social programs; the absence of any coherent or consistent provision of basic social programs across jurisdictions; the failure of governments to establish mechanisms to ensure that programs comply with human rights, including women's rights to equality; the development of workfare; intensification of the discourse on provincial sovereignty; and an increasing lack of transparency in government decision-making.
Since my time is nearly up and I can't say what else I wanted to say, I draw your attention to our recommendations...which relate to the CST and equalization to the have-not provinces; strategies to ensure basic rights and standards for income assistance; increase the national child benefit to $4,900, the amount recommended by the Campaign 2000; more funding for affordable housing; labour force development agreements in each of the provinces; rethink the current child care initiative and go back to the old plan, or even something better; income tax reform that really benefits low-income Canadians; full funding for the status of women program; a reinstatement of the funding for the court challenges program; restore the funding to the groups and organizations that were cut recently, such as literacy programs, CAP sites, aboriginal smoking prevention programs, and so on, which disproportionately affect low-income Canadians.
Thank you, Mr. Chairman.
Members of the committee, my name is Mr. Jim Gourlay. I'm chair of the Atlantic Magazines Association, which is an affiliate of Magazines Canada. With me is Mark Jamison, who is the chief executive officer of Magazines Canada.
To the extent that this should be considered a brief to you, on behalf of the magazine industry nationally, Magazines Canada is a national non-profit association, representing Canadian consumer magazines all across Canada. About 90% of Canadian magazines have paid circulation in both official languages. Member magazines span a wide range of topics, including business, news, politics, sports, arts and culture, leisure, lifestyles, and the environment, among others.
In our brief you will have read several recommendations for the Canadian magazine industry. However, this afternoon we would like to focus our comments on an urgent situation we are facing with respect to the publications assistance program, PAP, as it is known.
The consumer magazine industry is bracing for a major change that will have a dramatic impact on how magazine distribution and the access Canadians have to Canadian content magazines proceeds in the future. The issue is this: Canada Post has announced its intention to withdraw its $15-million financial contribution to the publication assistance program within the next five months, I believe.
The price tag of this decision is a $15-million gap that will cause an immediate 31% increase in postage costs for the average magazine. This comes on the heels of staggering year-after-year postage rate hikes and means that distribution costs will soar even higher. The situation will simply not be viable for many publishers. I will tell you that postal costs have increased about 100%. They have doubled in the last eight years, and we're looking at 31% on top of that.
The effects of Canada Post's decision are many. It could mean cutting back on the amount of editorial and Canadian content pages that can be produced. It could mean fewer jobs and assignments for Canada's writers, creators, illustrators, and photographers. The fact that some magazines will not survive could mean that there will be fewer Canadian magazines in the marketplace and less choice for readers.
This will also drastically alter the way magazines are delivered to Canadians, because Canada Post may no longer be an affordable option. The industry is forced into considering alternative delivery methods, and this could mean prohibitive distribution costs, especially in rural areas like Atlantic Canada, to the extent that Canadians living outside major urban centres will not have the same access as other Canadians to affordable Canadian magazines.
Canada Post's withdrawal from PAP effectively puts an end to a century-long distribution partnership and to a highly successful subscription-based delivery model that has evolved because of federal government magazine policy.
What we are asking you today is that the finance committee recommend that Canada Post's financial contribution to the publications assistance program be maintained, until a proper review and evaluation of Canada's magazine policy. In our view, Canada's highly successful magazine policy should first be reviewed and evaluated before such crippling cuts are allowed, with five months' notice.
Carving out space for a Canadian voice has always been a challenge in this country, for two reasons: first, the country's geography, with a relatively small population spread across a huge land mass, makes magazine distribution more difficult and more costly than in many other countries; and second, culturally competing with the enormous size and influence of the United States entertainment industry is daunting.
Indiscriminate cuts do not take into consideration how to best serve Canadian readers. Canada's magazine policy needs to consider how we can best ensure that rural Canadians and others are able to access Canadian information, perspectives, and stories at affordable rates. It needs to consider the importance of Canada's smart jobs--our writers, designers, editors, and illustrators. It needs to take into account the health of Canadian culture and all the small to medium-sized businesses that publish more than two-thirds of our diverse and rich collection of magazines.
Thank you, Mr. Chairman.
I'd like to begin by thanking you for the opportunity today to raise the concerns of our $51 billion industry in Canada.
There are two substantive issues I'd like to raise here in the brief time I have available. The first is the GST and the second is labour shortage.
The one-point cut to the GST earlier this year was applauded by our industry from coast to coast. After more than 15 years, the GST remains a sore point for our industry. It is discriminatory and unfair, adding tax to our ready-to-eat meals while leaving ready-to-heat meals tax-free. I would encourage this committee to recommend that government move as quickly as possible to reduce this tax to 5%.
The other pressing issue is labour shortage. For members in western Canada, this is already a crisis. For the balance of the country, it is a growing problem. There's no getting around or wishing away the two realities that confront our industry: first, the country's birth rate has fallen precipitously in the last three decades, seriously constraining growth in the labour market; second, we're on the verge of the biggest exodus from the labour market in the country's history--the baby boomers are starting to retire.
When you look at these two factors, you can only conclude that these challenges ahead are daunting. The Conference Board of Canada projects there will be a shortfall of more than 950,000 workers in Canada by 2020 unless we do something to increase the available labour pool.
All industries will suffer from the labour shortage, but the outlook for the food service industry is particularly daunting. Our industry is skewed toward youth, and in fact the available workforce will be older. Food service today relies on young people for its workers. In fact, 44% of food service workers--more than 440,000 employees--are between the ages of 15 and 24, but projections suggest that by the year 2025 the population of that group, the 15-to-24-year-olds, will actually decline by 330,000.
In order to meet this challenge, we in the industry need to strengthen our recruitment and our retention activities. We will have to access older workers and look for new pools of talent to entice the industry, but we can't overcome the demographic reality confronting the Canadian labour market.
We need dramatic changes in public policy, including modernization of the immigration point system so that it recognizes the diverse needs of Canada's labour market; greater flexibility and easier access for temporary foreign workers; the working holiday program and the provincial nominee program; elimination of the clawbacks in our federal retirement benefits programs, which punish retirees for supplementing their incomes; and incentives for labour mobility within Canada, encouraging the unemployed to move from areas of high unemployment to areas of high demand.
We also recommend that government take a serious look at lowering the tax burden on low-income Canadians, thus encouraging them to enter the workforce. There are a number of ways government can lower the tax burden on Canadian workers, including lowering the bottom tax rate or raising the basic personal exemption, and adding a yearly basic exemption of $3,000 into the Employment Insurance program, as we already have in the Canada pension plan.
A yearly basic exemption in the EI program has been recommended twice in the past by this committee and twice by the human resources committee. The YBE would put more money into the pockets of working Canadians and provide targeted payroll tax relief to labour-intensive industries.
In summary, Mr. Chairman, the labour shortage is already a crisis in western Canada, and it will be the biggest single issue we face in the years to come. I believe that you and your committee should recommend to the Minister of Finance that he move as quickly as possible to address the labour shortage, so that we will be able to compete tomorrow.
Thank you, Mr. Chairman and committee members.
