FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, November 22, 1999

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[English]

The Chair (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I want to call the meeting to order and welcome everyone here this afternoon.

This afternoon, ladies and gentlemen, we have the pleasure to have with us representatives from the following organizations: the Health Sciences Association of Alberta; the Regional Health Authorities of Manitoba; the Confederation of Alberta Faculty Associations; and the Edmonton Coalition on Homelessness. We have a couple of individuals who are also going to be making some presentations, and we have the Canadian Centre on Substance Abuse. And that is indeed the entire list.

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As many of you have actually appeared before the committee before, you probably know you have five minutes to make your introductory remarks. We have received many of your briefs already, in September, and have had an opportunity to review them. If you can give us a five-minute overview, that will allow us a greater length of time for a question and answer session.

We will begin with the president of the Health Sciences Association of Alberta, Elisabeth Ballermann. Welcome.

Ms. Elisabeth R. Ballermann (President, Health Sciences Association of Alberta): Thank you, Mr. Chairman and members of the committee. On behalf of the Health Sciences Association of Alberta, I do thank you for this opportunity to express the view of our organization. HSAA is a trade union that represents over 10,000 health care workers within this province.

You have received our submission, and in this short time available I will concentrate on those items that most directly affect our membership, although I submit that none of the items included in the brief that we have submitted are irrelevant.

In keeping with the goals and the missions of the Health Sciences Association, our key priorities are in the area of social programs. The first priority that we encourage the federal government to concentrate on is that of reducing poverty. Of course, poverty is a multifaceted issue and any number of initiatives will have a direct or indirect impact.

No one is unaware of the aging of our population, which by itself represents many challenges. Budget-cutting exercises at all levels of government have hit seniors hard. Whether by introduction of user fees and premiums from which they were previously exempt or by reductions in services such as health care, these cuts have had a negative impact on a large number of our older Canadians. We therefore encourage this government to ensure that senior citizens are well served by fully indexing pensions and by committing to strengthening various social programs.

Children are at the other end of the age spectrum. While we note the plan to increase maternity leave, we also believe we must follow through on the objective of a national child care program. Ensuring quality child care that is universal and affordable will have many positive effects on children and will reduce poverty. It will assist parents in obtaining an adequate income, and will allow children opportunities to learn and socialize in a safe and nurturing setting.

We urge this government to do its utmost, within the constraints of the division of powers between the provinces and the federal government, to address the following initiatives regarding poverty and homelessness: we encourage adequate social assistance benefits; that suitable public buildings be made available as emergency shelters; that adequate medical services be provided, including clinics, outreach workers, infirmaries, screening, immunization, nutrition, and hygiene programs; that emergency funding for community agencies that provide assistance to the homeless be adequate; that we double moneys for housing assistance within this country; and that stable, long-term funding be provided to agencies that assist with poverty and homelessness. We've also included increased remuneration to members of our military. The fact that many of our military personnel live in poverty really is a national disgrace and must be addressed.

Not surprisingly, health care is also high on our priority list. Addressing poverty will impact on health care demands, since studies universally link socio-economic and health status. Restoring health care funding is but one aspect of the whole health care picture.

Within health we currently face dramatic shortages in a number of professions. These are the product of a number of factors: growing demand due to our growing and aging population; the aging of the health workforce; post-secondary education opportunities that are limited; and health policy, with its resultant brain drain.

Among our members, physical therapists, occupational therapists, radiation therapists, diagnostic stenographers, respiratory therapists, speech language pathologists, and lab and x-ray technologists, among others, are already experiencing severe shortages. This is in addition to the more frequently cited registered nurses and physicians many of us have heard about.

We submit that this government must address the situation immediately by providing incentives for young Canadians to enter the healing professions. These incentives would include sufficient funding to post-secondary education in order to enable expansion of programs; enhanced assistance to students in the form of tuition rebates; stipends during clinical internships or residencies; and incentives to remain in Canada—in other words, loan forgiveness based on service in areas of high need. Unless we increase the supply of most health care professions, we will continue to be faced with unacceptably long waits for key services, with the spectre of patients being sent to the United States for some types of treatment.

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We ask that the federal government follow through on its promise of a national pharmacare and home care program. There's no doubt this would be costly, but there's equally no doubt it would be cost-effective, reducing the overall cost of health expenditures. We believe Canadians, given the choice, would be willing to delay or forego tax cuts if they could see the benefits they would derive.

In advanced education, I've already mentioned the issues of students for health disciplines. However, we also encourage programs to ensure that our students do not graduate with dramatic post-secondary debts.

Other issues we have addressed are infrastructure, foreign aid, research and development, and aspects of eligibility for employment assistance.

Those are my submissions.

Thank you.

The Chair: Thank you very much, Ms. Ballermann.

We'll now hear from the Regional Health Authorities of Manitoba, and André Rémillard, chair of its council of CEOs. Welcome.

Mr. André Rémillard (Chair, Council of Chief Executive Officers Regional Health Authorities of Manitoba): Thank you, Mr. Chairman, honourable committee members. I'm pleased to be presenting today on behalf of the Regional Health Authorities of Manitoba. I am the chair of the provincial council of chief executive officers and the chief executive officer of one of the regions in Manitoba.

Just to frame my comments today, I would like to explain a little bit about the Regional Health Authorities of Manitoba. There are 13 regional health authorities in Manitoba, with 10 in the rural northern areas, one in Brandon, and two in the city of Winnipeg. Collectively, we're responsible for the direction, the operation, the coordination, and the provision of a full continuum of health services across the province. The continuum includes acute health services, hospitals, long-term care facilities, community-based programs, mental health programs, public health, ambulance services. In essence, it includes all of the health services that are provided to the province of Manitoba, with the exception of cancer care—which is provided by Cancer Care Manitoba—and the Addictions Foundation of Manitoba programs directed at addictions. Our mission collectively is to develop an efficient and effective inter-regional health delivery system to meet the needs of Manitobans.

Today my presentation covers two of the points that are in your primary themes. They are, firstly, the issue of social infrastructure, and, secondly, tax relief and tax reform. To that we add a third issue, which is the issue of health human resources.

Mr. Chairman, in our written submission we endorsed the recommendations that were put forward by the national association, the Canadian Healthcare Association, and again I reiterate that endorsement today. The Regional Health Authorities of Manitoba fully endorse the recommendations that have been put forward by the Canadian Healthcare Association. I won't review those in detail, but I will focus on the priorities that are of particular significance to Manitoba.

With regard to tax relief and reform, the RHAs of Manitoba would urge the federal government to consider the relationship with health care spending and increasing Canadian productivity before determining the tax cuts that are to be announced at various income levels. Consider in particular four points. First of all, recent tax cuts that have occurred have been offset by increases in out-of-pocket expenses for health services. In essence, I think Canadians are now individually paying for some of the reductions that have occurred in government spending.

Secondly, there's a trade-off in reducing taxes and enhancing social programs. Certainly I think there is a competition at this point in time as to whether or not we see a reduction in our tax rates or whether we're looking at supplementing social programs.

Third, inequities in income are powerful and well-documented influences on health status. When we're making tax cuts, we must therefore narrow income inequities and ensure that the people who are indeed in need of those tax reductions are receiving them. Tax reductions must be fair; they must benefit those who need them the most. We need to balance appropriate government spending with other social program and infrastructure areas, to the benefit of Canadians.

On the second point with regard to social infrastructure, the Regional Health Authorities of Manitoba urge the federal government to commit $1.5 billion in additional funds to first raise the CHST cash transfer to provinces by $500 million for fiscal year 2000-2001, and secondly, to provide the provinces with a $1 billion initial investment to the broad continuum of care. We would also urge you to consider applying a growth factor to the cash component of the CHST in order to ensure the long-term sustainability of our health care system.

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Specifically, in this area we have four key messages. First, last year's federal budget was indeed a good beginning, but it wasn't enough, and we certainly do need more money to sustain the current level of health care in the country.

Secondly, the existing publicly funded medicare system must continue to be supported.

Thirdly, the broad continuum of care must also be publicly supported. Right now, I think public support is limited to a couple of large facets of the health delivery system. We need to look much more broadly at the broader continuum to include health promotion and injury prevention kinds of programs and the like.

Fourthly, the principles of the social union need to be honoured.

In terms of the health human resources, I think it has already been mentioned with the previous presentation, but it bears repeating. The regional health authorities do urge the federal government to provide funding and to enable the development of short-term and long-term solutions to address the many health human resource issues that are facing the authorities across the country.

The availability of appropriate health human resources is a major issue for the regional health authorities in Manitoba, and certainly in the rest of the country. RHAs are experiencing the challenges of having inadequate numbers of appropriately trained and appropriately educated health professionals. Federal government funding is needed to enable the development of short-term and long-term solutions to address these many health human resources kinds of issues.

To close, I do appreciate the opportunity to have participated in this regional consultation, and we look forward to the continuation of the trend that was started in 1999 in supporting the health system and in addressing the determinants of health to influence the health of the people of this country.

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

We'll now hear from the Confederation of Alberta Faculty Associations, Dr. Scott Grills, president, and Mr. Alan Meech, executive director.

Welcome.

Dr. Scott Grills (President, Confederation of Alberta Faculty Associations): Thank you, Mr. Chair and committee members.

The Confederation of Alberta Faculty Associations represents faculty at the University of Alberta, Athabasca University, Augustana University College, and the University of Lethbridge. Our presentation before you reflects the concerns of the members of those associations.

I will briefly review some of the highlights of our submission in order to facilitate conversation following.

We support a balanced approach amongst the three main alternatives available to the federal government as it undertakes a review of increasing revenues. Specifically, and in order of priority, we support a return to baseline funding that approximates 1993-94 levels, continuing debt reduction, and moderate tax reduction. Our position is in fact consistent with what large-scale polling and survey research is suggesting within the social sciences, as well as amongst Canadians more generally.

The basis of our request for increased support in terms of social spending directed towards post-secondary education reflects our concerns for the current state of our universities. The consequences of decreased funding, both in terms of CHST transfers and, in the case of Alberta, decreased provincial funding, are seen on our campuses. Most directly, our students are experiencing increased tuition fees.

In the province of Alberta in the last decade, student tuition fees have increased 194%. Corresponding with increasing tuition fees is increased student debt load. This has the effect of transferring debt from the province and the nation to individual students or individual learners.

We are also seeing decreasing numbers of full-time faculty at our institutions and full-time researchers. This corresponds with decreasing salaries, and with decreasing salaries we see a corresponding impact tearing through to our ability to attract the best researchers and professors in our universities and our ability to keep them within the university system and within our country. We are also seeing the beginning of a trend of declining numbers of students in post-secondary education. This is most pronounced in the area of part-time studies.

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Recent federal initiatives have been welcome to members of the association, but they are palliative rather than restorative. The recently announced 1,200 research positions are a welcome initiative but make a break between what we see as the fundamental dual roles of university faculty as both teachers and researchers.

Increased federal funding to the granting councils is also welcome. However, MRC and NSERC have received support at levels in excess of the restorative funding to the Social Sciences and Humanities Research Council.

The Millennium Scholarship Endowment Fund is welcome but will assist only a minority of the students within our system. Likewise, RESP provisions are helpful but are likely to benefit only that segment of the population that is able to access adequately the provisions of that program.

We recognize that it is exceedingly difficult to disentangle the consequences of federal government policy changes with practices of provincial governments. In Alberta, we've seen a direct decline of 21% in post-secondary education funding over the period of 1994-1997, and our ability to reinstate that funding has been uneven at best. We can only observe the consequences on our campuses: increasing numbers of students in our classes, decreasing numbers of teachers and researchers, pressures on classrooms and laboratories and corresponding infrastructure, and exceedingly difficult circumstances in keeping our libraries up to date. Libraries in Canada continue to decline in their ranking relative to their North American comparison point.

When we compare Canada with other G-7 countries, we note that our competitors in post-secondary education are increasing their investment while investment in Canada declines comparatively. As a small example of this, we note that in the period from 1995-96 to the present in Alberta, we've seen an increase in funding in post-secondary education of 1%; in B.C. it's 2%. However, when we look at the state of Washington, it's plus 15%; Oregon, plus 20%; and California, plus 42%.

We are concerned that Canada is living off its intellectual capital in its universities and is in fact consuming it. We are asking for across-the-board funding assistance through some mechanism that harmonizes federal and provincial jurisdiction claims, which will ultimately benefit all Canadians.

We see the current opportunities that rest before the federal government as an opportunity to reinvest in the post-secondary education system and show the leadership necessary to ensure that this system is there to serve all Canadians, the students, learners, and the research functions of our universities.

Thank you, Mr. Chair.

The Chair: Thank you very much, Dr. Grills.

We'll now hear from the Edmonton Coalition on Homelessness, Mr. Frank Manzara, board member.

Mr. Frank Manzara (Board Member, Edmonton Coalition on Homelessness): Thank you, Mr. Chairman, and good afternoon, committee members.

I'm a volunteer member of the Edmonton Coalition on Homelessness. I wish to thank you for affording us the opportunity of speaking to you.

We are a coalition with more than 30 local member agencies. We were formed in 1986 with the goal of creating a strong local voice on housing and homelessness issues.

Our submission to you today is the first public statement to a federal committee by our coalition. We wish to add our voice to those who call for active federal government participation to eliminate the critical reality of housing and homelessness that exists so widely across the country.

The type of housing we focus upon is that which falls well below the purview of market scale housing. This is the type of housing that we contend requires the active involvement of all levels of government, as well as builders and community representatives. We are involved, then, with social housing, and some stock of seniors housing falls within the definition of low-cost affordable housing.

Since 1993 the lack of affordable social housing in our local communities and across Canada has become an embarrassing national crisis. Negligible amounts of new housing have been constructed, and the rental market has become more expensive, to the point where many renters and owners have seen more than 50% of their incomes devoted to housing. Families, even those with children, are forced into the grim reality of homelessness, where the most destitute singles were once considered the prime candidates.

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We are now at the point where the mayors and councils of our major cities have identified the state of homelessness as a national crisis.

How can we talk about homelessness if we neglect to consider affordable housing for our most marginal citizens, the lowest of income earners? How can we talk about the lack of affordable housing in forums that exclude any level of government or members of the building industry or involved members of our communities?

What ECOH is saying, and what the other presenters are saying, is every level of government and every other player named is essential to find solutions and to develop effective programs to provide any type of housing that will accommodate Canadians in need and reduce, and even eliminate, the tragic state of homelessness we are now experiencing in this country, which by UN standards is the ideal place to live.

Speaking of the United Nations, Canada has been criticized on two occasions in the most recent reports because of their abysmal record on homelessness and housing.

Canada does not lack for solutions. We have a history of success in funding the development of hundreds of thousands of units of affordable housing over many years. In many communities, there are successful pilot projects geared to specific housing needs. There have been large numbers of useful studies on all aspects of housing issues, many of them commissioned by Canada Mortgage and Housing Corporation.

There has also been a large number of blueprints for action, and I will sight one. The national Liberal caucus created a task force in 1989. The end result of their undertakings was the May 14, 1990, report called Finding Room: Housing Solutions for the Future. The housing critic for the Liberals at the time was the Honourable Paul Martin and his colleague Joe Fontana. They produced a valuable report, which we consider stands the test of time. We commend that report to you as a useful blueprint for establishing a national housing strategy and much more.

ECOH, as do many other advocates, considers housing to be vital infrastructure and a valued investment. Housing is an investment. A large share of Canadian capital assets are in residential real estate. Federal incentives and subsidies over the years have contributed substantially to this asset. Social housing too is an investment. Older social housing operates at below market rents and permits subsidies to become more cost effective as the years progress.

Federal spending on housing can be secured as an investment in a real way by mortgages that ensure the benefits flow to those who need them in the future.

Finally, this coalition, along with a growing number of national, provincial, and local organizations, endorses the 1% solution. Spending on housing by all levels of government equals about 1% of their combined budgets. The 1% solution calls for an additional 1% to be spent by each government on housing. For the federal government this solution equals about $2 billion annually.

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Thank you very much.

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

We'll now hear from Harold Buchwald, founding member of Pitblado Buchwald Asper. Welcome.

Mr. Harold Buchwald (Individual Presentation): Mr. Chairman, ladies and gentlemen of the House of Commons committee on finance, it's a very special pleasure for me, and for Mrs. Helen Steinkopf of Winnipeg, who is with me, to appear before you and make this submission.

We've already filed with the clerk and tabled with you our proposal, which is a proposal for a registered disadvantaged residential savings plan. In sum, it's a tax savings plan to help disadvantaged people, mentally challenged people, become homeowners.

We take our cue from that important sentence, that critical sentence, in the recent October Speech from the Throne that had the government say, through the voice of the Governor General:

No commitment we make today will be more important for the long-term prosperity and well-being of our society than the commitment to invest our efforts in very young children.

The very young children we are inviting the Government of Canada to invest its efforts in are children who are mentally retarded. I think the politically correct term is mentally challenged. These children have their handicaps. They'll have to live at home most of their lives. At some point in time they'll have to leave home for a variety of reasons—their parents won't be able to take care of them any longer; their siblings have moved away. They'll have to be some place in the community, and the government will have to provide housing for them.

Our proposal is that if the parents of those children were enabled through the income tax system to put money, on a tax deductible basis, into a savings plan that would accumulate to that period of time when the child has to move out of the home and into some other residence, and if the funds in that trust fund were then used to purchase a residence, or an interest in a residence if they do it in partnership—the pattern is that they live communally, they live three or four in a group home, an apartment, or a condominium—that would be a great boost; that would be a tremendous advantage to the parents of those children, to the children themselves, and to the community at large.

If our proposal has a familiar ring to you, ladies and gentlemen, that's not an accident. We borrowed liberally from the former registered home ownership savings plan, the RHOSP, that was part of the tax regime between the period 1974 to 1985. It was an inspired plan that allowed first purchasers of residences to save money on a tax deductible basis by putting their money away in one of these registered trusts and then applying the proceeds against the first purchase of a residence, thereby helping many young people save for a first residential purchase who otherwise might not be able to do this.

We translate that to the parents and to the relatives of mentally disadvantaged children, who one day will have to come out of their own homes and into the community generally and will need housing. When no housing is available, of course, it's done on a crisis and ad hoc basis, and it's not very satisfactory.

We outline in our proposal—and it's only a two-page proposal and it's on file with you—how the plan would work. Simply put, the RDRSP would allow the contributor—the parents or a relative or someone like that—who meets certain qualifications, which the Department of Finance and the Department of National Revenue would establish...we're not establishing them for you here today. It would allow the person to contribute up to 20% of his or her taxable income annually. If the contributors are the parents of the disadvantaged person, they would be permitted to apportion the annual contributions between them.

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Contributions would be made to an authorized financial institution. All contributions would be deductible against the contributor's income for the taxation year of contribution. Earnings on the contributions, in the hands of the depository, would not be taxable.

We propose that on the acquisition of a residential unit for the disadvantaged person, payments out of the RDRSP would not be taxable when used solely for that purpose. Any excess amounts would be paid into a discretionary trust fund for the disadvantaged person, and the income on that trust fund, of course, would be taxable.

Following the RHOSP plan, these would be done with existing trust companies, credit unions, banks, or other credible or government-approved financial institutions, such as life insurance companies or other financial services companies that would accept them and hold them in trust. We're not reinventing the wheel here; we're adapting the wheel, if I may say so.

We would give this a limited life. Contributors or their successors could maintain a trust for only 30 years. By that time, the child would have likely been moved into the community as a disadvantaged adult. In the 31st year, if it wasn't used to purchase a residential unit for the disadvantaged person, the full amount of the plan would have to be withdrawn over a five-year period by the contributor and taxed at the contributor's then regular rate, or given to a non-profit organization dealing with disadvantaged people or another disadvantaged person's RDRSP trust.

To sum up, we think the benefits are self-evident, but I would like to take the liberty of suggesting them to you. The establishment of registered disabled persons savings plans would serve as an incentive to enable contributors, particularly young parents, to save, accumulate, and preserve capital to be used for the eventual purchase of residential units for their disadvantaged children or relatives. It would greatly assist the contributors' savings programs and help them meet their obligations to provide permanent housing for disadvantaged persons.

It would save the governments considerable amounts of money because the governments are obliged to provide housing for these persons, if no other housing is available. More important than anything else, it would relay something that is very powerful about home ownership to people who are otherwise devalued. A home makes someone feel they are part of the community and provides status and security. That is what it would do for these disadvantaged persons.

We think it's a credible plan. The idea originated with Mrs. Steinkopf. I've tried to turn it into a plausible, workable mechanism. We think it would affect maybe 50,000 families in the country under our scheme. As Mrs. Steinkopf likes to say, planning averts crisis.

Thank you very much, Mr. Chairman.

The Chair: Thank you very much, Mr. Buchwald, Mrs. Steinkopf.

We'll now hear from the Canadian Centre on Substance Abuse, Ms. Frances Dover. Welcome.

Ms. Frances Dover (Member of the Board, Canadian Centre on Substance Abuse): Thank you.

Mr. Chairman, honourable members, ladies and gentlemen, as treasurer of the Canadian Centre on Substance Abuse, and also as president of a company that has been providing services on drug and alcohol issues to the private sector, governments, child welfare, and native services for the past 11 years, I want to share with you some of the issues Canada is dealing with today.

The topics to cover include the extent of the substance abuse in the workplace, problems associated with substance abuse, the cost involved, and finally recommendations on how the federal government can deal with these.

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I don't think it's a surprise to anyone the extent of substance abuse in Canada's workplace. When more than one in five workers report using alcohol on the job, I think it's something we have to address. The extent of alcohol and drug use in the workforce is strongly influenced by the extent of alcohol and drug use generally in any society, and hence the ramifications and effects on the social infrastructure.

What's the profile of a worker most likely to use drugs and alcohol in the workplace today? It's inversely proportionate to their position in a corporation or organization. Certain occupations are at greater risk. We find with alcohol they include the food and beverage, transportation, and maritime industries. We find with drugs they include the recreation, entertainment, and construction industries.

We also find that they use more than one substance. If there is misuse of a drug or alcohol, they'll go up on cocaine and come down on the depressant alcohol. They'll mix and match until finally they're using one and the other, and their peaks and troughs emotionally become those of the Rocky Mountains.

Why do we worry about this? What are the problems caused by intoxication and impairment? I think one of the strongest is the decision-making judgment. In the 11 years we have been working in this business we have found young, single mothers of children, we have found young men in the oil patch, who started using marijuana when they were 14. Some of them graduated to cocaine, others stayed with marijuana. When they reached the age of 20, they still had the emotional maturity of 14, yet they were driving heavy equipment. They were on the oil rigs with chains flying about, and their lack of motor coordination and emotional immaturity often resulted in the loss of a limb. We have found that.

