FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, October 22, 1997

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[English]

The Vice-Chair (Ms. Paddy Torsney (Burlington, Lib.)): As we've said a couple of times today, we are very pleased to be here in Charlottetown, Prince Edward Island. Thank you, Mayor, for arranging great weather for us. It's a nice bonus.

The Standing Committee on Finance is here to listen to your presentations and to have question and answer sessions to flesh out some of the ideas. In terms of process, we have approximately six speakers who will each have five minutes to speak.

At the end of all the presentations, we will go to questions from our members of Parliament. Hopefully the question will be directed to one person, and if that person chooses to answer, terrific. If anybody else would like to speak, you can just raise your hand. I encourage our questioners to be as brief as possible in order to get the maximum number of responses. Those rounds will be roughly five minutes as well.

At the end of the round of questions, we'll have one-minute wrap-ups from the people seated at that side of the table. That will be your opportunity to either elaborate on something that has come to mind during the session, to reiterate what you said at the beginning, or to add or make an additional plea.

If there's something you need to discuss but you don't have enough time here, the written briefs form part of the basis of our discussions and of the writing of our report to the minister. We will start to do that on November 7, so please don't feel that your only time to speak to us is the five minutes and the one minute. There is a lot of additional opportunity to communicate with us. Of course, writing to your members of Parliament is free, and they can certainly forward anything to us.

I'll proceed now. First of all, let me introduce the members of Parliament. Mr. Ritz will be here in two seconds. He's from Saskatchewan and he's representing the Reform Party. Monsieur Perron is from Quebec and is representing the BQ. Madame Vautour is from New Brunswick and is representing the New Democratic Party. Mr. Brison is from Nova Scotia, representing the Progressive Conservatives. Mr. Gallaway and I are both from Ontario and represent the Liberals. And Mr. Iftody is from Manitoba and also represents the Liberal Party.

Colleagues, there have been some changes to the list. Around the table, we have Lisa Doyle McBain and Irene Dawson, from the Federation of Prince Edward Island Municipalities; John MacDonald and Marilyn Waugh Arsenault, from the Greater Summerside Chamber of Commerce; Ian McDonald, the mayor of Charlottetown—I think I heard you on the radio this morning; Cleve Myers, Cathy Rose Ellsworth and Harvey MacKinnon, from the Greater Charlottetown Area Chamber of Commerce; and we have Edith Perry, who is here representing herself.

I'll turn it over to you for the first five minutes, Ms. Dawson.

Ms. Irene Dawson (President, Federation of Prince Edward Island Municipalities): Thank you.

My name is Irene Dawson, president of the Federation of Prince Edward Island Municipalities, referred to as FPEIM. Lisa Doyle McBain is our executive director.

The Federation of P.E.I. Municipalities was formed in 1957 with the purpose of representing as one organization the interests of the cities, towns and communities within the province of Prince Edward Island.

Municipalities are the order of government closest to the people, and the yardstick by which the provincial and federal governments are assessed. Municipal input is crucial and unique. As an organization that represents another order of government, we are pleased to have this opportunity to speak with you as you prepare your 1998-99 budget.

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Words cannot express the pleasure and excitement felt by municipal officials about the establishment of the long-awaited tripartite municipal infrastructure program. Since its inception in 1993, over $49.5 million has been designated to Prince Edward Island through the infrastructure works program. On behalf of all our member municipality members and taxpayers, I wish to sincerely thank your government for listening to municipal governments and working co-operatively on this tremendously successful program.

The program has enabled the creation and upgrading of much-needed sewer and water systems and roadways, created jobs, improved the environment, and provided revenue for all three orders of government. The benefits far outweigh the costs. We believe a longer-term approach is needed to tackle the municipal infrastructure deficit—a strategy that would involve all three orders of government.

When the goods and services tax was implemented, the Minister of Finance made the promise that municipal governments would bear no greater burden under the goods and services tax than they had under the federal sales tax.

After three years of analysis and negotiations, our national body, the Federation of Canadian Municipalities, was able to reach an agreement with the federal government to avoid any additional burden on property taxes or any disincentive to having work done by the private sector. The effective tax rate was determined to be 3%, a rebate of 57.14%.

We appreciate the attention given to the position of municipal governments during the inception of the goods and services tax and wish to ensure that such considerations will be maintained if harmonized sales tax becomes a reality in Prince Edward Island.

The rebate preserves the balance in the amount of work contracted out to the private sector. Application of the full 7% GST burden to supplies and services would create self-supply, as opposed to contracting out to the private sector. An expanded public sector at the municipal level would result.

Municipalities are providing, with increasing demands and decreasing resources, essential services to the property owners of Canada. Offloading of additional fiscal responsibilities to municipalities would result in significant property tax increases and devastating service reductions. It is important to note that there is only one taxpayer.

The federal government makes $600 million in payments in lieu of taxes, or PILTs, to municipalities annually, with $425 million paid by departments and $175 million by agent crown corporations. The federal government is Canada's largest property owner, with 63,000 buildings. FPEIM maintains that the federal government, as a good corporate citizen, has an obligation to pay its fair share of property taxes for services such as fire and police protection, sewer and water, waste collection and snow removal. We do not wish to see a future freeze or negative reform of the municipal grant program, as happened in 1992. It is only right that the federal government pay for municipal services that its properties receive.

Negotiations between FCM and federal officials took place in 1996 and agreement in principle was reached. We urge that legislation be enacted to entrench this agreement.

In conclusion, we would like to stress the utmost importance of involving municipal government in decision making. We have all learned from past experiences that consultation is the key to success. We would like to emphasize that these are but a few of our concerns. We encourage you to continue to provide an avenue to hear these specific concerns and issues, and we look forward to working closely with you in the future for the benefit of our mutual constituents.

Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Ms. Dawson.

Now we will have Ms. Arseneault.

Ms. Marilyn Waugh Arsenault (President, Greater Summerside Chamber of Commerce): Madam Chair, members of the parliamentary Standing Committee on Finance, the Greater Summerside Chamber of Commerce appreciates this opportunity to appear before you to present a brief in response to the two questions posed in the letter your clerk of the committee faxed to us on October 20.

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Given the importance of such consultations as these, the Greater Summerside Chamber of Commerce strongly prefers to be appropriately prepared for its appearance and to be able to present a well-researched brief. At our last presentation in November 1995, we suggested a longer turnaround time than 18 days. We received a fax questionnaire on October 20, 1997, allowing two days to prepare. This is not long enough for a volunteer organization to do appropriate research for a presentation.

Generally speaking, Canadian deficit reduction has been on target. We continue to support governments taking mostly expenditure measures to achieve its deficit reduction target. However, it is extremely important that hard-working individual Canadian taxpayers should not have to bear the greater proportion of our tax load. In terms of revenue measures, we would support government firmly ensuring that larger corporations always pay their fair share of taxes.

A fundamental guiding principle in regard to employment insurance must be that the target is achieved in as humane as possible a manner, avoiding undue hardship for individuals. We continue to hear that the EI fund has a high surplus. This issue needs to be addressed immediately. The government ought to take this opportunity to reduce employee and employer premiums. This reduction, in turn, will stimulate job growth, which in turn puts more tax dollars into the government's purse.

On debt reduction, the government must not lose sight of the need for debt reduction as the deficit disappears.

Taxes should be reduced to individuals and groups wherever and whenever practical. Reduced taxes would put more disposable income into individual pockets, thus allowing them to spend more on goods and services, thereby stimulating our economy. A smaller tax burden for large and small business would assist their being even more competitive in the regional, national and global marketplace.

We will support any and all federal government measures that are administratively or otherwise possible to ensure that the Canadian labour force is skilled enough to allow us to compete to the best advantage around the world.

The chamber supports the continuation and enhancement of such programs as Canadian health care, employment insurance and Canada Pension. Education must be a high priority and be standardized across Canada.