The beverage alcohol market in Canada could well be the poster boy for the theme of this year's pre-budget consultations, Canada's place in a competitive world—a poster boy, that is, of what not to do to create a dynamic and a competitive market.
This is the spirits industry's first appearance before the committee in many years. We have not joined the legions of business interests who have extended their hands for the ever-greater, taxpayer-funded handouts and subsidies. We believe instead in the virtues of a level playing field and competition. Competence should decide relative winners and losers in a free market, not tax policy.
We indicated in our formal brief to the committee that a glass of wine, a bottle of beer, and a spirit cocktail each contains an equivalent level of alcohol. Yet the Government of Canada imposes a federal excise duty of 9¢ on a glass of wine, 11¢ on a bottle of beer, and 20¢ on a spirits cocktail. In essence, the glass of wine is afforded a 56% subsidy and beer a 47% subsidy when compared with the duty rate imposed on spirits. In other words, the federal excise duty on spirits is approximately twice the rate imposed on competing beer and wine producers.
This huge variance in relative fiscal federal burdens under the excise duty structure, including directly competing and substitutable beverage alcohol products, is the economic equivalent of a direct subsidy. This is a subsidy with the same familiar negative economic consequences, including the misallocation of resources, lowered productivity, slower growth, and a less dynamic consumer marketplace. In fact, if the federal Department of Finance had mailed out $927 million in cash to the beer and wine industries, the effect would have been the same.
Surely there are more appropriate uses of federal taxpayer money than to distort the beverage alcohol market in this manner. Of course, the problems and inequities within the beverage alcohol market in Canada aren't confined to the federal government. A number of provincial governments have even more egregious behaviours and policies.
But the federal government has a leadership role to play, and instead of being part of the solution it is actually part of the problem. Since federal excise duties are the first level of tax applied within the value chain, any discrimination is magnified by compounding taxes on taxes before reaching its ultimate end point, the Canadian adult consumer.
October 17, 2006 is an inauspicious date in the history of Canada. On that day, the House of Commons approved a ways and means motion that implemented, retroactive to July 1 this year, even further subsidies to certain wine and beer companies, thereby increasing excise duty marketplace distortions. In respect of beer, the new excise amendments provide sliding-scale relief on the first 7.5 million litres of beer packaged annually in Canada. While the additional excise duty relief for beer was originally tabled in the spring budget as a small-brewer assistant measure, and was intended to benefit only those brewers whose annual production was less than 30 million litres, this already exceedingly high cap has been eliminated and the additional assistance is now available to every brewer in Canada regardless of size or circumstances. Coincidentally, October 17 this year was also the date that Sapporo Brewery of Japan, a $4.3 billion conglomerate, formally assumed control of Sleeman Breweries.
The same ways and means motion also exempts from any excise duty all wine made from Canadian grapes and fruits. So instead of paying the already low 9¢-per-glass excise duty, a vintner can reduce that to zero if the wine is made from Canadian-sourced agricultural products. From an economic and even political perspective, we have to ask why Canadian spirits manufacturers and our farm suppliers are not given the same opportunity to avoid excise duties on our own products, most of which are made from 100% Canadian-sourced cereal grains.
The spirits industry's signature product is Canadian whiskey. Canadian whiskey brands like Crown Royal, Canadian Club, Wisers, and Schenley are iconic symbols of Canada exported around the world, yet they are severely disadvantaged in their own home market by their own federal government.
As members will be aware, there have been no beer or wine retail price reductions as a result of the excise duty relief in effect as of July 1. This won't surprise members, since this was the evidence provided to the committee by the beer and wine industries themselves. Additional excise duty relief would be pocketed by suppliers and at least in part reinvested in the marketplace to compete—to compete, that is, against spirit suppliers and grow their market shares at our expense. Lower excise duties for beer and wine provide those segments with higher gross margins, which are used to compete in the markets.
Spirit suppliers are constrained from fully competing here and abroad for our fair share of the market by artificially low prices in our home markets. If Canada wants a competitive beverage market and a prosperous beverage alcohol industry, fundamental reform of federal excise duties is urgently required.
Good afternoon, Mr. Chair.
Thank you for the opportunity to speak to this committee.
The Nova Scotia Home Builders' Association is the provincial arm of the Canadian Home Builders' Association and represents the residential construction industry, including builders, renovators, developers, trade contractors, and the like.
My name is Suzanne Bona, and I am the past president of the province's largest home builders' association, local Central Nova, and the Nova Scotia representative for the national Canadian Home Builders' urban council. I am also president of one of Nova Scotia's largest home building companies, Scotian Homes.
With me today are Paul Pettipas, chief executive officer of the Nova Scotia Home Builders Association, and Sherry Grant, communications director.
The topics I will discuss today include infrastructure costs, downloading and affordability, GST reduction and indexation, skilled labour shortages, and the underground economy.
The first point I will look at is on the affordability and infrastructure costs. Currently, there is no mechanism in place for provinces and municipalities to be accountable for the federal moneys they receive. Are we certain that the federal money for the infrastructure is being spent in the areas where it should be? Is it being diverted into other areas, thereby forcing municipalities to download additional costs, fees, and charges on to builders and developers, which ultimately means the homeowner will be the one paying in the end?
For example, in Halifax the municipality is looking at increasing sewer redevelopment fees from 30¢ to 80¢ per square foot. This means that for homes similar to what our association recently built for Habitat for Humanity, the cost will have gone from $547 to an incredible $1,459. This alone will put the idea of home ownership out of reach for some families in Nova Scotia.
It is our recommendation that the federal government create a system whereby infrastructure money provided to the provinces be accounted for to ensure the well-being of Canadians.
When it comes to the affordability of homes, I will draw your attention to the numbers provided by CMHC on the average new single houses in Halifax from 1998 to 2007. The cost of new homes has risen from $156,000 in 1998 to a forecasted $328,000 for 2007.
This may not seem significant in comparison to the cost of houses in the western part of Canada. When you compare the average household income for a family in the Halifax area, however, you will see why this increase is having such a dramatic effect on the affordability of new homes.
Based on estimates from CMHC market analysis, looking at annual growth and aggregate personal incomes to all households, the average income per household is $71,000. The average for owner-based households is $89,000, with the average for renter-based households standing at $44,000.
This type of income, coupled with the price of new houses, creates a challenge for families in Nova Scotia. In saying this, it is not only new home buyers who are affected by this. The resale markets are also often on par with new homes in regards to pricing.
This leads to my second point, on the GST reduction and indexation.
The 1% reduction of GST from 7% to 6% was well applauded and a positive step. We look forward to another 1% GST reduction.
In addition to the GST reduction, I would be remiss not to bring to the forefront the topic of indexation. With the introduction of the GST, it was the government's commitment for the GST rebate to be indexed on a sliding scale between $350,000 and $400,000. However, this has yet to occur.
As you can see from the drastic increases in housing prices in Nova Scotia alone, there will be a major problem over the next few years. It is already a huge problem in larger urban centres such as Vancouver, where 97.6% of the houses, almost all, are priced higher than $350,000, therefore putting the GST rebate out of reach for homeowners.
The third point I would like to touch on is skilled labour shortages. This is an issue that we are faced with across the country and in many industries, as was already heard here today. In particular, the residential construction industry is facing a critical shortage, and we are continuing looking at ways to overcome this challenge. In particular, the immigration policies need to be taken into consideration to help manage the issue in the short term.