We have found reduced efficiency in work performance and the inability to respond when a crisis arises, which is one of the major problems. We see it all the time in our business.

What about chronic use? Dependence—they're totally preoccupied with where they're going to get their next fix or their next drink. Forget about the last couple of hours of work, if not the whole work day.

We find that our clients are willing to put money into drugs and alcohol programs, but they need the resource background. We're in an era of liability. I just have to remind you of the Exxon Valdez. They went after the deepest pocket. Not too many companies can take a $15 billion hit as a fine.

Drugs and alcohol are costing big bucks, and not just for the private sector. The workers know there are drugs and alcohol in the workplace. Management sometimes gets worried about putting in a strong program, but not the workers. More than half feel that attendance, morale, and motivation are affected by drug and alcohol misuse, and they're right. More than 44% of workers said that health care and workplace safety were affected. When you get into safety and health problems, it will inevitably fall on the public purse.

If you turn to page 5 of your handout, you'll find that any one of these problems costs money. Be it accidents, absenteeism, or turnover, they all cost money. They have negative impacts, not just on the company but on the public sector. Let's take a look at the estimated costs. Some of these are 1996 figures—I promise you they've increased. If you look at alcohol, it's just under $12 billion for alcohol misuse, lost productivity, or alcohol premature mortality. With drugs it's running right now at $2.5 billion, but I think it's a bit higher.

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So what is the Canadian Centre on Substance Abuse asking of the federal government? We're asking for your leadership and long-term commitment. We need more information that can be available to the provinces and the corporations. A lot of these companies, in the 11 years I've been working with them, simply don't know where to start.

We need statistics, research, and studies that can be shared internationally. We have only two studies we can talk about, while the United Kingdom, France, and Germany have handfuls, as does the United States. I'm not one of those people who will allow us to use United States statistics. We're different, but we need the leadership of the federal government.

Thank you very much.

The Chair: Thank you very much, Ms. Dover.

We will now go to the question and answer session—a five-minute round, starting with Mr. Epp.

Mr. Ken Epp (Elk Island, Ref.): Thank you for your presentations.

I'd like to start with the Health Sciences Association. Obviously you're representing a group of people who are involved in the health field. Our job here is to try to find out how the budget should be adjusted so we can meet the needs of the maximum number of Canadians.

You indicated there should be more money for housing assistance. How does this fit into your portfolio as a health worker? I was just curious about that.

Ms. Elisabeth Ballermann: We have taken a rather broad approach because, as I indicated earlier and as we've indicated in our brief, socio-economic status and health are integrally related. Study after study verify this link; therefore, by addressing the broad aspects of poverty and homelessness, we believe the demand on our health care system will also be reduced.

When we look at Alberta, for example, recent statistics indicate that heart disease is three times as high among the poorest aspect of our population as it is among the most affluent. Therefore, we believe addressing these aspects deals with health as well as the specific of poverty.

Mr. Ken Epp: We probably need a little more research there to make a link as to whether it's cause or effect in that particular case. That answers my question on that.

One of the areas where you're asking for more money is in direct funding of health care. I think I picked that up. I don't think you were explicit on it. You also mentioned you wanted to have national pharmacare. Why would you pick on that only?

Right now we have a very fragmented health care system in Canada; we're aware of that. Only certain things are covered. For example, we know that among school children and adults alike, the need for dental care is as great as any other health care, yet that's not covered in the federal program. The need for vision care—eye glasses, ophthalmological services—is also a priority, but only some of that is covered. You're covered if you go to an ophthalmologist for some disease, but if you need glasses you pay for them yourself.

I'm just wondering, how far do you want us to go in funding health care and all of the health needs of Canadians out of the federal coffers?

Ms. Elisabeth Ballermann: It is obviously a major issue from a financial point of view. We have responded to programs the federal government itself has indicated are priorities, which would include the home care program as well as the pharmacare program. I would tend to agree with you, quite frankly, that if we look at optometry services and dental care, they ought to be part of health care.

It seems intuitively inconsistent to suggest that under the Canada Health Act we will cover hospital and physician services, but when that physician prescribes a medication, after having diagnosed the ailment, there is no coverage for medication. Therefore, the efficiencies of scale that could be achieved, the purchasing power that could be achieved through a coordinated national pharmacare program, would have two effects.

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First, it would reduce the overall cost of pharmaceuticals for Canadians. The second, of course, is that it would provide pharmaceuticals for everyone. At this point, a large number of Canadians have some coverage through employers, and some are covered through various social programs, but there is a percentage of people who have no coverage for medications at all. We believe that to really ensure the health of the citizens of this country, a national pharmacare program would certainly assist.

Similarly with the home-care program. We are moving health care out of our hospitals into the community. Another presenter indicated health promotion and injury prevention. We would echo that those are very important areas to look at in the area of health care. I do understand there is not a bottomless pit of money, but I also understand that in this day, when Canadians have been told that we need to tighten our belts in order to bring the deficit and our debt under control, our deficit is under control. It is our position that it is quite easy for governments and Canadians to be seduced by the idea of tax cuts. But we submit that solid social program spending is preferable to tax cuts.

Mr. Ken Epp: Okay, thank you. I would have more questions, but very quickly I want to ask a question of the Health Authorities of Manitoba. The federal government has announced that they've been putting $11.5 billion back into the health care system. Isn't that enough?

Mr. André Rémillard: It's quite consistent with what has been put forward by the Canadian Healthcare Association. I think the $11 billion probably brings it back to about 1993 levels or thereabouts. There has been a gradual ratcheting back of the federal contribution to the Canadian health care system over the last number of years, and I think what has been put back into the system is certainly making up for some of the lost time and some of the funding that has been withdrawn by the federal government.

Certainly, I think there's a clear need for an additional $0.5 billion to bring it current, and there's a recognition that if we are looking at things like home care and community-based care programs, there's a need for some seed money, if you want to call it that, to create a national program.

If we look at Manitoba's situation, for example, I think we've got a home care program that's the envy of most of the other provinces in the country. In the region I'm involved in specifically, in the last three years we've seen our budget for home care increase from $4.5 million to about $6.5 million. That's over a three-year period. I think there's been a comparable decrease in the number of dollars that have been spent on acute care services in our region, so in essence the home care delivery system, home care development, has been at the expense of acute care services.

Mr. Ken Epp: Okay. I have a question on that. The balance of where the health care money is spent is really, within fairly broad parameters, a provincial decision. Do you really advocate that the federal government should be giving more rules, regulations, and limitations on how the money they collect from the taxpayers, bring to Ottawa, and then send back to the provinces from whence it first came is spent and how it's divvied up in the health care field?

Mr. André Rémillard: Again, using the home care example, Manitoba has an excellent home care program. It's been at the expense of a lot of other health-related programs in the province. In other provinces, their home care programs, if they exist at all, are user funded. If the federal government were to say that they would like to invest in home care services.... I think that's somewhere you'll have to go in the near future with the greying of our population. We're not going to be able to sustain the hospital-based services that we have been providing in the past.

If the federal government does in fact ensure and contribute to a home care program across the country, what we would like to see in Manitoba is to have those dollars used to bolster and develop the programs that have suffered, if you want to call it that, with the inception of home care in Manitoba.

• 1410

Mr. Ken Epp: Okay, thank you.

The Chair: Thank you, Mr. Epp.

If you'd kindly put on channel 1 on these devices, you'll get to hear M. de Savoye.

Mr. Pierre de Savoye (Portneuf, BQ): It's not that they'll get to hear me—they can hear me—but they will understand,

[Translation]

because I will speak French.

I thank you all for coming today to meet with us and share your concerns on various issues.

Obviously, the issues are many and I will not be able to deal with them all. I will leave it up to my colleagues to take up the subjects I will not cover. I am especially interested in two issues, those relating to health, which Mr. Rémillard and Mrs. Ballermann have raised, and next the subject of education.

With regard to health care, Mr. Rémillard, you are concerned that the principles of social union should be honoured and you want your province to be able to move forward in those areas where it already has taken the lead. I can tell you that Quebeckers share this concern in many ways, among others because they already have their own pharmacare program.

When people like Mrs. Ballermann tell us we should set up a national program, we are always somewhat afraid to have the federal government come in and tell us how to do what we already have been doing very well for two years. I imagine you have a similar concern.

You know that Quebec did not sign the social union agreement, but that it may be imposed on us anyway.

Would you not have liked to be able to opt out with full compensation, to have a full opting-out? Would that not solve your problem?

Mr. André Rémillard: No, I do not think it would be a solution for our province. The matter of portability of social programs is very important for Manitoba and the other provinces.

Mr. Pierre de Savoye: However, you are afraid the principles might not be honoured and that you would be forced to do what you already do in a different way, in a manner contrary to your objectives.

Mr. André Rémillard: We have already invested in our home care program and we would prefer the federal funding to be used for other programs that we may have neglected in order to invest in our home care program.

Mr. Pierre de Savoye: If I understand correctly, you would like to be able to use the money which would otherwise be invested in the home care program for other needs, since you already have made this investment. Is this what you are saying? You would like to use these monies in a different way, since you have already made those investments.

Mr. André Rémillard: Yes, but they should be programs in the health care area. We would not like this money to be used for building highways.

Mr. Pierre de Savoye: I understand and I fully agree with you.

The brief of the Confederation of Alberta Faculty Associations talks about the interprovincial mobility of students at the post-secondary level. You mentioned, among other things, that Quebec requires students from other provinces to pay higher tuition fees than its own students.

I would like to ask your views on what I am going to say. You are aware that Quebec has decided to maintain tuition fees in Quebec at a relatively low level, through the taxes we pay, in order to make education more accessible. It is a choice we made as tax payers. Other provinces have followed a different road. In fact, you mentioned in your brief that here, in Alberta, tuition fees at the post-secondary level have gone up, which has an impact on access to education.

• 1415

What do you suggest, since Quebec was justified in making this choice? Do you suggest the federal government should compensate us for the difference in fees paid by students from outside the province and compensate in the same way students from Quebec who study in Alberta, for example? When a student from Quebec goes to study in Alberta, should the federal government make up the difference between what he would pay in Quebec and what he will pay in Alberta? If we want things to be equal, somebody will need to equalize opportunities. How do you envision such an equalization?

[English]

Dr. Scott Grills: The members of our association are concerned about the consequences of students in the province of Alberta being somewhat disadvantaged as they potentially move from one province to the other. We're also concerned about the disjunction between the tuition fees in our province and the province of Ontario with corresponding tuition fees in other provinces. We believe it is absolutely essential that students be able to have free access and movement throughout the country in order to gain access to some of the specialized university programming that exists only in one province or another and for which there is no need for duplication of services in a country of this size. We have not however taken a position specifically on federal government policy relative to the most effective means of responding to the disjunction. Rather, our central concern is around the question of accessibility rather than the mechanisms specifically by which that can be accomplished.

Mr. Pierre de Savoye: You're missing my point. If the student from Quebec wants to go to study at the University of London, the tuition fee is higher than in Quebec. If you want to maintain accessibility, it should be the same for our students to go to your place at no extra cost. Who will pay the difference? That's my question. Your concern is valid. But if you have only a concern without a solution, it's a lot more difficult for us to envision how we can satisfy your expectation. Would you have any advice to give us?

Dr. Scott Grills: Ultimately, we think the most effective response on the part of the federal government is to increase base funding to universities. The mechanism for that in Alberta's case may be through increases to CHST transfers. The problem however, and we're seeing it in our province, is the resources may not be directed in the same way in which the federal government intends. But should we find adequate resources in terms of transfers, then we may be able to see appropriate reductions or responses to tuition levels.

Currently in the province of Alberta our public institutions are limited to capping tuition at 30% of operating expenses of universities. The only institution that has had to go to that level at this point among the universities is the University of Lethbridge, which has priced their tuition out of line. But by ensuring that universities are adequately funded at a base level, that we see as ultimately the most important mechanism for responding to accessibility.

The Chair: Merci. Thank you.

Ms. Leung.

Ms. Sophia Leung (Vancouver Kingsway, Lib.): Thank you, Mr. Chair. I want to thank you all for sharing some of your concerns and ideas with us. I have a couple of questions. First I want to comment on Ms. Frances Dover's presentation, which was a very eloquent presentation. You call for leadership support from the federal government. Of course, we'd like to. I wonder what kind of communication you have to convey your concern to the Department of Health and to the Standing Committee on Health? They are two very major ones.

Ms. Frances Dover: We have representation on a board of directors from Health Canada. We certainly can convey this to them. We do continually.

Ms. Sophia Leung: You know we do have an advisory committee for the Minister of Health.

Ms. Frances Dover: Yes.

• 1420

Ms. Sophia Leung: That's another one. I'm on the committee, but I think you should work with all of those. That would be a good start. Perhaps you can form a task force, but whatever, you probably have a lot of good ideas.

I want to address my question to Frank. As a matter of fact, I'm from Vancouver and am quite familiar with some of the concerns there too. You call for the 1% solution, and we have a group called First Call—who you've probably heard of—and they also ask for 1%.

I have a little concern here. You say in the last paragraph: “The One Percent Solution calls for an additional one percent to be spent by each government on housing.” What do you mean by each government? Do you mean each level of government or each government, or what government? Would it be only on housing alone? Are there any other services we should consider for the homeless? Health, for instance?

Mr. Frank Manzara: I must admit to not being thoroughly familiar with the concept, but my understanding is that each level of government, federal, provincial, and territorial, would make some contribution to the success of housing programs.

Ms. Sophia Leung: I want to give you an example for Vancouver from the east side, downtown. We deal with a lot of marginal groups—substance abusers and prostitution or HIV/AIDS—and we find that it's a multi-problem and requires a multi-problem approach.

Mr. Frank Manzara: Of course.

Ms. Sophia Leung: There's not just housing alone. Agreed, housing is very important, but I suggest perhaps you should think this through, expand a little bit more.

At a centre I recently visited called the Portland Hotel Society there were really the marginal people, whom no one really cared for. The one RN, just one, and two staff look after them all, and I was amazed. I was really amazed. The difference is they provide a roof, housing, which is kept very clean, spic and span. We are looking for perhaps integrated house care. They are the people who will not follow the traditional health treatment, health services.

So we have to think about other alternatives to provide and bring the health services to them, or perhaps other ways. It's very complex at this stage, but I really support that.

I have a third question for Mr. Grills. Regarding your comments about the education costs and many other concerns, last week the post-secondary education committee I'm on had a big meeting with some of the executive representatives from the AUCC—you're probably familiar with that—and we had a very good discussion. We talked about a lot of basic questions. We know education belongs to the provincial level. That's really where we start.

I think we have to think in terms that we do transfer, but how do we have any guarantee that you get it? It's as simple as that. So perhaps we have to think in terms of how we resolve the health commitment, and perhaps you should think about the social union route to safeguard some of the funding going to higher education, etc.

I don't know if you have any comments on that.

Dr. Scott Grills: In the absence of a national post-secondary act, it becomes particularly problematic in that we face problems that are not faced in the same way relative to health care.

In Alberta we're in the happy situation, I believe at least, of having a ministry of learning that has indicated it has no interest in standing in between federal dollars and students in the province of Alberta. So our government provincially has been quite open at the ministerial level and levels immediately below that to working with the federal government to achieve some of these direct ends that we're working towards.

So in the sorts of programming we've seen the federal government undertaking, I do not believe in an extended sense that our ministry has been a difficult partner in those exchanges.

The reality of the situation for us is that we need to be able to deliver moneys to the base operations of the university, to the resources that assist with student accessibility, to the recruitment and retention of faculty, and to basic research. Ultimately that involves delivering money, and through the current mechanism, the CHST transfers, it is open to redirection.

• 1425

We are open to possibilities that would see the federal government undertake strategies to seek commitments through social union discussions on the part of provinces to dedicate transfers to post-secondary education. But we in Alberta are well aware of some of the national problems around it, and recent statements made by the provincial government in Ontario are hostile to some of these programmings. But in this province we are open to it, and the faculty associations are working with our administration and our provincial government to assist with this.

The Chair: Thank you.

Mr. Jones.

Mr. Jim Jones (Markham, PC): Thank you, Mr. Chairman, and thank you all for your deliberations.

My first question is to the Edmonton Coalition on Homelessness. You said in your presentation that since 1993 on, there has been a decline in low-cost housing, and it has become an embarrassment; the state of homelessness is a national crisis.

I'd like to go back to 1989-1993. At that point in time we were going through a worldwide recession, a slowdown in economic growth, and then I go ahead 10 years. We have balanced our budget. It seems like we have good economic activity. What has happened in those 10 years? To my knowledge, back in 1989 to 1993, I didn't seem to hear about the problem that seems to have now become pervasive, the problem with the homeless right across the country. What has happened over the last number of years that has caused this problem?

Mr. Frank Manzara: My understanding of the situation is that in 1993 the federal government made a decision to transfer the responsibilities for social housing to the provinces and to the municipalities, and moneys were not as much available as they had previously been. Some of the housing that was more effectively used at that point in time, since 1993 has been taken from the social housing holdings, I suppose, to reduce the amount of available housing.

The answer is not perhaps as simple as I might be making it appear, because if you also combine the reduced availability of housing, the increased rents that are being charged to low-income people, and I suppose to any sector of society, it just creates a situation that gets more difficult as time goes on.

Mr. Jim Jones: Yet in the thing from the Health Sciences Association of Alberta—I guess they were quoting a Liberal party pollster—they said they found that 61% of Canadians are very concerned about health care compared to 54% who are very concerned about taxation. That's the question you're being asked here.

In the paper presented by the person from the Regional Health Authorities of Manitoba, one of the recommendations it has there is to urge the federal government to consider the relationship of health care spending and increased Canadian productivity before determining how much our tax cuts will be announced for various income levels.

Is there anything else emerging that could reduce the downward costs of health care instead of having the spiralling cost up? For example, I was thinking the other day.... We had a neighbour—I'm not sure what the injury was—who went to the Internet after he had gone to his doctor, and he learned more on the Internet than he had on all his visits he made to the doctor.

• 1430

Is there a way we could start to reduce health care costs by maybe teaching things earlier in the school system, and also by people taking preventative measures themselves, maybe by educating themselves on a medium like the Internet?

Mr. André Rémillard: I think there are some fairly well-known concepts called the determinants of health. They identify about 11 different factors to the health of an individual, the health of the population. They include things like early childhood development, education, housing, social supports, and health services. Certainly I think anything we can do to influence those kinds of factors and develop those factors.... I think you've heard a number of discussions today in support of housing and in support of early childhood development programs. Women and infant nutrition is one of the programs we have in Manitoba. We have the Baby First program in Manitoba.

Certainly there are a large variety of programs that are available on a somewhat sporadic kind of basis—if you want to call them that—through schools and the education system. If we had more consistency amongst those programs, I think that certainly would help and would decrease the need for the high-end, high-cost kinds of services.

I think it's widely recognized that hospital services alone probably contribute to about 5% to 10% of the health of the population, yet that's probably where we're putting 95% of our resources right now. I think there is certainly a need to bolster those other areas so that we don't have to use the high-end, high-cost kinds of programs at the tail end.

The Chair: One last question.

Mr. Jim Jones: My question now is to Ms. Dover. Is substance abuse worse now that it was, say, 10 years ago in the province of Alberta, or is it relatively the same?

Ms. Frances Dover: Nationally or in the province?

Mr. Jim Jones: Nationally and in the province.

Ms. Frances Dover: What we're finding is that drugs are up, no question. The latest real concern is methamphetamine. It has come up through the northwest United States, and it's rampant in Vancouver right now at rave parties. They just got a huge bust of pills coming in from Madrid. It's replacing cocaine, and we expect it to come over the Rockies into Alberta and be almost as strong here going into the spring of 2000.

In alcohol, we're finding that those who are getting into alcohol are really getting into it. There are those who will have a beer or what have you, but there are those who go big time when they go, due to the stress factors in their domestic life or in their professional life. The ones who do get into it are getting into it big time now, so it's more serious among those who get in. Amongst the executives, the two-martini lunch at the Petroleum Club isn't really there today. They're not into that as much as they used to be. But among younger people and among lower occupational levels, it's increasing. That's what we're finding.

Mr. Jim Jones: And why is it increasing amongst the young?

Ms. Frances Dover: I think it's stress and the availability of both drugs and alcohol. Anyone can afford drugs. Without getting too technical, you dilute them. It's called cutting drugs. You put Dutch Cleanser or whatever you can find into cocaine powder, you sell half of it, and you can keep half of it to use. So there's more availability of drugs than ever before in this country.

The RCMP say they are only getting about 7% of the drugs that come into this country from the Far East, from the Golden Triangle, or in through Europe. That means 93% are still floating around here. Some go south of the border. We're the main gate for drugs going into the United States, but the rest of them stay here in Canada.

Mr. Jim Jones: Thank you.

The Chair: Thank you, Mr. Jones.

On behalf of the committee, I'd like to thank you. This was an excellent panel.

As you know, our job gets tougher and tougher as we travel across the country, because people come with very strong cases on their issues. Of course, even though there is a surplus, that is also limited. On any given day, when we hear panellists with strong cases like yours, we could in fact be investing or spending many billions of dollars.

• 1435

Having said that, we want to thank you very much, because you do add value to the debate about priorities and which road we should actually take to ultimately improve the standard of living for Canadians and their quality of life.

We're going to suspend for approximately two minutes in order to set up for the next session.

• 1440

• 1443

The Acting Chair (Mrs. Karen Redman (Kitchener Centre, Lib.)): Thank you for coming, and welcome. We'll continue the meeting.

Each of you has five minutes to give us your presentation, and then we will ask questions. We'll start by hearing from Louise Rogers, president of the Alberta Association of Registered Nurses.

Ms. Louise Rogers (President, Alberta Association of Registered Nurses): Thank you.

The Alberta Association of Registered Nurses is the professional and regulatory body for Alberta's 24,000 registered nurses, and we are indeed pleased to be a part of this consultation process. We have four areas that we would like to focus on: sustainable funding, privatization, health human resource planning, and investment in repairing the nursing workforce.

Sustainable funding is a key requirement for a sustainable health system. The investment in health care is an investment in our most valuable resource—Canadians themselves. The health of Canadians and the health of the economy are intertwined. A well-funded, sustainable public health system is an important contributor to Canada's productivity and competitiveness and to the ability of Canadians to live rewarding, productive lives.