A number of resolutions were adopted at the annual meeting of the Canadian Chamber of Commerce in Saskatoon on September 14, 15 and 16 of this year. We fully support the resolution on debt and deficit reduction, which we believe was presented to you when the Canadian Chamber appeared before the committee.

In conclusion, we want to take the opportunity to say that the Greater Summerside Chamber of Commerce is an organization that lobbies all levels of government for the good of not only the business community but for the community in general.

We want you to be aware that we have an excellent import and export port in Summerside that has tremendous benefits for our community. That port is being neglected by Transport Canada. To quickly summarize this issue, between wharf repair, breakwater repair and dredging, the estimated cost of $5.25 million should be immediately spent on the infrastructure to bring it up to an average standard.

Madam Chair and members of the committee, we sincerely thank you for inviting our chamber to appear before you today and to present our views by way of a brief on the financial question.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Ms. Waugh Arsenault.

Your Worship Ian McDonald.

Mr. Ian McDonald (Mayor of Charlottetown): Madam Chair, thank you for the opportunity to be here. Before I start, I'd like to welcome the committee to Charlottetown. It's too bad you're only staying for one day. Every tourist who visits the island is worth about $1,000 a day to our economy, so I insist that you could stay another day if you want to.

The Vice-Chair (Ms. Paddy Torsney): You'll be happy to know that some of us are going to stay for an extra hour to do a little artwork on the economy.

Mr. Ian McDonald: I have answered the questions in a much more personal way, and I think when I'm all finished here in about three and a half minutes or so the three questions the gentleman gave me over the telephone will be answered—to my satisfaction, anyway.

I left my glasses at home and it's a long distance, so you'll have to bear with me. I'm not having a good day.

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It's important to mention initially that my father worked for the federal government for 30 years, and it was not considered a bad thing. In fact it was a source of family pride to be working for the federal government. In my opinion, a prime example of what the federal government should be in the business of doing is providing opportunity.

A lot of people out there feel the federal government's programs make people so dependent that they lose their initiative. It happens in some cases, but I feel they have enabled people with few resources to reach their full potential.

The federal government can be a lot of things to a lot of people. Its student loans program, through the provincial government, enabled me to get an education, and for that I'm grateful. But as Mayor of Charlottetown, I view the federal government from a different angle.

The most acute problem—no pun intended there of course—for the great divide in this country is the economic isolation of Atlantic Canada from the rest of the nation. There has been out-migration to central and western Canada. Some towns cease to exist as physical entities because of the failed fishery. Some areas are so economically depressed that despair is the only word used to describe them.

I consider myself a realist, and realistically speaking, things are not good in Atlantic Canada, more specifically in P.E.I. and in Charlottetown, as a result of federal government cutbacks. I don't use the word “initiatives”, because that's way too vague. Cutbacks is exactly what they are.

In making decisions that impact upon our city and province, the federal government has not taken into consideration the notion of individual regional differences, and if they have, of course, it's a token initiative. I hate to use that word.

It's like teaching in a classroom with 35 students: no two are the same. Some regulations can apply to all 35 students, but like a good teacher, you must make allowances for individual difference. You can close a seaport in British Columbia and their economy can make up the difference, but you lose one federal government job here on Prince Edward Island and we notice it in our economy.

It seems the federal government doesn't recognize, or for that matter understand, the seasonal nature of our economy. It's a fact of life that our economy is dependent upon transfer payments from Ottawa. I have some statistics, and Irene did a very good job of relating those statistics to you. An extremely high percentage of our GDP comes from transfer payments—71% or 72%. I don't think it's important here to get that point across now; maybe at a later date.

Our economy is dependent on transfer payments from Ottawa, and our national government should take pride in doing so because of our uniqueness in the federation, and I should say in the confederation. They didn't mind asking us to join back in 1873, and they gave us special considerations back then. There's no need to get into that just yet.

Per capita, there are more abuses of the EI system in Ontario than in all of Atlantic Canada. I'm just going to cite a couple of examples.

We are not the only region dependent on EI, but we are painted as abusers of the insurance system that subsidizes the auto industry in Ontario. We get a bad reputation in eastern Canada because of our economy. I would like to see the federal government, the finance chair, or the Prime Minister explain this to the rest of the country.

As a result of our federal government programs, our seaport, a major resource in this city, is being underdeveloped. With federal assistance, it could indeed be a job creator. Why did the federal government pour millions into a port in Churchill, Manitoba, which is two degrees south of the Arctic Circle, to the tune of $26 million over the last three years? I don't know if I have my statistics right on that, but it's close. Was it a region in despair?

Our airport has fallen victim to a cross-Canada scheme to save the federal government money, but at a cost of jobs to our economy.

What annoys me is the fact that these national decisions are made in the centre of the country, without one iota of consultation or consideration. Statistics and demographics are being used to almost decide the fate of our country, the fate of our province, and the fate of Atlantic Canada. Why can't the federal government be more flexible?

I could go on and on and list many programs that impact in a negative way on our quality of life here in Charlottetown. But I mentioned earlier that there are some good programs as well.

My basic consideration is that the federal government be more sensitive and compassionate to the needs of islanders and to the needs of the residents of Charlottetown. My philosophy for the bottom line is if we're serious about reform, we have to help people climb up the first rung of the economic ladder. To get to independence, the way things are now, that first rung is a little rickety, and I hate to say this, but welfare and EI make a lot more sense than many jobs. You've got to change the incentives. If you work, you should not be poor.

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Thank you very much for the presentation. I realize it's rather brief. My notice was very short, in terms of statistics. Actually five minutes would never be enough to make an impact, I do not believe. That's why my presentation gave more of a personal side and a very general side, as opposed to the specifics. Once again I thank Irene for being specific and bailing us out here in her presentation on behalf of the municipality. Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Mayor McDonald. My experience has been that people can make quite an impact on us in five minutes, so not to worry about that.

Ms. Cathy Rose Ellsworth, please, for five minutes.

Ms. Cathy Rose Ellsworth (President, Greater Charlottetown Area Chamber of Commerce): Madam Chair, members of Parliament, I'm Cathy Rose Ellsworth, president of the Greater Charlottetown Area Chamber of Commerce. With me today are Cleve Myers, a member of our policy committee, and Harvey MacKinnon, general manager of the chamber.

Before I give my presentation I just want to add support to Marilyn's comments about having such little time to prepare for a document such as this. We would prefer to have a little more time.

The Greater Charlottetown Area Chamber of Commerce welcomes this opportunity to make a presentation to the Standing Committee on Finance for its pre-budget consultations. Unfortunately we could not make a presentation last year, as the committee decided not to visit Prince Edward Island during 1996.

The chamber wishes to congratulate the Minister of Finance for the ongoing efforts and progress that have been made in reducing the amount of the annual deficit. Based on the minister's current predictions, we will have a balanced budget by the year ending March 31, 1998, which is virtually two years earlier than predicted only last year.

On October 20, 1997 we were asked to present our views on the following. The process of deficit reduction—has the progress to date been too slow or too fast? Have the methods been appropriate? The Greater Charlottetown Area Chamber of Commerce agrees the process to date has been about the proper pace, and some methods have been appropriate. However, there is much more to be done on the expenditure side of our financial picture.

To repeat just two items from a 1995 statement to your committee, which should be looked at as opportunities for deficit reduction—number one, reduction of waste and overspending by government. While progress has been made in this area over the past few years, there is still much work to be done.

There is no one in this room who could not cite several examples of government spending that defy the laws of economics, and point out clearly that the public sector remains unconvinced and therefore uncommitted to spending reductions. One local example is the relocation of a government office at considerable cost by a federal minister to his own riding, solely because that area did not have its share of government jobs. While this may be the case, the result was a net outflow of public money with no net gain to the region.

This type of leadership from the highest levels offers little in terms of direction or commitment on spending reduction to public sector workers and the general public.