Our recommendation is to redevelop the point system to allow temporary skilled trades people into the country, which would be a recommendation in the short term.
In addition to this, the Canadian Home Builders' Association has developed and presented a human resources development action plan, which calls for the federal government to take a leadership role in the development and delivery of training through Canada's existing training and education system. It's important to move forward with this initiative to ensure the sustainability of the residential construction industry.
Finally, our fourth point concerns the underground economy. This accounts for a huge portion of the residential construction industry and severely impacts all Canadians. The existing contract payment reporting system that was introduced is not effective, and it is not doing what it was intended to do.
I'm here on a two-tiered mission, and I bet this will surprise you, but I'm here to thank the present government for what it did recently for affordable housing. I mean the $1.4 billion that was recently transferred to the PTs by way of trust. In New Brunswick, we are looking at close to $25 million, until March 2009, that we can spend on affordable housing. The only thing we can hope for in New Brunswick is that our new provincial government can get off the mark and work with us and spend that money before 2009, but spend it in the best possible manner. We think, if we're smart, we will add around 1,000 affordable housing units in New Brunswick, so that's the good part.
You might want to say to me, “What the hell are you doing here, then, today?” Well, I have another side. I think that the federal government should make affordable housing the foundation or the cornerstone of its social policy framework.
In the invitation that you sent us here, you asked us to tell you what the budget should have in it to ensure that our citizens are healthy, have the right skills, are motivated, and will do better for themselves and for their communities and their society. How can you be healthy, number one, if you can't afford to eat because your housing takes up 50%, 60%, 70%, 80% of your total income? Okay? So don't put money in health first. Put money in housing, because it ain't going to help. You're putting on a band-aid, but you're not fixing the wound.
It's the same thing for motivating people to educate themselves, for parents to motivate their kids to do something. When you are poor, and you can't even afford to feed your kids, and you got to take them to the food back or the soup kitchen, how are going to be motivated to motivate your kids for the future? So there again, put the money where it would do the most good. If you have a safe and secure and affordable place to live, then these other things will come. You will be healthier. You will be more motivated. You will want to work. You will want to contribute. So that's that one.
My suggestion is, if you say to me that affordable housing is okay till March 2009, so shut up, I will ask you why you don't, in the 2007 budget, put a fair chunk of money aside, and in the 2008 budget do the same thing. When the end of this program comes in 2009, you will have another big chunk of money. It will not hurt as much, and then you'll be ready to continue to establish affordable housing as the cornerstone of your social policy programs.
We are concerned about some other programs, though, that we hear through the grapevine might terminate in March 2007. The RRAP program, the rehabilitation program for low-income housing, is a heck of a good program. It's been there a long time. It's created an industry within itself. It makes the stock more viable for the future. I can't believe for one minute that this government is going to cancel the RRAP program. One thing that you've got to tell us now, or tell us in early November is that you won't cancel it, because it's creating a heck of a mess in the industry.
The same thing goes for SCIPI, Supporting Communities Partnership Initiative. I'm part of SCIPI. It did a heck of a lot of good. It is doing a heck of a lot of good in the communities. It involves a lot of people who care and who volunteer, and it helps the people who need them. The reason we need SCIPI is that we don't have enough affordable housing. So unless we get enough of that, we're going to continue to need SCIPI, but there, again, tell us now, early in November, that SCIPI isn't going to be shut down come next March, because I know it's creating a heck of a lot of havoc in our areas.
There are other things. We're hear you're going to sell off CMHC. Please don't do it. It's served Canadians for 60 years. I don't believe that's going to happen anyway, but I'm saying use the funds that CMHC is bringing in; turn them around and put them into affordable housing, and then you won't have to have that in your budget.
I could go on, but thank you.
I want to tell you today about one of Canada's greatest success stories. I want to tell you about Halifax.
In the last ten years Halifax has completely turned around its economy, and that's due to a unique partnership between the private sector and our business community here in Halifax. We now have our sights set on bigger goals.
In the last year, we have completed a cultural plan, an immigration strategy, a regional plan, and HRM's--Halifax's--first ever economic plan. That plan will build on the public-private partnership that has grown our community over the last ten years. This economic strategy is a plan to keep our kids, grow our community, be competitive, and build the best community in the world. A strong Halifax is good for Nova Scotia, and a strong Halifax is good for Canada.
Our economic strategy is all about people. It's about investing in creativity. It's about the world getting to know us here in Halifax a little better. It's about having confidence in ourselves and in doing so, building new partnerships. It's about having the best business climate in Canada.
We have an economic vision. We have a plan. We know exactly where we're going. We know exactly what we need to get there. We also know that the federal government will be a key partner with us in growing that future. So let me give you a few examples.
This strategy recognizes that communities have to invest in a social and cultural infrastructure that enhances quality of life. In this respect, Canada's bid to host the 2014 Commonwealth Games represents the best chance in two or three generations to fast-track this kind of investment in our community. We need this investment to attract and hold young people who will help us build the future. We are pleased that the federal government is a committed partner to these games.
Second, our partnership of business and government knows that we have to pay more attention to the largest employer in our community, and that's the Canadian military. They put hundreds of millions of dollars into our economy every single year, and they're going to grow, and we want them to grow here. So the business community, along with local government partners, is working to develop and enhance the value proposition and the business case for defence expansion here in HRM.
The third example is the Halifax gateway, which represents an important economic opportunity, not just for Nova Scotia, but for all of Canada. The Halifax Gateway Council is a partnership of public sector agencies and private sector organizations. This group has identified clear priorities for growing the Halifax gateway. Halifax represents a real alternative for Asian cargo coming to Canada. We are already handling Asian cargo coming through Suez. There is about the same distance between Halifax and Hong Kong as between Vancouver and Hong Kong. So Asian cargo flowing through the port is already building our business activity. Businesses have already discovered this route into Canada. Halifax is already an option for the business community moving Asian cargo into this country. It's time for the Government of Canada to follow business and move to a two-ocean gateway policy.
Finally, let me talk about our business climate. We have a lot of work to do here in Nova Scotia to meet our goal of having the best business climate in the country. Current discussions on fiscal transfers will have a big impact on that business climate and on our competitiveness.
For example, a simple measure like removing resource rents from the equalization formula could cost Nova Scotia a quarter of a billion dollars a year. That cost would have to be absorbed through local taxes or through a reduction in services. So any cuts or changes to federal transfers would undermine our competitiveness. I urge the government to be fair and balanced in these negotiations.
Thank you for the opportunity.
Thank you, Mr. Chairman.
The New Brunswick Childcare Coalition is happy to appear before the Standing Committee on Finance .
The Coalition is a nonprofit membership-based organization that includes individuals and organizations from across the province. We promote high quality, accessible, nonprofit childcare services provided by trained and well-paid staff for all children and parents in the province who want or need them. We are affiliated to the Childcare Advocacy Association of Canada, a national organization.
In order for Canada to prosper in the world today and in the future, it is necessary that we invest in our full potential. It is especially critical that we offer adequate support to ensure that children acquire the foundations for lifelong health, learning, and skill development.
As is already recognized in most other developed countries, quality child care programs help build these foundations and also help support ongoing learning, skill development, and labour force attachment for the parents. Public investments that improve access to quality child care services are affordable because these benefits significantly outweigh the costs involved.