The AARN, consistent with the Canadian Nurses Association's recommendation to the federal government, recommends that the federal government provide long-term and sustainable funding for our health system. A minimum increase must be an additional $1.5 billion as of April 2000 and must fully index the total cash entitlement allocated to reflect the changing needs of Canadians by April 2001.

Our publicly funded health system is a national treasure that Canadians expect the federal government to improve and enhance. The insidious growth of privatization within the system threatens the very principles upon which it is based.

• 1445

In Alberta, our provincial government has made it clear that it is their intention to introduce legislation in the spring that will facilitate health authorities' contracting insured surgical services to private, for-profit providers. This is clearly the slippery slope for our publicly funded system, not only in Alberta but in the whole of Canada.

The AARN recommends that the federal government provide strong and decisive leadership in upholding the principles and the spirit of the Canada Health Act, and in ending the actions by provincial governments to move to a system of using private, for-profit providers to deliver public health services.

Qualified health professionals are an essential component of the Canadian health care system. Health human resources planning is needed now in order to address the growing strains being placed upon the system by shortages of health care professionals. Sound health human resources planning must be based on a national strategy and must involve all stakeholders.

The AARN recommends that the federal government provide leadership and funding to develop a national strategy for health human resources planning to ensure an appropriate health care workforce for the future.

Investment in repairing the nursing workforce is essential for maintaining a quality health care system. The cost of restructuring has been high for nurses. The AARN commends the federal government for its vision in establishing the nursing research fund in the 1999 budget. In view of the nursing shortage that is upon us, enhanced funding is needed to attract young Canadians into the nursing profession, to study and support the integration of new graduates into the profession, to create innovative programs to enable us to bring our Canadian-educated nurses home, and for research to analyse the number and types of nurses needed in all sectors of health care and in both urban and rural remote areas.

The AARN recommends that the federal government provide $50 million per year for the next five years in order to support the research and strategies needed to repair the nursing workforce.

Thank you.

The Acting Chair (Ms. Karen Redman): Thank you, Ms. Rogers.

Now we'll hear from Audrey M. Cormack, president of the Alberta Federation of Labour.

Welcome.

Ms. Audrey M. Cormack (President, Alberta Federation of Labour): Thank you very much.

The Alberta Federation of Labour believes that Canada has an opportunity, provided by several concurrent years of budget surpluses, to begin the next century with a fresh vision and a new promise. We feel the budgetary priorities for the next fiscal year should be, first, a budget that meets the stated needs of the majority of Canadians, not just the economic elite. It's time these pre-budget consultations produce something tangible in the way of improved health care, education, social welfare, and other public services, and without passing the costs on to people who make use of these services.

We are strongly opposed to any form of across-the-board tax cuts. Instead, we support a combination of increased tax brackets at the upper end to collect more taxes from the wealthiest, increased collection of corporate income tax, and full indexation of tax brackets. As well, we have long been advocates of elimination of the GST.

Finally, if any tax breaks are to be considered, we feel they must be applied only to the lower-income earners and be made revenue neutral by increased taxes on the wealthiest.

The federation is strongly concerned about the erosion of the value of federal transfers to the provinces. We feel that many of the provincial problems in advanced education, health care, and social welfare are directly related to a real decrease in federal support. We would like to see the restoration of federal transfers to the same percentage of GDP as in 1993-94, which is 3.7%.

We also support the re-establishment of full cash transfers—not tax points—for education, health, and social assistance funding because of the fragmentation of program standards that occurs in different provinces with the increased discretion in provincial spending of federal dollars.

In line with this, we strongly urge the entrenchment of stronger national standards for all health care, post-secondary, and social assistance programs as prerequisites for receiving transfer payments.

• 1450

We also believe that the current practice of placing an increasing portion of the costs of advanced education onto students is regressive. We should instead be aiming for the elimination of tuition fees at post-secondary institutions. Funding should be given directly to institutions instead of to students in the form of loans.

The federation also supports the restoration of general funding and employment in the federal pubic service. Many federal public programs have been compromised by the staffing and funding cuts forced upon them in the deficit years. We feel that a full assessment of declining service levels should be carried out in consultation with the federal employees' bargaining agents, with the goal of restoring the integrity of all programs. We specifically urge the government to identify the cumulative effects of cuts to federal research programs, again with the goal of restoring funding.

With the rest of the Canadian labour movement, the AFL strongly urges the government to restore unemployment insurance benefit levels and benefit duration entitlements to the highest previous levels. Further, we feel that the qualification requirements for collecting UI must be relaxed to permit all workers who lose their jobs, for any reason, to collect UI.

Finally, we have several strong recommendations for the new government—actions to create a better Canada in the new millennium.

We suggest the creation of a national not-for-profit child care plan. This has been long promised and is badly needed by working Canadians. I have postcards for our national child care program, and given that we're two days away from National Child Day, I will pass these around and urge you to sign them; and if not, at least you'll know where Canadians' hearts are on the important issue of child care.

Secondly, we propose the creation of a federal task force to develop a long-term national economic/industrial and jobs plan.

That's our submission summary. We have more concrete proposals in the brief that we have presented to you.

Thank you.

The Acting Chair (Ms. Karen Redman): Thank you, Ms. Cormack.

We'll now hear from Ms. Morris, Canadian Federation of Students National Graduate Council. And you're the national executive representative. Welcome.

Ms. Joy Morris (National Executive Representative, National Graduate Council, Canadian Federation of Students): Thank you.

The National Graduate Council is comprised of over 45,000 graduate students at public universities across Canada. As graduate students, we have quite a unique role in the institutions where we exist. Many of us are, at the same time, both teachers and students. We are, at the same time, conducting research ourselves under the supervision of faculty members. We're paying for our learning, and at the same time we're often employed by the university and being paid for our contributions to the research and teaching at the university.

Still, most of us live below the poverty line throughout our studies, which often last well into our thirties, and many of us are also accumulating massive debt in order to cover our tuition fees and living expenses during this period.

My name is Joy Morris, and I've just completed my PhD in mathematics at Simon Fraser University.

I'm going to discuss briefly each of the six recommendations that are contained in the brief we submitted to this committee. Those are the restoration of targeted transfer payments to the provinces for post-secondary education; a removal of the ten-year ban on student bankruptcy; ensuring that employment insurance funds are spent to directly benefit the unemployed; making scholarships income-tax-free; increasing funding for research through the granting councils without tying funds to private partnerships; and finally, particularly, increasing funding for social sciences and humanities research.

Post-secondary education in Canada is in a state of crisis. With the massive reductions in federal transfer payments that occurred in 1993, one of two things has happened to universities across Canada. In some cases the quality of education has been slowly eroding, with larger class sizes and fewer faculty members available to cover the workload, while in other cases the burden of the lack of funding has been borne by students as tuition fees have increased astronomically. Sometimes it's one or the other of these that has happened; in most cases it's a combination of the two.

Higher tuition fees have meant increased levels of student debt and poverty. Despite the value of public post-secondary education that our society professes, we are in danger of creating a system that is of interest neither to the rich, who can afford better quality, nor to the poor, who can't afford it at all.

• 1455

In the last federal budget, targeted transfer payments for health care were restored to approximately 1993 levels, and our first and most important recommendation to the committee is that the same be done for post-secondary education in this budget.

In the 1998 budget, a law was introduced to prohibit students from discharging their student loan debt through bankruptcy until 10 years after graduation. This idea that some people should have access to bankruptcy provisions while other people don't is pretty clearly, I would argue, discriminatory and, furthermore, inhumane. We're quite proud to be part of a charter challenge to this law that's ongoing currently, but in our opinion, it would certainly be preferable for the government to recognize its mistake and repeal the law before the challenge is completed.

The employment insurance fund has been accumulating massive surpluses over the past few years, but the unemployed are often not benefiting from these funds. On the contrary, eligibility for EI programs is restricted to the point where people who paid this money are not able to access it when they need it. People pay into EI for employment insurance, not to reduce the national debt. If more money is needed for other federal spending, it should be raised through taxes and not by drawing off the surplus of a dedicated fund.

In terms of tax relief and reform, we believe any tax relief measures should go to help those who truly need them. The so-called brain drain, insofar as it exists at all, we believe is more a result of underfunding of research and social programs than of the effects of taxing. If there were sufficient funding in the post-secondary education system to provide opportunities for teaching and research at reasonable levels, taxation would not generally be sufficient incentive for leaving the country.

That said, there is one specific tax measure that we would advocate. Currently the first $500 of scholarship income is tax free, and that's been the case since the early 1970s, unchanged. Your committee has recommended increases to that amount in the past, but they've never been implemented, while student expenses have increased astronomically. Five hundred dollars is not really enough to cover one semester's worth of textbooks, and textbooks are not a tax-deductible expense for students. So I think there's clear indication that this needs to be increased, and we would argue that in fact scholarship income should be entirely tax free.

While research is absolutely critical to competing in a knowledge-based economy, the federal government has demonstrated its awareness of this recently with the restoration of funding to the granting councils that occurred in the last couple of budgets: the Canadian Institutes for Health Research, the new research chair positions that were recently announced, and funding for the commercialization of research. We've been quite pleased with each of these measures, but we caution that the increasing trend towards private partnerships concerns us. If government money is tied to private funds, then, for the most part, only immediately profitable research will be carried out, and that's a very short-sighted, short-term thing that will hurt us greatly a few years down the road. Also, research that's beneficial to society may not be economically profitable.

We're also concerned that the Social Sciences and Humanities Research Council remains grossly underfunded in comparison with the other granting councils, despite repeated and united recommendations from the research community to redress this inequality. Despite the new and restored funding, Canada still lags far behind international competitors, the United States in particular, in regards to funding for research, even if we consider, rather than total funding, funding for scientists.

Our last recommendations are that funding for research be further increased, with particular emphasis on funding for research in the social sciences and humanities, and that any new funds not be tied to industry funding.

Thank you for your time and attention. I'd be happy to answer any questions later.

The Acting Chair (Ms. Karen Redman): Thank you, Ms. Morris.

Now we'll hear from the Conference of Defence Associations Institute: Colonel Samuel E. Blakely, president, and Colonel Paul Hughes, adviser.

Colonel Samuel E. Blakely (President, Conference of Defence Associations Institute): Thank you, Madam Chairperson.

It is a pleasure to speak to you on behalf of the Conference of Defence Associations Institute, which is the independent defence studies and public information arm of CDA. I am accompanied here by Colonel Paul Hughes, a former militia district commander, a current supporter of the strong defence of Canada, and with particular interest in the militia.

In the event that my remarks might go past five minutes, I'm going to go to my recommendations first, so they will remain with you.

• 1500

I recommend, one, that the carved funding for defence be increased by $500 million; two, that there be no further reductions in regular force or reserve personnel; three, that the militia component of the armed forces be increased over a five-year period from the current level of $17,500 to $45,000; and four, that there be an increased emphasis on utilizing the militia in meeting the demands of peacekeeping and peacemaking by the Canadian Armed Forces.

Let me first say how very concerned we are in the institute about the successive reductions to the defence budgets from 1989 through 1999. They have had a disastrous impact on the regular armed forces and perhaps even more so on the reserve component.

While in the current fiscal year there has been a small increase to the DND budget, it has fallen far short of the substantial increase needed to meet the needs of a military that is struggling mightily to meet its operational commitments. These commitments are likely to increase, and despite the admirable can-do attitude displayed by the military, attitude alone will not make up for the shortfalls in manpower, equipment, spare parts, ammunition, uniforms, and technology.

Canada benefited from the so-called peace dividend even before there was a peace. The fact that Canada has not measured up to the expectations of its NATO and other international partners has been publicly expressed and is a national embarrassment to all Canadians who feel a need to assume our responsibilities as well as gaining from the benefits of an increasingly global economy.

A majority of the Canadian public supports an increase in funding for defence. Canadians are aware that if this country wants to play an important and significant role in international affairs and benefit from the economic and political advantages that brings, it must also assume its fair and reasonable share of military obligations and commitments.

The world has many trouble spots currently, and many more are emerging. The readiness of Canada's armed forces must be maintained and improved. This holds true of the reserve force as well as the regular force. We must not and cannot become ever more reliant on our friends and allies to pick up our share of the burden of global intervention.

It has been suggested that perhaps 1.6% to 2% of the gross domestic product should be permanently assigned to defence. We would recommend to your committee that you examine that possibility.

While DND continues to examine its financial allocations internally to determine how it can best assign resources to meet commitments, too often it appears the reserve component is given the last consideration. They are vulnerable to reductions that go to support other functions. This occurs not surprisingly but mistakenly, given the huge payroll demands of its permanent military and civilian staffs.

It seems funding committed to the reserve budget has not in fact been protected. Militia units have had up to 20% of their planned funding removed arbitrarily. This has had a negative effect on training, recruiting, and morale of the units affected. This, combined with the planned land force reserve restructure—a plan that calls for the reduction of militia units by one-third and a re-rolling of a number of other units as service support—has had a devastating impact on the militia. The plan referred to has mercifully been placed on hold by the Minister of National Defence, pending a review by an independent committee appointed by the minister.

In summary, the reserve component of the armed forces is not being adequately funded. Resources dedicated to its maintenance and training have been arbitrarily redirected, resulting in serious problems for the militia.

We will attempt to provide answers to any questions the committee might have. Thank you.

The Acting Chair (Ms. Karen Redman): Thank you, Colonel.

We'll now hear from the Canadian Federation of Independent Business, represented by Mr. Dan Kelly, vice-president, prairie region.

Welcome.

Mr. Dan Kelly (Vice-President, Prairie Region, Canadian Federation of Independent Business): Thank you very much.

On behalf of the Canadian Federation of Independent Business and our 17,000 members across the prairies, I want to thank you for hearing our presentation to you this afternoon.

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For those of you who may not be aware, the CFIB represents small and medium-sized firms across Canada. We represent all sectors of the economy. We operate under the principle of one member, one vote.

The document I've put before you this afternoon details a number of the results from a variety of surveys CFIB does throughout the year, some of which may be familiar to you, others of which are prairie-specific and also touch on the issue of the farm income problem many of our members are facing.

There are 180,000 businesses in the three prairie provinces: Manitoba, Saskatchewan, and Alberta. Of those firms, 75% have fewer than five employees. Of the firms across this region, 98% have under 500 employees; that means they're either small or medium-sized. Unfortunately what happens is very often a number of people in decision-making positions don't understand fully that Canada and the prairie region in particular have a heavy dominance of small and medium-sized firms as part of their business population.

Businesses in all regions in the prairies share many of the same issues with their national counterparts. However, some of them are more strongly felt in this region than in any other.

I want to share with you some of the new information we've just released with respect to our members' expectations for the year 2000. Across the prairies, we have among the most optimistic and the least optimistic members in the country.

On a number of different variables, our members in Alberta are more optimistic than in any other province. In fact more job growth is predicted among our members in Alberta than in any other province in Canada, at 6.1%. This is well above the average of 4.9% that we are predicting at the national level. However, the other two prairie provinces, Manitoba and Saskatchewan, both are predicting 3.5% job growth among small and medium-sized enterprises, far lower than the national average.

As I mentioned, we have the most optimistic members in the country here in Alberta, and we have among the least optimistic in Manitoba and Saskatchewan. What I'd like to do is provide to you a few reasons for why that may be the case.

Certainly the farm income problem has been a serious blow to many of our members in the other two prairie provinces, Saskatchewan and Manitoba, and has had a significant impact here in Alberta as well. However, I would put to you that the reason our members in Alberta are more optimistic than in the rest of the country has a great deal to do with good government policy, policy that does favour small and medium-sized businesses and provides them with the resources they need to help job creation in the province here locally.

From my vantage point, the federal government can take some important lessons from what's going on right here in the prairie region. Certainly, as I said, the farm income problem has contributed to this, but good government policy, particularly on tax and regulatory issues, has contributed to the optimism our members are experiencing in Alberta.

In Alberta the government's announcement that it will substantially reduce the personal income tax has in no small way contributed to this increased optimism, and according to our members surveyed, it has contributed to their greater ability to create jobs, many of those jobs being full-time.

If you look at figure 4 in the brief, you'll see that when examining our members' high-priority issues, there is no more significant concern amongst small and medium-sized enterprises than the total tax burden they are facing. Fully 91.6% of our members cited the total tax burden—federal, provincial, and municipal—as negatively affecting them and an issue they want CFIB to attend to.

From the personal income tax to the GST, employment insurance, CPP, the provincial payroll taxes, and corporate income taxes, our members really do cite high income taxes, high business taxes, and high personal taxes as the main reasons they have been inhibited to a certain extent from creating jobs.

I also want to touch on one of the issues that is felt more in the prairies than in any other area in Canada, and that is the shortage of qualified labour. Right now—and this is a good news and a bad news problem we're facing—as you know, the prairie region, Manitoba, Saskatchewan, and Alberta, has the lowest unemployment rate of any region in the country. In my home province, Manitoba, our members are really feeling the shortage of qualified labour, to the point where one in two of our members—50% of the businesses in Manitoba—tell us they can't find enough workers to put their products and services to market. That's something I take very seriously.

Again, it's a good news and a bad news story. The good news is, the economy across Canada and in Manitoba has been reasonably strong and has contributed to a great deal more additional jobs being created, and of course many of those people have moved from the ranks of the unemployed back to work, which is a fantastic scenario.

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Unfortunately, though, there is a bad side to that. One is we are still losing a large number of our people from Manitoba, in that they're going elsewhere. They're going to the United States, and in a large degree they're going here; they're coming here to Alberta.

We talk about the brain drain from Canada to the U.S. I'm more concerned right now about the brain drain from Manitoba and Saskatchewan to the province of Alberta, because many of our members say they can't hang onto good employees because they are being attracted to provinces with lower tax burdens. Great news for Alberta. Bad news for Manitoba and bad news for Saskatchewan.

I also wanted to touch on something that has just developed in Saskatchewan. You know about the personal income tax reform that's going on in Alberta, where they're delinking their tax system, their personal income tax system, from the federal system. Finance Minister Eric Cline had earlier commissioned a report to be done by a number of accountants in Saskatchewan. The NDP-commissioned report in Saskatchewan has also recommended they delink from the federal system, something our members are concerned about. However, they have also suggested significant reductions in personal income tax in that province.

So this is definitely a non-partisan issue. We have the NDP commissioning a report in Saskatchewan that talks about a $420-million cut in personal income taxes in that small province. If you think about that, that's a larger per capita tax cut in Saskatchewan than would have been granted in Alberta, if in fact those things are adopted by both governments in the way they're suggesting.

That's very good news, and would lead, in our view, to a significant increase in optimism among our members in the province of Saskatchewan. They're talking about paying for that in part by broadening the base of their provincial sales tax, and that's an issue we are concerned about.

I wanted to touch on a couple of brief things. Much of this I know my colleagues at the national level, Katherine Swift and Garth White, have presented to you. I don't want to repeat what they said, but our members in the prairie region, like our members nationally, want to see far more emphasis placed on debt and tax reduction than on the spending side of the equation. In fact, in the prairies, we would like to see 49¢ of every surplus dollar dedicated to debt reduction, 39¢ dedicated to tax relief, and only 12¢ dedicated to increases in spending.

I was pleased to hear that the Alberta Federation of Labour supports the idea of ending bracket creep. We've been saying for some time that income tax bracket creep, the de-indexation of tax brackets to inflation, has hurt lower-income Canadians more than it has hurt higher-income Canadians.

I should tell you some of my friends on the right side of the equation in Manitoba like the concept of bracket creep, because they say if you want to end progressivity of the income tax system, the best way to do that is through income tax bracket creep.

I don't think that's a recommendation your committee wants to put forward, that we continue with bracket creep to essentially reduce the progressivity of our income tax system, but that is really what is happening right now. Our members, small and medium-sized enterprises, to their credit, want to see an end to income tax bracket creep as one of their highest personal income tax priorities.

It does take some leadership on our part when our members tell you their highest priority on the tax side is not corporate income tax, is not payroll taxes, both of those being priorities, but is personal income taxation. Our members show leadership in the fact that they regard cuts to personal income taxes, arming consumers with more dollars, as being the most valuable way of stimulating economic development across this country.

I have many other results to share with you. I did want to mention very briefly our information on the farm income problem. Of our members, 60% tell us in the prairies that the farm income problem has had a major negative impact on their business; three-quarters of our regular members, non-farm members, tell us a healthy agriculture sector is important to have a healthy small business economy, so they're very, very intrinsically linked; and 90% of our members blame low commodity prices and subsidies.

Our recommendation to you, though, is that increasing subsidization of agriculture is not the answer for the long term, in terms of addressing this problem. Our members recommend ending or reducing farm fuel taxes as a way of helping them out in the short term. In fact, over 50% of our members suggested that as a means. Another is getting more active on ending international trade subsidies. Only 12% of our members said ad hoc programs, such as AIDA, were the answer to the farm income problem.

I've touched on a myriad of things, but I want to urge you to take seriously our support for the concept in the economic statement of introducing a multi-year plan for tax cuts. We're very supportive of the federal government's efforts in that regard, but we want to ensure that amounts to meaningful tax relief for Canadians. Unfortunately, over the last few years, tax cuts have been eaten up by slow increases in other taxes, and at the end of the day Canadians, Canadian business owners, have not gotten any further ahead.

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We urge you to take this advice seriously and to provide in the year 2000 budget meaningful tax relief for small businesses and all Canadian consumers.

Thank you very much.

The Acting Chair (Mrs. Karen Redman): Thank you, Mr. Kelly.

We'll now hear from the Canadian Association of Gift Planners, William D. Hawley, chair, government relations. Welcome.

Mr. William D. Hawley (Chair, Government Relations Committee, Canadian Association of Gift Planners): Thank you, Madam Chairperson.

I'd like to begin by expressing my admiration for the capacity of the committee, whose mental dexterity allows them to cover such a waterfront as is presented just even this afternoon, and I guess to ask rhetorically which of you is really James Bond in the evening.

The Canadian Association of Gift Planners is about 1,000 people, as our brief indicates. Those are individuals who are attached to charities all across Canada. So there would be roughly 1,000 charities represented by the association. For the most part, those are professional individuals, meaning lawyers, accountants, perhaps ex-bankers and so on, who have left their previous career and attached themselves to a foundation, let's say, at a university where their sole function now is to approach people and work with people who would be prepared to make major donations to those institutions.

That's a phenomenon that reflects a larger phenomenon. The CAGP has grown to 1,000 members since it began about five years ago. That reflects the growth in the charitable sector. I read a report the other day that said the charitable sector in Canada now has economic activity that matches or potentially exceeds right now the GDP of British Columbia.