Instead of efforts to reduce spending there is still a great flurry of activity each March by government departments to spend what is left of their current budgets, lest they lose it. The present budget model, if not rewarding spending, does not discourage it or reward savings.

The chamber encourages government to explore the use of incentives to reward spending-reduction initiatives. Implementation of such a model may be difficult and subject to criticism. Difficult problems require ingenuity and courage, both of which Canadians have in abundance.

The second item: continuation of privatization and contracting out. The chamber recognizes recent privatization efforts and urges the continuation of this policy to any service that can be more effectively delivered outside of government. All services should be scrutinized from the viewpoint of what can't be privatized or contracted out, rather than what can be.

The next issue on which we were requested to present our views is priorities. How should the government set its priorities with respect to debt reduction, spending increases, or tax relief?

The Greater Charlottetown Area Chamber of Commerce is in agreement with the Canadian Chamber of Commerce's position on debt and deficit. The election campaign of 1997, as well as the subsequent statements by the federal government, indicated the federal government's intention to spend the fiscal dividend well before that dividend has arisen.

The Canadian Chamber of Commerce has been consistent in emphasizing that the real fiscal problem is not the deficit, but the level of debt in Canada. The high level of debt, particularly the high portion held by foreigners, means that if Canadian or foreign investors lose confidence in the Canadian economy or Canadian economic policy, interest rates will rise, and the debt level will increase still further.

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It is important to remember that much of our recent success in deficit reduction has resulted from unusually low interest rates. A return to more traditional rates would make it difficult to sustain annual surpluses. Each percentage increase would cost approximately $6 billion. In short, the high level of our debt relative to our ability to finance it, as indicated by the debt-to-GDP ratio of 75%, continues to impair the federal government's ability to exercise its taxation and spending policies in a flexible, responsive manner.

The Canadian Chamber of Commerce recommends that the highest priority be given to debt reduction rather than program-expenditure increases or significant tax reductions, at least until the debt-to-GDP ratio has fallen below 60%. At that point, the high priority of debt reduction, a new target debt-to-GDP ratio and the appropriate pace to that target, should be identified.

The only exception to this is the chamber's position that employment insurance premiums should be reduced by 60¢ on the employee's side, with the appropriate cut on the employer's side. This move would restore the EI fund to general stability versus its present surplus situation.

The priorities on debt and deficit reduction have never included increasing taxes as a method of deficit reduction. The current level of EI premiums not only provides sufficient funds to cover anticipated EI program expenditures but also includes an additional amount, which is effectively a deficit-reduction tax.

The Canadian Chamber of Commerce has the following recommendations for the federal government, which we also support.

First, in recognizing that the real fiscal problem arises from the level of debt relative to our ability to pay for it, it should continue its policy of fiscal restraint well beyond when the deficit is eliminated. It should go at least until the debt-to-GDP ratio has fallen below 60%, which is expected to be 2001 or 2001.

Second, it should give the highest priority to debt reduction by vigorously restricting any increase in program expenditures and by slowly phasing in any significant reduction in tax rates, except for the 60% cut to EI premiums, which has been the subject of the past Canadian Chamber of Commerce resolutions.

Third, it should develop a long-term debt-reduction plan and a long-term plan for tax reduction over the next 10 years.

The chamber thanks the standing committee for the opportunity to present. We wish you success in the difficult, challenging, and hopefully rewarding days ahead. Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Ms. Rose Ellsworth. Now, Ms. Perry, please.

Ms. Edith Perry (Individual Presentation): I want to thank you very much for allowing me a last-minute opportunity to speak. I probably would have felt more comfortable speaking with the group of people who came in this morning, but I find it very interesting that those in a number of groups who spoke before me share some of my concerns.

I'm a Canadian, first of all. I'm a transplanted prairie person who is living in Prince Edward Island. My husband is a maritimer. He comes from Nova Scotia. Our children have had both their feet in the western and eastern parts of Canada.

I'm going to say one thing that will reinforce what the mayor just said to you people. Please don't see easterners as those who are whining, holding their hands out, and waiting for what they can get from welfare, EI, and all that sort of thing. That certainly is not the case. As a western Canadian, I have found that easterners are very hard-working and independent, and they have a high standard of expectations for what they do.

We have developed a system that has made it impossible for them to have steady employment and a good return for the basically primary resource economy they have here. I think it would be incumbent upon the federal government and its representatives to realize that eastern Canadians must have their interests looked at not because they're have-nots, poor, or from just a smaller region of whiners, but because they are every bit as much a part of Canada as are those from central Canada and western Canada.

Having said that, I'm just going to go through a couple of points. I would like to see far more input on employment promotion. Here are some suggestions I heard very eloquently put forward in a Cross Canada Check-Up phone-in from a very passionate caller. I have to agree with him. I don't have any expertise, of course, in banking and all those sorts of things, but I did understand the bare bones of what he was saying.

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What he was saying is the federal government should put a qualifier on Canada's banks in terms of the money they invest. It is the federal government's support and insurance of the Canadian banks that allows them to be viable, so it should be the federal government that puts a qualifier or a condition on where the Canadian banks invest their money. A certain percentage of their money, and a greater percentage of their money, should be invested in the Canadian local and community-based economy, not in your national-international corporate-based companies or projects, but at the community level.

It has been done by some provincial governments. Autopac, which is a government automobile insurance institution, has made a qualifier there. Any surplus of profits that the Autopac makes is to go into health and education. I do not know if that is still the case, because they have problems from different provincial governments, but at one time when I was still in Manitoba that was the case.

Get rid of the federal heritage department. Set some ground rules for the marketplace that initiates sound business and employment and protects the environment. Really set down some ground rules and abide by them. Integrate a progressive form—and I underline progressive form—of guaranteed annual income. Recognize that higher CPP deductions will be a hardship for low-income folks—and I am certainly one of them.

Students loans are very important. I have two children in university now, and one is not sure he wants to go to university. We are encouraging him to do so. When they get out of university they are going to have one great big loan to pay back—never mind a home or plans for a home. There need to be more bursary types of write-off. A well-educated and well-trained future generation is a long-term gain or asset for Canada. Take a step back and take a real hard look at privatizing. Private interests do not necessarily look at providing public good for public service. They are in the business of making money.

Thank you, and welcome to Prince Edward Island.

The Vice-Chair (Ms. Paddy Torsney): Thank you. It is my second time here in a month, Ms. Perry, so I am very happy to be back.

Mr. Ritz, for five minutes, please.

Mr. Gerry Ritz (Battlefords—Lloydminster, Ref.): Thank you, Madam Chair.

Welcome, everyone. We certainly appreciate your comments and the general tone of your submissions.

One common thread I noticed in several of the presentations was talking again about the infrastructure program. There were a couple of additions to that. I really commend the municipal people. You are the last line of defence. The taxpayers know where you live. You tend to take the brunt of any measures they don't like. There is no ambiguity or whatever in your representation. You are right there.

Someone mentioned that there is only one taxpayer. That has always been my concern with the infrastructure program. Is that taxpayer getting the most bang for his buck? Should we be targeting infrastructure dollars into things that benefit everyone, such as roads and bridges—someone mentioned your wharf here—and things like that, or should we be staying away from...? I know in one spot there was a museum built. In another one there was an art gallery built, and the people are not supporting it because they did not see that as a viable alternative for their tax dollars. So I'll just toss that out there to some of the RM people and Mr. Mayor, too, if you would care to comment on that. Should we be targeting those dollars more to make sure we are getting the bang for that taxpayer's dollar?

The Vice-Chair (Ms. Paddy Torsney): Who would like to speak first? Who is going to speak first?

Mr. McDonald and Ms. Dawson, I think you have both been specifically requested. First, Mr. McDonald, the mayor.

Mr. Ian McDonald: Would you repeat the question, please.