As the Standing Committee on Finance conducts prebudget consultations clearly focused on Canada's place in a competitive world, we want to offer the following recommendations: the government should invest in quality childcare services providing support to children, families and communities, as well as to the economy, which will improve the global competitiveness of Canada.
However, the benefits of childcare will only be realized through a focused public investment strategy that ensures families' access to quality services. To build the childcare system that New Brunswickers and Canadians want and need, the New Brunswick Childcare Coalition calls on the federal government to restore and increase sustained, long-term federal funding to the provinces and territories. Federal transfers must be specifically dedicated to improving and expanding childcare services, based on provincial and territorial plans to advance quality, universal access and affordability.
Quality child care enhances the skill set and talent level of the Canadian labour force immediately and in the future. It offers parents, especially mothers, the opportunity to increase their labour force attachment and upgrade their skills while helping their young children get a healthy start, develop social skills, and build a foundation for lifelong learning.
These developmental benefits translate into greater contributions back to the community and reduce the chances that children will require targeted supports later in life. Social development and skill acquisition benefits not only citizens but also their employers. Canada's advantage in a competitive world is its people, and child care is a vital part of human capital and labour force development.
It is not surprising that the Bank of Canada's governor, David Dodge, the Vancouver Board of Trade, and a recent survey of executives in Canada's largest companies all have identified the economic importance of public investment in early learning and child care. It also helps to explain why the most comprehensive studies done show that the benefits of quality universal child care systems outweigh the cost by a factor of two to one, not including the additional benefits to children who are at risk.
The federal government is terminating the bilateral agreements that provided dedicated funding for provinces and territories to improve their child care services and replacing these funds with two piecemeal approaches: a taxable family allowance and a fiscal incentive for child care capital costs.
Though these approaches are intended to offer market-based efficiencies, years of experience and research indicate that they will not deliver the child care services we need because they are not tied to community-based strategies and therefore unlikely to respond to community-wide needs; will not create a national child care system, yet they hinder the provinces and territories in creating their own systems; and lack clear accountability for public funds. For example, what responsibility will the capital incentives recipients have to ensure access to new spaces by children with disabilities and lower-income families?
I'm going to go directly to my recommendations.
Being the local boy here doesn't give me any more time, so I'm going to move very quickly.
I could ask you all questions. I'm going to start with Fred, and then go to Suzanne, and then to Rob McKelvie. Rob has, by the way, for when you guys are back here the next time, the best fish and chips in town at a place called “McKelvies” down the road, with real malt vinegar.
Fred, you talked about the economy in Halifax, and it's done very well. One of the factors that hasn't contributed much is the declining federal presence. We were hit hard by program review some ten years ago, and while other parts of Canada--certainly Ottawa--have rebuilt their federal presence in terms of human resources, we haven't. Could you comment on that?
Yes. We talk about this in our brief.
On the surface of it, the recent cuts look like they were across the board, all over the place. But when you actually drill down and look at where the cuts are in terms of the status of women and the court challenges programs, of course those affect the equality of women and their ability to participate in civic, political, and economic life.
When you go down below that and you look at the cuts to literacy and the cuts to CAP programs, and so on and so forth, all of those programs that were recently cut will disproportionately affect low-income people, and the majority of low-income people are women.
We see these cuts as being cumulative. They started in the nineties, and they have been cumulative.
The recent cut to the child care program is going to be devastating for low-income women who want to get into the labour force. If they earn anything over about $25,000 a year in this province, they're entitled to hardly to any subsidy.
The costs of that and then the other cuts to programs, skills learning, and training are really going to affect the ability of low-income women in particular to participate, economically and socially.
It's the multitude of issues facing aboriginal women that has unfortunately been used in the past as an excuse for not dealing with this single issue that I asked you about. Again in your answer, I think you illustrated part of the reason that past governments in this country have been able to ignore this issue and put it on the back burner for so long. So I'll ask you again: do you—
Ms. Stella Lord: Well, why don't you invite the aboriginal women's association—
The Chair: Madam, we have heard—
Ms. Stella Lord: —to speak to you directly--
The Chair: We have heard from numerous aboriginal spokespeople. And in fact your condemnation of our promotional material is most unjustified. The fact is we have heard and continue to hear from aboriginal representatives.
If you have specific ideas after this meeting on how we could do a better job of advancing that cause, I'd be glad to hear them. But we will continue now, Madam, with questions from other committee members.
Thank you for your response.
That's the same treatment I get all the time. That's what happens when you're shorter than the chair, I guess.
Thank you again to all the presenters. It's tough to ask questions, but the submissions are interesting. Some of them, obviously, don't correspond to what we're looking for, but this is a finance committee, and we have some decisions to make. Nothing is easy.
I'm just going to try to ask a couple of quick questions. The first one is for Mr. McKelvie, from the restaurants association.
Recommendation number three, if you could clarify it a little bit, states that you recommend that the government revise the immigration point system to remove barriers and restrictions for entry-level workers willing to work in Canada. What exactly does that mean? Does it mean you're willing to lower the barrier so that anybody can come in? Are we looking to lower the barrier based on education and skill level, when everybody else is asking us to bring in more skilled people?
Thank you, Mr. Chairman.
Mrs Lord, there's a whole series of recommendations at the end of your brief. The last one calls on the government to restore fully the funding of programs whose budgets have been cut by the Conservative government a few weeks ago. We're talking of about 750 million dollars.
You've referred to literacy, public assistance, smoking cessation campaigns in First Nations, the voluntary and community sector, and education and training programs, but you've never referred to the cuts made to the financial assistance program to social economy enterprises, even though it seems to me to be a promising program. Indeed, it's a program that can be helpful when the private sector doesn't want to take its responsibilities and when the public sector might not be the best player. That has been confirmed, for example, in the case of the Quebec childcare network. Social economy has an important role to play.
Did you forget to mention it or was it implicit?
I would like to thank the chairperson for allowing me the opportunity to speak at the committee today. I'm particularly glad to appear, given that one of the committee's principal goals is to look at ways of making Canada more competitive. This is a goal I firmly support, and I think research libraries play a significant part in achieving this objective by the information services and resources they provide directly in support of research and innovation.
The Canadian Association of Research Libraries represents Canada's major academic research libraries, as well as public institutions such as the Library and Archives Canada and the Library of Parliament. Our members' collections form the backbone of Canada's intellectual holdings in all disciplines. Collectively, our members spend more than $500 million in new acquisitions.
Competitiveness and success are built upon a dynamic research sector, which in turn must rely upon access to information that is current and comprehensive. That's why, in 2004 alone, 40% of research activities took place in Canada's universities, which were fully supported by Canada's university research libraries.
The government has already recognized the importance of economic research by increasing funding to a number of grant councils and research programs in its budget of 2006, something that we applaud.
They are all important steps forward, but it is important also to look at other steps that need to be taken so that Canada's research institutions can best compete internationally.
I will focus on three of these today: the indirect costs of research program, the GST, and the new challenges of e-learning.