I think the main point, the main perspective, I would like to convey to you this afternoon as a committee—because you've been a friend of the charitable sector over the past number of cycles that we've been through as an association with you—is the fact that this tremendous economic activity in the sector is putting quite a strain on the legislation we have in place to support the sector.

So the contents of the brief we've given you really focus on some of the areas where that strain is beginning to show. I'll focus on just four of those out of the list in the brief and invite you to consider recommending in your report some activity at the Department of Finance to address those areas, to clarify for Canadians how they can give to support many of the causes that are being discussed by the other speakers before you this afternoon.

The first of those is I think roughly the equivalent of a basketball player's clever move, or a hockey player, who has a give-and-go. We have had for some time in Canada a thing called charitable remainder trusts, not your average run of the mill term that you're familiar with. They're an import into Canada from the U.S.

The unfortunate thing is we've never really had rules in our system in Canada to support or adequately provide a foundation for that gifting technique. We're at a stage now where charities have been using this technique for quite some time, and without that adequate support they're really getting themselves into a position where I think we're going to find a lot of difficulty and perhaps some strange assessments coming forward.

The fact of the matter is that Revenue Canada has been extremely helpful. They have been very generous in their interpretation of the Canadian rules. But the real support is not there. We would like you, along with us, to ask the Department of Finance to move in this area to remove the thin ice component in this particular area.

If you like, what this should become in Canada is a strong gifting incentive for middle-income Canadians. It would be appealing to a senior, for example, who would be prepared to make a gift or a designation today of capital. You know, a little old lady who's going to the symphony or something has half a million dollars that she would be prepared to give away to a charity. She could do that. She could make a commitment today of the capital.

But this particular sort of individual would be interested in a CRT, where at the same time she couldn't necessarily do without the income. So she would have to hang onto the income stream associated with it, but make the designation today that the capital would go.

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That's point one, which we think is our best emphasis to you today.

The second point would be to end the bias against private foundations that appeared in the last two sets of amendments that came out. We think that may have been innocent, but it could also be philosophical.

Regardless, the point to make is that private foundations in Canada have played a very significant role in the charitable sector, and they will continue to play a significant role. There is not a good public policy basis for distinguishing between private foundations and public foundations, particularly, for example, when it comes to the availability of the new incentives that, perhaps partly as a result of this committee's recommendation a few years ago, was introduced to allow transfers of capital property with only half the normal capital gains tax being triggered. Why that should not be available to private foundations is a mystery to us.

The third point is really a very general application. This is the kind of thing that filters up from trust lawyers and estate practitioners and so on.

Again, our system in Canada does not clearly identify the results when a person makes a gift under their will. That, I would suggest, would be a bit startling to most individuals.

For example, if someone left a gift to a charity under their will—let's say it's 50% of the residue of their estate—the rules in our tax system right now would cause that gift to founder. In the first instance, you don't know how much the residue of the estate is going to be at the time the individual dies. That will be two or three years down the road, and by the time you get two or three years down the road, it's too late to go back and make the claim for your tax credit in the year in which you died. So you're caught in a conundrum there that you can't really find your way out of.

Again, it's only thanks to the good graces of Revenue Canada, from a generous administrative policy position, that we're not finding ourselves in all kinds of difficulty with simple gifts like that in wills.

Finally, just as a very basic point, the same capital gains incentive introduced a couple of budgets ago has done very, very well. There has been a lot of activity under that proposal. When it was introduced, there was a sunset clause attached to it. The simple recommendation I would make—and I think the minister has begun making public statements that are favourably disposed toward this already—is that the sunset clause be eliminated now to provide some level of certainty for people who are considering that type of gift. It would open up a great deal of additional planning activity under that incentive if we knew, as quickly as possible, that the sunset clause was gone.

There are other proposals in the brief, but I'll stop there.

Thank you.

The Acting Chair (Mrs. Karen Redman): Thank you very much, Mr. Hawley.

We'll now hear from the Municipal District of Rocky View.

Mr. Kivisto, welcome.

Mr. Peter Kivisto (Municipal Manager, Municipal District of Rocky View): Thank you, Madam Chairperson. It's a pleasure to be here, and we thank you for the opportunity to make a presentation.

I'm here on behalf of our council and our residents. We're a rural municipality covering some one million acres north, east, and west of Calgary. Our residents total about 27,000 people.

We'd like to focus our discussion on eight areas. First of all, we want to lend our support to the Federation of Canadian Municipalities' proposal for the quality of life infrastructure program, which you've probably heard about, to invest in environmental, transportation, and social infrastructure through a national partnership of municipal, provincial, territorial, and federal governments.

The second item deals with uncertified airports. You might wonder why this is here before a finance committee. What we have in case law in Canada is a no man's land between jurisdictions, whether it be provincial, municipal or federal, as to how you deal with these issues on developments at uncertified aerodromes.

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We would like to see a delegation of responsibility down through the province to ourselves so that we can deal appropriately with proposals for developments at these airports. Failing that, we would encourage the allocation of resources to Transport Canada to allow them to have the resources to address the public consultation that's required and the ultimate approvals for these proposals that we get regularly.

The next topic is the environmental, economic, and financial impacts of the proposed endangered species legislation. Farmers and ranchers in Alberta for the last 100 years or more have been excellent stewards of the land. They continue to be excellent stewards. However, the proposed legislation may, in our opinion, create an onerous financial impact on those residents. We request that adequate compensation be paid to landowners for protecting the endangered species on title lands.

The issue of abandoned railway lines has been in the news recently in the Calgary area. Over the last 10 years, linear trails have become popular in various parts of North America. Recently a CPR rail line was gifted to the Trans Canada Trail group without the option for the adjacent landowners or the municipalities to have the first right of refusal or purchase on those linear trails. Landowners have come forward now with a series of concerns about access, liability, policing, fire, economic development, future ownership, risks, and the ongoing costs being placed on themselves as well as the local jurisdictions.

With regard to the issue of excise taxes collected on diesel and gas in Alberta, we understand—and I can be corrected on the numbers—some $500 million in excise tax is collected, and very little or none is reinvested in the infrastructure in Alberta.

We would request that Canada maintain its investment in its road infrastructure to remain competitive with respect to both the North American and international economies. A proportionate investment in infrastructure is requested so that our province and other provinces can continue to generate the economic activity that produces the tax dollars that eventually end up in Ottawa.

The GST has been raised by other speakers. Our municipality ends up paying about $250 million annually for non-rebated GST. When you add that across the municipalities, I suspect it's a significant dollar amount. It represents 3% on our general municipal taxes. We would request that the same rules applied to provinces and the federal government apply to municipalities with respect to GST exemptions.

On the federal grant-in-lieu property tax payment issue, we request that the federal government, like every other taxpayer, pay their bills on time.

Next is the issue of the protection of the one-third tax exemption allowances for municipal elected officials. In Alberta, Revenue Canada has chosen to audit, assess, and collect taxes from municipalities. I believe we were one of the first ones to get reassessed, and the trend has continued.

This is not a practice consistent with the past practice that was understood by Revenue Canada and Alberta municipalities. It seems to be an initiative that's been started up in the past year. We ended up paying some $40,000 on behalf of our elected officials.

Again, it's the general principle, we understand, of taxing one level of government by another, and we would ask that a one-year moratorium be placed to provide municipalities in Alberta with an opportunity to meet Revenue Canada's new reporting requirements for these allowances as opposed to going back retroactively.

I'd be pleased to answer any questions.

Thank you.

The Acting Chair (Mrs. Karen Redman): Thank you very much, Mr. Kivisto.

I think we'll start our seven-minute round with Mr. Epp.

Mr. Ken Epp: Thank you very much.

Thank you to all the presenters. I appreciate your input into our thinking here.

I'd like to begin with Mr. Kivisto. I normally try to go the sequential route here, but he raised the important question of GST charges, which is really money collected from ratepayers in the form of municipal taxes, usually property taxes. That's your prime source of income, and it's transferred to the federal government. When most jurisdictions look at the total amount of taxes that are paid by their residents, they find that a very small proportion of it really goes into the municipal coffers. It's the residential portion only. The income taxes and all the other taxes go to the federal and provincial governments. So here you are with your small amount.

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The City of Calgary indicated this morning that about 8% of their money is collected by themselves. Of that, they turn around and send a whole bunch of money to Ottawa from their little slice of 8%.

You mentioned it with GST. How come you didn't mention it with EI? That's another place where the government is taking money from employers and employees. In your case, you're a substantial employer, I would think. How many employees do you have altogether?

Mr. Peter Kivisto: Our employee complement is in the neighbourhood of 150 staff, and it goes up during the summer season, when we have contract staff on. We contract a significant amount of our operations out to third parties.

Our payroll is about $5 million, and you could add on 17% for costs of benefits, including UI, CPP, and so forth. It is a significant portion. It's something that's been around for a long time. GST is more recent. It's a cost that is not paid by the other levels of government, and it's something we thought we'd focus on.

Of our tax dollars, for every dollar that's collected, approximately 75¢ goes to pay education taxes. The 25% that remains is allocated for our own operations, including taxes to other parties and so forth. So it's a very small amount. Even if we tabulated zero, we'd still be facing increases every year.

Mr. Ken Epp: Okay, good.

I guess I'm a little bit on the hobby horse of the EI overpayment, because it seems to me the government is using that mechanism illegally. I think the EI Act specifically says it's a designated fund. One of the previous presenters to the committee said it was held in trust on behalf of people who may lose their jobs, and it's a breach of trust if it's used for any other purpose. I've therefore been asking people to express themselves on the EI fund specifically.

Maybe we'll get back to you a little later, unless you have something else you want to say.

Mr. Peter Kivisto: There were many topics that we thought about and that we obtained information on very late in the day for these sessions. We've certainly expressed that concern to our colleagues in Edmonton, as well as to our city colleagues here. We share their views, if that is of assistance.

Mr. Ken Epp: Okay, thank you.

I'd like to address a question to both the Alberta Association of Registered Nurses and the Alberta Federation of Labour, because probably both of you are coming at this from about the same point of view.

I'm really wondering about this. Health care is under provincial jurisdiction in our Constitution. If I hear you right, you are saying you want to have Ottawa exercise more control on what is constitutionally Alberta's right and to prevent Alberta from doing what it needs to do to improve our health care system by the coercion of withholding our money. Alberta sends $10 billion a year more to Ottawa than we get back. What do we get back? It's around 70¢ on the dollar, and it's probably less than that. But now you're saying we should really give Ottawa a large amount of control over the money it takes from us, and that it should then refuse to give back for health care, which is a provincial jurisdiction. Please explain yourselves.

Ms. Louise Rogers: Thank you.

From the perspective of the Alberta Association of Registered Nurses, and if I also look at the health summit that took place in Alberta, the citizens of Alberta value our health system. They value the tenets and the spirit of the Canada Health Act. Two of the very fundamental principles under that are accessibility and comprehensiveness. Where we see the province of Alberta headed is toward more and more contracting out, more and more privatization within the system, which then can turn around and redefine what comprehensiveness and accessibility will mean within this province.

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Mr. Ken Epp: If you were to look at it from an outcomes base, and if, as a result of this, the waiting lists are shorter and the delivery of services is more rapid and at least of equal if not better quality, why would you object to that? Right now we have the ability as Canadian citizens, no matter what province we're in—and we've had some very high-profile Canadians exercise this ability—to pack up and go to the States.

I had a friend who very recently needed a diagnosis. It wasn't available here, so he headed off to the States. Now, are you proposing we should close the borders and not allow our citizens to go to where they can get a facility? That's one question.

I think we're misunderstanding what the Klein government is proposing here. I think what they're saying is that it's still all publicly funded. The delivery, though, is going to be through private organizations, which have a tendency to operate very efficiently.

Ms. Louise Rogers: Audrey, I don't know if you want to answer? Okay.

I guess, Mr. Epp, there are many examples of many countries that have attempted to do exactly what Alberta is doing. It has been a failure. Australia is one of the more recent ones around here.

I am not saying that we should close the borders. If people want to operate in a purely private business and they want to have private services that are not funded by the public purse...because basically, what we are going to be doing in Alberta is transferring public funds over to the private sector. The private sector is in the business of health care to make money. Therefore, there will have to be profits that are taken out of the public purse in the private sector.

Mr. Ken Epp: But every doctor in this province, and I think probably most of them in the country, operates as a professional corporation. They are all in the business of making money. A doctor who cannot make enough money to pay his bills isn't going to stay in Canada. He'll leave. So if they are private corporations in the business of making a profit, why do you object to that? We're all in the business of trying to make a living.

Ms. Louise Rogers: Actually, we are on record as saying we would move toward a model of primary health care for Canada—the Alberta Association of Registered Nurses as well as the Canadian Nurses Association. We believe that will lead to better outcomes. We have no research to show us that the private facilities give us better outcomes—none. So from our perspective, we do not want to see an increase in what is already private for-profit health care in this province.

Mr. Ken Epp: Well, I guess that debate will continue. I talked recently to an elderly lady who needed to have cataract surgery. The doctor said, “You can wait in the lineup; it'll be six months.” This didn't happen to be in Alberta. It was in a neighbouring province starting with the letter “S”—the home of socialist health care. The doctor said to this lady, “You can wait for six months, but the chances of having 100% success are diminished because of the wait. We really recommend you do this right away.” They said to the husband, “If you have the money, take your wife to Alberta and get this thing done right away, because it'll be best.” He did, and everything is fine. Instead of spending the money he earned on a TV or a stereo or whatever, he spent it on his wife's eyesight. He got a better outcome. I submit that.

I think we probably err by saying that only the socialist plan works and the other one can not. There are so many other areas where it seems that the non-socialist plan seems to work very fine. In fact, I remember when I first came to Alberta and we had MSI here. It seemed to work a lot better than what we have now.

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Ms. Louise Rogers: Mr. Epp, I would like to indicate to you that I believe you're my MP, so perhaps one of these days you and I can sit down—

Mr. Ken Epp: Well, we should.

Ms. Louise Rogers: —and have a discussion about this.

Mr. Ken Epp: Sure, we should.

Ms. Audrey Cormack: I'd also like to offer some comments, since it was also directed at me. I have to admit, the idea of possibly getting Albertans to spend their disposable dollars on health care rather than TV, after having to listen to Klein last week using our taxpayers' dollars to put TV time on, is tempting me a little more. If I didn't have a TV, I wouldn't have to listen.

However, I don't think we're here necessarily to debate the interpretation of what Premier Klein is considering. Unfortunately, that will only come out in time, and we really don't...we all have our opinions and we can cite surveys. I agree with everything that Louise said. But I think what we are here to do is make our case for national standards, which is your question.

I also fully appreciate, speaking for myself, that you and I will differ dramatically. I am a very strong nationalist. Your party is not, and so we have to agree to disagree when we come to beginning these discussions.

I think, when you talk about constitution, unless we're planning on getting into a very long discussion about social contracts, some of the changes we made, and where the provincial governments have to come on side, our constitution's been there with the Canada Health Act and other areas that we've worked under with national standards since day one, or at least as far back as we can remember.

I don't see that there's been a great amount of change there. Clearly, there's been some indication that what we're planning in Alberta will go against the Canada Health Act, and we need to be very aware of those changes. So I think we need to be clear about what we are discussing and planning here.

Mr. Ken Epp: Okay. Just to summarize then, your message is loud and clear that the federal government should use its spending power and the ability to withhold payments to the provinces in order to coerce the provinces to comply. Do you agree with that?

Ms. Audrey Cormack: No, and I think it's interesting that we can have a discussion.... What we need to do is have a federal government that upholds some quality standard as determined by Canadians, in this case for health care.

Mr. Ken Epp: Yes.

Ms. Audrey Cormack: When that does not happen, then you have to do something about it. Now, I've never been one in favour of saying you can't impose standards without some dollar figure attached to them. Quite frankly, I think our federal government should be able to impose national standards with no dollar figure attached. But if the only way the Alberta government is going to listen is by taking money out—because money is God to Alberta—then so be it.

But the bottom line is the national standards, not the money.

Mr. Ken Epp: Okay. You've expressed yourself well, and my time is up. I wish I could carry on.

The Chair: It was up a long time ago.

Mr. Ken Epp: It was, Mr. Chairman. I'm aware of that. It was fun, though.

The Chair: We have Mr. de Savoye. Kindly pick these up. It's on channel 1, and you'll be able to hear him in either language, English or French. Is that better?

[Translation]

Mr. Pierre de Savoye: Thank you, Mr. Chairman. You are doing a good job.

We could talk at length about the health issue. I share the concerns you have mentioned. You will of course understand that I do not agree that the federal government should be imposing its rules. In Quebec, we know how to take care of things properly ourselves, with all due respect for the people who need health care. The real problem is due to the fact that funding has been slashed and the Canadian social transfer has been reduced by a sizeable amount, which has had an effect on health care from coast to coast. And this did not affect only health care, but also education.

Let us talk about education, because it is important. There is something that costs more than investment in education, and that is the absence of investment in education. This is the former teacher speaking to you.

You mentioned the problem of the costs for post-secondary students. This is a problem that is real from one end of the country to the other, even though it is less serious in Quebec because our tuition fees for students are not as high. It nevertheless is a problem.

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You mentioned the bankruptcy act, as well as bursaries, saying that they should be tax free. What is your view of bursaries? Quebec has had a bursary system for the past 30 years. In the rest of Canada, there is the Millennium Fund that is kicking in. There are also bursaries that various corporations grant to students carrying out research.

Could you give us an overview of the way in which a good bursary system might function, so as to ensure that Canadian students benefit from reduced tuition fees as well as smaller debts once they have finished their studies? How do you see the situation?

[English]

Ms. Joy Morris: Pretty clearly a system of scholarships, or bursaries, more specifically—and we're very clearly in favour of bursaries rather than scholarships, need-based income rather than merit-based—does need to be to some extent harmonized, because there are many different programs, and many of them target precisely the same people. Particularly with the merit-based programs, your very top students get more and more and more money from 10 or 20 different programs, while many students who really need it, and who, due to their socioeconomic background, may not have had the same opportunities and therefore may not appear to do as well merit-wise, can't access those same programs.

There needs to be some sort of agreement between federal and provincial governments as to what will be covered by what levels of government. And there certainly does need to be a system of grants that adequately covers the expenses of education.

That said, a really pressing need at the moment is for base, core funding for education. Students can be funded all you like, but unless that funding goes into higher tuition fees, which again increases the problem in a vicious cycle, their quality of education is going to erode as the universities or other post-secondary institutions can't afford to hire the best professors or give them adequate time to do the work they've been hired to do.

[Translation]

Mr. Pierre de Savoye: You are telling me that we are in a vicious circle. We can ask for more money for students so as to provide them with a better education, but fewer students will have access to this improved education, or else we can ask for less money for students, and a greater number of them will have access to a lower quality education because the resources will be smaller.

How might we break this vicious circle? Should the federal government not re-establish transfer payments to provinces so as to allow them to reinvest in education?

[English]

Ms. Joy Morris: Yes, we believe very strongly that the federal government needs to re-establish the federal transfers to provinces and that they need to be dedicated to post-secondary education, because certainly in some cases they're not getting to where they're aimed, although in other provinces they are. And it has to be a taxpayer, and therefore a government and a public, responsibility to ensure that access to education is available to all Canadians.

[Translation]

Mr. Pierre de Savoye: Thank you. I would like to ask a final question.

Ms. Cormack, you mentioned earlier the importance of a national child care program. You are aware that two or two and a half years ago Quebec set up a daycare program that is working well. Could you tell us if the program that you envisage would be similar to the one that is already in place in Quebec? If not, what would the differences be?

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[English]

Ms. Audrey Cormack: My apologies for not knowing fully how the Quebec system works, but let me say what we need is a fully funded national child care program that addresses the needs of Canadians. What that means is it has to have licensed child care workers with enough child care spaces, and it has to be accessible in terms of funding.

Also, we'd like to see some importance given not only to where these child care facilities are—and obviously to the child care givers, by which I mean they need to be licensed—but also to what hours they're available and what's provided. If you're looking at women trying to access well-paying jobs or non-traditional jobs, that's very important as well.

Mr. Pierre de Savoye: Just for your information, the Quebec program answers all of your preoccupations for $5 a day. That's how low it is. However, I've heard some parents would like the hours to be extended beyond 6 p.m., because some of them find it hard, with the traffic, to be there in time, and there's a surcharge if they are late. So that is the part that could be better. That's just for your information.

Ms. Audrey Cormack: We'll take it. It would be great.

This concern about 6 p.m. is a very valid one. I've heard horror stories about children being put on the sidewalk if the parents are not there in time. It is a serious concern for a lot of parents.

Mr. Pierre de Savoye: They aren't put on the sidewalk, but there's an additional charge. There should be a solution for that.

Thank you.

The Chair: Thank you.

Mr. Cullen, followed by Ms. Leung.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you very much, Mr. Chairman.

Thank you, presenters, for your thoughtful input into this process.

Ms. Cormack, I would agree with you on your view of the health care system and on why it's so important in Canada to have our own uniquely Canadian health care system. But on the taxation, in your brief you say, and I quote:

According to OECD figures, Canada's total tax receipts are 36.8% of our GDP. The OECD average is 37.7% of GDP—and the European Union average is 42.4%.

To support your thesis, you say, “In general, Canada does not have an excessive tax burden.” That reminds me of the person who has their head in the freezer and their feet in the furnace, and on average they're okay.

I have the 36.8% figure too; that's the total tax revenue in relation to GDP. However, if we look at personal income tax as a percentage of GDP, Canada's is 14%, compared to, let's say, some of the G-7 countries: the U.S.'s is 11.6%; Japan's is 5.9%. In any case, Canada's is definitely the highest.

If we look at corporate income tax, we're somewhere in the middle, but many countries have implemented some corporate tax reductions as well in the last year or so.

In payroll and social security taxes, we're quite low in relation to the other G-7, and in taxes on goods and services as a percentage of GDP, we're actually quite low again. The U.S. and Japan are lower than us, but France, Germany, Italy, and the U.K. are higher.

So yes, it's true when you average things out perhaps, but given that information, does that change your view that in Canada we do not have an excessive tax burden?

Ms. Audrey Cormack: Let me offer in answer a bit of a rephrasing of how we feel about taxes. I appreciate the opportunity to do this, because one of the other presenters here commented on our position, and I just want to be clear so that everybody understands.