Mr. Gerry Ritz: Which part?

The gist of the question is should we be targeting our infrastructure dollars, since there is one taxpayer paying for all three levels of the contributions? Should we be more specific in our targeting of those infrastructure dollars into works that are good for everyone—sewers, bridges, roads—or should we be allowing them to be spent on what some taxpayers call the more frivolous things, art galleries and things like that?

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Mr. Ian McDonald: I don't think they're frivolous. I think it probably wouldn't hurt, in a roundabout way, the way you asked. The bulk of the dollars should be spent on infrastructure—streets, roads, sewer, bridges, those sorts of things. But I think there also should be room to spend on items some consider frivolous. I don't consider them to be such, but that's the word somebody used someplace else.

The nature of our economy here is seasonal. For tourism, I think things like museums are critical to drawing people here. What's good for Alberta may not be good for Prince Edward Island, and that was the crux of my presentation.

What we can't have is legislation that is all-encompassing. I think it's important that you take that under consideration. There's no reason you can't have differential tax rates and those sorts of things in municipalities, and there's no reason the legislation you pass in Ottawa has to be all-encompassing. I know there are amendments here and amendments there, but the infrastructure program is flexible in a lot of cases. In some cases, it's not so flexible.

It's really a complex question. To answer it here in one afternoon I probably couldn't do. But I'd like to see the infrastructure program not only be used for the frivolous, as you say—and I don't mean that in a derogatory sense at all—but also in the true sense of the word “infrastructure”, keeping in mind also that there are some municipalities that can't afford part of the infrastructure money, the 33¢ dollar. It's just not there. So maybe there should be a program in place up to a certain amount of money in order to allow some municipalities to introduce some sort of a sewer system or upgrade a bridge or whatever the case may be.

So that's just a.... If I get on a roll, I guess I could go all afternoon.

The Vice-Chair (Ms. Paddy Torsney): Not with me in this chair.

Ms. Dawson, please.

Ms. Irene Dawson: I will be brief, Madam Chair.

The Federation of P.E.I. Municipalities is in absolute agreement with our national body, the FCM's stand on the priorities being sewer and water, streets, sidewalks and roadways. We feel that until every Canadian has access to pure, safe, clean drinking water, a lot of other things perhaps should not be looked at and be viewed as necessities at this point in time. When the necessities are completed, then perhaps we could move into cultural experiences and that sort of thing. That's certainly our position on it.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Ms. Dawson.

Mr. Ritz, there are thirty seconds left if you wanted to actually say something else.

Mr. Gerry Ritz: No, I'll pass them on to my learned colleague here.

The Vice-Chair (Ms. Paddy Torsney): I'm sure he'll use them.

[Translation]

Mr. Perron, please.

Mr. Gilles-A. Perron (Saint-Eustache—Sainte-Thérèse, BQ): I will talk to you in French. I'm sorry.

Mayor McDonald, you said in your presentation that decisions are made in the centre of the country, without any consultation in your area.

[English]

I hope I am translating properly.

[Translation]

In that case, do you think that the federal government should transfer most programs to the provincial level, as well as the monies that go with them, if that level of government is closer to the situation, the towns and the citizens? The programs could then be much more flexible. I would like to hear your comments on this issue, Mayor McDonald.

[English]

Mr. Ian McDonald: Initially, I made a statement about the federal government. I think the federal government does a good job with some of the programs.

A lot of people are glad to have the federal government in their district, and I still think the federal government could do a whole lot better in administering these programs. There's no need, but if you want to decentralize and send another department down here to Charlottetown, we'll gladly take it. But I think that with careful scrutiny and a little more consultation, the federal government can still deliver a good program.

The Vice-Chair (Ms. Paddy Torsney): Ms. Dawson, did you wish to comment?

Ms. Irene Dawson: I'm sorry, we were having a little bit of a problem with catching the first of the questions.

[Translation]

The Vice-Chair (Ms. Paddy Torsney): Mr. Perron, could you repeat your question?

Mr. Gilles-A. Perron: I will repeat my question to Ms. Dawson.

[English]

I think I'll try it in English this time.

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Mr. McDonald mentioned in his statement that a decision was made in Ottawa without any advice or anyone coming to see what is going on in the lower division. I was asking Ms. Dawson and you, Ms. Ellsworth, I presume, why the federal government will not fund this program at the provincial level, so that those people could run those programs, because they are closer to you people.

The Vice-Chair (Ms. Paddy Torsney): Ms. Dawson.

Ms. Irene Dawson: I think the crux of the whole thing is consultation. It may not be necessary to send programs to the provincial level and expect something marvellous there to happen, but without consultation at the federal level, the provincial level, and the municipal level, we end up with fractured programs, fractured incentives, fractured structures. I do not think anyone benefits from fractured anything, and I think consultation is the key with the three levels of government involved.

The Vice-Chair (Ms. Paddy Torsney): Rose Ellsworth, did you wish to comment also?

Ms. Cathy Rose Ellsworth: This is not about infrastructure, but it is about the federal training dollars that have come down.

Again I would like to echo Ms. Dawson's comments. I am finding that very scattered, very.... I am afraid that the sorts of thrusts the provincial governments are making, because it has been passed down to their budgets, are not going to be as all encompassing or as global as perhaps some of the federal thrusts could be.

I do not know if I am making myself clear, but before you do anything like that, where you are passing down these programs provincially...I agree with you, I think there has to be a lot more consultation and a lot more agreement as to what sort of a thrust those programs are going to take.

The Vice-Chair (Ms. Paddy Torsney): Madam Vautour.

Ms. Angela Vautour (Beauséjour—Petitcodiac, NDP): Good afternoon. I want to thank everyone for their presentations.

I want to make a few comments and address a question or two with my five minutes.

I have to say I enjoyed Mayor McDonald's presentation. I think you hit a couple of points when you mentioned the abuse in the act. I think you are totally right in what you said. I also found interesting your comments that there are some instances where the EI or SA is actually better than some jobs that are being offered, if I understood right, because I do believe $5.25 is the minimum salary here. It's in the wind today that someplace they are looking to bring it back down, and that scares me. I think if we look at no national child care whatsoever, people working for $5.25 an hour...this does not add up at the end of the day.

Another point that was interesting—is it Ms. Ellsworth? I would look at privatization I know businesses want the government to privatize their businesses, but what is your feeling on guaranteeing decent jobs to people while businesses are being privatized or making sure that those jobs are staying in the country?

I am thinking now of the airport in Moncton. Local people just lost their contracts because someone in Ottawa bid $1.79 more than the people running it in Moncton today. This is what happens when there is privatization. It is the lowest bid, and the person who used to make $12 or $13 an hour is now working for $5.35 an hour.

Since you want the government to privatize more—and we see it with park employees, people who were working for $11 an hour giving in to $4 or $5.25 an hour—how could the businesses guarantee, if we did give a direction to privatize everything, that the salaries would still be decent salaries for the people to live on?

Another thing is that statistics are very clear that contracting out is more expensive than letting the government provide the jobs.

Would Mr. McDonald or—

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Mr. Ian McDonald: I'm a firm believer in the federal government and the provincial government. If the federal government is going to take credit for job creation, they had better stay involved. They had better get involved. I'm obviously not one bit in favour of this business of privatization, for some of the reasons you mentioned. It's near and dear to my heart.

One other thing, Madam Vautour. You mentioned the business of work. I'm a firm believer that if you work in this country, you shouldn't be poor, but that's not the way it works. All I'm saying is if you're working and you're poor, there's got to be some other incentive someplace. Somebody has to help out.

In a lot of cases in Atlantic Canada, welfare and EI are a hell of a lot more attractive than a job, so what are we going to do about it? Well, in conjunction with the feds, the provinces, and the municipalities, we should do something about it soon. That's the number one issue in the country.