Concerning the indirect costs of research program, increases in funding to granting councils such as NSERC in the last budget ensure that Canada's strong research foundation reaches its full potential. But beyond supporting direct costs of research in Canada, we must consider their related indirect costs, particularly to Canada's research libraries. Whenever there is an increase in direct research grants, there is a corresponding increase in indirect costs. The indirect costs of research program helps offset these, especially at research libraries. Funding, for example, is used to expand access to electronic resources and journals and databases critical to all research, as well as acquiring the technologies that deliver these resources efficiently and quickly for our researchers.
Previously, the indirect costs of research program covered about 25% of the overall cost of research grants to universities. New investments in the last budget have raised that figure to 26%, but for Canada to be internationally competitive, we need to reach 40% coverage.
On the GST, presently university libraries receive a full rebate on the GST they pay on printed books and on subscriptions to most print magazines and periodicals. This means the budget goes further, resulting in more and new materials on the shelves. Nowadays, however, scholarly materials overwhelmingly are being delivered in an electronic format, to the point that now in fact we spend more on electronic journals and resources than we do on print. However, such materials are not eligible for the GST rebate. There is no apparent justification for this. An electronic journal varies only from the print edition in medium, and the funds freed up by rebating electronic materials can and should be used to purchase other materials. Here, a minor change in definition can have a major effect.
On e-learning, as Canada moves towards a knowledge-based e-economy, electronic or e-learning will become more and more important to serve the needs of learning communities. E-learning is a critical component in Canada's overall capability to sustain economic development and foster a cohesive civil society. It provides the ability to access and deliver high-quality educational materials, anywhere, at any time. Beyond the university, it helps Canada's scattered population upgrade professional and trade qualifications, as well as focus on lifelong learning.
A national e-learning strategy should be a natural Canadian priority. That's why we're pleased to be working with the Canadian Council on Learning to develop one. One of Canada's strategic goals should be to compete internationally with countries that are implementing strong national plans in this area.
I have two important closing notes that will be of interest to parliamentarians. First, CARL members are spearheading an exciting new project, called the Alouette Canada open digitization initiative, which brings together libraries, archives, museums, and other interested communities to present our cultural heritage, documents, and artifacts online to our citizens and to the world. Most importantly, Alouette Canada provides for ensuring access to that heritage. This is a project that will impact your constituents and is worthy of public support.
Secondly, I would be remiss if I did not highlight Mr. Lunn's recent decision to keep producing printed topographical maps and to keep the Canada Map Office open. This decision will mean that Canadians can continue to have access to printed maps that are critical for safety in so many traditional Canadian pursuits, such as hiking, canoeing, boating, and tourism.
I appreciate this opportunity to put forward some of our ideas.
The Face of Poverty Consultation is a group of representatives from various communities in the Halifax regional municipality who have been working together for some four years doing advocacy and education around poverty issues that are causing so much suffering in our community and our country. People knocking on doors and asking for help are familiar to all of us. Canada is one of the richest countries in the world, and it ranks 18th among 23 industrialized countries in terms of child poverty. Approximately 112,000 Canadians died in three wars and peacekeeping missions. Now, ten times that number, over one million children, are engaged in a war on poverty here in Canada. Over 1.7 million Canadians live in substandard or unaffordable housing, and at least 14,000 Canadians are homeless. If nothing else, these are very shocking statistics, and they represent people who live right here in Canada.
A fundamental tenet of each of the face groups represented in the Face of Poverty Consultation is “love thy neighbour”. One of the ways we do this is to attempt to ensure that all our neighbours have shelter, food, income, health services, access to education, and employment--the very things we desire for ourselves. In our years of study and experience together, we have recognized again and again that persons living in poverty do not have these basic necessities.
Poverty goes far beyond the lack of daily needs. It forecloses choices and options that many take for granted. It deprives people of experiences that contribute to meaning and human development. We have only to look at recent situations in France, Australia, and in some communities here in Canada to realize the damage that poverty can do to a society. It is our contention that something needs to be done about poverty, right now.
The United Nations Covenant on Economic, Social, and Cultural Rights states that all citizens have a right to adequate shelter, food, income, health, and employment. Canada is a signatory to this and other UN documents of a like nature. We know that in May of this year, a United Nations report expressed concern about the high poverty rates in Canada. It recommended that Canada take all possible measures, to the maximum of available resources, to ensure the enjoyment of economic, social, and cultural rights for all. In fact, it did say that issues of hunger and homelessness should be termed a “national emergency”.
Reports and studies from other sources, as diverse as the Toronto Dominion Bank, the National Council of Welfare, and the national child poverty report card, come to the same conclusions.
People are poor. People do not have enough money. This was one of the first comments made by a young mother we spoke to in a family resource centre. If people cannot earn enough money for themselves, then they are dependent upon others to help them with the necessities of life. Governments are agents who can make changes in this situation. Churches and other community agencies have supplied band-aids for citizens, when what is required is bold innovation by governments. We believe it is a human right to be free of poverty. Polls consistently indicate that Canadians value their safety net and that they want to help their fellow citizens to have a good life.
Politicians have often told us that they need to hear from citizens before they try to bring about changes to the system. Volunteers from all walks of life, old and young, give countless hours of their time, energy, money, and goods to help those in need. This seems to indicate that citizens do support any and all efforts to balance the inequalities in our society.
We are not asking for a shrinking of the federal government. We are asking for better government, government with accountability to and for all its citizens. We are asking for cooperation and negotiation among the various levels of government.
More specifically, we find ourselves able to support the recommendations made by the Citizens for Public Justice. They are calling for a poverty reduction strategy for Canada that would include, among other things, raising the child tax benefits—
Thank you, Mr. Chair, ladies and gentlemen. I'm Nick Busing, president and CEO of the Association of Faculties of Medicine of Canada.
My association, AFMC, represents the 17 faculties of medicine in Canada. We have a tripartite mission: undertaking health research to improve the lives of Canadians, educating future physicians of Canada, and providing clinical care in all settings, with a focus on the tertiary and quaternary environment.
Today I wish to focus on health research and on health human resources that are required for our mission and for the country. We can measure our prosperity and our competitiveness by looking at the research and developments taking place in Canada. The benefits of health research are seen across the country, in direct impacts upon the health of all Canadians, in identifying system-wide improvements to the delivery of health care, in creating economic benefits to the training of knowledge workers, and in providing widespread employment opportunities. The benefits of health research accrue over time and can only occur in an environment of sustained and long-term investments.
In recent years we in Canada have made impressive gains. We are equipping our major research institutions for the future through the CFI program, in partnership with the provincial governments. We have recruited and retained an impressive array of Canada research chairs to take advantage of our array of investments in infrastructure. In fact, many recruited from abroad are helping to reverse the brain drain. Now our tri-council funding agencies have the ongoing responsibility to provide the operating grants to enable our researchers to fully capitalize on the outstanding facilities Canadians have provided to enable research across the spectrum of health care issues.
We're now in the interesting position where from a research perspective our place in the competitive global economy has improved, yet to both sustain this competitive position and improve upon it, we need to address the disparity between the facilities and researchers and the funds essential to their daily operations.
Canadians do not spend up to a decade investing in research, then flatline the operational funding base and expect to take full advantage of the opportunities created. If we are to address the number one concern of Canadians—an improved and sustainable health care system—AFMC along with other major health research partners have identified the need for increased funding to all tri-council agencies, with an emphasis on funding for CIHR as the number one issue for success in maintaining our competitive edge.