We favour more tax brackets, not fewer. We don't agree with a flatter tax. We went to a flatter tax with Mulroney, when we went to the three tax brackets, and the only people who benefited were people with very high incomes or incomes below $10,000. An argument can be made that people under $10,000 shouldn't be paying taxes, but what I'd like to argue is that people should be making more than $10,000 a year. That's quite shameful.

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If you look at it in terms of the disposable income of workers, the disposable income people have, the argument being made to me constantly is that they have little disposal income because of the large amount of taxes they pay. But we need to have a debate about the taxes that pay for the services we require. So then you look at how people increase their taxable income.

I appreciate that we're lower and middle on some, but I would share another statistic with you. These are figures from the 1990 to 1997 period of time. The share of provincial GDP going to wages and salaries in Alberta dropped in that period from about 48% in 1990 to just under 45%. Ontario in the same time period held steady at just over 50%, and B.C. actually increased from about 48% to about 52.5%. But I don't see anyone really concerned that we're the lowest in percentage of GDP. Nobody trots that figure out.

What we need to recognize is that in this whole tax debate, we have to talk about where our taxes come from. Maybe we should talk about the statistics from over the past 20 or 30 years on how much personal income tax as a proportion of the total tax pie has been collected from individuals as opposed to corporations and industry. In Alberta we just had a report released last week on the missed income to our provincial government in oil and gas royalties.

What I'm saying to you is that all of us, on both sides, can trot out all the figures we want, but we need a national discussion on taxes in this country—on how we collect them, who we collect them from, how we disburse them, and what they're used for. If we do that in conjunction with an industrial job strategy, we'll be a lot better off.

Mr. Roy Cullen: Thank you for that.

When you talk about when people begin to pay tax, in the context of disposable income, do you also take into account the GST credit and the child tax credit? Often these numbers are quoted. That affects the net tax, as you know, and people in the lower incomes clearly get that benefit. In fact increasingly many people are off the tax rolls completely because of those provisions. Maybe you could come back to that.

In your brief you talk about the GST as being particularly troublesome, and I know Canadians polled recently said they would like to see the GST reduced or removed. But in relation to the other industrialized countries, our taxes on goods and services are actually in the middle, if not in the low range.

But I agree with you that we need a good debate on taxation; that's what this process is about. There's perhaps work to be done on the brackets.

When you're talking about people in poverty who are having to pay tax, are you taking into account and including the GST credit and the child tax benefit?

Ms. Audrey Cormack: Specifically, when you look at what people in poverty pay in income tax, it would be on the same basis as their income. GST and child tax credits are in fact credits that are refunded after certain criteria have been met.

My point is that we should be looking at some credible incomes for people. I would suggest to you that people would rather make a decent income, pay their fair share of taxes, and be part of our economic systems than receive credits because they are living and working in poverty.

Mr. Roy Cullen: Thank you, Ms. Cormack.

Thank you, Mr. Chairman.

The Chair: Thank you, Mr. Cullen.

Ms. Leung.

Ms. Sophia Leung: Thank you, Mr. Chair.

I want to thank you all for your very thoughtful presentations. I have a couple of questions. The first one I want to address to Mr. Dan Kelly of the CFIB.

I was very interested in your talk about tax cuts. As you know, this committee actually recommended the elimination of the 5% surtax.

• 1600

Here you propose a multi-year plan to reduce. Do you have any specifics in mind? Is it five years or four years or what? This is very general to me. I'd like you to expand on that, if you can.

Mr. Dan Kelly: Sure. We haven't put specific numbers in any individual cell over our multi-year plan. I can tell you that I also deal with provincial budgets and made a recommendation to the provincial government in Manitoba that they announce a five-year plan for tax reductions, with a two-point cut per year over a series of years.

With respect to personal income taxes as part of your plan, the highest priority we have is a restoration of indexation of the tax system to ensure that we don't continue to lose ground due to bracket creep. I know about and appreciate some of the moves the federal government made last year to try to address that in part. As you noted, there was the elimination of the 5% high-income surtax. That, again, could also be achieved over a multi-year plan. For example, if you were to stage that out at 1% per year to lower that until eventually it would be eliminated, it might be a way of bridging the gap in protecting federal revenue to a certain degree and at the same time providing what we've been looking for: the light at the end of the tunnel.

Again, we're also looking for across-the-board tax cuts. Unlike other presenters at the other end of the table, we don't believe that one category of taxpayers is more deserving of a tax cut than another. We believe all Canadians need to see some tax relief, including low-income Canadians, because in many respects, those are our customers. We don't take the view “tax them more, tax us less”; we believe that all Canadians of all income categories are deserving of tax relief.

Certainly one of the ways in which this could be accomplished is to lower each of the major tax brackets by a point per year over a multi-year plan. I don't have a specific number to offer you today. As you know, CFIB does this by membership surveys, and we don't have data at this point with respect to specifics on a tax cut per year.

But at the end of the day, we would like to see Canadians' paycheques grow as opposed to shrink. That's why, while we've been appreciative of the employment insurance reductions, we've also been cognizant of the fact that CPP has been increasing at a rate much faster than the EI has been cut.

The same is true of personal income tax. Bracket creep has eclipsed, in many respects, any of the strategic or small reductions in personal income tax that the government has made over the last number of years. That is what really has to change. I'd love to see Canadian consumers have a noticeable increase on their paycheques at the end of the year. I'm sure that you, as members of Parliament, would like to see the same so that we all have greater resources to spend on some of the priorities that all of us value in our own homes.

Ms. Sophia Leung: You just mentioned something about 50¢ for debt reduction. Is the 39¢ for tax?

Mr. Dan Kelly: Yes, for tax cuts.

Ms. Sophia Leung: The 11¢ is for social spending?

Mr. Dan Kelly: Yes.

Ms. Sophia Leung: Okay. We have heard many suggestions: health, education, etc. Do you think 11¢ will be sufficient to meet all the needs for Canadians?

Mr. Dan Kelly: I would put it to you that if the federal government ever attempted to meet all of the needs of all of the groups asking for money, we would need to have 100% tax rates to provide for the needs on social spending alone.

I'm certainly not suggesting, nor are our members in many of the surveys we've done, that there doesn't need to be reinvestment in some of our priority areas. Health care and education, of course, are two of the highest-priority issues that you hear about from Canadians.

However, one thing we have suggested in the past is that if the federal government in fact views additional spending on certain priorities, either transfers to the provinces or any other social spending, it should be, in many respects, viewed as not increasing the net expenditures on the part of the federal government—finding from within.

If the federal government in fact views the child agenda as its priority this year—last year it was the education budget and the year before that it was the health care budget—we believe the federal government should find from within its existing spending portfolios areas in which it can reduce spending in order to put spending on the priorities as opposed to, on an annual basis, finding a new priority of the day, throwing more money at that, and leaving Canadian taxpayers, of course, on the hook for any additional spending.

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The debate is not simple, and I certainly don't envy you your jobs in terms of balancing these priorities, but what I can tell you is that after Canadians have gone through extreme fiscal restraint and higher taxes to finally wrestle down the federal deficit, if at the end of the day our reward is simply to get back into spending as we did many years ago, you'll find a lot of disappointed Canadians and a lot of disappointed small business owners.

One of the things we appreciate is the message from Paul Martin and many of your members of Parliament that you are going to be putting forward a tax plan in the same way you're going to be putting in place a health care plan or an education spending plan. These are important priorities for Canadians. We appreciate your efforts in that regard.

Ms. Sophia Leung: I just have a quick comment, Mr. Hawley, on your comment about simplifying some of the charitable process. I really couldn't agree with you more.

Mr. William Hawley: Thank you.

Ms. Sophia Leung: I know a donor who has a sizeable art collection. She has terminal cancer. She doesn't have much time. They make it very difficult, because there need to be two appraisers to verify, etc. It certainly discourages, and I certainly would support any way to simplify that.

The Chair: Thank you very much.

We'll now go to the honourable Lorne Nystrom.

Hon. Lorne Nystrom (Regina—Qu'Appelle, NDP): Thank you, Mr. Chair.

I have questions, Mr. Chair, first of all to Audrey Cormack. Mr. Epp was partly right about what he said to you about helping under the provincial jurisdiction or a constitution. I had the dubious honour of sitting on seven constitutional committees over about 10 years—for patriation, Meech Lake, and the referendum—and it wasn't that much fun.

But I say he was partly right. Under our Constitution, the provinces of course have jurisdiction over health and administration of health. But also under the Constitution, the federal government has the spending power. They used that to create national medicare, which was cost-shared in the first place, with 50% of the dollars coming from Ottawa and 50% from the provinces. Now that's down to about 11% or 12% from Ottawa and the rest from the provinces.

Under the Constitution, the federal government can also establish national standards. Also under our Constitution, if a province violates those national standards they have the right to take the money away or to withhold payment.

So I fully support you in your position of penalizing Ralph Klein if he violates the Canada Health Act. Indeed, it's the obligation of government to penalize Klein if he does that. I just wanted to point that out and ask you if you had any more to add to that issue, which is very important.

Ms. Audrey Cormack: I agree with you and thank you.

In terms of the sharing of services, again, I think that was set up so we could have our provincial ability to do certain things, given that sometimes demographics dictate that you may need more spending in one area. The whole idea of the national standards—that we're the country of Canada, that we want to have the same, that what we believe in for one, we believe in for all—is the really important concept. I agree with you totally.

Mr. Lorne Nystrom: Mr. Kelly, I'd like to ask you about a couple of things you said.

You're a man of intelligence, and you made an interesting comparison about your home province and mine. Your province just routed the Conservatives in September and ours did about eight years ago because of the horrendous debts and deficits they racked up in Saskatchewan under Grant Devine. You compared both of them to Alberta, and you seemed to think Alberta was doing so much better.

It seems to me you forgot about the whole question of oil. If we in Saskatchewan and Manitoba had the oil Alberta has had for 50 years, we might make Alberta look pretty shabby by comparison. It's sort of like comparing apples and oranges or like saying, “You get into the ring with Mike Tyson, Dan Kelly.” What's going to happen? You're both men, but there's a little difference between the two of you; watch for your ears if nothing else.

You're talking about 49% going to paying down the debt, 39% for across-the-board tax cuts—which will go from the poor citizens to the Conrad Blacks, I gather from what you're saying—and only 12% for program spending. Why would you advocate such a small amount for program spending when indeed there has been a tremendous cutback in spending?

Here's the other question. You said that some people advocate spending like we spent years ago. I haven't seen anybody advocating spending like we did years ago. Most people who come before us say we should have a balanced budget and have some fiscal responsibility. People at this table in this room today have not advocated going into great deficits.

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Who has been saying that? Why do you say only 12% towards extra spending? Why penalize people who are depending on the health care system or education. The homeless situation and the farm crisis in my province and your province.... Why only 12% there, and why so much on the other side of the ledger? It seems to me that's really an imbalance.

Mr. Dan Kelly: I'll address a couple of those things; for starters, the oil revenue issue.

Saskatchewan just announced that in fact its surplus is going to exceed what they anticipated in the first place as a result of oil revenue in your home province.

Mr. Lorne Nystrom: It's $18 million compared to $8 million.

Mr. Dan Kelly: Yes.

That is very good news and in fact has allowed the provincial budget in Saskatchewan to be far less dependent on federal equalization than in Manitoba, which is a tremendous thing. In fact, I remember having some debates with Janice MacKinnon about the fact that she said, yes, we could cut taxes and it might stimulate the economy, but if we stimulate the economy too much, we're going to lose equalization payments and not come out any further ahead.

It's certainly a correct factual argument, and at the same time a kind of depressing one, in that it's the same argument that I hear from people who are unfortunate enough to have to be on welfare: Yes, I can go and work, but if I go and work and earn a little bit of money, that's going to be taken from my welfare payment at the end of the day.

Alberta has had a fairly significant ability to fund many of its programs due to its oil and gas revenue. But I seem to recall Stockwell Day saying somewhat less than 10%—and I'm going completely by memory—of the most recent Alberta provincial budget was financed through resource revenue and 90% was through general tax revenue on consumers and businesses.

I think we have to remember that Alberta does have additional resources, but Manitoba, Saskatchewan, and every other province in Canada still have to compete with that reality.

One of the things in the document that the NDP in Saskatchewan commissioned is the fact that it says that in order to hang onto our best and our brightest in Saskatchewan, we have to deal with the tax environment we're facing in Saskatchewan, come hell or high water. The borders are so porous that if we don't do it, the consequences are far more grave than if we do.

I also want to say with respect to the 12¢ figure on social spending that it isn't me saying that; it's our members saying that through surveys we've done. Our members do believe we provide enough revenue to the federal government to pay for the most vital programs that we as Canadians value.

Mr. Lorne Nystrom: You mean your members have actually said 12%?

Mr. Dan Kelly: Yes.

Through membership surveys, we've asked them what portion of the federal government surpluses should be dedicated to tax cuts, to debt repayment, and to a social spending increase. That 12¢ of every dollar has been determined by our members, not by me and not by a board of directors.

As I said before, many of our members do value very deeply the programs that we as Canadians value. As you may recall, CFIB was there during the CPP debate. Our members supported the continuation of that program, where there is considerable disagreement as to whether the government maintaining the pension plan is the best route to go.

In every small community across this province, across the region, and across the country, our members value health care and education because they are members of the local community, the same way as absolutely everyone else. They are the same people who are being hit up for donations from the local hockey teams and from the local hospital district for money for this, that, and the other thing, and nine times out of 10 they are there to provide that. They value the programs in the same way that I believe other Canadians do.

But we believe unless we start attending to the tax burden that we as Canadians are facing, we are not going to be able to provide, for the long term, the same degree of quality service as we have in the past. Certainly there's been erosion in the quality of some of the service across the country, but for the most part, our members are saying that in order to save some of the programs we value, we have to be able to build and grow the economy.

I should say I've been quite amused with the advice that's coming out of the Saskatchewan government at the moment, because it seems to be echoing just that, that it's important that we build the economy to protect our social programs. It's important to pay down our debt, because if we don't do that, we're not going to have these programs for the future.

Mr. Lorne Nystrom: Just imagine Saskatchewan with Alberta's oil.

Mr. Dan Kelly: Absolutely.

Mr. Lorne Nystrom: Years ago you fought very much against the GST at the CFIB.

Mr. Dan Kelly: Yes.

Mr. Lorne Nystrom: You're not mentioning that nowadays—not just you, but Catherine Swift as well.

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There was a recent poll done by Earnscliffe in Ottawa for Paul Martin. When they asked Canadians what taxes should be cut, 54% said it should be the GST, 35% said personal income tax, and on down from there. I wonder why your organization does not reflect public opinion.

I have one more question, to Audrey. On the whole question of EI, people talk about the EI premiums being too high. Most people forget that a lot of people were cut off EI because of changes a few years ago. So instead of cutting the premiums drastically, maybe they should be cut back some more, but not drastically, and some of that money redirected to people who have been cut off. I think 37% qualify now; years ago it was about 80%.

So I'd ask those two questions in that order, please.

Mr. Dan Kelly: Sure.

With respect to the priority tax reductions, 60% of our members view sales tax as a priority for tax reduction, both federal and provincial.

Mr. Lorne Nystrom: That's PST and GST?

Mr. Dan Kelly: Yes, and 82% viewed income taxes as their priority.

I don't think that should be taken as a suggestion that a reduction in the GST or a reduction in sales taxes is a bad thing. I can guarantee you that if you, as a finance committee, were to recommend a reduction in the GST, you would find very little opposition from small businesses across this country.

But I have to say in terms of priorities, priorities for themselves and for their customers, they cite personal income tax as a higher priority in that regard.

If you look at what is going on at the provincial level in Saskatchewan, the recommendation, of course, is to broaden the PST to a larger number of products and services, including insurance and including taxation of off-reserve purchases bought for aboriginal people. It's a fairly interesting report. Of course, they don't suggest at the same time that they harmonize with the GST and provide input tax credits to small business.

I remember meeting with Roy Romanow last year. In his debate over whether to cut personal income taxes or sales taxes, he said to us in a meeting that the sales tax is the politically right tax to cut and income taxes are the economically right tax to cut. That was Roy Romanow, not me. I don't think we would be any different in that regard.

Mr. Lorne Nystrom: In other words, you'd be political rather than economical?

Mr. Dan Kelly: I think our members support the tax cuts that would stimulate the economy the most, and they're suggesting income taxes would be the way to do that.

Mr. Lorne Nystrom: But why cut the GST or the PST?

Mr. Dan Kelly: They cut the PST. Now they're talking about broadening it.

Mr. Lorne Nystrom: You said you agree with him.

Mr. Dan Kelly: I agreed with his assessment that sales tax is the politically right tax to cut.

Mr. Lorne Nystrom: Audrey, please.

Ms. Audrey Cormack: On the unemployment insurance, we definitely would support the concern about not enough Canadians receiving benefits. Our figures show that scarcely 36% of unemployed Canadians receive benefits, as opposed to 83% in 1989.

I would comment that I find it highly ironic that our governments, federal and provincial and others, are telling us that we must be more adaptable, more flexible, we must end our thoughts of lifelong jobs, and we have to be prepared to move. But at the very same time we're being told that the insurance system that we and our employers pay into, which would allow us that very flexibility that we're supposed to be looking at in the future, is being taken right out from under us.

It's a real concern. It's a concern in the growing number of part-time jobs and contract work for women. It's again the issue of people working two or three jobs and just not qualifying.

I think the positive move we did see was the move to total hours, rather than hours per week or month. I know that's also causing us some problems in some of our areas in Alberta in terms of construction and also some of our members who work in oil fields and camps and things like that, but generally that was a positive move. But it is a concern when you look at it over the last ten years and it's down from 83% to 36%.

The Chair: Thank you, Mr. Nystrom.

We'll go to Mr. Jones for a final question.

Mr. Jim Jones: Thank you, Mr. Chairman.

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Ms. Cormack, in your opening statement you said that you would increase taxes to people in the upper income tax bracket, increase taxes to corporations, have a fully funded child care program, and abolish the GST. What would you do if we abolished the GST? How would you find this additional revenue to replace what is a cash cow now to the federal government?

Ms. Audrey Cormack: Abolishing the GST is just one part of it. I think what I've been trying to say is that calls for tax cuts are premature and misguided. We can't look at tax cuts, or we can't look at any of it, in isolation of looking at our revenues and our expenditures. But it seems to me that the only side we're looking at is expenditures, or, on the revenue side, the only thing we're looking at is the personal income tax. Here in Alberta, for example—and I'm sorry I don't have the exact figures on the total budget revenue; I didn't bring them with me today—there are three sources of revenue: oil and gas, income tax, and gambling. Gambling is very high, I might say. We are also very concerned about that in terms of the social implications.

I could give a short answer to your question, because you reiterated that we support more taxes on corporations if you cut the GST, which in fact was supposed to have replaced another tax. We would just make up the revenue in removing some tax cuts to the corporations.

I think what I've been trying to say is that's not what we're advocating in simple terms either. What we want to do is look at our social programs. Louise talked very well about our health care. We have some really big concerns there, but we need to talk about how we're going to provide an increasing standard of living for Canadians, not a decreasing standard.

Mr. Jim Jones: Mr. Kelly, in your brief you said that to pay down the debt they should pay down $3 billion, or a little more than $3 billion. But if you look at the math on a $580 billion debt, that's going to take close to 200 years. Don't you really mean that we should be locking the servicing costs and starting with a certain principal repayment in a total thing like a mortgage repayment schedule, so that we could pay it down in 30 or 35 years and don't touch that money? So as we pay more in principal we have to pay less in interest. Just work it that way.

Mr. Dan Kelly: In our presentation we said legislate a mandatory debt repayment schedule of at least $3 billion per year. So we'd like to see at the very first the government commit to a debt repayment schedule, and then we can debate what that amount might be.

We were quite supportive and made comment with respect to the Manitoba debt repayment legislation, which I believe is reasonably progressive. It talks about paying back the provincial debt over a 30-year time horizon. Right now that means we're paying about $75 million per year back on our provincial debt.

The savings as a result of that have been put into a fiscal stabilization fund to pay for other program spending, as the Tories did, or, as the NDP is suggesting, getting rid of it altogether.

We have been supportive of the concept of debt repayment legislation. The actual dollar amount I think is something that needs further debate. I certainly share the concern that if we pay down $3 billion a year on the debt it's going to take us a great many years, but the concept is very important to us.

Mr. Jim Jones: Ms. Rogers, in your presentation you indicated that between now and the year 2011 there's going to be a shortage of between 59,000 and 113,000 nurses. Right now we're losing nurses to the U.S., but we're also losing doctors to the U.S. We're also having trouble attracting people into the nursing profession. What are we doing to turn this around?

Secondly, with the fact that we're losing doctors, and a lot of these nurses being very highly trained people, is there a thought of offloading some of what are traditionally doctors' responsibilities onto the nursing profession and make it a more professional group of people so that people would want to go into that profession?

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Ms. Louise Rogers: First off, I would indicate to you that nurses do not wish to take over the work of the physicians, but nurses are very interested in having the barriers removed so that nurses can practice to their full scope of practice. We have many barriers within legislation and policy and regulations, and many in attitudes, that prevent nurses from practising to their full scope of practice.

I would indicate to you that within the province of Alberta, and we need to have the statistics adjusted across Canada as well.... In September, the Alberta Association of Registered Nurses did a survey of the schools of nursing to see how we were stacking up with regard to our young people now being more interested in the profession of nursing. Actually, within the province of Alberta, we had just over 800 students admitted to the funded seats in the programs. We turned away over 980 students. We actually turned away more qualified students than we admitted. So what we are looking for is to have the caps removed on the funded seats within the programs so that indeed we can provide the nursing for the future.

Mr. Jim Jones: When you say the full scope of practice, if they were allowed to practice to the full scope of practice, whose responsibilities would that be eroding?

Ms. Louise Rogers: I don't know that it's eroding anything. I think we have, within the health care field, many overlaps in practice. Indeed, I do recognize that at the upper end we would be overlapping into the physician.

An interesting comment was made by one of the family practitioners when we were talking about the role of the registered nurse and the things they do. The physician said, “I do that every day as well.” So in many ways many physicians are also practising within the domain of nursing. I think we just have to recognize the contribution that each practitioner makes and make sure that we do not have barriers within legislation or policy that prevent the profession from practising to their full scope.

Mr. Jim Jones: Thank you.

I have one final question to Ms. Morris. You said you want to appeal the law that doesn't allow students to declare bankruptcy until 10 years after graduation. Why is that all bad, or is this just a principle of your individual rights? What is wrong with this? There's nothing wrong.