If you're working, you shouldn't be poor, but the unfortunate part is we are. So if you were to come up with some incentives to help the working poor, it would alleviate a hell of a lot of problems in this country.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mayor McDonald.

I've got Ms. Perry wishing to speak. I'm not sure if Ms. Arsenault wanted to speak and whether Mr. Myers wanted to go after. I'll go to Ms. Perry and then I'll see where you guys are.

Ms. Edith Perry: Actually, they just increased the minimum wage to $5.50 an hour.

I want to put a personal face on people who are seasonal workers, people who work at a low wage and people who work in a primary industry.

My husband is a professional. He is a veterinarian by profession. Because of his age, he is now working only part-time. And guess what? He doesn't get to work in Prince Edward Island. He gets to work for four months in Manitoba. Apparently he's going to be going to Newfoundland. He gets to work elsewhere, which means he travels elsewhere. Sometimes they'll pay his costs, sometimes not.

We depend on EI, when it comes right down to it. Because of his age he cannot get any kind of a labourer's job. People look at him...what's a professional doing here looking to pound some boards? He doesn't get into his own profession because farmers are going out of business and there are too many veterinarians already as it is. That means he's limited in his earnings income.

I work at a part-time job in a mussel plant. It's here, granted, and I have managed to get a little bit more than the minimum wage. I would say my employer is a little more progressive, but I am not making $10 an hour and I'm not making $11 an hour and I am limited to working on average between 45 and 50 hours every two weeks.

Our youngest child is still at home. He's 17. He is still our dependant. We also have to provide in many ways for—many of you must have had the experience—our two oldest children. They can't make an income because they are in university and require help.

If we had not planned.... And let me tell you, average Canadians do plan for the future if they have the wherewithal to plan. We were fortunate in that I inherited some money. I am using that inheritance to help our family manage to get by. When I am 65, I may not have my inheritance. I may not have old age pension. I may not have medicare. My children will not be in a financial situation either, so let's talk about the realities. Let's put a personal face on what it really is like for people in Canada to make just an average, decent income.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Ms. Perry.

Mr. Myers and then maybe....

Mr. Cleve Myers: (Policy Committee Member, Greater Charlottetown Area Chamber of Commerce): Thank you. I believe your question was about privatization and whether everything should be privatized. Then you mentioned something about contracting out, with statistics proving that it's more expensive to do that than to supply the service from within the government.

I'd be interested in seeing those statistics. Maybe I'll get you to send them to me, because it's certainly not the general feeling of business that the government does things more cheaply or more efficiently than private industry can do it.

I'm not fully aware of the example you cited with respect to what went on in New Brunswick, but I did see a little thing in the paper this morning about the $1.80 or whatever it was. With respect to that, I guess my comment would be there's something wrong with a policy that allows that to happen. I don't think you rule out that kind of practice simply because somebody made a decision that doesn't make any sense for the area.

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If you're going to do something in an area, there should be rider in the policy, I would suggest, that says so long as the price is within 10% perhaps, the net benefits that accrue to the region mean it's still worthwhile spending the money in that region rather than letting it be supplied somewhere else for $1.80. That's a prime example of something not making any sense, and those kinds of things have to be put in policy before you tender things.

You mentioned why would one privatize something and have it done for $5.50—the minimum wage here, by the way, is $5.40. That's the third opinion, the correct one.

The Vice-Chair (Ms. Paddy Torsney): We might have it by the end of the day.

Mr. Cleve Meyers: You have to look at the particular thing being done. You can't create a false economy and have things done for double the price they would normally be done for. You get into an area of sustainability. We're just coming out of high debt, high deficits, and we need to develop an economy that can be sustained well into the future so things are done for reasonable prices and other areas or other countries don't start doing them. We've seen some of that. We develop a false economy and can't continue. We can cite individual instances. Nobody wants to go from $12 to $6, but it's better than going from $12 to nothing in the future.

The Vice-Chair (Ms. Paddy Torsney): Thank you.

Mr. MacDonald from the Greater Summerside Chamber.

Mr. John J. MacDonald (General Manager, Greater Summerside Chamber of Commerce): Thank you very much, Madam Chair.

I have just two quick comments on privatization.

It's interesting to note that I think we've always beat up on the government on how they run their affairs and their business, but when we want to jump into privatization and leave a company to address a particular business in their own way, we're not sure we want them to. I think in a lot of cases privatization is probably the way to go. It gets government off of your back doorstep, curbs wages...and competition. I think it becomes very competitive out there by supply and demand.

The last speaker talked about minimum wage versus the salary we're getting when we fall. The government sometimes is the worst culprit in that flag jobs on the highways are paying $9 to $10 an hour. I can assure you as a small retail business owner, I cannot pay that in my particular business and survive. I think that's what it comes down to. We have a lot of businesses, such as the ma and pa businesses, that are trying to survive...a little more wage at it and they'll probably hire additional people.

Take this minimum wage. Sometimes I get the feeling we take it to a higher height than was probably intended to be. It should be also looked at as an opportunity to break into the workforce. There are many people who'd gladly take even less than $5.40 just to get some experience in the workforce.

Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Mr. MacDonald.

We'll now move to Mr. Brison for five minutes, please.

Mr. Scott Brison (Kings—Hants, PC): First of all, I too would like to thank each and every one of you for your presentations.

I'm an Atlantic Canadian. We face some unique challenges in Atlantic Canada. Government has been both a source of assistance over the past 30 years and a source of the problem and has helped to contribute to some of the systemic difficulties we have in Atlantic Canada.

With regard to minimum wage discussion—and I have to get into this a little bit—we can increase minimum wage in Canada. If we were to do that, we'd also be increasing our unemployment rate. That's been demonstrated internationally. That is unequivocal, and anyone who says otherwise has a paucity of information and studies to draw on. In fact, an article I read this morning, in the October 11, 1997 issue of The Economist, said France has made a decision to have a high minimum wage and a high rate of unemployment. We can make that decision, but I think those are the types of decisions we have to consider very carefully. There's no simple solution to these complex issues.

In any case, there's a feeling now that the government, in speaking of increasing spending, is talking about filling the holes they've dug over the past four years. In Atlantic Canada, with a significantly lower percentage of the population, we've had something like 27% of the cuts to social spending. These cuts have been in health care and education.

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Mrs. Perry, you were speaking about the investments in our young people. I think young people have suffered the most in terms of long-term competitiveness. You also mentioned that you would not have a difficulty seeing the end of Heritage Canada. So it demonstrates that you're willing to see hard decisions being made, but we would ask about your prioritization.

My question is whether we should be developing a litmus test for new spending. Should it be specifically focused on things like competitiveness, societal competitiveness, education for young people, health care? We have a population of 30 million in Canada. Through training and education we could have the most competitive society in the world in 10 to 15 years, and in a globalized economy that is focused on knowledge-based industry. We could do that; I really believe we could do it. Should we be developing some sort of litmus test related to competitiveness, focusing on education initiatives and that sort of thing?

The Vice-Chair (Ms. Paddy Torsney): I will call on Ms. Perry. I'm not sure if Ms. Rose Ellsworth wants to comment.

Ms. Edith Perry: Would you clarify what you mean by competitiveness in health and education?

Mr. Scott Brison: Our ability to compete in a global economy is based on the education of our young people. With that in mind, should there be some sort of litmus test for other investments like health care and education because we're improving the competitiveness of Canadian society? We can invest in these things. Is that going to be the litmus test by which we gauge the legitimacy of a program?

Ms. Edith Perry: I thought that was being done all along before we came up with all the cutbacks we have had in health and education. I think it's proving to be a fairly negative impact. So I would be very cautious about where the government is heading in terms of how they want to make education and health services competitive.

Mr. Scott Brison: I'm sorry, I'm not sure about.... I'm looking at health and education as positives—positive expenditures—and I'm justifying them based on how competitive they can make our young people for the future. So I'm not talking of increased competition.