Today we are recommending that the federal government commit to a substantial increase in funding to CIHR to maximize and build on our gains to date and to allow Canada to become even more competitive in our global environment.
The second area we wish to address is that of health human resources. Data is mounting that we are short of nurses, physicians, and other health care workers. Yes, we can make system changes, such as working inter-professionally, extending hours of access to MRIs, changing scopes of practice, modifying payment practices, and introducing new models of practice—and so on. However, these reforms still require health care workers, and we do not have enough.
I'm sure you all know the statistics regarding physicians: we rank 21st among OECD countries; the average physician is about 49 years of age; there has been a 20% increase in the proportion of physicians in their fifties. Surveys show millions of Canadians are without a family doctor. The problem is not only with the number of health care providers, such as physicians. The problem starts with the lack of a coordinated national mechanism to understand the type and numbers of providers we need, in the face of all the system changes I have just referenced.
For years now, organizations have recommended a pan-Canadian planning process for HHR, with adequate funding. Recent sector studies and the Canadian Medical Forum have supported this.
If we really want to make system changes in how and where we deliver care, we need to understand far better the role and function of all health care providers and create a flexible, inter-professional workforce. It requires data collection, analysis, research, comparative study, forecasting, and recommendations. It would be a modest investment that could launch this essential planning tool for Canada, and we ask you to invest in it.
Thank you, Mr. Chair. Thank you for the opportunity to take part.
As a point of information for the committee, in addition to my role at Sport Nova Scotia, I am also the chair of the Canadian Council of Provincial and Territorial Sport Federations.
I would like to speak very briefly about Sport Nova Scotia and then discuss a couple of Canadian sport issues prior to presenting three recommendations that we think will be critical for sport in our country.
Sport Nova Scotia is a federated organization made up of over 60 provincial sport organizations and more than 170,000 registered members across the province. As the numbers show, sport affects a large segment of our province's population. This situation is true not just for Nova Scotia, but across the entire country. In fact, we know that 55% of Canadians take part in sport in some capacity.
In addition, sport represents approximately 2% of jobs in Canada and 1.2% of the GDP. One of the reasons so many Canadians are involved is because of the broad benefits that sport delivers. In Nova Scotia the range of these benefits can be illustrated by the partnerships that Sport Nova Scotia has developed.
In government alone, we've worked with the federal Department of Justice and with Human Resources and Skills Development Canada. At the provincial level we've worked with the Department of Health Promotion and Protection and the Department of Community Services to deliver programs.
The most commonly cited benefit for sport is, of course, health. We often hear of the many health benefits that are provided, including decreasing the risk of heart disease, stroke, colon cancer, and type 2 diabetes. However, it is important that we realize the broader role that sport plays in our society. When we consider statistics that tell us that active children perform better in school and active people are less likely to suffer from mental illness, it becomes obvious that sport has the ability to cut across many different spectrums.
Given the scope of our work at Sport Nova Scotia as a provincial federation, I think it is fair to ask what the relevance of the federal budget is to us. We think we'll show that it has a very significant impact; we think that impact will grow over the coming years. That's why we made the effort to be here today.
In recent years federal, provincial, and territorial ministers approved the Canadian sport policy and the long-term athlete development model. Both are geared towards improving the quality and delivery of sport programs at every level for all Canadians. Most recently, the road to excellence program has also been launched.
The significant point for all these programs is the large role that provincial and territorial sport organizations will be asked to play in order to make these programs successful. A large segment of the Canadian sport policy is enhancing participation, which is geared to help us meet our goal of a 10% increase in sport participation; the long-term athlete development model also includes significant participation and recreation components. In addition, the new road to excellence program specifically cites the key role of provincial and territorial sport federations across Canada.
The tie-in from these programs to the federal budget will determine whether Canada will be successful in achieving these goals. Currently the provincial and territorial sport organizations that will be asked to deliver much of these programs face real human and financial resource challenges. Nova Scotia is an example. Only 28 of 65 different provincial sport organizations have even part-time staff.
With that challenge in mind, we have three recommendations that we consider conditions for success in order to see Canada reach our participation goals. First, we'd like to see the implementation of the promise to spend 1% of the health budget on sport and physical activity, most importantly with specific collaborative measures to ensure that provincial and territorial sport organizations are resourced properly to allow the programs I've mentioned already to work.
Second, we believe an infrastructure strategy and fund for sport and physical activity need to be developed. Canada currently faces an estimated $14 billion sport and recreation infrastructure deficit, and we will not achieve our goals if we don't address it.
Finally, we would like to see strong support for Halifax's Commonwealth Games bid as a mechanism to address the large infrastructure deficit in Atlantic Canada compared to the rest of the country.
I firmly believe that these investments are beneficial not only for Canadian citizens but also for our financial outlook. We have mountains of evidence that show us how much retroactive health and justice measures cost. We need to shift our focus to curtailing these costs by proactively addressing the risk factors that cause them.
The measures we are recommending today are part of a solution to these problems and part of a long-term vision that ensures we give our children the chance they deserve, and that's part of making Canada a healthy, prosperous place for their children.
Mr. Chairman, honourable members, on behalf of the 47 member companies of the Direct Sellers Association and 1.3 million independent sales contractors, we want to thank you for the opportunity to participate in this consultation.
The direct selling companies and the independent sales contractors market a wide variety of products and services directly to the consumer, usually in the consumer's home rather than in traditional retail establishments. The industry's combined labour force earned an estimated $966 million in income, of which $772 million was paid in bonuses and commissions to independent sales contractors, based on retail sales of $1.96 billion.
The DSA applauds the federal government's reduction of the GST as an important step in getting money back into the pockets of Canadians. We also believe that personal income tax reductions are necessary to promote economic growth, job creation, and international competitiveness. While the DSA recognizes that such cuts must be balanced by the government's spending commitments, we believe that such tax reductions should remain an important priority.
The direct selling industry is a vital part of the small business sector in Canada, investing in entrepreneurial and human capital. The direct selling industry has a tremendous capacity to create jobs, promote entrepreneurial activity among Canadians, and in the process reduce dependence on social assistance programs.
The direct selling industry provides accessible business opportunities with little or no investment, usually less than $500. It is open to all Canadians, without any restrictions with respect to gender, age, education, knowledge, or previous experience. This business opportunity is accessible to all men and women everywhere in Canada, whether they live in urban or rural communities.
Accessibility of these earnings opportunities is highlighted by the fact that close to 24% of all independent sales contractors have no more than a high school education, 49% have some post-secondary education, and 27% percent have either a graduate degree or undergraduate degree.
With 88% of the direct sellers being women operating their own small businesses on flexible hours in their homes, there is a lesser burden on the already strained child care system than there would be if these women were working in more conventional jobs with fixed hours.
The direct selling industry also offers a viable business opportunity that has an unlimited capacity to transform individuals who are dependent on social programs such as employment insurance into successful small business operators. Accordingly, the DSA recommends a partnership between itself and the government to educate and promote the direct selling business opportunity to individuals currently receiving social assistance and employment insurance.
For this partnership to work, existing EI rules must be amended, as there are currently barriers for those who are receiving such benefits. As an example, while there is now a provision that allows for a certain level of additional income to be earned from employment before social benefits are reduced, there is currently only uncertain and limited transitional relief for earnings from self-employment.