Ms. Joy Morris: It's an issue of equality. If bankruptcy legislation exists at all, which it certainly does in Canada, and the right to declare bankruptcy when one is in desperate straits, which is when one takes such options, then that right should be equally available to all Canadians. The idea that one can't discharge one's student loan debts through bankruptcy for 10 years, and therefore gets hounded by credit agencies, goes through not having any credit rating for an extremely long time, etc., and basically has no ability to establish oneself as a potentially contributing member of the economy again, until long past what would occur if one were immediately to discharge those debts and start over, is completely unreasonable. There's a reason debtors' prisons were abolished too. It's not a productive stance.

The Chair: Thank you.

I would like to follow up on Mr. Jones' question vis-à-vis student loans and bankruptcies. We've made some changes to the Student Loans Act, right? I think we give interest relief now for 60 months, which is five years. Is that correct? Basically, the people who are going to declare bankruptcy would be declaring it after this. Is that correct?

Ms. Joy Morris: Yes.

The Chair: Is that what actually happens? Or do they in fact declare bankruptcy before they even exercise this option?

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Ms. Joy Morris: Certainly not. The whole bankruptcy process requires that they've basically exercised all options available to them. However, they may have additional debts in which interest relief is not an option in some cases. That basically means they're forced into bankruptcy because they've taken out personal loans to finance their education or whatever. That situation basically forces them into bankruptcy regardless of the fact that they may not have to pay interest on the particular student portion of their loan.

The Chair: I understand that tuition has been going up, and I am with you on that. But in a sort of sense of fairness, would you consider interest relief for 60 months after graduation to be a generous program? How would you describe that program?

Ms. Joy Morris: I would say that's fairly generous. I would say there are probably a lot of students who don't require that much. But at the same time, particularly in areas like Newfoundland, where jobs are extremely hard to come by, there are a lot of students who do require quite a bit of time to establish themselves. They would be extremely hard-burdened by having to immediately begin to pay interest.

The Chair: So I gather that your point is that under bankruptcy laws, young people or students should be treated the same as everybody else and not be exempted.

Ms. Joy Morris: Yes.

The Chair: Okay.

On behalf of the committee, I'd like to thank you very much. It has been a very interesting session. The message here in Calgary today is very clear. There are many demands being placed on the projected surplus. Choices will have to be made, and every choice also brings with it a trade-off, of course.

In this committee, we really are motivated by two major issues, and those are the quality of life of Canadians and their standard of living. We will be making recommendations that address those two issues, because we think those are indeed fundamental. Of course, we have to figure out which road is going to bring about greater economic growth for the country so that we can in fact deal with all the issues that we have to deal with. That is the challenge we face. But stay tuned. On December 10, we will be publishing a report based on the hearings, and your points of view will be expressed very clearly in that report.

Thank you very much.

We'll suspend for approximately two to three minutes, and then we'll be back for another session.

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• 1639

The Chair: I would like to call the meeting to order and welcome everyone here this afternoon. We have the pleasure to have with us, from the City of Edmonton, the deputy mayor, Ms. Wendy Kinsella, and Randy Garvey, the chief financial officer. We also have our presenters from Agricore, the Financial Executives Institute Canada, and the International Association of Fire Fighters.

We will begin with Ms. Wendy Kinsella, deputy mayor of the City of Edmonton, welcome.

Ms. Wendy Kinsella (Deputy Mayor, City of Edmonton): Thank you, Mr. Chairman, honourable members, ladies and gentlemen. I'd first like to thank you very much for providing us the opportunity to speak to you this afternoon.

I'm sure you know the reason I'm here before you; it's no secret. Like everyone else, I'm here to ask for money. But I would like you to understand that we're not coming cap in hand. We come in the knowledge that our city is working hard to address a problem that we simply cannot deal with alone.

• 1640

The problem is that as a municipality, we have more responsibilities than resources, and in this we do not differ from other Alberta municipalities. We are expected to supply an environmental, transportation, and social infrastructure to over 670,000 people, with funding sources that are limited to raising property taxes, which is, as you are all well aware, an unpopular move; borrowing money, which is a very costly and at best a short-term solution; and finding assistance from other levels of government.

I know the federal government has worked hard to put its financial house in order. You've reduced the debt. You've reduced expenditures. I think now is the perfect time to help municipalities, so that we don't acquire or reacquire unmanageable debt.

Edmonton does not make the request that you seriously consider the FCM proposal on fuel tax lightly, nor do we ask it without having taken a number of measures of our own to put our house in order. We have developed and approved our first long-range financial plan. We are currently debating a 2000 budget, incorporating the major principles of that plan, including limiting expenditures, balancing tax revenues and user fees, and seeking financial arrangements with other levels of government. This year our civic budget places a strong emphasis on funding capital shortfalls that we know our city will incur over the next five years, and we are in the position of possibly being forced to borrow money to fund them. As well, we're engaged in a more long-term planning process—for example, our waste-management strategic plan, the 2000-2002 corporate business plan, and Plan Edmonton, which is our long-term plan for our city.

Long-term planning makes it easier to anticipate and manage expenditure requirements and revenue needs into the future, but even with our city's best efforts, we cannot shoulder this responsibility alone. Our provincial government recognizes that fact. As part of their reinvestment strategy, they are reinvesting in municipalities. They've recently made changes to their capital-granting formula for both Edmonton and Calgary. Now, they'll base the capital transportation grants we receive on a proportional share of fuel tax collected in our area.

I urge the federal government to consider doing the same. If Edmonton receives funding through tax sharing to pay for much-needed infrastructure projects, it won't benefit just Edmonton; believe me, we will all benefit.

For example, Edmonton is the distribution point for goods and services for major economic initiatives like the huge tar sands project in Fort McMurray. If we take the tar sands as an example, a successful tar sands project will generate increased tax revenue for all three levels of government. On the other hand, if Edmonton's infrastructure proves to be an obstacle rather than an asset to the tar sands project, we'll all be the poorer.

Edmonton's infrastructure problem is just that right now—a problem. But if we wait many years more it will become in fact a crisis, and none of us want to have to deal with issues on a crisis basis. So we ask that we address the situation now, while it's still manageable, and that we all work together on the solution.

Edmonton is doing its part. We've created a strategy to deal with our infrastructure gap. The provincial government is beginning to do their part in adjusting their formula for capital grants. The federal government can do their part by supporting the FCM proposal. But we want to be clear that in supporting the FCM proposal for a share of federal fuel tax, it is not the intent of the City of Edmonton to ask for an increase in the fuel tax rate currently paid by consumers. Rather, our intent is to share in fuel tax revenue already collected by the federal government.

We believe that the FCM's proposal is a creative and innovative way to begin dealing with infrastructure funding problems. We support it wholeheartedly, and we thank you for your consideration.

The Chair: Thank you very much, Ms. Kinsella.

We'll now hear from Agricore, the vice-president, George Groeneveld. Welcome.

Mr. George Groeneveld (Vice-President, Agricore): Thank you, Mr. Chairman, honourable members, and ladies and gentlemen. On behalf of Agricore, I'd like to thank the committee for the opportunity to meet with you today.

First, I'd like to take a few minutes to introduce you to Agricore. Agricore is a farmer-owned cooperative that was created just over a year ago with the merger of Alberta Wheat Pool and Manitoba Pool Elevators. Agricore is a very significant investor in the agricultural industry in the three Canadian prairie provinces, northeastern British Columbia, and the northern great plains of the United States.

• 1645

We are positioning our company and our farmer-owner members to capture the opportunities that will be provided in a world where population continues to grow and in which we believe the demand for our consistently high-quality products will increase. With a little help from the next round of the World Trade Organization negotiations, we hope to help Canada reach its goal of 4% of the total world agricultural trade by the year 2005.

As our industry thrives on trade, so does it suffer. We acknowledge that your committee has organized these consultations around a set of themes. But given the very serious situation currently faced by the western farmers, we believe it is absolutely critical that we impress upon your committee, and through you, the Minister of Finance, that the western grain and oilseeds industry is indeed at risk.

You may have noticed in your travels that this year's harvest was a bountiful one. This should have been a time for optimism and hope, but due to the trade-distorting subsidies provided by our competitors and the resulting drop in world prices, combined with poor seeding and harvest weather resulting in lower-quality crops, farm income is going to be significantly lower than average this year. The outlook for the year 2000 is no better.

Agricore's members appreciate the efforts the government has made to date to provide disaster assistance to Canadian farmers. However, we need to point out that the safety nets and the disaster assistance programs currently in place were designed to help farmers mitigate the risk of normal market and weather fluctuations, not to address the effects of trade-distorting subsidies and the prolonged periods of extreme low income that result.

To illustrate that point, I would use the most recent set of numbers from AIDA, the federal disaster assistance program. In the provinces where the income crisis is being felt the most, Saskatchewan and Manitoba, about four out of every five applications that are made for assistance are not accepted. The program is designed as a safety net under the occasional severe income drop, not the kinds of severe and lengthy price drops that we are now experiencing.

Your committee has asked for input on tax relief and reform uses for the current fiscal surplus. We suggest that there is another very important use, a reinvestment in western Canadian agriculture. Our farmers certainly contribute to more than their share of the budget cuts. In addition to our industry's direct addition to this country's balance of trade, government support to our industry is over 60% lower than it was less than a decade ago. This is at a time when our competitors in the United States and the European Union are providing billions of extra dollars to their producers.

We hope you can recommend that the government address this situation from both the cost side and the income side with financial support to the industry. On the cost side, we urge you to recommend the reinstatement of the rebate on federal excise taxes on farm fuel. That could add well over $1 million to the farm economy every year. We also suggest that farmers receive a direct rebate of their portion of the excise tax paid on rail fuel.

Grain and oilseed producers pay over $62 million annually for government services. Not only should the government freeze all cost-recovery efforts, but we encourage you to recommend that some of the fees currently paid by farmers should be absorbed by government.

The debt load in western Canadian agriculture has increased dramatically. Between 1993 and 1997, farm debt increased by about 20% in the prairie provinces. The drop in commodity prices, combined with weather disasters in many areas of western Canada, make it difficult, if not impossible, for some of the producers to service their debt. We are urging the government to provide assistance to farmers to help them re-amortize and restructure their debt loads.

As I said, government support of the grain and oilseed industry will have to be taken on both costs and income. We hope to work with the government to develop forms of assistance that will provide support to the industry to ensure that it is in the position to capture the benefits that will be provided by a new, liberalized, and less-distorted international trade environment.

The income situation in Canada is immediate and severe. If nothing is done to address the income disaster, we suggest that the cost to the western economy, and to Canada's economy in general, will be very large indeed.

Thank you very much, Mr. Chairman.

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

• 1650

We'll now hear from the Financial Executives Institute Canada, Peter W. Rollason, chair, government affairs committee. Welcome.

Mr. Peter W. Rollason (Chair, Government Affairs Committee, Financial Executives Institute Canada): Thank you, Mr. Chairman, and thank you to the committee for inviting us here today and enabling us to make our presentation to you. I won't read my speech, but will just try to give you some brief highlights of what is in it as we go.

First of all, we feel very strongly, after doing this for a variety of years, that this whole process of a pre-budget vetting and discussion is an excellent, democratic-type of process. I'm saying that for two reasons. We enjoy being here, but we want to make sure this continues into the future.

The focus of our organization, the Financial Executives Institute Canada, emanates from our own constituents, who are finance professionals working mainly in large companies across the country, covering all sectors of industries, as well as the public service. Increasingly, there are members of our group from smaller companies now, so we have a constituency that is quite broad and speaks from experience and knowledge, mainly in the area of financial matters.

In a recent survey of our members, our top priorities for federal government action were significant reductions in personal and corporate taxes. Do such reductions meet the needs of all Canadians? We know the answer is not completely so, and I'd like to explore that for a moment.

All Canadians benefit when the actions of individuals, businesses, and the public sector increase productivity. In fact, job creation arises, for the most part, from increases in productivity. So if we, as Canadians, can create a better environment to increase productivity, we can create more jobs and raise the overall standard of living of Canadians.

Will that solve all the problems? No, but we think we are doing the correct action to mitigate many of our present problems. Tax reductions at the personal and business levels will help create a more productive economy, and all Canadians will benefit from that. This may seem to be an overly simplistic model, but it works better than others.

Our second priority from our member survey was to continue debt reduction. That makes sense, as it lowers the overall burden on government finances and allows the government greater flexibility to do other things.

Let's remember one thing. We started on our debt reduction drive just recently, when the debt-to-GDP ratio was in the 60% to 70% range. Many of our competitors, being other large trading nations, are working to reduce the debt-to-GDP ratio to a lower rate.

In this country, we talk about a ratio target of some 40%. We have started to lower the ratio and will continue to do so, but we should remember that much of what is currently happening is more because the GDP is rising than the fact the debt is going down. So billions of dollars each year are still being diverted to pay down debt, and in particular to service the interest on the debt. We know that money can be used elsewhere, hence the priority for that.

This leads us into the general concept of social infrastructure. Our infrastructure in the social sense is ailing, as we can tell on a province-by-province basis across the country. We need to improve health, education, youth, children, and homeless programs. As members of the various political parties making up the Parliament of Canada, each of you knows about situations where there's a demonstrable need for help and assistance. You have to be sensitive to social infrastructure, and so are we at the Financial Executives Institute.

Our concern arises more from the concept that we sometimes hear of throwing money at a problem and it will go away. In our opinion, being a business and finance organization, we know from experience that just tons of money do not solve long-term problems. They give a sense that we are doing a good job, but it is people who solve problems, and the solutions to these problems are different from solutions in the past.

Part of the reason we are having problems is that times and techniques are changing, but we seem to resist changing our delivery systems for our problem solutions. So we recommend that efforts be taken to determine how to better render these services to solve today's problems.

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What we have in Canada today is a new economy, born in the eighties out of the start of the global restructuring, and assisted dramatically with new forms of technology and productivity tools arising in the eighties and nineties. There have been many paradigm shifts in many industries, and Canadian industry, to a great extent, has to respond to these changes. Old ways of production and delivery no longer work, so we adapt.

The same thing can be said for our programs and delivery systems within the public domain in Canada. At all levels—municipal, provincial, and federal—we are faced with change. The best way to meet change is to recognize it and deal with it in ways that take benefit from the changes. We believe the federal government can show its commitment to change by the way it deals with social infrastructure needs and tax cuts for individuals and businesses and by how quickly it reduces the terrible debt burden.

Thank you, Mr. Chairman.

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

We'll now hear from Ms. Beverley Smith. Welcome.

Ms. Beverley Smith (Individual Presentation): Thank you for letting me speak to you today.

[Translation]

Are you all members of the Bloc?

Mr. Pierre de Savoye: I am a member of the Bloc. One of my colleagues represents the Conservative Party and the other the Reform Party.

Ms. Beverley Smith: Are you all from Quebec?

Mr. Pierre de Savoye: No.

[English]

You're from the Toronto area.

The Chair: I'm an independent chairman.

[Translation]

Ms. Beverley Smith: I would have liked to have addressed you in French, but the presentation I have prepared is in English.

[English]

I would just like to make my three points in five minutes. First, I argue for parents to have free choice about how to raise their children and for the state to value and fund this equally.

Since I spoke to this committee a year ago, a lot of exciting things have happened for me. I made a complaint at the United Nations that was successful in March. There was a close vote in the House of Commons on the issue I deal with—I think it was close. This must be the best country in the world to complain in, because I was not whisked away in the dead of night. I have been treated with great politeness.

Paul Martin spoke to me by phone and met with me in August to discuss my concerns. The justice minister has announced a review of policies about discrimination against women and socio-economic status.

A subcommittee on tax fairness for families was convened and submitted a report in June, suggesting major changes in this area.

The Supreme Court, in an analogous decision in M. v. H., ruled that it is a violation of the Charter of Rights and Freedoms for legislation to favour certain lifestyle options over others, because to channel behaviour in that way removes family autonomy, and family autonomy is vital to a democracy. I realize M. v. H. was about same-sex benefits, but I think the choice of how to raise your children is analogous.

National polls by the Globe and Mail and others have confirmed that parents want choices in child rearing, and this issue affects a majority of people who are being treated poorly by the present tax system.

Alberta government treasurer Stockwell Day met with me, and his government has already moved to correct some of the inequities I've received. The Prime Minister has announced that the next budget will address children's issues. In other words, I'm very optimistic governments are starting to understand this message.

My second point is that the world is watching. The United Nations complaint I made was supported by groups in Italy, Australia, Belgium, and France. We know that all UN nations have been asked to value traditional and paid caregiving work, and Canada signed the agreement to do that.

I was a guest on a phone-in show from New York City and was invited to write an article about this for a women's international newsletter in Boston. Several U.S. groups have informed me they're watching this issue closely because it deals with something important to all industrialized nations. Women are in the paid labour force, and they're trying to figure out how to value women, how to take care of the children, and how to deal with women who would like to be with their children.

Third, I am proud of Canada's interest in this issue, but we have one major decision left. Mr. Martin's plan, from what I read, seems to be to remove inequities as he reduces tax. This strikes me as a brilliant way to do both tax reduction and social spending on children. So we have the money and the will; the problem is simply how to do this.

Choice one, recommended a few moments ago in another presentation, would be to directly fund big showplace day cares—centres of excellence around the country—and offer to every child in the nation universal day care. Some provinces and many nations have tried this, but we know this does not satisfy the needs of all parents.

Choice two is to give the same money to parents directly and let them choose what type of care is best for their child, whether it be by a grandma, nanny, dad at home, mom in the home-based office, day care, or any other arrangement. No receipts would be required.

• 1700

I favour the second option. The Royal Commission on the Status of Women in Canada favoured the second option in 1970. If you fund national showpiece centres under whatever name, you will be again funding one style of child rearing only. If you fund parents, you confirm that every child is of equal value and that parents are in the best position to know what works for their child.

I believe that if you fund parental choice and the benefits flow with the child, you will reduce family stress, reduce child poverty and improve job satisfaction, and people will be more productive in the paid labour force because they know things are fine with the kids. And you will probably reduce brain drain because family tax policy is a major reason people move. Fair taxes please families. You will also be showing that you do not play favourites with children.

I am really proud to be Canadian. This government is really trying to listen to the people on this issue, but so far it's only talk. Now we have an opportunity to act, so I urge you just to remember this issue and to invest in people over places, in individuals over institutions, in kids over commerce, in babies over business. This issue is simply about choice.

The Chair: Thank you very much, Ms. Smith.

We'll now hear from the International Association of Fire Fighters, Scott Wilcox and Bryan Neilson.

Welcome.

Dr. Scott Wilcox (Recording Secretary, Calgary Fire Fighters Association, International Association of Fire Fighters): Mr. Chairman, thank you very much. It's a real honour for us to be here today. We appreciate the opportunity to come in to address the panel, and we appreciate your introduction.

In addition to our responsibility for Calgary firefighters, we also sit on a jurisdictional committee for the International Association of Fire Fighters. I'm one of the three representatives from Canada who sits on that, and I represent British Columbia, Alberta, and Saskatchewan, as well as the Territories. In essence, then, we're here to represent western Canadian firefighters.

In the International Association of Fire Fighters in Canada there are approximately 17,000 professional firefighters. It's a really difficult task for me to on one hand fairly portray the day-to-day realities faced by firefighters, without on the other hand running the risk of sounding somewhat melodramatic, but I hope my comments today can find a balance in that.

In 1998, two firefighters in Calgary were honoured with medals by the Governor General's office for acts of bravery during a hotel fire. Firefighter John Morley James was awarded the Meritorious Service Medal posthumously for giving his life while searching for trapped victims in the hotel fire. Captain Ian Risk was awarded the Meritorious Service Cross for his actions at the same incident.

While I can tell you in full candour that the firefighters of Calgary found this to be a very moving gesture by the crown, it does not reflect the daily situation faced by most firefighters in this great nation. What it does do is reinforce the somewhat stereotypical, if you will, professional standing guard to protect life and property from the ravages of fire, national disasters, and medical emergencies, and making a litany of other interventions that preserve human life.

What you will not generally hear from firefighters is the individual cost of doing what we do. In a nutshell, what we do is die younger. We die younger as the result of a career spent in the line of hazardous materials, toxic combustibles, communicable diseases, and intermittent but extreme physical exertion. When a new rookie enters a fire station for his first shift, one of the very first things he will hear somebody saying is, “Congratulations, kid, but did you know you just lost 10 years from your life?” While I can guarantee this will be said amid some laughter, for the rest of this person's career, that is now the unspoken truth.

It is this knowledge and the events that we are involved with on a day-to-day basis that bind firefighters closer than any other workforce in the country. It is this that is our silent badge of honour, not medals.

In consideration of the physical nature of the profession, the government currently recognizes firefighting as a public safety occupation under Canada's Income Tax Act regulations, thus permitting retirement at age 55. This is clearly in the best interests of the public we serve as well as for firefighters. Oddly, however, firefighters are not allowed to accumulate their pensions at a faster rate than those who are allowed to work until 65. We therefore find ourselves to be in a position in which firefighters are in essence being penalized. While the current law satisfies health and safety concerns, it does not provide firefighters with the same length of time to plan for retirement. This is a longstanding inequity in Canada's pension system and one that we hope can be addressed through this committee.

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Increasing the pension accrual rate for firefighters from 2% to 2.33% will allow us to contribute to our pensions at a marginally increased rate. This assumes a 30-year career at the 2.33% accrual rate as opposed to a 35-year career based on a 2% accrual rate. Our aim in this is not to change the tax assistant level available to firefighters—and I think I'm the only person who's not here asking for more money. It simply would allow us to contribute a greater portion of our money to our pensions. I would submit it to the panel that this is a logical extension of both current and longstanding legislation, and it would cause no direct increase to the federal government. It has the added benefit of encouraging retirements and new job growth.

In brief, this is our request of this panel, and I have brought a copy of the brief that was written by Sean McManus, who is the Canadian director of the International Association of Fire Fighters. It contains some additional anecdotal information that the board might find of interest.

In conclusion, a common question put to firefighters, particularly by municipalities, is something along the lines of, “Aren't fires decreasing? Really, how often do you go?” As firefighters, we hear this ad nauseam, if you will. To you and to those people, I would give some information.