Ms. Edith Perry: I think you should also put in another condition or ingredient. It isn't just technology that's going to make our young people competitive. I think we have to remember that human services are very much needed. There are the social services, the people who provide counselling and mediation.

The baby boomers are becoming very old and will require special care. They need... There's a certain amount of computerization you can do with an older person, but you can't take away that personal touch.

Let me just give you one tiny example, looking at it as well in terms of education. You can't take away that personal touch that is human contact. I just came from spending an hour this morning with a child in grade eight in a program we have here called Love, where older volunteers educate. We're not there to educate in any form, but because our teachers are already stretched in terms of resources. These are kids who.... This child is in grade eight, and she's operating at a grade three level. She's thirteen years old, and you really have to wonder where that child is going to go. What is her future going to be like? What does the year 2000 mean to her? I think we really have to be careful. Let's not take the human element out of what we do.

I do have one question, for any one of you. I'm taking a liberty—I know that—but I do have to leave. It's at these kinds of discussions where you get people sitting around a table, and usually some kind of equilibrium gets set.

I'd really like to know what did happen to the GST in terms of bringing down the debt. When they promoted that to us, I had visions. I think I understood that if the GST was collected, it was going to bring down the debt—not the deficit—in x number of years. I'm aware of the difference between deficit and debt. Can anyone answer that question for me? Has it gone towards the debt?

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The Vice-Chair (Ms. Paddy Torsney): Why don't I get some further details sent to you?

Ms. Edith Perry: Would you?

The Vice-Chair (Ms. Paddy Torsney): Obviously the previous government had that idea. Certainly the information is there.

A voice: Cheer up.

A voice: We'll fix you up.

The Vice-Chair (Ms. Paddy Torsney): Obviously the amount of revenue it's generating is far lower than the deficit the government had been running at the time. So you have to be out of a deficit before you really start getting into applying any money to a debt.

The situation was quite out of control, and I'm not sure that, as you say, all the promises were kept.

Ms. Edith Perry: It sounds like the GST really hasn't gone towards the debt then.

The Vice-Chair (Ms. Paddy Torsney): Well arguably if it's paying off our deficit or if it's making the deficit lower because we're collecting more revenue.... Every year's deficit is added to the national debt. So instead of the $42 billion when we took office, if we didn't have the GST it might have been $58 million. So the debt would have gone up to a larger amount.

I can get you those numbers, and perhaps you can agree or disagree, and give us further comment, as you wish.

Ms. Edith Perry: Okay, thank you.

The Vice-Chair (Ms. Paddy Torsney): Are you leaving now? The meeting is going to end at 2.30.

Ms. Edith Perry: Is it?

The Vice-Chair (Ms. Paddy Torsney): Yes. Hopefully we can keep you.

I now call on Ms. Rose Ellsworth.

Ms. Rose Ellsworth: I only have one comment to make. I think that maritimers have done more than their share per capita as far as reducing the deficit. Don't stop now. Don't start putting money back into the economy because you feel that things are better. Always keep in mind what's happening with our deficit. We have to get the debt down.

One of the statistics here is that we're paying 30¢ on the dollar towards our interest payments on the debt. I don't think you can reduce any more the spending in health and social programs. I definitely think that if you're going to put any dollars back in, those would be the areas—and education. But keep that big picture in mind, and don't get flak.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Ms. Rose Ellsworth.

Mr. Gallaway.

Mr. Roger Gallaway (Sarnia—Lambton, Lib.): Before Mrs. Perry leaves, I have a question. She raised something I thought was of great interest; that is, that if it's not a question of new spending, it's a question of determining whether present spending is relevant.

I have a couple of questions, one for Mrs. Perry and one for the rest of our guests. She mentioned eliminating Heritage Canada. As an example, Heritage Canada spends $800 million a year to prop up the CBC. Could you live without it? I would like to hear your viewpoint. I'm not disagreeing with you. I'm not disagreeing with you at all.

Ms. Edith Perry: I must have given the wrong name; I meant the department that's handing out flags.

Mr. Roger Gallaway: That's the same one.

The Vice-Chair (Ms. Paddy Torsney): Heritage Canada incorporates several departments. It's probably the largest budget in the whole government.

Ms. Edith Perry: Okay. So which one of them does the flags?

The Vice-Chair (Ms. Paddy Torsney): It does flags. It does all our cultural programs.

A voice: It does parks.

The Vice-Chair (Ms. Paddy Torsney): It does parks, it does multiculturalism, it does the status of women, it does the CBC, it does the CRTC. It has a huge group of programs.

Ms. Edith Perry: But there is this office with some people in there.

A voice: Oh right, okay.

The Vice-Chair (Ms. Paddy Torsney): You just meant the flag program specially, rather than Heritage Canada?

Ms. Edith Perry: If that would help—

Mr Roger Gallaway: The Canadian unity office, I suspect.

Ms. Edith Perry: I'm sure there are many more.

Mr. Roger Gallaway: Okay. I misunderstood what you said.

Ms. Edith Perry: No, please don't do away with the CBC, or any of those.

Mr. Roger Gallaway: Well, that's what I was trying to gauge.

Mayor McDonald, you talked about individual regional differences, and you cited a case where money was spent in Manitoba on the Churchill situation. I should tell you that it's my understanding that money came out of the Western Economic Diversification Fund.

Mr. Ian McDonald: What does that mean?

Mr. Roger Gallaway: Well, that means that in western Canada it is equal to the ACOA.

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We're talking about the rational and sane spending of money so that we get the kind of effect most Canadians would want, and so that there is a positive effect.

In terms of the $308.9 million allocated for ACOA—because there is this recognition that there are individual regional differences—do you believe we should perhaps pull that money back and at the same time look at a more objective application of those funds?

Mr. Ian McDonald: How much is allocated to the western ACOA fund?

Mr. Roger Gallaway: I have no idea.

Mr. David Iftody (Provencher, Lib.): It's $250 million.

Mr. Ian McDonald: Is that for Manitoba alone?

Mr. David Iftody: For all the west.

Mr. Ian McDonald: We have $300 million here?

Mr. Roger Gallaway: It's $308.9 million.

Mr. Ian McDonald: Okay. I'll have to take your word for it.

What was the question again?

Mr. Roger Gallaway: My question is, should we collapse all of these special regional funds?

Mr. Ian McDonald: Absolutely not. Why would you do that?

Mr. Roger Gallaway: I'm asking you.

Mr. Ian McDonald: And I'm telling you. It would be ridiculous to do that. You are telling me now that we should make application to ACOA to upgrade our ports. Is that what you are telling or asking me to do? We've already done that. There's no ACOA funding there to upgrade our ports.

I'm telling you this—there must be another way. The funding to upgrade Churchill came from the western ACOA. Is that so?

Mr. Roger Gallaway: That's right.

Mr. Ian McDonald: Then what we'll do is apply to ACOA here and probably write and the whole committee here for support when it comes up.

I don't mean to be sarcastic, but $26 million for Churchill, Manitoba, seems to me to be an awful lot of money for a seaport on Hudson Bay. When we look at the east coast, we're looking at one seaport here in Prince Edward Island that we would need $8 million for to make it as modern as you could possibly make it. We would have a cruise ship business here for five months of the year, comparable to any cruise ship business on the eastern seaboard.

That's basically all I'm saying.

Mr. Roger Gallaway: Listen, I'm from Ontario, and we don't have any such funding.

It's neither here nor there to me, but the fact of the matter is, the western ministers, as a group of three, decided this was an important expenditure for Churchill. What I'm saying to you is that.... You have some other similar mechanism on the east coast to access the $308.9 million, which is apparently generally available to the maritime provinces. You may not like the decisions that are arrived at—

Mr. Ian McDonald: Excuse me one second. I don't believe ACOA money is available for infrastructure.