In the DSA's view, the current rules discriminate against the direct selling industry and inhibit the transition from dependency to independence, by discriminating amongst those who are serious from the outset in establishing their own direct selling businesses. While the DSA applauds the government for its reduction in the GST rate, there are a number of GST-related issues that we believe need to be addressed, namely the GST treatment of dietary supplements and natural health products—and I direct you to page 9 of our submission—and the expansion of the GST direct sellers mechanism that is set out in detail on page 8.
While the GST direct sellers mechanism is operating in a positive fashion and has been beneficial to consumers, government, and the direct selling industry since the inception of GST, it currently discriminates against the independent sales contractors of the approximately 20% to 25% of the industry that operates through independent sales agents, a group that is excluded. DSA therefore recommends that the government introduce straightforward technical amendments so that the direct sellers mechanism applies throughout the industry without discrimination.
Mr. Chairman, I have a letter that outlines specifically how this could be done and I will give it to you after.
Now I want to turn to the subject of dietary supplements and natural health products, which increasingly Canadians are using on a daily basis as part of their daily diet and health routine. The Excise Tax Act provides complete GST relief to, or makes zero-rated, food or beverages for human consumption, with the exception of snack foods and carbonated beverages. The Canada Revenue Agency, however, changed its administrative interpretation of what constitutes zero-rated foods or beverages and has indicated that most if not all dietary supplements and natural health products are to be treated as taxable.
DSA seriously disputes the CRA's rationale and believes that most consumers consider such products as essential parts of their daily intake of food and beverages.
Mr. Chairman, the Direct Sellers Association and its members appreciate this opportunity to participate in the budget consultation process. As always, we are prepared to provide our support to the government to help achieve its goals.
Thank you, Mr. Chairman.
We appreciate the opportunity to speak here today. Mr. Irving sends his regrets that he wasn't able to be here in person today, due to another commitment.
Canadian manufacturers, and particularly exporters, have been challenged by a high Canadian dollar, increased energy costs, and increased transportation costs. In the forest products sector, recent pulp mill, paper mill, and sawmill closures highlight the human tragedy that results when capital investment is not made and productivity is not improved to ensure ongoing competitiveness. For many years, J.D. Irving has understood the need to continually reinvest in our people and to upgrade our operations.
Global capital investment in new pulp and paper capacity illustrates the glaring gap in Canada capital projects. From 2000 to 2007, there's going to be $14 billion invested in pulp and paper in Asia, $12 billion in Europe, $7 billion in South America, and only a little over $1 billion in Canada. This is an industry that we used to dominate. Recent studies confirm that for the past seven years, North American capital spending in the pulp and paper sector has been consistently below 100% of depreciation, and today is hovering below the 50% mark. Capital investment of anything less than annual depreciation, as a minimum, puts Canada seriously behind in this very fierce global competition.
We believe that current capital cost allowance rules and rates are one of the factors that are contributing to this problem. We recommend increasing CCA rates for manufacturing and processing equipment from 30% declining balance rates to 50% on a straight-line basis. This change reflects more appropriately the economic depreciation that's caused by rapid changes in technology that are occurring in a highly competitive world market. This will improve the payback and reduces the risk associated with very large capital-intensive investments.
We also believe the CCA rate for manufacturing and processing buildings should be changed from 4%—a very low rate—to at least a 10% declining balance rate. This will better reflect the economic depreciation associated with buildings and heavy-use processes.
The renewable power production incentive should be expanded to include modernizing existing facilities. Expansion or some modifications to existing equipment and facilities should be eligible for accelerated capital cost allowances, not just new facilities. This would allow us to make changes to our existing facilities to make them more competitive and more environmentally friendly.
We believe that the government should eliminate the half-year rule for new investments. Elimination of the half-year rule is one of the things that would significantly reduce the risk and improve the payback for large capital investments. Also, the current capital cost allowance regime has a “ready for use” rule that should be abandoned and changed to one that properly reflects assets at acquisition.
One of the other areas where we see there is opportunity for changes is in the regime around taxation of productivity improvements. Under the current taxation regime, when it comes to incentive pay or variable pay for improvements in productivity, it is taxed at very high marginal tax rates. We believe there should be some non-taxable or low-taxable category of employee income for productivity bonuses, up to a maximum of $2,500 per year for employees who earn up to $50,000 a year. This will place variable compensation for productivity improvements in the same category as medical and pension benefits.
Government and employees are also facing very significant challenges when it comes to containing health costs. There are three primary preventable contributors to poor health in employees: smoking, inactivity, and excess weight. Companies like ours are willing to make investments in wellness programs that would tackle these problem areas. For every dollar invested in comprehensive prevention and health promotions programs, we're saving $3 to $8 in terms of a payback. However, the tax system is putting up roadblocks.
Every time a company today pays for a smoking-cessation program, a weight-reduction program, or a fitness club membership for employees, employees get an income tax bill. We believe the government should encourage greater participation in programs such as fitness programs or smoking-cessation or approved weight-loss programs. The government should consider employee reimbursement of these programs the same as they treat health care benefits--that is, they're not taxed in the hands of employees. We're recommending that employers fund these initiatives, not governments, but the government should get out of the way and allow it to happen.
Thank you for the opportunity to present here today.
Thank you, Mr. Chair. I'm pleased to be here today on behalf of Mayor Peter Kelly, who was unable to attend this session.
Thank you for the opportunity to discuss Halifax Regional Municipality's current economic and financial situation and our growing relationship with the Government of Canada.
As a regional municipality, we have a rich history and culture. We are unique in many respects. We are Canada's largest municipality, covering more than 5,600 kilometres, an area larger than the province of Prince Edward Island.
Halifax is the business and financial capital of the Atlantic region. While it has roughly 40% of the population, it accounts for nearly half of the provincial GDP. The 5.3% unemployment rate is below provincial and national averages.
I wanted to take the opportunity today to talk to you about what we see as the fiscal imbalance, some of the initiatives HRM has under way, and our key needs as you begin to plan for the next federal budget.
The Council of the Federation recently argued that there is a vertical fiscal imbalance in the country, with the federal government having more fiscal resources than it requires relative to its spending responsibilities, and the provinces having the reverse. This situation has become even more difficult at the municipal level.
In a province such as Nova Scotia, the difficulties are compounded. While HRM is the fastest-growing municipality in the region, it is simply not large enough to function without strong links to the federal and provincial governments. Other major cities have the benefit of other types of taxation--an example is transfer of fuel taxes--and greater cost-sharing from their respective provincial governments; Halifax is not in that position. Greater federal investments in municipalities are much needed and much appreciated.
In order to ensure we are a continually progressive, responsive, and responsible organization, HRM has taken on many initiatives of strategic importance for our community: for a decade HRM has had one of the leading solid waste collection systems in the world; in partnership with the provincial and federal governments, we have undertaken the harbour solutions project.
Since 1999, HRM has decreased outstanding debt by 20%, exceeding the goals of our debt reduction plan. HRM has an A rating with Standard & Poor's and continues to adhere to our own multi-year financial strategy.
We continue to build on these successes through initiatives such as our recently adopted regional plan, which lays out an integrated approach over the next 25 years to development in a sustainable and environmentally friendly manner. It's estimated that the regional plan will have a financial benefit of approximately $250 million in cost avoidance over that time period.