You call us when the boat has overturned and a loved one is vanishing down a river. You call us when a child has broken through ice on a pond while playing hockey. You call us when a sudden hail storm has motorists standing on their rooftops on inter-city highways. You call us to do heavy urban search and rescue when buildings collapse or ditches give way. You call us when a freight train derails and unknown toxins and odd-coloured gases are everywhere, or when a tractor trailer is overturned on a highway. You call us when a window washer is dangling from the 35th floor of a large building. You call us to every medical emergency you can imagine, and many that you cannot, from a mother giving birth away from a hospital, to an HIV-infected drug addict, to a frantic parent who has discovered the attempted suicide of a child, to the wife who has found her lifelong companion having a heart attack. You call us when an inbound aircraft has a fire onboard or has declared a hydraulic problem. In many nations, you call us when terrorists threaten, and often now when weapons of mass destruction have been used, such as in Japan. In short, in Calgary, you call on us for emergencies every 17 minutes—and we are reflective of the national average. And, yes, you call us in Calgary to put out structural and wildland grass fires seven times a day.

We do not come to you with our hats in hand—and I appreciate the comment from the deputy mayor of Edmonton that it's not in our nature. We are proud of what we do, and we're proud of the citizens that we serve, for we are truly the nation's first responders. We do not parade our badges of honour in front of the public, but as one who represents thousands, I can tell you that we would retire much happier if we could better prepare for it.

Thank you.

The Chair: Thank you very much.

We'll now hear from the chief executive officer of SemBioSys, Mr. Andrew Baum.

Mr. Andrew Baum (President and Chief Executive Officer, SemBioSys Genetics Inc.): Thank you very much, Mr. Chairman and distinguished members of the committee. It's an honour and a privilege to have the opportunity to speak with you today.

I believe this is a very exciting time as Canada addresses how we'll fully benefit from the outstanding economic growth of the past few years. In my particular area, this is also an exciting time because technology continues to drive economic growth and progress here in Canada and elsewhere, truly transforming the world in which we live.

In particular, it is becoming clear that the 21st century promises to be the biotechnology century. There has been a veritable explosion in medicine and agriculture due to the innovations of biotechnology, driven by tremendous advances of molecular biology, biochemistry, and the application of information technology to the life sciences. Canada has been a major participant in this area as a result of outstanding research in both the academic and commercial sectors.

• 1710

My own company, SemBioSys, is an example of the potential benefits that can be gained from Canada's technology leadership. The technology underlying our company was developed by Dr. Maurice Maloney, a professor at the University of Calgary in the early 1990s. In the mid-nineties, SemBioSys was “spun out” of the university as an independent company. We have since established ourselves as a world leader in molecular farming, which is the production of pharmaceutical and other proteins in plants. We have grown to a company employing 30 highly trained scientists, and we plan to dramatically increase our employment over the next few years. We plan to offer a wide range of high-value products to the food, pharmaceutical, and industrial markets.

The key to creating more companies like SemBioSys is continued investment in basic and applied research at government and academic institutions and the creation of an environment in which entrepreneurs are supported in converting that outstanding research into thriving businesses. In that context, it is therefore very encouraging to see that both Mr. Chrétien and Mr. Martin have acknowledged the importance of these factors in recent speeches.

In particular, in Mr. Chrétien's throne speech, he specifically mentions the need to make significant investments in genomics. Such an investment is critical if Canada is to maintain its position as a world leader in the biotechnology century, as this project will provide the raw material for innovation.

In Mr. Martin's speech to the House of Commons Standing Committee on Finance, he addressed the need to promote innovation and increase basic investments in research and development generally and in biology and biotechnology specifically. In particular, the commitment to 2,000 new research chairs in Canadian universities will help to ensure that Canada continues to innovate at a fundamental level.

However, I must offer a word of caution. I and many in the biotechnology industry here in Canada are concerned that Canada is not fully competitive in terms of offering an environment that supports entrepreneurship and commercial investment in the biotechnology sector. In addition to the outstanding research here, this is critical to the formation of new biotechnology companies. The government must therefore use a combination of tax incentives and infrastructure support spending to create a setting that facilitates risk-taking and long-term investments. If it does so, we will ensure that Canadian research and results are used to create Canadian benefits. If it does not, it risks having Canada's investments and research being used to drive the biotechnology industry in the U.S. and elsewhere.

I'm confident that the government appreciates the opportunities represented to Canada and the world by a vibrant Canadian biotechnology industry and has already taken many of the steps necessary to ensure that this industry thrives in the 21st century. Still, it is critical that the government continue to invest in basic research and that it continue to search for ways to promote and smooth the progress of investment and business creation in biotechnology by the private sector.

Thank you very much for the opportunity to address you today.

The Chair: Thank you very much, Mr. Baum, and thanks, everyone, for your presentations.

We'll now proceed to the question and answer session, and we'll begin with Mr. Epp.

Mr. Ken Epp: Thank you, Mr. Chairman, and thank you also for introducing it as a question and answer session, since the one we have in Ottawa is only a question period....

Come on, you guys, lighten up a bit.

A voice: Oh, oh!

A voice: I thought that was pretty bad, Mr. Epp.

Mr. Ken Epp: I guess if that's the funniest we get here today, we're in trouble.

Anyway, I'd like to first of all talk to the City of Edmonton about infrastructure. I take it you support the three levels of government all working together to support the development of infrastructure at the municipal level.

Ms. Wendy Kinsella: Yes.

Mr. Ken Epp: Just like that.

Ms. Wendy Kinsella: Well, let me say more.

Mr. Ken Epp: Yes, do you want to enlarge on that?

Ms. Wendy Kinsella: The federal infrastructure programs we've had in the past were supported by the three levels of government. I think the first one was in 1994 and the last one was in 1997, and they allowed us to make some progress in that regard. Typically, that money was used for one-time items. We never knew when the money was going to come again, so we were unable to do some long-term planning.

I think if you look historically, you'll find that even into the eighties the federal government was involved in infrastructure in municipalities, and sewers and roadways were joint projects of the federal government, the provincial government, and the municipalities. We have seen a continued withdrawal both of that kind of capital money and, for example, the Canada assistance plan being withdrawn, which did fund operating issues in the city.

• 1715

So while I applaud you and I think it's absolutely critical that we all live within our means, if you are looking at a period of time where you do have surpluses and you are looking at reinvestment in the country, then I believe that infrastructure is something that simply must be addressed.

Mr. Ken Epp: I think you've stated your case very well.

I've heard from a number of municipalities that the objection they had to it was that it was an unhappy intrusion into their decision-making. In other words, the money was available if they spent it for A, B, and C, but they would really spend it on D, and that unfortunately was not included in the program. Meanwhile I've had some complaints from taxpayers that some of the money was very ill-directed.

Lastly, in the province of Alberta we send about $10 billion a year more to Ottawa than we get back. If we would encourage the Ottawa government not to be involved in this, we could actually, with the money we have here, do more than we're doing now. However, I know also as Canadians we like to support the province of Quebec and other provinces in developing their infrastructure.

I'll just throw that in for my separatist friend here.

Ms. Wendy Kinsella: The transfer payment issue, of course, has been an issue for Alberta for some time. I think that's something you'll have to address, but, believe me, there are lots of people who would support revisiting that.

As to the rest, I think we're in accord.

Mr. Ken Epp: Okay.

I want to talk to Beverley Smith. This is an item that is very close to my heart since our decision when we were parents was that my wife would be a full-time mom and I'd make the income, and way back then it was possible to do it. Now, with the increased tax load, it's more and more difficult. We now have three children and two of them are married, and the two who are married are both making the choice of having one of the parents stay at home to raise their own children.

You say it's time to stop talking and time to start acting. However, I didn't hear from your presentation what specifically you want us to do. Do you have an idea in your head of exactly how we should address this problem?

Ms. Beverley Smith: You want the money one, right?

Mr. Ken Epp: That's what I'd like to know.

Ms. Beverley Smith: On the politeness one, you could refer to all women as working women, even if they're in the home. That wouldn't cost anything. You could give homemakers pensions. That would let us contribute to our own old age so that we don't have to be poor. That's our money working for us. That would be nice.

But on the tax one, I think if you had the child care expense deduction claimable by everyone who has a child, because if you have a child you have expenses raising the child.... I am not in favour of universal day care. I'm in favour of universal funding of children.

Mr. Ken Epp: And have you thought about the actual mechanism of doing this funding? Are you thinking of having every parent, on behalf of the children in that home, getting a cheque from the federal government? Are you looking at a refundable tax credit? What kind of a mechanism are you envisioning?

Ms. Beverley Smith: I've heard a number of arguments for both of those. The cheque from the government, a thing like the family allowance, was a beautiful thing, but maybe you don't like to work it that way. A refundable tax credit could be looked at. I don't care as long as it's equal for all parents. The concern I have, which made me complain to the UN, is that it's not equal.

Mr. Ken Epp: I understand that the finance committee report pretty well debunked the idea that it was unequal. Did you read that report?

Ms. Beverley Smith: Not for me.

Mr. Ken Epp: Okay. You obviously have studied that report, since it was of interest to you. Do you have any quick and easy areas in which this committee should be informed as to where that did in fact not address the problem? Or is that too big an assignment?

Ms. Beverley Smith: Are you referring to the chart about the family that earns—

Mr. Ken Epp: There's that, but also the report in its entirety. Maybe I should ask it this way. Did you, after the finance committee issued its report and it was tabled in the House, study the report and prepare a rebuttal to it as to where it was not accurate?

Ms. Beverley Smith: Yes, I submitted that.

Mr. Ken Epp: Has that been circulated?

Ms. Beverley Smith: To the government, yes, I would think.

Mr. Ken Epp: You sent it to the Minister of Finance, presumably.

Ms. Beverley Smith: Yes.

Mr. Ken Epp: Mr. Chairman, we should probably get copies of that. It would be interesting, particularly for Mr. Szabo, who isn't here today.

The Chair: If you would like to table it with the committee in the future, that would be great.

Ms. Beverley Smith: Table it? Send it on?

The Chair: Yes, exactly.

Mr. Ken Epp: Send us a fax copy of it.

• 1720

Ms. Beverley Smith: I was disappointed in it. Besides the fact that not even all the committee agreed on it, it didn't address the issues broadly enough. There are a lot of people—and you heard from some in Ottawa—who say the problem starts before you even have children, when you don't look at families as units. I think that option to income split—I know you heard this morning from a person who argued that—is one option. It was not considered. It was not under the mandate of that subcommittee, and we certainly think that would help.

Mr. Ken Epp: Would you favour—I don't know, again, whether you've given thought to this specific little technicality—equal exemptions for both parents; that is, your basic exemption, or income splitting for tax purposes or filing a family return?

The government has stated very strongly that they want to continue to tax individuals and not families. We've also had presentations at this committee that said, please don't tax families; tax individuals. We've had witnesses come to the committee and tell us that. What's your view on that?

Ms. Beverley Smith: It would be nice if you were consistent. You tax on the basis of the individual, but you return benefits on the basis of the family. So you win both ways.

If you tax on the basis of the individual and you return benefits on the basis of the individual, homemakers, for example, who earn nothing would get massive benefits because we have no income. But you figure out a way to give us no benefits because we have to count our husbands' income. But that only works for the way you give benefits; it doesn't work for how you tax us.

Mr. Ken Epp: In other words, we should do one or the other but be consistent.

Ms. Beverley Smith: It would be financially in the public interest to be consistent. In your interest, maybe not.

Mr. Ken Epp: Would you favour income splitting as a way of solving the problem?

Ms. Beverley Smith: I think in the M. v. H. decision—other Supreme Court decisions have talked about when you recognize that people choose how to relate to each other, they may choose to share income. If they choose to share income, then that's their decision and they should be taxed because they have made that decision. Everybody knows that a married couple probably shares income anyway, and it is their judgment that whatever one is bringing into the relationship, the other is also bringing his or her half, whether it be monetary or not.

So I think it would be enlightened of the Government of Canada to notice that there are many ways of contributing to a family short of money, and family tax would recognize that. It would be an option. I wouldn't force it on anybody.

Mr. Ken Epp: We could debate a long time.

I have a question for the firefighters. You indicated that you were willing to pay a small, marginal, additional amount into your pension fund in order to be able to retire after 30 years instead of 35. I think that's the gist of your plan. What is that marginal increase you're anticipating?

Dr. Scott Wilcox: What we're asking for is a change in the income tax regulations that would allow us to contribute 2.33% as opposed to—

Mr. Ken Epp: I'm aware of that. I'm aware of what you're asking, but you, in passing, said that you're not asking the taxpayers for anything. In fact, I think you are because you are going to contribute more in the time when you are employed before you retire, and if your employer matches it—in most instances, firefighters are paid by municipal governments—it would be a matching contribution on their part. I'm asking what marginal increase you are anticipating there.

Dr. Scott Wilcox: I think Ms. Kinsella would agree with this. We certainly would, if we were given this ability, look to our employers on an initial basis to do some form of matching. Typically it's between 50-50 to 60-40, depending on the municipality you work for.

I think my point was that clearly there would be an indirect cost to the government in that we would have 0.33% more money that we would be able to contribute, on a tax-free basis, to a registered pension plan. I don't see that as the same as asking for a direct payment. I think the incremental or marginal difference to the Canadian government would be to municipalities, and clearly there would be a cost to municipalities.

The other option too is if we firefighters were granted this and municipalities took a very forceful bargaining position, we might end up paying for it on our own.

• 1725

Mr. Ken Epp: Okay. I'm just wondering whether you've had advice on this, because actuarially speaking, depending on the age of the person, when they started working, when they retired, and so on, the amount of premium required to make it actually balance off in terms of how many....

You know, you're paying in for five fewer years, you're getting out for five more years, and the actuarial payment increase is anything between 50% and 75% more. Quite a substantial increase in money has to go into it if it's to be a self-sustaining program.

I don't know whether you're aware of that.

Dr. Scott Wilcox: Yes, you're correct that from an actuarial perspective there would be a larger component to that, but I think what firefighters right across the nation are finding is that as our world becomes significantly more complex, the baseline requirements to get in, which were very minimal a generation ago, have changed.

For instance, in Calgary currently—and I can speak for most of western Canada—if you don't have a long list of letters behind your name, you're just not qualified any more. What's happening, then, is that where it used to be a very young person's game, and they typically would be in the department for 25, 35, and 40 years, the average age over the last five years has been somewhere around the 30- to 31-year mark.

So it is becoming an issue. If I'd gotten on the Calgary fire department when I was 19, say, I would have all kinds of time to do this, but that's not the case now.

Mr. Ken Epp: Okay.

My time is up, unfortunately, Mr. Chairman. I should really let other members of the committee ask questions.

Thank you.

The Chair: Monsieur de Savoye.

[Translation]

Mr. Pierre de Savoye: I thank you for your participation in our work. Your comments and recommendations have enlightened us.

First of all, allow me to inform my colleague from the Reform Party that for the last two years Quebec has been a net fiscal contributor to Canada's finances. Prior to that, all of the provinces were receiving more than what they were putting in, and this is what contributed to the accumulation of the $600 billion debt.

That having been said, Ms. Smith, you mention in your brief that if we do not value children, then people will have fewer of them. Indeed, people have been having fewer children for several years now. Couples no longer have two or more children on average, but fewer than two, and our population would be dropping if it weren't for immigration that brings new people to Canada.

If we want to encourage families to have children, I do not think improvements to taxation are sufficient. Other measures are necessary: for example, allowing women to pursue their career while having children. How many women in their twenties or early thirties tell themselves that they will have a child later because right now they must invest in their career? Today it is therefore difficult for a couple to plan for their professional lives and their family lives. Would you care to share with us your views of this whole question so as to enlighten our thinking on this matter?

Ms. Beverley Smith: I agree with you. It is precisely for this reason that I am here today. There are numerous ways of ensuring the care of children: a mother might stay at home to take care of her children; another mother might work and take her children to daycare; yet another might work nights while her mate works days. Our tax system does not provide an exemption for the child care requirements of people in this latter category, who do not use daycare services. There is no recognition of daycare costs if you place your child in the care of his or her grandmother or of the father, who for example is a writer or a journalist and who works at home. These choices nevertheless entail certain costs, but the only expenses that are recognized are those relating to daycare services.

• 1730

Mr. Pierre de Savoye: You are trying to establish an approach whereby parents who decide to stay at home rather than calling upon daycare services would be compensated. But I believe that there are other problems that lead couples to decide to not have children, precisely because they are concerned about pursuing a career.

A woman who becomes pregnant, who has a baby, who stays at home for several months or even for up to two or three years is worried that when she returns to the work force, she will not be able to pursue her career. There will have been an interruption and she will suffer the consequences.

Should we not provide, through legislation or otherwise, an obligation for companies or organizations to reintegrate mothers who have spent time at home to have and to raise a child?

Ms. Beverley Smith: I do not believe that there should be an obligation to give more to these women than to the others, because they have made equal choices. If I had to place my child in daycare as of the age of six months and hardly ever saw him, I would prefer to not have the child. The daycare system does not encourage women to have children because it moves children away from their mother.

I recognize what you are saying and I have nothing against daycare centres. I however believe that the government should not be obligated to offer such services. Its responsibility is rather to provide enough money to parents for them to be able to make choices. I believe that companies could set up daycare centres.

Mr. Pierre de Savoye: Thank you, Madam Smith.

Mr. Rollason, in the course of your presentation, you stated, regarding employment insurance, that an important surplus has been accumulated over recent years and that this could serve as a cushion in case of an economic downturn. Are you aware that this surplus no longer exists? It exists on paper. It is a debt that the government owes the employment insurance fund, but the money is no longer there. It was not set aside. I wanted to tell you that so that you do not have any allusions. If we encounter an economic problem, that money will not be there.

Furthermore, I understood you to say, regarding social infrastructure, that any additional expense should be justified and that we should not move away from the priorities, which are debt reduction and tax reduction.

In the area of health and education, do you believe it would be justified to reestablish federal transfer payments to their previous levels? If not, then what level would be justified?

[English]

Mr. Peter Rollason: I think there were two questions in that.

First, with respect to the mythical EI surplus, I'm well aware of that. I really don't think it exists. The money has gone into the federal coffers to be otherwise used on operations.

The problem with that type of accounting is that when the time comes, and the economy goes into some type of downturn, we're going to have a double whammy. First of all, we're likely going to have a greater call on the EI funds over and above the norm we have now. Secondly, I would expect that, due to declining profitability and declining incomes, personal and business income taxes, and likely sales taxes at provincial and federal levels, will go down, which is going to put a fair amount of stress on federal financing. I've been aware of that for quite a while, and we commented on that earlier in one of our submissions.

• 1735

With respect to what we've said about social infrastructure, I heard someone talk about this earlier, and I agree with them. It's very difficult to pick on one item as part of this collage of things the federal government has to do. I think you have to take them all within the context that they're all related to each other.

So, yes, we do talk about decreasing personal and business taxes, about paying down the debt, and about being be careful with the social infrastructure costs. We have commented on the fact that perhaps a good way to look at them—not downgrading what they're involved with but to exercise some degree of control—is to say, look, we already have a very large pool of money that's being spent on a variety of activities for which the federal government is responsible, and that pool should be stabilized and best efforts made to try to see how we could be smarter at spending that money. I don't have any particular rate or something, as you've proposed at this point.

Mr. Pierre de Savoye: Some people have suggested the 50-50 approach. Do you think that is acceptable?

Mr. Peter Rollason: We've talked about percentages ourselves. The problem with percentages is one tends to focus on the numbers other than what's behind the numbers. For that reason we didn't suggest that personal income taxes should go down by x and business by y, and this and that. Quite frankly, I don't think we have the resources to know what the appropriate numbers should be. That's why I say you have to look at the whole package and work out what it is.

We all know the implications of doing this and not doing that, and although our organization represents business, and in particular financial people, we're sensitive to a need to look very seriously at the social infrastructure. It's obvious that it has to be looked at very closely.

Our message is, rather than throw a lot of money at it, let's really look at it and see how we can deliver what we need to do in a better way than we have before. That's really our message in that regard.

[Translation]

Mr. Pierre de Savoye: Thank you, Mr. Rollason.

[English]

The Chair: That's a very interesting question on the 50-50 split. Don't you think the government really ought to concentrate on good public policy rather than percentages?

Mr. Peter Rollason: Should I become a politician to answer that question?

I agree. I think if there's anything that's lacking at times it's the fact that maybe we don't have good, clearly defined, well-debated policy so that we understand the rules of the game. The numbers should fall out of a clear understanding of what we're trying to do, rather than set a number target and then try to make the policy fit.

The Chair: Mr. Cullen.

Mr. Roy Cullen: Thank you, Mr. Chairman, and thank you, panellists, for your presentations.

I have a question for Ms. Kinsella, and one for Mr. Rollason if I can get there.

Ms. Kinsella, I may be confused, and this happens from time to time, but for clarity, the Federation of Canadian Municipalities has come forward very strongly, as I recall, for a new infrastructure program, roughly one-third, one-third, one-third. The part that was somewhat new, at least from my perspective, was an emphasis on social infrastructure, but they've been quite consistent on that.

In parallel to that there has been another initiative that talks about renewing our national highway system and this notion of the dedicated tax—in other words, financing some of that with part of the fuel tax, perhaps federally and provincially.

I'm a little confused. With your proposal here you say you're supporting the FCM proposal for a share of the federal fuel tax. Would that be to finance this infrastructure package that the federation is talking about, or is that to finance the national highway system?

Ms. Wendy Kinsella: Our presentation is based on the quality of life infrastructure program from the FCM, and that's what we're referring to. I would say, however, that I'm sure you're all well aware of the state of the national highways, so it's something that's going to have to be looked at by the federal government as well.

• 1740

Mr. Roy Cullen: When you look at the national highway system, apart from the point where the highways come into cities, one would presumably have to look at a somewhat different cost-sharing. In fact, it has been couched in terms of a cost-sharing between the federal government, the provinces, and the private sector. But are you supporting a renewal of our national highway system as it relates to cities, or as it relates to...?

Ms. Wendy Kinsella: That's as it relates across the country as a whole.

I think we flourish because we are a trade centre. Quite a bit of what goes on in Calgary now is warehousing, and distribution as well, based on the fact that they're on the Trans-Canada Highway. We are on the Yellowhead Highway, and in fact you may notice that CN's intermodal yard being built in Edmonton is placed where it is because of its proximity to the Yellowhead Highway. The Yellowhead Highway Association has spoken in great detail and to a number of bodies about the state of that road and the fact that it does need work between the cities. In terms of the Yellowhead Highway in Edmonton, we put a significant amount of money into its upgrade. We'll continue to shoulder that responsibility, but we see the highway as a whole as needing work.

For your information, the provincial government has recently told us it is going to take over responsibility for, for example, the north-south trade corridor where it goes through Edmonton. So it will look after building and maintaining that road, because it's a provincial responsibility.