Mr. Roger Gallaway: I have no idea.

Mr. Ian McDonald: Well, I'll tell you what. You'd better get your homework done, because we can't access that money.

The Vice-Chair (Ms. Paddy Torsney): I don't think that was—

Mr. Roger Gallaway: I'm not talking about infrastructure, I'm talking about spending generally. You're talking about individual regional differences.

Mr. Ian McDonald: To get the seaport upgrade just like Churchill, Manitoba, it would not be $26 million; $8 million would be plenty. So we could tap into ACOA for that; that's what you're telling me?

Mr. Roger Gallaway: No, I'm not asking you that. What I'm saying to you is that there is $308.9 million available for expenditure here. How it's spent, I have no idea. What the criteria might be, I have no idea. But it is directed to the Atlantic provinces.

I'm asking you if you would favour a different test in terms of releasing some of these moneys so that it has a desired economic effect. One of the witnesses has raised the point that in fact a minister moved an office to his riding because he thought that was a good thing to do. That wasn't a very prudent use of government money.

Mr. Ian McDonald: I understand your question now. It might be a little selfish of me to think like that. I don't mean that it's due to that, but I think your point's well taken. I think I missed the drift of it.

I would find that very difficult to do. I think that money has been set aside for business initiatives. What I would like to be able to do is make this a special project. I'm sure there is another agency, maybe Heritage Canada; we could tap into it that way.

Some hon. members: Oh, oh.

Mr. Ian McDonald: I understand where you're coming from, I really do.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mayor McDonald.

Mr. Iftody, a quick question.

Mr. David Iftody: Thank you.

I really appreciate the opportunity to be here in your community. I would direct that particularly to the mayor and other folks here. It's unfortunate we can't stay too long. I have to catch a plane soon, so I had better talk fast. I have a chair who keeps me last on the list; I'm not sure why. We'll have to talk about that later.

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At any rate, I'm from Manitoba—

Mr. Ian McDonald: Not from Churchill.

Some hon. members: Oh, oh!

Mr. David Iftody: I'm going to get there in a few minutes. Stay with me, Mayor McDonald. I couldn't help it; I was leaping off my seat as you were speaking.

Let me make a couple of points that I think are important. Western Canadians and Atlantic Canadians have shared similar struggles historically with respect to the government in Ottawa and so on. I think we've gone through similar things. I pose a couple of points here that I think have to be made.

Ms. Ellsworth, you mentioned that Atlantic Canada had taken upon itself...or that the federal government visited more upon Atlantic Canada than other regions with respect to the cuts. In fact, that is not true. The regions were balanced off in terms of the proportion and percentage of cutbacks within all regions of the country, also within the different departments. The Department of Industry, which spends most of its money in Ontario, was cut back by 60%. So on balance, it evened out. The difference is, in Atlantic Canada those cuts, however proportionate, were felt much more deeply. That's my sense of things.

In western Canada, one of the things we really had to deal with was that since confederation, in right of confederation, really, one of the carrots dangled in front of western farmers to enter into confederation was the Crow rate for the transportation of grain.

In the 1993-94 budget the Government of Canada killed that subsidy, which provided $750 million a year to western farmers to get their grain out to ports. What that means for each farmer in western Canada, each family farm—are you ready for this?—is another $20,000 bill to ship your grain. That's what they were stuck with.

One of the things we've tried to do in western Canada to wrestle with this and go off into the 21st century was to first find closer ports, i.e., Churchill, which was funded by the Western Economic Diversification Fund, a fund by the federal government through the transport department for diversification and privatization, which presumably, I hope, would be open to the good people of P.E.I. in the same way it was to Manitobans.

The farmers from northern Alberta, Saskatchewan and Manitoba will be able to ship that product now through Churchill. I would have to say that out of that $26 million, the Province of Manitoba, the Conservative government, chipped in $9 million as well. But let me share something with you that I hope is helpful to the people here.

You know, we talk about infrastructure and job creation. The Treasury Board has done an analysis of this. For our infrastructure program we talked a lot about job creation, but it costs $60,000 a job. That's a whole lot of money, and I don't think in the long term it was a healthy, structural kind of thing to provide such employment for somebody for five or six years.

The purpose of the infrastructure program, in my view, ought to have been, and should still be, to provide, in this case P.E.I., with the necessary structural strength to carry you up, to attract other kinds of investment to your province and your community over the next 10, 15, or 20 years.

We've done that in Manitoba. We've had an explosion now in agricultural growth in the hog sector, in dairy, for example, moving away from grain. Have you done an analysis in P.E.I. about what you need from the Government of Canada in terms of structural changes so that you folks can get a better grip on what's happening here economically and move into the 21st century?

The Vice-Chair (Ms. Paddy Torsney): Does anyone want to address that?

Mr. Ian McDonald: I can, Madam Chair, but I have to go and cut a ribbon at 2.30.

I appreciate your kind remarks. I'm a little more up to date on Churchill. I'll use that as an example. I didn't know you were from Manitoba, of course.

Mr. David Iftody: You were walking right into that.

Mr. Ian McDonald: Oh, yes, no question about it; big time. But we made our point.

Listen, I have to leave now. Thank you very much for your time here this afternoon. Merci beaucoup and au revoir.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mayor McDonald. If you do have any additional comments or thoughts that you want to get to us, you're more than welcome to do so.

Do you walk the sidewalks to that school or not?

Some hon. members: Oh, oh!

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Mayor Dawson. Ms. Dawson; I'm sorry.

Ms. Irene Dawson: Thank you for the temporary promotion.

The Vice-Chair (Ms. Paddy Torsney): Were you a mayor actually?

Ms. Irene Dawson: No, I'm a councillor.

The Vice-Chair (Ms. Paddy Torsney): You're a councillor in which area?

Ms. Irene Dawson: The town of Clermont. It's one of the municipalities in the province having municipal elections in two weeks' time.

I'd like to comment on the last speaker from the panel. We certainly feel the infrastructure program does exactly what you're suggesting we do. We can't expect to attract business and build our economy if we cannot provide sewers, streets, roads, and sidewalks. That's why the infrastructure program is all-important.

There's another comment I would like this committee to take with it. I feel it's extremely important. I think we witnessed it here this afternoon. When deliberations are taking place, I urge the federal government to consult with the provincial and territorial federations of municipalities and similar associations, because we speak for not only the city of Charlottetown, which has a port, but we also represent the little community of Ebbsfleet, which has 138 residents.

We are a very fair-minded, open organization, and we have no specific, particular little focus, but for the betterment of the province, I urge you to consult with the federations as you go across the country. Listen to us and consult with us not just at specific pre-budgetary times, but when decisions are being made.

Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you very much, Ms. Dawson.

Just before we go to our one-minute round, I would like to address an issue that was raised earlier by a couple of presenters. I was not on the committee last year, but I understand that it did not come to Prince Edward Island because you were in the middle of a provincial election. Instead, people were invited to go to Ottawa and make presentations there. The goal was not to meddle in P.E.I. There was still an opportunity. I understand that those who wanted to have an input into the process were encouraged to send written briefs.

In terms of this process, the House came back a week later than anticipated, so things have been condensed a little bit. We do have an obligation to report to the minister by November 28. As I might have said earlier, we will start writing our report on November 7. So if additional information, facts, or ideas come to you, or if there are things you hear in the newspaper or whatever and you want to disagree or agree, you're more than welcome to send that information to us. This is not the end of the consultation process here today.

Departing perhaps from other years, I believe the committee mostly heard from speakers initially in Ottawa, and then went out. This time we have gone out, and then later we're going to hear from speakers in Ottawa. Groups like the Canadian Chamber of Commerce will be in Ottawa. The Federation of Canadian Municipalities I would imagine would make a presentation.