We have recently undertaken a new municipal tax reform initiative. We also now have a cultural plan that establishes our mandate in this area and we are proud to have just begun the implementation of the region's first economic strategy.
As of last year, our council adopted a municipal vision for immigration in our community and an immigration action plan to guide our organization in being even more welcoming to all. We have as well undertaken a new infrastructure planning process to guide infrastructure investment within the region. Like many Canadian cities, HRM is striving to keep its aging infrastructure in adequate working condition.
Here are some considerations I would like to throw out as you consider the 2007-08 federal budget; I would urge you to consider them.
Regarding the 2014 Commonwealth Games, continued all-government support, both political and financial, will be key to our success.
With regard to infrastructure funding support, continued reinvestment in federal infrastructure funding programs such as the gas tax, revenue sharing, MRIF, CSIF, and strategic transit are of paramount importance to HRM and other Canadian cities. Without such funding, municipalities would not be able to make many of the investments that have been made to date in aging municipal infrastructure. However, much more work remains to be done.
Another thing we'd like you to consider is the Halifax Atlantic gateway support. The Halifax gateway accounts for $1 billion in wages each year. Greater investment, integration, and partnership are required to grow the gateway and to ensure it is recognized and promoted as the east coast logistics hub.
There is also the community energy project. There is a unique opportunity in HRM to make a significant impact on cleaner air, as well as to enhance energy security through the community energy project. Federal support to implement the project is imperative. To match the provincial commitment, $20 million in federal funding is required to bring this project and its substantial environmental, financial, and social benefits to fruition.
Federal funding for law enforcement is another important consideration. HRM continues to look forward to the federal funding for additional law enforcement officers for municipal police agencies that was announced in last year's federal budget.
As for the DND Standing Contingency Task Force, as the Department of National Defence continues to progress toward the establishment of a Standing Contingency Task Force, HRM will remain supportive and urge financial support to ensure its success.
The sport animator has been linked through the Department of Health Promotion and Protection to our after-school physical activity program. What that program involves is our going into communities to train high school students in the community to deliver after-school programs for children in grades four to six. It's geared towards children who are not already participating in sport.
We work at the school level, with the principals and the teachers, to try to identify and encourage those children who may not participate in sport at that time to get involved, with the goal being, over a 24-week period, that at the end of the program those children would feel comfortable, if they enjoyed a particular sport, in maybe signing up. More importantly, if they're out on their front lawn and there are some kids playing in their neighbourhood, they wouldn't be embarrassed or too shy to take part.
It's really geared towards giving them the very basic, fundamental skills. At the same time, it's providing some leadership skills for the high school students, so that you're creating the leadership piece of your community as well.
We're currently piloting one of those programs at one of the nine sites we're operating this year, where this high school leadership piece is going to be offered as a curriculum credit through the high school in efforts to expand the program.
We don't have any numbers at this stage of the game.
As I think you know, we've had a program here like that, just about a year old now, with a healthy living tax credit. I think the initial numbers we've had have been positive. At the same time, we have to realize that it only affects those people who are receiving an income at the level where they are paying taxes.
To give you an indication, the program we have, which delivers financial assistance to underprivileged children so that they can participate in sport, has doubled in size over the past year in terms of the money we're allocating to children across the province, the same time as the tax credit has been in effect.
It needs to be a comprehensive approach. I think it's a great idea, a great step or measure, but I think we need to address other things at the same time.
There are a number of projects in the paper mills, pulp mills, and sawmills, particularly around energy consumption. Energy is a huge cost in both newsprint and specialty paper production, and in sawmill production.
Some of the projects we're looking at include some sort of cogeneration facility that may use biomass or even bark boilers, and converting current boilers, and so on. We're looking in particular at converting current boilers at sawmills, and at biomass boilers in a number of areas to generate electricity or steam.
There are a number of potential areas where we could convert boilers that today are using bunker oil, bunker C, to biomass generation. These projects have marginal paybacks, but they're certainly things we think we're going to have to do long term, as energy prices continue to improve.
Being able to access this program, which currently is only for new facilities, would allow us to make a significant series of investments in the very short-term future.
How we move forward is a rather challenging and broad question, and I'm sure there's lots of wisdom around the room.
Health research is what I'm talking to you about today. To be honest with you, I want to emphasize that it's a key component of moving forward in that manner. In fact, it is a key component in addressing some of the issues I've heard brought here to the table, issues such as poverty and so on. If you look at CIHR, CIHR has a research strategy that is much broader than what you may think of in terms of the traditional biomedical strategy. There is research in other pillars.
I would argue that from the research point of view, we've built the infrastructure, as I've indicated, and we have the researchers, but unless we provide the operating grants, we won't be able to deliver; we won't be able to deliver across the board. I realize it's not an easy one- to two-year vision, but unless we do that research now, that's what will impact us 10 and 20 years down the road for the health of the country. I would urge you to see it in that manner.
I can only speak to our company's experience, where we certainly spend a great deal of time documenting and putting out these programs. Most of the programs we have in place are in areas where we have organized labour. All of these agreements we have in place are outside of the labour agreements. Anything that's inside the labour agreement simply doesn't count and is not eligible towards this.
So anything we have with regard to incentives is outside of and over and above labour agreements.
Typically the issues you have in collective bargaining are more around employees looking for something that is more tax-effective, such as enhanced health care benefits or enhanced pension benefits. Things that put pure dollars in their pockets sometimes are less meaningful, if they're going to be taxed at high marginal rates.
I can speak to ours. We certainly have very documented, methodical programs, with very specific measures and very specific caps. There's no question that it would have to be the variable pay that's at risk. In that way, the $2,500 cap is not simply $2,500 that can be split up.
I think most labour groups are not going to want to put any of their compensation at risk; they're going to want to have it firm. I don't think you're going to see the types of abuse that maybe you could if it weren't at risk.
Thank you, Mr. Chairman.
Thank you for coming.
I have one question for Ms. Earle. You may or may not have thought about it.
One thing I've heard from seniors in my riding of Burlington in Ontario—and the poverty issue tends to be with seniors, to be frank with you, or at least the ones who are coming to see me—is that they're often getting clawed back if they find a part-time job, or a job of some sort.
Has your organization thought about your position on clawbacks and whether you would be encouraging us to review that issue?
I've also heard, even today, at 5.4% unemployment.... I know it's not the whole issue for poverty, but employment is part of it.
I'd like to know what your comments or your organization's comments are on what you feel about clawbacks for those who are on social assistance.
I appreciate the opportunity to have the last question here in Halifax. We've had a very busy day, a good day, and some very good presentations.
As we say farewell to Nova Scotia and head off to Quebec for tomorrow, I want to specifically mention the 2014 Commonwealth Games. We had international visitors come in last week to check out Halifax as a spot. I think the reviews were all very positive.
There has been some issue about the Commonwealth Games and financing. In my view, we have to have confidence in the team we have in place: Fred MacGillivray, Scott Logan, and representatives of government.
I have a lot of faith that this would be very good for Nova Scotia, because I think the infrastructure that's left behind can be good for sport in Nova Scotia. I wonder, Jamie, or maybe Dan, if you could talk very briefly about the infrastructure and why this is good for Nova Scotia.