Mr. Roy Cullen: As far as the traditional infrastructure program that the federation has proposed and supported and encouraged, you're not proposing that be financed with a portion of the federal fuel tax. They're two separate propositions, are they not, certainly in what I'm aware of, in any case.

Ms. Wendy Kinsella: Just one moment. I want to make sure I'm correct.

Mr. Roy Cullen: Okay.

Ms. Wendy Kinsella: Yes, I think they're two separate programs.

Mr. Roy Cullen: Okay. That's great. That helps me in my own mind. Thank you.

Mr. Rollason, in your proposal, in fairness, I think you try to wrestle with the question of priorities. It's a difficult one for you and for us. But, for example, on the EI premiums, I think the level you've suggested here would basically go a long way to wiping out the surpluses that are projected certainly over the next couple of years, out to 2002. Would you advocate reducing the EI premiums to the level you're proposing here if it meant putting the federal government back into a deficit?

As you know, in 1986 the Auditor General insisted that the EI account was in a deficit. They insisted that it be consolidated with consolidated revenue because it was understating the government's financial situation—or overstating it, depending on your point of view. So these funds are basically consolidated with the government. If you reduce it to the level you've proposed here, I think you'd have a good chance of putting the government back into a deficit. Would you advocate that?

Mr. Peter Rollason: I don't think anyone in their right mind would advocate that. Personally, I would advocate that perhaps the Auditor General's case was specific to the time. I think there's a different situation now.

I don't know whether it's quite the same as, say, rolling all the CPP deficit or surplus into the government's accounts. That has been kept separate for specific reasons.

I think there's probably a case to be made to build up a surplus large enough to take into account contingencies that may arise as a result of a downturn in the economy. Once you've achieved that, set your rate structure, together with whatever the benefits—there has to be some balance—so that you're taxing the workers and the corporations fairly and at the same time being able to afford a proper level of benefits to the unemployed should that happen.

Mr. Roy Cullen: Thank you. In terms of timing, the only thing I would contend has changed is that in 1986 it was in a deficit and now it's in a surplus, perhaps a proportionally larger surplus. I think that's the point: what to do with this increasing surplus.

Let me come back to another point. We have to decide what to do with scarce resources. The surpluses have been projected forward using the numbers of eight of Canada's leading economists. It's $5.5 billion next year, $8.5 billion in 2002, and onward.

• 1745

You make a strong case for debt reduction. If we were going to make a really bold move against debt reduction, we'd pretty well have to gobble up the full $57 billion over the next five years in projected surpluses. Even that is only making a dent, which would mean clearly we'd have to really forget about any tax reductions and any kind of social spending, apart from inflation and population growth.

If you had to make a choice, there is a case to say let's bring down the debt quickly, let's reduce the amount we're paying out on debt service, and create more fiscal room to do all the kinds of things people are asking us to do. If you had that choice to make—and you talked yourself about how the only thing that's really changing much is the GDP, the debt at $3 billion a year—what would you choose? Because often you have to choose: it's either debt reduction or tax relief.

Mr. Peter Rollason: Let me give you an example. The debt is what, $560 billion, roughly?

Mr. Roy Cullen: Yes.

Mr. Peter Rollason: You were talking about $5 billion, $6 billion a year pure surplus in an earlier session. We're talking more than our lifetimes, several lifetimes, to pay that down. It's not realistic to look at that level of surplus and apply it fully to pay the debt, because we're not going to see the benefit in the near future.

I'd like to get back to the GDP number. Maybe it's more in our interest to make a higher GDP in this country, which creates a lot more other things, like tax revenues, salaries, and things like that, which would then, on a curve, maybe blow your surpluses higher than they are. Those surpluses are based on a model of the economy. If we can change that model so that we have everybody more productive—more people working, people earning more, etc.—we can change the whole equation around and generate more money.

If I had my preference, I'd rather see those productivity things happen, and I think they start with some relief in the tax levels in the country to create a more productive environment and incent people, new businesses like this, to generate jobs.

The Chair: Thank you.

Ms. Redman.

Mrs. Karen Redman: Thank you, Mr. Chairperson. I'd like to ask a question of Mr. Baum.

I appreciate that in your presentation you talked about investment in basic research. We've heard earlier today from other people who talked about the fact that it's a good thing that Canada has been putting money back into research and development. I know we have one of the most generous tax treatments of companies that want to involve themselves in research and development.

We also heard today from people who were arguing that we are putting too much money into investment in research and development, whether it's basic or product development, and that we need to put more into the social sciences. I'm just wondering if you'd respond to that.

Mr. Andrew Baum: In my mind, in a time when you have a huge deficit, it would be incumbent upon the government to first identify where you're going to get the biggest bang for your buck. I would argue that in that context, intelligently applied investments in basic research and development create an environment where that can be created into products, and that is probably the greatest opportunity for wealth creation that Canada or any other country in the developed world faces. If there are investments, and structures are established in an intelligent, coherent way, the opportunity to address the other areas in the long term will be substantially greater.

Mrs. Karen Redman: Is the best vehicle we have for that the granting councils?

Mr. Andrew Baum: I think the granting councils are a piece of it. I think it's important to recognize a couple of things.

First, in the same way that electronics has clearly transformed business and social life in this decade, biotechnology is clearly going to do that in the next decade. It's just a fact.

• 1750

The second thing is in order to make the biotechnology industry vibrant, you need two things. First and foremost, you need people, because ideas are a brain-driven business, and secondly—from someone who is continually trying to raise money, as a biotech CEO—you need cash.

I think, therefore, you need to create an environment where those two things can come together. The granting councils are a piece of that. I think historically granting councils have tended to lean toward funding basic academic research, and what's necessary for Canada to get the benefit of those investments is to ensure that the private sector is incented to take advantage of that technology.

I come from the United States. I don't know if I should admit that to this group. I represent, I guess, the reverse brain drain. But I know that trying to recruit people from the States is extremely difficult, whereas we are continually fighting to keep and retain Canadian science and Canadian inventions in this country. And if in fact you make the decision to invest in basic research, you're basically subsidizing the rest of the world if you don't create an environment for that research to be commercialized here in Canada, which I don't think is the intent of those investments.

Mrs. Karen Redman: One of the issues that was brought out earlier, which I find very distressing—I have two universities in my community, and in a lot of regards, I don't disagree with what you're saying—is the fact that we have an aging university population as far as the teaching faculty goes. That same population has an average age of 55 in the United States as well. I go back to the fact that research and development dollars do an awful lot. They do lead to innovation—we have the centre for innovation in Canada. But it also retains the best and brightest here if we can create that kind of research milieu where they can count on the dollars and stay here. I do worry that it can't be just economically driven.

Mr. Andrew Baum: I would agree. The best research programs recognize, even small companies like ours, that there's a balance on research that has a clear product focus. And there's a basic belief, which I think most biotechnology and high-tech executives share, that if a portion of your resource is dedicated to just basic research for the sake of doing basic research, it will bear benefits. I don't disagree with that at all.

Again, I think there are two issues. One is that there's a balance between those two, and that's one that both the granting councils and biotech and other high-technology executives are continually dealing with. It is a point in fact that your best researchers will not focus on “economically driven” research unless a portion of their time is freed up to do what interests them, because that's what really drives creative science.

The second point I would make is that as you begin to implement a program with the granting councils to fund basic research, it's critical to have an integrated strategy that looks at and facilitates the full benefit of that to Canada, beyond basic research.

The Chair: Thank you.

Mr. Nystrom, followed by Mr. Jones.

Mr. Lorne Nystrom: I would like to ask a question of the vice-president of Agricore, the former Manitoba pool and Alberta pool that amalgamated very recently.

I think you've touched on a very serious crisis facing the country today, namely, the fate of the prairie grain farmer, and it's something that is really beyond the hands of the farmer. I look at the statistics on subsidies from federal governments that were used by the premiers of Saskatchewan and Manitoba when they were in Ottawa a couple of weeks ago. In Europe, the farmer gets 55¢ out of the dollar from the treasury in Brussels. In the United States it's 38¢ out of the dollar. In our country, it's 9¢ out of the dollar. And as you say in your brief, the support of the federal government to the farmer in this country has dropped by 60% in the last several years.

I think in Saskatchewan, which depends more on wheat and oilseeds, it has dropped by about 78% over the same period of time. I think that shows why there is such a crisis now in terms of the farming communities in Saskatchewan and Manitoba, and to a lesser degree in the province of Alberta.

I wonder if you could elaborate on what our committee should be saying to the Minister of Finance, to Mr. Martin, in addition to, of course, arguing that the subsidies in Europe and the United States should come down. In the interim we need a tremendous injection of cash. The Saskatchewan and Manitoba positions—not just of the governments but I guess you could say the solidarity positions of all the parties in those provinces, the chambers of commerce, and the farm organizations—are that $1.3 billion in extra money in addition to AIDA, coming out of this next budget, is needed in order to survive out there in terms of the farm.

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Would you agree with that? Can you elaborate more on how severe the crisis is?

Mr. George Groeneveld: Thank you very much, Mr. Nystrom. You're absolutely right. You've hit the nail right on the head. It's the farmer of western Canada who is now competing against the treasuries of the United States and the European Union, which of course isn't very logical. It's not going to work.

As you may recall, six or seven years ago when the prices of grains were good, the farmers gladly contributed their share and hung in there. With the loss of the Crow rate, which you're familiar with, and whatnot...the price of grain was very good at that time so there wasn't much said, but now the chickens have come home to roost, so to speak.

Mr. Lorne Nystrom: The Crow has.

Mr. George Groeneveld: That's right.

I've been on the national safety net committee, working with the Department of Agriculture in helping out with safety net programs. The safety net programs, as I described in the brief, are woefully inadequate. They don't compensate for the slow troughs we have in the grains industry. In the pork industry, or in the beef industry, perhaps, on occasion, they have the quick peaks and those are easier to deal with. But when your reference year goes down and the price goes down...for the income disaster we're faced with right now, the programs are of course not adequate.

We've been told many times by Mr. Vanclief and his department that there will be no acreage payment—“read my lips on this”. We at Agricore have taken a different approach. After you've been told that enough times, you tend to believe that's probably what is going to happen. That's exactly what happened when the Manitoba and Saskatchewan governments went there two weeks ago. They got the same answer we got. We've been working on cost recovery, which is in the neighbourhood of $62 million a year downloaded on to the farmer, and these types of things. Maybe we'll work with some tax relief until we get this thing back on track, but it is indeed a problem.

In Saskatchewan and Manitoba, people are struggling mightily. Alberta isn't far behind, but we're a little diversified and into the cattle industry here, and we don't have that problem.

But I think you have a hard time justifying a cheap food policy in Canada—which we have, there's no doubt about it. We're very concerned that the present-day government isn't too concerned about that. They seem to think that if the Canadian farmer isn't there, someone else will produce the product, and they probably would, but I suggest that's not going to be good for Canada.

Mr. Lorne Nystrom: I have a question for you. You're someone who has been involved in this for quite a while. What really puzzles me is why our country was so anxious to bring down our subsidies to the farmers. The Crow rate is gone and other farm programs are gone. In comparison with what has happened in Europe and in the United States, where their subsidies have not dropped despite the trade agreements—and in some cases they've gone up—ours have gone down.

A couple of the Liberal MPs, who I shall not name—and they're not here today but they are involved in this issue—said to me that the problem, in their opinion, is that the bureaucrats have control of the situation in the Department of Agriculture. They have no understanding of or grasp of the seriousness and the consequences of some of these ideas in terms of all these cutbacks on the farm front.

It puzzles me why we'd be such Boy Scouts on this, why we'd be so anxious just to rip apart our subsidy program and our safety net programs. The Americans aren't doing it. Clinton is announcing billions more in terms of farm support. He talks free trade and trade liberalization out of one side of his mouth; out of the other side, there are great subsidies. It's the same thing in Europe and Brussels for the French farmer, the Belgian farmer, and the Germans, and you can go on and on.

Why has this happened? Have politicians lost control of the agenda in terms of making public policy in this country? Are the bureaucrats really in control? Do we have bureaucrats who understand what's happening on the farm? I'm sure you have a lot of wisdom. You've dealt with these people. Do you have any advice for this committee?

I know Mr. Cullen would be anxious to know. He was a great supporter of keeping the Crow. I heard him make speeches on it. He's from Toronto.

Mr. George Groeneveld: That is a rarity—to support the Crow from Toronto.

Voices: Oh, oh!

Mr. Roy Cullen: Thank you, Lorne.

A voice: No, he was eating crow.

Mr. Lorne Nystrom: Oh, I'm sorry. He was eating crow.

Mr. George Groeneveld: The comments you made are interesting. Being good Boy Scouts on this pops to the front of my mind on that last world trade agreement, the last GATT round where we conceded a lot of the issues there, like we thought the United States and the European market did as well.

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However, Canada chose to reduce its subsidies more quickly than anyone else, and virtually reduced its subsidies, whereas all of a sudden the United States and, more importantly, the common market...we hear about “GATT green” all the time. All of a sudden we have blue boxes, we have orange boxes—call it what you like, but it's another form of cheating, and that's all it is. Canada of course chose to take the Boy Scout route, you might say, and honoured its word at that particular time.

Mr. Lorne Nystrom: This is very useful to know.

Seriously, Mr. Cullen has the honour of being the parliamentary secretary to Paul Martin, the Minister of Finance. It's important that he hear this, as he is someone who is not from the prairies and has no direct contact with grain farmers unless he comes to meetings of this sort.

Mr. George Groeneveld: Right.

Mr. Lorne Nystrom: It really struck me as very curious that we've been so fast to get rid of our subsidies all of a sudden while other countries have done the opposite, despite the agreement. Now we're going to Seattle, starting on Tuesday next, November 30. There will be more push to do the same thing. In fact, Clinton would like us to get rid of the Canadian Wheat Board, seeing it as an unfair tool that helps Canadian farmers. I'm just afraid we're going to be continuing further down this slope.

Mr. George Groeneveld: It's interesting, because the Canadian government, in going into this round, in consultation with a lot of the other farm groups and the CFA, has decided on the stand they're going to take at the next round of WTO, which is certainly a much stronger stand than we took last time.

But we already hear that the French farmers are threatening to go to Seattle to disrupt the whole process—in case we get somewhere. This is a tough battle and it's an issue that the Government of Canada is going to have to dig in pretty tough on. But are we tough enough? Are we big enough?

You brought up an interesting example with the Americans and what they can do. We are very careful to keep all our policies GATT green so they're not countervailable, and the Americans frankly don't give a damn. They'll throw money at the people, but they're not an exporting country like we are, so who's going to bother them a whole lot? But we, as Canada...and certainly the Wheat Board will come up as an issue—

Mr. Lorne Nystrom: Okay. Thank you very much.

I'd like to ask Ms. Kinsella, as the deputy mayor of a big city, prairie-style, what the farm economy means to the city, in terms of why this is the big issue here on the prairies. When the farmer is not doing as well, I'm sure it affects the city as well urban people in the province of Alberta and right across the prairies.

Ms. Wendy Kinsella: I think it affects us in a number of ways. First, as I've said to you, we are a warehousing and distribution centre. From that perspective, we want to see the movement of goods through our city. Not in terms of grain farming...but certainly we built part of our economic strategy on pork production, and we were hoping to be a processing centre for pork in the province. That didn't work out, with the result that it cost the city about 800 jobs.

So although we look at our resources as one of the pillars of the Alberta economy, certainly grain and farming continue to be, and as the product moves through the city and creates jobs and all the spin-offs, it does impact on cities.

Mr. Lorne Nystrom: It seems to me we're in danger here of losing an awful lot in terms of economic stimulus and creation of jobs. When the farmer is better off we tend to all be better off; it's the foundation of the country. I think a recommendation of this committee might go a long way in terms of helping to alleviate the situation.

Do I have one more question or is that my time?

The Chair: That's time.

Mr. Lorne Nystrom: Okay—part of the benefits of free trade, I guess.

The Chair: Mr. Jones.

Mr. Jim Jones: Thank you, Mr. Chairman.

Thank you all for your deputations. I'm really just going to zero in on Mr. Rollason.

In your brief, you said:

...productivity can be improved by increasing the level of innovation, risk taking, investment in research and development, and the suitability of the workforce to embrace the new economy.

Last week, I was at a worldwide satellite hookup program called “Lessons in Leadership”. One of the people presenting there was Tom Peters, who wrote In Search of Excellence and many other books. He said that over the last 50 years we've been honing in on the manufacturing part of it and making that efficient.

He said really what's happening now to the knowledge-based industry and especially to the white collar industries is that giant sucking feeling as we're sucking the slack out of the white collar workforce. He said that within the next 10 years the white collar jobs will be reconfigured almost beyond recognition. He also said that in 20 years computers will be smarter than people. I just wonder if you agree with that.

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A couple of weeks ago I accompanied the Minister of Industry down to Atlanta and saw what Atlanta was doing for the State of Georgia. With their technology association and strategy, they're in 14th or 16th place, with the idea of going to first. I don't think they'll ever get to first, but if they get to fourth or fifth, it will be at Canada's expense.

I also wonder, when there was the Asian flu, why the flight to quality wasn't to our economy and investing in our economy; it was to the U.S. The U.S. economy, taxation system, and innovation are sort of the standard. Can Canada up this standard, set their own tax policies and standards, and not be more in line with the U.S?

On my final question, based on your 900 or 1,500 chief financial officers, over the last x number of years, because of our tax policies, have we lost expansion of large U.S. companies in plants and research and development sites because of our high taxes and our unfavourable investment climate?

Mr. Peter Rollason: We'll still be smarter than computers. We'll keep ahead of them.

The Chair: Does that apply to everybody, Mr. Rollason, or just Liberals?

Mr. Peter Rollason: I'm not a politician. I refuse to answer on the grounds it might incriminate me.

You said a lot of things, and I'll try to be brief. It's very difficult when you have one economy that seems to be driving not only what happens in Canada, but to a large extent what's happening throughout the rest of the world, especially since the Asian economies kind of tanked a year or two ago. But I expect they'll be coming back. Time tends to take care of a lot of these things. To answer your question specifically, we will always be highly influenced, no matter what the United States does, because of our close proximity, the affinity of our culture, and so on. We will be compared.

One of our fallbacks is that we have a very good quality of life. I think people sometimes use that as a good reason why, even though some of these other things may be better, they're not going to move and leave the country, or whatever. That may be a little different when it comes to investment decisions and so on.

I don't know whether I've answered your first question, but I'll try to get into the second one now, regarding the loss of plants and so on. Part of that was because the U.S. was off the ground first in their global restructuring. In that respect, they were taking older companies and rejuvenating them. That's really where the high-tech industry started from. We and the rest of the world have been kind of chasing them. There were some plant closures, and I suspect in a global economy it will ultimately come down to whoever is smartest and can do things best will survive.

So what do we do in Canada? We can't take on the U.S. head on, but there are lots of things we can do in a variety of fields where we can carve out niches that may be very small compared to the U.S., but may be good businesses from a world-wide perspective, and so on, like this business here. It's a small business and growing. There are lots of them. As long as we don't try to take the U.S. head on... We'll lose, but if we're smart about where we go, we will be able to find the money, wherewithal, and incentives to do things. That's my feeling anyway.

Mr. Jim Jones: My question is really whether we have to be more conforming, like the U.S. I never said we had to take them on, but we want to get the opportunities—the expansion of Intel, Microsoft, and all of those large companies that are setting up in other places, such as Ireland. Why can't we get our share of growth, instead of Bill Gates coming up to the University of Waterloo and taking our top students? Why isn't he coming here and building a programming lab? Is it because he just wants everything in the evil empire of Redmond, Washington, or is it because of our tax situation here in this country?

Mr. Peter Rollason: I think taxes can always be part of the problem and are part of the problem, but I suspect it's not the entire situation. In his case, it's probably better just to have things close by. They're dealing in ideas, energy, and people, and having them close together probably works for him.

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We do use the tax difference as an excuse or a reason, and I think it's something we should look at very seriously. Canada has to be competitive with all the other countries it's competing with, and if it's not competitive, whether it's on taxes, salaries, or education, we won't do as well. So we have to look at the whole bundle of goods.

Thank you.

The Chair: I just want to follow up on Mr. Jones' comment. Consider that 90% of the Canadian population lives within 100 miles of the American border. We share a culture and the borders are becoming seamless. I think it's also generational, in the sense that there were probably more anti-American feelings in the sixties and seventies than there are today.

When you look at e-commerce, 66% of purchases made through the Internet by Canadian consumers are in the United States of America. I think we have to begin to get ready for a North American economy. You can't really run away from it, and in that sense the issue of taxation becomes very important. Granted we very much want to remain Canadian, but that also means we are North Americans. The two are not mutually exclusive; they actually support each other.

The point I'm making is that if we want to maintain the social programs we've grown accustomed to, we have to generate economic growth and wealth. If the tax system is not competitive, then it's an impediment to wealth creation. In that sense it hurts our ultimate goal, which is the improvement of the standard of living and quality of life for people. So, Mr. Rollason, do we really have a choice but to focus on becoming more and more competitive?

Mr. Peter Rollason: We are a trading country, and that means we're playing hockey with all the other teams. We need to have a good team or the best team. We have to be competitive in all aspects, to the extent that if we can't be competitive in one area, we have to be more competitive in another. But taxation is one of the benchmarks that a lot of people use in competitiveness, and it has a very high priority.

You're right that things that can ultimately lead to greater competitiveness and productivity lead to higher incomes, higher GDP, and a better country. That's how we compete on the sum total of all the resources we bring to the table.

The Chair: History teaches us that. When machinery was introduced on the farm, everybody was against it because they thought it would displace thousands of farmers. In reality, those resources were used in cities, specialization took over, and a greater generation of wealth gave everybody a better standard of living. I think we're going through that with the technological revolution, which will have exactly the same benefits.

That was more of a comment than a question, but that was your fault because you brought it up, Mr. Jones.

Mr. Jim Jones: Also, we're going through a technology revolution with no borders.

The Chair: Exactly.

Mr. Epp.

Mr. Ken Epp: I have just a really short point of order. Its almost trivial, but a member from the Bloc made a statement regarding the finances of Quebec and that they were net payers in. I simply would appeal to people to look at the Public Accounts of Canada to find the facts. That's my statement. Thank you.

Mr. Pierre de Savoye: I support that.

The Chair: The Reform and the Bloc are in agreement—that's good news.

On behalf of the committee, I'd like to thank you very much. I think you have a clear understanding of the debate that is going to take place within Canada on this particular issue. You've certainly added great value to it. So on behalf of the committee, thank you very much.

The meeting is adjourned to the call of the chair.