In terms of the infrastructure program, as a little PSA for that, it was something that was absolutely a recommendation from the FCM. My understanding from my own province is that the agreements between the federal government and each province were unique to each province. Different systems were set up in different places as appropriate to that province. It was a bottom-up proposal. But in all places, it's my understanding that it is one-third, one-third, and one-third. If the arrangement wasn't as you wished in P.E.I., then people are more than welcome to be in on any discussion.

I would just like to say that there are lots of opportunities. There will hopefully be pre-budget consultations here in each riding for people to participate in and give their ideas. Whether it is in a pre-budget consultation period or not, hopefully our offices are always open to you. I encourage you to give us your ideas, because sometimes these things take some time to catch on. Whether it's focused just on this month-and-a-half process or whether it's something for the long term, we're always looking for good ideas.

We'll now move to the one-minute wrap-up round. We have one extra minute, since we lost somebody. I will throw the floor open to those who have not spoken but have come with organizations.

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Ms. McBain, you have one minute as a taxpayer to tell us what you'd like.

Ms. Lisa Doyle McBain (Executive Director, Federation of Prince Edward Island Municipalities): I think President Dawson covered all the points we wish to make.

The Vice-Chair (Ms. Paddy Torsney): Okay. Ms. Dawson.

Ms. Irene Dawson: I think I said everything except for one statement, which someone made earlier. I would like to reiterate that an educated society leads to a healthier nation, so education of our youth is extremely important and pays off in savings of health dollars in the long run.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Ms. Dawson. Mr. McDonald.

Mr. Ian McDonald: Thank you. We appreciate the opportunity to appear here, but we emphasize again that the notice was pretty short. In two days it's pretty hard—

The Vice-Chair (Ms. Paddy Torsney): You're brilliant nonetheless.

Mr. Ian McDonald: You're getting out of it.

It's a pretty easy process. Personally, I sit here and look at.... The government is very complicated. They want to throw all kinds of things into how to do a budget and where to go and stuff, but I think we have an educational program that needs to be attended to across Canada. We have the best health care in the world, which needs to be taken care of, and we have a Canadian pension plan and I think that needs to be taken care of too.

I hear a lot of talk on the Canadian pension. A survey was done last year. They asked young people age 20 to 27, and they said they wouldn't expect to have a Canadian pension plan. When I was 20 to 27 I never even thought about it, nor did I care about it, but those people will come into an age bracket where they're going to need security. Don't think they're going to invest their own dollars to protect themselves at the end, because that isn't how it works. A high percentage will do it and a low percentage won't.

I think it's very important that we protect the programs we've developed over the years. I think they're very good to Canada and they're looked upon by the rest of world as something special.

So start loosening up the purse strings, create jobs and the tax dollars will fall back into the purse.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. McDonald. Ms. Waugh Arsenault.

Ms. Marilyn Waugh Arsenault: Thank you for inviting us here today to participate. Next year I'd like the committee to consider coming to Summerside. It's not that far from Charlottetown.

The Vice-Chair (Ms. Paddy Torsney): I plan to be here in the summer. Maybe I'll come and visit.

Mr. Myers.

Mr. Cleve Myers: I want to thank you for the opportunity to be here and to help present as well.

When I look at the budgeting process globally, I know that the finance minister stated just a short time ago that he cut up the credit card and there won't be any more credit. I hope that will be the case. I hope we won't find ourselves getting more into debt, as the problem of having a huge debt and deficit hanging over our heads might erode somewhat. Obviously, there will always be an incentive and urge to spend money, especially as we get near a federal election. We can get into trouble that way. It's no different from what we do personally. We need to be encouraged to stay away from those kinds of things. I hope this finance minister's successor will have the same kinds of feelings and impact on the economy.

We are a very diverse nation, and it never ceases to amaze me how little we understand what goes on in the rest of the country. We tend to look at things from our own viewpoint. We had a prime example here today: we don't like you spending money in Manitoba, especially when we can't get it here. We heard a good reason why that was done, but the question he didn't get an answer to—have we done the same kind of homework here so that we can get our $8 million.... I suspect we have to do a little more work in that direction.

Consultation is very helpful, and the more we do of it the better.

Finally, I have lived in central Canada—in Ottawa—and I know what they sometimes think of Atlantic Canada and I understand some of the reasons they think that of us in Atlantic Canada. But in that consultative process there needs to be a better understanding of the seaonality of the employment down here and why it is that way. It is not just that we are a lazy bunch down here, because we're not. We're very inventive and hard working and we deal with what we've got to deal with here.

Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Mr. Myers. Ms. Rose Ellsworth.

Ms. Cathy Rose Ellsworth: I've only had the last name Ellsworth for three days, so I'm still getting my tongue around it.

The Vice-Chair (Ms. Paddy Torsney): Congratulations.

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Ms. Cathy Rose Ellsworth: Actually, that's not true. It's been ten days. I've been back from my honeymoon for three days.

I have a couple of comments that are outside of our proposal. They're personal things.

I was on a federal task force on small business for six months prior to the second-to-last budget, and it was interesting how businesses from across Canada got together—there were 30 of us—and made some recommendations or suggestions. One of the things I said during that process I'm going to repeat.

I heard it said once during the Canadian chamber's deliberations that the disability fund currently comes out of CPP. We have an unfunded CPP, and I would like to see a recommendation that the disability fund either come out of the EI program or out of general revenues. It makes no sense for it to come out of an unfunded program that's already in trouble when we have a surplus in another fund. So that's one suggestion I made at a personal level.

As well, because we have a high rate of self-employment and because of the cuts we've faced, I think the SEAP—the self-employment assistance program—that was initiated is an excellent program and should never be cut.

Those are just two extra comments.

The Vice-Chair (Ms. Paddy Torsney): Thank you. Mr. MacKinnon.

Mr. Harvey MacKinnon (General Manager, Greater Charlottetown Area Chamber of Commerce): Thank you for this opportunity.

First, I agree with the comments that were made related to education, health care, and pension plans. The only caution I would have is don't look for extra funding. Rather, rework the funding that's there and do a better job. If we want to educate our people from Ontario and from the western section, then Canada should be doing more to encourage tourism to come to P.E.I.

The Vice-Chair (Ms. Paddy Torsney): That's my plan for next summer.

Ms. Perry.

Ms. Edith Perry: I want to thank you for allowing me this last-minute opportunity to speak.

I would like to remind the members who have remained to listen to us to make sure a human face is put on any considerations or deliberations when we're talking about spending. We've heard some cautions about not spending high, wide and handsome. It's called prioritizing when we spend money and make sure it goes to people and in human interests.

Thank you.

The Vice-Chair (Ms. Paddy Torsney): Thank you, Ms. Perry.

I want to thank everyone who came and spoke to us today in P.E.I., particularly those who spoke on this panel.

I encourage you to visit the table that's marked in white over there. It has copies of the presentations made to us so far today, as well as a copy of the minister's presentation, which set out the parameters for this discussion. He gave it to us last Wednesday in Vancouver.

We thank you for your ideas on short notice, as well for your commitment, passion and personal experiences. It's very important to all of us. I can assure you that the committee members who are here and those who are not here will get a copy of the transcript. All of your presentations and comments, including my summer plans, are on the Internet. It is a good thing I didn't say what month we were coming. If you have anything else, please ensure that you get it to us.

Finally, the CPP hearings start on October 28—I'm trying to remember what I told to which panel—and I think wrap up around November 18 or so. If you have already given us ideas about CPP, we'll make sure they go into the deliberations on Bill C-2.

If you have additional comments and you want to either appear or get written submissions to us on the bill, please either contact us through your member of Parliament or directly, and make sure we have the benefit of your input.

Again, thank you all very much. He's not here to take credit, so I guess the chamber will have to take credit for the good weather. Judging by the newscast I saw last night, I think this might be the warmest part of Canada today, so we're very happy to be here.

This meeting is adjourned until 9 a.m. tomorrow in Ottawa.